NASD Board Unanimously Approves Major Restructuring

The National Association of Securities Dealers, Inc. (NASD®), announced that its Board of Governors yesterday has unanimously approved a major restructuring of the NASD. NASD Chairman and Chief Executive Officer Frank G. Zarb said, "Today's Board actions are a win-win-win for investors, issuers and NASD members. Investors and issuers get a more agile, better-capitalized Nasdaq®-one that can be quicker to put technology to use and better able to create the digital global stock market. Members get reduced fees through a better-funded NASD Regulation®, reduced regulatory administrative burdens through the increased use of technology, an increasingly member-focused NASD organization, and the opportunity to participate financially in each phase of the Nasdaq® recapitalization." The NASD Board authorized the staff to: 1.Proceed with Phases 1 and 2 of the proposed restructuring and recapitalization of The Nasdaq Stock Market®; 2.Conduct a vote of NASD membership prior to proceeding with Phase 1. 3.Earmark approximately $114 million over seven years for the reduction of fees and assessments to the membership. 4.Earmark up to $500 million of the proceeds for the benefit of NASD Regulation. 5.Earmark up to $215 million for the benefit of the American Stock Exchange®. Commenting on today's board actions were Governors Robert R. Glauber, a professor at Harvard University and head of the NASD Board's Fairness Committee, Alan L. Davidson, President of Zeus Securities, Inc., and Frank E. Baxter, Chairman and CEO of the Jeffries Group and head of the NASD Board's Baxter Committee. Glauber noted, "The restructuring has many moving parts that were extensively analyzed by the Fairness Committee. The Baxter Committee provided a roadmap with these objectives: enhance the competitiveness of Nasdaq, fairly recognize the members' contribution to building Nasdaq, strengthen NASDR and maintain its independence, reduce regulatory costs to members, and protect NASD's commitments to the Amex. Management and the Board have worked hard to balance and meet these objectives. The plan approved today, in the view of the Fairness Committee, is fair to the NASD and is members and achieves the Baxter Committee objectives." Davidson commented, "We have all worked hard to be sure that the interests of the small firms are well represented. Today's plan does that. I enthusiastically support today's board actions and encourage my colleagues in the membership to vote to approve this historic restructuring of the NASD." Baxter explained the impact of the restructuring on Nasdaq, "The new ownership structure for Nasdaq will allow it to compete successfully in today's highly competitive market environment for three fundamental reasons: First, it better aligns the interests of the Market with the interests of key participants. Second, it provides both an initial infusion of capital and easier ongoing access to capital. Third, as a for-profit stock based company governed by the Market's leading participants, Nasdaq should be more agile, flexible, and effective in responding to industry and market conditions." The National Association of Securities Dealers, Inc., is the largest securities-industry, self-regulatory organization in the United States. It is the parent organization of The Nasdaq-Amex Market Group, Inc., and NASD Regulation, Inc. Through The Nasdaq-Amex Market GroupSM, the NASD operates The Nasdaq Stock Market and the American Stock Exchange. Through its regulatory subsidiary, the NASD develops rules and regulations, provides a dispute resolution forum, and conducts regulatory reviews of member activities for the protection and benefit of investors. The NASD oversees the nation's 5,600 brokerage firms and more than 600,000 registered brokers. For more information about the NASD and its subsidiaries, please visit the following Web sites: www.nasd.com; www.nasdaq.com; www.amex.com; www.nasdr.com; or the Nasdaq NewsroomSM at www.nasdaqnews.com.