Nasdaq And Primex Trading To Offer Investors State-Of-The-Art Electronic Price-Improvement System

The Nasdaq Stock Market® today announced that it has signed a letter of intent with Primex Trading N.A., LLC, to provide investors and Market Makers with a unique electronic trading platform. Primex Trading's technology will be offered exclusively to Nasdaq®. The PRIMEX AUCTION SYSTEMTM employs patent-pending technology that enhances and automates trading methods found on a floor-based exchange. The new system will allow members of the National Association of Securities Dealers, Inc. (NASD®), to seek price improvement opportunities for their customer's orders by exposing them to a broad electronic "crowd" of participants. These participants will then compete for the orders based on price within the context of the best quotes publicly displayed. "Incorporating this cutting-edge technology into the Nasdaq market is another indication Nasdaq is committed to providing investors and market participants alternative means to receive quality executions," said Frank G. Zarb, Chairman and CEO, of the NASD® parent of The Nasdaq Stock Market. "This system provides broker/dealers an important tool to serve their customers and offers a valuable opportunity to partner with NASD members in U.S. and foreign equity markets." "The Primex Trading partners believe that by incorporating our unique auction platform within Nasdaq's strong dealer network, we will create a long-sought-after hybrid market that includes the best aspects of both dealer and auction marketplaces," said Peter B. Madoff, Manager of Primex Trading. The system is designed to complement existing trading models used by Market Makers in the dealer marketplace, as well as by Electronic Communications Networks (ECNs). The new trading platform would employ sophisticated technology to execute orders at prices better than the national best bid or offer. In providing access through a Nasdaq-governed facility, Market Makers and others, including order-entry firms and ECNs, would be able to enter customer market orders into the system anonymously. Such orders would interact with responses from the electronic "crowd," consisting of brokers, dealers and sponsored institutions. By such open interaction, market orders have an opportunity to obtain prices that improve upon the current best bid or offer. Nasdaq will offer the system to its market participants for use strictly on a voluntary basis. Nasdaq intends to offer the new system for use in trading Nasdaq and New York Stock Exchange securities by this coming summer. This action reflects the NASD Board's consistent principle that trading systems that provide value to investors and market participants should be included as part of The Nasdaq Stock Market. In accordance with the non-binding letter of intent, The Nasdaq Stock Market has the option to license the PRIMEX AUCTION SYSTEMTM for use overseas. Nasdaq previously announced plans to create a pan-European electronic stock market and a similar market in Japan. Over the coming weeks, NASD staff will work closely with its Board, appropriate Board committees, and Primex to finalize details of the agreement, and specify how the system will integrate this kind of leading-edge technology into the Nasdaq marketplaces. Primex Trading, founded by Bernard L. Madoff Investment Securities, is a partnership consisting of Madoff, Merrill Lynch, Goldman Sachs, Salomon Smith Barney, and Morgan Stanley Dean Witter. The Nasdaq Stock Market lists nearly 5,000 companies, has the largest dollar volume of trades of any financial market, and trades more shares per day than any other U.S. market. Current market capitalization is $4.5 trillion. Nasdaq is a subsidiary of the NASD, the largest securities-industry, self-regulatory organization in the United States. For more information about Nasdaq, visit the Nasdaq Web site at www.nasdaq.com or the Nasdaq NewsroomSM at www.nasdaqnews.com.