Update On The NYSE-Archipelago Merger By John A. Thain

I want to update you on a number of developments regarding our merger with Archipelago and the status of our filings with regulatory authorities. Since our Member town hall meeting last month, we have completed much of the work necessary for our S-4 (proxy statement-prospectus) filing.

The Board of Directors will meet during the week of July 18 to make decisions on several key open items. Once the Board has approved the working draft, we will file it with the SEC and make it available to the Membership. Among other important information, the draft S-4 will contain, or have attached, the following information:

• Summaries of the transaction and details about the new company;
• Risk factors;
• A description of the negotiations of the transaction and our Board’s review of the transaction, as well as minutes of our relevant Board meetings;
• A complete text of the fairness opinion by Lazard, as well as the materials prepared by Lazard describing its analysis as presented to our Board;
• The merger agreement, engagement letters and support and lock-up agreements;
• Governance structure of NYSE Group Inc.;
• Pro-forma financial statements for the combined company;
• Our current thinking regarding trading licenses based upon a proposal made by the Board of Executives floor representatives;
• Plans for the allocation of stock to NYSE employees;
• Details on the special Member meeting at which you will be voting on the Archipelago transaction, and;
• Details of a mechanism for enabling Members to choose, within the overall terms of the deal, more stock or more cash.

Between the time this draft is made available to you and completion of the final S-4 which you will use to consider the transaction, we anticipate holding a Member town hall meeting to answer your specific questions and concerns. We intend to update the draft as more details are firmed up and in response to SEC and Member comments. As the timing for these meetings becomes clearer, we will provide you with more specifics.

On the antitrust front, the Department of Justice has issued a second request for documentation after reviewing our original Hart-Scott-Rodino filing. We are now in the process of collecting the materials needed to fulfill that document request, and will submit them as soon as possible. We have also begun the process of seeking a ruling from the IRS on the tax implications of the transaction.

The market has continued to view the merger positively. Archipelago stock is now trading at around $40, giving each seat an implied value of $3.5 million and the NYSE Group an implied market value of $6.5 billion. There have been a number of recent seat sales at $2.5 million. The lease market has tightened up as well, with leases now around $60,000.

We will continue to report to you on an ongoing basis, as developments may warrant, and welcome your input in the interim.

cc: NYSE Chairman Marshall N. Carter
NYSE Board of Directors