• Direct NASDAQ data feed subscribers
• NASDAQ market data redistributors

Summary:

• On January 13, 2006, the Securities and Exchange Commission (SEC) approved NASDAQ’s application to register The NASDAQ Stock Market LLC, a newly formed subsidiary, as a National Securities Exchange.
• NASDAQ will work with the SEC to determine the date on which NASDAQ will satisfy the conditions specified in the approval order and begin operating as an exchange.
• For more information, please refer to the NASDAQ Exchange Registration section of the NASDAQ Trader website.

On January 13, 2006, the SEC approved NASDAQ’s application to register as a National Securities Exchange. NASDAQ^® will now work with the SEC to determine the operational date — the date on which NASDAQ will begin operating as an exchange. This date is subject to NASDAQ satisfying any conditions specified in the approval order. NASDAQ hopes that the operational date will be on or around April 1, 2006; however, as NASDAQ must first satisfy the conditions specified in the SEC approval order and due to the uncertainties associated with some of these conditions, the actual date may be delayed.

Exchange registration allows NASDAQ to operate as an independent self regulatory organization (SRO), without being controlled by the NASD.

• As an SRO, NASDAQ will have its own rules regarding trading, listing, membership and regulation. NASDAQ will, however, continue to be subject to SEC oversight.
• NASDAQ’s new status will eliminate any perception of conflict of interest between the regulation of the market and the primary trading center.
• Becoming an exchange will eliminate some disparate treatment of securities listed on NASDAQ, because they are not considered “exchange-listed.” Some state laws accord securities “listed on an exchange” more favorable treatment than other securities.

While NASDAQ already operates like an exchange, there will be two key changes for market participant firms:

• NASDAQ’s transaction facilities will be separated from the over-the-counter trade processing facilities (ACT). NASDAQ’s transaction execution services, including the NASDAQ Market Center^®, Brut and Inet, will be operated under NASDAQ’s exchange license. And, subject to SEC approval, NASDAQ plans to offer trade reporting through the Trade Reporting Facility, a new limited liability company operated by NASDAQ. As outlined in UTP Vendor Alert #2005-036, the Trade Reporting Facility will be identified by the market center identifier of "L" on the UTP Trade Data Feed^SM (UTDF^SM).
• NASD members that currently operate as order-entry firms, market making firms or ECNs in the NASDAQ Market Center will need to register as NASDAQ members in order to use the NASDAQ Market Center trading system and other NASDAQ services.  For more information on the exchange registration process, please refer to Head Trader Alert #2006-005.

For background materials (including a list of frequently asked questions), please refer to the NASDAQ Exchange Registration section of the NASDAQ Trader^® website. Firms may also contact the following NASDAQ departments for additional information:

• Market participant firms should contact NASDAQ Market Sales at 800.846.0477.
• Direct data feed subscribers and market data redistributors should contact NASDAQ Market Data Distribution at 301.978.5307.