Notice to Members 05-56

Extension of Pilot Program Increasing Position and Exercise Limits for Stock Options

On August 10, 2005, NASD filed for immediate effectiveness with the Securities and Exchange Commission (SEC) amendments to Rule 2860, which extend a pilot program that increases certain stock options position and exercise limits to March 3, 2006. The pilot program was scheduled to expire on September 2, 2005.

The rules, as amended, are set forth in Attachment A. The amendments became effective August 10, 2005.

Questions concerning this Notice may be directed to Gary L. Goldsholle, Associate Vice President and Associate General Counsel, Office of General Counsel (OGC), Regulatory Policy and Oversight (RPO), at (202) 728-8104, or James L. Eastman, Assistant General Counsel, OGC, RPO, at (202) 728-6961.