Notice to Members 06-46

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

On August 10, 2006, NASD filed for immediate effectiveness with the Securities and Exchange Commission (SEC) amendments to Rule 2860 extending until March 1, 2007, a pilot program increasing certain stock options position and exercise limits. The pilot program was scheduled to expire on September 1, 2006.

The rules, as amended, are set forth in Attachment A.

The amendments become effective September 1, 2006.

Questions concerning this Notice may be directed to Gary L. Goldsholle, 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.