News Release

NASD and AMEX to Combine to Create a Global Market of Markets

New York, New York, March 18, 1998—The National Association of Securities Dealers, Inc. (NASD®) and the American Stock Exchange (Amex) jointly announced today that their respective governing Boards have approved an agreement to merge the Amex into the NASD family of companies. The transaction is subject to a definitive agreement and the approval of the Amex membership. Structural and rule changes will require approval from the Securities and Exchange Commission (SEC). This strategic combination creates a market alliance unparalleled in technology, expertise, information and execution to meet the needs of investors worldwide. The Amex equity and options markets will operate separately from The Nasdaq Stock MarketSM and Nasdaq InternationalSM.

Frank G. Zarb, Chairman and Chief Executive Officer of NASD, and Richard F. Syron, Chairman and Chief Executive Officer of Amex, said, "The combination of Amex and NASD is a win for all concerned—investors, member firms, and listed companies. Through this combination, we will have the resources, state-of-the-art technologies and management to achieve a more efficient, transparent and lower-cost market structure.

"For investors, it will mean more efficient pricing, greater access to specialist posts through a new, automated electronic limit-order book, faster execution and reduced transaction costs. For listed companies, it will provide a unique choice between Nasdaq, a state-of-the-art quote-driven market, and the newly enhanced Amex, featuring a state-of-the-art order-driven structure. For member firms, it will produce substantial cost savings and a more level playing field by leveraging NASD’s technology and integrating regulatory functions."

"Building on the strengths of both organizations, we will jointly develop a fully automated electronic limit order facility for equities that will be the first of its kind to be operated in the United States by a primary market. The new facility, which will operate on the NASD’s extensive network, will permit electronic routing of customer orders directly from brokers around the world to Amex specialist posts in New York for immediate, automatic execution. It will allow viewing of the Amex specialist ‘book’ above and below the quote, and for the first time will enable brokerage firms to obtain real-time limit-order information for investors. No other stock market in the United States is comparable."

"The NASD/Amex combination will also enhance the growth potential of Amex’s strong options business, the volume of which has increased 65 percent over the past two years. The combined NASD/Amex global position in equities and derivatives trading will further the worldwide expansion of our member firms," Zarb and Syron added.

Under the terms of the agreement, the NASD will commit more than $100 million over the next several years primarily to install state-of-the-art technology to ensure that Amex and The Nasdaq Stock Market meet the needs of a globalized capital markets system. The combination of NASD and Amex will create significant synergies for the industry, including targeted cost savings of hundreds of millions of dollars over a five-year period.

The combination of NASD and Amex represents the first major step in creating a "market of markets" to be built and operated on a global network of computers connecting market participants around the world. This combination capitalizes on the opportunities created by the revolution in information technology that now makes possible stock market alliances on a worldwide basis. It is a leading-edge transaction for the securities industry, bringing together under one roof equity and options markets and facilitating the delivery of price and quote information for both markets through a common global network.

The transaction will be structured to be tax free to Amex seatholders. Regular Amex seats will retain the right to trading, brokerage and specialist activities. Amex Option Principal Members will retain the right to participate as registered options traders. The NASD will provide $30 million to be applied to a seat-stabilization program for Regular Amex seatowners. All such funds not applied to the stabilization program will be invested by the NASD in technology or facilities for the Amex.

As part of the NASD family, Amex will operate as an independent subsidiary of the NASD with its own Board of Directors. The new Amex Board will consist of four industry directors, four staff representatives and eight public representatives. The Amex Board will designate four members to serve on the twenty-seven member NASD parent Board.

The American Stock Exchange is the only primary marketplace in the United States for both equities and derivative securities. The Amex trades more than 900 issues on its primary list. In the options market, the Amex trades options on 29 broad-based and sector indexes, and 896 stocks and 103 Long-term Equity AnticiPation Securities (LEAPS). In addition, the Amex is a leader in listing warrants on foreign currencies and indexes as well as hybrid instruments and other structured products.

The National Association of Securities Dealers, Inc., is the largest securities industry self-regulatory organization in the United States. Through its subsidiaries, The Nasdaq Stock Market, Inc., and NASD Regulation, Inc., the NASD designs, operates and regulates securities markets and develops rules and regulations, provides a dispute resolution forum and conducts regulatory reviews of member activities, all for the benefit and protection of the investor.