NASDAQ OMX Group (NDAQ)

Note I—Payment for order flow

At December 31, 2006, the Exchange held total cash in the amount of $5,539,000 and total receivable and payable balances of $4,294,000 and $9,833,000, respectively, related to its various Payment for Order Flow (PFOF) programs noted below. At December 31, 2005, the Exchange held total cash in the amount of $2,323,000 and total receivable and payable balances of $2,665,000 and $4,988,000, respectively.

In August 2000, the Exchange instituted its original PFOF program, charging specialists and registered options traders (ROTs) $1.00/contract for all trades executed against a customer in the top 120 equity options. The Exchange acted as custodian of the process, collecting funds from specialists and ROTs and reimbursing specialists as appropriate. The amount of funds billed above the balance requested by the specialists was rebated to all applicable parties on a pro-rata basis. At December 31, 2006, the Exchange held cash in the amount of $1,000 and receivable and payable balances of $3,000 and $4,000, respectively, related to the original PFOF program. At December 31, 2005, the Exchange held cash in the amount of $118,000 and receivable and payable balances of $3,000 and $121,000, respectively, related to the original PFOF program. The Exchange suspended its original program in August 2001.

In November 2002, the Exchange re-instituted a modified PFOF program, which charged ROTs a variable rate between $0.00/contract and $1.00/contract for all trades executed against a customer in the top 120 equity options, and later included a 500 contract cap per individual cleared side of a transaction. The Exchange acted as custodian of the process, collecting funds from ROTs and reimbursing specialists as appropriate. The amount of funds billed above the balance requested by the specialists was rebated to all applicable ROTs on a pro-rata basis. At December 31, 2006, the Exchange held cash in the amount of $4,000 and receivable and payable balances of $53,000 and $57,000, respectively, related to the modified PFOF program. At December 31, 2005, the Exchange held cash in the amount of $4,000 and receivable and payable balances of $57,000 and $61,000, respectively, related to the modified PFOF program.

In August 2004, the Exchange revised its PFOF program to charge ROTs $1.00/contract for equity options on the then top-ranked equity option and $.35/contract for all other equity option trades executed against a customer, subject to a 500 contract cap per individual cleared side of a transaction, if the specialist in that option participated in the PFOF program. The Exchange acted as custodian of the process, collecting funds from ROTs and reimbursing specialists as appropriate. The amount of funds collected above the balance requested by the specialists was rebated to all applicable ROTs on a pro-rata basis. In September 2004, the Exchange charged $1.00/contract on the then top-ranked equity option and $.40/contract for the remaining top 150 equity options for trades executed against a customer, subject to a 500 contract cap per individual cleared side of a transaction, if the specialist in that option participated in the PFOF program. The amount of funds collected above the balance requested by the specialists was carried forward to the next month by option. Excess PFOF funds collected from ROTs but not requested by specialists in connection with the PFOF program in effect in September and October 2004 were later rebated to ROTs on a pro rata basis. In November 2004, the Exchange charged a

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PFOF program fee of $.40/contract on all equity options traded on the Exchange other than options on FXI, which were not assessed a PFOF fee, and on the then top-ranked equity option, which continued to be charged $1.00/contract, subject to a 500 contract cap per individual cleared side of a transaction, if the specialist in that option participated in the PFOF program. Rebates to applicable ROTs were also reinstituted. At December 31, 2006, the Exchange held cash in the amount of $-0- and receivable and payable balances of $-0- and $-0-, respectively, related to its revised PFOF program. At December 31, 2005, the Exchange held cash in the amount of $5,000, and receivable and payable balances of $2,000 and $7,000, respectively, related to its revised PFOF program.

In October 2005, the Exchange revised its PFOF program to charge specialists, Directed ROTs (DROTs) who participate in the program, and ROTs $0.75/contract for equity options on the then top-ranked equity option and $.60/ contract for all other equity option trades, other than options on FXI which are not assessed a PFOF fee, executed against an electronically delivered customer order executed on the Exchange, subject to a 500 contract cap per individual cleared side of a transaction. The Exchange acts as custodian of the process, collecting funds from specialists, DROTs and ROTs and making payments to order flow providers as directed by specialists and DROTs. The amount of funds collected above the balance requested by the specialists or DROTs is carried forward to future months by specialist or DROT pool unless the applicable specialist or DROT requests the excess to be rebated on a pro rata basis to the applicable specialists, DROT or ROT who paid into that pool of funds. The program is in effect as a pilot program that was currently scheduled to expire on May 27, 2007. At December 31, 2006, the Exchange held cash in the amount of $5,535,000 and receivable and payable balances of $4,237,000 and $9,773,000, respectively, related to its current PFOF program. At December 31, 2005, the Exchange held cash in the amount of $2,196,000, and receivable and payable balances of $2,603,000 and $4,799,000, respectively, related to its current PFOF program.