1. Nasdaq Japan Markets Pre-discussion Ken Peffers UNLV September 2004

2. Nasdaq Stock Market founded 1960s evolved to become highly efficient electronic platform that unites more than 500 markets in which buyers and sellers exch information and transact business At end of 2000, average of 1.7 bil trans per day.

3. Nasdaq provides Shared technology and business infrastructure (communications and computing systems, facilities and equipment) for member companies Operating and process model (to support business transactions) Management and information model (to enable coordination and control)

4. Decision making for the firm When business conditions are stable DM resembles chess game Players plan series of moves, anticipating countermoves After each move players analyze situation and plan new moves

5. During periods of innovation or instability Players moves may not reflect rational thinking Opponents may know things you don’t know Must return to fundamental analysis of business structure Define, execute, and evolve strategy

6. Nasdaq Market Players Issuers IPOs, established firms Build new business Prepare for IPO Apply for listing approval Gain approval and list Offer secondary offerings

7. Issuer Support Service Providers Venture capital firms Lawyers and accountants Investment bankers PR firms Consultants Provide funding, advice and services to entrepreneurs and execs Assist with development of capabilities needed to define and execute strategy

8. Market Makers Share market info about avail and price of shares and level of supply and demand for each security Stimulate demand and supply Accept and post buy and sell orders Match best bid and offer Execute trades

9. Regulators SEC, NASD Develop regulations to protect investors and maintain the integrity of the securities markets Monitor and enforce regulations Define disclosure standards for public companies

10. Clearance and Settlement Agents Banks, National Securities Clearing Corporation, etc. Book trade Notify buyers, sellers and market makers Notify banks Settle accounts Provide insurance

11. Investor Support Service Providers Market research firms, financial analysts and advisors, Portfolio and fund managers Assist investors with the def of investment goals

12. Investors Ind and inst. Access info and advice and develop expertise Make decisions concerning the dev and mgmt of investment portfolios

13. Nasdaq Japan Markets Postscript Ken Peffers UNLV September 2004

14. Management Question What advice would you give to the NJM team?

15. Material Facts Nasdaq Japan strong standards key benefit of Nasdaq Japan Global market potential Difficulty of starting firm in Japan 5% of wealth in equities; 80% in savings and insurance Japanese economy can benefit from transparent, liquid capital market

16. Material Facts Company is running out of cash. Won’t have sufficient cash to complete the hybrid model without new investments. New pool of IPO’s in Japan has dried up Stock market boom is off in US. Large US Nasdaq firms, i.e., MS, Dell, Cisco, etc. interested in listing in NJM but not in a hurry.

17. Analysis It will take a long time to develop a hybrid model in Japan Hybrid market model requires high volume, but without it there is little incentive to switch to NJM.

18. Analysis ETFs (exchange traded funds) best hope for liquidity Competing interests of all of the stakeholders makes it slow going to evolve the firm. Peoplesoft, OSE, Nasdaq US,

19. August 16, 2002