London Stock Exchange Shareholder Circular

The Board of London Stock Exchange Group plc ("the Exchange Group") is posting today its second shareholder circular (the "Circular") in response to the final offer posted by Nasdaq on 12 December 2006.

The Circular highlights the excellent prospects of the Exchange Group which are underpinned by its global leadership position for listings, the continuing structural shift to higher volumes of trading driven by declining transaction costs, increasingly fast and efficient technology and the growing demand for data products.

The Circular includes the Exchange's SETS forecast for financial year 2008 of at least 480,000 average trades per day, an increase of at least 180 per cent. As evidence of the Board's confidence in the Exchange Group's growth prospects, the Board also announces an increase of up to £250 million in its existing share buyback programme, underlining its commitment to continue its proactive approach to capital management. Over the last two and a half years, the Exchange Group has returned or announced a commitment to return up to £974 million, 35 per cent of its current market capitalisation.

Furthermore, the Circular illustrates the Exchange Group's long culture of competing successfully for liquidity against a number of trading platforms in the UK and, with MiFID, the opportunity for the Exchange Group to extend its successful franchise in an increasingly pan-European market.

The Circular sets out the Board's continuing view that the Exchange Group should be valued against a much broader group of global exchanges which is supported by financial experts in recent precedent exchange transactions. Nasdaq's offer of 24.4x is far below the trading P/E multiples for the 12 months to 31 December 2006 of virtually all other major listed exchanges.

The Board of the Exchange Group continues to recommend strongly that Exchange Group shareholders reject Nasdaq's wholly inadequate offer and take no action in respect of their shareholdings.

Clara Furse, Chief Executive Officer of the Exchange Group, commented: "Today's revised SETS forecast, together with the recently announced tariff changes, support a compelling value creation story for the Exchange Group. The Exchange is an increasingly attractive strategic asset in the rapidly evolving global exchange sector."

Chris Gibson-Smith, Chairman of the Exchange Group, commented: "The Board's confidence in the Exchange Group's growth prospects explains the focus on ensuring the standalone value of the Exchange Group is fully understood. Nasdaq's wholly inadequate offer persists in undervaluing the world's capital market. Your Board remains open to a strategic combination and the Circular explains that shareholders and customers would benefit from a transaction which properly recognises the value of the Exchange Group and its markets. Shareholders should not be persuaded to sell their shares below their true value." -- www.londonstockexchange.com