**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**




WASHINGTON,
      D.C. 20549




**FORM
      10-Q**




(MARK
      ONE)




xQUARTERLY
      REPORT
      PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934




FOR
      THE QUARTERLY PERIOD ENDED JUNE 30, 2006




OR




o TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934




FOR
      THE TRANSITION PERIOD FROM  TO




COMMISSION
      FILE NUMBER: 001-32829




**NYSE
      GROUP, INC.**


(Exact
      name of registrant as specified in its charter)




**DELAWARE**
            **20-2786071**(State
                or other jurisdiction of
              incorporation
                or organization)
            (I.R.S.
                Employer
              Identification
                No.)


**11
      Wall Street**


**New
      York, New York 10005**


(Address,
      including zip code, of


Registrant’s
      principal executive offices)




(212)
      656-3000


(Registrant’s
      telephone number including area code)




Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the Registrant was required
      to file such reports) and (2) has been subject to such filing requirements
      for
      the past 90 days. Yes x No ࿠




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer or a non-accelerated filer (as defined in Rule 12b-2 of the
      Exchange Act).




Large
      Accelerated Filer ࿠  
      Accelerated Filer ࿠  
      Non-accelerated Filer x




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes ࿠ No x




As
      of August 1, 2006, the registrant had approximately 156.1 million shares of
      common stock, $0.01 par value per share, outstanding.










**INDEX**





Page


PART
      I - FINANCIAL INFORMATION




Item
                1.
            Financial
                StatementsCondensed
                consolidated statements of financial condition at
                June 30, 2006 and December 31, 2005
            1Condensed
                consolidated statements of income for the three
                and six months ended June 30, 2006 and 2005
            2Condensed
                consolidated statement of changes in stockholders’
                equity for the six months ended June 30, 2006
            3Condensed
                consolidated statements of cash flows for the six
                months ended June 30, 2006 and 2005
            4Notes
                to condensed consolidated financial
                statements
            5Item
                2.
            Management’s
                Discussion and Analysis of Results of
                Operations and Financial Condition
            17Item
                3.
            Quantitative
                and Qualitative Disclosure about Market
                Risk
            43Item
                4.
            Controls
                and Procedures
            43


PART
      II - OTHER INFORMATION




Item
                1.
            Legal
                Proceedings
            43Item
                1A.
            Risk
                Factors
            45Item
                4.
            Submission
                of Matters to a Vote of Security
                Holders
            46Item
                6.
            Exhibits
            47











**CERTAIN
      TERMS**




Throughout
      this report, unless otherwise specified or if the context otherwise
      requires:





·
            “NYSE
                Group,” “we,” “us” and “our” refer to NYSE Group, Inc., a Delaware
                corporation, and its subsidiaries, which, following the merger, include
                the NYSE and Archipelago;




·
            “NYSE”
                refers to (i) prior to the completion of the merger, New York Stock
                Exchange, Inc., a New York Type A not-for-profit corporation, and
                (ii)
                after the completion of the merger, New York Stock Exchange LLC,
                a New
                York limited liability company, and its subsidiaries, NYSE Market,
                Inc., a
                Delaware corporation (“NYSE Market”), and NYSE Regulation, Inc., a New
                York not-for-profit corporation (“NYSE
                Regulation”);




·
            “Archipelago”
                refers to, prior to and following the completion of the merger,
                Archipelago Holdings, Inc., a Delaware corporation, and, where the
                context
                requires, its predecessor, Archipelago Holdings, LLC, a Delaware
                limited
                liability company;




·
            "NYSE
                Arca" refers to NYSE Arca, L.L.C., a Delaware limited liability company
                (formerly known as Archipelago Exchange, L.L.C.), NYSE Arca, Inc.,
                a
                Delaware corporation (formerly known as the Pacific Exchange, Inc.),
                and
                NYSE Arca Equities, Inc., a Delaware corporation (formerly known
                as PCX
                Equities, Inc.);




·
            “merger”
                refers to the mergers combining the NYSE and Archipelago under NYSE
                Group,
                which were completed on March 7, 2006;
                and




·
            “combination”
                refers to the proposed combination of NYSE Group and Euronext, N.V.
                (“Euronext”) and certain related transactions which, upon completion,
                would combine the businesses of NYSE Group and Euronext under NYSE
                Euronext, Inc., a Delaware corporation (“NYSE
                Euronext”).














**FORWARD-LOOKING
      STATEMENTS**




This
      quarterly report on Form 10-Q contains statements that may constitute
“forward-looking statements” within the meaning of the safe harbor provisions of
      the Private Securities Litigation Reform Act of 1995. In some cases, you can
      identify these statements by forward-looking words such as “may,” “might,”
“will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,”
“predict,” “potential” or “continue,” and the negative of these terms and other
      comparable terminology. These forward-looking statements, which are subject
      to
      known and unknown risks, uncertainties and assumptions about us, may include
      projections of our future financial performance based on our growth strategies
      and anticipated trends in our business. These statements are only predictions
      based on our current expectations and projections about future events. There
      are
      important factors that could cause our actual results, level of activity,
      performance or achievements to differ materially from the results, level of
      activity, performance or achievements expressed or implied by the
      forward-looking statements. In particular, you should consider the numerous
      risks and uncertainties described under “Risk Factors” in our annual report on
      Form 10-K for the year ended December 31, 2005.




These
      risks and uncertainties are not exhaustive. Other sections of this report
      describe additional factors that could adversely impact our business and
      financial performance. Moreover, we operate in a very competitive and rapidly
      changing environment. New risks and uncertainties emerge from time to time,
      and
      it is not possible to predict all risks and uncertainties, nor can we assess
      the
      impact of all factors on our business or the extent to which any factor, or
      combination of factors, may cause actual results to differ materially from
      those
      contained in any forward-looking statements.




Although
      we believe the expectations reflected in the forward-looking statements are
      reasonable, we cannot guarantee future results, level of activity, performance
      or achievements. Moreover, neither we nor any other person assumes
      responsibility for the accuracy or completeness of any of these forward-looking
      statements. You should not rely upon forward-looking statements as predictions
      of future events. We are under no duty to update any of these forward-looking
      statements after the date of this report to conform our prior statements to
      actual results or revised expectations and we do not intend to do
      so.




We
      caution you not to place undue reliance on the forward-looking statements,
      which
      speak only as of the date of this report.




We
      expressly qualify in their entirety all forward-looking statements attributable
      to us or any person acting on our behalf by the cautionary statements contained
      or referred to in this section.












**PART
      I  -****FINANCIAL
      INFORMATION**




**Item
      1.****Financial
      Statements**




**NYSE
      GROUP, INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF FINANCIAL
      CONDITION**


(In
      thousands, except per share data)




**June
                30, 2006**
            
            **December
                31, 2005**(Unaudited)**Assets**Current
                assets:Cash
                and cash equivalents
            
            $
            272,666
            
            $
            43,492Investment
                securities, at fair value
            
            
            797,151
            
            
            980,591Securities
                purchased under agreements to resell
            
            
            35,534
            
            
            127,888Accounts
                receivable, net
            
            
            314,366
            
            
            184,185Deferred
                income taxes
            
            
            91,156
            
            
            91,919Other
                assets
            
            
            46,769
            
            
            36,142Total
                current assets
            
            
            1,557,642
            
            
            1,464,217Property
                and equipment, net
            
            
            403,603
            
            
            343,534Goodwill
            
            
            528,771
            
            
            -Other
                intangible assets, net
            
            
            583,895
            
            
            -Deferred
                income taxes
            
            
            331,589
            
            
            290,145Other
                assets
            
            
            89,449
            
            
            106,249Total
                assets
            
            $
            3,494,949
            
            $
            2,204,145**Liabilities
                and stockholders’ equity**Current
                liabilities:Accounts
                payable and accrued expenses
            
            $
            337,905
            
            $
            322,263Section
                31 fees payable
            
            
            371,643
            
            
            232,146Deferred
                revenue
            
            
            243,899
            
            
            105,313Deferred
                income taxes
            
            
            46,018
            
            
            25,238Total
                current liabilities
            
            
            999,465
            
            
            684,960Accrued
                employee benefits
            
            
            326,459
            
            
            323,373Deferred
                revenue
            
            
            325,162
            
            
            329,197Deferred
                income taxes
            
            
            251,637
            
            
            9,289Other
                liabilities
            
            
            29,493
            
            
            23,037Total
                liabilities
            
            
            1,932,216
            
            
            1,369,856Minority
                interest
            
            
            37,193
            
            
            35,164Commitments
                and contingencies**Stockholders’
                equity**Members’
                equity
            
            
            -
            
            
            807,781Common
                stock, $0.01 par value, 400,000 shares authorized; 157,727 and 0
                shares
                issued; 156,082 and 0 shares outstanding
            
            
            1,577
            
            
            -Common
                stock held in treasury, at cost: 1,645 and 0 shares
            
            
            (65,569
            )
            
            -Additional
                paid-in capital
            
            
            1,535,399
            
            
            -Retained
                earnings
            
            
            62,882
            
            
            -Accumulated
                other comprehensive loss
            
            
            (8,749
            )
            
            (8,656
            )Total
                stockholders’ equity
            
            
            1,525,540
            
            
            799,125**Total
                liabilities and stockholders’ equity**
            
            $
            3,494,949
            
            $
            2,204,145


The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.






1


**NYSE
      GROUP, INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF INCOME**


(In
      thousands, except per share data)


(Unaudited)




Three
                months ended June 30,
            
            Six
                months ended June 30,2006
            
            2005
            
            2006
            
            2005**Revenues**Activity
                assessment
            
            $
            189,766
            
            $
            141,773
            
            $
            328,975
            
            $
            234,713Transaction
            
            
            198,009
            
            
            37,806
            
            
            274,160
            
            
            75,759Listing
            
            
            88,768
            
            
            85,465
            
            
            177,236
            
            
            171,460Market
                data
            
            
            60,390
            
            
            46,290
            
            
            108,605
            
            
            90,440Data
                processing
            
            
            41,881
            
            
            47,759
            
            
            81,272
            
            
            92,664Regulatory
            
            
            44,740
            
            
            32,614
            
            
            85,164
            
            
            62,233Licensing,
                facility and other
            
            
            35,986
            
            
            13,104
            
            
            59,064
            
            
            28,038Total
                revenues
            
            
            659,540
            
            
            404,811
            
            
            1,114,476
            
            
            755,307Section
                31 fees
            
            
            (189,766
            )
            
            (141,773
            )
            
            (328,975
            )
            
            (234,713
            )Merger
                expenses and related exit costs
            
            
            (9,681
            )
            
            -
            
            
            (12,295
            )
            
            -Compensation
            
            
            (138,403
            )
            
            (128,337
            )
            
            (306,852
            )
            
            (257,013
            )Liquidity
                payments
            
            
            (74,821
            )
            
            -
            
            
            (93,791
            )
            
            -Routing
                and clearing
            
            
            (23,400
            )
            
            -
            
            
            (29,603
            )
            
            -Systems
                and communications
            
            
            (30,682
            )
            
            (32,038
            )
            
            (60,584
            )
            
            (63,794
            )Professional
                services
            
            
            (29,424
            )
            
            (34,155
            )
            
            (57,319
            )
            
            (61,051
            )Depreciation
                and amortization
            
            
            (36,077
            )
            
            (26,446
            )
            
            (64,240
            )
            
            (52,619
            )Occupancy
            
            
            (21,454
            )
            
            (17,078
            )
            
            (40,064
            )
            
            (33,939
            )Marketing
                and other
            
            
            (28,027
            )
            
            (17,546
            )
            
            (47,018
            )
            
            (31,758
            )Regulatory
                fine income
            
            
            6,222
            
            
            1,268
            
            
            23,161
            
            
            21,977**Operating
                income**
            
            
            84,027
            
            
            8,706
            
            
            96,896
            
            
            42,397Investment
                and other income, net
            
            
            17,017
            
            
            12,920
            
            
            33,838
            
            
            23,192Gain
                on sale of equity investment
            
            
            -
            
            
            -
            
            
            20,925
            
            
            -Income
                before income tax provision and minority interest
            
            
            101,044
            
            
            21,626
            
            
            151,659
            
            
            65,589Income
                tax provision
            
            
            (38,542
            )
            
            (7,415
            )
            
            (58,265
            )
            
            (26,224
            )Minority
                interest in income of consolidated subsidiary
            
            
            (1,329
            )
            
            (1,225
            )
            
            (1,873
            )
            
            (360
            )**Net
                income**
            
            $
            61,173
            
            $
            12,986
            
            $
            91,521
            
            $
            39,005Basic
                earnings per share
            
            $
            0.39
            
            $
            0.11
            
            $
            0.65
            
            $
            0.34Diluted
                earnings per share
            
            $
            0.39
            
            $
            0.11
            
            $
            0.64
            
            $
            0.34Basic
                weighted average shares outstanding
            
            
            156,422
            
            
            115,699
            (a)
            
            141,619
            
            
            115,699
            (a)Diluted
                weighted average shares outstanding
            
            
            157,428
            
            
            115,699
            (a)
            
            142,716
            
            
            115,699
            (a)


(a)
            Adjusted
                to reflect the March 7, 2006 merger with Archipelago, giving retroactive
                effect to the issuance of shares to former NYSE members. See Note
                1 to the
                condensed consolidated financial
                statements.




The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.






2


**NYSE
      GROUP, INC.**


**CONDENSED
      CONSOLIDATED STATEMENT OF CHANGES
      IN**


**STOCKHOLDERS’
      EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 2006**


(In
      thousands)


(Unaudited)




**Common
                Stock****Members’
                Equity**
            
            **Shares**
            
            **Par
                Value**
            
            **Treasury
                Stock**
            
            **Additional
                Paid-In Capital**
            
            **Retained
                Earnings**
            
            **Accumulated
                Other Comprehensive Income (Loss)**
            
            **Total****Balance
                as of December 31, 2005**
            
            $
            807,781
            
            
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            (8,656
            )
            $
            799,125Net
                income for the period from January 1 to March 7, 2006
            
            
            28,639
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            1,275
            
            
            29,914Members’
                distribution
            
            
            (409,800
            )
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (409,800
            )Members’
                dividend
            
            
            (96,400
            )
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (96,400
            )Exchange
                of NYSE membership interest
            
            
            (330,220
            )
            
            109,522
            
            
            1,095
            
            
            -
            
            
            329,125
            
            
            -
            
            
            -
            
            
            -Merger
                with Archipelago
            
            
            -
            
            
            47,625
            
            
            476
            
            
            (65,569
            )
            
            1,150,206
            
            
            -
            
            
            -
            
            
            1,085,113Employee
                stock transactions
            
            
            -
            
            
            580
            
            
            6
            
            
            -
            
            
            56,068
            
            
            -
            
            
            -
            
            
            56,074Net
                income for the period from
              March
                8 to June 30, 2006
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            62,882
            
            
            (1,368
            )
            
            61,514**Balance
                as of June 30, 2006**
            
            $
            -
            
            
            157,727
            
            $
            1,577
            
            $
            (65,569
            )
            $
            1,535,399
            
            $
            62,882
            
            $
            (8,749
            )
            $
            1,525,540




The
      accompanying notes are integral part of these condensed consolidated financial
      statements.






3


**NYSE
      GROUP, INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH
      FLOWS**


(In
      thousands)


(Unaudited)




**Six
                months**
              **ended
                June 30,****2006**
            
            **2005****Cash
                flows from operating activities:**Net
                income
            
            $
            91,521
            
            $
            39,005**Adjustments
                to reconcile net income to net cash provided by operating
                activities:**Depreciation
                and amortization
            
            
            64,240
            
            
            52,619(Gain)
                loss on disposition of assets
            
            
            (84
            )
            
            2,291Minority
                interest
            
            
            2,029
            
            
            178Deferred
                income taxes
            
            
            (4,082
            )
            
            (1,853
            )Provision
                for losses on accounts receivable
            
            
            1,530
            
            
            (650
            )Stock
                based compensation
            
            
            40,525
            
            
            -Gain
                on sale of equity investment
            
            
            (20,925
            )
            
            -**Change
                in operating assets and liabilities:**Accounts
                receivable, net
            
            
            (56,286
            )
            
            (28,953
            )Other
                assets
            
            
            (13,512
            )
            
            8,656Accounts
                payable, accrued expenses and SEC transaction fee payable
            
            
            (13,642
            )
            
            124,675Deferred
                revenue
            
            
            148,978
            
            
            131,715Accrued
                employee benefits
            
            
            3,086
            
            
            4,111Net
                cash provided by operating activities
            
            
            243,378
            
            
            331,794**Cash
                flows from investing activities:**Cash
                acquired in Archipelago merger
            
            
            218,201
            
            
            -Sales
                of investment securities
            
            
            7,456,182
            
            
            3,603,804Purchases
                of investment securities
            
            
            (7,272,836
            )
            
            (3,857,165
            )Net
                sales of securities purchased under agreements to resell
            
            
            92,354
            
            
            8,135Purchases
                of property and equipment
            
            
            (39,802
            )
            
            (54,376
            )Sale
                (purchase) of equity investment
            
            
            25,784
            
            
            (10
            )Net
                cash provided by (used in) investing activities
            
            
            479,883
            
            
            (299,612
            )**Cash
                flows from financing activities:**Distribution
                to former Members
            
            
            (409,800
            )
            
            -Dividend
                to former Members
            
            
            (96,400
            )
            
            -Employee
                stock transactions
            
            
            15,697
            
            
            -Principal
                payment of capital lease obligations
            
            
            (3,584
            )
            
            (4,013
            )Net
                cash used in financing activities
            
            
            (494,087
            )
            
            (4,013
            )Net
                increase in cash and cash equivalents for the period
            
            
            229,174
            
            
            28,169Cash
                and cash equivalents at beginning of period
            
            
            43,492
            
            
            15,456Cash
                and cash equivalents at end of period
            
            $
            272,666
            
            $
            43,625**Supplemental
                disclosures:**Cash
                paid for income taxes
            
            $
            38,409
            
            $
            12,500Cash
                paid for interest
            
            $
            1,155
            
            $
            2,513**Non-
                cash investing and financing activities:**Exchange
                of NYSE membership interest
            
            $
            330,220
            
            
            -Merger
                with Archipelago
            
            $
            1,085,113
            
            
            -




The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.






4


**NYSE
      GROUP, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS**


(Unaudited)




**Note
      1  -**  **Organization
      and Description of Business**




NYSE
      Group is a holding company that, through its subsidiaries, operates two
      securities exchanges: the NYSE and NYSE Arca. NYSE Group is a leading provider
      of securities listing, trading and market data products and services. NYSE
      Group
      was formed in connection with the merger of the NYSE and Archipelago, which
      was
      completed on March 7, 2006. NYSE Group common stock is listed on the NYSE under
      the symbol “NYX”.




The
      NYSE is the world’s largest cash equities exchange. The NYSE is approximately
      three times the size of the next largest cash equities exchange in the world
      in
      terms of aggregate market capitalization of domestic listed
      companies.




NYSE
      Arca operates the first open, all-electronic stock exchange in the United States
      and has one of the leading market positions in trading exchange-traded funds
      (“ETFs”) and exchange-listed securities. NYSE Arca is also an exchange for
      trading equity options.




The
      NYSE owns two-thirds of the Securities Industry Automation Corporation (“SIAC”)
      and reports SIAC’s financial results on a consolidated basis. SIAC is an
      important industry resource providing critical automation and communications
      services to the NYSE, the American Stock Exchange LLC (“AMEX”) and other
      organizations to support order processing, trading and the reporting of market
      information, among other functions. SIAC also provides system support for
      certain national market system functions and for important regulatory and
      administrative activities. In addition, SIAC provides telecommunication and
      managed services through its wholly owned subsidiary, Sector, Inc. (“Sector”),
      to subscribers primarily in the securities industry.




The
      regulatory functions of the NYSE and NYSE Arca are conducted by NYSE Regulation,
      a separate not-for-profit subsidiary of NYSE Group.




**Note
      2  -**  **Basis
      of Presentation**




The
      accompanying condensed consolidated financial statements include the accounts
      of
      NYSE Group and all wholly-owned subsidiaries, as well as of SIAC. The results
      of
      operations of Archipelago have been included in NYSE Group’s results of
      operations since March 8, 2006.




The
      accompanying condensed consolidated financial statements are prepared in
      accordance with accounting principles generally accepted in the United States
      and reflect all adjustments, consisting of only normal recurring adjustments,
      that are, in the opinion of management, necessary for a fair statement of the
      results for the period. All material intercompany accounts and transactions
      have
      been eliminated in consolidation. Certain information and footnote disclosures
      normally included in financial statements, which are normally required under
      accounting principles generally accepted in the United States, have been
      condensed or omitted; however, management believes that the disclosures are
      adequate to make the information presented not misleading.




The
      preparation of these condensed consolidated financial statements, in conformity
      with accounting principles generally accepted in the United States, requires
      management to make estimates and assumptions that affect the reported amounts
      of
      assets and liabilities as of the date of the financial statements and the
      reported amounts of revenues and expenses during the reported period. Actual
      results could be materially different from these estimates. Certain prior period
      amounts have been reclassified to conform to the current






5




period’s
      presentation.




The
      condensed consolidated financial statements are unaudited and should be read
      in
      conjunction with the audited financial statements as of and for the year ended
      December 31, 2005, included in the NYSE Group annual report on Form 10-K filed
      with the SEC on March 31, 2006. Operating results for the three and six months
      ended June 30, 2006 are not necessarily indicative of the results that may
      be
      expected for the year ending December 31, 2006.




**Note
      3  -**  **Business
      Combinations**




*Archipelago
      Holdings, Inc.*




On
      March 7, 2006, Archipelago and the NYSE combined their businesses and became
      wholly-owned subsidiaries of NYSE Group, a newly created, for profit and
      publicly traded holding company. Through the merger, NYSE Group intends to
      continue to grow market position in trading volume and enhance the trading
      technology of both the NYSE and NYSE Arca. Together, the NYSE and NYSE Arca
      provide a full-service market that offers customers a choice of products and
      appeals to all types of investors.




On
      March 7, 2006, each of the 1,366 members of the NYSE was entitled to receive
      $300,000 in cash and 80,177 shares of NYSE Group common stock in exchange for
      its NYSE membership. In addition, a cash dividend of $70,571 was declared and
      paid to each of the 1,366 members. Each NYSE member had the opportunity to
      make
      either a cash election to increase the cash portion (and decrease the stock
      portion) of their merger consideration, or a stock election to increase the
      stock portion (and decrease the cash portion) of their merger consideration.
      The
      aggregate number of shares of NYSE Group common stock issued to all of the
      NYSE
      members in the merger, together with the aggregate number of shares reserved
      for
      issuance to NYSE employees, equaled approximately 70% of NYSE Group common
      stock
      issued and outstanding, or approximately 109.5 million shares.




On
      March 7, 2006, (i) each share of the issued and outstanding shares of
      Archipelago’s common stock was converted automatically into the right to receive
      one share of NYSE Group common stock, (ii) all outstanding stock options of
      Archipelago, whether vested or unvested, converted into options to purchase
      an
      equivalent number of shares of NYSE Group common stock, and (iii) all
      outstanding restricted stock units of Archipelago converted into an equal number
      of restricted stock units of NYSE Group common stock. The aggregate number
      of
      shares (including shares underlying stock options and restricted stock units)
      received by Archipelago stockholders, equaled approximately 30% of the issued
      and outstanding shares of NYSE Group common stock, or approximately 46.0 million
      shares.




Under
      the purchase method of accounting, the total merger consideration, which was
      determined based on the fair market value of Archipelago common stock beginning
      two days before and ending after April 20, 2005 (the date the merger was agreed
      to and announced), was $1,085.1 million. The results of operations of
      Archipelago have been included in NYSE Group’s results of operations since March
      8, 2006.




The
      following is a summary of the purchase price in the Archipelago merger (in
      thousands):




Purchase
                price
            
            $
            1,085,113Acquisition
                costs
            
            
            25,422Total
                purchase price
            
            $
            1,110,535






6






The
      purchase price was allocated to the assets acquired and liabilities assumed
      based on the estimated fair value of Archipelago net assets as of the merger
      date as follows (in thousands):




Historical
                cost of net assets acquired
            
            $
            458,290Elimination
                of Archipelago’s historical goodwill and intangibles
            
            
            (240,095
            )Adjustment
                to fair value of property and equipment
            
            
            17,000Deferred
                tax impact of purchase accounting adjustments
            
            
            (233,531
            )Fair
                value of identifiable intangible assets
            
            
            584,500Other
            
            
            (4,400
            )Goodwill
            
            
            528,771Total
                purchase price
            
            $
            1,110,535




The
      allocation of the purchase price to Archipelago assets and liabilities are
      only
      preliminary allocations based on estimates of fair values and will change when
      estimates are finalized. Therefore, the information above is subject to change
      pending the final allocation of purchase price. NYSE Group does not expect
      any
      of the goodwill to be deductible for tax purposes.




During
      2005, NYSE Group adopted a plan to eliminate positions. As a result of this
      decision, NYSE Group recorded a $3.9 million charge consisting of severance
      and
      related costs during 2005. For the six months ended June 30, 2006, NYSE Group
      recorded a $5.8 million charge due to 77 additional positions being eliminated
      as a result of our continued integration efforts and cost containment
      initiatives. These positions were primarily included within trading floor
      operations and miscellaneous administrative areas. The following is a summary
      of
      the severance charges and utilization for the six months ended June 30, 2006
      and
      the remaining accrual at June 30, 2006 (in thousands):




Balance
                at December 31, 2005
            
            $
            3,804Additional
                severance
            
            
            5,825Amount
                paid in 2006
            
            
            (1,423
            )Balance
                at June 30, 2006
            
            $
            8,206







These
      costs associated with the additional severance for the six months ended June
      30,
      2006 are included in merger expenses and related exits costs in the condensed
      consolidated statements of income. Based on current severance dates and the
      accrued severance at June 30, 2006, NYSE Group expects to pay these amounts
      through 2007.




*PCX
      Holdings, Inc. and Wave Securities, LLC.*




On
      September 26, 2005, Archipelago completed its acquisition of PCX Holdings
      (“PCX”) for a total purchase price of approximately $94.0 million consisting of
      a $90.9 million cash payment to PCX stockholders and certain employees of PCX,
      and approximately $3.1 million of direct acquisition costs incurred by
      Archipelago. As part of the acquisition of PCX, Archipelago undertook to divest
      Wave Securities LLC (“Wave Securities”), a previously wholly-owned subsidiary of
      Archipelago. On March 3, 2006, Archipelago completed the sale of Wave
      Securities.




*Pro
      Forma Results*




The
      following table provides pro forma results of operations as if (i) the
      acquisition of PCX by Archipelago, (ii) the disposition of Wave Securities
      by
      Archipelago and (iii) the






7




merger
      between Archipelago and NYSE had been completed at the beginning of the earliest
      period presented (in thousands, except per share data):




**Three
                months ended June 30,**
            
            **Six
                months ended June 30,****2006**
            
            **2005**
            
            **2006**
            
            **2005**Revenues
            
            $
            659,540
            
            $
            583,044
            
            $
            1,258,460
            
            $
            1,102,259Net
                income
            
            
            66,885
            
            
            17,949
            
            
            126,864
            
            
            55,209Basic
                earnings per share
            
            $
            0.43
            
            $
            0.11
            
            $
            0.81
            
            $
            0.34Diluted
                earnings per share
            
            $
            0.42
            
            $
            0.11
            
            $
            0.81
            
            $
            0.34




Pro
      forma results do not include any anticipated cost savings or other effects
      of
      the planned integration of NYSE and Archipelago’s businesses.




**Note
      4  -**  **Combination
      with** **Euronext** **N.V.**




On
      May 22, 2006, NYSE Group proposed a business combination with
      Euronext  which
      would create NYSE Euronext, a global marketplace with an expected combined
      market capitalization of approximately $21 billion.




Euronext
      is a cross-border exchange providing international services for regulated cash
      markets and derivative
      markets in Belgium, France, the United Kingdom, the Netherlands and
      Portugal.




Both
      parties signed a definitive combination agreement on June 1, 2006.
      The
      combination is expected to
      close during
      the first quarter of 2007
      and is
      subject to regulatory approval and the approval of NYSE Group and Euronext
      shareholders.




In
      the
      combination, NYSE Group and Euronext will combine their businesses under NYSE
      Euronext, a Delaware corporation formed for the purpose of this transaction.
      Euronext’s business will be brought under NYSE Euronext through an exchange
      offer and a post-closing reorganization, and NYSE Group’s business will be
      brought under NYSE Euronext through a merger.




In
      the
      exchange offer, NYSE Euronext will offer to acquire each outstanding Euronext
      ordinary share in exchange for €21.32 in cash and 0.98 of a share of NYSE
      Euronext common stock. The exchange offer also will have a mix and match
      election to permit Euronext shareholders to elect all cash or all stock in
      exchange for their Euronext ordinary shares, subject to proration to ensure
      that
      the total amount of cash paid, and the total number of shares of NYSE Euronext
      common stock issued, in the exchange offer to the Euronext shareholders, as
      a
      whole, are equal to the total amount of cash and number of shares that would
      have been paid and issued if all Euronext shareholders received the standard
      offer consideration.




Immediately
      after the successful completion of the exchange offer, a wholly owned subsidiary
      of NYSE Euronext will merge with NYSE Group, and, as a result, NYSE Group will
      become a wholly owned subsidiary of NYSE Euronext, and each share of NYSE Group
      common stock will be converted into the right to receive one share of NYSE
      Euronext common stock.




As
      soon
      as possible after the completion of these transactions, NYSE Euronext intends
      to
      effectuate a corporate reorganization of Euronext and its subsidiaries for
      the
      purpose of providing Euronext shareholders who did not exchange their Euronext
      ordinary shares in the exchange offer with the same consideration that such
      shareholders would have received






8




had
      they
      tendered their Euronext ordinary shares in the exchange offer.




**Note
      5  -**  **Segment
      Information**




Subsequent
      to the merger with Archipelago, NYSE Group operates under three reportable
      segments: Market, SIAC Services and Regulation. NYSE Group’s segments are
      managed and operated as three business units and organized based on services
      provided to customers.




Market
      represents primarily the fees earned from (i) obtaining new listings and
      servicing existing listings on the NYSE and NYSE Arca, (ii) providing access
      to
      trade execution, (iii) distributing market information to data subscribers
      and  (iv) issuing trading licenses (previously membership
      fees).




SIAC
      Services provides communication and data processing operations and systems
      development functions to the NYSE and third party customers.




Regulation
      provides regulatory services (including member firm regulation, market
      surveillance, enforcement, listed company compliance and arbitration), performed
      by NYSE Regulation, to the NYSE and NYSE Arca. Regulatory fees are paid by
      member organizations and are primarily assessed based upon their Gross FOCUS
      revenues. In addition, Regulation collects regulatory fines that are levied
      against members and member organizations.




Summarized
      financial data concerning NYSE Group’s reportable segments is as follows (in
      thousands):




**Three
                months ended June 30,**
            
            **Market**
            
            **SIAC
                Services**
            
            **Regulation**
            
            **Corporate
                Items and Eliminations**
            
            **Consolidated****2006**Revenues
            
            $
            602,656
            
            $
            96,272
            
            $
            74,960
            
            $
            (114,348
            )
            $
            659,540Operating
                income
            
            
            67,536
            
            
            2,366
            
            
            14,125
            
            
            -
            
            
            84,027**2005**Revenues
            
            $
            355,560
            
            $
            113,534
            
            $
            61,250
            
            $
            (125,533
            )
            $
            404,811Operating
                income (loss)
            
            
            7,594
            
            
            2,120
            
            
            (1,008
            )
            
            -
            
            
            8,706







**Six
                months ended June 30,**
            
            **Market**
            
            **SIAC
                Services**
            
            **Regulation**
            
            **Corporate
                Items and Eliminations**
            
            **Consolidated****2006**Revenues
            
            $
            1,019,092
            
            $
            193,055
            
            $
            153,200
            
            $
            (250,871
            )
            $
            1,114,476Operating
                income (loss)
            
            
            80,563
            
            
            (10,753
            )
            
            27,086
            
            
            -
            
            
            96,896**2005**Revenues
            
            $
            660,054
            
            $
            220,552
            
            $
            118,288
            
            $
            (243,587
            )
            $
            755,307Operating
                income (loss)
            
            
            27,449
            
            
            (1,327
            )
            
            16,275
            
            
            -
            
            
            42,397




SIAC
      operates on a cost recovery model driven by its customers’ demands. Under this
      model, any increase or decrease in SIAC’s expenses typically results in a
      corresponding change in its revenues. During the three and six months ended
      June
      30, 2006, SIAC incurred $2.0 million and $15.6 million, respectively, related
      to
      stock-based compensation for awards granted to certain of its employees as
      part
      of the merger with Archipelago. There was no corresponding increase in revenue,
      as this expense was not shared with non-NYSE Group






9




customers.




**Note
      6  -**  **Goodwill
      and Other Intangible Assets**




The
      following table presents the details of the intangible assets and goodwill
      acquired by reportable segment (in thousands):




**Market**
            
            **Regulation**
            
            **SIAC
                Services****Estimated
                Fair Value**
            
            **Useful
                Life (in years)**
            
            **Estimated
                Fair Value**
            
            **Useful
                Life (in years)**
            
            **Estimated
                Fair Value**
            
            **Useful
                Life (in years)**Asset
                class:National
                securities exchange registration
            
            $
            511,000
            
            
            Indefinite
            
            
            -
            
            
            N/A
            
            
            -
            
            
            N/ACustomer
                relationships
            
            
            34,700
            
            
            20
            
            
            -
            
            
            N/A
            
            
            -
            
            
            N/ATrade
                names
            
            
            38,800
            
            
            20
            
            
            -
            
            
            N/A
            
            
            -
            
            
            N/ATotal
                intangibles
            
            $
            584,500
            
            
            
            
            
            -
            
            
            
            
            
            -Goodwill
            
            $
            528,771




Amortization
      expense for the intangible assets was approximately $0.9 million and $1.2
      million for the three and six months ended June 30, 2006, respectively.




The
      estimated future amortization expense of purchased intangible assets as of
      June
      30, 2006 is as follows (in thousands):




**Year
                ending December 31,**2006
                (period from July 1
              to
                December 31, 2006)
            
            $
            1,8382007
            
            
            3,6752008
            
            
            3,6752009
            
            
            3,6752010
            
            
            3,675Thereafter
            
            
            55,738Total
            
            $
            72,276







**Note
      7  -**  **Stock
      Based Compensation**




Statement
      of Financial Accounting Standards (“SFAS”) 123R, “Share-Based Payment”, requires
      that compensation costs associated with share-based payment transactions be
      recognized in financial statements. NYSE Group adopted SFAS 123R during the
      first quarter of 2006.




Effective
      March 8, 2006, NYSE Group adopted the NYSE Group, Inc. Stock Incentive Plan
      (the
“Plan”) and converted three Archipelago long-term incentive plans. As part of
      the merger with Archipelago, 0.2 million shares underlying restricted stock
      units granted to former Archipelago directors, officers and employees and 2.6
      million shares underlying stock options granted to former Archipelago directors,
      officers and employees were converted to restricted stock and stock options,
      respectively, of NYSE Group.








10






On
      March 8, 2006, NYSE Group granted approximately 1.2 million restricted stock
      units to NYSE employees and certain SIAC employees under the Plan. These
      restricted stock units vest 50% on the grant date and 25% on each of the first
      and second anniversaries of the grant date. Compensation expense is based on
      the
      market price of the shares underlying the awards on the grant date and
      recognized ratably over the vesting period. NYSE Group estimates an expected
      forfeiture rate while recognizing the expense associated with these awards.
      As
      of June 30, 2006, the employees of NYSE Group held approximately 1.8 million
      stock options with a weighted average exercise price of $14.09 (1.4 million
      of
      which were exercisable at a weighted average exercise price of $14.37) and
      1.4
      million restricted stock units. As of June 30, 2006, the total aggregate
      intrinsic value of stock options outstanding and exercisable was $99.5 million
      and $77.1 million, respectively.




For
      the three and six months ended June 30, 2006, NYSE Group recorded $5.9 million
      and $40.5 million, respectively, of stock based compensation included in
      compensation in the condensed consolidated statements of income. As of June
      30,
      2006, there was approximately $23.9 million of total unrecognized compensation
      cost related to stock options and restricted stock units. This cost is expected
      to be recognized over approximately three years.




**Note
      8  -**  **Retirement
      Benefits**




During
      2005, the NYSE and SIAC announced that effective March 31, 2006, the future
      benefit accrual of all active participants in the pension plans and supplemental
      executive retirement plan (“SERP”) will be frozen. Effective April 1, 2006, NYSE
      Group employees became eligible to receive benefits from a new employer-funded
      defined contribution Retirement Benefit Accumulation Plan (“RBAP”). RBAP expense
      incurred for the three months ended June 30, 2006 was $2.8 million.




NYSE
      and SIAC currently do not expect to provide any additional funding to the
      pension plans during 2006.




The
      following table sets forth the pension and SERP plans’ amounts recognized (in
      thousands):




**Pension
                Plan Cost****Three
                months ended June 30,**
            
            **Six
                months ended June 30,****2006**
            
            **2005**
            
            **2006**
            
            **2005****NYSE**
            
            **SIAC**
            
            **NYSE**
            
            **SIAC**
            
            **NYSE**
            
            **SIAC**
            
            **NYSE**
            
            **SIAC**Cost
                of benefits earned
            
            $
            (185
            )
            $
            -
            
            $
            3,472
            
            $
            2,897
            
            $
            2,643
            
            $
            2,495
            
            $
            6,944
            
            $
            5,795Interest
                on benefits earned
            
            
            5,545
            
            
            2,966
            
            
            5,589
            
            
            3,508
            
            
            10,979
            
            
            5,932
            
            
            11,178
            
            
            7,017Net
                amortizations
            
            
            (252
            )
            
            154
            
            
            280
            
            
            44
            
            
            39
            
            
            308
            
            
            561
            
            
            87Estimated
                return on plan assets
            
            
            (8,114
            )
            
            (4,249
            )
            
            (7,412
            )
            
            (4,237
            )
            
            (15,886
            )
            
            (8,498
            )
            
            (14,825
            )
            
            (8,474
            )Recognized
                actuarial (gain) or loss
            
            
            -
            
            
            -
            
            
            -
            
            
            753
            
            
            -
            
            
            -
            
            
            -
            
            
            1,507Curtailment
                charge
            
            
            252
            
            
            -
            
            
            -
            
            
            -
            
            
            1,125
            
            
            -
            
            
            -
            
            
            -Aggregate
                pension (benefit) expense
            
            $
            (2,754
            )
            $
            (1,129
            )
            $
            1,929
            
            $
            2,965
            
            $
            (1,100
            )
            $
            237
            
            $
            3,858
            
            $
            5,932





11





**SERP
                Plan Cost****Three
                months ended June 30,**
            
            **Six
                months ended June 30,****2006**
            
            **2005**
            
            **2006**
            
            **2005****NYSE**
            
            **SIAC**
            
            **NYSE**
            
            **SIAC**
            
            **NYSE**
            
            **SIAC**
            
            **NYSE**
            
            **SIAC**Cost
                of benefits earned
            
            $
            334
            
            $
            -
            
            $
            515
            
            $
            231
            
            $
            540
            
            $
            188
            
            $
            1,031
            
            $
            461Interest
                on benefits earned
            
            
            718
            
            
            378
            
            
            933
            
            
            401
            
            
            1,549
            
            
            757
            
            
            1,866
            
            
            803Net
                amortizations
            
            
            123
            
            
            27
            
            
            384
            
            
            201
            
            
            99
            
            
            53
            
            
            767
            
            
            402Aggregate
                SERP expense
            
            $
            1,175
            
            $
            405
            
            $
            1,832
            
            $
            833
            
            $
            2,188
            
            $
            998
            
            $
            3,664
            
            $
            1,666




In
      addition to providing pension benefits, NYSE and SIAC maintain defined benefit
      plans to provide certain health care and life insurance benefits for eligible
      retired employees. During 2005, NYSE and SIAC announced that changes would
      be
      made to the post retirement plan, including the underlying plan design and
      contribution strategy. The following are the plans’ amounts recognized during
      the respective periods (in thousands):




**Post
                Retirement Plan Cost****Three
                months ended June 30,**
            
            **Six
                months ended June 30,****2006**
            
            **2005**
            
            **2006**
            
            **2005****NYSE**
            
            **SIAC**
            
            **NYSE**
            
            **SIAC**
            
            **NYSE**
            
            **SIAC**
            
            **NYSE**
            
            **SIAC**Cost
                of benefits earned
            
            $
            1,194
            
            $
            541
            
            $
            1,137
            
            $
            667
            
            $
            2,382
            
            $
            1,082
            
            $
            2,274
            
            $
            1,334Interest
                on benefits earned
            
            
            1,953
            
            
            881
            
            
            1,750
            
            
            888
            
            
            4,152
            
            
            1,762
            
            
            3,501
            
            
            1,776Net
                amortizations
            
            
            (67
            )
            
            329
            
            
            (61
            )
            
            390
            
            
            146
            
            
            658
            
            
            (122
            )
            
            779Aggregate
                Post Retirement expense
            
            $
            3,080
            
            $
            1,751
            
            $
            2,826
            
            $
            1,945
            
            $
            6,680
            
            $
            3,502
            
            $
            5,653
            
            $
            3,889







**Note
      9  -**  **Related
      Party Transactions**




The
      Depository Trust Company (“DTC”) and the National Securities Clearing
      Corporation (“NSCC”) are wholly-owned subsidiaries of The Depository Trust &
Clearing Corporation (“DTCC”). DTCC is a holding company that supports DTC,
      which provides settlement and custody services to banks and broker-dealers,
      and
      NSCC, which provides trade clearance, netting and settlement services to banks,
      broker-dealers, mutual funds, insurance companies and other financial
      institutions.




On
      March 28, 2006, NYSE Group sold its shares of DTCC common stock, which
      represented approximately 28% of DTCC’s common stock, for a $23.4 million cash
      payment. NYSE Group carried this investment at its $2.5 million cost and
      therefore realized a $20.9 million pre-tax gain that was included in gain on
      sale of equity investment for the six months ended June 30, 2006 in the
      condensed consolidated statements of income. The after-tax impact of this gain
      was included in the cash dividend paid to each former NYSE member in connection
      with the merger of NYSE and Archipelago. As of June 30, 2006, NYSE Group owns
      50% of the outstanding preferred stock of DTCC.








12




SIAC
      performs services for AMEX, which is a one-third owner of SIAC.




The
      following revenues have been derived from (in thousands):




**Three
                months ended June 30,**
            
            **Six
                months ended June 30,****2006**
            
            **2005**
            
            **2006**
            
            **2005**DTCC
            
            $
            4,764
            
            $
            8,326
            
            $
            10,342
            
            $
            17,193AMEX
            
            
            14,126
            
            
            17,822
            
            
            30,516
            
            
            35,865




These
      revenues are included in data processing in the condensed consolidated
      statements of income.




**Note
      10  -**  **Earnings
      per Share**




Historically,
      the weighted average number of shares was adjusted to reflect the merger with
      Archipelago giving retroactive effect to the issuance of 84,699 shares of common
      stock to each former member, corresponding to the maximum number of shares
      issuable to a member under the stock election provision.




The
      following is a reconciliation of the basic and diluted earnings per share
      computations (in thousands except per share data):




**Three
                months ended June 30,**
            
            **Six
                months ended June 30,****2006**
            
            **2005**
            
            **2006**
            
            **2005**Net
                income for basic and diluted earnings per share
            
            $
            61,173
            
            $
            12,986
            
            $
            91,521
            
            $
            39,005Shares
                of common and common stock equivalents:Weighted
                average shares used in basic computation
            
            
            156,422
            
            
            115,699
            
            
            141,619
            
            
            115,699Dilutive
                effect of:Employee
                stock options and restricted stock units
            
            
            1,006
            
            
            -
            
            
            1,097
            
            
            -Weighted
                average shares used in diluted computation
            
            
            157,428
            
            
            115,699
            
            
            142,716
            
            
            115,699Basic
                earnings per share
            
            $
            0.39
            
            $
            0.11
            
            $
            0.65
            
            $
            0.34Diluted
                earnings per share
            
            $
            0.39
            
            $
            0.11
            
            $
            0.64
            
            $
            0.34






As
      of June 30, 2006, 1.4 million shares of restricted stock units and options
      to
      purchase 1.8 million shares of common stock were outstanding. For the three
      and
      six months ended June 30, 2005, there were no options or restricted stock units
      outstanding.




**Note
      11  -**  **Litigation
      and Other Matters**




The
      following supplements and amends our discussion set forth under “Legal
      Proceedings” in Part I, Item 3 of our annual report on Form 10-K for the year
      ended December 31, 2005, as updated by Part II, Item 1 of our quarterly report
      on Form 10-Q for the period ended March 31, 2006. The
      following should be read in conjunction with these financial
      statements.








13






*In
      re NYSE Specialists Securities Litigation*




On
      June
      2, 2006, plaintiffs filed in the U.S. Court of Appeals for the 2d Circuit an
      opening brief in support of their appeal from the decision of the U.S. District
      Court for the Southern District of New York entering a final judgment in favor
      of NYSE. NYSE filed its brief in opposition on August 2, 2006.




*Merger-Related
      Litigation*




In
      March
      2006, Janet Hyman and Sylvia Lief, each a former NYSE member, filed separate
      complaints in New York Supreme Court against NYSE and John A. Thain. The
      complaints sought compensatory damages for alleged breach of fiduciary duty
      based on a purported duty of defendants to disclose NYSE’s merger discussions
      with Archipelago prior to the sale of plaintiffs’ NYSE memberships on March 1
      and 2, 2005, respectively.




On
      April
      19, 2006, NYSE and Mr. Thain served motions to dismiss the Hyman and Lief
      complaints. On June 9, 2006, Ms. Hyman and Ms. Lief each served an amended
      complaint, which added an additional cause of action for breach of fiduciary
      duty and a new cause of action for negligence. On June 22, 2006, D. Paul
      Rittmaster, another former NYSE member represented by the same law firm as
      Ms.
      Hyman and Ms. Lief, filed a complaint in New York Supreme Court against NYSE
      and
      Mr. Thain asserting the same causes of action alleged in the amended complaints
      of Hyman and Lief. On July 28, 2006, NYSE and Mr. Thain served a motion to
      dismiss the Hyman and Lief amended complaints and the Rittmaster complaint
      on
      the grounds, among others, that defendants had no legal duty to make the
      disclosures plaintiffs assert they should have made.




*Compensation-Related
      Litigation*




On
      July
      26, 2006, the court denied the motion of defendant Kenneth Langone for summary
      judgment in his favor on the single cause of action asserted against him by
      the
      New York Attorney General; Mr. Langone has appealed that denial. On July 17,
      2006, NYSE and former NYSE Chairman John S. Reed filed motions for summary
      judgment dismissing all of Richard Grasso’s counterclaims against them. On July
      31, 2006, the New York Attorney General filed a motion for partial summary
      judgment in its favor on claims asserted against Mr. Grasso, and Mr. Grasso
      filed motions for summary judgment in his favor with respect to three of the
      six
      causes of action asserted against him by the Attorney General. Mr. Grasso also
      has moved for summary judgment dismissing the one claim asserted by the Attorney
      General against NYSE. In addition, defendant Carl McCall has moved for summary
      judgment dismissing the third-party claims asserted against him by Mr. Grasso.
      On August 8, 2006, the court ruled that the New York Attorney General’s claim
      against Mr. Grasso for restitution and imposition of a constructive trust is
      an
      equitable claim that must be tried to the court rather than to a jury, and
      that
      it will commence trial of that claim (which will be tried separately from all
      other claims asserted in the case) on October 16, 2006. The appellate court
      has
      not yet rendered a decision on Mr. Grasso’s appeal of the trial court’s denial
      of his motion to dismiss four of the six claims against him, including the
      claim
      for restitution and imposition of a constructive trust now scheduled for trial
      in October.




*Employment-Related
      Litigation*




On
      April
      20, 2006, Graciela DaSilva, Vjoca Selmanovic and Robin Max Morris filed a
      complaint in the U.S. District Court for the Southern District of New York
      against NYSE Group, Building Maintenance Service, LLC (“BMS”), a cleaning
      service contractor, and five unnamed corporations, seeking compensatory and
      punitive damages for alleged gender discrimination and retaliation in violation
      of federal and local laws. Ms. DaSilva currently is employed as a porter by
      NYSE
      Group; Mr. Morris previously was employed by NYSE as a






14








supervisor
      of porters. Mr. Selmanovic previously was employed as a porter by BMS. On May
      24, 2006, NYSE Group filed an answer to the complaint in which it denied
      allegations of wrongdoing and asserted various defenses.




*Other
      Matters*




On
      or about April 25, 2006, the Independent Broker Action Committee, Inc. (“IBAC”),
      which describes itself as a not-for-profit corporation whose membership consists
      of independent NYSE brokers, filed a petition in the U.S. Court of Appeals
      for
      the District of Columbia (“DC Circuit”) seeking review of two orders issued by
      the SEC (Exchange Act Releases No. 34-53539 (March 22, 2006) and 34-53382
      (February 27, 2006) (the “Orders”)) insofar as they relate to the creation of
      the NYSE Hybrid Market SM and NYSE’s proposed method of allocating trading rights. The petition named the
      SEC as respondent and asked the court to vacate Exchange Act Release No.
      34-53539 regarding the NYSE Hybrid Market SM and that portion of Exchange Act Release No. 34-53382 that approved NYSE’s
      proposed method of allocating trading rights at NYSE through annual trading
      licenses, and to remand the matter to the SEC for further proceedings. IBAC
      also
      asked the SEC to stay the authorization given to NYSE under Exchange Act Release
      No. 34-53539 to implement subsequent phases of the NYSE Hybrid
      Market SM , pending the court’s resolution of IBAC’s petition for review.





NYSE
      submitted an opposition to IBAC’s stay request before the SEC and was granted
      leave to intervene to oppose IBAC’s petition before the DC Circuit. Following
      joint requests to the SEC and the DC Circuit, the SEC has deferred ruling on
      IBAC’s stay request and the DC Circuit has deferred briefing on the petition
      itself, to allow IBAC to determine whether it wishes to continue to pursue
      the
      petition in light of subsequent developments with regard to the NYSE Hybrid
      Market SM .





NYSE
      Group is defending a number of other actions and investigations, the ultimate
      outcome of which cannot reasonably be determined at this time. In the opinion
      of
      management and legal counsel, the aggregate of all possible losses from all
      such
      other actions and investigations should not have a material adverse effect
      on
      the consolidated financial condition or results of operations of NYSE
      Group.





**Note
      12  -**  **Comprehensive
      Income**




The
      following outlines the components of other comprehensive income (in
      thousands):




**Three
                months ended June 30,**
            
            **Six
                months ended June 30,****2006**
            
            **2005**
            
            **2006**
            
            **2005**Net
                income
            
            $
            61,173
            
            $
            12,986
            
            $
            91,521
            
            $
            39,005Unrealized
                gains (losses) on available-for-sale securities
            
            
            (1,583
            )
            
            2,067
            
            
            (93
            )
            
            (3,623
            )Total
                comprehensive income
            
            $
            59,590
            
            $
            15,053
            
            $
            91,428
            
            $
            35,382


**Note
      13 -**  **Deferred
      Revenue**




Components
      of deferred revenue were as follows (in thousands):




**June
                30, 2006**
            
            **December
                31, 2005**Listing
                fees - original
            
            $
            410,454
            
            $
            414,887Listing
                fees - annual
            
            
            132,252
            
            
            -Registered
                representative and maintenance fees
            
            
            9,079
            
            
            10,180License
                fees
            
            
            10,384
            
            
            100Other
            
            
            6,892
            
            
            9,343Total
                deferred revenue
            
            $
            569,061
            
            $
            434,510Less:
                current portion
            
            $
            243,899
            
            $
            105,313Long-term
                portion
            
            $
            325,162
            
            $
            329,197






15






The
      long-term portion of the deferred revenue balances represented deferred original
      listing fees, which is a component of the Market segment. The current portion
      of
      the deferred revenue balances will be realized within the following reportable
      segments (in thousands):




**June
                30, 2006**
            
            **December
                31, 2005**Market
            
            $
            227,921
            
            $
            85,960Regulation
            
            
            11,168
            
            
            13,839SIAC
            
            
            4,810
            
            
            5,514Total
            
            $
            243,899
            
            $
            105,313


**Note
      14  -**  **Net
      Capital Requirements**




Certain
      wholly-owned subsidiaries of NYSE Group, Archipelago Securities, LLC (“ARCAS”)
      and Archipelago Trading Services, Inc. (“ATSI”), are registered broker-dealers
      and are subject to net capital requirements under SEC Rule 15c3-1. ATSI computes
      its net capital using the basic method. Under this method, ATSI must maintain
      minimum net capital (as defined), and the ratio of aggregate indebtedness (as
      defined) to net capital may not exceed 15 to 1. ARCAS computes its net capital
      under the alternative method. The method requires that minimum net capital
      not
      to be less than the greater of $250,000 or 2% of the aggregate debit items
      arising from customer transactions.




As
      of June 30, 2006, these subsidiaries were in compliance with their respective
      net capital requirements and their net capital, net capital in excess of
      required net capital, and ratio of aggregate indebtedness to net capital were
      as
      follows (in thousands, except ratios):




Net
                capital:ARCAS
            
            $
            15,966ATSI
            
            
            7,727Net
                capital in excess of required net capital:ARCAS
            
            $
            15,716ATSI
            
            
            7,676Ratio
                of aggregate indebtedness to net capital:ARCAS
            
            
            N/AATSI
            
            
            0.10
                to 1


Advances
      to affiliates, dividend payments and other equity withdrawals are subject to
      certain notification and other provisions of the net capital rule of the SEC
      and
      other regulatory bodies.




NYSE
      Group’s international broker-dealer subsidiaries are subject to capital adequacy
      requirements promulgated by authorities of the countries in which they operate.
      As of June 30, 2006, these subsidiaries had met their capital adequacy
      requirements.




16







**Item
      2.**  **Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations**




You
      should read the following discussions and
      analysis of the financial condition and operations of NYSE Group together
      with the condensed consolidated financial statements and related notes as well as the
      forward looking statements included elsewhere in this report.




Certain
      prior period amounts presented in the discussion and analysis have been
      reclassified to conform to the current presentation.





**Overview**




NYSE
      Group was organized on May 2, 2005. As of December 31, 2005 and up until March
      7, 2006, NYSE Group had no assets (other than $200 it received on December
      29,
      2005 from the sale of one share of its common stock to each of NYSE and
      Archipelago) and had not conducted any material activities other than those
      incident to its formation. However, on March 7, 2006, upon the consummation
      of
      the merger of the NYSE and Archipelago, NYSE Group became the parent company
      of
      the New York Stock Exchange LLC (which is the successor to New York Stock
      Exchange, Inc.) and Archipelago.




We
      are a holding company that, through our subsidiaries, operates two securities
      exchanges: the NYSE and NYSE Arca. We are a leading provider of securities
      listing, trading and market data products and services. We were formed in
      connection with the merger of the NYSE and Archipelago, which closed on March
      7,
      2006.




**Business
      Development**




***NYSE/Archipelago
      Merger***





On
      April 20, 2005, the NYSE entered into a definitive merger agreement with
      Archipelago, pursuant to which the NYSE and Archipelago agreed to combine their
      businesses and became wholly owned subsidiaries of NYSE Group, a newly-created,
      for profit and publicly-traded holding company. The merger closed on March
      7,
      2006. As of that date, the NYSE and Archipelago became wholly owned subsidiaries
      of NYSE Group. NYSE Group common stock is listed on the NYSE and is traded
      under
      the symbol “NYX”.





In
      the merger, each NYSE member received in exchange for its NYSE membership
      $300,000 in cash and 80,177 shares of NYSE Group common stock. In addition,
      a
      cash dividend of $70,571 was declared and paid to each holder of record of
      a
      NYSE membership as of March 6, 2006. In the merger, the NYSE members had the
      opportunity to make either a cash election to increase the cash portion (and
      decrease the stock portion) of their merger consideration, or a stock election
      to increase the stock portion (and decrease the cash portion) of their merger
      consideration. These elections were subject to proration. The aggregate number
      of shares of NYSE Group common stock issued to all of the NYSE members in the
      merger, together with the aggregate number of shares reserved for issuance
      to
      NYSE employees, equaled approximately 70% of the NYSE Group common stock issued
      and outstanding at the closing of the merger, or approximately 109.5 million
      shares, on a diluted basis.




In
      the merger: (i) each share of the issued and outstanding shares of Archipelago’s
      common stock was converted automatically into the right to receive one share
      of
      NYSE Group common stock; (ii) all outstanding stock options of Archipelago,
      whether vested or unvested, converted into options to purchase an equivalent
      number of shares of NYSE Group common stock; and (iii) all outstanding
      restricted stock units of Archipelago converted into an equal number of
      restricted stock units of NYSE Group common stock. The






17




aggregate
      number of shares (including shares underlying stock options and restricted
      stock
      units) received by Archipelago stockholders, equaled approximately 30% of the
      issued and outstanding shares of NYSE Group common stock at the closing of
      the
      merger, or approximately 46.0 million shares.




As
      a result of the merger, we expect to achieve operational synergies resulting
      from the consolidation of capabilities and elimination of redundancies, and
      to
      achieve greater efficiencies from increased scale, market integration, more
      automation and for-profit structure. We have identified cost saving
      opportunities in a number of areas, including hiring freezes and headcount
      reductions, the elimination of overlaps in technology, marketing, occupancy,
      and
      general and administrative costs, and increased efficiencies in our general
      business processes.




***Selling
      Shareholder Offering***




On
      May 10, 2006, NYSE Group completed a selling shareholder offering of 28.75
      million shares of common stock at $61.50 per share, for which NYSE Group
      received no proceeds.




***Combination
      with Euronext N.V.***




On
      May 22, 2006, NYSE Group proposed a business combination with Euronext which
      would create NYSE Euronext, a global marketplace with an expected combined
      market capitalization of approximately $21 billion.




Euronext
      is a cross-border exchange providing international services for regulated cash
      markets and derivative
      markets in Belgium, France, the United Kingdom, the Netherlands and
      Portugal.




Both
      parties signed a definitive combination agreement on June 1, 2006.
      The
      combination is expected to
      close during
      the first quarter of 2007
      and is
      subject to regulatory approval and the approval of NYSE Group and Euronext
      shareholders. For a discussion of certain risks associated with the combination,
      see Part II, Item 1A “Risk Factors” in this Form 10-Q.




In
      the
      combination, NYSE Group and Euronext will combine their businesses under NYSE
      Euronext, a Delaware corporation formed for the purpose of this transaction.
      Euronext’s business will be brought under NYSE Euronext through an exchange
      offer and a post-closing reorganization, and NYSE Group’s business will be
      brought under NYSE Euronext through a merger.




In
      the
      exchange offer, NYSE Euronext will offer to acquire each outstanding Euronext
      ordinary share in exchange for €21.32 in cash and 0.98 of a share of NYSE
      Euronext common stock. The exchange offer also will have a mix and match
      election to permit Euronext shareholders to elect all cash or all stock in
      exchange for their Euronext ordinary shares, subject to proration to ensure
      that
      the total amount of cash paid, and the total number of shares of NYSE Euronext
      common stock issued, in the exchange offer to the Euronext shareholders, as
      a
      whole, are equal to the total amount of cash and number of shares that would
      have been paid and issued if all Euronext shareholders received the standard
      offer consideration.




Immediately
      after the successful completion of the exchange offer, a wholly owned subsidiary
      of NYSE Euronext will merge with NYSE Group, and, as a result, NYSE Group will
      become a wholly owned subsidiary of NYSE Euronext, and each share of NYSE Group
      common stock will be converted into the right to receive one share of NYSE
      Euronext common stock.








18






As
      soon
      as possible after the completion of these transactions, NYSE Euronext intends
      to
      effectuate a corporate reorganization of Euronext and its subsidiaries for
      the
      purpose of providing Euronext shareholders who did not exchange their Euronext
      ordinary shares in the exchange offer with the same consideration that such
      shareholders would have received had they tendered their Euronext ordinary
      shares in the exchange offer.




**Segment
      Reporting**




Subsequent
      to the merger with Archipelago, NYSE Group operates under three reportable
      segments: Market, SIAC Services and Regulation. NYSE Group’s segments are
      managed and operated as three business units and organized based on services
      provided to customers.




Market
      represents primarily the fees earned from (i) obtaining new listings and
      servicing existing listings on the NYSE and NYSE Arca, (ii) providing access
      to
      trade execution, (iii) distributing market information to data
      subscribers , and (iv) issuing trading licenses (previously membership fees).




SIAC
      Services provides communication and data processing operations and systems
      development functions to the NYSE and third party customers.




Regulation
      provides regulatory services (including member firm regulation, market
      surveillance, enforcement, listed company compliance, and arbitration),
      performed by NYSE Regulation, to the NYSE and NYSE Arca. Regulatory fees are
      paid by member organizations and are primarily assessed based upon their Gross
      FOCUS revenues. In addition, Regulation collects regulatory fines that are
      levied against members and member organizations.




**Operating
      Data**




NYSE
      Group revenues are affected by many factors, including the number of companies
      listed on NYSE and NYSE Arca (both new and continuing), corporate actions by
      these companies (for example stock splits and mergers), trading activity, demand
      for data processing, and demand for market information. The following table
      presents selected operating data for the periods presented. A description of
      the
      manner in which the NYSE and NYSE Arca calculate their trading volumes and other operating measures is set forth below.






19




Three
                months ended June 30,
            
            Six
                months ended June 30,2006
            
            2005
            
            2006
            
            2005**NYSE
                Company listings**(1)**:**NYSE
                listed issuers(2)
            
            
            2,697
            
            
            2,637
            
            
            2,697
            
            
            2,637Number
                of new issuer listings(3)
            
            
            24
            
            
            36
            
            
            53
            
            
            73**NYSE
                Listed Issues**(4):NYSE
                Group Matched Volume(5)
            
            
            121,582
            
            
            102,969
            
            
            235,235
            
            
            203,958NYSE
                Group Handled Volume(6)
            
            
            124,024
            
            
            104,500
            
            
            239,713
            
            
            207,007Total
                NYSE Listed Consolidated Volume
            
            
            162,452
            
            
            127,745
            
            
            313,292
            
            
            252,938**NYSE
                Group Share of Total Consolidated Volume:**Matched
                Volume(5)
            
            
            74.8
            %
            
            80.6
            %
            
            75.1
            %
            
            80.6
            %Handled
                Volume(6)
            
            
            76.3
            %
            
            81.8
            %
            
            76.5
            %
            
            81.8
            %**NYSE
                Arca and Amex Listed Issues**:NYSE
                Group Matched Volume(5)
            
            
            7,841
            
            
            4,655
            
            
            13,856
            
            
            8,340NYSE
                Group Handled Volume(6)
            
            
            9,067
            
            
            5,325
            
            
            15,983
            
            
            9,563Total
                NYSE Arca and Amex Listed Consolidated Volume
            
            
            26,363
            
            
            16,871
            
            
            47,216
            
            
            32,264**NYSE
                Group Share of Total Consolidated Volume**:Matched
                Volume(5)
            
            
            29.7
            %
            
            27.6
            %
            
            29.3
            %
            
            25.8
            %Handled
                Volume(6)
            
            
            34.4
            %
            
            31.6
            %
            
            33.9
            %
            
            29.6
            %**Nasdaq
                Listed Issues**:NYSE
                Group Matched Volume(5)
            
            
            27,841
            
            
            20,734
            
            
            52,077
            
            
            43,457NYSE
                Group Handled Volume(6)
            
            
            33,971
            
            
            26,010
            
            
            64,043
            
            
            54,660Total
                Nasdaq Listed Consolidated Volume
            
            
            134,946
            
            
            112,756
            
            
            265,639
            
            
            234,264**NYSE
                Group Share of Total Consolidated Volume:**Matched
                Volume(5)
            
            
            20.6
            %
            
            18.4
            %
            
            19.6
            %
            
            18.6
            %Handled
                Volume(6)
            
            
            25.2
            %
            
            23.1
            %
            
            24.1
            %
            
            23.3
            %**Exchange-Traded
                Funds******(4),(7):NYSE
                Group Matched Volume(5)
            
            
            11,078
            
            
            5,937
            
            
            19,631
            
            
            10,766NYSE
                Group Handled Volume(6)
            
            
            12,253
            
            
            6,618
            
            
            21,823
            
            
            12,008Total
                ETF Consolidated Volume
            
            
            28,590
            
            
            18,430
            
            
            50,960
            
            
            34,836**NYSE
                Group Share of Total Consolidated Volume:**Matched
                Volume(5)
            
            
            38.7
            %
            
            32.2
            %
            
            38.5
            %
            
            30.9
            %Handled
                Volume(6)
            
            
            42.9
            %
            
            35.9
            %
            
            42.8
            %
            
            34.5
            %**Equity
                Options**(8):NYSE
                Group Options Contracts
            
            
            44.2
            
            
            29.7
            
            
            92.7
            
            
            66.3Total
                Consolidated Options Contracts
            
            
            470.0
            
            
            315.1
            
            
            916.5
            
            
            633.7NYSE
                Group Share of Total
            
            
            9.4
            %
            
            9.4
            %
            
            10.1
            %
            
            10.5
            %**Market
                Information**(9)**:**Tape
                A share of trades (%)
            
            
            86.1
            %
            
            91.8
            %
            
            86.6
            %
            
            91.7
            %Tape
                B share of trades (%)
            
            
            33.7
            %
            
            49.3
            %
            
            38.0
            %
            
            48.3
            %Tape
                C share of trades and shares (%)
            
            
            24.2
            %
            
            21.1
            %
            
            23.1
            %
            
            21.1
            %Professional
                subscribers
            
            
            417,329
            
            
            423,447
            
            
            417,329
            
            
            423,447**Regulatory
                Fees:**Gross
                FOCUS revenues ($ billions)(10)
            
            
            66.1
            
            
            47.0
            
            
            127.3
            
            
            84.8**Data
                Processing Fees:**%
                SIAC revenues from customers other than NYSE
            
            
            43.5
            %
            
            40.8
            %
            
            42.1
            %
            
            41.3
            %






20


(1)
            Number
                  does not include issuers listed on NYSE Arca. There were 11 operating
                  companies exclusively listed on NYSE Arca as of June 30,
                  2006.


(2)
            Number
                of listed operating companies, closed-end funds and ETFs as of period
                end.




(3)
            Includes
                initial public offerings, quotations and transfers from other markets
                of
                common equity securities.




(4)
            Includes
                NYSE Crossing Sessions 1, 2, 3 and
                4.




(5)
            Represents
                the total number of shares of equity securities and ETFs executed
                on NYSE
                Group's exchanges.




(6)
            Represents
                the total number of shares of equity securities and ETFs internally
                matched on NYSE Group's exchanges or routed to and executed at an
                external
                market center. NYSE Arca routing includes
                odd-lots.




(7)
            Data
                included in previously identified
                categories.




(8)
            Includes
                trading in U.S. equity options contracts, not equity-index
                options.




(9)
            Represents
                the NYSE Group share of qualifying trades for Tapes A and B reported
                by
                NYSE Group to the consolidated tape, as compared to the total number
                of
                qualifying trades for Tapes A and B reported to the consolidated
                tape by
                all other participating market centers. NYSE Group share of Tape
                C
                represents the average of: (i) the share of qualifying trades for
                Tape C
                reported by NYSE Group to the consolidated tape, as compared to the
                total
                number of qualifying trades for Tape C reported to the consolidated
                tape
                by all other participating market centers; and (ii) the share of
                qualifying share volume for Tape C reported by NYSE Group to the
                consolidated tape, as compared to the total qualifying share volume
                for
                Tape C reported by all other participating market centers. The
                consolidated tape refers to the collection of market data that multiple
                markets make available on a consolidated basis.




(10)
            Gross
                FOCUS revenues represent revenues generated by member broker-dealers
                as
                reported on their "FOCUS" report (a report that is required to be
                filed
                with the SEC). A member broker-dealer's regulatory fee is based on
                the
                revenues reported. The NYSE records revenue on a six-month lag; the
                data
                is provided on this basis.




**Sources
      of Revenues**




Activity
      Assessment




NYSE
      Group pays SEC fees pursuant to Section 31 of the Exchange Act. These Section
      31
      fees are designed to recover the costs to the government of supervision and
      regulation of securities markets and securities professionals. NYSE Group,
      in
      turn, collects activity assessment fees from organizations executing trades
      on
      the NYSE and NYSE Arca, and recognizes these amounts when invoiced. Fees
      received are included in cash at the time of receipt and, as required by law,
      the amount due to the SEC is remitted semiannually and recorded as an accrued
      liability until paid. The activity assessment fees are designed so that they
      are
      equal to the Section 31 fees. As a result, neither the size of Section 31 fees
      nor the size of activity assessment fees has an impact on NYSE Group’s net
      income.




Transaction




On
      the NYSE, trading fees are paid by member organizations based on their trading
      activity. Fees are assessed on a per share basis for trading in equity
      securities. The fees are applicable to all transactions that take place on
      the
      NYSE, and the fee amounts vary, based on the size and type of trade that is
      consummated. There is no fee for small electronic trades. All members and member
      organizations pay trading fees except “$2 brokers” (who, by definition, effect
      transactions only for other member organizations) and specialists. There are
      two






21




caps
      that apply to the trading fees (other than fees for trading ETFs), and member
      organizations pay the lesser of these two fee caps on a monthly basis. The
      first
      cap is a maximum fixed dollar amount of $600,000 per month. The second is a
      variable cap that is equal to 2% of the net commissions that a member
      organization earns on the trades it executes on the trading floor. As a result
      of these caps, fluctuations in trading volumes, regardless of direction or
      magnitude, do not have a significant impact on our trading fees.




On
      NYSE Arca, trading fees are charged to customers for trade execution of equity
      securities and equity options. NYSE Arca earns transaction fees for (i) customer
      orders of equity securities matched internally on NYSE Arca, as well as for
      customer orders routed out, and (ii) customer orders of equity options traded
      or
      cleared through NYSE Arca.




For
      equity securities, NYSE Arca charges a per share fee (denominated in tenths
      of a
      cent per share) to each customer that executes against a buy order or sell
      order
      posted internally. NYSE Arca refers to these customers when they purchase or
      sell securities as “liquidity takers,” as they removed liquidity from NYSE Arca.
      A liquidity taker may be either a purchaser or a seller, and is distinguished
      from a “liquidity provider” generally by the type of buy order or sell order it
      posts on NYSE Arca. NYSE Arca also charges a per share fee (denominated in
      tenths of a cent per share) to customers whose orders of equity securities
      are
      routed out to an external market center displaying the best buy order or sell
      order in the market for a particular security.




On
      June 30, 2006, NYSE Group announced transaction-pricing changes for NYSE listed
      equities and NYSE Arca options, effective August 1, 2006. The new pricing
      includes, but is not limited to, the following changes:





·
            Transaction
                fees on NYSE-listed equities will be based on a fixed rate of 0.00025
                per
                share rather than the current variable fee schedule.





·
            The
                monthly cap, referenced above on trading NYSE-listed cash equities,
                will
                be increased to $750,000 from $600,000.





·
            The
                cap equal to 2% of net commissions for trading on the NYSEwill
                be eliminated.





·
            Free
                system orders on all NYSE-listed equities transactions will also
                be
                eliminated (fees for ETF system orders under 5,100 shares will continue
                to
                be waived).





·
            Specialists
                will not incur transaction fees for trading
                ETFs.





The
      pricing structures of the NYSE and NYSE Arca continue to be examined as part
      of
      a broad strategic review of NYSE Group’s opportunities for revenue growth and
      efficiency improvement and to better capture value for the services rendered
      by
      aligning more closely transaction revenue with executed volume, product
      expansion and new product development. Transaction fees that NYSE Group earns
      in
      the future could also depend on the outcome of certain regulations and rule
      changes, such as Regulation NMS.





Listing




Companies
      pay listing fees when they initially list on the NYSE or NYSE Arca, and annually
      thereafter. Listing fees consist of two components: original listing fees and
      other corporate action related fees. Original listing fees, subject to a minimum
      and maximum amount, are based on the number of shares that the company initially
      lists with the NYSE or NYSE Arca. Other corporate action related fees are paid
      by listed companies in connection with corporate actions involving the issuance
      of new shares to be listed on the NYSE or NYSE










22








Arca,
      such as stock splits, rights issues, sales of additional securities, and mergers
      and acquisitions, which are subject to a minimum and maximum fee. Annual fees
      are charged based on the number of outstanding shares of the listed company
      at
      the end of the previous year. These fees are recognized on a pro-rata basis
      over
      the calendar year. Original listing fees are recognized on a straight-line
      basis
      over estimated service periods of 10 years for the NYSE and 5 years for NYSE
      Arca. Unamortized balances are recorded as deferred revenue on the consolidated
      statements of financial condition.




Data
      Processing




SIAC
      charges data  processing
      fees to customers other than NYSE Group (fees charged to NYSE Group are
      eliminated in consolidation) for communication services, data processing
      operations and systems development functions. SIAC operates on a cost recovery
      model driven by its customers’ demands. Under this model, any increase or
      decrease in SIAC’s operating expenses results in a corresponding change in its
      revenues. In addition, SIAC earns revenues through its subsidiary, Sector,
      which
      offers an array of communications and data processing services, primarily to
      the
      broker-dealer community.




Market
      Data




NYSE
      Group collects market information fees principally for consortium-based data
      products and, to a lesser extent, for NYSE proprietary data products.
      Consortium-based data fees are determined by securities industry plans.
      Consortium-based data revenues that coordinated market data distribution
      generates (net of joint processing and administration costs) are distributed
      to
      participating markets on the basis of their respective number of trades. Last
      sale prices and quotes in NYSE-listed securities are disseminated through Tape
      A, which constitutes the majority of the NYSE’s revenues from consortium-based
      market data revenues. NYSE Group also receives a share of the revenues from
      Tape
      B and Tape C, which represents data related to trading of certain securities
      that are listed on Nasdaq, AMEX, and other regional exchanges, including ETFs.
      These revenues are influenced by demand for the data by professional and
      non-professional subscribers, as well as the NYSE Group’s share of trades. In
      addition, NYSE Group receives fees for television broadcasts, vendor access
      and
      other usage fees related to per quote or per trade data. NYSE Group proprietary
      products make available market data covering activity that takes place solely
      on
      the NYSE and NYSE Arca’s markets, independent of activity on other
      markets.




Regulatory




Regulatory
      fees are principally comprised of member firm regulation fees and market
      surveillance fees collected by NYSE Group. Member firm regulation fees are
      based
      on member organizations’ gross revenues, as reported in their FOCUS filing with
      the NYSE, and assessed on a six-month lag. Market surveillance fees are charged
      to specialists and floor brokers to recover some of the costs of overseeing
      trading on the NYSE floor. Other regulatory fees include revenue from
      registration of branch offices, registered individuals and specialists, as
      well
      as fees for certain licensing examinations necessary to operate in the
      securities industry.




Licensing,
      facility and other




On
      January 4, 2006, the NYSE completed a modified Dutch auction, as a result of
      which it
      sold 1,274
      trading licenses at an annualized price of $49,290 per license, subject to
      SEC
      approval of applicable NYSE rules, which approval was obtained on February
      27,
      2006. The NYSE has made available a maximum of 1,366 trading licenses, and
      any
      unsold trading licenses can be purchased at a 10% premium to the established
      auction price, on a pro rata basis, during the course of 2006. Currently, we
      anticipate approximately $51 million in revenue






23






from
      trading licenses for the period from March 8 to December 31, 2006, which
      is recognized on a straight-line basis over this period. There could be
      significant uncertainty regarding the number and price of trading licenses
      that
      will be sold in a given year, which could result in fluctuation in the amount
      of
      trading license fees we receive each year.




Facility
      and other fees primarily comprise fees received for services provided to
      specialists, brokers and clerks physically located on the NYSE floor that enable
      them to engage in the purchase and sale of securities on the trading floor.
      These services include booth and post space, communication, trading analysis
      and
      technology.




**Components
      of Expenses**




Section
      31 Fees




See
      “—Activity Assessment Fees” above.




Merger
      Expenses and Related Exit Costs




Merger
      expenses and related exit costs consist of severance costs, as well as legal,
      printing and accounting fees incurred in connection with the May 2006 selling
      shareholder offering of our common stock, and other professional fees directly
      attributable to the merger with Archipelago.





Compensation




NYSE
      Group’s compensation expense includes employee salaries, incentive compensation
      (including stock-based compensation) and related benefits expense, including
      pension, medical, postretirement medical, and SERP charges. Part-time help,
      primarily related to security personnel at the NYSE, is also recorded in this
      category.




Liquidity
      Payments




To
      enhance the liquidity of its system, NYSE Arca pays a small fee per share
      (denominated in tenths of a cent per share) to participants, referred to as
      “liquidity providers,” that post buy orders and sell orders on NYSE Arca, when
      the quote is executed against, or “hit,” by liquidity takers purchasing or
      selling securities internally on NYSE Arca.




Routing
      and Clearing




NYSE
      Arca incurs routing charges when NYSE Arca does not have the best buy or sell
      order in the market for a security that a customer is trying to buy or sell
      on
      NYSE Arca. In that case, NYSE Arca routes the customer’s order to the external
      market center that displays the best buy order or sell order. The external
      market center charges NYSE Arca a fee per share (denominated in tenths of a
      cent
      per share) for routing to its system.




In
      addition, NYSE Arca incurs clearance, brokerage and related transaction
      expenses, which primarily include costs incurred in self-clearing activities,
      service fees paid per trade to exchanges for trade execution, and costs incurred
      due to erroneous trade execution.








24






Systems
      and Communications




NYSE
      Group’s systems and communications expense includes (i) certain costs for
      development and maintenance of trading, regulatory and administrative systems,
      (ii) investments in system capacity, reliability and security and (iii) network connection with its customers and its data centers, as well
      as
      connectivity to various other market centers.




Professional
      Services




NYSE
      Group’s professional services expense includes consulting charges related to
      various technological and operational initiatives, as well as legal and audit
      fees. Our historical spending related to professional services consists
      principally of legal and consulting expenses. While we are focused on reducing
      costs, including professional services costs, there is no guarantee that our
      professional services expenses will decline in the future. Under certain
      circumstances, particularly as we pursue our business strategy, we may be
      required to incur significant professional services costs, such as legal
      expenses.




Depreciation
      and Amortization




This
      item includes costs from depreciating fixed assets and amortizing intangible
      assets over their estimated useful lives. It also included depreciation of
      computer hardware and capitalized software.




Occupancy




Occupancy
      includes costs related to NYSE Group’s leased premises, as well as real estate
      taxes and maintenance of owned premises.




Marketing
      and Other




Marketing
      and other expenses includes advertising, printing and promotion expenses,
      insurance premiums, travel and entertainment expenses as well as other
      administrative expenses.




**Regulatory
      Fine Income**




Regulatory
      fine income is generated from fines levied by NYSE Regulation, which regulates
      and monitors the activities on our securities exchanges and enforces member
      organization compliance with applicable law and the rules of the exchanges.
      The
      frequency with which fines may be levied and their amount will vary based upon
      the actions of participants on the NYSE and NYSE Arca. Regulatory fines are
      used
      for regulatory purposes.




**Results
      of Operations**




We
      have treated  the
      merger as a purchase business combination for accounting purposes, with the NYSE
      designated as the business and accounting acquirer. As a result, the historical
      results of the NYSE are the historical results of NYSE Group. The results of
      operations of NYSE Arca have been included in the results of operations of
      NYSE
      Group since March 8, 2006.




Three
      Months Ended June 30, 2006 Versus Three Months Ended June 30, 2005




The
      following table sets forth NYSE Group’s consolidated statements of income for
      the three months ended June 30, 2006 and 2005, as well as the percentage
      increase or decrease for each consolidated statement of income item for the
      three months ended June 30, 2006, as compared to such item for the three months
      ended June 30, 2005:






25




**Three
                months ended June 30,****Dollars
                (in Millions)**
            
            **2006**
            
            **2005**
            
            **Percent
                Increase (Decrease)**RevenuesActivity
                assessment
            
            $
            189.8
            
            $
            141.8
            
            
            33.9
            %Transaction
            
            
            198.0
            
            
            37.8
            
            
            423.8
            %Listing
            
            
            88.8
            
            
            85.5
            
            
            3.9
            %Market
                data
            
            
            60.4
            
            
            46.3
            
            
            30.5
            %Data
                processing
            
            
            41.9
            
            
            47.7
            
            
            (12.3
            )%Regulatory
            
            
            44.7
            
            
            32.6
            
            
            37.2
            %Licensing,
                facility and other
            
            
            36.0
            
            
            13.1
            
            
            174.6
            %Total
                revenues
            
            
            659.6
            
            
            404.8
            
            
            62.9
            %Section
                31 fees
            
            
            (189.8
            )
            
            (141.8
            )
            
            33.9
            %Merger
                expenses and related exit costs
            
            
            (9.7
            )
            
            -
            
            
            100.0
            %Compensation
            
            
            (138.4
            )
            
            (128.3
            )
            
            7.8
            %Liquidity
                payments
            
            
            (74.8
            )
            
            -
            
            
            100.0
            %Routing
                and clearing
            
            
            (23.4
            )
            
            -
            
            
            100.0
            %Systems
                and communications
            
            
            (30.7
            )
            
            (32.0
            )
            
            (4.2
            )%Professional
                services
            
            
            (29.4
            )
            
            (34.2
            )
            
            (13.9
            )%Depreciation
                and amortization
            
            
            (36.1
            )
            
            (26.4
            )
            
            36.4
            %Occupancy
            
            
            (21.5
            )
            
            (17.1
            )
            
            25.6
            %Marketing
                and other
            
            
            (28.0
            )
            
            (17.5
            )
            
            59.7
            %Regulatory
                fine income
            
            
            6.2
            
            
            1.2
            
            
            390.7
            %Operating
                income
            
            
            84.0
            
            
            8.7
            
            
            865.2
            %Investment
                and other income, net
            
            
            17.0
            
            
            12.9
            
            
            31.7
            %Income
                before taxes and minority interest
            
            
            101.0
            
            
            21.6
            
            
            367.2
            %Provision
                for income taxes
            
            
            (38.5
            )
            
            (7.4
            )
            
            419.8
            %Minority
                interest in income of consolidated subsidiary
            
            
            (1.3
            )
            
            (1.2
            )
            
            8.5
            %Net
                income
            
            $
            61.2
            
            $
            13.0
            
            
            371.1
            %


**Consolidated
      Results**




For
      the three months ended June 30, 2006, the results of operations of NYSE Group
      included the results of the NYSE, SIAC and the results of operations of NYSE
      Arca following the March 7, 2006 merger with Archipelago. For the same period
      a
      year ago, the results of operations of NYSE Group only included the results
      of
      the NYSE and SIAC.




For
      the three months ended June 30, 2006, NYSE Group reported revenues (excluding
      activity assessment fees), operating income and net income of $469.8 million,
      $84.0 million and $61.2 million, respectively. This compares to revenues
      (excluding activity assessment fees), operating income and net income of $263.0
      million, $8.7 million and $13.0 million, respectively, for the three months
      ended June 30, 2005.




The
      $206.8 million increase in revenues (excluding activity assessment fees), $75.3
      million increase in operating income and $48.2 million increase in net income
      for the period reflect the following principal factors:




*Increased
      revenues* - NYSE Arca’s results of operations were consolidated for the three months ended
      June 30, 2006 and contributed revenues of $180.4 million (excluding activity
      assessment fees), which was the primary driver of the period-over-period
      increase.






26




*Increased
      operating income* - The period over period increase in operating income of $75.3 million was
      the
      result of NYSE Arca’s contribution to operating income of $36.0 million as well
      as other revenue growth and overall operating efficiencies as we continue to
      meet our integration goals.




*Improved
      net income* - Period over period, net income increased $48.2 million including $22.5 million
      related to NYSE Arca, revenue growth and overall operating efficiencies.




**Segment
      Results**




Subsequent
      to the merger with Archipelago, NYSE Group operates under three reportable
      segments: Market, SIAC Services and Regulation. NYSE Group’s segments are
      managed and operated as three business units and organized based on services
      provided to customers.




Market
      represents primarily the fees earned from (i) obtaining new listings and
      servicing existing listings on the NYSE and NYSE Arca, (ii) providing access
      to
      trade execution, (iii) distributing market information to data
      subscribers , and (iv) issuing trading licenses (previously membership fees).




SIAC
      Services provides communication and data processing operations and systems
      development functions to the NYSE and third party customers.




Regulation
      provides regulatory services (including member firm regulation, market
      surveillance, enforcement, listed company compliance, and arbitration),
      performed by NYSE Regulation, to NYSE and NYSE Arca. Regulatory fees are paid
      by
      member organizations and are primarily assessed based upon their Gross FOCUS
      revenues. In addition, Regulation collects regulatory fines that are levied
      against members and member organizations.




Market
      Segment Results - Revenues




**Three
                months ended June 30,****Dollars
                (in Millions)**
            
            **2006**
            
            **2005**
            
            **Percent
                Increase (Decrease)**Activity
                assessment
            
            $
            189.8
            
            $
            141.8
            
            
            33.9
            %Transaction
            
            
            198.0
            
            
            37.8
            
            
            423.8
            %Listing
            
            
            88.8
            
            
            85.5
            
            
            3.9
            %Market
                data
            
            
            60.4
            
            
            46.3
            
            
            30.5
            %Market
                services provided to Regulation
            
            
            29.7
            
            
            31.1
            
            
            (4.4
            )%Licensing,
                facility and other
            
            
            36.0
            
            
            13.1
            
            
            174.6
            %Total
                revenues
            
            $
            602.7
            
            $
            355.6
            
            
            69.5
            %


*Transaction* - For the three months ended June 30, 2006, compared to the three months ended
      June 30, 2005, transaction fees increased by $160.2 million, or 423.8%,
      primarily as a result of NYSE Arca’s contribution since the completion of the
      merger on March 7, 2006.




*Listing* - The following table sets forth the revenues from listing fees calculated
      in
      accordance with U.S. generally accepted accounting principles (“as reported”)
      and as would be reported on a basis without giving effect to U.S. generally
      accepted accounting principles (“billed basis”). NYSE Group believes that the
      presentation of billed basis revenues, as they relate to original fees, is
      a
      good indicator of current listing fee activity as billed basis information
      excludes the effects of recognizing revenues related to original fees over
      periods ranging from 5 to 10 years.






27




**Three
                months ended June 30,****2006**
            
            **2005**
            
            **Percent
                Increase**
              **(Decrease)****As
                reported**
            
            **As
                billed**
            
            **As
                reported**
            
            **As
                billed**
            
            **As
                reported**
            
            **As
                billed**Annual
                fees
            
            $
            66.1
            
            $
            66.1
            
            $
            62.9
            
            $
            62.9
            
            
            5.1
            %
            
            5.1
            %Original
                fees
            
            
            22.7
            
            
            20.9
            
            
            22.6
            
            
            20.9
            
            
            -
            
            
            -$
            88.8
            
            $
            87.0
            
            $
            85.5
            
            $
            83.8
            
            
            3.9
            %
            
            3.8
            %


For
      the three months ended June 30, 2006, compared to the three months ended June
      30, 2005, listing fee revenue increased $3.3 million, or 3.9%, on an as reported
      basis.




Listing
      fees are primarily derived from annual listing fees and original listing fees.
      Original listing fees are deferred and recognized over the estimated service
      periods ranging from 5 to 10 years. The difference between the as reported
      revenues and the billed basis revenues is due to the amortization of listing
      fees in accordance with U.S. generally accepted accounting
      principles.




Annual
      listing fees totaled $66.1 million on both an as reported and billed basis
      for
      the three months ended June 30, 2006, compared with $62.9 million on both an
      as
      reported and billed basis for the three months ended June 30, 2005, an increase
      of 5.1%. The period over period improvement is due to the increase in aggregate
      shares billed at the beginning of the year, from approximately 387 billion
      to
      408 billion, as well as new listings of shares during the year, which generate
      annual fees for the period of the year listed. Annual listing fees are
      recognized on a pro-rata basis over the calendar year.




Original
      listing fees amounted to $22.7 million on an as reported basis. On a billed
      basis, original listing fees totaled $20.9 million for the three months ended
      June 30, 2006,  unchanged
      as compared to the same period a year ago.




*Market
      Data* - For the three months ended June 30, 2006, compared to the three months ended
      June 30, 2005, market data fees increased $14.1 million, or 30.5%, primarily
      from the contribution of NYSE Arca’s operations, following the March 7, 2006
      merger with Archipelago.




*Market
      services provided to Regulation* - For the three months ended June 30, 2006, compared to the three months ended
      June 30, 2005, market services provided to Regulation decreased $1.4 million,
      or
      4.4%. These services, which include costs associated with supporting IT
      infrastructure, finance, human resources and other administrative functions,
      are
      provided by Market to support the operations of Regulation. The period over
      period decrease was primarily driven by overall cost savings
      initiatives.




*Licensing,
      facility and other* - For the three months ended June 30, 2006, compared to the three months ended
      June 30, 2005, licensing and facility fees increased $22.9 million, or 174.6%.
      License trading fees represented $16.0 million of the increase. Also driving
      the
      increase was the new pricing for certain facility charges implemented in January
      2006. NYSE Group did not generate licensing fees in the same period a year
      ago.




SIAC
      Services Segment Results - Revenue




**Three
                months ended June 30,****Dollars
                (in Millions)**
            
            **2006**
            
            **2005**
            
            **Percent
                Increase (Decrease)**Data
                processing - non- NYSE
            
            $
            41.9
            
            $
            47.7
            
            
            (12.3
            )%Data
                processing - NYSE
            
            
            54.4
            
            
            65.8
            
            
            (17.3
            )%Total
                revenues
            
            $
            96.3
            
            $
            113.5
            
            
            (15.2
            )%





*Data
      processing—non-NYSE -* For
      the three months ended June 30, 2006, compared to the three months ended June
      30, 2005, data processing fees decreased $5.8 million, or 12.3%, to $41.9
      million. The decline is due to reduced level of services provided to SIAC’s
      major customers and lower revenues from the communication services of
      Sector.






28




*Data
      processing—NYSE -* For
      the three months ended June 30, 2006, compared to the three months ended June
      30, 2005, data processing fees decreased $11.4 million, or 17.3%, to $54.4
      million. These fees decreased due to cost reduction initiatives.




Regulation
      Segment Results - Revenues




**Three
                months ended June 30,****Dollars
                (in Millions)**
            
            **2006**
            
            **2005**
            
            **Percent
                Increase (Decrease)**Regulatory
            
            $
            44.7
            
            $
            32.6
            
            
            37.2
            %Regulatory
                services provided to Market
            
            
            30.2
            
            
            28.6
            
            
            5.5
            %Total
                revenues
            
            $
            74.9
            
            $
            61.2
            
            
            22.4
            %





*Regulatory
      Fees* - For the three months ended June 30, 2006, compared to the three months ended
      June 30, 2005, regulatory fees increased $12.1 million, or 37.2%, to $44.7
      million. For the three months ended June 30, 2006, NYSE Arca contributed
      regulatory fees of $2.8 million. The remaining $9.3 million increase was due
      to
      higher reported Gross FOCUS revenues ($66.1 billion compared to $47.0 billion
      period over period).




*Regulatory
      services provided to Market* - For the three months ended June 30, 2006, compared to the three months ended
      June 30, 2005, regulatory services provided to Market increased $1.6 million
      or
      5.5%. These services, which include costs associated with surveillance,
      examination and enforcement with respect to Market activities, and overseeing
      compliance by listed companies, are provided by Regulation. The increase
      primarily reflects increased compensation costs for cash awards granted to
      Regulation employees following the merger with NYSE Arca.




Market
      Segment Results - Expenses




**Three
                months ended June 30,****Dollars
                (in Millions)**
            
            **2006**
            
            **2005**
            
            **Percent
                Increase (Decrease)**Section
                31 fees
            
            $
            189.8
            
            $
            141.8
            
            
            33.9
            %Merger
                expenses and related exit costs
            
            
            9.7
            
            
            -
            
            
            100.0
            %Compensation
            
            
            60.9
            
            
            46.3
            
            
            31.5
            %Liquidity
                payments
            
            
            74.8
            
            
            -
            
            
            100.0
            %Routing
                and clearing
            
            
            23.4
            
            
            -
            
            
            100.0
            %Regulatory
                services provided to Market
            
            
            30.2
            
            
            28.6
            
            
            5.5
            %Systems
                and communications
            
            
            13.1
            
            
            6.3
            
            
            107.8
            %SIAC
                support (1)
            
            
            54.4
            
            
            65.8
            
            
            (17.3
            )%Professional
                services
            
            
            19.7
            
            
            23.8
            
            
            (17.1
            )%Depreciation
                and amortization
            
            
            27.0
            
            
            15.4
            
            
            75.6
            %Occupancy
            
            
            10.4
            
            
            6.6
            
            
            57.8
            %Marketing
                and other
            
            
            21.7
            
            
            13.4
            
            
            61.7
            %Total
                expenses
            
            $
            535.1
            
            $
            348.0
            
            
            53.8
            %(1)Market’s
                SIAC support expense will not equal SIAC Services’ revenues from Data
                processing - NYSE as certain fees billed to the NYSE by SIAC relate
                to
                software developed for the NYSE’s internal use, and as a result a portion
                of these fees incurred during the application development stage has
                been
                capitalized.







29






*Merger
      expenses and related exit costs* . For
      the three months ended June 30, 2006, we incurred $9.7 million in merger
      expenses and related exit costs consisting of severance costs ($5.8 million),
      legal, printing and accounting fees incurred in connection with the May 2006
      selling shareholder offering of our common stock ($2.1 million), and other
      professional fees ($1.8 million) directly attributable to the March 7, 2006
      merger with Archipelago. NYSE Group did not incur any similar expenses in the
      same period a year ago.





Market
      Compensation




**Three
                months ended June 30,****Dollars
                (in Millions)**
            
            **2006**
            
            **2005**
            
            **Percent
                Increase (Decrease)**Salaries
                and bonus
            
            $
            41.0
            
            $
            32.5
            
            
            26.2
            %Stock-based
                compensation
            
            
            3.9
            
            
            -
            
            
            100.0
            %Benefits
                and other
            
            
            16.0
            
            
            13.8
            
            
            15.9
            %$
            60.9
            
            $
            46.3
            
            
            31.5
            %


*Compensation* .
      For the three months ended June 30, 2006, compared to the three months ended
      June 30, 2005, compensation was up $14.6 million, or 31.5%. The employees of
      NYSE Arca accounted for $15.5 million of this increase. Excluding the impact
      of
      NYSE Arca’s consolidation and stock based compensation during the three months
      ended June 30, 2006, compensation decreased by $4.8 million primarily due to
      cost savings initiatives. NYSE Group did not record any stock-based compensation
      in the same period a year ago.




*Liquidity
      payments* .
      For the three months ended June 30, 2006, NYSE Arca incurred liquidity payments
      of $74.8 million. NYSE Group did not incur any similar expenses in the same
      period a year ago.




*Routing
      and clearing* .
      For the three months ended June 30, 2006, NYSE Arca incurred routing and
      clearing fees of $23.4 million. NYSE Group did not incur any similar expenses
      in
      the same period a year ago.




*Regulatory
      services provided to Market* .
      For the three months ended June 30, 2006, compared to the three months ended
      June 30, 2005, regulatory services provided to Market increased $1.6 million
      or
      5.5%. The increase primarily reflects increased compensation costs for cash
      awards granted to Regulation employees following the merger with NYSE
      Arca.




*Systems
      and SIAC Support* .
      For the three months ended June 30, 2006, compared to three months ended June
      30, 2005, systems related costs decreased $4.6 million, or 6.4%. For the three
      months ended June 30, 2006, the operations of NYSE Arca accounted for $5.9
      million of the $13.1 million of systems and communications. SIAC support costs
      decreased by 17.3% to $54.4 million due to structural cost effectiveness
      efforts, which resulted in lower data processing operations and systems
      development costs, lower headcount and increased utilization rates.




*Professional
      Services* .
      For the three months ended June 30, 2006, compared to the three months ended
      June 30, 2005, professional services decreased $4.1 million, or 17.1%. This decrease
      was
      primarily due to reduced legal fees and the achievement of certain integration
      synergies.




*Depreciation
      and Amortization* .
      For the three months ended June 30, 2006, compared to the three months ended
      June 30, 2005, depreciation and amortization increased $11.6 million, or 75.6%.
      The operations of NYSE Arca represented $8.9 million of the increase following
      the March 7, 2006 merger with Archipelago. The remaining $2.7 million increase
      was associated with capital expenditures on technology and
      infrastructure.






30






*Occupancy* .
      For the three months ended June 30, 2006, compared to the three months ended
      June 30, 2005, occupancy increased $3.8 million, or 57.8%, which was primarily
      the result of the consolidation of NYSE Arca’s operations following the
      completion of the March 7, 2006 merger with Archipelago.




*Marketing
      and other* .
      For the three months ended June 30, 2006, compared to the three months ended
      June 30, 2005, marketing and other expenses increased $8.3 million, or 61.7%,
      primarily as a result of continued increase in advertising and promotion
      activity, as well as higher insurance premiums and additional expenses incurred
      as a public company.




SIAC
      Services Segment Results - Expenses




**Three
                months ended June 30,****Dollars
                (in Millions)**
            
            **2006**
            
            **2005**
            
            **Percent
                Increase (Decrease)**Expenses:Compensation
            
            $
            50.3
            
            $
            57.5
            
            
            (12.4
            )%Systems
                and communications
            
            
            14.2
            
            
            22.8
            
            
            (37.6
            )%Professional
                services
            
            
            8.9
            
            
            11.0
            
            
            (18.8
            )%Depreciation
                and amortization
            
            
            7.8
            
            
            9.9
            
            
            (21.0
            )%Occupancy
            
            
            8.5
            
            
            8.0
            
            
            5.7
            %Marketing
                and other
            
            
            4.2
            
            
            2.2
            
            
            81.1
            %Total
                expenses
            
            $
            93.9
            
            $
            111.4
            
            
            (15.7
            )%




SIAC
      Services Compensation




**Three
                months ended June 30,****Dollars
                (in Millions)**
            
            **2006**
            
            **2005**
            
            **Percent
                Increase (Decrease)**Salaries
                and bonus
            
            $
            37.7
            
            $
            42.9
            
            
            (12.1
            )%Stock-based
                compensation
            
            
            1.9
            
            
            -
            
            
            100.0
            %Benefits
                and other
            
            
            10.7
            
            
            14.6
            
            
            (26.7
            )%$
            50.3
            
            $
            57.5
            
            
            (12.4
            )%


*Compensation* .
      For the three months ended June 30, 2006, compared to the three months ended
      June 30, 2005, compensation decreased $7.2 million, or 12.4%. This decrease
      was
      primarily due to cost reduction initiatives and the resulting decrease in
      average headcount, partially offset by $1.9 million of stock based compensation
      recognized for restricted stock units granted at the date of the merger with
      NYSE Arca.




*Systems
      and communications* .
      For the three months ended June 30, 2006, compared to the three months ended
      June 30, 2005, systems and communication expenses decreased $8.6 million, or
      37.6%, to $14.2 million, primarily as a result of cost containment
      initiatives.




*Professional
      Services* .
      For the three months ended June 30, 2006, compared to the three months ended
      June 30, 2005, professional services decreased $2.1 million, or 18.8%, to $8.9
      million. Lower average contract staff and decreased temporary support for
      trading operations contributed to the reduction.




*Depreciation
      and Amortization* .
      For the three months ended June 30, 2006, compared to the three months ended
      June 30, 2005, depreciation and amortization expense decreased $2.1 million,
      or
      21.0% period over period, to $7.8 million, as the number of assets reaching
      full
      depreciation outpaced capital expenditures.






31






*Occupancy* .
      For the three months ended June 30, 2006, compared to the three months ended
      June 30, 2005, occupancy costs increased by $0.5 million, or 5.7%, to $8.5
      million due to increased operating expenses.




*Marketing
      and other* .
      For the three months ended June 30, 2006, compared to the three months ended
      June 30, 2005, marketing and other expenses increased $2.0 million to $4.2
      million.




Regulation
      Segment Results - Expenses




**Three
                months ended June 30,****Dollars
                (in Millions)**
            
            **2006**
            
            **2005**
            
            **Percent
                Increase (Decrease)**Compensation
            
            $
            29.1
            
            $
            26.4
            
            
            10.2
            %Market
                services provided to Regulation
            
            
            29.7
            
            
            31.1
            
            
            (4.4
            )%Systems
                and communications
            
            
            0.5
            
            
            0.2
            
            
            117.7
            %Professional
                services
            
            
            1.8
            
            
            0.3
            
            
            489.9
            %Depreciation
                and amortization
            
            
            1.3
            
            
            1.2
            
            
            5.3
            %Occupancy
            
            
            2.5
            
            
            2.4
            
            
            4.5
            %Marketing
                and other
            
            
            2.2
            
            
            1.9
            
            
            17.5
            %Total
                expenses
            
            $
            67.1
            
            $
            63.5
            
            
            5.6
            %





Regulation
      Compensation




**Three
                months ended June 30,****Dollars
                (in Millions)**
            
            **2006**
            
            **2005**
            
            **Percent
                Increase (Decrease)**Salaries
                and bonus
            
            $
            22.5
            
            $
            19.9
            
            
            13.1
            %Deferred
                compensation award
            
            
            1.8
            
            
            -
            
            
            100.0
            %Benefits
                and other
            
            
            4.8
            
            
            6.5
            
            
            (26.2
            )%$
            29.1
            
            $
            26.4
            
            
            10.2
            %


*Compensation* .
      For the three months ended June 30, 2006, compared to the three months ended
      June 30, 2005, compensation increased $2.7 million, or 10.2%, to $29.1 million.
      This increase was primarily due to $1.8 million of cash awards granted
      to Regulation employees at the time of the merger coupled with a
      modest increase in the average Regulation headcount.




*Market
      services provided to Regulation* .
      For the three months ended June 30, 2006, compared to the three months ended
      June 30, 2005, market services provided to Regulation decreased $1.4 million,
      or
      4.4%. The decrease was due to cost savings initiatives.




*Professional
      services.* For
      the three months ended June 30, 2006, compared to the three months ended June
      30, 2005, professional services increased $1.5 million, to $1.8 million. These
      costs increased as newly established mandatory regulatory audits commenced
      during 2006.








32






Regulation’s
      other operating expenses, including systems and communications, depreciation
      and
      amortization as well as marketing and general and administrative expenses were
      relatively stable period over period.




Regulatory
      Fine Income




For
      the three months ended June 30, 2006, compared to the three months ended June
      30, 2005, fine income increased $5.0 million to $6.2 million. Regulatory fines
      result from actions taken by Regulation in its oversight of member organizations
      and accordingly may vary period over period.




Investment
      and Other Income, Net




The
      components of investment and other income, net, were as follows:




**Three
                months ended June 30,****Dollars
                (in Millions)**
            
            **2006**
            
            **2005**Investment
                income, net
            
            $
            9.1
            
            $
            9.8Other
                income
            
            
            7.9
            
            
            3.1Total
            
            $
            17.0
            
            $
            12.9







The
      decrease in investment income, net, is primarily attributable to a decrease
      in
      the average investment portfolio subsequent payments to the former members
      which
      is somewhat offset by the increased interest rates on our cash balances and
      investment portfolio. The increase in other income primarily relates to
      insurance reimbursements received which may vary period over
      period.




Income
      Taxes




The
      consolidated effective tax rate for the three months ended June 30, 2006 and
      June 30, 2005 was 38.1% and 34.3%, respectively. For the three months ended
      June
      30, 2006, we provided for income taxes at a 41.0% combined federal, state and
      local tax rate. Our 38.1% consolidated effective rate for the three months
      ended
      June 30, 2006 reflected certain tax refunds.




Six
      Months Ended June 30, 2006 Versus Six Months Ended June 30, 2005




The
      following table sets forth NYSE Group’s consolidated statements of income for
      the six months ended June 30, 2006 and 2005, as well as the percentage increase
      or decrease for each consolidated statement of income item for the six months
      ended June 30, 2006, as compared to such item for the six months ended June
      30,
      2005:






33




**Six
                months ended June 30,****Dollars
                (in Millions)**
            
            **2006**
            
            **2005**
            
            **Percent
                Increase (Decrease)**RevenuesActivity
                assessment
            
            $
            329.0
            
            $
            234.7
            
            
            40.2
            %Transaction
            
            
            274.2
            
            
            75.8
            
            
            261.7
            %Listing
            
            
            177.2
            
            
            171.5
            
            
            3.3
            %Market
                data
            
            
            108.6
            
            
            90.4
            
            
            20.1
            %Data
                processing
            
            
            81.3
            
            
            92.7
            
            
            (12.3
            )%Regulatory
            
            
            85.2
            
            
            62.2
            
            
            36.8
            %Licensing,
                facility and other
            
            
            59.1
            
            
            28.0
            
            
            110.7
            %Total
                revenues
            
            
            1,114.6
            
            
            755.3
            
            
            47.6
            %Section
                31 fees
            
            
            (329.0
            )
            
            (234.7
            )
            
            40.2
            %Merger
                expenses and related exit costs
            
            
            (12.3
            )
            
            -
            
            
            100.0
            %Compensation
            
            
            (306.9
            )
            
            (257.0
            )
            
            19.4
            %Liquidity
                payments
            
            
            (93.8
            )
            
            -
            
            
            100.0
            %Routing
                and clearing
            
            
            (29.6
            )
            
            -
            
            
            100.0
            %Systems
                and communications
            
            
            (60.6
            )
            
            (63.8
            )
            
            (5.0
            )%Professional
                services
            
            
            (57.3
            )
            
            (61.1
            )
            
            (6.1
            )%Depreciation
                and amortization
            
            
            (64.2
            )
            
            (52.6
            )
            
            22.1
            %Occupancy
            
            
            (40.1
            )
            
            (33.9
            )
            
            18.0
            %Marketing
                and other
            
            
            (47.0
            )
            
            (31.8
            )
            
            48.1
            %Regulatory
                fine income
            
            
            23.2
            
            
            22.0
            
            
            5.4
            %Operating
                income
            
            
            97.0
            
            
            42.4
            
            
            128.5
            %Investment
                and other income, net
            
            
            33.8
            
            
            23.2
            
            
            45.9
            %Gain
                on sale of equity investment
            
            
            20.9
            
            
            -
            
            
            100.0
            %Income
                before taxes and minority interest
            
            
            151.7
            
            
            65.6
            
            
            131.2
            %Provision
                for income taxes
            
            
            (58.3
            )
            
            (26.2
            )
            
            122.2
            %Minority
                interest in income of consolidated subsidiary
            
            
            (1.9
            )
            
            (0.4
            )
            
            375.0
            %Net
                income
            
            $
            91.5
            
            $
            39.0
            
            
            134.6
            %





**Consolidated
      Results**




For
      the six months ended June 30, 2006, the results of operations of NYSE Group
      included the results of the NYSE, SIAC and the results of operations of NYSE
      Arca since the March 7, 2006 merger with Archipelago. For the same period a
      year
      ago, the results of operations of NYSE Group only included the results of the
      NYSE and SIAC.




For
      the six months ended June 30, 2006, NYSE Group reported revenues (excluding
      activity assessment fees), operating income and net income of $785.6 million,
      $97.0 million and $91.5 million, respectively. This compares to revenues
      (excluding activity assessment fees), operating income and net income of $520.6
      million, $42.4 million and $39.0 million, respectively, for the six months
      ended
      June 30, 2005.




The
      $265.0 million increase in revenues (excluding activity assessment fees), $54.6
      million increase in operating income and $52.5 million increase in net income
      for the period reflect the following principal factors:




*Increased
      revenues* - NYSE Arca’s results of operations were consolidated for the
      full six months ended June 30, 2006 and contributed revenues of $226.6 million
      (excluding activity assessment fees), which was the primary driver of the
      period-over-period increase.




*Increased
      operating income*  - The period over period increase in operating income of $54.6 million was the
      result of (i) NYSE Arca’s contribution to operating income of $45.8 million for
      the six months ended June 30, 2006 partially offset by (ii) $37.3 million of
      compensation expense recorded at the time of the merger following the immediate
      vesting of approximately 600,000 restricted stock units granted to NYSE
      employees, and the immediate vesting of other compensation arrangements with
      NYSE Regulation employees.




*Improved
      net income* - Period over period, net income increased $52.5 million primarily as a result
      of increased operating revenue as well as $20.9 million gain recognized on
      the
      sale of shares of DTCC common stock in March 2006.








34






**Segment
      Results**




Market
      Segment Results - Revenues




**Six
                months ended June 30,****Dollars
                (in Millions)**
            
            **2006**
            
            **2005**
            
            **Percent
                Increase (Decrease)**Activity
                assessment
            
            $
            329.0
            
            $
            234.7
            
            
            40.2
            %Transaction
            
            
            274.2
            
            
            75.8
            
            
            261.7
            %Listing
            
            
            177.2
            
            
            171.5
            
            
            3.3
            %Market
                data
            
            
            108.6
            
            
            90.4
            
            
            20.1
            %Market
                services provided to Regulation
            
            
            71.1
            
            
            59.6
            
            
            19.1
            %Licensing,
                facility and other
            
            
            59.1
            
            
            28.0
            
            
            110.7
            %Total
                revenues
            
            $
            1,019.2
            
            $
            660.0
            
            
            54.4
            %







*Transaction* - For the six months ended June 30, 2006, compared to the six months ended
      June
      30, 2005, transaction fees increased by $198.4 million, or 261.7%, primarily
      as
      a result of NYSE Arca’s contribution since the completion of the merger on March
      7, 2006.




*Listing* - The following table sets forth the revenues from listing fees calculated
      in
      accordance with U.S. generally accepted accounting principles (“as reported”)
      and as would be reported on a basis without giving effect to U.S. generally
      accepted accounting principles (“billed basis”). NYSE Group believes that the
      presentation of billed basis revenues, as they relate to original fees, is
      a
      good indicator of current listing fee activity as billed basis information
      excludes the effects of recognizing revenues related to original fees over
      periods ranging from 5 to 10 years.




**Six****months ended June 30,****2006**
            
            **2005**
            
            **Percent
                Increase**
              **(Decrease)****As
                reported**
            
            **As
                billed**
            
            **As
                reported**
            
            **As
                billed**
            
            **As
                reported**
            
            **As
                billed**Annual
                fees
            
            $
            132.1
            
            $
            132.1
            
            $
            126.4
            
            $
            126.4
            
            
            4.5
            %
            
            4.5
            %Original
                fees
            
            
            45.1
            
            
            39.6
            
            
            45.1
            
            
            42.5
            
            
            -
            
            
            (6.8
            )%$
            177.2
            
            $
            171.7
            
            $
            171.5
            
            $
            168.9
            
            
            3.3
            %
            
            1.7
            %


For
      the six months ended June 30, 2006, compared to the six months ended June 30,
      2005, listing fee revenue increased $5.7 million, or 3.3%, on an as reported
      basis.




Listing
      fees are primarily derived from annual listing fees and original listing fees.
      Original listing fees are deferred and recognized over the estimated service
      periods ranging from 5 to 10 years. The difference between the as reported
      revenues and the billed basis revenues is due to the amortization of listing
      fees in accordance with U.S. generally accepted accounting
      principles.




Annual
      listing fees totaled $132.1 million on both an as reported and billed basis
      for
      the six months ended June 30, 2006, compared with $126.4 million on both an
      as
      reported and billed basis for the six months ended June 30, 2005, an increase
      of
      4.5%. The period over period improvement is due to the increase in aggregate
      shares billed at the beginning of the year, from approximately 387 billion
      to
      408 billion, as well as new listings of shares during the year, which generate
      annual fees for the period of the year listed. Annual listing fees are
      recognized on a pro-rata basis over the calendar year.




Original
      listing fees amounted to $45.1 million on an as reported basis. On a billed
      basis, original listing fees totaled $39.6 million for the six months ended
      June
      30, 2006  compared
      with $42.5 million, a 6.8% decrease, for the same period a year ago. The
      decrease was due to reduced new issue listings, from 73 to 53 driven primarily
      by a reduction in the number of new closed end fund listings which are highly
      interest rate sensitive.








35






*Market
      Data* - For the six months ended June 30, 2006, compared to the six months ended
      June
      30, 2005, market data fees increased $18.2 million, or 20.1%, primarily from
      the
      contribution of NYSE Arca since the completion of the merger on March 7,
      2006.




*Market
      services provided to Regulation* - For the six months ended June 30, 2006, compared to the six months ended
      June
      30, 2005, Market services provided to Regulation increased $11.5 million, or
      19.1%. Market
      provides these services, which include costs associated with supporting IT infrastructure,
      finance, human resources and other administrative functions to support the operations of Regulation. The increase was primarily driven
      by
      the additional investment in technology supporting Regulation and increased
      compensation costs for vesting of restricted stock units granted to Market
      employees following the merger with NYSE Arca.




*Licensing,
      facility and other* - For the six months ended June 30, 2006, compared to the six months ended June 30, 2005, licensing and facility fees increased $31.1 million, or 110.7%. License
      trading fees represented $20.5 million of the increase. Also driving the
      increase was the new pricing for certain facility charges implemented in January
      2006. NYSE Group did not generate licensing fees in the same period a year
      ago.




SIAC
      Services Segment Results - Revenue




**Six
                months ended June 30,****Dollars
                (in Millions)**
            
            **2006**
            
            **2005**
            
            **Percent
                Increase (Decrease)**Data
                processing - non-NYSE
            
            $
            81.3
            
            $
            92.7
            
            
            (12.3
            )%Data
                processing - NYSE
            
            
            111.8
            
            
            127.9
            
            
            (12.6
            )%Total
                revenues
            
            $
            193.1
            
            $
            220.6
            
            
            (12.5
            )%


*Data
      processing -* *n* *on-NYSE
      -* For
      the six months ended June 30, 2006, compared to the six months ended June 30, 2005, data processing fees decreased $11.4 million, or 12.3%, to $81.3 million.
      The decline is due to reduced level of services provided to SIAC’s major
      customers.




*Data
      processing -* ** *NYSE
      -* For
      the six months ended June 30, 2006, compared to the six months ended June 30, 2005, data processing fees decreased $16.1 million, or 12.6%, to $111.8 million.
      These fees decreased due to cost reduction initiatives.




Regulation
      Segment Results - Revenues




**Six
                months ended June 30,****Dollars
                (in Millions)**
            
            **2006**
            
            **2005**
            
            **Percent
                Increase (Decrease)**Regulatory
            
            $
            85.2
            
            $
            62.2
            
            
            36.8
            %Regulatory
                services provided to Market
            
            
            68.0
            
            
            56.1
            
            
            21.4
            %Total
                revenues
            
            $
            153.2
            
            $
            118.3
            
            
            29.5
            %





*Regulatory
      Fees* - For the six months ended June 30, 2006, compared to the six months ended June 30, 2005, regulatory fees increased $23.0 million, or 36.8%, to $85.2 million.
      For
      the six months ended June 30, 2006, NYSE Arca contributed regulatory fees of $3.5 million. The remaining
      $19.5
      million increase was due to higher reported Gross FOCUS revenues ($127.3 billion
      compared to $84.8 billion period over period).








36






*Regulatory
      services provided to Market* - For the six months ended June 30, 2006, compared to the six months ended June 30, 2005, regulatory services provided to Market increased $11.9 million or 21.4%.
      These services, which include costs associated with surveillance, examination
      and enforcement with respect to Market activities, and overseeing compliance
      by
      listed companies, are provided by Regulation. The increase primarily
      reflects increased compensation costs for cash awards granted to Regulation
      employees following the merger with NYSE Arca.




Market
      Segment Results - Expenses




**Six
                months ended June 30,****Dollars
                (in Millions)**
            
            **2006**
            
            **2005**
            
            **Percent
                Increase (Decrease)**Section
                31 fees
            
            $
            329.0
            
            $
            234.7
            
            
            40.2
            %Merger
                expenses and related exit costs
            
            
            12.3
            
            
            -
            
            
            100.0
            %Compensation
            
            
            134.1
            
            
            92.0
            
            
            45.8
            %Liquidity
                payments
            
            
            93.8
            
            
            -
            
            
            100.0
            %Routing
                and clearing
            
            
            29.6
            
            
            -
            
            
            100.0
            %Regulatory
                services provided to Market
            
            
            68.0
            
            
            56.1
            
            
            21.4
            %Systems
                and communications
            
            
            19.6
            
            
            13.2
            
            
            48.5
            %SIAC
                support (1)
            
            
            111.8
            
            
            127.9
            
            
            (12.6
            )%Professional
                services
            
            
            39.4
            
            
            41.2
            
            
            (4.4
            )%Depreciation
                and amortization
            
            
            45.8
            
            
            30.3
            
            
            51.3
            %Occupancy
            
            
            18.2
            
            
            13.5
            
            
            35.4
            %Marketing
                and other
            
            
            36.9
            
            
            23.7
            
            
            55.3
            %Total
                expenses
            
            $
            938.5
            
            $
            632.6
            
            
            48.4
            %(1)Market’s
                SIAC support expense will not equal SIAC Services’ revenues from Data
                processing - NYSE as certain fees billed to the NYSE by SIAC relate
                to
                software developed for the NYSE’s internal use, and as a result a portion
                of these fees incurred during the application development stage has
                been
                capitalized.







*Merger
      expenses and related exit costs* .
      For the six months ended June 30, 2006, we incurred $12.3 million in merger
      expenses and related exit costs consisting of severance costs ($5.8 million),
      legal, printing and accounting fees incurred in connection with the completion
      of the merger as well as the May 2006 selling shareholder offering of our common
      stock ($4.0 million), and other professional fees ($2.5 million) directly
      attributable to the March 7, 2006 merger with Archipelago. NYSE Group did not
      incur any similar expenses in the same period a year ago.




Market
      Compensation




**Six
                months ended June 30,****Dollars
                (in Millions)**
            
            **2006**
            
            **2005**
            
            **Percent
                Increase (Decrease)**Salaries
                and bonus
            
            $
            76.7
            
            $
            64.3
            
            
            19.3
            %Stock
                based compensation
            
            
            25.0
            
            
            -
            
            
            100.0
            %Benefits
                and other
            
            
            32.4
            
            
            27.7
            
            
            17.0
            %$
            134.1
            
            $
            92.0
            
            
            45.8
            %


*Compensation* .
      For the six months ended June 30, 2006, compared to the six months ended June
      30, 2005, compensation was up $42.1 million, or 45.8%. The employees of NYSE
      Arca accounted for $19.8 million of this increase following the completion
      of
      the merger on March 7, 2006. Excluding the impact of NYSE Arca’s consolidation
      during the six months ended June 30, 2006, compensation increased by $22.3
      million. This increase was primarily due to $25.0 million recognized for certain
      restricted stock units granted to NYSE Market employees following the merger
      with NYSE Arca and other stock based compensation, including a $21.0 million
      charge recorded at the time of the merger for the immediate vesting of






37




certain
      restricted stock units. NYSE Group did not record any stock-based compensation
      in the same period a year ago. Excluding the impact of NYSE Arca’s results and
      stock based compensation awards, compensation decreased by $2.7 million,
      primarily in relation to cost savings initiatives.




*Liquidity
      payments* .
      For the six months ended June 30, 2006, NYSE Arca incurred liquidity payments
      of
      $93.8 million. NYSE Group did not incur any similar expenses in the same period
      a year ago.




*Routing
      and clearing* .
      For the six months ended June 30, 2006, NYSE Arca incurred routing and clearing
      fees of $29.6 million. NYSE Group did not incur any similar expenses in the
      same
      period a year ago.




*Regulatory
      services provided to Market* .
      For the six months ended June 30, 2006, compared to the six months ended June
      30, 2005, regulatory services provided to Market increased $11.9 million or
      21.4%. The increase primarily reflects increased compensation costs for
      cash awards granted to Regulation employees following the merger with NYSE
      Arca.




*Systems
      and SIAC Support* .
      For the six months ended June 30, 2006, compared to six months ended June 30,
      2005, systems related costs decreased $9.7 million, or 6.9 %. For the six months
      ended June 30, 2006, the newly acquired operations of NYSE Arca accounted for
      $7.8 million of the $19.6 million of systems and communications. Other systems
      and communications expenses decreased $1.4 million as a result of cost reduction
      initiatives. SIAC support costs decreased by 12.6% to $111.8 million due to
      structural cost effectiveness efforts, which resulted in lower data processing
      operations and systems development costs, lower headcount and increased
      utilization rates.




*Professional
      Services* .
      For the six months ended June 30, 2006, compared to the year ended June 30,
      2005, professional services decreased $1.8 million or 4.4%. NYSE Arca accounted
      for $4.5 million of the $39.4 million. Excluding the impact of NYSE Arca’s
      consolidation during the six months ended June 30, 2006, professional services
      decreased by $6.3 million primarily due to reduced legal fees.




*Depreciation
      and Amortization* .
      For the six months ended June 30, 2006, compared to the six months ended June
      30, 2005, depreciation and amortization increased $15.5 million, or 51.3%.
      The
      operations of NYSE Arca represented $11.3 million of the increase following
      the
      March 7, 2006 completion of our merger. The remaining $4.2 million increase
      was
      chiefly associated with continued capital expenditures on technology and
      infrastructure.




*Occupancy* .
      For the six months ended June 30, 2006, compared to the six months ended June
      30, 2005, occupancy increased $4.7 million or 35.4%, which was primarily the
      result of the consolidation of NYSE Arca’s operations following the completion
      of the March 7, 2006 merger.




*Marketing
      and other* .
      For the six months ended June 30, 2006, compared to the six months ended June
      30, 2005, marketing and other expenses increased $13.2 million, or 55.3%,
      primarily as a result of increased advertising and promotion activity as part
      of
      the merger, as well as higher insurance premiums and additional expenses
      incurred as a public company.






38








SIAC
      Services Segment Results - Expenses




**Six
                months ended June 30,****Dollars
                (in Millions)**
            
            **2006**
            
            **2005**
            
            **Percent
                Increase (Decrease)**Compensation
            
            $
            113.1
            
            $
            115.7
            
            
            (2.2
            )%Systems
                and communications
            
            
            33.7
            
            
            45.0
            
            
            (25.1
            )%Professional
                services
            
            
            17.5
            
            
            21.0
            
            
            (16.8
            )%Depreciation
                and amortization
            
            
            16.1
            
            
            19.9
            
            
            (19.2
            )%Occupancy
            
            
            16.8
            
            
            15.6
            
            
            7.7
            %Marketing
                and other
            
            
            6.6
            
            
            4.7
            
            
            41.5
            %Total
                expenses
            
            $
            203.8
            
            $
            221.9
            
            
            (8.1
            )%





SIAC
      Services Compensation




**Six
                months ended June 30,****Dollars
                (in Millions)**
            
            **2006**
            
            **2005**
            
            **Percent
                Increase (Decrease)**Salaries
                and bonus
            
            $
            75.5
            
            $
            84.1
            
            
            (10.2
            )%Stock-based
                compensation
            
            
            15.6
            
            
            -
            
            
            100.0
            %Benefits
                and other
            
            
            22.0
            
            
            31.6
            
            
            (30.4
            )%$
            113.1
            
            $
            115.7
            
            
            (2.2
            )%


*Compensation* .
      For the six months ended June 30, 2006, compared to the six months ended June
      30, 2005, compensation decreased $2.6 million, or 2.2%. This decrease was
      primarily due to cost reduction initiatives and the resulting decrease in
      average headcount, which was partially offset by $15.6 million of stock based
      compensation recognized for certain restricted stock units granted to SIAC
      employees following the merger with NYSE Arca, including a $13.6 million charge
      recorded at the time of the merger for the immediate vesting of certain
      restricted stock units.




*Systems
      and communications* .
      For the six months ended June 30, 2006, compared to the six months ended June
      30, 2005, systems and communication expenses decreased $11.3 million, or 25.1%,
      to $33.7 million, primarily as a result of cost containment
      initiatives.




*Professional
      Services* .
      For the six months ended June 30, 2006, compared to the six months ended June
      30, 2005, professional services decreased $3.5 million, or 16.8%, to $17.5
      million. Lower average contract staff and decreased temporary support for
      trading operations contributed to the reduction.




*Depreciation
      and Amortization* .
      For the six months ended June 30, 2006, compared to the six months ended June
      30, 2005, depreciation and amortization expense decreased $3.8 million, or
      19.2%, period over period, to $16.1 million, as the number of assets reaching
      full depreciation outpaced capital expenditures.




*Occupancy* .
      For the six months ended June 30, 2006, compared to the six months ended June
      30, 2005, occupancy costs increased by $1.2 million, or 7.7%, to $16.8 million
      due to increased operating expenses.




*Marketing
      and other* .
      For the six months ended June 30, 2006, compared to the six months ended June
      30, 2005, marketing and other costs increased by $1.9 million, or
      41.5%.




39




Regulation
      Segment Results - Expenses




**Six
                months ended June 30,****Dollars
                (in Millions)**
            
            **2006**
            
            **2005**
            
            **Percent
                Increase (Decrease)**Compensation
            
            $
            63.8
            
            $
            52.6
            
            
            21.3
            %Market
                services provided to Regulation
            
            
            71.1
            
            
            59.6
            
            
            19.1
            %Systems
                and communications
            
            
            0.7
            
            
            0.4
            
            
            88.6
            %Professional
                services
            
            
            2.8
            
            
            0.8
            
            
            264.2
            %Depreciation
                and amortization
            
            
            2.4
            
            
            2.5
            
            
            (3.0
            )%Occupancy
            
            
            5.0
            
            
            4.9
            
            
            3.1
            %Marketing
                and other
            
            
            3.5
            
            
            3.2
            
            
            4.3
            %Total
                expenses
            
            $
            149.3
            
            $
            124.0
            
            
            20.4
            %







Regulation
      Compensation




**Six
                months ended June 30,****Dollars
                (in Millions)**
            
            **2006**
            
            **2005**
            
            **Percent
                Increase (Decrease)**Salaries
                and bonus
            
            $
            45.0
            
            $
            39.1
            
            
            15.1
            %Deferred
                compensation award
            
            
            6.7
            
            
            -
            
            
            100.0
            %Benefits
                and other
            
            
            12.1
            
            
            13.5
            
            
            (10.4
            )%$
            63.8
            
            $
            52.6
            
            
            21.3
            %


*Compensation* .
      For the six months ended June 30, 2006, compared to the six months ended June
      30, 2005, compensation increased $11.2 million, or 21.3%, to $63.8 million.
      This
      increase was primarily due to the $6.7 million recognition of certain cash
      awards granted to NYSE employees at the time of the merger coupled with a
      modest increase in headcount and related increased compensation costs
      within Regulation.




*Market
      services provided to Regulation* .
      For the six months ended June 30, 2006, compared to the six months ended June
      30, 2005, market services provided to Regulation increased $11.5 million, or
      19.1%, to $71.1 million. The increase was primarily driven by increased
      compensation costs for vesting of restricted stock units granted to Market
      employees following the merger with NYSE Arca.




*Professional
      services.* For
      the six months ended June 30, 2006, compared to the six months ended June 30,
      2005, professional services increased $2.0 million to $2.8 million. These costs
      increased as newly established mandatory regulatory audits commenced during
      2006.




Regulation’s
      other operating expenses, including systems and communications, depreciation
      and
      amortization as well as marketing and general and administrative expenses were
      relatively stable period over period.




Regulatory
      Fine Income




For
      the six months ended June 30, 2006, compared to the six months ended June 30,
      2005, fine income increased $1.2 million, or 5.4%. Regulatory fines result
      from
      actions taken by Regulation in its oversight of member organizations and
      accordingly may vary period over period.




Investment
      and Other Income, Net




The
      components of investment and other income, net, were as follows:






40




**Six
                months ended June 30,****Dollars
                (in Millions)**
            
            **2006**
            
            **2005**Investment
                income, net
            
            $
            19.2
            
            $
            15.5Other
                income
            
            
            14.6
            
            
            7.7Total
            
            $
            33.8
            
            $
            23.2







The
      increase in investment income, net, is primarily attributable to the increased
      interest rates on our cash balances and investment portfolio. The increase
      in
      other income relates to insurance reimbursements received which may vary period
      over period.




Gain
      on Sale of Equity Investment




On
      March 28, 2006, NYSE Group sold its shares of DTCC common stock for a $23.4
      million cash payment. NYSE Group carried this investment at its $2.5 million
      cost and therefore realized a $20.9 million pre-tax gain that is included in
      gain on sale of equity investment in the condensed consolidated statement of
      income for the six months ended June 30, 2006. The after-tax impact of this
      gain
      was included in the cash dividend paid to each former NYSE member in connection
      with the merger of NYSE and Archipelago.




Income
      Taxes




The
      consolidated effective tax rate for the six months ended June 30, 2006 and
      June
      30, 2005 was 38.4% and 40.0%, respectively. The decrease was primarily
      associated with the $20.9 million gain on sale of equity investment during
      2006,
      which was taxed at approximately 35% and from certain refunds.




**Liquidity
      and Capital Resources**




Historically,
      NYSE Group’s primary source of liquidity has been cash generated by the NYSE’s
      operations , and NYSE
      Group’s liquidity requirements have been for working capital, capital expenditures
      and
      general corporate use.




NYSE
      Group’s working capital was $558.2 million at June 30, 2006, and capital
      expenditures equaled $39.8 million for the six months ended June 30, 2006.
      Capital expenditures related primarily to the development and maintenance of
      corporate and regulatory systems and to trading technology, including
      expenditures relating to the development and implementation of NYSE Hybrid
      Market and compliance with Regulation NMS.




Cash
      and cash equivalents are generated primarily from listing services, sales of
      market information, collection of activity assessment fees (which are fully
      remitted to the SEC), data processing services provided by SIAC, collections
      of
      regulatory fees (which are based on FOCUS filing amounts), fees generated for
      trading (which are generally based on volume and commissions subject to certain
      caps), and investment income.




At
      June 30, 2006, NYSE Group had $272.7 million of cash and cash equivalents,
      an
      increase of $229.2 million from its cash and cash equivalents at December 31,
      2005. Current assets readily convertible into cash include accounts receivable,
      securities purchased under agreements to resell and marketable securities.
      These
      assets totaled $1,147.1 million at June 30, 2006 and, when combined with cash
      and cash equivalents, represented 91.1% of NYSE Group’s current
      assets.




Under
      the terms of the operating agreement of the New York Stock Exchange, LLC, no
      regulatory fees, fines or penalties collected by NYSE Regulation may be
      distributed to NYSE Group or any entity other than NYSE Regulation. As a result,
      the use of regulatory fees, fines and penalties collected by NYSE Regulation
      may
      be considered restricted. As of June 30, 2006, NYSE Group did not have any
      significant restricted cash balance.






41








With
      respect to investment activities, the boards of directors of NYSE Group and
      SIAC
      have separately approved investment policies for externally managed portfolios.
      The goals of these policies are to preserve principal, maintain adequate
      liquidity at all times to fund budgeted operating and capital requirements,
      and
      to maximize returns relative to investing guidelines and market conditions.
      NYSE
      Group’s current policies prevent it from investing directly in any equity type
      investment, however, this policy can be modified at the discretion of the chief
      executive officer and chief financial officer of NYSE Group, based on the
      delegation of authority by the board of directors. SIAC’s policies permit
      investing in equity funds. Participants in supplemental executive savings and
      other deferred compensation plans are permitted to invest in equity funds.
      Under
      NYSE Group’s policies, it may invest only in securities that are rated AA or
      better by two nationally recognized rating organizations and that are in U.S.
      dollar denominations. A portion of SIAC’s portfolio is used to fund its
      non-qualified benefit obligations. The average duration of the portfolios for
      both the NYSE Group and SIAC must not exceed two years. Both NYSE Group and
      SIAC
      periodically review their respective policies and investment
      managers.




As
      of June 30, 2006, NYSE Group had no outstanding short-term or long-term
      debt.




NYSE
      Group believes that cash flows from operating activities and financing
      capabilities along with future cash flows from operations are sufficient to
      meet
      the needs of its current operations. If existing cash balances are insufficient,
      NYSE Group intends to seek additional financing. NYSE Group may not be able
      to
      obtain additional financing on acceptable terms or at all.




Net
      cash provided by operating activities equaled $243.4 million for the six months
      ended June 30, 2006, consisting of net income of $91.5 million and the effects
      of non-cash items, such as depreciation, which does not adversely affect cash
      flows. Also, during the six months ended June 30, 2006, NYSE Group remitted
      $232.1 million to the SEC for Section 31 fees.




Net
      cash provided by investing activities equaled $479.9 million for the six months
      ended June 30, 2006. NYSE Group acquired $218.2 million of cash in connection
      with the Archipelago merger. Net sales in investment securities and securities
      purchased under agreements to resell of $275.7 million were liquidated to
      partially fund the $409.8 million distribution to NYSE former
      members.




As
      part of the merger, NYSE Group’s financing activities included a total cash
      distribution of $506.2 million (consisting of a $409.8 million cash distribution
      and a $96.4 million dividend) to the NYSE’s former members during the six months
      ended June 30, 2006.




**New
      Accounting Pronouncements**




In
      July 2006, the Financial Accounting Standard Board (FASB) issued FASB
      Interpretation No. (FIN) 48, *Accounting
      for Uncertainty in Income Taxes* ,
      an interpretation of Statement of Financial Standards (SFAS) No. 109, *Accounting
      for Income Taxes* .
      FIN 48 addresses how a reporting company accounts for all tax positions
      including the uncertain tax positions reflected or expects to be reflected
      in
      the company's past or future tax returns. The interpretation also requires
      the
      company to recognize interest and penalties associated with the uncertain tax
      positions. This interpretation is effective for fiscal years beginning after
      December 15, 2006. We are currently evaluating the potential impact, if any,
      that the implementation of FIN 48 will have on our financial condition, results
      of operations and cash flows.








42





In
      July 2006, the FASB affirmed its previous decision to make the recognition
      provision of its proposed standard, Employer’s Accounting for Defined Benefit
      Pension and Other Postretirement Plans, an amendment of FASB Statements No.
      87,
      88, 106 and 132R, effective for public companies for fiscal years ending after
      December 15, 2006. This decision requires the recognition on the statement
      of
      financial condition of the funded status of pension and other postretirement
      benefit plans. We are currently evaluating the potential impact, if any, that
      the implementation will have on our stockholders’ equity.




**Item
      3.**  **Quantitative
      and Qualitative Disclosures about Market Risk**




There
      have been no material changes in quantitative and qualitative disclosures about
      market risk from those disclosed
      in our annual report on Form 10-K  for
      the
      year ended December 31, 2005.




**Item
      4.**  **Controls
      and Procedures**




As
      of the end of the period covered by this report, we evaluated, under the
      supervision and with the participation of our management, including our chief
      executive officer and chief financial officer, the effectiveness of the design
      and operation of the disclosure controls and procedures, as defined in Rule
      13a-15(e) under the Exchange Act, of NYSE Group and its subsidiaries. Based
      upon
      that evaluation, our chief
      executive officer and chief financial officer  concluded
      that the design and operation of the disclosure controls and procedures were
      effective as of the end of the period covered by this report. No significant
      changes were made in our internal control over financial reporting, as defined
      in Rule 13a-15(f) under the Exchange Act, that have materially
      affected, or are reasonably likely to materially affect, our internal control
      over financial reporting during the period covered by this report. In July
      2006,
      we substantially completed a company-wide implementation of a single general
      ledger system. As of August 1, 2006, all of our subsidiaries were using this
      system. We have reviewed the internal controls affected by this implementation
      and believe that the internal controls surrounding the general ledger system,
      as
      modified, are appropriate and functioning effectively.




**PART
      II  -****OTHER
      INFORMATION**




**Item
      1.**  **Legal
      Proceedings**




The
      following supplements and amends our discussion set forth under “Legal
      Proceedings” in Part I, Item 3 of our annual report on Form 10-K for the year
      ended December 31, 2005, as updated by Part II, Item 1 of our quarterly report
      on Form 10-Q for the period ended March 31, 2006.





*In
      re NYSE Specialists Securities Litigation*




On
      June
      2, 2006, plaintiffs filed in the U.S. Court of Appeals for the 2d Circuit an
      opening brief in support of their appeal from the decision of the U.S. District
      Court for the Southern District of New York entering a final judgment in favor
      of NYSE. NYSE filed its brief in opposition on August 2, 2006.




*Merger-Related
      Litigation*




In
      March
      2006, Janet Hyman and Sylvia Lief, each a former NYSE member, filed separate
      complaints in New York Supreme Court against NYSE and John A. Thain. The
      complaints sought compensatory damages for alleged breach of fiduciary duty
      based on a purported duty of defendants to disclose NYSE’s merger discussions
      with Archipelago prior to the sale of plaintiffs’ NYSE memberships on March 1
      and 2, 2005, respectively.






43








On
      April
      19, 2006, NYSE and Mr. Thain served motions to dismiss the Hyman and Lief
      complaints. On June 9, 2006, Ms. Hyman and Ms. Lief each served an amended
      complaint, which added an additional cause of action for breach of fiduciary
      duty and a new cause of action for negligence. On June 22, 2006, D. Paul
      Rittmaster, another former NYSE member represented by the same law firm as
      Ms.
      Hyman and Ms. Lief, filed a complaint in New York Supreme Court against NYSE
      and
      Mr. Thain asserting the same causes of action alleged in the amended complaints
      of Hyman and Lief. On July 28, 2006, NYSE and Mr. Thain served a motion to
      dismiss the Hyman and Lief amended complaints and the Rittmaster complaint
      on
      the grounds, among others, that defendants had no legal duty to make the
      disclosures plaintiffs assert they should have made.




*Compensation-Related
      Litigation*




On
      July
      26, 2006, the court denied the motion of defendant Kenneth Langone for summary
      judgment in his favor on the single cause of action asserted against him by
      the
      New York Attorney General; Mr. Langone has appealed that denial. On July 17,
      2006, NYSE and former NYSE Chairman John S. Reed filed motions for summary
      judgment dismissing all of Richard Grasso’s counterclaims against them. On July
      31, 2006, the New York Attorney General filed a motion for partial summary
      judgment in its favor on claims asserted against Mr. Grasso, and Mr. Grasso
      filed motions for summary judgment in his favor with respect to three of the
      six
      causes of action asserted against him by the Attorney General. Mr. Grasso also
      has moved for summary judgment dismissing the one claim asserted by the Attorney
      General against NYSE. In addition, defendant Carl McCall has moved for summary
      judgment dismissing the third-party claims asserted against him by Mr. Grasso.
      On August 8, 2006, the court ruled that the New York Attorney General’s claim
      against Mr. Grasso for restitution and imposition of a constructive trust is
      an
      equitable claim that must be tried to the court rather than to a jury, and
      that
      it will commence trial of that claim (which will be tried separately from all
      other claims asserted in the case) on October 16, 2006. The appellate court
      has
      not yet rendered a decision on Mr. Grasso’s appeal of the trial court’s denial
      of his motion to dismiss four of the six claims against him, including the
      claim
      for restitution and imposition of a constructive trust now scheduled for trial
      in October.




*Employment-Related
      Litigation*




On
      April
      20, 2006, Graciela DaSilva, Vjoca Selmanovic and Robin Max Morris filed a
      complaint in the U.S. District Court for the Southern District of New York
      against NYSE Group, Building Maintenance Service, LLC (“BMS”), a cleaning
      service contractor, and five unnamed corporations, seeking compensatory and
      punitive damages for alleged gender discrimination and retaliation in violation
      of federal and local laws. Ms. DaSilva currently is employed as a porter by
      NYSE
      Group; Mr. Morris previously was employed by NYSE as a supervisor of porters.
      Mr. Selmanovic previously was employed as a porter by BMS. On May 24, 2006,
      NYSE
      Group filed an answer to the complaint in which it denied allegations of
      wrongdoing and asserted various defenses.




*Other
      Matters*




On
      or about April 25, 2006, the Independent Broker Action Committee, Inc. (“IBAC”),
      which describes itself as a not-for-profit corporation whose membership consists
      of independent NYSE brokers, filed a petition in the U.S. Court of Appeals
      for
      the District of Columbia (“DC Circuit”) seeking review of two orders issued by
      the SEC (Exchange Act Releases No. 34-53539 (March 22, 2006) and 34-53382
      (February 27, 2006) (the “Orders”)) insofar as they relate to the creation of
      the NYSE Hybrid Market SM and NYSE’s proposed method of allocating trading rights. The petition named the
      SEC as respondent and asked the court to vacate Exchange Act Release No.
      34-53539 regarding the NYSE Hybrid Market SM and that portion of Exchange Act Release No. 34-53382 that approved NYSE’s
      proposed method of allocating trading rights at NYSE through annual trading
      licenses, and to remand the






44




matter
      to the SEC for further proceedings. IBAC also asked the SEC to stay the
      authorization given to NYSE under Exchange Act Release No. 34-53539 to implement
      subsequent phases of the NYSE Hybrid Market SM , pending the court’s resolution of IBAC’s petition for review.





NYSE
      submitted an opposition to IBAC’s stay request before the SEC and was granted
      leave to intervene to oppose IBAC’s petition before the DC Circuit. Following
      joint requests to the SEC and the DC Circuit, the SEC has deferred ruling on
      IBAC’s stay request and the DC Circuit has deferred briefing on the petition
      itself, to allow IBAC to determine whether it wishes to continue to pursue
      the
      petition in light of subsequent developments with regard to the NYSE Hybrid
      Market SM .





NYSE
      Group is defending a number of other actions and investigations, the ultimate
      outcome of which cannot reasonably be determined at this time. In the opinion
      of
      management and legal counsel, the aggregate of all possible losses from all
      such
      other actions and investigations should not have a material adverse effect
      on
      the consolidated financial condition or results of operations of NYSE
      Group.




**Item
      1A.  Risk Factors**





Other
      than with respect to the risk factors below, there have been no material changes
      from the risks disclosed in the “Risk Factors” section of our annual
      report on Form 10-K for the year ended December 31, 2005 .





***Uncertainty
      related to our proposed combination with Euronext and contractual restrictions
      while the combination is pending could adversely affect our
      business.***




Uncertainty
      about when and whether the combination will be completed and about the effects
      of the combination may have an adverse effect on our business. These
      uncertainties could cause market professionals and others that deal with us
      to
      seek to change their existing business relationships with us, which could
      negatively affect our growth, revenues and results of operations. In addition,
      the combination agreement restricts us from taking specified actions without
      Euronext’s approval. These restrictions could prevent us from pursuing
      attractive business opportunities that may arise prior to the completion of
      the
      combination.




***Failure
      to complete the combination with Euronext could negatively impact our stock
      price, future business and financial results.***




Completion
      of the combination is subject to various conditions, including the approval
      by
      our stockholders and the shareholders of Euronext, as well as regulatory
      approvals. There is no assurance that the combination will be approved, and
      there is no assurance that the other conditions to the completion of the
      combination will be satisfied. If the combination is not completed, we will
      be
      subject to risks such as the following:




·
            because
                the current price of our common stock may reflect a market assumption
                that
                we will complete the combination, a failure to complete the combination
                could result in a negative perception of us and a decline in the
                price of
                our common stock;




·
            we
                will be required to pay certain costs relating to the combination,
                such as
                legal, accounting and financial advisory fees, and, under certain
                circumstances, we also may be required to pay certain expenses of
                Euronext;








45






·
            the
                combination may distract our management and employees from day-to-day
                operations and require substantial commitments of time and resources,
                which they otherwise could have devoted to other opportunities that
                could
                have been beneficial to us; and




·
            we
                would continue to face the risks that we currently face as an independent
                company.




**Item
      4.Submission of Matters to a Vote of Security
      Holders** ****




The
      shareholders of NYSE Group voted on two items at the Annual Meeting of
      Shareholders held on June 1, 2006:




1.
            
            the
                election of eleven directors to terms ending in 2007
                and2.
            
            a
                proposal to ratify the appointment of PriceWaterhouseCoopers LLP
                as the
                independent registered public accounting firm for
                2006.




The
      nominees for directors were elected based upon the following votes:




**Director**
            **Votes**
              **For**
            
            **Votes**
              **Withheld**Marshall
                N. Carter
            104,964,255
            
            2,412,344John
                A. Thain
            104,938,317
            
            2,438,282Ellyn
                L. Brown
            100,675,495
            
            6,701,104William
                E. Ford
            100,358,148
            
            7,018,451Shirley
                Ann Jackson
            100,217,169
            
            7,159,430James
                S. McDonald
            100,622,348
            
            6,754,251Duncan
                M. McFarland
            100,703,948
            
            6,672,651James
                J. McNulty
            100,700,525
            
            6,676,074Alice
                M. Rivlin
            100,104,641
            
            7,271,958Robert
                B. Shapiro
            100,453,678
            
            6,922,921Karl
                M. von der Heyden
            100,464,585
            
            6,912,014








The
      proposal to ratify the appointment of PriceWaterhouseCoopers
      LLP as
      independent registered public accounting firm for 2006 received the following
      votes:




**Votes**For
            105,820,914Against
            712,370Abstentions
            843,315





There
      were no broker non-votes for this item.








46






**Item
      6. Exhibits**




**Exhibit
                No.**
            
            **Description**2.1
            
            CombinationAgreement,
                dated as of June 1, 2006, by and among NYSE Group, Inc., Euronext
                N.V.,
                NYSE Euronext, Inc., and JeffersonMerger Sub, Inc.13.1
            
            Amended
                and Restated Certificate of Incorporation of NYSE Group, Inc.23.2
            
            Amended
                and Restated Bylaws of NYSE Group, Inc.310.1
            
            NYSE
                Group, Inc. 2006 Stock Incentive Plan431.1
            
            Certification
                of the principal executive officer pursuant to Rule 13a-14(a) or
                Rule
                15d-14(a) of the Exchange Act31.2
            
            Certification
                of the principal financial officer pursuant to Rule 13a-14(a) or
                Rule
                15d-14(a) of the Exchange Act32
            
            Certification
                of the principal executive officer and the principal financial officer
                pursuant to 18 U.S.C. Section 1350




1
        Incorporated by reference to Exhibit 2.1 to the registrant’s current report on
        Form 8-K (File No. 1-32829) filed on June 2, 2006.
 2
        Incorporated by reference to Exhibit 3.1 to the registrant’s registration
        statement on Form 8-A (File No. 1-32829) filed on March 7, 2006.
 3
        Incorporated by reference to Exhibit 3.2 to the registrant’s registration
        statement on Form 8-A (File No. 1-32829) filed on March 7, 2006.
 4
        Incorporated by reference to Exhibit 99.1 to the registrant’s current
        report on Form 8-K (File No. 1-32829) filed on June 7,
        2006.


47





SIGNATURES




Pursuant
      to the requirements of the Securities Exchange Act of 1934, NYSE Group has
      duly
      caused this report to be signed on its behalf by the undersigned thereunto
      duly
      authorized:




NYSE
                Group, Inc.Date:
            August
                11, 2006
            
            By:
            /s/
                Nelson ChaiNelson
                ChaiChief
                Financial Officer














































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