TPW
        DRAFT
        OF 5/11/06








**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**





**WASHINGTON,
      D.C. 20549**




**FORM
      10-Q**




**(MARK
      ONE)**


**ý** **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934**




**FOR
      THE QUARTERLY PERIOD ENDED MARCH 31, 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 ý No o




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 o Accelerated
      Filer o Non-accelerated
      Filer ý




Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act). Yes o No ý
 
 As
        of May
        1, 2006, the registrant had approximately 155.9 million shares of common
        stock,
        $0.01 par value per share, outstanding.









**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, 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 the Archipelago Exchange, L.L.C., a Delaware limited
                liability company, 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.





1


**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.







2




**PART
      I - FINANCIAL INFORMATION**




**Item
      1. Financial Statements**







**NYSE
      GROUP, INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION**


(In
      thousands, except per share data)




**March
                  31,****2006**
              
              **December
                  31,****2005**(Unaudited)**Assets**Current
                  Assets:Cash
                  and cash equivalents
              
              
              $206,631
              
              
              $43,492Securities
                  purchased under agreements to resell
              
              
              42,200
              
              
              127,888Investment
                  securities, at fair value
              
              
              618,114
              
              
              980,591Accounts
                  receivable, net
              
              
              322,684
              
              
              184,185Deferred
                  income taxes
              
              
              93,501
              
              
              91,919Other
                  assets
              
              
              58,953
              
              
              36,142Total
                  current assets
              
              
              1,342,083
              
              
              1,464,217Property
                  and equipment, net
              
              
              411,637
              
              
              343,534Goodwill
              
              
              528,155
              
              
              -Other
                  intangible assets, net
              
              
              586,923
              
              
              -Deferred
                  income taxes
              
              
              320,058
              
              
              290,145Other
                  assets
              
              
              77,990
              
              
              106,249Total
                  assets
              
              
              $3,266,846
              
              
              $2,204,145**Liabilities
                  and stockholders’ equity**Current
                  liabilities:Accounts
                  payable and accrued expenses
              
              
              $317,349
              
              
              $322,263Section
                  31 fees payable
              
              
              183,284
              
              
              232,146Deferred
                  revenue
              
              
              318,795
              
              
              105,313Deferred
                  income taxes
              
              
              34,022
              
              
              25,238Total
                  current liabilities
              
              
              853,450
              
              
              684,960Accrued
                  employee benefits
              
              
              323,337
              
              
              323,373Deferred
                  revenue
              
              
              326,622
              
              
              329,197Deferred
                  income taxes
              
              
              253,677
              
              
              9,289Other
                  liabilities
              
              
              28,757
              
              
              23,037Total
                  liabilities
              
              
              1,785,843
              
              
              1,369,856Minority
                  interest
              
              
              36,268
              
              
              35,164Commitments
                  and contingencies (Note 10)**Stockholders’
                  equity**Members’
                  equity
              
              
              -
              
              
              807,781Common
                  stock, $0.01 par value, 400,000 shares authorized; 157,147 and
                  0 shares
                  issued; 155,502 and 0 shares outstanding
              
              
              1,571
              
              
              -Common
                  stock held in treasury, at cost: 1,645 and 0 shares
              
              
              (65,569
              )
              
              -Additional
                  paid-in capital
              
              
              1,514,190
              
              
              -Retained
                  earnings
              
              
              1,709
              
              
              -Accumulated
                  other comprehensive income (loss)
              
              
              (7,166
              )
              
              (8,656
              )Total
                  stockholders’ equity
              
              
              1,444,735
              
              
              799,125**Total
                  liabilities and stockholders’ equity**
              
              
              $3,266,846
              
              
              $2,204,145







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




3


**NYSE
      GROUP, INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF INCOME**


(In
      thousands, except per share data)


(Unaudited)




**Three
                months ended March 31,****2006**
            
            **2005****Revenues**Activity
                assessment
            
            
            $139,209
            
            
            $92,940Transaction
            
            
            76,151
            
            
            37,953Listing
            
            
            88,468
            
            
            85,995Market
                data
            
            
            48,215
            
            
            44,150Data
                processing
            
            
            39,349
            
            
            44,900Regulatory
            
            
            40,424
            
            
            29,803Licensing,
                facility and other
            
            
            22,882
            
            
            14,729Total
                revenues
            
            
            454,698
            
            
            350,470Section
                31 fees
            
            
            (139,209
            )
            
            (92,940
            )Compensation
            
            
            (167,301
            )
            
            (127,769
            )Liquidity
                payments
            
            
            (18,970
            )
            
            -Routing
                and clearing fees
            
            
            (6,203
            )
            
            -Systems
                and communications
            
            
            (29,902
            )
            
            (31,742
            )Professional
                services
            
            
            (31,438
            )
            
            (28,050
            )Depreciation
                and amortization
            
            
            (28,163
            )
            
            (26,173
            )Occupancy
            
            
            (18,820
            )
            
            (17,036
            )Marketing
                and other
            
            
            (19,107
            )
            
            (14,085
            )Regulatory
                fine income
            
            
            16,939
            
            
            20,695**Operating
                income**
            
            
            12,524
            
            
            33,370Investment
                and other income, net
            
            
            17,166
            
            
            10,593Gain
                on sale of equity investment
            
            
            20,925
            
            
            -Income
                before income tax provision and minority interest
            
            
            50,615
            
            
            43,963Income
                tax provision
            
            
            (19,723
            )
            
            (18,809
            )Minority
                interest in (income) loss of consolidated subsidiary
            
            
            (544
            )
            
            865**Net
                income**
            
            
            $30,348
            
            
            $26,019Basic
                earnings per share
            
            
            $0.24
            
            
            $0.22Diluted
                earnings per share
            
            
            $0.24
            
            
            $0.22Basic
                weighted average shares outstanding
            
            
            125,958
            
            
            115,699
                (a
            )Diluted
                weighted average shares outstanding
            
            
            127,194
            
            
            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.




4


**NYSE
      GROUP, INC.**


**CONDENSED
      CONSOLIDATED STATEMENT OF CHANGES IN**


**STOCKHOLDERS’
      EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 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
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            34,859
            
            
            -
            
            
            -
            
            
            34,859Net
                income for the period from March 8 to March 31, 2006
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            1,709
            
            
            215
            
            
            1,924**Balance
                as of March 31, 2006**
            
            
            $-
            
            
            157,147
            
            
            $1,571
            
            
            $(65,569
            )
            
            $1,514,190
            
            
            $1,709
            
            
            $(7,166
            )
            
            $1,444,735




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




5


**NYSE
      GROUP, INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


(In
      thousands)


(Unaudited)




**Three
                months**
              **ended
                March 31,****2006**
            
            **2005****Cash
                flows from operating activities:**Net
                income
            
            
            $30,348
            
            
            $26,019**Adjustments
                to reconcile net income to net cash provided by operating
                activities*****:***Depreciation
                and amortization
            
            
            28,163
            
            
            26,173Loss
                on disposition of assets
            
            
            919
            
            
            -Minority
                interest
            
            
            1,104
            
            
            (1,103
            )Deferred
                income taxes
            
            
            (4,853
            )
            
            (752
            )Provision
                for losses on accounts receivable
            
            
            589
            
            
            1,342Stock
                based compensation
            
            
            34,660
            
            
            -Gain
                on sale of equity investment
            
            
            (20,925
            )
            
            -**Change
                in operating assets and liabilities:**Increase
                in accounts receivable, net
            
            
            (60,288
            )
            
            (21,527
            )Increase
                (decrease) in other assets
            
            
            (14,121
            )
            
            1,245Decrease
                in accounts payable and accrued expenses
            
            
            (67,729
            )
            
            (35,602
            )Decrease
                in SEC transaction fee payable
            
            
            (144,202
            )
            
            (658
            )Increase
                in deferred revenue
            
            
            203,637
            
            
            202,487Decrease
                (increase) in accrued employee benefits
            
            
            (36
            )
            
            5,707Increase
                (decrease) in other long term liabilities
            
            
            5,719
            
            
            (3,869
            )Net
                cash (used in) provided by operating activities
            
            
            (7,015
            )
            
            199,462**Cash
                flows from investing activities:**Cash
                acquired in Archipelago merger
            
            
            218,201
            
            
            -Sales
                of investment securities
            
            
            6,336,584
            
            
            2,773,739Purchases
                of investment securities
            
            
            (5,972,616
            )
            
            (2,846,278
            )Net
                sales (purchases) of securities purchased under agreements to
                resell
            
            
            85,688
            
            
            (85,476
            )Purchases
                of property and equipment
            
            
            (13,580
            )
            
            (24,293
            )Sale
                of equity investment
            
            
            23,436
            
            
            -Net
                cash provided by (used in) investing activities
            
            
            677,713
            
            
            (182,308
            )**Cash
                flows from financing activities:**Distribution
                to former Members
            
            
            (409,800
            )
            
            -Dividend
                to former Members
            
            
            (96,400
            )
            
            -Employee
                stock transactions
            
            
            346
            
            
            -Principal
                payment of capital lease obligations
            
            
            (1,705
            )
            
            -Net
                cash used in financing activities
            
            
            (507,559
            )
            
            -Net
                increase in cash and cash equivalents for the period
            
            
            163,139
            
            
            17,154Cash
                and cash equivalents at beginning of period
            
            
            43,492
            
            
            15,456Cash
                and cash equivalents at end of period
            
            
            $206,631
            
            
            $32,610**Supplemental
                disclosures:**Cash
                paid for income taxes
            
            
            $5,127
            
            
            -Cash
                paid for interest
            
            
            289
            
            
            $1,453**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.




6


**NYSE
      GROUP, INC.**


**NOTES
      TO THE 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,
      Inc., 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 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.






7





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 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 months ended
      March 31, 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 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 the 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.




8




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 the 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





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
            
            
            (234,375
            )Fair
                value of identifiable intangible assets
            
            
            586,600Other
            
            
            (5,040
            )Goodwill
            
            
            528,155Total
                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.


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




**Three
                months ended March 31,**2006
            
            
            2005Total
                revenues
            
            
            $598,964
            
            
            $519,188Net
                income
            
            
            59,979
            
            
            37,270Basic
                and diluted earnings per share
            
            
            $0.38
            
            
            $0.23





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




9


**Note
      4 - 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, of 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
      applied to members and member organizations.




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




**Three
                months ended****March
                31,**
            
            **Market**
            
            **SIAC
                Services**
            
            **Regulation**
            
            **Corporate
                Items and Eliminations**
            
            **Consolidated****2006**Revenues
            
            
            $416,078
            
            
            $96,741
            
            
            $76,324
            
            
            $(134,445
            )
            
            $454,698Operating
                income (loss)
            
            
            14,216
            
            
            (12,953
            )
            
            11,261
            
            
            -
            
            
            12,524**2005**Revenues
            
            
            $304,319
            
            
            $107,013
            
            
            $57,222
            
            
            $(118,084
            )
            
            $350,470Operating
                income (loss)
            
            
            18,769
            
            
            (3,400
            )
            
            18,001
            
            
            -
            
            
            33,370




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 months ended March 31,
      2006, SIAC incurred a $13.6 million stock-based compensation charge for certain
      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 customers.




10


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




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





Market
            Regulation
            SIAC
                ServicesEstimated
                Fair
              Value
            
            
            Useful
                Life
              (in
                years)
            
            
            Estimated
              Fair
                Value
            
            
            Useful
                Life
              (in
                years)
            
            
            Estimated
              Fair
                Value
            
            
            Useful
                Life
              (in
                years)Asset
                class:*Intangibles:*National
                securities exchange registration
            
            
            $511,000
            
            
            Indefinite
            
            
            -
            
            
            N/A
            
            
            -
            
            
            N/ACustomer
                relationships
            
            
            36,900
            
            
            20
            
            
            -
            
            
            N/A
            
            
            -
            
            
            N/ATrade
                names
            
            
            38,700
            
            
            20
            
            
            -
            
            
            N/A
            
            
            -
            
            
            N/ATotal
                intangibles
            
            
            $586,600
            
            
            
            
            
            -
            
            
            
            
            
            -Goodwill
            
            
            $528,155





Amortization
      expense and accumulated amortization for the intangible assets was approximately
      $0.3 million and zero for the three months ended March 31, 2006 and 2005,
      respectively.




The
      estimated future amortization expense of purchased intangible assets as of
      March
      31, 2006 is as follows (in thousands):




Year
                ending December 31,2006
                (period from April 1 to December 31, 2006)
            
            
            $2,8352007
            
            
            3,7802008
            
            
            3,7802009
            
            
            3,7802010
            
            
            3,780Thereafter
            
            
            57,330Total
            
            
            $75,285









**Note
      6 - 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.




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
      March 31, 2006,




11




the
      employees of NYSE Group held approximately 2.5 million stock options with a
      weighted average exercise price of $13.51 (2.0 million of which were exercisable
      at a weighted average exercise price of $13.60) and 1.4 million restricted
      stock
      units. As of March 31, 2006, the total aggregate intrinsic value of stock
      options outstanding and exercisable was $164.7 million and $133.6 million,
      respectively.




For
      the
      three months ended March 31, 2006, NYSE Group recorded $34.7 million of stock
      based compensation included in compensation in the condensed consolidated
      statement of income. As of March 31, 2006, there was approximately $29.8 million
      of total unrecognized compensation costs related to stock options and restricted
      stock units. This cost is expected to be recognized over approximately three
      years.




**Note
      7 - 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 and SERP plans will
      be
      frozen. Effective April 1, 2006, NYSE Group employees will be eligible to
      receive benefits from a new employer-funded defined contribution Retirement
      Accumulation Plan.




NYSE
      and
      SIAC expect to contribute the necessary amounts to meet the funding requirements
      under the Internal Revenue Code of 1986, as amended, for 2006.




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




**Pension
      Plan Cost**




**Three
                months ended March 31,****2006**
            
            **2005****NYSE**
            
            **SIAC**
            
            **NYSE**
            
            **SIAC**Cost
                of benefits earned
            
            
            $2,828
            
            
            $2,495
            
            
            $3,472
            
            
            $2,897Interest
                on benefits earned
            
            
            5,434
            
            
            2,966
            
            
            5,589
            
            
            3,508Net
                amortizations
            
            
            291
            
            
            154
            
            
            280
            
            
            44Estimated
                return on plan assets
            
            
            (7,771
            )
            
            (4,249
            )
            
            (7,412
            )
            
            (4,237
            )Recognized
                actuarial (gain) or loss
            
            
            -
            
            
            -
            
            
            -
            
            
            753Curtailment
                charge
            
            
            873
            
            
            -
            
            
            -
            
            
            -Aggregate
                pension expense
            
            
            $1,655
            
            
            $1,366
            
            
            $1,929
            
            
            $2,965





12






**SERP
      Plan Cost**




**Three
                  months ended March 31,****2006**
              
              
              **2005****NYSE**
              
              
              **SIAC**
              
              
              **NYSE**
              
              
              **SIAC**Cost
                  of benefits earned
              
              
              $205
              
              
              $188
              
              
              $515
              
              
              $231Interest
                  on benefits earned
              
              
              830
              
              
              378
              
              
              933
              
              
              401Net
                  amortizations
              
              
              (23
              )
              
              27
              
              
              384
              
              
              201Recognized
                  actuarial (gain) or loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -Aggregate
                  SERP expense
              
              
              $1,012
              
              
              $593
              
              
              $1,832
              
              
              $833




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, the 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 quarter (in
      thousands):




**Post
      Retirement Plan Cost**




**Three
                  months ended March 31,****2006**
              
              **2005****NYSE**
              
              **SIAC**
              
              **NYSE**
              
              **SIAC**Cost
                  of benefits earned
              
              
              $1,188
              
              
              $541
              
              
              $1,137
              
              
              $667Interest
                  on benefits earned
              
              
              2,198
              
              
              881
              
              
              1,750
              
              
              888Net
                  amortizations
              
              
              213
              
              
              329
              
              
              (61
              )
              
              390Aggregate
                  Post Retirement expense
              
              
              $3,599
              
              
              $1,751
              
              
              $2,826
              
              
              $1,945







**Note
      8 - 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 is included in gain on sale of
      equity investment in the condensed consolidated statements of income. The
      after-tax impact of this gain was included in the cash dividend paid to each
      former




13




NYSE
      member in connection with the merger of NYSE and Archipelago. As of March 31,
      2006, NYSE Group owns 50% of the outstanding preferred stock of
      DTCC.




For
      the
      three months ended March 31, 2006 and 2005, revenue from DTCC included in data
      processing in the condensed consolidated statements of income was $5.6 million
      and $8.9 million, respectively.




AMEX
      is a
      one-third owner of SIAC. For the three months ended March 31, 2006 and 2005,
      revenue from AMEX included in data processing in the condensed consolidated
      statements of income was $16.4 million and $18.0 million, respectively.




**Note
      9 - 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**
              **March
                31,****2006**
            
            
            **2005**Net
                income for basic and diluted earnings per share
            
            
            $30,348
            
            
            $26,019Shares
                of common and common stock equivalents:Weighted average shares used in basic computation
            
            
            125,958
            
            
            115,699Dilutive effect of:Employee stock options and restricted stock units
            
            
            1,236
            
            
            -Weighted average shares used in diluted computation
            
            
            127,194
            
            
            115,699Basic
                and diluted earnings per share
            
            
            $0.24
            
            
            $0.22







Options
      were outstanding to purchase 2.5 million shares of common stock and 1.4 million
      shares of restricted stock units as of March 31, 2006. For the three months
      ended March 31, 2005, there were no options or restricted stock units
      outstanding.




**Note
      10 - Litigation and Other Matters**




The
      following discussion of litigation and other matters is an update of matters
      discussed in 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. The following should be read in conjunction
      with
      these audited financial statements.




14





*In
      re
      NYSE Specialists Securities Litigation*





On
      February 17, 2006, the U.S. District Court for the Southern District of New
      York
      entered a final judgment in favor of the NYSE. Plaintiffs have filed a Notice
      of
      Appeal from that judgment.





*Merger
      Related Litigation*





On
      July
      12, 2005, Allison L. Wey filed a complaint in New York Supreme Court against
      the
      NYSE and the chief executive officer of the NYSE, John A. Thain, alleging causes
      of action for fraud, negligent misrepresentation and breach of fiduciary duty,
      and seeking unspecified compensatory damages. Ms. Wey, a former NYSE member,
      alleges that in connection with the sale of her NYSE membership on March 21,
      2005, she relied to her detriment on statements that Mr. Thain allegedly
      made to certain NYSE members on February 15, 2005 regarding the NYSE’s intention
      to “go public”. The NYSE and Mr. Thain believe that the claims are without
      merit. The NYSE and Mr. Thain filed an answer to the complaint on December
      23,
      2005; the case presently is in discovery.





On
      March
      2, 2006, Janet Hyman, a former NYSE member, filed a complaint in New York
      Supreme Court against the NYSE and Mr. Thain. The complaint seeks 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 Ms.
      Hyman’s sale of her NYSE membership on March 1, 2005.





On
      March
      15, 2006, Sylvia Lief, another former NYSE member who is represented by the
      same
      law firm as plaintiff Janet Hyman, filed a similar complaint in New York Supreme
      Court against the NYSE and Mr. Thain that also seeks compensatory damages for
      alleged breach of fiduciary duty based on a purported duty of defendants to
      disclose the NYSE’s merger discussions with Archipelago prior to Ms. Lief’s sale
      of her NYSE membership on March 2, 2005.





On
      April
      24, 2006, the NYSE and Mr. Thain filed motions to dismiss each of the complaints
      filed by Ms. Hyman and Ms. Lief, on the ground, among others, that they had
      no
      legal duty to make the disclosures alleged by plaintiffs.





*Compensation-Related
      Matters*





In
      January 2006, Kenneth Langone moved for summary judgment on the single cause
      of
      action asserted against him by the New York Attorney General; the court stated
      at a hearing that Mr. Langone’s motion would not be considered until depositions
      have been completed. On March 15, 2006, the court denied Richard A. Grasso’s
      motion to dismiss four of the six causes of action alleged by the New York
      Attorney General; Mr. Grasso has filed an appeal of that decision.





*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. Plaintiff 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. NYSE Group
      is presently evaluating the complaint, including its available defenses.




15





*Listing
      Claim Letter*




On
      September 7, 2005, the NYSE postponed commencement of trading of the stock
      of
      Life Sciences Research (“LSR”) on the NYSE. On or about April 5, 2006, NYSE
      Group received a letter from counsel for LSR enclosing a draft complaint
      alleging breach of alleged agreements with LSR, including to list LSR stock,
      and
      seeking specific performance, damages, and other relief. The letter expressed
      LSR’s interest in resolving the matter without litigation. Neither the
      likelihood of LSR’s actually commencing a lawsuit nor the ultimate outcome of
      such a suit reasonably can be determined at this time.





NYSE
      Group is defending a number of other actions and investigations, t he
      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.





16


**Note
      11 - Comprehensive Income**




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





Three
                  months
                ended
                  March 31,2006
              
              
              2005Net
                  income
              
              
              $30,348
              
              
              $26,019Unrealized
                  gains (losses) on available-for-sale securities
              
              
              1,490
              
              
              (5,690
              )Total
                  comprehensive income
              
              
              $31,838
              
              
              $20,329










**Note
      12 - Deferred Revenue**




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




March
              31,
                2006
            
            
            December
              31,
                2005Listing
                fees - original
            
            
            $412,169
            
            
            $414,887Listing
                fees - annual
            
            
            197,751
            
            
            -Registered
                representative and maintenance fees
            
            
            17,309
            
            
            10,180License
                fees
            
            
            10,614
            
            
            100Other
            
            
            7,574
            
            
            9,343Total
                deferred revenue
            
            
            $645,417
            
            
            $434,510Less:
                current portion
            
            
            $318,795
            
            
            $105,313Long-term
                portion
            
            
            $326,622
            
            
            $329,197






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):




March
              31,
                2006
            
            
            December
              31,
                2005Market
            
            
            $294,031
            
            
            $85,960Regulation
            
            
            19,917
            
            
            13,839SIAC
            
            
            4,847
            
            
            5,514Total
            
            
            $318,795
            
            
            $105,313







17


**Note
      13 - 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
      be less than the greater of $250,000 or 2% of the aggregate debit items arising
      from customer transactions.




As
      of
      March 31, 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
            
            
            $15,013ATSI
            
            
            6,811Net
                capital in excess of required net capital:ARCAS
            
            
            $14,763ATSI
            
            
            6,763Ratio
                of aggregate indebtedness to net capital:ARCAS
            
            
            N/AATSI
            
            
            0.11
                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 March 31, 2006, these subsidiaries had met their capital adequacy
      requirements.




**Note
      14- Subsequent Event**




In
      May
      2006, NYSE Group completed the secondary offering of 28.8 million shares of
      its
      common stock at $61.50 per share. These shares of common stock were sold by
      the
      selling stockholders, including certain underwriters or their affiliates and
      certain of NYSE Group’s executive officers. NYSE Group did not receive any of
      the proceeds from this offering.


18


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





You
      should read the following discussions together with our condensed consolidated
      financial statements and related notes as well as the forward looking statements
      included elsewhere in this report.





**Overview**





The
      following discussion and analysis of the financial condition and operations
      of
      NYSE Group should be read together with the condensed consolidated financial
      statements and notes included in this Form 10-Q. Certain prior period amounts
      presented in the discussion and analysis have been reclassified to conform
      to
      the current presentation.





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, a New York limited liability company (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.





**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.




19





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 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.




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
        (i) obtains new listings and services existing listings on the NYSE and NYSE
        Arca, (ii) provides access to trade execution, (iii) distributes market
        information to data subscribers and (iv) issues trading
        licenses.


SIAC
      Services provides communication and data processing operations and systems
      development functions to 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, of 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
      applied to member firms.





**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 each of the NYSE and NYSE Arca calculates its trading volumes
      and other operating measures is set forth below.




20




Three
                  Months EndedMarch
                  31,
                2006
              
              December
                31,
                  2005
              
              March
                  31,
                2005**Company
                  listings:**NYSE
                  listed issuers(1)
              2,682
              
              2,672
              
              2,630Number
                  of new issuer listings(2)
              29
              
              80
              
              38NYSE
                  share (%) of domestic qualified new operating company listings
                  proceeds
                  (IPOs)(3)
              83.5%
              
              81.3%
              
              95.8%NYSE
                  share (%) of international qualified new operating company listings
                  proceeds (IPOs)(4)
              79.1%
              
              100.0%
              
              100.0%**NYSE
                  Listed Issues**(5)**:**NYSE
                  Group Matched Volume(6)
              113,654
              
              110,299
              
              100,990NYSE
                  Group Handled Volume(7)
              115,689
              
              111,969
              
              102,507Total
                  NYSE Listed Consolidated Volume
              150,840
              
              142,319
              
              125,193**NYSE
                  Group Share of Total Consolidated Volume:**Matched
                  Volume(6)
              75.3%
              
              77.5%
              
              80.7%Handled
                  Volume(7)
              76.7%
              
              78.7%
              
              81.9%**NYSE
                  Arca and AMEX Listed Issues:**NYSE
                  Group Matched Volume(6)
              6,015
              
              6,077
              
              3,684NYSE
                  Group Handled Volume(7)
              6,917
              
              7,023
              
              4,238Total
                  NYSE Arca and AMEX Listed Consolidated Volume
              20,853
              
              20,257
              
              15,393**NYSE
                  Group Share of Total Consolidated Volume:**Matched
                  Volume(6)
              28.8%
              
              30.0%
              
              23.9%Handled
                  Volume(7)
              33.2%
              
              34.7%
              
              27.5%**Nasdaq
                  Listed Issues:**NYSE
                  Group Matched Volume(6)
              24,236
              
              19,593
              
              22,723NYSE
                  Group Handled Volume(7)
              30,072
              
              24,488
              
              28,650Total
                  Nasdaq Listed Consolidated Volume
              130,693
              
              110,568
              
              121,508**NYSE
                  Group Share of Total Consolidated Volume:**Matched
                  Volume(6)
              18.5%
              
              17.7%
              
              18.7%Handled
                  Volume(7)
              23.0%
              
              22.1%
              
              23.6%**Exchange-Traded
                  Funds**(5),(8)**:**NYSE
                  Group Matched Volume(6)
              8,553
              
              7,486
              
              4,828NYSE
                  Group Handled Volume(7)
              9,570
              
              8,405
              
              5,390Total
                  ETF Consolidated Volume
              22,370
              
              20,751
              
              16,406**NYSE
                  Group Share of Total Consolidated Volume:**Matched
                  Volume(6)
              38.2%
              
              36.1%
              
              29.4%Handled
                  Volume(7)
              42.8%
              
              40.5%
              
              32.9%**Equity
                  Options**(9)**:**NYSE
                  Group Options Contracts
              48.4
              
              46.4
              
              36.6Total
                  Consolidated Options Contracts
              446.5
              
              402.4
              
              318.6NYSE
                  Group Share of Total
              10.9%
              
              11.5%
              
              11.5%
  21
  **Three
                    Months Ended**March
                    31,
                  2006
                
                December
                  31,
                    2005
                
                March
                    31,
                  2005
 **Market
                  Information**(10)**:**Tape
                  A share of trades (%)
              87.04%
              
              91.18%
              
              91.72%Tape
                  B share of trades (%)
              41.87%
              
              45.71%
              
              47.09%Tape
                  C share of trades and shares (%)
              21.91%
              
              20.79%
              
              21.04%******Professional
                  subscribers******(Tape
                  A)
              415,612
              
              413,458
              
              411,086**Regulatory
                  Fees:**Gross
                  FOCUS revenues ($ billions)(11)
              61.1
              
              53.3
              
              37.8**Data
                  Processing Fees:**%
                  SIAC revenues from customers other than NYSE
              40.6%
              
              42.2%
              
              42.0%


(1)
            Number
                of listed operating companies, closed-end funds and ETFs as of period
                end.




(2)
            Includes
                initial public offerings and transfers of common stocks from other
                markets




(3)
            Proceeds
                raised by NYSE-listed domestic IPOs/Total proceeds raised by qualified
                domestic IPOs. Qualified domestic IPOs represent initial public offerings
                of U.S. issuers that meet the NYSE's initial listing criteria.




(4)
            Proceeds
                raised by NYSE-listed international IPOs/Total proceeds raised by
                qualified international IPOs. Qualified international IPOs represent
                the
                initial capital-raising event in the United States involving a listing
                by
                non-U.S. issuers that meet the NYSE's initial listing
                criteria.




(5)
            Includes
                NYSE Crossing Sessions 1, 2, 3 and
                4.




(6)
            Represents
                the total number of shares of equity securities and ETFs executed
                on NYSE
                Group's exchanges.




(7)
            Represents
                the total number of shares of equity securities and ETFs internally
                matched on the NYSE Group's exchanges or routed to and executed at
                an
                external market center. NYSE Arca routing includes
                odd-lots.




(8)
            Data
                included in previously identified
                categories.




(9)
            Includes
                trading in U.S. equity options contracts, not equity-index
                options.




(10)
            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.




(11)
              Gross
                  FOCUS revenues represent revenues generated by member broker-dealers
                  as
                  reported on their "FOCUS" report (as required by 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




22




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
      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. Although
      member organizations voted to eliminate the 2% cap in April 2005, that change
      has not yet been implemented. 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 remove 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.




The
      pricing structures of the NYSE and NYSE Arca are currently undergoing a
      fundamental examination as part of a broad strategic review of the 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.
      NYSE Group is currently exploring opportunities to develop new transaction
      pricing structures. NYSE Group intends to introduce a new NYSE transaction
      fee
      structure in 2006, although it is not possible at this time to predict the
      timing, scope, or potential impact of any such transaction fee changes, because
      these transaction fee changes are still being reviewed internally, and any
      proposed amendments have not yet been filed with the SEC for approval.
      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.




23




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 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




Data
      processing fees are charged by SIAC 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 regulation fees and market surveillance
      fees collected by NYSE Group. Member regulation fees are based on member
      organizations' gross FOCUS revenues, that is, revenues generated by member
      broker-dealers and reported on a six-month lag basis—as well as on the number of
      branch offices of member broker-dealers, and the number of registered
      representatives. 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




24




include
      revenue from applications, registration of branch offices 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 1,274 trading licenses were sold 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 from
      trading licenses for the period from March 8 to December 31, 2006. We will
      recognize this revenue 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.





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 supplemental executive retirement
      plan ("SERP") charges. Part-time help, primarily relates 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 Fees





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.




25





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.





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, we cannot assure you 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 the 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 issuer
      and
      member organization compliance with applicable law and the rules of the
      exchanges. We expect that NYSE Regulation will continue to levy fines for
      regulatory purposes as appropriate. The frequency in 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.





26


**Results
      of Operations**





The
      merger has been treated 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 March 31, 2006 Versus Three Months Ended March 31,
      2005





The
      following table sets forth NYSE Group's consolidated statements of income for
      the three months ended March 31, 2006 and March 31, 2005, as well as the
      percentage increase or decrease for each consolidated statement of income item
      for the three months ended March 31, 2006, as compared to such item for the
      three months ended March 31, 2005:





Three
                  months endedMarch
                  31,Dollars
                  (in Millions)
              2006
              
              2005
              
              Percent
                  Increase (Decrease)RevenuesActivity
                  assessment
              $139.2
              
              $
                  92.9
              
              49.8%Transaction
              76.2
              
              38.0
              
              100.6%Listing
              88.5
              
              86.0
              
              2.9%Market
                  data
              48.2
              
              44.2
              
              9.2%Data
                  processing
              39.3
              
              44.9
              
              (12.4)%Regulatory
              40.4
              
              29.8
              
              35.6%Licensing,
                  facility and other
              22.9
              
              14.7
              
              55.4%Total
                  revenues
              454.7
              
              350.5
              
              29.7%Section
                  31 fees
              (139.2)
              
              (92.9)
              
              49.8%Compensation
              (167.3)
              
              (127.8)
              
              30.9%Liquidity
                  payments
              (19.0)
              
              -
              
              100.0%Routing
                  and clearing fees
              (6.2)
              
              -
              
              100.0%Systems
                  and communications
              (29.9)
              
              (31.7)
              
              (5.8)%Professional
                  services
              (31.4)
              
              (28.1)
              
              12.1%Depreciation
                  and amortization
              (28.2)
              
              (26.2)
              
              7.6%Occupancy
              (18.8)
              
              (17.0)
              
              10.5%Marketing
                  and other
              (19.1)
              
              (14.1)
              
              35.7%Regulatory
                  fine income
              16.9
              
              20.6
              
              (18.1)Operating
                  income
              12.5
              
              33.3
              
              (62.5)%Investment
                  and other, net
              17.2
              
              10.6
              
              62.3%Gain
                  on sale of equity investment
              20.9
              
              -
              
              100.0%Income
                  before taxes and minority interest
              50.6
              
              43.9
              
              15.1%Provision
                  for income taxes
              (19.7)
              
              (18.8)
              
              4.9%Minority
                  interest in income of consolidated subsidiary
              (0.6)
              
              0.9
              
              (162.9)%Net
                  income
              $30.3
              
              $26.0
              
              16.6%









27


**Consolidated
      Results**





For
      the
      three months ended March 31, 2006, the results of operations of NYSE Group
      included the results of the NYSE and SIAC for the full quarter 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
      three months ended March 31, 2006, NYSE Group reported revenues (excluding
      activity assessment fees), operating income and net income of $315.5 million,
      $12.5 million and $30.3 million, respectively. This compares to revenues
      (excluding activity assessment fees), operating income and net income of $257.6
      million, $33.3 million and $26.0 million, respectively, for the three months
      ended March 31, 2005.





The
      $57.9
      million increase in revenues (excluding activity assessment fees), $20.8 million
      decrease in operating income and $4.3 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 period from March 8 to
      March 31, 2006 and contributed revenues of $58.5 million, which was the primary
      driver of the period-over-period increase.





*Lower
      operating income -* The
      period over period decrease in operating income of $20.8 million was the result
      of (i) $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, partially offset by (ii) NYSE
      Arca’s contribution to operating income of $9.8 million for the three months
      ended March 31, 2006.





*Improved
      net income -* Period
      over period, net income increased $4.3 million, despite the $20.8 million
      decrease in operating income, primarily as a result of the $20.9 million gain
      recognized on the sale of shares of DTCC common stock to certain DTCC
      participants in March 2006, and the $5.8 million contribution of NYSE Arca
      for
      the three months ended March 31, 2006.





**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
        (i) obtains new listings and retains existing listings on the NYSE and NYSE
        Arca, (ii) provides access to trade execution, (iii) distributes market
        information to data subscribers and (iv) issues trading licenses.
  SIAC
        Services provides communication and data processing operations and systems
        development functions to the NYSE and third party customers.
  28
  Regulation
        provides regulatory services performed by NYSE Regulation, of 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 on member firms.


Market
      Segment Results - Revenues


Three
                months endedMarch
                31,Dollars
                (in Millions)
            
            2006
            
            2005
            
            Percent
                Increase (Decrease)Activity
                assessment
            
            
            $139.2
            
            
            $92.9
            
            
            49.8
            %Transaction
            
            
            76.2
            
            
            38.0
            
            
            100.6
            %Listing
            
            
            88.5
            
            
            86.0
            
            
            2.9
            %Market
                data
            
            
            48.2
            
            
            44.2
            
            
            9.2
            %Market
                services provided to Regulation
            
            
            41.1
            
            
            28.5
            
            
            44.1
            %Licensing,
                facility and other
            
            
            22.9
            
            
            14.7
            
            
            55.4
            %Total
                revenues
            
            
            $416.1
            
            
            $304.3
            
            
            36.7
            %





*Transaction
      -* For the
      three months ended March 31, 2006, compared to the three months ended March
      31,
      2005, transaction fees increased by $38.2 million, or 100.6%, 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.





Three
                months endedMarch
                31,2006
            
            2005
            
            Percent
                Increase
              (Decrease)Dollars
                (in Millions)
            
            As
                reported
            
            As
                billed
            
            As
                reported
            
            As
                billed
            
            As
                reported
            
            As
                billedAnnual
                fees
            
            
            $65.8
            
            
            $65.8
            
            
            $63.6
            
            
            $63.6
            
            
            3.4
            %
            
            3.4
            %Original
                fees
            
            
            22.7
            
            
            18.9
            
            
            22.4
            
            
            21.5
            
            
            1.3
            %
            
            (12.0
            )%$88.5
            
            
            $84.7
            
            
            $86.0
            
            
            $85.1
            
            
            2.9
            %
            
            (0.4
            )%





For
      the
      three months ended March 31, 2006, compared to the three months ended March
      31,
      2005, listing fee revenue increased $2.5 million, or 2.9%, on an as reported
      basis.




29





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 $65.8 million on both an as reported and billed basis
      for
      the three months ended March 31, 2006, compared with $63.6 million on both
      an as
      reported and billed basis for the three months ended March 31, 2005, an increase
      of 3.4%. 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 $18.9 million for the three months ended
      March 31, 2006 compared with $21.5 million, a 12.0% decrease, for the same
      period a year ago. The decrease was due to reduced new issue listings, from
      38
      to 29, and the effects of a new pricing structure implemented in November
      2005.





*Market
      Data -* For the
      three months ended March 31, 2006, compared to the three months ended March
      31,
      2005, market data fees increased $4.0 million, or 9.2%, primarily from the
      contribution of NYSE Arca since the completion of the merger on March 7,
      2006.





*Market
      services provided to Regulation -* For
      the
      three months ended March 31, 2006, compared to the three months ended March
      31,
      2005, regulatory fees increased $12.6 million, or 44.1%. 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 increase was primarily driven by the
      additional investment in technology supporting Regulation.





*Licensing,
      facility and other -* For
      the
      three months ended March 31, 2006, compared to the three months ended March
      31,
      2005, licensing and facility fees increased $8.2 million, or 55.4%. License
      trading fees represented $4.5 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




Three
                months endedMarch
                31,Dollars
                (in Millions)
            
            
            2006
            
            
            2005
            
            Percent
                Increase
              (Decrease)Data
                processing - non- NYSE
            
            
            $39.3
            
            
            $44.9
            
            
            (12.4
            )%Data
                processing - NYSE
            
            
            57.4
            
            
            62.1
            
            
            (7.6
            )%Total
                revenues
            
            
            $96.7
            
            
            $107.0
            
            
            (9.6
            )%





*Data
      Processing Fees—Non-NYSE* .
      For the
      three months ended March 31, 2006, compared to the three months ended March
      31,
      2005, data processing fees decreased $5.6 million, or 12.4%, to




30




$39.3
      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.




*Data
      Processing Fees—NYSE* .
      For the
      three months ended March 31, 2006, compared to the three months ended March
      31,
      2005, data processing fees decreased $4.7 million, or 7.6%, to $57.4 million.
      These fees decreased due to cost reduction initiatives.




Regulation
      Segment Results - Revenues





Three
                months endedMarch
                31,Dollars
                (in Millions)
            
            
            2006
            
            
            2005
            
            Percent
                Increase (Decrease)Regulatory
            
            
            $40.4
            
            
            $29.8
            
            
            35.6
            %Regulatory
                services provided to Market
            
            
            35.9
            
            
            27.4
            
            
            30.9
            %Total
                revenues
            
            
            $76.3
            
            
            $57.2
            
            
            33.4
            %





*Regulatory
      Fees* - For
      the three months ended March 31, 2006, compared to the three months ended March
      31, 2005, regulatory fees increased $10.6 million, or ** 35.6%,
      to
      $40.4 million *.* For
      the
      three months ended March 31, 2006, NYSE Arca contributed regulatory fees of
      $0.8
      million. ** The
      remaining $9.8 million increase was due to higher reported Gross FOCUS revenues
      ($61.1 billion compared to $37.8 billion period over period).





*Regulatory
      services provided to Market -* For
      the
      three months ended March 31, 2006, compared to the three months ended March
      31,
      2005, regulatory services - Market increased $8.5 million or 30.9%. ** The
      increase reflects the additional headcount within Regulation and technology
      to
      support the regulation function.




31





Market
      Segment Results - Expenses





Three
                months endedMarch
                31,Dollars
                (in Millions)
            
            
            2006
            
            
            2005
            
            
            Percent
                Increase (Decrease)Section
                31 fees
            
            
            $139.2
            
            
            $92.9
            
            
            49.8
            %Compensation
            
            
            73.1
            
            
            45.7
            
            
            60.0
            %Liquidity
                payments
            
            
            19.0
            
            
            -
            
            
            100.0
            %Routing
                and clearing fees
            
            
            6.2
            
            
            -
            
            
            100.0
            %Regulatory
                services provided to Market
            
            
            35.9
            
            
            27.4
            
            
            30.9
            %Systems
                and communications
            
            
            10.1
            
            
            9.3
            
            
            8.5
            %SIAC
                support (1)
            
            
            53.8
            
            
            59.7
            
            
            (9.9
            )%Professional
                services
            
            
            21.8
            
            
            17.4
            
            
            25.4
            %Depreciation
                and amortization
            
            
            18.8
            
            
            15.0
            
            
            26.1
            %Occupancy
            
            
            8.0
            
            
            7.0
            
            
            14.1
            %Marketing
                and other
            
            
            15.9
            
            
            11.1
            
            
            42.7
            %Total
                expenses
            
            
            $401.8
            
            
            $285.5
            
            
            40.7
            %




(1)
            Market’s
                SIAC Support expense will not equal SIAC Services’ revenues from Data
                Processing Fees - 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.






Market
      Compensation


Three
                Months EndedMarch
                31,Dollars
              (in Millions)
            
            
            2006
            
            
            2005
            
            Percent
                Increase (Decrease)Salaries
                and bonus
            
            
            $35.6
            
            
            $30.4
            
            17.1
            %Stock-based
                compensation
            
            
            21.1
            
            
            -
            
            100.0
            %Benefits
                and other
            
            
            16.4
            
            
            15.3
            
            7.2
            %$73.1
            
            
            $45.7
            
            60.0
            %





For
      the
      three months ended March 31, 2006, compared to the three months ended March
      31,
      2005, compensation was up $27.4 million, or 60.0%. The employees of NYSE Arca
      accounted for $4.3 million of this increase following the completion of the
      merger on March 7, 2006. Excluding the impact of NYSE Arca’s consolidation
      during the three months ended March 31, 2006, compensation increased by $23.1
      million. This increase was primarily due to the $21.0 million charge
      recorded at the time of the merger following the immediate vesting of certain
      restricted stock units granted to NYSE Market employees. NYSE Group did not
      record any stock-based compensation in the same period a year ago.





*Liquidity
      payments.* For
      the
      three months ended March 31, 2006, NYSE Arca incurred liquidity payments of
      $19.0 million. NYSE Group did not incur any similar expenses in the same period
      a year ago.




32





*Routing
      and clearing fees* .
      For the
      three months ended March 31, 2006, NYSE Arca incurred routing and clearing
      fees
      of $6.2 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 March 31, 2006, compared to the three months ended March
      31,
      2005, Regulation support costs increased $8.5 million or 30.9%. ** The
      increase reflects the additional headcount within Regulation and technology
      to
      support the regulation function.





*Systems
      and SIAC Support.* For the
      three months ended March 31, 2006, compared to three months ended March 31,
      2005, systems related costs increased $0.8 million, or 8.5%. For the three
      months ended March 31, 2006, the newly acquired operations of NYSE Arca
      accounted for $1.7 million of the $10.1 million of systems and communications.
      Other systems and communications expenses decreased $0.9 million as a result
      of
      cost reduction initiatives. SIAC support costs decreased by 9.9% to $53.8
      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
      three months ended March 31, 2006, compared to the year ended March 31, 2005,
      professional services increased $4.4 million or 25.4%. This was primarily due
      to increased
      consulting fees related to our continued integration efforts as part of the
      merger with Archipelago.




*Depreciation
      and Amortization.* For the
      three months ended March 31, 2006, compared to the three months ended March
      31,
      2005, depreciation and amortization increased $3.8 million, or 26.1%. The
      operations of NYSE Arca represented $2.4 million of the increase following
      the
      March 7, 2006 completion of our merger. The remaining $1.4 million increase
      was
      chiefly associated with increased capital expenditures throughout 2005 on
      technology and infrastructure.





*Occupancy.* For
      the
      three months ended March 31, 2006, compared to the three months ended March
      31,
      2005, occupancy increased $1.0 million or 14.1%, 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
      three months ended March 31, 2006, compared to the three months ended March
      31,
      2005, marketing and other expenses increased $4.8 million, or 42.7%, primarily
      as a result of increased advertising and promotion activity as part of the
      merger.




33





SIAC
      Services Segment Results - Expenses






Three
                months endedMarch
                31,Dollars
                (in Millions)
            
            
            2006
            
            
            2005
            
            Percent
                Increase (Decrease)Expenses:Compensation
            
            
            $61.7
            
            
            $57.3
            
            
            7.6
            %Systems
                and communications
            
            
            19.5
            
            
            22.2
            
            
            (12.2
            )%Professional
                services
            
            
            10.0
            
            
            11.2
            
            
            (10.7
            )%Depreciation
                and amortization
            
            
            8.3
            
            
            10.0
            
            
            (17.5
            )%Occupancy
            
            
            8.3
            
            
            7.6
            
            
            9.9
            %Marketing
                and other
            
            
            1.9
            
            
            2.1
            
            
            (6.7
            )%Total
                expenses
            
            
            $109.7
            
            
            $110.4
            
            
            (0.7
            )%





SIAC
      Services Compensation





Three
                months endedMarch
                31,Dollars
                (in Millions)
            
            
            2006
            
            
            2005
            
            Percent
                Increase (Decrease)Salaries
                and bonus
            
            
            $36.6
            
            
            $42.1
            
            
            (13.0
            )%Stock-based
                compensation
            
            
            13.6
            
            
            -
            
            
            100.0
            %Benefits
                and other
            
            
            11.5
            
            
            15.2
            
            
            (24.3
            )%$61.7
            
            
            $57.3
            
            
            7.6
            %





*Compensation* .
      For the
      three months ended March 31, 2006, compared to the three months ended March
      31,
      2005, compensation increased $4.4 million, or 7.6%. This increase was primarily
      due to a $13.6 million charge recorded in connection with the immediate vesting
      of certain restricted stock units granted to SIAC employees at the time of
      the
      merger, which was partially offset by a $9.2 million, or 16.1%, decrease of
      salaries, bonuses and benefits in connection with cost reduction initiatives
      and
      the resulting decrease in average headcount.




*Systems*  *and
      communications* .
      For the
      three months ended March 31, 2006, compared to the three months ended March
      31,
      2005, systems and communication expenses decreased $2.7 million, or 12.2%,
      to
      $19.5 million, primarily as a result of cost containment initiatives.





*Professional
      Services* .
      For the
      three months ended March 31, 2006, compared to the three months ended March
      31,
      2005, professional services decreased $1.2 million, or 10.7%, to $10.0 million.
      Lower average contract staff and decreased temporary support for trading
      operations contributed to the reduction.





*Depreciation
      and Amortization* .
      For the
      three months ended March 31, 2006, compared to the three months ended March
      31,
      2005, depreciation and amortization expense decreased $1.7 million, or 17.5%
      period over period, to $8.3 million.





*Occupancy* .
      For the
      three months ended March 31, 2006, compared to the three months ended March
      31,
      2005, occupancy costs increased by $0.7 million, or 9.9%, to $8.3 million due
      to
      increased operating expenses.




34





*Marketing
      and other* .
      For the
      three months ended March 31, 2006, compared to the three months ended March
      31,
      2005, marketing and other expenses remained relatively flat period over
      period.




Regulation
      Segment Results - Expenses






Three
                months endedMarch
                31,Dollars
                (in Millions)
            
            
            2006
            
            
            2005
            
            
            Percent
                Increase (Decrease)Compensation
            
            
            $34.8
            
            
            $26.1
            
            
            32.9
            %Market
                services provided to Regulation
            
            
            41.1
            
            
            28.5
            
            
            44.1
            %Systems
                and communications
            
            
            0.3
            
            
            0.2
            
            
            51.2
            %Professional
                services
            
            
            0.9
            
            
            0.5
            
            
            100.6
            %Depreciation
                and amortization
            
            
            1.1
            
            
            1.3
            
            
            (11.0
            )%Occupancy
            
            
            2.5
            
            
            2.4
            
            
            1.8
            %Marketing
                and other
            
            
            1.3
            
            
            0.9
            
            
            45.9
            %Total
                expenses
            
            
            $82.0
            
            
            $59.9
            
            
            36.9
            %





Regulation
      Compensation




Three
                  months endedMarch
                  31,Dollars
                  (in Millions)
              
              
              2006
              
              
              2005
              
              
              Percent
                  Increase (Decrease)Salaries
                  and bonus
              
              
              $22.6
              
              
              $19.2
              
              
              17.2
              %Deferred
                  compensation award
              
              
              4.9
              
              
              -
              
              
              100.0
              %Benefits
                  and other
              
              
              7.3
              
              
              6.9
              
              
              5.8
              %$34.8
              
              
              $26.1
              
              
              32.9
              %







*Compensation* .
      For the
      three months ended March 31, 2006, compared to the three months ended March
      31,
      2005, compensation increased $8.7 million, or 32.9%, to $34.8 million. This
      increase was primarily due to the $4.9 million charge recorded in relation
      to
      the immediate vesting and recognition of certain cash awards granted to NYSE
      Regulation employees at the time of the merger coupled with an increase in
      the
      average Regulation headcount.





*Market
      services provided to Regulation.* For
      the
      three months ended March 31, 2006, compared to the three months ended March
      31,
      2005, market support costs increased $12.6 million, or 44.1%. These services
      are
      provided by Market to support the operations of Regulation. The increase was
      primarily driven by the additional investment in technology supporting
      Regulation.





Regulation’s
      other operating expenses, including systems and communications, professional
      services, 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 March 31, 2006, compared to the three months ended March
      31,
      2005, fine income decreased $3.7 million, or 18.1%. Regulatory fines results
      from actions taken by Regulation in its oversight of Market constituents and
      accordingly may vary period over period.




35





Investment
      and Other Income, Net





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





Three
                months endedMarch
                31,Dollars
                (in Millions)
            
            
            2006
            
            
            2005Investment
                income, net
            
            
            $9.9
            
            
            $6.7Insurance
                claims
            
            
            4.3
            
            
            3.1Other
            
            
            3.0
            
            
            0.8Total
            
            
            $17.2
            
            
            $10.6





The
      increase in investment income, net, is primarily attributable to the increased
      interest rates on our cash balances and investment portfolio.




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
      three months ended March 31, 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 three months ended March 31, 2006 and
      March 31, 2005 was 39.0% and 42.8%, respectively. The decrease was primarily
      associated with the $20.9 million gain on sale of an equity investment during
      2006, which was taxed at approximately 35%.




**Liquidity
      and Capital Resources**





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





NYSE
      Group’s working capital was $488.6 million at March 31, 2006 and capital
      expenditures equaled $13.6 million for the three months ended March 31, 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.




36





At
      March
      31, 2006, NYSE Group had $206.6 million of cash and cash equivalents, an
      increase of $163.1 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 $983.0 million at March 31, 2006 and, when combined with cash
      and
      cash equivalents, represented 88.6% 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 March 31, 2006, NYSE Group did not have any
      significant restricted cash balance.





With
      respect to investment activities, the boards of directors of the NYSE 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.
      The
      NYSE'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 the NYSE'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 and SIAC must not exceed two years. Both the NYSE and SIAC
      periodically review their respective policies and investment managers.





As
      of
      March 31, 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
      used in operating activities equaled $7.0 million for the three months ended
      March 31, 2006, consisting of net income of $30.3 million and the effects of
      non-cash items, such as depreciation, which does not adversely affect cash
      flows. Also, during the first quarter of 2006, NYSE Group remitted $232.1
      million to the SEC for Section 31 fees.





Net
      cash
      provided by investing activities equaled $677.7 million for the three months
      ended March 31, 2006 .
      NYSE
      Group acquired $218.2 million of cash in connection with the merger. Net sales
      in investment securities of $449.6 million were liquidated to 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 three months ended March 31,
      2006.




37




**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 reported by the NYSE and Archipelago in NYSE Group’s
      annual report on Form 10-K.





**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 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 or in other factors that could significantly affect
      our
      internal control over financial reporting subsequent to the date of their
      evaluation.




**PART
      II. OTHER INFORMATION**




**Item
      1. Legal Proceedings**




For
      the
      three months ended March 31, 2006, there were no material developments with
      regard to our previously reported matters and no other matters were reportable
      during the period with the exception of the following matters:




*In
      re
      NYSE Specialists Securities Litigation*





On
      February 17, 2006, the U.S. District Court for the Southern District of New
      York entered a final judgment in favor of the NYSE. Plaintiffs have
      appealed that judgment.





*Merger
      Related Litigation*





On
      July
      12, 2005, Allison L. Wey filed a complaint in New York Supreme Court against
      the
      NYSE and the chief executive officer of the NYSE, John A. Thain, alleging causes
      of action for fraud, negligent misrepresentation and breach of fiduciary duty,
      and seeking unspecified compensatory damages. Ms. Wey, a former NYSE member,
      alleges that in connection with the sale of her NYSE membership on March 21,
      2005, she relied to her detriment on statements that Mr. Thain allegedly made
      to
      certain NYSE members on February 15, 2005 regarding the NYSE’s intention to “go
      public”. The NYSE and Mr. Thain believe that the claims are without merit. The
      NYSE and Mr. Thain filed an answer to the complaint on December 23, 2005; the
      case presently is in discovery.





On
      March
      2, 2006, Janet Hyman, a former NYSE member, filed a complaint in New York
      Supreme Court against the NYSE and Mr. Thain. The complaint seeks 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 Ms.
      Hyman’s sale of her NYSE membership on March 1, 2005.





On
      March
      15, 2006, Sylvia Lief, another former NYSE member who is represented by the
      same
      law firm as plaintiff Janet Hyman, filed a similar complaint in New York Supreme
      Court against the




38




NYSE
      and
      Mr. Thain that also seeks 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 Ms. Lief’s sale of her NYSE membership on
      March 2, 2005.





On
      April
      24, 2006, the NYSE and Mr. Thain filed motions to dismiss each of the complaints
      filed by Ms. Hyman and Ms. Lief, on the ground, among others, that they had
      no
      legal duty to make the disclosures alleged by plaintiffs.





*Compensation-Related
      Matters*




In
      January 2006, Kenneth Langone moved for summary judgment on the single cause
      of
      action asserted against him by the New York Attorney General; the court stated
      at a hearing that Mr. Langone’s motion would not be considered until depositions
      have been completed. On March 15, 2006, the court denied Richard A. Grasso’s
      motion to dismiss four of the six causes of action alleged by the New York
      Attorney General; Mr. Grasso has filed an appeal of that decision.





*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, BMS and five unnamed corporations, seeking compensatory
        and
        punitive damages for alleged gender discrimination and retaliation in violation
        of federal and local laws. Plaintiff 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. NYSE
        Group
        is evaluating the complaint, including its available defenses.
 
 *Listing
        Claim Letter*
 
 On
        September 7, 2005, the NYSE postponed commencement of trading of the stock
        of
        LSR on the NYSE. On or about April 5, 2006, NYSE Group received a letter
        from
        counsel for LSR enclosing a draft complaint alleging breach of alleged
        agreements with LSR, including to list LSR stock, and seeking specific
        performance, damages, and other relief. The letter expressed LSR’s interest in
        resolving the matter without litigation. Neither the likelihood of LSR’s
        actually commencing a lawsuit nor the ultimate outcome of such a suit reasonably
        can be determined at this time.
 
 NYSE
        Group is defending a number of other actions and investigations, t he
        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.




39







**ITEM
      6. EXHIBITS**




**Exhibit
                No.**
            
            **Description**2.1
            
            Agreement
                and Plan of Merger, dated as of April 20, 2005, as amended and restated
                as
                of July 20, 2005, by and among New York Stock Exchange, Inc., Archipelago
                Holdings, Inc., NYSE Merger Sub LLC, NYSE Merger Corporation Sub,
                Inc. and
                Archipelago Merger Sub, Inc.12.2
            
            Amendment
                No. 1, dated as of October 20, 2005, to the Amended and Restated
                Agreement
                and Plan of Merger, by and among New York Stock Exchange, Inc.,
                Archipelago Holdings, Inc., NYSE Merger Sub LLC, NYSE Merger Corporation
                Sub, Inc. and Archipelago Merger Sub, Inc.12.3
            
            Amendment
                No. 2, dated as of November 2, 2005, to the Amended and Restated
                Agreement
                and Plan of Merger, by and among New York Stock Exchange, Inc.,
                Archipelago Holdings, Inc., NYSE Merger Sub LLC, NYSE Merger Corporation
                Sub, Inc. and Archipelago Merger 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 Plan410.2
            
            NYSE
                Group, Inc. 2006 Annual Performance Bonus Plan510.3
            
            Amendment
                No. 4 to the New York Stock Exchange, Inc. Supplemental Executive
                Savings
                Plan610.4
            
            New
                York Stock Exchange. Inc. Severance Pay Plan731.1
            
            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 Annex A to the registrant’s registration statement
          of Form S-4 (File No. 333-126780) filed on
          July 21, 2005.
 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 registration
          statement on Form S-8 (File No. 333-132284) filed on March 8,
          2006.
 5 Incorporated by reference to Exhibit 10.22 to the registrant’s registration
          statement on Form S-1 (File No. 333-132390) filed on March 13,
          2006.
 6 Incorporated by reference to Exhibit 10.32 to the registrant’s annual report on
          Form 10-K (File No. 1-32829) filed on March 31, 2006.
 7 Incorporated by reference to Exhibit 10.43 to the registrant’s annual report on
          Form 10-K (File No. 1-32829) filed on March 31, 2006.









40





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:





Date: 
                May 15, 2006
            NYSE
                Group, Inc.By:
                /s/ Nelson
                ChaiNelson ChaiChief Financial Officer








41