SCHEDULE 14A
                                 (Rule 14a-101)

                     INFORMATION REQUIRED IN PROXY STATEMENT

                            SCHEDULE 14A INFORMATION

           Proxy Statement Pursuant to Section 14(a) of the Securities
                              Exchange Act of 1934

Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|

Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by
    Rule 14a-6(e)(2))
 X  Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Materials Pursuant to Rule 14a-11(c) or Rule 14a-12

                      NATIONAL DISCOUNT BROKERS GROUP, INC.
-------------------------------------------------------------------------------
                (Name of Registrant as Specified in its Charter)

-------------------------------------------------------------------------------
    (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box): |X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

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                                      N.A.

     2)  Aggregate number of securities to which transaction applies:
                                      N.A.

     3) Per unit  price  or  other  underlying  value  of  transaction  computed
        pursuant to Exchange  Act Rule 0-11:  (set forth the amount on which the
        filing fee is calculated and state how it was determined):
                                      N.A.

     4)  Proposed maximum aggregate value of transaction:
                                      N.A.

     5)  Total fee paid:
                                      N.A.

|_| Fee paid previously with preliminary materials:

-------------------------------------------------------------------------------

|_|  Check box if any part of the fee is offset as provided by Exchange Act Rule
     0-11(a)(2)  and identify the filing for which the  offsetting  fee was paid
     previously.  Identify the previous filing by registration statement number,
     or the form or schedule and the date of its filing.

     1)  Amount Previously Paid:
     2)  Form, Schedule or Registration Statement No.:
     3)  Filing Party:
     4) Date Filed:




<PAGE>


                      National Discount Brokers Group, Inc.
                            10 Exchange Place Centre
                          Jersey City, New Jersey 07302


      --------------------------------------------------------------------
                    Notice Of Annual Meeting Of Stockholders
                           To Be Held October 25, 2000
      --------------------------------------------------------------------





The 2000 Annual Meeting of the Stockholders of National  Discount Brokers Group,
Inc. (the "Company") will be held at 90 Hudson Street,  1st Floor,  Jersey City,
New Jersey on October 25, 2000 at 4:00 p.m.,  New Jersey time for the  following
purposes:

(1)      To elect three Class 1 directors  to hold office for a term of three
         years or until their successors  have been duly  elected and qualified.

(2)      To approve the NDB Capital Markets CEO Bonus Plan.

(3)      To approve an amendment to the 2000 National Discount Brokers Group,
         Inc. Compensation Plan.

(4)      To ratify the appointment of PricewaterhouseCoopers LLP as the
         Company's independent auditors for the fiscal year ending May 31, 2001.

(5)      To transact such other business as may properly come before the meeting
         or any adjournment thereof.

The Board of Directors  has fixed the close of business on August 29,  2000,  as
the record date for  determining the  stockholders  entitled to notice of and to
vote at the meeting and any adjournment thereof.

Your  attention  is directed to the  accompanying  Proxy  Statement  for further
information regarding each proposal to be made.

All  stockholders  are asked to complete,  sign and date the enclosed  proxy and
return it promptly by mail in the enclosed self-addressed  envelope,  which does
not require postage if mailed in the United States.

                                              By Order of the Board of Directors


                                              Frank E. Lawatsch, Jr.
                                              Secretary



September 6, 2000
Jersey City, New Jersey



<PAGE>







                      National Discount Brokers Group, Inc.
                            10 Exchange Place Centre
                          Jersey City, New Jersey 07302

      --------------------------------------------------------------------
               Proxy Statement For Annual Meeting of Stockholders
      --------------------------------------------------------------------

This Proxy  Statement  is  furnished  by the Board of  Directors  (the "Board of
Directors" or the "Board") of National Discount Brokers Group,  Inc., a Delaware
corporation (the  "Company"),  in connection with the solicitation of proxies to
be used at the Annual Meeting of Stockholders  (the "Meeting") to be held at the
90 Hudson  Street,  Jersey City, New Jersey on October 25, 2000 at 4:00 p.m. New
Jersey  time,  and at any  adjournment  thereof.  This Proxy  Statement  and the
accompanying Annual Report, Notice and Proxy are being mailed to stockholders on
or about September 7, 2000. The principal  executive  offices of the Company are
located at 10 Exchange Place Centre, Jersey City, New Jersey 07302.

Only  stockholders of record at the close of business on the record date, August
29, 2000 (the "Record  Date") will be entitled to vote at the Meeting and at all
adjournments thereof.

On August 29,  2000,  there were  outstanding  and  entitled to vote  21,002,604
shares of the  Company's  common  stock,  $.01 par value per share (the  "Common
Stock").  Each outstanding share of Common Stock is entitled to one vote on each
matter to be voted upon.  A majority of the shares of Common  Stock  entitled to
vote at the Meeting will  constitute a quorum for the  transaction  of business.
Holders of Common Stock have no cumulative voting rights.

                                Voting Of Proxies

If a proxy is properly  signed by a stockholder  and is not revoked,  the shares
represented  thereby will be voted at the Meeting in the manner specified on the
proxy,  or if no manner is specified  with respect to any matter  therein,  such
shares  will be voted by the persons  designated  therein  (with  respect to the
matters as to which the  stockholder is entitled to vote) (a) "FOR" the election
of each of Dennis Marino, James H. Lynch, Jr. and Russell C. Horowitz as Class 1
directors of the Company,  (b) "FOR" the approval of the NDB Capital Markets CEO
Bonus Plan, (c) "FOR" an amendment of the 2000 National  Discount Brokers Group,
Inc.  Compensation  Plan,  (d)  "FOR" the  ratification  of the  appointment  of
PricewaterhouseCoopers  LLP as the Company's independent auditors for the fiscal
year ending May 31, 2001,  and (e) in connection  with the  transaction  of such
other business as may properly be brought before the Meeting, in accordance with
the judgment of the person or persons  voting the proxy.  If any of the nominees
for director is unable to serve or for good cause will not serve,  an event that
is not anticipated by the Company,  the shares  represented by the  accompanying
proxy  will be  voted  for a  substitute  nominee  designated  by the  Board  of
Directors or the  Nominating  Committee  thereof or the Board of  Directors  may
determine to reduce the size of the Board of Directors.

A proxy  may be  revoked  by the  stockholder  at any time  prior to the  voting
thereof  by giving  notice of  revocation  in writing  to the  Secretary  of the
Company,  by duly  executing  and  delivering  to the Secretary of the Company a
proxy bearing a later date or by voting in person at the Meeting.

Directors  of the  Company  will be  elected by a  plurality  of the vote of the
outstanding shares of Common Stock present,  in person or by proxy, and entitled
to vote at the  Meeting.  The  affirmative  vote of the  holders  of at  least a
majority of the  outstanding  shares of Common  Stock  present,  in person or by
proxy,  and entitled to vote at the Meeting is required for the ratification and
approval  of any  other  matter  which may be put to a  stockholder  vote at the
Meeting,  unless otherwise  required by the Delaware General  Corporation Law or
the Company's Restated

<PAGE>


Certificate of Incorporation,  as amended. Except for the election of directors,
as to any particular  proposal,  abstentions will have the same effect as a vote
against that proposal,  and broker non-votes will not be counted as votes for or
against the  proposal,  and will not be included in counting the number of votes
necessary  for  approval of the  proposal.  Votes  cast,  either in person or by
proxy,  will be  tabulated  by  American  Stock  Transfer & Trust  Company,  the
Company's transfer agent.


                 Voting Securities and Principal Holders Thereof

Security Ownership Of Certain Beneficial Owners

The following table sets forth certain information, as of August 29, 2000 (as of
July 7,  2000 with  respect  to  Deutsche  Bank AG),  regarding  the  beneficial
ownership  of the Common  Stock by each  person  known by the  Company to be the
beneficial  owner of more than five  percent  of the  outstanding  shares of the
Common Stock.  The Company has been advised that each  stockholder  listed below
has sole  voting and  dispositive  power  with  respect  to such  shares  unless
otherwise  noted  in  the  footnotes  following  the  table.   Pursuant  to  the
Stockholder Agreement between the Company and Deutsche Bank AG, Deutsche Bank AG
has agreed that as long as Deutsche Bank AG and its affiliates beneficially own,
for their own account,  in the  aggregate  10% or more of any class or series of
the  voting  capital  stock of the  Company,  it will  either  vote,  or execute
consents with respect to, all shares of the voting  capital stock of the Company
owned  by it or  its  affiliates  in  favor  of  all  proposals  recommended  by
management of the Company,  or if Deutsche Bank AG and its affiliates intend not
to vote, or execute consents,  to vote or execute consents respecting its shares
in the same  proportion  (for,  against and  abstaining) as all other holders of
voting  capital  stock of the  Company.  As of the Record Date for the  Meeting,
Common Stock is the only class or series of voting  capital stock of the Company
outstanding.
<TABLE>
<CAPTION>

                Name and Address                            Amount
                of Beneficial Owner                 Of Beneficial Ownership              Percentage of Class


                <S>                                       <C>                                   <C>
                Arthur Kontos
                10 Exchange Place Centre
                Jersey City, NJ 07302                     2,887,000 (1)                         13.62%

                Peter R. Kellogg
                120 Broadway
                New York, NY 10271                        2,940,222 (2)                         14.00%

                Deutsche Bank AG
                31 West 52nd Street
                New York, New York  10019                 3,419,582 (3)                         16.28%
                Attn:  General Counsel

<FN>
(1)  Comprised  of  1,357,854  shares of Common  Stock  held by Mr.  Kontos  and
     197,387 shares of Common Stock underlying Mr. Kontos' currently exercisable
     stock  options.  Also includes  125,000  shares of Common Stock held by the
     Arthur Kontos  Foundation,  753,562  shares of Common Stock held by limited
     partnerships  of which Mr.  Kontos is the general  partner and Mr.  Kontos'
     children are sole limited  partners,  and 453,197  shares over which he has
     sole voting  power which are subject to a voting trust  agreement  with his
     former wife.
</FN>

<FN>
(2)  Comprised of 730,942 shares of Common Stock held by Mr. Kellogg,  1,850,000
     shares  of  Common  Stock  held  by  IAT  Reinsurance   Syndicate  Ltd.,  a
     corporation,  all of whose voting stock is held by Mr. Kellogg and of which
     Mr.  Kellogg is president,  and 346,500  shares of Common Stock held by the
     Cynthia and Peter Kellogg Foundation and 12,780 shares of Common Stock held
     by  the J.  C.  Kellogg  Foundation.  Mr.  Kellogg  has  shared  beneficial
     ownership over the shares owned by the Cynthia and Peter Kellogg Foundation
     and the J. C. Kellogg Foundation.
</FN>

<FN>
(3)  Based upon  Amendment  No. 1 to Form 13D filed by Deutsche  Bank AG,  dated
     July 7,  2000,  Deutsche  Bank AG  reports  that it has  shared  voting and
     dispositive  power with respect to all shares of Common Stock  beneficially
     owned by it.
</FN>
</TABLE>


<PAGE>



Security Ownership of Management

The  following  table sets forth  certain  information,  as of August 29,  2000,
regarding  the  beneficial  ownership of the Common  Stock by each  director and
named executive officer (see "Compensation of Directors and Executive Officers")
of the Company  and by all  directors  and  executive  officers as a group.  The
Company has been advised that each stockholder  listed below has sole voting and
dispositive  power with respect to such shares,  unless  otherwise  noted in the
footnotes  below.  NDB Capital  Markets  Corporation  ("NDBC") is a wholly owned
subsidiary  of the  Company  specializing  in the  wholesale  market  making  of
over-the-counter  securities.  National Discount Brokers Corporation ("NDB.com")
is a wholly owned  subsidiary  of the Company  specializing  in offering  retail
discount brokerage services.
<TABLE>
<CAPTION>

                                                                 Number of Shares      Percentage of Common
             Name of Beneficial Owner                           Beneficially Owned     Stock Beneficially Owned

             <S>                                                  <C>           <C>               <C>
             Arthur Kontos,                                       2,887,000     (1)               13.62
             President and Chief Executive Officer
             of the Company, Vice Chairman of the
             Board and Director

             James H. Lynch, Jr., Chairman of the                    40,100     (2)                *
             Board and Director

             John P. Duffy, Director                                 64,000     (3)                *

             Dennis Marino,                                         166,529     (4)                *
             Executive Vice President and Chief
             Administrative Officer of the Company;
             Chairman of the Board of NDB.com

             Thomas W. Neumann,                                     214,282     (5)                1.02
             Executive Vice President of the Company;
             President and Chief Executive Officer of NDBC

             Ralph N. Del Deo, Director                              35,000     (6)                *

             James Romano,                                           27,431     (7)                *
             Executive Vice President, Capital Markets
             of NDBC

             Charles Kirkland Kellogg, Director                      11,500     (8)                *

             Russell C. Horowitz, Director                          265,000     (9)                1.26

             Kevin Parker, Director                                       0                        *

             Denise Isaac, Executive Vice President and              25,682     (10)               *
             Treasurer of the Company

             All Directors and Executive Officers as a            3,744,624     (11)              17.48
             Group (13 persons)

<FN>
                 * Less than 1%
</FN>



<PAGE>



<FN>
(1)           Consists of 1,357,854  shares of Common Stock held by Mr.  Kontos,
              197,387  shares of  Common  Stock  underlying  Mr.  Kontos'  stock
              options  exercisable  within 60 days of August 29,  2000,  125,000
              shares of  Common  Stock  held by the  Arthur  Kontos  Foundation,
              753,562  shares of Common  Stock held by limited  partnerships  of
              which Mr. Kontos is the general  partner and Mr. Kontos'  children
              are sole  limited  partners  and 453,197  shares over which he has
              only  sole  voting  power  which  are  subject  to a voting  trust
              agreement with his former wife.
</FN>

<FN>
(2)           Consists of 35,100  shares of Common Stock held by Mr. Lynch and
              5,000 shares of Common Stock  underlying  Mr.  Lynch's  stock
              options exercisable within 60 days of August 29, 2000.
</FN>

<FN>
(3)           Consists of 55,000 shares of Common Stock held by Mr. Duffy, 4,000
              shares of Common Stock held in trust for Mr. Duffy's  children and
              5,000  shares of  Common  Stock  underlying  Mr.  Duffy's  options
              exercisable within 60 days of August 29, 2000.
</FN>

<FN>
(4)           Consists of 116,132  shares of Common Stock held by Mr.  Marino
              and 50,397  shares of Common  Stock  underlying  Mr.  Marino's
              stock options exercisable within 60 days of August 29, 2000.
</FN>

<FN>
(5)           Consists of 121,477  shares of Common Stock held by Mr.  Neumann
              and 92,805 shares of Common Stock  underlying  Mr.  Neumann's
              stock options exercisable within 60 days of August 29, 2000.
</FN>

<FN>
(6)           Consists  of 20,000  shares of Common  Stock held by Mr.  Del Deo,
              10,000  shares of Common  Stock held by his wife and 5,000 shares
              of Common Stock underlying Mr. Del Deo's options exercisable
              within 60 days of August 29, 2000.
</FN>

<FN>
(7)           Consists of 27,431 shares of Common Stock underlying  Mr. Romano's
              stock options  exercisable  within 60 days of August 29, 2000.
</FN>

<FN>
(8)           Consists of 6,500 shares of Common Stock held by Mr.  Kellogg and
              5,000 shares Common Stock  underlying  Mr.  Kellogg's  stock
              options exercisable within 60 days of August 29, 2000.
</FN>

<FN>
(9)           Consists of 260,000 shares of Common Stock held by Go2Net, Inc., a
              corporation  of  which  Mr.  Horowitz  is  a  director  and  chief
              executive  officer and 5,000 shares of Common Stock underlying Mr.
              Horowitz's stock options  exercisable within 60 days of August 29,
              2000.
</FN>

<FN>
(10)          Consists of 1,250 shares of Common Stock held by Ms. Isaac and
              24,432  shares of Common Stock  underlying  Ms.  Isaac's stock
              options exercisable within 60 days of August 29, 2000.
</FN>

<FN>
(11)          Includes 422,452 shares of Common Stock underlying stock options
              exercisable within 60 days of August 29, 2000.
</FN>
</TABLE>

PROPOSAL 1.  ELECTION OF DIRECTORS

The Company's Restated  Certificate of Incorporation,  as amended,  which became
effective on February 4, 1987,  requires  that the Board of Directors be divided
into three classes.  In accordance  with the Company's  Restated  Certificate of
Incorporation,  at the 1987 annual  meeting,  Class 1 directors  were  initially
elected  for  a  term  that  expired  as of  the  1988  annual  meeting  of  the
stockholders of the Company, Class 2 directors were initially elected for a term
that expired as of the 1989 annual meeting of stockholders and Class 3 directors
were initially  elected for a term that expired as of the 1990 annual meeting of
stockholders.  At each annual  meeting,  directors will be elected for a term of
three years so that the term of office of one class of  directors  shall  expire
each year.

Three  individuals  are being  nominated for election at the Meeting to serve as
Class  1  directors  for a term  of  three  years  or  until  the  election  and
qualification of their successors.

The affirmative vote of the holders of a plurality of the shares of Common Stock
voted in person or by proxy at the Meeting is required  for the election of each
director.  Unless  otherwise  directed,  each proxy  executed  and returned by a
stockholder will be voted for the election of Dennis Marino, James H. Lynch, Jr.
and Russell C. Horowitz. If Mr. Marino, Mr. Lynch or Mr. Horowitz becomes unable
to serve or for good cause will not serve,  an event that is not  anticipated by
the  Company,  (i) the shares  represented  by the  proxies  will be voted for a
substitute nominee or substitute  nominees  designated by the Board of Directors
or the  Nominating  Committee  of the  Board of  Directors  or (ii) the Board of
Directors may  determine to reduce the size of the Board of  Directors.  At this
time, the Board of Directors knows of no reason why Mr. Marino, Mr. Lynch or Mr.
Horowitz  will not be able to serve as a director if elected.  Mr.  Horowitz was
appointed as a director pursuant to the Securities Purchase Agreement,  dated as
of February 5, 2000,  between the Company and Go2Net,  Inc. and Vulcan  Ventures
Incorporation (the "Securities  Purchase  Agreement").  The Securities  Purchase
Agreement provides that the Company is required to use its best efforts to cause
the election of a designee of Go2Net, Inc. and Vulcan Ventures Incorporated as a
director of the  Company,  so long as they  continue to hold all their shares of
Common Stocks purchased from the Company.  Pursuant to the Stockholder Agreement
between  Deutsche  Bank AG and the Company (the  "Stockholder  Agreement"),  Mr.
Parker was  elected a director  of the  Company.  The Company is required by the
Stockholder  Agreement to use its commercially  reasonable  efforts to cause the
election of a designee of Deutsche  Bank AG, so long as Deutsche Bank AG and one
or more of its direct or indirect  wholly-owned  subsidiaries  own Common  Stock
representing 10% or more of the outstanding voting stock of the Company.

The Board of Directors recommends a vote "FOR" the election of each of the above
nominees.

The name and age of each of the  nominees  and each of the  incumbent  directors
whose term will continue following the Meeting,  their respective positions with
the Company and the period  during  which each such  individual  has served as a
director are set forth below.  Additional  biographical  information  concerning
each of the nominees and each of the incumbent  directors and executive officers
of the Company follows the table.
<TABLE>
<CAPTION>

     Name                               Age    Position                                                  Director Since
     <S>                                <C>    <C>                                                            <C>
     Class 1 Directors

     Dennis Marino                      54     Director, Chairman of the Board of NDB.com; Executive          1981
                                               Vice President and Chief Administrative Officer of the
                                               Company

     James H. Lynch, Jr.                69     Chairman of the Board of the Company                           1989

     Russell C. Horowitz                34     Director                                                       2000

     Class 2 Directors

     Arthur Kontos                      54     Director, Vice Chairman of the Board, President and            1988
                                               Chief Executive Officer of the Company

     Ralph N. Del Deo                   75     Director                                                       1993

     Kevin Parker                       41     Director                                                       2000

     Class 3 Directors

     John. P. Duffy                     59     Director                                                       1992

     Thomas W. Neumann                  36     Director, President and Chief Executive Officer of             1992
                                               NDBC and Executive Vice President of the Company

     Charles Kirkland Kellogg           31     Director                                                       1999


</TABLE>

<PAGE>



Certain Biographical Information Concerning
Incumbent Directors and Executive Officers

James H. Lynch,  Jr. became  Chairman of the Board of Directors in July 1989. He
is an independent consultant to the securities industry. Mr. Lynch was a general
partner and member of the Executive  Committee of Spear,  Leeds & Kellogg,  L.P.
("SLK") for more than five years prior to his retirement  from SLK in June 1985.
SLK is a broker- dealer and a member of all major United States stock  exchanges
and acts as a specialist on the New York and American Stock Exchanges.

Arthur Kontos became Vice Chairman of the Board,  President and Chief  Executive
Officer of the Company in October 1988.  Mr.  Kontos was a managing  director of
SLK from June 1988 until October 1988,  when he joined the Company.  He became a
general partner of SLK in 1982 and President of S.G.I. Capital Holdings, Inc., a
general  partner of S.G.I. in 1988, from which positions he resigned in December
1991.  From July 1978 until May 1988,  Mr.  Kontos  served as a director  and as
President and Chief Executive Officer of Troster Singer  Corporation (now called
SLK Capital Markets, a division of Spear, Leeds & Kellogg, L.P. ("SLKC")).

Dennis  Marino has been  employed by the  Company  since  February  1969 and has
served  as  the  Company's  Chief  Administrative  Officer  since  1986.  He was
appointed  President of NDBC in January 1988, a position he held until  December
1997 at which time he became  Chairman  of  NDB.com.  From  February  1998 until
August,  1999,  Mr.  Marino  also  held the  positions  of  President  and Chief
Executive  Officer of NDB.com.  He has been an Executive  Vice  President of the
Company since 1977.

Thomas W. Neumann has served as an Executive Vice President of the Company since
1991 and was appointed President and Chief Executive Officer of NDBC in December
1997. Mr. Neumann joined NDBC in October 1988 and held various trading positions
with that company prior to being  appointed a senior vice  president in 1990 and
Head of Capital  Markets in 1995. From June 1986 until October 1988, Mr. Neumann
was an employee of SLKC.

John P. Duffy retired from his position as a managing director of SLK in 1991, a
position  he held  from  prior to  September  1987  until his  retirement.  As a
managing  director of SLK, Mr. Duffy acted as a specialist on The New York Stock
Exchange ("NYSE"). Mr. Duffy is also a director of Kinney Oil Co.

Ralph N. Del Deo is a senior partner of Gibbons,  Del Deo,  Dolan,  Griffinger &
Vecchione,  P.C.,  a New Jersey law firm that  provides  legal  services  to the
Company. His practice areas include litigation and general practice.

Charles  Kirkland  Kellogg became a Director in April 1999. Mr. Kellogg obtained
an M.B.A.  from The College of William and Mary in 1999.  After  graduation,  he
became an executive of Performance  Specialist  Group,  L.P., a NYSE specialist.
From 1996 to 1997, he served as special  projects  coordinator for NDB.com where
he assisted in developing  NDB.com's  online trading system.  From 1992 to 1995,
Mr. Kellogg served in various trading positions at NDBC and Equitrade  Partners,
L.P. (a New York Stock  Exchange  specialist  which was formerly an affiliate of
the Company).

Russell C.  Horowitz  became a Director in February  2000.  He is  co-founder of
Go2Net and has served as its  Chairman  and Chief  Executive  Officer  since its
inception in February 1996. In 1996, Mr. Horowitz also founded Xanthus  Capital,
L.P.,  a Seattle,  Washington-based  merchant  bank that  focuses  primarily  on
developing  companies in emerging growth industries or special  situations.  Mr.
Horowitz  serves as the Chief  Executive  Officer  and as a director  of Xanthus
Management,  L.L.C.,  the general partner of Xanthus Capital,  L.P. Mr. Horowitz
received B.A. in Economics from Columbia College of Columbia University in 1988.

Kevin Parker became a Director in June 2000. He is Managing  Director and Global
Head of Cash Equity Sales and Trading and Equity  Research at Deutsche  Bank AG.
From May 1997 until May 2000,  Mr. Parker was Managing  Director and Global Head
of Equity Derivatives for Deutsche Bank AG. Mr. Parker, prior to joining

<PAGE>



Deutsche Bank AG, was Managing Director and Chief Information  Officer of Morgan
Stanley & Co. from 1993 to 1997 and Asian equity  derivatives  head from 1988 to
1993.

Denise  Isaac,  age 33,  joined the Company in October  1995 as Chief  Financial
Officer.  She became Treasurer in April 1998 and Executive Vice President in May
1999.  Prior to her employment with the Company,  Ms. Isaac was a Senior Manager
in the financial  services  practice of KPMG LLP. Ms. Isaac was employed by KPMG
LLP since 1986 where she worked on various assignments and taught courses to the
securities industry.

Frank E.  Lawatsch,  Jr., age 56, was  appointed as  Executive  Vice  President,
Secretary and General Counsel of the Company in April 1999.  Prior to that time,
he was a senior  partner of Gibbons,  Del Deo,  Dolan,  Griffinger  & Vecchione,
P.C., a New Jersey law firm that provides legal  services to the Company.  Prior
to 1992, Mr.  Lawatsch served as general counsel to two publicly owned financial
service  corporations.  Mr. Lawatsch has been a member of the bar since 1969. He
is responsible for the Company's legal,  corporate  secretarial,  compliance and
human resource functions.

Daniel  Fishbane,  age 39, joined the Company in January 2000 as Chief Financial
Officer.  Prior to his employment with the Company,  Mr. Fishbane was a managing
director and comptroller from 1995 to 1996 and Chief Financial Officer from 1996
to 1999 of the New York office of D.E. Shaw & Co., LP.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities  Exchange Act of 1934, as amended,  requires the
Company's  executive  officers and directors,  and persons who  beneficially own
more than ten percent of a registered class of the Company's  equity  securities
to file reports of ownership and changes in ownership  with the  Securities  and
Exchange Commission and The New York Stock Exchange ("NYSE").  Based solely on a
review  of  the  copies  of  reports   furnished  to  the  Company  and  written
representations from the Company's executive officers, directors and persons who
beneficially own more than ten percent of the Company's equity  securities,  the
Company believes that,  during the preceding fiscal year and prior fiscal years,
all filing  requirements  applicable to its officers,  directors and ten percent
beneficial owners were met, except as noted below.  Dennis Marino filed two late
Form 4s, since he had inadvertently failed to report five separate transactions:
a grant of options in 1997 and four gifts of Common  Stock to various  charities
in 2000.  Thomas W.  Neumann  filed one late Form 4, since he had  inadvertently
failed to report two separate  transactions:  a grant of options in 1997 and the
sale of Common Stock in 1999.  Russell C. Horowitz  filed one late Form 4, since
he had  inadvertently  failed to report  the  exercise  of a warrant  to acquire
Common Stock by Go2Net,  Inc. Denise Isaac filed two late Form 4s, since she had
inadvertently  failed to report  the  grant of  options  in 1997 and the sale of
Common Stock in February 1999.  Actions have been taken to correct the foregoing
filings.

Meetings of the Board and Committees

During fiscal year 2000, the Board of Directors held eight meetings.  All of the
directors  except Mr.  Horowitz  attended at least 75% of the  aggregate  of all
meetings of the Board of Directors  and the total number of meetings held by all
committees  of the Board of  Directors of which each  respective  director was a
member  during the time he was  serving as such during the fiscal year ended May
31, 2000.

The Board of  Directors  has  created an  Executive  Committee,  a  Compensation
Committee,  an  Audit  Committee,  and a  Nominating  Committee.  The  Executive
Committee is comprised of James H. Lynch,  Jr., Arthur Kontos and Dennis Marino.
The  Compensation  Committee  is  comprised  of James H. Lynch,  Jr. and John P.
Duffy.  The Audit  Committee  is  comprised  of James H. Lynch,  Jr. and John P.
Duffy. The Nominating Committee is comprised of Arthur Kontos, John P. Duffy and
Thomas W. Neumann.


<PAGE>



The  Executive  Committee,  which held no meetings  during  fiscal year 2000, is
authorized,  among  other  things,  to exercise  such powers as may  lawfully be
delegated  to it by  the  Board  of  Directors,  including  the  appointment  of
officers,  the appointment of agents of the Company,  and the  determination  of
general  policy with regard to business of the Company.  Action by the Executive
Committee is subject to review and revision by the Board of Directors.

The Compensation  Committee,  which held three meetings during fiscal year 2000,
has  jurisdiction  on behalf of the  Company to approve,  disapprove,  modify or
amend all plans to  compensate  employees  including  bonuses.  No member of the
Compensation  Committee is eligible for any award of stock or any grant of stock
options  under any such plans  except for fixed stock  option  grants  under the
National Discount Brokers Group, Inc. 1999 Non-Qualified  Stock Option Plan. The
Compensation  Committee  determines  the salaries of all other  employees of the
Company who are directors and also  determines  the salaries of all employees of
the Company who are  executive  officers of the Company or who occupy such other
positions as may be designated by the Compensation Committee.

The Audit Committee,  which held four meetings during fiscal year 2000, operates
pursuant  to a written  charter  which was  approved by the Board on January 19,
2000. The charter  provides that the Audit Committee will review and monitor the
Company's  financial  reports and accounting  practices and, among other things,
make  recommendations to the Board with respect to audit policies and procedures
and the scope,  staffing and extent of audits,  review the  Company's  unaudited
quarterly financial results, review the annual yearend audit with management and
the  Company's  independent  auditors,  and  receive  and review  reports on the
independent auditor's  independence,  and review and evaluate the performance of
the independent auditors and the fees to be paid to the independent auditors.

The  Nominating  Committee was created by the Board of Directors for the purpose
of  nominating a slate of nominees for election to the Board of Directors by the
stockholders  of the  Company  at  each  Annual  Meeting  of  Shareholders.  The
Nominating  Committee is also responsible for nominating  candidates to fill the
position of each director,  if any, whose term as director  terminates  prior to
the date of any annual meeting of stockholders  and who is to be replaced by the
Board  of  Directors.  The  Nominating  Committee  does  not  consider  nominees
recommended by stockholders in its deliberations.  The Nominating Committee held
no meetings in fiscal year 2000.


<PAGE>




                Compensation Of Directors And Executive Officers

The following table sets forth  information  concerning the annual and long-term
compensation  for services in all capacities to the Company and its subsidiaries
for each of the fiscal years ended May 31, 2000,  1999 and 1998 of those persons
who were, at May 31, 2000,  (i) the Chief  Executive  Officer and (ii) the other
four most highly  compensated  executive  officers of the Company for the fiscal
year ended May 31, 2000 (such persons are the "named executive officers"):

<TABLE>
<CAPTION>

                          Executive Compensation Table

                                                                                     Annual Compensation

                                                    ------------ ------------------- ------------------- ---------------
<S>                                        <C>      <C>              <C>             <C>                    <C>
Name and                                                                                                    Securities
Principal                                  Fiscal                                    All Other              Underlying
Position                                   Year     Salary($)        Bonus($)        Compensation($)        Options (#)
--------                                   ----     ---------      -------------     ---------------        -----------


Arthur Kontos, Vice Chairman of the        2000      $300,000        $14,452,271
Board, President and Chief Executive       1999       300,000          6,459,539
Officer of the Company                     1998       300,000          3,479,439        $515,568 (1)         126,941

Dennis Marino, Executive Vice President    2000       225,000            775,000                              12,640
and Chief Administrative Officer of  the   1999       225,000            700,000                              19,660
Company; Chairman                          1998       173,077            350,000         175,075 (1)          42,966
of the Board of  NDB.com
Thomas W. Neumann                          2000       300,000          5,500,000                              12,640
Executive Vice President of the Company;   1999       311,538          1,500,000                              19,660
President and Chief Executive Officer of   1998       299,039            802,000 (2)     181,886 (1)          85,374
NDBC

James Romano                               2000       350,000          2,200,000 (3)                          17,640
Executive Vice President of NDBC           1999       363,461            800,000 (3)                                     19,660
                                           1998       350,000            250,000                           5,000


Denise Isaac                               2000       170,000            730,000                              12,635
Executive Vice President and Treasurer     1999       170,769            330,000                              19,665
of the Company                             1998       135,585            139,000                               5,000


No named executive officer received personal benefits or perquisites  during the
fiscal  year ended May 31, 2000 in excess of the lesser of $50,000 or 10% of his
or her aggregate salary and bonus.

<FN>
(1)  Represents gain recognized upon exercise of options.
</FN>

<FN>
(2)  Includes  $107,000  of bonus paid in fiscal  year  ended May 31,  1998 with
     respect to services performed in the fiscal year ended May 31, 1997.
</FN>

<FN>
(3)  Cash bonus for Mr. Romano includes commissions, representing a percentage
     of gross commissions on sales/trades.
</FN>
</TABLE>



<PAGE>



Compensation Arrangements

On May 31, 1997,  the Board of Directors  approved,  and Mr. Kontos  signed,  an
employment  agreement,  (the "Employment  Agreement").  The Employment Agreement
provided  for an initial term of  employment  from June 1, 1997 to May 31, 2000.
The Company  exercised its option to extend the term from June 1, 2000 until May
31, 2001.  Mr.  Kontos has the right to extend the term from June 1, 2001 to May
31, 2002.  The  Employment  Agreement  provides  that Mr. Kontos will receive an
annual base salary of $300,000 and an annual cash bonus pursuant to the terms of
the National  Discount  Brokers Group,  Inc. 1996 CEO Bonus Plan (the "CEO Bonus
Plan").  Pursuant to the CEO Bonus Plan,  for fiscal years  commencing  with the
fiscal year ended May 31, 1998,  the Chief  Executive  Officer of the Company is
entitled  to an  annual  cash  bonus  equal to 10% of the first  $10,000,000  of
"Income," and 15% of "Income" over $10,000,000.  "Income" means the consolidated
pre-tax net income of the Company without  deductions for the payment or accrual
of a bonus under the CEO Bonus Plan. For the fiscal year ended May 31, 2000, Mr.
Kontos  waived his receipt of  $2,400,000 of the bonus under the CEO Bonus Plan.
For the fiscal year ended May 31, 2001, Mr. Kontos has agreed to a 20% reduction
in the  amount  of the bonus  payable  to him  under  the CEO  Bonus  Plan.  The
Employment  Agreement may be terminated  (i) by Mr. Kontos either on thirty (30)
days prior  written  notice or at any time  following  a Change in  Control,  as
defined, (ii) by the Company for Cause, as defined, (iii) automatically upon the
death or disability of Mr. Kontos,  or (iv) by the Company without Cause. If the
Company  terminates  the  Employment  Agreement  without  Cause,  or Mr.  Kontos
terminates his  employment for Good Reason (as defined)  within one year after a
Change of Control,  Mr. Kontos is entitled to receive as  liquidated  damages an
amount  equal to three times his average  compensation  (including  base salary,
bonus and any other  compensation)  from the  Company  and its  subsidiaries  as
reported for federal  income tax purposes for the five previous  calendar  years
less $1.00  subject to the  limitation  that the amount shall not  constitute an
excess  parachute  payment  under  Section 280G of the Internal  Revenue Code of
1986, as amended. Generally, a Change in Control will be deemed to have occurred
under the  Employment  Agreement  (i) if any person  (other  than Mr.  Kontos or
persons  under his  control)  or group  acting in  concert  acquires  beneficial
ownership of more than 50% of the voting stock of the Company and the control so
acquired is exercised in any manner,  (ii) during a two year period  persons who
at the beginning of the period who constitute the Board of Directors and any new
director whose election was approved by at least 2/3 of the directors then still
in  office,  cease  for any  reason to  constitute  a  majority  of the Board of
Directors,  or  (iii)  the  Company  or a  subsidiary  of  the  Company  merges,
consolidates or engages in a similar transaction, other than a transaction where
voting securities of the Company outstanding prior to this transaction  continue
to represent 75% or more of the combined  voting power of the voting  securities
of the Company or the surviving  entity,  or the stockholders  approve a plan of
complete  liquidation  or an  agreement  for the sale or  disposition  of all or
substantially all of the Company's assets.


Compensation of Directors

Independent  directors  are paid at a rate of $18,000  annually  plus $1,000 for
each  committee  meeting  attended.  Each director who is not an employee of the
Company or its  subsidiaries  also receives an option to acquire 5,000 shares of
the Common  Stock at an exercise  price  equal to the fair  market  value of the
Common  Stock on the date the option is granted each time he or she is elected a
director.


<PAGE>



Option Grants in Last Fiscal Year

Shown below is information  with respect to the options to purchase Common Stock
granted to the Chief Executive  Officer and the named executive  officers of the
Company during the fiscal year ended May 31, 2000.
<TABLE>
<CAPTION>

                        Option Grants In Last Fiscal Year

                                                                                                           Potential Realizable
                                                                                                          Value at Assumed Annual
                                                                                                           Rates of Stock Price
                                         Individual Grants                                                Appreciation for Option
                                                                                                                   Term
-----------------------------------------------------------------------------------------------------    --------------------------
                             Number of        % of Total
                            Securities         Options
                            Underlying        Granted to    Exercise or Base
                              Options        Employees in        Price             Expiration
          Name              Granted (#)       Fiscal Year        ($/Sh)               Date               5% ($)        10% ($)
          ----              -----------    ---------------   -----------------       ----------          ------        -------

<S>                          <C>                <C>            <C>                   <C>                 <C>            <C>
Arthur Kontos                     0               0%


Dennis Marino                 7,640             1.32           $60 1/16 (1)           7/7/2009           $288,586       $731,333
                              5,000              .86            26 9/16 (2)          1/12/2010             83,525        211,669

Thomas W. Neumann             7,640             1.32            60 1/16 (1)           7/7/2009           $288,586       $731,333
                              5,000              .86            26 9/16 (2)          1/12/2010             83,525        211,669


James Romano                  7,640             1.32            60 1/16 (1)           7/7/2009           $288,586       $731,333
                             10,000             1.73            26 9/16 (2)          1/12/2010            167,050        423,338

Denise Isaac                  7,635             1.32            60 1/16 (1)           7/7/2009           $288,397       $730,854
                              5,000              .86            26 9/16 (2)          1/12/2010             83,525        211,669


<FN>
(1)     Options  granted  become  exercisable  with  respect  to  one-third  of
        the  shares  on each of the  first, second  and third anniversary of the
        date of grant of the options (July 7, 1999).
</FN>

<FN>
(2)     Options  granted  become  exercisable  with  respect  to  one-third  of
        the  shares  on each of the  first,  second  and third anniversary of
        the date of grant of the options (January 12, 2000).
</FN>

</TABLE>


<PAGE>



Option Exercises and Fiscal Year-End Values

Shown below is  information  with respect to the exercise of options to purchase
Common Stock by the Chief Executive Officer and the named executive officers and
unexercised  options to  purchase  shares of Common  Stock  granted to the Chief
Executive Officer and such named executive officers.
<TABLE>
<CAPTION>

          Aggregated Option Exercises In Fiscal Year Ended May 31, 2000
                          And May 31, 2000 Option Value

                                                                  Number of Unexercised            Value of Unexercised
                                                                       Options at                  In-the money Options
                           Number of Shares         Value            Fiscal Year-End              At Fiscal Year-End (1)
         Name             Acquired on Exercise    Realized      Exercisable    Unexercisable    Exercisable   Unexercisable


<S>                                <C>                 <C>        <C>                <C>         <C>                     <C>
Arthur Kontos                      0                   0          197,387                 0      $2,753,568              $0

Dennis Marino                      0                   0           47,851            27,415         507,705          23,002

Thomas W. Neumann                  0                   0           90,259            27,415       1,070,040          23,002

James Romano                       0                   0           24,885            32,415         244,623          23,002

Denise Isaac                       0                   0           21,888            27,412         208,250          23,002


<FN>
(1)      Based on the difference between the exercise price of the options and the closing price of the Common Stock on the New York
        Stock Exchange on May 31, 2000.
</FN>
</TABLE>


             Compensation Committee Report On Executive Compensation

General

The  Compensation  Committee  of the Board of  Directors  reviews the  Company's
existing and proposed executive  compensation plans and makes recommendations to
the  Board  of  Directors  regarding  such  plans  and  the  awards  to be  made
thereunder.

Set  forth  below is a  discussion  of the  Company's  compensation  philosophy,
together  with  a  discussion  of the  factors  considered  by the  Compensation
Committee in determining the  compensation of the Company's  President and Chief
Executive Officer and other named executive officers in this Proxy Statement for
the fiscal year ended May 31, 2000.

Members of the Compensation Committee during the fiscal year ended May 31, 2000
were John P. Duffy and James H. Lynch, Jr.

As part of the sale of Equitrade  Partners,  L.L.C.  to a subsidiary of SLK, the
Company redeemed a .01% interest in Equitrade  Partners,  L.L.C. held by John P.
Duffy  for   $1,130.09  in  cash.   See  "Certain   Relationships   and  Related
Transactions".


Compensation Philosophy

The  Company's  compensation  philosophy  focuses on providing  executives  with
annual  compensation that rewards  individual  performance  during the year, and
provides  incentives to executives to improve the long-term  performance  of the
Company. By paying competitive base salaries to executive officers, and making a
significant portion of their compensation contingent on their performance during
the year, the Company seeks to provide executives with significant incentives to
promote the interests of the Company and its stockholders.

Salaries.  Consistent  with its  compensation  philosophy,  the Company has paid
competitive base salaries to its salaried  officers and has  supplemented  these
salaries  with  performance-based  bonuses.  Traders  generally  receive no base
salaries, and are compensated on a commission basis with a minimum guarantee. In
making decisions with respect to the base salaries of executive officers for the
fiscal year ended May 31, 2000, the committee considered the performance of each
of the individuals in question  during the prior year, the Company's  results of
operations  for the fiscal year ended May 31, 2000 and the  responsibilities  of
the  executive  officers.  In  keeping  with  its  desire  to  base  much of the
compensation  of the Company's  executives on  performance  during the year, the
committee  generally  determined to maintain salaries for executive  officers at
the same level as the prior year.

Bonuses.  The discretionary  bonuses paid to the Company's officers with respect
to the fiscal year ended May 31, 2000 were determined  primarily by reference to
the Company's financial  performance for the fiscal year and by reference to the
volume of business  generated by them or under their direction during the fiscal
year. The performance of the Company's  President and Chief Executive Officer is
measured by reference to the Company's financial performance for the fiscal year
and his bonus is  determined  by a formula  contained in the  National  Discount
Brokers Group, Inc. 1996 CEO Bonus Plan ("CEO Bonus Plan").

Equity Based Compensation

The  Compensation  Committee  granted  non-qualified  stock options to executive
officers of the Company both to incentivise  them to increase their ownership of
Common Stock and as a retention device, as the options have a three-year vesting
schedule.

Chief Executive Officer Compensation

The  compensation  arrangements  for Mr.  Kontos with respect to the fiscal year
ended May 31,  2000 were based on the  Company's  compensation  philosophy.  The
Compensation  Committee  determined  not to make any  adjustments to Mr. Kontos'
base  salary for the year,  in an effort to provide Mr.  Kontos with  additional
incentives to continue to improve the Company's  performance.  Mr. Kontos' bonus
with respect to the fiscal year ended May 31, 2000 was  determined in accordance
with  the  provisions  of the CEO  Bonus  Plan.  Mr.  Kontos  elected  to  waive
$2,400,000  in bonus  payments  due him under the CEO Bonus Plan for this fiscal
year ended May 31, 2000.

                                                     THE COMPENSATION COMMITTEE


                                                     James H. Lynch, Jr.
                                                     John P. Duffy

Indemnification of Directors and Executive Officers

The Company has entered into  indemnification  agreements with its directors and
executive  officers  which  obligate the Company to indemnify  the  directors or
officers for all expenses (including attorney fees) and costs, judgments,  fines
and  settlement  amounts  paid or incurred by them in  connection  with  claims,
actions and  proceedings in which they are parties,  witnesses and subjects as a
result of their activities on behalf of the Company,  including, but not limited
to,  their  activities  as  directors  and  officers  of  the  Company  and  its
subsidiaries.  Pursuant to the agreements,  the directors or executive  officers
will be indemnified to the extent  permitted  under Delaware law. The agreements
cover all indemnified claims and proceedings  brought within ten years after the
resignation  of the director or executive  officer from all positions  held as a
director,  officer or  otherwise on behalf of the Company.  The  agreements  may
provide  indemnity to or limit liability of directors or executive  officers for
events  that  occurred  prior  to  the  date  of  the  agreement.  However,  the
enforceability  of these  retroactive  provisions has not been determined  under
Delaware law.


<PAGE>



Stock Option Plans

In August 1995,  the Board of Directors  adopted The Sherwood  Group,  Inc. 1995
Stock Option Plan (the "1995 Stock Option  Plan") which plan was approved by the
stockholders  at the 1995 Annual Meeting of  Stockholders.  Under the 1995 Stock
Option Plan,  767,200  shares of Common Stock were  authorized for issuance upon
exercise of options and stock appreciation  rights. In August 1997, the Board of
Directors amended the 1995 Stock Option Plan to allow for an additional  420,000
shares of Common Stock to be  authorized  for issuance  upon exercise of options
and stock appreciation  rights.  This amendment was approved by the stockholders
at the 1997 Annual Meeting of Stockholders. The maximum number of shares subject
to stock  options  that may be granted to any one  optionee  during any calendar
year under the 1995 Stock Option Plan may not exceed  300,000  shares.  The 1995
Stock Option Plan provides for the granting of both incentive and  non-incentive
stock  options and stock  appreciation  rights which may be issued in connection
with a stock option.  At May 31, 2000,  37,428 shares were  available for future
grant under the 1995 Stock Option  Plan.  No options were granted by the Company
under the 1995 Stock Option Plan during the fiscal year ended May 31, 2000.

On April 21, 1999, the Board of Directors  adopted the National Discount Brokers
Group,  Inc. 1999  Non-Qualified  Stock Option Plan (the "1999 Plan").  The 1999
Plan covers  1,000,000  shares of Common  Stock and provides for the granting of
non-qualified stock options to employees,  independent  contractors,  agents and
consultants of the Company and its subsidiaries. At May 31, 2000, 160,935 shares
were available for future grant under the 1999 Plan.  Options  covering  166,100
shares of Common Stock were  granted by the Company  under the 1999 Stock Option
Plan during the fiscal year ended May 31, 2000.  No  participant  may be awarded
options  exceeding  in the  aggregate  of 125,000  shares of Common Stock in any
fiscal year.  The 1999 Plan was amended by the Board of Directors to provide for
the grant of a non-qualified stock option to each non-employee director covering
5,000  shares of Common  Stock with an  exercise  price of equal to fair  market
value of the Common  Stock at the date of grant.  Non-employee  directors at the
time  of  adoption  of the  2000  Plan  received  such an  option.  Non-employee
directors  receive an option  covering  5,000 shares of Common Stock each fiscal
year he or she is elected a director of the Company.

On September 1, 1999, the Board of Directors approved the 2000 National Discount
Brokers Group, Inc.  Compensation Plan (the "2000 Plan") which plan was approved
by the  stockholders at the 1999 Annual Meeting of  Stockholders.  The 2000 Plan
covers  800,000  shares of Common  Stock and  provides for the granting of stock
awards,   incentive  stock  options,   non-qualified  stock  options  and  stock
appreciation rights to officers, employees,  independent contractors, agents and
consultants of the Company and its subsidiaries. On May 31, 2000, 392,500 shares
were available for future grant under the 2000 Plan.  Options  covering  412,500
shares of Common  Stock were  granted by the Company  under the 2000 Plan during
the fiscal year ended May 31, 2000, 5,000 of which were subsequently  cancelled.
No stock awards or stock  appreciation  rights have been granted  under the 2000
Plan.

401(k) Plan

In April 1992, the Company formed the Sherwood Securities Corp. 401(k) Plan (the
"401(k) Plan") which is a profit sharing plan qualified  under Section 401(k) of
the Code. The 401(k) Plan was renamed the National  Discount Brokers Group, Inc.
401(k) Plan,  effective January 1, 1999. Under the terms of the 401(k) Plan, all
employees of the Company and its subsidiaries  employed on February 1, 1992 were
immediately  eligible  to  participate.  All other  employees  are  eligible  to
participate  in the 401(k)  Plan  after  completing  six  months of service  and
attaining  age 21.  Employees  may  elect to have  deductions  made  from  their
salaries and  contributed to the 401(k) Plan. In addition,  the Company may make
matching  contributions  to the 401(k) Plan in such amounts as may be determined
in the  discretion of the Board of  Directors.  During the fiscal year ended May
31, 2000, there was a discretionary  Company  contribution to the 401(k) Plan of
$108,221.  Shares  of  Common  Stock  held in the  401(k)  Plan are voted by the
participants  in the  401(k)  Plan to the  extent  shares  of  Common  Stock are
credited to their respective accounts.



<PAGE>


Sabbatical Program

All full time  employees of the Company or its  subsidiaries  who have completed
five  years of  employment  may take a four  week  (three  months in the case of
members  of the  Executive  Committee  of the  Company)  paid  sabbatical.  Such
sabbatical must be taken within one year after the employee's fifth anniversary.
Sabbaticals may also be taken for each subsequent five-year period of employment
completed.  In addition, NDBC has usually assumed any trading losses incurred in
a trader's account during a trader's sabbatical.


                 Certain Relationships And Related Transactions

Spear, Leeds & Kellogg,  L.P. Equitrade Partners,  L.L.C. (a NYSE specialist and
former affiliate of the Company) cleared its securities  transactions  with SLK.
During the  Company's  2000 fiscal year,  Equitrade  paid fees in the  aggregate
amount of $138,644 to SLK in connection  with clearing  activities  performed by
SLK. On June 18, 1999, the Company and one of its wholly-owned subsidiaries sold
46.845%  of  the  membership  interests  in  Equitrade  Partners,  L.L.C.  to  a
subsidiary of SLK for  approximately  $100 million of which $15 million was used
by the Company to repay a loan of $15 million from SLK to the Company.  The sale
price for the Company's and its subsidiary's  membership  interests in Equitrade
Partners,  L.L.C.  was  determined  by the  Board  of  Directors  and the  Audit
Committee of the Board of  Directors.  The sale price  consisted  primarily of a
return of the capital of Equitrade Partners, L.L.C. allocated to the Company and
its  subsidiary,  the  repayment  of  loans  from  the  Company  and  one of its
subsidiaries to Equitrade  Partners,  L.L.C.,  the fair market value of seats on
the NYSE determined by reference to their current bid and ask for such seats and
a premium which was determined based upon among other things, valuations derived
from acquisitions of national and regional broker dealers and other precedential
acquisitions. On December 31, 1998, the Company borrowed $15 million from SLK at
an interest  rate of 6% per annum with an original  maturity  date of six months
which was subsequently  extended to the date of the sale of Equitrade  Partners,
L.L.C. to a subsidiary of SLK or eighteen  months after  termination of the sale
agreement.  From time to time, the Company had entered into short-term borrowing
facilities with SLK for the purpose of financing trading positions. Mr. Peter R.
Kellogg,  a holder of the Common  Stock  identified  under the  heading  "Voting
Securities and Principal Holders Thereof", is a senior managing director of SLK.
Charles  Kirkland  Kellogg,  a director of the  Company,  is the son of Peter R.
Kellogg.

Ralph N. Del Deo.  Mr. Del Deo is a senior  partner in the law firm of  Gibbons,
Del Deo, Dolan, Griffinger & Vecchione,  P.C., which performs legal services for
the Company, and certain of its subsidiaries.

Go2Net,  Inc.  Pursuant to the Co-Branding  and Marketing  Agreement dated as of
February 5, 2000,  by and between  Go2Net,  Inc.  and  NDB.com  (the  "Marketing
Agreement"), NDB.com is obligated to pay Go2Net, Inc. $22,500,000 in three equal
annual  installments  of $7,500,000.  The first  installment was paid during the
fiscal year ended May 31, 2000. In certain  circumstances,  the second and third
annual  installments  may be increased from  $7,500,000 to  $10,000,000  and the
third annual  installment  may be increased to  $12,500,000.  These payments are
being made for  promotional  activities  for NDB.com  conducted by Go2Net,  Inc.
principally  on its network  websites and for the licensing of Silicon  Investor
"Stock Talk" to NDB.com for use by NDB.com's customers. In addition,  NDB.com is
required to pay Go2Net, Inc. additional amounts if NDB.com receives in excess of
specified  numbers of qualified  applications  to open  brokerage  accounts as a
result of a link from a Go2Net network website or other  promotional  activities
of Go2Net,  Inc.  Go2Net,  Inc. is a  stockholder  of the Company and Russell C.
Horowitz, a director of the Company, is the Chairman and Chief Executive Officer
of Go2Net, Inc.


<PAGE>


Deutsche Bank AG. The Company has executed non-binding term sheets with Deutsche
Bank AG  pursuant  to which  Deutsche  Bank AG and the  Company  may form  joint
ventures to offer online discount  brokerage in the world, other than the United
States.  The Company has also entered into an agreement  with  Deutsche  Bank AG
regarding  the   involvement  by  the  Company  or  any  of  its  broker  dealer
subsidiaries in the  distribution  of United States initial public  offerings of
common stock for which Deutsche Bank AG or one of its  affiliates  serves as the
book running or joint book  running  underwriter.  NDB.com and Deutsche  Bank AG
have entered into an agreement pursuant to which Deutsche Bank AG or one or more
of its affiliates will make available to NDB.com  research  prepared by Deutsche
Bank AG or such affiliates for general  distribution to retail  customers in the
United  States.  Deutsche  Bank AG is a  beneficial  owner of the  Common  Stock
identified under the heading "Voting  Securities and Principal  Holders thereof"
and Kevin Parker, a director of the Company,  is an employee of Deutsche Bank AG
and serves on the Board as Deutsche Bank AG's representative.


                               Company Performance

Set  forth  below  is a  line  graph  comparing  the  percentage  change  in the
cumulative total  stockholder  return on the Common Stock against the cumulative
total return of the S&P Composite  500 Stock Index,  the S&P Small Cap 600 Stock
Index and the Dow Jones  Securities  Brokers  Index ("D J Brokers  Index").  The
Common  Stock was added to the S&P Small Cap 600 Index on January 13,  2000.  As
such,  the  Company  is  transitioning  to that  index  from the S&P 500 for the
purpose  of the  following  graph.  The  graph  assumes  that  the  value of the
investment  in the Common Stock and each index was $100 at May 31, 1995 and that
all dividends, if any, were reinvested.


<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG THE NATIONAL DISCOUNT BROKERS, THE S&P 500 INDEX, THE S&P SMALL CAP 600 INDEX
AND THE DOW JONES SECURITIES BROKERS INDEX

                                                                        Cumulative Total Return
                                                 5/95          5/96         5/97         5/98         5/99         5/00

<S>                                               <C>          <C>          <C>          <C>          <C>          <C>
National Discount Brokers Group, Inc.             100          156          180          164          676          426

S&P Composite 500                                 100          128          166          217          263          290

S&P Small-Cap 600                                 100          138          155          193          186          212

Dow Jones Securities Brokers                      100          128          199          346          506          536

</TABLE>
<PAGE>

PROPOSAL 2.       APPROVAL OF NDB CAPITAL MARKETS CEO BONUS PLAN

The Board of Directors is asking stockholders to approve the NDB Capital Markets
CEO Bonus Plan (the  "Bonus  Plan").  The  purposes of the Bonus Plan are to (i)
assist the Company and NDBC in motivating and retaining  NDBC's chief  executive
officer,  (ii) promote the  identification  of his  interests  with those of the
Company's  stockholders,  and (iii)  enable the  Company to pay an annual  bonus
which is based upon the achievement of specified  performance and deductible for
purposes of federal income taxation.

Reasons for the Proposal

The Company and its  subsidiaries  have paid cash bonuses to the chief executive
officer  of NDBC for a number  of  years as part of its  executive  compensation
program.  Under  applicable  Delaware law, the payment of such  compensation  to
officers  and  employees  is a  matter  within  the  authority  of the  Board of
Directors  or  a  committee  thereof  and  does  not  require  the  approval  of
stockholders.

Section  162(m) of the Internal  Revenue  Code of 1986,  as amended (the "Code")
disallows  federal income tax deductions for certain  executive  compensation in
excess of $1  million  per year ("$1  million  limit").  Under  Section  162(m),
compensation that qualifies as  "performance-based  compensation" is not subject
to  the  $1  million  limit.  One  of  the  conditions  to  qualify  bonuses  as
"performance-based  compensation" is stockholder  approval of the material terms
of the  performance  goals for  which  the  bonuses  are  paid.  To  permit  the
Compensation Committee to make an annual bonus that is comparable to those found
in the marketplace in which the Company  competes for executive talent and allow
the  Company  to pay a bonus that  qualifies  as  deductible  "performance-based
compensation" under Section 162(m), the Board of Directors has adopted the Bonus
Plan, subject to stockholder approval.


Description of the Bonus Plan

The following  summary of the material aspects of the Bonus Plan is qualified in
its entirety by reference to the full text of the Bonus Plan, a copy of which is
set forth as "Exhibit A" to this Proxy Statement.  Unless  otherwise  specified,
capitalized  terms used in this discussion have meanings assigned to them in the
Bonus Plan.

The Bonus Plan provides that a Bonus may be paid to the Chief Executive  Officer
of NDBC as of the last day of a Bonus Period, which will be the Company's fiscal
year ("Bonus  Period").  Only a person who serves as the Chief Executive Officer
of NDBC during the Bonus Period is eligible to participate in the Bonus Plan.

The Bonus Plan is  administered  by the  Compensation  Committee of the Board or
such other  committee  of  directors  as may be  designated  by the Board in the
future (the "Committee"). Each member of the Committee, which must have at least
two members, must meet the standards of independence  necessary to be classified
as an  "outside  director"  for  purposes  of Section  162(m) of the Code.  As a
result, no Participant or other employees of the Company or its subsidiaries are
permitted to serve on the Committee.

If the Bonus Plan is approved by the  stockholders,  the first Bonus Period will
be the fiscal year of the  Corporation  commencing in 2000. The Bonus is payable
in cash.

Following the end of a Bonus Period,  the Committee will compute the size of the
Bonus based upon a formula. The formula is 5.176% of Income.  "Income" means the
consolidated  pre-tax  income  from  continuing  operations  of the  Company  as
determined in accordance with generally accepted accounting principles,  without
any  deductions  for the  payment or  accrual of the Bonus or any bonus  payable
under the CEO Bonus Plan or any successor  plan thereto.  Once the Committee has
determined  the  amount  of the  Bonus  to be made for a Bonus  Period,  it must
certify the amounts in writing and authorize the Company  and/or NDBC to pay the
Bonus to the Chief Executive Officer in accordance with the terms and conditions
of the Bonus Plan.
<PAGE>

The Board may amend,  modify or  terminate  the Bonus Plan in any respect at any
time; provided, however, so long as Thomas W. Neumann is Chief Executive Officer
of NDBC,  the Bonus Plan may not be amended or  terminated  without his consent.
The Bonus Plan will remain in effect until terminated by the Board. No Bonus may
be granted under the Plan after its termination. Once the Bonus Plan is approved
by the  stockholders,  termination  of the Bonus Plan would not affect any Bonus
earned in full prior to  termination  of the Bonus Plan, but which is payable on
or after the date of termination  and such Bonus would continue to be subject to
the terms of the Bonus Plan  notwithstanding its termination.  If the Bonus Plan
is not approved by stockholders, it will be void.

Assumed Bonus Awards

Because the fiscal year commencing in 2000 is the first Bonus Period established
under the Bonus  Plan,  the size of the Bonus for that  Bonus  Period  cannot be
computed  until the Company's  Income for the fiscal year  commencing in 2000 is
known.  As a result,  the Bonus, if any, that may be paid to the Chief Executive
Officer of NDBC for the fiscal year Bonus Period is not currently determinable.

For purposes of  illustration  only, the Bonus which would have been paid to the
Chief  Executive  Officer of NDBC for the fiscal  year ended May 31, 2000 if the
Bonus Plan had been in effect for that fiscal year is $3,999,790.

Vote Required

Approval of the Bonus Plan  requires the  affirmative  vote of a majority of the
votes  cast by the  holders  of the Common  Stock,  in person or by proxy,  at a
meeting at which a quorum is present.  The Bonus Plan will terminate  unless the
Bonus  Plan  is  approved  by  the  Company's  stockholders.   The  Board  might
nevertheless  decide to continue to pay an annual  bonus to the Chief  Executive
Officer in accordance  with its historical  practices.  In such event,  however,
payments made to the Chief  Executive  Officer may not be deductible for federal
income tax purposes under Section 162(m) of the Code.


PROPOSAL 3.       APPROVAL OF AMENDMENT TO THE 2000 NATIONAL DISCOUNT BROKERS
                  GROUP, INC. COMPENSATION PLAN

At the  Meeting,  the  holders of the Common  Stock will be asked to vote upon a
proposal to approve an amendment to the 2000 National  Discount  Brokers  Group,
Inc.  Compensation  Plan (the "2000 Plan") to increase  from  800,000  shares to
1,300,000 shares, the number of shares of Common Stock for which options,  stock
awards and stock appreciation rights may be granted  thereunder.  The 2000 Plan,
as proposed to be amended, is attached as Exhibit B to this Proxy Statement.

Reasons For The Proposal

Under the 2000 Plan as  currently  in effect,  options,  stock  awards and stock
appreciation rights for up to 800,000 shares of the Common Stock may be granted.
The Board of  Directors  has  determined  that it is  advisable  to  continue to
provide  stock-based  incentive  compensation  to  the  Company's  officers  and
employees,  thereby  continuing  to align the interests of such  employees  with
those of  stockholders,  and that  awards  under the 2000 Plan are an  effective
means of providing  such  compensation.  In order to effectuate  options,  stock
awards and stock  appreciation  rights by the  Compensation  Committee set forth
herein  and to  continue  to grant  stock-based  incentive  compensation  in the
future,  it is  necessary  to  increase  the  number of  shares of Common  Stock
available for grant under the 2000 Plan.

Description of the 2000 Plan

The following is a summary of the 2000 Plan. This summary does not purport to be
complete,  and is qualified in its entirety by reference to the text of the 2000
Plan, which is attached as Exhibit B to this Proxy Statement.
<PAGE>

Purpose.  The purpose of the 2000 Plan is to provide an additional  incentive to
employees,  independent  contractors,  agents and consultants of the Company and
its  subsidiaries,  to aid in attracting  and retaining  employees,  independent
contractors,  agents and  consultants  and to closely align their interests with
those of  stockholders.  The 2000 Plan  authorizes the granting of stock awards,
options and stock  appreciation  rights of up to 800,000 shares of Common Stock,
and if Proposal 3 is  approved,  up to an  additional  500,000  shares of Common
Stock,   subject  to  adjustment  in  the  event  of  mergers,   consolidations,
reorganizations,  recapitalizations,  stock  dividends,  stock  splits  or other
change in the corporate structure or capitalization affecting the Common Stock.

Administration.  The  2000  Plan  will  be  administered  by  a  committee  (the
"Committee") of at least two directors who are "non-employee  directors" as such
term is defined in Rule 16b-3 of the  Exchange Act and  "outside  directors"  as
defined in Section 162(m) of the Internal  Revenue Code of 1986, as amended (the
"Code"),  presently the Compensation  Committee. In administering the 2000 Plan,
the  Committee  has the power to interpret  its  provisions  and to  promulgate,
amend,  and rescind  rules and  regulations  for its  administration,  to select
individuals  to receive  grants,  and to determine  the terms and  provisions of
grants of stock awards, options and stock appreciation rights.

Stock Awards.  The 2000 Plan provides for the granting of awards of Common Stock
("Awards") to any employee or officer of the Company or its subsidiaries, or any
other  person who is an  independent  contractor,  agent or  consultant  for the
Company or its  subsidiaries,  but not any director of the Company who is not an
employee of the Company or its  subsidiaries.  Awards may contain such terms and
conditions as the Committee may determine, including but not limited to, vesting
requirements and payment of consideration to the Company.

Option Grants.  The 2000 Plan provides for the granting of both incentive  stock
options (an "ISO") and  nonqualified  stock  options (a "NQO") and in connection
with such options the granting of stock  appreciation  rights (an "SAR").  NQO's
and ISO's are  referred  to as  "Options".  NQO's and SAR's may be issued to any
employee or officer of the Company or its subsidiaries,  or any other person who
is an  independent  contractor,  agent  or  consultant  of  the  Company  or its
subsidiaries  but not any  director of the Company who is not an employee of the
Company.  ISO's may be issued to  employees  and officers of the Company and its
subsidiaries,  but not to any independent contractor,  agent or consultant.  The
Committee also determines the times at which Options become  exercisable,  their
transferability  and the dates, not more than ten years after the date of grant,
on which  Options will expire.  In the event of a tender offer for more than 25%
of the Company's  outstanding stock, or a "change in control" (as defined in the
2000  Plan)  of  the  Company,   all  outstanding   Options  become  immediately
exercisable.  The fair  market  value of the stock with  respect to which  ISO's
under the 2000 Plan or any other plan of the Company  first  become  exercisable
may not exceed  $100,000  in any year.  The  option  price of an ISO is to be at
least 100% of the fair  market  value on the date of grant  (110% in the case of
optionees  holding  more than ten percent of the  combined  voting  power of all
classes of stock of the Company). The 2000 Plan, however,  permits the Committee
to grant NQO's at any exercise  price  consistent  with the purposes of the 2000
Plan,  whether or not such  exercise  price is equal to the fair market value of
the stock on the date of grant of the NQO.  NQO's with an exercise price of less
than  fair   market   value  on  the  date  of  grant   will  not   qualify   as
performance-based  compensation  under  Section  162(m)  of the  Code and so any
compensation  expense  generated  by the exercise of such an Option would not be
deductible  by the Company if the optionee is a "covered  employee"  who is paid
compensation  from the Company in an amount in excess of  $1,000,000 in the year
of exercise.

Options may be exercised by the payment of the  exercise  price in cash,  Common
Stock or a combination thereof. The Committee may make a loan for the purpose of
exercising  any Option  granted  under the 2000 Plan to an optionee in an amount
not to exceed 100% of the purchase price of the shares acquired upon exercise of
the  Options.  The loan must be  secured  by a pledge  of shares of the  Company
having an  aggregate  purchase  price equal to or greater than the amount of the
loan.
<PAGE>

Stock Appreciation Rights. The 2000 Plan permits the Committee to grant SAR's in
connection  with any Option granted under the Plan.  SAR's enable an optionee to
surrender  an  Option  and to  receive a payment  in cash or  Common  Stock,  as
determined by the  Committee,  equal to the  difference  between the fair market
value of the Common Stock on the date of surrender of the related Option and the
option price.

Future  and  Historic  Awards  and  Grants.  The  Committee  has  not  made  any
determination with respect to grants of Awards, Options or SAR's to employees in
the future.  As of August 29,  2000,  the Company had 6 executive  officers  and
approximately  900  employees,   who  are  not  executive   officers  who  could
potentially qualify for grants of Awards, Options or SAR's.

If Proposal 3 is approved by stockholders  and based upon shares of Common Stock
utilized or reserved under  existing or exercised  stock options as of August 1,
2000 under the 2000 Plan, up to 877,000 shares of Common Stock will be available
for grant of  Options,  Awards or SAR's  under the 2000  Plan,  which  shares of
Common  Stock had a market value of  $29,489,125  as of August 1, 2000 and up to
203,618  shares of Common  Stock will be  available  under the 1995 Stock Option
Plan and the 1999 Plan.

As of August 1, 2000, the Committee has granted options to 108 persons under the
2000 Plan.  The following  persons and groups were  recipients of these options:
Arthur Kontos:  none;  Dennis Marino:  5,000;  Thomas W. Neumann:  5,000;  James
Romano: 10,000; Denise Isaac: 5,000 ; all current executive officers as a group:
20,000;  all current directors who are not executive  officers as a group: none;
nominees for election as a director:  Dennis Marino: 5,000; James H. Lynch, Jr.:
none;  and Russell C.  Horowitz:  none;  each  associate  of any such  director,
executive  officer or nominee:  none;  each other  person who  received or is to
receive 5% of such options, awards or SAR's: none; and all employees,  including
all  current  officers  who are not  executive  officers,  as a group:  410,000.
Options  under the 2000  Plan  outstanding  as of  August 1, 2000 have  exercise
prices ranging from $26.5625 to $60.0625 per share.  The Options were issued for
a 10 year term from the date of grant and vest one-third each year commencing on
the first  anniversary  of the date of grant.  The  Company  has not granted any
Awards or SAR's as of August 1, 2000.

Termination  of Employment.  Unless  otherwise  provided by the  Committee,  the
following rules apply to all Options.  Options expire immediately if an employee
is  terminated  for  cause.   If  termination  of  employment  is  voluntary  or
involuntary without cause, Options expire three months after termination. In the
event of an employee's  death within such  three-month  period,  the  employee's
estate  may  exercise  the  Option  for the  number  of  shares  for which it is
exercisable at the date of termination, for one year after death but in no event
beyond the expiration dates of the Option. An Option  outstanding at the time an
employee  retires  under a  Company  retirement  plan  or  becomes  disabled  is
exercisable  within one year of termination for disability in the case of an ISO
or within  three months of  termination  in the case of an ISO to the extent the
ISO is exercisable at termination and in the case of a NQO may be exercisable at
any time to the extent that the optionee was  otherwise  entitled to exercise it
at the time of such  cessation  of  employment  with the Company or a subsidiary
thereof,  but in no event  after the  expiration  of the  option  period.  If an
employee  dies while  employed,  the  employee's  estate may exercise the Option
exercisable at the date of termination of employment for up to three years after
death  (one  year  in  the  case  of  voluntary  or  involuntary  without  cause
termination of employment),  but in no event beyond the expiration  dates of the
Option to the extent the Option was exercisable at the employee's date of death.
If the  employee  dies  within  three  months  after  voluntary  termination  of
employment  without cause,  each Option held by the employee may be exercised by
his or her estate or his or her  beneficiary  at any time within a period of one
year after  death  (but not after the  expiration  of the option  period) to the
extent  exercisable at the date of termination.  Unless otherwise  determined by
the  Committee,  Stock  Awards will  terminate  when the  employee's  employment
terminates for any reason.

Income Tax  Consequences.  Under present law the federal income tax treatment of
Awards, Options and SAR's under the 2000 Plan is generally as follows:
<PAGE>

Awards.  A person  receiving an Award will realize  income when the Award vests.
Any  compensation  includable in the gross income of an employee with respect to
an Award will be subject to appropriate federal income and employment taxes. The
Company will be entitled to a business expense  deduction in the same amount and
at the same  time as when the  recipient  of an  Award  recognizes  compensation
income.  Upon  subsequent  sale of the stock  covered  by an Award,  any  amount
realized in excess of the amount  recognized as  compensation  will constitute a
capital gain. A recipient  may make an election  under Section 83(b) of the Code
within  thirty (30) days after the date of grant of an Award,  in which case the
recipient  would  recognize  income on the date of grant rather than the date of
vesting of the Award.

Incentive Stock Options.  For regular income tax purposes,  an optionee will not
realize  taxable  income upon either the grant of an ISO or its  exercise if the
optionee has been an employee of the Company or a  subsidiary  at all times from
the  date of  grant to a date not more  than  three  months  before  the date of
exercise.  The difference between the fair market value of the stock at the date
of exercise and the  exercise  price of an ISO,  however,  will be treated as an
item of tax  preference in the year of exercise for purposes of the  alternative
minimum tax.

If the shares  acquired  upon an exercise  of an ISO are not  disposed of by the
optionee  within  two years  from the date of grant or within  one year from the
date of exercise, any gain realized upon a subsequent sale of the shares will be
taxable as  long-term  capital  gain.  In that  case,  the  Company  will not be
entitled to a deduction in connection  with the grant or the exercise of the ISO
or the subsequent  disposition of the shares by the optionee. The amount of gain
or loss realized upon such a sale or other  disposition  will be measured by the
difference between the amount realized and the earlier exercise price of the ISO
(the optionee's basis in the stock).

If the optionee  disposes of the shares  within two years from the date of grant
of the ISO or within one year from the date of exercise of the ISO, the optionee
will realize ordinary income in an amount equal to the excess of the fair market
value  of the  shares  at the  date of  exercise  (or  the  amount  realized  on
disposition,  if less) over the option price,  and the Company will be allowed a
corresponding  deduction.  If the amount realized on the disposition exceeds the
fair market value of the shares at the date of exercise the gain on  disposition
in excess of the amount treated as ordinary  income will be treated as a capital
gain.  Any such  capital  gain will be a long-term  capital gain if the optionee
holds the shares for more than one year from the date of exercise.

Nonqualified  Stock Options.  An optionee will not realize income upon the grant
of a NQO.  Upon the exercise of a NQO, an optionee will be required to recognize
ordinary income in an amount equal to the excess of the fair market value at the
date of exercise of the NQO over the option price. Any  compensation  includable
in the gross  income of an  employee  with  respect  to a NQO will be subject to
appropriate federal income and employment taxes. The Company will be entitled to
a business expense deduction in the same amount and at the same time as when the
optionee  recognizes  compensation  income. Upon a subsequent sale of the stock,
any  amount  realized  in excess of such fair  market  value will  constitute  a
capital  gain.  Any such  capital  gain will be a long-term  capital gain if the
optionee holds the shares for more than one year from the date of exercise.

In the limited circumstances in which an officer who is subject to Section 16(b)
of the Securities  Exchange Act of 1934, as amended (the "1934 Act") exercises a
NQO, which exercise is not exempt under Section 16(b) and the gain realized from
such exercise is subject to forfeiture  pursuant to Section 16(b),  no income is
recognized  for federal  income tax purposes at the time of exercise  unless the
optionee  makes an election under Section 83(b) of the Code within 30 days after
the date of exercise,  in which case the rules described in the second preceding
paragraph  would apply.  Where such an election is not made,  the optionee  will
recognize  ordinary  income on the first date that sale of such shares would not
create liability under Section 16(b) of the 1934 Act (this is generally, but not
necessarily,  six  months  after  the date of  exercise).  The  ordinary  income
recognized  to such an optionee  will be the excess,  if any, of the fair market
value of shares on such later date over the option exercise price.
<PAGE>

If an optionee  exercises an Option by tendering Company stock in payment of the
option  price the optionee  will be deemed to exchange the number of  previously
owned shares (e.g.,  50 shares) for an identical  number of new shares (e.g., 50
shares).  This deemed exchange of previously owned Company stock for new Company
stock should be eligible for nonrecognition  treatment under Section 1036 of the
Code as an exchange of common  stock for common  stock in the same  corporation.
With regard to the  additional  number of new Company  shares (e.g.,  the excess
over 50 shares)  that an  optionee  receives  pursuant  to the  exercise  of the
Option,  an  optionee  will be  deemed  to have  acquired  them  without  paying
consideration.  If such  extra  shares are issued  pursuant  to a NQO,  the fair
market value of such extra shares will be included in the  optionees'  income as
compensation  income and the Company will be allowed a corresponding  deduction.
If such extra shares are issued pursuant to an ISO, no income on the exercise of
such Options will be  recognized  by the  optionee,  and the Company will not be
allowed a compensation deduction.  The optionee's basis in the new shares deemed
exchanged  for  old  shares  will  be  equal  to  the  optionee's  basis  in the
surrendered  old shares,  and the  optionee's  holding period in such new shares
will include his or her holding period in the old shares.  The optionee's  basis
in the additional (or excess) new shares received will equal the amount that the
optionee  included in income  with  respect to those  shares  (their fair market
value for stock issued  pursuant to a NQO; zero for stock issued  pursuant to an
ISO), and the optionee's  holding period in such additional shares will start as
of the date of acquisition.

Stock Appreciation  Rights.  SAR's will not result in taxable income upon grant.
Upon exercise,  the optionee will realize  ordinary income in an amount equal to
the cash and/or the fair market value of any shares  received  which amount will
be subject to  appropriate  income and  employment  taxes.  The Company  will be
entitled to a corresponding compensation deduction.

The foregoing  discussion does not purport to be a complete  analysis of all the
potential tax consequences relevant to recipients of Awards, Options or SAR's or
to the  Company or its  subsidiaries.  The above  discussion  does not take into
account the effect of state and local tax laws.  Moreover,  no assurance  can be
given  that  legislative,  administrative,  regulatory  or  judicial  changes or
interpretations will not occur which could modify such analysis. In addition, an
individual's  particular  tax  status  and his or her other tax  attributes  may
result in different tax consequences from those described above. Therefore,  any
participant  in the 2000 Plan  should  consult  with his or her own tax  adviser
concerning  the tax  consequences  of the grant,  exercise and surrender of such
Awards,  Options or SAR's and the disposition of any stock acquired  pursuant to
the exercise of such Awards, Options or SAR's.

Amendments.  The Board of Directors may amend the 2000 Plan at any time, but may
not, without prior shareholder approval, increase the aggregate number of shares
that may be issued thereunder (except as provided in the 2000 Plan),  materially
increase the benefits to participants or materially  modify the  requirements as
to eligibility for participation in the 2000 Plan.

Termination.  The 2000 Plan terminates by its terms on September 1, 2009.

Vote Required

Pursuant  to The New  York  Stock  Exchange  stockholder  approval  policy,  the
affirmative  vote of a majority of the outstanding  shares of Common Stock voted
in person or by proxy at the Meeting is required for approval of the 2000 Plan.

The Board of Directors recommends a vote "FOR" the amendment of the 2000 Plan.



PROPOSAL 4.  RATIFICATION AND APPROVAL OF THE APPOINTMENT
                   OF INDEPENDENT AUDITORS

The   Company,    subject   to    stockholder    ratification,    has   selected
PricewaterhouseCoopers  LLP to serve as its independent  auditors for the fiscal
year ending May 31, 2001. If the  stockholders  do not ratify the appointment of
PricewaterhouseCoopers LLP, the Company may reconsider its selection.

A representative of PricewaterhouseCoopers  LLP is expected to be present at the
Meeting to respond to appropriate questions and will be given the opportunity to
make a statement if he or she desires to do so.
<PAGE>

The affirmative  vote of the holders of a majority of the shares of Common Stock
of the  Company  present,  in person or by proxy,  and  entitled  to vote at the
Meeting is required  for the  ratification  and approval of the  appointment  of
auditors.

The Board of Directors  recommends a vote "FOR" ratification and approval of the
appointment of PricewaterhouseCoopers LLP as independent auditors.



Stockholder Proposals For Next Annual Meeting; Discretionary Voting Authority

Any stockholder  proposals intended to be presented at the Company's next annual
meeting of stockholders  and submitted  pursuant to Rule 14a-8 of the Securities
and  Exchange  Commission,  must be received by the Company at its offices at 10
Exchange Place Centre, Jersey City, New Jersey 07302, on or before May 11, 2001,
for consideration for inclusion in the proxy material for such annual meeting of
stockholders.  Other  stockholder  proposals or other proposals  received by the
Company at its offices at 10 Exchange  Place  Centre,  Jersey  City,  New Jersey
07302 on or after July 27, 2000,  or other  matters  about which the Company did
not have notice prior to such date,  will be voted upon using the  discretionary
authority granted to proxies appointed by the Board of Directors at the Meeting.

Expenses Of Solicitation

The  cost of the  solicitation  of  proxies  will be borne  by the  Company.  In
addition to the use of the mails,  proxies may be solicited by regular employees
of the Company, either personally or by telephone or telegraph. The Company does
not expect to pay any  compensation  for the  solicitation  of proxies,  but may
reimburse  brokers  and other  persons  holding  shares in their names or in the
names of nominees for expenses in sending proxy  material to  beneficial  owners
and obtaining proxies of such owners.

Other Matters

The Board of Directors  does not intend to bring any matters  before the Meeting
other  than as stated in this Proxy  Statement,  and is not aware that any other
matters will be presented  for action at the Meeting.  If any other matters come
before the Meeting,  the persons  named in the enclosed  form of proxy will vote
the proxy with respect thereto in accordance with their best judgment,  pursuant
to the discretionary  authority granted by the proxy. Whether or not you plan to
attend  the  Meeting  in  person,  please  complete,  sign,  date and return the
enclosed proxy card promptly.

                                              By Order of the Board of Directors


                                              Frank E. Lawatsch, Jr.
                                              Secretary

Dated:  September 6, 2000


<PAGE>





                                    EXHIBIT A

                               NDB CAPITAL MARKETS
                                       CEO
                                   BONUS PLAN

1.   General Purposes of the Plan

     NDB  Capital  Markets  Corporation  (or  NDB  Capital  Markets,  LP when it
     succeeds to the active  business of NDB Capital  Markets  Corporation  (the
     "Corporation"))  CEO Bonus Plan is designed to (i) assist National Discount
     Brokers  Group,  Inc.  ("NDBG")  and  the  Corporation  in  motivating  and
     retaining  the  Corporation's  Chief  Executive  Officer,  (ii) promote the
     identification  of his interests  with those of NDBG, the  Corporation  and
     NDBG's  shareholders,  and (iii) enable NDBG and the  Corporation to pay an
     annual cash bonus which is based upon the  achievement of specified  levels
     of performance and deductible for purposes of federal income taxation.

2.   Definitions

     Terms not otherwise defined herein shall have the following meanings:

2.1  "Bonus"  means the cash bonus  paid to the Chief  Executive  Officer  for a
     Bonus Period,  as  determined  by the Committee in the manner  described in
     Sections 3 and 5 hereof.

2.2  "Bonus  Period" means NDBG's  fiscal year,  provided that the last day of a
     Bonus Period must be the last day of NDBG's fiscal year.

2.3  Board" means the Board of Directors of NDBG.

2.4  "Chief  Executive  Officer" means the person  designated as Chief Executive
     Officer of the Corporation from time to time.
2.5  "Code" means the Internal Revenue Code of 1986, as amended.

2.6  "Committee"  means the  committee  appointed by the Board to establish  and
     administer the Plan as provided herein;  provided, that the Committee shall
     have two or more  members  and each  member  of the  Committee  shall be an
     "outside  director" as defined for purposes of Section  162(m) of the Code.
     Unless otherwise determined by the Board, the Compensation Committee of the
     Board shall be the Committee.

2.7  "Income"  means  the  consolidated   pre-tax  net  income  from  continuing
     operations of NDBG, as determined  in accordance  with  generally  accepted
     accounting principles, without any deductions for the payment or accrual of
     a bonus under the National Discount Brokers Group, Inc. 1996 CEO Bonus Plan
     or any successor thereto, and the Bonus under the Plan.

2.8  "Plan" means NDB Capital Markets CEO Bonus Plan.

2.9  "Subsidiary"  means any entity 50% or more the voting  securities  of which
     are owned directly or indirectly by NDBG.


<PAGE>



3.   Administration

     Subject to the express provisions of the Plan, the Committee shall have
plenary  authority to interpret the Plan, to prescribe,  amend and rescind rules
and  regulations  relating  to it and to make all  other  determinations  deemed
necessary or advisable for the administration of the Plan. The determinations of
the Committee pursuant to this authority shall be conclusive and binding.

4.   Eligibility

     Bonus for a Bonus  Period may be made only to a person or  persons  who
serve(s)  as the Chief  Executive  Officer  during all or a portion of the Bonus
Period;  provided,  however that if during a Bonus Period more than one Bonus is
to be paid with respect to such Bonus Period due to the service of more than one
person as Chief Executive Officer during such Bonus Period, such Bonuses may not
exceed the Bonus which would have been paid if only one person had occupied such
position.  A person  who  serves  as both  Chief  Executive  Officer  and  Chief
Executive  Officer of National  Discount  Brokers Group,  Inc. may not receive a
Bonus  under  the  Plan for  periods  in which  he or she  serves  in such  dual
capacity.

5.   Bonus

5.1  As soon as  practicable  following  the end of a Bonus  Period,  but in all
     events prior to paying any Bonus,  the Committee  shall compute and certify
     in writing the Bonus for that Bonus Period. In performing such computation,
     the  Committee  may rely  upon  financial  statements  supplied  by  NDBG's
     officers, provided that the Committee believes such statements to have been
     prepared in accordance with generally  accepted  accounting  principles.  A
     Bonus shall equal 5.176% of Income in a Bonus Period.

5.2  As soon as practicable following the Committee's  completion of the actions
     specified in Section 5.1, the Committee shall certify in writing the Bonus,
     if any, to be paid to the Chief Executive Officer for that Bonus Period and
     shall  authorize  NDBG  and/or the  Corporation  to pay, or  authorize  the
     payment of, such Bonus to the Chief  Executive  Officer in accordance  with
     the terms and conditions of the Plan.

5.3  If the Chief Executive  Officer is not the Chief Executive  Officer for the
     whole  Bonus  Period,  the  Committee  may  reduce the Bonus for such Bonus
     Period  pro rata by  multiplying  the  Bonus  for such  Bonus  Period  by a
     fraction  of the  numerator  of which is the  number  of days in the  Bonus
     Period that the Chief Executive  Officer served as Chief Executive  Officer
     and the denominator is 365.

5.4  Bonuses shall be subject to applicable federal, state and local withholding
     taxes and other applicable withholding in accordance with the Corporation's
     payroll practices as in effect from time to time.

5.5  The Committee, subject to the terms and conditions as it may determine, and
     the Chief Executive  Officer pursuant to any deferred  compensation plan of
     the  Corporation,  shall have the  ability to defer the payment of a Bonus;
     provided,  in either case,  that any  additional  amounts  credited to such
     deferred  payment will be based either on a reasonable  rate of interest or
     the actual rate of return of one or more predetermined actual investments.

5.6  Except as  provided in Section  5.5,  the  Corporation  shall pay the Bonus
     within thirty days after the annual consolidated  financial  statements for
     NDBG are certified by NDBG's outside auditors.
<PAGE>


6.   Transferability

     Until paid to the Chief Executive Officer, a Bonus shall not be subject to
the claims of creditors  and may not be assigned, alienated, transferred or
uncumbered in any way other than by will or pursuant to the laws of descent
and distribution.

7.   Termination or Amendment

     The Board may not amend, modify or terminate the Plan in any respect at
any time without the consent of the Chief Executive Officer so long as Thomas W.
Neumann is the Chief Executive Officer of the Corporation. During the period any
other  person  is Chief  Executive  Officer,  the  Board  may  amend,  modify or
terminate  the Plan in any respect at any time  without the consent of the Chief
Executive Officer.

8.   Effectiveness of Plan and Awards

     The Plan shall be void ab initio  unless the Plan is  approved by a vote of
NDBG's  stockholders  at the  first  meeting  of NDBG's  stockholders  following
adoption of the Plan by the Board.

9.   Effective Date; Term of the Plan

     Subject to stockholder  approval  pursuant to Section 8, the Plan shall
be  effective  as of June 1, 2000 and the first Bonus Period shall be the fiscal
year of NDBG  commencing  in  2000.  The  Plan  shall  remain  in  effect  until
terminated  by the Board  pursuant  to Section 7. No Bonus may be paid under the
Plan after its  termination,  provided  that  termination  of the Plan shall not
affect any Bonus which has been fully earned prior to  termination  of the Plan,
but which is payable on or after the date of  termination  and such Bonus  shall
continue to be subject to the terms of the Plan notwithstanding its termination.

10.  Indemnification of Committee

     In addition to such other rights of indemnification as they may have as
Directors or as members of the  Committee,  each of the members of the Committee
shall  be  indemnified  by  NDBG  against  the  reasonable  expenses,  including
attorneys' fees, actually and reasonably incurred in connection with the defense
of any action, suit or proceeding,  or in connection with any appeal therein, to
which they or any of them may be a part by reason of any action taken or failure
to act under or in  connection  with the Plan or any Bonus made  hereunder,  and
against all amounts  reasonably  paid by them in  settlement  thereof or paid by
them in satisfaction of a judgment in any such action, suit or proceeding to the
maximum extent permitted by law.

11.  General Provisions

11.1 The  establishment  of the Plan shall not confer  upon the Chief  Executive
     Officer any legal or equitable right against the  Corporation,  NDBG or any
     Subsidiary, except as expressly provided in the Plan.

11.2 The  Plan  does not  constitute  an  inducement  or  consideration  for the
     employment of the Chief Executive Officer, nor is it a contract between the
     Corporation,  NDBG, or any  Subsidiary,  and the Chief  Executive  Officer.
     Participation in the Plan shall not give Chief Executive  Officer any right
     to be retained in the employ of NDBG, the Corporation or any Subsidiary.

11.3 Nothing  contained  in this Plan shall  prevent the Board or the  Committee
     from adopting  other or additional  compensation  arrangements,  subject to
     stockholder  approval if such approval is required,  and such  arrangements
     may be either generally applicable or applicable only in specific cases.
<PAGE>

11.4 The Plan shall be governed, construed and administered in accordance with
     the laws of the State of Delaware.







<PAGE>







                                    EXHIBIT B

                   2000 NATIONAL DISCOUNT BROKERS GROUP, INC.
                                COMPENSATION PLAN

SECTION 1.  PURPOSE

         The  purpose  of  the  2000  National   Discount  Brokers  Group,  Inc.
Compensation  Plan  (the  "Plan")  is to  provide  an  additional  incentive  to
employees,  independent contractors, agents and consultants of National Discount
Brokers Group, Inc. (the "Company") and its  Subsidiaries,  to aid in attracting
and retaining employees, independent contractors, agents and consultants, and to
closely align their interests with those of shareholders.

SECTION 2.  DEFINITIONS

         Unless the context clearly  indicates  otherwise,  the following terms,
when used in this Plan, shall have the meanings set forth in this Section 2.

         (a) "Beneficiary" shall mean the person, persons, trust or trusts which
have been designated by a Grantee in his or her most recent written  beneficiary
designation filed with the Committee to receive the benefits specified under the
Plan  upon  such  Grantee's  death.  If,  upon a  Grantee's  death,  there is no
designated  Beneficiary  or  surviving  designated  Beneficiary,  then  the term
Beneficiary means the Grantee's estate.

         (b) "Board" shall mean the Board of Directors of the Company.

         (c) "Change in  Control".  A change in control of the Company  shall be
deemed to have occurred if, over the initial  opposition  of the  then-incumbent
Board (whether or not such Board ultimately acquiesces therein),  (i) any person
or group of persons  (excluding the Company,  its  affiliates,  any benefit plan
maintained by the Company or its  affiliates,  and any  underwriter  temporarily
holding  securities  pursuant to an offering of such securities)  shall acquire,
directly or indirectly, stock of the Company having at least 25% of the combined
voting power of the Company's  then-outstanding  securities,  or (ii) Continuing
Directors (as hereinafter  defined) no longer  constitute at least a majority of
the members of the Board. "Continuing Director" shall mean any individual who is
a member  of the Board on  August  31,  1999 or is  designated  as a  Continuing
Director by a majority of the  Continuing  Directors on the Board at or prior to
such person's initial nomination or election to the Board.

         (d) "Code" shall mean the  Internal  Revenue Code of 1986 and the rules
and regulations thereunder, as it or they may be amended from time to time.

         (e) "Committee"  shall mean the Compensation  Committee of the Board or
such other  committee as may be  designated by the Board.  The  Committee  shall
consist of two or more members of the Board who are "non-employee  directors" as
such term is defined in Rule 16b-3 of the Exchange  Act, as from time to time in
effect and are "outside directors" as defined under Section 162(m) of the Code.

         (f) "Date of  Exercise"  shall  mean the  earlier  of the date on which
written  notice of exercise,  together  with payment in full, is received at the
office of the  Secretary  of the  Company or the date on which  such  notice and
payment are mailed to the  Secretary of the Company at its  principal  office by
certified or registered mail.
<PAGE>

         (g)  "Employee"  shall mean any employee,  including any officer of the
Company or any of its Subsidiaries,  or any other person,  who is an independent
contractor,  agent or consultant of the Company or any of its Subsidiaries,  and
excluding  any  director of the Company who is not  otherwise an employee of the
Company or any of its  Subsidiaries.  In  addition,  a person  who has  accepted
employment by the Company or any of its Subsidiaries is eligible to be granted a
Stock Award,  a Stock Option and/or a Stock  Appreciation  Right under the Plan;
provided,  however,  that such Stock Award,  Stock Option or Stock  Appreciation
Right shall be cancelled if such person fails to commence such employment and no
payment  of value may be made in  connection  therewith  until  such  person has
commenced  such  employment.  For the  purposes  of any  provision  of this Plan
relating to Incentive  Stock Options,  the term  "Employee"  shall be limited to
mean any  employee  (as that term is defined  under  Code  Section  3401(c))  or
officer  of the  Company or any of its  Subsidiaries,  but not any person who is
merely an independent  contractor,  agent or consultant of the Company or any of
its Subsidiaries.

         (h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

         (i) "Fair  Market  Value" shall mean the fair market value of the Stock
as determined by the Committee or under procedures established by the Committee.
Unless otherwise determined by the Committee, the Fair Market Value of the Stock
shall be the mean of the  highest  and  lowest  selling  prices  of the Stock as
reported  on the  Composite  Tape for  securities  traded on the New York  Stock
Exchange  on the  date  value  is to be  determined  (or  the  last  immediately
preceding date on which the Stock was traded).

         (j)  "Grantee" shall mean an Employee granted a Stock Option or a Stock
Award.

         (k)  "Granting  Date"  shall  mean  the  date on  which  the  Committee
authorizes  the issuance of a Stock  Option for a specified  number of shares of
Stock or a Stock Award to a specified Employee.

         (l)  "Incentive  Stock Option" shall mean a Stock Option  granted under
the Plan which is properly  qualified under the provisions of Section 422 of the
Code.

         (m)  "Nonqualified  Stock  Option"  shall mean a Stock  Option  granted
within the Plan which is not an Incentive  Stock  Option or otherwise  qualified
under similar tax provisions.

         (n) "Stock" shall mean the Common  Stock,  as par value $.01 per share,
of  the  Company,   or  such  other   securities  as  may  be  substituted   (or
resubstituted) for the Stock pursuant to Section 10.

         (o) "Stock  Appreciation  Right" shall mean a right granted pursuant to
the Plan to receive Stock, cash, or a combination thereof, upon the surrender of
the right to  purchase  all or part of the  shares of Stock  covered  by a Stock
Option.

         (p) "Stock Award" shall mean a grant under the Plan of an award of
Stock to an Employee.

         (q) "Stock Option" shall mean an Incentive Stock Option or Nonqualified
Stock Option granted pursuant to the Plan to purchase shares of Stock.

         (r) "Subsidiary" shall mean any subsidiary corporation as defined in
Section 424 of the Code.


<PAGE>



SECTION 3.  SHARES OF STOCK SUBJECT TO THE PLAN


         Subject to adjustment  pursuant to Section 10,  1,300,000 shares
of Stock shall be  reserved  for  issuance  upon the  exercise of Stock  Options
granted pursuant to this Plan or granted as Stock Awards. Shares delivered under
the Plan may be  authorized  and  unissued  shares or issued  shares held by the
Company  in its  treasury.  If any  Stock  Awards  or Stock  Options  expire  or
terminate  without having been vested or exercised,  the shares of Stock covered
by such Stock Award or Stock Option shall become  available  again for the grant
of Stock Awards or Stock Options hereunder.  Similarly, if any Stock Options are
surrendered  for cash  pursuant  to the  provisions  of Section 7, the shares of
Stock covered by such Stock Options  shall also become  available  again for the
grant of Stock  Options  hereunder.  Shares of Stock  covered  by Stock  Options
surrendered for Stock pursuant to Section 7, however, shall not become available
again for the grant of Stock Awards or Stock Options hereunder.


SECTION 4.  ADMINISTRATION OF THE PLAN

         (a) The Plan shall be  administered  by the  Committee.  Subject to the
express  provisions of the Plan, the Committee shall have authority to interpret
the Plan, to prescribe,  amend and rescind rules and regulations relating to it,
to determine the terms and  provisions of Stock Awards,  Stock Options and Stock
Appreciation Rights, and to make all other determinations necessary or advisable
for the  administration of the Plan. Any action of the Committee shall be final,
conclusive and binding on all persons,  including the Company, its Subsidiaries,
Grantees,  transferees  under  Section  12(g) hereof or other  persons  claiming
rights from or through a Grantee,  and  stockholders.  The express  grant of any
specific power to the Committee,  and the taking of any action by the Committee,
shall not be construed as limiting any power or authority of the Committee.  The
Committee may delegate to officers or managers of the Company or any Subsidiary,
or committees  thereof,  the  authority,  subject to such terms as the Committee
shall determine, to perform such functions,  including administrative functions,
as the  Committee may  determine,  to the extent that such  delegation  will not
result in the loss of an  exemption  under Rule 16b-3 for Stock  Options,  Stock
Awards or Stock Appreciation Rights granted to Grantees subject to Section 16 of
the  Exchange  Act in respect of the Company  and will not cause Stock  Options,
Stock   Awards  or  Stock   Appreciation   Rights   intended   to   qualify   as
"performance-based  compensation"  under  Code  Section  162(m)  to  fail  to so
qualify.  The Committee  may appoint  agents to assist it in  administering  the
Plan.

         (b) It is intended that the Plan and any transaction hereunder meet all
of the  requirements  of Rule 16b-3  promulgated  by the Securities and Exchange
Commission,  as such rule is  currently  in effect or as  hereafter  modified or
amended,  and all other  applicable  laws.  If any  provision of the Plan or any
transaction  would disqualify the Plan or such  transaction  under, or would not
comply with, Rule 16b-3 or other  applicable laws, such provision or transaction
shall be  construed  or deemed  amended  to  conform to Rule 16b-3 or such other
applicable  laws or otherwise  shall be deemed to be null and void, in each case
to the extent permitted by law and deemed advisable by the Committee.

(c) Any  controversy  or claim  arising  out of or related to this Plan shall be
determined unilaterally by and at the sole discretion of the Committee.

         (d) The Committee and each member thereof shall be entitled to, in good
faith, rely or act upon any report or other information  furnished to him or her
by any  executive  officer,  other  officer  or  employee  of the  Company  or a
Subsidiary, the Company's independent auditors,  consultants or any other agents
assisting in the  administration  of the Plan.  Members of the Committee and any
officer or employee of the Company or a Subsidiary acting at the direction or on
behalf  of the  Committee  shall  not be  personally  liable  for any  action or
determination  taken or made in good faith with respect to the Plan,  and shall,
to the extent  permitted  by law,  be fully  indemnified  and  protected  by the
Company with respect to any such action or determination.
<PAGE>

SECTION 5.  GRANTING OF STOCK OPTIONS

         (a) Only Employees shall be eligible to receive Stock Options under the
Plan.  Directors of the Company who are not also employees of the Company or one
of its Subsidiaries shall not be eligible for Stock Options.

         (b) The  option  price of each share of Stock  subject to an  Incentive
Stock  Option  shall be at least 100% of the Fair Market Value of a share of the
Stock on the Granting Date.

         (c) The option price of each share of Stock  subject to a  Nonqualified
Stock  Option  shall be 100% of the Fair Market Value of a share of the Stock on
the Granting Date, or such other price either greater than or less than the Fair
Market  Value  (but in no event  less  than the par  value of the  Stock) as the
Committee  shall  determine  appropriate  to the purposes of the Plan and to the
Company's total compensation program.

         (d) The Committee shall determine and designate from time to time those
Employees who are to be granted Stock Options and whether the  particular  Stock
Options are to be Incentive  Stock Options or  Nonqualified  Stock Options,  and
shall also specify the number of shares of Stock covered by and the option price
per share of each Stock Option.  Each Stock Option  granted under the Plan shall
be clearly  identified  as to its status as a  Nonqualified  Stock  Option or an
Incentive Stock Option.

         (e) The aggregate  Fair Market Value  (determined at the time the Stock
Option is granted) of the Stock with respect to which  Incentive  Stock  Options
are  exercisable  for the first time by any individual  during any calendar year
(under all such plans of the  individual's  employer  corporation and its parent
and subsidiary corporations) shall not exceed $100,000.

         (f) A Stock Option shall be  exercisable  during such period or periods
and in such  installments  as shall be  fixed by the  Committee  at the time the
Stock Option is granted or in any amendment thereto; but each Stock Option shall
expire not later than ten years from the Granting Date.

         (g) The Committee  shall have the authority to grant both  transferable
Nonqualified  Stock  Options and  nontransferable  Stock  Options,  and to amend
outstanding   nontransferable   Nonqualified   Stock   Options  to  provide  for
transferability.  Each  transferable  Nonqualified  Stock Option may provide for
such  limitations on  transferability  and  exercisability  as the Committee may
designate  at the time a  Nonqualified  Stock  Option is granted or is otherwise
amended to provide for transferability.

         (h) Stock  Options  may be granted to an  Employee  who has  previously
received Stock Awards, Stock Options, Stock Appreciation Rights or other options
whether such prior Stock Options,  Stock Awards or Stock Appreciation  Rights or
other  options  are  still  outstanding,   have  previously  been  exercised  or
surrendered in whole or in part, or are canceled in connection with the issuance
of new Stock Options, Stock Awards or Stock Appreciation Rights.

         (i) Subject to adjustment  pursuant to Section 10, the aggregate number
of shares of Stock  subject to Stock  Options  granted to an Employee  under the
Plan during any calendar year shall not exceed 300,000 shares.

         (j)  Notwithstanding  the  foregoing,  the option price of an Incentive
Stock  Option in the case of a Grantee  who owns  more than ten  percent  of the
total combined voting power of all classes of stock of the Company or any of its
Subsidiaries,  will not be less than one-hundred-ten  percent (110%) of the Fair
Market  Value  of the  Stock  at the  Granting  Date  and in the  case of such a
Grantee,  the  Incentive  Stock  Option may be exercised no more than five years
after the Granting Date.


<PAGE>

SECTION 6.  EXERCISE OF STOCK OPTIONS

         (a) Except as  provided in Section 9 or 12(g),  no Stock  Option may be
exercised  at any time unless the Grantee is an Employee on the Date of Exercise
and, in the case of holders of Incentive Stock Options,  has been an Employee at
all times during the period beginning on the Granting Date and ending on the day
3 months before the date of such exercise.

         (b) The  Grantee  shall  pay the  option  price  in full on the Date of
Exercise of a Stock Option in cash,  by check,  or by delivery of full shares of
Stock of the Company,  duly endorsed for transfer to the Company with  signature
guaranteed,  or by any combination  thereof.  Stock will be accepted at its Fair
Market Value on the Date of Exercise.

         (c) Subject to the approval of the Committee, or of such person to whom
the Committee may delegate such authority ("its designee"), the Company may loan
to the  Grantee a sum  equal to an amount  which is not in excess of 100% of the
purchase  price of the shares of Stock acquired upon exercise of a Stock Option,
such loan to be evidenced by the  execution  and delivery of a promissory  note.
Interest  shall be paid on the  unpaid  balance of the  promissory  note at such
times and at such rate as shall be  determined by the Committee or its designee.
Such  promissory note shall be secured by the pledge to the Company of shares of
Stock having an  aggregate  purchase  price on the date of purchase  equal to or
greater than the amount of such note. A Grantee  shall have,  as to such pledged
shares of Stock, all rights of ownership including the right to vote such shares
of Stock and to receive  dividends paid on such shares of Stock,  subject to the
security interest of the Company.  Such shares of Stock shall not be released by
the Company from the pledge unless the proportionate  amount of the note secured
thereby has been repaid to the Company;  provided,  however that shares of Stock
subject to a pledge may be used to pay all or part of the purchase  price of any
other option  granted  hereunder or under any other stock  incentive plan of the
Company under the terms of which the purchase  price of an option may be paid by
the  surrender of shares of Stock,  subject to the terms and  conditions of this
Plan  relating to the  surrender  of shares of Stock in payment of the  exercise
price of an option.  In such event, that number of the newly purchased shares of
Stock  equal to the  shares of Stock  previously  pledged  shall be  immediately
pledged as substitute  security for the pre-existing  debt of the Grantee to the
Company,  and thereupon  shall be subject to the provisions  hereof  relating to
pledged shares of Stock.  All notes executed  hereunder shall be payable at such
times  and in such  amounts  and  shall  contain  such  other  terms as shall be
specified by the  Committee  or its designee or stated in the option  agreement;
provided,  however,  that such terms shall conform to requirements  contained in
any applicable regulations which are issued by any governmental authority.

SECTION 7.  STOCK APPRECIATION RIGHTS

         (a) The Committee may grant to any Employee,  Stock Appreciation Rights
in connection with any Stock Option. Stock Appreciation Rights may be granted at
the time the related Stock Option is granted or at any time thereafter up to six
months prior to the expiration of the related Stock Option.

         (b) Stock Appreciation Rights shall be exercisable at such times and to
the extent that the related  Stock Option shall be  exercisable  and only to the
extent the Stock Appreciation  Right has a positive value,  unless the Committee
specifies a more restrictive period.

         (c) Upon the exercise of a Stock Appreciation  Right, the Grantee shall
surrender the related Stock Option or a portion thereof and shall be entitled to
receive  payment of an amount  determined by multiplying the number of shares as
to which the Stock Option rights are  surrendered by the difference  obtained by
subtracting  the exercise  price per share of the related  Stock Option from the
Fair  Market  Value of a share of Stock  on the Date of  Exercise  of the  Stock
Appreciation Right.
<PAGE>

         (d) Payment of the amount  determined  under Section 7(c) shall be made
in Stock,  in cash, or partly in cash and partly in Stock as the Committee shall
determine in its sole discretion.

SECTION 8.  GRANTING OF STOCK AWARDS

(a) Only  Employees  shall be eligible to receive  Stock  Awards under the Plan.
Directors of the Company who are not also employees of the Company or one of its
Subsidiaries shall not be eligible for Stock Awards.

(b) The  Committee  shall  determine  and  designate  from  time  to time  those
Employees who are to be granted Stock Awards and the terms and conditions of the
Stock  Awards,  including  the  number of shares of Stock  subject  to the Stock
Award,  vesting  provisions  and the rights of a Grantee of the Stock Award with
respect to the Stock until the Stock Award fully vests.


(c) During the period  prior to  vesting of a Stock  Award,  the  Grantee of the
Stock  Award  shall  have the  right  to  vote,  or give  written  consent  as a
stockholder  with  respect to, the shares of Stock  subject to the Stock  Award.
Subject to the  provisions of the Plan,  the  Committee  shall have the power to
determine whether Grantees shall have the right to receive dividends distributed
with respect to the shares of Stock  subject to the Stock Award and other rights
of a  stockholder  with respect to the Stock  subject to the Stock Award.  Until
vested,  shares of Stock  subject to a Stock Award may be held in custody  under
terms and  conditions  specified  by the  Committee.  Except as  provided by the
Committee pursuant to Section 12(g) with respect to a Stock Award, a Grantee may
not  sell,  transfer,  hypothecate,  pledge,  margin  or  otherwise  dispose  of
interests  in or  otherwise  encumber  shares of Stock  subject to a Stock Award
until the Stock Award vests.

(d) Subject to adjustment pursuant to Section 10, the aggregate number of shares
of Stock granted to an Employee during any calendar year shall not exceed 50,000
shares.

(e)  Except as  otherwise  determined  by the  Committee,  upon  termination  of
employment during the period when a Stock Award has not vested, Stock subject to
a Stock Award that is not at that time vested shall be forfeited and  reacquired
by the Company;  provided that the Committee may provide,  by rule or regulation
or in any agreement reflecting a Stock Award, or may determine in any individual
case, that restrictions or forfeiture  conditions  relating to the Stock subject
to a  Stock  Award  shall  be  waived  in  whole  or in  part  in the  event  of
terminations  resulting  from specified  causes,  and the Committee may in other
cases waive in whole or in part the  forfeiture  of the Stock subject to a Stock
Award.

(f) Stock  subject to a Stock Award  granted  under the Plan may be evidenced in
such manner as the Committee shall determine. If certificates  representing such
Stock are registered in the name of the Grantee,  the Committee may require that
such certificates bear an appropriate legend referring to the terms,  conditions
and  restrictions  applicable to such Stock,  that the Company  retain  physical
possession of the  certificates,  and that the Grantee  deliver a stock power to
the Company, endorsed in blank, relating to the Stock.

(g) As a condition to the grant of a Stock  Award,  the  Committee  may
require  that any cash  dividends  paid on Stock  subject to the Stock  Award be
automatically  reinvested  in  additional  shares  of  Stock.  Unless  otherwise
determined by the Committee,  Stock distributed in connection with a stock split
or stock dividend, and other property distributed as a dividend shall be subject
to restrictions and a risk of forfeiture to the same extent as the Stock subject
to the Stock Award with respect to which such shares of Stock or other  property
have been distributed.



<PAGE>

SECTION 9.  TERMINATION OF EMPLOYMENT

         Except as  otherwise  provided by the  Committee  at the time the Stock
Option or Stock Award is granted or any amendment  thereto,  if a Grantee ceases
to be an Employee then:

         (a) if termination  of employment is voluntary or  involuntary  without
cause, (i) all Stock Awards of such Grantee shall be cancelled as of the date of
termination  to the extent then unvested and (ii) such Grantee may exercise each
Stock Option held by the Grantee within three months after such termination (but
not after the  expiration  date of the Stock Option) to the extent of the number
of shares  subject to the Stock  Option  which are  purchasable  pursuant to its
terms at the date of termination;

         (b) if  termination  is for cause,  all Stock  Options and Stock Awards
held by such Grantee  shall be canceled as of the date of termination;

         (c) subject to the provisions of Section 9(e), if termination is (i) by
reason of  retirement  at a time when such  Grantee is  entitled  to the current
receipt of benefits under any retirement  plan  maintained by the Company or any
Subsidiary, or (ii) by reason of disability, each Nonqualified Stock Option held
by such  Grantee may be exercised by such Grantee at any time (but not after the
expiration  date of the  Nonqualified  Stock  Option) and each  Incentive  Stock
Option held by such Grantee may be exercised by such Grantee  within one year of
such  termination  for  disability and three months after such  termination  for
retirement (but not after the expiration date of the Incentive Stock Options) in
each case to the  extent of the  number of shares  subject  to the Stock  Option
which were purchasable pursuant to its terms at the date of termination;

         (d) if  termination  is by reason of the  death of such  Grantee,  each
Stock Option held by such Grantee may be exercised by such Grantee's  estate, or
by any person who  acquires  the right to exercise the Stock Option by reason of
such  Grantee's  death,  at any time  within a period of three years after death
(but not after the  expiration  date of the Stock  Option)  to the extent of the
total  number of shares  subject  to the Stock  Option  which  were  purchasable
pursuant to its terms at the date of termination; or

         (e) if such Grantee  should die within  three  months  after  voluntary
termination  of  employment  or  involuntary   termination   without  cause,  as
contemplated  in Section  9(a),  each Stock  Option held by such  Grantee may be
exercised by such Grantee's  estate,  or by any person who acquires the right to
exercise by reason of such Grantee's  death,  at any time within a period of one
year after death (but not after the expiration  date of the Stock Option) to the
extent  of  the  number  of  shares  subject  to the  Stock  Option  which  were
purchasable pursuant to its terms at the date of termination.

SECTION 10.  ADJUSTMENTS

         Except  as  provided  in this  Section,  in the  event  of any  merger,
consolidation, reorganization,  recapitalization, stock dividend, stock split or
other change in the corporate  structure or capitalization  affecting the Stock,
there  shall be an  appropriate  adjustment  made by the Board in the number and
kind of shares that may be granted in the aggregate and to individual  Employees
under the Plan, the number and kind of shares subject to each outstanding  Stock
Award, Stock Option and Stock Appreciation Right and the option prices. Upon the
dissolution or liquidation of the Company,  or upon a reorganization,  merger or
consolidation of the Company as a result of which the outstanding  securities of
the class then subject to Stock  Options or Stock Awards  hereunder  are changed
into or exchanged for cash or property or securities not of the Company's issue,
or upon a sale of  substantially  all of the  property of the Company to, or the
acquisition of stock  representing  more than eighty percent (80%) of the voting
power of the stock of the Company then  outstanding  by, another  corporation or
person,  the Plan  shall  terminate,  and all Stock  Options  and  Stock  Awards
theretofore  granted  hereunder  shall  terminate,  unless  provision be made in
writing in connection  with such  transaction for the continuance of the Plan or
for the assumption of Stock Options and Stock Awards theretofore granted, or the


<PAGE>

substitution  for such Stock Awards of awards  covering the stock of a successor
employer  corporation,  or a parent or a subsidiary thereof and the substitution
for such Stock  Options of options  covering  the stock of a successor  employer
corporation,  or a parent or a subsidiary thereof, with appropriate  adjustments
as to the  number  and kind of shares and  prices,  in which  event the Plan and
Stock Options and Stock Awards theretofore  granted shall continue in the manner
and under the terms so provided; provided, however that unless provision is made
for substitution of Stock Awards and Stock Options as provided above, such Stock
Options shall be fully exercisable  immediately prior to the termination thereof
and Stock  Awards  shall  vest  immediately  prior to the  termination  thereof.
Notwithstanding  anything in the Plan to the  contrary,  if any right under this
Plan  would  cause a  transaction  to be  ineligible  for  pooling  of  interest
accounting  that  would,  but for the  right  hereunder,  be  eligible  for such
accounting  treatment,  the  Committee  may  modify or adjust  the right so that
pooling of interest accounting shall be available, including the substitution of
Stock having a Fair Market Value equal to the cash otherwise  payable  hereunder
for the right  which  caused the  transaction  to be  ineligible  for pooling of
interest accounting.

SECTION 11.  TENDER OFFER; CHANGE IN CONTROL

         (a) A Stock Option shall become  immediately  exercisable to the extent
of the total  number of shares of Stock  subject to the Stock Option and a Stock
Award  shall  immediately  vest in full in the event of (i) a tender  offer by a
person or persons other than the Company for all or any part of the  outstanding
Stock if,  upon  consummation  of the  purchases  contemplated,  the  offeror or
offerors would own,  beneficially or of record, an aggregate of more than 25% of
the outstanding Stock, or (ii) a Change in Control of the Company.

         (b) The  Committee  may authorize the payment of cash upon the exercise
of a Stock Appreciation Right during a period (i) beginning on the date on which
a tender offer as described in (a),  above,  is first published or sent or given
to  holders  of Stock  and  ending  on the date  which is seven  days  after its
termination  or  expiration,  or (ii) beginning on the date on which a Change in
Control of the Company  occurs and ending on the twelfth  business day following
such date.

SECTION 12.  GENERAL PROVISIONS

         (a) Each Stock Option,  Stock  Appreciation Right and Stock Award shall
be evidenced by a written instrument  containing such terms and conditions,  not
inconsistent with this Plan, as the Committee shall approve.

         (b) The granting of a Stock Option,  Stock  Appreciation Right or Stock
Award in any year  shall not give the  Grantee  any right to  similar  grants in
future  years or any right to be  retained  in the employ of the  Company or any
Subsidiary  or  interfere  in any way with  the  right  of the  Company  or such
Subsidiary to terminate an Employee's employment at any time.

         (c)  Notwithstanding any other provision of the Plan, the Company shall
not be required to issue or deliver any certificate or  certificates  for shares
of Stock under the Plan prior to fulfillment of all of the following conditions:

                  (i)  The listing, or approval for listing upon notice of
issuance, of such shares on the New York Stock Exchange;

                  (ii) Any  registration or other  qualification  of such shares
under any state or federal law or  regulation,  or the  maintaining in effect of
any such  registration  or other  qualification  which the Committee may, in its
discretion upon the advice of counsel, deem necessary or advisable; and
<PAGE>

                  (iii) The obtaining of any other  consent,  approval or permit
from any state or federal  governmental  agency which the Committee  may, in its
discretion upon the advice of counsel, determine to be necessary or advisable.

         (d) The  Company  shall  have the right to deduct  from any  payment or
distribution  under  the Plan  any  federal,  state  or local  taxes of any kind
required by law to be  withheld  with  respect to such  payments or to take such
other action as may be necessary to satisfy all  obligations  for the payment of
such taxes. In case distributions are made in shares of Stock, the Company shall
have the right to retain  the value of  sufficient  shares of Stock to equal the
amount of tax to be withheld  for such  distributions  or require a recipient to
pay the  Company  for any such taxes  required  to be withheld on such terms and
conditions prescribed by the Committee.

         (e) No Grantee shall have any of the rights of a shareholder by reason
of a Stock Option until it is exercised.

         (f) This Plan shall be construed  and enforced in  accordance  with the
laws of the State of Delaware  (without  regard to the  legislative  or judicial
conflict of laws rules of any state), except to the extent superseded by federal
law.

         (g) No Stock Option, Stock Award or Stock Appreciation Right or other
right or interest of a Grantee under the Plan shall be pledged,  hypothecated or
otherwise  encumbered  or subject to any lien,  obligation  or liability of such
Grantee to any party  (other than the Company or a  Subsidiary),  or assigned or
transferred  by such Grantee  otherwise  than by will or the laws of descent and
distributionor  to a  Beneficiary  upon the death of a  Grantee,  and such Stock
Option,  Stock  Award  or  Stock  Appreciation  Right  or  rights  that  may  be
exercisable  shall be  exercised  during the lifetime of the Grantee only by the
Grantee  or his or her  guardian  or legal  representative,  except  that  Stock
Option,  Stock Award or Stock  Appreciation  Right and other rights  (other than
Incentive Stock Options and Stock  Appreciation  Rights in tandem therewith) may
be  transferred to one or more  transferees  during the lifetime of the Grantee,
and may be exercised by such  transferees  in accordance  with the terms of such
Stock Option,  Stock Award or Stock  Appreciation  Right, but only if and to the
extent such  transfers are  permitted by the  Committee  pursuant to the express
terms  of any  agreement  reflecting  a  Stock  Option,  Stock  Award  or  Stock
Appreciation  Right (subject to any terms and conditions which the Committee may
impose thereon). A beneficiary,  transferee, or other person claiming any rights
under the Plan from or  through  any  Grantee  shall be subject to all terms and
conditions of the Plan and any agreement  reflecting a Stock Option, Stock Award
or Stock  Appreciation  Right  applicable to such  Grantee,  except as otherwise
determined by the Committee,  and to any additional terms and conditions  deemed
necessary or appropriate by the Committee.


SECTION 13.  AMENDMENT AND TERMINATION

         (a) The Plan shall terminate on September 1, 2009 and no Stock Award or
Stock Option shall be granted hereunder after that date, provided that the Board
may terminate the Plan at any time prior thereto.

         (b) The Board may amend the Plan at any time without notice;  provided
however, that the Board may not, without prior approval by the shareholders, (i)
increase the maximum  number of shares of Stock for which Stock Options or Stock
Awards may be granted  (except as contemplated by the provisions of Section 10),
(ii) materially  increase the benefits accruing to participants  under the Plan,
or (iii) materially  modify the requirements as to eligibility for participation
in the Plan.


<PAGE>



          (c)  Except as  specifically  contemplated by the Plan, no termination
or  amendment  of the Plan may,  (i)  without the consent of a Grantee to whom a
Stock Option shall theretofore have been granted, adversely affect the rights of
such Grantee under such Stock Option, or (ii) without the consent of a recipient
of a Stock Award, adversely affect the rights of such recipient under such Stock
Award.

SECTION 14.  EFFECTIVE DATE AND SHAREHOLDERS' APPROVAL

         The Plan shall become  effective as of September 1, 1999 subject to its
approval by the affirmative votes of the holders of a majority of the securities
of the Company  present,  or  represented,  and  entitled to vote thereon at the
annual meeting of shareholders of the Company or any adjournment or postponement
thereof.




<PAGE>



                      National Discount Brokers Group, Inc.

The undersigned  hereby appoints John P. Duffy, and Ralph N. Del Deo and each of
them, with full power of substitution, as proxies for the undersigned, to attend
the annual meeting of stockholders of National Discount Brokers Group, Inc. (the
"Company"),  to be held at 90 Hudson Street,  Jersey City, New Jersey on October
25, 2000, at 4:00 p.m., New Jersey time, or any adjournment thereof, and to vote
the number of shares of common stock of the Company that the  undersigned  would
be entitled to vote, and with all the power the  undersigned  would possess,  if
personally present, as follows:

1.       /  / For or /  / Withhold Authority to vote for the following nominees
         for election as Class 1 directors:


Nominees: Dennis Marino, James H. Lynch, Jr., Russell C. Horowitz

(Instruction:  To withhold authority to vote for any individual nominee, write
 the nominee's name on the line provided below.)

---------------------------------


2.       Approval of the NDB Capital Markets CEO Bonus Plan

                      / / For or / / Against or / / Abstain

3.       Approval of an amendment to the 2000 National Discount Brokers Group,
         Inc. Compensation Plan.

                      / / For or / / Against or / / Abstain

4.       Approval of the appointment of PricewaterhouseCoopers LLP as the
         Company's independent auditors for the fiscal year ending May 31, 2001.

                      / / For or / / Against or / / Abstain

5.       In their discretion, on such other business as may properly come before
         the meeting or any adjournment thereof.


<PAGE>


         The  Proxies  will  vote as  specified  herein  or,  if a choice is not
specified,  they will vote For the  nominees  listed in Item 1, For the proposal
set  forth in Items 2, 3 and 4, and in  their  discretion  with  respect  to the
matters referred to in Item 5.

         This Proxy is solicited by the Board of Directors of the Company.


                                                      Receipt  of the  Notice of
                                                      Annual      Meeting     of
                                                      Stockholders,        Proxy
                                                      Statement  dated September
                                                      6, 2000 and Annual  Report
                                                      to  Stockholders is hereby
                                                      acknowledged:
                                                      Date:_________________2000
                                                      --------------------------
                                                             (Signatures)
                                                      (Please  sign  exactly  as
                                                      your names appear  hereon,
                                                      indicating,  where proper,
                                                      official    position    or
                                                      representative capacity.)