I. Comparing and Contrasting Millennium and other Nasdaq-Centric ECN's

In 1999, Millennium was founded by a partnership comprised of NYFIX, Inc. and 10 prominent US Investment Banks including ABN Amro, Bank of America, Deutsche Bank, JP Morgan, Lehman Brothers, Morgan Stanley, SC Bernstein, SG Cowen, UBS Warburg, and Wachovia Securities. We are a firm focused on the electronic interaction of listed equity order flow. As a result my comments will focus exclusively on Listed equity securities.

Millennium went live in September of 2001 and has steadily grown daily executed volume to our current average of approximately 9 million shares/day. Our customers are comprised of Investment Banks, Online Trading Firms, and Program Trading entities. In total we have 65 contracted users of the system. Importantly, they contribute a pool of liquidity to our system by passing their DOT and institutional block volume though Millennium by default on its way to the floor of the NYSE.This pass through volume is allowed to interact with resting orders that can improve the price reflected on the NYSE by at least $0.01. If our system cannot improve price that order is immediately (100 - 150 milliseconds) sent onto its original destination. Trades are immediately printed in the NASDAQ Intermarket. We do not publish a quote in competition with the NYSE and we presently have no aspirations to become a US Stock Exchange.

NYFIX, Inc. the parent of Millennium is the dominant provider ofNetwork Services and Order Management Technology to the Listed Trading Marketplace. We estimate that we touch approximately 40% of institutional block trading liquidity every trading day. On the re-opening of the exchange September 17, 2001 NYFIX, Inc. touched 1.2 billion shares of executed Listed volume. On any given day, 15% - 20% of this volume is passed through Millennium.

II. A Quiet Revolution

US Listed market structure is differentiated in one very critical way from the Nasdaq marketplace. In 1996, the change in Nasdaq order handling rules mandated by the regulatory overhaul of that market catalyzed growth of the ECN model. In effect, Nasdaq market access was "democratized". The US Listed marketplace has not experienced a transformational event of this magnitude. While investors have electronic access (such as DOT) to the NYSE, they must interact with a "gatekeeper" (NYSE Specialist) when transacting with trading counterparties. Firms wishing to compete with the NYSE Specialist as market makers have historically been relegated to the ITS (Intermarket Trading System). This has created a market opportunity for Millennium. Many of our constituent clients aspire to compete with the NYSE Specialist. We provide a mechanism by which they can interact electronically with a subset of NYSE liquidity as long as they are willing to improve price. We give these firms the ability to submit order flow instantaneously and cancel order flow instantaneously. Their only obligation when they submit a live order into our system is to transact.

There is a quiet revolution starting in the US Listed marketplace. Investors and traders who have become disenchanted with current market structure are moving beyond the experimentation phase. They are starting to employ ATS' like the ones represented here today. The value proposition is clear - execution that is electronically matched without human intermediation takes one middleman and the resulting economic impact out of the equation. What makes that possible today? I would submit to you that advanced technology, industry protocols, and high speed networks support this type healthy competition without the resultant risk of fragmentation.

III. Profound Change

This quiet revolution combined with the decimalization of stocks, the consolidation of NYSE Specialist units, the requirement to submit quality of execution data for the public record , and the extended bear market in the US Equity Markets is in the process of causing profound change to the Securities Industry.

Given the lack of investment returns generated in the past three years, there has been increasing scrutiny placed on transaction costs by end investors. In an era where outsized investment returns have been eliminated by poor market performance, best execution is not a luxury item. It can make or break best performance.

Market centers are compelled to publish their quality of execution data in accordance with SEC Regulation 11ac1-5. We welcome this objective measurement of performance. In our most recent filing as of August, 2002 we compared very favorably against a listed equity market center average In the four main categories used measure performance. They are the following: 1) Percentage of order flow executed in 0-9seconds, 2) Percentage of orders that were price improved, 3) Average order size, and 4) Percentage of orders executed outside the quote. Millennium executed 97.9% of its order flow within 0-9 seconds versus a market center average of 52%. Millennium price improved 75.6% of its order flow versus a market center average of 32.9%. Millennium's average order size was equal to 926 shares versus a market center average of 882 shares. Millennium traded outside of the quote 5.9% of the time versus a market center average of 21.3%.

IV. Summary

While we can argue about the changing role of an intermediary all day long, there is one inescapable and unavoidable truth to the present supply chain in the trading US listed equity securities - there are a lot of middlemen. The question becomes - how does each link in that chain justify its own unique cost/benefit. We would argue that technology is changing the answer to that question and the possible outcomes. Special interests that argue against "fragementation" are really arguing against competition. Our publicly available quality of execution data clearly makes the case for the automation of client interaction and the resultant benefit.