Specialist Expansion to Non Amex Venues

We have been asked by several issuers to consider expanding our Specialist role to additional venues. Our current products (26 both trading and allocated) are all on the Amex. We have done a preliminary analysis and currently are seriously considering becoming a LMM on ARCA. We have eliminated the NYSE as a possible expansion. We view Hybrid as a difficult hurdle to leap. Also, our analysis indicates that the NYSE is almost twice as expensive as the Amex in terms of start up and ongoing operations. The one hurdle which stands out is that a separate BD would have to be formed as the Amex operation and the ARCA operation cannot be in the same BD. This would entail a separate management structure for the two BDs. We will keep you informed as to our progress.

Additionally, we are considering expanding our non specialist trading activities into more products. Currently we have 2 market makers on the Amex floor. We are considering adding floor Market Makers and also looking into trading ETFs remotely from an upstairs desk.

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