SEC Division of Trading and Markets no-action letter: EDX London Limited and OM London Exchange Limited — SEC — US

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October 29, 2003

Mr. Derek Oliver Director of Legal Affairs EDX London Limited and OM London Exchange Limited 131 Finsbury Pavement London EC2A 1NT United Kingdom

Re:

EDX London Limited, OM London Exchange Limited-Standardized and Flexibly Structured Swedish, Norwegian, and Danish Stock Options and Standardized and Flexibly Structured OMX Index, OBX Index, and KFX Index Options

Dear Mr. Oliver:

In your letter on behalf of EDX London Limited ("EDX London") and OM London Exchange Limited ("OMLE"), which we received on October 27, 2003, you request advice that, based on the circumstances stated in this letter, the Division of Market Regulation ("Division") will not recommend enforcement action to the Securities and Exchange Commission ("Commission") against (1) EDX London, any of the officers, directors, or representatives of EDX London, or any member of EDX London (an "EDX London Member" or "Member") under Section 5 of the Securities Exchange Act of 1934 ("Exchange Act") by reason of EDX London not registering as a national securities exchange under Section 6 of the Exchange Act; (2) EDX London, any of the officers, directors, or representatives of EDX London, or EDX London Members, by reason of EDX London and EDX London Members not registering under Section 15(b) of the Exchange Act as broker-dealers; and (3) OMLE or any of the officers, directors, or representatives of OMLE by reason of OMLE not registering as a clearing agency under Section 17A of the Exchange Act, if EDX London and its Members act, as described below, to familiarize certain registered broker-dealers and large financial institutions in the United States with EDX London and certain stock and index options listed and traded on EDX London. Specifically, although EDX London will trade other equity derivatives and may trade options on other underlying interests, the following options listed and traded on EDX London are the sole subject matter of this request: standardized and flexibly structured 1 Swedish, Norwegian, and Danish stock options ("Stock Options") and standardized and flexibly structured OMX Index, 2 OBX Index, 3 and KFX Index 4 options ("Index Options") (the Stock Options and Index Options are referred to, collectively, as the "Options"). The relief you seek is similar to that previously granted by the Division to other non-U.S. exchanges. 5

We understand the facts to be as follows:

OM AB ("OM") 6 and the London Stock Exchange plc ("LSE") formed EDX London to acquire, among other business lines, the Scandinavian equity derivatives exchange business owned and operated by OMLE. 7 The U.K. Financial Services Authority ("FSA") has approved EDX London as a Recognised Investment Exchange ("RIE"). EDX London's activities as a RIE are regulated by the FSA pursuant to the Financial Services and Markets Act of 2000.

On June 30, 2003, EDX London began trading the Options that formerly were listed and traded on OMLE. 8 Although OMLE no longer trades the Options, OMLE currently serves as the Designated Clearing House for the Options and, accordingly, OMLE is the central clearing counterparty for all Options traded through the facilities of EDX London.

EDX London is seeking to conclude an agreement with a third party that will replace OMLE as the Designated Clearing House for EDX London. When EDX London appoints another party as the Designated Clearing House for EDX London, that party will assume responsibility as the central clearing counterparty for all options contracts traded on EDX London. At that time, OMLE will discharge or novate the EDX London Options contracts reflecting open positions registered with it and, simultaneously, the open positions will be registered with the new Designated Clearing House. EDX London anticipates that this transition will not be implemented until the first quarter of 2004. Prior to the transition, EDX London will submit a letter to the Division on behalf of the new Designated Clearing House asking that the Division not recommend enforcement action against EDX London's new Designated Clearing House if the new Designated Clearing House does not register as a clearing agency under Section 17A of the Exchange Act. 9

OMLE registered Swedish stock options and OMX Index Options on Form S-20, and OMLE plans to file a post-effective amendment deregistering any unsold Swedish stock options and OMX Index Options under its Form S-20, on or about October 29, 2003.

The standardized Stock Options are "American style" and, as such, may be exercised at any time prior to expiration. The standardized Index Options are "European style" and, as such, may be exercised only during a specified period immediately prior to expiration in accordance with EDX London's rules.

EDX London has entered into an Exchange Co-operation Agreement with Stockholmb�rsen, Oslo B�rs, and K�benhavns Fondsb�rs that provides for the Options contracts to be tradeable in a combined market comprising members of each of the exchanges. Stockholmb�rsen is authorized as an exchange by the Swedish Financial Supervisory Authority and is authorized to provide clearing services under the Swedish legislation governing exchange and clearing operations. Oslo B�rs is authorized as a Norwegian exchange in accordance with the Stock Exchange Act (Act of November 27, 2000:2000 no 80) and is supervised by the Norwegian regulator, Kredittilysnet. K�benhavns Fondsb�rs is authorized as a Danish exchange in accordance with the Consolidated Act (No 587 of 9 July 2002) and is supervised by the Danish regulator, Finnanstilysnet.

EDX London, Stockholmb�rsen, Oslo B�rs, and K�benhavns Fondsb�rs each function as distinct exchanges, have their own rules and members, and are supervised by their own national regulator. However, in relation to the Options, each member of each exchange may participate in a combined order book. Orders are entered into the combined order book on an anonymous basis. 10

Quotation and transaction reporting for the Options is produced by the best orders provided by the membership of the relevant exchanges at any given time. Each exchange is responsible for the supervision of the activities of its members and for the clearing and settlement of transactions by its members either directly, in the case of Stockholmb�rsen, or by arrangements made by the exchange with a clearing house. Options contracts purchased or sold by Members will be cleared and settled by OMLE. Because their members participate in a combined market relating to these instruments, EDX London, Stockholmb�rsen, Oslo B�rs, and K�benhavns Fondsb�rs have ensured that their respective rules relating to the trading and clearing of the Options are harmonized.

EDX London represents that the Exchange Co-Operation Agreement that EDX London has entered into with Stockholmb�rsen, Oslo B�rs, and K�benhavns Fondsb�rs provides for the sharing of regulatory information with Stockholmb�rsen, Oslo B�rs, and K�benhavns Fondsb�rs that would enable EDX London to obtain information it required to investigate a suspected manipulation of the Options traded on EDX London. Where the underlying equity for a Stock Option or one of the component stocks of the OMX Index, the OBX Index, or the KFX Index is traded on another market, EDX London represents that it will be able to obtain information required to investigate a suspected manipulation either directly from the relevant market or from Stockholmb�rsen, Oslo B�rs, or K�benhavns Fondsb�rs.

EDX London represents that it has the power under its rules to require members to provide it with information or to assist EDX London otherwise in relation to activities carried out on its markets.

EDX London Members execute transactions on EDX London by entering orders through OM's CLICK� exchange technology platform or by placing orders with EDX London officials by telephone.

EDX London currently has 63 Members, 62 of whom were previously members of OMLE. Access to the trading facilities of EDX London is restricted to EDX London Members. All EDX London Members are required to satisfy certain legal, financial, and technical membership criteria on an ongoing basis. Among other things, they must demonstrate that they have received the requisite regulatory authorization for the type of investment business that they wish to conduct on EDX London. EDX London Members that have a permanent place of business within the United Kingdom must be authorized by the FSA. EDX London Members that have a permanent place of business in Iceland, Norway, Liechtenstein, or a country that is part of the European Union, but not within the United Kingdom, must be authorized by the relevant regulator in their respective home country. EDX London Members that do not have a permanent place of business in any of the foregoing countries must demonstrate to the satisfaction of EDX London that they are subject to an appropriate level of regulation with respect to their EDX London-related activities and that they comply with local regulatory requirements.

EDX London Members must satisfy the membership criteria appropriate to the capacity in which they intend to act on EDX London and must have the necessary legal and financial capacity. In particular, a prospective member of EDX London must satisfy EDX London that it has sufficient net current assets and an adequate capital base. EDX London will not permit a Member to participate in trading at EDX London unless the Designated Clearing House recognizes the Member as a Direct Clearing Member 11 or the Member is a party to a General Clearing Member Agreement with a General Clearing Member 12 at the Designated Clearing House.

EDX London's procedures are designed so that for every outstanding Option for which there is a buyer there is a writer of an Option of the same series who has undertaken to perform the writer's obligations in the event that an exercise is assigned to such writer. Once the exercise of an Option is allocated to a particular writer that writer is contractually obligated to perform in accordance with the terms of the Option. These contractual obligations are secured by the securities or cash that the writer has deposited with the Designated Clearing House.

Non-Clearing Members and non-Member customers will not be party to contracts registered by Clearing Members with the Designated Clearing House. When such persons enter into Option contracts with an EDX London Member, the Member or its General Clearing Member at the Designated Clearing House will act as a principal in relation to the non-Clearing Member or non-Member customer and make a matching contract on the market which, in the case of a Clearing Member, will be registered with the Designated Clearing House or, in the case of a non-Clearing Member, will lead to the registration with the Designated Clearing House of a related contract by the Clearing Member with whom the non-Clearing Member has an arrangement.

Clearing Members must provide margin to cover their exposure to the Designated Clearing House and their customers correspondingly must provide margin to their Clearing Member. The required margin is calculated in accordance with the rules of the Designated Clearing House, taking into account the risks associated with the market volatility of the Options position, and is marked to the market at least daily and adjusted accordingly. Settlement of Option transactions, and daily mark-to-market margin payments, must be made to the Designated Clearing House in London by Clearing Members. Exercises also must be effected in London with the Designated Clearing House, which will randomly allocate (i.e., assign) exercises to writers.

After the exercise of a Stock Option has been allocated, the clearing and settlement of each transaction in the underlying securities takes place within the regular settlement system of the stock market on which the underlying securities are listed. Deliveries of Swedish stock will be effected through V�rdepapperscentralen VPC AB, the standard equity settlement system for Swedish stocks. Deliveries of Norwegian stock will be effected through Verdipapirsentralen ("Norwegian VPS"), the Norwegian Registry of Securities. Deliveries of Danish stock will be effected through Verdipapirsentralen ("Danish VPS"), the Danish Registry of Securities.

Index Options are cash settled through the Designated Clearing House. Settlement of OMX Index Options, OBX Index Options, and KFX Index Options is effected in cash in Swedish Kroner, Norwegian Kroner, and Danish Kroner, respectively.

Prices on EDX London for Options are publicly quoted, and Options are bought and sold, in the currency of settlement for the Option, i.e., Swedish Kroner for Swedish stock options and OMX Index Options, Norwegian Kroner for Norwegian stock options and OBX Index Options, and Danish Kroner for Danish stock options and KFX Index Options. All transactions creating or closing positions in Options are executed in London by EDX London Members and settled at the Designated Clearing House in London by them or by the Clearing Member acting on their behalf at the Designated Clearing House. Options are certificateless and transactions and positions are evidenced by statements from EDX London to EDX London Members and from EDX London Members to their customers.

Options are not fungible or interchangeable with options that are traded on any other market. Thus, any Option position opened on EDX London can be closed only on EDX London or exercised only by an EDX London Member and giving an exercise notice to EDX London.

Currently, for Options trading, EDX London does not provide direct electronic access to EDX London to persons located in the U.S. EDX London represents that it will not make Options trading accessible in this fashion to persons located in the U.S. without express approval from the Commission.

EDX London wishes to familiarize certain registered broker-dealers and large financial institutions in the U.S. with EDX London and its Options and proposes to take the limited steps described below with respect only to "Eligible Broker-Dealers" and "Eligible Institutions." To be Eligible, each such entity must meet the following standards:

(a) It must be a "qualified institutional buyer" as defined in Rule 144A(a)(1) under the Securities Act of 1933 ("Rule 144A" and the "Securities Act," respectively), or an international organization excluded from the definition of "U.S. person" in Rule 902(k)(2)(vi) of Regulation S under the Securities Act; and

(b) It must have had prior actual experience with traded options in the U.S. options market and, therefore, would have received the disclosure document for U.S. standardized options called for by Rule 9b-1 under the Exchange Act that is prepared by the Options Clearing Corporation and the U.S. options exchanges and entitled "Characteristics and Risks of Standardized Options" ("Options Disclosure Document" or "ODD").

EDX London will require EDX London Members to take reasonable steps to assure themselves, before effecting any transaction in Options with or for a customer located in the United States, that: (1) the customer is an Eligible Broker-Dealer or an Eligible Institution; (2) the customer is acting for its own account or the account of another Eligible Broker-Dealer or Eligible Institution or the managed account of a non-U.S. person (within the meaning of Rule 902(k)(2)(i) of Regulation S under the Securities Act); and (3) the customer has received the EDX London disclosure document described below. EDX London will advise EDX London Members that it has been advised that, under U.S. law, EDX London Members that are not U.S. registered broker-dealers may deal with Eligible Institutions only in accordance with Rule 15a-6 under the Exchange Act, principally through U.S. registered broker-dealers as provided in such Rule.

You represent that EDX London will institute rules requiring EDX London Members to furnish Eligible Broker-Dealers and Eligible Institutions with an EDX London disclosure document before accepting an order from that Eligible Broker-Dealer or Eligible Institution to purchase or sell Options. EDX London's rules also will require that each EDX London Member obtain written representations from any Eligible Broker-Dealer or Eligible Institution, signed by an appropriate officer of the Eligible Broker-Dealer or Eligible Institution, to the following effect:

It is an Eligible Broker-Dealer or Eligible Institution, and as such it (i) owns and invests on a discretionary basis a specified amount of eligible securities sufficient for it to be a qualified institutional buyer under Rule 144A under the Securities Act (and if a bank, S&L, or other thrift institution, has net worth meeting the requirements of Rule 144A under the Securities Act), and (ii) has had prior actual experience in the U.S. standardized options markets and as a result thereof has received the ODD;

It has received the EDX London disclosure document;

Its transactions in Options will be for its own account or for the account of another Eligible Broker-Dealer or Eligible Institution or for the managed account of a non-U.S. person within the meaning of Rule 902(k)(2)(i) of Regulation S under the Securities Act;

It will not transfer any interest or participation in an Option it has purchased or written to any other U.S. person, or to any person in the United States, that is not an Eligible Broker-Dealer or Eligible Institution;

It will cause any disposition of an Option it has purchased or written to be effected only on EDX London and to be registered for clearing and settlement at the Designated Clearing House. It understands that any required payments for premium settlement, exercise or closing of any Option in respect of which it has a contract with an EDX London Member must be made in London and in Swedish, Danish, or Norwegian Kroner, as appropriate. It also understands that, if in relation to an Option it has a contract with an EDX London Member as a writer of such Option, margin must be provided to that Member and maintained, measured, and deposited in Swedish, Danish, or Norwegian Kronor, as appropriate;

If it is an Eligible Broker-Dealer or Eligible Institution acting on behalf of another Eligible Broker-Dealer or Eligible Institution that is not a managed account, it has obtained from the other a written representation to the same effect as the foregoing and will provide it to the EDX London Member upon demand; and

It will notify the EDX London Member of any change in the foregoing representations prior to placing any future order, and the foregoing representations will be deemed to be made with respect to each order it gives to an EDX London Member.

Copies of the EDX London disclosure document, in the form submitted to and reviewed by the Division, will be provided only to Eligible Broker-Dealers and Eligible Institutions. The EDX London disclosure document provides an overview of EDX London, with attention to significant differences from standardized options in the U.S. domestic options market, as well as special factors relevant to U.S. entities transacting in Options.

EDX London will not engage in any general advertisement in the United States concerning Options.

Representatives of EDX London outside the U.S. (an "EDX London Representative") will be available to respond to inquiries concerning EDX London from Eligible Broker-Dealers and Eligible Institutions. An EDX London Representative may make personal calls on, and correspond or otherwise communicate with, entities that the EDX London Representative reasonably believes to be Eligible Broker-Dealers and Eligible Institutions to familiarize them with the existence and operations of EDX London. Any Eligible Broker-Dealer or Eligible Institution would be provided, upon its first visit, communication, or inquiry, with the EDX London disclosure document. 13 EDX London will maintain a reasonable supply of that document, and of the most recently published annual report of EDX London, to respond to requests from Eligible Broker-Dealers and Eligible Institutions. An EDX London Representative also may participate in programs and seminars in the U.S. An EDX London Representative will not give investment advice or make any recommendations with respect to specific Options, nor will an EDX London Representative solicit, take, or direct orders, nor recommend or refer Eligible Broker-Dealers or Eligible Institutions to particular EDX London Members. If requested by an Eligible Broker-Dealer or Eligible Institution, an EDX London Representative may make available to the requester a list of all EDX London Members empowered to take orders from the public, and any registered U.S. broker-dealer affiliates of such Members.

EDX London will require that EDX London Members, before effecting a transaction with or for an Eligible Broker-Dealer or Eligible Institution in Options, determine that the Eligible Broker-Dealer or Eligible Institution has received the ODD and the EDX London disclosure document and maintain a record of that determination. EDX London will furnish the Division, at least 30 days prior to the date definitive copies are furnished to Eligible Broker-Dealers or Eligible Institutions, with a copy of any amendment made to the EDX London disclosure document because the information contained in that document becomes or will become materially inaccurate or incomplete, or because there is or will be an omission of material information necessary to ensure that the document is not misleading.

You represent that EDX London will continue to be an exchange organized, operating and regulated in the United Kingdom and that, in making its Options known to a particular, sophisticated segment of the U.S. financial community it will not be altering this fact. You also represent that EDX London will establish careful limitations to assure compliance with applicable U.S. securities laws, and that EDX London will continue as necessary to establish further limitations to assure continued compliance with applicable U.S. securities laws.

Finally, you ask, on behalf of EDX London, that the Division confirm to you that it will not recommend that the Commission take enforcement action of the nature set forth in the opening paragraph of this letter, and that (a) the furnishing of the EDX London disclosure document by EDX London, by an EDX London Representative, by an EDX London Member, or by an Eligible Broker-Dealer, to an Eligible Broker-Dealer or Eligible Institution will satisfy the obligation of a broker or dealer under Rule 9b-1(d) of the Exchange Act to furnish an options disclosure document before accepting an order from a customer to purchase or sell an Option, and (b) that neither the furnishing of an EDX London disclosure document by EDX London or an EDX London Representative to an Eligible Broker-Dealer or Eligible Institution, nor the furnishing of an EDX London disclosure document by an EDX London Member to an Eligible Broker-Dealer, or, in response to an unsolicited inquiry concerning Options, to an Eligible Institution, will constitute a "solicitation" or the provision of a "research report" as those terms are used in Rule 15a-6(a) under the Exchange Act.

Response:

Based on the facts and representations set forth above, the Division will not recommend enforcement action to the Commission against EDX London, EDX London Representatives, or EDX London Members under Section 15(a) of the Exchange Act if EDX London, EDX London Representatives, or EDX London Members act as you describe to familiarize Eligible Broker-Dealers and Eligible Institutions in the United States with Options without EDX London, EDX London Representatives, or EDX London Members registering with the Commission as broker-dealers under Section 15(b) of the Exchange Act. Also, the Division will not recommend enforcement action to the Commission against EDX London, EDX London Representatives, or EDX London Members under Section 15(a) of the Exchange Act if, solely in connection with the satisfaction of obligations under Exchange Act Rule 9b-1(d), the terms and conditions of this letter, and under the limited circumstances set forth above, (1) an EDX London Representative, an EDX London Member or an Eligible Broker-Dealer provides the EDX disclosure document to an Eligible Broker-Dealer and the EDX London Member effects transactions in Options with or for that Eligible Broker-Dealer pursuant to Rule 15a-6(a)(4) under the Exchange Act, or (2) an EDX London Representative furnishes an EDX London disclosure document to an Eligible Institution, or an EDX London Member furnishes an EDX London disclosure document to an Eligible Institution in response to an otherwise unsolicited inquiry concerning Options, and the EDX London Member effects transactions in Options with or for that Eligible Institution pursuant to Rule 15a-6(a)(1) under the Exchange Act. The Division notes that EDX London will advise its Members that it has been advised that, under U.S. law, EDX London Members that are not U.S. registered broker-dealers may deal with Eligible Broker-Dealers and Eligible Institutions only in accordance with Rule 15a-6 under the Exchange Act, principally through U.S. registered broker-dealers as provided in the Rule. Based on the foregoing, the Division also will not recommend that the Commission take enforcement action against OMLE under Section 17A of the Exchange Act if it operates solely in the manner described above for Options without OMLE registering with the Commission as a clearing agency. In addition, the Division will not recommend that the Commission take enforcement action against EDX London under Section 5 of the Exchange Act if EDX London operates solely in the manner described above with respect to Options without registering with the Commission as a national securities exchange under Section 6 of the Exchange Act.

Finally, the Division has reviewed the EDX London disclosure document. Based on our review of the EDX London disclosure document, the Division will not recommend that the Commission take enforcement action against an Eligible Broker-Dealer, EDX London Representative, or EDX London Member if the Eligible Broker-Dealer, EDX London Representative, or EDX London Member furnishes the EDX London disclosure document, in compliance with Rule 9b-1(d), to an Eligible Broker-Dealer or Eligible Institution before the Eligible Broker-Dealer or Eligible Institution effects a transaction in Options, subject to the following conditions:

The Eligible Broker-Dealer or Eligible Institution previously has received the ODD;

EDX London requires that EDX London Members, before effecting a transaction with or for an Eligible Broker-Dealer or Eligible Institution in Options, determine as described above, that the Eligible Broker-Dealer or Eligible Institution has received the ODD and the EDX London disclosure document and maintains a record of that determination; and

If the information contained in the EDX London disclosure document becomes or will become materially inaccurate or incomplete or there is or will be an omission of material information necessary to make the EDX London disclosure document not misleading, EDX London will amend or supplement its disclosure document by filing five copies of the amendment or supplement to the disclosure document with the Division at least 30 days prior to the date definitive copies are furnished to customers, unless the Division determines otherwise having due regard to the adequacy of the information disclosed and the public interest and protection of investors. 14

These positions of the Division concern enforcement action only and do not represent conclusions on the applicability of statutory or regulatory provisions of the federal securities laws. The Division has taken these positions based, in part, on the fact that the Commission has entered into a Memorandum of Understanding with the U.K. Department of Trade and Industry 15 regarding the sharing of investigative and other information, and that foreign broker-dealers, including EDX London Members, electing to deal with U.S. institutional investors pursuant to Rule 15a-6(a)(3) under the Exchange Act are required to provide directly to the Commission, upon request, information, documents, testimony, and assistance in taking evidence of persons that relate to transactions pursuant to Rule 15a-6(a)(3) under the Exchange Act. In addition, you have represented that EDX London has the power under its rules to require EDX London Members to provide it with information or to assist EDX London otherwise in relation to activities carried out on its markets. You also have represented that the Exchange Co-operation Agreement entered into by EDX London with Stockholmb�rsen, Oslo B�rs, and K�benhavns Fondsb�rs would enable EDX London to obtain the information required to investigate a suspected manipulation of the Options traded on EDX London, and that when the stock or stocks underlying an Option trade on a market other than Stockholmb�rsen, Oslo B�rs, or K�benhavns Fondsb�rs, EDX London would be able to obtain the information required to investigate a suspected manipulation of the Option either directly from the market that trades the stock or from Stockholmb�rsen, Oslo B�rs, or K�benhavns Fondsb�rs. Moreover, you represent that only EDX London Members have access to the facilities of EDX London, which is a RIE and subject to regulation by the FSA.

Finally, these positions are based on your representations that EDX London currently does not provide direct electronic access for Option trading to persons located in the U.S., and that EDX London will not make Options accessible in this fashion absent express approval from the Commission.

The positions of the Division in this letter are based on the representations that you have made; any different facts or conditions might require a different response, and these positions are subject to modification or revocation if the facts and representations set forth above are altered.

Sincerely,

Elizabeth K. King Associate Director

1 Flexibly structured options include certain variable terms. When a flexibly structured option is purchased and sold in an opening transaction, the parties to the transaction have the flexibility, within certain limits established in EDX London's rules, to fix the option's style, exercise price, and expiration date.

2 The OMX Index, a capitalization-weighted index comprised of the 30 most liquid stocks traded on Stockholmb�rsen, is designed to reflect the development of the Swedish equity market.

3 The OBX Index, a capitalization-weighted index comprised of the 25 most liquid stocks traded on Oslo B�rs (the Oslo Stock Exchange), is designed to reflect the development of the Norwegian equity market.

4 The KFX Index, a capitalization-weighted comprised of the 20 most liquid stocks traded on K�benhavns Fondsb�rs (the Copenhagen Stock Exchange), is designed to reflect the development of the Danish equity market.

See

e.g. , Letter from Robert Colby, Deputy Director, Division, Commission, to Richard P. Streicher, Loeb & Loeb LLP, dated July 27, 1999 (regarding equity options and TOPIX Index options traded on the Tokyo Stock Exchange); Letter from Robert Colby, Deputy Director, Division, Commission, to Nancy Jacklin, Clifford Chance, dated July 23, 1999 (regarding equity options and Nikkei 225 Index options and Nikkei 300 Index options traded on the Osaka Securities Exchange); Letter from Robert L.D. Colby, Deputy Director, Division, Commission, to Jane Kang Thorpe, Orrick, Herrington & Sutcliffe, dated October 26, 1998 (regarding STOXX 50 Index and EURO STOXX 50 Index options traded on MONEP); Letter from Robert L.D. Colby, Deputy Director, Division, Commission, to Wesley G. Nissen, Katten Muchin & Zavis, dated September 1, 1998 (regarding equity and index options traded on the Mercato Italiano dei Derivati); Letter from Robert L.D. Colby, Deputy Director, Division, Commission, to Nancy Jacklin, Clifford Chance, dated March 6, 1996 (regarding FLEX options traded on the London International Financial Futures and Options Exchange ("LIFFE")); Letter from Robert Colby, Deputy Director, Division, Commission, to Phillip McBride Johnson, Skadden, Arps, Slate, Meagher & Flom, dated September 26, 1995 (regarding equity and index options traded on the Hong Kong Futures Exchange); and Letter from William H. Heyman, Director, Division, Commission, to Gary Lynch, Davis, Polk & Wardwell, dated May 1, 1992 (regarding equity and index options traded on LIFFE).

6 OM, a publicly quoted company whose shares are listed on the Swedish Stock Market, owns Stockholmb�rsen AB (the Swedish equity and derivatives market), which owns OMLE.

7 The LSE holds a 76% controlling interest in EDX London and OM holds a 24% interest in EDX London.

8 OMLE ceased trading the Options on June 27, 2003.

9 For the remainder of this letter, the term "Designated Clearing House" refers to OMLE.

10 The following example illustrates how a U.S. investor's order could be matched with an order entered in the combined order book. A member of Oslo B�rs enters into the combined order book an order to sell 50 March 2004 OMX Index Options. If the Oslo B�rs member's order is the best sell offer, it could be matched with a buy order entered by an EDX London Member acting on behalf of a U.S. investor. The matched orders would result in a trade being executed, with the following registered contracts resulting from the order book match: the Oslo B�rs member has a contract to sell 50 March 2004 OMX Index Options to NOS, the clearing house for Oslo B�rs; NOS has a contract to sell 50 March 2004 OMX Index Options to Stockholmb�rsen (Stockholmb�rsen acts as the bridge between the clearing houses); Stockholmb�rsen has a contract to sell 50 March 2004 OMX Index Options to OMLE, the Designated Clearing House for EDX London; and OMLE has a contract to sell 50 March 2004 OMX Index Options to the EDX London Member acting for the U.S. investor.

11 The Designated Clearing House requires a Direct Clearing Member to have net current assets in excess of �1 million and fully paid-up share capital or other non-distributable reserves of �500,000.

12 The Designated Clearing House requires a General Clearing Member to have net current assets in excess of �2 million and fully paid-up share capital or other non-distributable reserves of �1 million.

13 If the first communication is by telephone, the EDX London disclosure document will be mailed within one business day of the communication.

14 EDX London should provide the Division with any material amendments to its disclosure document sufficiently in advance of the planned distribution date to provide the Division with time to review the proposed amendments and EDX to make any necessary revisions.

15 Memorandum of Understanding on Mutual Assistance and the Exchange of Information Between the United States Securities and Exchange Commission and the Commodity Futures Trading Commission and the United Kingdom Department of Trade and Industry and the Securities Investment Board, International Series No. 323 (September 30, 1991). Following the enactment of the Financial Services and Markets Act 2000, the FSA became the successor signatory to the MOU.

Incoming Letter:

Ms. Elizabeth King Associate Director Office of Market Supervision Division of Market Regulation Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549

Re: EDX London Limited and OM London Exchange Limited - No-Action Letter Request

Dear Ms. King:

On behalf of EDX London Limited ("EDX London") and OM London Exchange Limited ("OMLE"), we request your advice, based on this letter and in view of similar relief granted by the Division of Market Regulation (the "Division") to other non-U.S. exchanges, 1 (a) that the Division will not recommend to the Securities and Exchange Commission (the "Commission") enforcement action (i) against EDX London, any of the officers, directors or representatives of EDX London, or any member of EDX London ("EDX London members") under Section 5 of the Securities Exchange Act of 1934, as amended ("Exchange Act"), by reason of EDX London not registering as a national securities exchange under Section 6 of the Exchange Act; (ii) against EDX London, any of the officers, directors or representatives of EDX London, or EDX London members, by reason of EDX London and EDX London members not registering under Section 15(b) of the Exchange Act as broker-dealers; and (iii) against OMLE or any of the officers, directors or representatives of OMLE by reason of OMLE not registering as a clearing agency under Section 17A of the Exchange Act; if EDX London and its representatives and members act as described below to familiarize certain registered broker-dealers and large financial institutions in the U.S. with EDX London and its Stock Options and Index Options as defined below, and (b) as set forth in the second-to-last paragraph of this letter.

I. Formation of EDX London

On December 9, 2002, the London Stock Exchange plc ("LSE") and OM AB ("OM") announced an agreement to form EDX London, a jointly-owned concern for the development of a London-based international equity derivatives business. The LSE holds a 76 percent controlling stake in EDX London and OM holds a 24 percent interest. The completion of the transaction was conditional upon certain conditions being satisfied, including EDX London securing recognition as a Recognised Investment Exchange, and confirmation being obtained from the Office of Fair Trading that the transaction would not be referred to the U.K. Competition Commission. Following approval as a RIE by the U.K. Financial Services Authority ("FSA") and the satisfaction of the other conditions, the transaction was completed on June 30, 2003. 2

Under the agreement EDX London acquired the Scandinavian equity derivatives exchange business owned and operated by OMLE. 3 The completion of the transaction on June 30, 2003 resulted in the transfer of trading from OMLE to EDX London in those Stock Options and Index Options listed and traded on OMLE at that time. Trading in such options at OMLE ceased at the close of business on June 27, 2003. EDX London opened for trading such options on June 30, 2003. At present OMLE is the Designated Clearing House for EDX London and is accordingly the central clearing counterparty for all such contracts traded by way of the facilities of EDX London. EDX London is seeking to conclude an agreement with a third party with the intent that that party will replace OMLE as the Designated Clearing House for EDX London. On appointment of such party as the Designated Clearing House for EDX London it will assume responsibility as the central clearing counterparty for all options contracts traded on EDX London. At such time, OMLE will discharge or novate the EDX London options contracts reflecting open positions registered with it, and, simultaneously, such open positions will be registered with the new Designated Clearing House. It is anticipated that this transition will not be implemented until the first quarter of 2004. Prior to the implementation of such arrangements, EDX London will submit a request for clearing agency relief on behalf of the new Designated Clearing House.

Currently, Stock Options and Index Options traded on EDX London are registered on Form S-20. OMLE will remain the issuer of the Options contracts for the purposes of Form S-20 until such time as OMLE files a post-effective amendment deregistering any unsold options under the OMLE Form S-20. EDX London anticipates that OMLE will file this amendment prior to October 28, 2003. OMLE will continue to act as the Designated Clearing House for EDX London and as the central clearing counterparty for Stock Options and Index Options traded on EDX London untilthe arrangements regarding the appointment of a replacement Designated Clearing House described above have been implemented. From such time, registration and clearing of all Options transactions on EDX London will be performed by the new Designated Clearing House. (The term "Designated Clearing House" is used is this letter to refer to OMLE in its current capacity as central clearing counterparty for contracts traded at EDX London and any party appointed to act in that capacity by EDX London in succession to OMLE following the transfer of such responsibilities described above.)

II. The EDX London Options Market

As was previously the case with OMLE, EDX London currently lists for trading standardized and flexible put and call options on individual stocks of selected Swedish companies listed on Stockholmsb�rsen, the Swedish Stock Market and options on the OMX Index�. In addition, EDX London lists for trading standardized and flexible options on individual stocks of selected Norwegian and Danish companies listed on Oslo B�rs, the Norwegian Stock Market and K�benhavns Fondsb�rs, the Danish Stock Market, respectively, and options on the OBX Index� and KFX Index�.

EDX London has entered into an Exchange Co-Operation Agreement with Stockholmsb�rsen, Oslo B�rs and K�benhavns Fondsb�rs which provides for the above Options Contracts to be tradable in a combined market comprising members of each of the exchanges. Stockholmsb�rsen is authorized as an exchange by the Swedish Financial Supervisory Authority and is authorized to provide clearing services under the Swedish legislation governing exchange and clearing operations. Oslo B�rs is authorized as a Norwegian exchange in accordance with the Stock Exchange Act (Act of November 27, 2000 : 2000 no 80) and is supervised by the Norwegian regulator, Kredittilysnet. K�benhavns Fondsb�rs is authorized as a Danish exchange in accordance with the Consolidated Act (No 587 of 9 July 2002) and is supervised by the Danish regulator, Finanstilysnet. EDX London, Stockholmsb�rsen, Oslo B�rs and K�benhavns Fondsb�rs each function as distinct exchanges, have their own rules and members and are supervised by their own national regulator. However, in relation to Stock Options and Index Options, members of each exchange benefit from the provision of an anonymous combined order book 4 in such Options in which members of each Co-operating Exchange may participate. Quotation and transaction reporting for Options is produced by the best orders provided by the membership of the relevant exchanges at any given time. Each exchange is responsible for the supervision of the activities of its members and for the clearing and settlement of transactions entered into by its members either directly in the case of Stockholmsb�rsen or by arrangements made by the exchange with a clearing house. Options Contracts entered into by members of EDX London will be cleared and settled by EDX London's Designated Clearing House. As their members participate in a combined market relating to these instruments, EDX London, Stockholmsb�rsen, Oslo B�rs and K�benhavns Fondsb�rs have ensured that their respective rules relating to the trading and clearing of and the contract specifications for such Options are harmonized.

The Exchange Co-operation Agreement entered into by EDX London with Stockholmsb�rsen, Oslo B�rs and K�benhavns Fondsb�rs provides for the sharing of regulatory information with Stockholmsb�rsen, Oslo B�rs and K�benhavns Fondsb�rs which would enable EDX London to obtain information it required to investigate a suspected manipulation of the Stock Options and Index Options traded at EDX London. Where the underlying Stock for a Swedish, Norwegian or Danish Option or one of the constituent stocks of the OMX Index, the OBX Index or the KFX Index is traded on another market, EDX London will be able to obtain information required for such purposes either directly from the market in question or from Stockholmsb�rsen, Oslo B�rs or K�benhavns Fondsb�rs as the case may be. EDX London also represents that it has the power under its Rules to require members to provide it with information or to assist EDX London otherwise in relation to activities carried on on its markets.

The OMX Index is a capitalization-weighted index, designed to reflect the development of the Swedish equity market. The OMX Index comprises the 30 most liquid stocks, calculated in Swedish Kronor, traded on the Swedish Stock Market. The OBX Index is a capitalization-weighted index, designed to reflect the development of the Norwegian equity market. The OBX Index comprises the 25 most liquid stocks, calculated in Norwegian Kronor, traded on the Norwegian Stock Market. The KFX Index is a capitalization-weighted index, designed to reflect the development of the Danish equity market. The KFX Index comprises the 20 most liquid stocks, calculated in Danish Kronor, traded on the Danish Stock Market. (The term "Stock Options" is used in this letter to refer to standardized and flexible options on individual stocks of selected companies listed on any of the above three stock markets, and the term "Index Options" is used to refer to standardized and flexible options on any of the above three indexes.)

Stock Options traded at EDX London are "American Style," and, as such, may be exercised at any time prior to expiration. Index Options traded at EDX London are "European Style," and, as such, may be exercised only during a specified period immediately prior to expiration in accordance with EDX London Rules. Options may be traded on other underlying interests in the future. EDX London will trade other equity derivatives, but the Stock Options and Index Options referred to above (together, the "Options" or "EDX London Options") are the sole subject matter of this request.

Access to the trading facilities of EDX London is restricted to members of the Exchange. All EDX London Members are required to satisfy certain legal, financial, and technical membership criteria, on an ongoing basis. Among other things, they are required to demonstrate that they have received the requisite regulatory authorization for the type of investment business that they wish to conduct on the Exchange. EDX London Members that have a permanent place of business within the United Kingdom must be authorized by the FSA. Members that have a permanent place of business in Iceland, Norway, Liechtenstein, or a country that is part of the European Union ("EU"), but not within the United Kingdom, must be authorized by the relevant regulator in their respective home country. Members that do not have a permanent place of business in any of the foregoing countries must demonstrate to the satisfaction of EDX London that they are subject to an appropriate level of regulation with respect to their Exchange-related activities and that they comply with local regulatory requirements.

Each member of EDX London ("EDX London Member" or "Member") will be required to deposit and maintain margin with the Designated Clearing House with respect to each Option which is registered in its account at the Designated Clearing House. The margin required of Members is calculated according to the rules of the Designated Clearing House ("the Designated Clearing House Rules"), taking into account the risks associated with the fluctuations in the premium for an Option, and is marked to market at least daily and adjusted accordingly. Stock Options and Index Options are not fungible or interchangeable with options that are traded on any other market. Thus, any EDX London Options position opened on EDX London can be closed only on EDX London or exercised only by a Member giving an exercise notice to EDX London.

The membership of EDX London at present comprises 63 member firms, 62 of whom were previously members of OMLE. Members are required to satisfy the membership criteria applied by EDX London appropriate to the capacity in which they intend to act at EDX London and must have the necessary legal and financial capacity. In particular, a prospective member must satisfy EDX London that it has sufficient net current assets and an adequate capital base. A Member will not be permitted to participate in trading at EDX London unless it is either recognized by the Designated Clearing House as a Direct Clearing Member or is a party to a General Clearing Member Agreement with a General Clearing Member at the Designated Clearing House.

The financial criteria currently applied by the Designated Clearing House for such purposes are: (i) a General Clearing Member must have net current assets in excess of �2 million and fully paid-up share capital or other non-distributable reserves of �1 million; and (ii) a Direct Clearing Member must have net current assets in excess of �1 million and fully paid-up share capital or other non-distributable reserves of �500,000.

EDX London option trading will be conducted using OM's CLICK� exchange technology platform. Members will enter orders into their computer terminals by providing the following information: (i) the Series, Type, Class and the Exchange Listed Instruments in question; (ii) the Expiration Month; (iii) whether its order is to buy or to sell; (iv) whether its order is a Call or a Put; (v) the price for the Order or, if the Order is a Combination Order, its net price; (vi) the Order's volume; (vii) whether it is a Limit Order, Market Order or a Combination Order; (viii) whether it is a Single Order or a Block Order; (ix) the Account to which the transaction, if executed, is to be allocated; and (x) if appropriate, the identification code of the Customer for whom the Order has been placed. Members which do not maintain an electronic connection to EDX London may arrange for Orders to be entered into the electronic Orderbook by communicating their instructions by telephone to EDX London officials.

EDX London's procedures are designed so that for every outstanding Option for which there is a buyer there is a writer of an Option of the same series who has undertaken to perform the writer's obligations in the event that an exercise is assigned to such writer. Once the exercise of an Option is allocated to a particular writer, that writer is contractually obligated to perform in accordance with the terms of the Option. These contractual obligations are secured by the securities or cash that the writer has deposited with the Designated Clearing House.

After exercise of Stock Options has been allocated, clearing and settlement of each transaction in the underlying securities takes place within the regular settlement system of the stock market on which the underlying security is listed. Index Options will be cash-settled through the Designated Clearing House. The Designated Clearing House will enter into registered contracts as principal with its clearing member. Settlement of options contracts, including daily market-to-market margin payments, will be made to the Designated Clearing House in London by its clearing members. Deliveries of Swedish Stock will be effected through V�rdepapperscentralen VPC AB ("VPC"), the standard equity settlement system for Swedish stocks. Deliveries of Norwegian Stock will be effected through Verdipapirsentralen ("Norwegian VPS"), the Norwegian Registry of Securities. Deliveries of Danish Stock will be effected through Verdipapirsentralen ("Danish VPS"), the Danish Registry of Securities.

Comparable in its function, if not in the detailed aspects of its operation, to a clearing agency for a U.S. options market, the Designated Clearing House will be the counterparty to Clearing Members, all acting as principals, in respect of, inter alia, Option contracts registered by such Clearing Members with the Designated Clearing House. The Designated Clearing House will maintain a balance of open positions between all (Clearing Members as ) writers and all (Clearing Members as) buyers of the contracts registered with the Designated Clearing House. Non-Clearing Members and non-member customers will not be party to any contracts registered by Clearing Members withthe Designated Clearing House. When such persons enter into Stock Option or Index Option contracts with a member of EDX London, such member or its General Clearing Member at the Designated Clearing House will act as a principal in relation to the Non-Clearing Member or non-member customer and make a matching contract on the market which, in the case of a Clearing Member, will be registered with the Designated Clearing House or, in the case of a Non-Clearing Member, will lead to the registration with the Designated Clearing House of a related contract by the General Clearing Member with whom the Non-Clearing Member has a clearing arrangement. Clearing Members are required to provide margin to cover their exposure to the Designated Clearing House and their customers will correspondingly be required to provide margin to their Clearing Member. The margin required to be provided to the Designated Clearing House is calculated in accordance with its rules and takes into account the risks associated with the market volatility of the Options position and is marked to market at least daily and adjusted accordingly. Settlement of Option transactions, and daily mark-to-market margin payments will be required to be made to the Designated Clearing House in London by Clearing Members. Exercises will also be required to be effected in London withthe Designated Clearing House, which will randomly allocate (i.e., assign) exercises to writers.

Prices on EDX London for Equity Options and Index Options are publicly quoted, and Options are bought and sold, in the currency of settlement for such Option, namely Swedish Kroner for Swedish Stock and OMX Index Options, Norwegian Kroner for Norwegian Stock and OBX Index Options and Danish Kroner for Danish Stock and KFX Options. All transactions creating or closing positions in Options are executed in London by EDX London Members and settled at the Designated Clearing House in London by them or by the Clearing Member acting on their behalf at the Designated Clearing House. Options are certificateless and transactions and positions are evidenced by statements from EDX London to EDX London Members and by them to their customers. Following exercise of a Stock Option, delivery of the underlying stock will be effected through the VPC, the Norwegian VPS or the Danish VPS as the case may be. Settlement of OMX Index Options, OBX Index Options and KFX Index Options is effected in cash in Swedish Kroner, Norwegian Kroner and Danish Kroner respectively.

Equity Options and Index Options are not fungible or interchangeable with options that are traded on any other market. Thus, any Equity Option or Index Options position opened on EDX London can be closed only on EDX London or exercised only by an EDX London Member and giving an exercise notice to EDX London.

III. Conditions for No-Action Request

EDX London wishes to familiarize certain registered broker-dealers and large financial institutions in the U.S. with EDX London and its Stock Options and Index Options and proposes to take the limited steps described below with respect only to "Eligible Broker-Dealers" and "Eligible Institutions." To be Eligible, each such entity must meet the following standards:

It must be a "qualified institutional buyer" as defined in Rule 144A(a)(1) under the Securities Act, or an international organization excluded from the definition of "U.S. person" by Rule 902(k)(2)(vi) of Regulation S under the Securities Act; and

It must have had prior actual experience with options traded in the U.S. standardized or "listed" options market (and, therefore, would have received the disclosure document for U.S. standardized options called for by Rule 9b-1 under the Exchange Act).

EDX London Members will be required to take reasonable steps to assure themselves, before effecting any Stock Options or Index Options transaction for or with a customer located in the U.S., that the customer is an Eligible Broker-Dealer or an Eligible Institution, that the customer is acting for its own account or the account of another Eligible Broker-Dealer or Eligible Institution or the managed account of a non-U.S. person (within the meaning of Rule 902(k)(2)(i) of Regulation S under the Securities Act), and that the customer has received the EDX London disclosure document referred to below. EDX London will advise its Members that it has been advised that, under U.S. law, Members that are not U.S. registered broker-dealers may deal with Eligible Institutions only in accordance with Rule 15a-6 under the Exchange Act, principally through U.S. registered broker-dealers as provided in such Rule.

EDX London will institute rules requiring Members to furnish to Eligible Broker-Dealers and Eligible Institutions an EDX London disclosure document before accepting an order from such entity to purchase or sell Stock Options or Index Options. The rules will also require that Members obtain written representations from any Eligible Broker-Dealer or Eligible Institution, signed by an appropriate officer, to the following effect:

It is an Eligible Broker-Dealer or Eligible Institution, and as such it (i) owns and invests on a discretionary basis a specified amount of eligible securities sufficient to be a qualified institutional buyer under Rule 144A (and if a bank, savings and loan, or other thrift institution, has a net worth meeting the requirements of Rule 144A), and (ii) has had prior actual experience in the U.S. standardized options markets and as a result thereof has received the options disclosure document entitled "Characteristics and Risks of Standardized Options" that is prepared by the Options Clearing Corporation and U.S. options exchanges;

It has received the EDX London disclosure document described below;

Its transactions in EDX London Stock Options or Index Options will be for its own account or for the account of another Eligible Broker-Dealer or Eligible Institution or for the managed account of a non-U.S. person within the meaning of Rule 902(k)(2)(i) of Regulation S under the Securities Act;

It will not transfer any interest or participation in a Stock Option or Index Option it has purchased or written to any other U.S. person, or to any person in the U.S., who is not an Eligible Broker-Dealer or Eligible Institution;

It will cause any disposition of a Stock Option or Index Option that it has purchased or written to be effected only on EDX London and to be registered for clearing and settlement at the Designated Clearing Housefor the time being appointed by EDX London. It understands that any required payments for premium, settlement, exercise or closing of any EDX London Stock Option or Index Option in respect of which it has a contract with a Member must be made in London and in Swedish, Danish, or Norwegian Kronor, as appropriate. It also understands that, if in relation to a Stock Option or Index Option it has a contract with a Member as a writer of such Option, margin must be provided to that Member, and maintained, measured and deposited in Swedish, Danish, or Norwegian Kronor, as appropriate;

It will notify the Member of any change in the foregoing representations prior to placing any future order, and the foregoing representations will be deemed to be made with respect to each order it gives to a Member.

A draft of the rule which EDX London intends to adopt on or before October 28, 2003 is attached to this letter as Appendix 1.

An EDX London disclosure document, in the form submitted to and reviewed by the Division (a draft of which is attached hereto as Appendix 2), will be provided only to those U.S. person investors that are Eligible Broker-Dealers and Eligible Institutions. The EDX London disclosure document provides an overview of EDX London and the Stock Options and Index Options, with attention to significant differences from standardized options in the U.S. domestic options market, and sets forth special factors relevant to U.S. entities transacting in EDX London Stock Options and Index Options.

EDX London will not engage in any general advertisement concerning EDX London Stock Options and Index Options in the U.S.

Representatives of EDX London outside the U.S. will be available to respond to inquiries concerning EDX London from Eligible Broker-Dealers and Eligible Institutions. An EDX London Representative may make personal calls on and correspond or otherwise communicate with entities such Representative reasonably believes to be Eligible Broker-Dealers and Eligible Institutions in order to familiarize them with the existence and the operations of EDX London. Any Eligible Broker-Dealer or Eligible Institution would be provided, upon its first visit, communication or inquiry, with the EDX London disclosure document . EDX London will maintain a reasonable supply of that document, and of the most recently published annual report of EDX London, to respond to requests therefor from Eligible Broker-Dealers and Eligible Institutions. 5 An EDX London Representative may also participate in programs and seminars in the U.S. An EDX London Representative will not give investment advice or make any recommendations with respect to specific Stock Options or Index Options, nor will an EDX London Representative solicit, take, or direct orders, nor recommend or refer particular Members. If requested by an Eligible Broker-Dealer or Eligible Institution, an EDX London Representative may make available to the requester a list of all Members empowered to take orders from the public, and any registered U.S. broker-dealer affiliates of such Members.

Currently, for Options Trading, EDX London does not provide direct electronic access to EDX London to persons located in the United States. EDX London represents that it will not make Stock Options and Index Options trading accessible in this fashion to persons located in the U.S. without express approval from the Commission.

EDX London will continue to be an exchange organized, operating and regulated in the United Kingdom, and in making its Stock Options and Index Options known to a particular, sophisticated segment of the U.S. financial community it will not be altering this fact. EDX London will establish careful limitations in order to assure compliance with applicable U.S. securities laws, and EDX London will continue as necessary to establish further limitations to assure continued compliance with applicable U.S. securities laws.

Making information concerning EDX London available in the U.S. as described in this letter will serve to increase, in a responsible manner, information concerning an important new world marketplace that will be of benefit to appropriate U.S. professionals.

We therefore respectfully request on behalf of EDX London that you confirm to us that the Division will not recommend that the Commission take enforcement action of the nature set forth in the opening paragraph of this letter, and that you advise us (a) that furnishing of the EDX London disclosure document by EDX London from outside the U.S., by an EDX London Representative, by a Member or by an Eligible Broker-Dealer, in each case, to an Eligible Broker-Dealer or Eligible Institution will satisfy any obligation of a broker or dealer under Rule 9b-1(d) under the Exchange Act to furnish an options disclosure document before accepting an order from a customer to purchase or sell a Stock or Index Option; and (b) that neither the furnishing of an EDX London disclosure document to an Eligible Broker-Dealer or Eligible Institution by EDX London or by an EDX London Representative, nor the furnishing of the EDX London disclosure document by a Member to an Eligible Broker-Dealer or, in response to an unsolicited inquiry concerning Stock Options and Index Options, to an Eligible Institution, will constitute solicitation or provision of a research report, as such terms are used in Rule 15a-6(a) under the Exchange Act.

If you need any further information concerning this request, please do not hesitate to call the undersigned, at +44 (20) 7065 8506 , or James T. McHale, at (202) 739-5237

Yours truly,

cc:

Derek Oliver Director of Legal Affairs EDX London & OM London Exchange Limited]

David Sirignano, Esquire Morgan, Lewis & Bockius LLP

Paul Dudek Securities and Exchange Commission

See Tokyo Stock Exchange, Inc. (available November 15, 2002); ParisBourse SA (available December 6, 1999); Tokyo Stock Exchange (available July 27, 1999); Osaka Securities Exchange (available July 23, 1999); Societe de Compensation des Marches Conditionnels (available October 26, 1998); Mercato Italiana dei Derivati (available September 1, 1998); Societe de Compensation des Marches Conditionnels (available June 17, 1996); London International Financial Futures and Options Exchange (available March 6, 1996); Hong Kong Futures Exchange limited - Hang Seng Index Options (available September 26, 1995); London International Financial Futures Exchange (available May 1, 1992).

2 EDX London's activities as a RIE are regulated by the FSA pursuant to the Financial Services and Markets Act 2000.

3 OMLE is a RIE and is a wholly-owned subsidiary of Stockholmsb�rsen AB, which in turn is a wholly-owned subsidiary of OM, a publicly quoted company whose shares are listed on the Swedish Stock Market. The OMLE's activities as a RIE are regulated by the FSA pursuant to the Financial Services and Markets Act 2000.

4 Members of each co-operating exchange can participate in trading in a combined orderbook in the relevant instrument, say, OMX Options. This means that each member of each exchange can enter an order in the combined orderbook. Those orders are entered on an anonymous basis. If the member of Oslo B�rs wants to sell 50 March 2004 OMX Options, it enters an order in the combined orderbook. If that is the best sell offer, a buy order that matches it will result in a trade being executed. That buy order could be entered into by an EDX London member acting for a U.S. investor. In that situation, there will be the following registered contracts which result from the orderbook match : The member of Oslo B�rs has a contract to sell 50 March 2004 OMX Options to NOS. NOS (the clearing house for Oslo B�rs) has a contract to sell 50 March 2004 OMX Options to Stockholmsb�rsen (SB acts as the bridge between clearing houses). SB has a contract to sell 50 March 2004 OMX Options to OMLE (the clearing house for EDX London and OMLE has a contract to sell 50 March 2004 OMX Options to the EDX London member (acting for the U.S. investor).

It is important to note that the structure of the orderbook differs from the contractual structure that results from orderbook execution. Thus while the orders that match in the orderbook in the above example are entered by the members of Oslo B�rs and EDX London, the clearing and contractual structure has a different pattern and the contract entered into on behalf of the U.S. investor will always be a contract between the member of EDX London acting on behalf of the U.S. investor and OMLE. That ensures that it is only contracts that are covered by the no-action relief that will be offered to U.S. investors.

5 If the first communication is by telephone, the EDX disclosure document will be mailed within one business day of the communication.

Rules of EDX London

EDX.2.23

Eligible U.S. Investors

EDX.2.23.1

Members should note that Stock Options and Index Options may be offered and sold to those U.S. persons that are broker-dealers registered with the U.S. Securities and Exchange Commission (" SEC ") or large financial institutions that, in either case, are "Eligible Broker-Dealers" or "Eligible Institutions" (collectively, " U.S. Eligible Investors ") subject to the provisions of this Rule. To be Eligible, each such entity must:

be a "qualified institutional buyer" as defined in Rule 144A(a)(1) under the U.S. Securities Act of 1933 (" Securities Act "), or an international organization excluded from the definition of "U.S. person" by Rule 902(k)(2)(vi) under the Securities Act; and

have had prior actual experience with options traded in the U.S. standardized or "listed" options market (who would therefore already have received the disclosure document for U.S. standardized options called for by Rule 9b-1 under the U.S. Securities Exchange Act of 1934 (" Exchange Act ")).

EDX.2.23.2

For the purposes of this Rule, " Stock Option " means a Swedish Stock Option, a Norwegian Stock Option or a Danish Stock Option as the case may be and " Index Option " means an OMX Index Option, an OBX Index Option or a KFX Index Option as the case may be.

EDX.2.23.3

Members shall obtain written representations from any U.S. Eligible Investor, signed by an appropriate officer, to the following effect:

it is a "qualified institutional buyer" as defined in Rule 144A(a)(1) under the Securities Act and, as such, it (i) owns and invests on a discretionary basis a specified amount of eligible securities sufficient to be a qualified institutional buyer under Rule 144A (and if a bank, savings and loan, or other thrift institution, has a net worth meeting the requirements of Rule 144A);

it has had prior actual experience in the U.S. standardized options markets and as a result thereof has received the options disclosure document entitled "Characteristics and Risks of Standardized Options" that is prepared by the Options Clearing Corporation and U.S. options exchanges;

it has received a copy of EDX London's this booklet entitled "Special Characteristics and Risks of Standardised Options Contracts Traded at EDX London;

its transactions in Options will be for its own account or for the account of another U.S. Eligible Investor or for the managed account of a non-U.S. person within the meaning of Rule 902(k)(2)(i) under the Securities Act;

it will not transfer any interest or participation in an Option it has purchased or written to any other U.S. person, or to any person in the U.S., who is not an U.S. Eligible Investor;

it will cause any disposition of an Option that it has purchased or written to be effected only on EDX London and to be settled at the Designated Clearing House appointed by EDX London. It understands that any required payments for premium, settlement, exercise or closing of any Stock Option or Index Option in respect of which it has a contract with a Member must be made in London and in Swedish, Danish, or Norwegian Kronor, as appropriate. It also understands that, if in relation to an Option it has a contract with a Member as a writer of such Option, margin must be provided to that Member, and maintained, measured and deposited in Swedish, Danish, or Norwegian Kronor, as appropriate;

if it is an U.S. Eligible Investor acting on behalf of another U.S. Eligible Investor that is not a managed account, it has obtained from the other a written representation to the same effect as the foregoing and will provide it to the Member upon demand; and

it will notify the Member of any change in the foregoing representations prior to placing any future order, and the foregoing representations will be deemed to be made with respect to each order it gives to a Member.

EDX.2.23.4

Members that are not U.S. registered broker-dealers may deal in Stock Options or Index Options with U.S. Eligible Investors only in accordance with Rule 15a-6 under the Exchange Act, principally through U.S. registered broker-dealers as provided in such Rule.

http://www.sec.gov/divisions/marketreg/mr-noaction/edx102903.htm

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Modified: 02/09/2005