Offer Rejection

London Stock Exchange Group PLC
19 December 2006



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO AUSTRALIA OR CANADA

Shareholder Circular


19 December 2006

The Board of London Stock Exchange Group plc ('the Exchange Group') is today
posting its shareholder circular (the 'Circular') in response to the final offer
posted by Nasdaq on 12 December 2006*.  As stated in the Exchange Group's
announcements on 20 November and 12 December 2006, the Board unanimously rejects
Nasdaq's wholly inadequate offer as it substantially undervalues the Exchange
Group and fails to reflect the unique strategic position and the powerful
earnings and operational momentum of the business.

The Circular highlights the Exchange Group's position at the centre of the
globalisation of capital markets, the exceptional resilience and quality of the
business and its ability to compete successfully in a fertile environment for
highly efficient listing and trading platforms.

The Circular includes the Exchange Group's forecast for adjusted basic earnings
per share for the 12 months to 31 December 2006 which is expected to be not less
than 50.4 pence per share, an increase of no less than 58 per cent. The Board
also announces its intention to recommend a FY 2007 final dividend of not less
than 12 pence per share, bringing the total dividend for FY 2007 to at least 18
pence per share, an increase of at least 50 per cent compared to FY 2006.

The Board highlights that Nasdaq's final offer is the lowest price Nasdaq can
currently offer under the Takeover Code.  The offer values the Exchange Group at
a multiple of 24.7x adjusted basic EPS for the 12 months to 31 December 2006,
lower than the multiple of 29.8x adjusted earnings for the 12 months to 31
December 2005 from Nasdaq's withdrawn proposal in March 2006. Nasdaq's final
offer is also lower than the trading multiple for Euronext N.V. of 30.1x for the
12 months to 31 December 2006.

Consequently, the Board of the Exchange Group strongly recommends that Exchange
Group shareholders reject Nasdaq's wholly inadequate offer and take no action in
respect of their shareholdings.

Chris Gibson-Smith, Chairman of the Exchange Group, commented:

'Over the last twelve months, records have tumbled in terms of money raised as
well as the volume and value of trading on our markets.  This is further
confirmation of the significant progress we are making towards the realisation
of our vision to be 'the world's capital market'. For the second time this year,
Nasdaq is offering a wholly inadequate price for the company and shareholders
should reject the offer.'


For further information, please contact:

London Stock Exchange Group plc
John Wallace - Media                                 [phone]
Paul Froud - Investor Relations                      [phone]

Merrill Lynch                                        [phone]
Matthew Greenburgh
Richard Slimmon

Lehman Brothers                                      [phone]
Anthony Fry
Stephen Fox

Finsbury                                             [phone]
James Murgatroyd
Simon Moyse


* The offer has been made by Nightingale Acquisition Limited, a wholly owned
subsidiary of The Nasdaq Stock Market, Inc. ('Nasdaq'). Nasdaq has defined '
final' in its offer document as meaning that its offer will not be revised
except: (i) upon the recommendation of London Stock Exchange Group plc Board; or
(ii) if a firm intention to make a competing offer for London Stock Exchange
Group plc is announced, whether or not subject to preconditions.

A conference call for analysts will take place at 10:00 GMT today, Tuesday 19
December.  Dial-in details and slides for the call will be available on the
Exchange Group's website from 08:30 GMT this morning:  
http://www.londonstockexchange-ir.com/lse/bid/

A copy of the Exchange Group's Circular responding to Nasdaq's offer is
available on: http://www.londonstockexchange-ir.com/lse/bid/

A replay of the conference call will be available on the Exchange Group's
website later this morning.


Sources and bases:

- The Exchange Group multiple of 24.7x is calculated as Nasdaq's offer price of
  1,243 pence per ordinary share divided by the Exchange Group's forecast 
  adjusted basic earnings per share for the 12 months ended 31 December 2006. 
  The 29.8x multiple offered in Nasdaq's withdrawn proposal is sourced from the 
  Nasdaq press release of 10 March 2006

- The Euronext N.V. multiple of 30.1x is calculated using the 12 months ended 31
  December 2006 earnings per share estimates as sourced from Reuters and the 
  share price as at 15 December 2006 (being the latest practicable date prior 
  to posting of the Circular)

The Directors of the Exchange Group accept responsibility for the information
contained in this announcement. To the best of the knowledge and belief of the
Directors of the Exchange Group (who have taken all reasonable care to ensure
that such is the case), the information contained in this announcement for which
they accept responsibility is in accordance with the facts and does not omit
anything likely to affect the import of such information.

PricewaterhouseCoopers LLP, Merrill Lynch International and Lehman Brothers
Europe Limited have each given and not withdrawn their consent to the inclusion
of their respective reports in this announcement.

Merrill Lynch International, which is regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for the Exchange Group and
no-one else in connection with the offer and will not be responsible to anyone
other than the Exchange Group for providing the protections afforded to clients
of Merrill Lynch International nor for providing advice in relation to the
offer.

Lehman Brothers Europe Limited, which is regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for the Exchange Group and
no-one else in connection with the offer and will not be responsible to anyone
other than the Exchange Group for providing the protections afforded to clients
of Lehman Brothers Europe Limited nor for providing advice in relation to the
offer.


LONDON STOCK EXCHANGE GROUP plc

FORECASTS FOR THE THREE, NINE AND TWELVE MONTH PERIODS ENDING 31 DECEMBER 2006

In the absence of unforeseen circumstances and on the basis of preparation and
principal assumptions set out below, the Directors make the following forecasts
for basic earnings per share excluding exceptional items ('Adjusted basic
earnings per share'):

•  Adjusted basic earnings per share will not be less than 14.5p per share for 
   the three months ended 31 December 2006 (three months ended 31 December 
   2005: 9.8p per share), an increase of not less than 48%.

•  Adjusted basic earnings per share will not be less than 38.6p per share for 
   the nine months ended 31 December 2006 (nine months ended 31 December 2005: 
   25.5p per share), an increase of not less than 51%.

•  Adjusted basic earnings per share will not be less than 50.4p per share for 
   the twelve months ended 31 December 2006 (twelve months ended 31 December 
   2005: 31.9p per share), an increase of not less than 58%.


Basis of preparation

The forecasts of Adjusted basic earnings per share are based on, where
appropriate, the published unaudited interim results for the six months ended 30
September 2006, the results shown by the unaudited management accounts for the
two months ended 30 November 2006 and a forecast for the month of December 2006.

The forecasts have been prepared in accordance with the accounting policies used
in the Interim Report for the six months ended 30 September 2006.

The forecast tax charge has been calculated using an effective tax rate of
29.2%.

The forecast Adjusted basic earnings per share for the calendar year ending 31
December 2006 has been calculated as set out in the table below:



                                                                      Adjusted
                                                                      Earnings
                                                                     __________
                                                                            £m
                                                                     __________

Year ended 31 March 2006                                                  95.2
Less: 9 months ended 31 December 2005                                    (64.8)
Add: 9 months ending 31 December 2006                                     84.7
                                                                     __________
12 months ending 31 December 2006                                        115.1
                                                                     __________
Weighted average number of shares for 
calendar year ending 31 December 2006 (millions)                         228.5
                                                                     __________

Unaudited Adjusted basic earnings per share for 
calendar year ending 31 December 2006 (pence)                             50.4p
                                                                     __________



Forecast Adjusted basic earnings per share excludes exceptional items to enable
comparison of underlying earnings of the business with prior periods.  The
adjustments made were as follows:


                                 Three months ending     Nine months ending    Twelve months ending 
                                      31 December             31 December             31 December
                                     2006       2005        2006        2005        2006        2005
                                Unaudited  Unaudited   Unaudited   Unaudited   Unaudited   Unaudited
                                _____________________________________________________________________
                                       £m         £m          £m          £m          £m          £m
_____________________________________________________________________________________________________
Profit for the financial period 
attributable to equity holders       30.6*      28.2       84.7*        52.6       102.8*       64.8
_____________________________________________________________________________________________________
Adjustments:
Exceptional items                       -*      (5.1)         -*        20.6        14.1*       24.7
Tax effect of exceptional               
items                                   -        1.9          -         (4.7)       (1.8)       (4.7)
Exceptional items and                  
taxation attributable to
minority interest                       -          -          -         (3.7)          -        (3.7)
_____________________________________________________________________________________________________
Adjusted profit for the                     
period attributable to equity
holders                              30.6       25.0       84.7          64.8      115.1        81.1
_____________________________________________________________________________________________________

_____________________________________________________________________________________________________
Adjusted basic earnings per       
share - pence                        14.5p       9.8p      38.6p         25.5p      50.4p       31.9p
_____________________________________________________________________________________________________
               
Weighted average number of
shares - millions                   211.7      254.2      219.7         254.0      228.5       254.0
_____________________________________________________________________________________________________


  * No account has been taken of the exceptional costs incurred or to be 
    incurred in relation to the Nasdaq bid defence.  There are no other 
    exceptional items in the three or nine months ending 31 December 2006.


Principal assumptions

The principal assumptions used in the forecast are set out as follows:

(i)     Assumptions outside the influence of the Exchange Group Directors:

        •   There will be no major disruption to the business of the Exchange as
            a result of failure to the Exchange's IT infrastructure;

        •   There will be no material change in current levels of activity on 
            the Exchange's markets caused by significant changes in economic or 
            other  factors;

        •   There will be no change in the regulatory environment of the 
            Exchange Group nor any significant changes to relevant legislation, 
            including taxation legislation or rates of taxation; and

        •   There will be no major disruptions in the business of the Exchange, 
            its suppliers or customers by reason of natural disaster, terrorism,
            extreme weather conditions, industrial disruption, civil disturbance
            or government action.

(ii)    Assumptions for factors under the influence of the Exchange Group 
        Directors:
 
        •   There will be no material changes in the Exchange Group's 
            management, existing operational strategy, or accounting policies 
            and methodologies.



The Directors
London Stock Exchange Group plc
10 Paternoster Square
London EC4M 7LS

Merrill Lynch International
Merrill Lynch Financial Centre
2 King Edward Street
London EC1A 1HQ

Lehman Brothers Europe Limited
25 Bank Street
London E14 5LE

Merrill Lynch International and Lehman Brothers Europe Limited are henceforth
collectively referred to in this letter as the 'Advisers'.



19 December 2006

Dear Sirs

London Stock Exchange Group plc

We report on the profit forecasts comprising the adjusted basic earnings per
share of the London Stock Exchange Group plc (the 'Company') and its
subsidiaries (together the 'Group') for the three months, nine months and twelve
months ending 31 December 2006 (together, the 'Profit Forecasts').  The Profit
Forecasts and the material assumptions upon which they are based, are set out in
the document issued by the Company dated 19 December 2006 (the 'Document').

This report is required by Rule 28.3(b) of the City Code on Takeovers and
Mergers issued by the Panel on Takeovers and Mergers (the 'City Code') and is
given for the purpose of complying with that rule and for no other purpose.
Accordingly, we assume no responsibility in respect of this report to
Nightingale Acquisition Limited, a wholly owned subsidiary of The Nasdaq Stock
Market, Inc., (the 'Offeror') or The Nasdaq Stock Market, Inc. or any other
person connected to, or acting in concert with, the Offeror or to any other
person who is seeking or may in future seek to acquire control of the Company
(an 'Alternative Offeror') or to any other person connected to or acting in
concert with an Alternative Offeror.

Responsibilities

It is the responsibility of the directors of the Company (the 'Directors') to
prepare the Profit Forecasts in accordance with the requirements of the City
Code.

It is our responsibility to form an opinion as required by Rule 28.3(b) of the
City Code as to the proper compilation of the Profit Forecasts and to report
that opinion to you.

Save for any responsibility under Rule 28.3(b) of the City Code to any person as
and to the extent there provided, to the fullest extent permitted by law we do
not assume any responsibility and will not accept any liability to any other
person for any loss suffered by any such other person as a result of, arising
out of, or in connection with this report or our statement, required by and
given solely for the purposes of complying with Rule 28.4 of the City Code,
consenting to its inclusion in the Document.

Basis of Preparation of the Profit Forecasts

The Profit Forecasts have been prepared on the basis stated in the Document,
and:

   (a)  for the three months ending 31 December 2006 is based on the unaudited
        management accounts for the two months ended 30 November 2006 and a 
        forecast for the month of December 2006;

   (b)  for the nine months ending 31 December 2006 is based on the unaudited
        interim financial results for the six months ended 30 September 2006, 
        the unaudited management accounts for the two months ended 30 November 
        2006 and a forecast for the month of December 2006; and

   (c)  for the twelve months ending 31 December 2006 is based on the unaudited
        management accounts for the three months ended 31 March 2006, the 
        unaudited interim financial results for the six months ended 30 
        September 2006, the unaudited management accounts for the two months 
        ended 30 November 2006 and a forecast for the month of December 2006.


The Profit Forecasts are required to be presented on a basis consistent with the
accounting policies of the Group.


Basis of Opinion

We conducted our work in accordance with the Standards for Investment Reporting
issued by the Auditing Practices Board in the United Kingdom.  Our work included
evaluating the basis on which the historical financial information included in
the Profit Forecasts has been prepared and considering whether the Profit
Forecasts have been accurately computed based upon the disclosed assumptions and
the accounting policies of the Group.  Whilst the assumptions upon which the
Profit Forecasts are based are solely the responsibility of the Directors, we
considered whether anything came to our attention to indicate that any of the
assumptions adopted by the Directors which, in our opinion, are necessary for a
proper understanding of the Profit Forecasts have not been disclosed or if any
material assumption made by the Directors appears to us to be unrealistic.

We planned and performed our work so as to obtain the information and
explanations we considered necessary in order to provide us with reasonable
assurance that the Profit Forecasts have been properly compiled on the basis
stated.

Since the Profit Forecasts and the assumptions on which they are based relate to
the future and may therefore be affected by unforeseen events, we can express no
opinion as to whether the actual results reported will correspond to those shown
in the Profit Forecasts and differences may be material.

Our work has not been carried out in accordance with auditing standards
generally accepted in the United States of America or auditing standards of the
Public Company Accounting Oversight Board (United States) and accordingly should
not be relied upon as if it had been carried out in accordance with those
standards.

Opinion

In our opinion, the Profit Forecasts have been properly compiled on the basis of
the assumptions made by the Directors and the basis of accounting used is
consistent with the accounting policies of the Group.


Yours faithfully


PricewaterhouseCoopers LLP
Chartered Accountants

________________________________________________________________________________

The Directors
London Stock Exchange Group plc
10 Paternoster Square
London EC4M 7LS


19 December 2006


Dear Sirs,

We have discussed with you as Directors of London Stock Exchange Group plc the
profit forecast comprising adjusted basic earnings per share for London Stock
Exchange Group plc and its subsidiaries for the three, nine and twelve month
periods ended 31 December 2006 included in the circular to shareholders to be
issued on 19 December 2006 (together the 'Profit Forecast') and the basis on
which this has been prepared.

We have also discussed the accounting policies and basis of calculation for the
Profit Forecast with PricewaterhouseCoopers LLP, London Stock Exchange Group
plc's auditors, and have considered their letter of today's date addressed to
yourselves and ourselves on this matter.  You have confirmed to us that all
information material to the Profit Forecast has been disclosed to us.  We have
relied on the accuracy and completeness of all such information and have assumed
such accuracy and completeness for the purpose of rendering this letter.

On the basis of the foregoing, we consider that the Profit Forecast, for which
you as Directors of London Stock Exchange Group plc are solely responsible, has
been compiled with due care and consideration.

This letter is provided to you solely in connection with Rule 28.3(b) of the
City Code on Takeovers and Mergers and for no other purpose.


Yours faithfully,

Merrill Lynch International         Lehman Brothers Europe Limited



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