On June 15, 2001, the Securities and Exchange Commission (SEC) approved a rule change filed by National Securities Clearing Corporation ("NSCC" or the "Corporation") to modify and consolidate the Rules of NSCC in connection with its Clearing Fund requirements.

The rule change permits NSCC to apply a risk-based margining Clearing Fund methodology to all NSCC Members. (See Important Notice A 5254 / P&S 4824, dated April 27, 2001, at: http://www.NSCC.com/impnot/notices/notice2001/a5254.htm.)

The following Members are subject to these rule changes immediately: Members currently subject to Addendum O of the Rules of NSCC; Applicants approved for NSCC membership from and after April 24^th; and, Members who have a position which will subject them to a deposit requirement based on market maker domination calculations.

NSCC is placing every remaining Member into deciles and will apply the revised Clearing Fund methodologies pursuant to a step-by-step, decile-by-decile plan based upon the volatility classification of each such Member’s unsettled portfolio. Accordingly, Members with the most volatile portfolios will be subject to these rule changes first, on or shortly after June 15^th, provided, however, that to the extent any such Member has significant CNS obligations resulting from options exercises and assignments or is a Municipal Securities Brokers’ Broker, it will be subject to these rule changes in conjunction with or after all other Members, but in no event later than December 31, 2002.

To accommodate this transition, Addendum O and other currently existing Clearing Fund requirements will be keep effective until all Members are subject to the revised rules.

NSCC’s Risk Management Department has already begun to notify Members about changes to their Clearing Fund requirements. All other Members will be contacted in advance of the scheduled effective date of their new requirements.