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Correspondence Letter

 David P. Warren

 Executive Vice President and Chief Financial Officer

 One Liberty Plaza

 New York, NY 10006

 October 11,
2005

 Via Edgar

 Securities and Exchange Commission

 Division of Corporate Finance

 100 F Street N.E.

 Washington, D.C. 20549-0408

Attention:

Joyce Sweeney

 Accounting Branch Chief

Re:
The Nasdaq Stock Market Inc. Form 10-K for the Fiscal Year Ended December 31, 2004

 Form 10-Q for the Quarter Ended June 30, 2005

 File No. 000-32651

 Dear Ms. Sweeney,

 On behalf of the Nasdaq Stock Market Inc. (the “Company” or “Nasdaq”),
set forth below are responses to the comment letter dated September 27, 2005 from the staff of the Division of Corporate Finance (the “Staff’) of the Securities and Exchange Commission (the “SEC”) relating to the
Company’s Form 10-K for the fiscal year ended December 31, 2004 and the Form 10-Q for the quarter ended June 30, 2005.

 Form 10-K for the Fiscal Year Ended December 31, 2004

 Financial Statements

 Note 2- Summary of Significant Accounting Policies, page F-8

 Revenue Recognition and Cost of Revenues, page F-12

 Securities and Exchange Commission

 Joyce Sweeney

 October 11, 2005

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 1. We note your
disclosure that Nasdaq Financial Products’ revenues are recognized when earned. Please tell us and in future filings disclose the terms of your licensing agreements and how your revenue recognition policy for these revenues is consistent with
SAB Topic 13.

 We develop and license Nasdaq-branded financial products and
associated derivatives as part of Nasdaq Financial Products to exchanges and other financial institutions. Nasdaq receives licensee fees for its trademark licenses related to the QQQ and other financial products linked to Nasdaq indices issued in
the United States and abroad. Nasdaq primarily has two types of licensing agreements, transaction-based licenses and asset-based licenses.

 Transaction- based licenses:

 Transaction-based licenses are generally renewable long term agreements. Customers are charged based on transaction volume or a minimum contract amount, or both. If a
customer is charged based on transaction volume, Nasdaq recognizes revenue when the transaction occurs. If a customer is charged based on a minimum contract amount, Nasdaq recognizes revenue on a pro-rata basis over the licensing term.

 Asset-based licenses:

 Asset-based licenses are generally renewable long term agreements. Customers are charged
based on a percentage of assets under management for licensed products, per the agreement, on a monthly or quarterly basis. These revenues are recorded on a monthly or quarterly basis over the term of the license agreement.

 Revenue Recognition:

 Recognition of licensing agreements is consistent with SAB Topic 13 as follows:

•

Each agreement is evidenced by an executed license agreement representing persuasive evidence of an agreement.

•

Revenues are recognized over the period that services are performed in accordance with the term of the license agreements.

•

Licensing revenues are fixed or determinable and are based on a contractual amount, assets under management or transactional volume.

•

Collectibility of fees is reasonably assured.

 The Company will include disclosure regarding the terms of the licensing agreements and the revenue recognition policy as noted above in future filings.

 Securities and Exchange Commission

 Joyce Sweeney

 October 11, 2005

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 2. Please provide us
with your analysis pursuant to EITF 99-19 as it relates to the presentation of your Nasdaq Market Center and Nasdaq Market Services Subscriptions revenues for the periods presented. In future filings please describe the critical elements of these
revenues and how they impact your application of EITF 99-19 in your Critical Accounting Policies disclosures in MD&A.

 Nasdaq Market Center:

 The Nasdaq Market Center provides market participants with access to The Nasdaq Stock Market execution services, such as quoting and trading capabilities, and reporting services such as trade reporting and risk
management. Nasdaq provides customers with the ability to electronically execute trades in equity securities either through Nasdaq’s execution system (formerly known as “SuperMontage”) or the Brut ECN (which together comprise the
Nasdaq Market Center). The primary fee for these execution services is a transaction execution charge, assessed on a per share basis to the party that accesses the liquidity. Nasdaq generally credits a portion of the per share execution charge as a
rebate to the market participant that provides the liquidity.

 Prior to the
2nd quarter of 2005, Nasdaq recorded the transaction fee net of the liquidity rebate for transactions executed on
SuperMontage on a net basis in accordance with EITF 99-19. All indicators of gross vs. net reporting contained in EITF 99-19 were considered. However, the following were considered as the primary indicators of net reporting:

•

Primary Obligor: Nasdaq, through SuperMontage, is not the counterparty and does not act on a principal basis on any trades executed through its system. Therefore, Nasdaq does not
take securities positions and does not record in its general ledger the value of the securities executed on its market. The buyer and seller for each transaction executed on Nasdaq are responsible for clearance and settlement of the transaction,
through National Securities Clearing Corporation (“NSCC”) directly or a clearing broker that is a participant in NSCC, and reflect the positions on their respective books and records. Therefore, Nasdaq does not have any settlement risk;
this risk is assumed by the market participants transacting through SuperMontage.

•

Risk of Loss: Under NASD Rule 4705 and our statutory immunities, the Company historically disclaimed any liability for losses arising from malfunctions of the SuperMontage
order-execution system. This rule eliminated liability or risk of loss to the Company for system failures. Effective March 31, 2005, Nasdaq amended Rule 4705 (Limitation of Liability Rule) to provide compensation for losses due to malfunctions
of the order-execution systems of the Nasdaq Market Center in certain circumstances. This rule change and the application of this change are discussed in more detail in the response to comment #6.

 On September 7, 2004, Nasdaq completed its acquisition of Toll Associates LLC
(“Toll”), which is a holding company for Brut, LLC (“Brut”), the owner and operator of

Securities and Exchange Commission

 Joyce Sweeney

 October 11, 2005

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 the Brut ECN, a
broker-dealer registered pursuant to the Securities Exchange Act of 1934 (the “Act”). Pursuant to EITF 99-19, execution revenues from transactions executed through Brut were historically reported on a gross basis in revenues, and expenses
such as the liquidity rebate payments were historically recorded in cost of revenues. Upon consummation of the acquisition of Toll, Nasdaq continued to report execution revenues and related expenses on a gross basis in accordance with EIFT 99-19.
All indicators of gross vs. net reporting were considered. However, the following were considered as the primary indicators of gross reporting:

•

Primary Obligor: Brut, an Alternative Trading System (“ATS”), is registered with the SEC as a broker-dealer; Brut is not registered as a National Securities Exchange (like
the NYSE, Pacific Exchange (“PCX”)) or a Registered Securities Association (like the NASD) (collectively “Self Regulatory Organizations” or “SROs”) as defined under the Act. Brut ECN, as a broker-dealer, acts as
principal to the transactions executed through the ECN.

•

Risk of Loss: As a registered broker-dealer, transactions executed on Brut are conducted on a principal basis which exposes the Company to clearance and settlement risk.

 Nasdaq Market Services Subscriptions:

 Nasdaq Market Services Subscriptions revenues are based on the number of presentation
devices in service and quotes delivered through those devices. Nasdaq Market Services Subscriptions revenues are recognized in the month the information is provided. These revenues are recorded net of amounts due under revenue sharing arrangements
with market participants.

 The most significant component of Nasdaq Market
Services Subscriptions presented on a net basis in accordance with EITF 99-19 is the UTP Plan Revenue Sharing, which was $79.4 million or 42.3% of gross Nasdaq Market Services Subscriptions revenues for the year ended December 31, 2004. Nasdaq
is the Securities Information Processor (“SIP”) for the Joint Self-Regulatory Organization Plan Governing the Collection, Consolidation and Dissemination of Quotation and Transaction Information for Nasdaq-Listed Securities Traded on
Exchanges on an Unlisted Trading Privileges Basis (“UTP Plan”), in addition to being a participant in the UTP Plan. Nasdaq’s position as the SIP and a participant is unique to the exchange industry. As SIP, Nasdaq facilitates the
collection and dissemination of revenues on behalf of the UTP Plan participants. Each participant in the UTP Plan shares in the revenues associated with the sale of certain subscription revenue based on their contribution percentage to total volume.
The UTP Plan has an Operating Committee comprised of representatives from each of the participants, which is responsible for administering the UTP Plan. All indicators of gross vs. net reporting pursuant to EITF 99-19 were considered in analyzing
the appropriate presentation of UTP Plan Revenue Sharing. However, the following were considered as the primary indicators of net reporting:

•

Primary Obligor: As noted above, Nasdaq, in its unique role as SIP, only facilitates the collection and dissemination of revenues on behalf of the UTP Plan participants. As a
participant, Nasdaq shares in the net distribution of revenue according to the plan on the same terms as all other plan participants.

 Securities and Exchange Commission

 Joyce Sweeney

 October 11, 2005

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•

Risk of Loss/Credit Risk: Risk of loss on the revenue is shared equally among plan participants according to the UTP Plan.

•

Price Latitude: The Operating Committee (not Nasdaq as SIP), subject to SEC approval, is responsible for setting the level of fees to be paid by vendors, subscribers and taking
action in accordance with the provisions of the UTP Plan.

 The
liquidity rebate and UTP Plan Revenue Sharing are the most significant components of Market Services Revenue impacted by EITF 99-19. Revenue associated with tape fee revenue sharing and the Nasdaq General Revenue Sharing Program in aggregate account
for less than 5% of Market Services Revenue on a gross basis for the year ended December 31, 2004. However, Nasdaq performed similar analyses for tape fee revenue sharing and the Nasdaq General Revenue Sharing Program and considered the
indicators of gross vs. net reporting and determined these revenues should be reported net.

 The Company will include a description of the critical elements of the significant revenue streams noted above and the application of EITF 99-19 in the Critical Accounting Policy disclosures in MD&A in future
filings.

 Note 9- Goodwill and Intangible
Assets, page F-27

 3. We note your disclosure on page F-28 that both
technology and customer relationships intangible assets are being amortized over a ten-year estimated average useful life. Please tell us how you determined the estimated average useful lives of each of these intangible assets. In your analysis,
address points raised in your discussion of Risk Factors regarding competition, rapidly changing technology, evolving industry standards, frequent enhancements to existing services and products, the introduction of new services and products and
changing customer demands.

 The identifiable intangible assets acquired in
the Brut acquisition were a software licensing agreement from SunGard Data Systems, Brut’s former parent, and customer relationships. Both the software licensing agreement and the customer relationships are being amortized over an estimated
average useful life of ten years.

 To assist with valuing the intangible assets
and useful lives discussed below, Nasdaq engaged an independent valuation specialist to assist in determining the fair values of the net assets acquired and the identifiable intangible assets. The valuation was performed in accordance with Statement
of Financial Accounting Standards No. 142 “Goodwill and Other Intangible Assets” (SFAS No. 142).

 Technology

 The software licensing agreement, rather than the underlying trading platform, is the technology identifiable intangible asset that was valued. This license is separate and distinct from the software and hardware that
is used to run Nasdaq’s trading platforms.

 The technology that Nasdaq
acquired in the Brut acquisition was embedded in the Brass Utility from SunGard. Nasdaq obtained this technology through a perpetual, royalty-free agreement to license among Nasdaq, Brut and SunGard. There are three main components of the software
licensing agreement that provide material value to Nasdaq:

•

Core trading technology- which Nasdaq expected to use for approximately 15 months while converting Brut to the SuperMontage trading system. Because of the shorter useful life
assigned to this asset, the remainder of our response focuses on the two other licensed technology components below.

•

Customer interface- many customers access Brut through a standardized computer-to-computer order management system and protocol known as FIX API. Nasdaq integrated the FIX protocol
into the SuperMontage system with an expected remaining useful life of ten years.

•

Routing technology- Brut’s routing technology was integrated into SuperMontage and has an expected remaining useful life of ten years.

 As noted above, the licensing agreement is a perpetual royalty-free agreement to use the Brut
technology. At the time of the Brut acquisition, Nasdaq intended to use the license for many years as evidenced by the perpetual term. However, despite the perpetual term of the license, Nasdaq did not believe that it would use the license
“indefinitely” nor was

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 it an indefinite life
intangible asset. Pursuant to paragraphs Nos. 11 and 12 of SFAS No. 142, Nasdaq believes that after ten years, the level of maintenance expenditures to support the licensing agreement would be material in relation to the carrying amount of the
intangible asset. The marketplace will continue to evolve and requirements will change, therefore the level of maintenance expenditures will grow, and new replacement products that are more efficient may become available. Since the precise useful
life of the software licensing agreement was not known, Nasdaq determined ten years to be the best estimate of the software licensing agreement useful life.

 The Company believes that it is important to note the distinction between a licensed technology that provides ongoing enhancements, versus the underlying hardware or
operating system on which it runs. As noted in the “Risk Factors” section, hardware and software applications and customer demands are constantly changing. As a result, such software and hardware generally have a five year useful
life. However, the terms of this license from SunGard enable Nasdaq to maintain and enhance the technology to address market changes and competitive enhancements. The application of this in the case of routing technology and the computer
interface are discussed separately below.

 Nasdaq considers the Brut routing
technology to be the most important component of the licensed technology. Prior to the acquisition of Brut, the Nasdaq trading platform, SuperMontage, did not have a router. Currently, Nasdaq has made the necessary enhance