The global securities industry intermediates between buyers and sellers of securities and other financial instruments. The investors who buy and sell securities are generally either retail or institutional, and can include individual investors, pension funds, insurance companies, and mutual funds. Securities can typically be issued in a variety of forms and maturities, but generally carry either debt- or equity-like characteristics. On a daily basis, investor decisions about the allocation of capital to various uses and enterprises and associated return expectations result in decisions to buy and sell securities, which in turn generate billions of transactions and trades which need to be accurately processed in order to ensure the smooth flow of capital.

According to the Bureau of Labor Statistics, the U.S. securities industry employs 804,000 individuals. Industry personnel manage the accounts of nearly 93 million investors directly and indirectly through corporate, thrift, and pension plans. According to the Securities Industry Association, in 2005 the industry generated an estimated $326.7 billion in domestic revenues, an increase of 38% from 2004.

The Company generally provides securities clearing services to its correspondents in the U.S. on a fully-disclosed basis. The Company’s U.S. clearing broker is a member of the following: Chicago Stock Exchange, NASD, Chicago Board Options Exchange, OneChicago, International Securities Exchange, NYSE ARCA Exchange, Options Clearing Corp., MSRB, NSCC, DTC, ICMA, Euroclear, Securities Investor Protection Corporation (SIPC) and Pacific Exchange (PCX) and is a participant of the Boston Options Exchange (BOX).

Canada has four types of approved clearing models and the Company’s Canadian operation is approved for all of these. The Company is concentrating on Type 3 clearing services. As a Type 3 carrying broker, the Company’s key responsibilities include the trading of securities for customers’ accounts and for the introducing broker’s principal business, making deliveries and settlements of cash and securities in connection with such trades, holding securities and/or cash of customers and of the introducing broker and preparing and delivering directly to customers documents as required by applicable law and regulatory requirements with respect to the trades cleared by the Company, including confirmation of trades, monthly statements summarizing transactions for the preceding month and, for inactive accounts, statements of securities and money balances held by the Company for customers.

The Company’s Canadian clearing broker provides fully-disclosed and omnibus clearing services to the Canadian markets. It is a participating organization with the Toronto Stock Exchange, an approved participant with the Montreal Exchange, and a participating organization with the TSX Venture Exchange. The Broker is a member of the Canadian Investor Protection Fund and is regulated by the Investment Dealers Association of Canada and the securities commission in each province and territory in Canada.

Total expenses for communication and data processing requirements increased $1.8 million, or 38.9%, to $6.3 million from the quarter ended March 31, 2005 to the quarter ended March 31, 2006.

Interest expense on short-term obligations increased $13.6 million, or 153.8%, to $22.4 million from the quarter ended March 31, 2005 to the quarter ended March 31, 2006.

Interest expense on long term debt increase from $697,000 for the quarter ended March 31, 2005 to $1.2 million for the quarter ended March 31, 2006.