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January 1, 2004

The Boston BOX Is Almost Ready

By Gregory Bresiger

With 100 major firms ready to trade, officials of the Boston Options Exchange (BOX) are hoping to begin operations soon, according to its parent, the Boston Stock Exchange.

"We are just awaiting final approval from the SEC. We are still figuring to be begin operations this quarter," Kenneth Liebler, CEO of the Boston Stock Exchange, told Traders Magazine. He added that BOX's rollout will take about two months and it will initially have 250 options classes. BOX would be the second electronic options exchange in the U.S.

So what's holding things up? Possibly, it is BOX's unique structure. It would have no specialists. Also, its approach on fees and market makers is controversial. "We could have an unlimited number of market makers. That's provided that we get a good response," Liebler said. BOX officials are also expecting that their cost structure will undercut their traditional and electronic competitors. In its latest filing, BOX officials write that its cost structure "would attract order flow... and would promote competitive pricing."

But some in the industry aren't happy with its proposal to charge $0.20 per contract for broker dealers trading for their proprietary accounts. Most other exchanges are charging more than that. Fees on other exchanges are generally ranging from $0.15 to $0.55 per contract.