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Ready for Demutualization: BOX and PIP Are Forcing Rivals to Fight Back With Better Services

Traders Magazine, December 2004

Mark Longo

Talk about dog-eat-dog. The U.S. options industry seems headed for a vicious round of fee cuts and price improvement rebates as the exchanges wrestle each other for order flow. This comes as the options exchanges, responding to savage competition, are opening the doors to public ownership. The upstart electronic Boston Options Exchange (BOX) - which only accounts for about three percent of total U.S. equity options volume - is in the middle of this fracas. Its radical price improvement process - PIP - has forced others to look more closely at their models. One fear is that the trading volume on BOX could rise significantly as more firms learn about and try the PIP.

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