MEMORANDUM

TO: File
FROM: John Roeser
DATE: October 20, 2003
RE: Meeting with representatives of the Chicago Board Options Exchange, Inc. on Proposed Rule Change by the Boston Stock Exchange, Inc. Establishing Trading Rules for the Boston Options Exchange Facility, Release Nos. 34-47186 and 34-48355, File No. SR-BSE-2002-15


On October 20, 2003, members of the Division of Market Regulation staff (Annette Nazareth, Bob Colby, Steve Williams, Elizabeth King, Debby Flynn, and John Roeser) met with William Brodsky, Mark Duffy, Ed Tilly, Joanne Moffic-Silver, and Howard Kramer of Schiff Hardin & Waite, outside counsel for CBOE, to discuss the Boston Stock Exchange's proposed new electronic options trading facility. Specifically, the CBOE representatives raised concerns regarding internalization and trading in penny increments. In addition, the representatives of CBOE reiterated comments on the Boston Stock Exchange's proposal set forth in a letter to Jonathan G. Katz, Secretary, Commission, from William Brodsky, Chairman and CEO, CBOE, dated September 16, 2003.