TO: File
FROM: Susie Cho
DATE: November 17, 2003
RE: Conference call with Morgan Stanley 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 November 4, 2003, members of the Division of Market Regulation staff (Elizabeth King, Debby Flynn, and Susie Cho) spoke with Tom Cardillo and Tom McManus of Morgan Stanley to discuss the Boston Stock Exchange's proposed new electronic options trading facility, the Boston Options Exchange ("BOX"). The Morgan Stanley representatives raised concerns about the BOX internalization mechanism and its long-term consequences for options market structure.