Investors could have another stock exchange as early as next year.

The Chicago Board Options Exchange, the nation's largest options exchange, says it intends to get into the business of trading stocks and will launch a new exchange in early 2007. The CBOE on Thursday says it has also begun converting itself into a holding company, a process that could lead to an eventual IPO.

The CBOE's plan to launch a stock exchange could pose another challenge to the New York Stock Exchange, a unit of NYSE Group ( NYX), and the Nasdaq Stock Market ( NDAQ). The CBOE's plans come on the heels of an earlier announcement by the International Stock Exchange ( ISE) that it too will launch a new stock exchange, called the ISE Stock Exchange.

The ISE, based in New York, is a rival to the CBOE in the options market. The ISE went public in an initial public offering a little over a year ago.

The CBOE plan must still be approved by the Securities and Exchange Commission.

CBOE officials, in announcing their plans, say four firms are investing in the new exchange: Interactive Brokers Group, LaBranche ( LAB), Susquehanna International and a division of Van Der Moolen ( VDM). LaBranche and Van Der Moolen are two of the biggest specialists firms on the NYSE.

The CBOE says the new stock exchange will be a "hybrid market'' that mixes electronic trading with a floor-based market-maker system. The hybrid market sounds similar to the one the NYSE is embracing.

"We believe the CBOE Stock Exchange and its hybrid market model can extend these same advantages to the stock world by providing it with this economical and proven alternative market,'' says CBOE Chairman and CEO William Brodsky.