UPDATE 2-Chicago Board Options Exchange nears IPO

* May 21 member vote paves way for Q2 public offering

* CBOE sets $25 per-share floor for IPO

* Minimum IPO price would value CBOE at $2.5 bln

* SEC-proposed fee cap could hurt revenues (Adds details on valuation, proposed fee cap)

By Ann Saphir

WASHINGTON, April 27 (Reuters) - The Chicago Board Options Exchange set a May 21 membership vote on a plan to convert to a shares-based organization, moving the biggest U.S. options exchange closer to an initial public offering.

The CBOE will issue about 90.7 million shares to its current owners in the restructuring, and an additional 10 million shares afterward, it said in a Monday Securities and Exchange Commission filing dated April 26.

The exchange also set a $25-per-share floor for the initial offering price, which would value the CBOE at about $2.5 billion. That is less than the $3.3 billion enterprise value implied by the most recent sale of a CBOE seat.

CBOE's IPO price may come under pressure from a proposed SEC rule that would cap the fees that exchanges can charge. In the same filing, the CBOE said the fee caps could have a material adverse effect on its business.

CBOE chief William Brodsky has for years wanted to follow in the footsteps of every other major U.S. exchange by becoming a publicly-traded company, but was prevented from doing so by a long-running legal dispute with CME Group Inc (CME.O)-owned Chicago Board of Trade that was finally resolved last year.

An IPO would free Brodsky to better compete with rivals and possibly pursue mergers or acquisitions that were impossible as a member-owned firm, he has said.

Each share issued in the pre-IPO restructuring will deliver a $1.25 pre-IPO dividend, the CBOE said, resulting in a total pre-IPO dividend payment of $113.4 million.

Memberships have demanded the dividends in return for giving up their right to use their seat to trade on the exchange.

After restructuring, they will pay the exchange directly for that right, giving CBOE a new revenue stream from trading access fees.

The new fees will account for a "significant" portion of its annual revenue, it said.

But SEC-proposed fee caps could skim $14.2 million a year from CBOE's revenue, which last year topped 426 million, CBOE said in the filing.