January 14, 2005
Exchange
Bulletin
Volume 33, Number 2
The Constitution and Rules of the Chicago Options Exchange, Incorporated (“Exchange”), in certain specific instances, require
the Exchange to provide notice to the Exchange membership. To satisfy this requirement, a complimentary copy of the Exchange Bulletin, including the Regulatory Bulletin, is delivered to all effective members on a weekly basis.
CBOE members are encouraged to receive the Exchange and Regulatory Bulletin and Information Circulars via e-mail. E-mail
subscriptions may be obtained by submitting your name, firm, mailing address, e-mail address, and phone number, to
members@cboe.com, or, by contacting the Membership Department by phone, at 312-786-7449. There is no charge for e-mail
delivery of the Exchange and Regulatory Bulletin or for Information Circulars. If you do sign up for e-mail delivery, please
remember to inform the Membership Department of e-mail address changes.
Additional subscriptions for hard copy delivery may be obtained by submitting your name, firm, mailing address, e-mail address and telephone number to: Chicago Board Options Exchange, Accounting Department, 400 South LaSalle, Chicago, Illinois 60605, Attention: Bulletin Subscriptions. The cost of an annual subscription (July 1 through June 30) is $200.00 ($100.00
after January 1), payable in advance. The Exchange reserves the right to limit subscriptions by non-members.
For up-to-date Seat Market Quotes, refer to CBOE.com and click “Seat Market Information” under the “About CBOE” tab. For
access to the CBOE Member Web Site, please also notify the Membership Department using the contact information above.
Copyright © 2004 Chicago Board Options Exchange, Incorporated
SEAT MARKET QUOTES AS OF FRIDAY, JANUARY 14, 2005
CLASS
CBOE/FULL
CBOT/FULL
BID
$280,000.00
$1,000,000.00
OFFER
$300,000.00
$1,300,000.00
LAST SALE AMOUNT
$300,000.00
$1,250,000.00
LAST SALE DATE
January 11, 2005
January 10, 2005
MEMBERSHIP SALES AND TRANSFERS
From
Nassau Corporation
To
Paul Kepes
Price/Transfer
$300,000.00
Date
1/11/2005
Page 2
January 14, 2005
Volume 33, Number 2
Chicago Board Options Exchange
MEMBERSHIP INFORMATION FOR 1/6/05 THROUGH 1/12/05
MEMBERSHIP APPLICATIONS RECEIVED FOR
WHICH A POSTING PERIOD IS REQUIRED
Individual Membership Applicants
Date Posted
Kyle Hilbrenner, Nominee
Tradelink LLC
1947 N. Dayton, Apt. 1R
Chicago, IL 60614
1/12/05
***Correction to CBOE Bulletin Dated: 1/7/05***
Individual Membership Applicants
Date Posted
Ryan M. Sellers, CBT-RF
Saen Options USA Inc.
534 W. Belden, #2-D
Chicago, IL 60614
1/5/05
MEMBERSHIP LEASES
New Leases
Effective Date
Lessor: John J. Conklin
Lessee: KC-Co. II LLC
Michael R. Quaid, NOMINEE
Rate:
0.8920%
Term: Daily
1/6/05
Lessor: Bernard W. Horwich
Lessee: CTC LLC
Joseph F. Landy III, NOMINEE
Rate:
0.8920%
Term: Monthly
1/7/05
Lessor: MB Partners II
Lessee: CTC LLC
Paul Kepes, NOMINEE
Rate:
0.8920%
Term: Monthly
1/7/05
Lessor: Daniel A. Gooze
Lessee: Lakeshore Securities, LP
Patrick W. Wehr, NOMINEE
Rate:
0.8920%
Term: Monthly
Effective Date
Lessor: O & R Options Co.
Lessee: Everest Trading, LLC
Brooks C. Taylor, NOMINEE
Rate:
0.875%
Term: Monthly
1/12/05
Terminated Leases
Termination Date
Lessor:
Merrill Lynch, Pierce,
Fenner & Smith, Inc.
Lessee: Susquehanna Investment Group
1/7/05
Lessor: Dru Options
Lessee: BOTTA Capital Management LLC
1/10/05
Lessor: William R. Power
Lessee: Commercial Crush Trading, LLC
Bruce I. Andrews (BIA), NOMINEE
1/11/05
Lessor: O & R Options Co.
Lessee: HGI, Inc.
Timothy Cody (CDY), NOMINEE
1/11/05
Lessor: CCD #1, Inc.
Lessee: BOTTA Capital Management LLC
1/12/05
Lessor: R. Whiting, Incorporated
Lessee: Vintage Capital LLC
1/12/05
Lessor: Citadel Derivatives Group LLC
Lessee: JOH Options Inc.
1/12/05
MEMBERSHIP TERMINATIONS
Individual Members
Nominee(s) / Inactive Nominee(s):
Termination Date
1/7/05
Jeffrey F. Brice (JBB)
SLK-Hull Derivatives LLC
440 S. LaSalle Street, 3rd Floor
Chicago, IL 60605
1/6/05
Lessor: O & R Options Co.
Lessee: HGI, Inc.
Timothy Cody, NOMINEE
Rate:
0.875%
Term: Monthly
1/10/05
Adrian Velazquez (ADR)
TD Options, LLC
141 W. Jackson Blvd., Ste. 800
Chicago, IL 60604
1/7/05
Lessor: Dru Options
Lessee: PFTC LLC
Mark M. Grywacheski, NOMINEE
Rate:
0.875%
Term: Monthly
1/10/05
Peter J. Tatooles (TTT)
TD Options, LLC
230 S. LaSalle St., Ste. 688
Chicago, IL 60604
1/7/05
Lessor: William J. Deevy
Lessee: CTC LLC
Adrian Velazquez, NOMINEE
Rate:
0.8920%
Term: Monthly
1/10/05
Eric Bleile (BLZ)
Wellington Capital Markets, LLC
440 S. LaSalle, Ste. #2910
Chicago, IL 60605
1/10/05
Lessor: Newcastle Financial LLC
Lessee: Commercial Crush Trading, LLC
Bruce I. Andrews, NOMINEE
Rate:
0.8920%
Term: Monthly
1/11/05
Timothy Cody (CDY)
HGI, Inc.
141 W. Jackson, Ste. #1520
Chicago, IL 60604
1/11/05
Lessor: Terrel W. Brostoff
Lessee: CTC LLC
Stacey Albrecht, NOMINEE
Rate:
0.8920%
Term: Monthly
1/11/05
Christopher M. Wheaton (WTS)
SLK-Hull Derivatives LLC
440 S. LaSalle Street, 3rd Floor
Chicago, IL 60605
1/12/05
Lessor: Burton F. Brooks
Lessee: TD Options, LLC
Anthony T. Capobianco, NOMINEE
Rate:
0.875%
Term: Monthly
1/12/05
Keir S. Collins (KIR)
First Derivative Traders, LP
440 S. LaSalle, Ste. 3100
Chicago, IL 60605
1/12/05
Page 3
January 14, 2005
Volume 33, Number 2
Member Organizations
Chicago Board Options Exchange
Member Organizations
CBT Registered For:
Termination Date
CBT Registered For:
King James Securities LLC
Sharon King
440 S. LaSalle - Ste. 3100
Chicago, IL 60605
1/12/05
Westward Capital LLC
1/7/05
311 S. Wacker Drive - Ste. 900
Chicago, IL 60606
Type of Business to be Conducted: Market Maker
Effective Date
***Correction to CBOE Bulletin Dated: 1/7/05***
Lessor(s):
Effective Date
CBT Registered For:
Termination Date
1/11/05
BNP Paribas Brokerage Services Inc
209 S. LaSalle - 5th Fl
Chicago, IL 60604
1/5/05
Newcastle Financial LLC
2735 N. Pine Grove Ave.
Chicago, IL 60614
Type of Business to be Conducted:
***Correction to CBOE Bulletin Dated: 1/7/05***
EFFECTIVE MEMBERSHIPS
Individual Members
CBT Registered For:
Effective Date
Peter J. Meyer (PMJ)
1/7/05
Westward Capital LLC
311 S. Wacker Drive - Ste. 900
Chicago, IL 60606
Type of Business to be Conducted: Market Maker
Daniel R. Lomer (LOM)
1/7/05
Grace Trading LLC
440 S. LaSalle, Suite 3400
Chicago, IL 60605
Type of Business to be Conducted: Market Maker
Nominee(s) / Inactive Nominee(s):
Effective Date
Michael R. Quaid (NFC)
1/6/05
KC-Co. II LLC
10 S. LaSalle St., Ste. 2300
Chicago, IL 60603
Type of Business to be Conducted: Market Maker
Terrence E. Burke (NPL)
1/7/05
X-Change Financial Access LLC
4827 W. Main St
Monee, IL 60449
Type of Business to be Conducted: Floor Broker
Adrian Velazquez (ADR)
1/10/05
CTC LLC
141 W. Jackson Blvd., Ste 800
Chicago, IL 60604
Type of Business to be Conducted: Market Maker/ Floor Broker
Timothy Cody (CDY)
1/10/05
HGI, Inc.
141 W. Jackson Ste #1520
Chicago, IL 60604
Type of Business to be Conducted: Market Maker
Sergio Padilla (SRG)
1/12/05
TD Options, LLC
230 South LaSalle - Ste. 688
Chicago, IL 60604
Type of Business to be Conducted: Market Maker/ Floor Broker
Brooks C. Taylor (BCT)
1/12/05
Everest Trading, LLC
440 S. LaSalle - Ste 3100
Chicago, IL 60605
Type of Business to be Conducted: Market Maker
CBT Registered For:
Effective Date
BNP Paribas Securities Corp.
787 Seventh Avenue
New York, NY 10019
Type of Business to be conducted:
Floor Broker / Non-Member Customer Business
1/5/05
JOINT ACCOUNTS
New Participants
Acronym
Effective Date
Daniel G. Engel
QCI
1/6/05
Jason A. Milton
QCI
1/6/05
Jason A. Milton
QCP
1/6/05
Michael R. Quaid
QVK
1/6/05
Michael R. Quaid
QII
1/6/05
Michael R. Quaid
QQD
1/6/05
Joseph F. Landy III
QGQ
1/7/05
Joseph F. Landy III
QXY
1/7/05
Andrew J. Skolnick
QYW
1/7/05
Steven Sowinski
QWZ
1/7/05
Daniel R. Lomer
QDW
1/7/05
George P. Konhilas
QSC
1/7/05
Joseph F. Landy III
QGT
1/7/05
Spencer D. Worley
QGS
1/10/05
Adrian Velazquez
QXY
1/10/05
Adrian Velazquez
QGQ
1/10/05
Adrian Velazquez
QGT
1/10/05
Jacques F. Fernandes
QCI
1/10/05
Adrian Velazquez
QCT
1/10/05
Sharon S. King
QRI
1/12/05
Sergio Padilla
QBB
1/12/05
Sergio Padilla
QRX
1/12/05
Sergio Padilla
QWJ
1/12/05
Page 4
January 14, 2005
Volume 33, Number 2
Chicago Board Options Exchange
New Participants
Acronym
Effective Date
CHANGES IN MEMBERSHIP STATUS
Brooks C. Taylor
QHM
1/12/05
Individual Members
Timothy G. McMahon
QCP
1/12/05
New Accounts
Acronym
Effective Date
Martin L. Dim
QPV
1/12/05
Terrence J. McGovern
QPV
1/12/05
Basilios T. Papanastoy
QPV
1/12/05
Thomas PapoutsisQPV
1/12/05
J. Philip Zwick
QPV
1/12/05
Terminated Participants Acronym
Termination Date
Jeffrey F. Brice
QIA
1/6/05
Jeffrey F. Brice
QBD
1/6/05
Jeffrey F. Brice
QLL
1/6/05
Adrian Velazquez
QRX
1/7/05
Adrian Velazquez
QBB
1/7/05
Adrian Velazquez
QFE
1/7/05
Adrian Velazquez
QHO
1/7/05
Adrian Velazquez
QWJ
1/7/05
Peter J. Tatooles
QBB
1/7/05
Peter J. Tatooles
QRX
1/7/05
Peter J. Tatooles
QWJ
1/7/05
Eric Bleile
QWC
1/10/05
Christopher M. Wheaton
QLL
1/12/05
Christopher M. Wheaton
QBD
1/12/05
Christopher M. Wheaton
QIA
1/12/05
Kevin J. Hincks
QBD
1/12/05
Kevin J. Hincks
QIA
1/12/05
Kevin J. Hincks
QLL
1/12/05
Keir S. Collins
QPR
1/12/05
Terminated Accounts
Acronym
Termination Date
Jonathan Merrill Harsch
QSG
1/10/05
Thomas W. Pruter
QSG
1/10/05
Douglas R. Walker
QSG
1/10/05
Effective Date
Daniel Abramson
1/6/05
From
Nominee for CTC LLC; Market Maker
To:
Nominee for CTC LLC; Market Maker / Floor Broker
Stacey Albrecht
1/6/05
From
Nominee for CTC LLC; Market Maker
To:
Nominee for CTC LLC; Market Maker / Floor Broker
Drew A. Becker
1/6/05
From
Nominee for CTC LLC; Market Maker
To:
Nominee for CTC LLC; Market Maker / Floor Broker
Thomas R. Beehler
1/6/05
From
Nominee for CTC LLC; Market Maker
To:
Nominee for CTC LLC; Market Maker / Floor Broker
Curtis Bilyeu
1/6/05
From
Nominee for CTC LLC; Market Maker
To:
Nominee for CTC LLC; Market Maker / Floor Broker
Jason P. Bristol
1/6/05
From
Nominee for CTC LLC; Market Maker
To:
Nominee for CTC LLC; Market Maker / Floor Broker
Robert Ciosek
1/6/05
From
Nominee for CTC LLC; Market Maker
To:
Nominee for CTC LLC; Market Maker / Floor Broker
Douglas C. Draeger
1/6/05
From
Nominee for CTC LLC; Market Maker
To:
Nominee for CTC LLC; Market Maker / Floor Broker
Paul Drinan
1/6/05
From
Nominee for CTC LLC; Market Maker
To:
Nominee for CTC LLC; Market Maker / Floor Broker
Bradley R. Dumes
1/6/05
From
Nominee for CTC LLC; Market Maker
To:
Nominee for CTC LLC; Market Maker / Floor Broker
Brett M. Estell
1/6/05
From
Nominee for CTC LLC; Market Maker
To:
Nominee for CTC LLC; Market Maker / Floor Broker
Chris Giannakopoulos
1/6/05
From
Nominee for CTC LLC; Market Maker
To:
Nominee for CTC LLC; Market Maker / Floor Broker
Lauren Goldsmith
1/6/05
From
Nominee for CTC LLC; Market Maker
To:
Nominee for CTC LLC; Market Maker / Floor Broker
Jeff D. Heitzman
1/6/05
From
Nominee for CTC LLC; Market Maker
To:
Nominee for CTC LLC; Market Maker / Floor Broker
Ryan A. Hesser
1/6/05
From
Nominee for CTC LLC; Market Maker
To:
Nominee for CTC LLC; Market Maker / Floor Broker
Daren E. Lee
1/6/05
From
Nominee for CTC LLC; Market Maker
To:
Nominee for CTC LLC; Market Maker / Floor Broker
Emmanuel L. Liontakis
1/6/05
From
Nominee for CTC LLC; Market Maker
To:
Nominee for CTC LLC; Market Maker / Floor Broker
Michael M. Mayor
1/6/05
From
Nominee for CTC LLC; Market Maker
To:
Nominee for CTC LLC; Market Maker / Floor Broker
Page 5
January 14, 2005
Volume 33, Number 2
Chicago Board Options Exchange
Effective Date
Effective Date
Thomas J. Pradd, Jr.
1/6/05
From
Nominee for CTC LLC; Market Maker
To:
Nominee for CTC LLC; Market Maker / Floor Broker
Jamie Rauch
1/6/05
From
Nominee for CTC LLC; Market Maker
To:
Nominee for CTC LLC; Market Maker / Floor Broker
Joseph F. Landy III
1/7/05
From:
Nominee For Lakeshore Securities, L.P.; Market Maker/
Floor Broker
To:
Nominee For CTC LLC; Market Maker/ Floor Broker
Sharon S. King
1/12/05
From:
CBT Registered For King James Securities LLC;
Market Maker
To:
CBT Registered For Consolidated Trading, LLC; Market
Maker
HGI, Inc.
1/11/05
From:
Lessee/ Member Organization Affiliated with a CBT
Registered For; Associated with a Market Maker/ Floor
Broker
To:
Member Organization Affiliated with a CBT Registered
For; Associated with a Market Maker/ Floor Broker
***Correction to CBOE Bulletin Dated: 1/7/05***
Individual Members
Effective Date
Thomas J. Mahoney
1/5/05
From:
CBT Registered For BNP Paribas Brokerage Services
Inc.; Floor Broker
To:
CBT Registered For BNP Paribas Securities Corp.;
Floor Broker
MEMBER ADDRESS CHANGES
Kevin J. Hincks
1/12/05
From:
Lessor/ Nominee For SLK-Hull Derivatives LLC; Market
Maker/ Floor Broker
To:
Lessor
Individual Members
Effective Date
Member Organizations
Effective Date
Member Organizations
Herzog, Heine, Geduld, Inc.
4804 Deer Lake Dr. E, 4th Fl.
Jacksonville, FL 32225
1/7/05
BOGH Panzeca, LLC
900 Forestview Ave.
Park Ridge, IL 60068
1/10/05
Effective Date
HGI, Inc.
1/10/05
From:
Member Organization Affiliated with a CBT Registered
For; Associated with a Market Maker/ Floor Broker
To:
Lessee/ Member Organization Affiliated with a CBT
Registered For; Associated with a Market Maker/ Floor
Broker
POSITION LIMIT CIRCULARS
Pursuant to Exchange Rule 4.11, the Exchange issued the below listed Position Limit Circulars between January 7 and January 11, 2005. The complete
circulars are available from the Department of Market Regulation, in the data information bins on the 2nd Floor of the Exchange, and on the CBOE
website at cboe.com under the “Market Data” tab.
To receive regular updates of the position limit list via fax, contact Candice Nickrand at (312) 786-7730. Questions concerning position and exercise
limits may be directed to the Department of Market Regulation to Rich Pedraza at (312) 786-7077 or Tim Mac Donald at (312) 786-7706.
Position Limit Circular PL05-01
January 7, 2005
Equity Position and Exercise Limits will
be decreased to a Lower Tier Limit Effective
January 24, 2005
Position Limit Circular PL05-02
January 7, 2005
Exchange Traded Funds’ Position and Exercise
Limits will be decreased to a Lower Tier Limit
Effective January 24, 2005
Position Limit Circular PL05-03
January 7, 2005
Adjusted Position and Exercise Limits for certain
Equity Option Classes will revert to either their
Applicable Standard or Adjusted Position and Exercise
Limits effective January 24, 2005
POSITION LIMIT CIRCULAR PL05-04
January 11, 2005
CBOE Gold Index (“GOX”) qualified for a Higher Tier
Position and Exercise Limit
Effective January 11, 2005
Page 6
January 14, 2005
Volume 33, Number 2
Chicago Board Options Exchange
RESEARCH CIRCULARS
The following Research Circulars were distributed between January 4 and January 12, 2005. If you wish to read the entire document, please
refer to the CBOE website at www.cboe.com and click on the “Trading Tools” Tab. New listings and series information is also available in the
Trading Tools section of the website. For questions regarding information discussed in a Research Circular, please call The Options Clearing
Corporation at 1-888-OPTIONS.
Research Circular #RS05-003
January 4, 2005
M.D.C. Holdings, Inc. (“MDC”)
30% Stock Dividend
Ex-Distribution Date: January 11, 2005
Research Circular #RS05-004
January 4, 2005
Telecomunicacoes Brasileiras S.A.-Telebras ADS
(“TBH & adj. TBW/THJ”)
Determination of Cash-in-Lieu Amount
Research Circular #RS05-005
January 4, 2005
Wireless HOLDRs Trust (“WMH & adj. HTW/WDW”)
Determination of Cash-in-Lieu Amount
Research Circular #RS05-007
January 5, 2005
PeopleSoft, Inc. (“PSFT/PQO/WOZ/VOP”)
Tender Offer FURTHER EXTENDED by
Pepper Acquisition Corp.
Research Circular #RS05-008
January 5, 2005
Argosy Gaming Company (“AGY”) Proposed Merger
with Penn National Gaming, Inc. (“PENN”)
Research Circular #RS05-014
January 7, 2005
PeopleSoft, Inc. (“PSFT/PQO/WOZ/VOP”):
Merger Completed — Cash Settlement
Research Circular #RS05-021
January 10, 2005
NeighborCare, Inc. (“NCRX/QNY”)
Tender Offer FURTHER EXTENDED
by Omnicare, Inc. (“OCR”)
Research Circular #RS05-022
January 10, 2005
Aventis ADS (“AVE/adj. ABJ”)
Determination of Cash-in-Lieu Amount
Research Circular #RS05-025
January 11, 2005
Asyst Technologies, Inc. (“ASYTE/QQY”)
Underlying Symbol Change to “ASYT”
Effective Date: January 12, 2005
Research Circular #RS05-027
January 12, 2005
Software HOLDRs Trust (“SWH”) Cash Distribution
Ex-Distribution Date: January 13, 2005
Research Circular #RS05-010
January 6, 2005
Stelmar Shipping Ltd. (“SJH”) Proposed Merger
with Overseas Shipholding Group, Inc. (“OSG”)
Research Circular #RS05-032
January 12, 2005
Ceradyne, Inc. (“CRDN/AUE”)
3-for-2 Stock Split
Ex-Distribution Date: January 19, 2005
Research Circular #RS05-011
January 7, 2005
Alcan Inc. (“AL/YXU/OZB”)
Distribution of Shares of
Novelis Inc. (“NVL”)
Ex-Distribution Date: January 19, 2005
Research Circular #RS05-033
January 12, 2005
AMERIGROUP Corporation (“AGP”)
2-for-1 Stock Split
Ex-Distribution Date: January 19, 2005
Research Circular #RS05-012
January 7, 2005
Shuffle Master, Inc. (“SHFL/SFQ”)
3-for-2 Stock Split
Ex-Distribution Date: January 18, 2005
Research Circular #RS05-013
January 7, 2005
First Health Group Corp. (“FHCC/FHQ”) Proposed Merger
with Coventry Health Care, Inc. (“CVH/WJU/OVB”)
Research Circular #RS05-034
January 12, 2005
Joy Global, Inc. (“JOYG/JQY”)
3-for-2 Stock Split
Ex-Distribution Date: January 24, 2005
Research Circular #RS05-035
January 12, 2005
NCR Corporation (“NCR”)
2-for-1 Stock Split
Ex-Distribution Date: January 24, 2005
January 19, 2005
Volume RB16, Number 3
Regulatory
Bulletin
The Constitution and Rules of the Chicago Board Options Exchange, Incorporated
(“Exchange”), in certain specific instances, require the Exchange to provide notice to the membership. The weekly Regulatory Bulletin is delivered to all effective members to satisfy this
requirement.
Copyright © 2004 Chicago Board Options Exchange, Incorporated
Regulatory
Circulars
Regulatory Circular RG05-05
To:
Members and Member Organizations
From: Regulatory Services Division
Legal Division
Date:
January 10, 2005
Re:
SEC Approval of CBOE Rule Filing re Systematizing Orders & COATS
On January 7, 2005, the SEC approved CBOE rule change, SR-CBOE-2004-77, which
amends CBOE rules relating to the systematizing of orders in connection with the requirement to implement a consolidated options audit trail system (“COATS”). The following is a
brief summary of the requirement to systematize orders.
General Requirement. Except as described below, beginning on Monday, January 10,
2005, each order, cancellation of, or change to an order in any option class transmitted to
CBOE should be “systematized”, in a format approved by CBOE, either before it is sent to
CBOE or upon receipt on the floor of CBOE. An order is systematized if:
(i)
(ii)
the order is sent electronically to CBOE; or
the order that is sent to CBOE non-electronically (e.g., telephone orders)
is input electronically into CBOE’s systems contemporaneously upon receipt on CBOE, and prior to representation of the order.
It is the responsibility of the member receiving a non-electronic order on the floor of the
CBOE to systematize such orders. The manner of systematizing orders will be through the
Floor Broker Workstation (“FBW”), BERS, or through proprietary systems approved by CBOE.
OEX, XEO, SPX & SPDRs. The requirement to systematize orders shall apply in the OEX,
SPX, XEO and SPDR option classes1 beginning on March 28, 2005.
Marketable Orders. With respect to non-electronic, market and marketable orders sent to
CBOE, the member responsible for systematizing the order shall input into CBOE’s systems at least the following eight specific items with respect to the order prior to the representation of the order: (i) the option symbol; (ii) the expiration month; (iii) the expiration year; (iv)
the strike price; (v) buy or sell; (vi) call or put; (vii) the number of contracts; and (viii) the
Clearing Member. Any additional information with respect to the order shall be input into
CBOE’s systems contemporaneously upon receipt, which may occur after the representation and execution of the order.2
1
On January 10, 2005, CBOE submitted a rule change to the SEC, SR-CBOE-2005-04, proposing to amend
Rule 6.24 to state that the requirement to systematize orders in the SPDRs option class will commence on
March 28, 2005. CBOE requested accelerated approval of the rule change.
2
As noted in the filing, CBOE intends to continue to evaluate whether some number of order terms less than
the eight identified above would be sufficient to distinguish one order from another that a member may receive
at or about the same time, and thus support eliminating the necessity to input some of these orders terms prior
to representation. CBOE also will continue to evaluate whether there are more efficient means or devices to
input the required order information.
Regulatory Circulars
continued
Regulatory Circular RG05-05 continued
Malfunction of Systems. In the event of a malfunction or disruption of CBOE’s systems
such that a member is unable to systematize an order, the member or member organization shall manually record the order information in written form including the time of its
receipt during the time period that the malfunction or disruption occurs. After the malfunction or disruption ceases, the member shall immediately resume systematizing orders. In
addition, the member shall exert best efforts to input electronically into CBOE’s systems
all relevant order information received during the time period when there was a malfunction
or disruption of CBOE’s systems as soon as possible, and in any event shall input such
data electronically into CBOE’s systems not later than the close of business on the day
that the malfunction or disruption ceases.
Due Diligence Rule. As part of the rule change, CBOE also amended Rule 6.73 - Responsibilities of Floor Brokers to make explicit that a broker’s responsibility to immediately
and continuously represent market and marketable orders is subject to the requirement
that each order must be systematized prior to representation.
If you have questions concerning the FBW or other devices to systematize orders, please
contact Monica Wiedlin-Torres at 786-7368, Jeff Short at 786-8410, or Maureen Smith at
786-7556. If you have any questions relating to the rule filing, please contact Patrick
Sexton at 786-7467. Finally, if you have any regulatory related questions about this new
requirement or reports showing current systemization rates, please contact Karen Charleston
at 786-7724.
Regulatory Circular RG05-06
To:
Members and Member Organizations
From: Department of Financial and Sales Practice Compliance
Date:
January 12, 2005
Re:
CBOE Rule 9.25, Borrowing From or Lending to Customers
On December 16, 2004, the Securities and Exchange Commission (“SEC”) approved CBOE
Rule 9.25, Borrowing From or Lending to Customers, which restricts registered persons of
members or member organizations from borrowing or lending money to their customers,
unless the borrowing or lending arrangement falls within one of five permissible types of
lending arrangements:
i)
ii)
iii)
iv)
v)
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the customer is a member of the registered person’s immediate family
(as defined in the rule);
the customer is a financial institution regularly engaged in the business
of providing credit, financing, or loans, or other entity or person that regularly arranges or extends credit in the ordinary course of business;
the customer and the registered person are both registered persons of
the same member organization;
the lending arrangement is based on a personal relationship outside of
the broker-customer relationship; or
the lending arrangement is based on a business relationship outside of
the broker-customer relationship.
January 19, 2005, Volume RB16, Number 3
Regulatory Circulars
continued
Regulatory Circular RG05-06 continued
Additionally, if a member or member organization chooses to permit their registered persons
to engage in borrowing or lending arrangements with their customers, Rule 9.25 requires
members and member organizations to have written procedures allowing the borrowing and
lending of money between registered persons and customers of the member or member
organization. Rule 9.25 also requires members and member organizations to pre-approve in
writing the following types of lending arrangements: the customer and the registered person
are both registered persons of the same member organization; the lending arrangement is
based on a personal relationship with the customer, such that the loan would not have been
solicited, offered, or given had the customer and the associated person not maintained a
relationship outside of the broker/customer relationship; or the lending arrangement is based
on a business relationship outside of the broker-customer relationship.
Members and member organizations could choose to prohibit the practice of borrowing from
or lending to customers by registered persons.
Questions regarding this Regulatory Circular may be directed to Barry Szurgot at (312) 7867756 or Larry Bresnahan at (312) 786-7713.
Regulatory Circular RG05-07
To:
Market-Makers and DPMs
From: Equity Option Procedures Committee
Index Floor Procedures Committee
Date:
January 12, 2005
Re:
Elimination of Electronically-Generated Orders Rule
Effective immediately, Rule 6.8A is no longer effective. Formerly, this rule prohibited the
electronic generation and communication of orders to the Exchange. As such, electronically-generated orders are now eligible for submission to the Exchange.
If you have any questions regarding this circular, please contact Steve Youhn in the Legal
Division at (312) 786-7416.
January 19, 2005, Volume RB16, Number 3
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