February 11, 2005
Volume 33, Number 6
Exchange
Bulletin
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, FEBRUARY 11, 2005
CLASS
CBOE/FULL
CBOT/FULL
BID
$320,000.00
$1,235,000.00
OFFER
$335,000.00
$1,350,000.00
LAST SALE AMOUNT
$320,000.00
$1,237,500.00
LAST SALE DATE
February 2, 2005
February 11, 2005
Page 2
February 11, 2005
Volume 33, Number 6
Chicago Board Options Exchange
MEMBERSHIP INFORMATION FOR 2/3/05 THROUGH 2/9/05
MEMBERSHIPAPPLICATIONS RECEIVED FOR
WHICH A POSTING PERIOD IS REQUIRED
Individual Membership Applicants
Date Posted
Joseph P. Wall, Nominee
Equitec Proprietary Markets, LLC
555 S. Kenilworth
Elmhurst, IL 60126
2/8/05
Effective Date
Jeffery P. Thompson (MZU)
2/7/05
Canal Street Trading, LLC
680 N. Lakeshore Drive - #1216
Chicago, IL 60611
Type of Business to be Conducted: Market Maker
Tony Aimone (AGA)
2/9/05
Susquehanna Investment Group
175 W. Jackson Blvd., Ste. #1700
Chicago, IL 60604
Type of Business to be Conducted: Market Maker/Floor Broker
MEMBERSHIP LEASES
New Leases
Effective Date
Member Organizations
Lessor: Citadel Derivatives Group LLC
Lessee: Stuartt R. Kammer
Rate:
0.75%
Term: 17 Days
2/3/05
Lessee(s):
Lessor: Marc I. Beilinson
Lessee: JOE, LLC
Stephen C. Pechloff, NOMINEE
Rate:
0.75%
Term: Monthly
2/3/05
Lessor: Ruth I. Kahn
Lessee: Canal Street Trading, LLC
Jeffery P. Thompson, NOMINEE
Rate:
0.75%
Term: Monthly
2/7/05
Terminated Leases
Termination Date
Lessor: Pershing LLC
Lessee: Citadel Derivatives Group LLC
John M. Regan (JKR), NOMINEE
2/3/05
Lessor: Pershing LLC
Lessee: Stuartt R. Kammer (KAM)
2/3/05
Lessor: Charles J. Peres
Lessee: Harrison Trading Group, LLC
2/7/05
JOE, LLC
2/3/05
141 W. Jackson Blvd., Ste. 500
Chicago, IL 60604
Type of Business to be Conducted: Market Maker
JOINT ACCOUNTS
MEMBERSHIP TERMINATIONS
Individual Members
CBT Exercisers:
Termination Date
Phillip J. Sylvester (OPS)
1433 N. Dearborn
Chicago, IL 60610
2/3/05
Nominee(s) / Inactive Nominee(s):
Termination Date
William P. Litgen (LTG)
Harrison Trading Group, LLC
601 S. LaSalle, Ste. 200
Chicago, IL 60605
2/3/05
EFFECTIVE MEMBERSHIPS
Individual Members
Nominee(s) / Inactive Nominee(s):
Effective Date
Effective Date
Stephen C. Pechloff (PEC)
2/3/05
JOE, LLC
141 W. Jackson, Ste. 500
Chicago, IL 60604
Type of Business to be Conducted: Market Maker
Thomas D. Tracy (TRC)
2/4/05
Merrill Lynch, Pierce, Fenner & Smith, Inc.
440 S. LaSalle, #1124
Chicago, IL 60605
Type of Business to be Conducted: Floor Broker
New Participants
Acronym
Effective Date
Sergio Padilla
QHO
2/3/05
Kevin M. Scanlan
QHO
2/3/05
Jeffery I. Fried
QLJ
2/3/05
Brian R. Tobin
QNT
2/3/05
John M. Conway
QHS
2/7/05
Wesley Alan Breton
QND
2/7/05
Tony Aimone
QEW
2/9/05
Tony Aimone
QFS
2/9/05
Tony Aimone
QJY
2/9/05
Tony Aimone
QLO
2/9/05
Tony Aimone
QMD
2/9/05
Tony Aimone
QNA
2/9/05
Tony Aimone
QPO
2/9/05
Tony Aimone
QUT
2/9/05
Tony Aimone
QVA
2/9/05
Tony Aimone
QYH
2/9/05
Tony Aimone
QYS
2/9/05
David G. Goldberg
QVK
2/9/05
Ned R. Kline
QVK
2/9/05
Zane Edwin Rigden
QVK
2/9/05
Michael G. Tuft
QVK
2/9/05
Terminated Participants Acronym
Termination Date
William P. Litgen
2/3/05
QKN
Page 3
February 11, 2005
Terminated Participants Acronym
Volume 33, Number 6
Chicago Board Options Exchange
Termination Date
Terminated Participants Acronym
Termination Date
QYS
2/8/05
William P. Litgen
QRF
2/3/05
Redmond E. Lyons-Keefe
Akiva Balfour
QMP
2/8/05
Thomas J. Neil
QYH
2/8/05
Akiva Balfour
QNA
2/8/05
Thomas J. Neil
QMP
2/8/05
Akiva Balfour
QMD
2/8/05
Thomas J. Neil
QNA
2/8/05
Akiva Balfour
QPO
2/8/05
Thomas J. Neil
QPO
2/8/05
Akiva Balfour
QVA
2/8/05
Thomas J. Neil
QVA
2/8/05
Akiva Balfour
QSM
2/8/05
Thomas J. Neil
QLO
2/8/05
Akiva Balfour
QFS
2/8/05
Thomas J. Neil
QSM
2/8/05
Akiva Balfour
QYS
2/8/05
Thomas J. Neil
QMD
2/8/05
Akiva Balfour
QEW
2/8/05
Thomas J. Neil
QEW
2/8/05
Akiva Balfour
QIS
2/8/05
Thomas J. Neil
QIS
2/8/05
Akiva Balfour
QPN
2/8/05
Thomas J. Neil
QPN
2/8/05
Akiva Balfour
QJY
2/8/05
Thomas J. Neil
QJY
2/8/05
Akiva Balfour
QNY
2/8/05
Thomas J. Neil
QFS
2/8/05
Akiva Balfour
QUT
2/8/05
Thomas J. Neil
QYS
2/8/05
Akiva Balfour
QYH
2/8/05
Thomas J. Neil
QNY
2/8/05
Christopher G. Larkin
QEW
2/8/05
Thomas J. Neil
QUT
2/8/05
Christopher G. Larkin
QIS
2/8/05
Bradley A. Cohn
QFS
2/8/05
Christopher G. Larkin
QJY
2/8/05
Kaj Michael Gartz
QFS
2/8/05
Christopher G. Larkin
QNY
2/8/05
David A. Goldsmith
QFS
2/8/05
Christopher G. Larkin
QPN
2/8/05
Bradley A. Cohn
QLO
2/8/05
Christopher G. Larkin
QUT
2/8/05
Kaj Michael Gartz
QLO
2/8/05
Redmond E. Lyons-Keefe
QNY
2/8/05
David A. Goldsmith
QLO
2/8/05
Redmond E. Lyons-Keefe
QUT
2/8/05
Bradley A. Cohn
QVA
2/8/05
Redmond E. Lyons-Keefe
QMP
2/8/05
Kaj Michael Gartz
QVA
2/8/05
Redmond E. Lyons-Keefe
QNA
2/8/05
David A. Goldsmith
QVA
2/8/05
Redmond E. Lyons-Keefe
QMD
2/8/05
Bradley A. Cohn
QEW
2/8/05
Redmond E. Lyons-Keefe
QPO
2/8/05
Kaj Michael Gartz
QEW
2/8/05
Redmond E. Lyons-Keefe
QVA
2/8/05
David A. Goldsmith
QEW
2/8/05
Redmond E. Lyons-Keefe
QSM
2/8/05
Bradley A. Cohn
QIS
2/8/05
Redmond E. Lyons-Keefe
QLO
2/8/05
David A. Goldsmith
QIS
2/8/05
Redmond E. Lyons-Keefe
QIS
2/8/05
Bradley A. Cohn
QPN
2/8/05
Redmond E. Lyons-Keefe
QYH
2/8/05
David A. Goldsmith
QPN
2/8/05
Redmond E. Lyons-Keefe
QEW
2/8/05
Bradley A. Cohn
QYS
2/8/05
Redmond E. Lyons-Keefe
QPN
2/8/05
Kaj Michael Gartz
QYS
2/8/05
Redmond E. Lyons-Keefe
QJY
2/8/05
David A. Goldsmith
QYS
2/8/05
Redmond E. Lyons-Keefe
QFS
2/8/05
Bradley A. Cohn
QUT
2/8/05
Kaj Michael Gartz
QUT
2/8/05
Page 4
February 11, 2005
Volume 33, Number 6
Chicago Board Options Exchange
Terminated Participants Acronym
Termination Date
Terminated Participants Acronym
Termination Date
David A. Goldsmith
QUT
2/8/05
Jeffrey D. Ream
QIS
2/8/05
Bradley A. Cohn
QJY
2/8/05
Jeffrey D. Ream
QJY
2/8/05
Kaj Michael Gartz
QJY
2/8/05
Jeffrey D. Ream
QLO
2/8/05
David A. Goldsmith
QJY
2/8/05
Jeffrey D. Ream
QMD
2/8/05
Bradley A. Cohn
QNY
2/8/05
Jeffrey D. Ream
QMP
2/8/05
Kaj Michael Gartz
QNY
2/8/05
Jeffrey D. Ream
QNA
2/8/05
David A. Goldsmith
QNY
2/8/05
Jeffrey D. Ream
QNY
2/8/05
Bradley A. Cohn
QMP
2/8/05
Jeffrey D. Ream
QPN
2/8/05
David A. Goldsmith
QMP
2/8/05
Jeffrey D. Ream
QPO
2/8/05
Bradley A. Cohn
QNA
2/8/05
Jeffrey D. Ream
QSM
2/8/05
Kaj Michael Gartz
QNA
2/8/05
Jeffrey D. Ream
QUT
2/8/05
David A. Goldsmith
QNA
2/8/05
Jeffrey D. Ream
QVA
2/8/05
Bradley A. Cohn
QMD
2/8/05
Jeffrey D. Ream
QYH
2/8/05
Kaj Michael Gartz
QMD
2/8/05
Jeffrey D. Ream
QYS
2/8/05
David A. Goldsmith
QMD
2/8/05
Terminated Accounts
Acronym
Termination Date
Kaj Michael Gartz
QPO
2/8/05
John S. Stafford Jr.
QSP
2/4/05
David A. Goldsmith
QPO
2/8/05
Thomas W. Herrala II
QDL
2/4/05
Bradley A. Cohn
QPO
2/8/05
Daniel C. Malone
QDL
2/4/05
Bradley A. Cohn
QSM
2/8/05
John S. Stafford Jr.
QDL
2/4/05
David A. Goldsmith
QSM
2/8/05
Eric J. Fish
QWW
2/8/05
Bradley A. Cohn
QYH
2/8/05
Timothy J. Werner
QWW
2/8/05
Kaj Michael Gartz
QYH
2/8/05
Mason Lawson Phelps
QWW
2/8/05
David A. Goldsmith
QYH
2/8/05
Eric J. Fish
QPK
2/8/05
Carole Pestien
QFS
2/8/05
Andrew J. Hodgman
QPK
2/8/05
Carole Pestien
QIS
2/8/05
Paul J. Jiganti
QPK
2/8/05
Carole Pestien
QJY
2/8/05
Paul A. Oldani
QPK
2/8/05
Carole Pestien
QMD
2/8/05
Gregory P. Pokorney
QPK
2/8/05
Carole Pestien
QMP
2/8/05
CHANGES IN MEMBERSHIP STATUS
Carole Pestien
QNY
2/8/05
Individual Members
Carole Pestien
QPN
2/8/05
Carole Pestien
QPO
2/8/05
Carole Pestien
QUT
2/8/05
Carole Pestien
QVA
2/8/05
Carole Pestien
QLO
2/8/05
Carole Pestien
QSM
2/8/05
Jeffrey D. Ream
QEW
2/8/05
Jeffrey D. Ream
QFS
2/8/05
Effective Date
Paul K. Suvak
2/8/05
From:
Nominee for PKS Trading LLC; No Floor Functions
To:
Nominee for PKS Trading LLC; Market Maker
Page 5
February 11, 2005
Member Organizations
Volume 33, Number 6
Effective Date
BNY Brokerage Inc.
2/8/05
From:
Lessor/Non-Member Customer Business
To:
Lessor
Harrison Trading Group, LLC
2/7/05
From:
Lessee/Member Organization Affiliated with a CBT
Registered For; Associated with a Market Maker
To:
Member Organization Affiliated with a CBT Registered
For; Associated with a Market Maker
Chicago Board Options Exchange
MEMBER ADDRESS CHANGES
Individual Members
Effective Date
Patrick J. McGuire
3692 SW Marine Dr.
Vancouver, B.C. Canada V6N3Z4
2/8/05
Canal Street Trading, LLC
2/7/05
From:
Member Organization Affiliated with a CBT Registered
For; Associated with a Market Maker
To:
Lessee/Member Organization Affiliated with a CBT
Registered For; Associated with a Market Maker
RESEARCH CIRCULARS
The following Research Circulars were distributed between February 3 and February 10, 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 #RS05-081
February 3, 2005
Henry Schein, Inc. (“HSIC/HQE/YUH/OLF”)
2-for-1 Stock Split
Ex-Distribution Date: March 1, 2005
Research Circular #RS05-090
February 8, 2005
Astoria Financial Corporation (“AF”)
3-for-2 Stock Split
Ex-Distribution Date: March 2, 2005
Research Circular #RS05-082
February 4, 2005
***UPDATE – Distribution Amount, Payable Date
and Ex-Date Determined*** Bayer AG (“BAY”) Cash
Distribution in Lieu of Ordinary Shares
of Lanxess AG - Form of Election
Ex-Distribution Date: February 8, 2005
Research Circular #RS05-092
February 8, 2005
Goldcorp Inc. (“GG”)
Exchange Offer AMENDED/INCREASED by
Glamis Gold Ltd. (“GLG”)
Research Circular #RS05-083
February 4, 2005
Caesars Entertainment, Inc. (“CZR/YVK/ODL”)
Proposed Election Merger
with Harrah’s Entertainment, Inc. (“HET/WBI/VKH”)
Research Circular #RS05-084
February 7, 2005
NeighborCare, Inc. (“NCRX/QNY”)
Tender Offer FURTHER EXTENDED by
Omnicare, Inc. (“OCR”)
Research Circular #RS05-085
February 7, 2005
First Health Group Corp. (“FHCC/adj. FHU”)
Determination of Cash-in-Lieu Amount
Research Circular #RS05-093
February 9, 2005
EOG Resources, Inc. (“EOG/YBK/OAC”)
2-for-1 Stock Split
Ex-Distribution Date: March 2, 2005
Research Circular #RS05-095
February 9, 2005
Hollywood Entertainment Corporation (“HLYW/HWQ/YZH/OYF”)
Exchange Offer by Blockbuster Inc. (“BBI/YCQ/OIW”)
Research Circular #RS05-099
February 10, 2005
Varco International, Inc. (“VRC”) Proposed Merger
with National-Oilwell, Inc. (“NOI”)
February 16, 2005
Volume RB16, Number 7
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 RG05-16
Date:
February 3, 2005
To:
Members and Member Firms
From:
Market Operations Department
Re:
Restrictions on Transactions in
Tower Automotive (TWR)
Tower Automotive, (TWR), said its shares would be delisted from the NYSE as of February
3, 2005. The Company filed for Chapter 11 bankruptcy protection on February 1, 2005 in
order to address liquidity concerns and to get some breathing room while it restructures its
debt.
As of February 3, 2005 trading on CBOE in existing series of TWR options will be subject to
the following restrictions. Only closing transactions maybe effected in any series of TWR
options except for (i) opening transactions by Market-Makers executed to accommodate
closing transactions of other market participants and (ii) opening transactions by CBOE
member organizations to facilitate the closing transactions of public customers executed
as crosses pursuant to and in accordance with CBOE Rule 6.74(b) or (d).
The execution of opening transactions in TWR options, except as permitted above, and/or
the misrepresentation as to whether an order is opening or closing, will constitute a violation
of CBOE rules, and may result in disciplinary action. Member organizations should ensure
that they have appropriate procedures in place to prevent their customers from entering
opening orders in this restricted option class.
There are no restrictions in place with respect to the exercise of TWR options. The provisions of this circular apply to any options on Tower Automotive traded on CBOE.
Any questions regarding this circular may directed to Kerry Winters at (312) 786-7312 or
Joanne Heenan-Hustad at (312) 786-7786.
Rule Changes,
Interpretations
and Policies
APPROVED RULE CHANGES
The Securities and Exchange Commission (“SEC”) has approved the following change(s)
to Exchange Rules pursuant to Section 19(b) of the Securities Exchange Act of 1934, as
amended (“the Act”). Copies are available on the CBOE public website at www.cboe.com/
legal/effectivefiling.aspx.
The effective date of the rule change is the date of approval unless otherwise noted.
SR-CBOE-2005-04
Systematizing Orders in the SPDR Option Class
On January 10, 2005, the SEC approved Rule Change File No. SR-CBOE-2005-04, which
filing amends CBOE Rule 6.24 to provide that the requirement to systematize orders in
the SPDR option class will commence on March 28, 2005 (Securities Exchange Act
Release No. 51006, 70 FR 2680 (January 14, 2005)). Any questions regarding the rule
change may be directed to Pat Sexton, Legal Division, at 312-786-7467. The text of the
amended rules is set forth below. New language is italicized.
Rule 6.24
Required Order Information
(a) Orders Must Be Systematized. The Exchange has undertaken with the other
options exchanges to develop a Consolidated Options Audit Trail System
(“COATS”), which when fully developed and implemented, will provide an accurate, time-sequenced record of electronic and other orders, quotations, and transactions in certain option classes listed on the Exchange. Unless otherwise provided, the requirements of this Rule shall commence on January 10, 2005. In
connection with the implementation of COATS:
(a)(1) – (2)
No change.
(a)(3) Orders in Certain Index Option Classes and the Standard and Poor’s
Depositary Receipts (“SPDR”) Option Class. The requirement to systematize
orders as set forth in this Rule shall commence on March 28, 2005, in the following option classes: the S&P 500 index option class (SPX), the SPDR option
class, the S&P 100 index option class (OEX), and the European-style S&P 100
index option class (XEO).
(a)(4)
No change.
(b) – (c)
No change.
. . . Interpretations and Policies:
.01 - .07
RB2
No change.
February 16, 2005, Volume RB16, Number 7
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2004-77
COATS - Systematizing Orders
On January 7, 2005, the SEC approved Rule Change File No. SR-CBOE-2004-77, which
filing amends CBOE rules relating to the systematizing of orders in connection with the
requirement to design and implement a consolidated options audit trail system (“COATS”)
(Securities Exchange Act Release No. 50996, 70 FR 2436 (January 13, 2005)). Any questions regarding the rule change may be directed to Pat Sexton, Legal Division, at 312-7867467. The text of the amended rules is set forth below. New language is italicized.
Rule 6.24
Required Order Information
(1)
Except as provided in paragraphs (a)(2) through (a)(4), and (b), of this
Rule, each order, cancellation of, or change to an order transmitted to the Exchange must be “systematized”, in a format approved by the Exchange, either
before it is sent to the Exchange or upon receipt on the floor of the Exchange. An
order is systematized if: (i) the order is sent electronically to the Exchange; or (ii)
the order that is sent to the Exchange non-electronically (e.g., telephone orders) is
input electronically into the Exchange’s systems contemporaneously upon receipt
on the Exchange, and prior to representation of the order.
(2)
Market and Marketable Orders. With respect to non-electronic, market
and marketable orders sent to the Exchange, the member responsible for systematizing the order shall input into the Exchange’s systems at least the following
specific information 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 the Exchange’s systems contemporaneously upon receipt, which may occur
after the representation and execution of the order.
(3)
Orders in Certain Index Option Classes. The requirement to systematize
orders as set forth in this Rule shall commence on March 28, 2005, in the following
option classes: the S&P 500 index option class (SPX), the S&P 100 index option
class (OEX), and the European-style S&P 100 index option class (XEO).
(4)
In the event of a malfunction or disruption of the Exchange’s systems
such that a member is unable to systematize an order, the member or member
organization shall follow the procedures as described in paragraph (b) of this Rule
during the time period that the malfunction or disruption occurs. Upon the cessation of the malfunction or disruption, the member shall immediately resume systematizing orders. In addition, the member shall exert best efforts to input electronically into the Exchange’s systems all relevant order information received during the time period when there was a malfunction or disruption of the Exchange’s
systems as soon as possible, and in any event shall input such data electronically
into the Exchange’s systems not later than the close of business on the day that
the malfunction or disruption ceases. If, following a malfunction or disruption, the
Exchange’s systems were to become available for the systemization of orders
after the close of business, the member would be expected to input electronically
into the Exchange’s systems all relevant order information received during the
malfunction or disruption on the next business day.
(b)
With respect to orders received during a malfunction or disruption of the
Exchange’s systems under paragraph (a)(4) above:
(1)
Transmitted to the Floor. Each order transmitted to the Exchange must be
recorded legibly in a written form that has been approved by the Exchange, and the
member receiving such order must record the time of its receipt on the floor and
legibly record the terms of the order, in written form.
February 16, 2005, Volume RB16, Number 7
RB3
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2004-77 continued
(2)
Cancellations and Changes. Each cancellation of, or change to, an order
that has been transmitted to the floor must be recorded legibly in a written form
that has been approved by the Exchange, and the member receiving such cancellation or change must record the time of its receipt on the floor.
(c)
Executions. A member transmitting from the floor a report of the execution of an order must record the time at which a report of such execution is
received by such member.
. . . Interpretations and Policies:
.01
Any member desiring to use an order form other than those provided by
the Exchange must submit such form to the appropriate Floor Procedure Committee and obtain its approval prior to using such form on the Floor. When approving
an order form other than those provided by the Exchange, the appropriate Floor
Procedure Committee shall ensure that the form complies with COATS.
.02
The use of hand signal communications on the floor of the Exchange
may be used to initiate an order, to increase or decrease the size of an order, to
change an order’s limit, to cancel an order, or to activate a market order. Any
initiation, cancellation, or change of an order relayed to a floor broker through the
use of hand signals also must be systematized in accordance with paragraph (a)
of this Rule. All other rules applicable to order preparation and retention, and
reporting duties are applicable to orders under this Interpretation, except that the
record-keeping obligation lies with the member signaling the order where a hand
signal is used. All cancellations and changes of orders held by the Order Book
Official must be provided in written form or electronically, and also must be systematized in accordance with paragraph (a) of this Rule.
.03
The appropriate Floor Procedure Committee will from time to time prescribe the form of Telephone and Terminal Order Formats in a Manual and the
contents of this Manual are hereby incorporated in these Rules and will have full
force and effect as if fully set forth herein. The Telephone and Terminal Order
Formats in the Manual shall comply with the requirements of COATS.
.04
Accommodation liquidations as described in Rule 6.54 are exempt from
the requirements of this Rule. However, the Exchange maintains quotation, order
and transaction information for accommodation liquidations in the same format as
the COATS data is maintained, and will make such information available to the
SEC upon request.
.05
FLEX options, as described in Chapter 24A of the Exchange’s rules, are
exempt from the requirements of this Rule. However, the Exchange will maintain
as part of its audit trail quotation, order and transaction information for FLEX
options in a form and manner that is substantially similar to the form and manner
as the COATS data is maintained, and will make such information available to the
SEC upon request.
.06
Any proprietary system approved by the Exchange on the Exchange’s
trading floor which receives orders will be considered an Exchange system for
purposes of paragraph (a)(1) of this Rule. Any proprietary system approved by the
Exchange shall have the functionality to comply with the requirements of COATS.
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Interpretations and
Policies continued
SR-CBOE-2004-77 continued
.07
On-floor Market-Maker Orders. Each order transmitted by a Market-Maker
while on the floor, including any cancellation of or change to such order, must be
systematized in accordance with the procedures described in Paragraph (a) and (b)
of this Rule, as applicable.
*****
Rule 6.73 Responsibilities of Floor Brokers
(a) – (d) No change.
. . . Interpretations and Policies:
.01 - .03
No change.
.04
Pursuant to Rule 6.73(a), and subject to the requirement to systematize
orders prior to representation pursuant to Rule 6.24, a Floor Broker’s use of due
diligence in handling an order shall include the immediate and continuous representation at the trading station where the option class represented by the order is
traded, any of the following types of orders: (1) market orders, (2) limit orders to sell
where the specified price is at or below the current offer or, (3) limit orders to buy
where the specified price is at or above the current bid.
SR-CBOE-2004-78
Automatic Execution on RAES
On December 1, 2004, the SEC approved Rule Change File No. SR-CBOE-2004-78, which
filing extends a pilot program until November 30, 2005 to allow broker-dealer orders that are
eligible for execution on RAES to automatically execute against customer limit orders on
CBOE’s book in classes designated by the appropriate Floor Procedure Committee (Securities Exchange Act Release No. 50779, 69 FR 71087 (December 8, 2004)). Any questions
regarding the rule change may be directed to Angelo Evangelou, Legal Division, at 312-7867464. The text of the amended rules is set forth below. New language is italicized.
Rule 6.8
RAES Operations
(a)-(g)
No change.
. . . Interpretations and Policies
.01
(a)
No change.
(b) The appropriate FPC may permit broker-dealer orders to be automatically executed pursuant to this Interpretation and Policy .01, subject to the following provisions:
(1) Broker-dealer orders entered through the Exchange’s order routing system will not be automatically executed against orders in the limit order
book unless permitted on a class-by-class basis by the appropriate Floor
Procedure Committee. Broker-dealer orders may interact with orders in the
limit order book only after being re-routed to a floor broker for representation in the trading crowd unless permitted on a class-by-class basis by the
appropriate Floor Procedure Committee pursuant to a pilot program that
will expire on November 30, 2005. Broker-dealer orders are not eligible to
be placed in the limit order book pursuant to Rule 7.4.
February 16, 2005, Volume RB16, Number 7
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Interpretations and
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SR-CBOE-2004-78 continued
(2)-(4)
No change.
(c)
No change.
(d)
No change.
.02-.09
No change.
SR-CBOE-2005-07
Marketing Fee for SPDR Options
On January 12, 2005, the SEC approved Rule Change File No. SR-CBOE-2005-07, which
filing amends the CBOE Fee Schedule to establish fees for transactions in options on
SPDRs (Securities Exchange Act Release No. 51027, 70 FR 3407 (January 24, 2005)).
Any questions regarding the rule change may be directed to Jaime Galvan, Legal Division,
at 312-786-7058. The text of the amended Fee Schedule is available from the Legal
Division, or can be accessed online at www.cboe.com, under the “About CBOE” link.
SR-CBOE-2005-09
Marketing Fee Surplus Refund
On January 28, 2005, the SEC approved Rule Change File No. SR-CBOE-2005-09, which
filing amends the CBOE Marketing Fee to provide for a monthly refund of any surplus
(Securities Exchange Act Release No. 51101, 70 FR 6057 (February 4, 2005)). Any
questions regarding the rule change may be directed to Andrew Spiwak, Legal Division, at
312-786-7483. The text of the amended Fee Schedule is available from the Legal Division,
or can be accessed online at www.cboe.com, under the “About CBOE” link.
SR-CBOE-2005-13
Linkage – Satisfaction Liability
On January 31, 2005, the SEC approved Rule Change File No. SR-CBOE-2005-13, which
filing extends a linkage pilot program relating to the satisfaction of Satisfaction Orders and
revises the maximum number of contracts to be filled with respect to any Satisfaction
Orders (Securities Exchange Act Release No. 51112, 70 FR 6742 (February 8, 2005)). Any
questions regarding the rule change may be directed to Angelo Evangelou, Legal Division,
at 312-786-7464. The text of the amended rules is set forth below. New language is
italicized.
Rule 6.83 Order Protection
(a)
Avoidance and Satisfaction of Trade-Throughs.
(1)
No change.
(2)
Price and Size. The price and size at which a Satisfaction Order shall be
filled is as follows:
(i) No change.
(ii) Size. An Aggrieved Party may send a Satisfaction Order up to the
lesser of the size of the Verifiable Number of Customer Contracts that
were included in the disseminated bid or offer that was traded through
and the size of the transaction that caused the Trade-Through. Subject to
paragraph (2)(i) above and paragraph (b) below, a Member shall fill in full
all Satisfaction Orders it receives following a Trade-Through, subject to
the following limitations:
(A) No change.
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(B) Notwithstanding paragraph (A) above, for a pilot period beginning on February 1, 2005 and ending on January 31, 2006, if the
transaction that caused the Trade-Through occurred in the period
between five minutes prior to the regularly-scheduled close of trading in the principal market in which the underlying security is traded
and the close of trading in the Option Class, the maximum number of contracts to be satisfied with respect to any Satisfaction
Order from any Participant Exchange is 50 contracts.
PROPOSED RULE CHANGES
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934, as amended (“the
Act”), and Rule 19b-4 thereunder, the Exchange has filed the following proposed rule changes
with the Securities and Exchange Commission (“SEC”). Copies of the rule change filings
are available at www.cboe.com/legal/submittedsecfilings.aspx. Members may submit written comments to the Legal Division.
The effective date of a proposed rule change will be the date of approval by the SEC, unless
otherwise noted.
SR-CBOE-2005-16
Margin Requirements
On February 7, 2005, the Exchange filed Rule Change File No. SR-CBOE-2005-16, which
filing proposes to extend until February 7, 2006 a pilot program relating to complex spread
order margin requirements. The pilot program, which will be reflected in an updated regulatory circular, authorizes the Exchange to derive and put into effect margin requirements for
certain complex options spreads. Any questions regarding the proposed rule change may
be directed to Jaime Galvan, Legal Division, at 312-786-7058. The text of the amended Fee
Schedule is available from the Legal Division, or can be accessed online at www.cboe.com,
under the “About CBOE” link.
SR-CBOE-2005-17
Amended Fee Schedule – Tape B Securities
On January 26, 2005, the Exchange filed Rule Change File No. SR-CBOE-2005-17, which
filing proposes to amend the CBOE Fee Schedule to adopt a revenue sharing program for
trades in Tape B securities. Any questions regarding the proposed rule change may be
directed to Jaime Galvan, Legal Division, at 312-786-7058. The text of the amended Fee
Schedule is available from the Legal Division, or can be accessed online at www.cboe.com,
under the “About CBOE” link.
February 16, 2005, Volume RB16, Number 7
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