March 18, 2005
Volume 33, Number 11
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, MARCH 18, 2005
CLASS
CBOE/FULL
CBOT/FULL
BID
$390,000.00
$1,355,000.00
OFFER
$415,000.00
$1,420,000.00
LAST SALE AMOUNT
$400,000.00
$1,400,000.00
LAST SALE DATE
March 9, 2005
March 16, 2005
INFORMATION CIRCULAR IC05-30 - March 11, 2005
To:
CBOE Members
Re:
Registration for Remote Market Maker (RMM) Status
From:
CBOE Membership Department
Upon approval of CBOE’s RMM rules, CBOE or CBOT (exercised) individual members and member firms (“member(s)”) may
register for RMM Status. The member must have a Broker-Dealer number that is effective with the SEC. Members must register
for RMM Status by submitting the Membership Registration for Remote Market-Maker (RMM) Status form to the CBOE Membership Department. The form is available on-line at www.cboe.org/RMMregistration. The form can also be obtained in the Membership Department offices.
At the time that the member registers for RMM Status, the member must be an approved CBOE Member. A member does not
need to own or lease a membership at the time that this form is submitted.
Members that have registered for RMM Status will then be eligible to request appointments for Virtual Trading Crowds (“VTC”).
E-mail requests for VTC appointments will be accepted by the Market Quality Assurance Department at a date in April, which will
be provided shortly.
Approved RMM’s who have been granted VTC appointments are required to either own or lease a CBOE or CBOT (exercised)
membership by the rollout date of their appointed class(es).
If you have any questions concerning the registration for RMM Status, please contact the Membership Department at (312) 7867449.
Page 2
March 18, 2005
Volume 33, Number 11
Chicago Board Options Exchange
MEMBERSHIP INFORMATION FOR 3/10/05 THROUGH 3/16/05
MEMBERSHIPAPPLICATIONS RECEIVED FOR
WHICH A POSTING PERIOD IS REQUIRED
Individual Membership Applicants
Date Posted
Jonathan A. Sion, Lessor
37 Longcommon Rd.
Riverside, IL 60546
3/10/05
Jerry Swarbrick, Nominee
Charles Schwab & Co., Inc.
7529 N. Overhill
Chicago, IL 60631
3/10/05
MEMBERSHIP LEASES
Termination Date
Michael J. Levy (MJL)
Sallerson-Troob LLC
440 S. LaSalle, Suite 950
Chicago, IL 60605
3/10/05
Robert F. Levy (LVY)
Sallerson-Troob LLC
440 S. LaSalle, Suite 3100
Chicago , IL 60605
3/10/05
George M. Fushi (GMF)
Blue Capital Group LLC
401 S. LaSalle, Suite 700
Chicago, IL 60605
3/11/05
David Piotrowski (SKI)
SLK-Hull Derivatives LLC
2709 E. 96th St.
Chicago, IL 60617
3/16/05
New Leases
Effective Date
Lessor: Cassandra Trading Group, LLC
Lessee: Blue Capital Group LLC
David J. Thompson, NOMINEE
Rate:
0.8281%
Term: Monthly
3/11/05
Lessor:
Stathis Family Limited
Partnership III
Lessee: DRO WST Trading LLC
Michael Dalesandro, NOMINEE
Rate:
$2,523.99
Term: Monthly
3/14/05
Lessor:
The Michas Family Limited
Partnership
Lessee: Susquehanna Investment Group
Brian W. Hansen, NOMINEE
Rate:
0.875%
Term: Monthly
3/14/05
Lessor:
Stathis Family Limited
Partnership III
Lessee: DRO WST Trading LLC
William S. Menden, NOMINEE
Rate:
$2,523.99
Term: Monthly
3/15/05
Benjamin H. Szelag (SLG)
3/10/05
Andrie Trading LLC
440 S. LaSalle, Suite 1910
Chicago, IL 60605
Type of Business to be Conducted: Market Maker
Lessor: Essex Radez, LLC
Lessee: Sparta Group Of Chicago, LP
Eric V. Ochotnicki, NOMINEE
Rate:
$121.08
Term: 1 Day
3/16/05
Terminated Leases
Patrick J. Logue (LOG)
3/15/05
Lakeshore Securities, LP
401 S. LaSalle, Suite 1000
Chicago, IL 60605
Type of Business to be Conducted: Market Maker/Floor Broker
Termination Date
Lessor: Jules Sobel
Lessee: Susquehanna Investment Group
Brian W. Hansen (BRI), NOMINEE
3/11/05
Lessor:
Stathis Family Limited
Partnership III
Lessee: Andrie Trading LLC
Brian A. Scullion (SKL), NOMINEE
3/14/05
Lessor:
3/15/05
Stathis Family Limited
Partnership III
Lessee: Bear Wagner Specialists LLC
Member Organizations
CBT Registered For:
Termination Date
Alcibiades, LLC
1201 W. Wrightwood Ave. #21
Chicago, IL 60614
3/10/05
EFFECTIVE MEMBERSHIPS
Individual Members
Nominee(s) / Inactive Nominee(s):
Effective Date
William S. Menden (WSM)
3/15/05
DRO WST Trading LLC
8912 W. Fairfield Lane
Tinley Park, IL 60477
Type of Business to be Conducted: Market Maker
Eric V. Ochotnicki (OZY)
3/16/05
Sparta Group Of Chicago, LP
440 S. LaSalle, Suite 2101
Chicago, IL 60605
Type of Business to be Conducted: Floor Broker
JOINT ACCOUNTS
MEMBERSHIP TERMINATIONS
New Participants
Acronym
Effective Date
Individual Members
Benjamin H. Szelag
QDD
3/10/05
Nominee(s) / Inactive Nominee(s):
Termination Date
Benjamin H. Szelag
QDX
3/10/05
Patrick Brice (PXB)
Andrie Trading LLC
440 S. LaSalle, 19th Floor
Chicago, IL 60605
3/10/05
Benjamin H. Szelag
QND
3/10/05
Benjamin H. Szelag
QNX
3/10/05
Brian W. Hansen
QJY
3/11/05
Michael A. Dalesandro
QRO
3/14/05
Page 3
March 18, 2005
Volume 33, Number 11
Chicago Board Options Exchange
New Accounts
Acronym
Effective Date
CHANGES IN MEMBERSHIP STATUS
Robert E. Beltz
QHO
3/16/05
Individual Members
Anthony T. Capobianco
QHO
3/16/05
Richard T. Childs
QHO
3/16/05
Jason Coogan
QHO
3/16/05
Todd W. Dart
QHO
3/16/05
Jeffrey Haag
QHO
3/16/05
Raymond F. Hurley
QHO
3/16/05
Brian P. Kelly
QHO
3/16/05
Deepa Pai
QHO
3/16/05
Paul A. Partyka
QHO
3/16/05
Effective Date
Jeffrey D. Bower
3/10/05
From:
CBT Registered For Alcibiades, LLC; Market Maker
To:
CBT Exerciser; Market Maker
Michael A. Dalesandro
3/14/05
From:
Lessor
To:
Lessor/Nominee For DRO WST Trading LLC; Market
Maker
Terrence J. Andrews
3/15/05
From:
CBT Registered For CTC LLC; Market Maker/Floor
Broker
To:
Nominee For CTC LLC; Market Maker/Floor Broker
Member Organizations
Effective Date
X-Change Financial Access LLC
3/16/05
From:
Owner/Lessee/Member Organization Affiliated with a
CBT Registered For; Associated with a Floor Broker
To:
Owner/Lessee/Non-Member Customer Business/
Member Organization Affiliated with a CBT Registered
For; Associated with a Floor Broker
Terminated Participants Acronym
Termination Date
Patrick Brice
QDD
3/10/05
Patrick Brice
QDX
3/10/05
Patrick Brice
QND
3/10/05
Patrick Brice
QNZ
3/10/05
Michael J. Levy
QPY
3/10/05
George M. Fushi
QOJ
3/11/05
David Piotrowski
QCA
3/16/05
David Piotrowski
QIA
3/16/05
David Piotrowski
QLL
3/16/05
Terminated Accounts
Acronym
Termination Date
MEMBER ADDRESS CHANGES
Robert E. Beltz
QDZ
3/10/05
Individual Members
Effective Date
Jason Coogan
QDZ
3/10/05
3/14/05
Todd W. Dart
QDZ
3/10/05
Gary V. Sagui
750 W. Lake Cook Road, Suite 115
Buffalo Grove, IL 60089
Jeffrey Haag
QDZ
3/10/05
3/14/05
Richard T. Childs
QDZ
3/10/05
James B. Burns
21831 Yellow Finch Lane
Frankfort, IL 60423
Raymond F. Hurley
QDZ
3/10/05
3/16/05
Deepa Pai
QDZ
3/10/05
Rene Gonzalez
600 N. McClurg Court, #3907
Chicago, IL 60611
Paul A. Partyka
QDZ
3/10/05
3/16/05
Robert E. Beltz
QWH
3/10/05
Macario Lullo
222 S. Riverside Plaza, 30th Fl.
Chicago, IL 60606
Anthony T. Capobianco
QWH
3/10/05
Member Organizations
Effective Date
Richard T. Childs
QWH
3/10/05
3/14/05
Brian P. Kelly
QWH
3/10/05
Templar Securities LLC
750 W. Lake Cook Road, Suite 115
Buffalo Grove, IL 60089
Jason Coogan
QWH
3/10/05
MEMBER NAME CHANGES
Jeffrey Haag
QWH
3/10/05
Member Organizations
Effective Date
Raymond F. Hurley
QWH
3/10/05
QWH
3/10/05
From:
To:
3/11/05
Deepa Pai
Paul A. Partyka
QWH
3/10/05
Andrie Trading LLC
3/11/05
From:
Lessee/Member Organization Affiliated with a CBT
Registered For; Associated with a Market Maker
To:
Owner/Lessee/Member Organization Affiliated with a
CBT Registered For; Associated with a Market Maker
Cassandra Trading Group LLC
3/11/05
From:
Owner/Member Organization Affiliated with a CBT
Registered For; Associated with a Market Maker/Floor
Broker
To:
Lessor/Member Organization Affiliated with a CBT
Registered For; Associated with a Market Maker/Floor
Broker
Bowery Specialists Group, LLC
Jane Street Specialists, LLC
Page 4
March 18, 2005
Volume 33, Number 11
Chicago Board Options Exchange
RESEARCH CIRCULARS
The following Research Circulars were distributed between March 10 and March 17, 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 #RS05-144
March 10, 2005
*****UPDATE*****UPDATE*****UPDATE*****
Aetna Inc. (“AET/AAF/WLY/WYP/VLC/VJA”)
2-for-1 Stock Split
Ex-Distribution Date: March 14, 2005
Research Circular #RS05-151
March 11, 2005
*****UPDATE*****UPDATE*****UPDATE*****
Telecomunicacoes Brasileiras S.A.-Telebras ADS (“TBH & adj.
TBW”)Rights Distribution
Ex-Rights Date: TO BE ANNOUNCED
Research Circular #RS05-145
March 10, 2005
*****REVISION*****REVISION*****REVISION*****
XTO Energy Inc. (“XTO/YTN/OUO”)
4-for-3 Stock Split
Ex-Distribution Date: March 16, 2005
Research Circular #RS05-152
March 14, 2005
Fidelity National Financial, Inc. (“FNF/WWJ/VWJ & adj. WGF”)
CONTRACT ADJUSTMENT FOR SPECIAL CASH DIVIDEND
Ex-Date: March 29, 2005
Research Circular #RS05-146
March 11, 2005
Gold Fields Limited ADS (“GFI”)
Subsequent Full Exchange Offer EXTENDED by
Harmony Gold Mining Company Limited ADS (“HMY”)
Research Circular #RS05-147
March 11, 2005
Hollywood Entertainment Corporation (“HLYW/HWQ/YZH/OYF”)
Exchange Offer EXTENDED by Blockbuster Inc.
(“BBI/YCQ/OIW”)
Research Circular #RS05-148
March 11, 2005
MIM Corporation (“MIMS/OQX/WLQ/VQE”)
Name and Underlying Symbol Change to:
BioScrip, Inc. (“BIOS”)
Effective Date: March 14, 2005
Research Circular #RS05-149
March 11, 2005
Varco International, Inc. (“VRC”) Merger COMPLETED
with National-Oilwell, Inc. (“NOI”)
Research Circular #RS05-150
March 11, 2005
*****UPDATE*****UPDATE*****UPDATE*****
National-Oilwell, Inc. (“NOI”)
Name, Stock and Option Symbol Change to
National Oilwell Varco, Inc. (“NOV”)
Effective Date: March 14, 2005
Research Circular #RS05-153
March 14, 2005
D.R. Horton, Inc. (“DHI/YRI/VEI & adj. YGA”)
4-for-3 Stock Split
Ex-Distribution Date: March 17, 2005
Research Circular #RS05-158
March 15, 2005
Coldwater Creek Inc. (“CWTR/UCJ”)
3?for?2 Stock Split
Ex-Distribution Date: March 21, 2005
Research Circular #RS05-159
March 15, 2005
DuPont Photomasks, Inc. (“DPMI/DUD”) Proposed Merger
with Toppan Printing Co., Ltd.
Research Circular #RS05-163
March 16, 2005
Activision, Inc. (“ATVI/AQV/WXT/VEN”)
4-for-3 Stock Split
Ex-Distribution Date: March 23, 2005
Research Circular #RS05-164
March 17, 2005
Beazer Homes USA, Inc. (“BZH/BAD/WZF/VZE”)
3-for-1 Stock Split
Ex-Distribution Date: March 23, 2005
March 23, 2005
Volume RB16, Number 12
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 RG05-32
To:
All Designated Primary Market-Makers (DPMs)
From: Regulatory Services Division and Legal Division
Date:
March 11, 2005
Re:
Limit Order Display Requirements
SUMMARY OF KEY ISSUES
-
The SEC approved CBOE’s limit order display rule (SR-CBOE-2004-35). DPMs
continue to be required to execute or book, with certain exceptions, eligible customer limit orders immediately but no later than 30-seconds under normal market
conditions (the “standard”).
-
Certain types of orders previously excluded from the display requirement will no
longer be excluded under the new Rule (see below). Effective March 21, 2005, the
Limit Order Display Analysis (“LODA”) Report data will reflect the elimination of
these exclusions.
-
The LODA compliance standard has been 95%. With the approval of the rule, the
standard will be increased with the intention that over time, it will move toward
100%. Depending on the circumstances involved in the handling of a particular
order, however, the Regulatory Division may take disciplinary action against a
DPM for failure to book or execute even one order in less than 30 seconds if the
circumstances warrant such treatment.
DISCUSSION
New CBOE Rule 8.85(b)(i) - “Display Obligation” requires each DPM to display immediately
the full price and size of any customer limit order that improves the price or increases the
size of the best disseminated CBOE quote. “Immediately” means, under normal market
conditions, as soon as practicable but no later than 30-seconds after receipt by the DPM.
The term “customer limit order” means an order to buy or sell a listed option at a specified
price that is not for the account of either a broker or dealer; provided, however, that the term
customer limit order shall include an order transmitted by a broker or dealer on behalf of a
customer.
Regulatory Circulars
continued
Regulatory Circular RG05-32 continued
Exceptions to the immediate display requirement include:
•
Orders executed upon receipt;
•
An order where the customer who placed it requests that it not be displayed, and upon receipt of the order, the DPM announces in public outcry the information concerning the order that would be displayed if the
order were subject to being displayed;
•
An order for which immediately upon receipt a related order for the principal account of a DPM reflecting the terms of the customer order is routed
to another options exchange that is a participant in the Intermarket Options Linkage Plan;
•
Orders defined in Rule 6.53: contingency orders; one-cancels-the-other
orders; all or none orders; fill or kill orders; immediate or cancel orders;
complex orders (e.g., spreads, straddles, combinations); and stock-option orders;
•
Orders received before or during a trading rotation (as defined in Rule 6.2,
6.2A, and 6.2B), including Opening Rotation Orders as defined in Rule
6.53(l). However, these orders must be displayed immediately upon conclusion of the applicable rotation; and
•
Orders for more than 100 contracts, unless the customer placing such
order requests that the order be displayed.
EXCLUSIONS NO LONGER ALLOWED BEGINNING FEBRUARY 21, 2005:
•
•
Orders routed in the first and last five minutes of trading;
Orders that would lock or cross the NBBO at the time of
routing.
Effective March 21, 2005, DPMs will be required to comply with the revised rule and
the new standard.
LODA Reports measuring the DPM’s performance at the standard are provided to DPMs
via the internet (https://www.cboe.org/loda). The Exchange will provide DPMs with reports
containing data from the period of February 21, 2005 to March 18, 2005 for educational
purposes. It is the DPM’s obligation to access and review its daily and weekly LODA
Reports to ensure that the DPM is in compliance with the standard. Promptly at the end of
each expiration cycle the Department will provide written notice to each DPM that appears
to have failed to meet the standard. Pursuant to Rule 17.2, the DPM is given 15 days from
the date of notice to submit any reasons why disciplinary action should not be taken or
should be limited.
Sanctions for limit order display failures are generally determined pursuant to Rule 17.50(g)(5)
– “Imposition of Fines for Minor Rule Violations” or referred to the BCC. A rolling twenty-four
(24) month “look back” period is applied to LODA violations according to the summary fine
schedule below:
1st Offense:
2nd Offense:
3rd Offense:
Subsequent Offenses:
RB2
Summary fine in the range of $500 to $1,500
Summary fine in the range of $1,000 to $3,000
Summary fine in the range of $2,000 to $5,000
Summary fine in the range of $3,500 to $5,000
6th and subsequent offense(s) referred to BCC
March 23, 2005, Volume RB16, Number 12
Regulatory Circulars
continued
Regulatory Circular RG05-32 continued
In determining whether to impose a sanction and in establishing the severity of any such
sanction, the Exchange may take into consideration extenuating or exacerbating factors,
including but not limited to, market conditions, the amount of business being handled at the
DPM post and station, or whether the delay in order handling appears to have been deliberate or the result of negligence.
Contacts:
Tim Mac Donald, Department of Market Regulation, at 312-786-7706
Steve Youhn, Legal Division, at 312-786-7416
Regulatory Circular RG05-33
To:
Members and Member Organizations
From: Regulatory Services Division
Legal Division
Date:
March 11, 2005
Re:
Systematizing Orders & COATS
********IMPORTANT REMINDER********
The requirement to systematize orders shall apply in the OEX, SPX, XEO and SPDR
option classes beginning on Monday, March 28, 2005.
As previously indicated in Regulatory Circular RG05-05, 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. 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 the order. The manner of systematizing orders will be through the
Floor Broker Workstation (“FBW”), BERS, or through proprietary systems approved by CBOE.
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.1
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.
1
March 23, 2005, Volume RB16, Number 12
RB3
Regulatory Circulars
continued
Regulatory Circular RG05-33 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.
Regulatory Reports Showing Current Systemization Rates
Members are reminded that various reports are available for online viewing on Document
Direct (also known as Infopac) to allow members to monitor their compliance with the
COATS requirements. The website for viewing COATS reports is (https://
infopacnt.cboe.com). User identification and passwords for these reports is the same as
those currently used by members to access other data via Document Direct, such as trade
match reports (further information may be obtained from Leo Wojtaszek at 786-7645).
Questions pertaining to the content of the COATS Regulatory Reports can be directed to
Joanne Heenan (786-7786) or Jerry Runquist (786-7006).
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 requirement, please contact Joanne Heenan at 786-7786, or Jerry Runquist at 786-7006.
Regulatory Circular RG05-34
Date:
March 14, 2005
To:
Members and Member Firms
From: Regulatory Services Division
RE:
Description of Procedures for the ROS Opening on VIX Futures and Options
Contract Settlement Days
CBOE has recently implemented a system change to the modified ROS opening
procedure that automatically cancels Market-Maker and broker dealer orders that are
entered in the electronic book but are not executed at the opening in the SPX option
contract months whose prices are used to calculate the VIX index. Therefore, Market-Makers and broker dealers are no longer required to cancel these orders immediately following the opening. All other provisions related to the modified ROS
opening procedure, which are summarized below, remain the same.
The settlement date for VIX futures contracts, and for VIX options contracts when they will
begin trading on CBOE, is on the Wednesday immediately prior to the standard Friday
options expiration. CBOE Rule 6.2A.03 provides for a modified ROS opening procedure in
the SPX only on the settlement date of VIX futures and options contracts. The normal
ROS opening procedure will occur on all other days and on the VIX futures settlement date
in all SPX option contract months whose prices are not used to calculate the VIX index.
RB4
March 23, 2005, Volume RB16, Number 12
Regulatory Circulars
continued
Regulatory Circular RG05-34 continued
Participation in the Modified ROS Opening Procedure
In the SPX ROS opening on that Wednesday only, all orders (including public customer,
broker-dealer, CBOE Market-Maker and away Market-Maker and specialist orders), other
than contingency orders, may be placed in the electronic book only in those SPX option
contract months whose prices are used to calculate the VIX index. The contract months
used in the VIX calculation will either be the nearby or the nearby and second nearby
contract months. Since the other option contract months are never used in the calculation
of VIX, Market-Maker and broker-dealer orders may not be placed in the electronic book for
those months. In addition, in order to participate in the ROS opening, all orders for placement in the electronic book must be received prior to 8:28 a.m.
Market-Makers not in the SPX pit and broker-dealers must electronically submit orders for
placement in the electronic book for the modified ROS opening. Market-Makers in the SPX
pit may submit orders for placement in the electronic book for the modified ROS opening via
one of the following methods:
1.
Submit the order to a floor broker that has access to CBOE’s Order Routing System (ORS).
2.
Submit the order through a hand-held terminal that has futures/options
routing functionality (e.g., FOC, REDI).
3.
Submit a paper ticket to the Order Book Official (Note: Only paper tickets
for market orders will be accepted – limit orders may not be submitted via
paper ticket for placement in the electronic book for participation in the
ROS opening).
All Market-Maker orders should designate the Market-Maker account in the CMTA field of
the order.
Market-Maker Requirements in the Modified ROS Opening Procedure
All Market-Makers, including LMMs, who are required to log on to ROS or RAES for the
current expiration cycle are required to log on to ROS during the modified ROS opening
procedure if the Market-Maker is physically present in the SPX trading crowd. On the
Wednesday of the VIX futures contract settlement only, all SPX LMMs will collectively set
the Autoquote values that will be used by ROS to calculate the opening prices for all series
in the SPX option contract months whose prices are used to calculate the VIX index. ROS
contracts to trade in SPX will be assigned equally, to the greatest extent possible, to all
logged-on Market-Makers, including the LMMs.
LMMs are required to set Autoquote values for the modified ROS opening procedure consistent with their obligation to price option contracts fairly. In addition, members submitting
orders for placement on the electronic book may not do so for the purpose of creating or
inducing a false, misleading, or artificial appearance of activity or for the purpose of unduly
or improperly influencing the opening price or settlement or for the purpose of making a price
which does not reflect the true state of the market. Violations of these requirements are
subject to disciplinary action.
March 23, 2005, Volume RB16, Number 12
RB5
Regulatory Circulars
continued
Regulatory Circular RG05-34 continued
Signing on to ROS for the Modified ROS Opening Procedure
All Market-Makers who are required to log on to ROS for the modified ROS opening procedure must do so prior to 8:28 a.m.
Signing on to ROS requires a change in the Market-Maker’s profile found on the RAES
sign-in terminal. All Market-Makers signed on to RAES that are not LMMs are signed on
using the letter ‘Z’ in the field before the affected class symbol. Signing on to ROS as well
as RAES requires that the letter ‘Z’ be changed to a ‘B’ for both (ROS & RAES).
Prior to signing on for the day, type in the Market-Maker’s acronym and password and hit
F15 once. Change the ‘Z’ in front of the necessary symbols to ‘B’ and hit F15 again.
At some point after the opening and prior to the next ROS opening, Market-Makers that are
not LMMs must change their profile to once again show a ‘Z’ indicating RAES only.
Any questions regarding this circular may be directed to Steve Slawinski of the Regulatory
Division at 312-786-7744 or Patrick Fay of the CBOE Futures Exchange at 312-786-7925.
(Replaces RG04-72)
RB6
March 23, 2005, Volume RB16, Number 12
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-2005-08
Modified Capitalization Weighted Indexes
On March 9, 2005, the SEC approved Rule Change File No. SR-CBOE-2005-08, which filing
amends CBOE Rules to include modified capitalization weighted indexes in CBOE’s generic
listing standards for narrow-based indexes (Securities Exchange Act Release No. 51349, 70
FR 12916 (March 16, 2005)). Any questions regarding the rule change may be directed to
Jim Flynn, Legal Division, at 312-786-7070. The text of the amended rules is set forth below.
New language is italicized.
Rule 24.2.
Designation of the Index
Rule 24.2.(a)
(b)
Notwithstanding paragraph (a) above, the Exchange may trade options on
a narrow-based index pursuant to Rule 19b-4(e) of the Securities Exchange
Act of 1934, if each of the following conditions is satisfied:
(1)
(2)
No change.
The index is capitalization-weighted, price-weighted, equal dollar-weighted,
or modified capitalization-weighted, and consists of ten or more component securities:
(3) – (4)
(5)
No change.
In a capitalization-weighted index or a modified capitalization-weighted index, the lesser of the five highest weighted component securities in the
index or the highest weighted component securities in the index that in the
aggregate represent at least 30% of the total number of component securities in the index each have had an average monthly trading volume of at
least 2,000,000 shares over the past six months:
(6) – (12)
(c)
(1)– (3)
(4)
No change.
No change.
The following maintenance listing standards shall apply to each class of
index options originally listed pursuant to paragraph (b) above:
No change.
In a capitalization-weighted index or a modified capitalization-weighted index, the lesser of the five highest weighted component securities in the
index or the highest weighted component securities in the index that in the
aggregate represent at least 30% of the total number of stocks in the index
each have had an average monthly trading volume of at least 1,000,000
shares over the past six months. In the event a class of index options
listed on the Exchange fails to satisfy the maintenance listing standards
set forth herein, the Exchange shall not open for trading any additional
series of options of that class unless such failure is determined by the
Exchange not to be significant and the Commission concurs in that determination, or unless the continued listing of that class of index options has
been approved by the Commission under Section 19(b)(2) of the Exchange
Act.
(d) – (e) No change.
March 23, 2005, Volume RB16, Number 12
RB7
Rule Changes,
Interpretations and
Policies continued
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-2005-22
RMM Inactivity Fee
On March 14, 2005, the Exchange filed Rule Change File No. SR-CBOE-2005-22, which
filing proposes to adopt an inactivity fee to be charged against RMMs that fail to commence quoting in their appointed classes during the rollout of the RMM program. Any
questions regarding the proposed rule change may be directed to Steve Youhn, Legal
Division, at 312-786-7416. The text of the proposed rule amendments is set forth below.
Proposed new language is underlined. Proposed deleted language is [stricken out]. A
copy of the amended Fee Schedule will be available online at www.cboe.com under the
“About CBOE” link shortly.
Rule 8.4
Remote Market-Makers
(a) – (f) No change
Interpretations and Policies. . .
.01 Reallocation of Products Allocated to RMM for Failure to Quote: For each
product for which an RMM is assessed an inactivity fee, as described in Section
22 of the Exchange’s Fee Schedule, the Exchange will reallocate the product
from the RMM to another member in accordance with the requirements of Rule
8.3A.
SR-CBOE-2005-23
Amended RMM Rules
On March 14, 2005, the Exchange filed Rule Change File No. SR-CBOE-2005-23, which
filing proposes to amend CBOE’s RMM Rules to remove the Physical Trading Crowd appointment alternative and to create an “A+” tier consisting of the two most actively traded
products on the Exchange (options on SPDRs and QQQQs). Any questions regarding the
proposed rule change may be directed to Steve Youhn, Legal Division, at 312-786-7416.
The text of the proposed rule amendments is set forth below. Proposed new language is
underlined. Proposed deleted language is [stricken out].
Rule 8.3A
Maximum Number of Market Participants Quoting
Electronically per Product
*****
(a) –(c) No change .
Interpretations and Policies . . .
.01 Establishing the Class Quoting Limits:
RB8
March 23, 2005, Volume RB16, Number 12
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-23 continued
(a) Products Trading on the Exchange as of January 6, 2005:
The CQL for all products trading on the Hybrid Trading System is twenty-five (25).
The CQLs for products trading on the Hybrid 2.0 Platform are as follows: 40 for the
20% most actively-traded products over the preceding quarter, excluding “A+” tier
products; 35 for the next 20% most actively-traded products; 30 for the next 20%
most actively-traded products; and 25 for all other Hybrid 2.0 Platform products.
(For purposes of this Rule, the term “product” refers to all options of the same single
underlying security/value.) With respect to products designated as “A+” tier products, as defined in Rule 8.4(d), the CQL is 40.
At the end of each calendar quarter, products (excluding “A+” tier products) will be
assigned a different CQL based on the revised trading volume statistics (“new
CQL”). The following rules apply to those products for which the new CQL decreases:
(i) – (ii) No change.
(b) – (d) No change.
Rule 8.4
Remote Market-Makers
(a) – (c) No change.
(d) Appointment of RMMs: An RMM will have a [may choose either a Physical
Trading Crowd or Virtual Trading Crowd appointment, as described below. For purposes of this Rule, the term “product” refers to all options of the same single underlying security/value.
(i) Physical Trading Crowd (“PTC”) Appointment: A PTC appointment shall correspond to the location of a physical trading station on the floor of the CBOE. An
RMM’s PTC appointment confers the right to quote electronically (and not in open
outcry): 30 Hybrid 2.0 products traded in that specific trading station for each Exchange membership it owns; or 20 Hybrid 2.0 products traded in that specific trading station for each Exchange membership it leases.
(ii)] Virtual Trading Crowd (“VTC”) Appointment[: A VTC appointment], which
confers the right to quote electronically (and not in open outcry) an appropriate
number of products selected from “tiers” that have been structured according to
trading volume statistics. Of the products included in the Hybrid 2.0 Platform, Tier
A will consist of the 20% most actively-traded products over the preceding three
calendar months, excluding “A+” tier products, Tier B will consist of the next 20%
most actively-traded products, etc., through Tier E, which will consist of the 20%
least actively-traded products. Tier “A+” will consist of options on Standard &
Poor’s Depositary Receipts and options on the Nasdaq-100 Index Tracking Stock.
All products within a specific Tier will be assigned an “appointment cost” depending
upon its Tier location. Each “A+” Tier product will have an “appointment cost” of .60.
Each Tier A product will have an “appointment cost” of .10, each Tier B product will
be .0667, each Tier C product will be .05, each Tier D product will be .04, and each
Tier E product will be .033. An RMM as part of its VTC appointment may select for
each Exchange membership it owns or leases any combination of Hybrid 2.0 products whose aggregate “appointment cost” does not exceed 1.0. For example, an
RMM could request six “A Tier” products (6x.10), four “C Tier” products (4x.05), and
five “D Tier” products (5x.04) to constitute its VTC appointment. For purposes of
this Rule, the term “product” refers to all options of the same single underlying
security/value.
March 23, 2005, Volume RB16, Number 12
RB9
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-23 continued
The Exchange will rebalance the “tiers” (excluding the “A+” tier) once each calendar quarter, which may result in additions or deletions to their composition. When
a product changes “tiers” it will be assigned the “appointment cost” of that tier.
Upon rebalancing, each RMM with a VTC appointment will be required to own or
lease the appropriate number of Exchange memberships reflecting the revised
“appointment costs” of the products constituting its appointment.
An RMM may only change its appointment upon advance notification to the Exchange in a form and manner prescribed by the Exchange.
Exchange memberships used to satisfy membership requirements to possess an
RMM VTC appointment may not be used for any other purpose while being used
in an RMM capacity, including being leased to another member or for trading on
the trading floor. For purposes of this Rule, an Exchange membership shall include a transferable regular membership or a Chicago Board of Trade full membership that has effectively been exercised pursuant to Article Fifth(b) of the Certificate of Incorporation.
(e) – (f) No change.
SR-CBOE-2005-24
Allocation of RAES Orders to Market-Makers
On March 15, 2004, the Exchange filed Rule Change File No. SR-CBOE-2005-24, which
filing creates a 1000 spoke RAES wheel comprised of 1000 spokes with assignment
procedures that are identical to the assignment procedures applicable to the 100 spoke
RAES wheel. The proposed rule, which may only be implemented in index option classes,
would include an option to include all Market-Maker volume, instead of just in-crowd agency
volume, as part of the Market-Maker’s review period volume. Any questions regarding the
proposed rule change may be directed to Dave Doherty, Legal Division, at 312-786-7466.
The text of the proposed rule amendments is set forth below. Proposed new language is
underlined. Proposed deleted language is [stricken out].
Rule 6.8 – RAES Operations
(a) – (g) No change.
*****
…Interpretations and Policies:
.01 - .05 No change.
RB10
March 23, 2005, Volume RB16, Number 12
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-24 continued
.06 (a) In the exercise of their authority to determine the procedure for assigning
RAES-eligible orders to Participating Market-Makers for execution, the appropriate
FPCs have determined that in the absence of any specified alternative assignment
methodology, an assigned Participating Market-Maker is required to buy/sell the
entirety of each RAES order assigned to him up to the maximum size of RAESeligible orders in that class of options. Alternatively, the appropriate FPC may specify
that some or all options classes are subject to “Variable RAES”, [or to] the “100
Spoke RAES Wheel”, or with respect to index option classes only, the “1000 Spoke
RAES Wheel”. Other than immediately after the Commission initially approves the
Exchange to use Variable RAES (in which case Variable RAES may be implemented without the requisite notice), any time the appropriate FPC intends to discuss an issue related to the RAES allocation method the FPC must provide at least
three days’ advance notice to the Exchange’s membership and must provide members with either the opportunity to provide written comments or the opportunity to
appear at the meeting, or both regarding the proposed change.
(b)
No change.
(c) Under the “100 Spoke RAES Wheel,” RAES orders would be assigned to loggedin Market-Makers [according to] based on the percentage of their in-person agency
contracts traded in that class (excluding RAES contracts traded) compared to all of
the Market-Maker in-person agency contracts traded (excluding RAES contracts)
during the review period. The review period will be determined by the appropriate
Floor Procedure Committee and may be for any period not in excess of 10 trading
days within the previous 30 calendar days. The trading days within the review period may be for non-consecutive trading days. The percentage distribution will be
calculated at the conclusion of each trading day and will be applied to the 100
Spoke RAES Wheel distribution on the following trading day. On each revolution of
the RAES wheel, subject to the exceptions described below, each participating
Market-Maker (who is logged onto RAES at the time) will be assigned enough
contracts to replicate his percentage of contracts on RAES that he traded in-person
in that class during the review period. A participation percentage will be calculated
for each Market-Maker for each class that the Market-Maker trades. For this purpose all DPM Designees of the same DPM unit will have their percentage aggregated into a single percentage for the DPM unit.
Once a Market-Maker has logged onto RAES, he will be assigned contracts on the
RAES Wheel until his Market-Maker participation percentage has been met. This
may mean that multiple orders (or an order and a part of the succeeding order) will
be assigned to the same Market-Maker on the Wheel. To understand how the RAES
orders will actually be allocated to Market-Makers to meet those percentages, one
must understand the concepts of “spokes” and “wedges.” A “spoke” is 1% of the
RAES wheel and often may be equal to one contract. The appropriate Floor Procedure Committee may determine the number of contracts that make up one spoke.
Each Market-Maker logged onto RAES for that class, regardless of his participation percentage, is entitled to be assigned at least one spoke on every revolution of
the RAES wheel. For example, if a spoke equals one contract then there will be
100 [spokes] contracts that will be assigned to Market-Makers on every revolution
of the RAES wheel. If a spoke is defined as five contracts then there will be 500
RAES contracts assigned to the participating Market-Makers before the RAES
wheel completes one revolution. Generally, the RAES Wheel will consist of the
number of spokes replicating the cumulative percentage of all Market-Makers logged
onto the system who have a participation percentage plus one spoke for each
Market-Maker that does not have a specific participation percentage.
March 23, 2005, Volume RB16, Number 12
RB11
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-24 continued
A “wedge” is the maximum number of spokes that a Market-Maker may be consecutively assigned at any one time on the RAES wheel. Because the size of the
wedge may be smaller than the number of contracts to which a particular MarketMaker is entitled during one revolution of the RAES Wheel, that Market-Maker will
receive more than one turn during one revolution of the RAES wheel. The wedge
size will be variable, at the discretion of the appropriate Floor Procedure Committee and may be different for different classes or the same for all classes.
The appropriate Floor Procedure Committee will notify the membership of each
class of options that is subject to the “100 Spoke RAES Wheel”.
(d) Under the “1000 Spoke RAES Wheel”, which may only be implemented in
index option classes, all of the terms and provisions set forth in CBOE Rule
6.8.06(c) with respect to the 100 Spoke RAES Wheel shall apply to the 1000
Spoke RAES Wheel, except that (i) the 1000 Spoke RAES Wheel is comprised of
1000 spokes, each of which generally represents .1% of the 1000 Spoke RAES
Wheel, and (ii) the appropriate Floor Procedure Committee shall determine on a
class-by-class basis whether the assignment of RAES orders to logged-in Market-Makers is based on the percentage of a Market-Maker’s contracts traded in
that index option class (excluding RAES contracts traded) compared to all Market-Maker contracts traded (excluding RAES contracts) during the review period,
or the percentage of the Market-Maker’s in-person agency contracts traded in that
class (excluding RAES contracts traded) compared to all Market-Maker in-person
agency contracts traded (excluding RAES contracts) during the review period.
The appropriate Floor Procedure Committee will notify the membership of each
class of options that is subject to the “1000 Spoke RAES Wheel” and the method
of allocation for RAES orders under the 1000 Spoke RAES Wheel.
([d] e) The effectiveness of any other methodology for assigning RAES orders to
Participating Market-Makers that may be adopted by an appropriate FPC shall be
conditioned upon its having been filed with the Securities and Exchange Commission pursuant to Section 19(b) of the Securities Exchange Act of 1934.
.07 - .09
SR-CBOE-2005-25
No change.
Appointment to Regulatory Oversight Committee
On March 16, 2004, the Exchange filed Rule Change File No. SR-CBOE-2005-25, which
filing proposes to amend CBOE Rule 2.1 pertaining to the appointment of the members
and chairman of CBOE’s Regulatory Oversight Committee. Any questions regarding the
proposed rule change may be directed to Pat Sexton, Legal Division, at 312-786-7467. The
text of the proposed rule amendments is set forth below. Proposed new language is
underlined. Proposed deleted language is [stricken out].
Rule 2.1. Committees of the Exchange
Rule 2.1(a) Establishment of Committees. In addition to committees specifically
provided for in the Constitution, there shall be the following committees: Appeals,
Arbitration, Business Conduct, appropriate Floor Procedure Committees, Floor
Officials, appropriate Market Performance Committees, Membership, Product
Development and such other committees as may be established in accordance
with the Constitution. Except as may be otherwise provided in the Constitution or
the Rules, the Vice Chairman of the Board, with the approval of the Board, shall
appoint the chairmen and members of such committees to serve for terms expiring at the first regular meeting of the Board of Directors of the next calendar year
RB12
March 23, 2005, Volume RB16, Number 12
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-25 continued
and until their successors are appointed or their earlier death, resignation or removal. Consideration shall be given to continuity and to having, where appropriate,
a cross section of the membership represented on each committee. Except as
may be otherwise provided in the Constitution or the Rules, the Vice Chairman of
the Board may, at any time, with or without cause, remove any member of such
committees. Any vacancy occurring in one of these committees shall be filled by
the Vice Chairman of the Board for the remainder of the term. Notwithstanding the
foregoing, the Chairman of the Board, with the approval of the Board, shall appoint
Directors to serve on the Governance Committee and the Regulatory Oversight
Committee, whose members shall not be subject to removal except by the Board.
The Chairman of the Governance Committee and the Chairman of the Regulatory
Oversight Committee shall be appointed by the Chairman of the Board. Whenever
the Vice Chairman of the Board is, or has reason to believe he may become, a
party to any proceeding of an Exchange committee, he shall not exercise his power
to appoint or remove members of that committee, and the Chairman of the Board
shall have such power.
(b) – (d) No change.
March 23, 2005, Volume RB16, Number 12
RB13
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-20
CBOT Exercise Right
On March 9, 2005, the Exchange filed Rule Change File No. SR-CBOE-2005-20, which
filing consists of an interpretation of paragraph (b) of Article Fifth of the CBOE Certificate
of Incorporation that is embodied in an Agreement dated October 7, 2004 between CBOE
and CBOT. The 2004 Agreement reflects the agreement of CBOE and CBOT concerning
the nature and scope of the Exercise Right in light of the expanded operation of the CBOT’s
electronic trading system. The interpretation of the Exercise Right embodied in the 2004
Agreement is also reflected in a related proposed amendment to CBOE Rule 3.16. Any
questions regarding the proposed rule change may be directed to Art Reinstein, Legal
Division, at 312-786-7570. The 2004 Agreement is included as an exhibit to this rule filing
and can be viewed in the electronic copy of this rule filing posted on CBOE’s website. The
text of the proposed rule amendment is set forth below. Proposed new language is underlined. Proposed deleted language is [stricken out].
Rule 3.16 Special Provisions Regarding Chicago Board of Trade Exerciser
Memberships1
(a)
Termination of Nontransferable Memberships. No change.
(b)
Board of Trade Exercisers. For the purpose of entitlement to membership
on the Exchange in accordance with Paragraph (b) of Article Fifth of the Certificate of Incorporation of the Exchange (“Article Fifth(b)”) the term “member of the
Board of Trade of the City of Chicago” (the “CBOT”), as used in Article Fifth(b), is
interpreted to mean an individual who is either an “Eligible CBOT Full Member” or
an “Eligible CBOT Full Member Delegate,” as those terms are defined in the Agreement entered into on September 1, 1992 (the “1992 Agreement”) between the
CBOT and the Exchange, [and] in the Agreement entered into on December 17,
2003, (the “2003 Agreement”) between the CBOT and the Exchange, and in the
Agreement entered into on October 7, 2004, (“the 2004 Agreement”) between the
CBOT and the Exchange, as further interpreted in accordance with that certain
proposed rule change filed with the Securities and Exchange Commission as File
No. SR-CBOE-2002-41, and shall not mean any other person. In order to permit
Eligible CBOT Full Members and Eligible CBOT Full Member Delegates to participate in an offer, distribution or redemption of the kind referred to in the last two
sentences of Paragraph 3(a) of the 1992 Agreement, and solely for such purpose,
the Exchange will waive all membership dues, fees and other charges and all
qualification requirements, other than those that may be imposed by law, that may
be applicable to the application for membership on the Exchange of each Eligible
CBOT Full Member and Eligible CBOT Full Member Delegate who wishes to exercise the Exercise Right during the period commencing on the date the Exchange
gives notice to the CBOT pursuant to Paragraph 3(b) of the 1992 Agreement and
ending on the date such individual participates in such offer, distribution or redemption (as the case may be); provided, however, that (i) no Exerciser Member
(as defined in the 1992 Agreement) for whom dues, fees and other charges and
qualification requirements are waived in accordance with the foregoing shall have
any rights as a member of the Exchange other than to participate in such offer,
distribution or redemption, and (ii) the membership on the Exchange of each such
Exerciser Member shall terminate immediately following the time such individual
participates in such offer, distribution or redemption.
Another pending CBOE Rule Filing (File No. SR-CBOE-2005-19) also proposes changes to Rule 3.16(b),
and those proposed changes are not reflected in the text of Rule 3.16(b) included in Item 1 to this filing.
1
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March 23, 2005, Volume RB16, Number 12