April 15, 2005
Exchange
Bulletin
Volume 33, Number 15
The Constitution and Rules of the Chicago Board 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 by hard copy or e-mail 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 if applicable, 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 after the first complimentary copy may be obtained by submitting your name, firm
if any, 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 nonmembers.
For up-to-date Seat Market Quotes, call 312-786-7456 or 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 by sending an e-mail to
members@cboe.com or by phone at 312-786-7449.
Copyright © 2005 Chicago Board Options Exchange, Incorporated
SEAT MARKET QUOTES AS OF FRIDAY, APRIL 15, 2005
CLASS
CBOE/FULL
CBOT/FULL
BID
$491,500.00
$1,380,000.00
OFFER
$498,500.00
$1,440,000.00
LAST SALE AMOUNT
$498,000.00
$1,419,001.00
LAST SALE DATE
April 12, 2005
April 12, 2005
MEMBERSHIP SALES AND TRANSFERS
From
Larkspur Securities, Inc.
Larkspur Securities, Inc.
Craig R. Luce
Patrick F. Girondi
Paul C. Carey
KOU-PRI Investments, LLC
KISAY 1, LP
KISAY 1, LP
Kevin J. Hincks
Citadel Derivatives Group LLC
Stephen Koch
KISAY 1, LP
To
EWT, LLC
EWT, LLC
Lehman Brothers Inc
Jonathan A Sion
Jonathan A Sion
TRO Trading Group LLC
TRO Trading Group LLC
EWT, LLC
TRO Trading Group LLC
Justin Steinberg
Lehman Brothers Inc
EWT, LLC
Price/Transfer
$475,000.00
$494,000.00
$494,000.00
$475,100.00
$500,000.00
$500,000.00
$498,000.00
$498,000.00
$510,000.00
$510,000.00
$490,000.00
$498,000.00
Date
4/7/05
4/8/05
4/8/05
4/8/05
4/8/05
4/8/05
4/8/05
4/8/05
4/11/05
4/11/05
4/12/05
4/12/05
Page 2
April 15, 2005
Volume 33, Number 15
Chicago Board Options Exchange
DPM APPOINTMENT TRANSFER PROPOSAL - April 14, 2005
This notice is given in accordance with the procedures utilized by the MTS Committee under CBOE Rule 8.89 in considering
DPM appointment transfer proposals. Under Rule 8.89, the MTS Committee posts notice of any proposal by a DPM involving
greater than a nominal transfer of interest in the DPM’s organization. During the posting period, members may submit to the
MTS Committee written comments and/or written alternative proposals. Following the posting period, the MTS Committee will
determine what action to take regarding the proposal based on the factors enumerated in Rule 8.89 and the accompanying
guidelines issued by the Board of Directors. The MTS Committee has not yet made any determination regarding whether to
approve or disapprove the proposal described below, and the posting of the proposal does not imply that the MTS Committee
has reached a particular determination with respect to the proposal.
The MTS Committee has received a proposal from Botta Capital Management, LLC (“BCM”) and Botta Specialists, LLC (“BSP”), both
member organizations, regarding a transfer in the ownership interest in BCM. BSP operates several DPM trading stations on the CBOE,
which are located at Post 2, Station 9; Post 2, Station 10.
Currently, BCM owns 100% of BSP and the ownership structure of BCM consists of several classes of members, each with certain rights
and obligations. The Class A members are Pax Clearing Corporation (“Pax”), Jeffrey Wolfson, Kevin Luthringshausen, Kelly
Luthringshausen, and Michael Frazin. The Class C members are Steven Malitz, William Lynn, and Ilene Resnick Garber. The Class F
members are Philip Teuscher and Peter Guth. There are several Class B members.
Under the proposal, Pax will withdraw from ownership in BCM and Zydeco, LLC (“Zydeco”) will own 100% of the Class A membership
interests in BCM. Zydeco’s current ownership structure is as follows: Kevin Luthringshausen – 100%, but under the terms of the
proposal, Zydeco will admit Timothy Mullen, Kelly Luthringshausen, and Christopher Quander as members and Kevin Luthringshausen
and Kelly Luthringshausen will transfer their interests in BCM to Zydeco in exchange for additional interests in Zydeco. Also under the
proposal, Jeffrey Wolfson will become a Class C member of BCM, but the existing Class C members will retain their Class C memberships. The Class B membership interests in BCM will be retired. The current Class F members will remain Class F members.
The management and operational structure of the BSP DPMs will not change.
Any written comments and/or alternative written proposals must be received by the MTS Committee, in care of Daniel Hustad,
Business Development Division (312-786-7715), on or before April 22, 2005. Unless otherwise requested, any written comments
and/or alternative written proposals will be made available for review by the membership. For additional information regarding
this posting, please contact Daniel Hustad at the number provided above.
MEMBERSHIP INFORMATION FOR 4/7/05 THROUGH 4/13/05
MEMBERSHIPAPPLICATIONS RECEIVED FOR
WHICH A POSTING PERIOD IS REQUIRED
Effective Date
Lessor: Joel A. Smith
Lessee: Wolverine Trading LLC
Rate:
0.8128%
Term: Monthly
4/7/05
4/13/05
Lessor: Bernard J. McDermott
Lessee: Wolverine Trading LLC
Rate:
0.8128%
Term: Monthly
4/7/05
Date Posted
Lessor: Prudential Equity Group LLC
Lessee: Wolverine Trading LLC
Rate:
0.8128%
Term: Monthly
4/7/05
Lessor: Mario D’Agostino
Lessee: Michael T. Stowick
Rate:
0.8128%
Term: Monthly
4/8/05
Lessor: Lehman Brothers Inc.
Lessee: TS Obinger Corporation
Todd S. Obinger, NOMINEE
Rate:
0.8128%
Term: 60 Days
4/8/05
Lessor: Lehman Brothers Inc.
Lessee: TD Options, LLC
Miguel Rosales, NOMINEE
Rate:
0.875%
Term: Monthly
4/8/05
Lessor: Lehman Brothers Inc.
Lessee: Vitale Trading LLC
Conan J. Vitale, NOMINEE
Rate:
0.8128%
Term: 20 Days
4/8/05
Lessor: UBS Securities, LLC
Lessee: Timber Hill LLC
Rate:
0.875%
Term: Monthly
4/8/05
Individual Membership Applicants
Date Posted
Robert I. Steinberg, Lessor
1139 Lathrop Ave.
River Forest, IL 60305
Member Organization Applicants
HSBC Securities (USA) Inc.
4/7/05
Robert L. Streit, CBT Registered For
452 Fifth Avenue
New York, NY 10018
HSBC Markets (USA) Inc. – Parent
HSBC Investment (North America) Inc. – Owner
Michael W. Emerson – General Counsel
Robin D. Jones – Chief Operating Officer/Director
Anthony J. Murphy – CEO/Director
Joseph M. Petri – Director
Vincent J. Toia – SROP/CROP
David M. Watts – Chief Financial Officer
William Wong – CCO/Managing Director/Head of
Compliance
MEMBERSHIP LEASES
New Leases
Effective Date
Lessor: James P. Butler
Lessee: LiquidPoint, LLC
R Kevin Lawless, NOMINEE
Rate:
0.8128%
Term: Monthly
4/7/05
Lessor: Robert G. Martin
Lessee: Wolverine Trading LLC
Rate:
0.8128%
Term: Monthly
4/7/05
Page 3
April 15, 2005
Volume 33, Number 15
Chicago Board Options Exchange
Effective Date
Terminated Leases
Termination Date
Lessor: Andrie Trading LLC
Lessee: Man Securities Inc.
Theodore Castro Jr., NOMINEE
Rate:
0.875%
Term: Monthly
4/11/05
Lessor: James P. Butler
Lessee: CMZ Trading, LLC
4/7/05
4/7/05
Lessor: KISAY 1, LP
Lessee: Grace Trading LLC
Andrew S. Rosenkrantz, NOMINEE
Rate:
0.875%
Term: Monthly
4/11/05
Lessor: Larkspur Securities, Inc.
Lessee: LiquidPoint, LLC
R. Kevin Lawless (KLA), NOMINEE
4/8/05
Lessor: Revcon Inc.
Lessee: John R. Henington
Rate:
0.875%
Term: Monthly
4/11/05
Lessor: Geneva Stock, LLC
Lessee: Vitale Trading LLC
Conan J. Vitale (CJV), NOMINEE
Lessor: SLK-Hull Derivatives LLC
Lessee: Dowd Broker Group, Inc.
4/8/05
Lessor: Joseph Klopfer Investments Inc.
Lessee: Group One Trading, LP
James P. McFadden, NOMINEE
Rate:
0.875%
Term: Monthly
4/11/05
Lessor: MB Partners II
Lessee: TD Options, LLC
Miguel Rosales (MIG), NOMINEE
4/8/05
Lessor: Mario D’Agostino
Lessee: Group One Trading, LP
Michael Sinoway, NOMINEE
Rate:
0.875%
Term: Monthly
4/11/05
Lessor: Craig R. Luce
Lessee: TS Obinger Corporation
Todd S. Obinger (TOX), NOMINEE
4/8/05
4/11/05
Lessor: Larkspur Securities, Inc.
Lessee: Michael T. Stowick (MTS)
4/8/05
Lessor: JRG Enterprises, Inc.
Lessee: Group One Trading, LP
David R. Stec, NOMINEE
Rate:
0.875%
Term: Monthly
Lessor: KISAY 1, LP
Lessee: Quiet Light Securities LLC
4/11/05
Lessor: Jonathan A. Sion
Lessee: Equitec-Feldman DPM Group, LLC
Timothy E. Starsia, NOMINEE
Rate:
0.875%
Term: Monthly
4/11/05
Lessor: Mario D’Agostino
Lessee: John R. Henington (HTN)
4/11/05
Lessor: Jonathan A. Sion
Lessee: Bear Wagner Specialists LLC
David S. Levinsky, NOMINEE
Rate:
0.875%
Term: Monthly
4/11/05
Lessor: TRO Trading Group LLC
Lessee: Brian H. Force
Rate:
0.875%
Term: 20 Days
4/12/05
Lessor: Mont R. Wickham
4/11/05
Lessee: Man Securities Inc.
Theodore Castro Jr. (AYO), NOMINEE
Lessor: TRO Trading Group LLC
Lessee: Citigroup Derivatives Markets Inc.
Rate:
0.875%
Term: Monthly
4/12/05
Lessor: Board Broker Services Inc.
4/12/05
Lessee: Equitec Proprietary Markets, LLC
Richard L. Graziadei Jr. (GRZ), NOMINEE
Lessor: Board Broker Services Inc.
Lessee: Compass Services LLC
Richard L. Graziadei Jr., NOMINEE
Rate:
0.8128%
Term: Monthly
4/12/05
Lessor: KISAY 1, LP
Lessee: Brian H. Force (FRC)
4/12/05
4/13/05
Lessor: KOU-PRI Investments, LLC
Lessee: Citigroup Derivatives Markets Inc.
4/12/05
Lessor: Alan J. Lifchultz
Lessee: NOJ Trading, LLC
Eric M. Ringo, NOMINEE
Rate:
0.8128%
Term: Monthly
Lessor: KISAY 1, LP
Lessee: Samurai Trading, LLC
David Piotrowski (SKI), NOMINEE
4/13/05
Lessor: EWT, LLC
Lessee: Samurai Trading, LLC
David Piotrowski, NOMINEE
Rate:
0.875%
Term: 20 Days
4/13/05
Lessor: Stephen Koch
Lessee: NOJ Trading, LLC
Eric M. Ringo (RNG), NOMINEE
4/13/05
Lessor: EWT, LLC
Lessee: PFTC LLC
David A. Filippini, NOMINEE
Rate:
0.875%
Term: 20 Days
4/13/05
Lessor: Larkspur Securities, Inc.
Lessee: PFTC LLC
David A. Filippini (JQY), NOMINEE
4/13/05
4/13/05
Lessor: M. Jamil Akhtar
Lessee: Cutler Group, LP
Neal C. Salmen, NOMINEE
Rate:
0.875%
Term: Monthly
4/13/05
Lessor: Alan J. Lifchultz
Lessee: Sparta Group Of Chicago, LP
Lessor: Paul C. Carey
4/11/05
Lessee: Equitec-Feldman DPM Group, LLC
Timothy E. Starsia (UVA), NOMINEE
Lessor: Patrick F. Girondi
Lessee: Bear Wagner Specialists LLC
David S. Levinsky (DSL), NOMINEE
4/11/05
Page 4
April 15, 2005
Volume 33, Number 15
Chicago Board Options Exchange
MEMBERSHIP TERMINATIONS
Member Organizations
Individual Members
CBT Registered For:
Termination Date
GUC, Inc
440 S. LaSalle - Ste. 2500
Chicago, IL 60605
4/11/05
Lessor(s):
Termination Date
KOU-PRI Investments, LLC
1509 N. Lincoln Ct.
Arlington Heights, IL 60004
4/12/05
CBT Exercisers:
Termination Date
Matthew C. Johnson (LUG)
1641 Wickham Court
Green Oaks, IL 60048
4/13/05
CBT Registered For:
Termination Date
Michael A. Gucciardo (MGX)
GUC, Inc
440 S. LaSalle - Ste. 2500
Chicago, IL 60605
4/11/05
Lessor(s):
Termination Date
Paul C. Carey
9126 S. Damen
Chicago, IL 60620
4/11/05
Stephen Koch
7965 Cranes Pointe Way
West Palm Beach, FL 33412
4/13/05
Nominee(s) / Inactive Nominee(s):
Termination Date
Joseph A. El-Etr (ETR)
Interactive Brokers LLC
209 S. LaSalle, 10th Floor
Chicago, IL 60604
4/7/05
Todd Short (SHO)
Equitec-Feldman DPM Group, LLC
111 W. Jackson Blvd. - 20th Floor
Chicago, IL 60604
4/8/05
Nicole R. Sanders (NCO)
SLK-Hull Derivatives LLC
2120 East 177th Street, Apt. #2C
Lansing, IL 60438
4/8/05
Jayme A. Demes (JMI)
SLK-Hull Derivatives LLC
440 S. LaSalle Street - 17th Floor
Chicago, IL 60605
4/8/05
Michael J. Smollen (UDK)
SLK-Hull Derivatives LLC
440 S. LaSalle Street - 17th Floor
Chicago, IL 60605
4/12/05
Edward C. Wong (EDY)
Sparta Group Of Chicago, LP
440 S. LaSalle - Ste. 2101
Chicago, IL 60605
4/12/05
EFFECTIVE MEMBERSHIPS
Registered For a Member Organization: Termination Date
Kevin J. Hincks (HUV)
BBS Partners LLC
440 S. LaSalle, Ste. 623
Chicago, IL 60605
4/13/05
Individual Members
CBT Exercisers:
Effective Date
Matthew C. Johnson (LUG)
4/12/05
1641 Wickham Court
Green Oaks, IL 60048
Type of Business to be Conducted: Market Maker
Geoffrey S. Gummersall (GUM)
4/13/05
440 S. LaSalle, #1717
Chicago, IL 60605
Type of Business to be Conducted: Market Maker
CBT Registered For:
Effective Date
Lawrence M. Shover (LMS)
4/7/05
KC-Co. II LLC
10 S. LaSalle - #2300
Chicago, IL 60603
Type of Business to be Conducted: Market Maker
Michael Weingart (VIX)
4/7/05
VX Trading, Inc.
1436 W. Wellington
Chicago, IL 60657
Type of Business to be Conducted: Market Maker
Bradley J. Hadraba (BDR)
4/8/05
Sparta Group Of Chicago, LP
440 S. LaSalle, Ste. 2100
Chicago, IL 60605
Type of Business to be Conducted: Market Maker
Lessor(s):
Effective Date
Jonathan A. Sion
141 W. Jackson
Chicago, IL 60604
4/11/05
Nominee(s) / Inactive Nominee(s):
Effective Date
Kyle Hilbrenner (HIL)
4/8/05
Tradelink LLC
200 W. Jackson, Ste. 2300
Chicago, IL 60606
Type of Business to be Conducted: Market Maker
Franz F. Paul (FFP)
4/8/05
SLK-Hull Derivatives LLC
440 S. LaSalle, 3rd Floor
Chicago, IL 60605
Type of Business to be Conducted: Market Maker/ Floor Broker
Daniel D. Mulvihill Jr. (MLV)
4/8/05
Robert C. Sheehan & Associates, LLC
141 W. Jackson - Ste. 3520
Chicago, IL 60604
Type of Business to be Conducted: Market Maker/ Floor Broker
Page 5
April 15, 2005
Volume 33, Number 15
Effective Date
James J. Lazzarini (LZZ)
4/8/05
Merrill Lynch, Pierce, Fenner & Smith, Inc.
440 S. LaSalle St., #2101
Chicago, IL 60605
Type of Business to be Conducted: Floor Broker
Hugh J. Flannery (HGH)
4/8/05
Morgan Stanley & Co. Inc.
440 S. LaSalle, 38th Fl.
Chicago, IL 60605
Type of Business to be Conducted: Floor Broker
Timothy J. Werner (TTW)
4/11/05
TD Options, LLC
230 S. LaSalle St., Ste. 688
Chicago, IL 60604
Type of Business to be Conducted: Market Maker/ Floor Broker
Andrew S. Rosenkrantz (DRW)
4/11/05
Grace Trading LLC
440 S. LaSalle Street - Suite 3100
Chicago, IL 60605
Type of Business to be Conducted: Market Maker
James P. McFadden (MCF)
4/11/05
Group One Trading, LP
440 S. LaSalle, Ste. 3232
Chicago, IL 60605
Type of Business to be Conducted: Market Maker/ Floor Broker
Michael Sinoway (SIN)
4/11/05
Group One Trading, LP
440 S. LaSalle - Suite 3232
Chicago, IL 60605
Type of Business to be Conducted: Market Maker/ Floor Broker
David R. Stec (DRS)
4/11/05
Group One Trading, LP
440 S. LaSalle St. - Suite 3232
Chicago, IL 60605
Type of Business to be Conducted: Market Maker/ Floor Broker
Stuart D. Saltzberg (SSD)
4/11/05
RightSide Trading LP
440 S. LaSalle - Suite 2101
Chicago, IL 60605
Type of Business to be Conducted: Market Maker
Jerry Swarbrick (JCS)
4/12/05
Charles Schwab & Co., Inc.
440 S. LaSalle - Suite 1200
Chicago, IL 60605
Type of Business to be Conducted: No Floor Functions
Neal C. Salmen (NCS)
4/13/05
Cutler Group, LP
440 S. LaSalle, Suite 1124
Chicago, IL 60605
Type of Business to be Conducted: Market Maker
Member Organizations
CBT Registered For:
Effective Date
VX Trading, Inc.
4/7/05
1436 W. Wellington
Chicago, IL 60657
Type of Business to be Conducted: Market Maker
Lessee(s):
Effective Date
Compass Services LLC
4/12/05
111 W. Jackson, 20th Floor
Chicago, IL 60604
Type of Business to be Conducted: Market Maker/ Floor Broker
Chicago Board Options Exchange
Lessor(s):
Effective Date
TRO Trading Group LLC
440 S. LaSalle St. - Suite 2101
Chicago, IL 60605
4/12/05
JOINT ACCOUNTS
New Participants
Acronym
Effective Date
Lawrence M. Shover
QII
4/7/05
Lawrence M. Shover
QQD
4/7/05
Lawrence M. Shover
QVK
4/7/05
Kyle Hilbrenner
QSO
4/8/05
Phillip C. Yee
QRR
4/8/05
David S. Levinsky
QBW
4/8/05
Joseph D. Mueller
QLL
4/8/05
Joseph D. Mueller
QIA
4/8/05
Lee Silver
QYA
4/8/05
Franz F. Paul
QCA
4/8/05
Franz F. Paul
QIA
4/8/05
Franz F. Paul
QLL
4/8/05
Joseph R. Dawczak
QSJ
4/8/05
Katrina L. Katzenberger
QGS
4/11/05
Andrew S. Rosenkrantz
QDW
4/11/05
Joseph D. Mueller
QCA
4/11/05
Benjamin Dekker
QEW
4/11/05
Benjamin Dekker
QFS
4/11/05
Benjamin Dekker
QJY
4/11/05
Benjamin Dekker
QLO
4/11/05
Benjamin Dekker
QMD
4/11/05
Benjamin Dekker
QNA
4/11/05
Benjamin Dekker
QPO
4/11/05
Benjamin Dekker
QUT
4/11/05
Benjamin Dekker
QVA
4/11/05
Benjamin Dekker
QYH
4/11/05
Benjamin Dekker
QYS
4/11/05
Michael Sinoway
QGO
4/11/05
David R. Stec
QGO
4/11/05
Timothy E. Starsia
QJS
4/11/05
Stuart D. Saltzberg
QQR
4/11/05
Michael Sinoway
QNX
4/11/05
James P. McFadden
QNX
4/11/05
David R. Stec
QNX
4/11/05
Page 6
April 15, 2005
Volume 33, Number 15
New Participants
Acronym
Effective Date
Michael Sinoway
QOP
4/11/05
James P. McFadden
QOP
4/11/05
David R. Stec
QOP
4/11/05
James P. McFadden
QGO
4/11/05
Chicago Board Options Exchange
Effective Date
Richard L. Graziadei Jr.
4/12/05
From:
Nominee For Equitec Proprietary Markets, LLC; Floor
Broker
To:
Nominee For Compass Services LLC; Market Maker/
Floor Broker
Terminated Participants Acronym
Termination Date
Eric R. Hartin
QTH
4/7/05
Justin Steinberg
4/12/05
From:
CBT Registered For McLaughlin Capital, LLC; Market
Maker
To:
Lessor/ CBT Registered For McLaughlin Capital, LLC;
Market Maker
Eric R. Hartin
QTI
4/7/05
Member Organizations
Eric R. Hartin
QTO
4/7/05
Todd Short
QJS
4/8/05
Nicole R. Sanders
QCA
4/8/05
BBS Partners LLC
4/13/05
From:
Owner/ Lessee/ Registered For; Associated with a
Market Maker/ Floor Broker
To:
Owner/ Lessee; Associated with a Market Maker/ Floor
Broker
Nicole R. Sanders
QIA
4/8/05
Nicole R. Sanders
QLL
4/8/05
Jayme A. Demes
QCA
4/8/05
Jayme A. Demes
QIA
4/8/05
Jayme A. Demes
QLL
4/8/05
Timothy E. Starsia
QQR
4/11/05
Michael J. Smollen
QCA
4/12/05
Michael J. Smollen
QIA
4/12/05
Michael J. Smollen
QLL
4/12/05
CHANGES IN MEMBERSHIP STATUS
Individual Members
Effective Date
Eric R. Hartin
4/7/05
From:
Nominee For Timber Hill LLC; Market Maker/ Floor
Broker
To:
Nominee For Interactive Brokers LLC; Floor Broker
Mark R. Salerno
4/7/05
From:
CBT Registered For Sallerson-Troob LLC; Market
Maker
To:
CBT Registered For Sallerson-Troob LLC; Market
Maker/ Floor Broker
Craig R. Luce
4/8/05
From:
Owner/ Lessor; Market Maker/ Floor Broker
To:
Owner; Market Maker/ Floor Broker
Timothy E. Starsia
4/11/05
From:
Nominee For RightSide Trading LP; Market Maker
To:
Nominee For Equitec-Feldman DPM Group, LLC;
Market Maker/ Floor Broker
Effective Date
Citadel Derivatives Group LLC
4/12/05
From:
Lessor/ Owner/ Lessee/ Member Organization Affiliated
with a CBT Registered For; Associated with a Market
Maker/ Floor Broker
To:
Owner/ Lessee/ Member Organization Affiliated with a
CBT Registered For; Associated with a Market Maker/
Floor Broker
Morgan Stanley & Co Inc
4/8/05
From:
Lessor/ Non-Member Customer Business/ Member
Organization Affiliated with a CBT Registered For;
Associated with No Floor Functions
To:
Lessor/ Owner/ Non-Member Customer Business;
Associated with a Floor Broker
MEMBER ADDRESS CHANGES
Individual Members
Effective Date
David B. Carman
1749 N. Wells, #2211
Chicago, IL 60614
4/8/05
Kevin R. Novak
440 S. LaSalle, Suite 3100
Chicago, IL 60605
4/11/05
John R. Henington
440 S. LaSalle - Ste. 3100
Chicago, IL 60605
4/11/05
MEMBER NAME CHANGES
Member Organizations
Effective Date
From:
To:
4/12/05
Equitec Compass LLC
Compass Services LLC
Page 7
April 15, 2005
Volume 33, Number 15
Chicago Board Options Exchange
RESEARCH CIRCULARS
The following Research Circulars were distributed between April 7 and April 14, 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 #RS05-220
April 7, 2005
OfficeMax Incorporated (“OMX/YYB/OPH”)
Partial Self Tender Offer
Research Circular #RS05-221
April 7, 2005
Retek Inc. (“RETK/QRD”)
Subsequent Tender Offer by Ruby Merger Corp.
Research Circular #RS05-222
April 7, 2005
Take-Two Interactive Software, Inc. (“TTWO/TUO/YSR/OSR”)
3-for-2 Stock Split
Ex-Distribution Date: April 12, 2005
Research Circular #RS05-223
April 7, 2005
Embarcadero Technologies, Inc. (“EMBT/MBQ”)
Underlying Symbol Change to “EMBTE”
Effective Date: April 8, 2005
Research Circular #RS05-225
April 8, 2005
Ascential Software Corporation (“ASCL/IFQ/YIR/VIF”)
Proposed Merger with International Business
Machines Corporation (“IBM/WCX/WIB/VIB”)
Research Circular #RS05-227
April 8, 2005
Hollywood Entertainment Corporation
(“HLYW/HWQ/YZH/OYF”) Proposed
Merger with Movie Gallery, Inc. (“MOVI/QLV”)
Research Circular #RS05-228
April 8, 2005
Metro–Goldwyn–Mayer Inc. (“MGM/YOV/OCK”)
Merger COMPLETED with LOC Acquisition Company
Research Circular #RS05-229
April 11, 2005
International Steel Group Inc.
(“ISG/YRW/VOE”) Proposed Election Merger with
Mittal Steel Company N.V. Class A (“MT”)
Research Circular #RS05-231
April 11, 2005
*****UPDATE*****
Options Currently Ineligible for Additional Series/Months –
Failure to Make Timely Reports
Research Circular #RS05-232
April 12, 2005
Retek Inc. (“RETK/QRD”):
Merger Completed — Cash Settlement
Research Circular #RS05-233
April 12, 2005
OfficeMax Incorporated (“OMX/YYB/OPH”)
Partial Self Tender Offer EXTENDED
Research Circular #RS05-234
April 12, 2005
*****UPDATE – FINAL DISTRIBUTION RATIO ANNOUNCED*****
PC Mall, Inc. (“MALL/QGS”)
Distribution of Shares of
eCOST.com, Inc. (“ECST”)
Ex-Distribution Date: April 12, 2005
Research Circular #RS05-235
April 12, 2005
Magnum Hunter Resources, Inc. (“MHR”)
Distribution of Beneficial Units of
TEL Offshore Trust (“TELOZ”)
Ex-Distribution Date: April 14, 2005
Research Circular #RS05-237
April 12, 2005
aaiPharma Inc. (“AAII/IUQ”)
Underlying Symbol Change to “AAIIE”
Effective Date: April 13, 2005
Research Circular #RS05-238
April 12, 2005
Red Robin Gourmet Burgers, Inc. (“RRGBE/QZR”)
Underlying Symbol Change to: (“RRGB”)
Effective Date: April 13, 2005
Research Circular #RS05-239
April 12, 2005
VERITAS Software Corporation (“VRTSE/VIV/YQM/OFQ”)
Underlying Symbol Change to “VRTS”
Effective Date: April 13, 2005
Research Circular #RS05-241
April 13, 2005
Engineered Support Systems, Inc. (“EASI/UFE”)
3-for-2 Stock Split
Ex-Distribution Date: April 18, 2005
Research Circular #RS05-242
April 13, 2005
Staples, Inc. (“SPLS/PLQ/YWL/OQZ”)
3-for-2 Stock Split
Ex-Distribution Date: April 18, 2005
Research Circular #RS05-243
April 13, 2005
Gerdau S.A. (“GGB”)
3-for-2 ADS Split
Ex-Distribution Date: April 19, 2005
Research Circular #RS05-244
April 13, 2005
Cheniere Energy, Inc. (“LNG/YCH/ONP”)
2-for-1 Stock Split
Ex-Distribution Date: April 25, 2005
Research Circular #RS05-245
April 13, 2005
Pixar (“PIXR/PQJ”)
2-for-1 Stock Split
Ex-Distribution Date: April 19, 2005
Research Circular #RS05-253
April 14, 2005
Hershey Foods Corporation (“HSY”)
Name Change to: The Hershey Company
Effective Date: April 20, 2005
Research Circular #RS05-255
April 14, 2005
AMX Corporation (“AMXC/AQP”):
Merger Completed — Cash Settlement
April 20, 2005
Volume RB16, Number 16
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
Rule Changes,
Interpretations
and Policies
APPROVED RULE CHANGE(S)
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-2005-25
Appointment of the Members and Chairman of the ROC
On April 4, 2005, the SEC approved Rule Change File No. SR-CBOE-2005-25, which filing
amends CBOE Rule 2.1 pertaining to the appointment of the members and chairman of
CBOE’s Regulatory Oversight Committee (Securities Exchange Act Release No. 51472, 70
FR 18064 (April 8, 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 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 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.
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-20
CBOE/CBOT Exercise Right
On March 31, 2005, the SEC approved Rule Change File No. SR-CBOE-2005-20, which
filing consists of an interpretation of the rules of the CBOE as set forth in paragraph (b) of
Article Fifth of the CBOE Certificate of Incorporation (hereafter, “Article Fifth(b)”) concerning the effect on the CBOE/CBOT Exercise Right. The interpretation of the Exercise Right
embodied in the Agreement is also reflected in a related proposed amendment to CBOE
Rule 3.16 (Securities Exchange Act Release No. 51462, 70 FR 17739 (April 7, 2005)). Any
questions regarding the rule change may be directed to Art Reinstein, Legal Division, at
312-786-7570. The text of the amended rules is set forth below. New language is italicized.
Rule 3.16 Special Provisions Regarding Chicago Board of Trade Exerciser
Memberships
(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, 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-200241, 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.
RB2
April 20, 2005, Volume RB16, Number 16
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2004-58
Remote Market-Making
On March 24, 2005, the SEC approved Rule Change File No. SR-CBOE-2004-58, which
filing amends existing rules and adopts new rules, related to Remote Market-Making. This
filing also makes corresponding changes to rules that were recently amended in the approval of SR-CBOE-2004-75 (Securities Exchange Act Release No. 51429, 70 FR 16536
(March 31, 2005)). Any questions regarding the rule change may be directed to Steve
Youhn, Legal Division, at 312-786-7416. The text of the amended rules is set forth below.
New language is italicized.
Rule 8.3
Appointment of Market-Makers
This Rule governs the appointment of Market-Makers other than Remote MarketMakers. Rule 8.4 governs the appointment of Remote Market-Makers.
(a) On a form or forms prescribed by the Exchange, a registered Market-Maker
may apply for an Appointment (having the obligations of Rule 8.7(b) or Rule 30.40,
as appropriate) in one or more classes of option contracts or in securities traded
subject to the rules in Chapter XXX. From among those Market-Makers registered,
the appropriate Market Performance Committee shall ordinarily make two or more
Appointments for each class of option contracts or other securities. In making
such Appointments, the Committee shall give attention to (a) the preference of
registrants; (b) the maintenance and enhancement of competition among MarketMakers in each class of contracts; (c) assuring that financial resources available to
a Market-Maker enable him to satisfy the obligations set forth in Rule 8.7 or Rule
30.40 with respect to each class of option contracts to which he is appointed; and
(d) the impact additional Market-Makers will have on Exchange systems capacity.
Limitations on appointments due to Exchange systems capacity shall be in accordance with Interpretations and Policies .01 to Rule 8.3A.
The appropriate Market Performance Committee may arrange two or more classes
of contracts into groupings based on, among other things, similar trading locations
on the floor, and may make Appointments to those groupings rather than to individual classes. The appropriate Market Performance Committee may suspend or
terminate any Appointment of a Market-Maker under this rule and may make additional Appointments whenever, in the Committee’s judgment, the interests of a fair
and orderly market are best served by such action.
(b) No change
(c) Absent an exemption by the appropriate Market Performance Committee, an
appointment of a Market-Maker confers the right to quote: (i) electronically in all
classes traded on the Hybrid Trading System that are located in one designated
trading station (“appointed trading station”) provided, however, that with respect to
Hybrid 2.0 Classes (as defined in Rule 1.1(aaa)), a Market-Maker may submit
electronic quotations in up to 40 classes for each Exchange membership it owns or
up to 30 classes for each Exchange membership it leases; and (ii) in open outcry all
classes traded on the Exchange.
With respect to classes located at his/her appointed trading station, a MarketMaker may submit, for a one-year pilot period ending March 24, 2006 electronic
quotations from a location outside of the appointed trading station in his/her appointed Hybrid classes and his/her 40 or 30 appointed Hybrid 2.0 classes. Any
Market-Maker affiliated with an e-DPM or RMM shall be ineligible to submit electronic quotations from outside of its appointed trading station pursuant to this rule in
any class in which the affiliated e-DPM or RMM has an appointment.
April 20, 2005, Volume RB16, Number 16
RB3
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2004-58 continued
A Market-Maker may only change its appointed trading station with the prior approval of the Exchange. Such requests must be made in a form and manner
prescribed by the Exchange. In determining whether to approve such requests,
the Exchange shall consider the factors contained in paragraph (a).
A Market-Maker will be presumed to have an appointment in all non-Hybrid 2.0
classes located at his/her appointed trading station unless the Market-Maker specifically indicates to the Exchange that he/she does not want to include a particular class(es) as part of his/her appointment (“excluded classes”). A Market-Maker
is not eligible to submit electronic quotations into any class it designates as an
excluded class. Any request by a Market-Maker to receive a subsequent appointment in a previously excluded class will be handled in accordance with Rule 8.3A.
(d) A member or prospective member adversely affected by a determination made
by the appropriate Market Performance Committee under this Rule, including the
denial of an appointment in a particular class, may obtain a review thereof in
accordance with the provisions of Chapter XIX.
*****
Rule 8.3A
Maximum Number of Market Participants Quoting
Electronically per Product
With respect to products trading on the Hybrid Trading System or on the Hybrid 2.0
Platform, the Exchange will impose an upper limit on the aggregate number of
members that may quote electronically in each product ( “Class Quoting Limit” or
“CQL”). (For purposes of this Rule, the term “product” refers to all options of the
same single underlying security/value.) Interpretations and Policies .01 specifies
the Class Quoting Limits for all products trading on Hybrid and the Hybrid 2.0
Platform.
When a CQL is established for each product, the following criteria govern which
members are entitled to quote electronically in that subject product. A MarketMaker (excluding an RMM and e-DPM) that is not eligible to quote electronically in
a product may quote in open outcry in that product.
(a) Products Trading on the Hybrid 2.0 Platform as of March 18, 2005 and
Products Trading on the Hybrid Trading System as of March 18, 2005:
The DPM and e-DPMs (if applicable) assigned to the product on March 18, 2005,
and Market-Makers who: (1) are in good standing with the Exchange; and (2) (i)
have transacted at least 80% of their Market-Maker contracts and transactions inperson in each of the three immediately preceding calendar months prior to March
18, 2005 in option products traded in the trading station; or (ii) were physically
present in the trading station acting in the capacity of a Market-Maker on March
18, 2005, are entitled to quote electronically in those products for as long as they
maintain an appointment those products.
All other Market-Makers, RMMs, and approved e-DPMs that request the ability to
submit quotes electronically in the subject product will be entitled to quote electronically in that product in the order in which they so request provided the number
of members quoting electronically in the product does not exceed the CQL. When
the number of members in the product quoting electronically equals the CQL, all
other members requesting the ability to quote electronically in that product will be
wait-listed in the order in which they submitted the request.
RB4
April 20, 2005, Volume RB16, Number 16
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2004-58 continued
The waiting list operates based on time priority. When the product can accommodate another electronic quoter (whether due to attrition or an increase in the CQL),
the member at the “top” of the list ( i.e., the member that has been on the waiting list
the longest amount of time) has priority. Once a member is wait-listed, the Exchange may not alter his/her position on the wait-list other than to improve such
position ( i.e., the Exchange may not place other members ahead of a previously
wait-listed member). If a wait-listed member is offered, yet refuses, the ability to
quote electronically in the subject product, the member will be removed from that
waiting list.
(b) Products Added to the Hybrid 2.0 Platform After March 18, 2005: With
respect to a product that is added to the Hybrid 2.0 Platform after March 18, the
DPM and e-DPMs appointed to the product will be entitled to quote electronically.
All Market-Makers quoting in the product prior to its addition to the Hybrid 2.0
Platform will be entitled to quote electronically provided that: (i) they have transacted at least 80% of their Market-Maker contracts and transactions in-person in
each of the three immediately preceding calendar months prior to the product being
added to the Hybrid 2.0 Platform in option products traded in the trading station; or
(ii) they were physically present in the trading station acting in the capacity of a
Market-Maker on the day prior to the product being added to the Hybrid 2.0 Platform. If at the time a product is added to the Hybrid 2.0 Platform the aggregate
number of DPMs, e-DPMs, and Market-Makers entitled to quote electronically in
the product exceeds the CQL, then the product will have an “increased CQL,” as
described in Interpretations and Policies .01(a). Reduction of any “increased CQL”
will be in accordance with the procedures described in Interpretations and Policies
.01(a).
All other members will be entitled to quote electronically in that product in the order
in which they so request provided the number of members quoting electronically in
the product does not exceed the CQL. When the number of members quoting
electronically in the product equals the CQL, all other members will be wait-listed in
the order in which they request the ability to quote electronically. The wait-list will
operate as described above in paragraph (a).
(c) Products Added to the Hybrid Trading System After March 18, 2005: With
respect to a new product that commences trading on the Hybrid Trading System
after March 18, 2005, the assigned DPM will be entitled to quote electronically.
Thereafter, all other members will be entitled to quote electronically in that product
in the order in which they so request provided the number of members quoting
electronically does not exceed the CQL. When the number of members quoting
electronically in the product equals the CQL, all other members will be wait-listed in
the order in which they request the ability to quote electronically. The wait-list will
operate as described above in paragraph (a).
Interpretations and Policies . . .
.01 Establishing the Class Quoting Limits:
(a) Products Trading on the Exchange as of March 18, 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; 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.)
April 20, 2005, Volume RB16, Number 16
RB5
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2004-58 continued
At the end of each calendar quarter, 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) Products Not Traded on the Exchange as of March 18, 2005:
The CQL for all products newly-listed on the Exchange after March 18, 2005 will
be 25 until such time that the CQL increases in accordance with this Interpretations and Policies .01.
(c) – (d) No change
.02 “Temporary Appointments” for the Period from March 21, 2005 through
the end of the Initial RMM Appointment Process
The following procedures apply to Market-Makers’ requests to change their appointed trading stations during the period commencing March 21, 2005, and lasting until the termination of the Initial Remote Market-Maker (“RMM”) Appointment
Process (“IRAP”). The IRAP is the mechanism by which electronic appointments
will be granted to RMMs and other Market-Makers during the initial allocation
process, which is expected to occur during the week of April 18, 2005.
1. Beginning March 21, 2005, until the termination of the IRAP, all Market-Maker
requests to change their appointed trading stations will be granted on a temporary
basis (“temporary appointment”), provided the CQL for the requisite product has
not been met (i.e., on a space-available basis, as described in Rule 8.3A.01).
Each temporary appointment terminates at 3:15 p.m. (CT) on the last day of the
IRAP, at which point all Market-Makers’ appointed trading stations will revert to
the appointed trading station the Market-Maker held on March 18, 2005.
2. In order to receive a permanent appointment in a product in which a MarketMaker previously held a temporary appointment, a Market-Maker must participate in the IRAP and be allocated such product.
3. Upon termination of the IRAP, all Market-Maker (including RMM) requests for
appointments and/or appointed trading stations will be handled subject to the
requirements of Rule 8.3A (Class Quoting Limits) and in accordance with the
appointment procedures of Rules 8.3 (Market-Maker appointments) and 8.4 (RMM
appointments), as applicable.
*****
Rule 8.7
(a)
Obligations of Market-Makers
No change
(b) Appointment. With respect to each class of option contracts for which he holds
an Appointment under Rule 8.3, a Market-Maker has a continuous obligation to
engage, to a reasonable degree under the existing circumstances, in dealings for
his own account when there exists, or it is reasonably anticipated that there will
exist, a lack of price continuity, a temporary disparity between the supply of and
demand for a particular option contract, or a temporary distortion of the price
relationships between option contracts of the same class. Without limiting the
foregoing, a Market-Maker is expected to perform the following activities in the
course of maintaining a fair and orderly market:
RB6
April 20, 2005, Volume RB16, Number 16
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2004-58 continued
(i) To compete with other Market-Makers to improve markets in all series of options
classes comprising the Market-Maker’s appointment at the trading station where a
Market-Maker is physically present or into which a Market-Maker is quoting electronically.
(ii) No change
(iii) To update market quotations in response to changed market conditions in his/
her appointed options classes at the trading station where a Market-Maker is present
or at the trading station into which a Market-Maker quotes electronically and to
assure that any market quote it causes to be disseminated is accurate.
A. With respect to trading in appointed classes:
(1) Market-Makers who are physically present in their appointed trading station
may enter quotes and orders in their appointed classes by public outcry in
response to a request for a quote or, in classes in which Hybrid or Hybrid 2.0 is
implemented, through an Exchange-approved electronic interface via an Exchange-approved quote generation device.
(2) Market-Makers may also enter quotes and orders in their appointed Hybrid
and Hybrid 2.0 classes from outside of their appointed trading stations (pursuant to Rule 8.3) through an Exchange-approved electronic interface via an
Exchange-approved quote generation device.
(3) Market-Makers, whether in their appointed trading stations or not, may also
submit orders for automatic execution in accordance with the requirements of
Rules 6.8 or 6.13.
B. With respect to trading in non-appointed classes, Market-Makers may submit
orders for automatic execution in accordance with the requirements of Rules 6.8 or
6.13.
C. RMMs may enter quotes and orders remotely (i.e., from outside of the physical
trading station for the subject class) through an Exchange-approved electronic interface. RMMs may not quote in open outcry.
(iv)
No change
(c) Classes of Option Contracts other than those to which appointed. With respect
to classes of option contracts in which he does not hold an Appointment, a MarketMaker should not engage in transactions for an account in which he has an interest
which are disproportionate in relation to, or in derogation of, the performance of his
obligations as specified in paragraph (b) of this Rule with respect to those classes
of option contracts to which he does hold Appointments. Whenever a MarketMaker enters the trading station for a class of option contracts located away from
his appointed trading station in other than a floor brokerage capacity, he shall fulfill
the obligations established by paragraph (b) of this Rule and, for the rest of the
trading day, such Market-Maker may be required to undertake the obligations specified in paragraph (b) of this Rule upon determination by the Order Book Official in
accordance with Rule 7.5. Furthermore, Market-Makers should not:
(i) Congregate in a particular class of option contracts; or
(ii) Individually or as a group, intentionally or unintentionally, dominate the market in
option contracts of a particular class; or
April 20, 2005, Volume RB16, Number 16
RB7
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2004-58 continued
(iii) Effect purchases or sales on the floor of the Exchange except in a reasonable
and orderly manner.
(d) Market Making Obligations Applicable in Hybrid Classes
No change
(i) Market-Maker Trades Less Than 20% Contract Volume Electronically:
No change
(ii) Market-Maker Trades More Than 20% Contract Volume Electronically:
No change
(A) No change
(B) Continuous Quoting Obligation: A Market-Maker will be required to maintain
continuous electronic two-sided quotes for at least ten contracts (undecremented
size) in 60% of the series of his/her appointed classes. If the underlying primary
market disseminates a 100-share quote, a Market-Maker’s undecremented quote
may be for as low as 1-contract (“1-up”), however, this ability is expressly conditioned on the process being automated ( i.e., a Market-Maker may not manually
adjust his quotes to reflect 1-up sizes). Quotes must automatically return to at
least 10-up when the underlying primary market no longer disseminates a 100share quote. Market-Makers that have not automated this process may not avail
themselves of the relief provided herein. The ability to quote 1-up shall operate on
a pilot basis and shall terminate August 17, 2005.
(C) Continuous Open Outcry Quoting Obligation: In response to any request for
quote by a floor broker or DPM representing an order as agent, in-crowd MarketMakers must provide a two-sided market complying with the current quote width
requirements contained in Rule 8.7(b)(iv) for a minimum of ten contracts for nonbroker-dealer orders and one contract for broker-dealer orders.
(e)
No change
Interpretations and Policies:
.01 - .02 No change
.03
For purposes of Rule 8.7, the following percentage requirements apply to
Market-Maker trading activity for each quarter of a calendar year, except for unusual circumstances as determined by the appropriate Market Performance Committee. The appropriate Market Performance Committee may assign a weighting
factor based on volume to one or more classes or series of option contracts in
connection with these requirements.
A. Trading in Appointed Classes: Respecting distribution of trading activity, at
least 75 percent of a Market-Maker’s total contract volume must be in option
classes to which he has been appointed pursuant to Rule 8.3.Trading in nonappointed
classes of options at the request of a Floor Official, Order Book Official, Board
Broker or DPM shall be deemed to be trading in appointed classes for purposes of
this Interpretation.
RB8
April 20, 2005, Volume RB16, Number 16
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2004-58 continued
B. In-Person Requirements for Market-Makers in non-Hybrid Classes: Respecting
the manner in which Market-Maker transactions may be executed in non-Hybrid
classes, a Market-Maker must execute in person, and not through the use of orders, at least 25 percent of his total transactions, provided, however, that for any
calendar quarter in which a Market-Maker receives Market-Maker treatment for offfloor orders in accordance with Rule 8.1, in addition to satisfying the requirements
of paragraph A of this Interpretation .03, the Market-Maker must execute in person,
and not through the use of orders, at least 80 percent of his total transactions. The
off-floor orders for which a Market-Maker receives Market-Maker treatment shall be
subject to the obligations of Rule 8.7(a) and in general shall be effected for the
purpose of hedging, reducing risk of, rebalancing or liquidating open positions of the
Market-Maker. The appropriate Market Performance Committee may exempt one or
more options classes from this calculation.
.04 - .08
No change
.09 The obligations and duties of Market-Makers set forth in Rule 8.7 paragraphs
(a) and (b) apply to an in-crowd Market-Maker only when the in-crowd Market-Maker
is present in the trading crowd and to a Market-Maker electronically quoting from
outside of his/her appointed trading station (in accordance with Rule 8.3(c)) or to an
RMM only when the Market-Maker or RMM is logged on to the CBOE Hybrid system. Market-Makers remain subject to Rule 7.5 while on the floor of the Exchange.
.10 - .13
No change
PROPOSED RULE CHANGE(S)
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 change(s)
with the Securities and Exchange Commission (“SEC”). Copies of the rule change filing(s)
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-2005-30
Expiration Dates for FLEX Options
On April 11, 2005, the Exchange filed Rule Change File No. SR-CBOE-2005-30, which filing
proposes to amend CBOE rules regarding permissible expiration dates for FLEX Options.
Any questions regarding the proposed rule change may be directed to Angelo Evangelou,
Legal Division, at 312-786-7464. The text of the proposed rule amendments is set forth
below. Proposed new language is underlined. Proposed deleted language is [stricken out].
Rule 24A.4.
Terms of FLEX Options
(a) General.
(1) Options series will not be pre-established for FLEX trading. The variable terms of
FLEX Options as provided for in this Rule 24A.4 shall be established through the
Request for Quotes process and the bidding and offering mechanics detailed in this
Rule. Other terms of FLEX Option contracts, including the applicable index multiplier in the case of U.S. dollar-denominated FLEX Index Options, shall be the same
as those that apply to Non-FLEX Options.
April 20, 2005, Volume RB16, Number 16
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Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-30 continued
(2) Every FLEX Request for Quotes and every FLEX Option contract shall contain one element, as designated by the parties to the contract, from each of the
following contract term categories:
(i) – (iii) No change.
(iv) Expiration date (specified as to day, month and year, except that a
FLEX Option may not expire on [any business day that falls on, or within
two business days of, a third Friday-of-the-month] an expiration day for
any Non-FLEX Option other than a QIX option);
(v) No change.
(3)-(4) No change.
(b)-(c) No change.
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April 20, 2005, Volume RB16, Number 16