April 22, 2005
Exchange
Bulletin
Volume 33, Number 16
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 22, 2005
CLASS
CBOE/FULL
CBOT/FULL
BID
$478,000.00
$1,385,000.00
OFFER
$493,000.00
$1,500,000.00
LAST SALE AMOUNT
$488,500.00
$1,475,000.00
LAST SALE DATE
April 22, 2005
April 21, 2005
MEMBERSHIP SALES AND TRANSFERS
From
AB Financial, LLC
O & R Options Company
BE Partners, LLC
Robert B. Gianone
Citadel Derivatives Group, LLC
Ted A. Fried
Geneva Stock, LLC
Regent Limited
To
EWT, LLC
EWT, LLC
EWT, LLC
Holland Trading House, LLC
TRO Trading Group, LLC
Lehman Brothers, Inc.
WH Trading, LLC
EWT, LLC
Price/Transfer
$495,000.00
$498,500.00
$500,000.00
$499,000.00
$500,000.00
$490,000.00
$488,000.00
$488,500.00
Date
4/18/05
4/18/05
4/18/05
4/18/05
4/18/05
4/19/05
4/21/05
4/22/05
Page 2
April 22, 2005
Volume 33, Number 16
Chicago Board Options Exchange
MEMBERSHIP INFORMATION FOR 4/14/05 THROUGH 4/20/05
MEMBERSHIP LEASES
MEMBERSHIP TERMINATIONS
New Leases
Effective Date
Individual Members
Lessor: Ted A. Fried
Lessee: TBMP, LLC
Paul E. Stone, NOMINEE
Rate:
0.875%
Term: 43 Days
4/19/05
CBT Exercisers:
Termination Date
4/20/05
Lessor: Howard I. Lidov
Lessee: S & W Grain Co.
Brian M. Connelly, NOMINEE
Rate:
0.8128%
Term: Monthly
4/19/05
John H. Tocks (HTJ)
123 S. Stonegate Rd.
Lake Forest, IL 60045
CBT Registered For:
Termination Date
4/20/05
Scott J. Yanklowitz (SJY)
HGI, Inc.
141 W. Jackson, Suite 1520
Chicago, IL 60604
4/14/05
Lessor: Justin Steinberg
Lessee: AB Financial LLC
John A. Possidoni, NOMINEE
Rate:
0.875%
Term: 9 Days
4/14/05
Lessor: Holland Trading House, LLC
Lessee: Equitec Structured Products, LLC
Ronald M. Pittelkau, NOMINEE
Rate:
0.8128%
Term: 20 Days
4/20/05
David Johnson (DJ)
Morgan Stanley & Co. Inc.
440 S. LaSalle, 38th Floor
Chicago, IL 60605
4/15/05
Lessor: EWT, LLC
Lessee: Tradelink LLC
Rick S. Peterson, NOMINEE
Rate:
0.875%
Term: 20 Days
4/20/05
Francis D. Wisniewski (WIZ)
Sallerson-Troob LLC
440 S. LaSalle, Suite 950
Chicago, IL 60605
4/20/05
Robert P. Baids (MUK)
Equitec Proprietary Markets, LLC
111 W. Jackson Blvd., 20th floor
Chicago, IL 60604
4/18/05
Lessor: TRO Trading Group LLC
Lessee: Wolverine Trading LLC
Kathryn M. Gallagher, NOMINEE
Rate:
0.8128%
Term: Monthly
Lessor(s):
Termination Date
Terminated Leases
Termination Date
4/14/05
Ted A. Fried
2131 Stirling Rd.
Bannockburn, IL 60015
4/19/05
Lessor: TRO Trading Group LLC
Lessee: Citigroup Derivatives Markets Inc.
Lessor: KISAY 1, LP
Lessee: Citigroup Derivatives Markets Inc.
4/14/05
Robert B. Gianone 4/20/05
111 W. Jackson Blvd., 20th Floor
Chicago, IL 60604
Lessor: Knoblauch Securities Corp.
Lessee: Platinum Financial LLC
Jason R. Bolding (BOL), NOMINEE
4/18/05
Nominee(s) / Inactive Nominee(s):
Termination Date
Eugene S. Filippo (EUG)
Ronin Capital, LLC
230 S. LaSalle, Suite 400
Chicago, IL 60604
4/14/05
Scott N. Stoliar (SNS)
Consolidated Trading, LLC
440 S. LaSalle, Suite 3100
Chicago, IL 60605
4/15/05
Daniel R. Passarelli (PAS)
G-Bar Limited Partnership
440 S. LaSalle, Suite 650
Chicago, IL 60605
4/18/05
Jason R. Bolding (BOL)
Platinum Financial LLC
440 S. LaSalle, Suite 713
Chicago, IL 60605
4/18/05
Imran A. Farooq (FRQ)
Platinum Trading LLC
440 S. LaSalle, Suite 713
Chicago, IL 60605
4/18/05
Benjamin R. Scott (BRS)
Rubicon Investments LLC
440 S. LaSalle, 9th Floor
Chicago, IL 60605
4/18/05
Lessor: Hartz Construction Company, Inc.
4/18/05
Lessee: Rubicon Investments LLC
Benjamin R. Scott (BRS), NOMINEE
Lessor: Ted A. Fried
Lessee: TBMP, LLC
Paul E. Stone (SNE), NOMINEE
4/19/05
Lessor: Howard I. Lidov
Lessee: Ronin Capital, LLC
4/19/05
Lessor: O & R Options Company
Lessee: Tradelink LLC
Rick S. Peterson (RIC), NOMINEE
4/20/05
Lessor: Robert B. Gianone
4/20/05
Lessee: Equitec Structured Products, LLC
Ronald M. Pittelkau (RMP), NOMINEE
Lessor: BE Partners LLC
4/20/05
Lessee: Wolverine Trading LLC
Kathryn M. Gallagher (KMG), NOMINEE
Page 3
April 22, 2005
Volume 33, Number 16
Chicago Board Options Exchange
Effective Date
Termination Date
James C. Tharin Jr. (TAM)
Jackson Financial Group, Inc.
440 S. LaSalle, Suite 3100
Chicago, IL 60605
4/19/05
Brian F. Ludden (LDO)
Northern Access LLC
440 S. LaSalle, 16th Floor
Chicago, IL 60605
4/20/05
James W. Febel (JAZ)
Jackson Financial Group, Inc.
440 S. LaSalle, Suite 3100
Chicago, IL 60605
4/20/05
Kevin P. Davitt (KPD)
Market Street Securities, Inc.
1508 W. Addison
Chicago, IL 60613
4/20/05
Peter V. Rogus (BOG)
Citigroup Derivatives Markets Inc.
172 Sycamore Dr.
Hawthorn Woods, IL 60047-8900
4/20/05
Gregory M. Fish (FIS)
Citigroup Derivatives Markets Inc.
2817 Saddlebrook Circle
Minnetonka, MN 55305
4/20/05
James C. Tharin, Jr. (TAM)
4/20/05
Jackson Financial Group, Inc.
440 S. LaSalle, Suite 3100
Chicago, IL 60605
Type of Business to be Conducted: Market Maker
JOINT ACCOUNTS
New Participants
Acronym
Effective Date
William P. Litgen
QLN
4/20/05
Terminated Participants Acronym
Termination Date
Eugene S. Filippo
QAB
4/14/05
Scott J. Yanklowitz
QHG
4/14/05
Scott N. Stoliar
QCC
4/15/05
Scott N. Stoliar
QWZ
4/15/05
Daniel R. Passarelli
QYA
4/18/05
Jason R. Bolding
QZA
4/18/05
Imran A. Farooq
QDG
4/18/05
Robert P. Baids
QAM
4/18/05
EFFECTIVE MEMBERSHIPS
Robert P. Baids
QFY
4/18/05
Individual Members
Robert P. Baids
QJP
4/18/05
Robert P. Baids
QSC
4/18/05
Robert P. Baids
QFW
4/18/05
Robert P. Baids
QRQ
4/18/05
Brian F. Ludden
QLN
4/20/05
Kevin P. Davitt
QMK
4/20/05
Peter V. Rogus
QCM
4/20/05
Peter V. Rogus
QKD
4/20/05
Peter V. Rogus
QNT
4/20/05
Peter V. Rogus
QPZ
4/20/05
Peter V. Rogus
QUN
4/20/05
Gregory M. Fish
QCM
4/20/05
Gregory M. Fish
QKD
4/20/05
Gregory M. Fish
QNT
4/20/05
Gregory M. Fish
QPZ
4/20/05
Gregory M. Fish
QUN
4/20/05
Terminated Accounts
Acronym
Termination Date
Benjamin R. Scott
QBQ
4/18/05
Benjamin R. Scott
QUR
4/18/05
Donald F. Urbas Jr.
QBQ
4/19/05
Donald F. Urbas Jr.
QUR
4/19/05
CBT Exercisers:
Effective Date
John H. Tocks (HTJ)
4/19/05
123 S. Stonegate Rd.
Lake Forest, IL 60045
Type of Business to be Conducted: Market Maker
CBT Registered For:
Effective Date
Kevin J. Hincks (HUV)
4/18/05
BBS Partners LLC
440 S. LaSalle, Suite 623
Chicago, IL 60605
Type of Business to be Conducted: Market Maker
Nominee(s) / Inactive Nominee(s):
Effective Date
Brian M. Connelly (BCC)
4/19/05
S & W Grain Co.
2101 N. Oakley Ave.
Chicago, IL 60647
Type of Business to be Conducted: Market Maker
James W. Febel (JAZ)
4/19/05
Jackson Financial Group, Inc.
440 S. LaSalle, Suite 3100
Chicago, IL 60605
Type of Business to be Conducted: Market Maker
Michael A. Klaus (KLS)
4/19/05
X-Change Financial Access LLC
440 S. LaSalle, Suite 3900
Chicago, IL 60605
Type of Business to be Conducted: Floor Broker
William P. Litgen (LTG)
4/20/05
Northern Access LLC
440 S. LaSalle, Suite 705
Chicago, IL 60605
Type of Business to be Conducted: Market Maker
Page 4
April 22, 2005
Volume 33, Number 16
Chicago Board Options Exchange
CHANGES IN MEMBERSHIP STATUS
Individual Members
Effective Date
James M. Jacobsen
4/18/05
From:
Nominee For Citadel Derivatives Group LLC; Market
Maker
To:
Nominee For Equitec Structured Products, LLC; Market
Maker/Floor Broker
Member Organizations
Effective Date
Holland Trading House, LLC
4/20/05
From:
Owner/Lessee; Associated with a Market Maker
To:
Lessor/Owner/Lessee; Associated with a Market Maker
Effective Date
BBS Partners LLC
4/18/05
From:
Owner/Lessee; 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.
4/14/05
From:
Lessor/Owner/Non-Member Customer Business/
Member Organization Affiliated with a CBT Registered
For; Associated with a Market Maker/Floor Broker
To:
Lessor/Owner/Non-Member Customer Business;
Associated with a Floor Broker
Rubicon Investments LLC
4/18/05
From:
Lessee/ Member Organization Affiliated with a CBT
Registered For; Associated with a Market Maker
To:
Member Organization Affiliated with a CBT Registered
For; Associated with a Market Maker
RESEARCH CIRCULARS
The following Research Circulars were distributed between April 14 and April 21, 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 #RS05-255
April 14, 2005
AMX Corporation (“AMXC/AQP”):
Merger Completed — Cash Settlement
Research Circular #RS05-264
April 20, 2005
Delta and Pine Land Company (“DLP”)
Partial Self Tender Offer
Research Circular #RS05-258
April 18, 2005
International Steel Group Inc. (“ISG/YRW/VOE”)
Election Merger COMPLETED
with Mittal Steel Company N.V. Class A (“MT”)
Research Circular #RS05-265
April 21, 2005
KB Home (“KBH/YAB/OHK”)
2-for-1 Stock Split
Ex-Distribution Date: April 29, 2005
Research Circular #RS05-260
April 18, 2005
United Defense Industries, Inc. (“UDI”) Proposed Merger
with BAE Systems North America Inc.
Research Circular #RS05-268
April 21, 2005
UTStarcom, Inc. (“UTSIE/UON/WQZ/OEU”)
Underlying Symbol Change to “UTSI”
Effective Date: April 22, 2005
Research Circular #RS05-262
April 19, 2005
*****UPDATE*****UPDATE*****UPDATE*****
Mandalay Resort Group (“MBG/YSG/OBI”) Proposed Merger
with MGM MIRAGE (“MGG/YDM/VYG”)
Research Circular #RS05-263
April 19, 2005
Kerr-McGee Corporation (“KMG/YNK/OGM”)
Partial Self Tender Offer
Research Circular #RS05-269
April 21, 2005
Lakes Entertainment, Inc. (“LACO/QWL”)
Underlying Symbol Change to “LACOE”
Effective Date: April 22, 2005
April 27, 2005
Volume RB16, Number 17
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 RG05-38
To:
Membership
From: Trading Operations, Regulatory Services Division and Legal Division
Date:
April 14, 2005
Re:
Minimum Quote Size and Maximum Quote Width in Hybrid Classes
Minimum Quote Size
Initial Market-Maker quote size in Hybrid classes must be for at least 10-contracts,
whether the quote is provided in open outcry or electronically. Once the size decrements to zero, the Market-Maker must replenish to at least 10-contracts, except as
specified below.
Effective in August 2004, in Hybrid classes, Market-Makers, DPMs, and e-DPMs (i.e.
“MM”) were given the ability to post a 1-up size on the appropriate side of the underlying
option quote when the quote size on the primary underlying market is 1-up (i.e., 100
shares).1 This process must be automated (i.e., no manual adjustments). This means
that when the primary market increases its quote size from 1-up, CBOE MM quote size
must automatically (not manually) increase to the minimum requirement of 10-up.
Examples:
NYSE quote size in ABC stock is 1x1:
CBOE MMs’ minimum quote size re
quirement is 1x1 for calls and puts.
NYSE quote size in ABC stock is 1x7: CBOE MMs’ minimum quote size re
quirement is 1x10 for calls and 10x1
for puts.
NYSE quote size in ABC stock is 20x1: CBOE MMs’ minimum quote size re
quirement is 10x1 for calls and 1x10
for puts.
Pre-requisite to Quoting 1-up
Prior to being able to participate in this pilot program, MMs or their vendors that provide
their handheld quoting devices must demonstrate to the Exchange that they have automated the process. Members should have their vendors contact Trading Operations
(via the Help Desk at 7100) to certify that their systems are compliant. Members that
provide 1-up quoting without certification by themselves or their vendors are in violation
of Exchange rules and subject to disciplinary action.
Open Outcry RFQs:
Market-Makers MUST respond to all verbal RFQs with a legal-width, 10-up market for
customers and 1-up for BDs.
1
The ability to quote 1-up in Hybrid was approved as a one-year pilot period set to expire August 17, 2005.
Regulatory Circulars
continued
Regulatory Circular RG05-38 continued
Quote Widths:
Electronic quotes MUST be no wider than legal-width. In Hybrid classes, electronic
quotes are permitted to be $5 wide following the opening rotation in each security.2
Opening rotation and open outcry quotes in Hybrid classes must comply with the same
maximum permissible widths as non-Hybrid classes.
“Quote Aping” and Anticompetitive Conduct
In the Hybrid Approval Order, the SEC stated:
Although it is not unlawful for a Market-Maker to take the prices offered by its
competitors into account when setting its own prices, or to follow or copy
prices of its competitors, such a decision must be a unilateral business judgment not intended to harass or punish a competitor for improving prices or
otherwise acting competitively and not the result of collusive agreement. Accordingly, the Commission expects that the CBOE will surveil its market to
ensure that Market-Makers are not coordinating quotes in the Hybrid system or
engaging in other anticompetitive conduct.
Contacts:
Questions regarding the certification process for quoting 1-up, should be addressed to
Anthony Montesano at (312)786-7365 or Greg Burkhardt at (312)786-7531 in Trading
Operations, or Tim MacDonald in Market Regulation at (312) 786-7706. For questions
regarding application of the rules, please contact Andrew Spiwak at (312) 786-7483 or
Tim MacDonald at (312) 786-7706.
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-2005-29
MTS Committee Selection and Composition Changes
On April 19, 2005, the Exchange filed Rule Change File No. SR-CBOE-2005-29, which filing
proposes to amend the manner in which the MTS Committee members are selected and
how the composition of the committee is determined. Any questions regarding the proposed rule change may be directed to Jim Flynn, Legal Division, at 312-786-7070. The text
of the proposed rule amendments is set forth below. Proposed new language is underlined.
Proposed deleted language is [stricken out].
Rule 8.82 - MTS Committee
[(a)] The selection of MTS Committee members and the determination of the composition of the MTS Committee shall be made in accordance with Rule 2.1. [consist of the Vice-Chairman of the Exchange, the Chairman of the Market Performance Committee, and nine persons elected by the membership of the Exchange.
2
The maximum permissible spread widths applicable to non-Hybrid classes as well as to Hybrid classes
during rotations and in open outcry are as follows: $0.25 for options under $2, $0.40 for options above $2 but
not over $5, $0.50 for options above $5 but not over $10; $0.80 for options above $10 but not over $20; and
$1 for options above $20, as set forth in Rule 8.7(b)(iv).
RB2
April 27, 2005, Volume RB16, Number 17
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-29 continued
(b) The nine elected MTS Committee members shall include: three members whose
primary business is as a Market-Maker; three members whose primary business is
as a Market-Maker or as a DPM Designee; and three members whose primary
business is as a Floor Broker, at least two of whom represent public customer
orders in the course of their activities as a Floor Broker. One of the nine elected
positions on the MTS Committee may instead be filled by a person (i) who directly
or indirectly owns and controls a membership with respect to which the person acts
as a lessor, (ii) whose primary business is not as a Market-Maker, DPM Designee,
or Floor Broker, and (iii) whose primary residence is located within 80 miles of the
Exchange’s trading floor. No elected member of the MTS Committee may be affiliated (as defined under Rule 1.1(j)) with any other elected member of the MTS Committee. The nine elected MTS Committee members shall have three-year terms,
three of which shall expire each year.
(c) The election procedures for the nine elected MTS Committee members shall be
the same as the election procedures for elected Directors that are set forth in Article
IV and Article V of the Exchange Constitution. Accordingly, the following shall occur
as part of these procedures: The Nominating Committee shall select nominees to
fill expiring terms and vacancies on the MTS Committee. Nominations may also be
made by petition, signed by not less than 100 voting members and filed with the
Secretary of the Exchange no later than 5:00 p.m. (Chicago time) on the Monday
preceding the 1st Friday in November, or the first business day thereafter in the
event that Monday occurs on a holiday. The election to fill the expiring terms and
vacancies on the MTS Committee shall be held as part of the annual election. The
term of office of each MTS Committee member elected at an annual election meeting shall commence at the time of the first regular Board of Directors meeting of the
calendar year following that annual election meeting and shall continue until the first
regular Board meeting of the third succeeding calendar year. Elected MTS Committee members shall hold office for the terms for which they are elected and until their
successors are duly elected and qualified or until their earlier death, resignation, or
removal.
(d) Candidates for election to the MTS Committee, whether nominated by the Nominating Committee or by petition, shall be eligible for election in any of the categories
for which they qualify both at the time of their nomination and at the time of their
election. The sole judge of whether a candidate satisfies the applicable qualifications for election to the MTS Committee in a designated category shall be the
Nominating Committee in the case of candidates nominated by the Nominating
Committee, and shall be the Executive Committee in the case of candidates nominated by petition, and the decision of the respective committee shall be final. In the
event a person’s status changes following election to the MTS Committee, the sole
judge of whether the person continues to satisfy the applicable qualifications for
service on the MTS Committee shall be the Board of Directors.
(e) In the event of the refusal, failure, neglect, or inability of any MTS Committee
member to discharge that person’s duties, or for any cause affecting the best interests of the Exchange, the sufficiency of which the Board of Directors shall be the
sole judge, the Board shall have the power, by the affirmative vote of at least twothirds of the Directors then in office, to remove that MTS Committee member from
the Committee.
(f) Any vacancy occurring among the members of the MTS Committee may be filled
by a qualified person appointed by the Vice Chairman of the Board with the approval
of the Board of Directors. The term of any MTS Committee member so chosen shall
be from the date of appointment until the first regular Board meeting of the calendar
year following the next annual election meeting and until the person’s successor is
duly elected and qualified, or until the person’s earlier death, resignation, or removal. The remaining portion of the unexpired term of an MTS Committee member,
if any, shall be served by a person elected at the next annual election meeting.]
April 27, 2005, Volume RB16, Number 17
RB3