May 20, 2005
Exchange
Bulletin
Volume 33, Number 20
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, MAY 20, 2005
CLASS
CBOE/FULL
CBOT/FULL
BID
$486,000.00
$1,695,000.00
OFFER
$500,000.00
$1,745,000.00
LAST SALE AMOUNT
$500,000.00
$1,695,000.00
LAST SALE DATE
May 19, 2005
May 12, 2005
MEMBERSHIP SALES AND TRANSFERS
From
Hayes Securities Ltd.
Citadel Derivatives Group LLC
To
Holland Trading House LLC
Michael A. Williams
Price/Transfer
$495,000.00
$500,000.00
Date
5/18/05
5/19/05
REVISED
DPM APPOINTMENT TRANSFER PROPOSAL - May 11, 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”), a member organization, and Botta Specialists, LLC (“BSP”) and Susquehanna Investment Group (“SIG”), both member organizations approved to operate as DPMs, regarding a
transfer of a BSP DPM appointment, which is located at Post 2, Station 10.
Currently, the ownership structure of BSP is as follows: BCM owns 100% of BSP. The ownership structure of BCM is as follows: Zydeco,
LLC (“Zydeco”) owns 100% of the Class A membership interests in BCM and there are several other classes of membership in BCM.
Under the proposal, the BSP DPM located at Post 2, Station 10 will be transferred to SIG, who will be responsible for the management and
operation of the DPM.
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 May 24, 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.
Page 2
May 20, 2005
Volume 33, Number 20
Chicago Board Options Exchange
MEMBERSHIP INFORMATION FOR 5/12/05 THROUGH 5/18/05
MEMBERSHIP APPLICATIONS RECEIVED FOR
Nominee(s) / Inactive Nominee(s):
WHICH A POSTING PERIOD IS REQUIRED
Individual Membership Applicants
Date Posted
Patrick D. Lusk, Lessee
9331 E. Sands Drive
Scottsdale, AZ 85255
5/16/05
Kent L. Oots, Nominee
Stephens Inc.
5107 Glenmere Road
North Little Rock, AR 72116
5/16/05
5/18/05
EFFECTIVE MEMBERSHIPS
Individual Members
CBT Registered For:
MEMBERSHIP LEASES
New Leases
Jeremy M. Kalan (JER)
Susquehanna Investment Group
175 W. Jackson Blvd., Ste. 1700
Chicago, IL 60604
Termination Date
Effective Date
Lessor: TRO Trading Group LLC
5/12/05
Lessee: Wellington Capital Markets, LLC
Wellington Capital Markets, LLC RMM, NOMINEE
Rate:
1.00%
Term: Monthly
Lessor: Kula Corporation
Lessee: Global Execution Brokers, LP
Michael T. Lyons, NOMINEE
Rate:
1.00%
Term: Monthly
5/12/05
Lessor: Geneva Stock, LLC
Lessee: CTC LLC
Daniel Abramson, NOMINEE
Rate:
1.25%
Term: Monthly
5/16/05
Lessor: Ladenburg, Thalmann & Co. Inc.
Lessee: Lakeshore Securities, LP
Patrick W. Wehr, NOMINEE
Rate:
1.00%
Term: Yearly
5/16/05
Lessor: Marshall C. Spiegel
5/16/05
Lessee: Hardcastle Trading USA LLC
Hardcastle Trading USA LLC RMM, NOMINEE
Rate:
$4,216.52
Term: Yearly
Terminated Leases
Termination Date
Lessor: Kula Corporation
Lessee: Susquehanna Investment Group
Michael T. Lyons (LYO), NOMINEE
5/12/05
Lessor: Paul Kepes
Lessee: CTC LLC
Daniel Abramson (ABR), NOMINEE
5/16/05
Lessor: Marshall C. Spiegel
Lessee: John J. Piwowarczyk (JJP)
5/16/05
Lessor: Holland Trading House, LLC
Lessee: Equitec Structured Products, LLC
5/18/05
Effective Date
Jeffrey W. Schneider (HEX)
5/17/05
Harrison Trading Group, LLC
723 N. Noble Street
Chicago, IL 60622
Type of Business to be Conducted: Market Maker
Nominee(s) / Inactive Nominee(s):
Effective Date
Edward M. Reid
5/12/05
Wellington Capital Markets, LLC
440 S. LaSalle, Ste. 2910
Chicago, IL 60605
Type of Business to be Conducted: Remote Market Maker
Brent E. Hippert
5/16/05
Hardcastle Trading USA LLC
1 Barker Ave, 4th Fl.
White Plains, NY 10601
Type of Business to be Conducted: Remote Market Maker
Basilios T. Papanastoy (BTP)
5/16/05
Prospect Trading LLC
440 S. LaSalle - Ste. 721
Chicago, IL 60605
Type of Business to be Conducted: Market Maker
Member Organizations
CBT Registered For:
Effective Date
Lessee(s):
Effective Date
Hardcastle Trading USA LLC
5/16/05
1 Barker Avenue
White Plains, NY 10601
Type of Business to be Conducted: Remote Market Maker
JOINT ACCOUNTS
MEMBERSHIP TERMINATIONS
Individual Members
CBT Registered For:
Termination Date
Macario Lullo (LLO)
Deutsche Bank Securities Inc.
222 S. Riverside Plaza, 30th Fl.
Chicago, IL 60606
5/18/05
New Participants
Acronym
Effective Date
Mark Wolicki
QDZ
5/12/05
Wellington Capital
Markets LLC RMM
QWC
5/12/05
Basilios T. Papanastoy
QGR
5/16/05
Basilios T. Papanastoy
QPV
5/16/05
Basilios T. Papanastoy
QRP
5/16/05
Jeffrey W. Schneider
QRF
5/17/05
Terminated Participants Acronym
Termination Date
Michael T. Lyons
QFS
5/12/05
Michael T. Lyons
QNA
5/12/05
Page 3
May 20, 2005
Volume 33, Number 20
Chicago Board Options Exchange
Terminated Participants Acronym
Termination Date
Terminated Participants Acronym
Termination Date
Michael T. Lyons
QLO
5/12/05
Jeremy M. Kalan
QSM
5/18/05
Michael T. Lyons
QSM
5/12/05
Jeremy M. Kalan
QUT
5/18/05
Michael T. Lyons
QMD
5/12/05
Jeremy M. Kalan
QVA
5/18/05
Michael T. Lyons
QPO
5/12/05
Jeremy M. Kalan
QYH
5/18/05
Michael T. Lyons
QVA
5/12/05
Jeremy M. Kalan
QYS
5/18/05
Michael T. Lyons
QEW
5/12/05
Macario Lullo
QDC
5/18/05
Michael T. Lyons
QJY
5/12/05
CHANGES IN MEMBERSHIP STATUS
Michael T. Lyons
QYS
5/12/05
Individual Members
Michael T. Lyons
QUT
5/12/05
Michael T. Lyons
QYH
5/12/05
Michael T. Lyons
QIS
5/12/05
Michael T. Lyons
QMP
5/12/05
Michael T. Lyons
QNY
5/12/05
Michael T. Lyons
QPN
5/12/05
SMC Option RMM
QSV
5/18/05
Jeremy M. Kalan
QGS
5/18/05
Jeremy M. Kalan
QPO
5/18/05
Jeremy M. Kalan
QZT
5/18/05
Jeremy M. Kalan
QEW
5/18/05
Jeremy M. Kalan
QFS
5/18/05
Jeremy M. Kalan
QIS
5/18/05
Jeremy M. Kalan
QJY
5/18/05
Jeremy M. Kalan
QLO
5/18/05
Jeremy M. Kalan
QMD
5/18/05
Jeremy M. Kalan
QMP
5/18/05
Jeremy M. Kalan
QNA
5/18/05
Jeremy M. Kalan
QNY
5/18/05
Jeremy M. Kalan
QPN
5/18/05
Effective Date
Michael T. Lyons
5/12/05
From:
Nominee For Susquehanna Investment Group; Market
Maker/Floor Broker
To:
Nominee For Global Execution Brokers, LP; Floor
Broker
John J. Piwowarczyk
From:
Lessee; Market Maker
To:
CBT Exerciser; Market Maker
5/16/05
Martin L. Dim
5/16/05
From:
Nominee For Prospect Trading LLC; Market Maker
To:
CBT Registered For Prospect Trading LLC; Market
Maker
Paul Kepes
5/16/05
From:
Lessor/ Nominee For CTC LLC; Market Maker/Floor
Broker
To:
Nominee For CTC LLC; Market Maker/Floor Broker
Member Organizations
Effective Date
Deutsche Bank Securities Inc.
5/18/05
From:
Owner/Member Organization Affiliated with a CBT
Registered For/Non-Member Customer Business;
Associated with a Market Maker/Floor Broker
To:
Owner/Non-Member Customer Business; Associated
with a Market Maker
SMC Option Manangement LLC
5/18/05
From:
Owner/Lessee/Member Organization Affiliated with a
CBT Registered For; Associated with a Market Maker/
Floor Broker/Remote Market Maker
To:
Owner/Lessee/Member Organization Affiliated with a
CBT Registered For; Associated with a Market Maker/
Floor Broker
Ladenburg, Thalmann & Co. Inc.
5/16/05
From:
Owner/Non-Member Customer Business; Associated
with a Floor Broker
To:
Lessor/Non-Member Customer Business
Wellington Capital Markets, LLC
5/12/05
From:
Lessee; Associated with a Market Maker
To:
Lessee; Associated with a Market Maker/Remote
Market Maker
Page 4
May 20, 2005
Volume 33, Number 20
Chicago Board Options Exchange
POSITION LIMIT CIRCULARS
Pursuant to Exchange Rule 4.11, the Exchange issued the below listed Position Limit Circulars on May 17, 2005. The complete circulars are available
from the Department of Market Regulation, in the data information bins on the 2nd Floor of the Exchange, and on the CBOE website at cboe.com under
the “Market Data” tab.
To receive regular updates of the position limit list via fax, contact Candice Nickrand at (312) 786-7730. Questions concerning position and exercise
limits may be directed to the Department of Market Regulation to Rich Pedraza at (312) 786-7077 or Tim Mac Donald at (312) 786-7706.
Position Limit Circular PL05-18
May 17, 2005
Riggs National Corporation (“RIGS/RNQ”) election
merger completed with The PNC Financial Services
Group, Inc. (“PNC/WYL/VSM”)
Effective Date May 16, 2005
RESEARCH CIRCULARS
The following Research Circulars were distributed between May 13 and May 18, 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 #RS05-325
May 13, 2005
Adobe Systems, Inc. (“ADBE/AEQ/WAE/VAE”)
2-for-1 Stock Split
Ex-Distribution Date: May 24, 2005
Research Circular #RS05-335
May 16, 2005
Patina Oil & Gas Corporation (“POG”) Election Merger COMPLETED
with Noble Energy, Inc. (“NBL”) – Cash Settlement
Research Circular #RS05-326
May 13, 2005
******UPDATE******UPDATE*****UPDATE*****
Constellation Brands, Inc. Class A (“STZ/YEZ/ODD”)
2-for-1 Stock Split
Ex-Distribution Date: May 16, 2005
Research Circular #RS05-336
May 16, 2005
Telecomunicacoes Brasileiras S.A. - Telebras
(“Telebras HOLDRs”) (“TBH”)
Cash Distribution in Lieu of Rights
Ex-Date: May 18, 2005
Research Circular #RS05-327
May 13, 2005
ADC Telecommunications, Inc. (“ADCTD/TLQ & adj. YZR”)
Determination of Cash-in-Lieu Amount
Research Circular #RS05-338
May 17, 2005
Newfield Exploration Company (“NFX”)
2-for-1 Stock Split
Ex-Distribution Date: May 26, 2005
Research Circular #RS05-330
May 13, 2005
Photon Dynamics, Inc. (“PHTN/PDU/YDZ/OPU”)
Underlying Symbol Change to “PHTNE”
Effective Date: May 16, 2005
Research Circular #RS05-331
May 13, 2005
Riggs National Corporation (“RIGS/RNQ”)
Election Merger COMPLETED with The PNC Financial
Services Group, Inc. (“PNC/WYL/VSM”)
Research Circular #RS05-332
May 16, 2005
******UPDATE – DETERMINATION ON CONTRACT DELIVERABLE
Riggs National Corporation (“RIGS/RNQ”) Election
Merger COMPLETED with The PNC Financial Services
Group, Inc. (“PNC/WYL/VSM”)
Research Circular #RS05-339
May 17, 2005
Canadian Natural Resources Limited (“CNQ”)
2-for-1 Stock Split
Ex-Distribution Date: May 31, 2005
Research Circular #RS05-340
May 17, 2005
USF Corporation (“USFC/CZQ”) Proposed Amended Merger
with Yellow Roadway Corporation (“YELL/YUX/VYX”)
Research Circular #RS05-342
May 18, 2005
Telefonos de Mexico, S.A. de C.V. (“TMX/WTE/VTE”)
2-for-1 ADS Split
Ex-Distribution Date: May 31, 2005
May 25, 2005
Volume RB16, Number 21
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 RG05-49
To:
The Membership
From:
Marketing Committee
Date:
May 5, 2005
Subject:
Rule Change Proposing May 2005 Member Dues Waiver
CBOE filed with the SEC a rule change to waive member dues for May 2005 for CBOE
Market-Makers who automatically execute (through the use of “M” orders) 2000 contracts or
more during May 2005 in hybrid options classes, i.e. all equity options classes and the
MNX, QQQQ, Reduced Value Russell 2000 and SPDR options classes. May 2005 dues will
be rebated to qualifying members. The rebate will be processed in June and appear as a
credit on monthly bills sent to the clearing firms in early July. The Marketing Committee
believes that the proposed dues waiver will be successful in attracting additional MarketMaker volume to CBOE.
Any questions regarding this circular may be directed to any member of the Marketing
Committee or Andy Lowenthal at 312-786-7180 or lowenthl@cboe.com.
Regulatory Circular RG05-50
Date:
May 13, 2005
To:
Members and Member Organizations
From:
Regulatory Division
Legal Division
Trading Operations
Subject:
Hybrid System Opening Rule Change
The Securities and Exchange Commission has approved Chicago Board Options Exchange,
Incorporated (“CBOE”) rule filing SR-CBOE-2005-27, which requires CBOE e-DPMs to submit opening quotes in 100% of the series in all of their respective allocated Hybrid option
classes. Previously, only the DPM for any Hybrid option class was required to submit
opening quotes in every series for that class. With the SEC’s approval of this rule change,
beginning with the opening on May 16, 2005, e-DPMs will be obligated to submit opening
quotes with a minimum size of 10 contracts, present at the time the series open. Refer to
CBOE Regulatory Circular RG05-048, which addresses the prescribed legal widths required
for opening quotes.
A copy of this proposed rule change will be made available on the Exchange’s website at
www.cboe.com.
If you have any questions, please contact Jim Flynn at (312) 786-7070, Margaret Williams at
(312) 786-7834, Anthony Montesano at (312) 786-7365, or the Help Desk at (800) 405-3277.
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-2005-27
e-DPM Obligations
On May 9, 2005, the SEC approved Rule Change File No. SR-CBOE-2005-27, which filing
requires all e-DPMs to submit opening quotes during the HOSS opening rotation for every
series in each Hybrid class to which any e-DPM is allocated (Securities Exchange Act
Release No. 51670, 70 FR 28338 (May 17, 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 6.2B. Hybrid Opening System ( “HOSS”)
(a) For a period of time before the opening of trading in the underlying security, as
determined by the appropriate Floor Procedure Committee (FPC) and announced
to the membership via Regulatory Circular, the Hybrid System will accept orders
and quotes. The Hybrid System will disseminate to market participants (as defined
in Rule 6.45A) information about resting orders in the Book that remain from the
prior business day and any orders submitted before the opening. At a randomly
selected time within a number of seconds after the primary market for the underlying security disseminates the opening trade or the opening quote, the System
initiates the opening procedure and sends a notice (“Opening Notice”) to market
participants who may then submit their opening quotes. The DPM and each e-DPM
for the class must enter opening quotes. Spread orders and contingency orders do
not participate in the opening trade or in the determination of the opening price.
(b) – (i)
No Change
*****
Rule 8.85. DPM Obligations
(a) Dealer Transactions. Each DPM shall fulfill all of the obligations of a MarketMaker under the Rules, and shall satisfy each of the following requirements in
respect of each of the securities allocated to the DPM. To the extent that there is
any inconsistency between the specific obligations of a DPM set forth in subparagraphs (a)(i) through (a)(xiii) of this Rule and the general obligations of a MarketMaker under the Rules, subparagraphs (a)(i) through (a)(xiii) of this Rule shall
govern. Each DPM shall:
(i) – (xii) No Change
(xiii) enter opening quotes in accordance with Rule 6.2B in 100% of the series of
each allocated class.
(b) – (e) No Change
*****
RB2
May 25, 2005, Volume RB16, Number 21
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-27 continued
Rule 8.93. e-DPM Obligations
Each e-DPM shall fulfill all of the obligations of a Market-Maker and of a DPM under
the Rules (except those contained in Rules 8.85(a)(i),(iv),(v) and (vii)-(x), 8.85(b),
8.85(c)(i) and (v), and 8.85(e)), and shall satisfy each of the following requirements:
(i) – (x)
No Change
(xi) enter opening quotes in accordance with Rule 6.2B in 100% of the series of
each allocated class.
SR-CBOE-2005-36
Amended Fee Schedule
On May 12, 2005, the SEC gave notice of filing of immediate effectiveness for Rule Change
File No. SR-CBOE-2005-36, which amends the Fee Schedule to waive May 2005 member
dues for CBOE Market-Makers who automatically execute 2000 contracts or more during
May 2005 in hybrid options classes. Any questions regarding the rule change may be
directed to Jaime Galvan, Legal Division, at 312-786-7058. The text of the amended Fee
Schedule is available from the Legal Division, or can be accessed online at https://
www.cboe.org/publish/RegCir/RG05-049.pdf.
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-2005-38
Amended CBOE Fee Schedule & Rules
On May 13, 2005, the Exchange filed Rule Change File No. SR-CBOE-2005-38 for
immediate effectiveness, which filing proposes to amend the CBOE Fee Schedule and
rules, and issue a Regulatory Circular relating to the “Sales Value Fee.” Specifically, the
Exchange proposes to amend its Fee Schedule to change the name of its fee, provide
greater explanation and description of the fee and how it is collected, and clarify that it
applies with respect to both covered options related transactions and covered non-options
related transactions, and also proposes to delete Rule 30.60 since the fee will be set forth
and fully described in the Fee Schedule. Any questions regarding the rule change may be
directed to Jaime Galvan, Legal Division, at 312-786-7058. The text of the amended Fee
Schedule is available from the Legal Division, or can be accessed online at http://
www.cboe.com/AboutCBOE/FeeSchedule.aspx. The text of the proposed rule amendments
is set forth below. Proposed new language is underlined. Proposed deleted language is
[stricken out].
[Rule 30.60. Securities and Exchange Commission Transaction Fee
There shall be paid to the Exchange by each member and member organization, in
such manner and at such time as the Exchange shall direct, the sum of one cent
for each $300 or fraction thereof of the dollar volume of securities sold by such
member or member organization on the Exchange. The monies so paid to the
Exchange shall be paid to the Securities and Exchange Commission as the transaction fee imposed upon the Exchange under the Exchange Act.
May 25, 2005, Volume RB16, Number 21
RB3
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-38 continued
... Interpretations and Policies:
.01 The fee required to be paid under this Rule does not apply to any bond,
debenture, or other evidence of indebtedness, or any security which the Securities and Exchange Commission may, by rule, exempt from imposition of the fee.]
SR-CBOE-2005-39
$2.50 Strike Price Program
On May 13, 2005, the Exchange filed Rule Change File No. SR-CBOE-2005-39, which
filing proposes to amend CBOE Rule 5.5, Interpretation and Policy .05 pertaining to the
$2.50 Strike Price Program. 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 5.5
Series of Option Contracts Open for Trading
(a) – (c)
No Change
…Interpretations and Policies:
.01 - .04
No Change
.05
[The four options exchanges] (a) $2.50 Strike Price Program. Pursuant
to a program initially approved by the SEC in 1995, the Exchange may select up
to [100] 60 options classes on individual stocks for which the interval of strike
prices will be $2.50 where the strike price is greater than $25 but less than $50. [In
addition, starting in the fourth calendar quarter of 1998, the four options exchanges
may add twenty new classes to this program for each of the next five calendar
quarters, such that at the end of the period the Exchanges will be able to select up
to 200 classes to participate in the program. The 100 options classes and the 20
classes added each quarter may be selected by the various options exchanges
pursuant to any agreement mutually agreed to by the individual exchanges.] In
addition to those options selected by the Exchange, the strike price interval may
be $2.50 in any multiply-traded option once another exchange trading that option
selects such option, as part of this program. [The CBOE and any of the other
exchanges may also list strike prices of $2.50 on any option class that was
selected by the NYSE pursuant to this program.]
(b)
In addition, on any option class that has been selected as part of the
$2.50 Strike Price Program pursuant to paragraph (a) above, the Exchange may
list $2.50 strike prices between $50 and $75, provided the $2.50 strike prices
between $50 and $75 are no more than $10 from the closing price of the underlying stock in its primary market on the preceding day. For example, if an option
class has been selected as part of $2.50 Strike Price Program, and the underlying
stock closes at $48.50 in its primary market, the Exchange may list the $52.50
strike price and the $57.50 strike price on the next business day. If an underlying
security closes at $54, the Exchange may list the $52.50 strike price, the $57.50
strike price, and the $62.50 strike price on the next business day.
(c)
An option class shall remain in the $2.50 Strike Price Program until otherwise designated by the Exchange and a decertification notice is sent to the
Options Clearing Corporation.
.06 - .08
RB4
No Change
May 25, 2005, Volume RB16, Number 21
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-40
HOSS Procedures
On May 16, 2005, the Exchange filed Rule Change File No. SR-CBOE-2005-40, which filing
proposes to allow HOSS to open an option series as long as there is one quote present that
meets the legal quote width requirements of Rule 8.7(b). 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 6.2B. Hybrid Opening System (“HOSS”)
Rule 6.2B. (a) For a period of time before the opening of trading in the underlying
security, as determined by the appropriate Floor Procedure Committee (FPC) and
announced to the membership via Regulatory Circular, the Hybrid System will accept orders and quotes. The Hybrid System will disseminate to market participants
(as defined in Rule 6.45A) information about resting orders in the Book that remain
from the prior business day and any orders submitted before the opening. At a
randomly selected time within a number of seconds after the primary market for the
underlying security disseminates the opening trade or the opening quote, the System initiates the opening procedure and sends a notice (“Opening Notice”) to market participants who may then submit their opening quotes. The DPM and each eDPM for the class must enter opening quotes. Spread orders and contingency
orders do not participate in the opening trade or in the determination of the opening
price.
(b) After the Opening Notice is sent, the System will calculate and provide the
Expected Opening Price (“EOP”) and expected opening size (“EOS”) given the
current resting orders during the EOP Period (“EOP Period”). The appropriate FPC
will establish the duration of the EOP Period on a class basis at between five and
sixty seconds. The EOP, which will be calculated and disseminated to market
participants every few seconds, is the price at which the greatest number of orders
in the Book are expected to trade. After the Opening Notice is sent, quotes and
orders may be submitted without restriction. An EOP may only be calculated if: (i)
there are market orders in the Book, or the Book is crossed (highest bid is higher
than the lowest offer) or locked (highest bid equals lowest offer), and (ii) at least one
[the DPM’s] quote [is present and]complies with the legal width quote requirements
of Rule 8.7(b)(iv).
(c) – (d)
No Change
(e) The System will not open a series if one of the following conditions is met:
(i) There is no quote present in the series that complies with the legal width quote
requirements of Rule 8.7(b)(iv); [from the DPM for the series;]
(ii) The opening price is not within an acceptable range (as determined by the
appropriate FPC and announced to the membership via Regulatory Circular) compared to the [highest] lowest quote offer and the [lowest] highest quote bid [(e.g.,
the upper boundary of the acceptable range may be 125% of the highest quote offer
and the lower boundary may be 75% of the lowest quote bid)]; or
(iii)
No Change
(f) – (i)
No Change
May 25, 2005, Volume RB16, Number 21
RB5
ARBITRATION
AWARDS
Arbitration Awards
Pursuant to Exchange Rule 18.31, Arbitration Awards, for claims filed after September 1,
1989, are publicly available, provided that the name of a public customer will be withheld
upon the written request of the customer. Upon written request, copies of Awards are
available from the Arbitration Department.
Summaries of all Awards are published in the Regulatory Bulletin. In addition, all Awards
are provided to the Securities Arbitration Commentator and Glasser Legal Works. Awards
involving public customers are reported to the Central Registration Depository (CRD). Questions regarding arbitration may be directed to the Arbitration Department at 312-786-7070 or
312-786-7461.
RB6
Case Name:
O’Connor & Company, LLC v. Estate of Mark O’Brien
Case Number:
04M005
Date Received:
October 18, 2004
Summary of Issues:
Breach of Contract
Amount in Dispute:
$527,268.73
Award:
$527,268.73
Award Issued:
May 13, 2005
May 25, 2005, Volume RB16, Number 21