May 27, 2005
Exchange
Bulletin
Volume 33, Number 21
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 27, 2005
CLASS
CBOE
BID
$485,000.00
OFFER
$525,000.00
LAST SALE AMOUNT
LAST SALE ATE
$505,000.00
May 24, 2005
CBOT FULL MEMBERSHIP
CLASS
BID
OFFER
LAST SALE AMOUNT
LAST SALE DATE
With CBOE
Exercise Right
$1,695,001.00
$1,720,000.00
$1,695,001.00
May 24, 2005
Without CBOE
Exercise Right
__
__
__
__
CBOE Exercise
Right
__
$250,000.00
__
__
CBOE MEMBERSHIP SALES AND TRANSFERS
From
Citadel Derivatives Group LLC
BBS Partners LLC
Harry E. Simpson
To
EWT LLC
TRO Trading Group LLC
George E. Morris
Price/Transfer
$500,000.00
$500,000.00
$505,000.00
Date
5/20/05
5/23/05
5/24/05
Page 2
May 27, 2005
Volume 33, Number 21
Chicago Board Options Exchange
DPM APPOINTMENT TRANSFER PROPOSAL: NOTICE OF WITHDRAWAL - May 24, 2005
The MTS Committee is publishing this notice to advise that the attached DPM Appointment Transfer Proposal (as noticed on May 11, 2005 and
subsequently amended on May 17, 2005) has been withdrawn at the request of the parties involved in the proposed transfer.
Any questions regarding this matter may be directed to the MTS Committee, in care of Daniel Hustad, Business Development Division (312786-7715).
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.
MEMBERSHIP INFORMATION FOR 5/19/05 THROUGH 5/25/05
MEMBERSHIP APPLICATIONS RECEIVED FOR
WHICH A POSTING PERIOD IS REQUIRED
Date Posted
David J. Berger, Nominee
Group One Trading, LP
4019 N. Kenmore, Apt. 3
Chicago, IL 60613
5/25/05
Daniel T. Hillegass, Nominee
Group One Trading, LP
1449 W. Roscoe, #2
Chicago, IL 60657
5/25/05
5/25/05
5/25/05
Individual Membership Applicants
Date Posted
Alexander Shvartsman, Lessor
1755 Portage Pass
Deerfield, IL 60015
5/20/05
Michael J. Schmookler, Lessor
3143 Whisperwoods Ct.
Northbrook, IL 60062
5/20/05
Adam R. Walls, Nominee
Cutler Group, LP
1301 W. Wellington
Chicago, IL 60657
5/20/05
Michael F. Fong, Nominee
Susquehanna Investment Group
1120 N. LaSalle, #12J
Chicago, IL 60610
Daniel DeCore, Nominee
CTC LLC
1041 W. Belden Ave.
Chicago, IL 60614
5/24/05
Keith B. Kurzner, Nominee
CIBC World Markets Corp.
39 Benjamin Drive
Springfield, NJ 07081
Michael R. Lossia, Nominee
PEAK6 Capital Management LLC
40 E. Cedar, #19C
Chicago, IL 60611
5/24/05
Kim Swahlstedt, Lessor
383 Chilvers Ct.
Naperville, IL 60565
5/25/05
Jonathan A. Kloppenburg, Nominee
SMC Option Management LLC
1824 N. Lincoln Park W., # B3
Chicago, IL 60614
5/25/05
MEMBERSHIP LEASES
New Leases
Effective Date
Lessor:
Lessee:
Holland Trading House, LLC
Sparta Group Of Chicago, LP
Johnson T. Thomas, NOMINEE
0.75%
Term: Monthly
5/19/05
Glenn H. Smith
PFTC LLC
Michael D. Freund, NOMINEE
1.00%
Term: Monthly
5/19/05
Rate:
Lessor:
Lessee:
Rate:
Page 3
May 27, 2005
Volume 33, Number 21
Chicago Board Options Exchange
Effective Date
Lessor:
Lessee:
Rate:
Lessor:
Lessee:
Rate:
Lessor:
Lessee:
Rate:
Lessor:
Lessee:
Rate:
Termination Date
5/23/05
Michael A. Williams
Capstone Trading LLC
Capstone Trading LLC RMM, CHG
1.00%
Term: Monthly
5/23/05
Maureen M. Obermeier (MOE)
Citadel Derivatives Group LLC
131 S. Dearborn St., 37th Floor
Chicago, IL 60603
George E. Morris
Blue Capital Group LLC
James A. Myers Jr., NOMINEE
1.25%
Term: Monthly
5/24/05
Aaron J. Haack (AAK)
Citadel Derivatives Group LLC
131 S Dearborn, 37th floor
Chicago, IL 60603
5/23/05
TRO Trading Group LLC
The Hermitage Group, LLC
Steven J. Pettinato, NOMINEE
1.00%
Term: Monthly
5/24/05
Timothy W. Scharf (TSF)
Northern Access LLC
440 South LaSalle - 16th Floor
Chicago, IL 60605
5/24/05
Peter C. Guth
Zydeco Trading LLC
James M. Kittrell, NOMINEE
1.00%
Term: Monthly
5/24/05
William P. Litgen (LTG)
Northern Access LLC
440 S LaSalle, Ste. 705
Chicago, IL 60605
5/24/05
Termination Date
Shaun M. Williams (AUS)
Sparta Group Of Chicago, LP
2451 W. Moffat St., #2
Chicago, IL 60647
5/25/05
5/25/05
Terminated Leases
Lessor:
Lessee:
Glenn H. Smith
5/19/05
Sallerson-Troob LLC
Bradley Andrew Belden (BBN), NOMINEE
Lessor:
Lessee:
Hayes Securities Ltd.
Sparta Group Of Chicago, LP
Johnson T. Thomas (JTA), NOMINEE
5/19/05
William A. Gilcrest (WAG)
Futrex Trading LLC
1002 Woodbine Place
Lake Forest, IL 60045-2243
Lessor:
Lessee:
EWT LLC
Group One Trading, LP
John A. Kinahan (KIN), NOMINEE
5/23/05
Member Organizations
Lessor:
Lessee:
EWT LLC
Tradelink LLC
Rick S. Peterson (RIC), NOMINEE
Lessor:
Lessee:
Lessor(s):
Termination Date
5/23/05
Hayes Securities Ltd.
814 Marietta Street
South Bend, IN 46601
5/19/05
Harry E. Simpson
Blue Capital Group LLC
James A. Myers Jr. (ACL), NOMINEE
5/24/05
EFFECTIVE MEMBERSHIPS
Lessor:
Lessee:
TRO Trading Group LLC
Timber Hill LLC
5/24/05
CBT Registered For:
Lessor:
Lessee:
Peter C. Guth
Botta Specialist, LLC
Peter C. Guth (PG), NOMINEE
5/24/05
Andrew G. Bruce
5/19/05
Samurai Trading, LLC
5116 Kenilworth Pl., NE
Seattle, WA 98105
Type of Business to be Conducted: Remote Market Maker
Individual Members
MEMBERSHIP TERMINATIONS
Individual Members
CBT Registered For:
Termination Date
Salvatore Spinnato (ATO)
Panos Trading Limited Partnership
440 S. LaSalle - Ste. 743
Chicago, IL 60605
5/19/05
Lessor(s):
Termination Date
Harry E. Simpson
1355 Hackberry
Winnetka, IL 60093
5/24/05
Nominee(s) / Inactive Nominee(s):
Termination Date
Bradley Andrew Belden (BBN)
Sallerson-Troob LLC
440 S. LaSalle - Ste. 950
Chicago, IL 60605
5/19/05
Effective Date
Lessor(s):
Effective Date
Michael A. Williams
One Egret St.
New Orleans, LA 70124
5/19/05
Nominee(s) / Inactive Nominee(s):
Effective Date
Rachel W. Or (ROR)
CMZ Trading, LLC
141 W. Jackson Blvd., Suite 3310
Chicago, IL 60604
Type of Business to be Conducted: Market Maker
5/20/05
Patrick M. McCallum (PMC)
Man Securities Inc.
1617 N. Hudson St., Apt. 2R
Chicago, IL 60614
Type of Business to be Conducted: Floor Broker
5/23/05
Rodney A. Faragalla (RAF)
5/23/05
EWT LLC
345 N Maple Dr., #205
Beverly Hills, CA 90210
Type of Business to be Conducted: Remote Market Maker
Page 4
May 27, 2005
Volume 33, Number 21
Chicago Board Options Exchange
Effective Date
CHANGES IN MEMBERSHIP STATUS
Kirk M. Wojak (WOJ)
Quiet Light Securities LLC
3911 N. Leavitt
Chicago, IL 60618
Type of Business to be Conducted: Market Maker
5/23/05
Individual Members
Brian F. Ludden (LDO)
Northern Access LLC
440 S. LaSalle, 16th Floor
Chicago, IL 60605
Type of Business to be Conducted: Market Maker
5/24/05
Eren Levi (ERN)
Sparta Group Of Chicago, LP
440 S. LaSalle, Suite 2101
Chicago, IL 60605
Type of Business to be Conducted: Market Maker
5/25/05
Effective Date
Kathryn McBride
5/19/05
From:
Nominee For Equitec Structured Products, LLC; Market
Maker/ Floor Broker
To:
CBT Registered For Equitec Structured Products, LLC;
Market Maker/ Floor Broker
Rick S. Peterson
5/23/05
From:
Nominee For Tradelink LLC; Market Maker
To:
CBT Registered For Tradelink LLC; Market Maker
JOINT ACCOUNTS
New Participants
Acronym
Effective Date
Adrian Velazquez
QGT
5/19/05
Kirk M. Wojak
QHD
5/23/05
Rodney A. Faragalla
EWT
5/23/05
Westward Capital, LLC RMM QMW
5/24/05
Jeffrey D. Gehrke
QLN
5/24/05
Brian F. Ludden
QLN
5/24/05
John F. Starmann Jr.
QYW
5/24/05
Eren Levi
QUB
5/25/05
New Accounts
Acronym
Effective Date
EWT LLC RMM, EWA
EWT
5/20/05
EWT LLC RMM, EWK
EWT
5/20/05
Terminated Participants
Acronym
Termination Date
Salvatore Spinnato
QVV
5/19/05
Salvatore Spinnato
QTF
5/19/05
Maureen M. Obermeier
CIT
5/23/05
Aaron J. Haack
CIT
5/23/05
Peter C. Guth
QYZ
5/24/05
Jeffrey D. Gehrke
QWC
5/24/05
Timothy W. Scharf
QLN
5/24/05
William P. Litgen
QLN
5/24/05
Shaun M. Williams
QUB
5/25/05
William A. Gilcrest
QAG
5/25/05
William A. Gilcrest
QED
5/25/05
William A. Gilcrest
QPF
5/25/05
Jason B. Lazarus
5/23/05
From:
Nominee For Quiet Light Securities LLC; Market Maker
To:
CBT Registered For Quiet Light Securities LLC; Market
Maker
Jeffrey D. Gehrke
5/24/05
From:
Nominee For Wellington Capital Markets, LLC; Market
Maker
To:
Nominee For Northern Access LLC; Market Maker
Peter C. Guth
5/24/05
From:
Lessor/ Nominee For Botta Specialist, LLC; Market
Maker/ Floor Broker
To:
Lessor
******Correction to Bulletin Dated 5/13/05******
Roy W. Kissel
5/3/05
From:
CBT Registered For Cornerstone Trading LLC; Market
Maker/ Floor Broker
To:
CBT Registered For Cornerstone Trading LLC; Market
Maker/ Floor Broker/ Remote Market Maker
Member Organizations
Effective Date
BBS Partners LLC
5/25/05
From:
Owner/ Lessee/ Member Organization Affiliated with a
CBT Registered For; Associated with a Market Maker/
Floor Broker
To:
Lessee/ Member Organization Affiliated with a CBT
Registered For; Associated with a Market Maker/ Floor
Broker
Westward Capital LLC
5/24/05
From:
Lessee/ Member Organization Affiliated with a CBT
Registered For; Associated with a Market Maker
To:
Lessee/ Member Organization Affiliated with a CBT
Registered For; Associated with a Market Maker/ Remote
Market Maker
Capstone Trading LLC
5/23/05
From:
Lessee; Associated with a Market Maker
To:
Lessee; Associated with a Market Maker/ Remote Market
Maker
Samurai Trading, LLC
5/19/05
From:
Member Organization Affiliated with a CBT Registered
For; Associated with a Market Maker/ Floor Broker
To:
Member Organization Affiliated with a CBT Registered
For; Associated with a Market Maker/ Floor Broker/
Remote Market Maker
Page 5
May 27, 2005
Volume 33, Number 21
Chicago Board Options Exchange
RESEARCH CIRCULARS
The following Research Circulars were distributed between May 24 and May 26, 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 #RS05-348
May 24, 2005
USF Corporation (“USFC/CZQ”) Merger COMPLETED
with Yellow Roadway Corporation (“YELL/YUX/VYX”)
Research Circular #RS05-349
May 25, 2005
Bioenvision, Inc. (“BIVN/BQN”)
Underlying Symbol Change to “BIVNE”
Effective Date: May 26, 2005
Research Circular #RS05-350
May 25, 2005
Wellpoint, Inc. (“WLP/YFM/OSN & adj. FLW/YHG/VCZ”)
2-for-1 Stock Split
Ex-Distribution Date: June 1, 2005
Research Circular #RS05-351
May 25, 2005
UnitedHealth Group (“UNH/UHB/WUH/VUH adj. YQN/OVA”)
2-for-1 Stock Split
Ex-Distribution Date: May 31, 2005
Research Circular #RS05-353
May 26, 2005
Magnum Hunter Resources, Inc.
(“MHR & adj. MHH”) Proposed Merger
with Cimarex Energy Co. (“XEC”)
June 1, 2005
Regulatory
Circulars
Volume RB16, Number 22
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 Circular RG05-51
Date:
May 23, 2005
To:
Membership
From: Regulatory Services Division, Legal Division, and Systems Division
Re:
Opening Rotation Quoting in Hybrid Classes
Opening Quote Width
Opening rotation quotes MUST be consistent with the width requirements of Rule 8.7(b)(iv).
Permissible widths for Hybrid classes during opening rotation are:
Bid Price
Permissible Quote Width
Less than $2.00
$2.00 to $5.00
More than $5.00 to $10.00
More than $10.00 to $20.00
More than $20.00
$0.25
$0.40
$0.50
$0.80
$1.00
Members should also be aware that this Rule 8.7(b)(iv) and these widths apply to all standard listed options, including series that still have LEAPS symbols but that are within nine
months of expiration. The Market Performance Committee has also directed that LEAPS
series, i.e. series with more than nine months until expiration, be allowed double the permissible quote width specified above. Once a LEAPS series has nine-months or less until
expiration, the double-width differentials no longer apply, absent additional Market Performance Committee relief, regardless of whether the series symbol has converted to a normal or non-LEAPS symbol. Members must take precautions to not overlook the time to
expiration date, or the resultant bid/ask differentials may be impermissibly wide.
The Regulatory Division considers opening quotes that exceed the permitted width a serious regulatory matter and intends to treat instances uncovered as such.
Hybrid Opening System
The Hybrid Opening System (“HOSS”) currently opens series beginning within 8 seconds of
the initial print of the underlying security. Note that CBOE may soon reduce timers so that
series open in LESS THAN 8 seconds of the initial underlying print. To be certain of compliance, DPMs and e-DPMs may want to consider submitting their quotes as soon as possible
after the initial underlying print. Quotes may also be sent before the underlying print. Quoters
should be aware that HOSS does not require an underlying bid/ask update to open. Those
entering pre-open quotes using underlying bid/ask average should take appropriate steps to
ensure the accuracy of their opening quotes.
Regulatory Circulars
continued
Regulatory Circular RG05-51 continued
End of Opening Rotation
After the opening rotation, for Hybrid classes, the CBOE Hybrid Trading System disseminates a message each time the market transitions from one product state to another.
Market-Makers, including DPMs and e-DPMs, must comply with the opening quote width
requirement throughout the Opening Rotation product state. When the product state changes
to Open, options on classes trading on the Hybrid system may be quoted electronically
with a difference not to exceed $5 between the bid and the offer regardless of the price of
the bid. However, the rules do not provide a safe-harbor that Market-Maker quotes that are
consistently $5-wide will otherwise satisfy the requirements of Rule 8.7(b), including the
requirement to compete with other Market-Makers to improve markets in all series of option
classes at the station where the Market-Maker is present and to update market quotations
in response to changed market conditions.
Notification of Product State Change by the Hybrid System
Market-Makers whose front-end systems comply with the CBOE Market Interface (CMi)
are informed of the transition from Opening Rotation to Open via the CMi message “Product State”.
Market-Makers whose front-end system complies with the Financial Information Exchange
(FIX) protocol are informed of the transition from Opening Rotation to Open via the FIX
message “Security Status”.
Market-Makers or their vendors who provide their electronic quoting applications are encouraged to incorporate the Product State or Security Status message into the electronic
quoting applications to prevent the entry of illegally wide quotes during Opening Rotation.
Market-Makers who use a quote provider service that does not incorporate such messages
must continue to maintain quotes no wider than the Rule 8.7(b)(iv) width parameters until
they have otherwise manually confirmed that the series is open.
Contacts:
Questions regarding the market state transition messages in the CMi and FIX interfaces
should be addressed to API Testing Group at (312) 786-7300, option #2.
Questions regarding application of the rules, please contact Pat Sexton, Legal Division, at
(312) 786-7467 or Tim MacDonald in the Department of Market Regulation at (312) 7867706.
Regulatory Circular RG05-52
Date:
May 20, 2005
To:
Members
From: Department of Financial and Sales Practice Compliance
Re:
Characterization of Pass-Through of CBOE Sales Value Fee to Customers
CBOE assesses a Sales Value Fee to each member for sales of securities on CBOE with
respect to which CBOE is obligated to pay a fee to the Securities and Exchange Commission (“SEC”) under Section 31 of the Securities Exchange Act of 1934, as amended.
The Sales Value Fee is not a new fee. The CBOE Fee Schedule was recently amended to
change the title of the Fee and to include additional description of the Fee and its assessment.
RB2
June 1, 2005, Volume RB16, Number 22
Regulatory Circulars
continued
Regulatory Circular RG05-52 continued
The sales transactions to which the Sales Value Fee applies are sales of options (other than
options on a security index), sales of non-option securities, and sales of securities resulting
from the exercise of physical-delivery options traded on CBOE. CBOE’s Fee Schedule
describes how the Sales Value Fee is calculated and collected by CBOE.
The SEC recently amended its rules relating to Section 31 fees. In the Adopting Release for
these rule amendments (Securities Exchange Act Release No. 34-49928), the SEC observed that, in practice, self-regulatory organizations (“SROs”) obtain funds to meet their
Section 31 obligations by imposing charges on their members, who in turn pass these
charges to their customers. With regard to the pass-through of these fees to customers, the
SEC stated that Section 31 places no obligation on customers and that it is misleading to
suggest through the labeling of these pass-through fees that a customer incurs an obligation
to the SEC under Section 31. In addition, more recently, the SEC requested that each SRO
prohibit its members from characterizing these pass-through charges as a “Section 31 fee”
or “SEC fee” to the extent the SRO has not already done so.
Accordingly, CBOE is implementing the following requirement. Effective July 1, 2005, CBOE
members are prohibited from characterizing the pass-through of the CBOE Sales Value Fee
to their customers as a “Section 31 fee”, “SEC fee”, or other label that implies an SEC rule
or requirement that these funds be collected from broker-dealers or customers.
Any billing questions may be addressed to Ermer Love in the Accounting Department at
(312) 786-7032. Any other questions regarding this circular may be addressed to Lawrence
Bresnahan in the Department of Financial and Sales Practice Compliance at (312) 7867713.
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-2004-59
Back-up Trading Arrangements
On May 19, 2005, the SEC approved Rule Change File No. SR-CBOE-2004-59, which filing
provides a rule that will permit CBOE to enter into arrangements with one or more other
exchanges to provide trading facilities for CBOE listed options at another exchange in the
event that the functions of CBOE are severely and adversely affected by an emergency or
extraordinary circumstances, and similarly provide trading facilities at CBOE for another
exchange to trade its listed options if that exchange’s facility experiences a “disabling event”
(Securities Exchange Act Release No. 51717, 70 FR 30160 (May 25, 2005)). Any questions
regarding the rule change may be directed to Jaime Galvan, Legal Division, at 312-7867058. The text of the amended rules is set forth below. New language is italicized.
Temporary Access
Rule 3.22
Reserved.
*****
Back-up Trading Arrangements
June 1, 2005, Volume RB16, Number 22
RB3
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2004-59 continued
Rule 6.16
(a) CBOE is Disabled Exchange.
(1) CBOE Exclusively Listed Options.
A. For purposes of this Rule 6.16, the term “exclusively listed option” means an
option that is listed exclusively by an exchange (because the exchange has an
exclusive license to use, or has proprietary rights in, the interest underlying the
option).
B. The Exchange (“CBOE”) may enter into arrangements with one or more other
exchanges (each a “Back-up Exchange”) to permit CBOE and its members to use
a portion of the Back-up Exchange’s facilities to conduct the trading of some or all
of CBOE’s exclusively listed options in the event that the functions of CBOE are
severely and adversely affected by an emergency or extraordinary circumstances
(a “Disabling Event”). Such option classes shall trade as listings of CBOE. The
facility of the Back-up Exchange used by CBOE for this purpose will be deemed
to be a facility of CBOE.
C. Trading of CBOE exclusively listed options on CBOE’s facility at the Back-up
Exchange shall be conducted in accordance with the rules of the Back-up Exchange, except that (i) such trading shall be subject to CBOE rules with respect to
doing business with the public, margin requirements, net capital requirements,
listing requirements and position limits, (ii) CBOE members that are trading on
CBOE’s facility at the Back-up Exchange (not including members of the Back-up
Exchange who become temporary members of CBOE pursuant to paragraph
(a)(1)(F)) will be subject to CBOE rules governing or applying to the maintenance
of a person’s or a firm’s status as a member of CBOE, and (iii) CBOE Rule 8.87.01
may be utilized to establish a lower DPM participation rate applicable to trading on
CBOE’s facility on the Back-up Exchange than the rate that is applicable under
the rules of the Back-up Exchange if agreed to by CBOE and the Back-up Exchange. In addition, CBOE and the Back-up Exchange may agree that other CBOE
rules will apply to such trading. CBOE and the Back-up Exchange have agreed to
communicate to their respective members which rules apply in advance of trading. The Back-up Exchange rules that govern trading on CBOE’s facility at the
Back-up Exchange shall be deemed to be CBOE rules for purposes of such
trading.
D. The Back-up Exchange has agreed to perform the related regulatory functions
with respect to trading of CBOE exclusively listed options on CBOE’s facility at
the Back-up Exchange, in each case except as CBOE and the Back-up Exchange may specifically agree otherwise. The Back-up Exchange and CBOE
have agreed to coordinate with each other regarding surveillance and enforcement respecting trading of CBOE exclusively listed options on CBOE’s facility at
the Back-up Exchange. CBOE shall retain the ultimate legal responsibility for the
performance of its self-regulatory obligations with respect to CBOE’s facility at
the Back-up Exchange.
E. CBOE shall have the right to designate its members that will be authorized to
trade CBOE exclusively listed options on CBOE’s facility at the Back-up Exchange and, if applicable, its member(s) that will be an LMM or DPM in those
options. If the Back-up Exchange is unable to accommodate all CBOE members
that desire to trade on CBOE’s facility at the Back-up Exchange, CBOE may
determine which members shall be eligible to trade at that facility. Factors to be
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Policies continued
SR-CBOE-2004-59 continued
considered in making such determinations may include, but are not limited to, any
one or more of the following: whether the member is a DPM or LMM in the applicable product(s), the number of contracts traded by the member in the applicable
product(s), market performance, and other factors relating to a member’s contribution to the market in the applicable product(s).
F. Members of the Back-up Exchange shall not be authorized to trade in any CBOE
exclusively listed options, except that (i) CBOE may deputize willing floor brokers
of the Back-up Exchange as temporary CBOE members to permit them to execute
orders as brokers in CBOE exclusively listed options traded on CBOE’s facility at
the Back-up Exchange, and (ii) the Back-up Exchange has agreed that it will, at the
instruction of CBOE, select members of the Back-up Exchange that are willing to
be deputized by CBOE as temporary CBOE members authorized to trade CBOE
exclusively listed options on CBOE’s facility at the Back-up Exchange for such
period of time following a Disabling Event as CBOE determines to be appropriate,
and CBOE may deputize such members of the Back-up Exchange as temporary
CBOE members for that purpose.
(2) CBOE Singly Listed Options.
A. For purposes of this Rule 6.16, the term “singly listed option” means an option
that is not an “exclusively listed option” but that is listed by an exchange and not by
any other national securities exchange.
B. CBOE may enter into arrangements with a Back-up Exchange under which the
Back-up Exchange will agree, in the event of a Disabling Event, to list for trading
singly listed option classes that are then singly listed only by CBOE and not by the
Back-up Exchange. Any such option classes listed by the Back-up Exchange
shall trade on the Back-up Exchange and in accordance with the rules of the Backup Exchange. Such option classes shall be traded by members of the Back-up
Exchange and by CBOE members selected by CBOE to the extent the Back-up
Exchange can accommodate CBOE members in the capacity of temporary members of the Back-up Exchange. If the Back-up Exchange is unable to accommodate all CBOE members that desire to trade singly listed options at the Back-up
Exchange, CBOE may determine which members shall be eligible to trade such
options at the Back-up Exchange. Factors to be considered in making such determinations may include, but are not limited to, any one or more of the following:
whether the member is a DPM or LMM in the applicable product(s), the number of
contracts traded by the member in the applicable product(s), market performance,
and other factors relating to a member’s contribution to the market in the applicable
product(s).
C. Any options class listed by the Back-up Exchange pursuant to paragraph (a)(2)(B)
that does not satisfy the standard listing and maintenance criteria of the Back-up
Exchange will be subject, upon listing by the Back-up Exchange, to delisting (and,
thus, restrictions on opening new series, and engaging in opening transactions in
those series with open interest, as may be provided in the rules of the Back-up
Exchange).
(3) Multiply Listed Options.
CBOE may enter into arrangements with a Back-up Exchange to permit CBOE
members to conduct trading on a Back-up Exchange of some or all of CBOE’s
multiply listed options in the event of a Disabling Event. Such options shall trade
as a listing of the Back-up Exchange and in accordance with the rules of the Backup Exchange. Such options shall be traded by members of the Back-up Exchange
June 1, 2005, Volume RB16, Number 22
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and by CBOE members selected by CBOE to the extent the Back-up Exchange
can accommodate CBOE members in the capacity of temporary members of the
Back-up Exchange. If the Back-up Exchange is unable to accommodate all CBOE
members that desire to trade multiply listed options at the Back-up Exchange,
CBOE may determine which members shall be eligible to trade such options at
the Back-up Exchange. Factors to be considered in making such determinations
may include, but are not limited to, any one or more of the following: whether the
member is a DPM or LMM in the applicable product(s), the number of contracts
traded by the member in the applicable product(s), market performance, and other
factors relating to a member’s contribution to the market in the applicable product(s).
(b)
CBOE is Back-up Exchange.
(1) Disabled Exchange Exclusively Listed Options.
A. CBOE may enter into arrangements with one or more other exchanges (each
a “Disabled Exchange”) to permit the Disabled Exchange and its members to use
a portion of CBOE’s facilities to conduct the trading of some or all of the Disabled
Exchange’s exclusively listed options in the event of a Disabling Event. Such
option classes shall trade as listings of the Disabled Exchange. The facility of
CBOE used by the Disabled Exchange for this purpose will be deemed to be a
facility of the Disabled Exchange.
B. Trading of the Disabled Exchange’s exclusively listed options on the Disabled
Exchange’s facility at CBOE shall be conducted in accordance with CBOE rules,
except that (i) such trading shall be subject to the Disabled Exchange’s rules with
respect to doing business with the public, margin requirements, net capital requirements, listing requirements and position limits, and (ii) members of the Disabled Exchange that are trading on the Disabled Exchange’s facility at CBOE (not
including CBOE members who become temporary members of the Disabled Exchange pursuant to paragraph (b)(1)(D)) will be subject to the rules of the Disabled
Exchange governing or applying to the maintenance of a person’s or a firm’s
status as a member of the Disabled Exchange. In addition, the Disabled Exchange and CBOE may agree that other Disabled Exchange rules will apply to
such trading. The Disabled Exchange and CBOE have agreed to communicate to
their respective members which rules apply in advance of trading.
C. CBOE will perform the related regulatory functions with respect to trading of
the Disabled Exchange’s exclusively listed options on the Disabled Exchange’s
facility at CBOE, in each case except as the Disabled Exchange and CBOE may
specifically agree otherwise. CBOE and the Disabled Exchange have agreed to
coordinate with each other regarding surveillance and enforcement respecting
trading of the Disabled Exchange’s exclusively listed options on the Disabled
Exchange’s facility at CBOE. The Disabled Exchange has agreed that it shall
retain the ultimate legal responsibility for the performance of its self-regulatory
obligations with respect to the Disabled Exchange’s facility at CBOE.
D. CBOE members shall not be authorized to trade in any exclusively listed
options of the Disabled Exchange, except (i) that the Disabled Exchange may
deputize willing CBOE floor brokers as temporary members of the Disabled Exchange to permit them to execute orders as brokers in exclusively listed options
of the Disabled Exchange traded on the facility of the Disabled Exchange at
CBOE, and (ii) at the instruction of the Disabled Exchange, CBOE shall select
CBOE members that are willing to be deputized by the Disabled Exchange as
temporary members of the Disabled Exchange authorized to trade the Disabled
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Exchange’s exclusively listed options on the facility of the Disabled Exchange at
CBOE for such period of time following a Disabling Event as the Disabled Exchange determines to be appropriate, and the Disabled Exchange may deputize
such CBOE members as temporary members of the Disabled Exchange for that
purpose.
(2) Disabled Exchange Singly Listed Options.
A. CBOE may enter into arrangements with a Disabled Exchange under which
CBOE will agree, in the event of a Disabling Event, to list for trading singly listed
option classes that are then singly listed only by the Disabled Exchange and not by
CBOE. Any such option classes listed by CBOE shall trade on CBOE and in
accordance with CBOE rules. Such option classes shall be traded by CBOE members and by members of the Disabled Exchange selected by the Disabled Exchange to the extent CBOE can accommodate members of the Disabled Exchange
in the capacity of temporary members of CBOE. CBOE may allocate such option
classes to a CBOE DPM in advance of a Disabling Event, without utilizing the
allocation process under CBOE Rule 8.95, to enable CBOE to quickly list such
option classes upon the occurrence of a Disabling Event.
B. Any options class listed by CBOE pursuant to paragraph (b)(2)(A) that does not
satisfy the listing and maintenance criteria under CBOE rules will be subject, upon
listing by CBOE, to delisting (and, thus, restrictions on opening new series, and
engaging in opening transactions in those series with open interest, as may be
provided in CBOE rules).
(3) Multiply Listed Options.
CBOE may enter into arrangements with a Disabled Exchange to permit the Disabled Exchange’s members to conduct trading on CBOE of some or all of the
Disabled Exchange’s multiply listed options in the event of a Disabling Event. Such
options shall trade as a listing of CBOE and in accordance with CBOE rules. Such
options shall be traded by CBOE members and by members of the Disabled Exchange to the extent CBOE can accommodate members of the Disabled Exchange
in the capacity of temporary members of CBOE.
(c)
Member Obligations.
(1) Temporary Members of the Disabled Exchange
A. A CBOE member acting in the capacity of a temporary member of the Disabled
Exchange pursuant to paragraph (b)(1)(D) shall be subject to, and obligated to comply with, the rules that govern the operation of the facility of the Disabled Exchange
at CBOE, including the rules of the Disabled Exchange to the extent applicable
during the period of such trading. Additionally, (i) such CBOE member shall be
deemed to have satisfied, and the Disabled Exchange has agreed to waive specific
compliance with, rules governing or applying to the maintenance of a person’s or a
firm’s status as a member of the Disabled Exchange, including all dues, fees and
charges imposed generally upon members of the Disabled Exchange based on
their status as such, (ii) such CBOE member shall have none of the rights of a
member of the Disabled Exchange except the right to conduct business on the
facility of the Disabled Exchange at CBOE to the extent described in this Rule, (iii)
the member organization associated with such CBOE member, if any, shall be
responsible for all obligations arising out of that CBOE member’s activities on or
relating to the Disabled Exchange, and (iv) the Clearing Member of such CBOE
member shall guarantee and clear the transactions of such CBOE member on the
Disabled Exchange.
June 1, 2005, Volume RB16, Number 22
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SR-CBOE-2004-59 continued
B. A member of a Back-up Exchange acting in the capacity of a temporary
member of CBOE pursuant to paragraph (a)(1)(F) shall be subject to, and obligated to comply with, the rules that govern the operation of the facility of CBOE at
the Back-up Exchange, including CBOE rules to the extent applicable during the
period of such trading. Additionally, (i) such temporary member shall be deemed
to have satisfied, and CBOE will waive specific compliance with, rules governing
or applying to the maintenance of a person’s or a firm’s status as a member of
CBOE, including all dues, fees and charges imposed generally upon CBOE members based on their status as such, (ii) such temporary member shall have none
of the rights of a CBOE member except the right to conduct business on the
facility of CBOE at the Back-up Exchange to the extent described in this Rule, (iii)
the member organization associated with such temporary member, if any, shall be
responsible for all obligations arising out of that temporary member’s activities on
or relating to CBOE, and (iv) the Clearing Member of such temporary member
shall guarantee and clear the transactions on CBOE of such temporary member.
(2) Temporary Members of the Back-up Exchange
A. A CBOE member acting in the capacity of a temporary member of the Backup Exchange pursuant to paragraphs (a)(2)(B) or (a)(3) shall be subject to, and
obligated to comply with, the rules of the Back-up Exchange that are applicable to
the Back-up Exchange’s own members. Additionally, (i) such CBOE member
shall be deemed to have satisfied, and the Back-up Exchange has agreed to
waive specific compliance with, rules governing or applying to the maintenance of
a person’s or a firm’s status as a member of the Back-up Exchange, including all
dues, fees and charges imposed generally upon members of the Back-up Exchange based on their status as such, (ii) such CBOE member shall have none of
the rights of a member of the Back-up Exchange except the right to conduct
business on the Back-up Exchange to the extent described in this Rule, (iii) the
member organization associated with such CBOE member, if any, shall be responsible for all obligations arising out of that CBOE member’s activities on or
relating to the Back-up Exchange, (iv) the Clearing Member of such CBOE member shall guarantee and clear the transactions of such CBOE member on the
Back-up Exchange, and (v) such CBOE member shall only be permitted (x) to act
in those capacities on the Back-up Exchange that are authorized by the Back-up
Exchange and that are comparable to capacities in which the CBOE member has
been authorized to act on CBOE, and (y) to trade in those option classes in which
the CBOE member is authorized to trade on CBOE.
B. A member of a Disabled Exchange acting in the capacity of a temporary
member of CBOE pursuant to paragraphs (b)(2)(A) or (b)(3) shall be subject to,
and obligated to comply with, CBOE rules that are applicable to CBOE’s own
members. Additionally, (i) such temporary member shall be deemed to have
satisfied, and CBOE will waive specific compliance with, rules governing or applying to the maintenance of a person’s or a firm’s status as a member of CBOE,
including all dues, fees and charges imposed generally upon CBOE members
based on their status as such, (ii) such temporary member shall have none of the
rights of a CBOE member except the right to conduct business on CBOE to the
extent described in this Rule, (iii) the member organization associated with such
temporary member, if any, shall be responsible for all obligations arising out of that
temporary member’s activities on or relating to CBOE, (iv) the Clearing Member of
such temporary member shall guarantee and clear the transactions of such temporary member on the CBOE, and (v) such temporary member shall only be
permitted (x) to act in those CBOE capacities that are authorized by CBOE and
that are comparable to capacities in which the temporary member has been authorized to act on the Disabled Exchange, and (y) to trade in those option classes
in which the temporary member is authorized to trade on the Disabled Exchange.
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(d) Member Proceedings.
(1) If CBOE initiates an enforcement proceeding with respect to the trading during
a back-up period of the singly or multiply listed options of the Disabled Exchange
by a temporary member of CBOE or the exclusively listed options of the Disabled
Exchange by a member of the Disabled Exchange (other than a CBOE member
who is a temporary member of the Disabled Exchange), and such proceeding is in
process upon the conclusion of the back-up period, CBOE may transfer responsibility for such proceeding to the Disabled Exchange following the conclusion of the
back-up period. Arbitration of any disputes with respect to any trading during a
back-up period of singly or multiply listed options of the Disabled Exchange or of
exclusively listed options of the Disabled Exchange on the Disabled Exchange’s
facility at CBOE will be conducted in accordance with CBOE rules, unless the
parties to an arbitration agree that it shall be conducted in accordance with the rules
of the Disabled Exchange.
(2) If the Back-up Exchange initiates an enforcement proceeding with respect to
the trading during a back-up period of CBOE singly or multiply listed options by a
temporary member of the Back-up Exchange or CBOE exclusively listed options
by a CBOE member (other than a member of the Back-up Exchange who is a
temporary member of CBOE), and such proceeding is in process upon the conclusion of the back-up period, the Back-up Exchange may transfer responsibility for
such proceeding to CBOE following the conclusion of the back-up period. Arbitration of any disputes with respect to any trading during a back-up period of CBOE
singly or multiply listed options on the Back-up Exchange or of CBOE exclusively
listed options on the facility of CBOE at the Back-up Exchange will be conducted in
accordance with the rules of the Back-up Exchange, unless the parties to an arbitration agree that it shall be conducted in accordance with CBOE rules.
(e) Member Preparations.
CBOE members are required to take appropriate actions as instructed by CBOE to
accommodate CBOE’s back-up trading arrangements with other exchanges and
CBOE’s own back-up trading arrangements.
…Interpretations and Policies:
.01 This Rule 6.16 reflects back-up trading arrangements that CBOE has entered
into or may enter into with one or more other exchanges. To the extent that this Rule
provides that another exchange will take certain action, the Rule is reflecting what
that exchange has agreed to do by contractual agreement with CBOE, but the Rule
itself is not binding upon the other exchange.
*****
Authority to Take Action Under Emergency Conditions
Rule 6.17
The Chairman of the Board, the President or such other person or persons as may
be designated by the Board shall have the power to halt or suspend trading in some
or all securities traded on the Exchange, to close some or all Exchange facilities, to
determine the duration of any such halt, suspension or closing, to take one or more
of the actions permitted to be taken by any person or body of the Exchange under
Exchange rules, or to take any other action deemed to be necessary or appropriate
for the maintenance of a fair and orderly market or the protection of investors, or
June 1, 2005, Volume RB16, Number 22
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SR-CBOE-2004-59 continued
otherwise in the public interest, due to emergency conditions or extraordinary
circumstances, such as (1) actual or threatened physical danger, severe climatic
conditions, natural disaster, civil unrest, terrorism, acts of war, or loss or interruption of facilities utilized by the Exchange, or (2) a request by a governmental
agency or official, or (3) a period of mourning or recognition for a person or event.
The person taking the action shall notify the Board of actions taken pursuant to
this Rule, except for a period of mourning or recognition for a person or event, as
soon thereafter as is feasible.
SR-CBOE-2005-19
CBOT Exercise Right Interpretation
On May 24, 2005, the SEC approved Rule Change File No. SR-CBOE-2005-19, which filing
consists of an interpretation of Article Fifth(b) of the CBOE Certificate of Incorporation that
is embodied in an Agreement dated August 7, 2001 between CBOE and CBOT, as amended.
The 2001 Agreement, as amended, represents the agreement of CBOE and CBOT concerning the nature and scope of the Exercise Right following the consummation of a proposed restructuring of CBOT and in light of the expansion of the CBOT’s electronic trading
system (Securities Exchange Act Release No. 51733). 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, in the Agreement
entered into on August 7, 2001, (“the 2001 Agreement”) between the CBOT and
the Exchange as amended and supplemented by the Letter Agreement among
CBOT Holdings, Inc., CBOT and the Exchange entered into on October 7, 2004,
and by the Letter Agreement among CBOT Holdings, Inc., CBOT and the Exchange entered into on February 14, 2005, as further interpreted in accordance
with that certain proposed rule change filed with the Securities and Exchange
Commission as File No. SR-CBOE-2002-41, and shall not mean any other person.
In order to permit Eligible CBOT Full Members and Eligible CBOT Full Member
Delegates to participate in an offer, distribution or redemption of the kind referred
to in the last two sentences of Paragraph 3(a) of the 1992 Agreement, and solely
for such purpose, the Exchange will waive all membership dues, fees and other
charges and all qualification requirements, other than those that may be imposed
by law, that may be applicable to the application for membership on the Exchange
of each Eligible CBOT Full Member and Eligible CBOT Full Member Delegate who
wishes to exercise the Exercise Right during the period commencing on the date
the Exchange gives notice to the CBOT pursuant to Paragraph 3(b) of the 1992
Agreement and ending on the date such individual participates in such offer, distribution or redemption (as the case may be); provided, however, that (i) no Exerciser Member (as defined in the 1992 Agreement) for whom dues, fees and other
charges and qualification requirements are waived in accordance with the foregoing shall have any rights as a member of the Exchange other than to participate in
such offer, distribution or redemption, and (ii) the membership on the Exchange of
each such Exerciser Member shall terminate immediately following the time such
individual participates in such offer, distribution or redemption.
RB10
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EFFECTIVE-ON-FILING RULE CHANGE(S)
The following rule filings were submitted to the SEC “effective on filing,” and have taken
effect pursuant to Section 19(b)(3) of the Securities Exchange Act. They will remain in
effect barring further action by the SEC within 60 days after their publication in the Federal
Register. Copies are available on the CBOE public website at www.cboe.com/legal/
effectivefiling.aspx.
SR-CBOE-2005-42
Fee Cap on Merger Spread Transactions
On May 23, 2005, the Exchange filed Rule Change File No. SR-CBOE-2005-42, which filing
amends the CBOE Fee Schedule to adopt a fee cap on merger spread transactions. 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.
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-2005-41
Elimination of Position Limits on NDX Options
On May 20, 2005, the Exchange filed Rule Change File No. SR-CBOE-2005-41, which filing
proposes to eliminate position and exercise limits on NDX options. Any questions regarding
the 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 24.4. Position Limits for Broad-Based Index Options
(a) In determining compliance with Rule 4.11, there shall be no position limit for
broad-based index option contracts on the DJX, OEX, NDX, and SPX classes. All
other broad-based index option contracts shall be subject to a contract limitation
fixed by the Exchange, which shall not be larger than the limits provided in the chart
below.
BROAD-BASED INDEX
OPTION TYPE
STANDARD LIMIT
(on the same side of the market)
RESTRICTIONS
Nasdaq 100 Index (1/10th) (MNX)
750,000
None
[Nasdaq 100 Index (1/10th) (NDX)]
[75,000]
[None]
Russell 2000 Index (1/10th)
500,000
no more than 300,000
near-term
Dow Jones Equity REIT Index
250,000 contracts
None
Russell 2000 Index (1/5th)
250,000 contracts
no more than 150,000
near-term
Lipper Analytical/Salomon
Bros. Growth Fund Index
Lipper Analytical/Salomon Bros.
Growth and Income
Fund Index
75,000 contracts
no more than 50,000
near-term
June 1, 2005, Volume RB16, Number 22
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SR-CBOE-2005-41 continued
BROAD-BASED INDEX
OPTION TYPE
STANDARD LIMIT
(on the same side of the market)
RESTRICTIONS
S&P 500/Barra Growth or Value
36,000 contracts in the aggregate
no more than 21,500
near-term
S&P SmallCap 600GSTI Composite
100,000 contracts
no more than 60,000
near-term
50,000 contracts
no more than 30,000
near-term
45,000 contracts
no more than 25,000
near-term
25,000 contracts
no more than 15,000
near-term
Russell 2000
Russell 1000
Russell 1000 Growth
Russell 1000 Value
Russell 2000 Growth
Russell 2000 Value
Russell 3000
Russell 3000 Growth
Russell 3000 Value
Russell Midcap
Russell Midcap Growth
Russell Midcap Value
Russell Top 200 Index
Russell Top 200 Growth Index
Russell Top 200 Value Index
Mexico 30 Index
Germany 25
Morgan Stanley Multinational
Company Index
CBOE Euro 25 Index
CBOE Asian 25 Index
Reduced Value NYSE
Composite
Other broad-based index
(b) – (d) No Change.
. . . Interpretations and Policies:
.01
Broad-based Index Hedge Exemption
The broad-based index hedge exemption is in addition to the standard limit and
other exemptions available under Exchange rules, interpretations and policies.
The following procedures and criteria must be satisfied to qualify for a broadbased index hedge exemption.
(a) – (d) No Change.
(e)
Positions in broad-based index options that are traded on the Exchange
are exempt from the standard limits to the extent specified below.
RB12
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SR-CBOE-2005-41 continued
BROAD-BASED INDEX
OPTION TYPE
BROAD-BASED INDEX
HEDGE EXEMPTION
(is in addition to standard limit)
Nasdaq 100 Stock Index (1/10th value)
(MNX)
1,500,000 contracts
Russell 2000 Index (1/10th)
750,000 contracts
[Nasdaq 100 Stock Index (Full Value)
(NDX)]
[150,000 contracts]
Russell 2000 Index (1/5th)
375,000 contracts
S&P 500/Barra Growth or Value
65,000 contracts
other broad-based index
75,000 contracts
(f) – (h)
No Change.
.02
No Change.
.03
Reporting Requirement
Each member (other than CBOE Market-Makers) or member organization that maintains a broad-based index option position on the same side of the market in excess
of 100,000 contracts for OEX, NDX, or SPX and 1 million contracts for DJX, for its
own account or for the account of a customer, shall report information as to whether
the positions are hedged and provide documentation as to how such contracts are
hedged, in the manner and form required by the Department of Market Regulation.
The Exchange may specify other reporting requirements of this interpretation as
well as the limit at which the reporting requirement may be triggered.
.04 Margin and Clearing Firm Requirements
Whenever the Exchange determines, based on a report by the Department of Market Regulation or otherwise, that additional margin is warranted in light of the risks
associated with an under-hedged SPX, OEX, NDX, or DJX option position, the
Exchange may consider imposing additional margin upon the account maintaining
such under-hedged position pursuant to its authority under Exchange Rule 12.10.
Additionally, it should be noted that the clearing firm carrying the account will be
subject to capital charges under SEC Rule 15c3-1 to the extent of any margin
deficiency resulting from the higher margin requirements.
*****
Rule 24.4A – 24.4B
No Change.
*****
Rule 24.5 – Exercise Limits
Rule 24.5. In determining compliance with Rule 4.12, exercise limits for index
option contracts shall be equivalent to the position limits prescribed for option contracts with the nearest expiration date in Rule 24.4 or 24.4A. There shall be no
exercise limits for broad-based index options on DJX, OEX, NDX or SPX.
... Interpretations and Policies:
June 1, 2005, Volume RB16, Number 22
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SR-CBOE-2005-41 continued
.01 - .03 No Change.
*****
Rule 24A.7 – Position Limits for FLEX Narrow-Based Index Options; Reporting Requirements for Flex Broad-Based Index Options and Flex Equity
Options
Rule 24A.7. (a) Flex Narrow-Based Index Options
(i) – (ii) No Change.
(b)
FLEX Broad-Based Index Options. There shall be no position limits for
FLEX DJX, OEX, NDX or SPX option contracts. However, each member (other
than CBOE Market-Makers) or member organization that maintains a FLEX broadbased index option position on the same side of the market in excess of 100,000
contracts for OEX, NDX or SPX and 1 million contracts for DJX, for its own
account or for the account of a customer, shall report information as to whether
the positions are hedged and provide documentation as to how such contracts are
hedged, in the manner and form prescribed by the Department of Market Regulation. The Exchange may specify other reporting requirements of this interpretation
as well as the limit at which the reporting requirement may be triggered. In addition, whenever the Exchange determines, based on a report by the Department of
Market Regulation or otherwise, that additional margin is warranted in light of the
risks associated with an under-hedged FLEX DJX, OEX, NDX or SPX option
position, the Exchange may consider imposing additional margin upon the account maintaining such under-hedged position, pursuant to its authority under
Exchange Rule 12.10. Additionally, it should be noted that the clearing firm carrying the account will be subject to capital charges under SEC Rule 15c3-1 to the
extent of any margin deficiency resulting from the higher margin requirements.
(c) – (d) No Change.
RB14
June 1, 2005, Volume RB16, Number 22
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.
Case Name:
John J. Piwowarczyk v. Marshall Spiegel
Case Number:
05M002
Date Received:
April 27, 2005
Summary of Issues:
Breach of Contract – Lease Agreement
Amount in Dispute:
$0 – Declaratory Relief
Counterclaim:
Marshall Spiegel v. John J. Piwowarczyk
Amount in Dispute:
$2,860.00
*******
Award on Claim:
$0
Award on Counterclaim: $500 and Lease Agreement shall be effective up
to and including May 13, 2005
Award Issued:
June 1, 2005, Volume RB16, Number 22
May 6, 2005
RB15