August 26, 2005
Exchange
Bulletin
Volume 33, Number 34
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 (January 1 through
December 31) is $200.00 ($100.00 after July 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, AUGUST 26, 2005
CLASS
CBOE
BID
$650,000.00
OFFER
LAST SALE AMOUNT
$700,000.00
$700,000.00
LAST SALE DATE
August 17, 2005
CBOT FULL MEMBERSHIP
CLASS
With CBOE Exercise Right
BID
OFFER
$2,000,000.00
$2,150,000.00
Without CBOE Exercise Right
$0.00
$0.00
CBOE Exercise Right
$0.00
$100,000.00
LAST SALE AMOUNT
$2,050,000.00
N/A
$104,000.00
LAST SALE DATE
August 25, 2005
June 20, 2005
August 17, 2005
Page 2
August 26, 2005
Volume 33, Number 34
Chicago Board Options Exchange
Informational Circular IC05-106
Date:
August 24, 2005
To:
Membership
From:
Nominating Committee
Re:
Persons Who Have Submitted Their Names to Be Considered for Nomination to Board of Directors and
Nominating Committee
For each annual election, the Nominating Committee selects nominees to fill expiring terms on the Board of Directors and
Nominating Committee. To date, the individuals listed below have submitted their names to the Nominating Committee to be considered
for nomination to fill these positions for the 2005 annual election.
A candidate is required to satisfy the qualification criteria for the applicable position at the time of the Nominating Committee
slating meeting (currently scheduled for September 29, 2005) in order to be considered for nomination. Any candidate that does not
currently satisfy the qualification criteria may take steps to qualify before that time. A notation is included below after the name of each
candidate indicating whether that candidate currently satisfies the applicable qualification criteria (denoted with a Q), does not
currently satisfy the applicable qualification criteria (denoted with an N), or is being reviewed to determine whether or not the candidate
currently satisfies the applicable qualification criteria (denoted with an R).
Board of Directors
Floor Director
Lessor Director
Public Director
William Power (Q)
Robert Silverstein (Q)
James Boris (Q)
Carole Stone (Q)
Eugene Sunshine (Q)
Mark Zurack (Q)
Nominating Committee
Firm Member
Peter Bottini (Q)
Floor Member
Lessor Member
Jeffrey Kirsch (Q)
Public Member
Page 3
August 26, 2005
Volume 33, Number 34
Chicago Board Options Exchange
MEMBERSHIP INFORMATION FOR 8/18/05 THROUGH 8/24/05
MEMBERSHIP APPLICATIONS RECEIVED FOR
WHICH A POSTING PERIOD IS REQUIRED
Member Organization Applicants
Date Posted
Hard Eight Trading, LLC
8/22/05
Francis D. Wisniewski, CBT Registered For
209 S. LaSalle, Suite 625
Chicago, IL 60604
Igor Chernomzav – Managing Member
Caleb Fishkin – Managing Member
Kent R. Spellman – Managing Member
Francis Wisniewski – Managing Member
MEMBERSHIP LEASES
New Leases
Effective Date
Lessor: Arclight Securities, LLC
Lessee: Jane Street Options, LLC
Rate:
1.25%
Term: Monthly
8/18/05
Lessor: Peter C. Guth
8/22/05
Lessee: BOTTA Capital Management LLC
Kevin M. Luthringshausen, NOMINEE
Rate:
1.25%
Term: Monthly
Lessor: Seats Exchange Inc.
Lessee: Susquehanna Investment Group
Jeffrey D. Ream, NOMINEE
Rate:
1.25%
Term: Monthly
8/23/05
Terminated Leases
Termination Date
8/22/05
George Heidenreich (FVE)
Citigroup Derivatives Markets Inc.
111 W. Jackson Blvd., 10th Floor
Chicago, IL 60604
8/22/05
Alexander Ackerhalt (ACK)
Citigroup Derivatives Markets Inc.
111 W. Jackson Blvd., 10th Floor
Chicago, IL 60605
8/22/05
Paul A. Partyka (PTY)
Sparta Group Of Chicago, LP
4617 W. 99th Place
Oak Lawn, IL 60453
8/23/05
Stacey Albrecht (STC)
CTC LLC
141 W. Jackson Blvd., 8th Floor
Chicago, IL 60604
8/23/05
Joseph M. Malee (VAL)
AB Financial LLC
440 S. LaSalle, Suite 3100
Chicago, IL 60605
8/24/05
EFFECTIVE MEMBERSHIPS
Lessor: Arclight Securities, LLC
8/18/05
Lessee: Raymond P. Dempsey Inc.
William J. Heinlen (CHP), NOMINEE
Lessor: Peter C. Guth
8/22/05
Lessee: Zydeco Trading LLC
James M. Kittrell (KMJ), NOMINEE
Lessor: Seats Exchange Inc.
Lessee: Group One Trading, LP
Termination Date
Kevin M. Mohr (UNI)
Citigroup Derivatives Markets Inc.
111 W. Jackson Blvd., 10th Floor
Chicago, IL 60604
8/23/05
MEMBERSHIP TERMINATIONS
Individual Members
Individual Members
CBT Registered For:
Effective Date
Michael E. Sorvillo, Jr. (MES)
8/19/05
HGI, Inc.
141 W. Jackson Blvd., Suite 1520
Chicago, IL 60604
Type of Business to be Conducted: Market Maker/Floor Broker
John J. Massarelli (MAZ)
8/24/05
Belvedere Trading, LLC
440 S. LaSalle St.
Chicago, IL 60605
Type of Business to be Conducted: Market Maker
Nominee(s) / Inactive Nominee(s):
CBT Registered For:
Termination Date
Sanjiv M. Prasad (JIV)
HGI, Inc.
141 W. Jackson Blvd., Suite 1520
Chicago, IL 60604
8/19/05
Henry J. Algeo (HJA)
Consolidated Trading, LLC
440 S. LaSalle, Suite 3100
Chicago, IL 60605
8/22/05
Nominee(s) / Inactive Nominee(s):
Termination Date
James M. Kittrell (KMJ)
Zydeco Trading LLC
440 S. LaSalle, Suite 960
Chicago, IL 60605
8/22/05
Joseph Anthony Carsello (CSO)
McGowan Investors, LP
440 S. LaSalle, 19th Floor
Chicago, IL 60605
8/22/05
Effective Date
Andrew M. Woods (WDZ)
8/22/05
McGowan Investors, LP
2650 N. Lakeview Ave., Apt. 2607
Chicago, IL 60614
Type of Business to be Conducted: Market Maker
John Petrizzo (TRZ)
8/23/05
Group One Trading, LP
440 S. LaSalle, Suite 3232
Chicago, IL 60605
Type of Business to be Conducted: Market Maker/Floor Broker
JOINT ACCOUNTS
New Participants
Acronym
Effective Date
Eoin T. Callery
QTR
8/19/05
Michael E. Sorvillo Jr.
QHG
8/19/05
Joseph G. Kinahan
QWC
8/22/05
Todd A. Koster
QWC
8/22/05
Page 4
August 26, 2005
Volume 33, Number 34
Chicago Board Options Exchange
New Participants
Acronym
Termination Date
Terminated Participants Acronym
Termination Date
Frank P. Tenerelli
QGS
8/22/05
Stacey Albrecht
QXY
8/23/05
TRW Tim Wipert RMM
QWR
8/23/05
Stacey Albrecht
QCT
8/23/05
John Petrizzo
QNX
8/23/05
Stacey Albrecht
QGQ
8/23/05
John Petrizzo
QGO
8/23/05
Stacey Albrecht
QGT
8/23/05
John Petrizzo
QOP
8/23/05
Joseph M. Malee
QOO
8/24/05
Scotlond T. Ernsting
QSM
8/24/05
Terminated Accounts
Acronym
Termination Date
Michael F. Fong
QSM
8/24/05
Joseph G. Kinahan
QQE
8/22/05
Max W. Sung
QSM
8/24/05
Todd A. Koster
QQE
8/22/05
Scotlond T. Ernsting
QLO
8/24/05
CHANGES IN MEMBERSHIP STATUS
Max W. Sung
QLO
8/24/05
Individual Members
Jeffrey D. Ream
QLO
8/24/05
Robin Gohsman
QCP
8/24/05
Todd A. Koster
8/22/05
From:
CBT Registered For NOJ Trading, LLC; Market Maker
To:
CBT Registered For Wellington Capital Markets, LLC;
Market Maker/Floor Broker
Terminated Participants Acronym
Termination Date
Sanjiv M. Prasad
QHG
8/19/05
James M. Kittrell
QDZ
8/22/05
James M. Kittrell
QKX
8/22/05
James M. Kittrell
QZK
8/22/05
Kevin M. Mohr
QCX
8/22/05
Kevin M. Mohr
QNT
8/22/05
Kevin M. Mohr
QPZ
Kevin M. Mohr
Effective Date
Joseph G. Kinahan
8/22/05
From:
CBT Registered For NOJ Trading, LLC; Market Maker
To:
CBT Registered For Wellington Capital Markets, LLC;
Market Maker/Floor Broker
Eren Levi
8/23/05
From:
CBT Registered For Sparta Group Of Chicago, LP;
Market Maker
To:
Nominee For Sparta Group Of Chicago, LP; Market
Maker
8/23/05
8/22/05
Tim Wipert
From:
CBT Individual; Market Maker
To:
CBT Individual; Remote Market Maker
QUN
8/22/05
Member Organizations
Effective Date
Kevin M. Mohr
QXK
8/22/05
George Heidenreich
QKD
8/22/05
George Heidenreich
QNT
8/22/05
Belvedere Trading, LLC
8/24/05
From:
Lessee; Associated with a Market Maker/Floor Broker
To:
Lessee/Member Organization Affiliated with a CBT
Registered For; Associated with a Market Maker/Floor
Broker
Alexander Ackerhalt
QCM
8/22/05
Alexander Ackerhalt
QKD
8/22/05
Alexander Ackerhalt
QNT
8/22/05
Alexander Ackerhalt
QUN
8/22/05
Henry J. Algeo
QCC
8/22/05
Henry J. Algeo
QCI
8/22/05
Henry J. Algeo
QRI
8/22/05
Paul A. Partyka
QUB
8/23/05
MEMBER ADDRESS CHANGES
Individual Members
Effective Date
L. Michael De Fonso
440 S. LaSalle, Suite 3232
Chicago, IL 60605
8/18/05
Kenneth R. Silverstein
405 Village Green, Unit 410
Lincolnshire, IL 60069-3012
8/19/05
Paul L. Richards
4013 Grand Ave.
Western Springs, IL 60558
8/23/05
Thomas J. Mahoney
P.O. Box 198
Holicong, PA 18928
8/24/05
Page 5
August 26, 2005
Volume 33, Number 34
Chicago Board Options Exchange
RESEARCH CIRCULARS
The following Research Circulars were distributed between August 19 and August 24, 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 #RS05-598
August 19, 2005
Unocal Corporation (“UCL/adj. CZL/ZAF/LAE”)
Determination of Cash-in-Lieu Amount
Research Circular #RS05-605
August 24, 2005
Premcor Inc. (“PCO/VJE/WJE”) Proposed Election Merger
with Valero Energy Corporation (“VLO/BLO/VHB/YGY”)
Research Circular #RS05-599
August 19, 2005
Fortune Brands, Inc. (“FO & adj. HWF”)
Determination of Cash-in-Lieu Amount
Research Circular #RS05-606
August 24, 2005
Oshkosh Truck Corporation (“OSK”)
2-for-1 Stock Split
Ex-Distribution Date: August 29, 2005
Research Circular #RS05-601
August 23, 2005
Telecomunicacoes Brasileiras S.A.-Telebras
(“TBH & adj. TBW”) Distribution of American
Depositary Shares of Contax Participacoes S.A. (“CTXNY”)
Ex-Distribution Date: August 30, 2005
Research Circular #RS05-607
August 24, 2005
Dade Behring Holdings, Inc. (“DADE/JDQ”)
2-for-1 Stock Split
Ex-Distribution Date: August 30, 2005
Research Circular #RS05-602
August 23, 2005
Providian Financial Corporation (“PVN/VQV/WVR”)
Proposed Merger with Washington Mutual, Inc.
(“WM/VWI/WWI”)
Research Circular #RS05-608
August 24, 2005
Standard Pacific Corp. (“SPF”)
2-for-1 Stock Split
Ex-Distribution Date: August 30, 2005
Research Circular #RS05-603
August 24, 2005
UnitedGlobalCom, Inc. Class A (“UCOMA/adj. IGZ”)
Further Adjustment of IGZ Option Contract
Ex-Distribution Date: September 7, 2005
Research Circular #RS05-609
August 24, 2005
Ingersoll-Rand Company Limited Class A (“IR/VSV/YRS”)
2-for-1 Stock Split
Ex-Distribution Date: September 2, 2005
Research Circular #RS05-604
August 24, 2005
Hibernia Corporation (“HIB”) Proposed Election Merger
with Capital One Financial Corporation (“COF/OTF/YFN”)
August 31, 2005
Volume RB16, Number 35
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 RG05-69
Date:
August 18, 2005
To:
Members and Member Organizations
From: Department of Market Regulation
Re:
Position and Exercise Limits
Effective August 15, 2005, the existing position and exercise limit pilot program (“pilot
program”) has been extended for an additional six (6) months. As such, until February 23,
2006 the standard position and exercise limits, as provided under Exchange Rule 4.11,
Interpretation and Policy .02 to Rule 4.11, and Rule 4.12 will continue to be 25,000, 50,000,
75,000, 200,000, and 250,000 contracts, respectively.1 During this same period, the standard position and exercise limits for options on the Nasdaq-100 Index Tracking Stock (“QQQQ”)
shall continue to be 900,000 contracts.2 Prior to the conclusion of the pilot program period,
the Exchange may request another extension of the pilot program.
For additional information pertaining to this pilot program, refer to CBOE rule change SRCBOE-2005-61, which is posted on the Exchange website at www.cboe.com. For information on position and exercise limits in general, please refer to Rule 4.11 and Rule 4.12.
Any questions concerning this Regulatory Circular should be directed to Tim MacDonald at
(312) 786-7706 or Jim Flynn at (312) 786-7070.
1
Without the Pilot Program, the standard position and exercise limits are 13,500, 22,500, 31,500, 60,000, and
75,000 contracts, respectively.
2
Without the Pilot Program, the standard position and exercise limit for options on QQQQs is 300,000
contracts.
Regulatory Circular RG05-70
Date:
August 24, 2005
To:
Members, Member Firms and Member Organizations
From: Equity Options Procedure Committee
Re:
Direct Routing into the Complex Order Book (COB)
The Equity Options Procedure Committee has approved the routing of complex orders for
origins CUSTOMER, FIRM and BD directly into the COB in all equity classes that have the
COB enabled. With a few exceptions, the COB is currently enabled in three equity classes
per station. Expansion into more classes will commence in late August, and continue
through September, coinciding with the rollout of new PAR and FBW versions that will allow
brokers to view resting COB orders.
Regulatory Circulars
continued
Regulatory Circular RG05-70 continued
Routing changes will be effective as of September 2, 2005. Member firms will be contacted
by CBOE staff to confirm routing parameters. Prior to the change, complex orders could
only be sent into the COB from PAR. With this change, orders will be eligible to route
directly into the COB, bypassing PAR. Orders that are marketable will trade immediately,
while those that are not marketable will simply book and rest in the COB. Resting COB
orders will be canceled electronically upon receipt of a cancel request and will execute
electronically if:
(1)
(2)
(3)
the individual series quotes line-up to make the order marketable;
an opposing order that can trade with the resting order is received into the
COB; or
a Hybrid market participant submits an order to trade with the resting
order.
Hybrid market participants who use third party auto-quote systems should contact their
vendor regarding COB functionality.
Questions regarding this matter may be directed to Anthony Montesano at x7365, Mike
Trees at x8408 or the Help Desk at x7100.
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-2005-56
Market-Maker Quote Size Pilot Program
On August 15, 2005, the SEC approved Rule Change File No. SR-CBOE-2005-56, which
extends for an additional six months CBOE’s Pilot Program pertaining to Market-Maker
quote sizes. Any questions regarding the rule change may be directed to Patrick Sexton,
Legal Division, at 312-786-7476. The text of the amended rules is set forth below. New
language is italicized.
Rule 8.7: Obligations of Market-Makers
(a)
No change.
(b)
No change.
(c)
No change.
(d)
Market Making Obligations in Applicable Hybrid Classes
The following obligations in this paragraph (d) are only applicable to Market-Makers trading classes on the CBOE Hybrid System and only in
those Hybrid classes. As such, this paragraph has no applicability to nonHybrid classes. This paragraph is not applicable to Remote Market-Makers, who instead will be subject to the obligations imposed by Rule 8.7(e).
Unless otherwise provided in this Rule, Market-Makers trading classes
on the Hybrid System remain subject to all obligations imposed by CBOE
Rule 8.7. To the extent another obligation contained elsewhere in Rule 8.7
is inconsistent with an obligation contained in paragraph (d) of Rule 8.7
with respect to a class trading on Hybrid, this paragraph (d) shall govern
trading in the Hybrid class.
RB2
August 31, 2005, Volume RB16, Number 35
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-56 continued
These requirements are applicable on a per class basis depending upon
the percentage of volume a Market-Maker transacts electronically versus
in open outcry. With respect to making this determination, the Exchange
will monitor Market-Makers’ trading activity every calendar quarter to determine whether they exceed the thresholds established in this paragraph
(d). If a Market-Maker exceeds the threshold established below, the obligations contained in (d)(ii) will be effective the next calendar quarter.
For a period of ninety (90) days commencing immediately after a class
begins trading on the Hybrid system, the provisions of paragraph (d)(i)
shall govern trading in that class.
(i) Market-Maker Trades Less Than 20% Contract Volume Electronically:
If a Market-Maker on the CBOE Hybrid System never transacts more than
20% (i.e., he trades 20% or less) of his contract volume electronically in an
appointed Hybrid class during any calendar quarter, the following provisions
shall apply to that Market-Maker with respect to that class:
(A) No change.
(B) Continuous Electronic Quoting Obligation: The Market-Maker will
not be obligated to quote electronically in any designated percentage
of series within that class. If a Market-Maker quotes electronically, its
undecremented quote must be for at least ten contracts (“10-up”),
unless the underlying primary market disseminates a 100-share quote,
in which case the Market-Maker’s undecremented quote may be for
as low as 1-contract (“1-up”). The ability to quote 1-up when the underlying primary quotes 100 shares is expressly conditioned on the process being automated (i.e., a Market-Maker may not manually adjust
his quotes to reflect 1-up sizes). Quotes must automatically return to
at least 10-up when the underlying primary market no longer disseminates a 100-share quote. Market-Makers that have not automated
this process may not avail themselves of the relief provided herein.
The ability to quote 1-up shall operate on a pilot basis and shall terminate February 17, 2006.
(C) No change.
(D) No change.
(ii) Market-Maker Trades More Than 20% Contract Volume Electronically:
If a Market-Maker on the CBOE Hybrid System transacts more than 20%
of his contract volume electronically in an appointed Hybrid class during
any calendar quarter, commencing the next calendar quarter he will be
subject to the following quoting obligations in that class for as long as he
remains in that class:
(A) No change.
August 31, 2005, Volume RB16, Number 35
RB3
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-56 continued
(B) Continuous Quoting Obligation: A Market-Maker will be required
to maintain continuous electronic two-sided quotes for at least ten
contracts (undecremented size) in 60% of the series of his/her appointed classes. If the underlying primary market disseminates a
100-share quote, a Market-Maker’s undecremented quote may be
for as low as 1-contract (“1-up”), however, this ability is expressly
conditioned on the process being automated (i.e., a Market-Maker
may not manually adjust his quotes to reflect 1-up sizes). Quotes
must automatically return to at least 10-up when the underlying primary market no longer disseminates a 100-share quote. MarketMakers that have not automated this process may not avail themselves of the relief provided herein. The ability to quote 1-up shall
operate on a pilot basis and shall terminate February 17, 2006.
(C) No change.
(e) Obligations of Remote Market-Makers (RMMs): The following
obligations apply only to RMMs:
(i) RMMs must provide continuous two-sided, legal-width quotations
in 60% of the series of their appointed classes. The initial size of an
RMM’s quote must be for at least ten contracts (undecremented
size). The Exchange may consider exceptions to this quoting requirement based on demonstrated legal or regulatory requirements
or other mitigating circumstances (e.g., excused leaves of absence,
personal emergencies, or equipment problems).
If the underlying primary market disseminates a 100-share quote, an
RMM’s undecremented quote may be for as low as 1-contract (“1up”), however, this ability is expressly conditioned on the process
being automated (i.e., an RMM may not manually adjust its quotes
to reflect 1-up sizes). Quotes must automatically return to at least
10-up when the underlying primary market no longer disseminates a
100-share quote. RMMs that have not automated this process may
not avail themselves of the relief provided herein. The ability to quote
1-up shall operate on a pilot basis and shall terminate February 17,
2006.
(ii) – (vi)
SR-CBOE-2005-28
No change.
Elimination of DPM Backup AutoQuote System Obligations
On August 23, 2005, the SEC approved Rule Change File No. SR-CBOE-2005-28, which
eliminates from CBOE rules, a DPM’s obligation to maintain a backup AutoQuote system.
Any questions regarding the rule change may be directed to James Flynn, Legal Division,
at 312-786-7070. The amended text is set forth below. New language is italicized.
Rule 8.85 – DPM Obligations
Rule 8.85 (a) Dealer Transactions. Each DPM shall fulfill all of the obligations of a
Market-Maker 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)(x) of this Rule and the general obligations of a
Market-Maker under the Rules, subparagraphs (a)(i) through (a)(x) of this Rule
shall govern. Each DPM shall:
RB4
August 31, 2005, Volume RB16, Number 35
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-28 continued
(i) – (x) No change.
(b) – (e) No change.
... Interpretations and Policies:
.01- .04 No change.
****
Rule 17.50.
Imposition of Fines for Minor Rule Violations
(a)-(f)
No change.
(g)
The following is a list of the rule violations subject to, and the applicable
fines that may be imposed by the Exchange pursuant to this Rule:
(1)- (9) No change.
(10) Communications to the Exchange or the Clearing Corporation
(Rule 4.11)
No change.
SR-CBOE-2005-17
Amended Fee Schedule - Revenue Sharing Program
On August 15, 2005, the SEC approved Rule Change File No. SR-CBOE-2005-17, which
amends the CBOE Fee Schedule to adopt a revenue sharing program for trades in Tape B
securities. Under this program, the Exchange is proposing to share with CBOE DPMs and
Market-Makers who trade Tape B securities a portion of the revenues that the Exchange
receives under the Consolidated Tape Association Plan attributable to Tape B securities.
Any questions regarding the rule change may be directed to Jaime Galvan, Legal Division,
at 312-786-7058.
EFFECTIVE-ON-FILING RULE CHANGE(S)
The following rule filing(s) 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-2005-66
Fee Caps on Dividend and Merger Spread Transactions
On August 24, 2005, the Exchange filed Rule Change File No. SR-CBOE-2005-66, which
filing amends the Fee Schedule to extend until March 1, 2006 the pilot programs applicable
to fee caps on dividend and merger spread transactions. Any questions regarding the rule
change may be directed to Jaime Galvan, Legal Division, at 312-786-7058.
August 31, 2005, Volume RB16, Number 35
RB5
Discplinary
Decisions
At its meeting on July 27, 2005, the Business Conduct Committee (“BCC”) resolved the
following disciplinary matters by accepting one Letter of Consent and three Offers of
Settlement in which the subject and respondents consented to stipulations of facts and
findings as detailed below without admitting or denying that Exchange Rules had been
violated.
File No. 05-0032 (Letter of Consent, Decision issued August 18, 2005)
Torus Capital, LLC (“Torus”), an Exchange Market-Maker organization, was censured, fined
$10,000, and further ordered by the BCC to compute its net capital each day for 45
consecutive business days and submit its capital computation to the Exchange’s Member
Firm Regulation Department no later than 8:15 a.m.(central time). During the approximate
period from September 2004 through November 2004, on various dates, Torus operated
below its minimum net capital requirement. (CBOE Rules 4.2 - Adherence to Law; 13.1 Minimum Requirements; 15.1 - Maintenance, Retention and Furnishing of Books, Records
and Other Information; Section 15(c) of the Securities Exchange Act of 1934, as amended
(the “Act”) and Rule 15c3-1 - Net Capital thereunder; and Section 17(a) of the Act and Rule
17a-3 - Records to Be Made by Certain Exchange Members, Brokers and Dealers and
17a-5 – Reports to be Made by Certain Brokers and Dealers thereunder.)
File No. 05-0028 (Offer of Settlement, Decision issued August 19, 2005)
HGI, Inc. (“HGI”), an Exchange Marker-Maker organization registered as a broker/dealer,
was censured and fined $2,500 for the following conduct. HGI failed to file its Anti-Money
Laundering (“AML”) Compliance Program with the Exchange by December 13, 2004. As a
result, HGI impeded and delayed the Exchange’s investigation of this matter. In accepting
this Offer of Settlement, the BCC considered certain mitigating factors, including the fact
that although HGI may not have received actual notice of the letters requesting HGI to file
the required AML Compliance Program with the Exchange, HGI received constructive
notice of such letters, in that the letters were sent to HGI’s address designated for correspondence in its Exchange membership file. (CBOE Rules 4.20 – Anti-Money Laundering
Compliance Program; 15.1 – Furnishing of Books, Records and Other Information; and
17.2(b)- Complaint and Investigation: Requirement to Furnish Information)
File No. 05-0020 (Offer of Settlement, Decision issued August 17, 2005)
Gregory Pokorney (“Pokorney”), an Exchange Market-Maker member registered as a broker/dealer, was censured and fined $2,500 for the following conduct. Pokorney failed to file
his AML Compliance Program with the Exchange by December 13, 2004. As a result,
Pokorney impeded and delayed the Exchange’s investigation of this matter. In accepting
this Offer of Settlement, the BCC considered certain mitigating factors, including the fact
that although Pokorney may not have received actual notice of the letters requesting
Pokorney to file the required AML Compliance Program with the Exchange, Pokorney
received constructive notice of such letters, in that the letters were sent to Pokorney’s
address designated for correspondence in his Exchange membership file. (CBOE Rules
4.20 – Anti-Money Laundering Compliance Program; 15.1 – Furnishing of Books, Records
and Other Information; and 17.2(b)- Complaint and Investigation: Requirement to Furnish
Information)
File No. 05-0010 (Offer of Settlement, Decision issued August 17, 2005)
Knoblauch Securities Corporation (“Knoblauch”), an Exchange Lessor organization registered as a broker/dealer, was censured and fined $2,500 for the following conduct. Knoblauch
failed to file its AML Compliance Program with the Exchange by December 13, 2004. As
a result, Knoblauch impeded and delayed the Exchange’s investigation of this matter. In
accepting this Offer of Settlement, the BCC considered certain mitigating factors, including the fact that although Knoblauch may not have received actual notice of the letters
requesting Knoblauch to file the required AML Compliance Program with the Exchange,
Knoblauch received constructive notice of such letters, in that the letters were sent to
Knoblauch’s address designated for correspondence in its Exchange membership file.
(CBOE Rules 4.20 – Anti-Money Laundering Compliance Program; 15.1 – Furnishing of
Books, Records and Other Information; and 17.2(b)- Complaint and Investigation: Requirement to Furnish Information)
RB6
August 31, 2005, Volume RB16, Number 35