September 9, 2005
Exchange
Bulletin
Volume 33, Number 36
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, SEPTEMBER 9, 2005
CLASS
CBOE
BID
$515,000.00
OFFER
LAST SALE AMOUNT
$650,000.00
$650,000.00
LAST SALE DATE
August 31, 2005
CBOT FULL MEMBERSHIP
CLASS
With CBOE Exercise Right
BID
OFFER
$2,000,000.00
$2,100,000.00
Without CBOE Exercise Right
$0.00
$0.00
CBOE Exercise Right
$0.00
$100,000.00
LAST SALE AMOUNT
$2,075,000.00
N/A
$104,000.00
LAST SALE DATE
September 2, 2005
June 20, 2005
August 17, 2005
Page 2
September 9, 2005
Volume 33, Number 36
Chicago Board Options Exchange
Informational Circular IC05-117
Date:
September 6, 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
Edward Tilly (Q)
Richard Tobin (N)
William Power (Q)
Robert Silverstein(Q)
Christopher Wheaton (N)
James Boris (Q)
Carole Stone (Q)
Eugene Sunshine (Q)
Mark Zurack (Q)
Nominating Committee
Firm Member
Floor Member
Lessor Member
Peter Bottini (Q)
Dennis Carta (Q)
Richard Fuller (Q)
Sean Haggerty (Q)
Jeffrey Kirsch (Q)
Public Member
Page 3
September 9, 2005
Volume 33, Number 36
Chicago Board Options Exchange
MEMBERSHIP INFORMATION FOR 9/1/05 THROUGH 9/7/05
MEMBERSHIP LEASES
Termination Date
New Leases
Effective Date
Lessor: Gabriel Inc.
Lessee: Spivey Trading, LLC
Rate:
1.25%
Term: Monthly
9/1/05
Lessor: AST Partners, LLC
9/2/05
Lessee: Consolidated Trading, LLC
Mei Mei Christine Chan (WOW), NOMINEE
9/7/05
Lessor: Stathis Family Limited
Partnership III
Lessee: McGowan Investors, LP
Rate:
1.25%
Term: Monthly
9/1/05
Lessor: S & S Options
Lessee: Centurion Securities, LLC
Thomas J. Hess (TJH), NOMINEE
9/7/05
Lessor: Romajo Partners, Ltd.
Lessee: TPIS LLC
William J. Sullivan, NOMINEE
Rate:
1.2393%
Term: Monthly
9/1/05
Lessor: Merrill Lynch, Pierce,
Fenner & Smith, Inc.
Lessee: TD Options, LLC
Tom G. Sideris (TGS), NOMINEE
Lessor: Navillus, Inc.
Lessee: Northern Access LLC
Rate:
1.2393%
Term: Monthly
9/1/05
Lessor: Jean W. Ware
Lessee: Blue Capital Group LLC
Michael P. Manning, NOMINEE
Rate:
1.2393%
Term: Monthly
9/1/05
MEMBERSHIP TERMINATIONS
Lessor: EWT LLC
9/2/05
Lessee: Consolidated Trading, LLC
Mei Mei Christine Chan, NOMINEE
Rate:
1.25%
Term: 20 Days
Lessor: Sax Options Inc.
Lessee: SLK-Hull Derivatives LLC
Rate:
1.2393%
Term: Monthly
9/7/05
Lessor: Merrill Lynch, Pierce,
Fenner & Smith, Inc.
Lessee: Susquehanna Investment Group
Jonathan Ryan Garrity, NOMINEE
Rate:
1.25%
Term: Monthly
9/7/05
Lessor: S & S Options
Lessee: Susquehanna Investment Group
Andrew D. Little, NOMINEE
Rate:
1.25%
Term: Monthly
9/7/05
Terminated Leases
Termination Date
Lessor: Henry P. Gosiene
Lessee: HGI, Inc.
Timothy Cody (CDY), NOMINEE
9/1/05
Lessor: Stathis Family Limited
Partnership III
Lessee: Sallerson-Troob LLC
Joel J. Stone (SKR), NOMINEE
9/1/05
Lessor: Romajo Partners, Ltd.
9/1/05
Lessee: Equitec Proprietary Markets, LLC
Nicholas C. Reilly (NCR), NOMINEE
Lessor: Navillus, Inc.
9/1/05
Lessee: X-Change Financial Access LLC
Timothy G. Weinand (MWD), NOMINEE
Lessor: Gam Enterprises, Inc.
Lessee: DRO WST Trading LLC
Peter G. Erl (PJE), NOMINEE
9/1/05
Lessor: Jean W. Ware
Lessee: Ronin Capital, LLC
Eunshik L. Cho (CHO), NOMINEE
9/1/05
Individual Members
CBT Registered For:
Termination Date
William J. Terman (BIT)
Bit Enterprises Inc.
440 S. LaSalle - Ste. 3100
Chicago, IL 60605
9/1/05
Robert E. Morvice (BBO)
Panos Trading Limited Partnership
440 S. LaSalle - Ste. 700
Chicago, IL 60605
9/1/05
Christopher C. Evans (YOY)
Rockefeller Trading
8748 Rockefeller
Brookfield, IL 60513
9/1/05
Kevin J. Galassini (ASU)
Vintage Capital LLC
440 S. LaSalle, Ste. 950
Chicago, IL 60605
9/1/05
Michael E. Sorvillo Jr. (MES)
HGI, Inc.
141 W. Jackson Blvd., Suite #1520
Chicago, IL 60604
9/6/05
Nominee(s) / Inactive Nominee(s):
Termination Date
Nicholas C. Reilly (NCR)
Equitec Proprietary Markets, LLC
111 W. Jackson - 20th Fl.
Chicago, IL 60604
9/1/05
John F. McDermott (LTD)
The Hermitage Group, LLC
10416 Willow
Mokena, IL 60448
9/1/05
Joel J. Stone (SKR)
Sallerson-Troob LLC
1112 N. Dearborn
Chicago, IL 60610
9/1/05
David W. Granfield (DG)
Sax Options Inc
71 Oakwood Lane
Lincolnshire, IL 60069
9/1/05
Fred Teichert (TYK)
Sax Options Inc.
440 S. Lasalle - Ste. 1549
Chicago, IL 60605
9/1/05
Thomas J. Hess (TJH)
Centurion Securities, LLC
440 S. LaSalle, 19th Floor
Chicago, IL 60605
9/7/05
Page 4
September 9, 2005
Volume 33, Number 36
Chicago Board Options Exchange
Member Organizations
Effective Date
CBT Registered For:
Termination Date
Bit Enterprises Inc.
855 Sheridan Road
Highland Park, IL 60035
9/1/05
Rockefeller Trading
8748 Rockefeller
Brookfield, IL 60513
9/1/05
Lessor(s):
Termination Date
AST Partners, LLC
5440 Vanderbilt Ave.
Dallas, TX 75206
9/2/05
EFFECTIVE MEMBERSHIPS
Effective Date
Thomas M. Prosek (TMP)
9/1/05
253 Arboretum Circle
Wheaton, IL 60187
Type of Business to be Conducted: Market Maker
Paul G. Benson (BNP)
9/6/05
5617 N. Newark
Chicago, IL 60631
Type of Business to be Conducted: Market Maker
CBT Registered For:
Andrew D. Little (LTL)
9/7/05
Susquehanna Investment Group
175 W. Jackson Blvd., Ste. 1700
Chicago, IL 60604
Type of Business to be Conducted: Market Maker/ Floor Broker
Jonathan Ryan Garrity (GTY)
9/7/05
Susquehanna Investment Group
175 W. Jackson, Ste. 1700
Chicago, IL 60604
Type of Business to be Conducted: Market Maker/ Floor Broker
Member Organizations
Individual Members
CBT Exercisers:
Joseph Anthony Carsello (OOO)
9/7/05
Goldman Sachs & Co.
440 S. LaSalle, Suite 300
Chicago, IL 60605
Type of Business to be Conducted: Market Maker
Effective Date
J. Philip Zwick (ZWK)
9/1/05
Vintage Capital LLC
10 E. Ontario, #4407
Chicago, IL 60611
Type of Business to be Conducted: Market Maker
Sanjiv M. Prasad (JIV)
9/6/05
HGI, Inc.
141 W. Jackson Blvd., Suite 1520
Chicago, IL 60604
Type of Business to be Conducted: Market Maker/ Floor Broker
Nicholas Sung (NIQ)
9/7/05
DRO WST Trading LLC
4006 N. Sheridan Rd., Apt. 17
Chicago, IL 60613
Type of Business to be Conducted: Market Maker
Lessee(s):
Effective Date
Spivey Trading, LLC
9/1/05
2489 Meadowbrook Rd.
Jackson, MS 39211
Type of Business to be Conducted: Remote Market Maker
TPIS LLC
9/1/05
2290 Linden Ave.
Highland Park, IL 60035
Type of Business to be Conducted: Market Maker/ Floor Broker
JOINT ACCOUNTS
New Participants
Acronym
Effective Date
J. Philip Zwick
QBK
9/1/05
Sanjiv M. Prasad
QHG
9/6/05
Andrew D. Little
QGS
9/7/05
Jonathan Ryan Garrity
QGS
9/7/05
Joseph Anthony Carsello QKG
9/7/05
Joseph Anthony Carsello QRA
9/7/05
Joseph Anthony Carsello QZQ
9/7/05
Andrew D. Little
9/7/05
QLO
Terminated Participants Acronym
Termination Date
Daniel E. Spivey
9/1/05
Spivey Trading, LLC
2489 Meadowbrook Rd.
Jackson, MS 39211
Type of Business to be Conducted: Remote Market Maker
Nicholas C. Reilly
QAM
9/1/05
Nicholas C. Reilly
QFW
9/1/05
Nicholas C. Reilly
QJP
9/1/05
William J. Sullivan (WJS)
9/1/05
440 S. LaSalle - Ste. 722
Chicago, IL 60605
Type of Business to be Conducted: Market Maker
Nicholas C. Reilly
QFY
9/1/05
Nicholas C. Reilly
QSC
9/1/05
John F. McDermott
QFB
9/1/05
Robert E. Morvice
QTF
9/1/05
Robert E. Morvice
QVV
9/1/05
Kevin J. Galassini
QBK
9/1/05
Michael E. Sorvillo Jr.
QHG
9/6/05
Nominee(s) / Inactive Nominee(s):
Effective Date
Joseph Feldman (TMF)
9/2/05
Equitec-Schwartz, LLC
141 W. Jackson, Ste. 300
Chicago, IL 60604
Type of Business to be Conducted: Market Maker
Page 5
September 9, 2005
Volume 33, Number 36
CHANGES IN MEMBERSHIP STATUS
Individual Members
Effective Date
Peter G. Erl
9/1/05
From:
Nominee For DRO WST Trading LLC; Market Maker
To:
CBT Registered For DRO WST Trading LLC; Market
Maker
William J. Heinlen
9/1/05
From:
Nominee For Raymond P. Dempsey Inc.; Market
Maker/ Floor Broker
To:
CBT Registered For Raymond P. Dempsey Inc.; Floor
Broker
Ioannis S. Moraitis
9/1/05
From:
Nominee For SMC Option Management LLC; Market
Maker
To:
CBT Registered For SMC Option Management LLC;
Market Maker
Timothy Cody
9/1/05
From:
Nominee For HGI, Inc.; Market Maker
To:
CBT Registered For HGI, Inc.; Market Maker
Terrance G. Boyle
From:
Owner; Market Maker
To:
Owner; Remote Market Maker
9/1/05
Gary S. Bell
From:
Lessee; Market Maker
To:
Lessee; Remote Market Maker
9/1/05
Jeffrey A. Fairbanks
9/2/05
From:
Nominee For Equitec Proprietary Markets, LLC; Floor
Broker
To:
Nominee For Compass Professional Services LLC;
Floor Broker
Chicago Board Options Exchange
Member Organizations
Effective Date
Raymond P. Dempsey Inc.
9/1/05
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
Sax Options Inc.
9/1/05
From:
Owner; Associated with a Market Maker
To:
Lessor
The Hermitage Group LLC
9/2/05
From:
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/ Remote Market Maker
Jump Trading LLC
9/2/05
From:
Lessee; Associated with a Market Maker
To:
Lessee; Associated with a Market Maker/ Remote
Market Maker
MEMBER ADDRESS CHANGES
Individual Members
Effective Date
Patrick O’Rourke
55 Water Street, 32nd Floor
New York, NY 10041
9/6/05
Christopher P. Makowski
32300 Northwestern, Hwy. #234
Farmington Hills, MI 48334
9/7/05
RESEARCH CIRCULARS
The following Research Circulars were distributed between September 1 and September 8, 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 #RS05-627
September 1, 2005
American Express Company (“AXP/VAX/WXP”)
Distribution of Shares of
Ameriprise Financial, Inc. (“AMP”)
Ex-Distribution Date: October 3, 2005
Research Circular #RS05-634
September 6, 2005
*****UPDATE*****UPDATE*****UPDATE*****
Premcor Inc. (“PCO/adj. PMY/ZPO/LPO”)
Determination of Contract Deliverable — Cash Settlement
Research Circular #RS05-628
September 1, 2005
Immucor, Inc. (“BLUD/QMQ”)
Underlying Symbol Change to “BLUDE”
Effective Date: September 2, 2005
Research Circular #RS05-635
September 6, 2005
IAC/InterActiveCorp. (“IACID/QTH/VSW/YOY & adj. IJC/LCT/
ZCP/EKJ/OWK”)
Underlying Symbol Change to “IACI”
Effective Date: September 7, 2005
Research Circular #RS05-629
September 1, 2005
EGL, Inc. (“EAGL/KUF”)
Partial Self Tender Offer
Research Circular #RS05-636
September 8, 2005
Siliconware Precision Industries Co., Ltd. (“SPIL/QSP & adj.
SRD”)Determination of Cash-in-Lieu Amount
Research Circular #RS05-633
September 2, 2005
Telesystems International Wireless, Inc. (“TIWI/TAU”)
Distribution – Ex-Distribution Date – September 6, 2005
September 14, 2005
Volume RB16, Number 37
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 RG05-72
Date:
September 1, 2005
To:
The Membership
From:
Accounting
Subject:
Dividend & Merger Spreads Fee Cap Pilot Extended to March 1, 2006
Regulatory Circulars RG05-36 dated March 31, 2005 and RG05-53 dated May 31, 2005
detailed fee cap pilot programs for dividend and merger spreads through August 31, 2005.
The purpose of this circular is to inform you the pilot program has been extended until March
1, 2006.
Key details of the programs are described below:
Dividend Spreads Fee Cap of $2,000:
Market-Maker, firm and broker-dealer transaction fees are capped at $2,000 for all dividend
spreads executed on the same trading day in the same class. A dividend spread is defined
as any trade done to achieve a dividend arbitrage between any two deep-in-the-money
options.
Merger Spreads Fee Cap of $2,000:
Market-Maker, firm and broker-dealer transaction fees are capped at $2,000 for all merger
spread transactions executed on the same trading day in the same options class.
A merger spread is defined as a transaction executed pursuant to a strategy involving the
simultaneous purchase and sale of options of the same class and expiration date, but with
different strike prices, followed by the exercise of the resulting long options position, each
executed prior to the date on which shareholders of record are required to elect their respective form of consideration, i.e., cash or stock.
In order to benefit from the above fee caps, a standard rebate request form with supporting
documentation (e.g. clearing firm transaction data) must be submitted to CBOE Accounting
within 30 days of the above spreads trade date. Rebate request forms are available on the
CBOE members website (cboe.com) or on the 6th floor in Accounting.
Rebates will be processed via a credit to the member’s clearing firm at month-end. Clearing
firms will see the rebate credits as a separate item on monthly CBOE billing statements.
The $2,000 fee cap applies to CBOE transaction fees and excludes any marketing fee
assessments. As you are aware, certain marketing fees are rebated when a Market-Maker
trades with another Market- Maker. This Market-Maker-to-Market-Maker marketing fee rebate is processed separately.
Please contact Don Patton at 312-786-7026 or patton@cboe.com if you have any questions.
Regulatory Circulars
continued
Regulatory Circular RG05-73
Date:
September 1, 2005
To:
The Membership
From:
Financial Planning Committee
Subject:
Fee Reductions for September 2005
CBOE has averaged approximately 1,601,000 contracts per day (CPD) during the period
July 2004 through August 2005.
Per the Prospective Fee Reduction Program, Market-Maker and DPM transaction fees and
floor brokerage fees will be reduced by 25% per contract from standard rates during September 2005 (August 2005 discounts were 20%).
Standard
Rate
Fee
Equities Market-Maker Trans. Fee
Equities DPM Trans. Fee
QQQQ, SPY & Indexes
Mrkt. Maker/DPM Trans. Fee
Floor Brokerage Fee
Sept. ‘05
Rate
22 cents
12 cents
(1)24 cents
16.5 cents
9 cents
(1) 18 cents
4 cents
3 cents
(1) Above rates exclude a 10 cents license fee surcharge for the following products:
•
Dow Jones indexes
•
Mini Nasdaq 100 (MNX)
•
Nasdaq 100 (NDX)
•
Russell 2000 cash-settled index (RUT)
Please call Ermer Love (312-786-7032) if you have any questions.
Regulatory Circular RG05-74
Date:
September 02, 2005
To:
DIA Trading Crowd Members
From:
Trading Operations
Re:
Linkage Plan Overview for DIA
The Linkage Plan (the Plan) will be implemented in DIAMONDS (DIA) when another option
exchange lists DIA with CBOE. The corresponding CBOE linkage rules are 6.80 through
6.85. This memo is an overview for all CBOE members outlining the Plan requirements in a
hybrid option class.
•
RB2
Avoid Trade-Throughs: CBOE Members should avoid initiating trade
throughs of away exchange markets. If they do trade through a better
market, members may be subject to liability by having to fill a Satisfaction order and may be required to adjust trade prices to the NBBO. Even if
no S order is received, trade throughs will still be tabulated for regulatory
review and possible disciplinary action. This Linkage Rule applies to all
CBOE members.
September 14, 2005, Volume RB16, Number 37
Regulatory Circulars
continued
Regulatory Circular RG05-74 continued
•
Avoid Locking or Crossing NBBO Markets: CBOE Members who create
quotes that lock or cross another market should either move their market
to unlock or uncross the NBBO, or if they are a Market-Maker, they can
also send a Principal order through linkage to trade with the away market.
Failure to correct a locked or crossed market may result in disciplinary
action. This Linkage Rule applies to all CBOE members.
•
Unexecuted Linkage Orders: If inbound linkage orders are not fully traded
electronically or from PAR within the allotted time period, the remaining
balance will automatically reroute and trade with remaining volume in the
hybrid quote, or the linkage order will be canceled (due to no quote size
remaining).
•
All floor brokers in multiply listed classes must set their PAR Profile to
enable the NBBO Dialog window. This will allow each selected order to be
viewed against the quotes from all markets, not just those at CBOE. Linkage functionality is only enabled for the PAR terminal operated by the
OBO.
•
Any eligible Market-Maker can send a Principal order. To route P orders,
Market-Maker firms will provide CBOE members access to Linkage.
•
Customer orders that are marketable against a better quote at another
market will route to the DIA floor brokers’ PAR, instead of the OBO. These
orders should trade at the current NBBO price to avoid locking NBBO
quotes or possible trade-throughs.
Details on other aspects of linkage follow. For questions relating to the Linkage Plan, please
contact Tim Watkins at (312) 786-7172, or Roger Mulcahy at (312) 786-7280. For regulatory
questions related to linkage, please contact Margaret Williams at (312) 786-7834.
LINKAGE OVERVIEW in DIA:
•
The Plan includes 3 order types for Linkage:
o
Principal-Acting-As-Agent (P/A) Order
A DPM, PAR Official, or OBO holding an unexecuted customer
order can send a P/A linkage order representing the terms of that
customer order to the NBBO market.
o
Principal (P) Order
Any eligible CBOE Market-Maker can send a P linkage order for
his own account to the NBBO market. This includes on-floor Market-Makers, DPMs, eDPMs, RMMs, and LMMs.
o
Satisfaction (S) Order
Any market that trades through booked customer orders (in the
displayed quote) may receive a Satisfaction order claiming liability on behalf of booked customer orders. The violating market is
obligated to fill the S order. If no trade-through occurred, or if a
valid exception applies, the S order may be canceled.
•
The Plan establishes special minimum size guarantees and automatic
execution requirements for incoming P/A and P orders. These guarantees
require that the full linkage size must trade within 15 seconds or the receiving exchange’s quote must fade from the NBBO price, with any remaining
order balance canceled.
September 14, 2005, Volume RB16, Number 37
RB3
Regulatory Circulars
continued
Regulatory Circular RG05-74 continued
•
•
RB4
CBOE auto-ex handling of inbound Linkage orders (in hybrid classes,
including DIA):
o
Inbound Principal-Acting-As-Agent (P/A) and Inbound Principal
(P) will both auto-ex against the hybrid quote up to the full size of
the order, and any P/A or P order balance larger than the quote
size will route to PAR for a 12-second period. If the P/A or P is
not traded from PAR, it will reroute to trade with the hybrid quote.
If no quote remains, the P/A or P order will be automatically
canceled.
o
In certain scenarios a P/A or P order may not auto-ex against
the hybrid quote, or the minimum Auto-ex Size does not trade.
These orders will route to PAR, and the OBO will announce this
condition to the trading crowd. The crowd should step up and at
least fill this minimum amount at the original NBBO price.
o
Inbound Satisfaction (S) orders will route to PAR for 3 minutes,
no auto-ex. Another exchange views CBOE as trading through
their quote. CBOE members who traded-through must fill the S
order. Certain exemptions apply, allowing cancellation. Special
rules exist for block trades.
General Linkage Plan Rules:
Market-Maker Eligibility - To participate in linkage, a Market-Maker must be logged
into Hybrid, must be making 2-sided quotes, and satisfy the Linkage 80/20 Test. A
Market-Maker cannot send P orders for more than 20% of his or her customertraded contracts to an away market (must trade 80% or more at home exchange).
•
If the originating exchange receives no response to a P/A or P order within 20
seconds, the originating member is entitled to trade-through that NBBO price at
the next best NBBO, without penalty, provided all markets at the better price have
been addressed through linkage.
•
Linkage fees for P/A and P orders may be set by each individual exchange. The
receiving, or executing, exchange will charge a linkage fee if the order trades
there.
•
Principal Order Restrictions (P Class Gate): Auto-ex restrictions exist if multiple
Market-Makers from the same exchange route P orders for the same class to the
same NBBO market at the same time. Once a P order is automatically executed,
any subsequent P orders from that same exchange and the same option class
can be rejected for the next 15 seconds. CBOE will address all inbound P orders
for auto-ex handling after this 15-second reject period. (According to the Plan, any
subsequent outbound P orders from CBOE can be routed for manual handling
after this initial period and up to one minute. After one minute, the receiving market must resume auto-ex treatment for that class.)
September 14, 2005, Volume RB16, Number 37
Regulatory Circulars
continued
Regulatory Circular RG05-75
Date:
September 7, 2005
To:
All Members and Member Organizations
Attention:
Chief Executive Officer, Managing Partner, Chief Operations Officer,
Compliance Officer, Legal and Compliance Departments
From:
Regulatory Services Division
Subject:
Automated Submission of Trading Data – Rule 15.7
Attached is the Intermarket Surveillance Group (“ISG”) Regulatory Memorandum 2005-01
(“Notice”) that is being issued by the self-regulatory organizations acting jointly as members
of the ISG1 concerning the automated submission of trading information via the Electronic
Blue Sheet (“EBS”) System.
The Notice provides information on the validation of certain data fields in a Firm’s EBS
submission, which is consistent with the provisions of Rule 15.7, and reiterates EBS requirements that have been in existence since 1988.
Questions about this Notice should be directed to Pat Sizemore at (312) 786-7752.
1
American Stock Exchange LLC (AMEX), Boston Stock Exchange, Inc. (BSE), Chicago Board Options
Exchange, Inc. (CBOE), Chicago Stock Exchange, Inc. (CHX), International Securities Exchange (ISE),
NASD Inc. (NASD), National Stock Exchange (NSX), New York Stock Exchange, Inc. (NYSE), Pacific
Exchange, Inc. (PCX) and Philadelphia Stock Exchange, Inc. (PHLX).
September 14, 2005, Volume RB16, Number 37
RB5
Regulatory Circulars
continued
Regulatory Circular RG05-75 continued
Intermarket
Surveillance
Group
REGULATORY MEMORANDUM
ISG 2005-01
ATTENTION:
Chief Executive Officer, Managing Partner, Chief Operations Officer,
Compliance Officer, Legal and Compliance Departments
TO:
All Members and Member Organizations
FROM:
Intermarket Surveillance Group
DATE:
September 7, 2005
SUBJECT:
Electronic Blue Sheet Submissions / Intermarket Surveillance Group
(ISG)2
Since 1988, member and member organizations have been submitting trading information
requested by self-regulatory organizations (SROs) through the Electronic Blue Sheet (EBS)
System. The ISG SROs and the Securities and Exchange Commission (SEC), during the
course of inquiries and investigations, have encountered an increase in the number of
EBS data submissions containing inaccuracies (e.g., options symbol, trade date, name
address, buy/sell indicators, TIN1 and others). Some of these inaccuracies have been in
existence for a significant period of time and have resulted in regulatory action being
initiated by one or more of the ISG SROs. This is a reminder that EBS information is to be
furnished in a timely and accurate manner.3
In order to ensure that members and member organizations are reporting EBS data correctly, the ISG SROs require that all members and member organizations or their EBS
data providers immediately conduct a validation of all required EBS data elements to
ensure that EBS transmissions are consistent with current standards and accurately reflect members’ books and records. The validation is to be conducted and completed by no
later than March 31, 2006 and will require that documentation confirming that the validation
has occurred be retained by members and member organizations. Members and member
organizations have a continuing obligation to ensure that EBS submissions meet the
requirements noted.
Attachment A, Record Layout for Submission of Trading Information, describes the data
elements required in EBS transmissions. While all EBS data is important and needs to be
reported correctly for the purpose of complying with the validation requirement noted above,
all layout records that include an “R” in the “Field Format” must be validated.
Any inconsistency with overall EBS standards (discovered either as a result of the
validation process or otherwise) should be reported immediately as follows:
•
if the firm is a member of only one SRO, report to that SRO;
•
if the firm is a member of multiple SROs including the NYSE, report
to the NYSE; or
•
if the firm is a member of multiple SROs and is not a NYSE member,
report to the NASD.
If pursuant to an individual EBS request a member firm experiences reporting difficulties, it should contact the requesting SRO.
2
This Notice was prepared by the following self-regulatory organizations as members of the ISG:
American Stock Exchange LLC (AMEX), Boston Stock Exchange, Inc. (BSE), Chicago Board Options
Exchange, Inc. (CBOE), Chicago Stock Exchange, Inc. (CHX), International Securities Exchange
(ISE), NASD Inc. (NASD), National Stock Exchange (NSX), New York Stock Exchange, Inc. (NYSE),
Pacific Exchange, Inc. (PCX) and Philadelphia Stock Exchange, Inc. (PHLX).
3
AMEX – Rule 153A, CBOE – Rule 15.7, ISE – Rule 1404, NASD – Rules 8211, 8212 and 8213,
NSX – Rules 5.3 and 8.2, NYSE – Rules 342.20, 410A and 476(a) (11), PCX – Rule 10.2 (c), PHLX –
Rule 785 and SEC Rule 17a-25 under Section 17 of the Securities Exchange Act of 1934, as amended.
RB6
September 14, 2005, Volume RB16, Number 37
Regulatory Circulars
continued
Regulatory Circular RG05-75 continued
Members and member organizations are reminded of their obligations as to timeliness,
accuracy and completeness of data submitted by them or by service bureaus on their
behalf.
TIMELINESS
Members and member organizations, pursuant to the rules governing the submission of
blue sheet information, are required to meet the following requirements:
[1]
Response Time - In general, blue sheet submissions are to be received
by a requesting organization within ten (10) business days following the date of the
request for such information. However, members and member organizations may
be requested to furnish blue sheet information in less than the normal ten-day
reporting period and are expected to comply. Incomplete submissions do not fulfill
a member’s or member organization’s obligation to make timely submissions.
[2]
Retention Time - Members and member organizations are required to
maintain blue sheet information for the period of time set forth in Rule 17a-4(b) of
the Securities Exchange Act of 1934, and in a manner that permits the submission
of such data in accordance with [1] above.
ACCURACY
It is the responsibility of members and member organizations to ensure that the EBS information submitted to the requesting organization is accurate. Items [1] through [6] below are
areas in which inaccurate reporting of EBS data by certain members/member organizations
has surfaced. Therefore, the ISG SROs are restating members’ obligations with respect to
certain codes in an effort to assist the membership in the submission of accurate EBS data.
(This list is not all-inclusive as to EBS requirements. See above and also Attachment A.)
[1] Buy/Sell Code - Members and member organizations are reminded that buy/sell
codes for each trade must be designated:
0 = Buy
1 = Long Sale
2 = Short Sale
3 = Open Long or Buy Open
4 = Open Short or Sell Open
5 = Close Long or Sell Close
6 = Close Short or Buy Close
A = Buy Cancel
B = Long Sale Cancel
C = Short Sale Cancel
D = Open Long or Buy Open Cancel
E = Open Short or Sell Open Cancel
F = Close Long or Sell Close Cancel
G = Close Short or Buy Close Cancel
NOTE: Buy/Sell Codes 3 through 6 and D through G pertain only to options information. Only
these codes can be used when reporting options transactions.
[2] Exchange Code - Each trade reported must contain the marketplace of execution:
A = New York Stock Exchange
B = American Stock Exchange
C = Chicago Stock Exchange
D = Philadelphia Stock Exchange
E = Pacific Exchange
F = Boston Stock Exchange
G = National Stock Exchange
I = International Securities Exchange
K = Chicago Board Options Exchange
September 14, 2005, Volume RB16, Number 37
L = London (OTC or Exchange)
M = Toronto Stock Exchange
N = Montreal Stock Exchange
O = TSX Venture Exchange
Q = NASD ADF
R = NASDAQ
S = Over-the-Counter
T = Tokyo (OTC or Exchange)
Z = Other – Foreign
RB7
Regulatory Circulars
continued
Regulatory Circular RG05-75 continued
[3] Ticker Symbol - When submitting EBS information, all members and member
organizations are required to use the recognized stock symbol, or when options information is requested, the appropriate OPRA symbol to identify transactions in the
different option series of the underlying issue. The OPRA symbol must be reported in
the following format:
OPRA option symbol (space), OPRA expiration month symbol and OPRA strike
price symbol. (For example, the Maytag January 25 call option series would be
reported via blue sheets as MYG AE. This example uses six spaces in the field
designated by SIAC as “symbol” in the automated format.)
[4] Manual Components – Any members/member organizations that have to manually input any data as part of their EBS submission must use upper case alphas.
[5] Average Price Account – The average price account field should be used to
identify whether the account is the average price account itself or the recipient of
transactions for an average price account.
[6] Account Type Identifiers - In January 1993, members and member organizations were required to submit EBS information that contained expanded account type
identifiers used by the SROs for audit trail purposes. A matrix containing the current
account type identifiers is attached as Attachment B. To the extent that account type
identifiers are expanded/changed in the future by one or more SRO, all EBS information, going forward, should reflect any such expansion/change. The account type identifier in the EBS submission should correspond to the audit trail requirements of the
market of execution. It should be noted that NASD currently accepts all expanded
account type identifiers.
In no event should EBS information contain summarized activity for accounts that purchased and/or sold the security under review. Transactions made through an average price
account must be identified by the price of execution, as well as the average price given to
the customer’s account for which the transactions were effected. Every trade executed in
a requested security by a member or member organization must be reported to the requesting organization, including partial fills on orders not completed.
*
*
*
*
*
*
Members and member organizations must ensure that all EBS information is provided
correctly to the SROs and SEC and that EBS information is regularly validated. Validation
procedures and records pertaining to such validations are subject to examination by the
SROs and SEC. These records must be retained for the time period set forth by Section 17
of the Securities Exchange Act of 1934. Any inconsistencies should be reported to the
SROs immediately, in the manner previously described. Members and member organizations are reminded that failure to comply with EBS requirements will subject them to
disciplinary action.
To facilitate timely receipt of SROs’ EBS requests, members and member organizations
are to promptly notify the SROs of any changes regarding the identities and locations of
the designated recipients of such EBS requests. This includes the situation where an
SRO uses the Internet as its medium for transmitting its EBS requests. It is suggested
that in situations where a member or member organization receives EBS requests via the
Internet, such member/member organization create a shared Internet e-mail mailbox address that would be accessible by several individuals, to facilitate transmission in the
event that the primary recipient of EBS requests is unable to access his/her mailbox.
RB8
September 14, 2005, Volume RB16, Number 37
Regulatory Circulars
continued
Regulatory Circular RG05-75 continued
Additionally, please be advised that the ISG SROs are contemplating possible future enhancements to EBS (e.g., the inclusion of order identification information to facilitate market
reconstructions and more defined account name and address fields). In this context, the
SROs would welcome having dialogue with the member and member organization community as such enhancements are initiated.
Questions regarding this notice may be addressed to any of the following self-regulatory
staff:
SRO
AMEX
BOX
CBOE
CHX
NSX
ISE
NASD
NYSE
PCX
PHLX
Individual
Robert Ulmer
Bruce Goodhue
Pat Sizemore
Marguerite Donovan
Nicole Guiffra
Willie Wong
Rose Braisted
John Kroog
John Chapin
Edward Deitzel
Telephone No.
212-306-1283
617-235-2022
312-786-7752
312-663-2548
312-786-8809
212-897-8126
240-386-4987
212-656-6532
312-442-7790
215-496-5298
E-Mail
robert.ulmer@nasd.com
bruce.goodhue@bostonstock.com
sizemore@cboe.com
mdonovan@chx.com
guiffran@nsx.com
wwong@iseoptions.com
rose.braisted@nasd.com
jkroog@nyse.com
jchapin@pacificex.com
ed.deitzel@phlx.com
Any questions concerning the interpretation of SEC Rule 17a-25 under Section 17 of the
Securities Exchange Act of 1934 or need to report problems concerning EBS submissions
to the SEC, should be brought to the attention of:
Individual
Joseph Cella
Alton Harvey
September 14, 2005, Volume RB16, Number 37
Telephone No. E-Mail
202-551-4951
cellaj@sec.gov
202-551-5691
harveya@sec.gov
RB9
09/13/05
RECORD LAYOUT FOR SUBMISSION OF TRADING INFORMATION
ATTACHMENT A
1 of 9
**** THIS RECORD MUST BE THE FIRST RECORD OF THE FILE ****
FIELD POSITION
FIELD
FROM
TO
LENGTH
FIELD NAME/DESCRIPTION/REMARKS
1
3
3 FILLER
4
5
2 FILLER
6
10
5 DTRK-SYSID
11
12
2 FILLER
13
14
2 FILLER
15
16
2 FILLER
17
20
4 DTRK-ORIGINATOR
Please call SIAC for assignment (212) 383-2210
21
22
2 FILLER
23
26
4 DTRK-SUB-ORIGINATOR
Please call SIAC for assignment (212) 383-2210
27
27
1 FILLER
28
33
6 DTRK-DATE
Contains submission date.
34
34
1 FILLER
35
59
25 DTRK-DESCRIPTION
Required to identify this file.
60
80
21 FILLER
Field Format
Alphanumeric = A (All CAPS)
Numeric = N
Packed = P
Binary = B
Validation Required = R
Default Values – Code
Blanks = B
Zero = Z
FIELD
FORMAT
A
A
N
A
N
A
A
JUSTIFY
LJ
LJ
LJ
LJ
LJ
LJ
LJ
PICTURE
CLAUSE
X (3)
X (2)
9 (5)
X (2)
9 (2)
X (2)
X (4)
DEFAULT
VALUE
HDR
.S
12343
.E
00
.C
--
A
A
LJ
LJ
X (2)
X (4)
.S
--
A
N
LJ
LJ
X (1)
9 (6)
B
MMDDYY
A
A
LJ
LJ
X (1)
X (25)
A
LJ
X (21)
B
FIRM TRADING
INFORMATION
B
Justify
RJ = Right Justification of Data
LJ = Left Justification of Data
RECORD LAYOUT FOR SUBMISSION OF TRADING INFORMATION
09/13/2005
ATTACHMENT A
2 of 9
FIELD POSITION
FIELD
FIELD
PICTURE
DEFAULT
FROM
TO
LENGTH
FIELD NAME/DESCRIPTION/REMARKS
FORMAT
JUSTIFY CLAUSE
VALUE
1
1
1 HEADER RECORD CODE
A
-X
-Value: Low Values OR ZERO
2
5
4 SUBMITTING BROKER NUMBER
A-R
LJ
X (4)
B
If NSCC member use NSCC clearing number. If not a NSCC member, use clearing number assigned to you
by your clearing agency.
6
40
35 FIRM'S REQUEST NUMBER
A
-Tracking number used by the firm to record requests from an organization.
X (35)
B
41
46
47
54
55
55
56
70
71
80
6 FILE CREATION DATE
Format is YYMMDD
8 FILE CREATION TIME
Format is HH:MM:SS
1 REQUESTOR CODE
Requesting Organization Identification Values:
A = New York Stock Exchange
B = American Stock Exchange
C = Chicago Stock Exchange
D = Philadelphia Stock Exchange
E = Pacific Exchange
F = Boston Stock Exchange
G = National Stock Exchange
I = International Securities Exchange
K = Chicago Board Options Exchange
R = NASD
X = Securities Exchange Commission
Z = Other
15 REQUESTING ORGANIZATION NUMBER
Number assigned by requesting organization
10 FILLER
Field Format
Alphanumeric = A (All CAPS)
Numeric = N
Packed = P
Binary = B
Validation Required = R
Default Values – Code
Blanks = B
Zero = Z
A
--
X (6)
--
A
--
X (8)
--
A
--
X
--
A
LJ
X (15)
B
A
--
X (10)
B
Justify
RJ = Right Justification of Data
LJ = Left Justification of Data
09/13/2005
RECORD LAYOUT FOR SUBMISSION OF TRADING INFORMATION
ATTACHMENT A
3 of 9
FIELD POSITION
FIELD
FIELD
PICTURE
DEFAULT
FROM
TO
LENGTH
FIELD NAME/DESCRIPTION/REMARKS
FORMAT
JUSTIFY CLAUSE
VALUE
1
1
1 RECORD SEQUENCE NUMBER ONE
A
-X
-The first record of the transaction. Value: 1
2
5
4 SUBMITTING BROKER NUMBER
A-R
LJ
X (4)
-Identical to Submitting Broker Number in Header Record
6
9
4 OPPOSING BROKER NUMBER
A-R
LJ
X (4)
B
The NSCC clearing house number of the broker on the other side of the trade.
10
21
12 CUSIP NUMBER
A
LJ
X (12)
B
The cusip number assigned to the security. Left justified since the number is nine characters at present (8+
check digit) but will expand in the future
22
29
8 TICKER SYMBOL
A-R
LJ
X (8)
B
The symbol assigned to this security. For options, the OPRA option symbol (space), OPRA expiration month
symbol and OPRA strike price symbol should be used. (Ex. Maytag May 20 call option series would be
reported as MYG ED. This example uses six spaces in the field with a space between the OPRA symbol and
the OPRA expiration month.
30
35
6 TRADE DATE
A-R
-X (6)
B
The date this trade executed. Format is YYMMDD.
36
41
6 SETTLEMENT DATE
A
-X (6)
B
The date this trade will settle. Format is YYMMDD
42
53
12 QUANTITY
N-R
RJ
9 (12)
Z
The number of shares or quantity of bonds or option contracts.
54
67
14 NET AMOUNT
N
RJ
S9(12)V99
Z
The proceeds of sales or cost of purchases after commissions and other charges.
Continued on next page
Field Format
Alphanumeric = A (All CAPS)
Numeric = N
Packed = P
Binary = B
Validation Required = R
Default Values – Code
Blanks = B
Zero = Z
Justify
RJ = Right Justification of Data
LJ = Left Justification of Data
RECORD LAYOUT FOR SUBMISSION OF TRADING INFORMATION
09/13/2005
ATTACHMENT A
4 of 9
FIELD POSITION
FIELD
FIELD
PICTURE
DEFAULT
FROM
TO
LENGTH
FIELD NAME/DESCRIPTION/REMARKS
FORMAT
JUSTIFY CLAUSE
VALUE
68
68
1 BUY/SELL CODE
A-R
-X
B
Values: 0 = Buy, 1 = Sale, 2 = Short Sale, 3 = Buy Open, 4 = Sell Open, 5 = Sell Close, 6 = Buy Close.
A = Buy Cancel, B = Sell Cancel, C = Short Sale Cancel, D = Buy Open Cancel, E = Sell Open Cancel, F =
Sell Close Cancel, G = Buy Close Cancel. Values 3 to 6 and D to G are for options only
69
78
79
79
80
80
Field Format
Alphanumeric = A (All CAPS)
Numeric = N
Packed = P
Binary = B
Validation Required = R
10 PRICE
N-R
RJ
9(4)V(6)
The transaction price. Format: $$$$ CCCCCC.
1 EXCHANGE CODE
A-R
-X
Exchange where trade was executed. Values:
A = New York Stock Exchange
B = American Stock Exchange
C = Chicago Stock Exchange
D = Philadelphia Stock Exchange
E = Pacific Exchange
F = Boston Stock Exchange
G = National Stock Exchange
I = International Securities Exchange
K = Chicago Board Options Exchange
L = London Stock Exchange
M = Toronto Stock Exchange
N = Montreal Stock Exchange
O = TSX Venture Exchange
Q = NASD ADF
R = NASDAQ
S = Over-the-Counter
T = Tokyo Stock Exchange
Z = Other
1 BROKER/DEALER CODE
A-R
-X
Indicate if trade was done for another Broker/Dealer. Values: 0 = No; 1 = Yes
Default Values – Code
Blanks = B
Zero = Z
Z
B
B
Justify
RJ = Right Justification of Data
LJ = Left Justification of Data
RECORD LAYOUT FOR SUBMISSION OF TRADING INFORMATION
09/13/2005
ATTACHMENT A
5 of 9
FIELD POSITION
FIELD
FIELD
PICTURE
FROM
TO
LENGTH
FIELD NAME/DESCRIPTION/REMARKS
FORMAT
JUSTIFY CLAUSE
1
1
1 RECORD SEQUENCE NUMBER TWO
A
-X
Value: 2
2
2
1 SOLICITED CODE
A-R
-X
Values: 0 = No; 1 = Yes
3
4
2 STATE CODE
A-R
-X (2)
Standard Postal two character identification.
5
14
10 ZIP CODE/COUNTRY CODE
A-R
LJ
X (10)
Zip Code -- five or nine character (zip plus four)
Country code -- for future use.
15
22
8 BRANCH OFFICE/REGISTERED
A-R
LJ
X (8)
REPRESENTATIVE NUMBER
Each treated as a four-character field. Both are left justified.
23
28
6 DATE ACCOUNT OPENED
A-R
-X (6)
Format is YYMMDD
29
48
20 SHORT NAME FIELD
A
LJ
X (20)
Contains last name followed by comma (or space) then as much of first name as will fit.
49
79
78
79
80
80
Field Format
Alphanumeric = A (All CAPS)
Numeric = N
Packed = P
Binary = B
Validation Required = R
30 EMPLOYER NAME
1 TIN 1 INDICATOR
Values: 1 = SS#; 2 = TIN
1 TIN 2 INDICATOR
Values: 1 = SS#; 2 = TIN -- for future use.
Default Values – Code
Blanks = B
Zero = Z
DEFAULT
VALUE
-B
B
B
B
B
B
A
A-R
LJ
--
X (30)
X
B
B
A
--
X
B
Justify
RJ = Right Justification of Data
LJ = Left Justification of Data
09/13/2005
RECORD LAYOUT FOR SUBMISSION OF TRADING INFORMATION
ATTACHMENT A
6 of 9
FIELD POSITION
FIELD
FROM
TO
LENGTH
FIELD NAME/DESCRIPTION/REMARKS
1
1
1 RECORD SEQUENCE NUMBER THREE
Value: 3
2
10
9 TIN ONE
Taxpayer Identification Number
Social Security or Tax ID Number.
11
19
9 TIN TWO
Taxpayer Identification Number #2
Reserved for future use.
20
20
1 NUMBER OF N&A LINES
21
50
30 NAME AND ADDRESS LINE ONE
51
80
30 NAME AND ADDRESS LINE TWO
Field Format
Alphanumeric = A (All CAPS)
Numeric = N
Packed = P
Binary = B
Validation Required = R
Default Values – Code
Blanks = B
Zero = Z
FIELD
FORMAT
A
JUSTIFY
--
PICTURE
CLAUSE
X
DEFAULT
VALUE
--
A-R
LJ
X (9)
B
A
LJ
X (9)
B
A
A-R
A-R
-LJ
LJ
X
X (30)
X (30)
B
B
B
Justify
RJ = Right Justification of Data
LJ = Left Justification of Data
09/13/2005
RECORD LAYOUT FOR SUBMISSION OF TRADING INFORMATION
ATTACHMENT A
7 of 9
FIELD POSITION
FIELD
FROM
TO
LENGTH
FIELD NAME/DESCRIPTION/REMARKS
1
1
1 RECORD SEQUENCE NUMBER FOUR
Value: 4
2
31
30 NAME AND ADDRESS LINE THREE
32
61
30 NAME AND ADDRESS LINE FOUR
62
62
1 ACCOUNT TYPE IDENTIFIERS
See Attachment B for current codes.
63
80
18 ACCOUNT NUMBER
Account number
Field Format
Alphanumeric = A (All CAPS)
Numeric = N
Packed = P
Binary = B
Validation Required = R
Default Values – Code
Blanks = B
Zero = Z
FIELD
FORMAT
A
JUSTIFY
--
PICTURE
CLAUSE
X
DEFAULT
VALUE
--
A-R
A-R
A-R
LJ
LJ
--
X (30)
X (30)
X
B
B
B
A-R
LJ
X (18)
B
Justify
RJ = Right Justification of Data
LJ = Left Justification of Data
RECORD LAYOUT FOR SUBMISSION OF TRADING INFORMATION
09/13/2005
ATTACHMENT A
8 of 9
FIELD POSITION
FIELD
FIELD
FROM
TO
LENGTH
FIELD NAME/DESCRIPTION/REMARKS
FORMAT
JUSTIFY
1
1
1 RECORD SEQUENCE NUMBER FIVE
A
-Value: 5
2
31
30 NAME AND ADDRESS LINE FIVE
A-R
LJ
32
61
30 NAME AND ADDRESS LINE SIX
A-R
LJ
62
65
4 PRIME BROKER
A-R
LJ
Clearing number of the account's prime broker.
66
66
1 AVERAGE PRICE ACCOUNT
N-R
-1 = recipient of average price transaction.
2 = average price account itself.
67
71
5 DEPOSITORY INSTITUTION IDENTIFIER
A-R
LJ
Identifying number assigned to the account by the depository institution.
72
80
Field Format
Alphanumeric = A (All CAPS)
Numeric = N
Packed = P
Binary = B
Validation Required = R
9 FILLER
A
Default Values – Code
Blanks = B
Zero = Z
--
PICTURE
CLAUSE
X (1)
DEFAULT
VALUE
--
X (30)
X (30)
X (4)
B
B
B
9 (1)
Z
X (5)
B
X (9)
B
Justify
RJ = Right Justification of Data
LJ = Left Justification of Data
09/13/2005
RECORD LAYOUT FOR SUBMISSION OF TRADING INFORMATION
ATTACHMENT A
9 of 9
FIELD POSITION
FIELD
FIELD
PICTURE
DEFAULT
FROM
TO
LENGTH
FIELD NAME/DESCRIPTION/REMARKS
FORMAT
JUSTIFY CLAUSE
VALUE
1
1
1 TRAILER RECORD DATE
A
-X
-One record per submission. Must be the last record on the file. Value: High Values or "9"
2
17
16 TOTAL TRANSACTIONS
N
RJ
9 (16)
B
The total number of transactions. This total excludes Header and Trailer Records.
18
33
16 TOTAL RECORDS ON FILE
N
RJ
9 (16)
Z
The total number of 80 byte records. This total includes Header and Trailer Records, but not the Datatrak
Header Record (i.e., does not include the first record on the file).
34
80
47 FILLER
A
-X (47)
B
Field Format
Alphanumeric = A (All CAPS)
Numeric = N
Packed = P
Binary = B
Validation Required = R
Default Values – Code
Blanks = B
Zero = Z
Justify
RJ = Right Justification of Data
LJ = Left Justification of Data
09/13/2005
ACCOUNT TYPE IDENTIFIERS
Transaction Type
ATTACHMENT B
1 of 2
Security Type
Equity∗ Options
Non-Program Trading, Agency
A
Non-Index Arbitrage, Program Trading, Proprietary
C
Index Arbitrage, Program Trading, Proprietary
D
Index Arbitrage, Program Trading, Individual Investor
J
Non-Index Arbitrage, Program Trading, Individual Investor
K
Non-Program Trading, Proprietary
P
Non-Program Trading, Individual Investor
I
Non-Index Arbitrage, Program Trading, Agency
Y
Index Arbitrage, Program Trading, Agency
U
Index Arbitrage, Program Trading, as Agent for Other Member
M
Non-Index Arbitrage, Program Trading, as Agent for Other Member
N
Non-Program Trading, as Agent for Other Member
W
Specialist
S
C
F
S
Market-Maker
M
Non-Member Market-Maker/Specialist Account
N
Stock Specialist – Assignment
Y
Short Exempt, Agency
B
Customer Range Account of a Broker/Dealer
B
Registered Trader
G
Error Trade
Q
Competing Market Maker Proprietary Transaction: Affiliated w/ Clearing
Member
O
Competing Market Maker: Unaffiliated Member's Competing Market Maker
T
∗
Equity securities include those securities that trade like equities. For instance, ETFs and Structured Products.
09/13/2005
ACCOUNT TYPE IDENTIFIERS
Transaction Type
ATTACHMENT B
2 of 2
Security Type
Equity∗ Options
Competing Market Maker: Non-Member
R
Short Exempt Transaction: Proprietary Account of Clearing Member
Organization or Affiliated Member/Member Organization
E
Short Exempt Transaction: Proprietary Account of Unaffiliated
Member/Member Organization
F
Short Exempt Transaction: Individual Customer Account
H
Short Exempt Transaction: Competing Market Maker this is a
Member/Member Organization Trading for own account
L
Short Exempt Transaction: One Member Acting as Agent for Another
Member's Competing Market Maker Account
X
Short Exempt Transaction: Account of Non Member Competing Market
Maker
Z
Amex Option Specialist/Market Maker Trading Paired Security
V
Registered Trader Market Maker Transaction Regardless of the Clearing
Number
P
Transactions cleared for a NASDAQ market maker that is affiliated w/ the
clearing member that resulted from telephone access to the specialist.
Amex Only.
3
Transactions cleared for a member’s NASDAQ market maker that is not
affiliated with the clearing member that resulted from telephone access to
the specialist. Amex Only.
4
Transactions cleared for a non-member NASDAQ market maker that is not
affiliated with the clearing member that resulted from telephone access to
the specialist. Amex Only.
5
∗
Equity securities include those securities that trade like equities. For instance, ETFs and Structured Products.
Regulatory Circulars
continued
Regulatory Circular RG05-76
To:
Members and Member Organizations
From:
Legal Division
Date:
September 7, 2005
Subject:
RMM Appointments in DIA Options
On September 2, 2005, CBOE amended Rule 8.4(d) relating to Remote Market-Maker
(RMM) appointments in two respects. The rule change was effective on filing with the
SEC. (See CBOE-2005-74, which is available on CBOE’s website at www.cboe.org/legal.)
Options on Diamonds (DIA) were added to the A+ Tier for RMMs. Thus, there are now
three options classes in the A+ Tier: SPY options, QQQQ options, and DIA options.
•
The “appointment cost” for the A+ Tier was lowered from .60 to .25 for
each option class in the tier.
Additionally, at its meeting on September 2, 2005, the Index Floor Procedure Committee
approved adding DIA options to the Hybrid 2.0 Platform and the appointment of RMMs in
DIA options. To request an RMM appointment in DIA options, please contact Angela
Redell at (312) 786-7559.
September 14, 2005, Volume RB16, Number 37
Rule Changes,
Interpretations
and Policies
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-2005-71
Updated Fee Schedule for Options on DIAMONDS (“DIA”)
On September 1, 2005, the Exchange filed Rule Change File No. SR-CBOE-2005-71, which
filing proposes to amend its Fees Schedule to reduce or eliminate certain fees for DIA
options. Specifically, the Exchange proposes to reduce DIA customer and broker-dealer
transaction fees and eliminate the Market-Maker license fee surcharge applicable to transactions in DIA options. Any questions regarding the rule change may be directed to Jaime
Galvan, Legal Division, at 312-786-7058.
SR-CBOE-2005-72
Marketing Fee for Options on DIAMONDS (“DIA”)
On September 1, 2005, the Exchange filed Rule Change File No. SR-CBOE-2005-72, which
filing proposes to amend the marketing fee to assess the fee on options on DIAMONDS
(DIA). The fee will be imposed at the rate of $.22 per contract. The fee will commence on
September 2, 2005. Any questions regarding the rule change may be directed to Andrew
Spiwak, Legal Division, at 312-786-7483.
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-2005-67
Integrated Billing System Requirements
On September 2, 2005, the Exchange filed Rule Change File No. SR-CBOE-2005-67, which
filing proposes to revise Exchange Rule 3.23 which requires all members to designate a
CBOE Clearing Member for the payment of CBOE invoices. The proposed rule change
exempts from the Rule 3.23 requirements those members that are approved to act solely as
lessors. Any questions regarding the rule change may be directed to David Doherty, Legal
Division, at 312-786-7466. The text of the proposed rule amendments is set forth below.
Proposed new language is underlined. Proposed deleted language is [bracketed and strickenthrough].
Rule 3.23 Integrated Billing System
Every member, other than members that are approved to act solely as lessors,
must designate a Clearing Member for the payment of the member’s Exchange
invoices by means of the Exchange’s integrated billing system (“IBS”). The designated Clearing Member shall pay to the Exchange on a timely basis any amount
that is not disputed pursuant to IBS procedures by the member who is directly
involved. Such payments shall be drafted by the Exchange against the designated
Clearing Member’s account at the Clearing Corporation. The Clearing Corporation
shall have no liability in connection with its forwarding to the Exchange each month
a check representing the total amount that the Exchange advises the Clearing
Corporation is owed to the Exchange.
RB22
September 14, 2005, Volume RB16, Number 37
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-67 continued
(b)
Inapplicable.
(c)
Inapplicable.
SR-CBOE-2005-74
Remote Market-Maker Appointments
On September 2, 2005, the Exchange filed Rule Change File No. SR-CBOE-2005-74,
which filing proposes to amend CBOE Rule 8.4 relating to Remote Market-Maker appointments. Any questions regarding the rule change may be directed to Patrick 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 [bracketed and strickenthrough].
Rule 8.4. Remote Market-Makers
(a)
No change.
(b)
No change.
(c)
No change.
(d)
Appointment of RMMs: An RMM will have a Virtual Trading Crowd
(“VTC”) Appointment, which confers the right to quote electronically (and
not in open outcry) an appropriate number of products selected from
“tiers” that have been structured according to trading volume statistics.
Of the products included in the Hybrid 2.0 Platform, Tier A will consist of
the 20% most actively-traded products over the preceding three calendar
months, excluding “A+” tier products, Tier B will consist of the next 20%
most actively-traded products, etc., through Tier E, which will consist of
the 20% least actively-traded products. Tier “A+” will consist of options
on Standard & Poor’s Depositary Receipts, [and] options on the Nasdaq100 Index Tracking Stock, and options on Diamonds.
All products within a specific Tier will be assigned an “appointment cost”
depending upon its Tier location. Each “A+” Tier product will have an
“appointment cost” of [.60] .25. Each Tier A product will have an “appointment cost” of .10, each Tier B product will be .0667, each Tier C product
will be .05, each Tier D product will be .04, and each Tier E product will be
.033. An RMM as part of its VTC appointment may select for each
Exchange membership it owns or leases any combination of Hybrid 2.0
products whose aggregate “appointment cost” does not exceed 1.0. For
example, an RMM could request six “A Tier” products (6x.10), four “C
Tier” products (4x.05), and five “D Tier” products (5x.04) to constitute its
VTC appointment.
*****
(e)
No change.
(f)
No change.
. . . Interpretations and Policies:
.01
September 14, 2005, Volume RB16, Number 37
No change.
RB23
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-69
Deletion of Obsolete or Unnecessary Exchange Rules
On September 1, 2005, the Exchange filed Rule Change File No. SR-CBOE-2005-69, which
filing proposes to delete certain rules, or portions thereof, which have been determined by
the Exchange to be obsolete or unnecessary. The proposed deletions consist of rules, or
portions thereof, that reference: “Board Brokers”, that relate to “joint venture participants”,
and rules pertaining to commissions/fees in Chapters 2, 14 and 15, which are no longer
charged/assessed. Any questions regarding the rule change may be directed to Gregory
Hoogasian, Legal Division, at 312-786-7031. The text of the proposed rule amendments is
set forth below. Proposed new language is underlined. Proposed deleted language is [bracketed and stricken-through].
Rule 1.1 Definitions
(a) – (jj) No change
(kk)
Reserved. [The term “joint venture participant” means a member or nonmember of the Exchange who is qualified to execute in person transactions in joint
venture contracts in a trading crowd on the floor of the Exchange. A non-member
joint venture participant shall be treated as a member for purposes of Rules 6.7 and
6.20 (a), (b), (c) and (d) and Rule 6.20 Interpretations and Policies .01 and .04 (iv),
(v) and (vi) unless otherwise specified.]
(ll) – (aaa)
No change
*****
Chapter 2
*****
Rule 2.21. Reserved [Charge on Net Commissions
The Board may, from time to time, impose a charge upon members measured by
their respective net commissions on transactions effected on the Exchange. The
rate of such charge shall be determined by the Board as a percentage of the difference between the gross commission charged by a member on account of a transaction and the commission payable by such member to other members on account
of such transaction. Such charge shall be payable at such times and shall be
collected in such manner as may be determined by the Board.]
*****
Rule 2.25. Reserved [Collection of Certain Fees
(a) Use of Integrated Billing System.
The fees for delayed submission of trade information imposed under Rules 2.26
and 2.30 shall be collected through use of the integrated billing system of Rule
3.23.
(b) Appeal Procedures.
The dispute procedures authorized in Rule 2.30 shall be the exclusive remedy
available for challenge to the collection of any fees incurred pursuant to Rule 2.30.
Fees incurred under Rule 2.26 may be appealed in accordance with the provisions
of Chapter XIX.
RB24
September 14, 2005, Volume RB16, Number 37
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-69 continued
(c) Obligation of Clearing Member.
A Clearing Member may collect fees imposed under Rules 2.26 and 2.30(a) from
a member to whom such fees relate and for whom such Clearing Member acted
as such during the time periods in which the events giving rise to such fees
occurred. The amount of such fees shall be an obligation payable to the Exchange
by the Clearing Member regardless of whether the Clearing Member has actually
collected the fees from the member to whom they relate. In the event such a fee
is not paid, the Exchange may take action under Rule 2.23 or under Chapter XVII
against the member to whom such fees relate, the Clearing Member, or both.
(d) Collection Procedure.
Fees imposed under Rules 2.26 and 2.30 which are billed in a given month, may
be collected by the Exchange in the same or a succeeding month by drafting the
appropriate Clearing Member’s account at the Clearing Corporation. In the event a
request for verification of a fee has been timely made but no determination has
been reached before the deadline for monthly processing, the entire amount of the
fee in question shall be collected at the normal time and an adjustment in a
subsequent billing or a refund, either of which shall exclude any interest or time
value of money effects, shall be subsequently made if necessary after a determination is reached.]
*****
Rule 2.30. Reserved [Fee for Delayed Submission of Trade Information
(a) Fee Applicable to Exchange Members.
Any individual member (as designated by the executing broker acronym on a
transaction) who fails to submit the trade information required by Rule 6.51 for at
least eighty percent (80%) of all of that member’s transactions (both buys and
sells) for a given day within the maximum permitted time period after the time of
execution for the respective transactions ( “Maximum Permitted Time Period”) will
incur an additional transaction fee for that day. That additional transaction fee will
be two (2) cents per contract. The per-contract factor of the additional fee and the
percentage of transactions required will remain constant, but the Maximum Permitted Time Period will change as determined by the appropriate Clearing Procedure Committee ( “CPC”). The Maximum Permitted Time Period will be reduced
from two (2) hours to 90 minutes, from 90 minutes to 75 minutes, and finally from
75 minutes to (1) hour. The membership will be given 30 days notice of each
reduction, and each reduction will last for no less than three months in duration.
For any given day, the additional fee will be applied to the number of contracts
determined by multiplying (1) by (2):
(1) The number of trades of the member for which trade information was not
submitted within the Maximum Permitted Time Period divided by the total
number of trades of the member for which trade information was submitted for
that day.
(2) The total number of contracts comprising the trades executed by the member
during that day.
(b) Fee Applicable to Clearing Members.
September 14, 2005, Volume RB16, Number 37
RB25
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-69 continued
Any Exchange Clearing Member ( “Clearing Member”) which fails to submit the
trade information required by Rule 6.51 for at least eighty percent (80%) of all of the
trades executed for that Clearing Member on a given day within the Maximum
Permitted Time Period will incur an additional trade match fee for that day. That
additional fee will be two (2) cents per contract. The per-contract factor of the additional fee and the percentage of transactions required will remain constant, but the
Maximum Permitted Time Period will change as determined by the appropriate
Clearing Procedure Committee ( “CPC”). The Maximum Permitted Time Period will
be reduced from two (2) hours to 90 minutes, from 90 minutes to 75 minutes, and
finally from 75 minutes to (1) hour. The membership will be given 30 days notice of
each reduction, and each reduction will last for no less than three months in duration.
For any given day, the additional fee will be applied to the number of contracts
determined by subtracting (2) from (1) and multiplying that percentage by (3):
(1) Eighty percent (80%).
(2) The number of trades (records) executed for the Clearing Member for which
trade information was submitted within the Maximum Permitted Time Period divided by the total number of trades (records) executed for the Clearing Member for which trade information was submitted for that day.
(3) The total number of contracts comprising the trades executed for the Clearing
Member during that day.
With respect to a Clearing Member which has more than one clearing
number assigned to it by the Exchange, each division of that Clearing
Member represented by a separate clearing number will be treated as a
separate Clearing Member for all purposes of Rule 2.30.
(c) Nominee-Employee Members of Clearing Members.
This provision applies to an individual member who is a Clearing Member
employee ( “Clearing Member Employee”) and it only applies to trades
executed by the employee on behalf of that Clearing Member. For Purposes of Rule 2.30, if a Clearing Member Employee is assessed a fee for
delayed trade submissions, the member fee will be the only fee assessed
to those trades; a Clearing Member fee will not be assessed. However,
though calculated on the member’s activity, the Clearing Member will be
responsible for the member fee under these circumstances.
(d) Time of Execution.
(1) General Rule. For purposes of Rule 2.30, the time of execution will be the
time recorded by the individual member on the related card, ticket or electronic data storage medium pursuant to Rule 6.51, provided the time is
accurate with respect to when the transaction actually occurred. If there is
no time recorded on the card, ticket or electronic data storage medium
reporting the transaction, or the time recorded is not a valid time, the trade
information for that transaction will be deemed to have been submitted
after the Maximum Permitted Time Period. “Valid time” for purposes of this
Rule means a time during which trading in the relevant option contract was
eligible to take place.
(2) Market-Maker RAES Trades. Trade information for a Market-Maker’s side
of a transaction executed on the Retail Automated Execution System (
“RAES”) will be deemed to have been submitted within the Maximum Permitted Time Period for purposes of this Rule.
RB26
September 14, 2005, Volume RB16, Number 37
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-69 continued
(3) “As of” trades. Trade information for transactions executed on a previous
day, such as “as of” trades, will not be considered in applying this Rule.
(e) Time of submission.
For purposes of Rule 2.30, the time of submission will be determined in accor
dance with the provisions of Rule 6.58.
(f) Exceptions.
(1) Extenuating Circumstances.
(A) Effect on Clearing Members; requirements.
(i) A Clearing Member will incur no charges under Subparagraph (b) of this
Rule 2.30 for a given day if timely submission of trade information to the
Exchange was prevented by extenuating circumstances beyond the control of the Clearing Member.
(ii) The inability to make timely submissions due to circumstances which
fall under Subparagraph (f)(1)(A)(i) must remain in existence for at least
thirty (30) continuous minutes or for at least sixty (60) intermittent minutes during a given day in order for this exception to apply. With respect
to such circumstances which are attributable to a problem created by the
Exchange and which relate to fewer than seven (7) specific Clearing
Members, the time period(s) for determining whether the thirty or sixty
minute minimum periods have occurred will commence for a given Clearing Member at the time when that Clearing Member notifies the Exchange’s
Trade Processing Window personnel that a problem exists, based on the
time recorded by the Trade Processing Window personnel receiving this
notice, unless these Exchange personnel are already aware of the problem, in which case the time period(s) will commence at the time when the
Exchange personnel became so aware.
(iii) An act or omission by an agent of a Clearing Member will not, in itself, be
considered extenuating circumstances beyond the control of the Clearing Member.
(B) Effect on members.
If the exception in Subparagraph (f)(1)(A) of this Rule 2.30 applies to a Clearing Member for a given day, any individual member using that Clearing Member will incur no charges under Subparagraph (a) of this Rule 2.30 for that day
with respect to trades which were cleared by that Clearing Member.
(C) Examples of extenuating circumstances.
Examples of extenuating circumstances beyond the control of a Clearing
Member which, in most cases, will lead to application of the exception under
this Subparagraph (f)(1) are:
(i) hurricane, lightning, or other force majeure which directly causes the inability to submit data;
(ii) identifiable Exchange error, Exchange system failure, or inability of the
Exchange to receive information properly submitted;
September 14, 2005, Volume RB16, Number 37
RB27
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-69 continued
(iii) incidents created by outside parties which directly cause the inability to
submit data, which incidents are reported to local law enforcement or other
appropriate authorities; and
(iv) failure or malfunction of a Clearing Member’s computer equipment or computer software that directly causes the inability to submit data, provided that
the failure or malfunction is not caused by the negligence or intentional misconduct of the Clearing Member or persons associated with the Clearing Member.
(D) Examples of non-extenuating circumstances.
Examples of circumstances which, in most cases, will not lead to application
of the exception under this Subparagraph (f)(1) are:
(i) inclement weather conditions;
(ii) errors by messengers;
(iii) electronic queues, waiting lines, or telephone busy signals;
(iv) transmission line problems; and
(v) power failures, unless caused by identifiable outside non-related parties or
extreme external atmospheric conditions.
(g) Suspension of Fee Under Unusual Circumstances.
Under unusual circumstances which will affect or have affected the ability of a
significant number of individual members and/or Clearing Members to submit trade
information to the Exchange on a timely basis, the Clearing Procedures Committee
may, with the approval of the President of the Exchange or of the President’s
designee, suspend application of Rule 2.30 for a period not to exceed seven (7)
calendar days at any one time (which may be extended by subsequent suspensions each affected by the procedures required by this subparagraph). This type of
suspension order, which may be retroactive, will be in writing and state the reasons
for the order. The membership will be notified by Exchange publication, which may
be after the effective date, and which will be kept on record by the Secretary of the
Exchange.
(h) Appeals.
(1) Appeal Prerequisites. A member or Clearing Member may not appeal a fee
imposed under this Rule 2.30 unless that member has made either (A) a
valid request for verification pursuant to Subparagraph (h)(2) below, or (B)
a valid fee challenge pursuant to Subparagraph (h)(3) of this Rule.
(2) Verification Procedures.
(A) For Member charged. A member upon whom a fee is imposed
under this Rule 2.30 may use the verification procedures set forth
in Part B of Chapter XIX. The member may appeal the determination made on such a request for verification under Part A of Chapter XIX.
(B) For Clearing Member required to collect. The procedures of Subparagraph (h)(2)(A) also apply to a Clearing Member required to
collect a Rule 2.30 fee from a member, if the Clearing Member
disputes that it acted as that member’s Clearing Member during
the relevant time period.
RB28
September 14, 2005, Volume RB16, Number 37
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-69 continued
(3) Fee Challenges Based on Extenuating Circumstances.
A Clearing Member, or member using that Clearing Member, may challenge a
fee imposed under this Rule 2.30, if timely submission of trade information
was prevented by extenuating circumstances beyond the control of the Clearing
Member, as provided in Subparagraph (f)(1) of this Rule. Challenges must be
made within a time period to be established by the Exchange, which will be no
less than fifteen (15) days following the date the fee is imposed, and must be
made in the manner and form required by the Exchange. The Clearing Procedures Committee will review all fee challenges of $500 or more that have
been properly submitted and will determine whether the fee should remain as
billed or should be modified or eliminated. Challenges to fees amounting to
less than $500 that have been properly submitted will be reviewed by the staff
of the Exchange. Notice of the determination will be given in writing to the
member challenging the fee. The determination of the Clearing Procedures
Committee or, where appropriate, the staff of the Exchange, may be appealed under Part A of Chapter XIX.
(4) Excluded Defenses.
The following facts and circumstances will be excluded from consideration
regarding any challenge to, or appeal of, a fee imposed under this Rule 2.30:
(A) failure of a Clearing Member to pick up or otherwise collect trading cards
or tickets on a timely basis;
(B) failure of a Clearing Member to efficiently process and submit to the
Exchange the transaction information contained on trading cards, tickets
or an electronic data storage medium; and
(C) failure of one or more members to turn in their trading cards or tickets to
their Clearing Member on a timely basis. The fee imposed by this Rule is
intended to offset the significant expenditures made by the Exchange in
providing members with an intraday trade match service which benefits
the entire Exchange community and to offset the additional expenditures
and complexities associated with handling trade information submitted
by members on a delayed basis. A Market-Maker chooses the Clearing
Member who will act as his or her agent for trade clearance purposes and
a Clearing Member chooses the Market-Maker for whom it will provide
this service. A Non-Market-Maker member, other than a nominee-employee, chooses to execute orders for a specific Clearing Member and a
Clearing Member chooses to allow its orders to be executed by a specific
member. Therefore, the Exchange has adopted the policy of excluding
the above defenses as a fair and reasonable means to avoid the costly
and time-consuming process of having to determine whether the cause
of a delayed submission was due to a member or the member’s Clearing
Member.]
September 14, 2005, Volume RB16, Number 37
RB29
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-69 continued
*****
Chapter 6
*****
Rule 6.7 Exchange Liability
(a) – (c)
No change
…Interpretations and Policies:
.01
No change
.02
Reserved. [The provisions of Rule 6.7 are applicable to non-member joint
venture participants and any persons associated therewith.]
.03 - .04
No change
*****
Rule 6.20 Admission to and Conduct on the Trading Floor; Member
Education
(a) – (e)
No change
…Interpretations and Policies:
.01 - .06
No change
.07
Reserved [Non-member joint venture participants are subject to the provisions of Rule 6.20 (a), (b), (c), and (d) and Rule 6.20, Interpretation and Policy .01
and are subject to fines under Rule 17.50 pursuant to Rule 6.20(c) for violations of
Rule 6.20, and Rule 6.20 Interpretations and Policies .04 (iv), (v) and (vi). A nonmember joint venture participants against whom a fine is imposed under Rule 17.50
may contest the fine in accordance with the appeal provisions of Rule 17.50.]
.08 - .10
No change
*****
Rule 6.43. Manner of Bidding and Offering
(a) Bids and offers to be effective must either be entered electronically in a form
and manner prescribed by the Exchange via Exchange-approved quoting devices
or made at the post by public outcry, except that bids and offers made by the
[Board Broker or ]Order Book Official shall be effective if displayed in a visible
manner in accordance with Rule 7.7. All bids and offers shall be general ones and
shall not be specified for acceptance by particular members.
(b) No change.
*****
RB30
September 14, 2005, Volume RB16, Number 37
Rule Changes,
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SR-CBOE-2005-69 continued
Rule 6.46.Transactions Outside Book’s Last Quoted Range
If a transaction or the cancellation of an order causes the last displayed bid or last
displayed offer of an [Board Broker or ]Order Book Official to be removed from the
market, no member may participate in any transaction at a price below such last
bid or above such last offer until the [Board Broker or ]Order Book Official has
displayed a new bid or a new offer.
*****
Rule 6.47. Priority on Split-Price Transactions Occurring in Open Outcry
(a) Purchase or sale priority. If a member purchases (sells) one or more option
contracts of a particular series at a particular price or prices, he shall, at the next
lower (higher) price at which a member other than the [Board Broker or ]Order
Book Official is bidding (offering), have priority in purchasing (selling) up to the
equivalent number of option contracts of the same series that he purchased (sold)
at the higher (lower) price or prices, but only if his bid (offer) is made promptly and
the purchase (sale) so effected represents the opposite side of a transaction with
the same order or offer (bid) as the earlier purchase or purchases (sale or sales).
This paragraph only applies to transactions effected in open outcry.
(b)-(c)
No change.
... Interpretations and Policies:
.01
No change.
*****
Rule 6.54. Accommodation Liquidations
Trading under the following terms and conditions shall be available in each series
of option contracts open for trading on the Exchange.
(a) For classes not trading on the CBOE Hybrid System:
(i) Trading shall be conducted in accordance with other Exchange Rules
except as otherwise provided herein.
(ii) Limit orders labeled at a price of $1 per option contract must be placed
with the [Board Broker or] Order Book Official.
(iii) Bids or offers for opening transactions at a price of $1 per option contract
may be placed with the Order Book Official only to the extent that the
public order book contains unexecuted contra closing orders with which
the opening orders immediately may be matched.
(iv) Orders may be placed for customer, firm, and Market-Maker accounts,
with priority based upon the sequence in which such orders are placed
with the [Board Broker or] Order Book Official.
(v) Market-Makers shall not be subject to the requirements of Rule 8.7 for
orders placed pursuant to this Rule.
(vi) The [Board Broker or] Order Book Official appointed to each class of
option contracts shall be responsible for $1 orders for that class. All bids
and offers must be submitted to the [Board Broker or] Order Book Official
in writing and displayed as such in accordance with Rule 7.7, and the
[Board Broker or] Order Book Official shall effect all such transactions
during the day by matching such orders placed with him.
September 14, 2005, Volume RB16, Number 37
RB31
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-69 continued
(vii) All transactions at a price of $1 per option contract shall be reported to the
Exchange following the close of each business day.
(b) No Change.
. . . Interpretations and Policies:
.01 An [Board Broker or] Order Book Official who receives a closing buy order for
$1 per option contract shall attempt to execute the order against any $1 closing sell
orders in his possession. If any part of the buy order cannot be immediately executed, the [Board Broker or] Order Book Official shall display the $1 bid.
Upon receiving a closing sell order for $1 per option contract, the [Board Broker or]
Order Book Official shall attempt to execute the order against any $1 closing buy
orders in his possession. If any part of the sell order cannot be immediately executed, the [Board Broker or] Order Book Official shall display the $1 offer. The
[Board Broker or] Order Book Official may accept bids or offers for opening transactions at a price of $1 per contract only to the extent that the public order book
already contains closing orders for the contra side.
Upon execution of any $1 per contract orders, the [Board Broker or] Order Book
Official shall promptly supply reports of the transaction back to the member firms
involved. In accordance with (vii) above, he will not report the transactions to the
Exchange until after the close of each business day.
*****
Rule 6.70. Floor Broker Defined
A Floor Broker is an individual (either a member or a nominee of a member organization) who is registered with the Exchange for the purpose, while on the Exchange
floor, of accepting and executing orders received from members or from registered
broker-dealers. A Floor Broker shall not accept an order from any other source
unless he is either the nominee of, or has registered his individual membership for,
a member organization approved to transact business with the public in accordance with Rule 9.1. In the event the organization is approved pursuant to Rule 9.1,
a Floor Broker who is the nominee of, or who has registered his individual membership for, such organization may then accept orders directly from public customers
where (i) the organization clears and carries the customer account or (ii) the organization has entered into an agreement with the public customer to execute orders on
its behalf. Among the requirements a Floor Broker must meet in order to register
pursuant to Rule 9.1 is the successful completion of an examination for the purpose of demonstrating an adequate knowledge of the securities business. [Unless
the context otherwise indicates, a Board Broker acting as such in option contracts
of the class to which he has been appointed pursuant to Rule 7.3 shall be considered to be a Floor Broker wherever that term occurs in these Rules.]
[... Interpretations and Policies:
.01 For purposes of Rule 6.70, a Floor Broker may accept orders entered by nonmember joint venture participants while on the Exchange trading floor provided that
(1) such orders are for joint venture contracts or related option contracts and (2) that
orders for related option contracts are for hedge purposes only. The Exchange shall
determine the contracts that are related to the joint venture contracts. For example,
for the CBOE 50 and 250 Stock Index Futures contracts, the Exchange has determined that the related option contracts are OEX, SPX, NSX and SPL. For purposes of this Interpretation, no individual equity option contract would be deemed
to be a contract related to a joint venture contract.]
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*****
Chapter 7
*****
Rule 7.1. Order Book Official [and Board Broker Defined]
(a) No Change.
[(b) A Board Broker is an individual member, a nominee of a member organization
or a member organization who or which is registered with the Exchange for the
purposes of (i) acting as a “broker’s broker” for specified classes of options, at the
post at which such classes of options are traded, by accepting and attempting to
execute orders placed with him by other members, and (ii) monitoring the market
for such classes of options at the post, all in accordance with the provisions of
this Chapter; provided, that a member organization that is doing business with the
public in accordance with Chapter IX of these Rules or any individual member or
nominee employed by or otherwise associated with such a member organization,
shall be ineligible to become registered as a Board Broker.]
*****
Rule 7.2. Reserved [Registration of Board Brokers
An applicant for registration as a Board Broker shall file his application in writing
with the Secretary of the Exchange on such form or forms as the Exchange may
prescribe. An organization applying for registration as a Board Broker must designate a nominee who shall be subject to the same approval as if he were, himself,
a Board Broker. Applications shall be reviewed by the appropriate Floor Procedure
Committee, which shall consider an applicant’s ability as demonstrated by his
passing a Board Broker’s examination prescribed by the Exchange, and such
other factors as the appropriate Floor Procedure Committee deems appropriate.
Following the review of the appropriate Floor Procedure Committee, the application, together with the recommendation of the appropriate Floor Procedure Committee, shall be forwarded to the Membership Committee. After reviewing the
application and the recommendation of the appropriate Floor Procedure Committee, the Membership Committee shall either approve or disapprove the applicant’s
registration as a Board Broker. Before a registration shall become effective, the
Secretary, upon direction of the Membership Committee, shall post the name of
applicant on the bulletin board on the floor of the Exchange for at least 3 business
days. The registration of any person as a Board Broker may be suspended or
terminated by the Membership Committee or appropriate Floor Procedure Committee upon a determination that such person has failed to properly perform as a
Board Broker.
Any member or prospective member adversely affected by a determination of the
Membership Committee or appropriate Floor Procedure Committee under this Rule
may obtain a review thereof in accordance with the provisions of Chapter XIX.
... Interpretations and Policies:
September 14, 2005, Volume RB16, Number 37
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.01 In connection with the application of a member organization for registration as a Board Broker, the officers, directors, shareholders and partners of the organization, in addition to being subject to approval of the
Membership Committee under Rule 3.5, shall also be subject to the review
of the appropriate Floor Procedure Committee. No such person may be
engaged in the securities business in any capacity other than as a Board
Broker of the organization nor may they be associated in the securities
business unless such capacity, association or interest has been disclosed
to and approved by the appropriate Floor Procedure Committee.
.02 Deleted.]
*****
Rule 7.3. Designation of Order Book Officials [and Appointment of Board
Brokers]
(a) No Change.
[(b)(1) On a form or forms prescribed by the Exchange, a registered Board Broker
may indicate a preference to be appointed to act as such in one or more classes of
option contracts. From among those registered as Board Brokers and at such times
as the Exchange has not designated an Order Book Official for a particular class of
option contracts, the appropriate Floor Procedure Committee may appoint one or
more Board Brokers to act as such in each class of option contracts that is approved for trading on the Exchange. In making such appointments the appropriate
Floor Procedure Committee shall give attention to the interests of the Exchange,
its members, and the public in maintaining fair and orderly markets, to the preference of registrants and to establishment and maintenance of efficient, flexible arrangements for the sharing, among Board Brokers, of responsibility for all of the
classes of option contracts traded at a given post. No appointment of a Board
Broker shall be made without the Board Broker’s consent to such appointment,
provided that refusal to accept an appointment may be deemed sufficient cause for
the termination or suspension of a Board Broker’s registration.
(2) The appointment of a Board Broker may be suspended or terminated by
the appropriate Floor Procedure Committee if any of the following occur:
(i) The Chairman or President summarily suspends the Board Broker
pursuant to Chapter XVI of the Rules.
(ii) The Chairman of the appropriate Floor Procedure Committee (or, in
his absence any person to whom he may have delegated his authority
hereunder) determines that the Board Broker is in such operating difficulty that the Board Broker cannot be permitted to continue to do
business as a Board Broker with safety to investors, creditors, other
members or the Exchange.
(iii) The appropriate Floor Procedure Committee determines that the
suspension or termination of the Board Broker’s appointment would
further the interests of the Exchange, its members and the public in
maintaining fair and orderly markets, or where it determines that such
action would be in the public interest or for the protection of investors.
(iv) The good standing of a member is suspended, terminated or otherwise withdrawn, as provided in the rules.
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(3) A member or applicant for membership adversely affected by a determination made under subparagraphs (b)(1) or (b)(2) of this rule may obtain a
review thereof in accordance with the provisions of Chapter XIX.
(c) A Board Broker’s appointment to a particular class of option contracts
shall terminate upon the designation by the Exchange of an Order Book
Official for that class pursuant to paragraph (a) of this rule.]
... Interpretations and Policies:
.01 - .02 No Change.
*****
Rule 7.4. Obligations for Orders
(a)-(b)
No Change.
(c) [Availability. Each Board Broker or a temporary Board Broker designated in
accordance with Rule 7.9 must be at the post not later than one-half hour before
the opening of the market each business day (or such earlier time as may be set
by the appropriate Floor Procedure Committee because of unusual circumstances)
and must remain on the floor throughout the business day and for at least 15
minutes following the close of the market (or such longer period as may be set by
the appropriate Floor Procedure Committee because of unusual circumstances).
(d) ]Execution. An [Board Broker or ]Order Book Official shall use due diligence to
execute the orders placed in his custody at the best prices available to him under
the Rules of the Exchange.
[(e)](d)(1) If an [Board Broker or ]Order Book Official holds orders to buy and sell
the same option series, and if the highest bid and lowest offer displayed by the
[Board Broker or ]Order Book Official in that series differs by more than the minimum increment, he may cross such orders, provided he proceeds in the following
manner:
(i) An [Board Broker or ]Order Book Official shall request bids and offers for
such option series and make all persons in the trading crowd aware of his
request;
(ii) After providing an opportunity for such bids and offers to be made, he
must bid above the highest bid or offer below the lowest offer at prices differing by the minimum increment;
(iii) If neither his bid nor his offer is taken, he may cross the orders at such
higher bid or lower offer if possible, or at a price determined by the limit order
to be crossed, by announcing by public outcry that he is crossing and giving
the quantity and price.
(2) If an [Board Broker or ]Order Book Official holds orders to buy and sell the
same option series, and if the highest bid and lowest offer displayed by the
[Board Broker or ]Order Book Official in that series differ by the minimum
increment, he may cross such orders, by announcing by public outcry that he
is crossing and giving the quantity and the price.
(3) The provisions of paragraph (d) of this Rule shall not apply to matching 1¢
buy and sell orders under Rule 6.54.
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(4) The provisions of paragraph (d) of this rule shall not apply to matching
certain opening buy and sell orders in S&P 100 options. The procedures for
such orders are set forth in Interpretation .02 to Rule 24.13.
[(f)](e) Notwithstanding anything to the contrary in paragraph (d) of this Rule,
during the opening rotation for a class of option contracts, in the interests of
achieving a single price opening, an [Board Broker or ]Order Book Official may
proceed as follows:
(i) The [Board Broker or ]Order Book Official may match all market orders in his
possession;
(ii) He shall then announce by public outcry the number of contracts he has
matched and will cross at the opening price to be established;
(iii) He may then continue to bid or offer the remaining unmatched and unexecuted orders he has in his possession for execution during opening rotation.
[(g)](f) Electronic Execution in Non-CBOE Hybrid System Classes: Notwithstanding the priority provisions of paragraphs (a) and (b) of Rule 6.45, when the OBO or
DPM believes there are more orders on the electronic book screen that displays
market orders or limit orders that improve the market ( “live ammo screen”) than
can be expeditiously handled in open outcry, an OBO or DPM should select orders
from the “live ammo screen” to be electronically executed. In order to be electronically executed, the order selected from the live ammo screen must be marketable
and must meet the RAES eligible order size criteria for the appropriate options
class pursuant to the terms of Rule 6.8 or other applicable RAES rule. A MarketMaker that is signed onto RAES for that options class will be assigned as the
contra-party to any electronically executed order sent by the OBO from live ammo
pursuant to the RAES assignment methodology in place for that options class. This
paragraph has no applicability to options classes trading on the CBOE Hybrid System.
... Interpretations and Policies:
.01 In addition to market and limit orders, an [Board Broker or ]Order Book
Official may only accept such other types of orders as [have]has been designated by the appropriate Floor Procedure Committee.
.02 No Change.
.03 An [Board Broker or ]Order Book Official must maintain one “order shoe” for
each type of option in each class of option contracts traded at his post, and
these order shoes shall be the depository for all orders from the floor.
.04 For purposes of this Rule, the term “custody” shall mean that the order is
placed in the appropriate [Board Broker or ]Order Book Official order shoe for
the type of options in the particular options class.
.05 – .06
No Change.
*****
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Rule 7.5. Obligation for Fair and Orderly Market
At the request of a Floor Broker who holds an order for a particular option
contract, or before any crossing transaction is effected in accordance with
Rule 6.74, or whenever it is requested by a Floor Broker, or whenever in the
[Board Broker’s or ]Order Book Official’s opinion the interests of a fair, orderly
and competitive market are best served by such action, an [Board Broker or
]Order Book Official shall call upon those Market-Makers with Appointments
in that class of option contracts and each Market-Maker who does not have
such an Appointment if a transaction has been effected for his account on
that day in that class of option contracts to make bids and/or offers that
contribute to meeting the standards set forth in Rule 8.7. The [Board Broker or
]Order Book Official shall make a record of Market-Makers who fail to respond to such request. Copies of all records kept in accordance with this rule
shall be forwarded to the Department of Market Regulation.
... Interpretations and Policies:
.01 No Change.
.02 In order to facilitate the call for Market-Makers, the Exchange shall maintain a current list of Market-Makers’ Appointments with each [Board Broker or
]Order Book Official.
.03 Every Floor Broker who represents a Market-Maker with an order in any
options class shall, by public outcry at the post, indicate the identity of such
Market-Maker at the request of the [Board Broker, ]Order Book Official or any
member.
.04 No Change.
*****
Rule 7.7. Displaying Bids and Offers in the Book
The limit orders in the custody of an [Board Broker or ]Order Book Official shall
constitute his book. So far as practicable, an [Board Broker or ]Order Book Official shall continuously display, in a visible manner, the highest bid and lowest
offer, along with an indication of the number of option contracts bid for at the
highest bid and offered at the lowest offer in his book in each option contract for
which he is acting as [Board Broker or ]Order Book Official. When required by
market conditions, he may make such quotations available orally rather than by
displaying them.
... Interpretations and Policies:
.01 - .02
No Change.
.03 Prior to the opening of trading, whether at the beginning of a trading day or
after a trading halt, an [Board Broker or ]Order Book Official has the discretion not
to display, or to remove from display, high bids or low offers in his Book, where
circumstances are such that such bids or offers appear to be materially away
from the expected market in that series.
*****
September 14, 2005, Volume RB16, Number 37
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Rule 7.8. Disclosure of Orders
No Change.
... Interpretations and Policies:
.01 It shall not be deemed a violation of Rule 7.8 for an [Board Broker or ]Order
Book Official to give a Floor Broker a reasonable indication of where his order
stands in priority among the orders displayed pursuant to Rule 7.7.
*****
Rule 7.9. Reserved [Temporary Board Brokers
A Board Broker may temporarily designate another Board Broker to take or share a
book or books of such Board Broker. The designated Board Broker shall, while he is
in possession of such book or books, stand in the same relationship to the book or
books as the Board Broker who made the designation.
... Interpretations and Policies:
.01 All appointments as Board Broker shall be conditional upon the Board
Broker’s designation of a temporary Board Broker who is acceptable to the
Exchange.]
*****
Rule 7.10. Reserved [Board Broker’s Employees
A Board Broker shall, to the extent provided by the appropriate Floor Procedure
Committee, employ one or more Assistant Board Brokers who are members of the
Exchange, and regularly employ a clerk or clerks to assist him on the floor of the
Exchange, subject to the approval of the Exchange. No such non-member employee may effect an Exchange transaction.
... Interpretations and Policies:
.01 All appointments as Board Broker shall be conditional upon the Board
Broker’s employment of a clerical assistant who is acceptable to the Exchange.]
*****
Rule 7.11. Liability of Exchange for Actions of [Board Brokers and ]Order
Book Officials
(a) [In no event shall the Exchange be liable to members or persons associated
therewith for any loss, expense, damages or claims arising out of any errors or
omissions of a Board Broker or person associated therewith.] Except to the extent
provided in paragraph (b) of this Rule, the Exchange’s liability to members or persons associated therewith for any loss, expense, damages or claims arising out of
any errors or omissions of an Order Book Official or the assistants or clerks of an
Order Book Official shall be subject to the limitations set forth in paragraph (a) of
Rule 6.7 and to the further limitations set forth in paragraphs (b) and (c) of this Rule.
(b)-(e)
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*****
Chapter 9
*****
Rule 9.1. Exchange Approval
No Change.
[... Interpretations and Policies:
.01 No member organization shall conduct customer business with a non-member
joint venture participant as defined in Rule 1.1 (kk) while such participant is on the
Exchange trading floor without the specific written approval of the Regulatory
Services Division of the Exchange.
.02 Member organizations who have been approved to conduct business with
non-member joint venture participant pursuant to Interpretation .01 above are granted
limited exemptive relief to certain Chapter IX rules as indicated below. The exemptive relief is specifically limited to the customer relationship that exists between the non-member joint venture participant and the member organization
carrying the participant’s account respecting joint venture contracts or related
option contracts. The Exchange shall determine the contracts that are related to
the joint venture contracts.]
*****
Chapter 14
*****
Rule 14.2. Reserved [Reciprocal Arrangements
(a) Any reciprocal arrangement involving, directly or indirectly, securities dealt in
on this Exchange, or any change or termination of such arrangement, shall be
promptly reported to the Exchange in writing and shall be subject to the approval
of the Exchange.
(b) No member or member organization shall, in consideration of the receipt of
business handled or to be handled on the Exchange and at the direct or indirect
request of a non-member, make any payments or give up any work or give up all
or any part of any commission or other property to which such member or member organization is or will be entitled; provided, however, that this paragraph (b)
shall not be deemed to prohibit any transaction that is in accordance with a plan or
arrangement approved in writing by the President of the Exchange as being outside the intended scope and purpose of this paragraph (b).]
*****
Rule 14.3. Reserved [Commissions on Non-Member Orders
On business for non-members, the commission charged upon the execution of
each purchase and sale order in each option security dealt in on this Exchange
shall be as mutually agreed, and nothing in these rules or the practices of this
Exchange shall be construed to require or authorize members, member organizations or persons affiliated with members or member organizations, to agree or
arrange, directly or indirectly, for the charging of fixed rates of commission on
such business.]
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*****
Rule 14.5. Reserved [Intra-Member Rates for Floor Brokerage
On orders executed by Floor Brokers on the floor of the Exchange for a member or
member organization, when a principal is given up, the commission shall be as
mutually agreed.]
*****
Chapter 15
*****
Rule 15.4. Reserved [Monthly Commission Report
(a) Each member organization and each individual member other than one whose
membership is registered for a member organization may be required to submit to
the Treasurer of the Exchange within 18 days after the close of each month a report
on a form prescribed by the Exchange of commissions on business done on the
Exchange during the month. Such reports shall include in commissions of a member organization commissions of its nominees and of individual members whose
membership is registered for the organization. When a member has no such commissions to report for any month, a report shall be submitted so stating. An individual member whose membership ceases to be registered for a member organization and is not immediately registered for another member organization may file
reports under this paragraph commencing the next business day following such
termination of registration.
(b) Each report submitted under paragraph (a) of this Rule shall be accompanied by
payment of the net commission charge payable to the Exchange in accordance
with Rule 2.21.
(c) A member whose membership is transferred or a member organization which
dissolves shall, within three days of the transfer or dissolution, file a report covering
all commissions not previously reported under paragraph (a) of this Rule, and shall
accompany such report with payment of any net commission charge payable to
the Exchange in accordance with Rule 2.21.]
*****
Chapter 19
*****
Rule 19.1. Scope of Chapter
No Change.
... Interpretations and Policies:
.01
No Change.
.02
Reserved [For purposes of this Chapter “persons aggrieved by Exchange
action” may include non-member joint venture participants only as provided pursuant to Rule 6.20, Interpretation and Policy .07 and Rule 17.50(d).]
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*****
Chapter 30
*****
Rule 30.12 – Definitions of Bids and Offers, Certain Types of Orders
No Change.
…Interpretations and Policies:
.01 Notwithstanding any provisions of Rule 7.4 to the contrary, nothing shall
prevent a DPM or Order Book Official from accepting an order for a stock, warrant, UIT interest or other security subject to the rules in this Chapter XXX solely
because a member[, non-member joint venture participant] or non-member broker-dealer has an interest in such order.
A DPM or Order Book Official may accept one or more percentage orders. When
accepting more than one order, the DPM or Order Book Official must make every
effort to inform the entering Floor Brokers and Market-Makers that they will be
participating with another order or orders, and, therefore, that each order will receive less than 50% of the volume. When the DPM or Order Book Official is
handling more than one percentage order, each such order will be on a parity with
the other. When an odd amount of shares is involved (for example, 300 shares)
and a DPM or Order Book Official holds two percentage orders, he must give the
extra 100 shares to the Floor Broker or Market-Maker having priority on a time
basis. Therefore, all percentage orders given to a DPM or Order Book Official
must be time-stamped by the DPM or Order Book Official at his post location.
If a DPM or Order Book Official feels he cannot properly handle a number of
percentage orders at one time, he should call in a Floor Official to discuss the
situation.
If so instructed by the entering Floor Broker or Market-Maker, percentage orders
to buy will be converted into regular limit orders for transactions effected on “minus” or “zero minus” ticks. Conversely, if so instructed by the entering member,
percentage orders to sell will be converted into regular limit orders for transactions
effected on “plus” or “zero plus” ticks.
The elected portion of a percentage order shall be handled as a new limited price
order and shall take its place on the public order book as though it were a new
order received at the time of the electing transaction. When a DPM or Order Book
Official holds more than one percentage order, each individual order shall be elected
to the extent of the full amount of the electing transaction except that a percentage order held by a DPM or Order Book Official shall not be elected by any portion
of volume which results from the execution of a previously elected portion of a
percentage order.
All percentage orders and any special instructions related thereto or modifications
or cancellations thereof shall be in writing.
*****
September 14, 2005, Volume RB16, Number 37
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