September 30, 2005
Exchange
Bulletin
Volume 33, Number 39
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 30, 2005
CLASS
BID
CBOE
$625,000.00
OFFER
LAST SALE AMOUNT
$699,000.00
LAST SALE DATE
$650,000.00
September 27, 2005
CBOT FULL MEMBERSHIP
CLASS
BID
With CBOE Exercise Right
Without CBOE Exercise Right
CBOE Exercise Right
OFFER
$2,150,000.00
$2,475,000.00
$0.00
$0.00
$10,000.00
$98,000.00
LAST SALE AMOUNT
LAST SALE DATE
$2,150,000.00
September 28, 2005
N/A
June 20, 2005
$104,000.00
August 17, 2005
CBOE MEMBERSHIP SALES AND TRANSFERS
From
Argento Trading Company, LP
To
Michael A. Williams
Price/Transfer
$650,000.00
Date
9/27/2005
Page 2
September 30, 2005
Volume 33, Number 39
Chicago Board Options Exchange
MEMBERSHIP INFORMATION FOR 9/22/05 THROUGH 9/28/05
MEMBERSHIP APPLICATIONS RECEIVED FOR
Steve Shwaiko (SSO)
WHICH A POSTING PERIOD IS REQUIRED
Individual Membership Applicants
Date Posted
Matt Henderson, Nominee
Cutler Group, LP
835 W. Diversey, #1
Chicago, IL 60614
9/22/05
Robert E. Nilssen, Jr., Nominee
LaBranche Structured Products LLC
440 S. LaSalle, Suite 1938
Chicago, IL 60605
9/23/05
Michael J. Walsh, Nominee
Ronin Capital, LLC
1440 S. Michigan Ave., Apt. 521
Chicago, IL 60605
9/23/05
Member Organization Applicants
Date Posted
Cassidy Trading LLC
9/26/05
Cassidy McTigue, CBT-RF
440 S. LaSalle, Suite 2101A
Chicago, IL 60605
Cassidy H. McTigue – Managing Member
9/26/05
Archelon LLC
200 S. Wacker, Suite 2400
Chicago, IL 60606
Christopher K. Quek (CQK)
Archelon LLC
200 S. Wacker, Suite 2400
Chicago, IL 60606
9/26/05
John B. McKnight (BMK)
Geneva Trading LLC
440 S. LaSalle, Suite 1822
Chicago, IL 60605
9/26/05
Charles C. Harrold, III (CHD)
Equitec Proprietary Markets, LLC
111 W. Jackson Blvd., 20th Floor
Chicago, IL 60604
9/27/05
Doug T. Lenzo (DUG)
Futrex Trading LLC
948 W. Oakdale Ave., #4
Chicago, IL 60657
9/28/05
EFFECTIVE MEMBERSHIPS
Individual Members
MEMBERSHIP LEASES
New Leases
Termination Date
Effective Date
Lessor: Hartz Construction Company, Inc. 9/22/05
Lessee: Jane Street Specialists, LLC
Salih Sabri, NOMINEE
Rate:
1.2393%
Term: Monthly
Lessor: Richard E. Tobin
Lessee: Ronin Capital, LLC
Richard E. Tobin, NOMINEE
Rate:
1.2393%
Term: Monthly
9/23/05
Lessor: Gabriel Inc.
Lessee: TD Options, LLC
Rate:
1.25%
Term: Monthly
9/26/05
Lessor: GAM Enterprises, Inc.
Lessee: TD Options, LLC
Rate:
1.25%
Term: Monthly
9/26/05
Terminated Leases
Termination Date
Lessor: Hartz Construction Company, Inc. 9/22/05
Lessee: Zydeco Trading LLC
Lessor: Gabriel Inc.
9/26/05
Lessee: Everest Trading, LLC
Michael DeNardis (MDD), NOMINEE
MEMBERSHIP TERMINATIONS
Individual Members
Nominee(s) / Inactive Nominee(s):
Termination Date
Troy J. Ong (TJO)
Archelon LLC
200 S. Wacker, Suite 2400
Chicago, IL 60606
9/26/05
Gerald A. Rife III (RFE)
Archelon LLC
200 S. Wacker, Suite 2400
Chicago, IL 60606
9/26/05
Nominee(s) / Inactive Nominee(s):
Effective Date
Kevin J. Lee (KJL)
9/22/05
175 W. Jackson, Suite 200
Chicago, IL 60604
Type of Business to be Conducted: Market Maker/Floor Broker
Salih Sabri (SAB)
9/22/05
Jane Street Specialists, LLC
111 Broadway, 21st Floor
New York, NY 10006
Type of Business to be Conducted: Market Maker
Anthony B. Marti (ANT)
9/23/05
Ronin Capital, LLC
230 S. LaSalle, Suite 400
Chicago, IL 60604
Type of Business to be Conducted: Market Maker
Brian G. Hunt (BGH)
9/26/05
Ronin Capital, LLC
230 S. LaSalle, Suite 400
Chicago, IL 60604
Type of Business to be Conducted: Market Maker
Ryan T. Mackelfresh (SGT)
9/26/05
Citigroup Derivatives Markets Inc.
111 W. Jackson, 10th Floor
Chicago, IL 60604
Type of Business to be Conducted: Market Maker/Floor Broker
Charles C. Harrold III (CHD)
9/26/05
Equitec Proprietary Markets, LLC
111 W. Jackson Blvd., 20th Floor
Chicago, IL 60604
Type of Business to be Conducted: Market Maker/Floor Broker
Member Organizations
CBT Registered For:
Effective Date
ESH LLC
9/28/05
5960 N. McCook Ave.
Chicago, IL 60646
Type of Business to be Conducted: Market Maker
Page 3
September 30, 2005
Volume 33, Number 39
Chicago Board Options Exchange
JOINT ACCOUNTS
Termination Date
Christopher K. Quek
QAR
9/26/05
John B. McKnight
QGV
9/26/05
Doug T. Lenzo
QED
9/28/05
New Participants
Acronym
Effective Date
James D. Coughlan
QYW
9/22/05
Michael J. Guzy
QYW
9/22/05
Kevin J. Lee
QYW
9/22/05
Salih Sabri
QWY
9/22/05
OSI Grace Trading
LLC RMM
QDW
9/22/05
Benjamin J. Feller
QWZ
9/23/05
Anthony B. Marti
QAB
9/23/05
Brian G. Hunt
QHS
9/26/05
Brian G. Hunt
QRV
9/26/05
Ryan T. Mackelfresh
QCX
9/26/05
Grace Trading LLC
9/22/05
From:
Lessee/Member Organization Affiliated with a CBT
Registered For; Associated with a Market Maker
To:
Lessee/Member Organization Affiliated with a CBT
Registered For; Associated with a Market Maker/
Remote Market Maker
Ryan T. Mackelfresh
QUN
9/26/05
MEMBER ADDRESS CHANGES
James D. Coughlan
QOW
9/27/05
Individual Members
Effective Date
Michael J. Guzy
QOW
9/27/05
9/22/05
Kevin J. Lee
QOW
9/28/05
Trevor Wenberg
175 W. Jackson, Suite 1650
Chicago, IL 60604
Kevin J. Lee
QWV
9/28/05
9/22/05
Kevin J. Lee
QAU
9/28/05
Thomas C. Bruno
175 W. Jackson, Suite 1650
Chicago, IL 60604
New Accounts
Acronym
Effective Date
9/22/05
Jacob D. Bricker
QAU
9/26/05
Daniel W. Murphy
175 W. Jackson, Suite 1650
Chicago, IL 60604
James D. Coughlan
QAU
9/26/05
9/22/05
Peter Dannecker
QAU
9/26/05
John V. Nash
175 W. Jackson, Suite 1650
Chicago, IL 60604
Michael J. Guzy
QAU
9/26/05
9/22/05
Joseph F. Sacchetti
QAU
9/26/05
Chad R. Gramann
601 S. LaSalle, Suite 200
Chicago, IL 60605
Joseph P. Sullivan III
QAU
9/26/05
9/27/05
Paul C. Thomas
QAU
9/26/05
Elliott N. Mirman
1717 Deerfield Rd., Suite 300S
Deerfield, IL 60015
Terminated Participants Acronym
Termination Date
Member Organizations
Effective Date
Christopher J. Loughlin
QWD
9/22/05
9/22/05
Troy J. Ong
QAR
9/26/05
Resource Equities LLC
175 W. Jackson, Ste. 1650
Chicago, IL 60604
Gerald A. Rife III
QAR
9/26/05
9/27/05
Steve Shwaiko
QAR
9/26/05
Elliott Mirman Inc.
1717 Deerfield Rd., Suite 300S
Deerfield, IL 60015
CHANGES IN MEMBERSHIP STATUS
Individual Members
Effective Date
John P. Eshoo
9/28/05
From:
CBT Exerciser; Market Maker
To:
CBT Registered For ESH LLC; Market Maker
Member Organizations
Effective Date
Page 4
September 30, 2005
Volume 33, Number 39
Chicago Board Options Exchange
RESEARCH CIRCULARS
The following Research Circulars were distributed between September 26 and September 29, 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 #RS05-687
September 26, 2005
*****UPDATE*****UPDATE*****UPDATE*****
Electronics Boutique Holdings Corp. (“ELBO/LQB”)
Proposed Merger with GameStop Corp. (“GME”)
Research Circular #RS05-693
September 28, 2005
PetroKazakhstan Inc. Class A (“PKZ”)
Proposed Plan of Arrangement with CNPC International Ltd.
Research Circular #RS05-688
September 27, 2005
America West Holdings Corporation Class B (“AWA”)
Merger COMPLETED with US Airways Group, Inc. (“UAIRQ”)
Research Circular #RS05-697
September 28, 2005
World Air Holdings, Inc. (“WLDA/QWA”)
Underlying Symbol Change to “WLDAE”
Effective Date: September 29, 2005
Research Circular #RS05-689
September 27, 2005
Coventry Health Care, Inc. (“CVH/OVB/WJU”)
3-for-2 Stock Split
Ex-Distribution Date: October 18, 2005
Research Circular #RS05-698
September 28, 2005
*****UPDATE*****UPDATE*****UPDATE*****
Argosy Gaming Company (“AGY”)
Proposed Merger with Penn National Gaming, Inc. (“PENN”)
Research Circular #RS05-692
September 27, 2005
United Microelectronics Corporation (“UMC & adj. UJJ”)
Determination of Cash-in-Lieu Amount
Research Circular #RS05-700
September 29, 2005
Fidelity National Financial, Inc. (“FNF/VWJ/WWJ & adj. WGF”)
Distribution of Shares of
Fidelity National Title Group, Inc. (“FNT”)
Ex-Distribution Date: October 18, 2005
October 5, 2005
Volume RB16, Number 40
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 RG05-78
DATE:
September 27, 2005
TO:
Members, Member Firms and Member Organizations
FROM:
Index Floor Procedure Committee
RE:
Index Options Eligible for Routing into the Complex Order Book
(COB)
The Index Floor Procedure Committee has approved the routing of complex orders for
origins CUSTOMER, FIRM and BD directly into the COB, or from PAR to the COB, in the
DIA, QQQ, MNX, RUI, RLG and RLV option class as of the dates noted below.
Routing changes for DIA will be effective beginning September 28, 2005. Routing changes
for QQQ, MNX, RUI, RLG and RLV (which currently trade at Post 5, Station 9) will be
effective beginning September 29, 2005. Member firms will be contacted by CBOE staff
to confirm routing parameters. With these changes, orders will be eligible to route directly into the COB, bypassing PAR, or from PAR to the COB. Orders routed to the COB
that are marketable will trade immediately, while those that are not marketable will simply book and rest in the COB. Resting COB orders will be canceled electronically upon
receipt of a cancel request and will execute electronically if:
(1)
(2)
(3)
the individual series quotes line-up to make the order marketable;
an opposing order that can trade with the resting order is received into
the COB; or
a Hybrid market participant submits an order to trade with the resting
order.
Hybrid market participants who use third party auto-quote systems should contact their
vendor regarding COB functionality.
Questions regarding this matter may be directed to Anthony Montesano at x7365, Mike
Trees at x8408 or the Help Desk at x7100.
Regulatory Circulars
continued
Regulatory Circular RG05-79
DATE:
September 26, 2005
FROM:
Market Operations Department
RE:
Restrictions on Transactions in
Northwest Airlines (NWACQ)
On the Opening of business on September 26, 2005 the listing of Northwest Airlines
Corporation (NWACQ) was transferred to the Nasdaq SmallCAP Market.
As of September 26, 2005 trading on CBOE in existing series of NAQ (VUW, WAW)
options will be subject to the following restrictions. Only closing transactions may be
effected in any series of NAQ (VUW, WAW) options except for (i) opening transactions
by Market-Makers executed to accommodate closing transactions of other market
participants and (ii) opening transactions by CBOE member organizations to facilitate
the closing transactions of public customers executed as crosses pursuant to and in
accordance with CBOE Rule 6.74(b) or (d).
The execution of opening transactions in NAQ (VUW, WAW) options, except as permitted above, and/or the misrepresentation as to whether an order is opening or closing,
will constitute a violation of CBOE rules, and may result in disciplinary action. Member
organizations should ensure that they have appropriate procedures in place to prevent
their customers from entering opening orders in this restricted option class.
There are no restrictions in place with respect to the exercise of NAQ (VUW, WAW)
options. The provisions of this circular apply to any options on Northwest Airlines
Corporation traded on CBOE.
Any questions regarding this circular may directed to Kerry Winters at (312) 786-7312
or Joanne Heenan-Hustad at (312) 786-7786.
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-2005-76
Hybrid Rules Pertaining to Orders Represented in Open
Outcry
On September 12, 2005, the Exchange filed Rule Change File No. SR-CBOE-2005-76,
which filing proposes to extend the duration of Rule 6.45A(b), relating to the allocation
of orders represented in open outcry in equity option classes designated by the Exchange to be traded on Hybrid, through December 14, 2005. Any questions regarding
the rule change may be directed to Jennifer Lamie, Legal Division, at 312-786-7576.
New language is underlined.
Rule 6.45A – Priority and Allocation of Equity Option Trades on the CBOE
Hybrid System
Rule 6.45A. Generally: The rules of priority and order allocation procedures
set forth in this rule shall apply only to equity option classes designated by the
Exchange to be traded on the CBOE Hybrid System and has no applicability
to index option and options on ETF classes. The term “market participant” as
RB2
October 5, 2005, Volume RB16, Number 40
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-76 continued
used throughout this rule refers to a Market-Maker, an in-crowd DPM, an eDPM, a Remote Market-Maker, and a floor broker representing orders in the
trading crowd. The term “in-crowd market participant” only includes an in-crowd
Market-Maker, in-crowd DPM, and floor broker representing orders in the trading
crowd.
(a) No change.
(b) Allocation of Orders Represented in Open Outcry: The allocation of orders
that are represented in open outcry by floor brokers (including DPMs acting as
agent under 8.85(b)) shall be as described below in subparagraphs (b)(i) and
(b)(ii). With respect to subparagraph (b)(ii), the floor broker representing the order (including DPMs acting as agent under 8.85(b)) shall determine the sequence in which bids (offers) are made.
(i) – (iii) No change.
(iv) Duration of Rule 6.45A(b): Unless otherwise extended, the effectiveness of Rule 6.45A(b) terminates December 14, 2005.
(c) – (e) No change.
. . . Interpretations and Policies
.01 - .02 No change.
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. New language is underlined.
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.
(b)
No change.
(c)
No change.
October 5, 2005, Volume RB16, Number 40
RB3
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-70
Extension of Market-Maker Access to Automatic
Execution System
On September 12, 2005, the Exchange filed Rule Change File No. SR-CBOE-2005-70,
which filing proposes to extend the pilot program in Rule 6.13 relating to Market-Maker
access to the Exchange’s automatic execution system until October 12, 2006. Any
questions regarding the rule change may be directed to Jennifer Lamie, Legal Division,
at 312-786-7576. New language is underlined.
Rule 6.13 - CBOE Hybrid System’s Automatic Execution Feature
(a) No change.
(b) Automatic Execution
(i) No change.
(A) - (B) No change.
(C) Access:
(i) – (ii) No change.
(iii) 15-Second Limitation: With respect to orders eligible for submission pursuant to paragraph (b)(i)(C)(ii),
members shall neither enter nor permit the entry of
multiple orders on the same side of the market in an
option class within any 15-second period for an account or accounts of the same beneficial owner. The
appropriate FPC may shorten the duration of this 15second period by providing notice to the membership
via a Regulatory Circular that is issued at least one
day prior to implementation. The effectiveness of this
rule shall terminate on October 12, 2006.
(ii) - (iv) No change.
(c) – (e) No change.
RB4
October 5, 2005, Volume RB16, Number 40
Rule Changes,
Interpretations and
Policies continued
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-2005-77
Bid/Ask Differentials
On September 20, 2005, the Exchange filed Rule Change File No. SR-CBOE-2005-77,
which filing proposes to make a number of changes to its rules relating to bid/ask differentials, including reorganizing Rule 8.7(b)(iv) to set forth in separate paragraphs the
applicable bid/ask differentials in open outcry, during the opening rotation, and for option
classes trading on Hybrid or the Hybrid 2.0 Platform. 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 stricken-through].
Rule 5.8 – Long-Term Equity Option Series (LEAPS®)
Rule 5.8.
(a)
Notwithstanding conflicting language in Exchange Rule 5.6, the Exchange may list long-term equity option series (LEAPS®) that expire from 12 to
39 months from the time they are listed. There may be up to six additional
expiration months. Strike price interval[, bid/ask differential and continuity]
rules shall not apply to such option series until the time to expiration is less
than nine months.
(b)
No change.
*****
Rule 8.7 – Obligations of Market-Makers
Rule 8.7.
(a)
No change.
(b)
Appointment. With respect to each class of option contracts for which
he holds an Appointment under Rule 8.3, a Market-Maker has a continuous
obligation to engage, to a reasonable degree under the existing circumstances,
in dealings for his own account when there exists, or it is reasonably anticipated
that there will exist, a lack of price continuity, a temporary disparity between the
supply of and demand for a particular option contract, or a temporary distortion
of the price relationships between option contracts of the same class. Without
limiting the foregoing, a Market-Maker is expected to perform the following activities in the course of maintaining a fair and orderly market:
(i) – (iii) No change.
(iv)
To price options contracts fairly by, among other things, bidding and/or offering in the following manner:
October 5, 2005, Volume RB16, Number 40
RB5
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-77 continued
(A) Bidding and Offering in Open Outcry. With respect to all option
classes traded on the Exchange, bids and offers made in open outcry
shall be priced so as to create differences of no more than $0.25
between the bid and offer for each option contract for which the bid is
less than $2, no more than $0.40 where the bid is at least $2 but does
not exceed $5, no more than $0.50 where the bid is more than $5 but
does not exceed $10, no more than $0.80 where the bid is more than
$10 but does not exceed $20, [and] no more than $1 where the bid is
more than $20 but does not exceed $50, no more than $2 where the
bid is more than $50 but does not exceed $100, and no more than $3
where the bid is more than $100, provided that the appropriate Market
Performance Committee may establish differences other than the above
for one or more options series, including LEAPS. The bid/ask differentials stated above shall not apply to in-the-money series where the
quote width (i) on the primary market of the underlying security[ies
market], or (ii) calculated by the Exchange or its agent for various
indices pursuant to Interpretation .08 of Rule 8.7, as applicable, is
wider than the differentials set forth above. For these series, the bid/
ask differential may be as wide as the quotation on the primary market of the underlying security or calculated by the Exchange or its
agent for various indices, as applicable.
(B)
Opening Rotations. The provisions of Rule 8.7(b)(iv)(A) shall
apply during the applicable opening rotation employed in Hybrid classes,
Hybrid 2.0 classes, and Non-Hybrid and Non-Hybrid 2.0 classes.
([A]C) Option Classes Trading on the Hybrid Trading System and
Hybrid 2.0 Platform. Except as provided in subparagraphs (i) and (ii)
below, [O]option[s] [on] classes trading on the Hybrid Trading [s]System
and the Hybrid 2.0 Platform may be quoted electronically with a difference not to exceed $5 between the bid and offer regardless of the
price of the bid. [The $5 quote widths shall only apply to classes
trading on the Hybrid system and only following the opening rotation
in each security (i.e., the widths specified in paragraph (b)(iv) above
shall apply during opening rotation).] The provisions of Rule 8.7(b)(iv)(A)
shall apply to any [Q]quotes given in open outcry in Hybrid classes
and Hybrid 2.0 classes[may not be quoted with $5 widths and instead
must comply with the legal width requirements (e.g., no more than
$0.25 between the bid and offer for each option contract for which the
bid is less than $2) described in paragraph (iv) and not subparagraph
(iv)(A)].
i.
If the quote width on the primary market of the underlying security, or the quote width calculated by the Exchange
or its agent for various indices pursuant to Interpretation .08,
is wider than $5, then the bid/ask differentials for the option
class may be as wide as the quote width on the primary market of the underlying security or calculated by the Exchange
or its agent, as applicable. A Market-Maker’s ability to quote
wider than $5 when the quote width in the primary market of
the underlying security or calculated by the Exchange or its
agent for various indices, as applicable, exceeds $5 is conditioned upon the process being automated. Once the quote
width is $5 or less, the Market-Maker’s quotes must automatically return to being quoted electronically with a difference not to exceed $5 between the bid and offer regardless of
the price of the bid; and
RB6
October 5, 2005, Volume RB16, Number 40
Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-77 continued
ii.
The appropriate Market Performance Committee may
establish quote width differences other than as provided in Rule
8.7(b)(iv)(C) for one or more option series.
(c) – (e) No change.
. . . Interpretations and Policies:
.01 – .13 No change.
*****
Rule 24.9
Terms of Index Option Contracts
Rule 24.9.
(a)
No change.
(b) Long-Term Index Option Series (“LEAPS®”).
(1) Notwithstanding the provisions of Paragraph (a)(2), above, the Exchange
may list long-term index option series that expire from 12 to 60 months from the
date of issuance.
(A)
Index LEAPS may be based on either the full or reduced value
of the underlying index. There may be up to 10 expiration months, none
further out than sixty (60) months. Strike price interval[, bid/ask differential and continuity] rules shall not apply to such option series until
the time to expiration is less than twelve (12) months.
(c)
(B)
No change.
(2)
No change.
No change.
. . . Interpretations and Policies:
.01 – .13 No change.
SR-CBOE-2005-73
Expiration Dates for FLEX Options
On September 22, 2005, the Exchange filed Rule Change File No. SR-CBOE-2005-73,
which filing proposes to amend its rules regarding permissible expiration dates for FLEX
Options. Any questions regarding the rule change may be directed to Jennifer Lamie,
Legal Division, at 312-786-7576. 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 24A.4 - Terms of FLEX Options
Rule 24A.4. (a) General.
(1) Options series will not be pre-established for FLEX trading. The variable
terms of FLEX Options as provided for in this Rule 24A.4 shall be established
through the Request for Quotes process and the bidding and offering mechanics detailed in this Rule. Other terms of FLEX Option contracts, including the
applicable index multiplier in the case of U.S. dollar-denominated FLEX Index
Options, shall be the same as those that apply to Non-FLEX Options.
October 5, 2005, Volume RB16, Number 40
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Rule Changes,
Interpretations and
Policies continued
SR-CBOE-2005-73 continued
(2) Every FLEX Request for Quotes and every FLEX Option contract shall
contain one element, as designated by the parties to the contract, from each
of the following contract term categories:
(i) – (iii) No change.
(iv) Expiration date (specified as to day, month and year, except that a FLEX Option may not expire on [any business
day that falls on, or within two business days of, a third Friday-of-the-month] an expiration day for any Non-FLEX Option
other than a QIX option);
(v) No change.
(3)-(4) No change.
(b)-(c) No change.
Business Conduct
Committee
Decisions
At its meeting on September 7, 2005, the Business Conduct Committee (“BCC”) resolved the following disciplinary matters by accepting one Letter of Consent and eight
Offers of Settlement in which the subject and respondents consented to stipulations of
facts and findings as detailed below without admitting or denying that Exchange Rules
had been violated.
File No. 05-0004 (Offer of Settlement, Decision issued September 22, 2005)
TD Options, LLC (“TD Options”), an Exchange Designated Primary Market-Maker organization acting as a registered broker-dealer, was censured and fined $7,500 for the
following conduct. TD Options failed to execute several orders in a timely manner and
failed to afford firm quote treatment for at least the established number of contracts on
the remaining balance of the orders at the ask prices disseminated in the respective
series at the time the DPM received the aforementioned orders. (CBOE Rules 4.2 –
Adherence to Law; 7.4(d) – Obligation for Orders; 8.51 – Firm Disseminated Market
Quotes and 8.85(a)(ii), 8.85(b), 8.85(c)(ii) and 8.85(c)(iv) – DPM Obligations)
Consolidated File Nos. 05-0007 and 05-0039 (Letter of Consent, Decision issued September 22, 2005)
Okoboji Options, LLC (“Okoboji”), an Exchange Market-Maker organization, was censured, fined $20,000, and further ordered by the BCC to compute its net capital each
day for 45 consecutive business days and submit its capital computation to the
Exchange’s Member Firm Regulation Department no later than 8:00 am (central time).
During the approximate period from on or about September 15, 2004 through on or
about September 16, 2004 and from on or about April 14, 2005 through on or about
April 15, 2005, Okoboji operated below its minimum net capital requirement. (CBOE
Rules 4.2 - Adherence to Law; and 13.1 - Minimum Requirements; and Section 15(c) of
the Securities Exchange Act of 1934, as amended (the “Act”) and Rule 15c3-1 - Net
Capital thereunder)
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October 5, 2005, Volume RB16, Number 40
Business Conduct
Committee
Decisions
File No. 05-0011 (Offer of Settlement, Decision issued September 22, 2005)
Harry Cody (“Cody”), an Exchange Lessor member registered as a broker/dealer, was
censured and fined $2,500 for the following conduct. Cody failed to file his Anti-Money
Laundering (“AML”) Compliance Program with the Exchange by December 13, 2004. As
a result, Cody impeded and delayed the Exchange’s investigation of this matter. In
accepting this Offer of Settlement, the BCC considered certain mitigating factors, including the fact that although Cody may not have received actual notice of the letters
requesting Cody to file the required AML Compliance Program with the Exchange, Cody
received constructive notice of such letters, in that the letters were sent to Cody’s
address designated for correspondence in his Exchange membership file. (CBOE Rules
4.20 – Anti-Money Laundering Compliance Program; 15.1 – Furnishing of Books, Records
and Other Information; and 17.2(b)- Complaint and Investigation: Requirement to Furnish Information)
File No. 05-0012 (Offer of Settlement, Decision issued September 22, 2005)
Bit Enterprises, Incorporated (“Bit”), a registered CBT Exerciser and broker/dealer, was
censured and fined $2,500 for the following conduct. Bit failed to file its AML Compliance Program with the Exchange by December 13, 2004. As a result, Bit impeded and
delayed the Exchange’s investigation of this matter. In accepting this Offer of Settlement, the BCC considered certain mitigating factors, including the fact that although Bit
may not have received actual notice of the letters requesting Bit to file the required AML
Compliance Program with the Exchange, Bit received constructive notice of such letters, in that the letters were sent to Bit’s address designated for correspondence in its
Exchange membership file. (CBOE Rules 4.20 – Anti-Money Laundering Compliance
Program; 15.1 – Furnishing of Books, Records and Other Information; and 17.2(b)- Complaint and Investigation: Requirement to Furnish Information)
File No. 05-0018 (Offer of Settlement, Decision issued September 22, 2005)
Robert Groves (“Groves”), a registered CBT Exerciser and broker/dealer, was censured
and fined $2,500 for the following conduct. Groves failed to file his Anti-Money Laundering (“AML”) Compliance Program with the Exchange by December 13, 2004. As a result,
Groves impeded and delayed the Exchange’s investigation of this matter. In accepting
this Offer of Settlement, the BCC considered certain mitigating factors, including the
fact that although Groves may not have received actual notice of the letters requesting
Groves to file the required AML Compliance Program with the Exchange, Groves received constructive notice of such letters, in that the letters were sent to Groves’ address designated for correspondence in his Exchange membership file. (CBOE Rules
4.20 – Anti-Money Laundering Compliance Program; 15.1 – Furnishing of Books, Records
and Other Information; and 17.2(b)- Complaint and Investigation: Requirement to Furnish Information)
File No. 05-0019 (Offer of Settlement, Decision issued September 22, 2005)
Ted Breiter (“Breiter”), an Exchange Lessor member registered as a broker/dealer, was
censured and fined $2,500 for the following conduct. Breiter failed to file his Anti-Money
Laundering (“AML”) Compliance Program with the Exchange by December 13, 2004. As
a result, Breiter impeded and delayed the Exchange’s investigation of this matter. In
accepting this Offer of Settlement, the BCC considered certain mitigating factors, including the fact that although Breiter may not have received actual notice of the letters
requesting Breiter to file the required AML Compliance Program with the Exchange,
Breiter received constructive notice of such letters, in that the letters were sent to
Breiter’s address designated for correspondence in his Exchange membership file. (CBOE
Rules 4.20 – Anti-Money Laundering Compliance Program; 15.1 – Furnishing of Books,
Records and Other Information; and 17.2(b)- Complaint and Investigation: Requirement
to Furnish Information)
October 5, 2005, Volume RB16, Number 40
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Business Conduct
Committee
Decisions
File No. 05-0027 (Offer of Settlement, Decision issued September 22, 2005)
ROQ Capital, LLC (“ROQ”), a registered CBT Exerciser and broker/dealer, was censured and fined $2,500 for the following conduct. ROQ failed to file its AML Compliance
Program with the Exchange by December 13, 2004. As a result, ROQ impeded and
delayed the Exchange’s investigation of this matter. In accepting this Offer of Settlement, the BCC considered certain mitigating factors, including the fact that although
ROQ may not have received actual notice of the letters requesting ROQ to file the
required AML Compliance Program with the Exchange, ROQ received constructive
notice of such letters, in that the letters were sent to ROQ’s address designated for
correspondence in its Exchange membership file. (CBOE Rules 4.20 – Anti-Money
Laundering Compliance Program; 15.1 – Furnishing of Books, Records and Other Information; and 17.2(b)- Complaint and Investigation: Requirement to Furnish Information)
File No. 05-0030 (Offer of Settlement, Decision issued September 22, 2005)
Robert Klaskin (“Klaskin”), an Exchange Market-Maker member registered as a broker/dealer, was censured and fined $2,500 for the following conduct. Klaskin failed to
file his Anti-Money Laundering (“AML”) Compliance Program with the Exchange by
December 13, 2004. As a result, Klaskin impeded and delayed the Exchange’s investigation of this matter. In accepting this Offer of Settlement, the BCC considered certain mitigating factors, including the fact that although Klaskin may not have received
actual notice of the letters requesting Klaskin to file the required AML Compliance
Program with the Exchange, Klaskin received constructive notice of such letters, in
that the letters were sent to Klaskin’s address designated for correspondence in his
Exchange membership file. (CBOE Rules 4.20 – Anti-Money Laundering Compliance
Program; 15.1 – Furnishing of Books, Records and Other Information; and 17.2(b)Complaint and Investigation: Requirement to Furnish Information)
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October 5, 2005, Volume RB16, Number 40