October 28, 2005
Exchange
Bulletin
Volume 33, Number 43
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, OCTOBER 28, 2005
CLASS
CBOE
BID
$675,000.00
OFFER
LAST SALE AMOUNT
$765,000.00
LAST SALE DATE
$750,000.00
October 25, 2005
CBOT FULL MEMBERSHIP
CLASS
BID
OFFER
LAST SALE AMOUNT
LAST SALE DATE
With CBOE Exercise Right
$2,700,000.00
$3,000,000.00
$2,850,000.00
October 27, 2005
Without CBOE Exercise Right
$2,500,000.00
$3,300,000.00
$2,850,000.00
October 24, 2005
$25,000.00
$125,000.00
$90,000.00
October 28, 2005
CBOE Exercise Right
CBOE MEMBERSHIP SALES AND TRANSFERS
From
David Schorvitz LLC
Bridge Trading Company
J. Stephen Fossett
M. Jamil Akhtar
M. Jamil Akhtar
Citadel Derivatives Group LLC
To
Sheldon Weinberg
Mont R. Wickham
Burton P. Bilfeld
Timothy G. Keller
Charles C. Sorsby
Burton P. Bilfeld
Price/Transfer
$699,000.00
$700,000.00
$715,000.00
$725,000.00
$725,000.00
$750,000.00
Date
10/21/05
10/21/05
10/24/05
10/24/05
10/24/05
10/25/05
DPM APPOINTMENT TRANSFER APPROVAL – October 23, 2005
The MTS Committee has conditionally approved pursuant to CBOE Rule 8.89 a proposal from Citadel Derivatives Group, LLC (“Citadel”), a
member organization operating as a DPM, regarding a transfer of its DPM appointments. The Citadel DPM is located at Post 4 - Station 5.
Currently, Citadel’s ownership structure is as follows: Citadel Wellington, LLC – 99%, Citadel Limited Partnership – 1%.
Under the proposal, Citadel would transfer all of its DPM appointments to Susquehanna International Group, LLP (“SIG”) and Paul Jiganti of SIG
would assume responsibility for overseeing the operations of the DPM on behalf of SIG.
Page 2
October 28, 2005
Volume 33, Number 43
Chicago Board Options Exchange
MEMBERSHIP INFORMATION FOR 10/20/05 THROUGH 10/26/05
MEMBERSHIP APPLICATIONS RECEIVED FOR
MEMBERSHIP LEASES
WHICH A POSTING PERIOD IS REQUIRED
Individual Membership Applicants
Date Posted
New Leases
Effective Date
Donald J. Schell, Lessor
5666 Cape Leyte
Sarasota, FL 34242
10/24/05
Lessor: Carol Jane White
Lessee: Archelon LLC
Robert M. Cox, NOMINEE
Rate:
1.2455%
Term: Monthly
10/20/05
John B. Lloyd, Nominee
Capstone Trading LLC
44 Wall Street
New York, NY 10005
10/25/05
Doron Gahtan, Lessor
33 Empress Avenue, #1010
Toronto, ONT, CANADA M2N-6YS
10/26/05
William D. Baedke, Nominee
UBS Securities LLC
21 Dover Road
Westport, CT 06880
Lessor: Philip Mayster
10/20/05
Lessee: Citigroup Derivatives Markets Inc.
Timothy J. Pirowski Sr, NOMINEE
Rate:
1.2455%
Term: Monthly
10/24/05
10/26/05
Lessor: Mont R. Wickham
Lessee: Xenos, LLC
Harilaos S. Mantzoros, NOMINEE
Rate:
1.2455%
Term: 20 Days
10/25/05
Phillip E. Teuscher, CBT-RF
Sallerson-Troob LLC
1045 W. Wellington
Chicago, IL 60657
10/26/05
Lessor: Theodore E. Darch
Lessee: Goldman Sachs & Co.
Scott Patrick Hawley, NOMINEE
Rate:
1.2455%
Term: Monthly
10/25/05
Diana Christine Halloran, Nominee
Cutler Group, LP
11655 W. 193rd Street
Mokena, IL 60448
10/26/05
Lessor: Burton P. Bilfeld
Lessee: Jump Trading LLC
Robert D. Regan Jr., NOMINEE
Rate:
1.2455%
Term: 5 Days
10/26/05
Member Organization Applicants
Date Posted
Lessor: Charles C. Sorsby
Lessee: Cutler Group, LP
Neal C. Salmen, NOMINEE
Rate:
1.125%
Term: Monthly
AOS, Inc.
Gary M. DeWeese, Nominee
311 S. Wacker, Suite 1525
Chicago, IL 60606
Gary M. DeWeese – CCO/CFO/FINOP
Biljana Kljajic – CROP/SROP
Jere T. Wickert - President
10/26/05
Lessor: Timothy G. Keller
Lessee: Group One Trading, LP
John L. Bertolero, NOMINEE
Rate:
1.125%
Term: Monthly
10/26/05
Terminated Leases
Termination Date
Gargoyle Strategic Investments LLC
10/26/05
Scott England, CBT-RF
285 Grand Avenue, Bldg. 3 - 2nd Fl.
Englewood, NJ 07631
Gargoyle International Holdings LP – Investing Member
Gargoyle International Management LP – Managing
Member
Gargoyle Services LLC – General partner
Charles Goodgal – Managing Member
CCM Equities, LLC
10/24/05
Patrick R. Carroll, Nominee
200 S. Wacker, Suite 3325
Chicago, IL 60606
Gerald M. Ahern – SROP/CROP
Michael H. Crane – Member/Compliance Officer
Sheila A. Cavanagh - FINOP
Urbana Corporation
10/19/05
150 King Street West, Suite 1702
PO Box 46
Toronto, ONT, CANADA M5H-1J9
Thomas S. Caldwell – Chairman & President/Shareholder
Dorothy Caldwell – Shareholder
Caldwell Financial Ltd. – Shareholder
John Campbell, QC – Director & Secretary
Lessor: Carol Jane White
10/20/05
Lessee: Goldman Sachs Execution & Clearing, LP
Lessor: Philip Mayster
Lessee: Northern Access LLC
10/20/05
Lessor: UBS Financial Services, Inc.
Lessee: Navillus, Inc.
Donald E. Lapato (DNI), NOMINEE
10/20/05
Lessor: Charles J. Peres
10/21/05
Lessee: Wang Trading LLC
Richard M. Gabriel (ORO), NOMINEE
Lessor: Bridge Trading Company
10/24/05
Lessee: Xenos, LLC
Harilaos S. Mantzoros (HSM), NOMINEE
Lessor: J. Stephen Fossett
10/25/05
Lessee: Jump Trading LLC
Robert D. Regan, Jr. (BBY), NOMINEE
Lessor: David Schorvitz LLC
10/25/05
Lessee: Goldman Sachs & Co.
Scott Patrick Hawley (OWL), NOMINEE
Lessor: M. Jamil Akhtar
Lessee: Cutler Group, LP
Neal C. Salmen (NCS), NOMINEE
10/26/05
Lessor: M. Jamil Akhtar
Lessee: Group One Trading, LP
John L. Bertolero (JLB), NOMINEE
10/26/05
Page 3
October 28, 2005
Volume 33, Number 43
Chicago Board Options Exchange
MEMBERSHIP TERMINATIONS
Lessor(s):
Termination Date
Individual Members
David Schorvitz LLC
PO Box 548
Winnetka, IL 60093
10/26/05
Bridge Trading Company
717 Office Parkway
St. Louis, MO 63141
10/26/05
CBT Registered For:
Termination Date
Thomas E. Duddy (TEE)
Citadel Derivatives Group LLC
131 S. Dearborn Street, 37th Floor
Chicago, IL 60603
10/21/05
Shaun M. Williams (AUS)
Sparta Group Of Chicago, LP
440 S. LaSalle, Suite 2101
Chicago, IL 60604
10/21/05
Scott C. England (SCE)
Northern Access LLC
440 S. LaSalle, Suite 3100
Chicago, IL 60605
10/24/05
James P. Buckley (JUB)
Citadel Derivatives Group LLC
131 S. Dearborn Street, 37th Floor
Chicago, IL 60603
10/25/05
Lessor(s):
Termination Date
Charles J. Peres
7550 N. 16th St., Apt. 6238
Phoenix, AZ 85020-7643
10/21/05
J. Stephen Fossett
401 S. LaSalle, Suite 200
Chicago, IL 60605
10/25/05
M. Jamil Akhtar
215 S. Power Road, #105
Mesa, AZ 85206
10/26/05
Nominee(s) / Inactive Nominee(s):
Termination Date
Donald E. Lapato (DNI)
Navillus, Inc.
9235 S. Winchester
Chicago, IL 60620
10/20/05
Henry G. Nothnagel (HGN)
Wachovia Securities, LLC
901 E. Byrd St., 3rd Floor
Richmond, VA 23219
10/21/05
Richard M. Gabriel (ORO)
Wang Trading LLC
100 E. Bellevue, 24A
Chicago, IL 60611
10/21/05
Ricardo Ramos (RIX)
Citadel Derivatives Group LLC
131 S. Dearborn Street, 37th Floor
Chicago, IL 60603
10/25/05
Timothy E. O’Donnell (ODE)
Sallerson-Troob LLC
440 S, LaSalle, Suite 950
Chicago, IL 60605
10/26/05
EFFECTIVE MEMBERSHIPS
Individual Members
CBT Registered For:
Effective Date
Thomas W. Burke (BUR)
10/20/05
Northern Access LLC
1000 Parkers Lake Road
Wayzata, MN 55391
Type of Business to be Conducted: Remote Market Maker
Eren Levi (ERN)
10/24/05
440 S. LaSalle, Suite 2101
Chicago, IL 60605
Type of Business to be Conducted: Market Maker
Member Organizations
Lessee(s):
Termination Date
Wang Trading LLC
50 Washington Street, 10th Fl.
S. Norwalk, CT 06854
10/21/05
Lessor(s):
Effective Date
Burton P. Bilfeld
1217 W. Roscoe St.
Chicago, IL 60657
10/25/05
Charles C. Sorsby
676 N. Michigan Ave.
Chicago, IL 60611
10/26/05
Nominee(s) / Inactive Nominee(s):
Effective Date
John P. Kwilos (KWZ)
10/21/05
Blue Capital Group LLC
401 S. LaSalle, #700
Chicago, IL 60605
Type of Business to be Conducted: Market Maker
Scott D. Spears (ECJ)
10/21/05
Wachovia Securities, LLC
901 E. Byrd St.
Richmond, VA 23219
Type of Business to be Conducted: No Floor Function
Anne E. Walsh (AEW)
10/24/05
Wolverine Trading LLC
175 W. Jackson, Suite 200
Chicago, IL 60604
Type of Business to be Conducted: Market Maker
JOINT ACCOUNTS
New Participants
Acronym
Effective Date
John P. Kwilos
QOJ
10/21/05
Eren Levi
QUB
10/24/05
Anne E. Walsh
QOW
10/24/05
Anne E. Walsh
QWV
10/24/05
ARM Andrie
Trading LLC, RMM
QNZ
10/24/05
ARM Andrie
Trading LLC, RMM
QDD
10/24/05
Page 4
October 28, 2005
Volume 33, Number 43
Chicago Board Options Exchange
New Participants
Acronym
Effective Date
New Accounts
Acronym
Effective Date
Erik Bolinder
QNY
10/25/05
Todd Kotler
QBZ
10/24/05
Tony Aimone
QNY
10/25/05
Kevin J. Lee
QBZ
10/24/05
Benjamin Dekker
QNY
10/25/05
Stephen P. Meadows
QBZ
10/24/05
Scotlond T. Ernsting
QNY
10/25/05
James W. Moore
QBZ
10/24/05
Michael F. Fong
QNY
10/25/05
Jordan M. Pockross
QBZ
10/24/05
Sean W. Haggerty
QNY
10/25/05
Joseph F. Sacchetti
QBZ
10/24/05
Brian W. Hansen
QNY
10/25/05
Andrew J. Skolnick
QBZ
10/24/05
Andrew J. Hodgman
QNY
10/25/05
Thomas P. Stapleton
QBZ
10/24/05
Max W. Sung
QNY
10/25/05
Joseph P. Sullivan III
QBZ
10/24/05
Charles F. Thompson, Jr. QNY
10/25/05
Paul C. Thomas
QBZ
10/24/05
Spencer D. Worley
QNY
10/25/05
John F. Starmann Jr.
QBZ
10/24/05
Christopher G. Larkin
QLO
10/26/05
Terminated Participants Acronym
Termination Date
Christopher G. Larkin
QSM
10/26/05
Thomas E. Duddy
CIT
10/21/05
Christopher G. Larkin
QEW
10/26/05
Shaun M. Williams
QUB
10/21/05
Christopher G. Larkin
QFS
10/26/05
James P. Buckley
CIT
10/25/05
Christopher G. Larkin
QJY
10/26/05
Ricardo Ramos
CIT
10/25/05
Christopher G. Larkin
QMD
10/26/05
Kenneth W. Sandberg
CIT
10/25/05
Christopher G. Larkin
QNA
10/26/05
CHANGES IN MEMBERSHIP STATUS
Christopher G. Larkin
QNY
10/26/05
Individual Members
Christopher G. Larkin
QPN
10/26/05
Christopher G. Larkin
QPO
10/26/05
Christopher G. Larkin
QUT
10/26/05
Kenneth W. Sandberg
10/25/05
From:
Lessor/CBT Registered For Citadel Derivatives Group
LLC; Market Maker/Floor Broker
To:
Lessor
Christopher G. Larkin
QVA
10/26/05
Christopher G. Larkin
QYH
10/26/05
Christopher G. Larkin
QYS
10/26/05
Patrick Doherty
QZT
10/26/05
Patrick Doherty
QSM
10/26/05
Patrick Doherty
QPX
10/26/05
Patrick Doherty
QLO
10/26/05
Patrick Doherty
QIG
10/26/05
Patrick Doherty
QEX
10/26/05
New Accounts
Acronym
Effective Date
Scott R. Benton
QBZ
10/24/05
Eoin T. Callery
QBZ
10/24/05
Peter Dannecker
QBZ
10/24/05
Michael J. Guzy
QBZ
10/24/05
Thomas P. Halliday
QBZ
10/24/05
Member Organizations
Effective Date
Effective Date
Navillus, Inc.
10/20/05
From:
Lessor/Lessee; Associated with a Market Maker/Floor
Broker
To:
Lessor
Andrie Trading LLC
10/24/05
From:
Owner/Lessee/Member Organization Affiliated with a
CBT Registered For; Associated with a Market Maker
To:
Owner/Lessee/Member Organization Affiliated with a
CBT Registered For; Associated with a Market Maker/
Remote Market Maker
Page 5
October 28, 2005
Volume 33, Number 43
MEMBER ADDRESS CHANGES
Individual Members
Effective Date
Douglas S. Komen
141 W. Jackson, Suite 850
Chicago, IL 60604
10/25/05
Timothy Cody
141 W. Jackson, Suite 850
Chicago, IL 60604
10/25/05
Sanjiv M. Prasad
141 W. Jackson, Suite 850
Chicago, IL 60604
Herman S. Vigerust
141 W. Jackson, Suite 850
Chicago, IL 60604
Chicago Board Options Exchange
Effective Date
10/25/05
Frank A. Roszkiewicz
111 W. Jackson, 10th Floor
Chicago, IL 60604
Member Organizations
Effective Date
Citigroup Global Markets Inc.
111 W. Jackson, 10th Floor
Chicago, IL 60604
10/25/05
10/25/05
Infinium Capital Management, LLC
141 W. Jackson, Suite 850
Chicago, IL 60604
10/25/05
10/25/05
HGI, Inc.
141 W. Jackson, Suite 850
Chicago, IL 60604
10/25/05
POSITION LIMIT CIRCULARS
Pursuant to Exchange Rule 4.11, the Exchange issued the below listed Position Limit Circular on October 28, 2005. The complete circulars are available
from the Department of Market Regulation, in the data information bins on the 2nd Floor of the Exchange, and on the CBOE website at cboe.com under
the “Market Data” tab.
To receive regular updates of the position limit list via fax, contact Candice Nickrand at (312) 786-7730. Questions concerning position and exercise
limits may be directed to the Department of Market Regulation to Dan Earner at (312) 786-7059 or Tim Mac Donald at (312) 786-7706.
Position Limit Circular PL05-49
October 28, 2005
Adjusted Position and Exercise Limits for certain Equity
Option Classes and an Exchange Traded Fund will revert to
their Applicable Standard Position and Exercise Limits
effective November 21, 2005
RESEARCH CIRCULARS
The following Research Circulars were distributed between October 19 and October 27, 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 #RS05-751
Research Circular #RS05-760
October 19, 2005
October 26, 2005
WebMD Corporation (HLTH/HUT/VGW/WGQ”)
Activision, Inc. (“ATVI/adj. AHV/VCD”)
Name Change to: Emdeon Corporation
Determination of Cash-in-Lieu Amount
Effective Date: October 20, 2005
Research Circular #RS05-761
Research Circular #RS05-752
October 26, 2005
October 20, 2005
Fidelity National Financial, Inc. (“FNF/VWJ/WWJ & adj. FMF/
Eyetech Pharmaceuticals, Inc. (“EYET/QUJ”) Proposed
ZLB/LKG/WGF”) Determination of Cash-in-Lieu Amounts
Merger with OSI Pharmaceuticals, Inc.
(“OSIP/GHU/GHW/OIG/YIJ”)
Research Circular #RS05-764
October 27, 2005
Research Circular #RS05-755
PetroKazakhstan Inc. Class A (“PKZ”)
October 21, 2005
Plan of Arrangement COMPLETED - Cash Settlement
Phelps Dodge Corporation (“PD/PMZ/DPB/VZD/ZWW/WZP/
LWL”) NO CONTRACT ADJUSTMENT FOR CASH DIVIDEND
Research Circular #RS05-765
October 27, 2005
Research Circular #RS05-756
IVAX Corporation (“IVX/OIV/YIV & adj. YXO/OYA”) Proposed
October 21, 2005
Election Merger with Teva Pharmaceutical Industries
*****UPDATE*****UPDATE*****UPDATE*****
Limited (“TEVA/TVQ/OQV/WTX”)
Phelps Dodge Corporation (“PD/PMZ/DPB/VZD/ZWW/WZP/
LWL”) NO CONTRACT ADJUSTMENT FOR CASH DIVIDEND
November 2, 2005
Volume RB16, Number 44
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 RG05-97
Date:
October 24, 2005
To:
Members, Member Firms and Member Organizations
From: Trading Operations
Re:
Mini-SPX (XSP) Options (revision to RG05-96 from October 19, 2005)
On October 25th, 2005, CBOE will commence trading of “mini-S” options, based on a value
that is one-tenth the value of SPX. The product will trade in the SPY crowd, without a DPM
or LMM, on Hybrid, but with a few differences. Below is a summary of the specifics regarding open outcry and electronic trading details. In addition to the Q/A session that was held
on Thursday, October 20th, there will be a Q/A session concerning the operational aspects of
the product at 3:30P.M. in conference room 4A today, October 24th. Interested brokers,
market makers and member firm representatives are encouraged to attend.
Electronic Trading
1) Rather than UMA, the matching algorithm will be pro-rata, with a “Market Turner
Priority” (MTP) overlay. The market turner will receive 35% of each incoming autoex order, then share in the balance of the order with all other participants on a prorata basis. The pro-rata allocation assigned to the market turner will be based on
his/her remaining quote size after the initial 35% allocation.
2) The first participant to IMPROVE a displayed market will retain MTP status at that
price, as long as the participant does not move from that price. For example, MM1
turns the market and is first to offer at 1.15. MM2 moves to 1.10 offer while MM1
remains at 1.15. MM2 then moves back to 1.15, with MM1. MM1 has MTP status
at 1.15.
3) MTP does not apply until the first market move AFTER rotation. Thus, pre-opening
quotes or orders and resting GTCs from prior days will not have MTP status coming out of rotation.
4) Customer orders in the book do not have priority on electronic trades but will instead share with other participants on a pro-rata basis. As with any other participant, customers will be given MTP status if they turn the market.
5) There will be no joining period (Quote Trigger) for book trades.
6) The Quote Lock timer will be 1 second, but no Quote Lock alert message will be
disseminated via the API to those involved in the lock.
7) The Complex Order Book (COB) will be active.
8) Direct book routing for eligible simple and complex orders will be in effect. Firms
that wish to add restrictions and route otherwise bookable or auto-ex-eligible orders
to a broker or to the booth must e-mail the CBOE at ‘helpdesk@cboe.com’. Firms
must also select a crowd PAR broker for non-bookable orders.
9) DAY and GTC STP/STP LMT orders will be eligible for direct book routing. GTCs
will remain active in the book until filled, canceled or expired.
Regulatory Circulars
continued
Regulatory Circular RG05-97 continued
Open Outcry Trading
1) If the limit order book contains only customer orders, the customer book must
trade before the crowd can trade at the book price. PAR brokers must use the TB
button (not the TA button) to take out the book. Use of the TA button will allocate
the PAR order among ALL electronic participants, not just the customer book.
2) If the limit order book contains only non-customer orders, the book must receive
a share no less than the largest crowd participant, after the first crowd participant
takes his/her share. Note that the first participant may take no more than 70% of
the order (same for ALL Hybrid classes). Example: Book contains 100 noncustomer contracts at 1.20. Broker trades a 100-lot buy order in open outcry at
1.20. The first MM takes 70 contracts. 5 other MMs have equal interest on the
balance. The broker must include the non-customer book as a sixth participant on
the balance and may give 5 contracts each to the 5 MMs and the non-customer
book. The PAR broker must use the TB button (not the TA button) to take out the
book.
3) If the limit order book contains both customer and non-customer orders, and if the
TOTAL book quantity is less than the order quantity, the book must trade before
the crowd can trade at the book price. The PAR broker must use the TB button
(not the TA button) to take out the book.
4) If the limit order book contains both customer and non-customer orders, and the
TOTAL book quantity is greater than or equal to the order quantity, the PAR broker
must use the TA button to trade. The order will be allocated among ALL electronic
participants (similar to an auto-ex’d order).
Questions may be directed to Anthony Montesano at (312) 786-7365 or the Help Desk at
(312) 786-7100.
Regulatory Circular RG05-98
To:
Members and Member Firms
From: SPX Floor Procedure Committee
Options on SPDRs Floor Procedure Committee
Index Floor Procedure Committee
Date:
October 24, 2005
Re:
Spread Orders Involving Mini-SPX Options
The SPX Floor Procedure Committee, Options on SPDRs Floor Procedure Committee,
and Index Floor Procedure Committee have determined to expand the types of spread
orders that are permitted under CBOE Rule 24.19 to include any combination of Mini-SPX
options, SPDR options, and SPX options.1 The procedures to be followed in representing
and filling, for example, a Mini-SPX-SPDR option spread order or a Mini-SPX-SPX option
spread order are the same procedures as those that currently apply to representing and
filling a SPDR-SPX option spread order. Mini-SPX-SPX option spread orders may be
represented in open outcry in the Mini-SPX and SPX trading crowds and Mini-SPX-SPDR
option spread orders may be represented in open outcry in the Mini-SPX and SPDR option
trading crowds.
Any questions concerning the above may be directed to the Trading Floor Liaisons at
extension 4068.
If you or someone you know would like to receive CBOE Member Information Circulars via
e-mail, or, if you have an e-mail address change, please contact the CBOE Membership
Department at members@cboe.com, or, at 312-786-7449.
1
Rule 24.19 permits the execution of Multi-Class Broad-Based Index Option Spread Orders, which are
generally defined as orders to buy a stated number of contracts of a broad-based index option or ETF option
derived from a broad-based index and to sell an equal number, or an equivalent number of contracts of a
different broad-based index option or ETF option derived from a broad-based index. These orders may be
represented at the trading station of either option involved, subject to the conditions in Rule 24.19.
RB2
November 2, 2005, Volume RB16, Number 44
Rule Changes,
Interpretations
and Policies
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-2005-87
Non-Option Listing Rules
On October 21, 2005, the Exchange filed Rule Change File No. SR-CBOE-2005-87, which
filing proposes to incorporate into CBOE’s non-option listing rules the new rules set forth in
SEC Rule 12d2-2 so that the Exchange may continue to have the authority to suspend or
delist securities from trading on the Exchange in the event that the issuer and/or securities
of the issuer fail to adhere to certain of the Exchange’s original listing standards. Any
questions regarding the rule change may be directed to David Doherty, Legal Division, at
312-786-7466. Proposed new language is underlined. Proposed deleted language is [bracketed and stricken-through].
Rule 31.94. Suspension and Delisting Policies
A.-B. No change
C. Application of Policies
To assist in the application of these policies, the Exchange has adopted certain
criteria, outlined below, which a security must meet to continue to be listed on the
Exchange. However, these minimum criteria[,] in no way limit or restrict the
Exchange’s right to delist a security, and the Exchange may at any time, in view of
the circumstances in each case, suspend dealings in, or remove, a security from
listing or unlisted trading when in its opinion such security is unsuitable for continued trading on the Exchange. Such action will be taken regardless of whether the
issuer meets any or all of the criteria discussed below.
(a) Financial Condition and/or Operation Results —
(i) net worth (as defined in Rule 31.5) of at least $2,000,000 if such company has sustained losses from continuing operations and/or net losses in two of
its three most recent fiscal years; or
(ii) net worth (as defined in Rule 31.5) of at least $4,000,000 if such company has sustained losses from continuing operations and/or net losses in three of
its four most recent fiscal years.
NOTE: The Exchange will also consider suspending dealings in, or removing from the list, securities of a company which:
(i) has sustained losses from continuing operations and/or net losses in the five
most recent fiscal years; or
(ii) has sustained losses which are so substantial in relation to its overall operations
or its existing financial resources, or its financial condition has become so impaired
that it appears questionable, in the opinion of the Exchange, as to whether such
company will be able to continue operations and/or meet its obligations as they
mature.
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(b) Limited Distribution —Reduced Market Value
(i) common stock:
(A) the number of shares publicly held (exclusive of holdings of officers,
directors, controlling shareholders or other family or concentrated holdings) is at least 200,000; and
(B) the total number of round lot shareholders of record is at least 300;
and
(C) the aggregate market value of shares publicly held is at least
$1,000,000;
(ii) preferred stock:
(A) the number of shares publicly held is at least 50,000; or
(B) the aggregate market value of shares publicly held is at least
$1,000,000;
(iii) bonds: The delisting of bond and debenture issues will be considered
on a case by case basis. The Exchange will normally consider suspending dealings in, or removing from the list, debt security when any one or
more of the following conditions exist:
([a]A) if the aggregate market value or the principal amount of bonds
publicly held is less than $400,000 or;
([b]B) if the issuer is not able to meet its obligations on the listed debt
securities.
(c) Disposal of Assets —Reduction of Operations —Absent extraordinary circumstances, the Exchange will suspend dealings in, or remove from the list, securities of a company whenever any of the following events occur:
(i) If the company has sold or otherwise disposed of its principal operating assets or has ceased to be an operating company or has discontinued a substantial portion of its operations or business for any reason
whatsoever, including without limitation, such events as sale, lease, spinoff, distribution, foreclosure, discontinuance, abandonment, destruction,
condemnation, seizure or expropriation. Where the company has substantially discontinued the business that it conducted at the time it was
listed or admitted to trading, and has become engaged in ventures or
promotions which have not developed to a commercial stage or the success of which is problematical, it shall not be considered an operating
company for the purposes of continued trading and listing on the Exchange.
(ii) If liquidation of the company has been authorized. However, where
such liquidation has been authorized by stockholders and the company
is committed to proceed, the Exchange will normally continue trading
until substantial liquidation distributions have been made.
(iii) If advice has been received, deemed by the Exchange to be authoritative, that the security is without value. In this connection, it should be
noted that the Exchange does not pass judgment upon the value of any
security.
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(d) Failure to Comply with Listing Agreements —The securities of a company failing
(or the transfer agent or registrar of which fails) to comply with the Exchange rules
in any material respect (e.g., failure to distribute annual reports when due, failure to
report interim earnings, failure to observe Exchange policies regarding timely disclosure of important corporate developments, failure to solicit proxies, issuance of
additional shares of a listed class without prior listing thereof, failure to obtain shareholder approval of corporate action where required by Exchange policies, failure to
comply with Exchange corporate governance listing requirements, etc.) are subject
to suspension from dealings and, unless prompt corrective action is taken, removal
from listing.
(e) Convertible Bonds —A debt security convertible into a listed equity security will
be reviewed when the underlying equity security is delisted and will be delisted
when the underlying equity security is no longer subject to real-time trade reporting.
In addition, if the common stock is delisted for violation of any of the following
Exchange rules relating to corporate governance, the Exchange will also delist any
listed debt securities convertible into that common stock:
Rule 31.9 —Conflicts of Interest
Rule 31.10 —Corporate Governance
Rule 31.11 —Common Voting Rights
Rule 31.12 —Quorum
Rule 31.13 —Preferred Voting Rights
Rule 31.14 —Bondholders Remedies Upon Default
(f) SEC Rule 12d2-2(a) Conditions –The Exchange will remove a class of securities from listing whenever the Exchange is reliably informed that any of the conditions set forth in SEC Rule 12d2-2(a)(1) – (4) exist with respect to such security and
shall give notice to the SEC of such action on Form 25 in accordance with SEC
Rule 12d2-2(a).
([f]g) Other Events —The Exchange will normally consider suspending dealings in,
or removing from the list, a security when any one of the following events shall
occur:
(i) Registration No Longer Effective —If the registration (or exemption from
registration thereof) pursuant to the [Securities] Exchange Act [of 1934] is
no longer effective.
[(ii) Payment, Redemption or Retirement of Entire Class, Issue or Series
—If the entire outstanding amount of a class, issue or series is retired
through payment at maturity or through redemption, reclassification or otherwise. In such event the Exchange may, at a time which is appropriate
under all circumstances of the particular case, suspend dealings in the
security and, in the case of a listed security, give notice to the SEC on
Form 25, of the Exchange’s intention to remove such security from listing
and registration as required by Rule 12d-2(a) under the Securities Exchange
Act of 1934].
([i]ii) Operations Contrary to Public Interest —If the company or its management shall engage in operations which, in the opinion of the Exchange,
are contrary to the public interest.
(iii[v]) Failure to Pay Listing Fees —If the company shall fail or refuse to
pay, when due, any applicable listing fees established by the Exchange.
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(iv) Low Selling Price Issues —In the case of a common stock selling for
a substantial period of time at a price less than $3 per share, if the issuer
shall fail to effect a reverse split of such shares within a reasonable time
after being notified that the Exchange deems such action to be appropriate under all circumstances. In its review of the question of whether it
deems a reverse split of a given issue to be appropriate, the Exchange
will consider all pertinent factors including, market conditions in general,
the number of shares outstanding, plans which may have been formulated by management, applicable regulations of the state or country of
incorporation or of any governmental agency having jurisdiction over the
company, the relationship to other Exchange policies regarding continued listing, and, in respect of securities of foreign issuers, the general
practice in the country of origin of trading in low-selling price issues.
D.-F. No change
G. Delisting Procedures
Whenever the Exchange determines that it is appropriate to consider removing a
security from listing (or from unlisted trading) for other than [routine] the reasons
set forth in Rule 31.94(C)(f) [(redemptions or maturities)] it will follow the following
procedures:
(a) The Exchange will furnish the company with a statement in writing
indicating the facts and circumstances which have caused the Exchange
to consider the removal of the company’s security from listing (or unlisted trading) and specifying the delisting policies and guidelines which
are applicable. Such statement will also include the time and place when
a conference will be held by the appropriate officers of the Exchange to
hear any reasons why the company believes its security should not be
removed from listing (or unlisted trading).
(b) If, after such conference, the Exchange determines that the security
should be removed, it will notify the company in writing, indicating the
basis for such decision and the specific delisting policies and guidelines
under which action will be taken. Such notice will also inform the company that it may appeal to the Board of Directors of the Exchange and
request a hearing.
(c) If, within five days after receiving such written notice, the company
informs the Exchange in writing that it wishes to appeal the decision and
requests an opportunity for a hearing, the Exchange will give the company at least ten days prior written notice of the time and place at which
a hearing shall be held.
(d) Such hearing shall be held before an Exchange committee which may
be either a standing committee or a committee specially appointed for
the purpose and may consist of directors, Exchange officials, members,
and/or other persons (not having an interest in the matter) as the Board of
Directors shall determine. At least three members of the committee must
be present in order to conduct the hearing and only those members of the
committee who attend the hearing may vote with respect to any determinations the committee may make.
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(e) Any documents or other written material which the company wishes the
committee to consider should be submitted to the Exchange at least five
days prior to the date of the hearing.
(f) At the hearing, the company may make presentation as it deems appropriate concerning the matter of continued listing (or unlisted trading) of its
securities including the personal appearance by its officers, directors, accountants, counsel or other witnesses as well as the submission of any
additional documentary materials which it may wish the committee to consider. The company may determine the form and manner of its presentation to the committee subject, however, to such reasonable procedures as
the committee may prescribe to assure the orderly conduct of the hearing.
Members of the committee may question any of the representatives of the
company who appear at the hearing and may request the company to
furnish additional information. The committee may also consider and rely
upon any documents and written materials previously filed with, or submitted to, the Exchange by, or on behalf of, the company, as well as other
documents and materials relating to the company which come to the attention of the Exchange.
(g) After the conclusion of the company’s presentation, the committee will
determine whether or not to recommend to the Board of Directors that the
security be removed from listing (or unlisted trading). If the Committee
determines to recommend removal of the security from listing (or unlisted
trading), such recommendation shall be sent to the Board of Directors for
its consideration. The Board of Directors may authorize the Executive
Committee to consider any or all appeals, and in such case the decision of
the Executive Committee with respect thereto shall be final and conclusive. A director who serves on the committee or is present at the hearing
will not as a result thereof be prohibited from voting on the recommendation when it is considered by the Board of Directors or by the Executive
Committee, as the case may be.
(h) If the Board of Directors or the Executive Committee, as the case may
be, shall approve the recommendation of the committee which has heard
the matter, an application shall be submitted by the Exchange to the SEC
to strike the security from listing (or unlisted trading) and a copy of such
application shall be furnished to the issuer in accordance with Section 12
of the [Securities] Exchange Act [of 1934] and the rules promulgated thereunder. The Exchange shall also provide public notice, in accordance with
Rule 12d2-2(b)(iii) under the Exchange Act, of a final determination by the
Exchange to strike a class of securities from listing and/or withdraw the
registration of such securities on the Exchange in all cases other than as
provided pursuant to Rule 12d2-2(a) under the Exchange Act. [The action
required to be taken by the Exchange to strike a security from listing and
registration for routine reasons, such as redemption, maturity and retirement, is set forth in] Rule 12d2-2(a) [promulgated] under the [Securities]
Exchange Act sets forth the action required to be taken by the Exchange
to strike a security from listing and registration for routine reasons, such
as redemption, maturity, and retirement. The relevant portions of the Section and Rules under [such] the Exchange Act pertaining to the suspension, removal or withdrawal of securities for all other reasons, and the
requirements of the Exchange applicable in certain cases, are summarized below:
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(a) SEC authorization of withdrawal or striking from listing of Exchangelisted security —Section 12(d) of [Securities] Exchange Act;
(b) suspension of trading by Exchange —Rule 12d2-1 under the [Securities] Exchange Act;
(c) application of Exchange to strike security from listing and registration
—Rule 12d2-2([c]a) and ([e]b) under the [Securities] Exchange Act; or
(d) application of issuer to withdraw from listing and registration-Rule 12d22(c[d]) under the [Securities] Exchange Act. Pursuant to Rule 12d22(c)(2)(ii) under the Exchange Act, an issuer is required to provide written
notice to the Exchange of its determination to withdraw a class of securities from listing and/or registration on the Exchange no fewer than 10
days before the issuer files an application on SEC Form 25 with the SEC.
The Exchange shall provide public notice, in accordance with Rule 12d22(c)(3) under the Exchange Act, of the issuer’s intention to delist and/or
withdraw from registration its securities.
In appropriate circumstances, when the Exchange is considering delisting because a company no longer meets the requirements for continued listing, a company may, with the consent of the Exchange, file a delisting application, provided
that it states in its application that it is no longer eligible for continued listing on the
Exchange.
H. No Change.
... Interpretations and Policies:
.01
No change
(b)
Inapplicable.
(c)
Inapplicable.
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-2005-88
Fees for Options on the Mini-SPX
On October 24, 2005, the Exchange filed Rule Change File No. SR-CBOE-2005-88, which
filing proposes to amend CBOE’s Fee Schedule to establish fees for options on the MiniSPX (“XSP”). The Exchange also proposes to waive all fees for trading in XSP options
beginning with the launch of trading through January 31, 2006. Any questions regarding
the rule change may be directed to Jaime Galvan, Legal Division, at 312-786-7058.
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SR-CBOE-2005-85
Market Turner Priority
On October 24, 2005, the Exchange filed Rule Change File No. SR-CBOE-2005-85, which
filing proposes to modify CBOE’s Hybrid System rules regarding priority and allocation of
trades in index options and options on ETFs to adopt a market turner priority. Any questions regarding the rule change may be directed to Angelou Evangelou, Legal Division, at
312-786-7464. Proposed new language is underlined.
Rule 6.45B - Priority and Allocation of Trades in Index Options and Options on
ETFs on the CBOE Hybrid System
Generally: The rules of priority and order allocation procedures set forth in this rule
shall apply only to index options and options on ETFs that have been designated
for trading on the CBOE Hybrid System. The term “market participant” as used
throughout this rule refers to a Market-Maker, a Remote Market-Maker, an in-crowd
DPM or LMM, an e-DPM with an appointment in the subject class, 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 or LMM, and floor
broker representing orders in the trading crowd.
(a) Allocation of Incoming Electronic Orders: The appropriate Exchange procedures committee will determine to apply, for each class of options, one of the
following rules of trading priority described in paragraphs (i) or (ii). The Exchange will
issue a Regulatory Circular periodically specifying which priority rules will govern
which classes of options any time the appropriate Exchange committee changes
the priority.
(i) Price-Time or Pro-Rata Priority
Price-Time Priority: Under this method, resting quotes and orders in the
book are prioritized according to price and time. If there are two or more
quotes or orders at the best price then priority is afforded among these
quotes or orders in the order in which they were received by the Hybrid
System; or
Pro-Rata Priority: Under this method, resting quotes and orders in the
book are prioritized according to price. If there are two or more quotes or
orders at the best price then trades are allocated proportionally according
to size (in a pro-rata fashion). The executable quantity is allocated to the
nearest whole number, with fractions 1/2 or greater rounded up and fractions less than 1/2 rounded down. If there are two market participants that
both are entitled to an additional 1/2 contract and there is only one contract
remaining to be distributed, the additional contract will be distributed to the
market participant whose quote or order has time priority.
Additional Priority Overlays Applicable to Price-Time or Pro-Rata Priority
Methods
In addition to the base allocation methodologies set forth above, the appropriate
Exchange procedures committee may determine to apply, on a class-by-class basis, one or more of the following designated market participant overlay priorities in
a sequence determined by the appropriate Exchange procedures committee. The
Exchange will issue a Regulatory Circular periodically which will specify which
classes of options are subject to these additional priorities as well as any time the
appropriate Exchange procedures committee changes these priorities.
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(1) Public Customer: When this priority overlay is in effect, the highest bid and
lowest offer shall have priority except that public customer orders shall have
priority over non-public customer orders at the same price. If there are two or more
public customer orders for the same options series at the same price, priority
shall be afforded to such public customer orders in the sequence in which they are
received by the System, even if the Pro-Rata Priority allocation method is the
chosen allocation method. For purposes of this Rule, a Public Customer order is
an order for an account in which no member, non-member participant in a jointventure with a member, or non-member broker-dealer (including a foreign brokerdealer) has an interest.
(2) Participation Entitlement: The appropriate Exchange procedures committee
may determine to grant Market-Makers participation entitlements pursuant to the
provisions of Rule 8.87, 8.13, or 8.15B. In allocating the participation entitlement,
all of the following shall apply:
(A) To be entitled to their participation entitlement, the Market-Maker’s order
and/or quote must be at the best price on the Exchange.
(B) The Market-Maker may not be allocated a total quantity greater than the
quantity that it is quoting (including orders not part of quotes) at that price. If
Pro-Rata Priority is in effect, and the Market-Maker’s allocation of an order
pursuant to its participation entitlement is greater than its percentage share of
quotes/orders at the best price at the time that the participation entitlement is
granted, the DPM or LMM or e-DPM shall not receive any further allocation of
that order.
(C) In establishing the counterparties to a particular trade, the participation
entitlement must first be counted against that Market-Maker’s highest priority
bids or offers.
(D) The participation entitlement shall not be in effect unless the Public Customer priority is in effect in a priority sequence ahead of the participation
entitlement and then the participation entitlement shall only apply to any remaining balance.
(3) Market Turner: “Market Turner” means a party that was the first to enter an
order or quote at a better price than the previous best disseminated Exchange
price and the order (quote) is continuously in the market until the particular order
(quote) trades. There may be a Market Turner for each price at which a particular
order trades. When this priority overlay is in effect, the Market Turner has priority
at the highest bid or lowest offer that he established. The Market Turner priority at
a given price remains with the order (quote) once it is earned. For example, if the
market moves in the same direction as the direction in which the order from the
Market Turner moved the market, and then the market moves back to the Market
Turner’s original price, then the Market Turner retains priority at the original price.
Market Turner priority cannot be established until after the opening print and/or the
conclusion of the opening rotation and, once established, shall remain in effect
until the conclusion of the trading session.
The appropriate Exchange procedures committee may determine, on a class-byclass basis, to reduce the Market Turner priority to a percentage of each inbound
order that is executable against the Market Turner. In such cases, the Market
Turner may participate in the balance of an order, pursuant to the allocation procedure in effect, after the Market Turner priority has been applied. To the extent the
Market Turner order (quote) is not fully exhausted, it shall retain Market Turner
priority for subsequent inbound orders until the conclusion of the trading session.
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(ii)
No change.
(b)-(d)
No change.
…Interpretations and Policies:
.01 - .02 No change.
November 2, 2005, Volume RB16, Number 44
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