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ExchangeBulletin

March 14, 2003 Volume 31, Number 11The 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 theExchange Bulletin, including the Regulatory Bulletin, is delivered to all effective members on a weekly basis.

Additional subscriptions may be obtained by submitting your name, firm, mailing address, e-mail address and telephonenumber to: Chicago Board Options Exchange, Accounting Department, 400 South LaSalle, Chicago, Illinois 60605, Attention:Bulletin Subscriptions. The cost of an annual subscription (July 1 through June 30) is $200 ($100 after January 1) for hard copydelivery or $100 ($50 after January 1) for e-mail delivery, payable in advance. Non-members are welcome to subscribe.

It’s easy to stay informed about issues at CBOE! CBOE Members can now receive informational and news notices via-email orfax. To sign up, simply e-mail your name and desired e-mail address or fax number to: [email protected] or contact Doug Luzziat 312-786-7105.

Members are required to report any address or telephone number changes to the Membership Department at (312) 786-7449pursuant to Exchange Rule 3.7(b).

For more current Seat Market Quotes, call (312) 786-7456 or refer to the CBOE Membership website at cboe.com. Members mayobtain access to the Membership website by calling the Membership Department at (312) 786-7449.

CLASS BID OFFER LAST SALE AMOUNT LAST SALE DATECBOE/FULL $160,000.00 $180,000.00 $170,000.00 March 6, 2003CBOE/OTP No Bid $6,000.00 $4,000.00 February 28, 2003

CBOT/FULL $370,000.00 $390,000.00 $360,000.00 February 25, 2003

SEAT MARKET QUOTES AS OF FRIDAY, MARCH 7, 2003

OPTION TRADING PERMIT LEASE POOL AS OF FRIDAY, MARCH 7, 2003Highest Bid: No Bid Highest Monthly Rate: $1,000.00OTPs Available: Twenty Lowest Monthly Rate: $1,000.00Last Lease: $1,000.00 on November 6, 2002

From To Price/Transfer Date

Paul J. Jiganti Mark R. Jiganti Transfer 3/03/03

MEMBERSHIP SALES AND TRANSFERS

INFORMATION CIRCULARS

From To Price/Transfer Date

Option Funding Group, LP The Chimera Group, LLC $4,000.00 3/03/03

OPTION TRADING PERMIT SALES AND TRANSFERS

Information Circular IC03-33

DATE: March 5, 2003

TO: Membership

FROM: Allocation Committee

RE: Allocation of Option Classes

The Allocation Committee determined pursuant to Exchange Rule 8.95 to allocate the option classes listed below to the following DPMs:

CLASS Underlying Option Class DPM LOCATION Symbol Symbol

1. CBOE Euro 25 Index EOR EOR Timber Hill, LLC P4, S62. CBOE Asia 25 Index EYR EYR Timber Hill, LLC P4, S6

Stay informed about issues at CBOE! Sign up today to receive informational and news notices via e-mail or fax. E-mail your name, firm (ifapplicable) and desired e-mail address or fax number to: [email protected] or contact Doug Luzzi at 312-786-7105.

March 14, 2003 Volume 31, Number 11 Chicago Board Options Exchange

Information Circular IC03-34

DATE: March 5, 2003

TO: Membership

FROM: Allocation Committee

RE: Allocation of Option Classes

The Allocation Committee determined pursuant to Exchange Rule 8.95 to allocate the option classes listed below to the following DPMs:

CLASS Underlying Option Class DPM LOCATIONSymbol Symbol

Industrial Select Sector SPDR Fund XLI XLI CTC, LLC P10, S1Cyclical/Transportation Select Sector SPDR Fund XLY XLY CTC, LLC P10, S1Utilities Select Sector SPDR Fund XLU XLU SLK-Hull Derivatives, LLC P1, S7American Pharmaceutical Partners, Inc. APPX AQO SMC Option Management, LLC P4, S10 Kinross Gold Corporation KGC KGC Specialist DPM, LLC P2, S6Oneok, Inc. OKE OKE Susquehanna Investment Group P5, S3eResearch Technology, Inc. ERES UDB Geneva DPM, LLC P4, S6SafeNet, Inc. SFNT UUI Susquehanna Investment Group P3, S4

Stay informed about issues at CBOE! Sign up today to receive informational and news notices via e-mail or fax. E-mail your name, firm (ifapplicable) and desired e-mail address or fax number to: [email protected] or contact Doug Luzzi at 312-786-7105.

MEMBERSHIP INFORMATION FOR 2/27/03 THROUGH 3/5/03MEMBERSHIP APPLICATIONS RECEIVED FORWHICH A POSTING PERIOD IS REQUIRED

Individual Membership Applicants Date Posted

Wayne L. Bush, Nominee 3/3/03SLK-Hull Derivatives LLC330 N. GarfieldHinsdale, IL 60521

Lawrence Dunning, Nominee 3/4/03Mako Global Derivatives, LLC600 N. McClurg Court, #3808AChicago, IL 60611

Patrick J. Lahey, Nominee 3/4/03W.H. Trading, LLC13 Old Hunt RoadNorthfield, IL 60093

Eric G. Lewis, Nominee 3/5/03Consolidated Trading, LLC628 W. Roscoe, #1NChicago, IL 60657

Jason A. Milton, Nominee 3/5/03Consolidated Trading, LLC2540 Brian Dr.Northbrook, IL 60062

Sean P. Dunne, Nominee 3/5/03First Options Of Chicago, Inc.1959 Jamestown Dr.Palatine, IL 60074

Member Organization Applicants Date Posted

BOG-Santefort LLC 3/5/03Stephan Santefort, Nominee440 S. LaSalle - Ste. 618Chicago, IL 60605

Paul Benson – Managing MemberDaniel F. O’Neill – Managing MemberPeter J. Gancer – Managing Member

Southwest Securities, Inc. 2/28/03John L. O’Donnell, Nominee1201 Elm Street, Suite 3500Dallas, TX 75270

SWS Group Inc. – ParentDaniel L. Leland – CEO/PresidentStacy M. Hodges – CFO/Executive Vice PresidentWilliam D. Felder – Executive Vice President

Compass Execution Services, LLC 2/27/03Patrick R. Carroll, NomineeRichard L. Graziadei, NomineeDavid Green, NomineeKevin S. Martinez, NomineeRonald A. Myers, NomineeD. Jasper Simkowski, Nominee200 W. Jackson - 20th Fl.Chicago, IL 60606

Patrick G. Carroll – CEONortheast Securities, Inc.- Control AffiliateSWS Group, Inc. – Control Affiliate

TJM Proprietary Trading, LLC 02/21/03John T. Burke, Nominee30 S. Wacker, Ste. #1920Chicago, IL 60605

Thomas J. Murphy – PresidentSteve Beitler – Executive Vice PresidentJohn T. Burke – Executive Vice President

MEMBERSHIP LEASES

New Leases Effective Date

Lessor: Susquehanna Investment Group 2/28/03Lessee: AB Financial, LLC

Herchel Portman (POR), NOMINEERate: 1 1/8% Term: 1 Day

Lessor: Maurice E. Grosby 3/3/03Lessee: Ronin Capital, LLC

Mark T. King, NOMINEERate: 1.1207% Term: Monthly

Date Posted


Lessor: David F. Shawler 3/3/03Lessee: Equitec Proprietary Markets LLC

Dan Tully, NOMINEERate: 1 1/4% Term: Monthly

Lessor: Jackson Financial Group, Inc. 3/3/03Lessee: Tahoe Trading, LLC

Stanley B. Gray, NOMINEERate: 1 1/8% Term: Monthly

Lessor: Susquehanna Investment Group 3/3/03Lessee: BOTTA Capital Management LLC

Robert F. Levy, NOMINEERate: 1 1/8% Term: Monthly

Lessor: Mark R. Jiganti 3/3/03Lessee: Ronin Capital, LLC

Tara Begeman, NOMINEERate: 1 1/8% Term: Monthly

Lessor: Hartz Construction Company, Inc. 3/3/03Lessee: Blue Capital Group LLC

Michael F. Rubin, NOMINEERate: 1 1/4% Term: Monthly

Lessor: PEAK6 Capital Management LLC 3/3/03Lessee: Options Pro Consulting, LLC

James J. Miccucio, NOMINEERate: 1 1/4% Term: Monthly

Lessor: Lee E. Tenzer 3/3/03Lessee: Knight Financial Products, LLC

Alexis E. Santiago, NOMINEERate: 1.1207% Term: Monthly

Lessor: M.B. Partners 3/3/03Lessee: SMC Option Management LLC

Alec S. Milam, NOMINEERate: 1 1/8% Term: Monthly

Lessor: Stephen Koch 3/3/03Lessee: Quinlan J. RibordyRate: 1.1207% Term: Monthly

Lessor: Merrill Lynch, Pierce,Fenner & Smith, Inc. 3/3/03

Lessee: Ronin Capital, LLCGiovanni Stella, NOMINEE

Rate: 1 1/8% Term: Monthly

Lessor: Merrill LynchProfessional Clearing Corp. 3/3/03

Lessee: Israel A. Englander & Co., Inc.Kevin M. Jelinek, NOMINEE

Rate: 1 1/8% Term: Monthly

Lessor: Richard P. Schneider 3/3/03Lessee: William J. PopperRate: 1 1/8% Term: Monthly

Lessor: Edward Doherty 3/3/03Lessee: Penson Financial Services, Inc.

Richard B. Anspacher, NOMINEERate: .01375% Term: Monthly

Lessor: Jan C. Philipsborn 3/3/03Lessee: Ronin Capital, LLC

Derek A. Yerkovich, NOMINEERate: 3/4% Term: Monthly

Lessor: Michael A. Dalesandro 3/4/03Lessee: Edward H. Brown IIIRate: 1 1/8% Term: Monthly

Terminated Leases Termination Date

Lessor: Susquehanna Investment Group 2/28/03Lessee: Susquehanna Financial Group, LLP

Lessor: OptionsXpress, Inc. 3/3/03Lessee: CTC LLC

Lessor: Maurice E. Grosby 3/3/03Lessee: Newtonian Trading LLC

Lessor: David F. Shawler 3/3/03Lessee: Equitec Trading, LLC

Bradford Minier (DLA), NOMINEE

Lessor: Susquehanna Investment Group 3/3/03Lessee: AB Financial LLC

Herchel Portman (POR), NOMINEE

Lessor: Lee E. Tenzer 3/3/03Lessee: Lawrentz Associated LLC

David A. Lawrentz (LRZ), NOMINEE

Lessor: Richard P. Schneider 3/3/03Lessee: Ronin Capital, LLC

Mark T. King (MKK), NOMINEE

Lessor: Bridge Trading Company 3/3/03Lessee: Ink Kiss, Inc.

Ira N. Kudish (INK), NOMINEE

Lessor: Stephen Koch 3/3/03Lessee: Equilibrium Trading LLC

Steve J. Mazepa (MZP), NOMINEE

Lessor: Jackson Financial Group, Inc. 3/3/03Lessee: Third Millennium Trading, LLC

Kevin Byrnes (KMB), NOMINEE

Lessor: Robert J. Wasserman 3/3/03Lessee: BOTTA Capital Management LLC

Robert F. Levy (LVY), NOMINEE

Lessor: Paul J. Jiganti 3/3/03Lessee: Ronin Capital, LLC

Tara Begeman (TAR), NOMINEE

Lessor: Hartz Construction Company, Inc. 3/3/03Lessee: G-Bar Limited Partnership

Phillip C. Yee (YEE), NOMINEE

Lessor: M.B. Partners 3/3/03Lessee: HGI, Inc.

Sanjiv M. Prasad (JIV), NOMINEE

Lessor: Banc Of America Securities LLC 3/3/03Lessee: JOH Options Inc.

James U. Wieties (UFF), NOMINEE

Lessor: Daniel T. Guth 3/3/03Lessee: CTC LLC

Lessor: Merrill Lynch, Pierce,Fenner & Smith, Inc. 3/3/03

Lessee: Susquehanna Investment Group

Lessor: Edward Doherty 3/3/03Lessee: Banc Of America Securities LLC

Lessor: Merrill LynchProfessional Clearing Corp. 3/3/03

Lessee: Susquehanna Investment Group

Lessor: Larkspur Securities, Inc. 3/3/03Lessee: William J. Popper (WAP)

Effective Date


Termination Date

Lessor: Jan C. Philipsborn 3/3/03Lessee: Wellington Capital Markets, LLC

Edward M. Reid (EMR), NOMINEE

Lessor: Michael A. Dalesandro 3/4/03Lessee: DRO WST Trading LLC

OPTION TRADING PERMIT LEASES

Effective OTP Leases Effective Date

Lessor: Ronin Capital, LLC 2/27/03Lessee: PB Nayber, LLC

Jeffrey L. Bassock (GEF), NOMINEERate: $47.62 Term: 1 Day

Terminated OTP Leases Termination Date

Lessor: Ronin Capital, LLC 2/28/03Lessee: PB Nayber, LLC

Jeffrey L. Bassock (GEF), NOMINEE

MEMBERSHIP TERMINATIONS

Individual Members

CBT Exercisers: Termination Date

John E. Callahan (JEC) 2/27/03175 W. Jackson Blvd., Ste. #400Chicago, IL 60604

Michael J. Glass (GLS) 2/27/03440 S. LaSalle – Ste. 2500Chicago, IL 60605

Bruce A. Williams (BAW) 2/28/039001 Royal DriveBurr Ridge, IL 60521

Gary D. Pigatto (GDP) 3/3/038010 Green Briar Ct.Burr Ridge, IL 60525

CBT Registered For: Termination Date

Chad M. Franckowiak (CMF) 2/28/03Knight Financial Products, LLC111 W. Jackson Blvd., 10th floorChicago, IL 60605

Shaun E. Buss (SEB) 3/3/03Shaun Buss, LLC230 S. LaSalle - 6th Fl.Chicago, IL 60604

John E. Balderson (JEB) 3/3/03Rockridge Trading LLC440 S. LaSalle – Ste. 3100Chicago, IL 60605

Brooks C. Taylor (BCT) 3/3/03Third Millennium Trading, LLC440 S. LaSalle – Ste. 3100Chicago, IL 60605

Nominee(s) / Inactive Nominee(s): Termination Date

Jason P. Bristol (BRJ) 2/27/03CTC LLC440 S. LaSalle St., Ste. #1850Chicago, IL 60605

Michael R. Salem (IRN) 2/28/03PEAK6 Capital Management LLC2044 W. Roscoe – Apt. #1SChicago, IL 60618

Jeffrey L. Bassock (GEF) 2/28/03PB Nayber, LLC202 Sharphill RoadWilton, CT 06897

Bradford Minier (DLA) 3/3/03Equitec Trading, LLC111 W. Jackson - 20th Fl.Chicago, IL 60604

David A. Lawrentz (LRZ) 3/3/03Lawrentz Associated LLC30403 Fowler CircleWarrenville, IL 60555

Elan A. Strominger (EXS) 3/3/03Susquehanna Investment Group175 W. Jackson – Ste. 1700Chicago, IL 60604

Brock Howard Blazo (BBR) 3/3/03CTC LLC440 S. LaSalle – Ste. 1850Chicago, IL 60605

Kevin Byrnes (KMB) 3/3/03Third Millennium Trading LLP440 S. LaSalle, Ste. #3100Chicago, IL 60605

Ira N. Kudish (INK) 3/3/03Ink Kiss, Inc.7226 N. TrippLincolnwood, IL 60646

Chad I. Sinsheimer (HMR) 3/3/03Group One Trading, LP440 S. LaSalle, 32nd Fl.Chicago, IL 60605

Charles J. Cavalier (CVR) 3/3/03Timber Hill LLC440 S. LaSalle – Ste. 2450Chicago, IL 60605

Steve J. Mazepa (MZP) 3/3/03Equilibrium Trading LLC440 S. LaSalle - Ste. 1822Chicago, IL 60605

Charles W. Bohling (CWB) 3/3/03SMC Option Management LLC1959 N. Seminary - #2FChicago, IL 60614

Sanjiv M. Prasad (JIV) 3/3/03HGI, Inc.141 W. Jackson Blvd., Suite 1880Chicago, IL 60604

Anthony J. Carone (AJC) 3/3/03Knight Financial Products, LLC1808 S. CalumetChicago, IL 60616


Daniel C. Williams (DCW) 3/5/03Geneva Stock, LLC440 S. LaSalle – Ste. 1822Chicago, IL 60605

James G. Miller (TKY) 3/5/03Susquehanna Investment Group175 W. Jackson – Ste. 1700Chicago, IL 60604

Daniel Cauley (DEC) 3/5/03Susquehanna Investment Group175 W. Jackson – Ste. 1700Chicago, IL 60604

Mark L. Dooley (MBD) 3/5/03Susquehanna Investment Group175 W. Jackson – Ste. 1700Chicago, IL 60604

Affliated with CBT Registered For: Termination Date

Shaun Buss, LLC 3/3/03130 S. CanalChicago, IL 60606

Lessee(s): Termination Date

Lawrentz Associated LLC 3/3/03David Lawrentz440 S. LaSalle – Ste. 700Chicago, IL 60605

Ink Kiss, Inc. 3/3/03440 S. LaSalle – Ste. 1600Chicago, IL 60605

Equilibrium Trading LLC 3/3/03440 S. LaSalle - Ste. 1822Chicago, IL 60605

EFFECTIVE MEMBERSHIPS

Individual Members

CBT Exercisers: Effective Date

Steven F. Callahan (SCX) 2/27/03175 W. Jackson, Ste. #400Chicago, IL 60604Type of Business to be Conducted: Market Maker

Lessee(s): Effective Date

Quinlan J. Ribordy (KWN) 3/3/03440 S. LaSalle – Ste. 1822Chicago, IL 60605Type of Business to be Conducted: Market Maker

Lessor(s): Effective Date

Mark R. Jiganti 3/3/03P.O. Box 3310Crested Butte, CO 81224Type of Business to be Conducted:

Nominee(s) / Inactive Nominee(s): Effective Date

Jeffrey L. Bassock (GEF) 2/27/03PB Nayber, LLC202 Sharphill RoadWilton, CT 06897Type of Business to be Conducted: Floor Broker/Market Maker

James J. Miccucio (CUU) 3/3/03Options Pro Consulting, LLC440 S. LaSalle – Ste. 1600Chicago, IL 60605Type of Business to be Conducted: Market Maker

David L. Bechtold (DEW) 3/3/03SMC Option Management LLC175 W. JacksonChicago, IL 60605Type of Business to be Conducted: Market Maker

Derek A. Yerkovich (YRK) 3/3/03Ronin Capital, LLC650 W. Arlington – Apt. 1WChicago, IL 60614Type of Business to be Conducted: Market Maker

Alec S. Milam (ALK) 3/3/03SMC Option Management LLC175 W. Jackson Blvd., Ste. 400Chicago, IL 60604Type of Business to be Conducted: Floor Broker/Market Maker

Giovanni Stella (GPS) 3/3/03Ronin Capital, LLC230 S. LaSalle StreetChicago, IL 60604Type of Business to be Conducted: Market Maker

Richard B. Anspacher (PFS) 3/3/03Penson Financial Services, Inc.1700 Pacific – Ste. 1400Dallas, TX 75201Type of Business to be Conducted: No Floor Function

Daniel C. Williams (DCW) 3/4/03Geneva Stock, LLC440 S. LaSalle – Ste. 1822Chicago, IL 60605Type of Business to be Conducted: Market Maker

Gary R. Silverman (GYS) 3/5/03Geneva Stock, LLC440 S. LaSalle – Ste. 1822Chicago, IL 60605Type of Business to be Conducted: Market Maker

Member Organizations

Lessee(s): Effective Date

Pension Financial Securities, Inc. 3/3/031700 Pacific Avenue – Ste. 1400Dallas, TX 75201Type of Business to be Conducted: No Floor Function

JOINT ACCOUNTS

New Participants Acronym Effective Date

John H. Waterfield III QRA 2/28/03

John E. Smollen Jr. QRA 2/28/03

Scott J. Yanklowitz QHJ 3/3/03

Termination Date


Giovanni Stella QCL 3/3/03

Derek A. Yerkovich QWC 3/3/03

New Accounts Acronym Effective Date

Samuel P. Hart QSX 3/3/03

Daniel J. O’Brien QSX 3/3/03

Terminated Participants Acronym Termination Date

Jason P. Bristol QGQ 2/27/03

Jason P. Bristol QXY 2/27/03

Chad M. Franckowiak QUN 2/28/03

Brock Howard Blazo QGO 3/3/03

Brock Howard Blazo QXY 3/3/03

Elan A. Strominger QDP 3/3/03

Elan A. Strominger QEW 3/3/03

Elan A. Strominger QEX 3/3/03

Elan A. Strominger QFS 3/3/03

Elan A. Strominger QGS 3/3/03

Elan A. Strominger QIG 3/3/03

Elan A. Strominger QIS 3/3/03

Elan A. Strominger QLO 3/3/03

Elan A. Strominger QNA 3/3/03

Elan A. Strominger QNY 3/3/03

Elan A. Strominger QPN 3/3/03

Elan A. Strominger QSM 3/3/03

Elan A. Strominger QYH 3/3/03

Elan A. Strominger QYS 3/3/03

Elan A. Strominger QZT 3/3/03

Elan A. Strominger QMD 3/3/03

Elan A. Strominger QPO 3/3/03

Elan A. Strominger QVA 3/3/03

Chad I. Sinsheimer QGO 3/3/03

Charles J. Cavalier QTH 3/3/03

Charles J. Cavalier QTI 3/3/03

Charles W. Bohling QTN 3/3/03

Sanjiv M. Prasad QHG 3/3/03

Anthony J. Carone QCM 3/3/03

James G. Miller QGS 3/5/03

James G. Miller QLO 3/5/03

Daniel Cauley QGS 3/5/03

Mark L. Dooley QDP 3/5/03

Mark L. Dooley QEW 3/5/03

Mark L. Dooley QEX 3/5/03

Mark L. Dooley QFS 3/5/03

Mark L. Dooley QGS 3/5/03

Mark L. Dooley QIG 3/5/03

Mark L. Dooley QLO 3/5/03

Mark L. Dooley QNA 3/5/03

Mark L. Dooley QPX 3/5/03

Mark L. Dooley QSM 3/5/03

CHANGES IN MEMBERSHIP STATUS

Individual Members Effective Date

Paul D. Zavodnyik 2/27/03From: Nominee For G-Bar Limited Partnership; Market MakerTo: CBT Registered For G-Bar Limited Partnership; Market

Maker

Herchel Portman 2/28/03From: Lessor to BOTTA Capital Management LLCTo: Lessor to BOTTA Capital Management LLC/Nominee for

AB Financial, LLC; Market Maker

Rodney Sitter 3/3/03From: Lessor to Third Millennium Trading, LLC/Nominee for

Third Millenium Trading, LLC; Market MakerTo: Lessor to Third Millennium Trading, LLC

Herchel Portman 3/3/03From: Lessor to Botta Capital Management LLC/Nominee for AB

Financial, LLC; Market MakerTo: Lessor to BOTTA Capital Management LLC

Edward H. Brown III 3/4/03From: Lessor To Big Ten Trading CompanyTo: Lessor To Big Ten Trading Company/Lessee From

Michael A Dalesandro; Floor Broker

Member Organizations Effective Date

The Chimera Group LLC 3/3/03From: Lessee; Associated with a Market MakerTo: Lessee/Lessor; Associated with a Market Maker

Banc Of America Securities LLC 3/3/03From: Lessor/Lessee/Non-Member Customer Business;

Associated with a Market MakerTo: Lessor/Owner/Non-Member Customer Business;

Associated with a Market Maker

HGI, Inc. 3/3/03From: Member Organization Affiliated with a CBT-Registered

For/Lessee; Associated with a Floor Broker/MarketMaker

To: Member Organization Affiliated with a CBT-RegisteredFor; Associated with a Floor Broker/Market Maker

Effective Date Termination Date


Effective Date Effective Date

Third Millennium Trading, LLC 3/3/03From: Lessee/Member Organization Affiliated with a CBT-

Registered For; Associated with a Market MakerTo: Lessee; Associated with a Market Maker

PB Nayber, LLC 2/28/03From: Lessee/Lessor; Associated with a Floor Broker/Market

MakerTo: Lessor

PB Nayber, LLC 2/27/03From: LessorTo: Lessee/ Lessor; Associated with a Floor Broker/Market

Maker

POSITION LIMIT CIRCULARSPursuant to Exchange Rule 4.11, the Exchange issued the below listed Position Limit Circulars on March 7, 2003. The complete circulars areavailable from the Department of Market Regulation, in the data information bins on the 2nd Floor of the Exchange, and on the CBOE websiteat 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 andexercise limits may be directed to the Department of Market Regulation to Joanna Fields at (312) 786-7128 or Michael Felty at (312) 786-7504.

POSITION LIMITSFor a complete list of all applicable limits, check 2nd Floor Data Information Bins or contact the Department of Market Regulation. If you wishto receive regular updates of the position limit list, please contact Candice Nickrand at (312) 786-7730 of the Department of Market Regulation.

Position Limit Circular PL03-14March 7, 2003Equity Position and Exercise Limits will bedecreased to a Lower Tier Limit EffectiveMarch 24, 2003

RESEARCH CIRCULARSThe following Research Circulars were distributed between February 24, 2003 and March 4, 2003. If you wish to read the entiredocument, please refer to the CBOE website at www.cboe.com and click on the “Trading Tools” Tab. New listings and seriesinformation is also available in the Trading Tools section of the website. For questions regarding information discussed in a ResearchCircular, please call The Options Clearing Corporation at 1-888-OPTIONS.

Position Limit Circular PL03-15March 7, 2003Adjusted Position and Exercise Limits for certainEquity Option Classes will revert to theirApplicable Standard Position and Exercise Limitseffective March 24, 2003

Research Circular #RS03-071February 24, 2003Tootsie Roll Industries, Inc. (“TR”)3% Stock DividendEx-Distribution Date: February 28, 2003Research Circular #RS03-073February 24, 2003Software HOLDRs Trust (“SWH”) Cash DistributionEx-Distribution Date: February 26, 2003

Research Circular #RS03-074February 24, 2003Crown Cork & Seal Company, Inc. (“CCK”)Name Change to: Crown Holdings, Inc.Effective Date: February 26, 2003

Research Circular #RS03-075February 25, 2003*****CORRECTION*****CORRECTION*****CORRECTION*****Software HOLDRs Trust (“SWH”) Cash DistributionEx-Distribution Date: February 26, 2003

Research Circular #RS03-076February 25, 2003Apache Corporation (“APA/KWA/XWA & adj. KXI”)5% Stock DividendEx-Distribution Date: March 10, 2003

Research Circular #RS03-077February 25, 2003Expedia, Inc. (“EXPE/UED”)2-for-1 Stock SplitEx-Distribution Date: March 11, 2003

Research Circular #RS03-078February 26, 2003Barr Laboratories, Inc. (“BRL”)3-for-2 Stock SplitEx-Distribution Date: March 18, 2003

Research Circular #RS03-079February 26, 2003XTO Energy Inc. (“XTO”)4-for-3 Stock SplitEx-Distribution Date: March 19, 2003Research Circular #RS03-082February 28, 2003AmeriPath, Inc. (“PATH/AQE”) Proposed Mergerwith Amy Holding Company

Research Circular #RS03-085March 3, 2003Hollywood Casino Corporation (“HWD”) Merger COM-PLETEDwith Penn National Gaming, Inc. (“PENN/UQN”)

Research Circular #RS03-088March 4, 2002Telefonica, S.A. ADS (“TEF & adj. EBB”)2% American Depository Share (“ADS”) DividendEx-Distribution Date: March 6, 2003

RegulatoryBulletin

March 14, 2003 Volume RB14, Number 11

The Constitution and Rules of the Chicago Board Options Exchange, Incorporated(“Exchange”), in certain specific instances, require the Exchange to provide notice to themembership. The weekly Regulatory Bulletin is delivered to all effective members tosatisfy this requirement.

RegulatoryCirculars

Regulatory Circular RG03-12

To: Member Firms

From: Regulatory Services Division

Date: March 5, 2003

Re: Supplement to the Options Disclosure Document Regarding ExerciseSettlement Values

On February 27, 2003, the Securities and Exchange Commission (“SEC”) approvedthe Options Clearing Corporation’s Supplement to the Options Disclosure Document(“ODD”) relating to: 1) Options on Investment Companies and Similar Entities; 2) Spe-cial Exercise Settlement Procedures or Restrictions that may be Imposed Upon theOccurrence of Certain Extraordinary Events; and, 3) Disclosure that a RegistrationStatement and Prospectus Will No Longer be Available from the OCC or U.S. OptionsExchanges. Member Firms should be aware that Exchange Rule 9.15 requires thateach customer who was previously furnished an ODD be furnished with a copy of anamendment to the current ODD. Member Firms may comply with this requirement invarious ways, including but not limited to one of the following:

(1) The firm may choose to conduct a mass mailing of the Supplement to allof their approved customers who have already received the ODD.

(2) The firm may deliver the Supplement to a customer, who has alreadyreceived the ODD, with the first confirmation of an option transaction.

In any event, the Supplement must also be delivered to any new options customerswhen the customer is provided with a copy of the current ODD.

Copies of the ODD or the Supplement may be obtained by contacting Diane Svobodaof the Options Clearing Corporation at (312) 322–6212 or at [email protected] about this memorandum may be directed to Lawrence J. Bresnahan at (312)786–7713 or David E. Carlson at (312) 786-7052.

RB2 March 14, 2003, Volume RB14, Number 11

Regulatory Circular RG03-13

Date: March 5, 2003

To: Members and Member Organizations

From: Membership Department

Re: Option Trading Permit Lease Pool Procedures

In connection with the transfer of the New York Stock Exchange (NYSE) option pro-gram to the CBOE, the Exchange created and issued seventy-five Option TradingPermits. The Permit gives the holder limited member status by entitling the holder toonly the following trading rights and privileges:

1. To be admitted to the trading area on the second floor for the purpose ofengaging in the activity of a Market Maker, DPM and/or Floor Broker in theoption classes that are located in that area, which classes are the formerNYSE option classes that are not also traded on the CBOE main trading floor,and any classes which are subsequently allocated to the second floor tradingarea; and

2. To trade by order as principal those classes of equity options that were tradedon both the CBOE and the NYSE immediately prior to the relocation of theNYSE option program to the CBOE; and

3. To trade by order as principal all classes of options traded on the CBOE inaddition to those described in paragraphs 1 and 2 above, provided that thePermit holder’s total contract volume in such classes of options during anycalendar quarter may not exceed twenty percent (20%) of the sum of suchPermit holder’s total in person contract volume as principal effected pursuantto paragraph 1 above and the Permit holder’s contract volume pursuant toparagraph 2 above; and

4. To be admitted to the main CBOE trading floor for the purpose of trading anyNYSE Option (as defined in CBOE Rule 3.27) located on the main tradingfloor and for the purpose of responding to the call of a Board Broker or OrderBook Official pursuant to Rule 7.5 in respect of any class of options in whicha transaction has been effected for the Permit holder’s account on the day ofthe call.

Operation of the Lease Pool

The Exchange deposited into a “lease pool” those Option Trading Permits not issuedto NYSE option members, plus any Option Trading Permits which, following their issu-ance to NYSE option members, were surrendered by those members. There arecurrently twenty-eight Permits in the lease pool. These Permits were allocated toleases pursuant to a competitive bidding process. All current Option Trading Per-mit leases expire April 30, 2003.

The Permits in the lease pool will be re-allocated through a competitive bidding pro-cess that operates as follows:

1. The Exchange will accept from members and non-members who have quali-fied for membership sealed bids equal to the monthly rent that the bidder iswilling to pay for a six month Permit lease from May 1, 2003 through October31, 2003. All bids must be submitted in writing to the Membership Depart-ment and will be accepted until 4:00 p.m. on Friday, March 28, 2003.

Regulatory Circularscontinued

March 14, 2003, Volume RB14, Number 11 RB3

2. Upon the close of the bidding period, Permits in the pool will be awarded to thehighest bidders in a number equal to the total number of Permits in the pool atthat time. In the event that there is more than one bid at the lowest successfulbid level, the bid received first in time will have priority.

3 . The monthly rent to be paid by each successful bidder will be the dollar valueof the lowest successful bid (a method known as a “Dutch auction.”). Leasepayments will be collected by the Exchange at the beginning of each month.

4. Following each Dutch auction, bids for Permit leases for the current six monthlease period will continue to be accepted, provided that the amount of the bid isat least as high as the lease rate established in the most recent Dutch auction(“minimum qualifying bid”). Any bid submitted during the most recent Dutchauction which was not matched with a Permit, and which is equal to the mini-mum qualifying bid, or which is replaced with a bid that is equal to or greaterthan the minimum qualifying bid, shall remain an active bid for the current sixmonth lease period until the bid is canceled, the bid is matched with a Permit,or the current six month lease period expires. The high bid will be postedwithout the identity of the bidder attached.

5. A lessee may terminate the lessee’s Permit lease during the six-month leaseperiod by providing written notice to the Membership Department during itsnormal business hours. All permit lease termination notices shall be irrevo-cable. Upon receipt of notice of termination of a Permit lease, the MembershipDepartment will post notice of the availability of the Permit for at least twobusiness days on the Exchange bulletin board. The Permit will be transferredto the highest bidder whose bid is received by the Membership Department by3:30 p.m. on the first Wednesday after notice of the Permit’s availability hasbeen posted for at least two business days. The successful bidder (“new les-see”) shall pay rent at a monthly lease price equal to the new lessee’s bid forthe remainder of the six-month lease period.

6. A lessee who gives up a Permit prior to the end of the six-month lease period(“old lessee”) will remain responsible for lease payments on the Permit up tothe day when the Permit is transferred to a new lessee. If the Permit is trans-ferred during a month for which the old lessee has already paid the monthlylease payment, the old lessee will be reimbursed the old lessee’s payment forthat month prorated from the day the Permit was transferred to the new lessee.

7. All Permits in the lease pool will be Dutch auctioned in the manner described initems #1 through #3 above every six months. No priority will be given to cur-rent lessees.

8. Bidding restrictions:

a. Bids may be submitted by an individual member, a member organiza-tion, or an individual or organization qualified to become a member atthe time the bid is placed. Permits shall be transferable among quali-fied nominees of a member organization, so long as proper notificationis provided to the Membership Department in a manner prescribed bythe Exchange.

b. An individual can only lease one Permit from the lease pool at a time.Therefore, an individual who is already a Permit lessee may not submita Permit bid during the six-month lease period (except to bid in thenext Dutch auction) unless and until the lessee first terminates thelessee’s current lease.

Regulatory Circular RG03-13 continuedRegulatory Circularscontinued


c. Any bid submitted on behalf of an individual or organization that be-comes ineligible to receive a Permit shall be automatically canceled.

d. A bidder shall pay the Exchange a non-refundable fee of $550 eachtime the bidder submits a bid between Dutch auctions.

e. A bidder shall pay the Exchange a non-refundable fee of $550 eachtime the bidder submits a bid in one of the Exchange’s bi-annualDutch auctions. However, this $550 fee shall not be required when acurrent individual Permit lessee submits a bid in one of the Dutchauctions. Additionally, when a member organization currently leas-ing one or more Permits from the lease pool bids for one or moreadditional leases in one of the Dutch Auctions, the member organiza-tion shall only be assessed the $550 fee for each bid in excess of thenumber of Permits which the member organization currently leasesfrom the lease pool.

f. Any bid may be canceled or replaced at no charge.

g. The minimum bid for any Dutch Auction will be $1,000 per month.Minimum bid increments will be $50.

Questions concerning the terms of the Permits or the operation of the Permit leasepool may be directed to Regina Millison at 312-786-7452. Questions concerning thesteps necessary to obtain “qualified” status for the purposes of submitting a bid for aPermit lease may be directed to the Department of Membership at 312-786-7449.

Regulatory Circular RG03-13 continuedRegulatory Circularscontinued

Rule Changes,Interpretationsand Policies

APPROVED RULE CHANGE(S)The Securities and Exchange Commission (“SEC”) has approved the following change(s)to Exchange Rules pursuant to Section 19(b) of the Securities Exchange Act of 1934, asamended (“the Act”). Copies are available from the Legal Division.

The effective date of the rule change is the date of approval unless otherwise noted.

SR-CBOE-2002-63 Side-by-Side Trading and Integrated Market Making for ETFsand Related Options

Pursuant to Section 19(b)(3) of the Securities Exchange Act, Rule Change File No. SR-CBOE-2002-63 became effective December 31, 2002. (Securities Exchange Act Release No. 47200,68 FR 3907 (January 27, 2003)). This rule change amends Exchange Rule 30.18 and createsa new Rule 30.18A to permit limited “Side-by-Side Trading” and Integrated Market Making forexchange-traded funds and their related options on the CBOE floor. Side-by-Side Tradingrefers to the trading of options and their underlying securities in the same physical vicinity on thetrading floor, though not necessarily by the same DPM. Integrated Market Making refers to thetrading of options and their underlying securities by the same DPM, though not necessarily inthe same physical vicinity on the trading floor.

Any questions regarding the rule change may be directed to Chris Hill, Legal Division, at 312-786-7031. The text of the amended rules is set forth below. New language is italicized.

General Floor Prohibitions

RULE 30.18. No member of the Exchange, while on the floor, shall:

(a) Dealing When Option Granted or Held. Except as otherwise provided inSection (d) below, initiate the purchase or sale on the Exchange of any securitysubject to the Rules in this Chapter, for his own account or for any account in


SR-CBOE-2002-63 continued

which he, his member organization or any person associated with such member ormember organization is directly or indirectly interested, including by means of theissuance or acceptance of a commitment or obligation to trade, where (i) suchmember holds, or has sold or granted, an option or warrant on that security, or (ii)such member has knowledge that his member organization or any person associ-ated with such member or member organization holds, or has sold or granted, anysuch option or warrant; or

(b) No change.

(c) No change.

(d) Notwithstanding the foregoing:

(i) The DPM or an associated person of the DPM for an IPR, IPS, or TIRthat meets the criteria set forth in Interpretation and Policy .03 of thisRule may act as a DPM, market-maker, and/or floor broker in the relatedoptions without implementing procedures to restrict the flow of informa-tion between them and without any physical separation between thetrading in the underlying IPR, IPS, or TIR and the trading in the relatedoptions.

(ii) Reserved.

. . . Interpretations and Policies:

.01 No change.

.02 No change.

.03 The criteria to qualify particular IPRs, IPSs and TIRs for side-by-side tradingand integrated market making pursuant to Exchange Rule 30.18(d)(i) are as fol-lows:

a. Component securities that in the aggregate account for at least 90% ofthe weight of the portfolio must have a minimum market value of at least$75 million.

b. The component securities representing 90% of the weight of the portfo-lio each have a minimum monthly trading volume during each of the lastsix months of at least 250,000 shares.

c. The most heavily weighted component security cannot exceed 25% ofthe weight of the portfolio and the five most heavily weighted componentsecurities cannot exceed 65% of the weight of the portfolio.

d. The underlying portfolio must include a minimum of 13 securities.

e. All securities in the portfolio must be listed on a national securities ex-change or the NASDAQ Stock Market.

The following Rule is new.

Rule 30.18A Side-by-Side Trading Disclosure Requirements

30.18A. An options DPM that is also approved as a DPM in the underlying security ina side-by-side trading environment pursuant to Exchange Rule 30.18(d)(i) is required

Rule Changes,Interpretations andPolicies continued


to disclose on request to all participants in the option or security trading crowdsinformation about aggregate buying and selling interest at different price points rep-resented by limit orders then being represented or otherwise held by the DPM.

…Interpretations and Policies

.01 “Side-by-side trading” refers to the trading of options and their underly-ing securities in the same physical vicinity, though not necessarily by thesame DPM or firm.

.02 Notwithstanding the fact that a DPM’s option transactions may be inconformity with Rule 30.18 and its Interpretations and Policies, such DPMshall nonetheless be deemed to be in violation of Rule 30.18 if the DPM hasengaged in such option transactions for manipulative purposes.

SR-CBOE-2002-61 Linkage Plan

On January 31, 2003 the SEC approved Rule Change File No. SR-CBOE-2002-61,which enacts new Exchange rules pursuant to the adoption of the Options IntermarketLinkage Plan (Securities Exchange Act Release No. 47294, 68 FR 6727, February 7,2003)). The filing also clarifies the applicable CBOE fees for linkage orders, namely, thatCBOE will treat linkage orders for fee purposes the same as it would treat non-linkageorders from the same originating source). Any questions regarding the rule change maybe directed to Angelo Evangelou, Legal Division, at 312-786-7464. The text of the amendedrules is set forth below. New language is italicized. A copy of the amended Fee Scheduleis available from the Legal Division.

Section E: Intermarket Linkage

Rule 6.80. Definitions

The following terms shall have the meaning specified in this Rule solely for thepurpose of this Section E under Chapter VI:

(1) “Aggrieved Party” means a member of a Participant Exchange whose bidor offer was traded-through.

(2) “Block Trade” means a trade on a Participant Exchange that:

(i) involves 500 or more contracts and has a premium value of at least$150,000;

(ii) is effected at a price outside of the NBBO; and

(iii) involves either:

(A) a cross (where a member of the Participant Exchange rep-resents all or a portion of both sides of the trade), or

(B) any other transaction (i.e., in which such member repre-sents an order of block size on one side of the transaction only)that is not the result of an execution at the current bid or offer onthe Participant Exchange.

Contemporaneous transactions at the same price on a ParticipantExchange shall be considered a single transaction for the purpose ofthis definition.

SR-CBOE-2002-63 continuedRule Changes,Interpretations andPolicies continued


(3) “Broker/Dealer” means an individual or organization registered with the UnitedStates Securities and Exchange Commission in accordance with Section 15(b)(1)of the Exchange Act or a foreign broker or dealer exempt from such registrationpursuant to Rule 15a-6 under the Exchange Act.

(4) “Complex Trade” means the execution of an order in an options series inconjunction with the execution of one or more related order(s) in different optionsseries in the same underlying security occurring at or near the same time for theequivalent number of contracts and for the purpose of executing a particular in-vestment strategy.

(5) “Crossed Market” means a quotation in which the Exchange disseminates abid (offer) in a series of an Eligible Option Class at a price that is greater than (lessthan) the price of the offer (bid) for the series then being displayed from anotherParticipant Exchange.

(6) “Customer” means an individual or organization that is not a Broker/Dealer.Used with reference to a Linkage Order, it means an order which, if executed,would result in the purchase or sale for an account in which no Broker/Dealer hasan interest.

(7) “Eligible Market-Maker,” with respect to an Eligible Option Class, means aMarket-Maker that:

(i) is assigned to, and is providing two-sided quotations in, the EligibleOption Class;

(ii) is participating in the Exchange’s automatic execution system, if avail-able, in such Eligible Option Class; and

(iii) is in compliance with the requirements of Rule 6.85.

(8) “Eligible Option Class” means all option series overlying a security (as thatterm is defined in Section 3(a)(10) of the Exchange Act) or group of securities,including both put options and call options, which class is traded on the Exchangeand at least one other Participant Exchange.

(9) “Firm Customer Quote Size” with respect to a P/A Order means the lesser of(a) the number of option contracts that the Participant Exchange sending a P/AOrder guarantees it will automatically execute at its disseminated quotation in aseries of an Eligible Option Class for Customer orders entered directly for execu-tion in that market; or (b) the number of option contracts that the Participant Ex-change receiving a P/A Order guarantees it will automatically execute at its dis-seminated quotation in a series of an Eligible Option Class for Customer ordersentered directly for execution in that market. The Firm Customer Quote Size willbe at least 10 contracts for each series of an Eligible Option Class.

(10) “Firm Principal Quote Size” means the number of options contracts that aParticipant Exchange guarantees it will execute at its disseminated quotation forincoming Principal Orders in an Eligible Option Class. This number shall be nofewer than 10.

(11) “Linkage” means the systems and data communications network that linkselectronically the Participant Exchanges for the purposes specified in the Plan.

(12) “Linkage Order” means an Immediate or Cancel order routed through theLinkage as permitted under the Plan. There are three types of Linkage Orders:



(i) “Principal Acting as Agent (“P/A”) Order,” which is an order for theprincipal account of a Market-Maker (or equivalent entity on another Par-ticipant Exchange that is authorized to represent Customer orders) re-flecting the terms of a related unexecuted Customer order for which theMarket-Maker is acting as agent;

(ii) “Principal Order,” which is an order for the principal account of anEligible Market-Maker (or equivalent entity on another Participant Ex-change) and is not a P/A Order; and

(iii) “Satisfaction Order,” which is an order sent through the Linkage tonotify a Participant Exchange of a Trade-Through and to seek satisfac-tion of the liability arising from that Trade-Through.

(13) “Locked Market” means a quotation in which the Exchange disseminates abid (offer) in a series of an Eligible Option Class at a price that equals the price ofthe offer (bid) for the series then being displayed from another Participant Ex-change.

(14) “NBBO” means the national best bid and offer in an options series as calcu-lated by the Exchange.

(15) “Non-Firm” means, with respect to quotations, that members of a Partici-pant Exchange are relieved of their obligation to be firm for their quotations pur-suant to Rule 11Ac1-1 under the Exchange Act.

(16) “Participant Exchange” means a registered national securities exchangethat is a party to the Plan.

(17) “Plan” means the Plan for the Purpose of Creating and Operating anIntermarket Option Linkage, as such plan may be amended from time to time.

(18) “Reference Price” means the limit price attached to a Linkage Order by thesending Participant Exchange. Except with respect to a Satisfaction Order, theReference Price is equal to the bid disseminated by the receiving ParticipantExchange at the time that the Linkage Order is transmitted in the case of a Link-age Order to sell and the offer disseminated by the receiving Participant Ex-change at the time that the Linkage Order is transmitted in the case of a LinkageOrder to buy. With respect to a Satisfaction Order, the Reference Price is the bidor offer price reflecting order(s) of Customers disseminated by the sending Par-ticipant Exchange that was traded through, except in the case of a Trade-Throughthat is a Block Trade, in which case the Reference Price shall be the price of theBlock Trade that caused the Trade-Through.

(19) “Trade-Through” means a transaction in an options series at a price that isinferior to the NBBO.

(20) “Third Participating Market Center Trade-Through” means a Trade-Throughin a series of an Eligible Option Class that is effected by executing a LinkageOrder, and such execution results in a sale (purchase) at a price that is inferior tothe best bid (offer) being disseminated by another Participant Exchange.

(21) “Verifiable Number of Customer Contracts” means the number of Customercontracts in the book of a Participant Exchange.



Rule 6.81. Operation of the Linkage

By subscribing to the Plan, the Exchange has agreed to comply with, andenforce compliance by its members with, the Plan. In this regard, the followingshall apply:

(a) Pricing. Members may send P/A Orders and Principal Orders through theLinkage only if such orders are priced at the NBBO.

(b) P/A Orders.

(1) Sending of P/A Orders for Sizes No Larger than the Firm CustomerQuote Size. A Market-Maker may send through the Linkage a P/A Orderfor execution in the automatic execution system of a Participant Exchangeif the size of such P/A Order is no larger than the Firm Customer QuoteSize. Except as provided in subparagraph (b)(2)(ii) below, a Market- Makermay not break up an order of a Customer that is larger than the FirmCustomer Quote Size into multiple P/A Orders, one or more of which isequal to or smaller than the Firm Customer Quote Size, so that suchorders could be represented as multiple P/A Orders through the Linkage.

(2) Sending of P/A Orders for Sizes Larger than the Firm Customer QuoteSize. If the size of a P/A Order is larger than the Firm Customer QuoteSize, a Market-Maker may send through the Linkage such P/A Order inone of two ways:

(i) The Market-Maker may send a P/A Order representing theentire Customer order. If the receiving Participant Exchange’sdisseminated quotation is equal to or better than the ReferencePrice when the P/A Order arrives at that market, that exchangewill execute the P/A Order at its disseminated quotation for atleast the Firm Customer Quote Size. Within 15 seconds of re-ceipt of such order, the receiving Participant Exchange will in-form the Market-Maker of the amount of the order executed andthe amount, if any, that was canceled.

(ii) Alternatively, the Market-Maker may send an initial P/A Orderfor the Firm Customer Quote Size pursuant to subparagraph (b)(1)above. If the Participant Exchange executes the P/A Order andcontinues to disseminate the same quotation at the NBBO 15seconds after reporting the execution of the initial P/A Order, theMarket-Maker may send an additional P/A Order to the sameParticipant Exchange. If sent, such additional P/A Order must befor at least the lesser of 100 contracts or the entire remainder ofthe Customer order.

In any situation where a receiving Participant Exchange does not executea P/A Order in full, such exchange is required to move its quotation to aprice inferior to the Reference Price of the P/A Order.

(c) Principal Orders.

(1) Sending of an Initial Principal Order. An Eligible Market-Maker may send a Principal Order through the Linkage at a priceequal to the NBBO. Subject to the next paragraph, if the PrincipalOrder is not larger than the Firm Principal Quote Size, the receiv-ing Participant Exchange will execute the order in its automatic



execution system, if available, if its disseminated quotation isequal to or better than the price specified in the Principal Orderwhen that order arrives at the receiving Participant Exchange.If the Principal Order is larger than the Firm Principal QuoteSize, the receiving Participant will (a) execute the Principal Or-der at its disseminated quotation for at least the Firm PrincipalQuote Size and (b) within 15 seconds of receipt of such order,reply to the sending Participant Exchange, informing such Par-ticipant Exchange of the amount of the order that was executedand the amount, if any, canceled. If the receiving ParticipantExchange does not execute the Principal Order in full, it willmove its quote to a price inferior to the Reference Price of thePrincipal Order.

(2) Receipt of Multiple Principal Orders. Once the Exchangeprovides an automatic execution of a Principal Order in a seriesof an Eligible Option Class (the “initial execution”), the Exchangemay reject any Principal Order(s) in the same Eligible OptionClass sent by the same Participant Exchange for 15 secondsafter the initial execution unless: (1) there is a change of price inthe Exchange’s disseminated offer (bid) in the series of the Eli-gible Option Class in which there was an initial execution; and(2) such price continues to be the NBBO. After this 15 secondperiod, and until the sooner of (a) one minute after the initialexecution or (b) a change in the Exchange’s disseminated bid(offer), the Exchange is not obligated to provide an automaticexecution for any Principal Orders in the same Eligible OptionClass received from the Participant Exchange that sent the or-der resulting in the initial execution, and thus may treat any suchPrincipal Orders as being greater than the Firm Principal QuoteSize.

(d) Responses to Linkage Orders.

(1) Failure to Receive a Timely Response. A Member who does notreceive a response to a P Order or a P/A Order within 20 seconds ofsending the order may reject any response received thereafter purport-ing to report an execution of all or part of that order. The Member sorejecting the response shall inform the Participant Exchange sendingthat response of the rejection within 15 seconds of receipt of the re-sponse.

(2) Failure to Send a Timely Response. If a Member responds to a POrder or P/A Order more than 20 seconds after receipt of that order, andthe Participant Exchange to whom the Member responded cancels suchresponse, the Member shall cancel any trade resulting from such orderand shall report the cancellation to OPRA.

(e) Receipt of Orders. The Exchange will provide for the execution of P/AOrders and Principal Orders if its disseminated quotation is (i) equal to orbetter than the Reference Price, and (ii) equal to the then-current NBBO.Subject to paragraph (c) above, if the size of a P/A Order or Principal Orderis not larger than the Firm Customer Quote Size or Firm Principal QuoteSize, respectively, the Exchange will provide for the execution of the entireorder, and shall execute such order in its automatic execution system if thatsystem is available. If the size of a P/A Order or Principal Order is larger thanthe Firm Customer Quote Size or Firm Principal Quote Size, respectively, or



if the linkage order received is not eligible to be executed automatically, theMarket-Maker must address the order within 15 seconds to provide an execu-tion for at least the Firm Customer Quote Size or Firm Principal Quote Size,respectively. If the order is not executed in full, the Exchange will move itsdisseminated quotation to a price inferior to the Reference Price.

Rule 6.82. [Reserved]

Rule 6.83. Order Protection

(a) Avoidance and Satisfaction of Trade-Throughs.

(1) General Provisions. Absent reasonable justification and during nor-mal market conditions, members should not effect Trade-Throughs. Ex-cept as provided in paragraph (b) below, if a member effects a Trade-Through with respect to the bid or offer of a Participant Exchange in anEligible Option Class and the Exchange receives a complaint thereof froman Aggrieved Party, either:

(i) the member who initiated the Trade-Through shall satisfy, orcause to be satisfied, through the Linkage the Aggrieved Party inaccordance with subparagraph (a)(2) below; or

(ii) if the member elects not to do so (and, in the case of ThirdParticipating Market Center Trade-Through, the member obtainsthe agreement of the contra party that received the Linkage Or-der that caused the Trade-Through), then the price of the trans-action that constituted the Trade-Through shall be corrected to aprice at which a Trade-Through would not have occurred. If theprice of the transaction is corrected, the Member correcting theprice shall report the corrected price to OPRA, notify the AggrievedParty of the correction and cancel the Satisfaction Order.

(2) Price and Size. The price and size at which a Satisfaction Order shall be filledis as follows:

(i) Price. A Satisfaction Order shall be filled at the Reference Price. How-ever, if the Reference Price is the price of an apparent Block Trade thatcaused the Trade-Through, and such trade was not, in fact, a Block Trade,then the Member may cancel the Satisfaction Order. In that case, theMember shall inform the Aggrieved Party within three minutes of receipt ofthe Satisfaction Order of the reason for the cancellation. Within threeminutes of receipt of such cancellation, the Aggrieved Party may resendthe Satisfaction Order with a Reference Price of the bid or offer that wastraded through.

(ii) Size. An Aggrieved Party may send a Satisfaction Order up to the sizeof the Verifiable Number of Customer Contracts that were included in thedisseminated bid or offer that was traded through. Subject to subpara-graph (2)(i) above and paragraph (b) below, a Member shall fill in full allSatisfaction Orders it receives following a Trade-Through, subject to thefollowing limitations:

(A) If the number of contracts to be satisfied exceeds the size ofthe transaction that caused the Trade-Through, the size of theSatisfaction Order(s) that must be filled with respect to each Par-ticipant Exchange(s) shall be limited to the size of the transaction



that caused the Trade-Through, and the remainder of any Sat-isfaction Order(s) shall be canceled;

(B) If the transaction that caused the Trade-Through was for asize larger than the Firm Customer Quote Size with respect toany of the Participant Exchange(s) traded through, the total num-ber of contracts to be filled, with respect to all Satisfaction Or-ders received, shall not exceed the size of the transaction thatcaused the Trade-Through. In that case, the Member shall fillthe Satisfaction Orders pro rata based on the Verifiable Numberof Customer Contracts traded through on each Participant Ex-change, and shall cancel the remainder of such SatisfactionOrder(s); and

(C) Notwithstanding paragraphs (A) and (B) above, if the trans-action that caused the Trade-Through occurred in the periodbetween five minutes prior to the regularly-scheduled close oftrading in the principal market in which the underlying security istraded and the close of trading in the option class, the maximumnumber of contracts to be satisfied with respect to any Satisfac-tion Order from any Participant Exchange is 10 contracts.

(3) Rejection of Fills of Satisfaction Orders. Within 30 seconds of receipt ofnotification that another Participant Exchange has filled a Member’s SatisfactionOrder, the Member that sent the Satisfaction Order may reject such fill, but onlyto the extent that either: (i) the order(s) for the customer contracts underlying theSatisfaction Order already have been filled; or (2) the customer order(s) to buy(sell) the contracts underlying the Satisfaction Order were canceled.

(4) Protection of Customers. Whenever subparagraph (a)(1) applies, if PublicCustomer orders (or P/A Orders representing Public Customer orders) consti-tuted either or both sides of the transaction involved in the Trade-Through, eachsuch Public Customer order (or P/A Order) shall receive:

(i) the price that caused the Trade-Through; or

(ii) the price at which the bid or offer traded through was satisfied, if itwas satisfied pursuant to subparagraph (a)(1)(i), or the adjusted price, ifthere was an adjustment, pursuant to subparagraph (a)(1)(ii),

whichever price is most beneficial to the Public Customer order. Resulting differ-ences in prices shall be the responsibility of the Member who initiated the Trade-Through.

(b) Exceptions to Trade-Through Liability. The provisions of paragraph (a) per-taining to the satisfaction of Trade-Throughs shall not apply under the followingcircumstances:

(1) the Member who initiated the Trade-Through made everyreasonable effort to avoid the Trade-Through, but was unable todo so because of a systems/equipment failure or malfunction;

(2) the Member trades through the market of a Participant Ex-change to which such Member had sent a P/A Order or Princi-pal Order, and within 20 seconds of sending such order thereceiving Participant Exchange had neither executed the order



in full nor adjusted the quotation traded through to a price inferiorto the Reference Price of the P/A Order or Principal Order;

(3) the bid or offer traded through was being disseminated froma Participant Exchange whose quotes were Non-Firm with re-spect to such Eligible Option Class;

(4) the Trade-Through was other than a Third Participating Mar-ket Center Trade-Through and occurred during a period when,with respect to the Eligible Option Class, the Exchange’s quoteswere Non-Firm; provided, however, that, unless one of the otherconditions of this paragraph (b) applies, during any such period:(i) Members shall make every reasonable effort to avoid tradingthrough the firm quotes of another Participant Exchange; and (ii)it shall not be considered an exception to paragraph (a) if a Mem-ber regularly trades through the firm quotes of another Partici-pant Exchange during such period;

(5) the bid or offer traded through was being disseminated by aParticipant Exchange during a trading rotation in the Eligible Op-tion Class;

(6) the transaction that caused the Trade-Through occurred dur-ing a trading rotation;

(7) the transaction that caused the Trade-Through was the ex-ecution of a Complex Trade;

(8) in the case of a Trade-Through other than a Third Participat-ing Market Center Trade-Through, a Satisfaction Order with re-spect to the Trade-Through was not received by the Exchangefrom the Aggrieved Party promptly following the Trade-Throughand, in any event, (i) except in the final five minutes of trading,within three minutes from the time the report of the transaction(s)that constituted the Trade-Through was disseminated over OPRA,and (ii) in the final five minutes of trading, within one minute fromthe time the report of the transaction(s) that constituted the Trade-Through was disseminated over OPRA; or

(9) in the case of a Third Participating Market Center Trade-Through, a Satisfaction Order with respect to the Trade-Throughwas not received by the Exchange promptly following the Trade-Through. In applying this provision, the Aggrieved Party mustsend the Exchange a Satisfaction Order within three minutes fromthe time the report of the transaction that constituted the Trade-Through was disseminated over OPRA. To avoid liability for theTrade-Through, the Member receiving such Satisfaction Ordermust cancel the Satisfaction Order and inform the Aggrieved Partyof the identity of the Participant Exchange that initiated the Trade-Through within three minutes of the receipt of such SatisfactionOrder (within one minute in the final five minutes of trading). TheAggrieved Party then must send the Participant Exchange thatinitiated the Trade-Through a Satisfaction Order within three min-utes of receipt of the cancellation of the initial Satisfaction Order(within one minute in the final five minutes of trading).

(c) Responsibilities and Rights Following Receipt of Satisfaction Orders.



(1) When a Member receives a Satisfaction Order, that Member shall re-spond as promptly as practicable pursuant to Exchange procedures by ei-ther:

(i) specifying that one of the exceptions to Trade-Through liabilityspecified in paragraph (b) above is applicable and identifying thatparticular exception; or

(ii) taking the appropriate corrective action pursuant to paragraph(a) above.

(2) If the Member who initiated the Trade-Through fails to respond to a Sat-isfaction Order or otherwise fails to take the corrective action required underparagraph (a) within three minutes of receiving notice of a Satisfaction Or-der, and the Exchange determines that:

(i) there was a Trade-Through; and

(ii) none of the exceptions to Trade-Through liability specified inparagraph (b) above were applicable;

then, subject to the next paragraph, the Member who initiated the Trade-Through shall be liable to the Aggrieved Party for the amount of the actualloss resulting from non-compliance with paragraph (a) and caused by theTrade-Through.

If either (a) the Aggrieved Party does not establish the actual loss within 30seconds from the time the Aggrieved Party received the response to its Sat-isfaction Order (or, in the event that it did not receive a response, within fourminutes from the time the Aggrieved Party sent the Satisfaction Order) or (b)the Aggrieved Party does not notify the Exchange Participant that initiatedthe Trade-Through of the amount of such loss within one minute of establish-ing the loss, then the liability shall be the lesser of the actual loss or the losscaused by the Trade-Through that the Aggrieved Party would have sufferedhad that party purchased or sold the option series subject to the Trade-Throughat the “mitigation price.”

The “mitigation price” is the highest reported bid (in the case where an offerwas traded through) or the lowest reported offer (in the case where a bid wastraded through), in the series in question 30 seconds from the time the Ag-grieved Party received the response to its Satisfaction Order (or, in the eventthat it did not receive a response, four minutes from the time the AggrievedParty sent the Satisfaction Order). If the Participant Exchange receives aSatisfaction Order within the final four minutes of trading (on any day exceptthe last day of trading prior to the expiration of the series which is the subjectof the Trade-Through), then the mitigation price shall be the price establishedat the opening of trading in that series on the Aggrieved Party’s ParticipantExchange on the next trading day. However, if the price of the openingtransaction is below the opening bid or above the opening offer as estab-lished during the opening rotation, then the mitigation price shall be the openingbid (in the case where an offer was traded through) or opening offer (in thecase where a bid was traded through). If the Trade-Through involves a se-ries that expires on the day following the day of the Trade-Through and theSatisfaction Order is received within the four minutes of trading, the “mitiga-tion price” shall be the final bid (in the case where an offer was traded through)or offer (in the case where a bid was traded through) on the day of the tradethat resulted in the Trade-Through.



(3) A Member that is an Aggrieved Party under the rules of another ParticipantExchange governing Trade-Through liability must take steps to establish andmitigate any loss such Member might incur as a result of the Trade-Through ofthe Member’s bid or offer. In addition, the Member shall give prompt notice tothe other Participant Exchange of any such action in accordance with sub-paragraph (c)(2) above.

(d) Limitations on Trade-Throughs. Members may not engage in a pat-tern or practice of trading through better prices available on other ex-changes, whether or not the exchange or exchanges whose quotationsare traded through are Participant Exchanges, unless one or more of theprovisions of paragraph (b) above are applicable. In applying this provi-sion:

(1) The Exchange will consider there to have been a Trade-Through if a Member executes a trade at a price inferior to theNBBO even if the Exchange does not receive a Satisfaction Or-der from an Aggrieved Party pursuant to subparagraph (a)(1);

(2) The Exchange will not consider there to have been a Trade-Through if a Member executes a Block Trade at a price inferior tothe NBBO if such Member satisfied all Aggrieved Parties pursu-ant to subparagraph (a)(2) following the execution of the BlockTrade; and

(3) The Exchange will not consider there to have been a Trade-Through if a Member executes a trade at a price inferior to thequotation being disseminated by an exchange that is not a Par-ticipant Exchange if the Member made a good faith effort to tradeagainst the superior quotation of the non-Participant Exchangeprior to trading through that quotation. A “good faith effort” toreach a non-Participant Exchange’s quotation requires that aMember at least had sent an order that day to the non-ParticipantExchange in the class of options in which there is a Trade-Through,at a time at which such non-Participant Exchange was not re-lieved of its obligation to be firm for its quotations pursuant to Rule11Ac1-1 under the Exchange Act, and such non-Participant Ex-change neither executed that order nor moved its quotation to aprice inferior to the price of the Member’s order within 20 sec-onds of receipt of that order.

Rule 6.84. Locked and Crossed Markets

(a) Eligible Market-Maker Locking or Crossing a Market. An Eligible Market-Maker that creates a Locked Market or a Crossed Market shall unlock (un-cross) that market or shall direct a Principal Order through the Linkage totrade against the bid or offer that the Eligible Market-Maker locked (crossed).

(b) Members Other than an Eligible Market-Maker Locking or Crossing aMarket. A member other than an Eligible Market-Maker that creates a LockedMarket or a Crossed Market shall unlock (uncross) the market.

Rule 6.85. Limitation on Principal Order Access

A Market-Maker shall not be permitted to send Principal Orders in an EligibleOption Class through the Linkage for a given calendar quarter if the Market-Maker effected less than 80 percent of its volume in that Eligible Option Class



on the Exchange in the previous calendar quarter (that is, the Market-Makereffected 20 percent or more of its volume by sending Principal Orders throughthe Linkage) as calculated by the Exchange. This “80/20” is represented asfollows:

_ X _X+Y

“X” equals the total contract volume the Market-Maker effects in an EligibleOption Class against orders of Customers on the Exchange during a calen-dar quarter (a) including contract volume effected by executing P/A Orderssent to the Exchange through the Linkage, but (b) excluding contract volumeeffected by sending P/A Orders through the Linkage for execution on an-other Participant Exchange. “Y” equals the total contract volume the Market-Maker effects in such Eligible Option Class by sending Principal Ordersthrough the Linkage during that calendar quarter.


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