cboe exchange & regulatory bulletin · andor a. fleischman marlene fleischman transfer 10/21/02...

CLASS BID OFFER LAST SALE AMOUNT LAST SALE DATECBOE/FULL $155,000.00 $165,000.00 $160,000.00 October 23, 2002CBOE/OTP $250.00 $40,000.00 $100.00 September 19, 2002

CBOT/FULL $305,000.00 $317,000.00 $317,500.00 October 23, 2002

ExchangeBulletin

November 1, 2002 Volume 30, Number 44The 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 telephone number to:Chicago Board Options Exchange, Accounting Department, 400 South LaSalle, Chicago, Illinois 60605, Attention: Bulletin Subscrip-tions. The cost of an annual subscription (July 1 through June 30) is $200 ($100 after January 1) for hard copy delivery or $100 ($50after 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 or fax.To sign up, simply e-mail your name and desired e-mail address or fax number to: [email protected] or contact Doug Luzzi at 312-786-7105.

Members are required to report any address or telephone number changes to the Membership Department at (312) 786-7449 pursu-ant 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.

SEAT MARKET QUOTES AS OF FRIDAY, OCTOBER 25, 2002

OPTION TRADING PERMIT LEASE POOL AS OF FRIDAY, OCTOBER 25, 2002Highest Bid: No Bid Highest Monthly Rate: $1,000.00OTPs Available: Twelve Lowest Monthly Rate: $1,000.00Last Lease: $1,000.00 on October 17, 2002

MEMBERSHIP SALES AND TRANSFERSFrom To Price/Transfer DateAndor A. Fleischman Marlene Fleischman Transfer 10/21/02Jeffrey L. Bassock, LLC PB Nayber, LLC Transfer 10/21/02David W Snyder O & R Options Co. $159,000.00 10/22/02Lois J. Morris Paul J. Jiganti $160,000.00 10/23/02

MEMBERSHIP APPLICATIONS RECEIVED FORWHICH A POSTING PERIOD IS REQUIRED

Individual Membership Applicants Date Posted

Michael E. Shields, Nominee 10/18/02Ronin Capital, LLC444 W. Fullerton Pkwy., #1304Chicago, IL 60614

Dennis P. Harrigan, Nominee 10/21/02Bear Wagner Specialists, LLC9857 S. AversEvergreen Park, IL 60805

John Doran, CBT-Registered For 10/21/02Bear Hunter Structured Products, LLC1554 Willow Rd.Northfield, IL 60093

MEMBERSHIP INFORMATION FOR 10/17/02 THROUGH 10/23/02Date Posted

Todd A. Needleman, Nominee 10/23/02SLK-Hull Derivatives, LLC1258 North Ave.Highland Park, IL 60035

Mark Hoelting, CBT-Registered For 10/23/02Equitec Proprietary Markets, LLC2839 N. Damen, #1Chicago, IL 60618

MEMBERSHIP LEASES

New Leases Effective Date

Lessor: Lorna J. Martin 10/17/02Lessee: Calabria Trading, LLC

Douglas C. Draeger, NOMINEERate: .7479% Term: Monthly

November 1, 2002 Volume 30, Number 44 Chicago Board Options Exchange

Lessor: OptionsXpress, Inc. 10/17/02Lessee: CTC, LLC

Brian S. Heffley, NOMINEERate: .7479% Term: Monthly

Lessor: Peter H. Schulte 10/17/02Lessee: Ronin Capital, LLC

Erik M. Vaughan, NOMINEERate: 3/4% Term: Monthly

Lessor: P&D Investments LLC 10/18/02Lessee: Cutler Group, LP

Michael C. Shapiro, NOMINEERate: 3/4% Term: Monthly

Lessor: Creed Monarch, Inc. 10/18/02Lessee: CTC LLC

Ben P. Nixdorf, NOMINEERate: .7479% Term: Monthly

Lessor: B & R Group 10/21/02Lessee: Geneva Stock, LLC

John T. Malone, NOMINEERate: .7479% Term: Monthly

Lessor: DRU Options 10/21/02Lessee: Consolidated Trading, LLC

Philip W. Giordano, NOMINEERate: 3/4% Term: Monthly

Lessor: Marlene Fleischman 10/21/02Lessee: Timber Hill LLC

Ryan R. Paulsen, NOMINEERate: 7/8% Term: Monthly

Lessor: PB Nayber, LLC 10/21/02Lessee: WJC Trading Co., Inc.

John Gregorek, NOMINEERate: 0.7479% Term: Monthly

Lessor: Larkspur Securities, Inc. 10/22/02Lessee: S & W Grain Co.

Frank D. Bertone, NOMINEERate: 1% Term: Monthly

Lessor: O & R Options Co. 10/23/02Lessee: TD Options, LLC

James R. Bokowski, NOMINEERate: 3/4% Term: Daily

Terminated Leases Termination Date

Lessor: Lorna J. Martin 10/17/02Lessee: Midwest Partners, LLC

Scott J. O’Connell (SOJ), NOMINEE

Lessor: OptionsXpress, Inc. 10/17/02Lessee: Theodore L. Olshansky (TO)

Lessor: Peter H. Schulte 10/17/02Lessee: TD Options, LLC

Edward V. Dolinar (EDG), NOMINEE

Lessor: P&D Investments LLC 10/18/02Lessee: Group One Trading, LP

Kevin M. Shultz (SHX), NOMINEE

Lessor: Creed Monarch, Inc. 10/18/02Lessee: Bear Hunter Structured Products, LLC

Ben P. Nixdorf (BPN), NOMINEE

Lessor: B & R Group 10/21/02Lessee: Geneva, LLC

Keith A. Guerrini (LGX), NOMINEE

Lessor: DRU Options 10/21/02Lessee: Third Millennium Trading, LLC

Michael Bonney, NOMINEE

Lessor: Andor A. Fleischman 10/21/02Lessee: Timber Hill, LLC

Ryan R. Paulsen (RPX), NOMINEE

Lessor: Jeffrey L. Bassock, LLC 10/21/02Lessee: WJC Trading Co., Inc.

John Gregorek (BAU), NOMINEE

Lessor: Larkspur Securities, Inc. 10/22/02Lessee: HGI, Inc.

Peter Patton (PJP), NOMINEE

Lessor: David W. Snyder 10/23/02Lessee: TD Options, LLC

James R. Bokowski (JBO), NOMINEE

OPTION TRADING PERMIT LEASES

New OTP Leases Effective Date

Lessor: Option Funding Group, LP 10/18/02Lessee: Bear Hunter Structured Products, LLCRate: $800.00 Term: Monthly

Terminated OTP Leases Termination Date

Lessor: Option Funding Group, LP 10/18/02Lessee: Option Capital Group, LLC

LEASE POOL OPTION TRADING PERMIT LEASES

New OTP Leases Effective Date

Lessor: Chicago Board Options Exchange 10/22/02Lessee: Viking Trading, LLC

Stephen M. Kosanovich, NOMINEERate: $1,000.00 Term: Daily

MEMBERSHIP TERMINATIONS

Individual Members

CBT Exercisers: Termination Date

David P. Brennan (DPB) 10/21/02141 W. Jackson – Ste. 3720Chicago, IL 60604

CBT Registered For: Termination Date

Brian J. Haag (BAS) 10/23/02Tahoe Trading, LLC440 S. LaSalle St., Ste. 2500Chicago, IL 60605

Patrick T. Moran (PTO) 10/23/02DRO WST Trading LLC440 S. LaSalle – Ste. 2500Chicago, IL 60605

Lessee(s): Termination Date

Theodore L. Olshansky (TO) 10/17/02680 N. Lakeshore DriveChicago, IL 60611

Effective Date Termination Date


Termination DateLessor(s): Termination Date

Andor A. Fleischman 10/21/02P.O. Box 461Highland Park, IL 60035

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

Sherri M. Hastings (MSS) 10/17/02Midwest Partners, LLC3332 W. Holden CircleMatteson, IL 60443

Michael C. Shapiro (SHO) 10/21/02Cutler Group, LP440 S. LaSalle, Suite 1110Chicago, IL 60605

Keith A. Guerrini (LGX) 10/21/02Geneva LLC2025 W. Crystal, #1Chicago, IL 60622

Michael Bonney (MJB) 10/21/02Third Millennium Trading LLP440 S. LaSalle – Ste. 3100Chicago, IL 60605

Michael E. Stodden (STO) 10/21/02TD Options, LLC230 S. LaSalle St., Ste. 688Chicago, IL 60604

Andy Bert (ABT) 10/21/02Third Millennium Trading, LLC440 S. LaSalle, Ste. #3100Chicago, IL 60605

Gregg V. Bullinger (BUL) 10/22/02SLK-Hull Derivatives LLC311 S. Wacker - Ste. 800Chicago, IL 60606

Lincoln W. Brewer (LBW) 10/22/02SLK-Hull Derivatives LLC311 S. Wacker – Ste. 1400Chicago, IL 60606

Dylan F. Tuttle (TBY) 10/22/02Van der Moolen Options U.S.A. LLC1370 W. Grand Ave.Chicago, IL 60622

Robert F. Sepe (EVL) 10/22/02SLK-Hull Derivatives LLC311 S. Wacker - Ste. 1400Chicago, IL 60606

Michael W. Wallace (WAL) 10/22/02SLK-Hull Derivatives LLC311 S. Wacker – Ste. 1400Chicago, IL 60606

Robert A. Fodor (RAF) 10/22/02Prime Markets Group, LLC1140 W. MonroeChicago, IL 60607

David R. Tilley (TLE) 10/22/02SLK-Hull Derivatives LLC1730 N. Clark - Apt. 3806Chicago, IL 60614

Peter Patton (PJP) 10/22/02HGI, Inc.141 W. Jackson - Ste. 1880Chicago, IL 60604

Patrick W. Marsek (PWM) 10/22/02SLK-Hull Derivatives LLC311 S. Wacker Drive, Suite 1400Chicago, IL 60606

John F. McDermott (LTD) 10/22/02SLK-Hull Derivatives LLC10416 WillowMokena, IL 60448

Matthew W. Krupski (MTT) 10/22/02SLK-Hull Derivatives LLC311 S. Wacker Dr., Suite 1400Chicago, IL 60606

Philip W. Giordano (PGI) 10/23/02Consolidated Trading, LLC440 S. LaSalle, Ste. #3100Chicago, IL 60604

Brandon Cone (SAN) 10/23/02STR Trading Partners LLC230 S. LaSalle St. 4th floorChicago, IL 60604

Member Organizations

Lessee(s): Termination Date

Geneva, LLC 10/22/02Attn: Bill Lynn440 S. LaSalle – Ste. 1600Chicago, IL 60605

Lessor(s): Termination Date

Jeffrey L. Bassock, L.L.C. 10/21/023710 Pebble Beach Rd.Northbrook, IL 60062

EFFECTIVE MEMBERSHIPS

Individual Members

Lessor(s): Effective Date

Marlene Fleischman 10/21/0222747 El Dorado DriveBoca Raton, FL 33433Type of Business to be Conducted:

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

Kamil Libich (MXM) 10/17/02SLK-Hull Derivatives, LLC311 S. Wacker Drive, Suite 1400Chicago, IL 60606Type of Business to be Conducted: Floor Broker/Market Maker

James E. Macchione (SLM) 10/17/02SLK-Hull Derivatives, LLC311 S. Wacker Drive, Suite 1400Chicago, IL 60606Type of Business to be Conducted: Floor Broker/Market Maker

Douglas C. Draeger (DGR) 10/17/02Calabria Trading, LLC440 S. LaSalle - Ste. 700Chicago, IL 60605Type of Business to be Conducted: Market Maker


Brian S. Heffley (HEF) 10/17/02CTC, LLC440 S. LaSalle Street, Suite 1850Chicago, IL 60605Type of Business to be Conducted: Market Maker

Steven R. Rosen (RZN) 10/17/02SLK-Hull Derivatives, LLC311 S. Wacker Dr., Suite 800Chicago, IL 60606Type of Business to be Conducted: Floor Broker/Market Maker

Michael C. Shapiro (SHO) 10/18/02Cutler Group, LP440 S. LaSalle, Suite 1110Chicago, IL 60605Type of Business to be Conducted: Market Maker

Patrick M. Baker (BAK) 10/21/02Group One Trading, LP440 S. LaSalle, #3232Chicago, IL 60605Type of Business to be Conducted: Market Maker

Scott E. Noorthoek (OEK) 10/21/02TD Options, LLC230 S. LaSalle Street, Suite 688Chicago, IL 60604Type of Business to be Conducted: Floor Broker/Market Maker

Alan Wong (ALN) 10/21/02TD Options, LLC230 S. LaSalle St., Suite 688Chicago, IL 60604Type of Business to be Conducted: Market Maker

Shannon Joseph Brandt (SJB) 10/21/02Cutler Group, LP440 S. LaSalle – Ste. 1124Chicago, IL 60605Type of Business to be Conducted: Market Maker

Ian G. Coleman (RIV) 10/21/02Cutler Group, LP440 S. LaSalle – Ste. 1110Chicago, IL 60605Type of Business to be Conducted: Market Maker

John T. Malone (JTM) 10/21/02Geneva Stock, LLC440 S. LaSalle – Ste. 1822Chicago, IL 60605Type of Business to be Conducted: Market Maker

Philip W. Giordano (PGI) 10/21/02Consolidated Trading, LLC440 S. LaSalle, Ste. #3100Chicago, IL 60604Type of Business to be Conducted: Market Maker

Lance M. Klobach (LMK) 10/21/02Third Millennium Trading, LLC440 S. LaSalle – Ste. 3100Chicago, IL 60605Type of Business to be Conducted: Market Maker

Stephen J. Climo (CMO) 10/22/02SLK-Hull Derivatives, LLC311 S. Wacker – Ste. 1400Chicago, IL 60606Type of Business to be Conducted: Floor Broker/Market Maker

Effective DateKeith J. Hartl (KTH) 10/22/02STC, LLC4947 N. SeeleyChicago, IL 60625Type of Business to be Conducted: Floor Broker

Frank D. Bertone (SIN) 10/22/02S & W Grain Co.3631 S. Forest Ave.Brookfield, IL 60513Type of Business to be Conducted: Market Maker

Stephen M. Kosanovich (BGY) 10/22/02Viking Trading, LLC4004 Gilbert AvenueWestern Springs, IL 60558Type of Business to be Conducted: Market Maker

Michael R. VonLunen (UTA) 10/23/02Consolidated Trading, LLC440 S. LaSalle, Ste. 3100Chicago, IL 60605Type of Business to be Conducted: Market Maker

Member Organizations

Lessee(s): Effective Date

Calabria Trading, LLC 10/17/02440 S. LaSalle - Ste. 700Chicago, IL 60605Type of Business to be Conducted: Market Maker

Lessor(s): Effective Date

PB Nayber, LLC 10/21/02202 Sharp Hill RoadWilton, CT 06897Type of Business to be Conducted:

JOINT ACCOUNTSThis notice is given pursuant to Exchange Rule 8.9.

New Participants Acronym Effective Date

Brian S. Heffley QGQ 10/17/02

Brian S. Heffley QXY 10/17/02

Allyson J. Heumann QZT 10/17/02

Paul M. Micenko QSG 10/17/02

Erik M. Vaughan QSH 10/17/02

Steven R. Rosen QBD 10/17/02

Steven R. Rosen QLL 10/17/02

Kamil Libich QBD 10/17/02

James E. Macchione QBD 10/17/02

Kamil Libich QLL 10/17/02

James E. Macchione QLL 10/17/02

Steven R. Rosen QMC 10/21/02

Patrick M. Baker QGO 10/21/02

Scott E. Noorthoek QFE 10/21/02

John T. Malone QGV 10/21/02

Effective Date


Kamil Libich QMC 10/21/02

James E. Macchione QMC 10/21/02

Alan Wong QHZ 10/21/02

Charles J. Cavalier QTI 10/22/02

Andrew D. Bloom QJP 10/23/02

Michael R. VonLunen QCC 10/23/02

Andrew D. Bloom QSC 10/23/02

Andrew D. Bloom QAM 10/23/02

Stephen J. Climo QBD 10/23/02

Stephen J. Climo QLL 10/23/02

New Accounts Acronym Effective Date

Ryan P. McKenzie QRU 10/18/02

Christopher Barer QRU 10/18/02

Terminated Participants Acronym Termination Date

Sherri M. Hastings QYE 10/17/02

Erik M. Vaughan QGP 10/17/02

Erik M. Vaughan QGO 10/17/02

Erik M. Vaughan QOP 10/17/02

Erik M. Vaughan QJX 10/17/02

Keith A. Guerrini QGV 10/21/02

Michael E. Stodden QBY 10/21/02

Michael E. Stodden QRX 10/21/02

Gregg V. Bullinger QBD 10/22/02

Gregg V. Bullinger QLL 10/22/02

Lincoln W. Brewer QBD 10/22/02

Lincoln W. Brewer QLL 10/22/02

Michael W. Wallace QBD 10/22/02

Michael W. Wallace QLL 10/22/02

David R. Tilley QBD 10/22/02

David R. Tilley QLL 10/22/02

Patrick W. Marsek QBD 10/22/02

Patrick W. Marsek QLL 10/22/02

John F. McDermott QBD 10/22/02

John F. McDermott QLL 10/22/02

Matthew W. Krupski QBD 10/22/02

Matthew W. Krupski QLL 10/22/02

Gregg V. Bullinger QMC 10/22/02

Lincoln W. Brewer QWW 10/22/02

Dylan F. Tuttle QJI 10/22/02

Robert F. Sepe QMC 10/22/02

Michael W. Wallace QLS 10/22/02

Michael W. Wallace QMB 10/22/02

Michael W. Wallace QQB 10/22/02

Robert A. Fodor QFM 10/22/02

David R. Tilley QLS 10/22/02

David R. Tilley QQB 10/22/02

John S. Henkel QYE 10/22/02

Scott J. O’Connell QYE 10/22/02

Peter Patton QHG 10/22/02

John F. McDermott QMB 10/22/02

John F. McDermott QLS 10/22/02

Matthew W. Krupski QHT 10/22/02

Matthew W. Krupski QST 10/22/02

Brian J. Haag QBR 10/23/02

Robert R. Groves QRA 10/23/02

Terminated Accounts Acronym Termination Date

Terrence E. Cullen QKJ 10/21/02

Michael S. Brouder QRL 10/21/02

CHANGES IN MEMBERSHIP STATUS

Individual Members Effective Date

Allyson J. Heumann 10/17/02From: CBT Registered For Susquehanna Securities; Market MakerTo: CBT Registered For Susquehanna Investment Group;

Floor Broker/Market Maker

Erik M. Vaughan 10/17/02From: Nominee For Group One Trading, LP; Market MakerTo: Nominee For Ronin Capital, LLC; Market Maker

Joel J. Stone 10/18/02From: Nominee For TD Options, LLC; Floor Broker/Market MakerTo: CBT Registered For TD Options, LLC; Floor Broker/

Market Maker

Ben P. Nixdorf 10/18/02From: Nominee For Bear Hunter Structured Products LLC;

Market MakerTo: Nominee For CTC LLC; Market Maker

William H. Murnighan 10/22/02From: Nominee For KC-CO II, LLC; Market MakerTo: CBT Registered For KC-CO II, LLC; Market Maker

Effective Date Termination Date


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.

RESEARCH CIRCULARSThe following Research Circulars were distributed between October 21 and October 23, 2002. 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 alsoavailable in the Trading Tools section of the website. For questions regarding information discussed in a Research Circular, please callThe Options Clearing Corporation at 1-888-OPTIONS.

Research Circular #RS02-566October 21, 2002Commerce One, Inc. (“CMRC/RUC & adj. RHJ/RHE/KHD”)Introduction of New Unadjusted SeriesEffective Date: October 22, 2002

Research Circular #RS02-569October 21, 2002Actrade Financial Technologies Ltd. (“ACRT/QAC”)Underlying Symbol Change to “ACRTE”Effective Date: October 23, 2002

Research Circular #RS02-570October 22, 2002L.M. Ericsson Telephone Company ADS (“ERICY/RQC/LYD”)1-for-10 Reverse ADS SplitEx-Distribution Date: October 23, 2002

Research Circular #RS02-571October 22, 2002Waste Connections, Inc. (“WCNX/NBU”)Stock and Option Symbol Change to “WCN”Effective Date: October 24, 2002

Research Circular #RS02-572October 22, 2002DSPG Group, Inc. (“DSPG/DPQ”)Distribution of Shares of ParthusCeva, Inc. (“PCVA”)Ex-Distribution Date: ON A DATE TO BE ANNOUNCED

Research Circular #RS02-575October 23, 2002Engineered Support Systems, Inc. (“EASI/UFE”)3-for-2 Stock SplitEx-Distribution Date: November 1, 2002

RegulatoryBulletin

November 1, 2002 Volume RB13, Number 43

The Constitution and Rules of the Chicago Board Options Exchange, Incorporated(“Exchange”), in certain specific instances, require the Exchange to provide notice tothe membership. The weekly Regulatory Bulletin is delivered to all effective mem-bers to satisfy this requirement.

RegulatoryCirculars

Regulatory Circular RG02-86

Date: October 17, 2002

To: Membership

From: Office of the Chairman

Re: Product Delisting

Following the recommendations of the Allocation Committee, CBOE hasdetermined to delist the eighty-nine (89) option classes listed below in accordancewith Exchange Rules and the Exchange’s delisting policy. These options classeseither no longer meet the Exchange’s listing standards, or trade a low number ofcontracts per day and/or have low open interest. As a result, these option classesno longer warrant the expenditure of CBOE’s resources which otherwise wouldbe necessary to maintain the listing.

The process of delisting the option classes listed below, with the exception ofmultiply traded classes which may be immediately delisted by CBOE, will involvethe prompt delisting of series in which there is currently no open interest and noadditional series will be added in the future. The Committee will continue toreview all CBOE option classes on a periodic basis for additional delistingcandidates, and will make recommendations to the Office of the Chairmanconsistent with CBOE’s Rules and its delisting policy.

The delisting process for the following options classes will commence as of theclose of business on Friday, October 18, 2002.

MULTIPLY LISTED CLASSES

AAI AIRTRAN HOLDINGSACQ ACTIVE POWER, INC.AGR AGERE SYSTEMS INC. CLASS AASF ADMINISTAFF, INC.ASU ALLIANCE SEMICONDUCTOR CORPORATIONAV AVAYA, INC.

RB2 November 1, 2002, Volume RB13, Number 44

Regulatory Circularscontinued

Regulatory Circular RG02-86 continued

AWK AMERICAN WATER WORKS COMPANY, INC.BQD INTERACTIVE DATA CORPORATIONCBR CIBER, INC.CUE COMPUCREDIT CORPORATIONCYM VISIONICS CORPORATIONDGW DIGITAL LIGHTWAVE, INC.DUN NUANCE COMMUNICATIONS INC.DSS DLT & STORAGE SYSTEMSEAQ MESA AIR GROUP INC.

* EQB EXULT, INC.FQI GILAT SATELLITE NETWORKS LTD.FQJ INTERCEPT, INC.FQO EXFO ELECTRO-OPTICAL ENGINEERING, INC.FTO FRONTIER OIL CORPORATION L.L.C.GB WILSON GREATBATCH TECHNOLOGIES, INC.GKU AVIGEN, INC.GMU IMMUNOGEN, INC.HFN HI/FN, INC.HIW HIGHWOODS PROPERTIES, INC.HIZ AETHER SYSTEMS, INC.HPU VIROPHARMA, INC.IBU ABIOMED, INC.ICI IMPERIAL CHEM. PLCIEY LIBERATE TECHNOLOGIES, INC.IUK ENDO PHARMACEUTICALS HOLDINGS INC.IUW INTERWOVEN, INC.KAU OAK TECHNOLOGY, INC.

* LAY AT HOME CORPORATIONLQE C-COR ELECTRONICS, INC.MTQ EMISPHERE TECHNOLOGIES, INC.MXO MAXTOR CORPORATIONNQT NAUTICA ENTERPRISES, INC.OGU POWER-ONE, INC.OIQ ONYX PHARMACEUTICALS, INC.OSU STORAGENETWORKS, INC.

* OUZ OPENTV CORPORATIONPLL PALL CORPORATIONPWR QUANTA SERVICES, INC.QBN INTERPORE INTERNATIONAL, INC.QDI DDI CORPORATIONQGQ HOLLIS-EDEN PHARMACEUTICALSQHE IPC HOLDINGS, LTD.QHP HPL TECHNOLOGIES, INC.

* QIP MCSI INC.* QJP INDEVUS PHARMACEUTICALS, INC.

QOH NOVOSTE CORPORATIONQPA LAWSON SOFTWARE, INC.QRT QUINTILES TRANSNATIONAL CORP.QXP HARVARD BIOSCIENCE, INC.QYC INDEPENDENCE COMMUNITY BANK CORP.QYS SEEBEYOND TECHNOLOGY CORPORATION

November 1, 2002, Volume RB13, Number 44 RB3

Regulatory Circular RG02-86 continuedRegulatory Circularscontinued

RMK ARAMARK CORPORATION CLASS BRNV COMPANIA ANONIMA NAC TELEFONOS DE VSXU SPECTRALINK CORPTAM TUBOS DE ACERO DE MEXICO, S.A.-ADRTGR TRIGON HEALTHCARE, INC.THF TOLLGRADE COMMUNICATIONS, INC.TMO THERMO-ELECTRIC

* TQG GENZYME BIOSURGERY DIVISIONTTU TIME WARNER TELECOM, INC.TUN TERAYON COMMUNICATION SYSTEMS, INC.UAU INSTINET GROUP, INC.UCO UNIVERSAL COMPRESSION HOLDINGS, INC.UEP E.PIPHANY, INC.UHH HORIZON OFFSHORE INC.UOB XICOR, INC.UPN NETEGRITY, INCUPR IMPAX LABORATORIES, INC.UQG SUPERGEN, INC.UUL ULTICOM INC.UUM CENTILIUM COMMUNICATIONUVB VIRAGE LOGIC CORPORATIONUWL SONICWALL, INC.UXH RUDOLPH TECHNOLOGIES, INC.UXU CONNETICS CORPORATIONVUO VIGNETTE CORPORATIONVWV WAVE SYSTEMS CORPORATION

SINGLY LISTED CLASSESAQX AMERICAN XTAL TECHNOLOGY, INC.FGU PRAECIS PHARMACEUTICALS INC.JTU INET TECHNOLOGIES, INC.QIC NICE SYSTEMS LTD. ADRXQA CONVERA CORPORATION

XUS INTEGRATED SILICON SOLUTIONS, I

*This option class is multiply listed, but will be delisted inaccordance with the procedures applicable for delisting asingly listed option class because not every series in this classis traded on another exchange.


Regulatory Circularscontinued Regulatory Circular RG02-87


To: Members and Member Firms

From: Market Operations Department

Re: Restrictions on Transactions inHPL Technologies (QHP)

Trading in HPL Technologies (QHP) common stock on the NASD (HPLA)and trading in QHP options on CBOE was halted on NASD and CBOEon July 19, 2002 and the NASD subsequently delisted QHP commonstock.

Trading on CBOE in existing series of QHP options will reopen onOctober 18, 2002, subject to the following restrictions. Only closingtransactions may be effected in any series of QHP options, except for (i)opening transactions by market-makers executed to accommodate closingtransactions of other market participants and (ii) opening transactions byCBOE member organizations to facilitate the closing transactions of publiccustomers executed as crosses pursuant to and in accordance with CBOERule 6.74(b) or (d). Pursuant to Rule 8.51, floor officials have determinedthat all series of QHP option are in non-firm mode. In addition, QHP willnot be traded on RAES.

The execution of opening transactions in QHP options, except as permittedabove, and/or the misrepresentation as to whether an order is opening orclosing, will constitute a violation of CBOE rules, and may result indisciplinary action.

There are no restrictions in place with respect to the exercise of QHPoptions and the Options Clearing Corporation (OCC) has advised CBOEthat the expiration of HPL options will remain subject to OCC’s Exercise-by-Exception Procedures.

The provisions of this circular apply to any options on HPL Technologiestraded on CBOE, including any HPL Technologies option series with adifferent option symbol than QHP.

Any questions regarding this circular may directed to Kerry Winters at(312) 786-7312 or Patricia Cerny at (312) 786-7722.


Regulatory Circularscontinued Regulatory Circular RG02-88


To: Members and Member Firms

From: Market Operations Department

Re: No Restrictions on Transactions in CertainSunMicro Inc. Options (SUQ)

.

Any questions regarding this circular may directed to Kerry Winters at (312) 786-7312 or Mike Felty at (312) 786-7504.

Sun Micro Incorporated (SUQ) options are currently traded on the CBOE. SUQNovember Options were restricted to closing orders only, but now meet Exchangequalifications. Therefore, due to open interest in the November 2 ½ and November 5calls and puts, all restrictions for closing orders have been rescinded.


PROPOSED RULE CHANGEPursuant 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 followingproposed rule change with the Securities and Exchange Commission (“SEC”).A copy of the rule change filing is available from the Legal Division. Membersmay submit written comments to the Legal Division.

The effective date of a proposed rule change will be the date of approval by theSEC, unless otherwise noted.

On October 8, 2002, the Exchange filed Rule Change File No. SR-CBOE-2002-61, which proposes to adopt rules pursuant to the Options Intermarket LinkagePlan that will be uniform with those of other Plan participant SROs concerningsuch issues as trade-throughs, locked/crossed markets, and limitations on“Principal Order” access. This rule filing replaces a previous filing on this subject,SR-CBOE-2001-46.

Any questions regarding the proposed rule change may be directed to AngeloEvangelou, Legal Division, at 312-786-7464. The text of the proposed ruleamendments is set forth below. Proposed new language is underlined. A copyof the filing is available from the Legal Division.

CHAPTER VI * * * * *

Doing Business on the Exchange Floor * * * * *

(The entire following Section E. is new.)Section E: Intermarket Linkage

Rule 6.80. Definitions

The following terms shall have the meaning specified in this Rule solelyfor the purpose of this Section E under Chapter VI:

(1) “Aggrieved Party” means a member of a Participant Exchange whosebid or 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 atleast $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 Exchangerepresents all or a portion of both sides of the trade), or

(B) any other transaction (i.e., in which such memberrepresents an order of block size on one side of the

Rule Changes,Interpretations andPolicies


Rule Changes,Interpretations andPolicies continued

Regulatory Circularscontinued Regulatory Circular RG02-83 continued

SR-CBOE-2002-61 continued

transaction only) that is not the result of an execution atthe current bid or offer on the Participant Exchange.

Contemporaneous transactions at the same price on a Participant Exchangeshall be considered a single transaction for the purpose of this definition.

(3) “Broker/Dealer” means an individual or organization registered withthe United States Securities and Exchange Commission in accordance withSection 15(b)(1) of the Exchange Act or a foreign broker or dealer exemptfrom such registration pursuant to Rule 15a-6 under the Exchange Act.

(4) “Complex Trade” means the execution of an order in an options seriesin conjunction with the execution of one or more related order(s) in differentoptions series in the same underlying security occurring at or near thesame time for the equivalent number of contracts and for the purpose ofexecuting a particular investment strategy.

(5) “Crossed Market” means a quotation in which the Exchangedisseminates a bid (offer) in a series of an Eligible Option Class at a pricethat is greater than (less than) the price of the offer (bid) for the series thenbeing displayed from another Participant 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 whichno Broker/Dealer has an interest.

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

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

(ii) is participating in the Exchange’s automatic execution system,if available, 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 that term is defined in Section 3(a)(10) of the Exchange Act) or groupof securities, including both put options and call options, which class istraded on the Exchange and at least one other Participant Exchange.

(9) “Firm Customer Quote Size” with respect to a P/A Order means thelesser of (a) the number of option contracts that the Participant Exchangesending a P/A Order guarantees it will automatically execute at itsdisseminated quotation in a series of an Eligible Option Class for Customerorders entered directly for execution in that market; or (b) the number ofoption contracts that the Participant Exchange receiving a P/A Orderguarantees it will automatically execute at its disseminated quotation in aseries of an Eligible Option Class for Customer orders entered directly for




execution in that market. The Firm Customer Quote Size will be at least10 contracts for each series of an Eligible Option Class.

(10) “Firm Principal Quote Size” means the number of options contractsthat a Participant Exchange guarantees it will execute at its disseminatedquotation for incoming Principal Orders in an Eligible Option Class. Thisnumber shall be no fewer than 10.

(11) “Linkage” means the systems and data communications networkthat links electronically the Participant Exchanges for the purposesspecified in the Plan.

(12) “Linkage Order” means an order routed through the Linkage aspermitted under the Plan. There are three types of Linkage Orders:

(i) “Principal Acting as Agent (“P/A”) Order,” which is an orderfor the principal account of a Market-Maker (or equivalent entityon another Participant Exchange that is authorized to representCustomer orders) reflecting the terms of a related unexecutedCustomer order for which the Market-Maker is acting as agent;

(ii) “Principal Order,” which is an order for the principal accountof an Eligible Market-Maker (or equivalent entity on anotherParticipant Exchange) and is not a P/A Order; and

(iii) “Satisfaction Order,” which is an order sent through theLinkage to notify a Participant Exchange of a Trade-Throughand to seek satisfaction of the liability arising from that Trade-Through.

(13) “Locked Market” means a quotation in which the Exchangedisseminates a bid (offer) in a series of an Eligible Option Class at a pricethat equals the price of the offer (bid) for the series then being displayedfrom another Participant Exchange.

(14) “NBBO” means the national best bid and offer in an options seriesas calculated by the Exchange.

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

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

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


(18) “Reference Price” means the limit price attached to a Linkage Orderby the sending Participant Exchange. Except with respect to a SatisfactionOrder, the Reference Price is equal to the bid disseminated by the receivingParticipant Exchange at the time that the Linkage Order is transmitted inthe case of a Linkage Order to sell and the offer disseminated by thereceiving Participant Exchange at the time that the Linkage Order istransmitted in the case of a Linkage Order to buy. With respect to aSatisfaction Order, the Reference Price is the price that the member in thesending Participant Exchange is entitled to receive in satisfaction of a Trade-Through complaint under the Plan.

(19) “Trade-Through” means a transaction in an options series at a pricethat is inferior to the NBBO.

(20) “Third Participating Market Center Trade-Through” means a Trade-Through in a series of an Eligible Option Class that is effected by executinga Linkage Order, and such execution results in a sale (purchase) at a pricethat is inferior to the best bid (offer) being disseminated by anotherParticipant Exchange.

(21) “Verifiable Number of Customer Contracts” means the number ofCustomer contracts 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, thefollowing shall apply:

(a) Pricing. Members may send P/A Orders and Principal Orders throughthe Linkage 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 FirmCustomer Quote Size. A Market-Maker may send through theLinkage a P/A Order for execution in the automatic executionsystem of a Participant Exchange if the size of such P/A Order isno larger than the Firm Customer Quote Size. Except as providedin subparagraph (b)(2)(ii) below, a Market- Maker may not breakup an order of a Customer that is larger than the Firm CustomerQuote Size into multiple P/A Orders, one or more of which is equalto or smaller than the Firm Customer Quote Size, so that suchorders could be represented as multiple P/A Orders through theLinkage.

(2) Sending of P/A Orders for Sizes Larger than the Firm CustomerQuote Size. If the size of a P/A Order is larger than the FirmCustomer Quote Size, a Market-Maker may send through theLinkage such P/A Order in one of two ways:




(i) The Market-Maker may send a P/A Order representingthe entire Customer order. If the receiving ParticipantExchange’s disseminated quotation is equal to or betterthan the Reference Price when the P/A Order arrives atthat market, that exchange will execute the P/A Order atits disseminated quotation for at least the Firm CustomerQuote Size. Within 15 seconds of receipt of such order,the receiving Participant Exchange will inform the Market-Maker of the amount of the order executed and theamount, if any, that was canceled.

(ii) Alternatively, the Market-Maker may send an initialP/A Order for the Firm Customer Quote Size pursuant tosubparagraph (b)(1) above. If the Participant Exchangeexecutes the P/A Order and continues to disseminate thesame quotation at the NBBO 15 seconds after reportingthe execution of the initial P/A Order, the Market-Makermay send an additional P/A Order to the same ParticipantExchange. If sent, such additional P/A Order must be forat least the lesser of 100 contracts or the entire remainderof the Customer order.

In any situation where a receiving Participant Exchange does notexecute a P/A Order in full, such exchange is required to moveits quotation to a price inferior to the Reference Price of the P/AOrder.

(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 receivingParticipant Exchange will execute the order in its automaticexecution 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. Ifthe Principal Order is larger than the Firm Principal Quote Size,the receiving Participant will (a) execute the Principal Order at itsdisseminated quotation for at least the Firm Principal Quote Sizeand (b) within 15 seconds of receipt of such order, reply to thesending Participant Exchange, informing such ParticipantExchange of the amount of the order that was executed and theamount, if any, canceled. If the receiving Participant Exchangedoes not execute the Principal Order in full, it will move its quoteto a price inferior to the Reference Price of the Principal 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 Exchange



SR-CBOE-2002-61 continuedRule Changes,Interpretations andPolicies continued

may reject any Principal Order(s) in the same Eligible Option Classsent by the same Participant Exchange for 15 seconds after theinitial execution unless: (1) there is a change of price in theExchange’s disseminated offer (bid) in the series of the EligibleOption Class in which there was an initial execution; and (2) suchprice continues to be the NBBO. After this 15 second period, anduntil the sooner of (a) one minute after the initial execution or (b)a change in the Exchange’s disseminated bid (offer), the Exchangeis not obligated to provide an automatic execution for any PrincipalOrders in the same Eligible Option Class received from theParticipant Exchange that sent the order resulting in the initialexecution, and thus may treat any such Principal Orders as beinggreater than the Firm Principal Quote Size.

(d) Responses to Linkage Orders.

(1) Failure to Receive a Timely Response. A Member who doesnot receive a response to a P Order or a P/A Order within 20 secondsof sending the order may reject any response received thereafterpurporting to report an execution of all or part of that order. TheMember so rejecting the response shall inform the ParticipantExchange sending that response of the rejection within 15 secondsof receipt of the response.

(2) Failure to Send a Timely Response. If a Member responds toa P Order or P/A Order more than 20 seconds after receipt of thatorder, and the Participant Exchange to whom the Memberresponded cancels such response, the Member shall cancel anytrade resulting from such order and shall report the cancellation toOPRA.

(e) Receipt of Orders. The Exchange will provide for the execution of P/A Orders and Principal Orders if its disseminated quotation is (i) equal toor better than the Reference Price, and (ii) equal to the then-current NBBO.If the size of a P/A Order or Principal Order is not larger than the FirmCustomer Quote Size or Firm Principal Quote Size, respectively, theExchange will provide for the execution of the entire order, and shall executesuch order in its automatic execution system if that system is available. Ifthe size of a P/A Order or Principal Order is larger than the Firm CustomerQuote Size or Firm Principal Quote Size, respectively, the Market-Makermust address the order within 15 seconds to provide an execution for atleast the Firm Customer Quote Size or Firm Principal Quote Size,respectively. If the order is not executed in full, the Exchange will moveits disseminated quotation to a price inferior to the Reference Price.

* * * * *Rule 6.83. Order Protection

(a) Avoidance and Satisfaction of Trade-Throughs.(1) General Provisions. Absent reasonable justification and duringnormal market conditions, members should not effect Trade-




Throughs. Except as provided in paragraph (b) below, if amember effects a Trade-Through with respect to the bid or offerof a Participant Exchange in an Eligible Option Class and theExchange receives a complaint thereof from an Aggrieved Party,either:

(i) the member who initiated the Trade-Through shallsatisfy, or cause to be satisfied, through the Linkage theAggrieved Party in accordance with subparagraph (a)(2)below; or

(ii) if the member elects not to do so (and, in the case ofThird Participating Market Center Trade-Through, themember obtains the agreement of the contra party thatreceived the Linkage Order that caused the Trade-Through), then the price of the transaction that constitutedthe Trade-Through shall be corrected to a price at whicha Trade-Through would not have occurred. If the priceof the transaction is corrected, the Member correcting theprice shall report the corrected price to OPRA, notify theAggrieved Party of the correction and cancel theSatisfaction Order.

(2) Price and Size. The price and size at which a SatisfactionOrder shall be filled is as follows:

(i) Price. A Satisfaction Order shall be filled at theReference Price. However, if the Reference Price is theprice of an apparent Block Trade that caused the Trade-Through, and such trade was not, in fact, a Block Trade,then the Member may cancel the Satisfaction Order. Inthat case, the Member shall inform the Aggrieved Partywithin three minutes of receipt of the Satisfaction Orderof the reason for the cancellation. Within three minutesof receipt of such cancellation, the Aggrieved Party mayresend the Satisfaction Order with a Reference Price ofthe bid or offer that was traded through.(ii) Size. An Aggrieved Party may send a SatisfactionOrder up to the size of the Verifiable Number of CustomerContracts that were included in the disseminated bid oroffer that was traded through. Subject to subparagraph(2)(i) above and paragraph (b) below, a Member shall fillin full all Satisfaction Orders it receives following a Trade-Through, subject to the following limitations:

(A) If the number of contracts to be satisfiedexceeds the size of the transaction that caused theTrade-Through, the size of the SatisfactionOrder(s) that must be filled with respect to each




Participant Exchange(s) shall be limited to the sizeof the transaction that caused the Trade-Through,and the remainder of any Satisfaction Order(s) shallbe canceled;

(B) If the transaction that caused the Trade-Throughwas for a size larger than the Firm Customer QuoteSize with respect to any of the ParticipantExchange(s) traded through, the total number ofcontracts to be filled, with respect to all SatisfactionOrders received, shall not exceed the size of thetransaction that caused the Trade-Through. In thatcase, the Member shall fill the Satisfaction Orderspro rata based on the Verifiable Number ofCustomer Contracts traded through on eachParticipant Exchange, and shall cancel theremainder of such Satisfaction Order(s); and

(C) Notwithstanding paragraphs (A) and (B) above,if the transaction that caused the Trade-Throughoccurred during the five minutes prior to theregularly-scheduled close of trading in the principalmarket in which the underlying security is traded,the maximum number of contracts to be satisfiedwith respect to any one Participant Exchange is 10contracts.

(3) Rejection of Fills of Satisfaction Orders. Within 30 seconds ofreceipt of notification that another Participant Exchange has filleda Member’s Satisfaction Order, the Member that sent the SatisfactionOrder may reject such fill, but only to the extent that either: (i) theorder(s) for the customer contracts underlying the Satisfaction Orderalready 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 Public Customer orders (or P/A Orders representingPublic Customer orders) constituted either or both sides of thetransaction involved in the Trade-Through, each such PublicCustomer 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 wassatisfied, if it was satisfied pursuant to subparagraph(a)(1)(i), or the adjusted price, if there was an adjustment,pursuant to subparagraph (a)(1)(ii),

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




(b) Exceptions to Trade-Through Liability. The provisions of paragraph(a) pertaining to the satisfaction of Trade-Throughs shall not apply underthe following circumstances:

(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 ParticipantExchange to which such Member had sent a P/A Order or PrincipalOrder, and within 20 seconds of sending such order the receivingParticipant Exchange had neither executed the order in full noradjusted the quotation traded through to a price inferior to theReference 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 respectto such Eligible Option Class;

(4) the Trade-Through was other than a Third Participating MarketCenter Trade-Through and occurred during a period when, withrespect to the Eligible Option Class, the Exchange’s quotes wereNon-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 aMember regularly trades through the firm quotes of anotherParticipant Exchange during such period;

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

(6) the transaction that caused the Trade-Through occurred duringa trading rotation;

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

(8) in the case of a Trade-Through other than a Third ParticipatingMarket Center Trade-Through, a Satisfaction Order with respectto the Trade-Through was not received by the Exchange fromthe Aggrieved Party promptly following the Trade-Through and,in any event, (i) except in the final five minutes of trading, withinthree minutes from the time the report of the transaction(s) thatconstituted 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 Order mustcancel the Satisfaction Order and inform the Aggrieved Party ofthe 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 threeminutes 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 Membershall respond as promptly as practicable pursuant to Exchangeprocedures by either:

(i) specifying that one of the exceptions to Trade-Throughliability specified in paragraph (b) above is applicable andidentifying that particular exception; or

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

(2) If the Member who initiated the Trade-Through fails to respondto a Satisfaction Order or otherwise fails to take the correctiveaction required under paragraph (a) within three minutes ofreceiving notice of a Satisfaction Order, and the Exchangedetermines that:

(i) there was a Trade-Through; and

(ii) none of the exceptions to Trade-Through liabilityspecified in paragraph (b) above were applicable;

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

If either (a) the Aggrieved Party does not establish the actual losswithin 30 seconds from the time the Aggrieved Party received theresponse to its Satisfaction Order (or, in the event that it did not



receive a response, within four minutes from the time theAggrieved Party sent the Satisfaction Order) or (b) the AggrievedParty does not notify the Exchange Participant that initiated theTrade-Through of the amount of such loss within one minute ofestablishing the loss, then the liability shall be the lesser of theactual loss or the loss caused by the Trade-Through that theAggrieved Party would have suffered had that party purchasedor sold the option series subject to the Trade-Through at the“mitigation price.”

The “mitigation price” is the highest reported bid (in the casewhere an offer was traded through) or the lowest reported offer(in the case where a bid was traded through), in the series inquestion 30 seconds from the time the Aggrieved Party receivedthe response to its Satisfaction Order (or, in the event that it didnot receive a response, four minutes from the time the AggrievedParty sent the Satisfaction Order). If the Participant Exchangereceives a Satisfaction Order within the final four minutes oftrading (on any day except the last day of trading prior to theexpiration of the series which is the subject of the Trade-Through),then the mitigation price shall be the price established at theopening of trading in that series on the Aggrieved Party’sParticipant Exchange on the next trading day. However, if theprice of the opening transaction is below the opening bid or abovethe opening offer as established during the opening rotation, thenthe mitigation price shall be the opening bid (in the case wherean offer was traded through) or opening offer (in the case where abid was traded through). If the Trade-Through involves a series thatexpires on the day following the day of the Trade-Through and theSatisfaction Order is received within the four minutes of trading, the“mitigation price” shall be the final bid (in the case where an offerwas traded through) or offer (in the case where a bid was tradedthrough) on the day of the trade that resulted in the Trade-Through.

(3) A Member that is an Aggrieved Party under the rules of anotherParticipant Exchange governing Trade-Through liability must takesteps to establish and mitigate any loss such Member might incuras a result of the Trade-Through of the Member’s bid or offer. Inaddition, the Member shall give prompt notice to the otherParticipant Exchange of any such action in accordance withsubparagraph (c)(2) above.

(d) Limitations on Trade-Throughs. Members may not repeatedly tradethrough better prices available on other exchanges, whether or not theexchange or exchanges whose quotations are traded through areParticipant Exchanges, unless one or more of the provisions of paragraph(b) above are applicable. In applying this provision:



(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 Orderfrom 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 pursuantto subparagraph (a)(2) following the execution of the Block Trade;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 aParticipant Exchange if the Member made a good faith effort totrade against 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 relievedof its obligation to be firm for its quotations pursuant to Rule11Ac1-1 under the Exchange Act, and such non-ParticipantExchange neither executed that order nor moved its quotation to aprice inferior to the price of the Member’s order within 20 secondsof receipt of that order.

* * * * *

Rule 6.84. Locked and Crossed Markets(a) Eligible Market-Maker Locking or Crossing a Market. An EligibleMarket-Maker that creates a Locked Market or a Crossed Market shallunlock (uncross) that market or shall direct a Principal Order through theLinkage to trade against the bid or offer that the Eligible Market-Makerlocked (crossed).

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

* * * * *

Rule 6.85. Limitation on Principal Order AccessA Market-Maker shall not be permitted to send Principal Orders in anEligible Option Class through the Linkage for a given calendar quarter ifthe Market-Maker effected less than 80 percent of its volume in that EligibleOption Class on the Exchange in the previous calendar quarter (that is, theMarket-Maker effected 20 percent or more of its volume by sendingPrincipal Orders through the Linkage) as calculated by the Exchange. This“80/20” is represented as follows:




X

X+Y“X” equals the total contract volume the Market-Maker effects inan Eligible Option Class against orders of Customers on theExchange during a calendar quarter (a) including contract volumeeffected by executing P/A Orders sent to the Exchange through theLinkage, but (b) excluding contract volume effected by sending P/A Orders through the Linkage for execution on another ParticipantExchange. “Y” equals the total contract volume the Market-Makereffects in such Eligible Option Class by sending Principal Ordersthrough the Linkage during that calendar quarter.

On October 10, 2002, the Exchange filed Rule Change File No SR-CBOE-2002-62, which proposes to amend Interpretation .01(b)(2) to CBOE Rule 5.3 to modifythe pricing criteria for securities that underlie options traded at CBOE.

Any questions regarding the proposed rule change may be directed to Jim Flynn,Legal Division, at 312-786-7070. The text of the proposed rule amendments isset forth below. Proposed new language is underlined. Proposed deleted languageis [stricken out]. A copy of the filing is available from the Legal Division.

Chapter V – Securities Dealt In

* * * * *Criteria for Underlying Securities

Rule 5.3 (a) –(b) No change.

…Interpretations and Policies:

.01 The Board of Directors has established guidelines to be consideredby the Exchange in evaluating potential underlying securities forExchange option transactions. Absent exceptional circumstances withrespect to Paragraphs (a)(1) or (2), or (b)(1) or (2) listed below, at thetime the Exchange selects an underlying security for Exchange optiontransactions, the following guidelines with respect to the issuer shall be met.

(a) No change.

(b) Guidelines applicable to the market for the security are:

(1) Trading volume (in all markets in which the underlying securityis traded) has been at least 2,400,000 shares in the precedingtwelve months.

(2) (A) If the underlying security is a “covered security” as definedunder Section 18(b)(1)(A) of the Securities Act of 1933, the market

Rule ChangesInterpretations andPolicies continued


price per share of the underlying security has been at least $3.00for the previous five consecutive business days preceding the dateon which the Exchange submits a certificate to the Options ClearingCorporation for listing and trading. For purposes of thisInterpretation .01(b)(2)(A), the market price of such underlyingsecurity is measured by the closing price reported in the primarymarket in which the underlying security is traded.

(B) If the underlying security is not a “covered security”, [T]themarket price per share of the underlying security has been at least$7.50 for the majority of business days during the three calendarmonths preceding the date of selection, as measured by the lowestclosing price reported in any market in which the underlyingsecurity traded on each of the subject days.

.02 - .04 No Change.

.05(a)-(c) No Change.

(d) In the case of a Restructuring transaction that satisfies eitheror both of the conditions of subparagraphs (a)(1) or (a)(2)above in which shares of a Restructure Security are sold in apublic offering or pursuant to a rights distribution:

(i) No change.

(ii) the Exchange may certify that the market price of theRestructure Security satisfies the requirement of paragraph(b)(2) of Interpretation and Policy .01 above by relying on themarket price history of the Original Security prior to the ex-date for the Restructuring Transaction in the manner describedin paragraph (a) above, but only if the Restructure Securityhas traded “regular way” on an exchange or automaticquotation system for at least five trading days immediatelypreceding the date of selection, and at the close of trading oneach trading day preceding the date of selection, as well as atthe opening of trading on the date of selection the market priceof the Restructure Security was at least $7.50, or, if theRestructure Security is a Covered Security, as defined inparagraph (b)(2) of Interpretation and Policy .01 above, themarket price of the Restructure Security was at least $3.00.

(iii) No Change.

.06 - .09 No Change.

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


On October 15, 2002, the Exchange filed Rule Change No. SR-CBOE-2002-63,which proposes to amend CBOE Rules and the related Interpretations and Policiesto allow limited Side-by-Side trading and/or Integrated Market Making for certainsecurities and their related options.

Any questions regarding the proposed rule change may be directed to ChrisHill, Legal Division, at 312-786-7031. The text of the proposed rule amendmentsis set forth below. Proposed new language is underlined. Proposed deletedlanguage is [stricken out]. A copy of the filing is available from the LegalDivision.

Chapter XXX

Part A—Trading in Stocks, Warrants, and Other Securities

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 otherwiseprovided in Section (d) below, [I]initiate the purchase or sale on theExchange of any security subject to the Rules in this Chapter, for hisown account or for any account in which he, his member organizationor any person associated with such member or member organizationis directly or indirectly interested, including by means of the issuanceor acceptance of a commitment or obligation to trade, where (i) suchmember holds, or has sold or granted, an option or warrant on thatsecurity, or (ii) such member has knowledge that his memberorganization or any person associated with such member or memberorganization holds, or has sold or granted, any such option or warrant;or(b) No change.

(c) No change.

(d) Notwithstanding the foregoing:

(i) A member or member organization associated with the DPM,market-maker or floor broker for options on a stock admitted todealings on an unlisted basis may act as a DPM, market-maker,and/or floor broker in the underlying stock provided that such memberor member organization has established and obtained Exchangeapproval for procedures restricting the flow of material, non-publiccorporate information between themselves and the DPM, and anymember, officer, or employee associated therewith, as set forth inExchange Rule 8.91(e) and the Guidelines for Exemptive Reliefthereto.



of information between them and without any physical separationbetween the trading in the underlying IPR, IPS, or TIR and the tradingin the related options.

. . . Interpretations and Policies:

.01 No change.

.02 No change.

.03 The criteria to qualify particular IPRs, IPSs and TIRs for side-by-side trading and integrated market making pursuant to Exchange Rule30.18(d)(ii) are as follows:

a. Component securities that in the aggregate account for at least90% of the weight of the portfolio must have a minimum marketvalue of at least $75 million.

b. The component securities representing 90% of the weight ofthe portfolio each have a minimum monthly trading volumeduring each of the last six months of at least 250,000 shares.

c. The most heavily weighted component security cannot exceed25% of the weight of the portfolio and the five most heavilyweighted component securities cannot exceed 65% of theweight of the portfolio.

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

e. All securities in the portfolio must be listed on a nationalsecurities exchange or the NASDAQ Stock Market.

(The following rule is new.)

30.18A. An options DPM that is also approved as a DPM in theunderlying security in a side-by-side trading environment pursuantto Exchange Rule 30.18(d)(ii) is required to disclose on request toall participants in the option or security trading crowds informationabout aggregate buying and selling interest at different price pointsrepresented by limit orders then being represented or otherwise heldby the DPM.


(ii) The DPM or an associated person of the DPM for an IPR, IPS, orTIR that meets the criteria set forth in Interpretation and Policy .03 ofthis Rule may act as a DPM, market-maker, and/or floor broker in therelated options without implementing procedures to restrict the flow



* * * * *

Interpretations and Policies.01. “Side-by-side trading” refers to the trading of options andtheir underlying securities in the same physical vicinity, thoughnot necessarily by the same DPM or firm.

.02 Notwithstanding the fact that a DPM’s option transactionsmay be in conformity with Rule 30.18 and its Interpretations andPolicies, such DPM shall nonetheless be deemed to be in violationof Rule 30.18 if the DPM has engaged in such option transactionsfor manipulative purposes.

On October 21, 2002, the Exchange filed Rule Change No. SR-CBOE-2002-64,which proposes to adopt listing standards for options on the CBOE S&P 500®

Volatility Index.

Any questions regarding the proposed rule change may be directed to Jim Flynn,Legal Division, at 312-786-7070. A copy of the filing, including the text of theproposed amendment, is available from the Legal Division.

On October 18, 2002, the Exchange filed Rule Change No. SR-CBOE-2002-65,which proposes to create Electronic Access Firms (“EAFs”), a new form of accessto CBOE markets. Brokerage firms that apply and become approved by CBOEas EAFs will be able to electronically transmit agency orders to CBOE’s electronicorder handling and execution systems and have agency orders processed throughthose systems. This proposal was approved by the CBOE membership in theOctober 17, 2002 membership vote.

Any questions regarding the proposed rule change may be directed to JaimeGalvan, Legal Division, at 312-786-7058. A copy of the filing, including thetext of the proposed amendment, is available from the Legal Division.



On October 8, 2002, the SEC approved Rule Change File No. SR-CBOE-2002-51(Securities Exchange Release Act. No. 46607, 67 FR 63717 (10/15/02). This rulechange adopts a safe harbor provision from the CBOE’s “unbundling” rule (Rule6.8(c)(vii)) for customers who do not enter multiple RAES orders within 15 secondsof each other.

Any questions regarding the rule change may be directed to Steve Youhn, LegalDivision, at 312-786-7416. The full text of the amended rules, as modified, is setforth below. New language is italicized.

Rule 6.8 RAES Operations

(a)-(b) no change(c)(i)-(vi) no change

(c)(vii) For purposes of determining whether an order meets the maximumsize requirement set forth in sub-paragraph (c)(v), a customer’s order cannotbe split up (i.e., unbundled) such that its parts are eligible for entry intoRAES. Orders entered in compliance with CBOE Rule 6.8(e)(iii) (i.e., atleast 15-seconds apart) will not be considered to have been unbundled.

(d) no change

(e)(i)-(ii) no change

(e)(iii) Neither enter nor permit the entry of multiple orders on the sameside of the market in an option issue within any 15-second period for anaccount or accounts of the same beneficial owner.

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

The effective date of the rule change is the date of approval unless otherwisenoted.


cboe exchange & regulatory bulletin · andor a. fleischman marlene fleischman transfer 10/21/02...

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