the chicago board options exchange - cboe.com · the constitution and rules of the chicago board...

March 11, 1998 Volume 26, Number 10

The Constitution and Rules of the Chicago Board Options Exchange, Incorporated ("Exchange"), in certain specific instances, req uire theExchange to provide notice to the Exchange membership. To satisfy this requirement, a complimentary copy of the Exchange Bulletin ,including the bi-monthly Regulatory Bulletin , is provided to all individual members and nominees of member organizations on a weeklybasis.

Additional subscriptions may be obtained by submitting your name, firm, address and telephone number to: Chicago Board Options Ex-change, Attention: Marketing Department, 400 South LaSalle, Chicago, Illinois 60605. The cost of an annual subscription (July 1 through June30) is $100.00, ($50.00 after January 1) payable in advance. Non-members are welcome to subscribe.

Exchange Bulletin

Regulatory Circular

Regulatory Circular RG98-28

Date: March 5, 1998

To: Members and Member Organizations

From: Membership Department

Re: Transfers of Option Trading Permits

In connection with the transfer of the New York Stock Exchange (NYSE) option program to the CBOE, the Exchange created and issued seventy-fiveOption Trading Permits (OTPs). An OTP gives the holder limited member status by entitling the holder to the trading rights and privileges set forth inRule 3.27.

The Exchange deposited into a “lease pool” those OTPs not issued to NYSE option members, plus any OTPs which, following their issuance to NYSEoption members, were surrendered by those members. There are currently twenty-eight OTPs in the lease pool. Those twenty-eight OTPs will remainin the lease pool for the remaining six year life of the OTPs. OTPs in the lease pool are allocated to lessees pursuant to a competitive bidding processwhich is held every six months (see Regulatory Circular RG98-26).

In accordance with Rule 3.27(a)(5), the forty-seven OTPs that are not in the lease pool will become transferable (i.e. they may be sold, transferred, orleased by the owner) beginning Tuesday, April 28, 1998. The rules and procedures relating to the sale, transfer, or lease of an OTP will be the same asthe rules and procedures that relate to the sale, transfer, or lease of a regular Exchange membership.

In order to assure that a fair and orderly market is maintained, the Exchange’s Membership Department will begin accepting bids and offers for OTPson Monday, April 27, 1998 at 8:00 a.m. (the day prior to the first day that an OTP may be sold, transferred or leased). Any bid or offer for an OTP thatis received on April 27, 1998 will be posted on the Exchange Bulletin Board. However, any such bid or offer will not become effective until 8:00 a.m. onthe following morning at which time transactions in OTPs may take place.

Bids, offers and last sale prices for OTPs will be posted on the Exchange Bulletin Board and will be published in the Exchange Bulletin.

Questions concerning the terms of the OTPs or the operation of the OTP lease pool may be directed to Edward L. Provost at 312-786-7717. Questionsconcerning the purchase, sale, transfer, or lease of an OTP may be directed to the Department of Membership at 312-786-7460.

MEMBERSHIP INFORMATION FOR February 26, 1998 THROUGH March 4, 1998

Members are required to report any address or telephone number changes to the Membership Department at (312) 786-7449 pursuant toExchange Rule 3.6(b). For Seat Market Quotes, call (312) 786-7456.

SEAT MARKET QUOTES as of March 6, 1998 SEAT MARKET QUOTES as of February 28, 1997

Bid: $736,000.00 Bid: $735,000.00

Offer: $745,000.00 Offer: $745,000.00

Last Sale: $735,100.00 on February 27, 1998 Last Sale: $735,100.00 on February 27, 1998

March 11, 1998 Volume 26, Number 10 The Chicago Board Options Exchange Bulletin

OPTION TRADING PERMIT- LEASE POOL as of March 6, 1998

Highest Bid: $2,750.00 Highest Monthly Rate: $5,300.00

OTP's Available: None Lowest Monthly Rate: $2,800.00

Last Lease: $5,300.00 2/26/98

MEMBERSHIP APPLICATIONS RECEIVEDThis notice is given persuant to Exchange Rule 3.9. Please send anycomments to the Membership Committee in care of the MembershipDepartment.

Individual Member Applicants Date Posted

Matthew S. Pope, Nominee 02/26/98LETCO DPM, L.P.420 W. Surf - Apt. 411Chicago, IL 60657

Steven H. Merkle, Lessee 02/27/98158 Roslyn Rd.Barrington, IL 60010

Sanford Naiditch, Lessor 02/27/98176 Golf Village BlvdJupiter, FL 32458

Ronald I. Karzen, Nominee 03/03/98R.K. Options, Inc1461 Ridge Ave.Evanston, IL 60201

Scott D. Sheridan, Nominee 03/03/98TJC Options Limited Partnership1647 North BurlingChicago, IL 60614

Albert Simon III., CBT Registered For 03/03/98Alsco Investments Inc.843 Bluff St.Glencoe, IL 60022

Casey W. Dennison, Nominee 03/04/98G-Bar Limited Partnership3121 N. Racine - 2nd Fl.Chicago, IL 60657

Michael L. Geimer, Nominee 03/04/98Aspen Trading, L.L.C.1300 N. Astor - 8BChicago, IL 60610

Thomas M. Molsen, Nominee 03/04/98Charles Schwab & Co., Inc.3655 Gabrielle Ln. - #1416Aurora, IL 60504

John V. Rusin, Nominee 03/04/98Kawnipi Corp.3930 N. Pine Grove - #2303Chicago, IL 60613

Member Organization Applicants

BOG Partnership Six 02/27/98John W. Hurubean, CBT Registered For440 S. LaSalle - Ste. 619Chicago, IL 60605

John W. Hurubean - General PartnerDaniel F. O’Neill - Limited PartnerPeter J. Gancer - Limited PartnerPaul G. Benson - Limited Partner

JWL Trading Company, L.L.C. 03/04/98Justin K. Long, CBT Registered For440 S. LaSalle - Ste. 1600Chicago, IL 60605

Kenneth K. Long - MemberJames B. Gardner - MemberJustin K. Long - Member

MEMBERSHIP LEASESThis notice is given pursuant to Exchange Rules 3.15 and 3.16 whichpermit certain types of claims to be filed with the Membership De-partment within 20 days from the date of this Exchange Bulletin.

New Leases Effective Date

Lessor: T. Paul Natenberg 02/27/98Lessee: RTG Equities L.L.C.

R. Kevin Lawless, NOMINEERate: $428.29 Term: One Day

Membership Sales and Transfers

This notice is given pursuant to Rules 3.15 and 3.16 which permit certain types of claims to be filed with the Membership Depar tmentwithin 20 days from the date of this Exchange Bulletin.

From To Price/Transfer Date

Dain Rauscher Incorporated Interra Clearing Services Inc. Transfer 03/02/98

Dain Rauscher Incorporated Interra Clearing Services Inc. Transfer 03/02/98

Date Posted


Effective DateLessor: Merrill Lynch, Pierce, Fenner & 02/27/98

Smith, Inc.Lessee: GPZ Trading L.L.C.

Arn C. Andrews, NOMINEERate: 1 1/8% Term: Month to Month

Lessor: Scott R. Casty 03/02/98Lessee: Action Trading

David J. Negri, NOMINEERate: 1 1/8% Term: Month to Month

Lessor: William A. Brandt 03/02/98Lessee: SSGM, L.L.C.

Rory L. Samuels, NOMINEERate: 1 1/8% Term: Month to Month

Lessor: Joseph Klopfer Investments Inc. 03/02/98Lessee: The Helios Group Chicago LLC

Kenneth J. Heinz, NOMINEERate: 1 1/8% Term: Month to Month

Lessor: Fahnestock & Co. Inc. 03/02/98Lessee: WST Trading Inc.

Harry A. Mittenthal III, NOMINEERate: 1 1/8% Term: Month to Month

Lessor: Kurt R. Sax 03/02/98Lessee: OTC Arbitrage LTD

Thomas R. Fehrenbacher, NOMINEERate: 1 1/8% Term: Month to Month

Lessor: J. Stephen Fossett 03/02/98Lessee: Lakota Trading, Inc.

Patrick M. Walsh, NOMINEERate: 1 1/8% Term: Month to Month

Lessor: T. Paul Natenberg 03/02/98Lessee: Sling Trading Corp.

Gregory J. Olson, NOMINEERate: 1 1/8% Term: Month to Month

Lessor: Scott S. Samuelson 03/02/98Lessee: Pyramid Capital, L.L.C.

Kevin M. O’Connor, NOMINEERate: 1 1/8% Term: Month to Month

Lessor: Hayes Securities Ltd 03/02/98Lessee: Lawrence Helfant Inc.

Sean P. Moran, NOMINEERate: 1 1/8% Term: Month to Month

Lessor: Arthur M. Pearson 03/02/98Lessee: The Arbitrage Group, L.P.

Brian W. Doherty, NOMINEERate: 1 1/8% Term: Month to Month

Lessor: American Options Corp 03/02/98Lessee: Christopher P. EnnisRate: 1 1/8% Term: Month to Month

Lessor: Dain Rauscher Incorporated 03/02/98Lessee: John P. O’ConnorRate: 1 1/8% Term: Month to Month

Lessor: Romajo Partners, Ltd. 03/03/98Lessee: Ly Trading Corp.

Blong N. Ly, NOMINEERate: 1 1/8% Term: Month to Month

Lessor: Merrill Lynch Professional Clearing 03/03/98Corp.

Lessee: Group One Trading, L.P.Matthew G. Ziol, NOMINEE

Rate: 1 1/8% Term: Month to Month

Lessor: James Richardson 03/03/98Lessee: TJC Options Limited Partnership

Michael De Filippis, NOMINEERate: 1 1/8% Term: Month to Month

Lessor: Merrill Lynch Professional Clearing Corp. 03/04/98Lessee: Hull Trading Company, L.L.C.

Peter J. Layton, NOMINEERate: 1 1/8% Term: Month to Month

Lessor: James Richardson 03/04/98Lessee: Sallerson-Troob L.L.C.

Mark P. Corman, NOMINEERate: 1 1/8% Term: Monthly

Terminated Leases Termination Date

Lessor: Merrill Lynch, Pierce, Fenner 02/27/98& Smith, Inc.

Lessee: QSA, L.L.C.

Lessor: Fahnestock & Co. Inc. 03/02/98Lessee: Orbit II Partners, L.P.

Alan S. MacKenzie Jr. (AEM), NOMINEE

Lessor: T. Paul Natenberg 03/02/98Lessee: RTG Equities L.L.C.

R. Kevin Lawless (KLA), NOMINEE

Lessor: American Options Corp 03/02/98Lessee: Van Buren Venture

Chris Warren (WAR), NOMINEE

Lessor: Scott R. Casty 03/02/98Lessee: Zahr Trading

M. Barbara O’Brien (OBI), NOMINEE

Lessor: Joseph Klopfer Investments Inc. 03/02/98Lessee: LaRocque Trading Group L.L.C.

James T. Anstrand (BAG), NOMINEE

Lessor: Scott S. Samuelson 03/02/98Lessee: Gruntal & Co., L.L.C.

Rodney A. Hubbs (NEY), NOMINEE

Lessor: Larkspur Securities, Inc. 03/02/98Lessee: SSGM, L.L.C.

Rory L. Samuels (LSL), NOMINEE


Lessee: Hull Liquidity Fund, L.P.Alexander Magid (MAG), NOMINEE

Lessor: Kurt R. Sax 03/02/98Lessee: Tague Securities Corporation

Timothy C. Boyd (AEB), NOMINEE

Lessor: Romajo Partners, Ltd. 03/02/98Lessee: CIT Limited Liability Company

Daniel J. Marguerite (DAM), NOMINEE

Lessor: Arthur M. Pearson 03/02/98Lessee: Shafton Partnership, L.P.

David L. Shafton (SHF), NOMINEE

Effective Date


Lessor: William A. Brandt 03/02/98Lessee: Action Trading

David J. Negri (DJN), NOMINEE

Lessor: J. Stephen Fossett 03/02/98Lessee: The Helios Group Chicago LLC

Kenneth J. Heinz (JRZ), NOMINEE

Lessor: Hayes Securities Ltd. 03/02/98Lessee: Cooper Neff & Associates, L.P.

Lessor: Dain Rauscher Incorporated 03/02/98Lessee: Interra Clearing Services Inc.

John L. O’Donnell (ODL), NOMINEE

Lessor: Dain Rauscher Incorporated 03/02/98Lessee: John P. O’Connor (JO)

Lessor: James Richardson 03/03/98Lessee: Tague Securities Corporation

Timothy C. Boyd (AEB), NOMINEE


Lessee: Professional Edge Fund, L.P.Daniel T. Dismukes (DTD), NOMINEE

Lessor: James Richardson 03/04/98Lessee: TJC Options Limited Partnership

Michael De Filippis (DFO), NOMINEE

MEMBERSHIP OTP LEASES

New OTP Leases Effective Date

Lessor: Lease Pool 02/27/98Lessee: KP Limited Partnership

Kevin D. Powers, NOMINEERate: $5300.00 Term: Month to Month

Terminated OTP Leases Termination Date

Lessor: Lease Pool 02/27/98Lessee: GPZ Trading L.L.C.

Frederick J. Lovely (FRL), NOMINEE

MEMBERSHIP TERMINATIONSThis notice is given pursuant to Exchange Rules 3.15 and 3.27 whichpermit certain types of claims to be filed with the Membership De-partment within 20 days from the date of this Exchange Bulletin.

Individual Members Termination Date

CBT Exercisers:

Mark F. Wagner (IOO) 03/02/98848 Webster AveChicago, IL 60614

CBT Registered For:

Jeffrey J. Oechsel (OCH), (CBT) 02/26/98Cooper Neff & Associates, L.P.440 S. LaSalle - Ste. 1534Chicago, IL 60605

James J. Humes Jr. (JIM), (CBT) 03/02/98Hull Trading Company, L.L.C.440 S. LaSalle, Ste 3010Chicago, IL 60605

Desmond S. Paden (DSZ), (CBT) 03/04/98JSS Investments L.L.C.141 W. Jackson - #1920Chicago, IL 60604

Nominee(s) / Inactive Nominee(s):

Robert J. Bennitt (ITT) 02/27/98E. D. & F. Man International Securities, Inc.3302 Edgecreek Dr.New Lenox, IL 60451

Frederick J. Lovely (FRL) 02/27/98GPZ Trading L.L.C.230 S. LaSalle St., #688Chicago, IL 60604

Alan R. Woods (ALW) 02/27/98Eclipse J.V1111 W. Hawthorne - #CArlington Heights, IL 60005

Hamilton Reiner (NWM) 03/02/98NatWest Securities Corporation600 Steamboat Rd.Greenwich, CT 06830

Alan S. MacKenzie Jr. (AEM) 03/02/98Orbit II Partners, L.P.440 S. LaSalle - Ste. 2500Chicago, IL 60605

Daniel W. Youatt (DNL) 03/02/98Crement-Youatt G.P.15477 N. 88th AvenuePeoria, AZ 85382

R. Kevin Lawless (KLA) 03/02/98RTG Equities L.L.C.4415 W. KeelerChicago, IL 60630

Chris Warren (WAR) 03/02/98Van Buren Venture175 W. Jackson - Ste. A1714Chicago, IL 60604

Joseph P. Knoch (ACD) 03/02/98ADC Options400 S. LaSalle-CBOE Box 139Chicago, IL 60605

Peter W. Klebe (PKK) 03/02/98E. D. & F. Man International Securities, Inc.40 W. 617 La Fox Rd.St. Charles, IL 60175

M. Barbara O’Brien (OBI) 03/02/98Zahr Trading543 GroveGlencoe, IL 60022

Robert Lawrence Wilson (BOB) 03/03/98Professional Edge Fund, L.P.440 S. LaSalle, Suite 1124Chicago, IL 60605

Termination Date Termination Date


John J. Buatti (BUA) 03/04/98Cooper Neff & Associates, L.P.440 S. LaSalle - Ste. 1534Chicago, IL 60605

John R. Harrell (JHQ) 03/04/98Arbitrade, L.L.C.1109 Woodview Rd.Burr Ridge, IL 60521

Member Organizations

T.G. Options, Inc. 02/27/981220 Cambridge CtHighland Park, IL 60035

Van Buren Venture 03/02/98440 S. LaSalle - Ste. 600Chicago, IL 60605

Dain Rauscher Incorporated 03/02/9860 S. 6th St- Ste 19bMinneapolis, MN 55402

EFFECTIVE MEMBERSHIPSThis notice is given pursuant to Exchange Rule 3.11.

Individual Members Effective Date

Lessee(s):

Christopher P. Ennis (ENS) 03/02/982701 Oak AveNorthbrook, IL 60062Type of Business to be Conducted: Market Maker

Nominee(s) / Inactive Nominee(s):

Kevin D. Powers (PRS) 02/27/98KP Limited Partnership3424 Sheffield Ave., #2Chicago, IL 60657Type of Business to be Conducted: Market Maker

Arn C. Andrews (ACA) 02/27/98GPZ Trading L.L.C.230 S. LaSalle - Ste. 688Chicago, IL 60604Type of Business to be Conducted: Market Maker

R. Kevin Lawless (KLA) 02/27/98RTG Equities L.L.C.4415 W KeelerChicago, IL 60630Type of Business to be Conducted: Market Maker

M. Barbara O’Brien (OBI) 02/27/98Zahr Trading543 GroveChicago, IL 60614Type of Business to be Conducted: Market Maker Floor Broker

Gregory J. Olson (IGO) 03/02/98Sling Trading Corp.516 W. DemingChicago, IL 60614Type of Business to be Conducted: Market Maker

Patrick M. Walsh (PMW) 03/02/98Lakota Trading Inc.1250 N. Dearborn, #11AChicago, IL 60610Type of Business to be Conducted: Market Maker, Floor Broker

Geoff A. Crement (DNL) 03/02/98Crement-Youatt G.P.119 Prospect Ave.Wood Dale, IL 60191Type of Business to be Conducted: Floor Broker

Kevin M. O’Connor (MKO) 03/02/98Pyramid Capital, L.L.C.440 S. LaSalle - Ste. 600Chicago, IL 60605Type of Business to be Conducted: Market Maker

Brian W. Doherty (BWD) 03/02/98The Arbitrage Group, L.P.440 S Lasalle - Ste 753Chicago, IL 60605Type of Business to be Conducted: Market Maker

Jeff S. Kantor (JFF) 03/02/98E. D. & F. Man International Securities, Inc.9280 Birch AveMokena, IL 60448Type of Business to be Conducted: Floor Broker

Kevin P. Kolb (KAK) 03/02/98Timber Hill LLC1115 Holly LaneMunster, IL 46321Type of Business to be Conducted: Market Maker

Sean P. Moran (SMZ) 03/02/98Lawrence Helfant Inc.3325 N. Seminary - ChnChicago, IL 60657Type of Business to be Conducted: Floor Broker

Michael De Filippis (DFO) 03/03/98TJC Options Limited Partnership1246 Fordham Dr.Glendale Hts, IL 60139Type of Business to be Conducted: Market Maker

Blong N. Ly (BLG) 03/03/98Ly Trading Corp.440 S. LaSalle St., Suite 1021Chicago, IL 60605Type of Business to be Conducted: Market Maker

Joseph P. Knoch (ACD) 03/03/98ADC Options400 S. LaSalle-CBOE Box 139Chicago, IL 60605Type of Business to be Conducted: Floor Broker

Mark P. Corman (MEC) 03/03/98Sallerson-Troob L.L.C.815 McKenzie Station Dr.Lisle, IL 60532Type of Business to be Conducted: Market Maker, Floor Broker

Termination Date Effective Date


John F. Schuler QIN 03/02/98

Scott I. Bauer QIN 03/02/98

Michael B. Frazin QIN 03/02/98

Thomas R. Fehrenbacher QRK 03/02/98

Gary L. Knoblauch QRK 03/02/98

Edward W. Hanhardt QHH 03/02/98

Jeffrey L. Kost QHH 03/02/98

Jay A. Rosenbloom QHH 03/02/98

Thomas A. Bartlett QOT 03/03/98

James A. Hyman QOT 03/04/98

John P. Yopchick QOT 03/04/98

Mary E. Elm QOT 03/04/98

Keith D. Hoglund QMQ 03/04/98

James E. Keaty QMQ 03/04/98

James Gazis QMQ 03/04/98

James J. Tryzna QMQ 03/04/98

Terminated Participants Acronym Termination Date

Matthew G. Ziol QOP 02/26/98

Jeffrey J. Oechsel QBW 02/26/98

Jeffrey J. Oechsel QKW 02/26/98

Jeffrey J. Oechsel QNF 02/26/98

Alan R. Woods QEC 02/27/98

Thomas R. Fehrenbacher QJI 03/02/98

Thomas R. Fehrenbacher QTS 03/02/98

Robert Lawrence Wilson QJB 03/03/98

Tom Sosnoff QRP 03/04/98

John J. Buatti QKW 03/04/98

John R. Harrell QPZ 03/04/98

John R. Harrell QUN 03/04/98

Scott A. Snyder QQP 03/03/98

Scott A. Snyder QDW 03/04/98

Terminated Accounts

Scott D. Banke QSB 02/27/98

John S. Stafford Jr. QSB 02/27/98

Effective DateRegistered For a Member Organization:

Ronald J. Lejman (RON) 03/02/98BOG Partnership Five440 S. LaSalle - Ste. 619Chicago, IL 60605Type of Business to be Conducted: Market Maker

Member Organizations

KP Limited Partnership 02/27/98440 S. LaSalle - Ste. 3100Chicago, IL 60605Membership Function: LesseType of Business to be Conducted: associated with a Market Maker

Sling Trading Corp. 03/02/98440 S. LaSalle - Ste. 1021Chicago, IL 60605Membership Function: LesseType of Business to be Conducted: associated with a Market Maker

OTC Arbitrage LTD 03/02/98440 S. LaSalle - Rm 700Chicago, IL 60605Membership Function: LesseType of Business to be Conducted: associated with a Market Maker

BOG Partnership Five 03/02/98419 BerkshireCrystal Lake, IL 60014Type of Business to be Conducted: associated with a Market Maker

Ly Trading Corp. 03/03/98440 S. LaSalle - Ste. 1021Chicago, IL 60605Membership Function: LesseType of Business to be Conducted: associated with a Market Maker

JOINT ACCOUNTSThis notice is given pursuant to Exchange Rule 8.9.

New Participants Acronym Effective Date

Joseph Anthony Carsello QPH 02/26/98

Kevin P. Kolb QTH 03/02/98

Brian W. Doherty QCB 03/02/98

Michael De Filippis QCJ 03/03/98

Michael De Filippis QQP 03/03/98

Michael De Filippis QDL 03/04/98

Jonathan S. Grabill QKW 03/04/98

New Accounts

Raymond W. Boesen QRW 03/02/98

Christopher N. Arkin QRW 03/02/98

Scott A. Adams QRW 03/02/98

Kevin M. Luthringshausen QIN 03/02/98

Vincent E. Florack QIN 03/02/98


Michael A. Giangiorgi 03/03/98From: Nominee For RBC Dominion Securities

Corporation; Market MakerTo: CBT Exerciser Registered For RBC Dominion

Securities Corporation; Market Maker

Member Organization Applicants Effective Date

NatWest Securities Corp. 03/02/98From: Lessee; Non-Member Customer Business;

OCC Clearing; associated with a Floor BrokerTo: Lessee; Non-Member Customer Business;

associated with a Floor Broker

MEMBER ADDRESS CHANGES

Individual Members

Brian F. Cagney440 S. LaSalle St., Ste. 3100Chicago, IL 60605

Thomas Campbell480 N. McClurg #511Chicago, IL 60611

Diane M. Fantetti6709 19th St. Apt.4Berwyn, IL 60402

Scott D. Sheridan1647 N BurlingChicago, IL 60614

MEMBER NAME CHANGE

Member Organizations Effective DateFrom: Interra Clearing Services Inc. 03/02/98To Dain Rauscher Incorporated

Position LimitsFor all equity options classes except those listed below, the standard position and exercise limits pursuant to Exchange Rule 4 .11 and4.12 will be applicable. For a complete list of all applicable lists, check 2nd floor data information bins or contact the Depa rtment ofMarket Surveillance.

Class Limit DateBAQ/BAW 10,500 contracts 3/21/98HBI/WNU 7,500 contracts 3/21/98IR/IRU 1,575,000 shares 3/21/98NLQ 50,000 contracts 3/21/98PIR/PZW 1,125,000 shares 3/21/98QST/QZT 1,125,000 shares 3/21/98RAQ/WYH 3,445,000 shares 3/21/98WYH/RAQ 3,445,000 shares 3/21/98BKS 15,000 contracts 4/18/98CA/CWA 3,750,000 shares 4/18/98CVZ/PMZ 2,584,000 shares 4/18/98HHX/HRC 3,382,000 shares 4/18/98HRC/HHX 3,382,000 shares 4/18/98IBC 9,000 contracts 4/18/98IMG 459,000 shares 4/18/98KZQ/KZY 2,000,000 shares 4/18/98PWJ/PWZ 1,575,000 shares 4/18/98QOE/QZE 463,500 shares 4/18/98OWN/ZIT 1,125,000 shares 4/18/98ROK/ROX 10,500 contracts 4/18/98

SCI 21,000 contracts 4/18/98SFY/SYF 750,000 shares 4/18/98SFV 9,000 contracts 4/18/98SUB/SUV 1,125,000 shares 4/18/98TEO 15,000 contracts 4/18/98USI/IRZ 1,125,000 shares 4/18/98AGE 1,125,000 shares 5/16/98BQF 21,000 contracts 5/16/98CDN 50,000 contracts 5/16/98CWQ 50,000 contracts 5/16/98DLP/DLU 997,500 shares 5/16/98FTZ/IGL 15,000 contracts 5/16/98HMA/HMZ 1,575,000 shares 5/16/98HRS 15,000 contracts 5/16/98IGL/FTZ 15,000 contracts 5/16/98LM/LYM 598,500 shares 5/16/98MZY/OFQ/OFZ 3,603,000 shares 5/16/98NOI 9,000 contracts 5/16/98OFQ/QFZ/MZY 3,603,000 shares 5/16/98QVY 15,000 contracts 5/16/98

Class Limit Date

Effective DateCHANGES IN MEMBERSHIP STATUS

Individual Member Applicants Effective Date

Scott A. Adams 02/26/98From: CBT Exerciser; Floor Broker Market MakerTo: CBT Exerciser Registered For LFG, L.L.C.;

Market Maker

Arnold S. Arfa 02/26/98From: Nominee for JOH Options Inc.; Floor Broker/

Lessor to Eric B. WeederTo: Lessor to Eric B. Weeder

T. Paul Natenberg 02/27/98From: Membership Owner Registered For T. G. Options,

Inc.; Floor Broker, Market MakerTo: Lessor to RTG Equities L.L.C.

Thomas R. Fehrenbacher 03/02/98From: Nominee For Tague Securities Corporation;

Floor Broker, Market MakerTo: Nominee For OTC Arbitrage LTD.; Market Maker

David L. Shafton 03/02/98From: Nominee For Shafton Partnership, L.P.;

Market MakerTo: CBT Exerciser Registered For Shafton Partnership,

L.P; Market Maker

Daniel J. Marguerite 03/02/98From: Nominee For CIT Limited Liability Company;

Market MakerTo: CBT Exerciser Registered For CIT Limited Liability

Company; Market Maker

Anthony Dicrescenzo Jr. 03/02/98From: Lessor to ADC Options;To: Nominee For ADC Options; Floor Broker,

Market Maker; Lessor to ADC Options

Anthony Dicrescenzo Jr. 03/03/98From: Nominee for ADC Options; Market Maker,

Floor Broker; Lessor to ADC Options;To: Lessor to ADC Options


Research Circulars

The following Research Circulars were distributed between February 27, 1998 and March 6, 1998 . If you wish to read the entire document, and haveaccess to a fax machine, please call the CBOE FaxLine at 1-800-OPTIONS, choose option “4” and then option “1”. Please have your fax number andthe corresponding FaxLine document number ready. The FaxLine number is listed adjacent to each circular. To receive a list of all available documents,use the FaxLine number 000. You may also access the Research Circulars on our Web Site at http://www.cboe.com Questions regarding any of theinformation that is discussed in any Research Circular may be directed to the CBOE Investor Services Department at 1-800-OPTIONS.

CBOE Research Circular #RS98-97 FaxLine Document No.883March 6, 1998Greenpoint Financial Corporation (“GPT”) 2-for-1 Stock SplitEx-Distribution Date: March 5, 1998

CBOE Research Circular #RS98-98 FaxLine Document No. 900February 27, 1998New LEAPS ® Listing: Computer Associates International, Inc. (“CA”)

CBOE Research Circular #RS98-99 FaxLine Document No. 884February 27, 1998Amati Communications Corporation (“AMTX/ARQ”) Merger Completed — Cash Settlement

CBOE Research Circular #RS98-100 FaxLine Document No. 900March 2, 1998New Listings: MTI Technology Corporation (“MTIC/QTX”)

Class Limit DateRKQ 21,000 contracts 5/16/98RWQ/RZW 937,500 shares 5/16/98SEI 9,000 contracts 5/16/98VFC 15,000 contracts 5/16/98VX/VPQ 2,500,000 shares 5/16/98WPI 21,000 contracts 5/16/98XRQ 9,000 contracts 5/16/98YPQ/VX 2,500,000 shares 5/16/98AKS 9,000 contracts 6/20/98CKR/CKY 825,000 shares 6/20/98DSZ/WAC 990,000 shares 6/20/98FXH/QVS 900,000 shares 6/20/98GMH/GUZ 10,500 contracts 6/20/98HQR/HZR 7,500 contracts 6/20/98OCN 9,000 contracts 6/20/98WAI/WZA 7,500 contracts 6/20/98KHQ/KHW 1,575,000 shares 6/20/98NT 21,000 contracts 6/20/98QVS/FXH 900,000 shares 6/20/98UQD 15,000 contracts 6/20/98BQR/FLT 2,927,500 shares 7/18/98CQM/NWY 3,320,000 shares 7/18/98ECL 15,000 contracts 7/18/98ENZ/ENX 472,500 shares 7/18/98EQD/EZD 937,500 shares 7/18/98MEA 15,000 contracts 7/18/98MOQ/MOZ 937,500 shares 7/18/98NWY/CQM 3,320,000 shares 7/18/98ORG/ORY 750,000 shares 7/18/98PQO 50,000 contracts 7/18/98QIG/TWZ 50,000 contracts 7/18/98QRT 21,000 contracts 7/18/98QTP/ZTP 4,500 contracts 7/18/98TCB 9,000 contracts 7/18/98TWZ/QIG 1,695,000 shares 7/18/98VXQ 50,000 contracts 7/18/98YQC 9,000 contracts 7/18/98IOM 50,000 contracts 8/22/98KOZ/PPZ/PRH 15,000 contracts 8/22/98PRH/PPZ/KOZ 15,000 contracts 8/22/98QRI/RIU 1,125,000 shares 8/22/98SFE/SGZ 4,500 contracts 8/22/98FQB/FXB 1,575,000 shares 9/19/98QDA/QXA 675,000 shares 9/19/98XSQ/XYQ 3,750,000 shares 9/19/98WH/WHZ 10,500 contracts 9/19/98BJS 21,000 contracts 10/17/98CTX 9,000 contracts 10/17/98IQL 15,000 contracts 10/17/98QWA 21,000 contracts 10/17/98DKB 9,000 contracts 11/17/98HQR/HZR 7,500 contracts 12/20/98

Class Limit DateAAL/VHW 50,000 contracts 1/23/99BA/WBO/VBO 50,000 contracts 1/23/99CD/VUC/LUL/VFS/ 9,750,000 shares 1/23/99 LFSCIQ/WCI/VHR 42,000 contracts 1/23/99CTC/WDT/VDT/ 4,462,500 ADSs 1/23/99 CUC/VXDHAL/VHW 50,000 contracts 1/23/99HOT/IZT/VZU 4,900,000 shares 1/23/99IZT/VZU/HOT 4,900,000 shares 1/23/99KRB/LXK//VUK/ 4,500,000 shares 1/23/99 VKX/VZKMER/VME/LME 50,000 contracts 1/23/99MMM/WMU/VMU/ 25,000 contracts 1/23/99 VMVVFS/LFZ/CD/ 9,750,000 shares 1/23/99 VUC/LULVUZ/THQ/VTH/ 6,875,000 shares 1/23/99 LTHAIG/VAF/LAJ/ 3,750,000 shares 1/22/2000 VXE/LVJARC/VFR/LFR 40,000 contracts 1/22/2000BAC/VBA/LBA 50,000 contracts 1/22/2000CYQ/VYC/LCY/CYZ 3,750,000 shares 1/22/2000 VYV/LYLDD/VDD/LDD 50,000 contracts 1/22/2000EMC/VUE/LUE 50,000 contracts 1/22/2000GM/LGM/GMX/ 25,000 contracts 1/22/2000 VGN/LGZGPS/VGS/LGS 3,750,000 shares 1/22/2000 GZP/VWS/LVPHWP/VVX 32,500 contracts 1/22/2000IBM/VIB/LIB 50,000 contracts 1/22/2000LUV/VUV/LOV/ 3,000,000 shares 1/22/2000 LYU/VUY/LVWMTC/VM/LCT/MZM 25,000 contracts 1/22/2000 VZV/LYCORQ/VOR/LRO/OWQ 3,750,000 shares 1/22/2000 VZR/LRZ/WOUPEP/VP/LPP/PVP/ 25,000 contracts 1/22/2000 VPR/LDVSCH/VYS/LWS 2,000,000 shares 1/22/2000 SYH/VZY/LWZSLB/VWY/LYS 50,000 contracts 1/22/2000SLM/VRM/LOS/SLZ/ 2,625,000 shares 1/22/2000 VZL/LYMSWY/VYW/LYW 40,000 contracts 1/22/2000TXN/VXT/LTN 50,000 contracts 1/22/2000VSZ/WZY/VVX/HWP 32,500 contracts 1/22/2000WMB/VBB/LMB 21,000 contracts 1/22/2000MOB/VML/LML 50,000 contracts 2/19/2000


CBOE Research Circular #RS98-101 FaxLine Document No. 900March 2, 1998New LEAPS ® Listing: KLA-Tencor Corporation (“KLAC/KCQ”)

CBOE Research Circular #RS98-102 FaxLine Document No. 885February 13, 1998Coast Savings Financial, Inc. (“CSA/adj. ZCS”): Determination of Cash-in-Lieu Amount

CBOE Research Circular #RS98-103 FaxLine Document No. 886March 3, 1998Computer Sciences Corporation (“CSC”) Tender Offer by CAI Computer Services Corp.

CBOE Research Circular #RS98-104 FaxLine Document No. 900March 3, 1998New Listings: Consolidation Capital Corporation (“BUYR/QYB”)

CBOE Research Circular #RS98-105 FaxLine Document No. 887March 3, 1998LIN Television Corporation (“LNTV/LQV”)Merger Completed — Cash Settlement

CBOE Research Circular #RS98-106 FaxLine Document No. 900March 4, 1998New Listings: The E.W. Scripps Company (“SSP”)

Provident Bankshares Corporation (“PBKS/QEB”)Res-Care, Inc. (“RSCR/QQR”)SED International Holdings (“SECX/QQE”)Trans World Entertainment (“TWMC/TQT”)United Stationers, Inc. (“USTR/QTR”)Wesley Jessen Visioncare, Inc. (“WJCO/JQJ”)Wild Oats Markets, Inc. (“OATS/QOQ”)

CBOE Research Circular #RS98-107 FaxLine Document No. 888March 4, 1998Wonderware Corporation (“WNDR/WQD”) Tender Offer by WDR Acquisition Corp.

CBOE Research Circular #RS98-108 FaxLine Document No. 889March 4, 1998Corporate Express, Inc. (“CEXP/XQP”) Partial Self-Tender Offer EXTENDED

CBOE Research Circular #RS98-110 FaxLine Document No. 890March 5, 1998CBT Group PLC ADR (“CBTSY/QAG”) 4-for-1 SplitEx-Distribution Date: March 10, 1998

CBOE Research Circular #RS98-111 FaxLine Document No. 891March 5, 1998Computervision Corporation (“CVN/adj. CVZ”): Contract Adjustment Resulting froma 2-for-1 Stock Split in Parametric Technology (“PMTC”)Ex-Distribution Date: March 9, 1998

RegulatoryCirculars

RegulatoryBulletin

March 11, 1998 Volume RB9, Number 5

The Constitution and Rules of the Chicago Board Options Exchange, in certain specificinstances, require the Exchange to provide notice to the membership. The RegulatoryBulletin will be mailed to all members twice a month and is intended to satisfy thisrequirement.


Date: March 11, 1998

To: Members and Member Firms

From: Department of Market Regulation

Re: Exercises on the Day Prior to Expiration for Position Limit Purposes

While the Options Clearing Corp. (OCC) does not accept exercise instructions for expir-ing option contracts on the final day of trading prior to expiration, the Exchange hasdetermined that a member or customer may irrevocably exercise near-term, in-the-moneyoption positions on this day to eliminate such positions from their account for positionlimit purposes. A position is considered irrevocably exercised at the time an irrevocableexercise instruction memorandum (memorandum) is prepared and time stamped. There-fore, any member or customer with an overall position near the applicable limit the dayprior to expiration may prepare and time stamp an irrevocable memorandum for their near-term, in-the-money options to enable an increase in their overall position. Irrevocablememoranda must be completed prior to establishing additional positions that would other-wise put the account over the position limit. It is important to note that such irrevocablememoranda must be completed, even though a position may be subject to the OCC’sexercise by exception process. Only those near-term contracts indicated on irrevocablememoranda which are actually exercised will be eliminated from the account for positionlimit purposes.

To be applied against a position for position limit purposes, a copy of all irrevocablememoranda prepared on the day prior to expiration must be submitted to the Departmentof Market Regulation no later than the Monday following expiration. A copy must also bemaintained by both entering and clearing members for the appropriate amount of time inaccordance with SEC rules.

Any questions pertaining to this matter should be directed to Pat Cerny at (312) 786-7722or Karen Charleston at (312) 786-7724.

(Regulatory Circular RG 97-01 Reissued)

Limit comes into effect: On CMEopening (8:30 a.m.).

Trading halt: For 2 minutes if the offer isat limit 10 minutes after limit is reachedor at 2:30 p.m.

Limit no longer in effect: After the2 minute halt or, if no halt, 10 minutesafter the limit is reached or otherwise at2:30 p.m.

30 POINTS BELOW PREVIOUSDAY’S SETTLEMENT

Limit comes into effect: After the 15point limit.

Trading halt: For 2 minutes if the offer isat limit 10 minutes after limit is reached orat 2:30 p.m.

Limit no longer in effect: After the2 minute halt or, if no halt, 10 minutesafter the limit is reached or otherwise at2:30 p.m.

When S&P 500 futures contract reaches12 points below previous day’s close:Side Car restrictions on program trading andstop orders or stop limit orders.

When the DJIA advances (or declines)50 points from the previous day's close:Index arbitrage orders for S&P® componentstocks must be entered with buy-minus(or sell-plus) instruction until the advanceor decline returns to within 25 points fromprevious day's close.

None required.

15 POINTS BELOWPREVIOUS DAY’S SETTLEMENT

CME (S&P 500® FUTURES) NYSE ACTION CBOT (DJIA SM FUTURES)

None required because of CME or CBOTlimit or NYSE actions; discretionary actionsinclude, trading halts and suspensions.

Except on the last business day beforeexpiration, CBOE normally will restrictexercise of American style, cash settledindex options during any trading halt.CBOE may restrict exercise in equityoptions (other than during the 10 businessdays before expiration), but it normally willnot do so because of trading halts.

CBOE ACTION

None required; discretionary actions includetrading halts in individual stocks.

None required. None required; discretionary actionsinclude trading halts and suspensions(with the exercise restrictions describedabove).

(Continue )


INTER-EXCHANGE PROCEDURESIN VOLATILE MARKETS

As of February 1, 1998

For more information on the inter-exchange proceduresin volatile markets

or on CBOE options products,call 1-800-OPTIONS

or visit our Web site at http://www.cboe.com

This information has been compiled by CBOE for general information purposes only, and therefore should not be considered complete or precise. Most matters discussed are subjectto detailed exchange rules and to the discretion of exchange officials. The rules of the various exchanges are subject to change and may not be reflected in this information. CBOEassumes no responsibility for any errors or omissions in the information presented. In addition, this circular does not address specialized circumstances, such as the times that wouldbe applicable on days when one or more underlying equity markets is scheduled to close trading earlier than normal or the rules applicable to Chapter 30 securities. These specializedmatters are covered in detail by exchange rules. All times listed are Central times.

“S&P” and “S&P 500” are trademarks of Mc-Graw Hill, Inc., and "DJIA" is a service mark of Dow Jones & Company, Inc., and neither company assumes any liability in connection withthe trading of any contract based on its indexes.

(Date of issuance: February 20, 1998)

CME (S&P 500 FUTURES)

When DJIA drops 350 points belowprevious day’s close before 2:00 p.m.:Trading in all stocks halts for 30 minutes.

When DJIA drops 350 points belowprevious day’s close at or after 2:00p.m.: No mandated trading halt.

Limit comes into effect: On CBOTopening (8:15 a.m.)

Trading halt: If the futures contract is atthe 350 point limit when the NYSE declaresa 30 minute trading halt due to a 350 pointDJIA drop or the futures contract reachesthe 350 point limit during the NYSE 30minute trading halt.

Futures trading resumes after the NYSEends its trading halt and 50% of theunderlying stocks (capitalization-weighted)have resumed trading.

Limit no longer in effect:

If the NYSE has declared a 30 minutetrading halt before 2:00 p.m. due to a350 point DJIA drop: After the NYSEends its trading halt and 50% of theunderlying stocks (capitalization-weighted) have resumed trading;

At 2:00 p.m. if the NYSE has not thendeclared a 30 minute trading halt.

Because CME or CBOT limit is reached:None required; discretionary actions includetrading halts and suspensions (with theexercise restrictions described above).

Because NYSE declares floor-widecircuit breaker halt: Trading in allsecurities halted during NYSE circuitbreaker halt (with the exerciserestrictions described above).

DJIA DROPS 350

NYSE ACTION

350 POINTS BELOW PREVIOUSDAY'S SETTLEMENT

CBOT (DJIA FUTURES) CBOE ACTION

When DJIA drops 550 points belowprevious day’s close before 1:00 p.m.:Trading in all stocks halts for 1 hour.

When DJIA drops 550 points belowprevious day’s close at or after 1:00 p.m.but before 2:00 p.m.: Trading in all stockshalts for 30 minutes.

When DJIA drops 550 points belowprevious day’s close at or after 2:00p.m.: Trading in all stocks halts forremainder of day.

Limit comes into effect: When futurestrading resumes after 350 point limit or at2:00 p.m.

Trading halt: If the futures contract is atthe 550 point limit when the NYSE declaresa circuit breaker trading halt due to a 550point DJIA drop or the futures contractreaches the 550 point limit during theNYSE trading halt.

Futures trading resumes after the NYSEends its trading halt and 50% of theunderlying stocks (capitalization-weighted)have resumed trading, or if the NYSE closesfor the day, trading on the CBOT will closefor the day.

Limit no longer in effect: After theNYSE ends its trading halt and 50% of theunderlying stocks (capitalization-weighted)have resumed trading.

Because CME or CBOT limit is reached:None required; discretionary actions includetrading halts and suspensions (with theexercise restrictions described above).

Because NYSE declares a floor widecircuit breaker halt: Trading in all CBOEsecurities halted during NYSE circuitbreaker halt (with the exercise restrictionsdescribed above).

DJIA DROPS 550550 POINTS BELOW PREVIOUSDAY'S SETTLEMENT


Limit comes into effect: After the 30point limit or at 2:30 p.m.

When the NYSE has declared a 30minute trading halt before 2:00 p.m.due to a 350 point DJIA drop:

Trading halt: If the futures contract isat the 45 point limit when the NYSEdeclares a 30 minute trading halt due toa 350 point DJIA drop or the futurescontract reaches the 45 point limitduring the NYSE 30 minute trading halt.

Futures trading resumes after the NYSEends its trading halt and 50% of theunderlying stocks (capitalization-weighted) have resumed trading.

Limit no longer in effect: After theNYSE ends its trading halt and 50% ofthe underlying stocks (capitalization-weighted) have resumed trading.

At or after 2:00 p.m. when the NYSE hasnot declared a 30 minute trading haltbefore 2:00 p.m. due to a 350 point DJIAdrop:

Trading halt: For 2 minutes if theoffer is at limit 10 minutes after limit isreached.

Limit no longer in effect: After the 2minute halt or, if no halt, 10 minutes afterthe limit is reached.


Limit comes into effect: After the 45point limit.

Trading halt: If the futures contract is atthe 70 point limit when the NYSE declaresa circuit breaker trading halt due to a 550point DJIA drop or the futures contractreaches the 70 point limit during the NYSEtrading halt.

Futures trading resumes after the NYSEends its trading halt and 50% of theunderlying stocks (capitalization-weighted)have resumed trading, or if the NYSE closesfor the day, trading on the CME will close forthe day.

Limit no longer in effect: After theNYSE ends its trading halt and 50% of theunderlying stocks (capitalization-weighted)have resumed trading.


Limit comes into effect: After the 70 pointlimit.

None required; discretionary actions includetrading halts in individual stocks.

Limit comes into effect: When futurestrading resumes after 550 point limit.

None required; discretionary actions includetrading halts and suspensions (with theexercise restrictions described above).

700 POINTS BELOW PREVIOUSDAY'S SETTLEMENT

INTER-EXCHANGE PROCEDURES IN VOLATILE MARKETS(continued)

Regulatory Circular RG98-23As of 2/1/98

Februar Februar Februar Februar Februar y 25,y 25,y 25,y 25,y 25, 1998, 1998, 1998, 1998, 1998, VVVVVolume RB9,olume RB9,olume RB9,olume RB9,olume RB9, Number 4 Number 4 Number 4 Number 4 Number 4 RB1RB1RB1RB1RB1

Regulatory Circularscontinued


To: Members

From: Equity Floor Procedure Committee

Date: February 20, 1998

Re: Summary of the Current Equity Option Telephone Policy and the Out-standing Proposal to Amend the Policy

Summarized below is the current equity option post telephone policy and the current pro-posal before the SEC to amend the policy. The equity option post telephone policy appliesto all posts where equity options are traded, including DPM posts. However, as describedbelow, there is a different policy regarding the receipt of orders depending on whether theorder is for an equity option or a broad-based index option traded at an equity post.

1. What types of telephones may be used at the equity option post?There are a number of general use telephone lines that the Exchange has installed at eachequity option post. These lines are for calls within the building but may also be used to calloutside the Exchange. Some members may get approval for their own outside telephoneline on one of the Exchange telephones or have their own telephone installed, if space isavailable. Members and clerks may also get approval to use the Exchange’s wirelesstelephones or headsets. A request for any other telephone technology should be broughtbefore the Equity Floor Procedure Committee. Cellular telephones are prohibited on thefloor.

2. What are the capabilities of the Exchange’s wireless telephone system?The Exchange’s wireless telephone system and headsets are currently enabled to makeonly intra-floor telephone calls, although outside calls may be patched through one floorphone to the wireless telephones/headsets. Outside calls may not be placed from anExchange wireless telephone/headset at this time. The use of a headset on the floor isa privilege which is extended by the Exchange. This privilege may be revoked ifthe headsets are used in contravention of Exchange rules or policies.

3. Who may use the telephones at the post?The telephones at the posts, unless they have been dedicated to a particular member, arefor the general use of members, their clerks, and exchange staff. Members have priority onthe use of the telephones. Clerks may not monopolize the use of a general use telephone.

4. How may outside calls be placed from the post?Some members have their own direct dial telephones or telephone lines. For those mem-bers that use the general use telephones a PIN code is needed to make calls to locationsoutside of the Exchange building. PIN codes can be obtained from the Telecommunica-tions Department.

5. To where may calls be placed or from where may calls be received?There are no restrictions to where a call may be placed or from where a call may bereceived.

6. From what source may orders be received on the phones at the equity option posts?

A. Intra-floor lines : Any member may place an order over the intra-floor telephone lines atthe equity option posts.

B. Outside telephone lines: 1. Equity option classes . Only CBOE registered market-makers may send orders for an equity option class into an equity option post over theoutside telephone lines.

RB2RB2RB2RB2RB2 Februar Februar Februar Februar Februar y 25,y 25,y 25,y 25,y 25, 1998, 1998, 1998, 1998, 1998, VVVVVolume RB9,olume RB9,olume RB9,olume RB9,olume RB9, Number 4 Number 4 Number 4 Number 4 Number 4


Regulatory Circular RG98-24 continued

2. Broad-based index option . Any category of customer (i.e., members, broker-dealers,non-broker-dealers, or public customers) may send orders into an equity option post if theorder is for a broad-based index option or for specified narrow-based index options traded atthe equity option post. Currently, the narrow-based index option classes qualifying for thistreatment are options on the Dow Jones Utility Average and options on the Dow JonesTransportation Average. Those broad-based index options that do not trade at an equityoption post have their own telephone policies.

7. What is the proposal to expand the source of orders that may be received over the tele-phones at the equity option posts?The proposed amendment (which has been filed with the SEC but not yet approved) wouldallow orders for equity options entered by broker-dealers (whether firm, broker-dealer, orpublic customer) to be placed over the telephones if the conditions below are met. The orderfrom the broker-dealer must be placed on a call patched through a booth telephone to atelephone at the post and must involve the following persons at the following locations: (1) arepresentative of a member broker-dealer or its correspondent firm from a location off of theExchange trading floor, (2) a CBOE broker or an associated person of such broker at a boothon the floor of the Exchange, and (3) a CBOE floor broker (including a DPM) or other personauthorized to receive an order at an equity trading post on the floor of the Exchange. Note:Until the SEC approves this rule proposal, the only orders which may be entered ontelephones at the equity posts are those described in number 6 above. Brokers atthe equity posts may not receive orders directly from public customers even afterthis proposed rule change is approved by the SEC.

8. Must an order ticket be written up for an order telephoned into the equity post?Any order that is telephoned into the equity posts must be written on an Exchange approvedorder ticket and must be maintained as any other order ticket is maintained. The order ticketmay be written up at the booth or at the crowd.

9. Must the floor broker standing at the equity option post and accepting an order from abroker-dealer for a public customer be Series 7 registered?Only the broker speaking with the public customer is required to be Series 7 registered.Therefore, the floor broker at the equity post, since that broker will only be permitted to speakto a representative of a broker-dealer, need not be Series 7 registered.




Attention: Chief Executive Officers/Managing Partners/Compliance Officers/Senior Registered Options Principals

From: Capital Markets Division

Subject: Salomon Smith Barney Holdings Inc.Equity Linked Notes based upon the Dow Jones IndustrialAverage SM, Due * , 2005

The aforementioned Notes are the subject of a Preliminary Prospectus Supplement andwill commence trading at a date to be announced (Trading Symbol: DSB; CUSIP NO.79549B826).

DSB are senior unsecured debt securities of Salomon Smith Barney Holdings Inc. and willbe issued in denominations of $15 and integral multiples thereof. At maturity, holders ofDSB will be entitled to receive, with respect to each Note, the principal amount (i.e. $15)




plus a “Supplemental Redemption Amount” based on the percentage increase, if any, inthe Dow Jones Industrial AverageSM (see “Ending Index Value” below), multiplied by aParticipation Rate of at least 100%. In no event will the Supplemental Redemption Amountbe less than zero. The Securities will not provide for any other payment, nor will they beredeemable or callable prior to maturity.

The Preliminary Prospectus Supplement sets forth the following formula for calculating theSupplemental Redemption Amount:

$15 times [ Ending Index V alue** minus Starting Index V alue* ] times Participation Rate * Starting Index Value*

THE DOW JONES INDUSTRIAL AVERAGE:

Unless otherwise stated, all information herein on the Dow Jones Industrial AverageSM isderived from Dow Jones or other publicly available sources. Such information reflects thepolicies of Dow Jones as stated in such sources and such policies are subject to changeby Dow Jones. Dow Jones is under no obligation to continue to publish the Index and maydiscontinue its publication at any time.

The Dow Jones Industrial AverageSM is a price-weighted index (i.e., the weight of a compo-nent stock is based on its price per share rather than the total market capitalization of theissuer of such component stock) comprised of 30 common stocks chosen by the editors ofthe WSJ as representative of the broad market of U.S. industry. The corporations repre-sented in the Index tend to be leaders within their respective industries and their stocks aretypically widely held by individuals and institutional investors. Changes in the compositionof the Index are made entirely by the editors of the WSJ without consultation with thecorporations represented in the Index, any stock exchange, any official agency or theIssuer of the Notes. Although changes to the common stocks included in the Index tend tobe made infrequently, the component stocks may be changed at any time for any reason.Dow Jones, publisher of the WSJ, is not affiliated with the Issuer and has not participated inany way in the creation of the Notes.

“Dow JonesSM” and “Dow Jones Industrial AverageSM” are service marks of Dow Jones &Company, Inc. (“Dow Jones”) and have been licensed for use for certain purposes by theIssuer. The Notes are not sponsored, endorsed, sold or promoted by Dow Jones. DowJones makes no representation regarding the advisability of investing in the Notes.

CERTAIN RISK FACTORS:

• If the Ending Index Value does not exceed the Starting Index Value, Holders of DSB willonly receive the principal amount ($15 per Security) at maturity, and no SupplementalRedemption Amount. This may be true even if the value of the Dow Jones IndustrialAverageSM exceeds the Starting Index Value at some point during the life of the Notes.

• Because the Ending Index Value will be based upon the closing value of the Index on acertain day of each month during the eighteen-month period prior to maturity, a signifi-cant increase in the Index subsequent to issuance may be substantially or entirelyoffset by subsequent decreases in the value of the Index during or prior to the CalculationPeriod. In addition, a high Index value at the close of one or more months during theCalculation Period may be substantially or entirely offset by a low Index value at theclose of one or more months during such Period.

• The Notes will not bear periodic payments of interest. Because the Ending Index Valueof the Dow Jones Index may be less than, equal to or only slightly greater than theStarting Index Value, the effective yield to maturity on the Notes (which are linked to theamount by which such Ending Index Value exceeds such Starting Index Value) may be




less than that which would be payable on a conventional fixed-rate debt security of theIssuer. In addition, the return of only $15 in respect of each Note held at maturity may notcompensate the Holder for any opportunity cost implied by inflation and other factorsrelating to the time value of money.

• Any return on the Notes will be based on the appreciation of the Dow Jones IndustrialAverageSM and not on dividends paid on the stocks underlying the Index. Therefore, areturn on the Notes, if any, will not be the same as the return that could have been earnedif Holders of the Notes owned each of the stocks underlying the Index and receiveddividends.

• The trading value of DSB may be affected by a number of interrelated factors including,among other things, changes in the level of interest rates, the volatility of the Index, thetime remaining to maturity, dividend rates on the stocks comprising the Index, real oranticipated changes in the credit ratings or financial condition of the companies whosecommon stock are included in the Index, the creditworthiness of the Issuer, as well aspolitical, economic and other developments affecting the stocks included in the Index.

OTHER IMPORTANT INFORMATION:

• Investors should consider the tax consequences of investing in DSB. See “Certain UnitedStates Federal Income Tax Considerations” in the Preliminary Prospectus Supplement.

• The Notes are backed only by Salomon Smith Barney Holdings Inc. and do not giveHolders of DSB the right to receive any of the stocks comprising the Index.

Ownership of DSB will be maintained in book-entry form by or through The Depository TrustCompany (“DTC”). Beneficial owners will not have the right to receive physical certificatesevidencing their ownership except under certain limited circumstances described in the Pre-liminary Prospectus Supplement.

The foregoing information has been excerpted from the Preliminary Prospectus Supplement,and the Exchange assumes no responsibility for the accuracy or completeness of suchinformation. Members and associated persons of member organizations are advised to readboth the Prospectus and the Preliminary Prospectus Supplement.

REGULATORY CONSIDERATIONS :

MARGIN AND CAPITAL REQUIREMENTS

For margin and capital purposes, DSB will be considered an equity security. A long DSBposition will have an initial and maintenance margin requirement equal to 50% and 25% ofmarket value, respectively.

DSB does not qualify as an options hedge under the Securities and Exchange Commission’sRule 15c3-1 (the “Net Capital Rule”) or the Exchange’s margin rules. Therefore, membersshould be aware that making markets in or trading DSB, or any structured product that doesnot qualify as an options hedge, will subject the member to the provisions of the Net CapitalRule. Members should refer to Regulatory Circular RG 97-40 for further information regardingcapital requirements and structured products.

For capital purposes, DSB positions will be subject to a haircut equal to 15% of marketvalue. There are no haircut offsets for related derivative securities.

SALES PRACTICES

DSB is considered an equity security and is subject to the provisions of Rule 30.50. A


Regulatory Circular RG98-25 continuedRegulatory Circularscontinued

customer’s account is not required to be options approved. Members and associatedpersons of member organizations should take such steps as may be reasonablynecessary to assure that prospective purchasers of DSB reach an investment decisiononly after carefully considering the suitability of DSB in light of their particular financialcircumstances and objectives.

* * *Questions regarding suitability of customers transactions in these securities should bedirected to Larry Bresnahan (312) 786-7713 and questions regarding marginability shouldbe directed to Jim Adams (312) 786-7718. General product questions should be directedto Nick Parcharidis of the Capital Markets Division (212) 803-1411.

The purpose of this circular is to provide basic information to Members and Member Organizations regardinga proposed new issue of Equity Linked Notes based upon the Dow Jones Industrial Average K and toadvise of certain compliance responsibilities when handling transactions in these securities. This is not asales document and is not intended to be distributed to customers.

* To be announced at the time of the initial public offering.

** The Ending Index Value (EIV), as more fully described in the Preliminary Prospectus Supplement, will equalthe average of the values of the Dow Jones Industrial Index at the close of the market on the * of eachmonth during the eighteen-month period prior to maturity of the Notes.




From: Membership Department

Re: Option Trading Permit Lease Pool Procedures

In connection with the transfer of the New York Stock Exchange (NYSE) option program tothe CBOE, the Exchange created and issued seventy-five Option Trading Permits. ThePermit gives the holder limited member status by entitling the holder to only the followingtrading rights and privileges:

1.To be admitted to the trading area on the second floor for the purpose of engaging in theactivity of a Market Maker, DPM and/or Floor Broker in the option classes that arelocated in that area, which classes are the former NYSE option classes that are not alsotraded on the CBOE main trading floor, and any classes which are subsequently allo-cated to the second floor trading area and;

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

3.To trade by order as principal all classes of options traded on the CBOE in addition tothose described in paragraphs 1 and 2 above, provided that the Permit holder’s totalcontract volume in such classes of options during any calendar quarter may not exceedtwenty percent (20%) of the sum of such Permit holder’s total in person contract volumeas principal effected pursuant to paragraph 1 above and the Permit holder’s contractvolume pursuant to paragraph 2 above and;

4.To be admitted to the main CBOE trading floor for the purpose of responding to the call ofa Board Broker or Order Book Official pursuant to Rule 7.5 in respect of any class ofoptions in which a transaction has been effected for the Permit holders account on theday of the call.



The Exchange deposited into a “lease pool” those Option Trading Permits not issued toNYSE option members, plus any Option Trading Permits which, following their issuance toNYSE option members, were surrendered by those members. There are currently twenty-eight Permits in the lease pool. These Permits were allocated to lessees pursuant to acompetitive bidding process. All current Option T rading Permit leases expire April 30,1998.

Operation of the Lease Pool

Permits in the lease pool will be re-allocated through a competitive bidding process whichoperates as follows:

1. The Exchange will accept from members and non-members who have qualified for mem-bership sealed bids equal to the monthly rent that the bidder is willing to pay for a month-to-month lease from May 1, 1998 through October 31, 1998. All bids must be submittedin writing to the Membership Department and will be accepted until at 4:00 p.m. Friday,March 13, 1998.

2. Upon the close of the bidding period, Permits in the pool will be awarded to the highestbidders in a number equal to the total number of Permits in the pool at that time. In theevent that there is more than one bid at the cut-off level, the bid received first in time willhave priority.

3. The monthly rent to be paid by a lessee will be the dollar value of the bid submitted by thatlessee. Lease payments will be collected by the Exchange at the beginning of the month.

4. Following the auction, bids for Permit leases will continue to be accepted. The high bidwill be posted without the identity of the bidder attached.

5. Should any lessee desire to give up his Permit prior to the next auction, the MembershipDepartment will post the availability of the Permit for one full trading day. The Permit willthen be transferred to the bidder with the highest bid at 4:30 p.m. on that trading day.

6. A lessee who gives up his Permit prior to the end of the month will be reimbursed in theamount of the new lessee’s prorated lease payment for the balance of that month.

7. All Permits in the lease pool will be re-auctioned in the manner described in #1 and #2above every six months. No priority will be given to current lessees.

8. Bidding restrictions:

a. Bids may be submitted by individuals or organizations on behalf of identified individuals.

b. The person proposed to occupy a Permit must be a member or qualified to become amember at the time the bid is placed.

c. A non-refundable fee of $500 will be required at the time a bid is submitted.

d. No minimum bid price will be set. Minimum bid increments will be $50.

e. No lease of a Permit in the lease pool will become effective until there has been depos-ited with the Membership Department of the Exchange a Letter of Guarantee from aClearing Member in the amount equal to the last sale price of a Permit, except that untilsuch a sale takes place, the amount shall be $50,000.



Regulatory Circular RG98-26 continuedRegulatory Circularscontinued Questions concerning the terms of the Permits or the operation of the Permit lease pool

may be directed to Edward L. Provost at 312-786-7717. Questions concerning the stepsnecessary to obtain “qualified” status for the purposes of submitting a bid for a Permit leasemay be directed to the Department of Membership at 312-786-7460.

Regulatory Circular RG 98-27

Date: March 2, 1998

To: All Members, Registered Options Principals, Compliance Directors

From: Regulatory Services Division

Re: Irrevocable Exercise and Short Sale Requirements

This Circular addresses questions that members have presented to the Exchange con-cerning trading strategies related to selling a security long concurrent with or subsequentto the purchase of a call option on the underlying security and exercising such option. Inthe hypothetical situation, a firm desires to facilitate a customer who wishes to effect atransaction in an in-the-money call option series. After purchasing a call option from thecustomer, the firm will exercise the call and enter an order to sell the underlying securitylong, assuming no pre-existing short position in the stock. To the extent the firm cannotsell the security at the desired price level, the firm would desire to rescind its exercisenotice in order to avoid being long the stock.

The Exchange wishes to remind members of the short sale requirements of Rule 10a-1 (the“SEC Rule”) under Section 10(a) of the Securities Exchange Act of 1934 (the “Act”), whichhave been codified with respect to sales effected on the CBOE in CBOE Stock Rule 30.20(the “CBOE Rule”). This circular discusses those requirements only with respect to thescenario as outlined above; it is not meant to be all-inclusive. For a more complete discus-sion of Short Sale Requirements, see the Securities Exchange Act of 1934, or the Exchange’sCircular entitled “Short Sale Requirements” which will be issued in the near future.

Briefly, SEC Rule 10a-1 provides that an individual or entity, whether member or non-mem-ber, with no prior short position in the underlying security, who wishes to create for sale animmediate long position may concurrently acquire a call option and irrevocably exercise it,provided that the option purchase and exercise occurs concurrently with or prior to theentry of the order to sell the underlying security. However, to sell the security long theoption must be irrevocably exercised ; the exercise cannot be rescinded . Should theorder to sell the underlying security not be filled in its entirety, the individual or entity whoentered the order cannot rescind that portion of the entered exercise to create an exerciseequal to the number of shares sold.

Applied to the hypothetical scenario outlined in the first paragraph of this Circular, once thefirm and customer enter into an option transaction and the options are exercised in order tosell stock long, no portion of the option trade may later be broken (“busted”) . TheExchange realizes that a firm and/or customer may be left with a portion of their stock saleorder unexecuted due to adverse movement in the underlying; however, the parties cannotresolve this situation by “busting” a portion of the option trade. The Exchange would con-sider such action a violation of the Short Sale Rule. Apparent violations will be investigatedby the Exchange’s Regulatory Services Division, Department of Market Regulation, andmay result in formal disciplinary action by the Exchange’s Business Conduct Committee(“BCC”) or referral to the Securities and Exchange Commission (“SEC”).



Questions regarding this Circular may be addressed to Margaret E. Williams, Director, De-partment of Market Regulation, at (312) 786-7834, or Gregory R. Rich, Trading Floor Liaison,at 786-7847.

(RG96-19 revised)


To: All Exchange Members

From: Department of Financial and Sales Practice Compliance

Date: January 2, 1998

Subject: FOCUS REPORT (Form X-17A-5)1997 Year-End FilingDue March 2, 1998

Under SEC Rule 17a-10(a)(1) every registered broker-dealer is required to file FOCUS ReportX-17A-5 IIA and Schedule I for the calendar year ended December 31, 1997.

Enclosed you will find a FOCUS Report Part IIA and Schedule I. EVERY EXCHANGE MEM-BER AND MEMBER ORGANIZATION registered with the SEC as a broker-dealer and whosedesignated examining authority is the CBOE, must file FOCUS Report Part IIA and Sched-ule I thereto for calendar year 1997 no later than March 2, 1998 , with the Exchange’sDepartment of Financial and Sales Practice Compliance on the 7th floor.

The CBOE will compile the data and forward a computer tape containing the data for allmembers to the Securities and Exchange Commission.

In an effort to increase the confidentiality of FOCUS information and reduce pro-cessing time and errors in the preparation of FOCUS filings, the CBOE has enteredinto an agreement with the Chicago Board of Trade (“CBOT”) and the ChicagoMercantile Exchange (“CME”) to utilize WinJammer, an electronic FOCUS filingsystem. This year, CBOE members will have the option of using WinJammer, whichprovides for the direct electronic submission of FOCUS reports to the CBOE. Thisprogram eliminates the need for a paper copy filing. WinJammer is a personalcomputer program which requires the installation of WinJammer software and aPersonal Identification Number diskette (“PIN” disk). The software and PIN disk willbe provided by the CBOE upon a member’s completion of the WinJammer Soft-ware License Agreement and PIN Agreement. If you have any questions regardingWinJammer, and/or would like to request the WinJammer software and PIN disk,please contact the Department of Financial and Sales Practice Compliance at (312)786-7942.

Computer system requirements for operating WinJammer are discussed later inthis memorandum.

A number of clearing firms have indicated that they would be providing assistanceto their Members for year-end FOCUS completion and/or electronic FOCUS filing.For information regarding the services offered, please contact your respective clear-ing firm.

A twenty-five dollar ($25) filing fee was approved by the Board of Directors on June 5, 1991(Regulatory Circular RG91-39). The fee was initiated to partially recover FOCUS processingcosts and should be attached to form X-17A-5 (checks only, please). If the FOCUS is filedelectronically, your account at your clearing firm will be charged $25 no later than March 2,


1998. It is anticipated that a higher filing fee of $100 may be applied in 1999 for year-end1998 Focus filings submitted in paper form. Electronic filers would continue to be charged$25.

It should be noted that every member and member organization registered with the SECas a broker/dealer for which the Exchange has regulatory responsibility must file a FOCUSReport Form X-17A-5 Part IIA and Schedule I. Therefore, if you are a nominee and aregistered broker/dealer, you must submit a separate FOCUS Report Form X-17A-5 Part IIA and Schedule I for your personal broker-dealer activity. Your memberorganization must also submit these reports for the firm’s activities.

ATTENTION: CBT Exercisers and Lessors

Even if you did not execute any trades on the CBOE during calendar year 1997, if you havea broker/dealer registration with the SEC you are still required to file the FOCUS ReportForm X-17A-5 Part IIA and Schedule I.

*************

In filling out FOCUS Form X-17A-5 and Schedule I, it is very important that the followingpoints be observed:

1. Your filing must be accurate. You may wish to consult your accountant for assistance in satisfying your filing obligations.

2. All entries should pertain to your business as a broker/dealer. You need not listassets, liabilities or revenue derived outside your broker/dealer activity.

3. Line 12 (Total Assets) on page one (1) must equal line 25 (Total Liabilities andOwnership Equity) on page two (2).

4. The form must be signed (unless filing electronically) and must contain your bro-ker/dealer number (SEC file number).

5. Please be aware that it is your ultimate responsibility to file the FOCUS Report.Although your clearing firm may provide assistance with regard to completing theFOCUS Report, it is your responsibility to make sure your FOCUS Report is filedwith the Department of Financial and Sales Practice Compliance on or beforeMarch 2, 1998 .

*************

In accordance with CBOE Rule 17.50, any member who fails to file Form X-17A-5 andSchedule I for calendar year 1997 by March 2, 1998 shall be subject to the following fines:

DAYS LATE AMOUNT

1-30 $20031-60 $40061-90 $800

Repeated failure to file FOCUS Report Form X-17A-5 and Schedule I in a timely manner willbe referred to the Exchange’s Business Conduct Committee as will a failure to file morethan ninety (90) days late.

If you are unsure as to whether you are required to file or have any questions, pleasecontact the Department of Financial and Sales Practice Compliance on the 7th floor at(312) 786-7942.



*************

ATTENTION: WinJammer System Requirements

In order to run WinJammer you must be using Windows 3.1, Windows NT, Windows 95, OS/2, or Windows for Workgroups.

WinJammer will operate on a 386 computer with 4 MB of RAM, but it is highly recommendedthat you use at least a 486 computer with 16 MB of RAM. Additionally, if the computeryou’re using has only 4 MB of RAM it is suggested that you shut down all other applicationsto improve performance. Modem rate should be 2400 baud or higher. Specific instructionsare listed on page 3 of the Quick Start Guide which is provided with the WinJammersoftware .

In order to obtain a copy of the WinJammer software along with the Quick Start Guide ,please contact the Department of Financial and Sales Practice Compliance on the 7th floor at(312) 786-7942. For technical questions related to WinJammer’s installation and use,please contact CBOE Focus Help-Line at 312 786-7035.

(RG97-07 Reissued)


Rule Changes,Interpretationsand Policies

PROPOSED RULE CHANGE(S)

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934, as amended (“theAct”), and Rule 19b-4 thereunder, the Exchange has filed the following proposed rule change(s)with the Securities and Exchange Commission (“SEC”). A copy of the rule change filing(s)is available from the Legal Department. Members may submit written comments to theLegal Department.

The effective date of a proposed rule change will be the date of approval by the SEC, unlessotherwise noted.

SR-CBOE-98-04 – Obligations of Market-Makers

On February 5, 1998, the Exchange filed SR-CBOE-98-04, which proposes to clarify theapplication of Exchange Rules 8.7 and 8.51 to the activities of competing market-makers.The filing amends or adopts interpretations under the Rules to set forth the circumstanceswhere some coordination among market-makers is necessary. Such circumstances arise:

(1) In connection with the establishment of parameters used by the automatedquotation updating system (which is generally the Exchange’s Auto Quotesystem) to automatically generate options quotations in response tochanges in the market for the underlying security or index;

(2) In responding to requests for markets in size, such that the coordinatedefforts of more than one market-maker are called for in order to be able to fillany resulting order to buy or sell options; and

(3) Whenever a trading crowd, in order to be competitive with other markets,determines collectively to honor its disseminated quotations in a size greaterthan the size (ordinarily 10 contracts) called for under the Exchange’s firmquotation rule (Rule 8.51).

Any questions regarding the proposed rule change may be directed to Arthur Reinstein,Legal Department, at 312-786-7570. The full text of the proposed and amended Interpreta-


Rule Changes,Interpretations andPolicies continued

SR-CBOE-97-04 continued

tions under Rules 8.7 and 8.51 is set forth below. Proposed new language is underlined;proposed deletions are [bracketed].

Rule 8.7 Obligations of Market Makers

Interpretation .07

Market-Makers are expected to participate in and support Exchange sponsoredautomated programs, or approved equivalents, including but not limited to theRetail Automatic Execution System and Auto Quote. The variables in the formulaused in each trading crowd to generate automatically updated market quotationsshall be as agreed upon by the respective trading crowds. For those classes inwhich a DPM has been appointed, this responsibility shall be primarily assignedto the DPM pursuant to Rule 8.80(c)(3). The DPM shall disclose to the othermembers trading at the same trading station the following components of theformula used to generate automatically updated market quotations at that station:option pricing calculation model, volatility, interest rate, dividend, and what is usedto represent the value of the underlying; provided however, that the MTS Commit-tee shall have the discretion to exempt DPMs using proprietary automated quota-tion updating systems from having to disclose proprietary information concerningthe formulas used by those systems.

Interpretation .09

The obligation of Market-Makers to make competitive markets under Rule 8.7does not preclude members in a trading crowd from coordinating the crowd’sresponse to a request for a market that is larger than that which is ordinarilycapable of being filled by any single member.

Rule 8.51 Trading Crowd Firm Disseminated Market Quotes

Interpretation .09

Any trading crowd may agree to honor its disseminated quotes for a larger numberthan required under Rule 8.51, provided that any such agreement by a tradingcrowd shall not affect the obligation to reflect orders for a lesser number contractspursuant to Interpretation and Policy .03 above.

SR-CBOE-98-05 – Disclaimers

On February 6, 1998, the Exchange filed Rule Change File No. SR-CBOE-98-05, whichproposes to specifically identify Lipper Analytical Services, Inc. and Salomon Brothers,Inc. as entities entitled to the protection of the disclaimer set forth in Exchange Rule 24.14.A copy of the filing is available from the Legal Department. Any questions regarding therule change may be directed to Tim Thompson, Legal Department, at 312-786-7070.

SR-CBOE-98-06 – Rerouting of RAES Eligible Orders

On February 19, 1998, the Exchange filed Rule Change File No. SR-CBOE-98-06 whichproposes to provide for the turning off, during the last five minutes of the trading day, thatfeature of RAES that re-routes orders away from RAES when the RAES price is inferior tothe best bid or offer in any other market (“NBBO reject”). Currently, Interpretation .02 toRule 6.8 provides two situations in which the NBBO reject feature may not be employed:where a “fast market” in the equity options that are the subject of the orders in question hasbeen declared on the Exchange or where comparable conditions exist in the other market


Rule Changes,Interpretations andPolicies continued such that the firm quote requirements do not apply. The proposed rule change will add a third

situation that will apply to all equity options at the close of the trading day.

Any questions regarding the proposed rule change may be directed to Tim Thompson, LegalDepartment, at 312-786-7070. The full text of the proposed amendment to Interpretation .02under Rule 6.8 is set forth below. Proposed new language is underlined; proposed deletionsare [bracketed].

Rule 6.8. RAES Operations in Equity Options

Interpretation .02

Orders to buy or sell equity options that are multiply traded in one or more marketsin addition to the Exchange will not be automatically executed on RAES at pricesinferior to the current best bid or offer in any other market, as such best bids or offersare identified in RAES. Any such orders will be rerouted to the DPM or OBO for thatclass of options for non-automated handling. The DPM or OBO will report theexecution or non-execution of such orders to the firm that originally forwarded theorder to RAES. The procedures described in this Interpretation .02 shall not apply(i) for the last five minutes of the trading day (i.e. from 2:57 p.m. when the close is at3:02 p.m.); (ii) [in circumstances where] when a “fast market” has been declared onthe Exchange, or (iii) [where] when comparable conditions exist in the other marketsuch that the firm quote requirements do not apply.

SR-CBOE-98-07 – Committee Governing RAES Eligibility in SPX

On February 19, 1998, the Exchange filed Rule Change File No. SR-CBOE-98-07, whichproposes to change the Committee responsible for governing RAES eligibility in SPX fromthe appropriate Floor Procedure Committee to the appropriate Market Performance Commit-tee. A copy of the filing is available from the Legal Department. Any questions regarding therule change may be directed to Tim Thompson, Legal Department, at 312-786-7070.

SR-CBOE-98-08 – Electronic Filing of Focus Reports

On February 19, 1998, the Exchange filed Rule Change File No. SR-CBOE-98-08, whichproposes to require members who are required to compute net capital under Rule 15c3-1 ofthe Securities Exchange Act of 1934 to file their FOCUS reports electronically using theWinJammer™ system. Any questions regarding the proposed rule change may be directedTim Thompson, Legal Department, at 312-786-7070. The full text of proposed new Interpre-tation .02 to Rule 15.5 is set forth below.

Rule 15.5 Financial Reports

Interpretation .02

Members which are net capital computing must file electronically with the Exchange’sDepartment of Financial and Sales Practice Compliance any required monthly andquarterly FOCUS Reports utilizing the WinJammer™ system, or such other soft-ware as required by the Exchange.

SR-CBOE-98-06 continued


DisciplinaryDecisions

As directed by the Board of Directors, Business Conduct Committee decision summariesare to include the names of the member, member organization and/or associated personinvolved in each case. Although member organizations are identified in cases involvingcurrent or fomer employees, such disciplinary actions are against the named individualsand not the firms, unless specifically stated otherwise.

At its February 11, 1998 meeting, the Business Conduct Committee (“BCC”) resolved thefollowing disciplinary matter by accepting one offer of settlement wherein the respondentconsented to stipulations of facts and findings as detailed below without admitting or deny-ing that Exchange Rules had been violated.

File No. 97-0066 (Offer of Settlement) SBC Warburg Inc., an Exchange memberorganization, was fined $2,715 for the following conduct. On July 16, 1997, SBCWarburg submitted an “exercise advice” to the Exchange indicating its intent to exercise225 OEZ Jul 790 call option contracts and 118 OEX Jul 860 call option contracts onbehalf of its customer account. Subsequently, SBC Warburg failed to exercise any ofthe contracts it advised, without submitting an “advice cancel” to the Exchange. (CBOERule 11.1.03).

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