SEAT MARKET QUOTES AS OF FRIDAY, December 7, 2007 CLASS BID OFFER LAST SALE AMOUNT LAST SALE DATE CBOT FULL MEMBERSHIP (WITHOUT STOCK)

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1 Exchange December 7, 2007 Volume 35, Number 49 Bulletin The Constitution and Rules of the Chicago Board Options Exchange, Incorporated ( Exchange ), in certain specific instances, require the Exchange to provide notice to the Exchange membership. To satisfy this requirement, a copy of the Exchange Bulletin, including the Regulatory Bulletin, is delivered by free of charge or by hard copy for a fee to all effective members on a weekly basis. Members are encouraged to receive the Exchange and Regulatory Bulletin and Information Circulars via . subscriptions may be obtained by submitting your name, firm if applicable, address, and phone number, to members@cboe.com. There is no charge for delivery of the Exchange and Regulatory Bulletin or for Information Circulars. If you do sign up for delivery, please remember to inform the Membership Department of address changes. Subscriptions for hard copy delivery may be obtained by submitting your name, firm if any, mailing address and telephone number to: Chicago Board Options Exchange, Accounting Department, 400 South LaSalle, Chicago, Illinois 60605, Attention: Bulletin Subscriptions. The cost of an annual subscription (January 1 through December 31) is $ ($ after July 1), payable in advance. For up-to-date Seat Market Quotes, call THE-CBOE and select choice 3 from the main menu, or, visit click CBOE Member Site and then Seat Market Information on the following page. For access to the CBOE Member Web Site, please also notify the Membership Department by sending an to members@cboe.com or by phone at Copyright 2007 Chicago Board Options Exchange, Incorporated SEAT MARKET QUOTES AS OF FRIDAY, December 7, 2007 CLASS BID OFFER LAST SALE AMOUNT LAST SALE DATE CBOE $3,050, $3,150, $3,050, December 7, 2007 CBOT FULL MEMBERSHIP (WITHOUT STOCK) CLASS BID OFFER LAST SALE AMOUNT LAST SALE DATE With ERP $955, $1,300, $955, November 19, 2007 Without ERP $675, $720, $725, December 4, 2007 ERP $310, $369, $375, November 30, 2007 CBOE MEMBERSHIP SALES AND TRANSFERS From To Price/ Transfer Date CyberTrader, Inc. Jean T. Astrop $3,050, /7/07

2 Page December 7, 2007 Volume 35, Number 49 Chicago Board Options Exchange MEMBERSHIP INFORMATION FOR 11/29/07 THROUGH 12/5/07 MEMBERSHIP APPLICATIONS RECEIVED FOR WHICH A POSTING PERIOD IS REQUIRED Individual Membership Applicants Date Posted Patrick M. Nehls, Nominee 12/4/07 Ronin Capital, LLC 1901 W. Bradley Pl. Apt. 1 Chicago, IL Robert J. Dooley, Nominee 12/5/07 Quiet Light Securities, LLC 6101 N. Forest Glen Chicago, IL Michael F. Dooley, Nominee 12/5/07 Quiet Light Securities, LLC 2142 W. Pratt Chicago, IL Member Organization Applicants Date Posted FLGG, LLC 12/3/07 Jason M. McCabe, Nominee 440 S. LaSalle, #1822 Chicago, IL Geneva Stock LLC Member Gary R. Silverman Member Daniel C. Williams - Member MEMBERSHIP LEASES New Leases Effective Date Lessor: UBS Financial Services, Inc. 11/29/07 Lessee: CTC, LLC Mark R. Fluger, NOMINEE Lessor: Loren H. Newman 11/29/07 Lessee: Edgewater Partners, LLC Christopher C. Sporer, NOMINEE Lessor: Susquehanna Investment Group 11/30/07 Lessee: Citadel Derivatives Group, LLC Daniel Leo Dufresne, NOMINEE Lessor: Susquehanna Investment Group 11/30/07 Lessee: Citadel Derivatives Group, LLC Lessor: Deevy Options, LLC 11/30/07 Lessee: Rho BD, LLC Lessor: Timothy G. Keller 11/30/07 Lessee: Susquehanna Securities Peter A. Bercovich, NOMINEE Lessor: Alfred Street Nominees PTY Limited 12/3/07 Lessee: Blue Capital Group, LLC James B. Burns, NOMINEE Lessor: Green Options Ltd 12/3/07 Lessee: Wolf Trading, LLC Matthew E. Buckley, NOMINEE Lessor: Anthony M. Mareno 12/3/07 Lessee: Lakeshore Securities, LP Joseph W. Butler, NOMINEE Lessor: Sheldon Weinberg 12/3/07 Lessee: Savant Trading, LLC Lessor: Caldwell Chicago, LP III 12/3/07 Lessee: Synergy Capital Management, LLC Lessor: William T. O Donnell 12/3/07 Lessee: PTR, Incorporated Joseph DiMaggio, NOMINEE Lessor: Robert T. Beach 12/3/07 Lessee: Toro Trading, LLC Lessor: M.B. Partners II 12/3/07 Lessee: Walleye Trading, LLC ***Correction to Bulletin Dated November 30, 2007*** Lessor: Alfred Street Nominees PTY Limited 11/27/07 Lessee: Citigroup Derivatives Markets Inc. Terminated Leases Termination Date Lessor: Loren H. Newman 11/29/07 Lessee: Spormerica, LLC Christopher C. Sporer (SPR), NOMINEE Lessor: UBS Financial Services, Inc. 11/29/07 Lessee: PFTC, LLC Lessor: Neil K. Braverman 11/30/07 Lessee: Citadel Derivatives Group, LLC Lessor: Timothy G. Keller 11/30/07 Lessee: Susquehanna Investment Group Peter A. Bercovich (PAB), NOMINEE Lessor: New Wave Investment Co 11/30/07 Lessee: Citadel Trading Group, LLC Daniel Leo Dufresne (DLD), NOMINEE Lessor: Deevy Options, LLC 11/30/07 Lessee: CTC XS, LLC Lessor: Terrance G. Boyle 12/3/07 Lessee: Blue Capital Group, LLC James B. Burns (JBZ), NOMINEE Lessor: M.B. Partners II 12/3/07 Lessee: CTC, LLC

3 Page 3 December 7, 2007 Volume 35, Number 49 Chicago Board Options Exchange Lessor: Dtc International Trading Co. Ltd. 12/3/07 Lessee: Cutler Group, LP Lessor: Sheldon Weinberg 12/3/07 Lessee: DellaCamera Options Inc. Lessor: Green Options Ltd 12/3/07 Lessee: CTC, LLC Todd E. Mayer (TMA), NOMINEE Lessor: Nicholas M. McBride 12/3/07 Lessee: Wolf Trading, LLC Matthew E. Buckley (BUK), NOMINEE Lessor: Anthony M. Mareno 12/3/07 Lessee: PFTC, LLC Lessor: Caldwell Chicago, LP III 12/3/07 Lessee: Sunset Securities, LLC Donald F. Urbas Jr (URB), NOMINEE Lessor: Gary S. Bell 12/3/07 Lessee: Cutler Group, LP Lessor: William T. O Donnell 12/3/07 Lessee: Ronin Capital, LLC Joseph DiMaggio (JYD), NOMINEE Lessor: Robert T. Beach 12/3/07 Lessee: Lakeshore Securities, LP Joseph W. Butler (JYB), NOMINEE Lessor: UBS Securities, LLC 12/3/07 Lessee: RTS Capital, LLC ***Correction to Bulletin Dated November 30, 2007*** Termination Date Lessor: Peter J. Vallone 11/27/07 Lessee: Citigroup Derivatives Markets Inc. Member Organizations Lessee: Termination Date Spormerica, LLC 11/29/07 RTS Capital, LLC 12/3/07 ***Correction to Bulletin Dated November 30, 2007*** Individual Members Lessor: Termination Date Peter J. Vallone 11/27/07 EFFECTIVE MEMBERSHIPS Individual Members Nominee: Effective Date Mark R. Fluger (FUG) 11/29/07 CTC, LLC Type of Business to be Conducted: Market Maker Tyler D. Walters (TDW) 11/30/07 Specialists DPM, LLC Type of Business to be Conducted: Market Maker L Douglas Drury 11/30/07 Rho BD, LLC Type of Business to be Conducted: Remote Market Maker J. Bradley Lloyd 12/4/07 Capstone Trading, LLC Type of Business to be Conducted: Remote Market Maker Member Organizations MEMBERSHIP TERMINATIONS Lessee: Effective Date Individual Members Temporary Member: Termination Date Thomas A. Bond (TAB) 12/3/07 Temporary Member: Termination Date Rho BD, LLC 11/30/07 Type of Business to be Conducted: Remote Market Maker JOINT ACCOUNTS CHANGES IN MEMBERSHIP STATUS Individual Members Effective Date Joseph P. Daly (DLY) 12/3/07 RII Trading, LLC Lessor: Termination Date Christopher C. Sporer 11/29/07 From: Nominee For Spormerica, LLC; Market Maker To: Nominee For Edgewater Partners, LLC; Market Maker Neil K. Braverman 11/30/07 Terrance G. Boyle (TGB) 12/3/07 Nominee: Termination Date Gregory P. Pokorney (GPK) 11/29/07 Cutler Group, LP Thomas J. Cox (THM) 12/3/07 Capstone Trading, LLC Donald F. Urbas Jr. (URB) 12/3/07 Sunset Securities, LLC Chun Y. Lau 12/3/07 RTS Capital, LLC Peter A. Bercovich 11/30/07 From: Nominee For Susquehanna Investment Group; Market Maker To: Nominee For Susquehanna Securities; Market Maker Joseph DiMaggio 12/3/07 From: Nominee For Ronin Capital, LLC; Market Maker To: Nominee For PTR, Incorporated; Market Maker Member Organizations Effective Date DellaCamera Options Inc. 12/3/07 From: Lessor/ Lessee; Associated with a Remote Market Maker To: Owner; Associated with a Remote Market Maker

4 Page 4 December 7, 2007 Volume 35, Number 49 Chicago Board Options Exchange RESEARCH CIRCULARS The following Research Circulars were distributed between November 30 and December 7, If you wish to read the entire document, please refer to the CBOE website at and click on the Trading Tools Tab. New listings and series information is also available in the Trading Tools section of the website. For questions regarding information discussed in a Research Circular, please call The Options Clearing Corporation at OPTIONS. Research Circular #RS November 30, 2007 DIRECTV Group, Inc. ( DTV/VGL/YGH ) To Move and Begin Trading on the NASDAQ Effective Date: December 3, 2007 Research Circular #RS December 3, 2007 Rofin-Sinar Technologies Inc. ( RSTI/QRT ) 2-for-1 Stock Split Ex-Distribution Date: December 6, 2007 Research Circular #RS December 4, 2007 CheckFree Corporation ( CKFR/FCQ/OAG/YSP ) Merger COMPLETED with Fiserv, Inc. ( FISV/FQV/OMK/YPH ) - Cash Settlement Research Circular #RS December 4, 2007 GlobalSantaFe Corporation ( GSF/adj. GWK/XVM/YHO ) and Transocean Inc. ( RIG/adj. RFU/ZRN/YOB ) Determination of Cash-in-Lieu Amounts Research Circular #RS December 5, 2007 Multiple ishares To Move and Begin Trading on NYSE Arca Effective Date: December 6, 2007 Research Circular #RS December 6, 2007 XTO Energy Inc. ( XTO/OUO/YTN ) 5-for-4 Stock Split Ex-Distribution Date: December 14, 2007 Research Circular #RS December 6, 2007 Applied Micro Circuits Corporation ( AMCC/AEX ) 1-for-4 Reverse Stock Split Ex-Distribution Date: December 11, 2007 Research Circular #RS December 6, 2007 Penn National Gaming, Inc. ( PENN/UQN/XKP/KJJ ) Proposed Merger with PNG Acquisition Company Inc. Research Circular #RS December 6, 2007 Coley Pharmaceutical Group, Inc. ( COLY/QJC/OOA/LFF ) Tender Offer by Corvette Acquisition Corp. Research Circular #RS December 6, 2007 Andrew Corporation ( ANDW/AQN/VNA/WWN ) Proposed Merger with CommScope, Inc. ( CTV/XAT/LTW ) Research Circular #RS December 6, 2007 Horizon Offshore, Inc. ( HOFF/HNQ ) Proposed Merger with Cal Dive International, Inc. ( DVR ) Research Circular #RS December 6, 2007 Aspreva Pharmaceuticals Corporation ( ASPV/QOS/ZJT ) Proposed Merger/Arrangement with Galenica AG Research Circular #RS December 7, 2007 Temple-Inland, Inc. ( TIN/ZSM/YDE ) CONTRACT ADJUSTMENT FOR SPECIAL CASH DIVIDEND Ex-Distribution Date: December 10, 2007

5 December 12, 2007 Volume RB18, Number 50 The Constitution and Rules of the Chicago Board Options Exchange, Incorporated ( Exchange ), in certain specific instances, require the Exchange to provide notice to the membership. The weekly Regulatory Bulletin is delivered to all effective members to satisfy this requirement. Copyright 2007 Chicago Board Options Exchange, Incorporated. Regulatory Circular RG To: Members From: Trading Operations Date: December 3, 2007 Re: CFLEX Rollout Schedule REGULATORY CIRCULARS CBOE recently launched trading on its FLEX Hybrid Trading System ( CFLEX ), which is a hybrid-style system that features electronic RFQs, open outcry RFQs and an electronic book. CFLEX has been implemented in the following options classes: CSCO, EBAY, GE, GOOG, HD, INTC, JNJ, MO, PFE, RUT and SPY. Additional classes will begin moving from the existing FLEX trading (the legacy platform ) to the new CFLEX platform as follows: December 4, 2007: All other FLEX Index products and AMD, AMR, AMZN, BAC, BRCM, BMY, C, CAT, CHK, COP, CVX, DELL, ECA, ELN, F, FL, GM, GS, HAL, MOT, MRVL, MSFT, NEM, NEW, NVDA, ORCL, PD, QCOM, RIG, RIMM, RMBS, SBUX, SHLD, SNDK, TWX, VLO, WMT, XOM and YHHO. December 17, 2007: All other FLEX Equity products. The CFLEX settings will be as follows: Trading Increments: $0.01 for all FLEX Options. Crossing Entitlements: o Electronic RFQs: 20% for facilitations and solicitations in the following classes: DJX, DTX, DUX, DXL, FVX, GOX, INX, IRX, MVR, OEX, OIX, POU, SPX, TNX, TXX, TYX and XEO; for all other classes, the crossing entitlement shall be 40% for facilitations and solicitations. o Open Outcry RFQs: Per the attached table. Electronic RFQ Timers: o Response Period (T1): minimum of 10 seconds, maximum of 5 minutes. o Reaction Period (T2): maximum of 5 minutes. o Exposure Period (T3): minimum of 3 seconds. Open Outcry RFQ Timers: o Response Period for FLEX Index Options and FLEX Equity Options on ETFs: minimum of 5 minutes. o Response Period for all other FLEX Equity Options: minimum of 3 minutes.

6 A detailed summary of the CFLEX trading procedures is attached. 1 For further information, please go to or refer to rule filing SR-CBOE located at Additional questions may also be directed to Tom Foertsch at or to the CFLEX Helpdesk at (Replaces RG07-122) 1 Please note that these procedures have been updated to reflect the applicable crossing participation entitlements, as well as Section 11(a)(1) requirements for electronic RFQ and book transactions. Please also note Transfer Packages that are offered at the FLEX post subject to the transfer procedures under Rule 6.49A will continue to be traded in open outcry only. For a detailed description of the transfer procedures, refer to Rule 6.49A.

7 CFLEX Crossing Participation Entitlements for Open Outcry RFQs 2 For the classes listed below, 40% for open outcry facilitations and solicitations: ALL NON-ETF FLEX EQUITY OPTION CLASSES & BBH BDH DVY EFA EEM HHH IAH IBB IDU IEF IGV IWC IWP IWR IWS IWV IWW IWZ IYE IYH IYY LQD MDY OIH ONEQ OOO PPH RKH RSP RTH SHY SMH SML SWH TLT TTH UTH WMH XLB XLE XLF XLK XLP XLU XLV For the classes listed below, 40% for open outcry facilitations (and not solicitations): DGT DIA IGN IGU IGW IWB IWD IWF IWM IWN IWO OEF RMN SPY XLI XLY For the classes listed below, 20% for open outcry facilitations (and not solicitations): CYX DJX DTX DUX DXL FVX GOX INX IRX MNX MUT MVR NDX OEX OIX PFU POQ POU POY PVC PVF PVK PVL PVO PVP PVU QQQQ RLG RLV RMC RPY RUT SPX TNX TXX TYX VIX XEO XSP & ALL OTHER FLEX INDEX AND ETF OPTIONS CLASSES 2 For all FLEX Index Option classes, the open outcry crossing participation entitlement is the larger of the percentage noted above, a proportional share, $1 million underlying equivalent value or the remaining underlying equivalent value on a closing transaction.

8 CFLEX Trading Procedures Market Participants: There will be Qualified Market-Makers ( QMMs ) appointed to each class (see Rule 24B.9 for requirements); there will no longer be Appointed Market-Makers ( AMMs ) in the index classes. QMMs and brokers seeking to trade FLEX must file an amended letter of guarantee or authorization with CBOE s Membership Department (6 th Floor). You may obtain a form for such amended letter from the Membership Department. For those QMMs and brokers seeking to trade in open outcry on the Exchange s trading floor, E-FLEX and/or I-FLEX will be printed on your badge. Only Market-Makers and brokers with these indicators on their badges may trade in open outcry. In addition, members customers seeking to have direct electronic access to the CFLEX system (referred to as Sponsored Users ) must file a Sponsored User Agreement with the Membership Department (see Rule 6.20A). To confirm whether you have the current paperwork on file or to obtain the necessary forms, contact the Membership Department. Product Terms & Specs: These will be the same as had previously existed under the FLEX rules (see Rule 24B.4), including the applicable minimum value size requirements summarized below. Note that the minimum size requirements also apply to book trades. 3 o For an opening transaction resulting from an RFQ or from trading against the book in a series in which there is no open interest, the lesser of 250 contracts or the number of contracts overlying $1 million in the underlying securities in the case of FLEX Equity Options, and $10 million Underlying Equivalent Value in the case of FLEX Index Options. o For a transaction in any currently-opened FLEX series resulting from an RFQ or from trading against the book, 100 contracts in the case of opening transactions in FLEX Equity Options and 25 contracts in the case of closing transactions in FLEX Equity Options, and $1 million Underlying Equivalent Value in the case of both opening and closing transactions in FLEX Index Options, or in either case the remaining underlying size or Underlying Equivalent Value on a closing transaction, whichever is less. o For FLEX Quotes responsive to a FLEX Request for Quotes and FLEX Orders (undecremented size) submitted to rest in the book, 25 contracts in the case of FLEX Equity Options, and $1 million Underlying Equivalent Value in the case of FLEX Index Options, or in either case the remaining underlying size or Underlying Equivalent Value on a closing transaction, whichever is less. Minimum Trading Increment: The minimum trading increment will be $0.01 for FLEX Index and FLEX Equity Options (previously FLEX Equity Options were subject to the standard $.05 and $0.10 increments). These trading increments will apply to all FLEX Options, whether trading on the CFLEX platform or the legacy platform. Position & Exercise Limits, Reporting Requirements: For the applicable position and exercise limits, as well as reporting requirements, please refer to Rules 24B.7 and 24B.8. Crossing Participation Entitlements: The applicable crossing participation entitlements (after yielding to certain trading interests) will be as follows: 3 All transactions must also be in compliance with Section 11(a)(1) of the Exchange Act and the rules promulgated thereunder. Section 11(a)(1) prohibits a member from effecting transactions on the Exchange for the member s own account, the account of an associated person, or an account over which the member or its associated person exercises investment discretion (collectively referred to as proprietary orders), unless an exception applies. In this regard, Market- Makers effecting transactions in a market-making capacity are generally exempt from the restrictions of Section 11(a)(1). In addition, with respect to the FLEX electronic book: (i) a FLEX Order submitted on behalf of the proprietary account of a member that satisfies the requirements of the G exemption may only be entered to hit the electronic book. To the extent such a FLEX Order is not executed in whole or in part as soon as it hits the electronic book, it must be immediately cancelled by the FLEX Trader; and (ii) a member that satisfies the requirements of the effect versus execute exemption may use the System to submit a proprietary order originating from off the Exchange s trading floor into the electronic book. For further information on the applicable exception requirements, please refer to Section 11(a)(1) and CBOE Rule 24B.5(d)(4).

9 o Electronic RFQs: 20% for facilitations and solicitations in the following classes: DJX, DTX, DUX, DXL, FVX, GOX, INX, IRX, MVR, OEX, OIX, POU, SPX, TNX, TXX, TYX and XEO; for all other classes, the crossing entitlement shall be 40% for facilitations and solicitations. o Open Outcry RFQs: Per the attached table. It should be noted that the initiator of an RFQ (referred to as the Submitting Member or SM ) utilizing the electronic or open outcry RFQ mechanics cannot cross an order with a QMM unless certain conditions are satisfied (see Rule 24B.5(d)(2)(i)(C)). It should also be noted that an agency order cannot be crossed with a principal or solicited order via the book unless the agency order is first subject to an RFQ and the agency order is exposed for at least 3 seconds or, in the case of a principal order being executed against an agency order, the SM has been bidding (offering) for at least 3 seconds prior to receiving the agency order (see Rule 24B.5(b)(3)). Electronic RFQs: To initiate a FLEX transaction using the electronic RFQ process, the SM submits an electronic RFQ containing the applicable contract terms. If the SM is seeking a crossing participation entitlement (discussed below), the SM must check the intent to cross box as part of the RFQ request. Various timers apply during an electronic RFQ: o Response Period (T1): minimum of 10 seconds, maximum of 5 minutes T1 is a variable period set by the SM that denotes when responses can be entered, modified or canceled, including responses from the SM. Note that responses for the account of non-member Market-Makers (origin code N ) are not permitted and responses for the account of a non-member broker-dealer must be submitted using the origin code C. o Reaction Period (T2): maximum of 5 minutes T2 is a period when the SM can decide to trade; responses can continue to be entered, modified or cancelled during T2, but no trading will occur until the SM determines to accept or reject the RFQ responses. Note that if the SM enters a response during T2, the SM must wait a minimum of 3 seconds before entering a contra-side order. o Exposure Period (T3): minimum of 3 seconds T3 is a period that applies in crossing scenarios; if the SM enters an order during T2 that improves the BBO or matches the BBO but exceeds the available size, the SM must wait a minimum of 3 seconds before entering a contra-side order. Open Outcry RFQs: The procedures for open outcry RFQs for classes trading on the CFLEX platform differ in various respects from the traditional platform. The following summarizes the new CFLEX procedures: RFQ Process: o The SM must notify the FLEX Official (or other designee appointed by the Exchange in accordance with Rule 24B.14(a)) about all terms of the RFQ before notifying the trading crowd. Notification can be made over the phone but must be followed by a written RFQ form. The forms are available at the FLEX post. The RFQ must also include a response time interval specified in minutes and, except as provided below, must be for a period of at least 5 minutes for FLEX Index Options and FLEX Equity Options on ETFs, and a period of at least 3 minutes for all other FLEX Equity Options (these times will apply for options classes trading on the CFLEX platform and on the legacy platform). No RFQs can be submitted to the FLEX Official after 2:57 p.m. in a FLEX Equity Option class or 3:10 p.m. in a FLEX Index Option class (all times noted are Central). o After submitting an RFQ to the FLEX Official, the SM must then immediately announce the terms and specifications of the RFQ to the trading crowd where the listed option is traded. This communication must occur as soon as possible (and generally within 1 minute) following submission of the RFQ to the FLEX Official. o FLEX quotes responsive to the RFQ may be provided to the SM and must be entered during the request response time by public outcry. QMMs who choose to participate must give quotes that satisfy the minimum value size requirements (described above). Agents representing customer and/or firm accounts may also participate provided they satisfy the minimum value size

10 requirements. At the prescribed time, the SM will review all quotes for several seconds and will then announce the best bid and offer ( BBO ). Once the BBO is announced, the SM will have a reasonable amount of time to convey this information to the customer and determine if the customer will hit the bid or the offer, better the market or decline to trade. o No trade shall take place sooner than the expiration of the request response time interval (e.g., 5 minutes after an RFQ for a FLEX Index Option has been announced to the trading crowd). By this time, any public interest in response to the RFQ will be prepared to give a quote along with the QMMs in the trading crowd. o If the SM does not intend to cross or act as principal with respect to any part of the FLEX trade, the SM shall promptly accept or reject the BBO; provided, however, that if the SM either rejects the BBO or is given a BBO for less than the entire size requested, all FLEX Traders present in the trading crowd (other than the SM) will have an opportunity during the BBO Improvement Interval in which to match or improve, as applicable, the BBO. At the expiration of any such BBO Improvement Interval, the SM must promptly accept or reject the BBO. o If the SM indicates an intention to cross or act as principal with respect to any part of the FLEX trade, acceptance of the displayed BBO shall be automatically delayed until the expiration of the BBO Improvement Interval. Prior to the BBO Improvement Interval, the SM must announce to the trading crowd the price at which the SM expects to trade. In these circumstances, the SM may participate with all other FLEX Traders present in the trading crowd in attempting to improve or match the BBO during the BBO Improvement Interval. At the expiration of the BBO Improvement Interval, the SM must promptly accept or reject the BBO. o If the SM accepts the best bid or offer, highest bid (lowest offer) shall have priority. Allocation among multiple best bids (offers) at the same price shall be as follows: any crossing participation entitlement will have first priority; then all other FLEX responses submitted in response to an open outcry RFQ will have second priority based on the sequence in which they are submitted; to the extent that two or more best bid (offer) responses are submitted in open outcry at the same time and same price, or the SM cannot reasonably determine the sequence in which the open outcry bid (offer) responses were made, priority will be apportioned equally among the open outcry bids (offers); then trading interested represented in the book will have third priority. All transactions must be in compliance with Section 11(a)(1) of the Securities Exchange Act of 1934 and the rules promulgated thereunder. 4 In this regard, notwithstanding the priority provisions described above, bids (offers) submitted in open outcry on behalf of the proprietary account of a member relying on the G exemption must yield priority to any bid (offer) at the same price that is represented in the book and all other bids (offers) represented in the trading crowd that have priority over the book. o If the SM decides not to accept the best bid or offer made in response to the RFQ, any floor broker or QMM may accept the best bid or offer up to the size currently represented. If the SM accepts the best bid or offer, but there is excess size available, any floor broker or QMM may trade the balance available. Trade Entry and Trade Reconciliation: o If a trade takes place, the SM will report to the FLEX Official all pertinent information including price, quantity and buy/sell account information. All terms of each FLEX trade, including CMTA and Q-account, must be provided in a timely manner. Members risk the trade not clearing properly if this information is not provided. o FLEX trade reports are available to member firm back-office personnel at the Trading Processing window at approximately 3:30 p.m. If any errors are discovered, the firm must contact the Trading 4 See footnote 3 above.

11 Processing window no later than 4:00 p.m. After 4:00 p.m. no changes will be made to FLEX trades. o The intention of these procedures is to eliminate the incidence of errors that can cause mis-cleared trades. Please be advised that any member or member firm that fails to observe each of these procedures will be responsible for any errors or mis-clears that may result. Regulatory Circular RG Date: December 5, 2007 To: Members From: Trading Operations Re: Hybrid Electronic Quoting Fee In an effort to improve the quality of CBOE s disseminated quote while maintaining its quote mitigation efforts, CBOE modified the Hybrid Electronic Quoting Fee effective December 1, CBOE reduced the fee by both increasing credits for competitive quotes and by reducing the charge for noncompetitive quotes. For example, the credit for national best bid/offer (NBBO) market turning quotes was increased from $.02 to $.10 per 1,000 and at the opposite end of quote quality, the charge for duplicate quotes or off CBOE best bid or offer (BBO) decreased from $.05 to $.04 per 1,000. Specifically, CBOE amended the Hybrid Electronic Quoting Fee as follows: Increased the credit from $.02 to $.10 per 1,000 quotes, if a two-sided quote improves the NBBO on at least one side of the market. Increased the credit from $.01 to $.03 per 1,000 quotes, if a two-sided quote matches the NBBO on both sides of the market. Decreased from $.02 to $0.00 per 1000 quotes, if a two-sided quote matches the NBBO on only one side of the market. For Market-Makers and RMMs in high premium series, decreased from $.05 to $.04 per 1,000 quotes, if a two-sided quote matches the BBO on at least one side of the market. Decreased from $.05 to $.04 per 1,000 quotes, if a two-sided quote is a duplicate quote or if it does not satisfy any of the other conditions. The amended Hybrid Electronic Quoting Fee should encourage more competitive and efficient quoting and help to reduce quote traffic. The fee rewards liquidity providers that quote competitively and but still imposes a reduced cost on liquidity providers that do not. Tables showing the amended Hybrid Electronic Quoting Fee are set forth below. All Underlying Values Market Turner $.10 DPMs and e-dpms NBBO Match Both Sides Only $.03 NBBO Match One Side No Charge CBOE BBO Match - $.02 $.04 Duplicate & Off Market

12 Underlying <= $100, & Bid <= $10 Underlying <= $100, & Bid > $10 Underlying > $100, & Bid <= 15% of Underlying Underlying > $100, & Bid > 15% of Underlying Market Turner $.10 $.10 $.10 $.10 Market-Makers and RMMs NBBO NBBO Match Match Both One Side Sides Only $.03 $.03 $.03 $.03 No Charge No Charge No Change No Charge CBOE BBO Match $.02 $.04 $.04 $.04 $.02 $.04 $.04 $.04 Duplicate & Off Market For further details, please consult the CBOE Fees Schedule. If you have questions or would like to receive an that includes a projection of the impact on your quote fees, please call or Charles Hullihan at (312) or hullihan@cboe.com. Regulatory Circular RG To: Membership From: Trading Operations and Legal Division Date: December 5, 2007 Re: Ability to Quote 1-up Markets During Hybrid Opening System ( HOSS ) Rotations A rule change has become effective that permits Maker-Makers, RMMs, DPMs, e-dpms and LMMs (collectively referred to as CBOE MMs ) to post a 1-up size on the appropriate side of the option quote when the quote size on the primary underlying market is disseminating less than a 1000 share quote at the time the CBOE MM enters its opening quotes during a HOSS rotation. In contrast to intraday 1-up quoting requirements under Rule 8.7 (see RG04-92), this process does not require the 1-up opening quote process to be automated or the CBOE MM s quote size to automatically return to at least 10-up when the underlying primary market no longer disseminates less than a 1000-share quote. Instead, a CBOE MM can maintain a 1-up quote until the quote is decremented or the CBOE MM updates the quote. Once an option series is opened and a CBOE MM s quote is decremented or the CBOE MM determines to update the quote, such an updated quote would be subject to the electronic quotation size obligations set forth in Rule 8.7. Examples: If immediately prior to the time that a CBOE MM enters an opening quote during a HOSS rotation the NYSE quote size in ABC stock is 100x100, the CBOE MM s minimum quote size requirement is 1x1 for calls and puts. If immediately prior to the time that a CBOE MM enters an opening quote during a HOSS rotation the NYSE quote size in ABC stock is 100x700, the CBOE MM s minimum quote size requirement is 1x1 for calls and 1x1 for puts.

13 If immediately prior to the time that a CBOE MM enters an opening quote during a HOSS rotation the NYSE quote size in ABC stock is 2000x100, the CBOE MM s minimum quote size requirement is 10x1 for calls and 1x10 for puts. If you have questions regarding the foregoing, please refer to rule filing SR-CBOE , located online at or contact Anthony Montesano in Trading Operations at (312) , or Tim MacDonald in Market Regulation at (312) For questions regarding application of the rule, please contact Jennifer Lamie in the Legal Division at (312) APPROVED RULE CHANGE(S) R U L E C H A N G E S The Securities and Exchange Commission ( SEC ) has approved the following change(s) to Exchange rules pursuant to Section 19(b) of the Securities Exchange Act of 1934, as amended ( the Act ). Below, any additions to rule text are underlined, and any deletions are [bracketed]. Copies are available on the CBOE public website at The effective date of the rule change is the date of approval unless otherwise noted. SR-CBOE Delayed Start Options Series On November 28, 2007, the SEC approved Rule Change File No. SR-CBOE , which filing permits the listing and trading of Delayed Start Options Series, which are index options that lack a strike price until a predetermined strike setting date. Any questions regarding the rule change may be directed to Jennifer Lamie, Legal Division, at The rule text is shown below and the rule filing is available at: Rule Series of Option Contracts Open for Trading RULE 5.5. (a) After a particular class of options (call option contracts or put option contracts relating to a specific underlying security or calculated index) has been approved for listing and trading on the Exchange, the Exchange from time to time may open for trading series of options on that class. Only options contracts of series currently open for trading may be purchased or written on the Exchange. Prior to the opening of trading in a given series, the Exchange will fix the expiration month, year and exercise price of that series. For Short Term Option Series, the Exchange will fix a specific expiration date and exercise price, as provided in paragraph (d). For Quarterly Options Series, the Exchange will fix a specific expiration date and exercise price, as provided in paragraph (e). For Delayed Start Option Series, the Exchange will fix a specific expiration date and exercise price as provided under Rule 24.9(d). (b) Except for Short Term Option Series, [and] Quarterly Options Series, and Delayed Start Option Series, at the commencement of trading on the Exchange of a particular class of options, the Exchange usually will open three series of options for each expiration month in that class. The exercise price of each series will be fixed at a price per share, with at least one strike price above and one strike price below the price at which the underlying stock is traded in the primary market at about the time that class of options is first opened for trading on the Exchange. Paragraph (d) will govern the procedures for opening Short Term Option Series. Paragraph (e) will govern the procedures for opening Quarterly Options Series. Rule 24.9(d) will govern the procedures for setting the exercise price for Delayed Start Option Series. (c) (e) No change.... Interpretations and Policies: No change.

14 .03 Except for Short Term Option Series, [and] Quarterly Options Series, and Delayed Start Option Series, the Exchange usually will open four expiration months for each class of options open for trading on the Exchange: the first two being the two nearest months, regardless of the quarterly cycle on which that class trades; the third and fourth being the next two months of the quarterly cycle previously designated by the Exchange for that specific class. (For example, if the Exchange listed, in late April, a new stock option on a January-April-July-October quarterly cycle, the Exchange would list the two nearest term months (May and June) and the next two expiration months of the cycle (July and October). When the May series expires, the Exchange would add January series. When the June series expires, the Exchange would add August series as the next nearest month, and would not add April). Rule Suitability of Recommendations RULE 9.9. No Change.... Interpretations and Policies: * * * * *.01 No member, Registered Options Principal or Registered Representative shall recommend to a customer an opening transaction in any Delayed Start Option Series unless the customer previously has engaged in an options transaction. Rule Definitions RULE (a) (z) No changes. Delayed Start Option Series * * * * * (aa) The term Delayed Start Option Series means a series of a cash-settled index option class that begins trading without an exercise price and subsequently has its exercise price fixed by the Exchange as provided in Rule 24.9(d). * * * * * Rule Position Limits for Broad-Based Index Options RULE (a) (d) No change. (e) Positions in Short Term Option Series, [and] Quarterly Options Series, and Delayed Start Option Series shall be aggregated with positions in options contracts [on]in the same index class. Rule 24.4A - Position Limits for Industry Index Options RULE 24.4A. (a) (c) No change. * * * * * (d) Positions in Short Term Option Series, [and] Quarterly Options Series, and Delayed Start Option Series shall be aggregated with positions in options contracts [on]in the same index class. * * * * * Rule 24.4B Position Limits for Options on Micro Narrow-Based Indexes As Defined Under Rule 24.4(d)

15 RULE 24.4B. (a) No change. (b) Positions in Short Term Option Series, Quarterly Options Series, and Delayed Start Option Series shall be aggregated with positions in options contracts in the same index class. Rule Terms of Index Option Contracts RULE (a) (c) No change. * * * * * (d) (1) Delayed Start Option Series. The Exchange may open for trading Delayed Start Option Series on any security index that is approved for options trading on the Exchange. The exercise price for a Delayed Start Option Series shall be fixed in accordance with subparagraph (d)(2). Until the strike setting date, a Delayed Start Option Series shall be traded with European-style exercise methodology. After the strike setting date, a Delayed Start Option Series shall have the same exercise methodology (i.e., American-style or European-style) as other options contracts in the same index class. (2) A Delayed Start Option Series exercise price will be determined in relation to the closing price of the underlying index on the date on which the exercise price is fixed ( strike setting date ). The strike setting date for a particular Delayed Start Option Series shall be fixed by the Exchange prior to opening the Delayed Start Option Series ( opening date ) and shall not be sooner than one month nor later than twelve months after the opening date. The expiration date shall also be fixed by the Exchange prior to the opening date and shall not exceed the period set forth in Rule 5.8(a). (i) On the strike setting date, each Delayed Start Option Series shall be assigned a strike price that either is at-the-money, in-the-money by a specified amount, or out-of-the-money by a specified amount. The terms of each Delayed Start Option Series, including: (A) the determination of whether a Delayed Start Option Series shall be assigned an at-the money, in-the-money, or out-of-the-money strike price; and (B) the specified amount by which a strike price shall be established in or out-of-the-money (if applicable), shall be fixed by the Exchange on the opening date. (ii) The exercise price assigned to the Delayed Start Option Series will be rounded to the lesser of the nearest.125 or such smaller increment as may be fixed by the Exchange on the opening date, provided that such increment shall not be smaller than (3) Except as may otherwise be provided in this rule or as the context may otherwise require, Delayed Start Option Series shall be subject to all of the Exchange s Rules in the same manner as standard cash-settled index option series based on the same underlying index. (4) The Exchange s strike price interval rules shall not apply to Delayed Start Option Series. (5) DSOs in an index option class will be treated the same as any other options on the same index for the purpose of determining customer margin under Rule 12.3, except that spread margin will not be permitted between DSO and non-dso options for the time period between the initial listing of a DSO and its strike setting date.... Interpretations and Policies: No changes.

16 EFFECTIVE-ON-FILING RULE CHANGE(S) The following rule filing(s) were submitted to the SEC effective-on-filing, and may have taken effect pursuant to Section 19(b)(3) of the Securities Exchange Act. They will remain in effect barring further action by the SEC within 60 days after their publication in the Federal Register. Below, any additions to rule text are underlined, and any deletions are [bracketed]. Copies are available on the CBOE public website at: SR-CBOE Hybrid Electronic Quoting Fee On November 30, 2007, the Exchange filed Rule Change File No. SR-CBOE , which filing proposes to amend CBOE s Hybrid Electronic Quoting Fee. In particular, the filing proposes to reduce slightly, certain of the fees and increase the amounts that are credited for competitive quotations that improve or match the NBBO. Any questions regarding the rule change may be directed to Patrick Sexton, Legal Division, at The rule filing is available at SR-CBOE CBSX Odd Lot Transaction Fee On November 30, 2007, the Exchange filed Rule Change File No. SR-CBOE , which filing proposes to modify Odd Lot transaction fees for CBSX. Any questions regarding the rule change may be directed to Angelo Evangelou, Legal Division, at The rule filing is available at: SR-CBOE IWM Option Pilot Program On December 5, 2007, the Exchange filed Rule Change File No. SR-CBOE , which filing proposes to extend the IWM Option Pilot Program for an additional six-month period, through January 18, Any questions regarding the rule change may be directed to Jennifer Klebes, Legal Division, at The rule text is shown below and the rule filing is available at Rule 4.11 Position Limits RULE No change.... Interpretations and Policies: No change..07 The position limits under Rule 4.11 applicable to options on shares or other securities that represent interests in registered investment companies (or series thereof) organized as open-end management investment companies, unit investment trusts or similar entities that satisfy the criteria set forth in Interpretation and Policy.06 under Rule 5.3, shall be the same as the position limits applicable to equity options under Rule 4.11 and Interpretations and Policies thereunder. The position limits under Rule 4.11 applicable to options on the Nasdaq-100 Index Tracking Stock ("QQQQ"), the Standard and Poor's Depositary Receipts Trust (SPDR), and the DIAMONDS Trust (DIA) shall be 300,000 option contracts, except that during the 4.11 Pilot Program Period the position limit on the QQQQ shall be 900,000 contracts. In addition, the position limit under Rule 4.11 applicable to options on the ishares Russell 2000 Index Fund (IWM), shall be, for a pilot period from January 22, 2007, through [January 18] July 21, 2008, 500,000 option contracts.