Exchange. Bulletin. December 3, 2010 Volume 38, Number 49 TRADING PERMIT INFORMATION FOR 11/25/2010 THROUGH 12/1/2010

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1 Exchange December 3, 2010 Volume 38, Number 49 Bulletin The Bylaws and Rules of Chicago Board Options Exchange, Incorporated ( Exchange ), in certain specific instances, require the Exchange to provide notice to Exchange Trading Permit Holders. To satisfy this requirement, a copy of the Exchange Bulletin, including the Regulatory Bulletin, is delivered by or by hard copy free of charge to all effective Trading Permit Holders on a weekly basis. Trading Permit Holders 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 registration@cboe.com. If you do sign up for delivery, please remember to inform the Registration Services 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, Registration Services Department, 400 South LaSalle, Chicago, Illinois 60605, Attention: Bulletin Subscriptions. For access to the CBOE Trading Permit Holder Web Site, please also notify the Registration Services Department by sending an to registration@cboe.com or by phone at Copyright 2010 Chicago Board Options Exchange, Incorporated TRADING PERMIT INFORMATION FOR 11/25/2010 THROUGH 12/1/2010 TRADING PERMIT APPLICATIONS RECEIVED FOR WHICH BULLETIN PUBLICATION IS REQUIRED Individual Applicants Christopher Scott Alter CSS, LLC 825 W. Wolfram Street, Apt 1FF Chicago, IL Davis J. Johnston CMZ Trading, LLC 701 W. Jackson #304D Chicago, IL Frederick A Rice RCI Limited Partnership 226 Mermaids Bight Naples, FL TPH Organization Applicants Prime International Securities Arbitrage, LLC George N. Spaniak, Nominee 111 West Jackson Blvd. #1310 Chicago, IL Prime International Trading Ltd. Sole Owner Jeffrey J. Collins Shareholder George N. Spaniak - Manager James S Maltman (JSM) 12/1/10 Maltman Investments, L.P. Frank Coletto (FCO) 12/1/10 Cornerstone Trading, LLC Daniel E. Kirkpatrick (DNK) 12/1/10 Wellington Capital Markets, LLC Jeffrey M Voels (JMV) 12/1/10 Wellington Capital Markets, LLC TPH Organizations Nolita Capital LLC 12/1/10 Maltman Investments, L.P. 12/1/10 EFFECTIVE TRADING PERMIT HOLDERS Individuals Nominee: Termination Date Effective Date Aaron M Droba (ARN) 11/26/10 Nico Securities, LLC Type of Business to be Conducted: Market Maker TERMINATIONS Individuals Nominees: Termination Date Darryl A Behm (DYL) 11/30/10 CMZ Trading, LLC Brooks C. Taylor 12/1/10 Nolita Capital LLC

2 Page 2 December 3, 2010 Volume 38, Number 49 Chicago Board Options Exchange CHANGES IN TRADING FUNCTION TPH Organizations Effective Date Individuals Effective Date Benjamin W Dooley 12/1/10 From: Nominee For Ronin Capital, LLC; Market Maker To: Nominee For G-Bar Limited Partnership; Market Maker Cornerstone Trading, LLC 12/1/10 From: Cornerstone Trading, LLC; Market Maker/ Floor Broker To: Cornerstone Trading, LLC; Proprietary Trading Permit Holder Mark F Duffy 12/1/10 From: Proprietary Trading Permit Holder To: Nominee For Cornerstone Trading, LLC; Proprietary Trading Permit Holder RESEARCH CIRCULARS The following Research Circulars were distributed between November 23 and December 3, 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 29, 2010 Armstrong World Industries, Inc. ( AWI ) CONTRACT ADJUSTMENT FOR SPECIAL CASH DIVIDEND Ex-Date: December 13, 2010 Research Circular #RS November 29, 2010 Guess?, Inc. ( GES ) CONTRACT ADJUSTMENT FOR SPECIAL CASH DIVIDEND Ex-Date: December 6, 2010 Research Circular #RS November 29, 2010 Stein Mart, Inc. ( SMRT ) CONTRACT ADJUSTMENT FOR SPECIAL CASH DIVIDEND Ex-Date: December 6, 2010 Research Circular #RS November 29, 2010 OptionsXpress Holdings, Inc. ( OXPS ) CONTRACT ADJUSTMENT FOR SPECIAL CASH DIVIDEND Ex-Date: December 28, 2010 Research Circular #RS November 30, 2010 Interactive Brokers Group, Inc. ( IBKR ) CONTRACT ADJUSTMENT FOR SPECIAL CASH DIVIDEND Ex-Date: December 7, 2010 Research Circular #RS November 30, 2010 Airgas, Inc. ( ARG ) Tender Offer FURTHER EXTENDED by Air Products Distribution, Inc. Research Circular #RS December 1, 2010 Mirant Corporation ( MIR ) Proposed Merger with RRI Energy, Inc. ( RRI ) Research Circular #RS December 1, 2010 RRI Energy, Inc. ( RRI ) Name, Stock and Option Symbol Change to GenOn Energy, Inc. ( GEN ) Anticipated Effective Date: December 3, 2010 Research Circular #RS December 2, 2010 RLI Corp. ( RLI ) CONTRACT ADJUSTMENT FOR SPECIAL CASH DIVIDEND Ex-Date: December 14, 2010 Research Circular #RS December 2, 2010 Brown-Forman Corporation Class B ( BF.B/BFB ) CONTRACT ADJUSTMENT FOR SPECIAL CASH DIVIDEND Ex-Date: December 8, 2010 Research Circular #RS December 2, 2010 Members Retail HOLDRs Trust ( RTH ) Cash Distribution Ex-Distribution Date: December 3, 2010 Research Circular #RS December 2, 2010 Lions Gate Entertainment Corp. ( LGF ) Tender Offer FURTHER EXTENDED by Icahn Partners LP, Icahn Partners Master Fund LP, Icahn Partners Master Fund II LP, Icahn Partners Master Fund III LP, High River Limited Partnership, Icahn Fund S.A R.L., Daazi Holdings B.V., Canada Inc., and Ronald G. Atkey, in his capacity as the sole trustee of the LGE Trust Research Circular #RS December 3, 2010 Mirant Corporation ( MIR ) Merger COMPLETED with RRI Energy, Inc. ( RRI ) Research Circular #RS December 3, 2010 *****UPDATE*****UPDATE*****UPDATE***** RRI Energy, Inc. ( RRI ) Name, Stock and Option Symbol Change to GenOn Energy, Inc. ( GEN ) Effective Date: December 3, 2010 Research Circular #RS December 3, 2010 Regal Entertainment Group Class A ( RGC ) CONTRACT ADJUSTMENT FOR SPECIAL CASH DIVIDEND Ex-Date: December 16, 2010 Research Circular #RS December 1, 2010 Cogent, Inc. ( COGT ): Merger Completed -- Cash Settlement

3 December 3, 2010 Volume RB21, Number 49 The Bylaws and Rules of Chicago Board Options Exchange, Incorporated ( Exchange ), in certain specific instances, require the Exchange to provide notice to Trading Permit Holders. The weekly Regulatory Bulletin is delivered to all effective Trading Permit Holders to satisfy this requirement. Copyright 2010 Chicago Board Options Exchange, Incorporated. REGULATORY CIRCULARS Regulatory Circular RG To: Trading Permit Holders and Trading Permit Holder Organizations From: Business Development Division Date: November 30, 2010 Re: Continuation of Qualified Waiver of $.18 Customer Transaction Fee in Options on the S&P 500 Exchange Traded Fund (SPY) CBOE is extending the waiver of the customer transaction fee in options on SPY of $0.18 per contract for all business executed either in open outcry or in the CBOE Automated Improvement Mechanism (AIM) through March 31, This change is subject to SEC approval. Additionally, CBOE continues to waive transaction fees for customer orders of 99 contracts or less in all ETF, ETN and HOLDRs options regardless of their execution venue. Please direct any questions to Anthony Montesano at (312) or montesan@cboe.com, or to Eric Frait at (312) or frait@cboe.com. Regulatory Circular RG To: Trading Permit Holders and Trading Permit Holder Organizations From: Business Development Division Date: November 30, 2010 Re: Change to Rebate for Qualifying Market Maker Transactions in Hybrid Agency Liaison (HAL) Mechanism CBOE currently provides a $0.20 per contract rebate to market makers who execute transactions in HAL in response to auction messages, provided those market makers have, in the previous calendar month, submitted at least 60% of their total quotes in the subject penny pilot class (not including LEAPS) on either side of the NBBO. December 3, 2010 Volume RB21, Number 49 1

4 Effective December 1, 2010, the rebate will be reduced to $0.15 per contract, with all other qualifying standards remaining unchanged. This change is subject to SEC approval. Please direct any questions to Anthony Montesano at (312) or or to Eric Frait at (312) or December 3, 2010 Volume RB21, Number 49 2

5 Regulatory Circular RG Date: November 30, 2010 To: From: Re: Trading Permit Holders and Trading Permit Holder Applicants Registration Services Department Trading Permit Holder Application and Other Related Fees The following is a list of the Exchange's Trading Permit Holder application fees and other related fees, together with a brief explanation of each fee, revised to reflect changes to the bandwidth allocated to Market-Maker Trading Permit Holders that maintain an appointment in a Hybrid 3.0 class. List of Fees Individual Applicant Fee (Trading Permit Holder/Nominee)...$2,500 New Trading Permit Holder Orientation & Exam Fee...$500 TPH Organization Application Fee (Corporation/Partnership/LLC)...$4,000 TPH Organization Renewal Fee (Corporation/Partnership/LLC)...$2,000 Associated Person Fee...$350 Fingerprint Processing Fee...$50 Renewal/Change of Status Fee...$500 Inactive Nominee Status Change (Trading Permit Swap) Fee Submission before 4:00 p.m. on date prior to effective date...$50 Submission after 4:00 p.m. on date prior to effective date or before 8:00 a.m. on effective date...$100 Submission after 8:00 a.m. on effective date...$200 Inactive Nominee Status (Parking Space) Quarterly Maintenance Fee...$750 Joint Account Application Fee...$1,000 Trading Permit Transfer Fee...$500 Non-Trading Permit Holder Customer Business Fee...$2,500 Order Service Firm Fee...$1,650 Applicant/Trading Permit Holder/Associated Person Subject to Statutory Disqualification...$2,750 Change in Status that, if Approved, Would Require Amended or Additional Rule 19h-1(c) Filing...$1,650 Market-Maker Trading Permit Fee Monthly Fee Amount after 12/31/10.$7,500 Monthly Fee Amount from 7/1/10 through 12/31/10...$6,000 Floor Broker Trading Permit Fee Monthly Fee Amount After 12/31/10...$7,500 Monthly Fee Amount from 7/1/10 through 12/31/10 $6,000 Electronic Access Permit Fee Monthly Fee Amount after 12/31/10...$2,000 Monthly Fee Amount from 7/1/10 through 12/31/10. $1,600 SPX Tier Appointment Fee (monthly fee amount)..$3,000 Quoting and Order Entry Bandwidth Packet Fee Monthly Fee Amount after 12/31/10...$3,750 Monthly Fee Amount from 7/1/10 through 12/31/10..$3,000 December 3, 2010 Volume RB21, Number 49 3

6 Order Entry Bandwidth Packet Fee See the Tables Below Order Entry Bandwidth Packet Fees for Trading Permit Holders Amount per Packet after 12/31/10 Amount Per Packet from 8/1/10 through 12/31/10 1 st 5 th Packet $2,000 per month $1,600 per month 6 th 8 th Packet $1,000 per month $800 per month 9 th 13 th Packet $500 per month $400 per month 14 th Packet and Each Additional Packet $250 per month $200 per month Fees for Order Entry Amount per Packet Amount Per Packet Bandwidth Packet(s) after 12/31/10 from 8/1/10 through Assigned to Sponsored User 12/31/10 1 st 6 th Packet $2,000 per month $1,600 per month 7 th 9 th Packet $1,000 per month $800 per month 10 th 14 th Packet $500 per month $400 per month 15 th Packet and Each $250 per month $200 per month Additional Packet ALL FEES ARE NON-REFUNDABLE December 3, 2010 Volume RB21, Number 49 4

7 Individual Applicant Fee (Trading Permit Holder/Nominee) - This fee is payable by a new individual applicant for Trading Permit Holder status on the Exchange. The applicant s Fingerprint Processing Fee is included as part of this fee. New Trading Permit Holder Orientation & Exam Fee - This fee is payable by each applicant seeking Trading Permit Holder status, which requires a trading function. TPH Organization Application Fee (Corporation/Partnership/LLC) - This fee is payable by an applicant that desires to be a TPH organization on the Exchange. This fee encompasses the TPH Organization Application and related documentation, one Nominee Individual Application Fee associated with the TPH Organization Application, and Associated Person(s) Fees that are part of this TPH Organization Application. TPH Organization Renewal Fee (Corporation/Partnership/LLC) - This fee is payable by a former trading firm member or TPH organization that reapplies for Trading Permit Holder status within 9 months of their membership or Trading Permit Status termination date and becomes an effective TPH organization within 1 year of their membership or Trading Permit Status termination date. This fee encompasses the TPH Organization Application and related documentation and one Nominee who is either (i) an existing individual Trading Permit Holder desiring to change Trading Permit Holder status or (ii) a former individual member or Trading Permit Holder who reapplies for Trading Permit Holder status within 9 months of their membership or Trading Permit Status termination date and becomes an effective Trading Permit Holder within 1 year of their membership termination date. Associated Person Fee - The Associated Person Fee is payable for the addition of certain individuals on a TPH organization s Form BD. This fee includes the related Fingerprint Processing Fee. This Fee is payable by each executive officer, general partner, or LLC Manager. Additionally, this Fee is payable by each principal shareholder that has 5% or more direct ownership of a class of a voting security of a TPH organization corporation, limited partner who has the right to receive upon dissolution, or has contributed, 5% or more of the partnership's capital, and LLC member who has the right to receive upon dissolution, or has contributed, 5% or more of the LLC's capital. This Fee is also payable by any person classified as a Control Person of the TPH organization. Fingerprint Processing Fee - This Fee will be assessed for employees of Trading Permit Holders and any other individual requesting the Exchange to process a fingerprint, electronically or otherwise, excluding fingerprint requirements for Individual Applicants, individuals applying for Renewal/Change of Status, and Associated Persons. Renewal/Change of Status Fee - This fee is payable (i) by an existing individual Trading Permit Holder desiring to change Trading Permit Holder status or (ii) by a former individual Trading Permit Holder or former individual member who reapplies for Trading Permit Holder status within 9 months of their membership or Trading Permit Holder status termination date and becomes an effective Trading Permit Holder within 1 year of their membership or Trading Permit Holder status termination date. A former individual Trading Permit Holder or former individual member who reapplies for Trading Permit Holder status within 9 months of termination from membership or Trading Permit Holder status will be assessed the Renewal/Change of Status fee at the time of submission of the application. If that person becomes an effective Trading Permit Holder more than 1 year after their membership or Trading Permit Holder status termination date, the person will then be charged an additional fee equal to the difference between the Individual Application Fee and the Renewal/Change of Status fee. This Fee includes the related Fingerprint Processing Fee, if applicable. December 3, 2010 Volume RB21, Number 49 5

8 Inactive Nominee Status Change (Trading Permit Swap) Fee - This fee is payable whenever an inactive nominee moves to active status. The amount of this fee varies in accordance with when the Registration Services Department receives notice of the status change via the submission of a Notification of Change in Nominee Status Form. If the Notification Form is submitted before 4:00 p.m. on the date prior to the effective date of the status change, the fee is $50. If the Notification Form is submitted after 4:00 p.m. on the date prior to the effective date of the status change or before 8:00 a.m. on the effective date of the status change, the fee is $100. If the Notification Form is submitted after 8:00 a.m. on the effective date of the status change, the fee is $200. No fee applies to moves from active to inactive status. Inactive Nominee Status (Parking Space) Quarterly Maintenance Fee - This fee is payable quarterly by a TPH organization for each inactive nominee status that the TPH organization wishes to maintain. (E.g., a TPH organization firm desiring the ability to have 3 parking spaces within which to designate inactive nominees would pay this fee at the beginning of each quarter for each of the 3 parking spaces.) Joint Account Application Fee - This fee is payable for each application to establish a new joint account. Trading Permit Transfer Fee - This Fee is assessed to a Trading Permit Holder for each Trading Permit for which the Registration Services Department has received a request for transfer under CBOE Rule 3.1(d)(ii). There is a $2,000 Fee cap for a request covering multiple Trading Permits per transfer. Non-Trading Permit Holder Customer Business Fee - This fee is payable by applicant TPH organizations that plan to conduct a public customer business. Order Service Firm Fee - This fee is payable by applicant firms that plan to conduct an order service business pursuant to CBOE Rule Applicant/Trading Permit Holder/Associated Person Subject to Statutory Disqualification - This fee is payable whenever a person or entity is subject to a statutory disqualification under the Securities Exchange Act of 1934 and: (i) is an applicant for Exchange Trading Permit Holder status, (ii) is seeking to be an associated person of an Exchange Trading Permit Holder (except where the Exchange is merely asked to concur in an SEC Rule 19h-1 filing by another self regulatory organization), or (iii) is an existing Exchange Trading Permit Holder or associated person who makes an application in accordance with Rule 3.18(b) or with respect to whom a proceeding is initiated pursuant to Rule This fee is in addition to any other Trading Permit-related fees that might be applicable. Change in Status that, if Approved, Would Require Amended or Additional SEC Rule 19h-1(c) Filing - This fee is payable whenever a person or entity, on whose behalf the Exchange has filed a Rule 19h-1(c) filing that has been approved by the SEC, applies for a change in status that requires the Exchange to file an amended or additional Rule 19h-1(c) filing, if the Exchange approves the requested change in status. This fee is in addition to any other Trading Permit-related fees that might be applicable. Cap on Trading Permit-Related Fees for Organizational Restructuring Trading Permit application fees and other Trading Permit-related fees related solely to a TPH organization structural change (e.g., related to a change from a limited partnership to a limited liability company and not to use of additional Trading Permits) are capped at $10,000. Market-Maker Trading Permit Fee This fee will be assessed monthly commencing July 1, 2010 to each Market-Maker Trading Permit Holder. The Market-Maker Trading Permit entitles the holder to act as a Market-Maker (including a Market-Maker trading remotely), DPM, edpm or LMM. This Permit provides an appointment credit of 1.0, a quoting and order entry bandwidth allowance, up to three logins, trading floor access and Trading Permit Holder status (including access to CBSX). If a Market-Maker December 3, 2010 Volume RB21, Number 49 6

9 Trading Permit is issued during a calendar month after the first trading day of the month, the access fee for the Market-Maker Trading Permit for that calendar month is prorated based on the remaining trading days in the calendar month. Market-Maker Trading Permits will be renewed automatically for the next month unless the Trading Permit Holder submits written notification to the Registration Services Department by the 25 th day of the prior month (or the preceding business day if the 25 th is not a business day) to cancel the Market-Maker Trading Permit effective at or prior to the end of the applicable month. To the extent a Market-Maker is able to submit electronic quotes in a Hybrid 3.0 class (such as an LMM that streams quotes in the class or a Market-Maker or LMM that streams quotes in a series of a Hybrid 3.0 class that trades on the Hybrid Trading System), the Market-Maker shall receive the quoting bandwidth allowance to quote in, and only in, that class. Floor Broker Trading Permit Fee This fee will be assessed monthly commencing July 1, 2010 to each Floor Broker Trading Permit Holder. The Floor Broker Trading Permit entitles the holder to act as a Floor Broker. This Permit provides an order entry bandwidth allowance, up to three logins, trading floor access and Trading Permit Holder Status (including access to CBSX). If a Floor Broker Trading Permit is issued during a calendar month after the first trading day of the month, the access fee for the Floor Broker Trading Permit for that calendar month is prorated based on the remaining trading days in the calendar month. Floor Broker Trading Permits will be renewed automatically for the next month unless the Trading Permit Holder submits written notification to the Registration Services Department by the 25 th day of the prior month (or the preceding business day if the 25 th is not a business day) to cancel the Floor Broker Trading Permit effective at or prior to the end of the applicable month. Electronic Access Permit (EAP) Fee This fee will be assessed monthly commencing July 1, 2010 to each EAP Holder. The EAP entitles the holder to electronic access to the Exchange. Holders must be broker-dealers registered with the Exchange in one or more of the following capacities: (a) Clearing Trading Permit Holder; (b) TPH organization approved to transact business with the public; (c) Proprietary Trading Permit Holder; and (d) order service firm. This permit does not provide access to the trading floor. A Proprietary Trading Permit Holder is a Trading Permit Holder with electronic access to the Exchange to submit proprietary orders that are not Market-Maker orders (i.e. that are not M orders for the Proprietary Trading Permit Holder s own account or an affiliated Market-Maker account). The EAP provides an order entry bandwidth allowance, up to three logins and Trading Permit Holder Status (including access to CBSX). If an EAP is issued during a calendar month after the first trading day of the month, the access fee for the EAP for that calendar month is prorated based on the remaining trading days in the calendar month. EAPs will be renewed automatically for the next month unless the Trading Permit Holder submits written notification to the Registration Services Department by the 25 th day of the prior month (or the preceding business day if the 25 th is not a business day) to cancel the EAP effective at or prior to the end of the applicable month. SPX Tier Appointment Fee This fee will be assessed monthly commencing July 1, 2010 to any Market-Maker Trading Permit Holder that either (a) has an SPX Tier Appointment at any time during a calendar month; or (b) conducts any open outcry transactions in SPX at any time during a calendar month. Each SPX Tier Appointment may only be used with one designated Market-Maker Trading Permit. SPX Tier Appointments will be renewed automatically for the next month unless the Trading Permit Holder submits written notification to the Registration Services Department by the last business day of the prior month to cancel the SPX Tier Appointment effective at or prior to the end of the applicable month. Quoting and Order Entry Bandwidth Packet Fee This fee will be assessed monthly commencing on July 1, 2010 to Market-Maker Trading Permit Holders that have registered for a Quoting and Order Entry Bandwidth Packet. A Quoting and Order Entry Bandwidth Packet is available to Market-Maker Trading Permit Holders only and entitles the holder to a quoting and order entry bandwidth allowance and up to December 3, 2010 Volume RB21, Number 49 7

10 three additional logins, which may then be added onto the total bandwidth pool for a Market-Maker s acronym(s) and Trading Permit(s). If a Quoting and Order Entry Bandwidth Packet is issued during a calendar month after the first trading day of the month, the fee for that calendar month is prorated based on the remaining trading days in the calendar month. Quoting and Order Entry Bandwidth Packets will be renewed automatically for the next month unless the Trading Permit Holder submits written notification to the Registration Services Department by the last business day of the prior month to cancel the Quoting and Order Entry Bandwidth Packet effective at or prior to the end of the applicable month. Order Entry Bandwidth Packet Fee - This fee will be assessed monthly commencing July 1, 2010 to Trading Permit Holders that have registered for an Order Entry Bandwidth Packet. An Order Entry Bandwidth Packet is available to all Trading Permit Holders and entitles the holder to order entry bandwidth allowance and up to three additional logins. A Trading Permit Holder may also obtain and assign to a Sponsored User of the Trading Permit Holder one or more Order Entry Bandwidth Packets. In that event, the fees for the assigned bandwidth packet(s) are assessed to the Trading Permit Holder and the bandwidth packet(s) may be utilized solely by the Sponsored User (and not by the Trading Permit Holder or any other Sponsored User). If an Order Entry Bandwidth Packet is issued during a calendar month after the first trading day of the month, the fee for that calendar month is prorated based on the remaining trading days in the calendar month. Order Entry Bandwidth Packets will be renewed automatically for the next month unless the Trading Permit Holder submits written notification to the Registration Services Department by the last business day of the prior month to cancel the Order Entry Bandwidth Packet effective at or prior to the end of the applicable month. Any questions regarding this Regulatory Circular may be directed to Regina Millison at (312) or Stan Leimer at (312) in the Registration Services Department. (Regulatory Circular RG Revised). December 3, 2010 Volume RB21, Number 49 8

11 Regulatory Circular RG To: Trading Permit Holders and Trading Permit Holder Organizations From: Business Development Division Date: December 1, 2010 Re: Suspension of Marketing Fee Collection for most Electronic Transactions in Options on the S&P 500 Exchange Traded Fund (SPY) Effective December 1, 2010, CBOE will suspend collection of the marketing fee on electronic transactions in SPY options, with the exception of those electronic transactions conducted in the Automated Improvement Mechanism ( AIM ). CBOE will continue to collect the marketing fee for open outcry transactions in SPY. The level of the marketing fee in SPY options for qualifying transactions will remain at $0.25 per contract. Please direct any questions to Anthony Montesano at (312) or montesan@cboe.com, or to Eric Frait at (312) or frait@cboe.com. Regulatory Circular RG To: Trading Permit Holders From: Trading Operations Date: December 1, 2010 Re: SPX PM-settled Weeklys (End-of-Week Options) System Settings On December 2, 2010, CBOE plans to begin trading PM-settled SPX Weeklys (End-of-Week options), symbol SPXW, on the Hybrid trading system. System settings will be as follows: - Orders of any origin will be eligible for auto-execution. - As a protection measure, market orders that require fills at multiple prices will stop executing and route to PAR once the next available price is more than an allowable amount beyond the initial BBO that existed when the order was first received. Settings are as follows: Permissible execution beyond initial BBO Initial BBO 0.50 = = = = = = = = =.80 December 3, 2010 Volume RB21, Number 49 9

12 = = 1.20 Above 50 = Orders of any origin will be eligible to rest in the simple (non-complex) order book. - The W origin code requirements (for professionals and voluntary professionals) will be applicable for SPXW but not for SPX. The transaction fees for W are the same as that for Broker-Dealers. For further information on the applicable fees, please refer to SR-CBOE and the Fees Schedule. - Trades executed electronically will be allocated in price-time sequence among all participants, including public customers, with the exception of opening trades at the minimum price increment. For such trades, the allocation method will continue to be as specified in Regulatory Circular RG Quote-to-Quote Lock timer will be set to 1 second. - Order origins C (public customer), W (professional and voluntary professional), B (broker/dealer) and F (firm) will be eligible to rest in COB and initiate a COA. - The minimum increment for limit prices on complex orders and COA auction responses is $.05. Participants responding to COA auctions are reminded that CBOE systems will not block responses sent in sub-nickel increments, although such prices are not permitted (see Regulatory Circular RG10-113). - The COA auction timer will be set to 250ms. - Complex orders with both SPX and SPXW legs will not be eligible for COA or COB but will be accepted and routed for manual handling. - AIM and SAL auctions will not be available. - Preferred Market Maker will not be available. - Reserve orders will not be permitted. Participants are reminded that CBOE systems will not reject such orders even though they are not permitted in SPXW. Other details: - Trades executed in open outcry will be allocated pursuant to Rule 6.45B(b). - The open outcry crossing entitlement will be 20% (after satisfying public customer orders) for facilitations (and not solicitations) of eligible orders of 50 contracts or more. Please refer to Rule 6.74(d) for further details. - Trading hours will be 8:30-3:15 on all trading days. CBOE is considering a rule change to potentially allow a closing time of 3:00 on expiration day in the future. - The in-person percentage requirement (Rule B) and 20% electronic contract volume test for various quoting obligations (Rule 8.7(d)) will be measured on a class basis (i.e., for SPX and SPXW activity combined). The quoting obligations that apply to SPXW options series once a Market-Maker trades more than 20% SPX plus SPXW contract volume electronically will begin the quarter following the quarter in which the 20% threshold was reached. (This information replaces/updates certain aspects of Regulatory Circular RG ) - SPXW will be subject to the same bid/ask differentials that apply to other SPX series (see Regulatory Circular RG10-30). The initial size of a Market-Maker quote must be for at least 10 contracts. IMPORTANT: Unless otherwise instructed by from the executing clearing firm, the Help Desk will set all routing parameters to deliver all eligible orders to the CBOEdirect trade engine for automated handling. Firms wishing to impose restrictions must the Help Desk at helpdesk@cboe.com. December 3, 2010 Volume RB21, Number 49 10

13 Please see Regulatory Circulars RG and RG for further information. Contact Anthony Montesano at / montesan@cboe.com, Greg Burkhardt at: / burkhard@cboe.com, or the Help Desk at / helpdesk@cboe.com with any questions. (Updates Regulatory Circular RG10-111) Regulatory Circular RG To: Trading Permit Holders From: Registration & Regulatory Services Divisions Date: December 1, 2010 Re: Professional Orders Aggregation of Accounts Under Rule 1.1(ggg), the term Professional means any person or entity that (i) is not a broker-dealer in securities, and (ii) places more than 390 orders in listed options per day on average during a calendar month for its own beneficial account(s). Trading Permit Holders should take note that the rule requires the aggregation of all beneficial accounts of a person or entity when calculating the number of orders placed. A person or entity cannot avoid designation as a Professional by spreading their activity over multiple accounts. Trading Permit Holders should also take note that the rule does not permit the disaggregation of a person s or entity s account(s) when calculating the number of orders placed. Example Customer A is a non-broker-dealer limited liability company with three LLC members. All orders placed for the account(s) of Customer A must be aggregated when calculating the number of orders placed for Customer A. That Customer A may have an account(s) organized into sub-accounts or in some other manner to disaggregate/segregate trading activity of, and/or sub-allocate profits/losses to, the various LLC members is not relevant. Additional questions may be directed to the Department of Market Regulation at or (Supplements Regulatory Circular RG09-148) December 3, 2010 Volume RB21, Number 49 11

14 EFFECTIVE-ON-FILING RULE CHANGE(S) R U L E C H A N G E S The following rule filings were submitted to the Securities and Exchange Commission ( SEC ) effective on filing, and may have taken effect pursuant to Section 19(b)(3) of the Securities Exchange Act of 1934 (the Act ). They will remain in effect barring further action by the SEC within 60 days after publication in the Federal Register. Copies are available on the CBOE public website at SR-CBOE Fees Schedule On November 30, 2010, the Exchange filed Rule Change File No. SR-CBOE , which filing proposes to amend the Market-Maker Trading Permit description in the Fees Schedule and Trading Permit Fee Circular to accommodate the listing of series on the Hybrid Trading System, in a class that is typically traded on the Hybrid 3.0 Platform. Any questions regarding the rule change may be directed to Kerry Adler, Legal Division, at The rule filing is available at SR-CBOE Fees Schedule On December 1, 2010, the Exchange filed Rule Change File No. SR-CBOE , which filing proposes to amend the Fees Schedule to adopt fees for Professional and Voluntary Professional transactions in S&P 500 Index option series (SPX) that trade on the Hybrid Trading System. Any questions regarding the rule change may be directed to Jennifer Lamie, Legal Division, at The rule filing is available at SR-CBOE Fees Schedule On November 30, 2010, the Exchange filed Rule Change File No. SR-CBOE , which filing proposes to amend the Fees Schedule to extend through March 31, 2011, a waiver of the transaction fee for public customer orders in options on Standard & Poor s Depositary Receipts that are executed in open outcry or in the Automated Improvement Mechanism. Any questions regarding the rule change may be directed to Jaime Galvan, Legal Division, at The rule filing is available at SR-CBOE Fees Schedule On December 1, 2010, the Exchange filed Rule Change File No. SR-CBOE , which filing proposes to reduce the amount of the Hybrid Agency Liaison (HAL) step-up rebate from $.20 per contract to $.15 per contract effective December 1, Any questions regarding the rule change may be directed to Jaime Galvan, Legal Division, at The rule filing is available at December 3, 2010 Volume RB21, Number 49 12

15 SR-CBOE Fees Schedule On December 1, 2010, the Exchange filed Rule Change File No. SR-CBOE , which filing proposes to amend the Marketing Fee Program. Specifically, CBOE proposes to not assess the marketing fee on electronic transactions in SPY options, except that it would continue to assess the marketing fee on electronic transactions resulting from AIM pursuant to CBOE Rule 6.74A and transactions in open outcry, and also to not assess the fee in transactions in Flexible Exchange Options. Any questions regarding the rule change may be directed to Patrick Sexton, Legal Division, at The rule filing is available at CBOE pdf. PROPOSED RULE CHANGE(S) Pursuant to Section 19(b)(1) of the Act, and Rule 19b-4 thereunder, the Exchange has filed the following proposed rule change with the SEC. Below, any additions to rule text are underlined, and any deletions are [bracketed]. Copies of the rule change filing are available at Members may submit written comments to the Legal Division. The effective date of a proposed rule change will be the date of approval by the SEC, unless otherwise noted. SR-CBOE Credit Option Margin Requirements On December 1, 2010, the Exchange filed Rule Change File No. SR-CBOE , which filing proposes to amend the margin requirements for Credit Options to be consistent with FINRA s margin requirements for Credit Default Swaps. This filing replaces SR-CBOE , which proposed a similar margin amendment and was previously withdrawn. Any questions regarding the rule change may be directed to Jenny Klebes, Legal Division, at The rule text is shown below and the rule filing is available at Rule 12.3 Margin Requirements RULE 12.3 (a) (k) No changes. (l) Credit Options (1) Risk Monitoring Procedures and Guidelines Trading Permit Holders are required to monitor the risk of customer and brokerdealer accounts with exposure to Credit Options and must implement and maintain a comprehensive written risk analysis methodology for assessing the potential risk to the Trading Permit Holder s capital over a specified range of possible market movements over a specified time period. For purposes of complying with this rule, Trading Permit Holders must employ the risk monitoring procedures and guidelines set forth below in sub-paragraphs (i) through (viii) of this Rule 12.3(l)(1). The Trading Permit Holder must review, in accordance with the Trading Permit Holder s written procedures, at reasonable periodic intervals, the Trading Permit Holder s credit extension activities for consistency with the risk monitoring procedures and guidelines set forth in this Rule 12.3(l)(1), and must determine whether the data necessary to apply the risk monitoring procedures and guidelines is accessible on a timely basis and information systems are available to adequately capture, monitor, analyze and report relevant data, including: December 3, 2010 Volume RB21, Number 49 13

16 (i) obtaining and reviewing the required account documentation and financial information necessary for assessing the amount of credit to be extended to customers and broker-dealers; (ii) assessing the determination, review and approval of credit limits to each customer and broker-dealer, and across all customers and broker-dealers, engaging in Credit Option transactions; (iii) monitoring credit risk exposure to the Trading Permit Holder from Credit Options, including the type, scope and frequency of reporting to senior management; (iv) the use of stress testing of accounts containing Credit Option contracts in order to monitor market risk exposure from individual accounts and in the aggregate; (v) managing the impact of credit extended related to Credit Option contracts on the Trading Permit Holder s overall risk exposure; (vi) determining the need to collect margin from a particular customer or broker-dealer in addition to the amount required by this Rule 12.3(l), including whether such determination was based upon the credit worthiness of the customer or broker-dealer and/or the risk of the specific Credit Option contracts; (vii) monitoring the credit exposure resulting from concentrated positions within both individual accounts and across all accounts containing Credit Option contracts: and (viii) maintaining sufficient margin in each customer and broker-dealer account to protect against the default of the largest individual exposure in the account as measured by computing the largest maximum possible loss. (2) Requiring Additional Margin. Trading Permit Holders shall, based on the risk monitoring procedures and guidelines required above, determine whether the margin required by this Rule 12.3(l) is adequate with respect to their customer and broker-dealer accounts and, where appropriate, increase such requirements. ([1]3) Margin Account -- Credit Default Options. (i) The initial and maintenance margin required on a[ny] Credit Default Option carried long in a customer[ s] or broker-dealer s account is a percentage of the option s cash settlement amount (as defined in Rule 29.1) according to the table below [100% of the current market value; provided, however, for the account of a qualified customer, the margin is 20% of the current market value. For purposes of this Rule 12.3(l), the term qualified customer shall be a person or entity that owns and invests on a discretionary basis no less than $5,000,000 in investments]. Credit Default Swap ( CDS ) Length of Time Until Expiration of the Option Spread* for the Reference Entity Underlying the Credit Default Option 1 Year or Less Greater than 1 Year / Less Than or Equal to 3 Years Greater Than 3 Years / Less Than or Equal to 7 Years % 1% 2% 3.5% % 2.5% 3.5% 5% % 5% 7.5% 10% % 7.5% 10% 12.5% 700 & above 7.5% 10% 12.5% 15% * Over LIBOR, in basis points. Greater Than 7 Years December 3, 2010 Volume RB21, Number 49 14

17 (ii) The initial and maintenance margin required on any Credit Default Option carried short in a customer[ s] or broker-dealer s account is a percentage of the option s cash settlement amount (as defined in Rule 29.1) according to the table below[is the cash settlement amount as defined in Rule 29.1; provided, however, for the account of a qualified customer, the margin is the lesser of the current market value plus 20% of the cash settlement amount defined in Rule 29.1 or the cash settlement amount]. Credit Default Swap ( CDS ) Length of Time Until Expiration of the Option Spread* for the Reference Entity Underlying the Credit Default Option 1 Year or Less Greater than 1 Year / Less Than or Equal to 3 Years Greater Than 3 Years / Less Than or Equal to 7 Years Greater Than 7 Years % 2% 4% 7% % 5% 7% 10% % 10% 15% 20% % 15% 20% 25% 700 & above 15% 20% 25% 30% * Over LIBOR, in basis points. (iii) Debt Security Offset. If an account is short a Credit Default Option and also has a short position in a debt security issued by the Reference Entity underlying the option, and the principal amount of the debt security is equal to: the cash settlement amount of the option multiplied by 1.33, no margin is required on the Credit Default Option. [Credit Default Option margin requirements may be satisfied by a deposit of cash or marginable securities.] ([2]4) Margin Account - Credit Default Basket Options. (i) The initial and maintenance margin required on a[ny] Credit Default Basket Option carried long in a customer[ s] or broker-dealer s account is a percentage of the option s cash settlement amount (as defined in Rule 29.1) according to the table below[100% of the current market value; provided, however, for the account of a qualified customer (as defined above), the margin is 15% of the current market value]. In the case of a Single Payout Credit Default Basket Option, the cash settlement amount to be used is the one that is the highest among the basket components, and in the case of a Multiple Payout Credit Default Basket Option, the cash settlement amount to be used is 50% of the sum of each basket component s cash settlement amount. Average Credit Default Swap ( CDS ) Spread* of the Basket Component Reference Entities 1 Year or Less Length of Time Until Expiration of the Option Greater than 1 Year / Less Than or Equal to 3 Years Greater than 3 Years / Less Than or Equal to 5 Years Greater Than 5 Years / Less Than or Equal to 7 Years %.5% 1% 2% 2.5% % 1.5% 2% 2.5% 3.5% 500 & above 1.5% 2.5% 5% 6% 7.5% Greater Than 7 Years December 3, 2010 Volume RB21, Number 49 15

18 * Over LIBOR, in basis points. (ii) The initial and maintenance margin required on a[ny] Credit Default Basket Option carried short in a customer[ s] or broker-dealer s account is a percentage of the option s cash settlement amount (as defined in Rule 29.1) according to the table below. In the case of a Single Payout Credit Default Basket Option, the cash settlement amount to be used is the one that is the highest among the basket components, and in the case of a Multiple Payout Credit Default Basket Option, the cash settlement amount to be used is 50% of the sum of each basket component s cash settlement amount. [as follows: (A) for Multiple Payout Credit Default Basket Options, the sum of each Basket Component s cash settlement amount as defined in Rule 29.1; provided, however, for the account of a qualified customer (as defined above), the margin is the lesser of the current market value plus 15% of the sum of each Basket Component s cash settlement amount as defined in Rule 29.1 or of the sum of each Basket Component s cash settlement amount; or (B) or Single Payout Credit Default Options, the Basket Component cash settlement amount as defined in Rule 29.1 that is the highest; provided, however, for the account of a qualified customer (as defined above), the margin is the lesser of the current market value plus 15% of the Basket Component cash settlement amount defined in Rule 29.1 that is the highest or the Basket Component cash settlement amount that is the highest.] Average Credit Length of Time Until Expiration of the Option Default Swap ( CDS ) Spread* of the Basket Component Reference Entities 1 Year or Less Greater than 1 Year / Less Than or Equal to 3 Years Greater than 3 Years / Less Than or Equal to 5 Years Greater Than 5 Years / Less Than or Equal to 7 Years Greater Than 7 Years % 1% 2% 4% 5% % 3% 4% 5% 7% 500 & above 3% 5% 10% 12% 15% * Over LIBOR, in basis points. (5) Spreads. If an account is short a Credit Option and is also long a Credit Option with the same underlying Reference Obligation(s), and the long option is paid for in full, and the long option does not expire before the short option, no margin is required ([(iii)]6) Credit [Default Basket ]Option margin requirements may be satisfied by a deposit of cash or marginable securities. (7) Concentrations. If, across all accounts, the maximum exposure in Credit Option contracts overlying any single Reference Entity exceeds the Trading Permit Holder s tentative net capital, the Trading Permit Holder must deduct from net capital an amount equal to the aggregate margin requirement for all such accounts on the Credit Option contracts (including Credit Default Basket Options having the subject Reference Entity as a component) overlying such single Reference Entity, as specified in this Rule 12.3(l). This deduction from net capital may be reduced by the amount of excess margin held in all customer and broker-dealer accounts. ([3]8) Cash Account --Credit Default Options. A Credit Default Option carried short in a customer s account is deemed a covered position, and eligible for the cash account, provided any one of the following either is held in the account at the time the option is written or is received into the account promptly thereafter: December 3, 2010 Volume RB21, Number 49 16

19 (i) cash or cash equivalents equal to 100% of the cash settlement amount as defined in Rule 29.1; or (ii) an escrow agreement. The escrow agreement must certify that the bank holds for the account of the customer as security for the agreement (A) cash, (B) cash equivalents, (C) one or more qualified equity securities, or (D) a combination thereof having an aggregate market value of not less than 100% of the cash settlement amount as defined in Rule 29.1 and that the bank will promptly pay the TPH organization the cash settlement amount in the event of a Credit Event as defined in Rule ([4]9) Cash Account - Credit Default Basket Options. A Credit Default Basket Option carried short in a customer s account is deemed a covered position, and eligible for the cash account, provided any one of the following either is held in the account at the time the option is written or is received into the account promptly thereafter: (i) For Multiple Payout Credit Default Basket Options, cash or cash equivalents equal to [100%] 50% of the sum of each Basket Component s cash settlement amount as defined in Rule 29.1; (ii) For Single Payout Credit Default Basket Options, cash or cash equivalents equal to 100% of the Basket Component cash settlement amount as defined in Rule 29.1 that is the highest; or (iii) an escrow agreement. The escrow agreement must certify that the bank holds for the account of the customer as security for the agreement (A) cash, (B) cash equivalents, (C) one or more qualified equity securities, or (D) a combination thereof having an aggregate market value of not less than 100% of the sum of each Basket Component s cash settlement amount as defined in Rule 29.1 in the case of Multiple Payout Credit Default Basket Option or 100% of the Basket Component cash settlement amount as defined in Rule 29.1 that is the highest in the case of a Single Payout Credit Default Basket Option and that the bank will promptly pay the TPH organization the cash settlement amount in the event of a Credit Event as defined in Rule * * * * * Rule 12.5 Determination of Value for Margin Purposes RULE Positions in active securities, except security futures contracts, dealt in on a recognized exchange (including option contracts) shall, for margin purposes, be valued at current market value prices; provided that, whether or not dealt in on an exchange, only those options contracts on a stock or stock index, or a stock index warrant, having an expiration that exceeds 9 months, or a Credit Option as defined in Rule29.1 [that is carried for the account of a qualified customer], and which are listed or guaranteed by the carrying broker-dealer, may be deemed to have market value for the purposes of Rule 12.3(c). Security futures contracts shall have no value for margin purposes. Positions in other securities shall be valued conservatively in the light of current market prices and the amount of anticipated realization upon a liquidation of the entire position. Substantial additional margin must be required in all cases where the securities carried are subject to unusually rapid or violent changes in value, or where the amount carried is such that they cannot be liquidated promptly. * * * * * SR-CBOE Anti-Money Laundering Compliance Program On December 2, 2010, the Exchange filed Rule Change File No. SR-CBOE , which filing proposes to amend Rule 4.20 to require all Trading Permit Holders or TPH organizations to conduct independent testing during the first calendar year of becoming a Trading Permit Holder or TPH December 3, 2010 Volume RB21, Number 49 17