Exchange. Bulletin. May 18, 2012 Volume 40, Number 20 TRADING PERMIT INFORMATION FOR 05/10/2012 THROUGH 05/16/2012

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1 Exchange May 18, 2012 Volume 40, Number 20 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 Trading Permit Holders 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 by Trading Permit Holders 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. Copyright 2012 Chicago Board Options Exchange, Incorporated TRADING PERMIT INFORMATION FOR 05/10/2012 THROUGH 05/16/2012 TRADING PERMIT APPLICATIONS RECEIVED FOR WHICH BULLETIN PUBLICATION IS REQUIRED TPH Organization Applicants Jefferies & Company, Inc. Alfred R. Petrillo, Nominee 520 Madison Avenue New York, NY Peregrine C. Broadbent - CFO/EVP/Director Brian P. Friedman - Director/Chairman/Executive Committee Richard B. Handler - Chairman/CEO/Director Charles J. Hendrickson Treasurer Jefferies Group Inc. - Holding Company Lauri A. Scoran - Chief Compliance Officer/Managing Director Michael J. Sharp - General Counsel/Secretary/EVP EFFECTIVE TRADING PERMIT HOLDERS Individuals Nominee: Effective Date Paul S Clark (CLK) 5/11/12 Ronin Capital LLC Type of Business to be Conducted: Market Maker NAME CHANGES TPH Organization Effective Date From: Assent LLC 5/14/12 To: SunGard Brokerage & Securities Services LLC

2 Page 2 May 18, 2012 Volume 40, Number 20 Chicago Board Options Exchange RESEARCH CIRCULARS The following Research Circulars were distributed between May 11 and May 17, 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 May 11, 2012 SAP AG ( SAP ) CONTRACT ADJUSTMENT FOR SPECIAL CASH DIVIDEND Ex-Date: May 21, 2012 Research Circular #RS May 11, 2012 SAP AG ( SAP ) CONTRACT ADJUSTMENT FOR SPECIAL CASH DIVIDEND Ex-Date: May 21, 2012 Research Circular #RS May 14, 2012 Infosys Limited ( INFY & adj. INFY1 ) CONTRACT ADJUSTMENT FOR SPECIAL CASH DIVIDEND Ex-Date: May 22, 2012 Research Circular #RS May 14, 2012 Liz Claiborne, Inc. ( LIZ ) Name, Stock and Option Symbol Change to Fifth & Pacific Companies, Inc. ( FNP ) Effective Date: May 15, 2012 Research Circular #RS May 14, 2012 FMC Corporation ( FMC ) 2-for-1 Stock Split Ex-Distribution Date: May 25, 2012 Research Circular #RS May 14, 2012 The Pep Boys Manny, Moe & Jack ( PBY ) Proposed Merger with Auto Acquisition Company, LLC Research Circular #RS May 14, 2012 Venoco, Inc. ( VQ ) Proposed Merger with Denver Parent Corporation Research Circular #RS May 14, 2012 AboveNet, Inc. ( ABVT ) Proposed Merger with Zayo Group, LLC Research Circular #RS May 16, 2012 Comverge, Inc. ( COMV ): Merger Completed -- Cash Settlement Research Circular #RS May 16, 2012 RADVISION Ltd. ( RVSN ) Proposed Merger with Avaya Inc. Research Circular #RS May 16, 2012 Human Genome Sciences, Inc. ( HGSI ) Tender Offer by H. Acquisition Corp. Research Circular #RS May 16, 2012 CryptoLogic Limited ( CRYP ) Tender Offer FURTHER EXTENDED by Amaya Gaming Group Inc. Research Circular #RS May 16, 2012 CVR Energy, Inc. ( CVI ) Subsequent Tender Offer by IEP Energy LLC Research Circular #RS May 16, 2012 Seadrill Ltd. ( SDRL ) CONTRACT ADJUSTMENT FOR SPECIAL CASH DIVIDEND Ex-Date: May 22, 2012 Research Circular #RS May 17, 2012 Corn Products International, Inc. ( CPO ) Name, Stock and Option Symbol Change to Ingredion Incorporated ( INGR ) Effective Date: June 4, 2012

3 May 18, 2012 Volume RB23, Number 20 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 2012 Chicago Board Options Exchange, Incorporated. REGULATORY CIRCULARS Regulatory Circular RG DATE : May 11, 2012 TO: FROM: RE: Trading Permit Holders Business Development CFLEX 2.0 Rollout SPY FLEX Option Class Effective Monday, May, 14, 2012 the SPY FLEX Option class will be temporarily removed from the CFLEX 2.0 system and re-added to the CFLEX 1.0 system until certain changes are made to the 2.0 system. The SPX FLEX Option class will remain on the CFLEX 2.0 system. Questions concerning this change can be directed to Matthew McFarland at or the CBOE Help Desk at or helpdesk@cboe.com. (Updates Regulatory Circular RG12-056) May 18, 2012 Volume RB23, Number 20 1

4 CBOE Regulatory Circular RG C2 Regulatory Circular C2 RG Date: May 11, 2012 To: From: Re: CBOE, C2 and CBSX Trading Permit Holders Legal and Regulatory Services Division Amendments to Rule 9.24 Telephone Solicitation Executive Summary The Exchange proposed changes to CBOE Rule 9.24 (Telephone Solicitation), which changes became effective upon filing with the Securities and Exchange Commission (SEC). 1 Chapter 9 of the C2 Rules incorporates by reference Chapter IX of the CBOE Rules, so this rule also applies to C2 Trading Permit Holders. The changes adopt provisions that are substantially similar to Federal Trade Commission (FTC) rules that prohibit deceptive and other abusive telemarketing acts or practices. These changes to CBOE Rule 9.24 will become operative on June 29, The text of Rule 9.24, as amended, can be found at and Questions regarding Rule 9.24 may be directed to the Regulatory Service Division s Regulatory Interpretations and Guidance team either by telephone at (312) or by at RegInterps@cboe.com, or to Andy Spiwak at or spiwak@cboe.com. Background and Discussion Rule 9.24 requires Trading Permit Holders to maintain and consult do-not-call lists, limit the hours of telephone solicitations and prohibit Trading Permit Holders from using deceptive and abusive acts and practices in connection with telemarketing. The SEC directed CBOE to adopt these telemarketing rules in accordance with the Telemarketing Consumer Fraud and Abuse Prevention Act of 1994 (Prevention Act). 2 The Prevention Act requires the SEC to promulgate, or direct any national securities exchange or registered securities association to promulgate, rules substantially similar to the FTC rules to prohibit deceptive and other abusive telemarketing acts or practices. 3 In 2011, SEC staff directed CBOE to conduct a review of its telemarketing rule and propose rule amendments that provide protections that are, in the SEC s view, at least as strong as those provided by the FTC s telemarketing rules. 4 Rule 9.24 Telemarketing The amendments to Rule 9.24 adopt provisions that are substantially similar to the FTC rules that prohibit deceptive and other abusive telemarketing acts or practices as described below. 1 See Securities Exchange Act Release No (March 15, 2012), 77 FR (March 21, 2012) (SR- CBOE ) (Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Telemarketing Rules). The rule filing also changes the name of Rule 9.24 to Telemarketing U.S.C U.S.C See Letter from Robert W. Cook, Director, Division of Trading and Markets, Securities and Exchange Commission, to William J. Brodsky, Chairman and Chief Executive Officer of CBOE Holdings, Inc. (May 12, 2011). May 18, 2012 Volume RB23, Number 20 2

5 Telemarketing Restrictions Amended Rule 9.24(a) provides that no Trading Permit Holder or associated person may make an outbound telephone call to: (1) any person s residence at any time other than between 8 a.m. and 9 p.m. local time at the called person s locations; (2) any person that previously has stated that he or she does not wish to receive any outbound telephone calls made by or on behalf of the Trading Permit Holder; or (3) any person who has registered his or her telephone number on the FTC s national do-not-call registry. The proposed rule change is substantially similar to the FTC s provisions regarding abusive telemarketing acts or practices. 5 Amended Rule 9.24 (c) provides that these telemarketing restrictions do not apply to outbound telephone calls by a Trading Permit Holder or an associated person if: (1) the Trading Permit Holder has received that person s express prior written consent; (2) the Trading Permit Holder has an established business relationship with the person; or (3) the person is a broker or dealer. New Rule 9.24(n)(1) defines established business relationship as a relationship between a Trading Permit Holder and a person if (1) the person has made a financial transaction or has a security position, a money balance, or account activity with the Trading Permit Holder or at a clearing firm that provides clearing services to the Trading Permit Holder within the 18 months immediately preceding the date of an outbound telephone call; (2) the Trading Permit Holder is the broker-dealer of record for an account of the person within the 18 months immediately preceding the date of an outbound telephone call; or (3) the person has contacted the Trading Permit Holder to inquire about a product or service offered by the Trading Permit Holder within the three months immediately preceding the date of an outbound telephone call. A person s established business relationship with a Trading Permit Holder does not extend to the Trading Permit Holder s affiliated entities unless the person would reasonably expect them to be included. Similarly, a person s established business relationship with a Trading Permit Holder s affiliate does not extend to the Trading Permit Holder unless the person would reasonably expect the Trading Permit Holder to be included. Caller Disclosures Rule 9.24(b) provides that no Trading Permit Holder or associated person make an outbound telephone call without disclosing truthfully, promptly and in a clear and conspicuous manner to the called person (1) the identify of the caller and the TPH organization; (2) the telephone number or address at which the caller may be contacted; and (3) that the purpose of the call is to solicit the purchase of securities or related services. The amended rule also provides that the *telephone number provided may not be a 900 number or any other number for which charges exceed local or longdistance transmission charges. Firm-Specific Do-Not-Call Lists Amended Rule 9.24(d) provides that each Trading Permit Holder making an outbound telephone call must make and maintain a list of persons who request not to receive further calls. Rule 9.24(d)(2) adopts procedures that Trading Permit Holders must institute to comply with the telemarketing restrictions and caller disclosure requirements described above prior to engaging in telemarketing. These procedures must meet the following minimum standards: (1) Trading Permit Holders must have a written policy for maintaining their firm-specific do-not-call lists; (2) personnel engaged in any aspect of telemarketing must be informed and trained in the existence and use of the Trading Permit Holder s firmspecific do-not-call list; (3) if a Trading Permit Holder receives a request from a person not to receive calls from that Trading Permit Holder, the Trading Permit Holder must record the request and place the person s name, if provided, and telephone number on its firm-specific do-not-call list at the time the request is made; 6 (4) Trading Permit Holders or associated persons making an outbound telephone call must make the caller disclosures described above; (5) in the 5 See 16 CFR 310.4(b)(1)(iii)(A) and (B) and (c). 6 Trading Permit Holders must honor a person s do-not-call request within a reasonable time from the date the request is made, which may not exceed 30 days from the date of the request. If these requests are recorded or maintained by a party other than the Trading Permit Holder on whose behalf the outbound telephone call is made, the Trading Permit Holder on whose behalf the outbound telephone call is made will still be liable for any failures to honor the do-not-call request. May 18, 2012 Volume RB23, Number 20 3

6 absence of a specific request by the person to the contrary, a person s do-not-call request will apply to the Trading Permit Holder making the call, and will not apply to affiliated entities unless the consumer reasonably would expect them to be included given the identification of the call and the product being advertised; and (6) a Trading Permit Holder making outbound telephone calls must maintain a record of a person s request not to receive further calls. Inclusion of the requirement to adopt these procedures will not create any new obligations on Trading Permit Holders, as they are already subject to identical provisions under Federal Communication Commission (FCC) telemarketing regulations. 7 Do-Not-Call Safe Harbors New Rule 9.24(e) adopts two exceptions to the telemarketing restriction that prohibits outbound telephone calls to persons on the FTC s national do-not-call registry. First, a Trading Permit Holder or associated person making outbound telephone calls will not be liable for violating that restriction if: (1) the Trading Permit Holder has an established business relationship with the called person; however, a person s request to be placed on the Trading Permit Holder s firm-specific do-not-call list terminates this established business relationship exception; (2) the Trading Permit Holder has obtained the person s prior express written consent; or (3) the Trading Permit Holder or associated person making the call has a personal relationship with the called person. Second, a Trading Permit Holder or associated person making outbound telephone calls will not be liable for violating the national do-not-call registry restriction if the Trading Permit Holder or associated person demonstrates that the violation is the result of an error and that as part of the Trading Permit Holder s routine business practice: (1) the Trading Permit Holder has established and implemented written procedures to comply with the telemarketing restrictions and caller disclosure requirements described above; (2) the Trading Permit Holder has trained its personnel, and any entity assisting in its compliance, in these procedures; (3) the Trading Permit Holder has maintained and recorded a firm-specific do-not-call list; and (4) the Trading Permit Holder uses a process to prevent outbound telephone calls to any telephone number on the Trading Permit Holder s firm-specific do-not-call list or the national donot-call registry, employing a version of the national do-not-call registry obtained from the FTC no more than 31 days prior to the date any call is made, and maintains records documenting this process. These safe harbors are substantially similar to the FTC s exceptions to the prohibition on making outbound telephone calls to persons on the FTC s national do-not-call registry. 8 Wireless Communications New Rule 9.24(f) clarifies that the application of the telemarketing rule also applies to Trading Permit Holders and associated persons making outbound telephone calls to wireless telephone numbers. Outsourcing Telemarketing New Rule 9.24(g) states that if a Trading Permit Holder uses another entity to perform telemarketing services on its behalf, the firm remains responsible for ensuring compliance with all provisions contained in the rule. Rule 9.24(f) clarifies that the entity or person that performs telemarketing services on the Trading Permit Holder s behalf must be appropriately registered or licensed, where required. Billing Information Amended Rule 9.24(h) requires, for any telemarketing transaction, a Trading Permit Holder or associated person to obtain the express informed consent of the person to be charged and to be charged using the identified account. If the telemarketing transaction involves pre-acquired account information and a free-to-pay conversion feature, a Trading Permit Holder or associated person must: (1) obtain from the customer, at a minimum, the last four digits of the account number to be charged; (2) obtain from the customer an express agreement to be charged and to be 7 8 See 47 CFR (d). See 16 CFR 310.4(b)(1)(iii)(B) and 16 CFR 310.4(b)(3). May 18, 2012 Volume RB23, Number 20 4

7 charged using the identified account number; and (3) make and maintain an audio recording of the entire telemarketing transaction. For any other telemarketing transaction involving pre-acquired account information, a Trading Permit Holder or associated person must: (1) identify the account to be charged with sufficient specificity for the customer to understand what account will be charged; and (2) obtain from the customer an express agreement to be charged and to be charged using the identified account number. The rule is substantially similar to the FTC s provision regarding the submission of billing information. 9 Caller Identification Information New Rule 9.24(i) includes caller identification information provisions that provide that Trading Permit Holders engaging in telemarketing must transmit caller identification information and are explicitly prohibited from blocking caller identification information. The telephone number provided must permit any person to make a donot-call request during normal business hours. Inclusion of these caller identification information provisions in the new rule does not create any new obligations on Trading Permit Holders as they are already subject to identical provisions under FCC regulations. 10 Unencrypted Consumer Account Numbers New Rule 9.24(j) prohibits a Trading Permit Holder or associated person from disclosing or receiving, for consideration, unencrypted consumer account numbers for use in telemarketing. The provision is substantially similar to the FTC s provision regarding unencrypted consumer account numbers. 11 Additionally, the provision defines unencrypted as not only complete, visible account numbers, whether provided in lists or singly, but also encrypted information with a key to its decryption. The definition is substantially similar to the view taken by the FTC. 12 Abandoned Calls New Rule 9.24(k) prohibits a Trading Permit Holder or associated person from abandoning any outbound telemarketing call. The abandoned calls prohibition is subject to a safe harbor under paragraph (k)(2), which provides that a Trading Permit Holder or associated person will not be liable for violating the prohibition on abandoning outbound telephone calls if: (1) the Trading Permit Holder or associated person employs technology that ensures abandonment of no more than three percent of all calls answered by a person, measured over the duration of a single calling campaign, if less than 30 days, or separately over each successive 30-day period or portion thereof that the campaign continues; (2) the Trading Permit Holder or associated person, for each telemarketing call placed, allows the telephone to ring for at least 15 seconds or four rings before disconnecting an unanswered call; (3) whenever a Trading Permit Holder or associated person is not available to speak with the person answering the telemarketing call within two seconds after the person s completed greeting, the Trading Permit Holder or associated person promptly plays a recorded message stating the name and telephone number of the Trading Permit Holder or associated person on whose behalf the call was placed; and (4) the Trading Permit Holder retains records establishing compliance with the safe harbor. The rule is substantially similar to the FTC s provisions regarding abandoned calls See 16 CFR 310.4(a)(7); see also Federal Trade Commission, Telemarketing Sales Rule, 68 FR 4580 (January 29, 2003) at See 47 CFR See 16 CFR 310.4(a)(6); see also Federal Trade Commission, Telemarketing Sales Rule, 68 FR 4580 (January 29, 2003) at See Federal Trade Commission, Telemarketing Sales Rule, 68 FR 4580 (January 29, 2003) at See 16 CFR 310.4(b)(1)(iv); see also 16 CFR 310.4(b)(4); and Federal Trade Commission, Telemarketing Sales Rule, 68 FR 4580 (January 29, 2003) at May 18, 2012 Volume RB23, Number 20 5

8 Prerecorded Messages New Rule 9.24(l) prohibits a Trading Permit Holder or associated person from initiating any outbound telemarketing call that delivers a prerecorded message without a person s express written agreement to receive such calls. The rule also requires that all prerecorded telemarketing calls provide specified opt-out mechanisms so that a person can opt out of future calls. The prohibition does not apply to a prerecorded message permitted for compliance with the safe harbor for abandoned calls described above. The rule is substantially similar to the FTC s provisions regarding prerecorded messages. 14 Credit Card Laundering New Rule 9.24(m) prohibits credit card laundering, the practice of depositing into the credit card system a sales draft that is not the result of a credit card transaction between the cardholder and the Trading Permit Holder. Except as expressly permitted by the applicable credit card system, the rule prohibits a Trading Permit Holder or associated person from: (1) presenting to or depositing into, the credit card system for payment, a credit card sales draft generated by a telemarketing transaction that is not the result of a telemarketing credit card transaction between the cardholder and the Trading Permit Holder; (2) employing, soliciting, or otherwise causing a merchant, or an employee, representative or agent of the merchant, to present to or to deposit into the credit card system for payment, a credit card sales draft generated by a telemarketing transaction that is not the result of a telemarketing credit card transaction between the cardholder and the merchant; or (3) obtaining access to the credit card system through the use of a business relationship or an affiliation with a merchant, when the access is not authorized by the merchant agreement or the applicable credit card system. The rule is substantially similar to the FTC s provisions regarding credit card laundering. 15 Definitions New Rule 9.24(n) adopts definitions that are substantially similar to the FTC s definitions. 16 The rule adopts substantially similar definitions of acquirer, billing information, caller identification service, cardholder, charitable contribution, credit, credit card, credit card sales draft, credit card system, customer, donor, established business relationship, free-to-pay conversion, merchant, merchant agreement, outbound telephone call, person, pre-acquired account information, telemarketer, and telemarketing. State and Federal Laws Amended Rule 9.24, Interpretation and Policy.01 reminds Trading Permit Holders and associated persons that engage in telemarketing that they also are subject to the requirements of relevant state and federal laws and rules, including the Prevention Act, the Telephone Consumer Protection Act of 1991, 17 and the rules of the FCC relating to telemarketing practices and the rights of telephone consumers See 16 CFR 310.4(b)(1)(v); see also Federal Trade Commission, Telemarketing Sales Rule, 73 FR (August 29, 2008). 15 See 16 CFR 310.3(c); see also Federal Trade Commission, Telemarketing Sales Rule, 60 FR (August 23, 1995) at See 16 CFR 310.2; see also Federal Trade Commission, Telemarketing Sales Rule, 60 FR (August 23, 1995) at 43843; and Federal Trade Commission, Telemarketing Sales Rule, 68 FR 4580 (January 29, 2003) at See 47 U.S.C See 47 CFR May 18, 2012 Volume RB23, Number 20 6

9 Regulatory Circular RG To: Trading Permit Holders From: Business Development Date: May 16, 2012 Re: AIM Opt-Out Effective May 22, 2012 CBOE will activate a new Opt Out feature for Automated Improvement Mechanism ( AIM ) auctions. Details are as follows: Opt Out will allow the contra/match order paired against the AIM Agency order to forgo any participation guarantee, if others are willing to fill the Agency order at the contra/match order s limit price or better. Opt Out is only available for contra/match orders with a limit price. Opt Out will be available for AIM simple and complex orders, including those with stock (pending activation), as well as for AIM ISO s and Sweep and AIM. Interested parties should contact the API Group at /api@cboe.com for message specifications and requirements for use of the Opt Out feature. Questions regarding this functionality may be directed to Anthony Montesano at or montesan@cboe.com or the Help Desk at or helpdesk@cboe.com. May 18, 2012 Volume RB23, Number 20 7

10 EFFECTIVE-ON-FILING RULE CHANGE(S) R U L E C H A N G E S The following rule filing(s) was 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 ). The rule filing(s) will remain in effect barring further action by the SEC within 60 days after 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 Fees Schedule On May 17, 2012, the Exchange filed Rule Change File No. SR-CBOE , which filing proposes to amend the CBOE Fees Schedule to amend the Customer Large Trade Discount to state that, for any Trading Permit Holder that executes 750,000 or more customer VIX options contracts in a month, regular customer transaction fees will only be charged up to the first 7,500 VIX options contracts per order in that month. Any questions regarding the rule change may be directed to Jeff Dritz, Legal Division, at The rule filing is available at 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(s) 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 Trading Permit Holders 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 CBOE S&P 500 AM/PM Basis Options On May 11, 2012, the Exchange filed Rule Change File No. SR-CBOE , which filing proposes to list and trade CBOE S&P 500 AM/PM Basis (SPBAS) options. SPBAS options reflect the difference between the Special Opening Quotation (SOQ) of the S&P 500 Index and the closing level of the S&P 500 Index on the third Friday of each month. 1 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 5.5 Series of Option Contracts Open for Trading RULE 5.5 (a) (e) No change. Interpretations and Policies No change..20 Notwithstanding Interpretation and Policy.01 above, the intervals between strike prices for CBOE S&P 500 AM/PM Basis option series shall be determined in accordance with Interpretation and Policy.01(e) to Rule * * * * * 1 Rule Change File No. SR-CBOE replaces Rule Change File No. SR-CBOE , which was included in the December 9, 2011 Bulletin. May 18, 2012 Volume RB23, Number 20 8

11 CHAPTER XXIV Index Options Rule 24.1 Definitions RULE No change. Interpretations and Policies:.01 The reporting authorities designated by the Exchange in respect of each index underlying an index option contract traded on the Exchange are as follows: Index Reporting Authority (Add the following to the current list:) CBOE S&P 500 AM/PM Basis CBOE * * * * * Rule 24.4 Position Limits for Broad-Based Index Options RULE (a) In determining compliance with Rule 4.11, there shall be no position limits for broad-based index option contracts (including reduced-value option contracts) on CBOE S&P 500 AM/PM Basis, CBOE S&P 500 Three-Month Realized Variance, CBOE S&P 500 Three-Month Realized Volatility and on the BXM (1/10th value), DJX, OEX, XEO, NDX, RUT, VIX, VXN, VXD, S&P 500 Dividend Index and SPX classes. All other broad-based index option contracts shall be subject to a contract limitation fixed by the Exchange, which shall not be larger than the limits provided in the chart below. * * * * * (b) (e) No change. Interpretations and Policies: No change..03 Reporting Requirement Each Trading Permit Holder (other than CBOE Market-Makers) or TPH organization that maintains a broad-based index option position on the same side of the market in excess of 100,000 contracts for OEX, XEO, NDX, RUT, VIX, VXN, VXD, S&P 500 Dividend Index, SPX, CBOE S&P 500 AM/PM Basis, CBOE S&P 500 Three-Month Realized Variance or CBOE S&P 500 Three-Month Realized Volatility and 1 million contracts for BXM (1/10th value) and DJX, for its own account or for the account of a customer, shall report information as to whether the positions are hedged and provide documentation as to how such contracts are hedged, in the manner and form required by the Department of Market Regulation. In calculating the applicable contract-reporting amount, reduced-value contracts will be aggregated with fullvalue contracts and counted by the amount by which they equal a full-value contract (e.g., 10 XSP options equal 1 SPX full-value contract). The Exchange may specify other reporting requirements of this interpretation as well as the limit at which the reporting requirement may be triggered.. 04 Margin and Clearing Firm Requirements Whenever the Exchange determines, based on a report by the Department of Market Regulation or otherwise, that additional margin is warranted in light of the risks associated with an under-hedged BXM (1/10th value), SPX, OEX, XEO, NDX, RUT, DJX, VIX, VXN, VXD, S&P 500 Dividend Index, CBOE S&P 500 AM/PM Basis, CBOE S&P 500 Three-Month Realized Variance or CBOE S&P 500 Three- Month Realized Volatility option position, the Exchange may consider imposing additional margin upon the account maintaining such under-hedged position pursuant to its authority under Exchange Rule Additionally, it should be noted that the clearing firm carrying the account will be subject to capital charges under SEC Rule 15c3-1 to the extent of any margin deficiency resulting from the higher margin requirements. * * * * * Rule 24.5 Exercise Limits RULE In determining compliance with Rule 4.12, exercise limits for index option contracts shall be equivalent to the position limits prescribed for option contracts with the nearest expiration date in Rule 24.4, 24.4A, or 24.4C. There shall be no exercise limits for broad-based index options (including reducedvalue option contracts) on CBOE S&P 500 AM/PM Basis,CBOE S&P 500 Three-Month Realized May 18, 2012 Volume RB23, Number 20 9

12 Variance, CBOE S&P 500 Three-Month Realized Volatility and on the BXM (1/10th value), DJX, OEX, XEO, NDX, RUT, VIX, VXN, VXD, S&P 500 Dividend Index, or SPX. Interpretations and Policies: No change. * * * * * Rule 24.6 Days and Hours of Business RULE No change. Interpretations and Policies: No change..03 On their last trading day, transactions in expiring CBOE S&P 500 AM/PM Basis options may be effected on the Exchange between the hours of 8:30 a.m. (Chicago time) and 3:00 pm (Chicago time). * * * * * Rule 24.9 Terms of Index Option Contracts RULE (a) General. (1) No change. (2) Expiration Months. Index option contracts may expire at three-month intervals or in consecutive months. The Exchange may list up to six expiration months at any one time, but will not list index options that expire more than twelve months out. Notwithstanding the preceding restriction, the Exchange may list up to twelve expiration months at any one time for any broad-based security index option contracts, including reduced-value and jumbo option contracts, (e.g., DJX, NDX, RUT and SPX) upon which the Exchange calculates a volatility index and for CBOE S&P 500 AM/PM Basis options. (A) (B) No change. (3) European-Style Exercise. The following European-style index options, some of which are A.M.-settled as provided in paragraph (a)(4), are approved for trading on the Exchange: (i)- (civ) No change. (cv) CBOE S&P 500 AM/PM Basis (P.M.-settled) (4) (5) No change. Interpretations and Policies:.01 The procedures for adding and deleting strike prices for index options are provided in Rule 5.5 and Interpretations and Policies related thereto, as otherwise generally provided by Rule 24.9, and include the following: (a) - (c) No change. (d) When new series of index options with a new expiration date are opened for trading, or when additional series of index options in an existing expiration date are opened for trading as the current value of the underlying index to which such series relate moves substantially from the exercise prices of series already opened, the exercise prices of such new or additional series shall be reasonably related to the current value of the underlying index at the time such series are first opened for trading. In the case of all classes of index options, the term reasonably related to the current value of the underlying index shall have the meaning set forth in Interpretation and Policy [.05].04 under Rule (e) [Reserved.] The interval between strike prices for CBOE S&P 500 AM/PM Basis options will be $1 or greater where the strike price is $200 or less and $5 or greater where the strike price is greater than $200. (f) (l) No change No change. * * * * * Rule 24A.7 Position Limits for FLEX Narrow-Based Index Options; Reporting Requirements for Flex Broad-Based Index Options and Flex Equity Options Exercise Limits RULE 24A.7. (a) No change. (b) Certain Broad-Based FLEX Index Options. There shall be no position limits for FLEX BXM (1/10th value), DJX, OEX, XEO, NDX, RUT, VIX, VXN, VXD, CBOE S&P 500 AM/PM Basis, CBOE S&P 500 Three-Month Realized Variance, CBOE S&P 500 Three-Month Realized Volatility, S&P 500 Dividend May 18, 2012 Volume RB23, Number 20 10

13 Index or SPX option contracts (including reduced-value option contracts). However, each Trading Permit Holder or TPH organization (other than CBOE Market-Makers) that maintains a FLEX broad-based index option position on the same side of the market in excess of 100,000 contracts for OEX, XEO, NDX, RUT, S&P 500 Dividend Index, CBOE S&P 500 AM/PM Basis or SPX and 1 million contracts for BXM (1/10th value) and DJX, for its own account or for the account of a customer, shall report information as to whether the positions are hedged and provide documentation as to how such contracts are hedged, in the manner and form prescribed by the Exchange. In calculating the applicable contract-reporting amount, reducedvalue contracts will be aggregated with full-value contracts and counted by the amount by which they equal a full- value contract (e.g., 10 XSP options equal 1 SPX full-value contract). The Exchange may specify other reporting requirements of this interpretation as well as the limit at which the reporting requirement may be triggered. In addition, whenever the Exchange determines that a higher margin is warranted in light of the risks associated with an under-hedged FLEX BXM (1/10th value), DJX, OEX, XEO, NDX, RUT, VIX, VXN, VXD, CBOE S&P 500 AM/PM Basis, CBOE S&P 500 Three-Month Realized Variance, CBOE S&P 500 Three-Month Realized Volatility, S&P 500 Dividend Index or SPX option position, the Exchange may consider imposing additional margin upon the account maintaining such under-hedged position, pursuant to its authority under Exchange Rule Additionally, it should be noted that the clearing firm carrying the account will be subject to capital charges under 15c3-1 under the Exchange Act to the extent of any margin deficiency resulting from the higher margin requirements. Rule 24A.8 Exercise Limits RULE 24A.8. (a) In determining compliance with Rules 4.12 and 24.5, exercise limits for FLEX Index and FLEX Individual Stock or ETF Based Volatility Index Options shall be equivalent to the FLEX position limits prescribed in Rule 24A.7. There shall be no exercise limits for broad-based FLEX Index Options (including reduced-value option contracts) on BXM (1/10th value), DJX, NDX, OEX, RUT, S&P 500 Dividend Index, SPX, VIX, VXN, VXD, CBOE S&P 500 AM/PM Basis, CBOE S&P 500 Three-Month Realized Variance, CBOE S&P 500 Three-Month Realized Volatility and XEO. (b) (d) No change. * * * * * Rule 24B.7 Position Limits and Reporting Requirements RULE 24B.7. (a) No change. (b) Certain Broad-Based FLEX Index Options. There shall be no position limits for FLEX BXM (1/10th value), DJX, NDX, OEX, RUT, S&P 500 Dividend Index, SPX, VIX, VXN, VXD, CBOE S&P 500 AM/PM Basis, CBOE S&P 500 Three-Month Realized Variance, CBOE S&P 500 Three-Month Realized Volatility or XEO option contracts (including reduced-value option contracts). However, each Trading Permit Holder or TPH organization (other than a FLEX Market-Maker) that maintains a FLEX broad-based index option position on the same side of the market in excess of 100,000 contracts for NDX, OEX, RUT, S&P 500 Dividend Index, SPX, VIX, VXN, VXD, CBOE S&P 500 AM/PM Basis,CBOE S&P 500 Three- Month Realized Variance, CBOE S&P 500 Three-Month Realized Volatility or XEO and 1 million contracts for BXM (1/10th value) and DJX, for its own account or for the account of a customer, shall report information as to whether the positions are hedged and provide documentation as to how such contracts are hedged, in the manner and form prescribed by the Exchange. In calculating the applicable contract-reporting amount, reduced-value contracts will be aggregated with full-value contracts and counted by the amount by which they equal a full-value contract (e.g., 10 XSP options equal 1 SPX fullvalue contract). The Exchange may specify other reporting requirements of this interpretation as well as the limit at which the reporting requirement may be triggered. In addition, whenever the Exchange determines that a higher margin is warranted in light of the risks associated with an under-hedged FLEX BXM (1/10th value), DJX, NDX, OEX, RUT, S&P 500 Dividend Index, SPX, VIX, VXN, VXD, CBOE S&P 500 AM/PM Basis, CBOE S&P 500 Three-Month Realized Variance, CBOE S&P 500 Three-Month Realized Volatility or XEO option position, the Exchange may consider imposing additional margin upon the account maintaining such under-hedged position, pursuant to its authority under Exchange Rule Additionally, it should be noted that the clearing firm carrying the account will be subject to capital charges May 18, 2012 Volume RB23, Number 20 11

14 under Rule 15c3-1 under the Exchange Act to the extent of any margin deficiency resulting from the higher margin requirements. Rule 24B.8. Exercise Limits RULE 24B.8. (a) In determining compliance with Rules 4.12 and 24.5, exercise limits for FLEX Index and FLEX Individual Stock or ETF Based Volatility Index Options shall be equivalent to the FLEX position limits prescribed in Rule 24B.7. There shall be no exercise limits for broad-based FLEX Index Options (including reduced-value option contracts) on BXM (1/10th value), DJX, NDX, OEX, RUT, S&P 500 Dividend Index, SPX, VIX, VXN, VXD, CBOE S&P 500 AM/PM Basis, CBOE S&P 500 Three-Month Realized Variance, CBOE S&P 500 Three-Month Realized Volatility and XEO. (b) (d) No change. * * * * * SR-CBOE Margin Requirements On May 11, 2012, the Exchange filed Rule Change File No. SR-CBOE , which filing proposes to adopt universal spread margin rules. Any questions regarding the rule change may be directed to Angelo Evangelou, Legal Division, at The rule text is shown below and the rule filing is available at Rule Margin Requirements (a) Definitions. For purposes of this Rule, the following terms shall have the meanings specified below. (1) (4) No change (5) For the purpose of this rule, the term spread means an equivalent long and short position in different call option series, different put option series, or combinations thereof, that collectively have a limited risk / reward profile, and meet the following conditions 1) all options must have the same underlying security or instrument, 2) all options must be either all American style or all European style, 3) all options must be either all listed or all OTC, 4) within option type(s), the long and short options must have equal aggregate underlying contract values and 5) the short option(s) must expire on or before the expiration date of the long option(s)[the term long butterfly spread means long put / two short puts / long put or long call / two short calls / long call where: the options are on the same underlying instrument, the long options are different option series, the short options are the same option series, the exercise prices of the positions are in ascending order, either all options expire at the same time or a long option expires after the other options expire concurrently, and the interval between exercise prices is equal. In the case of long butterfly spreads composed of cash-settled, European-style index options, all options must expire at the same time. (6) The term short butterfly spread means short put / two long puts / short put or short call / two long calls / short call where: the options are on the same underlying instrument, the short options are different option series, the long options are the same option series, the exercise prices of the positions are in ascending order, all options expire at the same time, and the interval between exercise prices is equal. (7) The term long condor spread means long put / short put / short put / long put or long call / short call / short call / long call where: the options are on the same underlying instrument, each option is a different option series, the exercise prices of the options are in ascending order, either all options expire at the same time or a long option expires after the other options expire concurrently, and the interval between exercise prices is equal. In the case of long condor spreads composed of cash-settled, European-style index options, all options must expire at the same time. (8) The term short iron butterfly spread means long put / short put / short call / long call where: the options are on the same underlying instrument, each option is a different option series, the exercise prices of the options are in ascending order, the short options have the same exercise price, either all options expire at the same time or a long option expires after the other options expire concurrently, and the interval between exercise prices is equal. In the case of short iron butterfly spreads composed of cashsettled, European-style index options, all options must expire at the same time. May 18, 2012 Volume RB23, Number 20 12

15 (9) The term short iron condor spread means long put / short put / short call / long call where: the options are on the same underlying instrument, each option is a different option series, the exercise prices of the options are in ascending order, either all options expire at the same time or a long option expires after the other options expire concurrently, and the interval between exercise prices is equal. In the case of short iron condor spreads composed of cash-settled, European-style index options, all options must expire at the same time.] ([10]6) The term box spread means an aggregation of positions in a long call option and short put option with the same exercise price ( buy side ) coupled with a long put option and short call option with the same exercise price ( sell side ) all of which have the same underlying component or index and time of expiration, and are based on the same aggregate current underlying value, and are structured as either: A) a long box spread in which the sell side exercise price exceeds the buy side exercise price or B) a short box spread in which the buy side exercise price exceeds the sell side exercise price. ([11]7) The term underlying stock basket means a group of securities which includes each of the component securities of the applicable index and which meets the following conditions (i) the quantity of each stock in the basket is proportional to its representation in the index, (ii) the total market value of the basket is equal to the underlying index value of the index options or warrants to be covered, (iii) the securities in the basket cannot be used to cover more than the number of index options or warrants represented by that value and (iv) the securities in the basket shall be unavailable to support any other option or warrant transaction in the account. ([12]8) The term cash equivalent is as defined in Section of Regulation T of the Board of Governors of the Federal Reserve System. ([13]9) The term listed for purposes of this Chapter 12 means a security traded on a registered national securities exchange or automated facility of a registered national securities association. ([14]10) The term OTC margin bond for purposes of this Chapter 12 means (1) any debt securities not traded on a national securities exchange that meet all of the following requirements (a) at the time of the original issue, a principal amount of not less than $25,000,000 of the issue was outstanding; (b) the issue was registered under Section 5 of the Securities Act of 1933 and the issuer either files periodic reports pursuant to the Act or is an insurance company under Section 12(g)(2)(G) of the Act; or (c) at the time of the extension of credit the creditor has a reasonable basis for believing that the issuer is not in default on interest or principal payments; or (2) any private pass-through securities (not guaranteed by a U.S. government agency) that meet all of the following requirements: (a) an aggregate principal amount of not less than $25,000,000 was issued pursuant to a registration statement filed with the Commission; and (b) current reports relating to the issue have been filed with the Commission; and (c) at the time of the credit extension, the creditor has a reasonable basis for believing that mortgage interest, principal payments and other distributions are being passed through as required and that the servicing agent is meeting its material obligations under the terms of the offering. ([15]11) The term Investment Grade in respect of any Corporate Debt Security, as that term is defined in Rule 28.1, means, if rated by only one nationally recognized statistical rating organization ( NRSRO ), is rated in one of the four highest generic rating categories; or if rated by more than one NRSRO, is rated in one of the four highest generic rating categories by all or a majority of such NRSROs; provided that if the NRSROs assign ratings that are evenly divided between (i) the four highest generic ratings and (ii) ratings lower than the four highest generic ratings, the Exchange will classify the Corporate Debt Security as Non-Investment Grade. ([16]12) The term Non-Investment Grade in respect of any Corporate Debt Security, as that term is defined in Rule 28.1, means, if rated by only one NRSRO (as defined in Rule 12.3(a)(15)), is rated lower than one of the four highest generic rating categories; or if rated by more than one NRSRO, is rated lower than one of the four highest generic rating categories by all or a majority of such NRSROs. ([17]13) The term Convertible in respect of any Corporate Debt Security, as that term is defined in Rule 28.1, means, notwithstanding the classification of a Corporate Debt Security as Investment Grade or Non-Investment Grade, means any Corporate Debt Security that may be exchanged for shares of the issuer s common or preferred stock. (14) The term OTC as used with reference to a call or put option contract means an over-thecounter option contract that is not traded on a national securities exchange and is issued and guaranteed by the carrying broker-dealer. 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16 (b) Customer Margin Accounts General Rule. No change (c) Customer Margin Account Exception. (1) (5) (C) (3) No change (4) Spreads. [Long Position Does Not Expire Before Short Position. This subparagraph applies to accounts carrying positions where long call options or call warrants (or long put options or put warrants), except for capped style options, offset positions in short call options or call warrants (or short put options or put warrants) for the same underlying component or index, provided the offsetting long position does not expire before the short position and the long position is paid in full. A long warrant may offset a short option contract and a long option contract may offset a short warrant provided they have the same underlying component or index and equivalent aggregate current underlying value. In the event the long position is not listed, it must be guaranteed by the carrying broker dealer; otherwise the short position must be margined separately pursuant to subparagraph (c)(5)(a) or (B), whichever is applicable.] (A) For spreads as defined in subparagraph (a)(5) of this Rule, the long options must be paid for in full. In addition, margin is required equal to the lesser of the amount required for the short option(s) by subparagraph (c)(5)(a) or (B), whichever is applicable, or the spread s maximum potential loss, if any. To determine the spread s maximum potential loss, first compute the intrinsic value of the options at price points for the underlying security or instrument that are set to correspond to every exercise price present in the spread. Then, net the intrinsic values at each price point. The maximum potential loss is the greatest loss, if any, from among the results. The proceeds for establishing the short options may be applied toward the cost of the long options and/or any margin requirement. A spread involving a put(call) warrant combined with a put(call) option is permitted provided the spread conforms with the definition of a spread in subparagraph (a)(5) of this rule.[when the exercise price of the long call position (or short put position) is less than or equal to the exercise price of the offsetting short call position (or long put position), no margin is required.] (B) Subparagraph (4)(A) above is not applicable to spreads involving Credit Options, Binary Options or Range Options. However, in respect of spreads involving Range Options, subparagraph (4)(A) above may be applied to pseudo positions in individual option series represented by each Range Option to derive a margin requirement provided that all Range Options expire at the same time, which margin requirement is subject to a maximum of the amount required by paragraph (n) of this Rule 12.3 for all Range Options.[When the exercise price of the long call position (or short put position) is greater than the exercise price of the offsetting short call position (or long put position) the amount of margin required is the lesser of (1) the margin required pursuant to subparagraph (c)(5)(a) or B above whichever is applicable or (2) the difference in aggregate exercise prices.] (C) Capped-Style Index Option (CAPS & Q-CAPS), Packaged Vertical Spread and Packaged Butterfly Spread As Defined In Rule (1) The requirements set forth in subparagraph[s] (4)(A) [and (4)(B) ]above apply to spreads composed of either CAPS, Q-CAPS, Packaged Vertical Spread or Packaged Butterfly Spread options provided the long and short option each have the same cap, vertical spread or butterfly spread interval (as applicable); except that[, in respect of spreads subject to subparagraph (4)(B),] the amount of margin required for a spread in CAPS, Q-CAPS or Packaged Vertical Spread options need not exceed the lesser of 1) any maximum potential loss as computed in accordance with subparagraph 4(A) above[difference in aggregate exercise prices] or 2) the cap, vertical spread or butterfly spread interval (as applicable). Cap interval, vertical spread interval and butterfly spread interval shall have the meanings defined in Rule (2) In respect of a short CAPS, Q-CAPS or Packaged Vertical Spread option offset by a long option that is not also a CAPS, Q-CAPS or Packaged Vertical Spread option, the amount of margin required is as set forth in subparagraph (4)(A) [or (4)(B) ]above; except that[, in respect of spreads subject to subparagraph (4)(B),] the amount of margin required need not exceed the lesser of 1) any maximum potential loss as computed in accordance May 18, 2012 Volume RB23, Number 20 14