Exchange. Bulletin. November 26, 2010 Volume 38, Number 48 TRADING PERMIT INFORMATION FOR 11/18/10 THROUGH 11/24/10

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1 Exchange November 26, 2010 Volume 38, Number 48 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 11/18/10 THROUGH 11/24/10 TRADING PERMIT APPLICATIONS RECEIVED FOR WHICH BULLETIN PUBLICATION IS REQUIRED TPH Organization Applicants WSP Commodity Trading LLC Anthony V. Gabrione, Nominee 440 S. LaSalle St., Suite 3600 Chicago, IL Samuel I. Sallerson Managing Member Jeffrey A. Wolfson - Managing Member TERMINATIONS Individuals Nominee: Termination Date Christopher J. Chapin (CJC) 11/18/10 Infinium Securities, LLC Earl M Vraney (PRL) 11/18/10 Lakeshore Securities, L.P. John Guastella (GWZ) 11/18/10 CMZ Trading, LLC John E Smollen (ANY) 11/22/10 Goldman Sachs & Co. John H. Waterfield (NYO) 11/22/10 Goldman Sachs & Co. Paul J Gnap (PLY) 11/23/10 DRO WST Trading LLC TPH Organizations QCL I Trading LLC 11/23/10 EFFECTIVE TRADING PERMIT HOLDERS Individuals Nominee: Effective Date David J. Thompson (MTE) 11/18/10 Rosenthal Global Securities, L.L.C. Type of Business to be Conducted: Market Maker James D Killen (JDK) 11/22/10 Israel A. Englander & Co.,Inc. Type of Business to be Conducted: Floor Broker Charles A Rock (ROK) 11/22/10 Toro Capital Management LLC Type of Business to be Conducted: Market Maker Scott H Brandt (SBR) 11/23/10 Brandt Equities, LLC Type of Business to be Conducted: Proprietary Trading Permit Holder CHANGES IN TRADING FUNCTION Individuals Effective Date Luke G O Donnell 11/23/10 From: Nominee For QCL I Trading LLC: Market Maker To: Nominee For DRO WST Trading LLC; Market Maker NAME CHANGES TPH Organizations Effective Date From: RBC Capital Markets Corporation 11/18/10 To: RBC Capital Markets LLC

2 Page 2 November 26, 2010 Volume 38, Number 48 Chicago Board Options Exchange RESEARCH CIRCULARS The following Research Circulars were distributed between November 19 and November 23, 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 19, 2010 Fastenal Company ("FAST") CONTRACT ADJUSTMENT FOR SPECIAL CASH DIVIDEND Ex-Date: November 22, 2010 Research Circular #RS November 19, 2010 Nelnet ( NNI ) CONTRACT ADJUSTMENT FOR ADDITIONAL CASH DIVIDEND Ex-Date: November 29, 2010 Research Circular #RS November 22, 2010 *****CLARIFICATION TO STJ1 CONTRACT DELIVERABLE***** AGA Medical Holdings, Inc. ( AGAM ) Election Merger COMPLETED with St. Jude Medical, Inc. ( STJ ) Research Circular #RS November 22, 2010 Limited Brands, Inc. ( LTD ) CONTRACT ADJUSTMENT FOR SPECIAL CASH DIVIDEND Ex-Date: December 3, 2010 Research Circular #RS November 22, 2010 Enterprise GP Holdings L.P. ( EPE ) Simplification/Merger COMPLETED with Enterprise Products Partners L.P. ( EPD ) Research Circular #RS November 22, 2010 King Pharmaceuticals, Inc. ( KG ) Tender Offer EXTENDED by Parker Tennessee Corp. Research Circular #RS November 22, 2010 *****UPDATE REVISED TERMS***** Dynergy Inc. ( DYN ) Proposed Merger with The Blackstone Group L.P. ( BX ) Research Circular #RS November 22, 2010 Masimo Corporation ( MASI ) CONTRACT ADJUSTMENT FOR SPECIAL CASH DIVIDEND Ex-Date: December 3, 2010 Research Circular #RS November 23, 2010 The Gymboree Corporation ( GYMB ): Merger Completed -- Cash Settlement Research Circular #RS November 23, 2010 Phoenix Technologies Ltd. ( PTEC ) Merger COMPLETED with Pharaoh Acquisition Corp. Cash Settlement

3 November 26, 2010 Volume RB21, Number 48 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 Date: November 19, 2010 To: Trading Permit Holders From: Office of the Secretary Re: Gratuities Rule 4.4 This circular addresses CBOE s policy regarding the permissibility of Trading Permit Holders and TPH organizations ( TPHs ) giving gratuities to CBOE employees and employees of financial concerns. CBOE s Conflict of Interest Policy restates limitations on gifts that are reflected in CBOE Rule 4.4 ("Rule"). Gifts and Gratuities to CBOE Employees In pertinent part, CBOE s Conflict of Interest Policy with respect to CBOE employees provides: CBOE employees may not accept any gift (including a gratuity, loan, discount, free service not generally available to the public, or other thing) valued in excess of $50 (in the aggregate) during any calendar year from any TPH or person associated with a TPH or any person or entity with whom the employee is directly and/or substantially involved in conducting business on behalf of CBOE (collectively, Related Person ). Gifts do not include business-related meals and entertainment permitted under the Conflict of Interest Policy. A gift to the spouse or domestic partner of a CBOE employee from any Related Person shall also be considered a gift to the employee under this policy, with the following exception. If a spouse or domestic partner of a CBOE employee is an employee of a November 26, 2010 Volume RB21, Number 48 1

4 If an employee receives gifts from more than one person associated with the same Related Person, these gifts are considered to be from the same Related Person and are aggregated for the purposes of this Policy. Regulatory Services Division and Office of Enforcement employees may not accept any gift that has more than a nominal value (such as a coffee mug) from the same Related Person. There are no exceptions to this restriction, without obtaining prior written consent from the Division Head in charge of the employee s division. In the case of Division Heads, this prior written consent must be obtained from the President; in the case of the President or the Executive Vice Chairman, this prior written consent must be obtained from the Chairman; and in the case of the Chairman, this prior written consent must be obtained from the General Counsel. Forms for employees to request approval for a gift from a Related Person in excess of the above limits are available on MYHRDATA or from the Office of the Secretary. Gratuities to Employees of Financial Concerns Where gratuities from a TPH to an employee of a financial concern (including another TPH or a non-tph broker, dealer, bank or institution) exceed $100 in any given calendar year, the donor must obtain the prior consent of the recipient s employer and of CBOE. Attached is a form that may be used to request prior approval of CBOE for gratuities to an employee of a financial concern in an amount greater than $100 in any calendar year. (CBOE employees should not use the attached form to request approval for a gift from a Related Person in excess of the above limits, and instead should use the form that is available on MYHRDATA or from the Office of the Secretary.) Questions regarding CBOE Rule 4.4 may be directed to Patrick Sexton at or sexton@cboe.com, or Jamie Galvan at or galvanj@cboe.com. November 26, 2010 Volume RB21, Number 48 2

5 Gratuities to Employees of Financial Concerns Form to Request Prior Approval of Gratuities Under CBOE Rule 4.4 This form may be used by Trading Permit Holders to request prior approval of CBOE for gratuities to an employee of a financial concern in an amount greater than $100 in any calendar year. 1. Name of Recipient 2. Recipient's Employer 3. Recipient's Position/Title 4. Nature of gratuity 5. Dollar value of gratuity 6. Total dollar value and nature of other gratuities to recipient during calendar year 7. Reason for gratuity 8. Person Giving the Gratuity Name of TPH: (Print) Organization, if any Signature: Date: 9. Consent of Employer: Granted Denied Name: (print) Firm Signature: Date: 10. Consent of Exchange: Granted Denied (for gifts to employees of financial concerns) Name: (print) Signature: Date: November 26, 2010 Volume RB21, Number 48 3

6 Regulatory Circular RG To: From: CBOE and CBSX Trading Permit Holders and TPH Organizations Registration and Regulatory Services Division Legal Division Date: November 24, 2010 Re: Proposal Regarding Registration and Qualification Requirements for Trading Permit Holders and Associated Persons The SEC has approved rule changes that expand the registration, qualification and continuing education requirements for individual CBOE and CBSX Trading Permit Holders and for associated persons of CBOE and CBSX Trading Permit Holders and TPH organizations. 1 The rule filing is located at: The text of the rule changes is attached for your reference. In accordance with the rule changes and the SEC s approval order, all individual Trading Permit Holders and individual associated persons who do not maintain a current registration on WebCRD and are engaged in the securities business of a Trading Permit Holder or TPH organization (as defined in Rule 3.6A) must register in WebCRD by submitting a Form U-4 (selecting the Approved Person category of registration under CBOE) and fingerprints no later than January 11, Web CRD is a secure registration and licensing system for entitled users only. Authorized users must complete and submit the appropriate forms to FINRA to be entitled to use Web CRD. Call the Gateway Call Center at (301) for further information and instructions regarding Web CRD entitlement. Web CRD is available Monday through Friday from 7 a.m., ET, until 11 p.m., ET. It is available three Saturdays of each month from 8 a.m., ET, until 6 p.m., ET, unless otherwise specified. Additional information respecting Web CRD may be found at: If you do not currently have access to WebCRD please call the Gateway Call Center at (301) or by utilizing the above link. The submission of fingerprints to WebCRD can be satisfied by providing an existing copy of the fingerprints and the related FBI Report and attaching a letter stating that the individual has been continuously employed with the Trading Permit Holder from the date of the fingerprints. Please note that WebCRD will not be available between 6:00 p.m. (EST) on December 23, 2010 through 7:00 a.m. (EST) on January 3, Trading Permit Holders and their associated persons are urged to review the related rule filing and the approval order for additional information regarding the rule changes, including, but not limited to, qualification requirements, continuing education requirements and the registration and qualification of a Chief Compliance Officer. Some of the details regarding implementation of certain of the provisions are still in the process of being finalized. CBOE plans to issue a more detailed regulatory circular describing the various requirements and will provide additional information as it becomes available through the issuance of additional regulatory circulars. 1 The approval order is located at: November 26, 2010 Volume RB21, Number 48 4

7 If you have any questions regarding this matter, please feel free to contact the following: Kerry Adler, Legal Division: (312) Larry Bresnahan, Department of Member Firm Regulation: (312) Stan Leimer, Registration Services Department: (312) November 26, 2010 Volume RB21, Number 48 5

8 Chicago Board Options Exchange, Incorporated Rules * * * * * Rule 3.6A. Qualification and Registration of [Certain] Trading Permit Holders and Associated Persons (a) Registration of Individual Trading Permit Holders and Individual Associated Persons Engaged in the Securities Business. (1) Individual Trading Permit Holders and individual associated persons engaged or to be engaged in the securities business of a Trading Permit Holder or TPH organization shall be registered with the Exchange in the category of registration appropriate to the function to be performed as prescribed by the Exchange. Before the registration can become effective, the individual Trading Permit Holder or individual associated person shall submit the appropriate application for registration, pass a qualification examination appropriate to the category of registration as prescribed by the Exchange and submit any required registration and examination fees. A Trading Permit Holder or TPH organization shall not maintain a registration with the Exchange for any person (1) who is no longer active in the Trading Permit Holder's or TPH organization s securities business; (2) who is no longer functioning in the registered capacity; or (3) where the sole purpose is to avoid an examination requirement. A Trading Permit Holder or TPH organization shall not make application for the registration of any person where there is no intent to employ that person in the Trading Permit Holder's or TPH organization s securities business. A Trading Permit Holder or TPH organization may, however, maintain or make application for the registration of an individual who performs legal, compliance, internal audit, back-office operations, or similar responsibilities for the Trading Permit Holder or TPH organization, or a person who performs administrative support functions for registered personnel, or a person engaged in the securities business of a foreign securities affiliate or subsidiary of the Trading Permit Holder or TPH organization. (2) Persons Exempt from Registration. The following individual Trading Permit Holders and individual associated persons of Trading Permit Holders are exempt from the registration requirements set forth in paragraph (1): (A) individual associated persons whose functions are solely and exclusively clerical or ministerial; (B) individual Trading Permit Holders and individual associated persons who are not actively engaged in the securities business; (C) individual Trading Permit Holders and individual associated persons whose functions are related solely and exclusively to the Trading Permit Holder's or TPH organization s need for nominal corporate officers or for capital participation; (D) individual associated persons whose functions are related solely and exclusively to: (i) transactions in commodities; (ii) transactions in security futures; and/or November 26, 2010 Volume RB21, Number 48 6

9 (iii) effecting transactions on the floor of another national securities exchange and who are registered as floor members with such exchange. (b) Financial/Operations Principal. Each [individual] Trading Permit Holder or TPH organization subject to Exchange Act Rule 15c3-1 shall designate a Financial/Operations Principal. The duties of a Financial/Operations Principal shall include taking appropriate actions to assure that the Trading Permit Holder or TPH organization complies with applicable financial and operational requirements under the Rules and the Exchange Act, including but not limited to those requirements relating to the submission of financial reports and the maintenance of books and records. Each Financial/Operations Principal is required to have successfully completed the Financial and Operations Principal Examination (Series 27 Exam). Each Financial/Operations Principal designated by a Trading Permit Holder or TPH organization shall be registered in that capacity with the Exchange [in a form and manner]as prescribed by the Exchange. A Financial/Operations Principal of a Trading Permit Holder or TPH organization may be a full-time employee, a part-time employee or independent contractor of the Trading Permit Holder or TPH organization. Trading Permit Holders and TPH organizations for which the Exchange is the Designated Examining Authority ("DEA") must provide prompt written notice to the Exchange['s Department of Financial and Sales Practice Compliance] for each person designated as a Financial/Operations Principal reporting whether such person is a full-time employee, part-time employee, independent contractor or has any outside business affiliations. (c) Chief Compliance Officer. Each Trading Permit Holder and TPH organization that is a registered broker-dealer shall designate a Chief Compliance Officer on Schedule A of Form BD. An individual designated as a Chief Compliance Officer is required to register with the Exchange and pass the appropriate heightened qualification examination(s) as prescribed by the Exchange. A person who has been designated as a Chief Compliance Officer on Schedule A of Form BD for at least two years immediately prior to January 1, 2002, and who has not been subject within the last ten years to any statutory disqualification as defined in Section 3(a)(39) of the Act; a suspension; or the imposition of a fine of $5,000 or more for a violation of any provision of any securities law or regulation, or any agreement with, rule or standard of conduct of any securities governmental agency, securities selfregulatory organization, or as imposed by any such regulatory or self-regulatory organization in connection with a disciplinary proceeding shall be required to register in the category of registration appropriate to the function to be performed as prescribed by the Exchange, but shall be exempt from the requirement to pass the heightened qualification examination as prescribed by the Exchange. (d) [Associated Person Statuses]Registration Required Under Chapter IX. [Associated person statuses under Chapter IX (along with the primary Exchange Rule concerning the status) include: (i) Registered Options Principal (Rule 9.2); (ii) Registered Representative (Rule 9.3); and (iii) Chief Compliance Officer (Rule 9.8).] Individual associated persons of a TPH organization that conducts a public customer business must also comply with the registration requirements set forth in Chapter IX. These additional registration categories include: (i) Registered Options Principal; and (ii) Registered Representative. (e) Requirement for Examination on Lapse of Registration. Any person whose registration has been revoked by the Exchange as a disciplinary sanction or whose most recent registration has been terminated for two or more years immediately preceding the date of receipt by the Exchange of a new application shall be required to pass a qualification examination appropriate to the category of registration as prescribed by the Exchange. November 26, 2010 Volume RB21, Number 48 7

10 ... Interpretations and Policies:.01 Each individual required to register under this Rule shall electronically file a Uniform Application for Securities Industry Registration ( Form U-4 ) through the Central Registration Depository system operated by the Financial Industry Regulatory Authority, Incorporated ( Web CRD ). [.01].02 Each individual [person in an associated person status enumerated in paragraph (a) or (b) of] required to register under this Rule shall[,] electronically submit to Web CRD [the NASD's Web Central Registration Depository ("CRD") System (i)] any required amendments to Form U-4. [.02].03 Any Trading Permit Holder or TPH organization that discharges or terminates the employment or retention of an individual [associated person enumerated in paragraph (a) or(b) of] required to register under this Rule shall comply with the termination filing requirements set forth in Rule 9.3(b) and Rule 9.3(c). [.03].04 Each individual [person in an associated person status enumerated in paragraph (a) or (b) of] required to register under this Rule is required to satisfy the continuing education requirements set forth in Rule 9.3A or any other applicable continuing education requirements as prescribed by the Exchange..05 The Exchange may, in exceptional cases and where good cause is shown, waive the applicable qualification examination and accept other standards as evidence of an applicant's qualifications for registration. Advanced age or physical infirmity will not individually of themselves constitute sufficient grounds to waive a qualification examination. Experience in fields ancillary to the securities business may constitute sufficient grounds to waive a qualification examination..06 For purposes of paragraph (a)(1) above, the Exchange shall consider an individual Trading Permit Holder or an individual associated person to be engaged in the securities business of a Trading Permit Holder or TPH organization if: (a) the individual Trading Permit Holder or individual associated person engages in one or more of the following activities in the capacity of a Trading Permit Holder or on behalf of the associated Trading Permit Holder or TPH organization: (1) proprietary trading; (2) market-making; (3) effecting transactions on behalf of a broker-dealer; (4) supervision or monitoring of proprietary trading, market-making, or brokerage activities; (5) supervision or training of those engaged in proprietary trading, market-making, or brokerage activities with respect to those activities; or (b) the individual Trading Permit Holder or individual associated person engages in the management of one or more of the activities enumerated in subparagraphs (1) through (5) above as an officer, partner or a director..07 Each Trading Permit Holder and TPH organization must register with the Exchange each individual acting in any of the following capacities: (i) officer; (ii) partner; (iii) director; (iv) supervisor of proprietary trading, market-making or brokerage activities; and/or (v) supervisor of those engaged in proprietary trading, market-making or brokerage activities with respect to those activities. Each Trading Permit Holder or TPH organization must register with the Exchange at least two individuals acting in one or more of the capacities described in (i)-(v) above. The Exchange may waive this requirement if a Trading Permit Holder or TPH organization demonstrates conclusively that only one individual acting in one or more of the capacities described in (i) through (v) above should be required to register. A Trading November 26, 2010 Volume RB21, Number 48 8

11 Permit Holder or TPH organization that conducts proprietary trading only and has 25 or fewer registered persons shall only be required to have one officer or partner who is registered in this capacity. For purposes of this Interpretation and Policy.07 to Rule 3.6A, a Trading Permit Holder or TPH organization shall be considered to conduct only proprietary trading if the Trading Permit Holder or TPH organization has the following characteristics: (a) The Trading Permit Holder or TPH organization is not required by Section 15(b)(8) of the Exchange Act to become a FINRA member but is a member of another registered securities exchange not registered solely under Section 6(g) of the Exchange Act; (b) All funds used or proposed to be used by the Trading Permit Holder or TPH organization are the Trading Permit Holder s or TPH organization s own capital, traded through the Trading Permit Holder s or TPH organization s own accounts; (c) The Trading Permit Holder or TPH organization does not, and will not, have customers; and (d) All persons registered on behalf of the Trading Permit Holder or TPH organization acting or to be acting in the capacity of a trader must be owners of, employees of, or contractors to the Trading Permit Holder or TPH organization. Rule 9.2. Registration of Options Principals * * * * * No TPH organization shall be approved to transact options business with the public until those persons associated with it who are designated as Options Principals have been approved by and registered with the Exchange. Persons engaged in the supervision of options sales practices or a person to whom the designated general partner or executive officer (pursuant to Rule 9.8) or another Registered Options Principal delegates the authority to supervise options sales practices shall be designated as Options Principals. In connection with their registration, Options Principals shall electronically file a Uniform Application for Securities Industry Registration or Transfer (Form U-4) with [the NASD's] Web CRD [System], shall successfully complete an examination as prescribed by the Exchange for the purpose of demonstrating an adequate knowledge of the options business and of the Rules of the Exchange, and shall further agree in the U-4 filing to abide by the Bylaws and Rules of the Exchange and the Rules of the Clearing Corporation. Any person required to complete Form U-4 shall promptly electronically file any required amendments to Form U-4 with [the NASD's] Web CRD [System]. Termination of employment or affiliation of any Registered Options Principal in such capacity shall be promptly electronically reported to [the NASD's] Web CRD [System] together with a brief statement of the reason for such termination on Form U Interpretations and Policies: No Change. November 26, 2010 Volume RB21, Number 48 9

12 Rule 9.3. Registration and Termination of Representatives (a) Registration. No TPH organization shall be approved to transact business with the public until those persons associated with it who are designated as Representatives have been approved by and registered with the Exchange. Persons who perform duties for the TPH organization which are customarily performed by sales representatives, solicitors, or branch office managers shall be designated as Representatives. In connection with their registration, Representatives shall electronically file a Uniform Application for Securities Industry Registration or Transfer (Form U-4) with [the NASD's] Web CRD [System] by appropriately checking the CBOE as a requested registration on the electronic U-4 filing, and shall successfully complete an examination for the purpose of demonstrating an adequate knowledge of the securities business, and shall further agree in the U-4 filing to abide by the Bylaws and Rules of the Exchange and the Rules of the Clearing Corporation. Any person required to complete Form U-4 shall promptly electronically file any required amendments to Form U-4 with [the NASD's] Web CRD [System]. (b) Termination - Filing of U-5's. The discharge or termination of employment of any registered person, together with the reasons therefor, shall be electronically reported to [the NASD's] Web CRD [System] by a TPH organization immediately following the date of termination, but in no event later than thirty (30) days following termination, on a Uniform Termination Notice for Securities Industry Registration (Form U-5). A copy of [said termination notice] the Form U-5 shall be provided concurrently to the person whose association has been terminated. (c) Termination - Filing of amended U-5's. The TPH organization shall electronically report to [the NASD's] Web CRD [System], by means of an amendment to the Form U-5 filed pursuant to paragraph (b) above, in the event that the TPH organization learns of facts or circumstances causing any information set forth in the [notice] Form U-5 to become inaccurate or incomplete. Such amendment shall be provided concurrently to the person whose association has been terminated no later than thirty (30) days after the TPH organization learns of the facts or circumstances giving rise to the need for the amendment.... Interpretations and Policies:.01 No Change. Rule 9.3A. Continuing Education for Registered Persons (a) (c) No Change.... Interpretations and Policies:.01 For purposes of this Rule, the term "registered person" means any Trading Permit Holder, registered representative or other person registered or required to be registered under Exchange rules[, but does not include any such person whose activities are limited solely to the transaction of business on the Floor with Trading Permit Holders or registered broker-dealers] No Change. * * * * * November 26, 2010 Volume RB21, Number 48 10

13 R U L E C H A N G E S APPROVED RULE CHANGE(S) The Securities and Exchange Commission ( SEC ) has approved the following change(s) to Exchange rules pursuant to Section 19(b) of the Securities Exchange Act of 1934, as amended (the Act ). Below, any additions to rule text are underlined, and any deletions are [bracketed]. Copies are available on the CBOE public website at The effective date of the rule change is the date of approval unless otherwise noted. SR-CBOE Credit Options On November 19, 2010, the SEC approved Rule Change File No. SR-CBOE , which filing amends certain rules pertaining to Credit Options. Under the rule change filing, Exchange may introduce contracts that have a payout that is less than $100,000. In addition, the rule change filing: (1) changes the quoting convention for Credit Default Options, (2) changes the minimum price variation for Credit Option, and (3) permits the Exchange to designate a single applicable Credit Event for Credit Options. 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 29.1 Definitions RULE The following terms as used in this Chapter, shall unless the context otherwise indicates, have the meanings herein specified. Cash Settlement Amount (a) The term cash settlement amount means the amount of cash that a holder will receive upon exercise of the contract. (i) For Credit Default Options, the cash settlement amount per contract is [generally equal to an] a fixed amount equal to the exercise settlement value [of $100] multiplied by a contract multiplier specified by the Exchange (which shall be at least 1 and no more than 1,000). The exercise settlement value will be an amount determined by the Exchange on a class-by-class basis and shall be equal to $1 or $100, or a value between those values. [and] The cash settlement amount is payable upon automatic exercise if the Exchange confirms a Credit Event in accordance with Rule If a Credit Event is not confirmed, the cash settlement value will be $0. If applicable, the cash settlement amount will be adjusted in accordance with Rule (ii) No change. (b) (j) No change. * * * * * Rule 29.2 Designation of Credit Default Option Contracts RULE (a) The Exchange may from time to time approve for listing and trading on the Exchange Credit Default Options that have been selected in accordance with Rule Each Credit Default Option class is designated by reference to the Reference Entity, Reference Obligation and applicable Credit Event(s). The Exchange will specify one or more of the following [applicable] Credit Event(s): (1) [will include a] Failure-to-Pay Default; or [and may include any other] (2) Event(s) of Default; or (3) Restructuring [, if any, that is specified by the Exchange]. November 26, 2010 Volume RB21, Number 48 11

14 (b) No change. Rule 29.2 supplements Rules 5.1, 5.3, 5.5 and 5.8. Rule 29.2A Designation and Terms of Credit Default Basket Option Contracts RULE 29.2A. (a) The Exchange may from time to time approve for listing and trading on the Exchange Credit Default Basket Options. Each Credit Default Basket Option class is designated by reference to: (1) the Notional Face Value of Basket (e.g., $100,000), (2) the Basket Components, (3) the weight of each Basket Component, which represents the fraction of the Notional Face Value of the Basket allocated to each Basket Component, (4) the recovery rate of each Basket Component, (5) the specified debt security that defines the Reference Obligation of each Basket Component (e.g., Corporation XYZ 8.375% July 2033 bond), and (6) the applicable Credit Event(s). The Exchange will specify one or more of the following [applicable] Credit Event(s): [will include a] (A) Failure-to-Pay Default; or [and may include any other] (B) Event(s) of Default; or (C) Restructuring [, if any, that is specified by the Exchange]. (b) No change. Rule 29.2A supplements Rules 5.1, 5.3, 5.5 and 5.8. Rule 29.3 Withdrawal of Approval of Underlying Reference Entity RULE The requirements for continuance of approval of Credit [Default] Options shall be in accordance with Rule * * * * * Rule Premium Bids and Offers; Minimum Increments; Priority and Allocation RULE (a) Bids and offers shall be expressed in terms of dollars per the contract multiplier unit (e.g., a bid of 7 shall represent a bid of $7,000 for a Credit Option with a specified contract multiplier of 1,000). (b) The minimum price variation ( MPV ) for bids and offers on both simple and complex orders for Credit Default Options and Credit Default Basket Options shall be [$0.05 ($50 per contract)] established on a class-by-class basis by the Exchange and shall not be less than $0.01. (c) (d) No change. * * * * * EFFECTIVE-ON-FILING RULE CHANGE(S) The following rule filing was submitted to the SEC effective on filing, and may have taken effect pursuant to Section 19(b)(3) of the Act. It 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 Penny Pilot Program November 26, 2010 Volume RB21, Number 48 12

15 On November 23, 2010, the Exchange filed Rule Change File No. SR-CBOE , which filing proposes to extend the Penny Pilot Program for an additional year, until December 31, Any questions regarding the rule change may be directed to Patrick Sexton, Legal Division, at The rule filing is available at November 26, 2010 Volume RB21, Number 48 13