Exchange. Bulletin. June 22, 2012 Volume 40, Number 25 TRADING PERMIT INFORMATION FOR 06/14/2012 THROUGH 06/20/2012 EFFECTIVE TRADING PERMIT HOLDERS

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1 Exchange June 22, 2012 Volume 40, Number 25 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 06/14/2012 THROUGH 06/20/2012 TRADING PERMIT APPLICATIONS RECEIVED FOR WHICH BULLETIN PUBLICATION IS REQUIRED TPH Organization Applicant Geneva MM, LLC Joseph Pultz, Nominee 440 S. LaSalle St., Suite 1758 Chicago, IL Geneva Derivatives Trading Corp. - Member Gary R. Silverman - Owner Daniel C. Williams - Owner Gary R. Silverman - Managing Member Daniel C. Williams - CCO/TP EFFECTIVE TRADING PERMIT HOLDERS Individuals Nominees: Effective Date Eric Michael Berindei (BER) 6/14/12 Nico Securities, LLC Type of Business to be Conducted: Market Maker Maura A. Autera 6/19/12 Lime Brokerage LLC Type of Business to be Conducted: No Trading Function TERMINATIONS Individuals Nominees: Termination Date William E. Billings (WEB) 6/14/12 PTR, Incorporated Glenn G. Baytala (BAY) 6/18/12 Gar Wood Securities, LLC Craig Bewick 6/18/12 W.H. Trading, LLC TPH Organization W.H. Trading, LLC 6/18/12

2 Page 2 June 22, 2012 Volume 40, Number 25 Chicago Board Options Exchange RESEARCH CIRCULARS The following Research Circulars were distributed between June 15 and June 21, 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 June 15, 2012 Catalyst Health Solutions, Inc. ( CHSI ) Proposed Merger with SXC Health Solutions Corp. ( SXCI ) Research Circular #RS June 15, 2012 XPO Logistics, Inc. ( XPO ) To Move and Begin Trading on NYSE Effective Date: June 14, 2012 Research Circular #RS June 15, 2012 MI Developments Inc. ( MIM ) Name, Stock and Option Symbol Change to Granite Real Estate Inc. ( GRP ) Effective Date: June 18, 2012 Research Circular #RS June 18, 2012 Under Armour, Inc. Class A ( UA ) 2-for-1 Stock Split Ex-Distribution Date: July 10, 2012 Research Circular #RS June 18, 2012 TAM S.A. ( TAM ) Exchange Offer EXTENDED by Lan Airlines S.A. ( LFL ) Research Circular #RS June 19, 2012 Direxion Daily Mid Cap Bull 3x Shares ( MWJ ) Capital Gains Distribution Ex-Distribution Date: June 20, 2012 Research Circular #RS June 20, 2012 Ardea Biosciences, Inc. ( RDEA ) Merger COMPLETED with AstraZeneca PLC ( AZN ) Research Circular #RS June 20, 2012 ***UPDATE - ANTICIPATED MERGER EFFECTIVE DATE - JULY 1, 2012*** Progress Energy, Inc. ( PGN ) Proposed Merger with Duke Energy Corporation ( DUK ) Research Circular #RS June 20, 2012 Duke Energy Corporation ( DUK ) 1-for-3 Reverse Common Share Split Anticipated Ex-Distribution Date: July 2, 2012 Research Circular #RS June 21, 2012 Imperial Sugar Company ( IPSU ): Merger Completed -- Cash Settlement Research Circular #RS June 19, 2012 LPL Investment Holdings Inc. ( LPLA ) Name Change to: LPL Financial Holdings Inc. Effective Date: June 20, 2012

3 June 22, 2012 Volume RB23, Number 25 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: June 18, 2012 TO: Trading Permit Holders FROM: Business Development RE: Allocation Algorithm Change for SPX Opening Trades at the Minimum Price Increment This circular partially updates RG08-72 and RG Previously, opening trades at the minimum price increment in SPX options series trading on the Hybrid 3.0 platform (i.e., at $0.05) were allocated as specified in Regulatory Circular RG08-72, while all other opening trades of orders/quotes priced at the market-clearing price were allocated pro-rata. With a recent system change, the allocation has changed such that, for SPX options trading on the Hybrid 3.0 platform, all opening trades of orders/quotes that are priced at the market clearing price are based on a pro-rata allocation, including any opening trades that occur at the minimum price increment. For such minimum price increment series, the Hybrid Opening System (HOSS) will continue to open even if a market order imbalance exists. In the event a sell MKT order imbalance exists, sell MKT orders have priority over limit orders to sell at the minimum increment. Thus, MKT orders are filled first based on a pro-rata allocation followed by limit orders at the minimum increment price, which are filled based on a pro-rata allocation. Questions may be directed to Anthony Montesano (312) , montesan@cboe.com or the CBOE Help Desk at (866) , helpdesk@cboe.com. June 22, 2012 Volume RB23, Number 25 1

4 Regulatory Circular RG DATE: June 21, 2012 FROM: RE: Market Operations Department Restrictions on Transactions in China North East Petroleum Holdings Ltd Effective June 21, 2012, China North East Petroleum Holdings Ltd ( NEP ) will be delisted from the NYSE. Trading in NEP will commence on the Other OTC market. The NEP option symbol will remain the same for one day and change to CNEP effective for trading on Friday, June 22, Trading on the CBOE in existing series of NEP/CNEP options will be subject to the following restrictions. Only closing transactions may be affected in any series of NEP/CNEP options except for (i) opening transactions by Market-Makers executed to accommodate closing transactions of other market participants and (ii) opening transactions by CBOE TPH organizations to facilitate the closing transactions of public customers executed as crosses pursuant to and in accordance with CBOE Rule 6.74(b) or (d). The execution of opening transactions in NEP/CNEP options, except as permitted above, and/or the misrepresentation as to whether an order is opening or closing, will constitute a violation of CBOE rules, and may result in disciplinary action. TPH organizations should ensure that they have appropriate procedures in place to prevent their customers from entering opening orders in this restricted option class. In addition, transactions in contravention of this restriction may be subject to nullification pursuant to Exchange Rule There are no restrictions in place with respect to the exercise of NEP/CNEP options. Any questions regarding this circular may be directed to Kerry Winters at (312) or the Regulatory Interpretations and Guidance team by telephone at (312) or by at RegInterps@cboe.com. CBOE restricted class memos can be accessed from CBOE.org at the following web address: June 22, 2012 Volume RB23, Number 25 2

5 Regulatory Circular RG DATE: June 21, 2012 TO: Trading Permit Holders FROM: Business Development RE: Allocation Algorithm Change for SPXW Opening Trades at the Minimum Price Increment This circular partially updates RG08-72 and RG Previously, opening trades at the minimum price increment in SPXW options series (i.e., at $0.05) were allocated as specified in Regulatory Circular RG08-72, while all other opening trades of orders/quotes priced at the marketclearing price were allocated in price-time sequence. With a recent system change, the allocation has changed such that, for SPXW options, all opening trades of orders/quotes that are priced at the market clearing price are based on a price-time allocation, including any opening trades that occur at the minimum price increment. For such minimum price increment series, the Hybrid Opening System (HOSS) will continue to open even if a market order imbalance exists. In the event a sell MKT order imbalance exists, sell MKT orders have priority over limit orders to sell at the minimum increment. Thus, MKT orders are filled first based in time sequence followed by limit orders at the minimum increment price, which are filled in time sequence. Questions may be directed to Anthony Montesano (312) , montesan@cboe.com or the CBOE Help Desk at (866) , helpdesk@cboe.com. Regulatory Circular RG To: Trading Permit Holders From: Business Development Date: June 21, 2012 RE: Russell Reconstitution on Friday, June 22, 2012 The NASDAQ Stock Market recently issued NASDAQ Equity Trader Alert # which, in relevant part, indicates that on Friday, June 22, 2012, Russell Investment Group will use the NASDAQ Closing Cross for the annual Russell Reconstitution and includes a list of potential contingency scenarios in order to prepare the industry for unusual market conditions. Certain contingency scenarios identified in the NASDAQ Equity Trader Alert in particular Scenarios 4 and 5 - involve scenarios where NASDAQ has an internal systems problem and would determine to resume/extend trading in an underlying stock for a period of time after the normal 3:00 pm close (all times noted are Central Time). The Chicago Board Options Exchange, Incorporated ( Exchange or CBOE ) has received inquiries from market participants about our contingency plans for options trading on CBOE and stock trading on CBSX should any of the contingency scenarios identified by NASDAQ occur, but particularly in the event that NASDAQ would determine to resume/extend trading after the normal 3:00 pm close. The Exchange is therefore issuing this circular to confirm that, for each of the Russell contingency scenarios outlined by NASDAQ in its Equity Trader Alert, CBOE does not intend to extend its trading session beyond the normal 3:00 pm or 3:15 pm close, as applicable, for any options class. CBSX also does not intend to extend its trading session beyond the normal 3:45 pm close for any stock. Due to the unpredictability of market events, this circular is intended to provide only general guidance and the Exchange reserves the right to modify its plans as necessary, without advance notification to the industry, in order to maintain fair and orderly markets and address additional unforeseen situations. Should the Exchange determine to take some action other than as noted above to address unusual market conditions in connection with the Russell Reconstitution and NASDAQ Closing Cross, the Exchange intends to use the following communications media to notify Trading Permit Holders of any action by CBOE or CBSX, as applicable: June 22, 2012 Volume RB23, Number 25 3

6 System Status alert page on the and websites The Exchange will also use Regulatory Circulars and notifications as needed. For more information about the Russell Reconstitution, the NASDAQ Closing Cross and NASDAQ s Russell contingency scenarios, please refer to the NASDAQ Equity Trader Alert # Questions on this circular may be directed to the CBOE Help Desk at (866) , helpdesk@cboe.com or the CBSX Help Desk at (866) , cbsxhelpdesk@cboe.com. Regulatory Circular RG Date: June 21, 2012 To: Trading Permit Holders From: CBOE Help Desk Re: GeoEye, Inc. (GEOY) As of June 21, 2012, GEOY no longer meets CBOE's requirements for continued listing. No new series on GEOY will be added until such time as GEOY meets CBOE's requirements for continued listing. Trading in existing series is not restricted. Any questions regarding this circular may be directed to Kerry Winters at (312) June 22, 2012 Volume RB23, Number 25 4

7 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 (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 CBSX Self-Trade Prevention Orders On June 7, 2012, the SEC approved Rule Change File No. SR-CBOE , which filing adopts three self-trade prevention modifiers on CBSX: Cancel Newest, Cancel Oldest, and Cancel Both. This will allow CBSX Traders to elect to be able to prevent their own proprietary orders or quotes from trading with each other. Any questions regarding the rule change may be directed to Jeff Dritz, Legal Division, at The rule text is shown below and the rule filing is available at Rule 51.8 Types of Orders Handled At the discretion of CBSX, and once the CBSX System is so enabled, any of the following types of orders may be accommodated on the CBSX System: * * * * * (t) Market-Maker Trade Prevention Order. A Market-Maker Trade Prevention Order is an immediate-orcancel order that is marked with the Market-Maker Trade Prevention designation. A Market-Maker Trade Prevention Order that would trade against a resting quote or order for the same Market-Maker will be cancelled, as will the resting quote or order. In circumstances in which both the Market-Maker Trade Prevention Order and a Self-Trade Prevention modifier are implicated, the Self-Trade Prevention modifier shall rule and take precedence. * * * * * Rule Self-Trade Prevention Modifiers. (a) Generally. A CBSX Trader may elect for all of his proprietary orders and quotes to be marked with a Self-Trade Prevention modifier. If a CBSX Trader makes such an election, any quote or order he submits will be prevented from executing against a resting opposite side order or quote that is labeled as originating from the same associated acronym and trading for the same account (for the purposes of this Rule, the Same CBSX Trader ). A CBSX Trader may only elect for one of: Cancel Newest, Cancel Oldest, or Cancel Both Self-Trade Prevention options. Such election shall apply to all of the CBSX Trader s eligible proprietary orders and quotes, and cannot be made on a per-order, per-quote, or security-by-security basis. In circumstances in which both the Market-Maker Trade Prevention Order and a Self-Trade Prevention Modifier are implicated, the Self-Trade Prevention modifier shall rule and take precedence. (b) Types of Self-Trade Prevention modifiers. Any of the types of Self-Trade Prevention modifiers may be accommodated on the CBSX System (upon election for one of such modifiers by a CBSX Trader): (1) Cancel Newest Self-Trade Prevention modifier. Any incoming order or quote submitted by a CBSX Trader will not execute against opposite side resting interest from the Same CBSX Trader. The incoming order or quote (or any portion thereof) will be canceled back to the Same CBSX Trader if such order or quote cannot trade with another eligible order or quote originating from any origin other than the Same CBSX Trader (for the purposes of this Rule 51.13, Another CBSX Trader ) (the incoming order or quote may only trade with another eligible order or quote originating from Another CBSX Trader if the order or quote originating from Another CBSX Trader is at as good a price as the order or quote from the Same CBSX Trader that is being skipped over ). The resting order or quote from the Same CBSX Trader will remain on the book. In the case of an opening or re-opening, the newer of the two orders or quotes submitted by the Same CBSX Trader will be canceled, and the older order or quote will be permitted to June 22, 2012 Volume RB23, Number 25 5

8 trade with eligible orders or quotes originating from Another CBSX Trader, and any remaining portion thereof will remain in the book. (2) Cancel Oldest Self-Trade Prevention modifier. Any incoming order or quote submitted by a CBSX Trader will not execute against opposite side resting interest from the Same CBSX Trader. When a CBSX Trader submits an incoming order or quote that would trade against opposite side resting interest from the Same CBSX Trader, that opposite side resting interest will be canceled. The incoming order or quote will be eligible to trade with another eligible order or quote originating from Another CBSX Trader. If any portion of the incoming order or quote does not trade with another eligible order or quote originating from Another CBSX Trader, it will be entered into the book. In the case of an opening or re-opening, the older of the two orders or quotes submitted by the Same CBSX Trader will be canceled, and the newer order or quote will be permitted to trade with eligible orders or quotes originating from Another CBSX Trader, and any remaining portion thereof will be entered into the book. (3) Cancel Both Self-Trade Prevention modifier. Any incoming order or quote submitted by a CBSX Trader will not execute against opposite side resting interest from the Same CBSX Trader. When a CBSX Trader submits an incoming order or quote that would trade against opposite side resting interest from the Same CBSX Trader, that opposite side resting interest will be canceled. The incoming order or quote (or any portion thereof) will be canceled back to the Same CBSX Trader if such order or quote (or part of such order or quote) cannot trade with another eligible order or quote originating from Another CBSX Trader. In the case of an opening or re-opening, both of the two orders or quotes will be canceled. * * * * * Rule 52.1 Matching Algorithm/Priority * * * * *... Interpretations and Policies:.01 In instances in which the Self-Trade Prevention modifiers are implicated, the Self-Trade Prevention modifier rules will supersede other allocation methods only for the purpose of preventing self-trades, as described in Rule EFFECTIVE-ON-FILING RULE CHANGE(S) The following rule filing(s) was submitted to the SEC effective on filing, and may have taken effect pursuant to Section 19(b)(3) of 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 Class Quoting Limits On June 14, 2012, the Exchange filed Rule Change File No. SR-CBOE , which filing proposes to increase the class quoting limit for options on Facebook from 50 to 60. Any questions regarding the rule change may be directed to Jeff Dritz, Legal Division, at The rule filing is available 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. June 22, 2012 Volume RB23, Number 25 6

9 SR-CBOE SAL, HAL/HAL2 and COA Auctions On June 6, 2012, the Exchange filed Rule Change File No. SR-CBOE , which filing proposes to (1) allow the Exchange on a class-by-class basis to open up SAL, HAL2 and COA auctions to all Trading Permit Holders; (2) allow redistribution of auction messages for classes that are open to all Trading Permit Holders; and (3) delete HAL, which is no longer used. Any questions regarding the rule change may be directed to Laura Dickman, Legal Division, at The rule text is shown below and the rule filing is available at Rule 6.2B Hybrid Opening System ( HOSS ) RULE 6.2B. (a) (h) No change.... Interpretations and Policies: No change..03 HAL Opening Procedure: This Interpretation and Policy governs the operation of the Hybrid Agency Liaison ( HAL ) for openings. The Exchange shall designate the classes in which HAL [or HAL2 ]shall be activated for openings. The Exchange shall also determine on a class-by-class basis the exposure period (which period of time shall not exceed 1.5 seconds) and allocation period (which period of time, when combined with the designated exposure time period (as opposed to an exposure period that is terminated early), shall not exceed a total of 3 seconds). For such classes, the following procedures shall apply in lieu of paragraph[s] (e) above. (a) (b) No change. (c) For purposes of this Interpretation and Policy: (i) No change. (ii) The exposure process will be conducted [either ]via HAL pursuant to [Rule 6.14 or HAL2 pursuant to ]Rule 6.14A[, as determined by the Exchange]. In addition, any remaining balance of orders not executed via HAL[/HAL2] on the opening that are priced or would be executed at a price that is not within an acceptable tick distance from the initial HAL[/HAL2] price will route as determined by the Exchange on a class-by-class basis to PAR or, at the order entry firm s discretion, to the order entry firm s booth (except that any remaining balance of opening contingency orders will be cancelled). If an order is not eligible to route to PAR, then the remaining balance will be cancelled. An acceptable tick distance shall be determined by the Exchange on a series-by-series and premium basis and shall be no less than 2 minimum increment ticks. For classes in which HAL[2] is activated, the acceptable tick distance will be the same as the acceptable tick distance established under Rule 6.13(b)(v[i]) No change. Rule 6.13 CBOE Hybrid System Automatic Execution Feature RULE (a) Applicability: No change. (b) Automatic Execution: Orders eligible for automatic execution through the CBOE Hybrid System may be automatically executed in accordance with the provisions of this Rule, Rule 6.13A[, 6.14] or 6.14A, as applicable. This section governs automatic executions and split-price automatic executions. The automatic execution and allocation of orders or quotes submitted by market participants also is governed by Rules 6.45A(c) and (d) and Rules 6.45B(c) and (d). (i) Eligibility: No change. (ii) Process: No change. (iii) Split Price Executions: For Hybrid classes, incoming eligible orders of a size greater than the disseminated size shall receive an automatic execution for a size up to the disseminated size. The remaining balance of the order if marketable, will automatically execute at the revised disseminated price provided the revised disseminated price represents the NBBO (if the revised price is inferior to NBBO the remaining balance of the order will route to PAR or, at the order entry firm s discretion, the order entry firm s booth or for processing pursuant to Rule [6.14 or] 6.14A[, as applicable]; if an order is not eligible to route to PAR, then the remaining balance will be cancelled). If not marketable, the remaining balance of the order will be automatically represented in the electronic book provided such order is eligible for book entry pursuant to Rule 7.4. If the order is not eligible for book entry, it will route to PAR or, at the order entry firm s discretion to the June 22, 2012 Volume RB23, Number 25 7

10 order entry firm s booth. If an order is not eligible to route to PAR, then the remaining balance will be cancelled. Pronouncements pursuant to this provision shall be made by the Exchange and announced via Regulatory Circular. (iv) Executions at NBBO: No change. (v) [Price Check Parameter for HAL Classes: For classes in which HAL (Rule 6.14) is activated, the CBOE Hybrid System will not automatically execute eligible orders that are marketable if the width between the Exchange s best bid and best offer is not within an acceptable price range (as determined by the Exchange on a series-by-series basis for market orders and/or marketable limit orders and announced to the Trading Permit Holders via Regulatory Circular). For purposes of this subparagraph: (A) An acceptable price range shall be determined by the Exchange on a class-by-class basis and shall be no less than: $0.375 between the bid and offer for each option contract for which the bid is less than $2, $0.60 where the bid is at least $2 but does not exceed $5, $0.75 where the bid is more than $5 but does not exceed $10, $1.20 where the bid is more than $10 but does not exceed $20, and $1.50 where the bid is more than $20. (B) The senior official in the Control Room or two Floor Officials may grant intra-day relief by widening the acceptable price range for one or more option series. Notification of intra-day relief will be announced via verbal message to the trading crowd, printer message to TPH organizations on the trading floor, and electronic message to Trading Permit Holders that request to receive such messages. Such orders will be routed on a class-by-class basis to PAR or, at the order entry firm s discretion, to the order entry firm s booth. If an order is not eligible to route to PAR, then the remaining balance will be cancelled.] [(vi)] Price Check Parameter for HAL[2] and All Other Classes: [For classes in which HAL (Rule 6.14) is activated see subparagraph (v) above, otherwise: t]the CBOE Hybrid System will not automatically execute eligible orders that are marketable if (1) the width between the national best bid and national best offer is not within an acceptable price range (as determined by the Exchange on a series-by-series basis for market orders and/or marketable limit orders and announced to the Trading Permit Holders via Regulatory Circular), or (2) the execution would follow an initial partial execution on the Exchange and would be at a subsequent price that is not within an acceptable tick distance from the initial execution (as determined by the Exchange on a series by series and premium basis for market orders and/or marketable limit orders and announced to the Trading Permit Holders via Regulatory Circular). For purposes of this subparagraph: (A) An acceptable price range ( APR ) shall be determined by the Exchange on a class-byclass basis and shall be no less than: $0.375 between the bid and offer for each option contract for which the bid is less than $2, $0.60 where the bid is at least $2 but does not exceed $5, $0.75 where the bid is more than $5 but does not exceed $10, $1.20 where the bid is more than $10 but does not exceed $20, and $1.50 where the bid is more than $20. An acceptable tick distance ( ATD ) shall be no less than 2 minimum increment ticks. (B) The senior official in the Control Room or two Floor Officials may grant intra-day relief by widening the APR and ATD for one or more option series. Notification of intra-day relief will be announced via verbal message to the trading crowd, printer message to TPH organizations on the trading floor, and electronic message to Trading Permit Holders that request to receive such messages. If an execution is suspended because the APR has not been met, the order will be routed to PAR or, at the order entry firm s discretion, to the order entry firm s booth. If an order is not eligible to route to PAR, then the remaining balance will be cancelled. If an execution is suspended because executing the remaining portion of an order would exceed the ATD, then such remaining portion will be exposed pursuant to the HAL[2] process in Rule 6.14A using the ATD as the exposure price. If a quantity remains at the conclusion of the HAL[2] process, the remaining quantity will be routed to PAR or, at the order entry firm s discretion, to the order entry firm s booth. If an order is not eligible to route to PAR, then the remaining balance will be cancelled. (c) (d) No changes. Rule 6.13A Simple Auction Liaison (SAL) RULE 6.13A. This Rule governs the operation of the SAL system. SAL is a feature within the Hybrid System that auctions marketable orders for price improvement over the NBBO. June 22, 2012 Volume RB23, Number 25 8

11 (a) SAL Eligibility. The Exchange shall designate the eligible order size, eligible order type, eligible order origin code (i.e. public customer orders, non-market-maker broker-dealer orders, and Market-Maker brokerdealer orders), and classes in which SAL shall be activated. For such classes, SAL shall automatically initiate an auction process for any order that is eligible for automatic execution by the Hybrid System pursuant to Rule 6.13 ( Agency Order ), except when the Exchange s disseminated quotation on the opposite side of the market from the Agency Order does not contain sufficient Market-Maker quotation size to satisfy the entire Agency Order. (b) SAL Auction. Prior to commencing the auction, SAL shall stop the Agency Order at the NBBO against Market-Maker quotations displayed at the NBBO on the opposite side of the market as the Agency Order. SAL will not allow such quotations to be cancelled or to move to an inferior price or size throughout the duration of the auction. The auction will last for a period of time not to exceed two (2) seconds as determined by the Exchange on a class-by-class basis. [Auction responses may be submitted by ]Market-Makers with an appointment in the relevant option class and Trading Permit Holders acting as agent for orders resting at the top of the Exchange s book in the relevant option series opposite the Agency Order may submit responses to the Auction message during the Auction period, unless the Exchange determines, on a class-by-class basis, to allow all Trading Permit Holders to submit responses to the Auction message. With respect to responses, the following shall apply: (i) Responses shall not be visible to other auction participants and shall not be disseminated to OPRA. (ii) Responses may be submitted in one-cent increments unless for the relevant option class the Exchange has determined that responses shall be submitted in standard increments. (iii) Multiple responses are allowed. (iv) Responses may be cancelled. (v) Responses cannot cross the Exchange s disseminated quotation on the opposite side of the market. (c) Allocation of Agency Orders. No change. (d) Early Termination of Auction. No change.... Interpretations and Policies:.01 No change..02 [Disseminating information regarding auctioned orders to third parties will be deemed conduct inconsistent with just and equitable principles of trade and a violation of Rule 4.1 and other Exchange Rules.]Redistributing the Auction messages provided by the Exchange to persons not eligible to respond to such messages pursuant to paragraph (b) above is prohibited, except in classes in which the Exchange allows all Trading Permit Holders to respond to such messages No change..05 [In lieu of permitting Auction responses by Market-Makers with an appointment in the relevant option class and Trading Permit Holders acting as agent for orders resting at the top of the Exchange s book opposite the Agency Order ( Qualifying Trading Permit Holders ) as provided in paragraph (b) above, the Exchange may determine on a class-by-class basis to permit SAL responses by all CBOE Market-Makers and Qualifying Trading Permit Holders. All other provisions of the Rule shall apply unchanged.]all pronouncements regarding determinations by the Exchange pursuant to Rule 6.13A and the Interpretations and Policies thereunder will be announced to Trading Permit Holders via Regulatory Circular. [Rule 6.14 Hybrid Agency Liaison (HAL)] [RULE This Rule governs the operation of the Hybrid Agency Liaison ( HAL ) system. HAL is a feature within the Hybrid System that provides automated order handling in designated classes trading on Hybrid for qualifying electronic orders that are not automatically executed by the Hybrid System. (a) HAL Eligibility. The Exchange shall designate eligible order size, eligible order type, eligible order origin code (i.e., public customer orders, non-market Maker broker-dealer orders, and Market Maker broker-dealer orders), and classes in which HAL shall be activated. HAL shall automatically process upon receipt: (i) eligible orders that are marketable against the Exchange s disseminated quotation while that quotation is not the NBBO; (ii) eligible orders that would improve the Exchange s disseminated quotation and that are marketable against quotations disseminated by other exchanges that are participants in the Intermarket Options Linkage; and June 22, 2012 Volume RB23, Number 25 9

12 (iii) for Hybrid 3.0 classes, eligible orders that would improve the Exchange s disseminated quotation except when the disseminated quotation is represented by a manual quote in which case the order will automatically route to the electronic book instead of being processed by HAL and the manual quote will be canceled. (b) HAL Order Handling. Orders that are received by HAL pursuant to subparagraph (a) above shall immediately upon receipt be electronically exposed to all Market-Makers appointed to the relevant option class as well as all Trading Permit Holders acting as agent for orders at the top of the Exchange s book ( Qualifying Trading Permit Holders ) in the relevant option series. The exposure shall be for a period of time determined by the Exchange on a class-by-class basis, which period of time shall not exceed 1.5 seconds. If during the exposure period, a Market-Maker or Qualifying Trading Permit Holder (on behalf of the order it is representing) commits to trade with any portion of the order, then the exposure period shall end and an allocation period shall commence. The allocation period shall be a period of time determined by the Exchange on a class-by-class basis, which period of time, when combined with the designated exposure period time (as opposed to an exposure period that is terminated early), shall not exceed a total of three (3) seconds. Allocation of the order shall be pursuant to subparagraph (c) below. If no responses are received during the exposure period or if there remains an unexecuted portion of an order at the conclusion of the allocation period, then the order (the Remaining Order ) shall be processed as follows: (i) if the Remaining Order is for the account of a public customer and is marketable against another exchange that is a participant in the Intermarket Options Linkage, then HAL shall route a P/A Order on behalf of the Remaining Order through the Linkage and any resulting execution of the P/A Order shall be allocated to the Remaining Order. If the P/A Order cannot be transmitted from the Exchange because the price of the P/A Order (or a better price) is no longer available on any market, then HAL shall, pursuant to normal order allocation processing, execute the Remaining Order against the Exchange s quote (provided such execution would not cause a trade-through) or, if the Exchange s quote is inferior to the Exchange s BBO at the time the order was received by HAL ( Exchange Initial BBO ), against the Market-Makers that constituted the Exchange Initial BBO at a price equal to the Exchange Initial BBO; (ii) if the Remaining Order is marketable against another exchange that is a participant in the Intermarket Options Linkage but is not for the account of a public customer, then HAL, when the system is enabled, shall route a Principal Order on behalf of the Remaining Order through the Linkage and any resulting execution of the Principal Order shall be allocated to the Remaining Order. If the Principal Order cannot be transmitted from the Exchange because the price of the Principal Order (or a better price) is no longer available on any market, then HAL shall, pursuant to normal order allocation processing, execute the Remaining Order against the Exchange s quote (provided such execution would not cause a trade-through) or, if the Exchange s quote is inferior to the Exchange Initial BBO, against the Market-Makers that constituted the Exchange Initial BBO at a price equal to the Exchange Initial BBO. Until the HAL system is enabled to route Principal Orders, the Remaining Order shall route to PAR; (iii) if the Remaining Order is not marketable (either on the Exchange or another exchange) it shall be entered into the Hybrid book for dissemination. (c) Allocation of Exposed Orders. Each Market-Maker or Qualifying Trading Permit Holder that submits an order or quote to trade with an order during the exposure or allocation periods shall be entitled to receive an allocation of the order in accordance with the allocation algorithm in effect for the option class pursuant to Rule 6.45A or 6.45B. There is no participation entitlement applicable to exposed orders, and response sizes are limited to the size of the exposed order for allocation purposes. (d) Early Termination of Exposure Period. In addition to the receipt of a response to trade any portion of the exposed order, the exposure period will also terminate early under the following circumstances: (i) If during the exposure period the Exchange receives an unrelated order on the opposite side of the market from the exposed order that could trade against the exposed order at the prevailing NBBO price, then the orders will trade. However, the exposure period shall not terminate if a quantity remains on the exposed order after such trade; (ii) If during the exposure period the Exchange receives an unrelated order on the same side of the market as the exposed order that is priced equal to or better than the exposed order, then the exposure period shall terminate and the exposed order shall be processed in accordance with subparagraph (b) (i), (ii) or (iii), as appropriate; June 22, 2012 Volume RB23, Number 25 10

13 (iii) If during the exposure of an order that is marketable against the Exchange Initial BBO, a Market- Maker attempts to move its quote to a price that is inferior to the Exchange Initial BBO, then the exposure period shall terminate and the exposed order shall be processed in accordance with subparagraph (b) (i) or (ii), as appropriate.... Interpretations and Policies:.01 A pattern or practice of submitting unrelated orders that cause an exposure period to conclude early will be deemed conduct inconsistent with just and equitable principles of trade and a violation of Rule 4.1 and other Exchange Rules..02 Disseminating information regarding exposed orders to third parties will be deemed conduct inconsistent with just and equitable principles of trade and a violation of Rule 4.1 and other Exchange Rules..03 In lieu of electronically exposing orders received by HAL to all Market-Makers appointed to the relevant options class and Qualifying Trading Permit Holders as provided in paragraph (b) above, the Exchange may determine on a class-by-class basis to permit orders received by HAL to be electronically exposed to all Trading Permit Holders that have elected to receive HAL messages. Such Trading Permit Holders would be permitted to submit responses on a proprietary or agency basis. All other provisions of the Rule shall apply unchanged except: (a) The allocation procedures in paragraph (c) shall not apply. Instead, each Trading Permit Holder that submits a response to trade with an order during the exposure or allocation periods shall be entitled to receive an allocation of the order in accordance with the allocation algorithm in effect for the option class pursuant to Rule 6.45A or 6.45B. There shall be no participation entitlement applicable to exposed orders and, if the allocation algorithm in effect for the option class is price-time or pro-rata, no public customer priority overlay will be in effect. Response sizes are limited to the size of the exposed order for allocation purposes. (b) The restriction on disseminating information regarding exposed orders to third parties in Interpretation and Policy.02 shall not apply..04 In lieu of electronically exposing orders received by HAL to all Market-Makers appointed to the relevant options class and Qualifying Trading Permit Holders as provided in paragraph (b) above, the Exchange may determine on a class-by-class basis to permit orders received by HAL to be electronically exposed to, and responses to be submitted by, all CBOE Market-Makers and Qualifying Trading Permit Holders. All other provisions of the Rule shall apply unchanged.] Rule 6.14A Hybrid Agency Liaison [2] (HAL[2]) RULE 6.14A. This Rule governs the operation of the Hybrid Agency Liaison [2] ( HAL[2] ) system. HAL[2] is a feature within the Hybrid System that provides automated order handling in designated classes trading on Hybrid for qualifying electronic orders that are not automatically executed by the Hybrid System. (a) HAL[2] Eligibility. The Exchange shall designate eligible order size, eligible order type, eligible order origin code ( i.e., public customer orders, non-market Maker broker-dealer orders, and Market Maker brokerdealer orders), and classes in which HAL[2] shall be activated. [HAL and HAL2 shall not be activated in the same class.] HAL[2] shall automatically process upon receipt: (i) an eligible order that is marketable against the Exchange s disseminated quotation while that quotation is not the NBBO, unless the Exchange s quotation contains resting orders and does not contain sufficient Market-Maker quotation interest to satisfy the entire order; (ii) an eligible order that would improve the Exchange s disseminated quotation and that is marketable against quotations disseminated by other exchanges that are participants in the Options Order Protection and Locked/Crossed Plan; (iii) for Hybrid 3.0 classes, an eligible order that would improve the Exchange s disseminated quotation; and (iv) an order submitted to HAL[2] as a result of the price check parameters of Rule 6.13(b)(v[i]). (b) Order Handling and [Flash ]Responses. Orders that are received by HAL[2] pursuant to subparagraph (a) above shall immediately upon receipt be electronically exposed at the NBBO price. The exposure shall be for a period of time determined by the Exchange on a class-by-class basis, which period of time shall not exceed 1 second. [The exposure message shall be made available to all ]Market-Makers [appointed to]with an appointment in the relevant option class and [all] Trading Permit Holders acting as agent for orders resting at the top of the Exchange s book in the relevant option series opposite the order submitted to HAL may submit responses to June 22, 2012 Volume RB23, Number 25 11

14 the exposure message during the exposure period[. Alternatively], unless the Exchange determines [may allow], on a class-by-class basis, to allow all Trading Permit Holders to submit responses to the exposure message[ to be made available to all Market-Maker or all Trading Permit Holders in place of all Market- Makers appointed to the class]. Responses (i) must be priced equal to or better than the Exchange s best bid/offer; (ii) must be limited to the size of the order being [flashed]exposed; and (iii) may be cancelled and/or replaced any time during the exposure period. (c) Allocation of Exposed Orders. Any responses priced at the prevailing NBBO or better shall immediately trade against the order (on a first come, first served basis). At the conclusion of the exposure period, the Exchange will evaluate all remaining responses as well as the disseminated best bid/offer on other exchanges and execute any remaining portion of the exposed order to the fullest extent possible at the best price(s) by first executing against responses (pursuant to the matching algorithm in effect for the class except that the participation entitlement and market turner status shall not apply to responses), and, second, routing IOC ISOs to other exchanges. Any portion of a routed IOC ISOs that returns unfilled shall trade against the Exchange s best bid/offer unless another exchange is quoting at a better price in which case new IOC ISOs shall be generated and routed to trade against such better prices. Any executions at the Exchange s best bid/offer will first trade against interest that was resting at the price at the time the exposed order was received, and any remaining balance will trade against all new interest at that price (in both cases pursuant to the matching algorithm for that class). All executions on the Exchange pursuant to this paragraph shall comply with Rule Executions will be subject to price check parameters set forth in Rule 6.13(b)(v[i]) when such price check functionality is enabled. (d) Early Termination of Exposure Period. No change.... Interpretations and Policies:.01 Redistributing the exposure messages provided by the Exchange to persons not eligible to [receive]respond to such messages pursuant to paragraph (b) above is prohibited, except in classes in which the Exchange allows all Trading Permit Holders to respond to such messages..02 No change..03 All pronouncements regarding determinations by the Exchange pursuant to Rule 6.14A and the Interpretations and Policies thereunder will be announced to Trading Permit Holders via Regulatory Circular. Rule 6.25 Nullification and Adjustment of Options Transactions RULE This Rule governs the nullification and adjustment of options transactions. Paragraphs (a) (1), (2) and (5) of this Rule have no applicability to trades executed in open outcry. (a) (f) No change.... Interpretations and Policies: No change..05 Transactions During Opening Rotation: For proposes of the obvious pricing error provision in paragraph (a) (1) of this Rule, non-broker-dealer Customer transactions during the opening rotation that are subject to the price adjustment and nullification provisions of subparagraph (ii) and (iii) shall include orders executed via ROS or HOSS, marketable orders entered before the open that are executed through the [Hybrid Agency Liaison] HAL process for openings under Rule 6.2B.03, and complex orders entered before the open that are executed immediately following the opening rotation through the Complex Order Book under Rule 6.53C provided such a complex order would have been marketable against the opening rotation price(s). Rule 6.53 Certain Types of Orders Defined RULE One or more of the following order types may be made available on a class-by-class basis. Certain order types may not be made available for all Exchange systems. The classes and/or systems for which the order types shall be available will be as provided in the Rules, as the context may indicate, or as otherwise specified via Regulatory Circular. (a) (o) No change. (p) Intermarket Sweep Order. An intermarket sweep order (ISO) shall have the meaning set forth in Rule ISOs shall not be processed pursuant to Rule[s 6.14 and] 6.14A. ISOs that are not designated as immediate or cancel shall book if not executed upon receipt. (q) (u) No change. June 22, 2012 Volume RB23, Number 25 12

15 (v) Market-Maker Trade Prevention Order. A Market-Maker Trade Prevention Order is an immediate-orcancel order that is marked with the Market-Maker Trade Prevention designation. A Market-Maker Trade Prevention Order that would trade against a resting quote or order for the same Market-Maker will be cancelled, as will the resting quote or order (unless the Market-Maker Trade Prevention Order is received while an order for the same Market-Maker is subject to an auction under Rule 6.13A, [6.14,] 6.14A, 6.74A or 6.74B, in which case only the Market-Maker Trade Prevention Order will be cancelled). Rule 6.53C Complex Orders on the Hybrid System RULE 6.53C. (a) Definition: No change. (b) Types of Complex Orders: No change. (c) Complex Order Book No change. (d) Process for Complex Order RFR Auction: Prior to routing to the COB or once on PAR, eligible complex orders may be subject to an automated request for responses ( RFR ) auction process. (i) For purposes of paragraph (d): (1) COA is the automated complex order RFR auction process. (2) A COA-eligible order means a complex order that, as determined by the Exchange on a class-by-class basis, is eligible for a COA considering the order s marketability (defined as a number of ticks away from the current market), size, complex order type (as defined in paragraphs (a) and (b) above) and complex order origin types (as defined in subparagraph (c) (i) above). Complex orders processed through a COA may be executed without consideration to prices of the same complex orders that might be available on other exchanges. (ii) Initiation of a COA: On receipt of a COA-eligible order and request from the Trading Permit Holder representing the order that it be COA d, the Exchange will send an RFR message to all Trading Permit Holders who have elected to receive RFR messages. The RFR message will identify the component series, the size of the COA-eligible order and any contingencies, if applicable, but will not identify the side of the market. (iii) Bidding and Offering in Response to RFRs: [Each ]Market-Makers with an appointment in the relevant option class[,] and [each ]Trading Permit Holders acting as agent for orders resting at the top of the COB in the relevant options series opposite the order submitted to COA[,] may submit responses to the RFR message ( RFR Responses ) during the Response Time Interval, unless the Exchange determines, on a classby-class basis, to allow all Trading Permit Holders to submit responses to the RFR message. (1) RFR Response sizes will be limited to the size of the COA-eligible order for allocation purposes and may be expressed on a net price basis in a multiple of the minimum increment (i.e., $0.10, $0.05 or $0.01, as applicable) or in a smaller increment that may not be less than $0.01, as determined by the Exchange on a class-by-class basis. RFR Responses will not be visible (other than by the COA system). (2) The Response Time Interval means the period of time during which responses to the RFR may be entered. The Exchange will determine the length of the Response Time Interval on a class-by-class basis; provided, however, that the duration shall not exceed three (3) seconds. (iv) (viii) No change.... Interpretations and Policies: No change..05 A pattern or practice of submitting orders that cause a COA to conclude early will be deemed conduct inconsistent with just and equitable principles of trade and a violation of Rule 4.1. Redistributing the RFR messages provided by the Exchange to persons not eligible to respond to such messages pursuant to paragraph (d) (iii) above is prohibited, except in classes in which the Exchange allows all Trading Permit Holders to respond to such messages.[disseminating information regarding COA-eligible orders to third parties will be deemed conduct inconsistent with just and equitable principles of trade and a violation of Rule 4.1 and other Exchange Rules.].06 No change..07 [In lieu of permitting RFR Responses by Market-Makers with an appointment in the relevant option class and each Trading Permit Holder acting as agent for orders resting at the top of the COB in the relevant options series ( Qualifying Trading Permit Holders ) as provided in subparagraph (d) (iii) above, the Exchange may June 22, 2012 Volume RB23, Number 25 13