SEAT MARKET QUOTES AS OF FRIDAY, SEPTEMBER 25, 2009 CLASS BID OFFER LAST SALE AMOUNT LAST SALE DATE CBOT FULL MEMBERSHIP (WITHOUT STOCK)

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1 Exchange September 25, 2009 Volume 37, Number 39 Bulletin The Constitution and Rules of the Chicago Board Options Exchange, Incorporated ( Exchange ), in certain specific instances, require the Exchange to provide notice to the Exchange membership. To satisfy this requirement, a copy of the Exchange Bulletin, including the Regulatory Bulletin, is delivered by free of charge or by hard copy for a fee to all effective members on a weekly basis. Members are encouraged to receive the Exchange and Regulatory Bulletin and Information Circulars via . subscriptions may be obtained by submitting your name, firm if applicable, address, and phone number, to members@cboe.com. There is no charge for delivery of the Exchange and Regulatory Bulletin or for Information Circulars. If you do sign up for delivery, please remember to inform the Membership Department of address changes. Subscriptions for hard copy delivery may be obtained by submitting your name, firm if any, mailing address and telephone number to: Chicago Board Options Exchange, Accounting Department, 400 South LaSalle, Chicago, Illinois 60605, Attention: Bulletin Subscriptions. The cost of an annual subscription (January 1 through December 31) is $ ($ after July 1), payable in advance. For up-to-date Seat Market Quotes, call THE-CBOE and select choice 3 from the main menu, or, visit click CBOE Member Site and then Seat Market Information on the following page. For access to the CBOE Member Web Site, please also notify the Membership Department by sending an to members@cboe.com or by phone at Copyright 2009 Chicago Board Options Exchange, Incorporated SEAT MARKET QUOTES AS OF FRIDAY, SEPTEMBER 25, 2009 CLASS BID OFFER LAST SALE AMOUNT LAST SALE DATE CBOE $2,150, $2,500, $2,400, September 22, 2009 CBOT FULL MEMBERSHIP (WITHOUT STOCK) CLASS BID OFFER LAST SALE AMOUNT LAST SALE DATE With ERP None None $725, September 30, 2008 Without ERP $240, $280, $275, September 22, 2009 ERP None None $230, October 13, 2008 CBOE MEMBERSHIP SALES AND TRANSFERS From To Price/Transfer Date Larry Stern South LaSalle Partners, LP $2,400, /22/09

2 Page 2 September 25, 2009 Volume 37, Number 39 Chicago Board Options Exchange MEMBERSHIP INFORMATION FOR 9/24/09 THROUGH 9/30/09 MEMBERSHIP APPLICATIONS RECEIVED FOR WHICH A POSTING PERIOD IS REQUIRED Individual Membership Applicants Date Posted Joshua Wachspress, Nominee 9/23/09 Group One Trading, L.P. 730 S. Clark, #1905 Chicago, IL Michael G. Boutross, Nominee 9/23/09 Group One Trading, L.P. 121 W. Chestnut St. #2404 Chicago, IL Member Organization Applicants Date Posted Instinet, LLC 9/22/09 Jonathan A. Kellner, Nominee 3 Times Square New York, NY Nathalie Cahlik Chief Financial Officer Instinet Holdings Incorporated Direct Owner Instinet Incorporated Direct Owner NHI Acquisition Holding Inc. Direct Owner Nomura Holdings Inc. Direct Owner Jonathan A. Kellner President Venu M. Palaparthi Acting Chief Compliance Officer V Derivatives, LLC 9/21/09 Brian A. Scullion, Nominee 858 W. Armitage - Suite 211 Chicago, IL Brian A. Scullion Managing Member MEMBERSHIP TERMINATIONS Individual Members Nominee: Thomas R. Prainito (SMY) 9/22/09 SMC Option Management LLC Member Organizations Lessor: TurningBlock Capital, LLC 9/22/09 EFFECTIVE MEMBERSHIPS Individual Members Nominee: Termination Date Termination Date Effective Date Eric A. Conlon (ECO) 9/22/09 SMC Option Management LLC Type of Business to be Conducted: Market Maker Member Organizations Lessor: Effective Date South LaSalle Partners, LP 9/22/09 MEMBERSHIP LEASES New Leases Effective Date Lessor: Sessio, LLC 9/17/09 Lessee: MOG Capital LLC Rate: 0.60% Term: Monthly Lessor: Michael A. Williams 9/22/09 Lessee: PTR, Incorporated Martin P. Rohrich, NOMINEE Rate: % Term: Monthly Lessor: South LaSalle Partners, LP 9/22/09 Lessee: Wolverine Trading LLC William F. Vachuska, NOMINEE Rate: % Term: Monthly Terminated Leases Termination Date Lessor: Larry Stern 9/22/09 Lessee: Wolverine Trading LLC William F. Vachuska (BIL), NOMINEE Lessor: TurningBlock Capital, LLC 9/22/09 Lessee: PTR, Incorporated Martin P. Rohrich (IGA), NOMINEE

3 Page 3 September 25, 2009 Volume 37, Number 39 Chicago Board Options Exchange RESEARCH CIRCULARS The following Research Circulars were distributed between September 21 and September 24, 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 September 21, 2009 Sadia S.A. ("SDA") Merger COMPLETED with BRF - Brasil Foods S.A. ("PDA") Research Circular #RS September 23, 2009 CF Industries Holdings, Inc. ( CF/CJW/GYW/XCX ) Exchange Offer FURTHER EXTENDED by North Acquisition Co. Research Circular #RS September 23, 2009 SPSS Inc. ( SPSS/QSK ) Proposed Merger with International Business Machines ( IBM ) Research Circular #RS September 23, 2009 TEPPCO Partners, L.P. ( TPP ) Proposed Merger with Enterprise Products Partners L.P. ( EPD ) Research Circular #RS September 23, 2009 HLTH Corporation ( HLTH/HUT ) Proposed Merger with WebMD Health Corp. ( WBMD/QWB ) Research Circular #RS September 24, 2009 Magellan Midstream Holdings, L.P. ( MGG ) Proposed Merger/ Simplification with Magellan Midstream Partners L.P. ( MMP ) Research Circular #RS September 24, 2009 Facet Biotech Corporation ( FACT/YQK & adj. LYO/XDO/YOJ ) Tender Offer by FBC Acquisition Corp. Research Circular #RS September 24, 2009 Cell Genesys, Inc. ( CEGE/UCG ) Proposed Merger with BioSante Pharmaceuticals, Inc. ( BPAX )

4 September 30, 2009 Volume RB20, Number 39 The Constitution and Rules of the Chicago Board Options Exchange, Incorporated ( Exchange ), in certain specific instances, require the Exchange to provide notice to the membership. The weekly Regulatory Bulletin is delivered to all effective members to satisfy this requirement. Copyright 2009 Chicago Board Options Exchange, Incorporated. REGULATORY CIRCULARS Regulatory Circular RG Date: September 18, 2009 To: Members From: Division of Regulatory Services Re: New M & N Order Marking Procedures in Restricted Series Prohibition on Opening Transactions in Restricted Series Pursuant to Exchange Rule 5.4 Withdrawal of Approval of Underlying Securities, the Exchange may determine that an underlying security previously approved for Exchange option transactions should no longer be approved and may prohibit any opening purchase or sale transactions in series of options that were previously opened (except that (i) opening transactions by Market- Makers executed to accommodate closing transactions of other market participants and (ii) opening transactions by CBOE member 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) may be permitted). 1 Currently, when trading in a series is restricted, the Hybrid Trading System is programmed to automatically restrict the entry of electronic orders using non-market-marker origin codes. If such an order is entered in a restricted series and marked close, it may be eligible for routing to the electronic book. If such an order is entered in a restricted series and marked open, it is automatically rejected. Because Market-Makers are permitted to enter opening electronic transactions in certain instances, and are not typically required to mark their orders open or close, the open/close filters have not been applied to electronic M and N orders. As a result, it is possible that an electronic opening transaction that does not satisfy the requirements of Rule 5.4 may occur inadvertently. To address this, a system enhancement is being implemented that will automatically restrict the entry of electronic M and N orders. The enhancement is expected to be available as soon as October 1, The purpose of this circular is to provide Members notice of the planned 1 Rule 6.74 Crossing Orders, relates only to open outcry crossing. September 30, 2009 Volume, RB20, Number 39 1

5 enhancement because it will necessitate some changes in the handling of electronic Market- Maker orders by Members. A follow-up circular will be issued to announce the specific implementation date once it is known. New Order Marking Procedures Once the system enhancement is implemented, the Exchange will require the following with respect to Market-Maker orders entered in restricted series: Open/Close Indicator Market-Makers are generally not required to mark their orders as open or close. However, when an options series becomes subject to Rule 5.4 s restrictions on opening transactions, M and N orders in that options series that are electronically routed to the Hybrid System must be marked open or close. The Exchange is imposing this requirement in accordance with paragraph (d)(m) of Rule 6.51 Reporting Duties, which provides in relevant part that each member must file trade information specified by the Exchange in the form prescribed by the Exchange. Handling of M Orders - M orders that are marked close may be eligible for routing to the electronic book. M orders that are marked open will be automatically rejected unless they contain an IOC contingency (see below). M orders that do not have an open/close indicator will be rejected. It is the responsibility of the member to verify whether an order is opening or closing before accepting an order in a restricted option. IOC on Opening M Orders To be eligible for electronic trading, M orders that are marked open will require an immediate-or-cancel (IOC) contingency. Opening M orders with an IOC contingency will be permitted to allow Market- Makers to accommodate other market participants closing orders that are resting in the electronic book. Please note that it will be the Market-Maker s responsibility to check that the contra-side is a resting order prior to submitting an M order that is marked open. 2 Block on N Orders N orders that are marked close may be eligible for routing to the electronic book. N orders marked open or without an open/close indicator will be rejected. As with all other orders, improperly marking an M or N order as close when it opened a position may constitute a violation of Rule 4.22 Communication to the Exchange or the Clearing Corporation. Any questions regarding this memorandum may be directed to Ji Min Kim at (312) , or Tanja Samardzija at (312) , in the Department of Market Regulation. Regulatory Circular RG The system enhancement will only be applicable to electronic M and N orders. Since electronic quotes will not be subject to the new open/close filter, it is still possible that an opening electronic transaction that does not satisfy the requirements of Rule 5.4 may occur inadvertently (e.g., an opening M order with an IOC contingency executes against an opening quote). It is also still possible for a transaction that does not satisfy the requirements of Rule 5.4 to occur in open outcry. These inadvertent opening transactions are subject to nullification under paragraph (a)(6) of Rule 6.25 Nullification and Adjustment of Options Transactions. September 30, 2009 Volume, RB20, Number 39 2

6 DATE: September 21, 2009 TO: FROM: RE: Members Legal Division and Trading Operations $0.50 Strike Program in Equity Option Classes CBOE recently amended its rules to establish a $0.50 Strike Program that allows CBOE to list $0.50 strikes, beginning at $1 and up through and including $3.50, on up to five equity option classes whose underlying security closed at or below $3. 1 The following is an overview of the rules and procedures for listing $0.50 strike prices under the $0.50 Strike Program. Eligible Option Classes CBOE can choose five equity option classes as part of the $0.50 Strike Program, but is not required to choose any or the maximum number of permissible classes. CBOE can also list $0.50 strike price intervals on any class another options exchange selects under a similarly adopted $0.50 Strike Program, but is not required to list $0.50 strike intervals on another exchange s pick. To be eligible, an underlying stock must close at or below $3 in its primary market on the previous trading day and have a national average daily volume that equals or exceeds 1000 contracts per day as determined by The Options Clearing Corporation during the preceding three calendar months. Procedures for Adding $0.50 Strike Prices After an option class is added to the $0.50 Strike Program, CBOE can list $0.50 strike prices of $1, $1.50, $2, $2.50, $3 and $ See Securities Exchange Act Release No (September 18, 2009) (SR-CBOE ). The Exchange recently eliminated from Rule the $3 market price per share maintenance listing requirement for continued approval of an underlying security. See Securities Exchange Act Release No (February 2, 2009), 74 FR 6332 (February 6, 2009) (SR-CBOE ). September 30, 2009 Volume, RB20, Number 39 3

7 The strike setting parameters set forth on the previous page are subject to the following restriction set forth in the recent amendment to the Options Listing Procedure Plan ("OLPP"): 2 o If the price of an underlying security is less than or equal to $20, the addition of new option series will be limited to 100% above or below the price of the underlying security. Example. If a stock closes at $1.50 the highest strike that may be added is $3 and the following $0.50 strikes would be permissible: $1, $1.50, $2, $2.50 and $3. Requests for $0.50 strikes should be directed to Kimberly Clady (312) , cladyk@cboe.com. Questions regarding this circular may be directed to Jenny Klebes, Legal Division, at or to Charlie Hulihan, Trading Operations, at The OLPP is a national market system plan under the Securities Exchange Act of The SEC's approval order of the recent amendment to the OLPP is available at September 30, 2009 Volume, RB20, Number 39 4

8 Regulatory Circular RG To: Members From: Legal Division Member and Regulatory Services Division Date: September 23, 2009 Re: Delta-Hedge Exemption for Customers is NOT Currently Available This circular reminds Members that on August 21, 2009 the Securities and Exchange Commission ("SEC") issued a contingent approval that will extend the delta-hedge exemption from equity position and exercise limits to positions of customers who hedge those positions in accordance with a pricing model maintained and operated by The Options Clearing Corporation (the "Exemption"). 1 The Exemption is not currently available to be utilized and will not be implemented until CBOE provides a representation to the Office of Compliance Inspections and Examinations that CBOE can conduct adequate surveillance for the Exemption. CBOE will announce to Members when the Exemption is available to be utilized. Questions regarding this circular may be addressed to Tim MacDonald at (312) or (macdonat@cboe.com) or Jenny Klebes at (312) or (klebes@cboe.com). 1 See Securities and Exchange Act Release No (August 21, 2009) 74 FR (August 27, 2009) (SR- CBOE ). September 30, 2009 Volume, RB20, Number 39 5

9 APPROVED RULE CHANGE(S) R U L E C H A N G E S The Securities and Exchange Commission ( SEC ) has approved the following change(s) to Exchange rules pursuant to Section 19(b) of the Securities Exchange Act of 1934, as amended (the Act ). Below, any additions to rule text are underlined, and any deletions are [bracketed]. Copies are available on the CBOE public website at The effective date of the rule change is the date of approval unless otherwise noted. SR-CBOE Hybrid Matching Algorithms On September 14, 2009, the Exchange filed Rule Change File No. SR-CBOE , which filing amends Rules 6.45A, Priority and Allocation of Equity Option Trades on the CBOE Hybrid System, and 6.45B, Priority and Allocation of Trades in Index Options and Options on ETFs on the CBOE Hybrid System, to adopt a modified participation entitlement priority overlay. Any questions regarding the rule change may be directed to Jennifer Lamie, Legal Division, at The rule text is shown below and the rule filing is available at Rule 6.45A - Priority and Allocation of Equity Option Trades on the CBOE Hybrid System (a) Allocation of Incoming Electronic Orders: The Exchange will determine to apply, for each class of options, one of the following rules of trading priority described in paragraphs (i) or (ii). The Exchange will issue a Regulatory Circular periodically specifying which priority rules will govern which classes of options any time the Exchange changes the priority. (ii) Price-Time or Pro-Rata Priority Additional Priority Overlays Applicable to Price-Time or Pro-Rata Priority Methods In addition to the base allocation methodologies set forth above, the Exchange may determine to apply, on a class-by-class basis, one or more of the following designated market participant overlay priorities in a sequence determined by the Exchange. The Exchange will issue a Regulatory Circular periodically which will specify which classes of options are subject to these additional priorities as well as any time the Exchange changes these priorities. (3) Modified Participation Entitlement: This participation entitlement is the same as provided in paragraph (2) above except as follows: Notwithstanding subparagraph (2)(D) above, the participation entitlement shall only be applied to the execution of an inbound order if there are no Public Customer orders resting at the best price or if a Public Customer was the first to rest interest at the best price. In all other cases, the participation entitlement and public customer priority will not be in effect. This participation entitlement overlay is only applicable to automatic executions and will not be applicable for auctions. September 30, 2009 Volume, RB20, Number 39 6

10 [3)] (4) Market Turner: "Market Turner" means a party that was the first to enter an order or quote at a better price than the previous best disseminated Exchange price and the order (quote) is continuously in the market until the particular order (quote) trades. There may be a Market Turner for each price at which a particular order trades. When this priority overlay is in effect, the Market Turner has priority at the highest bid or lowest offer that he established. The Market Turner priority at a given price remains with the order (quote) once it is earned. For example, if the market moves in the same direction as the direction in which the order from the Market Turner moved the market, and then the market moves back to the Market Turner's original price, then the Market Turner retains priority at the original price. Market Turner priority cannot be established until after the opening print and/or the conclusion of the opening rotation and, once established, shall remain in effect until the conclusion of the trading session. Rule 6.45B - Priority and Allocation of Trades in Index Options and Options on ETFs on the CBOE Hybrid System (a) Allocation of Incoming Electronic Orders: The Exchange will determine to apply, for each class of options, one of the following rules of trading priority described in paragraphs (i) or (ii). The Exchange will issue a Regulatory Circular periodically specifying which priority rules will govern which classes of options any time the Exchange changes the priority. (i) Price-Time or Pro-Rata Priority Additional Priority Overlays Applicable to Price-Time or Pro-Rata Priority Methods (3) Modified Participation Entitlement: This participation entitlement is the same as provided in paragraph (2) above except as follows: Notwithstanding subparagraph (2)(D) above, the participation entitlement shall only be applied to the execution of an inbound order if there are no Public Customer orders resting at the best price or if a Public Customer was the first to rest interest at the best price. In all other cases, the participation entitlement and public customer priority will not be in effect. This participation entitlement overlay is only applicable to automatic executions and will not be applicable for auctions. [(3)] (4) Market Turner: "Market Turner" means a party that was the first to enter an order or quote at a better price than the previous best disseminated Exchange price and the order (quote) is continuously in the market until the particular order (quote) trades. There may be a Market Turner for each price at which a particular order trades. When this priority overlay is in effect, the Market Turner has priority at the highest bid or lowest offer that he established. The Market Turner priority at a given price remains with the order (quote) once it is earned. For example, if the market moves in the same direction as the direction in which the order from the Market Turner moved the market, and then the market moves back to the Market Turner's original price, then the Market Turner retains priority at the original price. Market Turner priority cannot be established until after the opening print and/or the conclusion of the opening rotation and, once established, shall remain in effect until the conclusion of the trading session. September 30, 2009 Volume, RB20, Number 39 7

11 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. Below, any additions to rule text are underlined, and any deletions are [bracketed]. Copies are available on the CBOE public website at SR-CBOE Bid/Ask Differentials On September 18, 2009, the Exchange filed Rule Change File No. SR-CBOE , which filing proposes to amend CBOE s rules relating to bid/ask differentials. Specifically, this filing proposes to amend CBOE s rules to allow CBOE to set the bid/ask differential requirements on a class by class basis, and delete from its rules the specific differentials identified in Rule 8.7(b)(iv). Any questions regarding the rule change may be directed to Patrick Sexton, 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) (b) No change. (c) After the Rotation Notice is sent, the System will enter into a Rotation Period, during which the opening price will be established for each series. (i) (ii) No change. (iii) Prior to the expiration of this period, the System will not open a series unless opening quotes that comply with the bid/ask differential requirements determined by the Exchange on a class by class basis[legal width quote requirements of Rule 8.7(b)(iv)] have been entered by at least one Maker-Maker appointed to the class (or by the DPM or LMM, as determined on a class-by-class basis by the Exchange and announced to the membership via Regulatory Circular). (iv) No change. (d) (i) No change. Interpretations and Policies:.01 Not withstanding Paragraph (a), for purposes of Hybrid 3.0 Classes, the following shall apply: (a) No change. (b) The DPM or LMM must enter opening quotes that comply with the bid/ask differential requirements determined by the Exchange on a class by class basis[legal quote width requirements of Rule 8.7(b)(iv)]. If there is not a quote present in a series that complies with the [legal quote width] bid/ask differential requirements established by the Exchange[of Rule 8.7(b)(iv)], then that series will not open. (c) No change No change. Rule CBOE Hybrid System's Automatic Execution Feature Rule (a) No change. (b) (i) (iv) No change. September 30, 2009 Volume, RB20, Number 39 8

12 (v) Price Check Parameter: In classes in which HAL2 ( Rule 6.14A) is activated, and when the system in subparagraph (vi) below is enabled, see subparagraph (vi) below, otherwise: the CBOE Hybrid System will not automatically execute eligible orders that are market orders 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 and announced to the membership via Regulatory Circular). For purposes of this subparagraph: (A) An "acceptable price range" shall be no less than 1.5 times the corresponding bid/ask differential[s] requirements determined by the Exchange on a class by class basis[in Rule 8.7(b)(iv)(A)]. (B) No change. (vi) Price Check Parameter for HAL2 Classes: Once this feature is enabled, the CBOE Hybrid System, for classes eligible for HAL2 processing pursuant to Rule 6.14A, 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 and announced to the membership 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 and announced to the membership via Regulatory Circular). For purposes of this subparagraph: (A) An "acceptable price range" ("APR") shall be no less than 1.5 times the corresponding bid/ask differential[s] requirements determined by the Exchange on a class by class basis [in Rule 8.7(b)(iv)(A)]. An "acceptable tick distance" ("ATD") shall be no less than 2 minimum increment ticks. (B) No change. (c) (d) No change. Rule Nullification and Adjustment of Options Transactions 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) Trades Subject to Review A member or person associated with a member may have a trade adjusted or nullified if, in addition to satisfying the procedural requirements of paragraph (b) below, one of the following conditions is satisfied: (1) Obvious Price Error: For purposes of this Rule only, an obvious pricing error occurs when the execution price of an electronic transaction is above or below the Theoretical Price for the series by an amount equal to at least the amount shown below: Definition of Theoretical Price. For purposes of this Rule only, the Theoretical Price of an option series is: (i) (iii) No change. (iv) if there are no quotes for comparison, or if the bid/ask differential of the national best bid and offer for the affected series just prior to the erroneous transaction was at least two times the permitted bid/ask differential determined by the Exchange[under Rule 8.7(b)(iv)(A)], designated Trading Officials will determine the Theoretical Price. (2) (6) No change. September 30, 2009 Volume, RB20, Number 39 9

13 (b) (f) No change. Interpretations and Policies: No change. Rule 6.53C Complex Orders on the Hybrid System Rule 6.53C. (a) (d) No change. Interpretations and Policies: No change..08. Price Check Parameters: On a class by class basis, the Exchange may determine (and announce to the membership via Regulatory Circular) that COB will not automatically execute eligible complex orders that are: (a) Market orders if (i) the width between the Exchange's best bid and best offer in any individual series leg is not within an acceptable price range or (ii) the width between the Exchange's best net priced bid and best net priced offer in the individual series legs comprising the complex order is not within an acceptable price range. For purpose of this paragraph (a): (1) An "acceptable price range" shall be determined by the Exchange (and announced to the membership via Regulatory Circular) on a series by series basis for each series comprising the complex order (or, in the case of subparagraph (a)(ii), based on the sum of each individual series leg of a complex order) and be no less than 1.5 times the corresponding bid/ask differentials for individual series legs determined by the Exchange pursuant to [in] Rule 8.7(b)(iv)[(A))]; and (2) (4) No change. (b) (c) No change. Rule 8.7 Obligations of Market-Makers Rule 8.7. (a) No change. (b) No change. (i) (iii) No change. (iv) To price options contracts fairly by, among other things, bidding and/or offering [in the following manner] in accordance with the bid/ask differential requirements determined by the Exchange on a class by class basis.[: (A) Bidding and Offering in Open Outcry. With respect to all option classes traded on the Exchange, bids and offers made in open outcry shall be priced so as to create differences of no more than $0.25 between the bid and offer for each option contract for which the bid is less than $2, no more than $0.40 where the bid is at least $2 but does not exceed $5, no more than $0.50 where the bid is more than $5 but does not exceed $10, no more than $0.80 where the bid is more than $10 but does not exceed $20, and no more than $1 where the bid is more than $20, provided that the Exchange may establish differences other than the above for one or more options series. The bid/ask differentials stated above shall not apply to in-the-money series where the quote width (i) on the primary market of the underlying security, or (ii) calculated by the Exchange or its agent for various indices pursuant to Interpretation.08 of Rule 8.7, as applicable, is wider than the differentials set forth above. For these series, the bid/ask differential may be as wide as the quotation on the primary market of the underlying security or calculated by the Exchange or its agent for various indices, as applicable. September 30, 2009 Volume, RB20, Number 39 10

14 (B) Opening Rotations. The provisions of Rule 8.7(b)(iv)(A) shall apply during the applicable opening rotation employed in all classes. (C) Option Classes Trading on the Hybrid Trading System. Except as provided in subparagraphs (i) and (ii) below, option classes trading on the Hybrid Trading System may be quoted electronically with a difference not to exceed $5 between the bid and offer regardless of the price of the bid. The provisions of Rule 8.7(b)(iv)(A) shall apply to any quotes given in open outcry in Hybrid classes. i. The $5 bid/ask differential stated in subparagraph (C) above shall not apply to at-the-money series or in-the-money series where the quote width on the primary market of the underlying security, or the quote width calculated by the Exchange or its agent for various indices pursuant to Interpretation.08, is wider than $5. For these series, the bid/ask differential may be as wide as the quote width on the primary market of the underlying security or calculated by the Exchange or its agent, as applicable. For purposes of this subparagraph (C)(i), "in-themoney series" are defined as follows: for call options, all strike prices below the offer or last sale in the underlying security (whichever is higher); and for put options, all strike prices above the bid or last sale in the underlying security (whichever is lower); and ii. The Exchange may establish quote width differences other than as provided in subparagraph (C) for one or more option series.] (c) No change. (d) Market-Making Obligations in Applicable Hybrid Classes (i) Market-Maker Trades 20% or Less Contract Volume Electronically: If a Market-Maker on the CBOE Hybrid System never transacts more than 20% (i.e., trades 20% or less) of the Market-Maker's contract volume electronically in an appointed Hybrid class during any calendar quarter, the following provisions shall apply to that Market-Maker with respect to that class: (A) Quote Widths: With respect to electronic quoting, the Market-Maker will not be required to comply with the [quote width] bid/ask differential requirements determined by the Exchange [of CBOE Rule 8.7(b)(iv)] in that class. The effectiveness of this subparagraph (i)(a) shall be in effect in each Hybrid for a period of one year commencing with the date the class begins trading on the Hybrid System. (B) No change. (C) Continuous Open Outcry Quoting Obligation: in response to any request for quote by a floor broker, in-crowd Market-Makers must provide a twosided market complying with the [quote width] bid/ask differential requirements determined by the Exchange [contained in Rule 8.7(b)(iv)] for a minimum number of contracts determined by the Exchange on a class by class basis, which minimum shall be at least one contract and which minimum can vary for nonbroker-dealer orders and broker-dealer orders. (ii) Market-Maker Trades More Than 20% Contract Volume Electronically: If a Market-Maker on the CBOE Hybrid System transacts more than 20% of the Market- Maker's contract volume electronically in an appointed Hybrid class during any calendar quarter, commencing the next calendar quarter the Market-Maker will be subject to the following quoting obligations in that class for as long as he remains in that class: September 30, 2009 Volume, RB20, Number 39 11

15 (A) Quote Widths: [The] Market-Makers must comply with the [quote width] bid/ask differential requirements determined by the Exchange on a class by class basis [contained in Rule 8.7(b)(iv)]. (B) No change. (C) Continuous Open Outcry Quoting Obligation: In response to any request for quote by a member or PAR Official, in-crowd Market-Makers must provide a two-sided market complying with the [current quote width] bid/ask differential requirements determined by the Exchange [contained in Rule 8.7(b)(iv)] for a minimum number of contracts determined by the Exchange on a class by class basis, which minimum shall be at least one contract and which minimum can vary for non-broker-dealer orders and broker-dealer orders. (iii) No change. (iv) A Market-Maker that is in the trading crowd but that is not quoting electronically or in open outcry in an appointed class must provide an open outcry twosided market complying with the [current quote width] bid/ask differential requirements determined by the Exchange [contained in Rule 8.7(b)(iv)] for a minimum number of contracts determined by the Exchange on a class by class basis, which minimum shall be at least one contract and which minimum can vary for non-broker-dealer orders and broker-dealer orders in response to a request for quote by a member or PAR Official directed at that Market-Maker or when, in response to a general request for a quote by a member of PAR Official, a market is not then being vocalized by a reasonable number of Market-Makers. A Market-Maker may also be called upon by an Exchange official designated by the Board of Directors to submit a single quote or maintain continuous quotes in one or more series of a class to which the Market-Maker is appointed whenever, in the judgment of such official, it is necessary to do so in the interest of maintaining a fair and orderly market. Interpretations and Policies: No change..06 By making a verbal bid, a Market-Maker is also making an offer at the spread allowable in accordance with the bid/ask differential requirements determined by the Exchange on a class by class basis[under Rule 8.7(b)(iv)]. By making a verbal offer, a Market-Maker is also making a bid at the spread allowed in accordance with the bid/ask differential requirements determined by the Exchange on a class by class basis[under Rule 8.7(b)(iv)]..07 No change..08 The Exchange or its authorized agent may calculate bids and asks for various indices for the sole purpose of determining permissible bid/ask differentials on options on these indices. These values will be calculated by determining the weighted average of the bids and asks for the components of the corresponding index. These bids and asks will be disseminated by the Exchange at least every fifteen seconds during the trading day solely for the purpose of determining the permissible bid/ask differential that market-makers may quote on an in-the-money option on the indices. For in-the-money series in index options where the calculated bid/ask differential is wider than the applicable differential determined by the Exchange in accordance with [set out in] Rule 8.7(b)(iv), the bid/ask differential in the index option series may be as wide as the calculated bid/ask differential in the underlying index. The Exchange will not make a market in the basket of stock comprising the indices and is not guaranteeing the accuracy or the availability of the bid/ask values. The bid/ask values for those certain indices, which are calculated by the Exchange or its authorized agent, are disseminated for the purpose of determining permissible bid/ask September 30, 2009 Volume, RB20, Number 39 12

16 differentials on in-the-money index option series, in accordance with interpretations to Rule 8.7. As such, the Exchange is not making a market in these indices and these values should not be relied upon as indicative of the market in the indices. The Exchange's liability in connection with the calculation and dissemination of these bid/ask values for indices is limited to the same extent as provided in Rule in connection with the calculation and dissemination of current index values No change. Rule 8.14 Index Hybrid Trading System Classes: Market-Maker Participants Rule (a) No change. (b) (1) (2) No change. (3) In the event the Exchange activates request-for-quote ("RFQ") functionality in index classes, each MM will have an obligation to respond to that percentage of RFQs as determined by the Exchange, provided, however, that such percentage shall not be less than 80%. Regarding RFQ responses:. (i) MMs must comply with the bid-ask differential requirements determined by the Exchange on a class by class basis [contained in Rule 8.7(b)(iv):]. (ii) - (iv) No change. (4) No change. Rule 8.15 Lead Market-Makers and Supplemental Market-Makers in Hybrid 3.0 Classes Rule (a) No change. (b) The obligations of an LMM are as follows: 1. to quote a firm two-sided market of sufficient size to accommodate a relatively active opening within the bid/ask differential[s] requirements determined by the Exchange on a class by class basis [permitted by Rule 8.7] in all option series assigned to the zone; No change. (c) (d) No change. Interpretations and Policies: No change. Rule 8.15A Lead Market-Makers in Hybrid Classes Rule 8.15A. (a) No change. (b) LMM Obligations. LMMs are required to: (i) provide continuous electronic quotes (as defined in Rule 1.1 (ccc)) that comply with the bid/ask differential[s] requirements determined by the Exchange on a class by class basis [permitted by Rule 8.7(b)] in 90% of the option series within their assigned classes. In option classes in which both an On-Floor LMM and an Off-Floor DPM have been appointed, the On-Floor LMM shall not be obligated to comply with this paragraph (b)(i) and instead shall be obligated to comply with the obligations of Market- Makers in Hybrid classes in Rule 8.7(d); September 30, 2009 Volume, RB20, Number 39 13

17 (ii) (iv) No change. (v) respond to any open outcry request for quote by a floor broker with a twosided quote complying with the bid-ask differential requirements determined by the Exchange on a class by class basis, [current quote width requirements of Rule 8.7(b)(iv)] for the minimum number of contracts determined by the Exchange on a class by class basis, which minimum shall be at least one contract and which minimum can vary for non-broker-dealer orders and for broker-dealer orders; (vi) (vii) No change. Interpretations and Policies:.01 No change. Rule 8.85 DPM Obligations Rule (a) (i) (ii) No change. (iii) in the case of option contracts, comply with the bid/ask differential requirements determined by the Exchange on a class by class basis[of Rule 8.7(b)(iv)]; (iv) (xii) No change. (b) (e) No change. Interpretations and Policies: No change. Rule 8.93 e-dpm Obligations Rule (i) (ii) No change. (iii) comply with the bid/ask differential requirements determined by the Exchange on a class by class basis[of Rule 8.7(b)(iv)]; (iv) assure that its market quotations comply with the minimum size requirements prescribed by the Exchange, which minimum shall be at least one contract[shall be no less than 10 contracts]; (v) (xi) No change. September 30, 2009 Volume, RB20, Number 39 14