Ms. Jean A. Webb

Page 20 of 68

CHAPTER 5
OBLIGATIONS OF TRADING PRIVILEGE HOLDERS

Recordkeeping

501. Books and Records

(a)(a) Each Trading Privilege Holder and Clearing Member shall prepare and
keep current all books, ledgers and other similar records required to be kept by it
pursuant to mm: Regulations, the hange
Act, Exchange Act Regulations, and the Rules of the Exchange, and shall prepare
and keep current such other books and records and adopt such forms as the
Exchange may from time to time prescribe. Such books and records shall be
made available to the Exchange upon request.

(b)fb) With respect to each order, bid, offer or other message transmitted to the
CBOE System by an Authorized Trader of a Trading Privilege Holder, the
Trading Privilege Holder shall keep a record of which Authorized Trader of the
Trading Privilege Holder caused that order, bid, offer or other message to be
transmitted to the CBOE System.

Rules 502-506 No change

Customer Protection

507.NFA-Registration

(c) No Trading Privilege Holder or Clearing Member of the Exchange
(including any Person that is affiliated with such Trading Privilege Holder or
Clearing Member), may solicit or accept from any other Person an Order for the
purchase or sale of a Contract, unless such Trading Privilege Holder or Clearing
Member, or its respective affiliated Person, as the case may be, is registered in
any required capacity in accordance with Applicable Law.

(d) Any Trading Privilege Holder or Clearing Member that is required to be
tegistered as a futures commission merchant-er-as, an introducing broker,_a broker

or a dealer shall comply with the provisions of Commission Regulations § 155.
§ 155.4 or § 41.42(a) or Exchange Act Regulation § 15c3-3, as applicable.

Rule 508 No change

509. Customer Statements

Each Trading Privilege Holder and Clearing Member that enters into

trades on behalf of Customers shall furnish, or cause to be furnished, as soon as
practicable after the end of each month, a monthly statement of account to each of its

pustomers in a eee oumission Regulations or Exchange Act

lations. —Each-sueh-stat ¢-shall-indi the-Cust initi


Ms. Jean A. Webb

Page 41 of 68

m,

that be entered for. trade with another original Order nt to R
407. is one Contract. The vequest for quote response period under Rule 407(a) for
the re west for quote required t sent before tiation of a cross trade under
R Lv te) wi est fc yt onse_period, the
Trading Privilege Holder or Authorized Trader, as applicable, t expose to the
market for_at least five seconds under Rule 407(b) at least one of the original

Orders that it intends to cross.

Bl lock Trade _quan tity fo for the ‘parti cular Si Single Stock Future and the ‘other leg(s)
must_have_a_contract_size_that_is_reasonabl ated _to_the leg meeting the
mini Jock T

No_natural_person_associated_with_a_ Trading Privile: older_or Authorized
‘a is_knowl. of ding Bl de_of such Trading Privilege
Holder or Authorized Trader, or a Customer thereof ina Single Stock Future on
the m T re xecute a transacti i ‘or his or her
ow! count or, if applicable, for the account of a tomer over which he or she
as_contro or in the Si to which such lock ” ade relat

until _after_(i ~fuch_ Block Trade. a

Exchange in its block trading procedures or contract specifications has expired.

No-natural rson_associated_with a Tradin; Eile old 1 Lorizi d

hee ‘or Authorized Trader, or a Customer thei mee ina ane St ock Future on
any_other exchange or trading system, may enter an Order or execute a transaction

on the Exchange whether for_his_or her own _account_or, if applicable, for the
hich h hi 1 i

a

Future re has the same eunderving scourity as the contract to which such block
late il h i ish

corda Ci with the rules, proc: dures fe) contra Ls ificati lon: 50 +h_ exch;

in its “bl ck trading procedures or con! ct si ification tio h:



Ms. Jean A. Webb
Page 37 of 68

CHAPTER 7
DISCIPLINE AND ENFORCEMENT

Rule 701. Disciplinary Jurisdiction

(a) A Trading Privilege Holder and any Related Party who is alleged to have
violated, or aided and abetted a violation of, any provision of the CEA,
Commission Regulations thereunder,the Exchange Act, Exchange Regulations
thereunder, or any Rule of the Exchange regulating the conduct of business on the
Exchange shall be subject to the disciplinary jurisdiction of the Exchange under
this Chapter 7, and after notice and opportunity for a hearing may be
appropriately disciplined by expulsion, suspension, limitation of activities,
functions and operations, fine, censure, being suspended or barred from using
Trading Privileges or any other fitting sanction, in accordance with the provisions
- of this Chapter 7.

(b) - (c) No change
Rules 702 — 714 No change

ee RK

Chapters 8 - 10 No change


Ms. Jean A, Webb
Page 46 of 68

shares * price’

) for eai

(E) he Exchange will calculate the notional value of
the Narrow-Based Stock Index Future (the “Notional Value”) as
follows:

Notional_Value = Level of index underlying Narrow-Based

ock Index. * con multipli
The_Ex _will_calculate_the Market Cap
Position Limit_of the Narrow-Based_Stock Index Future _by
dividing the Stock Index Market Cap by the product_of the

Notional Va he Narrow-Bas tock re th
Market Cap Ratio: .

arket Cap Position Limit = lex_ Marke:

Notional Value * Market Cap Ratio

Gii) “SSF Position Limit”

h: will calculate notional value oj
the Narrow-Based Stock Index Future (same as (i)(E) above):

Notional Value = Level of index_unde
Stock Index Future * contract multiplier

ing_Narrow-Based

_.__For_ each _component__security__in__the index
underlyi Narr Stock Index Future, the Exchange

will multiply its index weight! by the Notional Value to determine

that security’s proportion of the Narrow-Based Stock Index Future,

(C)_____ For each component_security, the Exchange wil]
. in Gii ity’s price. Thi e

number of share at Secul resented in the Narrow-Based

(D)___ For each component security, the Exchange will
ivide the number of s calculated _in (ii 100 to obtain
the impli ¥ 5
Stock Index Futures contract.
wi ivide tl Li in,

stock futures contract speculative position limit set in Commission

ch component security,



Ms. Jean A. Webb

Page 14 of 68

Any violation of this Rule 411 for the purpose of taking advantage of an Order or
Orders shall constitute conduct which is inconsistent with just and equitable
principles of trade.

(b) — This Rule 411 shall not be construed to contravene any instructions
received by a Trading Privilege Holder from a Customer with respect to any
Order prior to its execution, but shall be construed to permit execution of Orders
under the conditions described in paragraph (a) above, without prior instructions
from a Customer.

Position Limits and Price Limits; Final Settlement Prices

412. Position Limits

(a) Position limits shall be as established by the Exchange from time to time:

i ission__Regulation 41,2. d_ othe i
Commission Regulations. Such position limits may be specific to a particular
Contract or delivery month or may be established on an aggregate basis among
Contracts or delivery months. Except as specified in paragraphs (b) and (c)
below, Trading Privilege Holders shall not control, or trade in, any number of
Contracts that exceed any position limits so established by the Exchange. Once
established, any such position limits shall be deemed to constitute a part of each
Trading Privilege Holder’s account and clearing agreement. Except as specified
in paragraphs (b) and (c) below, no Trading Privilege Holder shall be permitted to
enter into any transaction on the Exchange that would cause such Trading
Privilege Holder to exceed any position limits.

(b) = (g) No change

413. Price Limits; Final Settlement Prices

(a) The rules governing a particular Contract shall contain any price limits
that apply to trading in such Contract.

(b)___In the case of any Contract that is a cash-settled security futures product
(as such term is defined in Section 1a(32) of the CEA), the rules governing such
Contract shall establish principles for the determination of final settlement prices
that are consistent with Commission Regulation §41.25(b).

Off-Exchange Transactions

Rule 414 No change

415. Block Trading

(a) —(f) No change


Ms. Jean A. Webb

Page 56 of 68
spin-off, reorganization, recapitalization, restructuring or _ similar
rate tr. tion (“Re. ring Tran: ”
(vy) a lyin curity oth an. TF Share, _
Closed-En d Share, there must least 2,000 securi ders,

i an tanding. Se ity wil i
a National Securities Exchange or automated quotation system that_is
je n initial listing requiremen i! hareholder.
the case ofa R struc, ture Security issued or distributed to the holder:
igil mnsider_the_n

Transaction.
wi)

preceding 1 12 months

Requirement (vi) as Applied to Restructure Securities:

k-Back Test: In determinii ther_a_ Restructure ity that is
ed or distri the_shareholder: in Original Equi

c he ite book value_of the assets _attributed to the busine:

represented by the Restructure Security equals or exceeds $50
illion_ and the Relevant Percentage of the aggregate book value of
:



Ms. Jean A. Webb

Page 54 of 68
day after nc Lof tradi of. ity Futures, a “ ingful
tion tal volume_on <chi rit
Futures in which Tat market maker is dasienated as a market maker” shall
mean a minimum of 20 such trading v
« °°
To_quali a “dealer” in securit tracts_within the meani: io)
1251 nue-Code of 1986, as amended (the “Code”), a Trading
Enuiles told A a ize Trader-i is ired (i) to_r marl er for
pur eS Marg in rin rules under Cate; € € .
purposes of he Exchan in its regi: to pre wide ¢ otations for all products specified for the
market maker exclusion from the Exchange margin rules; and (iii) to quote a minimum
size of

(B) five (5) contracts for each product specifi ified by the member to the extent
such quotations are pr rovided for delivery months other than the next two

delivery mont nt and

‘efletive reiroactive ding day of
maker shall be responsible for maintaining books and records that confirm that it has

fulfilled its quarterly obligations under the market maker category elected _on its Market
jon F tur igne fc

quarter.


Ms. Jean A. Webb
Page 60 of 68

the ex-date of the Restructuring Transaction if the following Look-Back
Test is satisfied:

$500 million;

b he aggregate market value of the Restruc curi 1

exceeds the Relevant Percentage (defined below) of the aggregate
market value of the Original Equity Security;

book _v: i t
represent curil ual: Cc
million and the Relevant Percentage of the aggregate book value of
the _assets_attributed to the business represented by the Original
Equity Security; or
d) revel tri ine re ent
cture curl TeX million
Relevant Percentage of the revenues attributed to the business

pur] ining wheth ook-Back i i the

Furthermore,_in calculating comparative asset values and revenues,_the
Ex. will use the issuer’s (i) latest financial stat ii,
st_recent i interim_fi i te: lon:

interim financial statements cover a period of not less than three months),
whichever are mor t. inancial statements ma: it



Ms. Jean A. Webb
Page 64 of 68

agai the Exch: ”s requirements x en_f di
new delivery months in such Security Futures product and may lift any restriction

4. Whenever the Exchan; unces that approval of an underlying securit
n_withdrawn fo Teas hi h: en i a
issuer_of an underlying security has ceased to be in compliance with Exchange
Act reporting require t i and_Exchi
such terms ace deft ined_in th ule: the Exchan; as in Heck from ime t

ith

in
‘espect_to_suc! ch under! security for_any customer, inform_s such reustomer of
such fact and that the Exchange may prohibit further transactions in such Security

Futures products as it determines is necessary and appropriate.

eee Tenor Mn Senin nanss Product Basedl on_an_index lof T More Securiti

L For a Security Future an index f two or
securities to be eligible for initial listing, the index must:

(i) Meet the definition of a narrow-based security index in Section ]a(25) of
the CEA and Secti e ‘Act; and

(ii) + Meet the following requirements:

a e__capitalization-wei, ifi
italization-weighte ice-wei, di -wei d
i n_i in; i Settl curit’

Futures products only, approximately equal dollar-weighted.

‘eightin, thodol yr roximately Equal lar-Weighted
Indice: derlying Physicai ett ecurity Futures Products:
L hi: lly settled Secu Future.
on an approximately equal dollar-weighted ind.
or_more securities, each _component_security will be wei, ighted
1h ed. t price on t electi¢ te ject to
unding up or. m_ the ni avidencin
such securil t multi vi res or re
onent securities must istered under
jon df x
(c) Subject_to_(e) and (1) below, the component

securities that account for_at least 90% of the total index weight

and at least 80% of the total number of component securities in the



Ms. Jean A. Webb
Page 52 of 68

Other Specifications:

RRR KE
Chapters 20-21 Nochange

eK KKK
CFE Policies and Procedures I - VI No change

CFE Policy and Procedure VIL.__ Security Futures Market Maker Registration Policy and
Procedures

A.___Security Futures Market Maker Program

Pursuant te Exchange Rule 14, the E mark

market_m i ivi
mpl file wii e aker Registration For igni

registration form. the. Trading Privilege Halder or Authorized Trader sall confi that

as
wi

‘o qualify for the marl lusion i ange Rul for
? margi i ity Fi erson must:
Q) bea Trading Privilege Holder or Authorized ‘rader that is seristared with
xchai eS _as in
f Act;
(Q) be segisiered as_a floor trader or_a floor broker under Section 4 fay Lof
leale: an han;
“ der Section 1 f th ange Act;
(3) maintain records sufficient to prove compliance with the requirements of
le 5 le 41 A ul:
limitation tradi nci: ient


Ms. Jean A. Webb

Page 24 of 68

(h) Margin Call Records. Clearing Members_and, if applicable, Trading

Privilege Holders must maintain written records of all margin calls made, reduced
and deleted.

(i) Release of Margin Deposits. Clearing Members_and, if applicable,
Trading Privilege Holders may release margin deposits to a Customer only if such

deposits are in excess of the initial margin requirements.

G) Loans to Customers. Clearing Members_and, if applicable, Trading
Privilege Holders may not extend loans to Customers to use as a margin deposit

unless such loans are secured, as defined in Commission Regulation §1.17(c)(3),
and the proceeds of such loans are treated in accordance with Commission
Regulation §1.30.

(k) Aggregation of Accounts and Positions. For margin purposes, Clearing

Members and, if applicable, Trading Privilege Holders may aggregate Customer

accounts having identical ownership within the same classification of Customer
segregated, Customer secured, and nonsegregated.

0) Hedge Rate Eligibility. When extending hedge margin rates, Clearing
Members icabl ivil olders must have reasonable
support that such rates are being ae to bona-fide hedge and risk management
positions, as defined by Rule 412.

(m) Omnibus Accounts.

(i) Margin shall be collected on a gross basis in the case of a foreign
or domestic omnibus account.

(ii) | Maintenance margin requirements shall serve as both the initial
and maintenance margin requirements in the case of omnibus accounts.

(iii) | Written instructions from foreign and domestic omnibus accounts
shall be obtained and maintained for positions entitled to spread or hedge
margin rates.

(n) Liquidation of Accounts. In the event a margin call is not met within a
reasonable time (for purposes of Rule 516(n), one hour is deemed to be a
reasonable time), the Customer's trades, or a sufficient portion thereof, may be
closed-out in order to attain the required margin status. A determination as to
when and under what circumstances liquidation may occur is at the full discretion

of the Clearing Member or, if applicable, Trading Privilege Holder.

(0) Failure to Maintain Margin Requirements. The Exchange may direct a

Clearing Member or, if applicable, Trading Privilege Holder to immediately

liquidate all or part of a Customer's positions to eliminate a margin deficiency if

the Clearing Member or Trading Privilege Holder has failed to maintain margin

requirements for the account in accordance with Rule 516.


Ms. Jean A. Webb
Page 42 of 68

occ In makin, ination, the Help Desk ma: i I_relev:
factors, includin; rad rice for such Contract, a better bi ffer pri

Privilee ge Holder or Auth nize

les of the Clearin; ation. As ly_as i afi e ipt of a notice
of deliver learij ration wii I i k Future hel:

Trading Privilege Holder os Authorized_Trader, such Trading Privilege Holder or

f i f

such Co the_sell of such Contr: 1_immediatel:
hange. If d_on such notificati i indivi esi, d
the President and approved by the Board, determines that an Emergency exists, he or she
k tion_in_accordance with Rule 4 rr ne

under the circumstances, which action shall be binding upon both parties to the Contract
in_question; provided that_any action tal en in_accordan his_sentence_shall_be

Vi Boar der im:

revoked, suspended or modified by the Board.



Ms. Jean A. Webb
Page 5 of 68

167.162.-Vice Chairman

The term “Vice Chairman” means the individual serving as vice chairman
of the board of CBOE from time to time.

168.463-Vice President

The term “Vice President” means any individual appointed by the Board
from time to time to serve as a vice president of the Exchange.


Ms. Jean A. Webb

Page 35 of 68
DESCRIPTION OF OFFSET SECURITY INITIAL MARGIN MAINTENANCE
UNDERLYING REQUIREMENT MARGIN
THE SECURITY REQUIREMENT
FUTURE
‘Short security future and Jong position in | Individual stock or | The initial margin 10% of the current
13 | asecurity immediately convertible into | narrow-based required under market value, as defined
“~ | the same security underlying the security | security index Regulation T for the in Regulation T, of the

is

15
i Narrow-based 5% of the current 5% of the current
16 | cach based on anarrow-based security ecurity index market value for the market value of the long
based index future
Individual stock | The greater of: (1)5% | The greater of: (1) 5%
17 | that together tracks a narrow-hased and narrow-based | of the current market of the current market
S% oft 5% of the current
t market value of the
short security future(s). | short security future(s),
Long (short) a security future and short | Individual stock eater of: (1)3% | The greater of: (1) 3%
18 | Gong) an identical security future traded | andnarrow-based | of the currentmarket —_} of the current market
ona different market* security index value of the long value of the long
3% of the current 3% of the current
market value of the market value of the
short security future(s), | short security future(s),

clearing as 1_cleared the lerivatives clearing organization, have identical
t ificatis would __o} other i el.



Ms. Jean A. Webb
Page 21 of 68

bala: Jesins—bal: issi d—fees—incurred—i ived-and—trad

2 2 p
made.

510. Risk Disclosure Statement

Pr. 7 } t-fo3 Cust therth jnstituti |
im So Ps
i defined in- Commission Regulation $+1-3(g),-aln accordance with applicable
euston jon Regu $432},

requireme) in_the case_o' i Vv:

with the N or _th A (in_the
Privilege in, ber_that_is registered wi STG each bh Trading
Privilege Holder or Clearing Member, as the case may be, shall provide sueh-Customerits
Customers with a written disclosure statement in the form approved by the Exchange for
purposes of Commission Regulation § 1.55 or § 44.4241.41(b), as applicable, and any
other disclosure statement from time to time required by the Exchange.

Rules 511-514 No change
515.DPMs
(a) -(c) No change

(d) Each Exehange-MemberTrading Privilege Holder approved as a DPM

shall retain such status until (x) it resigns as a DPM and the Exchange relieves
such Exechange-MemberTrading Privilege Holder of its obligations to act as a
DPM, (y) the Exchange suspends or terminates such DPM’s status or (z) if
applicable, the time period referred to in paragraph (c)(ii) above expires. In any
of the feregoing circumstances, the Exchange shall have discretion to do one or
both of the following:

6) approve an interim DPM, pending the final approval of a
new DPM pursuant to the regular procedures for DPM approval; and

(ii) allocate on an interim basis to one or more other DPMs the
Contracts that were allocated to the DPM whose status is affected by such
circumstances, pending a final allocation of such Contracts pursuant to
paragraph (e) below.

Neither an interim approval nor an allocation made pursuant to this paragraph (d)
shall constitute a prejudgment with respect to the final approval or allocation.

(e)-G) No change


Ms. Jean A. Webb

Page 27 of 68
(i) the margin equi it_i °
Is below i intenance margin requirement;

Gi) subsequently, when the margin equity on deposit in such
Customer’s account, together with any outstanding margin calls, is less
than the applicable maintenance margin requirement.

h_call must ithi: iness D: the occurrence
vi iving ri: i b nd, i licable, Tradin;

Privilege Holders may call for additional margin at their discretion.

Clearing Members_and, if applicable, Trading Privilege Holders shall
reduce any call for margin only to the extent that margin deposits permitted under



Ms. Jean A. Webb

Page 23 of 68

Holder files a petition with, and receives permission from, the Exchange. Bank-
issued and trust-issued letters of credit must be drawable in the United States and
in a form acceptable to the Exchange. Letters of credit in a form approved by the
Clearing Corporation are deemed a form acceptable to the Exchange. Letters of
credit issued by the Customer, an affiliate of the Customer, the Clearing Member,
[or] an affiliate of the Clearing Member, or, if applic:
Holder_or an affiliate of the Tradi ng Privilege Holder shall not be accepted by
Clearing Members or Trading Privilege Holders as margin. All Customer assets
accepted by Clearing Members and, if applicable, Trading Privilege Holders as
margin deposits must be and remain unencumbered by third party liens against the
depositing Customer. Cash currency margin deposits shall be valued at market
value, unless the Exchange has prescribed otherwise. Clearing Members_and, if
applicable, Trading Privilege Holders, must comply with Commission Regulation
§ 1.49 when accepting and holding foreign currencies as a margin deposit on any
Contract. All other margin deposits shall be valued at an amourit not to exceed
market value less applicable deductions, as set forth in Exchange Act Rule 15c3-
1.

(e) Order Acceptance. Clearing Members_and,_if applicable, Trading
Privilege Holders shall not accept orders for an account unless sufficient margin is
on deposit in the account or is forthcoming within a reasonable period of time. In
the event an account has been subject to a margin call for an unreasonable time,
Clearing Members_and,_if i _Trading Privilege lers are only
permitted to accept orders that reduce the margin requirements of positions
existing in the account. In the event an account has been in debit for an

unreasonable time, Clearing Members_and, if applicable, Trading Privilege
Holders are not permitted to accept orders.

(f) Margin Calls. Calls for margin in the amount necessary to reach the
initial margin equity requirement must be issued: (i) when margin equity in an
account initially falls below the maintenance margin requirement, and (ii)
subsequently, when the sum of margin equity plus existing margin calls in an
account is less than the maintenance margin requirement. Such calls must be
made within one business day after the occurrence of the event that gives rise to
the call. A Clearing Member_and, if applicable, Trading Privilege Holder may, at
any time, at its discretion, call for additional margin. A Clearing Member and, if
is not required to call for or collect margin

for day trades.

(g)  Reduction/Deletion of Margin Calls. A margin call may be reduced only
through the receipt of margin deposits permitted pursuant to Rule 516(d). A
margin call may be deleted through: (i) the receipt of margin deposits permitted
under Rule 516(d) that equals or exceeds the amount of the total margin call, or
(ii) inter-day favorable market movements and/or the liquidation of positions,
provided that margin equity in the account is equal to or greater than the initial
margin requirement. The oldest outstanding margin call shall be reduced first.


Ms. Jean A. Webb
Page 36 of 68

CHAPTER 6
BUSINESS CONDUCT

Rules 601 —602 No change
603. Market Manipulation-or Demeralization

Any manipulation of the market in any Contract is prohibited. Orders

entered into the CBOE System for the purpose of upsetting the equilibrium of the-market
in-any -Contractgenerating unnecessary volatility or creating a condition in which prices

do not or will not reflect fair market values are prohibited and any Trading Privilege
Holder (including its respective Related Parties) who makes or assists in entering any
such Order with knowledge of the purpose thereof or who, with such knowledge, in any
way assists in carrying out any plan or scheme for the entering of any such Order, shall
be deemed to have engaged in an act detrimental to the Exchange.

Rule 604 No change
605. Sales Practice Rules

Without limiting the generality of Rule 604, each Trading Privilege
Holder (including its Related Parties) shall comply with any and all sales practice rules
(including those relating to bunched orders, opening and approval of accounts, suitability,
use of discretion, supervision of accounts, risk disclosure document delivery,
communications, monthly statements and confirmations, registration, qualification and
continuing education, customer complaints, prohibition against guarantees and profit
sharing and money laundering) from time to time promulgated by the NFA or, in the case
of seeurity futuresSecurity Futures, from time to time promulgated by the NFA or the
National it Dealers,tIne:NASD, which rules are hereby
incorporated by reference into this Rule 605.

Rules 606 — 615 No change


Ms. Jean A. Webb
Page 18 of 68

OF EXCHANGE ACTIONS OR IN ANY SPECIFIC INSTANCE WHERE THE
BOARD HAS GRANTED A WAIVER OF THIS PROVISION.

NO INDEX LICENSOR WITH RESPECT TO ANY INDEX
UNDERLYING A CONTRACT TRADED ON THE EXCHANGE AND NO
AFFILIATE OF SUCH INDEX LICENSOR MAKES ANY WARRANTY, EXPRESS
OR IMPLIED, AS TO THE RESULTS TO BE OBTAINED BY ANY PERSON FROM
THE USE OF SUCH INDEX, ANY OPENING, INTRA-DAY OR CLOSING VALUE
THEREFOR, OR ANY DATA INCLUDED THEREIN OR RELATING THERETO, IN
CONNECTION WITH THE TRADING OF ANY CONTRACT BASED THEREON OR
FOR ANY OTHER PURPOSE. THE INDEX LICENSOR AND ITS AFFILIATES
SHALL OBTAIN INFORMATION FOR INCLUSION IN, OR FOR USE IN THE
CALCULATION OF, SUCH INDEX FROM SOURCES THEY BELIEVE TO BE
RELIABLE, BUT THE INDEX LICENSOR AND ITS AFFILIATES DO NOT
GUARANTEE THE ACCURACY OR COMPLETENESS OF SUCH INDEX, ANY
OPENING, INTRA-DAY OR CLOSING VALUE THEREFOR, OR ANY DATE
INCLUDED THEREIN OR RELATED THERETO. THE INDEX LICENSOR AND ITS
AFFILIATES HEREBY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO SUCH
INDEX, ANY OPENING, INTRA-DAY, OR CLOSING VALUE THEREFOR, ANY
DATA INCLUDED THEREIN OR RELATING THERETO, OR ANY CONTRACT
BASED THEREON. THE INDEX LICENSOR AND ITS AFFILIATES SHALL HAVE
NO LIABILITY FOR ANY DAMAGES, CLAIMS, LOSSES (INCLUDING ANY
INDIRECT OR CONSEQUENTIAL LOSSES), EXPENSES, OR DELAYS, WHETHER
DIRECT OR INDIRECT, FORESEEN OR UNFORESEEN, SUFFERED BY ANY
PERSON ARISING OUT OF ANY CIRCUMSTANCE OR OCCURRENCE
RELATING TO THE PERSON'S USE OF SUCH INDEX, ANY OPENING, INTRA-
DAY OR CLOSING VALUE THEREFOR, ANY DATA INCLUDED THEREIN OR
RELATING THERETO, OR ANY CONTRACT BASED THEREON, OR ARISING
OUT OF ANY ERRORS OR DELAYS IN CALCULATING OR DISSEMINATING
SUCH INDEX. FOR PURPOSES OF THIS RULE 448,419, THE TERM ““INDEX
LICENSOR*” INCLUDES ANY PERSON THAT GRANTS THE EXCHANGE A
LICENSE TO USE AN INDEX IN CONNECTION WITH THE TRADING ON THE
EXCHANGE OF A CONTRACT BASED ON THE INDEX AND ANY PERSON
DESIGNATED BY THE EXCHANGE AS THE SOURCE FOR CALCULATING
AND/OR REPORTING THE LEVEL OF AN INDEX UNDERLYING A CONTRACT
TRADED ON THE EXCHANGE, AND ALSO INCLUDES, WITH RESPECT TO
ANY INDEX OF WHICH THE EXCHANGE OR AN AFFILIATE OF THE
EXCHANGE IS THE PROPRIETOR OR FOR WHICH THE EXCHANGE OR AN
AFFILIATE OF THE EXCHANGE CALCULATES AND/OR REPORTS LEVELS OF
THE INDEX, THE EXCHANGE ITSELF AND ITS AFFILIATES.

NOTWITHSTANDING ANY OF THE FOREGOING PROVISIONS,
THIS RULE 448419 SHALL IN NO WAY LIMIT THE LIABILITY OF ANY PERSON
ARISING FROM ANY VIOLATION BY SUCH PERSON OF THE CEA OR THE
COMMISSION REGULATIONS THEREUNDER.


Ms. Jean A. Webb
Page 62 of 68

trading volume for the ADR is at_] 0,000

rec ceipts in ‘the U.S. markets ona majority of the trading rr for
e- eriod prece

d The Securities and Exchan mmission and Cor ity Future

rading Commission have otherwise authorized the listing,

(xi) The Exchanse will not list for trading any Security Fuss
th rlyii urity i tructui rity that i
ued d utstandin: egardless of whether the Re: tructur Sec ri

apply in lieu oft the fol lowing maintenance requirements:

@ must istered under Section 12 of the Exchange Act
Gi) Th ust t_least shares _or_receij Vi

who are requi )
of the Exchange Act.

There must be at least 1,600 security holder:

It_must_have had an average daily trading volun (across all markets in
which the underlying security is traded) of |
evidencing the underlying security in each sfihe srecedin, 1 onths.

Requirement (iv) as lied to Restructure Securities:

If_a_ Restructure Security is approved for_a Security Futures. product
trading under the initial listing standards in Section A, th

trading volume history _of the Lrisinal Equity Security is define in

—— A jor _to_the col ent tr ing in the ucture



Ms. Jean A. Webb
Page 10 of 68

wit! it ivil Hold ame_reasons for which the NFA_may
den: voke registration of a mmission merchant or if such Person:

(i) (A) has a net worth (excluding personal assets) below
$25,000 if such Person is an individual, (B) has a net worth (excluding
personal assets) below $50,000 if such Person is an organization, (C) has
financial difficulties involving an amount that is more than 5% of such
Person’s net worth or (D) has a pattern of failure to pay just debts;

(ii) is unable satisfactorily to demonstrate a capacity to adhere
to all applicable Rules of the Exchange, Rules of the Clearing Corporation
and, Commission Regulations_(and, to the extent the Person appli

ing Privileges with re io Security Future icable Exchange
Act Regulations), including those concerning record-keeping, reporting,
finance and trading procedures;

(iii) would bring the Exchange into disrepute; or

(iv) for such other cause as the Exchange reasonably may
decide.

The Exchange _shall_ds ant_ in
applicant has failed to meet an irements for suc nt.

(c) The Exchange may determine not to permit a Trading Privilege Holder or
any Authorized Trader of a Trading Privilege Holder to keep its Trading
Privileges or maintain its association with a Trading Privilege Holder, or may
condition such Trading Privileges or association, as the case may be, if such
Trading Privilege Holder or Authorized Trader:

q@ fails to meet any of the qualification requirements for
Trading Privileges or association after such Trading Privileges or
association have been approved;

(ii) fails to meet any condition placed by the Exchange on such
Trading Privileges or association; or

(iii) violates any agreement with the Exchange.

(d) Any decision made by the Exchange pursuant to this Rule 304 must be
consistent with-beth the provisions of this Rule and the provisions of the CEA.

Any applicant who has been denied Trading Privileges or association with
a Trading Privilege Holder or granted only conditional Trading Privileges or
association, pursuant to this Rule 304, and any Trading Privilege Holder or
Authorized Trader of a Trading Privilege Holder who is not permitted to keep its
Trading Privileges or maintain its association with a Trading Privilege Holder or
whose Trading Privileges or association are conditioned pursuant to this Rule 304,


Ms. Jean A. Webb
Page 33 of 68



Ms. Jean A. Webb
Page 30 of 68

(iii) | Any Market Maker that fails to comply with the Rules of

the Exchange, Commission Regulations §§ 41.42 through 41.49 or Rules
400 through 406 under the Exchange Act, as applicable, shall be subject to

disciplinary action in accordance with Chay _Approy anctions in
c fail inclu ithout limitation, a ré
of such_Market_Maker” istration _as_a_dealer_in Security Future:

* "SPAN" is a registered trademark of Chicago Mercantile Exchange Inc., used herein under
icense. Chicago Mercantile Exchange Inc. assumes no liability in connection with the use of
SPAN by any person or entity.



Ms. Jean A. Webb
Page 7 of 68

to provide information to any such organization, association, board of trade or r
that is a party to an information sharing agreement with the Exchange, in accordance with

t! th itions set forth i c) ment



Ms. Jean A. Webb
Page 6 of 68

CHAPTER 2
GOVERNANCE OF THE EXCHANGE

General
Rules 201-212 No change
Confidentiality and Conflicts of Interest
213. Confidentiality

(a) | No member of the Board or any committee established by the Board or the
Rules of the Exchange shall use or disclose any material non-public information,
obtained in connection with such member’s participation in the Board or such
committee, for any purpose other than the performance of his or her official duties
as a member of the Board or such committee.

(b) —_No officer, employee or agent of the Exchange shall (i) trade in any
commodity interest or security if such officer, employee or agent has access to
material non-public information concerning such commodity interest or security
or (ii) disclose to any other Person material non public information obtained in
connection with such employee’s, officer’s or agent’s employment, if such
employee, officer or agent could reasonably expect that such information may
assist another Person in trading any commodity interest_or security.

(c)___No_ Exchange employee_shall_accept_directly or indirectly any_ gift,
gratuity, compensation or any other form of remuneration valued_at_an_ amount

greater than $100 annually from any Trading Privilege Holder or any Related
Party of a Trading Privilege Holder without the approval of the President.

(d) fe} For purposes of this Rule 213, the terms “employee,” “material
information,” “non-public information,” “related commodity interest” and
“commodity interest” shall have the meanings ascribed to them in Commission

Regulation § +59-1.59 and the term “security” shall have the meaning ascribed to
itin Section 3(a)(10) of the Exchange Act.

Rule 214 No change
Regulatory Cooperation
215. Regulatory Cooperation

The Exchange may from time to time enter into such agreements with
domestic or foreign self-regulatory organizations, associations, boards of trade and their
respective regulators providing for the exchange of information and other forms of
mutual assistance for financial surveillance, routine audits, market surveillance,
investigative, enforcement and other regulatory purposes as the Exchange may consider
necessary or appropriate or as the Commission may require._The Exchange is authorized


Ms. Jean A. Webb
Page 19 of 68

Miscellaneous
420,419-Transfers of Positions

(a)-(c) No change


Ms. Jean A. Webb

Page 9 of 68

Trading Privilege Holders

304. Eligibility for Trading Privileges

(a) Each member ofthe CBOE with trading privileges on CBOE from time to
time shall, by virtue of such membership, be eligible to obtain Trading Privileges
without any need to satisfy any additional criteria or requirements, except as may
be otherwise prescribed by the Exchange from time to time; provided that (i) to
the extent required by Applicable Law. such member is registered or otherwise
ermitte: the appropriate re: 0d) odies to conduct business on the
Exchange and (ii) any such member that is not a Clearing Member shall be
guaranteed by a Clearing Member in the manner described in Rule 1101.

(6}——Each Person that is not, at the time of application, a member of the-CBOE
with trading privileges on CBOE and that wishes to have Trading Privileges in

any. Contracts | must, (i) be of good fi nancial standing, and must-be{i}-a registered

+ nt dity_tradi: dvi
> ducing. y S 3
dit: 1 4 brek fj trad h-as-defined-in-Seeti
yp perater; +E 7 ned in a
ja-of the CEA (provided that-af] brok #1 trad d-net-bi istered

the-Exeh: 3 +# te-time: idedthat 4 -Py
y “any

ABE 5 -previded t-

tH Ht be extent i ined b licable

pa be teaistered business on the Exchange, and and. 1 ) if such such Person i is not a
Cleue Member, such Person shall be guaranteed by a Clearing Member in the

manner described in Rule 1101. In granting Trading Privileges-to-Pi that
ts + the ti: if Lieati he; f£the CRORE 4th tradi 33,

ppheation, ; , eS -privdegs

Lf,
e" J Pam i
RB; a Pp, fr¢ ky AL
Bess y-P: 3 + OTE -a: ts ay dition
tien} ith-a—Trad: Pp, 44, Hold forth, £¢ hich
) es re th i
the NEA a he +4, cz hp, ;
nay-deny-orr pistea: afutures-commi:
hant-The-Exeh: |. di 44 v.tts th, t-of-Trad:
= > v J F 6 Se
P; 4, ta Py 4; hee iated it;
BOS; Pi iS € y
tion) -with-a-Trading Privilege _Holderaddition, in each such case, the

Ex e ny (or may conditi of Trading Privileges. may
ft rs 7 Tn: an ssociati



Ms. Jean A. Webb
Page 25 of 68

* "SPAN" is a registered trademark of Chicago Mercantile Exchange Inc., used
herein under license. Chicago Mercantile Exchange Inc. assumes no liability in
connection with the use of SPAN by any person or entity.

517, Customer_Margin Requirements _for Contracts that_are Security

Futures

of Rul is Rul 7 shall_appl ositi ing fro.
transactions in Securit ded _on the Exch: i

to the extent Siti
app icable, Trading Privilege Helden en beaut of C ee in ae acc sour
(as such term is defined in Commission Regulation § 1.3(vv) and Exchange Act
Regulation 15c3-3(a)), with paragraph (n) of this 517 also applying to such
positions held _in securities ac its ich_term_is_defin issi

Re tion_1.3(ww’ )_and Exchange Act] Re; latio mn_15c3-3(a)). As used in this

term_is scfined | in Commissio

Regulation 4 i . ‘aker such t i
h(n ‘ ww). Nothing in this 7 - 17 shall alter the obligation of each

Clearing Member_and, if applicable, Trading Privilege Holder to_comply with

Applicable Law relati customer margin for transactions in Security Futures,
including without limitation Commission Regulations §§ 41.42 through 41,49 or
Rules 400 | 406 under the Exchange Act, as applicab! cluding in each

case any successor regulations or rules).

(b)__Margin System. The Standard Portfolio Analysis of Risk (SPAN®)* is the
margin system adopted by the Exchange. SPAN® generated margin requirements
shall_constitute Exchange margin ~ uirements. All references to margin in the
Rul the hall_be to margin te the_basi PAN®,
Margin systems_other_than n SPAN® may_be used _to msst_Exchancs_marein
requirements if the relevant Clearing Member or, if appli Tradin;

Holder can demonstrate that its margin system will It in in requirements
that_are_in_all_cases equal to or greater than_the corresponding requirements
determined on the basis of SPAN®._

rgin Rate. The_E: ill_set lish_the initial
maintenance —rmanein— rates —to—be. used__in_determining Exchange _margin
er ts; provide in It ired_m: for _or
sho ition_held_ if, licable, Ti

Holder on behalf of a Customer be leat than the tafe ftom lime to ime determined



CFE

Via Electronic Mail

July 25, 2005

ECRETARIAT

Ms. Jean A. Webb

Secretary

Commodity Futures Trading Commission
Three Lafayette Centre

1155 21st Street, N.W.

Washington, D.C. 20581

Re: CBOE Futures Exchange, LLC Rule Certification
Submission Number CFE-2005-20

Dear Ms. Webb:

Pursuant to Section 5c(c)(1) of the Commodity Exchange Act, as amended ("Act"), and § 40.6(a)
of the regulations promulgated by the Commodity Futures Trading Commission under the Act, CBOE
Futures Exchange, LLC ("CFE” or "Exchange") hereby submits new rules and policies and procedures
and amendments to existing rules and policies and procedures to accommodate the trading of security
futures on CFE ("Amendment"). The Amendment will become effective on July 26, 2005.

CFE is not aware of any substantive opposing views to the Amendment. CFE hereby certifies
that the Amendment complies with the Act and the regulations thereunder.

The Amendment, marked to show additions in underlined text and deletions in stricken text, is
attached as Appendix A.

Questions regarding this submission may be directed to David Doherty at (312) 786-7466. Please
reference our submission number CFE-2005-20 in any related correspondence.

CBOE Futures Exchange, LLC

By: films \ Spy—

Edward J. Joyce UU
President

ce: Riva Adriance (CFTC)
Jane Croessmann (CFTC)
Mark Baumgardner (OCC)

400 South LaSalle Street Chicago, Illinois 60605-1023 www.cboe.com/cfe


Ms. Jean A. Webb
Page 48 of 68

(B) Notwithstanding subparagraph (IID(A) of this Rule.
ifan opening price for one or more securities underlying a Narrow-
Based Stock Index Future is not readily available, the President of

the Exchange _or_hi: i ‘or_such ose_(referred_to

in_this Ri 1902(i) _ “Desi; cer”) will
determine whether the security or_securities_are likely to open
within a reasonable time.

1 If the Designated Officer determines that
one_or_more_ com, t iti li lO open
within a reasonable time, then for the component security or

ities which th ignat fficer ined were not
likely to open within a reasonable time, the last ling pric
of the underlying security 01 ities during the most recent
i ssion_for_such_securi securities will
used to calculate the special opening quotation.

(2) If the Designated Officer determines that the

ity_or securities are likely t n_within a reasonabl.
time, then for the component security or securities which the
ignated er_determined_were lik i) ithin

reasonable _time, the next available opening price of such
security or securities will be used to calculate the special
opening quotation.

securities association, then “openi rice” _shall_mean_the

ice_at_which a security opene: m_the prima:
market for the security. Under this provision, if a component
security is an ican Osi ipt_(“ ”) traded
on_a_national securities exchange or national _securiti
ation, th ni i h we e_derivi
from the national securities exchange or_national_securities
ciati at lists i

Stock Index value thi
ices of each security of the Stock Index.

means the normal hours for business of a national securiti


Ms. Jean A. Webb

Page 12 of 68

306. Dues, Assessments and Fees

(a) The Exchange shall have the sole power to set the dates and amounts of
any dues, assessments or fees to be levied on Trading Privilege Holders, which
dues, assessments or fees shall be paid to the Exchange when due.

(b) If a Trading Privilege Holder fails to pay when due any Exchange dues,
assessments or fees levied on such Trading Privilege Holder, and such payment
obligation remains unsatisfied for six consecutive months after its due date, the
Exchange may suspend, revoke, limit, condition, restrict or qualify the Trading
Privileges of such Trading Privilege Holder as it deems necessary or appropriate.

307. Limitations of Trading Privileges

(a) Notwithstanding anything in Rule 304 to the contrary, the Exchange may
at any time revoke, suspend, limit, condition, restrict or qualify the Trading
Privileges of any Trading Privilege Holder if, in the sole discretion of the
Exchange, such action is in the best interest of the Exchange. Any such sanction
imposed on a Trading Privilege Holder pursuant to this paragraph (a) may be
appealed by such Trading Privilege Holder in accordance with the provisions of
Chapter 9.

(b) If a Clearing Member revokes any authorization granted and guarantee
made by it to any Trading Privilege Holder pursuant to Rule 1101(b), such
Trading Privilege Holder’s Trading Privileges shall be automatically terminated,
and such Trading Privilege Holder must obtain another guarantee from a Clearing
Member before its Trading Privileges will be reinstated. If such Trading Privilege
Holder fails to obtain such a replacement guarantee within three months from_the
effective date of the revocation of the guarantee by its previous Clearing Member,
its Trading Privileges shall be automatically terminated.

Rules 308 — 310 No change


Ms. Jean A. Webb

Page 11 of 68

may appeal the Exchange’s decision in accordance with the provisions of Chapter
9. No determination of the Exchange to discontinue or condition a Person’s
Trading Privileges or association with a Trading Privilege Holder pursuant to this
Rule 304 shall take effect until the review procedures under Chapter 9 have been
exhausted or the time for review has expired.

Any applicant to become a Trading Privilege Holder who has been denied
Trading Privileges pursuant to this Rule 304 shall not be eligible for re-
application during the six months immediately following such denial.

305. Application for Trading Privileges

(a) Each applicant for Trading Privileges shall submit an application to the
Exchange in a form and manner prescribed by the Exchange. Each applicant shall
promptly update the application materials if any of the information provided
therein becomes inaccurate or incomplete after the date of submission and prior to
any approval of the application. The Exchange shall act upon, and approve or
disapprove, any such application without unreasonable delay.

(b) Each Person approved as a Trading Privilege Holder in accordance with
paragraph (a) above shall:

(6) pay to the Treasurer any applicable application fees, in such
amount as may be prescribed by the Exchange from time to time; and

(ii) agree in writing to abide by the Rules of the Exchange.

(c) Upon satisfaction of the requirements and procedures set forth in
paragraphs (a) and (b) above, a Person applying for Trading Privileges shall
obtain Trading Privileges. If the application process is not completed within 6six
months of its submission and payment of the required fee, the application shall be
deemed to be withdrawn.

(d) Each Trading Privilege Holder that is not registered or _notice-registered
with the NFA and that is not a CBOE member shall promptly update the
following information on file with the Exchange through the submission of
application materials by the Trading Privilege Holder and updates to those
materials pursuant to this Rule 305(d) if that information becomes inaccurate or
incomplete:

(i) disciplinary history information;
(ii) executive officer information; and

(iii) information regarding ownership interests in the
Trading Privilege Holder.


Ms. Jean A. Webb

Page 61 of 68

cture _ i a wa) jonai C1

11
Exchan utoi natic uotation stem fo. at least five trading d
on. eac ch tradin, on _which_the Restructure Security trades “regular
way” prior to the Selection Date, as well as_at the opening of trading on
Selectic late, the market price of the Restructure Security was _at le
$2.50.

Limitatio: on U ie 0) Lo Back Test: Except in the. case of a Re: tructure
Securit i

the ir alin volt me history for_that_tradin: .In_addition, once the
Exchange_commences_to_rely_upon_a_ Restructure _Security’s trading

me_and market price history fo trading day, the Exchange will
not rely upon the trading volume and market price history of the related
riginal Equi rity for any trading day thereafier.
Ifthe underlying security is an ADR:
x ¢ must have in place an ctiv illan in,

a ment_with the primai xchange in the home country where
the stock underlying the ADR is traded;

The combined trading volume of the ADR and other relat DRs

the Exchange has_in_place an_effective surveillanc aril
agreement, represents (on a share equivalent basis) at least 50% of

the combined worldwide trading volume in the ADR, the securii
lerlying th ADR, other classes of common stock related to the
Lyi Lyi: 1_stock ov
e-month period pri cedin: e dates of selection of the ADR for

_ The combine: ing volume of the ADR and other relat
ADRs and securities in the U.S. ADR market, ..and in markets with

which the Exchan si 2 ctive surveillan
Teem ri na i at Y
the combined worldwide trading volume in the ADR and in other
we ¢ three-mont . edi
the Selection
1 i i r_the ADR in .
arkets_over the three-month period precedin; electi te

is_at least 10 ipts;


Ms. Jean A. Webb

Page 44 of 68

This_chay tradin; a an’ Contract that _is_a rity Future

ion 1

th

the CEA) (each, a “Narrow-Based tock Index. tur i e procedures for trading,

ettleme: nd ther_matters_n¢ ificall: vered_h

governed by the other Rules of the Exchange.

question.

ttn che mince at fh the Exchange.

(c)____ Trading Hours; Delivery Months and Termination Dates, Narrow-Based
St Index _Futu 1 led_duri ivery i
d .

positions in any physically settled Narrow- Bane Stok Index Futte eld uing

ie ive tri
be. the. position li ita
Reg

position limit with respect to Na Narrows Deed Stock Index Fut Tuures to security in

the Narrow-Based Stock Index Future having x the lowest_average daily trading
vi e. Ea imi yublished.



Ms. Jean A. Webb
Page 32 of 68

DESCRIPTION OF OFFSET

tro

20% of the current
market value of the

put lem:
applied.

Long security future and short

dvi

The initial margin

narrow-based

position in the same security (or
ities bash derlying th
security future

security index

required under
Regulation T for the

is

Long security future (or basket of

security futures representing each
component of a narrow-based

securities index) and short call
y 7 teriyi

te

the:money amount,
ifany. Proceeds

may be applied.



Ms. Jean A. Webb

Page 49 of 68

the day scheduled for determination of the. final_settlem tment

price, or_if the security does not trade_on the securities

exchange or national securities association that_lists_the
security duri 1; i

D __Notwithstandi; other_provision_of this Rul
this Rule shall not be used to calculate the final settlement price of
Narrow-Bas sed Stock _Index_Future if the ‘ion_Clearin;

Stock Index F es ¢ in accordance with its rules and by-laws jaws and as as
permitted by Commission Regulation § 41.25(b) and SEC Rule 6h-

the request for quote r ined sent before the i initiation on of a cross trade under
i cconds. _Followin, re for _quote respon: iod,

Trading Privilege Holder or Authorized Trader, a: licable, must_expose_to th:
market for at_least five seconds under Rule 407(b) at least one of the original

qd) Price Limits. Pursuant to Rule 413, Narrow Based Stock Index Futures
ot subj ice limits.

Holder o or ~ Authorized. T Trader. ora Cus

mer thereof ina Narrow: Sed ‘Stock



Ms. Jean A. Webb
Page 31 of 68

Schedule A to Chapter 5
Margin Levels for Offsetting Positions
DESCRIPTION OF OFFSET | SECURITY. INITIALMARGIN ~—| MAINTENANCE MAR
UNDERLYING | REQUIREMENT REQUIREMENT
THE SECURITY
1 20% of the current The lower of: (1) 10% of the
7 marketvalue of the —_| aggregate exercise price® of the
long securi re, Mt ite put out-
plus pay forthe long —_| of-the-money* amount, if any;
put in full. or (2) 20% of the current
security future.

2Generally, for. ump i less_otherwise specifi ck_index warrants shall be treated as if

4“Out-of-the- ’” amounts shall be determined as follows:

(4) for stock index put options and warrants, any excess of the product of the current index value and the
5 inde a7 7 c. ——- =
e A e 4 er_14, 4 FR 2 (October 22, rde



Ms. Jean A. Webb

Page 68 of 68

t_to rebalance any _approximat ual_do)
weighted _index_underlying a physically settled Security Futures
product depending on several factors, including the relative price
ch f the component securities, the levels of volume and
open interest in the contracts and input from market participants.

Procedure for Rebalancing under (i):

See under C_1.(ii)(j) above.
jf the-underlyi indies is- maintained broker:

information concerning changes in and adjustments to the ‘index.

(k). Ina capitalization-weighted index, the lesser of:_(1)
the five highest usichiad component securities in the index each
have had an ave il di. | 1 5

or receipts over the. past ix_months; and (2) the highest weighted

receipts over the past six months.
qd) The total number of component securities _in_ the

index. must_not increase _or decrease _by more than 33- 13% from
ine

tal list isting,

If the foregoing maintenance standards are not satisfied, the Exchange will

not open for trading a Security Futures product based on an index

ed of ormore securities witha ne Li nth, unl
th val of th ch: i e

Commodity Futures Trading. Commission,


Ms. Jean A. Webb
Page 8 of 68

CHAPTER 3
MEMBERSHIP AND TRADING PRIVILEGES

Classes of Interest
301.LLC Members

All equity interests in the Exchange shall be held by the LLC members of
the Exchange from time to time, and all voting rights related to such interests shall be
exercised by such LLC members in accordance with the Rules of the Exchange.

302. Trading Privilege Holders

Each Trading Privilege Holder shall have the right to access the CBOE
System, including the right to place Orders for each of its proprietary accounts and, if
otherwise registered in any required capacity and—autherized—te—act—on—behalf—of
Cust derth CEA-and-G AH ion—-R eulati +h ve (if, Tequired) to

place Orders for the accounts of-sueh Customers.

Subject to the requirements and procedures set forth in this Chapter 3,
Trading Privileges shall be offered to all applicants from time to time approved by the
Exchange as eligible to be Trading Privilege Holders, subject to any limitations or
restrictions from time to time imposed by the Exchange.

Trading Privileges are non-transferable, non-assignable and may not be
sold or leased, except that Trading Privileges acquired by virtue of any membership
interest in the CBOE may be transferred, assigned, sold or leased together with such
membership interest. Any transfer, assignment, sale or lease of any membership interest
in the CBOE shall result in a simultaneous transfer, assignment, sale or lease, as
applicable, of the Trading Privileges attached to such membership interest, subject to any
requirements prescribed by the Exchange from time to time pursuant to Rule 304(a).

By virtue of obtaining Trading Privileges, a Trading Privilege Holder shall
not obtain any equity or other interest in the Exchange, including voting rights or rights to
receive any dividends or other distributions, whether arising from a dissolution, merger or
consolidation involving the Exchange or otherwise.

303. Authorized Traders

Each Trading Privilege Holder may from time to time permit one or more
individuals to act as its Authorized Traders. Each Authorized Trader shall satisfy such
requirements as may be prescribed by the Exchange from time to time. Without limiting
the generality of the foregoing, each Trading Privilege Holder shall ensure that (i) none
of its Authorized Traders shall be subject to any statutory disqualification (unless an
appropriate exemption has been obtained with respect thereto) and (ii) each of its
Authorized Traders shall be technically proficient and shall conduct its business in a fair
and equitable manner.


Ms. Jean A. Webb

Page 22 of 68

516. Customer Margin_Requirements for Contracts other than Security
Futures

(a) General Rule—__s 516 shall appl tions
resulting from transactions ‘in. Contracts other ton Security Futures, tae on the

x or_sub: x re, t_t

Exchange_or_subject_to_the Rules of the Exchange, to_the extent that_such
positions are held by Clearing Members_and, if anplicabls, Trading Privilege
Hol. on behalf of. mers i +h te:

Commission Regulation § 1.3(vv) and Exchange Act Regulation 15¢3-3(a)). No
Clearing Member or, if applicable. ding Privilege Holder may effect a
transaction or carry a position in a Contract other than Security Futures in the
account of a Customer, whether or not such Customer is a Trading Privilege
Holder, without proper and adequate margin in accordance with this Rule 516 and
all other applicable Rules of the Exchange.

In addition, Clearing Members_and, if applicable, Trading Privilege Holders must
adhere to the procedures set forth in the "Margins Handbook" issued by the Joint
Audit Committee. In the event the Margins Handbook is inconsistent with the
Rules of the Exchange, the Rules of the Exchange shall have precedence. Terms
used in this Rule 516 that are not defined in the Rules of the Exchange shall have
the meanings set forth in the Margins Handbook.

(b) Computation of Margin Requirements. Clearing Members_and,_if
applicable, Trading Privilege Holders must employ a risk-based portfolio
margining system acceptable to the Exchange, such as the Standard Portfolio
Analysis of Risk (SPAN®)* margin system, to compute margin requirements on
the applicable Contracts. The margin requirements imposed by this Rule 516 are

he minimum requirements. Clearing Members_and, if applicable, Trading
rivilege Holders may impose higher rates and/or more stringent requirements.

(c) | Margin Rates. The Exchange shall determine the rates used to derive
initial and maintenance margin requirements for any Contract. In the event of a
change in the margin requirement levels required by the Exchange, such change
shall apply to both new and existing positions. The Exchange shall have the
authority to apply different margin rates or margin requirement levels to different
types of accounts at its discretion.

(d) Acceptable weursin Deposits. Clearing Members. and,_if applicable,
rading Privilege Holders may accept from Customers as margin the following:
cash currencies of any denomination, readily marketable securities (as defined by

Exchange Act Rule 15c3-1(c)(11) and applicable Securities and Exchange
Commission interpretations), money market mutual funds allowable under
Commission Regulation § 1.25, and letters of credit issued by a bank or trust
company.

Securities that have been issued by the Customer or an affiliate of the Customer
shall not be accepted as margin unless the Clearing Member or Trading Privilege


Ms. Jean A. Webb

Page 59 of 68

the corresponding closing or opening price of the related Original Equity
Security.

Furthermore, in calculating comparative asset values and revenues, the
i i i i or ii

t_recently available_interim _financial_statement I as_such
interi) ial st cover riod thre S,
whichever are more recent, Those financial statem may be audited or

unaudited and may be pro forma,

Restructure Securities Issued in Publi
termining whether structure Security that is distrib: rr. te
a public offering or_a rights distribution satisfies requirement (viii), the
Exchange may look back to the market price history of the Original Equity
Security if: (i) the foregoing Look-. Back Test is satisfi ied; (ii) _the
R
Exchange _or automatic quotation syst r_at least _tradin: S
immediately preceding the Selection Date; and (iii) at the close of trading
on each trading day on which the Restructure Security trades “regular
way “ prior to the Selection Date, as well as at the opening of trading on
Selection Date, the market price of the Restructure Security we

$3.00.

Limitation on Use of Look-Back Test: Except in the case ofa Restructure

rity that_is tributed ri r. rt
distribution, the Exchange wil not ré on the _m rket rice hist
an Original Equi rity for an i ls. ies uy

the_trading volume_history for that trading day, In_addition, once the

71
ve e. marl ice hist for. i E;
not rely upon the trading volume and market price history of the related
riginal Equi: rity for any trading di re r,
If_the i ity_i “covered _securi fined
Section _18(b)(1)(A) of the Securiti t_of 19 shust ave _had_a
market_pri er_security of at_] mea:
closing price reported _in_any _market_in_which it has traded, for the
jority of busin a ing th ced

date of selection.
uirement (i3 ied to la iti

Look-, : termini rr
issued or distributed to th olders of an Original E. uri
(but not a Restructure Security that i is issued ust toa public offering

or ris listributi ais fic this reguirel — ‘loo



Ms. Jean A. Webb
Page 66 of 68

f the t iti V f vol id
open interest in the contracts and input from market participants.

re re for Rei ncing under (j):

The ermination for the manda: 1 rebak
in_approximately equal _dollar-weighted _in lerlyin;
ettled rity Futures product lescri in the firs
sentence of @j) will be the last trading day of the year. New
contract, r i corre. din
index is rebal ced _i accordance with (j) wi ill be based on an

will not bea -ted by any rebalancin:

k If the unde: index is maintain d_by_a_broker-
dealer, the index must_be Tet ) is not a

broker-dealer, and. ie _broker-dealer_must_have_in > _an

info tion nd_ its 0_ ha ic to

th
is of i alm of sss nen ach a irities in the index each have
d_an average daily tradin. mi t_90,000 sh:

Teceipts over the past six months. -_

D.____Maintenance_Standards_for_a_Security Futures Product _Based_on_an Index

urities_must_be register: der

Section 12 of the Exchange Act.



Ms. Jean A. Webb
Page 39 of 68

CHAPTER 18
SINGLE STOCK FUTURES
1801. Scope of Chapter
This chapter applies to trading in tract _that_is a Security F
a_sin, i h,_a “Singl ‘a r in,
clearin: itlement d_any_other ot ifical vered herein shall be
verned by Rul xch:

Jement ha “Specificati lement”” ti

Exchange may from-time io time approve. No Specifications Supplement shall
iv Exchange _h: i h ission_(i
isfyi e et forth i e

Tradii rs, Delive th; ‘ermii ek
es shall a i hh for delivery in such hi
F h 5 = ,
(d) ___Trading Units. Each Singl ‘ul IL 0 share t
lying Security.

— Aint, Price Fluctuations. The minimw

eculative Position Limits. For.

applicable to positions in any Single Stock Future held during the last five trading

di f an expiring Sin: tock Future shall be the ion limit adopt
Exchange in accordance with Commission Regulation § ae aioe ne
sition limit shall be ished by the Exc! ce.



Ms. Jean A. Webb

Page 40 of 68

Last Da in: ding in a icul: inat
the close of busin n_the termination date of such Contract

tract Modificatic T ificati i in;

Future shall be as_set_for the filing made with respect _theret ant

Commissi lation § 4 in) 01

n ve. e requirements_of these
les, _includin: ification t_forth in : ifications Supplem:

order, _tuling, directive or law_shall_ be deemed to_take precedence over_such
ications and__b yf Rul i i

Supplement an and all open and new Contracts shall be subject thereto.

i tract Adjustment. dj mts_to Single Sto ited

actions or transactions by or affecting the i issuer_of the Underlying Securities shall

St C ith tradi

an rence between the consolidated_pric af Inderlying Security _at

he time that i edo xch: id
consolidated _price_of the Underlying canis at_the close of regular
trading hours.

(iii) | Notwithstanding the above, the Exchange may in its sole
discretion_establi 1. i ti i

televant factors, including those discussed_in_this provision, when

the price-1 time priority base allocation method.



Ms. Jean A. Webb

Page 55 of 68

th rity_underlyin, "i t_each of the follow
requirements:
representing common stock or ordinary shares, a share of an “exchange
F_Share’”’), a trust i “TIR” h:
registered _closed- t_investment_company (“Closed-End
Fund Share”
(ii) It_must_b istered under Section 12 of the Exchange Act, and its issuer
must _be in compliance with any applicable requirements of the Exchange
Act.
Gii) = Itmust be. isted on a national securities exchange (a “‘National Securities
Nn: tr: ded through the facilities of a_national ritie:
association (“ es “national tem”
securi in 1 -]_un E mn, ct_(“N)
(iy) ven_million ipts_evidenci ie
underlyin i i d her
required i i i nt to Section 1
Exchange Act,
Requirement (¢ i criti
In_the_c il il is tici
restructuring or similar corporate transaction (“Restructure Security”),
the Exchange may assume that this requirement is satisfied if, based ona
nai the_produ intend
listing da illic t ‘estruct rity will
is t ing; or u curity will be listed

tic iti r ie tem that is



Ms. Jean A. Webb

Page 28 of 68

ibu, nts. _Clearin: em d,_if i Tradi
Privil Holders_shall_collect_margin a_gross_basis_fc itions_held_in
estic and 5 : > oe 5

requirements_shall_equal_the conresnondina maintenance margin requirements.
Cleari and, if applicabl. i ivi @) in_an

maintain written instructions from. domestic and_foreign omnibus accounts for

positions that are eligible for offset: raph (m) below.

require issi i 41,42 through 41.49 or Rules 4
through 406 under the Exchange Act, as applicable, within a reasonable period of

ich_shall_be no more than five Business Days, although the relevant
Clearing Member or, if applicable, Trading Privilege Holder may deem one hour
to be a reasonable period of time), the relevant Clearing Member or, if applicable,
Tradin; Privile e Holder ma’ jis idate positions in such Customer’s account to

licable margin requirements._

c.T: in; Privilege. ler fail maintai ici argi

any part of the po: vitlone k in such account to eliminate the - defic ciency :

i Positic yu of nmissio fon __ Regulation
41.45(b 2 an nd 2 under_the "a change e initial ani

(n)___ Exclusion for Market Makers.

(i) A Person shall be a “Market Maker” for purposes of. this

Rule_517, exclud the S fo
commission Regulation: 4: ough 41,49 and Rules 4(

mm hi Act, a: icable, in a itl
Commission Regulation § 4 2 and Rule 400(c)(2)(v) under the
Exchange Act with respect to all trading in-Security Futures for its own

count, i erson is a Trading Privilege Hol: uthorized Trader
that is istered with the Eashange asa dai (as ch sm seinen
Section 3: f the Exchange Act) in ity Futures.

i a floor loor broker with the
i T or leal i
U xchan; mn or as


Ms. Jean A. Webb
Page 58 of 68

Requirement (viii) as Applied to Restructure Securities:

Look-Back Test: In determining whether a Restructure Security that is
is. _distril re i rigin pit i

ut not a Restructure Security that is issued pursuant to _a public offerin,
or rights distribution) satisfies this requirement, the Exchange may “look
back” to the mar. rice history of the Original Equity Security prior to
the _ex- tal re ion_ij in, Ls
Test is satisfied:

(a The Restructure Security has an aggregate market value of at least

__The a: ite_ market value of the Restructure Securi or
exceeds the Relevant Posceatage.t ( defined below) of the aggregate
market value of the ( al

ate book value of the assets attributed t i
sented b -the Restructure Se i Is or ex th
millic he Relevant Percentage st kv:
the assets attributed. to-the business 1¢ ited _by the Original
Equity Security; or
d)___The revenues _attributed__to_thi siness represented _b
structure Securi' al: X¢ illion_an
Percent: f the reven ttribut iO. busi
1 igi i it
For 1) determi hether k-Back
erm re "mM %, whi licable
m la m with re wigii r_th
b re ni resent th re
a ii Uh when th ire determined with
re te Ti rt ti it_repri
i repre 6

In_calculating comparative aggregate market values. the Exchange will

ute the Rertructure Security's clatine. price on-its primary market on the
i jor tion Di la

ri ta ction I Mand will use



Ms. Jean A. Webb
Page 67 of 68

0) Subject_to_(d)_and_(k) below, the component
securities that account for atleast Os. of the total index seit
% of the total numt
andl at leat meet _the requirements. for. listing. a. single-security
future, as set forth in Section A.

(c) Each component security in the index must-have.

capitalizatior t. million, ex f the
lowest weighted component securities. that in the aguregate, account
for
market capitalizatic tion of only $500 mnillon,

preceding six_months for each. component security in the i index

must _be at | shar ci ch
lowest_weighted_component_securities_in_the index that_in the
ay ate ac or ret }% of the weight of the index

Pie ofan mn Association a and { (2) reported as an NMS security,

Forei riti eon _that_are_not

subject to comprehensive surveillance sharing. agreements must not

rese re th: we x.

. The _current__underlying _index__value _must__be

v 5_secon ing the time th

Seay Futures product is traded on the Exchange.
— lollar-weighted index must _be rebalanced

at least once calendar quarter, except that an roximat
r-wei, i underlying a__physically settled
Security Futures product need only be rebalanced as provided in_(i)
low.
‘oximatel, al__dollar-wei; —
underlyi hysi ed. Secutl roduct
‘balan i €: i

v le securi ition with the lowest value
in_the index for any period of 10 consecutive trading days within

the last month preceding the date of determination. In addition, the
Exchange may from time to time, but_no_more frequently than



Ms. Jean A. Webb
Page 4 of 68

157.455.Secretary

The term “Secretary” means the individual appointed by the Board from
time to time to serve as secretary of the Exchange.

158. Security Future

term “Security Future” he meani forth in Sectio;

the CEA,

159. Single Stock Future
The term “Si

161.456-Standing Committees
The term “Standing Committees” has the meaning set forth in Rule 206(a).
162.457-Subject
The term “Subject” has the meaning set forth in Rule 702(d).
163.458.-Trading Hours
The term “Trading Hours” has the meaning set forth in Rule 402(a).
164.1459-Trading Privilege Holder
The term “Trading Privilege Holder” means any Person holding Trading
Privileges. Trading Privilege Holder shall be deemed to be members of the Exchange for
purposes of the CEA and Commission Regulations thereunder.

165.460-Trading Privileges

The term “Trading Privileges” means a permit conferred by the Exchange
on any Person in accordance with Rule 305 to access the CBOE System.

166.164-Treasurer

The term “Treasurer” means the individual appointed by the Board from
time to time to serve as treasurer of the Exchange.


Ms. Jean A. Webb

Page 47 of 68

Re tion § 41.2. either 1 contrac!
number of implied 100-share contracts. This provides the number

of Narrow-Based Stock Index Futures contracts that could be held
without _violatin; e_spec lative osition limit_on_a futures
¢ ct_on. com if in; ck futures

contract existed), __If the security qualifies _for _ position
accountability, ignore that security for purposes of this calculation.

(F) The Exchange will list_the results _of (ii)(D) and

(ii(E). The SSF Position Limit is the minimum number of implied
contracts based on this list.

(f) Last Day of Trading. All trading ina particular Contract shal] terminate at
the close of the Jast Business Day preceding the termination date of such Contract,

ificati T ecification: a icul: W-] 1
Stock Index Future shall be as set forth in the filing made with respect thereto
yursuant mmission Regulation § 41.23. If overnmental a

body issues an order, ruling, directive or claws that conflicts with the requirements

h ntract Adjustments. Adj Narrow-Ba t in ures
related _to actions _or_transactions or_affecting_any_issuer_of Underlyin;
ecuriti IL adi the circ! ci din ‘om time to

time prescribed by the Clearing Corporation.

I)___Daily Settlement il ‘lement pric:
settled Nariow-Based Stock Index Fulures willbe calculated in the same
manner as Rule 1802(j).

(1) Final Settlement Price.

(A) The final settlement price for cash-settled Narrow-
Based Stock Index Futures shall be determined on the third Friday

e contract th. hi tO i mn
the third F Friday-of-th e coins month, the final settlement price

othe conact mh, hel elke ier casted
v-B: Ci:

opening quotation of the anderiving sock index (Stock laden’),


Ms. Jean A. Webb

Page 45 of 68

Pursuant to Rule 412(a), the Exchange shall establish speculative position limits

for_eac arrow-Base I Future duri iv

tradin, of an expiring Narrow-Based Stock Index Future according to the
Wi dology:

The position limit for each cash settled Narrow-Based Stock Index Future shall be

dl T_O! act c la_(i) “Marke' Positioy
Limit” or (ii) “SSF Position Limit” below, whichever _is less, rounded to
tiple of 1 contracts; provi wey. i i) or (Gi

whichever is less, calculates a number less than 500 but not less than 400 for any
i i imit wi tract:

Security Fut th ition Ii 000.

(i) “Market Cap Position Limit”

xchan; will di i the market
capitalization of the Standard & Poor’s 500 index (the “S&P 500”)
underlying the Narrow-Based Stock Index Future (the “Selection
> «“g vi >).
then
e E; inge will calcul; tional v: a
tur sition_in Chi Mercantile Exchange’s ("CME") S&P
fu i i S& Notion:
Vali ” ultip! &P 50 osition limit for
ME ' 11 months combin
e S&P _500 contract multipli to calculate;
S&P 500 Notional Value Limit = S&P 500 * 20,000 * $250;
then

(C) The Exchange will divide the S&P 500 Market Cap

by the S&P 500 Notional Value Limit to calculate the “Market Cap
Ratio”:

Market Cap Ratio = S&P 500 Market Cap/S&P 500 Notional

Val ue Limit;
then
capitalization of the stock index underlying the Narrow-Based

each st lock comprising the stock index (the “Stock Index Market
Cap”); then


Ms. Jean A. Webb
Page 15 of 68

Tradin; ivil older Or Ha for_a_non-

discretionai tomer account by means of a Block Trade only if the Customer
revi ited theret

(hy{e}— Any Block Trade in violation of these requirements shall constitute

conduct which is inconsistent with just and equitable principles of trade.
Special Circumstances
Rule 416 No change
417, Regulatory Halts

radi te 1 It t_all_times_that_a

Sr > fas defined in Commission. Regulation § 41.1(1)) has been
instituted for the security underlying such Single Stock Future.

(b)___Trading in_a Narrow-Based Stock Index Future. shall-be halted at all times
al

418, 447-Emergencies
(a) — (b) No change

(c) Notification and Recording. The Exchange will notify the Commission of
any action taken, or proposed to be taken, pursuant to this Rule 447418 in
accordance with Commission Regulation § 40.6. The decision-making process
with respect to, and the reasons for, any such action will be recorded in writing.

(d) Conflicts of Interest. The conflict of interest provisions set forth in Rule
214(b) and the related documentation requirements set forth in Rule 214(c) shall
apply, with any such modifications or adaptations as may be necessary or
appropriate under the circumstances, to the taking of any action under this Rule
447418 by the President, or his or her designee.

Limitation of Liability
419,418-Limitation of Liability; Legal Proceedings
EXCEPT AS OTHERWISE PROVIDED, AND EXCEPT IN
INSTANCES WHERE THERE HAS BEEN A FINDING OF FRAUD OR WANTON
OR WILLFUL MISCONDUCT, IN WHICH CASE THE PARTY FOUND TO HAVE

ENGAGED IN SUCH CONDUCT CANNOT AVAIL ITSELF OF THE
PROTECTIONS IN THIS RULE 448,419, NEITHER THE EXCHANGE (INCLUDING


Ms. Jean A. Webb
Page 57 of 68

V ibuted_te e iness re t th
Restructure Security equal or exceed $50 million and the Relevant
P m ibut in
by the Original Equity Security.

the Look-Back Test is satisfied, the

term “Relevant ntage “means: (i '%, when_th Lic
measure determined with respect to the Original Equity Security or the

i it repress incl th i repre re
Security; and (ii) 33-1/3%, when the applicable measure determined with
re t hi iginal i ity_or_th i it_represe

11
excludes the business represented by the Restructure Security,

m_calculati rativ re rl th Mn, ill
curity’s closing price on its prima rk the
which th ity i;

selected _as_an_und

“Selecti structure i is

Furthermore, in calculating comparative _asset values and revenues, the

Exchan; ‘si ial si )

most recently available interim financial statements _(s ng _as_such

i im fi i over. ri if n three

whichever are more recent. Those financial statem m audited or

unaudited and m¢ rO.

Limitation on Use of Look-Back Test: Except in the case of a Restructure

rit is_ distri Ur SU ‘O. ublic i r_rights

istributic wil re trading v istory Oj

an Original Equity Security for any trading day un, it also relies upo:

the mar. rice hist at trading di

In_addition, once Exchange comme) to_re on_a Restructure

’s trading vol and market price his for_a. ding di

I i i i TF Share, T. -
En d itm Vv. t ing v in all markets in
which the underlying security has traded) of at least 2,400,000 shares or
receipts evidencing t jerlyi ity int jing 12 ;



Ms. Jean A. Webb
Page 63 of 68

expiring Contract on the underlying security. The market price per share
of the underlying security will be measured by the closing price reported
the prii i i derlyi i

ecurity trade

i

Requirement (v) as Applic Restructure Securities:

Ifa Restructure Security is appr wr Security Futures produc: in;
under the initial listi: lards it ion A t price history o
the Original Equity Security prior to the commencement of trading in the

Re. ity, including “when- i

Ifthe underlying security is an ADR and was initially deemed appropriate

fc urity F re i ni 1 in

Section _A, the Exchange will not_open_for trading Security Futures
lucts havi ition ive ths 01 SS?

(a)____ The percentage of worldwide trading volume in the ADR and other
relate iti t int and in mark ith
which the Exchange has in place an effective surveillance sharing
agreement for any consecutive three-month period is: (1) at least
30%, without _r to the aver: ily trading v i
ADR; or (2) at least_15% when the average U.S. daily trading
volume in the ADR for the previous three months is at least 70,000

receipts;

)___T n, in n_effective_surveillan ri
a with 1 rimary_ exchange in the home country wher
h i lerlying the ADR is traded; or

ion and

ling Commission have otherwise authorized the list

2,____The Exchange will not open trading in a Single Stock Future with a new delivery
month unless:

@)

reporting requirements, or corrects any failure within 30 days after the
date the report was due to be filed; and

Th derlying security is listed on_a National Securities Exchai _is
principally traded through the facilities of a national securities association

and is designated as an NMS security.

under! lying security that has been found not to meet the Exchange’s requirements

ti IO" i te U e


Ms. Jean A. Webb
Page 17 of 68

ANY OTHER TRADING PRIVILEGE HOLDER. THE EXCHANGE (INCLUDING
ITS AFFILIATES) SHALL HAVE NO DUTY OR OBLIGATION TO VERIFY ANY
INFORMATION DISPLAYED ON THE CBOE SYSTEM OR OTHERWISE. EACH
TRADING PRIVILEGE HOLDER ACKNOWLEDGES AND AGREES THAT THE
EXCHANGE (INCLUDING ITS AFFILIATES) DOES NOT AND SHALL NOT
SERVE AS THE PRIMARY BASIS FOR ANY DECISIONS MADE BY ANY
TRADING PRIVILEGE HOLDER AND THAT THE EXCHANGE (INCLUDING ITS
AFFILIATES) IS NOT AN ADVISOR OR FIDUCIARY OF ANY TRADING
PRIVILEGE HOLDER.

ANY DISPUTE ARISING OUT OF THE USE OF THE CBOE SYSTEM
OR EXCHANGE SERVICES OR FACILITIES USED TO SUPPORT THE CBOE
SYSTEM IN WHICH THE EXCHANGE (INCLUDING ITS AFFILIATES) OR ANY
OF ITS DIRECTORS, COMMITTEE MEMBERS, OFFICERS, EMPLOYEES,
AGENTS OR CONTRACTORS IS A PARTY SHALL BE SUBJECT TO THE LAWS
OF THE STATE OF ILLINOIS. ANY ACTIONS, SUITS OR PROCEEDINGS
AGAINST ANY OF THE ABOVE MUST BE BROUGHT, WITHIN TWO YEARS
FROM THE TIME THEY FIRST ARISE, IN A FEDERAL COURT LOCATED IN
COOK COUNTY, ILLINOIS, OR IF THE REQUIREMENTS FOR FEDERAL
SUBJECT MATTER JURISDICTION ARE NOT MET, IN A STATE COURT
LOCATED IN COOK COUNTY, ILLINOIS. THIS PROVISION SHALL IN NO WAY
CREATE A CAUSE OF ACTION AND SHALL NOT AUTHORIZE AN ACTION
THAT WOULD OTHERWISE BE PROHIBITED BY THE RULES OF THE
EXCHANGE.

NO TRADING PRIVILEGE HOLDER OR PERSON ASSOCIATED
WITH A TRADING PRIVILEGE HOLDER SHALL INSTITUTE A LAWSUIT OR
OTHER LEGAL PROCEEDING AGAINST THE EXCHANGE OR ANY DIRECTOR,
COMMITTEE MEMBER, OFFICER, EMPLOYEE, AGENT OR CONTRACTOR OF
THE EXCHANGE (INCLUDING ITS AFFILIATES), FOR ACTIONS TAKEN OR
OMITTED TO BE TAKEN IN CONNECTION WITH THE OFFICIAL BUSINESS OF
THE EXCHANGE (INCLUDING ITS AFFILIATES). THIS PROVISION SHALL
NOT APPLY TO APPEALS OF DISCIPLINARY ACTIONS OR OTHER ACTIONS
BY THE EXCHANGE AS PROVIDED FOR IN THESE RULES.

ANY TRADING PRIVILEGE HOLDER OR PERSON ASSOCIATED
WITH A TRADING PRIVILEGE HOLDER WHO FAILS TO PREVAIL IN A
LAWSUIT OR OTHER LEGAL PROCEEDING INSTITUTED BY SUCH PERSON
AGAINST THE EXCHANGE (INCLUDING ITS AFFILIATES) OR ANY OF ITS
DIRECTORS, COMMITTEE MEMBERS, OFFICERS, EMPLOYEES, AGENTS OR
CONTRACTORS, AND RELATED TO THE BUSINESS OF THE EXCHANGE,
SHALL PAY TO THE EXCHANGE ALL REASONABLE EXPENSES, INCLUDING
ATTORNEYS’ FEES, INCURRED BY THE EXCHANGE IN THE DEFENSE OF
SUCH PROCEEDING TO THE EXTENT THAT SUCH EXPENSES EXCEED FIFTY
THOUSAND DOLLARS ($50,000.00). THIS PROVISION SHALL NOT APPLY TO
DISCIPLINARY ACTIONS BY THE EXCHANGE, ADMINISTRATIVE APPEALS


Ms. Jean A. Webb
Page 3 of 68

forth in Rule 404, as well as any other types of Orders that may be approved by the
Exchange from time to time.

149.147, Passwords
The term “Passwords” has the meaning set forth in Rule 513(b).
150.448-Person

The term “Person” means any natural person, association, partnership,
limited liability company, joint venture, trust or corporation.

151.149.-President

The term “President” means the individual serving as president of CBOE
from time to time.

152.456-Related Party

The term “Related Party” means, with respect to any Trading Privilege
Holder: any partner, director, officer, branch manager, employee or agent of such Trading
Privilege Holder (or any Person occupying a similar status or performing similar
functions); any Person directly or indirectly Controlling, Controlled by, or under common
Control with, such Trading Privilege Holder; or any Authorized Trader of such Trading
Privilege Holder.

153.454 Respondent

The term “Respondent” has the meaning set forth in Rule 704(b).
154,452-Responsible Trader

The term “Responsible Trader” has the meaning set forth in Rule 513(a).
155.453-Rule of the Clearing Corporation

The term “Rule of the Clearing Corporation” means the Certificate of
Incorporation, the By-laws and any rule, interpretation, stated policy, or instrument
corresponding to any of the foregoing, in each case as adopted or amended from time to
time by the Clearing Corporation relating to the Exchange or any or all of the Contracts.

156.454-Rule of the Exchange

The term “Rule of the Exchange” means any rule, interpretation, stated
policy, or instrument corresponding to any of the foregoing, in each case as adopted or
amended from time to time by the Exchange.


Ms. Jean A. Webb

Page 38 of 68

CHAPTER 11
CLEARING

1101. Clearing Member Guarantee

(a) Each Trading Privilege Holder that is not a Clearing Member and desires
to enter into transactions in Contracts must obtain the prior authorization from a
Clearing Member who will guarantee such transactions, or enter into an
appropriate arrangement with a person that has such authorization from a Clearing
Member. Each such guarantee or other arrangement must be in form and
substance satisfactory to, and approved by, the Exchange. A Clearing Member
shall guarantee and assume financial responsibility for all Contracts of each
Trading Privilege Holder guaranteed by it, and shall be liable for all trades made
by such Trading Privilege Holder.

(b) A Clearing Member may at any time revoke any authorization granted and
guarantee made by it to any Trading Privilege Holder in accordance with

paragraph (a) aboveby-providing —writt os such. tiente_and for
OSES. he _relationshi the_relev: earing Member_an
Exchange, and the obligations of such Clearing Member to the Exchange, such
revocation shall become effective upon the receipt of written notice thereof by the
Exchange.
Rules 1102 — 1105 No change

KR KKK

Chapters 12-17 No change


Ms. Jean A. Webb

Page 26 of 68

olders_ may accept from their Customers as margin deposits of cash.

€ edera ese € as
effect from time to ti satis! margin defici in_a_securiti
margin account, and any combination of the foregoing, each as valued in

accordance with Commission Regulati 41.46(c) and (e) or Rule 404(c

and (ec) under the Exchange Act, as applicable. Shares of a money market

mutual fun it meet the requirements of Commission Regulations § 1

4(b ler_the Exchange
licable, may _be_acc as_a_margi osit_from_a_Customer_for
purposes of this Rule 517.

ii) A Clearing Member_or, if applicable, Trading Privi

Holder shall not accept as margin from any Customer securities that have
been i issued by such Customer ofan Affi e_of such Cu: ustomer_un| bss

iles

and recei' ission from the Exch: such purpose.
(iii) All_assets deposited _by a Customer_to_meet_margin
requirements must_be_and remain unencumbered by third party claims

against the depositing Customer.
Gv) Excentio the extent prescribed. athena by the change

l_be val m: and all oth
osits_shall_be value t_an_amount_not_to_ vexcaed that_set forth in in
ission Rs i 1.46 Rul inder
the Exch; ct, as applicable (including in each_case_any succes:
regulations or rules).
tani der’ in; i licable, T:
Privilege Holders may_accept Orders for a Particular Customer account only i if
mar; h is forthcoming wii
reason: riod of ti ath shall_be_n than five Bu iness_Ds
although the relevant Clearing Member or, if applicabl di ilege Hol
may deem one hour to be a reasonable period of time), For a Customer account
t i calls _fc in an. Si iod_of time.
Clearin; m if. i ‘rading Pri e Holders may onl

Tradi: m ders for a Custom:

would liquidate to a deficit or that has a debit balance.



Ms. Jean A. Webb

Page 2 of 68
Appendix A
CFE RULEBOOK
CHAPTER 1
DEFINITIONS

Scope of Definitions

Unless otherwise specifically provided in the Rules of the Exchange or the
context otherwise requires, the terms defined in this Chapter shall for all purposes of the
Rules of the Exchange have the meanings specified herein.

Rules 101-123 No change
124. Contract
The term “Contract” means any Future-er, Option_or Security Future.
Rules 125-143 No change
144.NASD

The term “NASD” means the National Association of Securities Dealers,
and includes any successor organization,

145. Narrow-Based Stock Index Future

T ““Narrow-Base: k Inde; e”” e meaning set forth in
Rule 1901,
146.444-NFA

The term “NFA” means the National Futures Association, and includes
any successor organization fulfilling similar functions under the CEA.

147.1445.Option

The term “Option” means any option from time to time traded subject to
the Rules of the Exchange and issued or subject to issuance by the Clearing Corporation
pursuant to the Rules of the Clearing Corporation, to buy or sell any Future.

148.446-Order

The term “Order” means any Market Order, Limit Order, Cancel Order,
Cancel Replace Order, Day Order, Good ‘til Canceled Order, Spread Order or
Contingency Order (including any All or None Order, Fill or Kill Order, Immediate or
Cancel Order, Stop Order or Stop Limit Order), all having the respective meanings set


Ms. Jean A. Webb

Page 50 of 68

an b r
from time to time ribed_by the Exchange in its block trading procedures or
contract specification xpire

No_natural_person_associated_with a Trading Privilege Holder or Authorized
th: know. a < Trade of st ivil

Holder_or A uthorized_ Trad ustomer thereof in ono =Based Stock
Index Fu he in; may_ent

execute a transaction on the Exchange, whether for his or her own vactount on if

applicable, for the account _of a Customer over which he or she has control, for
any Narrow-Based Stock Index Future which has the same underlying index_a:
the-contract.to which. such.block. trade. relates_until after (i) such block trade is

rted_2 lished_in accordance with the_rul rocedures_or_contract
m_and (ii) any additional time
eriod_prescril _Exchange_in_ its block trading procedures or contract
pasio esatbed bye

(n) No-Bust Range. Pursuant _ to Rule 416, the Exchange error trade policy
e invoked for a

market price of the applicable Narrow-B: Based Stock Index Future. In accordance
wath Policy and Procedure III, the Help Desk. will determine what the true market

for the relevant Contract was immediately before the potential error trad
occured In making that determination, the Help Desk may consider all relevant
factors, including the last trade price for such Contract, a better bid or offe

a_more recent. price_in_a_different_contract_month_and_the prices of related
contracts trading in other markets.

(o) Preexecution Discussions, Suan ant to Policy and Procedure IV, -the.time

in pre-execution discussions with the o ther side of an Order is five seconds ; ‘after
that Order has been entered into the CBOE System.

tock Index Future, and pa nt of the price in act thi shi ade_in
ith the f the Clea i ible after the

respect thereof. in full andi in cash ( (in the case of a long position) « or in neither c case, if the



Ms. Jean A. Webb

Page 34 of 68
DESCRIPTION OF OFFSET SECURITY INITIAL MARGIN MAINTENANCE,
UNDERLYING | REQUIREMENT MARGIN
THE.SECURITY REQUIREMENT
FUTURE
7~=| Longa basket of marrow-based security | Narrow-based 20% of the current ‘The lower of: WY
Zz ks a broad- security index market value of the Jong | of ti te exerci
on the same index . pay for the long put in Money amount, if any;
full. or (2) 20% of the current
market value of th
basket of security
futures.
8 | futures that together tracks a broad- security index market value of the of the aggregate exercise
“| based security index and Jong a broad- short basket of narrow: | price of the call, plus the
based security index call option contract based security futures, t ut-of-
on the same index plus pay for the long the-money amount, if
callin full, any;.or (2) 20% of the
current market value of
the short basket of
security futures,
Long security future and short security Individual stock or he greater of: 5% of The greater of: 5% of
9 future on the same underlying security narow-based the current market value | the current market value
* | (orindex) security inde: of the Jong security of the long security
future; or (2) 5% of the | future; or (2) 5% of t
current market value of || current market value of
the short security future.
= = r
10 | short call option, The long security exercise price, plus the
- ‘| future, long put and short call must be on aggregate call in-the-
the same underlying security and the put money amount, if any.
and call must have the same exercise
price, (Conversion)
‘Long security future, long put option and | Individual stock or | 20% of the current The lower of: (1) 10%
11 | shortcall option, The long security narrow-based market value of the long | of the aggregate exercise
"| future, long put and short call must be.on | security index security future, plus the } price of the put plus the
the same underlying security and the put i
——
sxercise price must be below the call Collar)
Short security future and long position in
Par: 7 ities bask



Ms. Jean A. Webb
Page 43 of 68

1806. Form of Specifications Supplement

Supplement No.
Title of Single Stock Future:

Underlying Security:
Type of Underlying Security: common stock] [American Depositary Receipt
<) traded t issu
receipt] [share of closed-end management
investment company] [other
Trading Hours:
Delivery Months:
‘ermination Dates:
Trading Unit: 00 shar tlyi curit
Minimum Price Fluctuation: .01 per share, equal to ‘ontract
Threshold Width: Common StockPrice Threshold Width
share price < $10 $0.50
$10 < share price < $50 $1.00
$50 < share price $2.00
Position Limit: During the last five trading days, __ Contracts
net long or short
G i ition: 200 Contracts

Daily Price Limit:
Minimum Block Trade Quantity:

Time Period for Reporting Block ithout d no mo, ten minutes after

Trades: a Block Trade is tiated.
ast Day of Trading:
lit Day:


Ms. Jean A. Webb
Page 29 of 68

maintain records sufficient to prove compliance with the

equirements_set_forth_in_this h. ny ission
Re ion A2 2 v. R 4 2)v) x_the

ell Sec
Futures for its own account ona. regular or continuous basis, ca

A Market Maker satisfies condition (C) above if:
(such Market Maker: (x) provides continuous two-sided

ti ‘01 yu in, ve nths_of
Security Futures representing a meaningful proportion of the total
i me x m_Security Futures i i

that larket Mal is designated as a Market Mak Ls subject _t
Ss t conditions. t by the

Exchanee. teach as_a fast market in either a Security Future ora
lying _s ri € ich_times_suc

Market. Mal ‘er_must best efforts te. ontinuousl. _ and

2) such Mar! 2X ids %o.
requests for quotation for_all delivery months of Security Eotunes

in; ortion_of the total v

n_the Exchange from Securit ‘utures_in_which_that Market
Maker i: signated_as_a Market Maker, subject to relaxation
i I onditions as determi e¢ Exchan:
h t ‘ket_in_either_a Security Fi or_as
un i curity Fi ich_times_such M:
ker_must_use_its best_efforts uote _« etitively; and
en. in; for ion. ithin_five
econds with a_maximum_bi read no_more tl e
21 150% bi in_th im:
market for the security underlyin, h Security Fu

181" caley day after the commencement o: ing of Sei

i aS 2 eee
such trading volume.


Ms. Jean A. Webb

Page 13 of 68

General

CHAPTER 4
TRADING PROCEDURES AND STANDARDS

401.Contracts Traded on CBOE Futures Exchange

The Exchange shall determine which Contracts are available for trading

subject to the Rules of the Exchange from time to time, and approve rules containing the
specifications for such Contracts; provided that certifications or applications with respect
to such rules shall be submitted to the Commission as required by the CEA and the
Commission Regulations thereunder.

402. Trading Hours

(a) The Exchange shall from time to time determine (i) on which days the
Exchange shall be regularly open for business in any Contract (“Business Days”)
and (ii) during which hours trading in any Contract may regularly be conducted
on such days (“Trading Hours”). NeExcept to the extent expressly permitted by
the Rules of the Exchange, no Trading Privilege Holder (including its Authorized
Traders) shall make any bid or offer for, or engage in any transaction in, any
Contract before or after such hours.

(b) | The Exchange may from time to time adopt procedures for the opening or
closing of trading in any Contract.

Rules 403 - 410 No change

411.

Errors of Trading Privilege Holders

(a) If a Trading Privilege Holder discovers an error in the handling of an
Order for a Customer after the relevant trade is completed, and the Order cannot
be executed in the market at a price which is better than or equal to that at which
the Order should have been executed, such Trading Privilege Holder shall do one
or more of the following:

(i) Execute the Order in the market and previde-amake_an
appropriate cash adjustment to the Customer such that the Customer
effectively receives a price that is equal to or better than the price at which
its Order should have been executed; or

(ii) | Notwithstanding any other provision of these Rules to the
contrary, execute a spread transaction in the market where one leg is for
such Customer’s account and the other leg is for the account of such
Trading Privilege Holder; provided that, as a result of such spread
transaction, the Customer shall receive a price equal to or better than the
price at which its Order should have been executed. Any such spread
transaction must be reported to the Exchange.


Ms. Jean A. Webb
Page 65 of 68

future. as set forth in Section A.

___Each_ com; ity i i have
minimum market capitalization of at. least $15 million, except that

(e)____The average daily trading volume_in_each_ of the

preceding six months for each component security in the index

must _be at Jeast 45,500 shares or receipts, except that each of the

lowest_w ym} nt_securi i i it_in_the
aceiseate account for no more than 10% of the weight of the index
ma In avi ily tr: lum 750 s or

receipts. ipts for each of the last six months.

listed_on_a_ Nation: |_Sec ities Exchange 7 waded | thous
i iti i

represent. m more than 1% of the weight of the i



Ms. Jean A. Webb
Page 51 of 68

ansact 's_effecte a_ma a a a
accordance with t licabl lation of the Fed aR serve Board.
1904, Emergencies, Acts of God and Act of Government
i delivers or acceptance, or any precondition or requitement of cither in

tof Gods 8 Go oe of government or any othe ot er sr event or \e CO ‘control of fy
th i
the Exchange If based on such notification, the President, or any individual designated
by the President and approved by the Board, determines that an Emergency exists, he or
she mi take ch action in accordance with Rule 418 as he or she may deem necess:
in stion; provide t ctio: en_in_accordance with this sentence shall be
reviewed by the Board as soon as practicable_under the circumstances, and_may be
revoked, suspended or modifie e Board

1905, DPM Provisions
(a)__ DPM _Appointment._A Trading Privilege Holder will be appointed to act
5.

1906. Form of Specifications Supplement

Supplement No.
Title of Narrow-Based Stock Index Future:

Minimum Block Trade Quantity:

Last Day of Trading:
a .
Depositary for Underlying Security:



Ms. Jean A. Webb
Page 53 of 68

Exchange Rule 517(n) specifies two alternative ways for a Trading Privilege Holder or
Authorized Trader to satisfy the requirement that_a market maker hold itself out as being
i to_buy and sell Securit res_for its own accou a regular or continuou:
basis, _ Each rading Privilege Holder_or Authorized _Trader_seeking market_maker

designation must register for one of the following two market maker categori ad will

undertake to perform all of the obligations set forth in the elected category:

Category ].___The _market__maker_will__provide__continuous _ two-sided quotations
throughout _the trading day for all delives onths of Security Futures

representing a_meaningful proportion of the total trading volume_on the
Exchange from Security Futures in which that market maker is designated
as_a market maker, subject to relaxation during unusual market conditions
determined by the Exchange (s Sa fi ket in oe a Security
EST = FE time:

so eeutaet aha mani Bidesk spread of note on the ee
of $0.20 or 150 percent of the bid/ask spread in the primary market for the

security underlying each Security Future; or

te T ke will nid t ast_75_ percent of the requests for
quotations for_a deli ivery_months of Security Futures _representing a

meani Ir) of the total ing voh n com



Ms. Jean A. Webb
Page 16 of 68

ITS AFFILIATES) NOR ANY OF ITS DIRECTORS, COMMITTEE MEMBERS,
OFFICERS, EMPLOYEES, AGENTS OR CONTRACTORS SHALL BE LIABLE TO
ANY OTHER PERSON, INCLUDING ANY TRADING PRIVILEGE HOLDER,
AUTHORIZED TRADER OR CUSTOMER, FOR ANY LOSSES, DAMAGES,
COSTS, EXPENSES OR CLAIMS (INCLUDING LOSS OF PROFITS, LOSS OF USE,
DIRECT, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES)
(COLLECTIVELY, “LOSSES”), ARISING FROM (A) ANY FAILURE OR
MALFUNCTION OF, INCLUDING ANY INABILITY TO ENTER OR CANCEL
ORDERS INTO, THE CBOE SYSTEM OR ANY EXCHANGE SERVICES OR
FACILITIES USED TO SUPPORT THE CBOE SYSTEM, (B) ANY FAULT IN
DELIVERY, DELAY, OMISSION, SUSPENSION, INACCURACY OR
TERMINATION, OR ANY OTHER CAUSE, IN CONNECTION WITH THE
FURNISHING, PERFORMANCE, MAINTENANCE, USE OF OR INABILITY TO
USE ALL OR ANY PART OF THE CBOE SYSTEM OR ANY EXCHANGE
SERVICES OR FACILITIES USED TO SUPPORT THE CBOE SYSTEM OR (C) ANY
ACTION TAKEN OR OMITTED TO BE TAKEN IN RESPECT TO THE BUSINESS
OF THE EXCHANGE, EXCEPT, IN EACH CASE, TO THE EXTENT THAT SUCH
LOSSES ARE ATTRIBUTABLE TO THE WILLFUL MISCONDUCT, GROSS
NEGLIGENCE OR CRIMINAL ACTS OF THE EXCHANGE (INCLUDING ITS
AFFILIATES) OR ITS DIRECTORS, COMMITTEE MEMBERS, OFFICERS,
EMPLOYEES, AGENTS OR CONTRACTORS ACTING WITHIN THE SCOPE OF
THEIR RESPECTIVE AUTHORITY. WITHOUT LIMITING THE GENERALITY OF
THE FOREGOING, AND SUBJECT TO THE SAME EXCEPTION, THE EXCHANGE
SHALL HAVE NO LIABILITY TO ANY PERSON FOR ANY LOSSES THAT
RESULT FROM ANY ERROR, OMISSION OR DELAY IN CALCULATING OR
DISSEMINATING ANY CURRENT OR CLOSING VALUE OR ANY REPORTS OF
TRANSACTIONS IN OR QUOTATIONS FOR CONTRACTS, INCLUDING
UNDERLYING SECURITIES. THE FOREGOING SHALL APPLY REGARDLESS
OF WHETHER A CLAIM ARISES IN CONTRACT, TORT, NEGLIGENCE, STRICT
LIABILITY OR OTHERWISE.

THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OR
REPRESENTATIONS PROVIDED BY THE EXCHANGE (INCLUDING ITS
AFFILIATES) RELATING TO THE CBOE SYSTEM OR ANY EXCHANGE
SERVICES OR FACILITIES USED TO SUPPORT THE CBOE SYSTEM,
INCLUDING WARRANTIES OF MERCHANTABILITY AND WARRANTIES OF
FITNESS FOR A PARTICULAR PURPOSE OR USE. THE SERVICES OF THE
EXCHANGE ARE BEING PROVIDED ON AN “AS IS” BASIS AT EACH TRADING
PRIVILEGE HOLDER’S SOLE RISK. NEITHER THE EXCHANGE (INCLUDING
ITS AFFILIATES) NOR ITS DIRECTORS, COMMITTEE MEMBERS, OFFICERS,
EMPLOYEES, AGENTS OR CONTRACTORS MAKE ANY WARRANTY WITH
RESPECT TO, AND NO SUCH PARTY SHALL HAVE ANY LIABILITY TO ANY
TRADING PRIVILEGE HOLDER FOR, THE ACCURACY, TIMELINESS,
COMPLETENESS, RELIABILITY, PERFORMANCE OR CONTINUED
AVAILABILITY OF THE CBOE SYSTEM OR THE EXCHANGE, FOR DELAYS,
OMISSIONS OR INTERRUPTIONS THEREIN OR THE CREDITWORTHINESS OF