CFE Policy and Procedure V. Russell Index Futures Market Maker Program

Trading Privilege Holders (TPHs) may apply to the Exchange for appointment as a market maker in
the Mini-Russell 2000 Index futures contract, Mini-Russell 1000 Index futures contract, and Russell 1000
Index futures contract (the "Russell Index Products"). Any TPH that desires to apply for market maker status
should submit an application in the form of a letter outlining the organization's qualifications and
commitments.

The Exchange will approve up to five TPHs as market makers in the Russell Index Products under
this Program. TPHs shall be selected by the Exchange based on the Exchange's judgment as to which
applicants are most qualified to perform the functions of a market maker. Factors to be considered in making
this selection may include, but are not limited to, satisfaction of the qualifications listed below as well as any
one or more of the factors listed in Rule 515(b), as applied to market maker applicants instead of with respect
to DPM applicants.

The following describes the qualifications, obligations, incentive, and appointment term under the
Russell Index Futures Market Maker Program. The obligations and incentive listed below are with respect to
each of the Russell Index Products for which a TPH is appointed as a market maker under this Program
unless otherwise specified.

Qualifications

° Experience in trading options and/or futures on broad-based indices.
* Ability to automatically and systemically provide quotations.

Obligations

* For no less than 65% of the available trading hours in each calendar month, provide continuous bids
and offers in two contract months.

¢ Provide an average bid/ask spread of no more than $0.40 (over a calendar month).

© Provide an average quoted size of no less than 20 contracts (over a calendar month), with at least 2
contracts on the lesser-quoted size.

These obligations are subject to relief in the event of a fast market on the Exchange in the applicable
futures contract, a fast market in a related futures product, or other unusual market conditions (to be
determined solely by the Exchange). Under fast market or unusual conditions, a market maker is
expected to quote competitively using its best efforts.

The Exchange may terminate, place conditions upon, or otherwise limit a TPH's appointment as a market
maker under this Program if the TPH fails to perform its obligations under the Program. However,
failure of a TPH to comply with its obligations under this Program shall not be deemed a violation of
Exchange mules.

Incentive

¢ Payment of $0.50 per executed contract, with a monthly cap of $10,000 per TPH.

Term


Appendix A

CBOE FUTURES EXCHANGE
June 23, 2005

Mr. Xxxxx XXXXXX
Firm Yyyyyyy

1 Cccccccce Ddd
Chicago, IL 606060

Dear Mr. Xxxxxxx:

CBOE Futures Exchange (CFE) has reviewed the application submitted by [Insert Full Firm
Name] ({Insert Firm Abbreviation] to participate in CFE's Russell Index Futures Market Maker
Program, and | am pleased to inform you that CFE has selected [Insert Firm Abbreviation] for
appointment as a market maker under the Program. Pursuant to this appointment, [Insert Firm
Abbreviation] has been appointed to act as a market maker under the Program in the Mini-Russell
2000 Index futures contract, the Russell 1000 Index futures contract, and the Mini-Russel! 1000
Index futures contract. Trading on CFE in the Mini-Russell 1000 Index futures contract
commences on July 1, 2005, and that product will be added to the Program effective on that date.

[Insert Firm Abbreviation]'s market maker appointment under the Program commences on July
1, 2005. The provisions of the Program as effective on July 1, 2005, including the incentive [Insert
Firm Abbreviation] will receive for acting as a market maker in each of the above products and
the obligations to which [Insert Firm Abbreviation] will be subject in each of those products, is
attached for your reference. The Program provides that each market maker appointment under the
Program will expire on December 31, 2005 and that CFE may determine to extend the term of an
appointment, allow an appointment to expire, or replace the Program with a different market maker
program.

[Insert Firm Abbreviation] will be expected to begin quoting as a market maker under the
Program on July 1, 2005 or as soon as practicable after that date, taking into account any delays
that may occur which are beyond the control of your firm.

Please acknowledge [Insert Firm Abbreviation]'s acceptance of its market maker appointment
under the Program and agreement to the provisions of the Program and this letter by executing the
enclosed copy of this letter and returning it to me. Please feel free to call me with any questions.

Sincerely, Acknowledged and Agreed to by
[Insert Full Firm Name]

Patrick Fay By:

Managing Director, CFE
Name:,
Title:

Date:



e Each market maker appointment under the Russell Index Futures Market Maker Program will expire
on December 31, 2005. The Exchange may determine to extend the term of an appointment, allow
an appointment to expire, or replace this Program with a different market-maker program.


CFE

August 5, 2005

Via Electronic Mail OFC. OF THE

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-2005-25

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
("Commission") under the Act, CBOE Futures Exchange, LLC ("CFE" or "Exchange”) hereby
submits this rule change ("Amendment") to add the Mini-Russell 1000 Index futures contract to
the Russell Index Futures Market Maker Program ("Program") set forth in CFE Policy and
Procedure V and makes the Program effective in that product commencing on August 8, 2005.

In addition, CFE intends to pay to the market maker participants in the Program the
incentive amount under the Program with respect to Mini-Russell 1000 Index futures contracts
executed by those participants on CFE since July 1, 2005. Prior to July 1, 2005, which is the date
CFE first listed the Mini-Russell 1000 Index futures contract for trading on the Exchange, CFE
notified the Program participants that CFE intended to add the Mini-Russell 1000 Index futures
contract to the Program. In fact, the acknowledgement form ("Form") provided to Program
participants for signature prior to July 1, 2005, a form of which is attached as Appendix A,
references the Mini-Russell 1000 Index futures contract as one of the contracts included under the
Program. In addition, the Form attaches a version of CFE Policy and Procedure V ("Form
Version”) that is identical to the version that is being filed in this CFE-2005-24, since CFE
intended to file the Form Version concurrent with the listing of the Mini-Russell 1000 Index
futures contract on July 1, 2005. However, this change to the Program was inadvertently not
submitted to the Commission at that time. Since the Program participants had an expectation that
the Mini-Russell 1000 Index futures contract would be included under the Program as of July 1,
2005 and agreed to perform the obligations under the Program on that basis by executing the
Form, CFE believes it is appropriate to retroactively make the applicable incentive payments
under the Program with respect to the Mini-Russell 1000 Index futures contracts executed by
those market makers since July 1, 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.

kkk

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

1AT


Ms. Jean A. Webb
Page 2 of 3

CFE Policy and Procedure V. Russell Index Futures Market Maker Program

Trading Privilege Holders (TPHs) may apply to the Exchange for appointment as a
market maker in the Mini-Russell 2000 Index futures contract, Mini-Russell_1000 Index future:
contract, and Russell 1000 Index futures contract (the "Russell Index Products"). Any TPH that
desires to apply for market maker status should submit an application in the form of a letter
outlining the organization's qualifications and commitments.

The Exchange will approve up to five TPHs as market makers in the Russell Index
Products under this Program. TPHs shall be selected by the Exchange based on the Exchange's
judgment as to which applicants are most qualified to perform the functions of a market maker.
Factors to be considered in making this selection may include, but are not limited to, satisfaction
of the qualifications listed below as well as any one or more of the factors listed in Rule 515(b),
as applied to market maker applicants instead of with respect to DPM applicants.

The following describes the qualifications, obligations, incentive, and appointment term
under the Russell Index Futures Market Maker Program. The obligations and incentive listed
below are with respect to each of the Russell Index Products for which a TPH is appointed as a
market maker under this Program unless otherwise specified.

Qualifications

* Experience in trading options and/or futures on broad-based indices.
* Ability to automatically and systemically provide quotations.

Obligations

¢ For no less than 65% of the available trading hours in each calendar month, provide
continuous bids and offers in two contract months.
Provide an average bid/ask spread of no more than $0.40 (over a calendar month).

* Provide an average quoted size of no less than 20 contracts (over a calendar month), with
at least 2 contracts on the lesser-quoted size.

These obligations are subject to relief in the event of a fast market on the Exchange in the
applicable futures contract, a fast market in a related futures product, or other unusual market
conditions (to be determined solely by the Exchange). Under fast market or unusual conditions, a
market maker is expected to quote competitively using its best efforts.

The Exchange may terminate, place conditions upon, or otherwise limit a TPH's
appointment as a market maker under this Program if the TPH fails to perform its obligations
under the Program. However, failure of a TPH to comply with its obligations under this Program
shall not be deemed a violation of Exchange rules.

Incentive
* Payment of $0.50 per executed contract, with a monthly cap of $10,000 per TPH.

Term

Each market maker appointment under the Russell Index Futures Market Maker Program
will expire on December 31, 2005. The Exchange may determine to extend the term of an



Ms. Jean A. Webb
Page 3 of 3

appointment, allow an appointment to expire, or replace this Program with a different market-
maker program.

kk

Questions regarding this submission may be directed to David Doherty at (312) 786-
7466. Please reference our submission number CFE-2005-25 in any related correspondence.

CBOE Futures Exchange, LLC

vy Kk Sey —
Edward J. Joyce re) 3
President

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Mark Baumgardner (OCC)