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CLASS BID OFFER LASTSALEAMOUNT LASTSALEDATE

CBOE $2,350,000.00 $2,495,000.00 $2,350,000.00 September11,2007

CBOTFULLMEMBERSHIP(WITHOUTSTOCK)

CLASS BID OFFER LASTSALEAMOUNT LASTSALEDATE

WithERP $801,000.00 $900,000.00 $850,000.00 August22,2007

WithoutERP $621,000.00 $680,000.00 $621,100.00 September12,2007

ERP $195,000.00 $230,000.00 $225,000.00 September7,2007

ExchangeBulletinSeptember14,2007Volume35,Number37

The Constitution and Rules of the Chicago Board Options Exchange, Incorporated (“Exchange”), in certain specific instances, requiretheExchangetoprovidenoticetotheExchangemembership.Tosatisfythisrequirement,acopyoftheExchangeBul-letin,includingtheRegulatoryBulletin,isdeliveredbye-mailfreeofchargeorbyhardcopyforafeetoalleffectivemembersonaweeklybasis.

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Subscriptions for hard copy delivery may be obtained by submitting your name, firm if any, mailing address and telephone num-berto:ChicagoBoardOptionsExchange,AccountingDepartment,400SouthLaSalle,Chicago,Illinois60605,Attention:BulletinSubscriptions.Thecostofanannualsubscription(January1throughDecember31)is$200.00($100.00afterJuly1),payableinadvance.

Forup-to-dateSeatMarketQuotes,call1-877-THE-CBOEandselectchoice3fromthemainmenu,or,visitwww.CBOE.org,click“CBOEMemberSite”andthen“SeatMarketInformation”onthefollowingpage.ForaccesstotheCBOEMemberWebSite,pleasealso notify the Membership Department by sending an e-mail to [email protected] or by phone at 312-786-7449.

Copyright©2007ChicagoBoardOptionsExchange,Incorporated

SEATMARKETQUOTESASOFFriday,September14,2007

CBOEMEMBERSHIPSALESANDTRANSFERSFrom To Price/Transfer DateDorothy Bennett Citadel Derivatives Group, LLC $2,350,000.00 9/11/07

CBOEMEMBERSHIPSALESANDTRANSFERSFrom To Price/Transfer Date

Page � September 14, �007 Volume 35, Number 37 Chicago Board Options Exchange

MEMBERSHIPINFORMATIONFOR9/6/07THROUGH9/12/07MemberOrganizationsTemporaryMember: TerminationDate

Templar Securities, LLC 9/7/07

Lessee: TerminationDate

Edge Trading Group, LLC 9/7/07

EFFECTIVEMEMBERSHIPS

IndividualMembersNominee: EffectiveDate

Jason Seidel (JAE) 9/6/07MEBOptions,Inc.TypeofBusinesstobeConducted:FloorBroker

Ted M. Piotrowski (PIO) 9/6/07EverestTrading,LLCTypeofBusinesstobeConducted:MarketMaker

Brian J. Doveala (DOV) 9/7/07Pacific Trading Group, LLCTypeofBusinesstobeConducted:MarketMaker

CHANGESINMEMBERSHIPSTATUS

IndividualMembers EffectiveDate

Edward W. Hanhardt 9/7/07From: NomineeForEdgeTradingGroup,LLC; MarketMakerTo: NomineeForSallerson-TroobLLC;MarketMaker

MemberOrganizations EffectiveDate

Bascule Capital Trading, LLC 9/7/07From: Lessee;AssociatedwithaMarketMakerTo: Lessee; Associated with a Market Maker/Floor Broker

MEMBERSHIPAPPLICATIONSRECEIVEDFORWHICHAPOSTINGPERIODISREQUIRED

IndividualMembershipApplicants DatePosted

Michael J. Asselta, Nominee 9/6/07RidgeClearing&OutsourcingSolutions,Inc.33RossCt.Malverne,NY11565

Brian A. Raupp, Nominee 9/12/07Donovan,Schayer,&MasseyTrading,LLC3950N.LakeshoreDrive–Unit1827Chicago,IL60613

MemberOrganizationApplicants DatePosted

Jeridian Options, LLC 9/6/0740E.CedarSt.,Apt.20AChicago,IL60611MarcI.Beilinson–ShareholderBleuOptionsCorp.-Shareholder

MEMBERSHIPLEASES

NewLeases EffectiveDate

Lessor: Caldwell Chicago, LP V 9/6/07Lessee: EverestTrading,LLC TedM.Piotrowski,NOMINEERate: 0.25%Term:Monthly

Lessor: Edmund J. O’Connor 9/6/07Lessee: OptiverUS,LLCRate: 0.25%Term:Monthly

Lessor: Jay A. Rosenbloom 9/7/07Lessee: Sallerson-Troob,LLC EdwardW.Hanhardt,NOMINEERate: 0.25%Term:Monthly

TerminatedLeases TerminationDate

Lessor: Jay A. Rosenbloom 9/7/07Lessee: EdgeTradingGroup,LLC EdwardW.Hanhardt(EHX),NOMINEE

MEMBERSHIPTERMINATIONS

IndividualMembersTemporaryMember: TerminationDate

Gary V. Sagui (GUI) 9/7/07TemplarSecurities,LLC

Nominee: TerminationDate

Joseph C. Merrick (JCM) 9/6/07CutlerGroup,LP

Franklin K. Chow (VPO) 9/7/07Pacific Trading Group, LLC

September 14, �007 Volume 35, Number 37 Chicago Board Options Exchange

RESEARCHCIRCULARSThefollowingResearchCircularsweredistributedbetweenSeptember10andSeptember14,2007.Ifyouwishtoreadtheentiredocu-ment,pleaserefertotheCBOEwebsiteatwww.cboe.comandclickonthe“TradingTools”Tab.NewlistingsandseriesinformationisalsoavailableintheTradingToolssectionofthewebsite.ForquestionsregardinginformationdiscussedinaResearchCircular,pleasecallTheOptionsClearingCorporationat1-888-OPTIONS.

ResearchCircular#RS07-751September13,2007VectorGroupLtd.(“VGR”)5%StockDividendEx-DistributionDate:September18,2007

ResearchCircular#RS07-753September13,2007AccreditedHomeLendersHoldingCo.(“LEND/QFW/ODQ”)TenderOfferFURTHEREXTENDEDbyLSF5AccreditedMergerCo.,Inc.

ResearchCircular#RS07-754September13,2007DadeBehringHoldings,Inc.(“DADE/JDQ”)TenderOfferEXTENDEDbyBelfastMergerCo.

ResearchCircular#RS07-755September13,2007***UPDATE--ANTICIPATEDMERGEREFFECTIVEDATE-OCTOBER1,2007***SolectronCorporation(“SLR/VRL/WRL”)ProposedElectionMergerwithFlextronicsInternationalLtd.(“FLEX/QFL/OYB/YHK”)

ResearchCircular#RS07-756September14,2007GreaterBayBancorp(“GBBK/BBU”)ProposedMergerwithWellsFargo&Company(“WFC/VWF/WWR”)

ResearchCircular#RS07-757September14,2007Neoware,Inc.(“NWRE/QQA/OBB/YNI”)ProposedMergerwithHewlett-PackardCompany(“HPQ/VHP/WPW”)

ResearchCircular#RS07-758September14,2007AvayaInc.(“AV/VZH/YSH”)ProposedMergerwithSierraHoldingsCorp.

ResearchCircular#RS07-759September14,2007A.G.Edwards,Inc.(“AGE/OGR/YEG”)ProposedMergerwithWachoviaCorporation(“WB/VVD/WVD”)

ResearchCircular#RS07-742September10,2007FCStoneGroup,Inc.(“FCSX/QGD”)3for2StockSplitEx-DistributionDate:September28,2007

ResearchCircular#RS07-743September10,2007NationalOilwellVarco,Inc.(“NOV”)2-for-1StockSplitEx-DistributionDate:October1,2007

ResearchCircular#RS07-746September12,2007Palm,Inc.(“PALM/UPY/ZTO/LRK”)ProposedTransactionPursuanttoaPreferredStockPurchaseAgreement

ResearchCircular#RS07-747September12,2007eFundsCorporation(“EFD”)MergerCOMPLETEDwithFidelityNationalInformationServices,Inc.(“FIS”)-CashSettlement

ResearchCircular#RS07-748September12,2007MeridianGoldInc.(“MDG”)TenderOfferEXTENDEDbyYamanaGoldInc.(“AUY”)

ResearchCircular#RS07-749September12,2007SolectronCorporation(“SLR/VRL/WRL”)ProposedElectionMergerwithFlextronicsInternationalLtd.(“FLEX/QFL/OYB/YHK”)

ResearchCircular#RS07-750September13,2007NCRCorporation(“NCR/XPN/KBI”)DistributionofSharesofTeradataCorporation(“TDC”)Ex-DistributionDate:October1,2007

September 19, 2007 Volume RB18, Number 38

_____________________________________________________________________________

The Constitution and Rules of the Chicago Board Options Exchange, Incorporated (“Exchange”), in certain specific instances, require the Exchange to provide notice to the membership. The weekly Regulatory Bulletin is delivered to all effective members to satisfy this requirement. Copyright © 2007 Chicago Board Options Exchange, Incorporated.

REGULATORY CIRCULARS Regulatory Circular RG07-95 Date: September 12, 2007 To: CBOE Members From: Index Option Procedures Committee Re: Hybrid 3.0 Book Trigger and Allocation The Index Option Procedures Committee has approved the elimination of the joining period (Quote Trigger) timer for trades that are done against resting book orders in Hybrid 3.0 classes. Accordingly, the Book Trigger timer will be changed from 1000 milliseconds to zero milliseconds in MVR and OEX. Additionally, the Committee approved a change to the allocation methodology used for trades involving multiple Market-Makers from capped UMA (CUMA) to capped Pro-Rata. Trades with multiple Market-Makers include trades on the opening, trades done via COA, and trades done via HAL and SAL, when activated. The effective date for both these changes will be September 14, 2007. Questions regarding this change may be directed to Anthony Montesano at (312) 786-7365, the Help Desk at (312) 786-7100, or any member of the Index Option Procedures Committee. ________________________________________________________________________________

RULE CHANGES

APPROVED RULE CHANGE(S) The Securities and Exchange Commission (“SEC”) has approved the following change(s) to Exchange rules pursuant to Section 19(b) of the Securities Exchange Act of 1934, as amended (“the

September 19, 2007 Volume RB18, Number 38 1

Act”). Below, any additions to rule text are underlined, and any deletions are [bracketed]. Copies are available on the CBOE public website at www.cboe.com/legal/effectivefiling.aspx. The effective date of the rule change is the date of approval unless otherwise noted. _________________________________________________________________________________ SR-CBOE-2007-79 Position and Exercise Limits On August 9, 2007, the SEC approved Rule Change File No. SR-CBOE-2007-79, which filing proposes to eliminate position and exercise limits for options on the Russell 2000 Index (RUT) and codify that reduced-value options on broad-based security indexes for which full-value options have no position limits similarly have no position and exercise limits. Any questions regarding the rule change may be directed to Jennifer Klebes, Legal Division, at 312-786-7466. The rule text is shown below and the rule filing is available at http://www.cboe.org/publish/RuleFilingsSEC/SR-CBOE-2007-079.pdf.

Rule 24.4 - Position Limits or Broad-Based Index Options RULE 24.4. (a) In determining compliance with Rule 4.11, there shall be no position limit for broad-based index option contracts (including reduced-value option contracts) on the DJX, OEX, XEO, NDX, RUT, VIX, VXN, VXD and SPX classes. All other broad-based index option contracts shall be subject to a contract limitation fixed by the Exchange, which shall not be larger than the limits provided in the chart below.

BROAD-BASED INDEX OPTION TYPE

STANDARD LIMIT (on the same side of the market)

RESTRICTIONS

[Nasdaq 100 Index (1/10th) (MNX)]

[750,000] [None]

[Russell 2000 Index (1/10th)] [500,000] [no more than 300,000 near term]

Dow Jones Equity REIT Index

250,000 contracts None

[Russell 2000 Index (1/5th)] [250,000 contracts] [no more than 150,000 near term]

Lipper Analytical/Salomon Bros. Growth Fund Index Lipper Analytical/Salomon Bros. Growth and Income Fund Index

75,000 contracts no more than 50,000 near-term

S&P 500/Barra Growth or Value 36,000 contracts in the aggregate

no more than 21,500 near-term

S&P SmallCap 600 GSTI Composite



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http://www.cboe.org/publish/RuleFilingsSEC/SR-CBOE-2007-079.pdf


[Russell 2000] Russell 1000 Russell 1000 Growth Russell 1000 Value Russell 2000 Growth Russell 2000 Value Russell 3000 Russell 3000 Growth Russell 3000 Value Russell Midcap Russell Midcap Growth Russell Midcap Value Russell Top 200 Index Russell Top 200 Growth Index Russell Top 200 Value Index Mexico 30 Index Germany 25 Morgan Stanley Multinational Company Index CBOE Euro 25 Index CBOE Asian 25 Index


Reduced Value NYSE Composite 45,000 contracts no more than 25,000 near-term CBOE Russell 2000 Volatility IndexSM ("RVXSM")


Other broad-based index 25,000 contracts no more than 15,000 near-term (b) – (e) No Change. . . . Interpretations and Policies: .01 Broad-based Index Hedge Exemption The broad-based index hedge exemption is in addition to the standard limit and other exemptions available under Exchange rules, interpretations and policies. The following procedures and criteria must be satisfied to qualify for a broad-based index hedge exemption. (a) – (d) No Change. (e) Positions in broad-based index options that are traded on the Exchange are exempt from the standard limits to the extent specified below.

BROAD-BASED INDEX OPTION TYPE

BROAD-BASED INDEX HEDGE EXEMPTION (is in addition to standard limit)

[Nasdaq 100 Stock Index (1/10th value) (MNX)]

[1,500,000 contracts]

[Russell 2000 Index (1/10th)] [750,000 contract] [Russell 2000 Index (1/5th)] [375,000 contracts] S&P 500/Barra Growth or Value 65,000 contracts other broad-based index 75,000 contracts


(f) – (h) No Change. .02 No Change.

.03 Reporting Requirement Each member (other than CBOE Market-Makers) or member organization that maintains a

broad-based index option position on the same side of the market in excess of 100,000 contracts for OEX, XEO, NDX, RUT or SPX and 1 million contracts for DJX, for its own account or for the account of a customer, shall report information as to whether the positions are hedged and provide documentation as to how such contracts are hedged, in the manner and form required by the Department of Market Regulation. In calculating the applicable contract-reporting amount, reduced-value contracts will be aggregated with full-value contracts and counted by the amount by which they equal a full-value contract (e.g., 10 XSP options equal 1 SPX full-value contract). The Exchange may specify other reporting requirements of this interpretation as well as the limit at which the reporting requirement may be triggered.

. 04 Margin and Clearing Firm Requirements

Whenever the Exchange determines, based on a report by the Department of Market

Regulation or otherwise, that additional margin is warranted in light of the risks associated with an under-hedged SPX, OEX, XEO, NDX, RUT or DJX option position, the Exchange may consider imposing additional margin upon the account maintaining such under-hedged position pursuant to its authority under Exchange Rule 12.10. Additionally, it should be noted that the clearing firm carrying the account will be subject to capital charges under SEC Rule 15c3-1 to the extent of any margin deficiency resulting from the higher margin requirements.

* * * * *

Rule 24.5 — Exercise Limits RULE 24.5 In determining compliance with Rule 4.12, exercise limits for index option contracts shall be equivalent to the position limits prescribed for option contracts with the nearest expiration date in Rule 24.4 or 24.4A. There shall be no exercise limits for broad-based index options (including reduced-value option contracts) on DJX, OEX, XEO, NDX, RUT or SPX. ... Interpretations and Policies: .01 - .03 No Change.

* * * * *

Rule 24A.7 — Position Limits for FLEX Narrow-Based Index Options; Reporting Requirements for Flex Broad-Based Index Options and Flex Equity Options Exercise Limits

RULE 24A.7. (a) No Change. (b) FLEX Broad-Based Index Options. There shall be no position limits for FLEX DJX, OEX, XEO, NDX, RUT or SPX option contracts. However, each member (other than CBOE Market-Makers) or member organization that maintains a FLEX broad-based index option position on the same side of the market in excess of 100,000 contracts for OEX, NDX, RUT or SPX and 1 million


contracts for DJX, for its own account or for the account of a customer, shall report information as to whether the positions are hedged and provide documentation as to how such contracts are hedged, in the manner and form prescribed by the Department of Market Regulation. In calculating the applicable contract-reporting amount, reduced-value contracts will be aggregated with full-value contracts and counted by the amount by which they equal a full- value contract (e.g., 10 XSP options equal 1 SPX full-value contract). The Exchange may specify other reporting requirements of this interpretation as well as the limit at which the reporting requirement may be triggered. In addition, whenever the Exchange determines, based on a report by the Department of Market Regulation or otherwise, that additional margin is warranted in light of the risks associated with an under-hedged FLEX DJX, OEX, XEO, NDX, RUT, or SPX option position, the Exchange may consider imposing additional margin upon the account maintaining such under-hedged position, pursuant to its authority under Exchange Rule 12.10. Additionally, it should be noted that the clearing firm carrying the account will be subject to capital charges under SEC Rule 15c3-1 to the extent of any margin deficiency resulting from the higher margin requirements. (c) – (d) No Change. _________________________________________________________________________________ EFFECTIVE-ON-FILING RULE CHANGE(S) The following rule filing(s) were submitted to the SEC “effective-on-filing,” and may have taken effect pursuant to Section 19(b)(3) of the Securities Exchange Act. They will remain in effect barring further action by the SEC within 60 days after their publication in the Federal Register. Below, any additions to rule text are underlined, and any deletions are [bracketed]. Copies are available on the CBOE public website at www.cboe.com/legal/effectivefiling.aspx. _________________________________________________________________________________ SR-CBOE-2007-107 Temporary Membership Status On August 21, 2007, the Exchange filed Rule Change File No. SR-CBOE-2007-107, which filing proposes the continuation of temporary membership status from and after SEC approval of the Exchange’s pending rule interpretation concerning exercise right eligibility. Any questions regarding the rule change may be directed to Patrick Sexton, Legal Division, at 312-786-7467. The rule text is shown below and the rule filing is available at http://www.cboe.org/publish/RuleFilingsSEC/SR-CBOE-2007-107.pdf.

Rule 3.19. No change.

. . . Interpretations and Policies:

.01 No change. .02 A person ("Temporary Member") who has been granted temporary membership ("Temporary Membership") status at the Exchange pursuant to Interpretation and Policy .01 of this Rule 3.19 shall continue in that Temporary Membership status after the Commission's approval of SR-CBOE-2006-106, if and only if such person (i) has not previously terminated that Temporary Membership status and remains in good standing as of the close of business on the trading day immediately before the date of that approval, (ii) thereafter remains in good standing and continues to pay all applicable fees, dues, assessments and other like charges that are assessed against CBOE members, and (iii) pays to


http://www.cboe.com/legal/effectivefiling.aspx



the Exchange a monthly access fee set by the Exchange, which shall be due and payable in accordance with the provisions of the Exchange Fee Schedule. Such access fee shall be paid directly to the Exchange and shall not be escrowed. The Temporary Membership status granted to a Temporary Member pursuant to this Interpretation and Policy .02 shall terminate upon the earlier of (i) the voluntary termination of that Temporary Membership status by the Temporary Member, (ii) the approval by the Commission of a further proposed rule change that provides for the termination of that status and the granting of trading permits or another form of trading access to Temporary Members, or (iii) the consummation of a transaction pursuant to which either CBOE is converted into a stock corporation or memberships in CBOE are converted into stock. Temporary Members shall be subject to the regulatory jurisdiction of CBOE under the Act, the Constitution and the Rules, including CBOE's disciplinary jurisdiction under Chapter XVII. (b) Not applicable. (c) Not applicable. _________________________________________________________________________________ SR-CBOE-2007-105 Credit Default Options On August 21, 2007, the Exchange filed Rule Change File No. SR-CBOE-2007-105, which filing proposes to modify the rule provisions pertaining to Credit Default Option contract multipliers to permit the Exchange to vary the particular contract multiplier on a class-by-class basis within a range of 1 to 1,000. Any questions regarding the rule change may be directed to Jennifer Klebes, Legal Division, at 312-786-7466. The rule text is shown below and the rule filing is available at http://www.cboe.org/publish/RuleFilingsSEC/SR-CBOE-2007-105.pdf.

Rule 29.1- Definitions RULE 29.1. The following terms as used in this Chapter, shall unless the context otherwise indicates, have the meanings herein specified. Cash Settlement Amount (a) The term “cash settlement amount” means the amount of cash that a holder will receive upon exercise of the contract.

(i) For Credit Default Options, the cash settlement amount per contract is generally [$100,000 per contract (]equal to an exercise settlement value of $100 multiplied by a contract multiplier specified by the Exchange (which shall be at least 1 and no more than [of] 1,000) and is payable upon automatic exercise if the Exchange confirms a Credit Event in accordance with Rule 29.9. If a Credit Event is not confirmed, the cash settlement value will be $0. If applicable, the cash settlement amount will be adjusted in accordance with Rule 29.4.

(ii) No change. (b) – (j) No change.

* * * * *

Rule 29.5 – Position Limits RULE 29.5. (a) In determining compliance with Rule 4.11, [cash-settled] Credit Default Option contracts with a cash settlement value of $100,000 per contract (equal to an exercise settlement value of $100 multiplied by a contract multiplier of 1,000) shall have a position limit equal to 5,000 contracts on the same side of the market. In calculating the applicable position limits, reduced-value contracts (i.e., Credit Default Options with a cash settlement value of less than $100,000 per contract) will be aggregated with full-value contracts and counted by the amount by which they equal a full-value contract (e.g., 10 Credit Default Option contract with a cash settlement value of $10,000 per contract (equal to an exercise settlement value of $100 multiplied by a contract multiplier of 100)



equal one full-value contract). [and c]Cash-settled Credit Default Basket Options shall have a position limit equal to 50,000 contracts on the same side of the market. (b) – (d) No change.

* * * * *

Rule 29.6 – Reports Related to Position Limits and Liquidation of Positions

RULE 29.6. For purposes of Rules 4.13 and 4.14, references to Rule 4.11 in connection with position limits shall be deemed, in the case of Credit Options, to be Rule 29.5. In computing reportable Credit Options under Rule 4.13, Credit Options shall not be aggregated with non-Credit Option contracts. In addition, Credit Options of a given class shall not be aggregated with any other class of Credit Options. The applicable hedge reporting requirement described in Rule 4.13(b) shall apply to a position in excess of 1,000 Credit Option contracts on the same side of the market. In calculating the applicable position for Credit Default Option contracts, reduced-value contracts (i.e., Credit Default Options with a cash settlement value of less than $100,000 per contract) will be aggregated with full-value contracts and counted by the amount by which they equal a full-value contract (e.g., 10 Credit Default Option contract with a cash settlement value of $10,000 per contract (equal to an exercise settlement value of $100 multiplied by a contract multiplier of 100) equal one full-value contract).

Rule 29.6 supplements Rules 4.13 and 4.14.

* * * * *

Rule 29.9 – Determination of Credit Event, Automatic Exercise and Settlement RULE 29.9. (a) – (d) No change. (e) For Credit Default Options, if the Exchange determines that a Credit Event in the underlying Reference Entity has occurred prior to 10:59 p.m. (CT) on the last trading day, the Credit Default Option will automatically pay the applicable cash settlement amount [will be $100,000 per contract] (or the applicable adjusted amount) per contract. Otherwise the cash settlement amount will be $0. If a Credit Event has been confirmed by the Exchange prior to the last trading day, the Credit Default Option will cease trading upon confirmation of the Credit Event. (f) – (g) No change. Rule 29.9 replaces, for purposes of Chapter XXIX, Rule 11.1. Rule 11.2 is not applicable. _________________________________________________________________________________ PROPOSED RULE CHANGE(S) Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934, as amended (“the Act”), and Rule 19b-4 thereunder, the Exchange has filed the following proposed rule change(s) with the Securities and Exchange Commission (“SEC”). Below, any additions to rule text are underlined, and any deletions are [bracketed]. Copies of the rule change filing(s) are available at www.cboe.com/legal/submittedsecfilings.aspx. Members may submit written comments to the Legal Division. The effective date of a proposed rule change will be the date of approval by the SEC, unless otherwise noted. _________________________________________________________________________________


http://www.cboe.com/legal/submittedsecfilings.aspx

SR-CBOE-2007-109 ETF Listing Standards On August 21, 2007, the Exchange filed Rule Change File No. SR-CBOE-2007-109, which filing proposes to adopt generic listing standards for international exchange-traded funds on the CBOE Stock Exchange. Any questions regarding the rule change may be directed to Angelo Evangelou, Legal Division, at 312-786-7464. The rule text is shown below and the rule filing is available at http://www.cboe.org/publish/RuleFilingsSEC/SR-CBOE-2007-109.pdf.

Rule 31.5 - Criteria for Eligibility of Securities RULE 31.5. (A) - (K) No change. (L) IPRs.

(a)-(d) No change.

(e) Definitions. For purposes of this Rule 31.5(L), the following terms are defined below:

(1) The term “US Component Stock” shall mean an equity security that is registered under Sections 12(b) or 12(g) of the Exchange Act or an American Depository Receipt the underlying equity security of which is registered under Sections 12(b) or 12(g) of the Exchange Act.

(2) The term “Non-US Component Stock” shall mean an equity security that is not

registered under Sections 12(b) or 12(g) of the Exchange Act and that is issued by an entity that (a) is not organized, domiciled or incorporated in the United States, and (b) is an operating company (including real estate investment trusts (REITs) and income trusts, but excluding investment trusts, unit trusts, mutual funds, and derivatives).

(f) The Exchange will obtain a representation from the issuer of each series of IPRs that the

net asset value per share for the series will be calculated daily and will be made available to all market participants at the same time. . . . Interpretations and Policies: .01 The Exchange may approve a series of IPRs for listing and trading (including pursuant to unlisted trading privileges) pursuant to Rule 19b-4(e) under the Securities Exchange Act of 1934 provided each of the following criteria is satisfied:

(a) Eligibility Criteria for Index Components.

(1) U.S. Component Stocks. Upon the initial listing of a series of IPRs on the Exchange, or if the Exchange is trading the IPRs pursuant to unlisted trading privileges, upon the initial listing on the original listing exchange, each component of an index or portfolio of U.S. Component Stocks underlying a series of IPRs shall meet the following criteria:

[(1)](A) Component stocks that in the aggregate account for at least 90% of

the weight of the index or portfolio shall have a minimum market value of at least $75 million;



[(2)](B) The component stocks shall have a minimum monthly trading volume during each of the last six months of at least 250,000 shares for stocks representing at least 90% of the weight of the index or portfolio;

[(3)](C) The most heavily weighted component stock cannot exceed [25]30%

of the weight of the index or portfolio, and the five most heavily weighted component stocks cannot exceed 65% of the weight of the index or portfolio;

[(4)](D) The underlying index or portfolio must include a minimum of 13

stocks; and [(5)](E) All securities in an underlying index or portfolio must be U.S.

Component Stocks listed on a national securities exchange [or The Nasdaq Stock Market (including the Nasdaq SmallCap Market)] and shall be NMS stocks as defined in Rule 600 of Regulation NMS under the Exchange Act.

(2) Non-U.S. Component Stocks or Both U.S. Component Stocks and Non-U.S.

Component Stocks. Upon the initial listing of a series of IPRs on the Exchange, or if the Exchange is trading the IPRs pursuant to unlisted trading privileges, upon the initial listing on the original listing exchange, each component of an index or portfolio underlying a series of IPRs consisting of either (a) only Non-U.S. Component Stocks or (b) both U.S. Component Stocks and Non-U.S. Component Stocks shall meet the following criteria:

(A) Component stocks that in the aggregate account for at least 90% of the

weight of the index or portfolio shall have a minimum market value of at least $100 million;

(B) The component stocks shall have a minimum worldwide monthly trading

volume during each of the last six months of at least 250,000 shares for stocks representing at least 90% of the weight of the index or portfolio;

(C) The most heavily weighted component stock cannot exceed 25% of the

weight of the index or portfolio, and the five most heavily weighted component stocks cannot exceed 60% of the weight of the index or portfolio;

(D) The underlying index or portfolio must include a minimum of 20 stocks;

and (E) Each U.S. Component Stock must be listed on a national securities

exchange and must be an NMS stock as defined in Rule 600 of Regulation NMS under the Exchange Act, and each Non-U.S. Component Stock must be listed and traded on an exchange that has last sale reporting.

(3) Index or portfolio approved in connection with options or other derivative

securities. Upon the initial listing of a series of Index Portfolio Receipts, or upon trading pursuant to unlisted trading privileges, pursuant to Rule 19b-4(e) under the Exchange Act, the index or portfolio underlying such series shall have been reviewed and approved for trading of options, Index Portfolio Receipts, Index Portfolio Shares, Index-Linked Exchangeable Notes, or Index-Linked Securities by the Commission under Section 19(b)(2) of the Exchange Act and rules thereunder and the conditions set forth in the Commission’s approval order, including comprehensive surveillance sharing agreements regarding dissemination of


information continue to be satisfied. Each component stock of the index or portfolio shall be either (A) a U.S. Component Stock that is listed on a national securities exchange and is an NMS Stock or (B) a Non-U.S. Component Stock that is listed and traded on an exchange that has last sale reporting.

(b) Index Methodology and Calculation. (i) The index underlying a series of IPRs will be calculated based on either the market capitalization, modified market capitalization, price, equal-dollar or modified equal-dollar weighting methodology; (ii) If the index underlying a series of IPRs is maintained by a broker-dealer or fund advisor, the broker-dealer or fund advisor shall erect a "fire wall" around the personnel who have access to information concerning changes and adjustments to the index and the index shall be calculated by a third party who is not a broker-dealer or fund advisor; and (iii) [The current index value will be disseminated every 15 seconds over the Consolidated Tape Association's Network B.;] Any advisory committee, supervisory board, or similar entity that advises a Reporting Authority or a major market data vendor or that makes decisions on the index or portfolio composition, methodology and related matters, must implement and maintain, or be subject to, procedures designed to prevent the use and dissemination of material non-public information regarding the applicable index. (c) Disseminated Information. [The Reporting Authority will disseminate for each series of IPRs an estimate, updated every 15 seconds, of the value of a share of each series. This may be based, for example, upon current information regarding the required deposit of securities and cash amount to permit creation of new shares of the series or upon the index value.] If a series of IPRs is listed for trading, or trades pursuant to unlisted trading privileges, on the Exchange in reliance upon Rule 19b-4(e) under the Exchange Act, and invests solely in U.S. Component Stocks, the current value of the underlying index must be widely disseminated by one or more major market data vendors or disseminated over the consolidated tape at least every 15 seconds during trading hours on the Exchange. If a series of IPRs is listed for trading on the Exchange in reliance upon Rule 19b-4(e) under the Exchange Act and invest in both U.S. Component Stocks and Non-U.S. Component Stocks or only in Non-U.S. Component Stocks, the current value of the underlying index must be widely disseminated by one or more major market data vendors or disseminated over the consolidated tape at least every 60 seconds during trading hours on the Exchange. If the index value does not change during some or all of the period when trading is occurring on the Exchange (for example, for indexes of Non-U.S. Component Stocks because of time zone differences or holidays in the countries where such indexes’ component stocks trade), then the last official calculated index value must remain available throughout Exchange trading hours.

There must be disseminated for each series of IPRs, whether listed or traded pursuant to unlisted trading privileges, an estimate, updated at least every 15 seconds, of the value of a share of each series (the “Intraday Indicative Value”) during Trading on the Exchange. This may be based, for example, upon current information regarding the required deposit of securities plus any cash amount to permit the creation of new shares of the series or upon the index value. The Intraday Indicative Value will be updated at least every 15 seconds during the trading session on CBSX to reflect changes in the exchange rate between the U.S. dollar and the currency in which any component stock is denominated. If the Intraday Indicative Value does not change during some or all of the period when trading is occurring on CBSX, then the last official calculated Intraday Indicative Value must remain available throughout CBSX’s trading hours.


(d) Initial Shares Outstanding. A minimum of 100,000 shares of a series of IPRs is required to be outstanding at start-up of trading. (e) Surveillance Procedures. The Exchange will implement written surveillance procedures for IPRs. (f) Creation and Redemption. For Index Portfolio Receipts listed pursuant to Rules 31.5(L).01(a)(2) or (3), the statutory prospectus or the application for exemption from provisions of the Investment Company Act of 1940 for the series of Index Portfolio Receipts must state that the series of Index Portfolio Receipts must comply with the federal securities laws in accepting securities for deposits and satisfying redemptions with redemption securities, including that the securities accepted for deposits and the securities used to satisfy redemption requests are sold in transactions that would be exempt from registration under the Securities Act of 1933.

(M) IPSs.

(a)-(b) No change.

(c) Definitions. For purposes of this Rule 31.5(M), the following terms are defined below:

(1) The term “U.S. Component Stock” shall mean an equity security that is registered under Sections 12(b) or 12(g) of the Exchange Act or an American Depository Receipt the underlying equity security of which is registered under Sections 12(b) or 12(g) of the Exchange Act.

(2) The term “Non-U.S. Component Stock” shall mean an equity security that is not

registered under Sections 12(b) or 12(g) of the Exchange Act and that is issued by an entity that (a) is not organized, domiciled or incorporated in the United States, and (b) is an operating company (including real estate investment trusts (REITs) and income trusts, but excluding investment trusts, unit trusts, mutual funds, and derivatives).

(d) The Exchange will obtain a representation from the issuer of each series of IPSs that the

net asset value per share for the series will be calculated daily and will be made available to all market participants at the same time. . . . Interpretations and Policies: .01 The Exchange may approve a series of IPSs for listing and trading (including pursuant to unlisted trading privileges) pursuant to Rule 19b-4(e) under the Securities Exchange Act of 1934 provided each of the following criteria is satisfied:

(a) Eligibility Criteria for Index Components.

(1) U.S. Component Stocks. Upon the initial listing of a series of IPSs on the Exchange, or if the Exchange is trading the IPSs pursuant to unlisted trading privileges, upon the initial listing on the original listing exchange, each component of an index or portfolio of U.S. Component Stocks underlying a series of IPSs shall meet the following criteria:


[(1)](A) Component Stocks that in the aggregate account for at least 90% of the weight of the index or portfolio shall have a minimum market value of at least $75 million;

[(2)](B) The component stocks shall have a minimum monthly trading


[(3)](C) The most heavily weighted component stock cannot exceed [25]30%

of the weight of the index or portfolio, and the five most heavily weighted component stocks cannot exceed 65% of the weight of the index or portfolio;

[(4)](D) The underlying index or portfolio must include a minimum of 13

stocks; and [(5)](E) All securities in an underlying index or portfolio must be U.S.

Component Stocks listed on a national securities exchange [or The Nasdaq Stock Market (including the Nasdaq SmallCap Market)] and shall be NMS stocks as defined in Rule 600 of Regulation NMS under the Exchange Act.

(2) Non-U.S. Component Stocks or Both U.S. Component Stocks and Non-U.S.

Component Stocks. Upon the initial listing of a series of IPSs on the Exchange, or if the Exchange is trading the IPSs pursuant to unlisted trading privileges, upon the initial listing on the original listing exchange, each component of an index or portfolio underlying a series of IPSs consisting of either (a) only Non-U.S. Component Stocks or (b) both U.S. Component Stocks and Non-U.S. Component Stocks shall meet the following criteria:

(A) Component stocks that in the aggregate account for at least 90% of the

weight of the index or portfolio shall have a minimum market value of at least $100 million;

(B) The component stocks shall have a minimum worldwide monthly trading


(C) The most heavily weighted component stock cannot exceed 25% of the

weight of the index or portfolio, and the five most heavily weighted component stocks cannot exceed 60% of the weight of the index or portfolio;

(D) The underlying index or portfolio must include a minimum of 20 stocks;

and (E) Each U.S. Component Stock must be listed on a national securities

exchange and must be an NMS stock as defined in Rule 600 of Regulation NMS under the Exchange Act, and each Non-U.S. Component Stock must be listed and traded on an exchange that has last sale reporting.

(3) Index or portfolio approved in connection with options or other derivative

securities. Upon the initial listing of a series of Index Portfolio Shares, or upon trading pursuant to unlisted trading privileges, pursuant to Rule 19b-4(e) under the Exchange Act, the index or portfolio underlying such series shall have been reviewed and approved for trading


of options, Index Portfolio Receipts, Index Portfolio Shares, Index-Linked Exchangeable Notes, or Index-Linked Securities by the Commission under Section 19(b)(2) of the Exchange Act and rules thereunder and the conditions set forth in the Commission’s approval order, including comprehensive surveillance sharing agreements regarding dissemination of information continue to be satisfied. Each component stock of the index or portfolio shall be either (A) a U.S. Component Stock that is listed on a national securities exchange and is an NMS Stock or (B) a Non-U.S. Component Stock that is listed and traded on an exchange that has last sale reporting.

(b) Index Methodology and Calculation. (i) The index underlying a series of IPSs will be calculated based on either the market capitalization, modified market capitalization, price, equal-dollar or modified equal-dollar weighting methodology; (ii) If the index underlying a series of IPSs is maintained by a broker-dealer or fund advisor, the broker-dealer or fund advisor shall erect a "fire wall" around the personnel who have access to information concerning changes and adjustments to the index and the index shall be calculated by a third party who is not a broker-dealer or fund advisor; and (iii) [The current index value will be disseminated every 15 seconds over the Consolidated Tape Association's Network B.] Any advisory committee, supervisory board, or similar entity that advises a Reporting Authority or a major market data vendor or that makes decisions on the index or portfolio composition, methodology and related matters, must implement and maintain, or be subject to, procedures designed to prevent the use and dissemination of material non-public information regarding the applicable index. (c) Disseminated Information. [The Reporting Authority will disseminate for each series of IPSs an estimate, updated every 15 seconds, of the value of a share of each series. This may be based, for example, upon current information regarding the required deposit of securities and cash amount to permit creation of new shares of the series or upon the index value.] If a series of IPSs is listed for trading, or trades pursuant to unlisted trading privileges, on the Exchange in reliance upon Rule 19b-4(e) under the Exchange Act, and invests solely in U.S. Component Stocks, the current value of the underlying index must be widely disseminated by one or more major market data vendors or disseminated over the consolidated tape at least every 15 seconds during trading hours on the Exchange. If a series of IPSs is listed for trading on the Exchange in reliance upon Rule 19b-4(e) under the Exchange Act and invest in both U.S. Component Stocks and Non-U.S. Component Stocks or only in Non-U.S. Component Stocks, the current value of the underlying index must be widely disseminated by one or more major market data vendors or disseminated over the consolidated tape at least every 60 seconds during trading hours on the Exchange. If the index value does not change during some or all of the period when trading is occurring on the Exchange (for example, for indexes of Non-U.S. Component Stocks because of time zone differences or holidays in the countries where such indexes’ component stocks trade), then the last official calculated index value must remain available throughout Exchange trading hours.

There must be disseminated for each series of IPSs, whether listed or traded pursuant

to unlisted trading privileges, an estimate, updated at least every 15 seconds, of the value of a share of each series (the “Intraday Indicative Value”) during Trading on the Exchange. This may be based, for example, upon current information regarding the required deposit of securities plus any cash amount to permit the creation of new shares of the series or upon the index value. The Intraday Indicative Value will be updated at least every 15 seconds during the trading session on CBSX to reflect changes in the exchange rate between the U.S. dollar and the currency in which any component stock is denominated. If the Intraday Indicative Value does not change during some or all of the period when trading is occurring on CBSX,


then the last official calculated Intraday Indicative Value must remain available throughout CBSX’s trading hours.

(d) Initial Shares Outstanding. A minimum of 100,000 shares of a series of IPSs is required to be outstanding at start-up of trading. (e) Surveillance Procedures. The Exchange will implement written surveillance procedures for IPSs. (f) Creation and Redemption. For Index Portfolio Shares listed pursuant to Rules 31.5(M).01(a)(2) or (3), the statutory prospectus or the application for exemption from provisions of the Investment Company Act of 1940 for the series of Index Portfolio Shares must state that the series of Index Portfolio Shares must comply with the federal securities laws in accepting securities for deposits and satisfying redemptions with redemption securities, including that the securities accepted for deposits and the securities used to satisfy redemption requests are sold in transactions that would be exempt from registration under the Securities Act of 1933.

Rule 52.3 - Unusual Market Conditions RULE 52.3. (a) No change. (b) Trading Halts for Trading Pursuant to Unlisted Trading Privileges of Exchange Traded Funds on CBSX. (1) No change. (2) Normal Market Hours. During normal market hours, if a temporary interruption occurs in the calculation or wide dissemination of the applicable IIV or value of the underlying index by a major market data vendor and the listing market halts trading in the ETF, CBSX, upon notification by the listing market of such halt due to such temporary interruption, also shall immediately halt trading in the ETF on CBSX. If the IIV or the value of the underlying index continues not to be calculated or widely available as of the commencement of trading on CBSX on the next business day, CBSX shall not commence trading of the ETF that day. If an interruption in the calculation or wide dissemination of the IIV or the value of the underlying index continues, CBSX may resume trading in the ETF only if calculation and wide dissemination of the IIV or the value of the underlying index resumes or trading in the ETF resumes in the listing market._________________________________________________________________________________ SR-CBOE-2007-106 Doing Business with the Public On August 17, 2007, the Exchange filed Rule Change File No. SR-CBOE-2007-106, which filing proposes to amend CBOE rules that govern doing business with the public. Any questions regarding the rule change may be directed to Jaime Galvan, Legal Division, at 312-786-7058. The rule text is shown below and the rule filing is available at http://www.cboe.org/publish/RuleFilingsSEC/SR-CBOE-2007-106.pdf.

Chapter III

Membership




***** Qualification and Registration of Certain Associated Persons

Rule 3.6A. (a) No change. (b) Associated Person Statuses Under Chapter IX. Associated person statuses under Chapter IX (along with the primary Exchange Rule concerning the status) include: (i) Registered Options Principal (Rule 9.2); (ii) Registered Representative (Rule 9.3); and (iii) Chief Compliance Officer (Rule 9.8) [Senior Registered Options Principal (Rule 9.8); and (iv) Compliance Registered Options Principal (Rule 9.8)]. … Interpretations and Policies: No change.

Chapter IX

Doing Business with the Public

*****

Registration of Options Principals Rule 9.2. No member organization shall be approved to transact options business with the public until those persons associated with it who are designated as Options Principals have been approved by and registered with the Exchange. Persons engaged in the [management of the member organization's business pertaining to option contracts] supervision of options sales practices or a person to whom the designated general partner or executive officer (pursuant to Rule 9.8) or another Registered Options Principal delegates the authority to supervise options sales practices shall be designated as Options Principals. In connection with their registration, Options Principals shall electronically file a Uniform Application for Securities Industry Registration or Transfer (Form U4) with the NASD's Web CRD System, shall successfully complete an examination prescribed by the Exchange for the purpose of demonstrating an adequate knowledge of the options business and of the Rules of the Exchange, and shall further agree in the U4 filing to abide by the Constitution and Rules of the Exchange and the Rules of the Clearing Corporation. Any person required to complete Form U4 shall promptly electronically file any required amendments to Form U4 with the NASD's Web CRD System. Termination of employment or affiliation of any Registered Options Principal in such capacity shall be promptly electronically reported to the NASD's Web CRD System together with a brief statement of the reason for such termination on Form U5. …Interpretations and Policies: .01. Individuals engaged in the supervision of options sales practices and designated as Options Principals are required to qualify as an Options Principal by passing the Registered Options Principals Examination (Series 4) or the Sales Supervision Examination (Series 9/10). .02 Individuals who are delegated responsibility pursuant to Rule 9.8 for the acceptance of discretionary accounts, for approving exceptions to a member organization’s criteria or standards for uncovered options accounts, and for approval of communications, shall be designated as Options Principals and are required to qualify as an Options Principal by passing the Registered Options Principal Examination (Series 4).


Registration and Termination of Representatives

Rule 9.3. (a) – (c) No change. . . . Interpretations and Policies: .01 A person accepting orders from non-member customers (unless such customer is a broker-dealer registered with the Securities and Exchange Commission) is required to register with the Exchange and to be qualified by passing the General Securities Representatives Examination (Series 7).

Branch Offices of Member Organizations

Rule 9.6. (a) – (b) No change.

… Interpretations and Policies:

.01 Definition of Branch Office. — A "branch office" is any location where one or more associated persons of a member or member organization regularly conduct the business of effecting any transactions in, or inducing or attempting to induce the purchase or sale of any security, or is held out as such, excluding:

(A) any location that is established solely for customer service and/or back office type functions where no sales activities are conducted and that is not held out to the public as a branch office;

(B) any location that is the associated person's primary residence; provided that: (i) only one associated person, or multiple associated persons, who reside at that location and are members of the same immediate family, conduct business at the location; (ii) the location is not held out to the public as an office and the associated person does not meet with customers at the location; (iii) neither customer funds nor securities are handled at that location; (iv) the associated person is assigned to a designated branch office, and such branch office is reflected on all business cards, stationery, advertisements and other communications to the public by such associated person; (v) the associated person's correspondence and communications with the public are subject to all supervisory provisions of the Exchange's rules; (vi) electronic communications (e.g., e-mail) are made through the member's or member organization's electronic system; (vii) all orders are entered through the designated branch office or an electronic system established by the member or member organization that is reviewable at the branch office; (viii) written supervisory procedures pertaining to supervision of sales activities conducted at the residence are maintained by the member or member organization; and (ix) a list of the locations is maintained by the member or member organization;

(C) any location, other than a primary residence, that is used for securities business for less than 30 business days in any one calendar year, provided the member or member organization complies with the provisions of (ii) through (viii) of paragraph (B) above;

(D) an office of convenience, where the associated person occasionally and exclusively by appointment meets with customers, which is not held out to the public as a branch office (where such location is on bank premises, however, only signage required by the Interagency Statement (Statement on Retail Sales of Nondeposit Investment Products required under Banking Regulations) may be displayed);


(E) any location that is used primarily to engage in non-securities activities and from which the associated person effects no more than 25 securities transactions in any one calendar year; provided that any advertisements or sales literature identifying such location also sets forth the address and telephone number of the location from which the associated person conducting business at the non-branch locations are directly supervised;

(F) the Floor of a registered national securities exchange where a member or member organization conducts a direct access business with public customers; or

(G) a temporary location established in response to the implementation of a business continuity plan.

Notwithstanding the exclusions in subparagraphs .01(A) - (G) above, any location that is responsible for supervising the activities of persons associated with a member or member organization at one or more non-branch locations of such member or member organization is considered to be a branch office.

For purposes of this Rule, the term "business day" shall not include any partial business day provided that the associated person spends at least four hours on such business day at his or her designated branch office during the hours that such office is normally open for business.

For purposes of this Rule, the term "associated person of a member or member organization" is defined as a member or employee associated with a member or member organization.

For purposes of .01(B)(viii) above, written supervisory procedures shall include criteria for on-site for cause reviews of an associated person's primary residence. Such reviews must utilize risk-based sampling or other techniques designed to assure compliance with applicable securities laws and regulations and with Exchange Rules.

For purposes of .01(B)(viii) and (C) above, written supervisory procedures for such residences and other remote locations must be designed to assure compliance with applicable securities laws and regulations and with Exchange Rules.

Factors which should be considered when developing risk-based sampling techniques to determine the appropriateness of on-site for cause reviews of selected residences and other remote locations shall include, but not be limited to, the following: (i) the firm's size; (ii) the firm's organizational structure; (iii) the scope of business activities; (iv) the number and location of offices; (v) the number of associated persons assigned to a location; (vi) the nature and complexity of products and services offered; (vii) the volume of business done; (viii) whether the location has a Series 9/10-qualified person on-site; (ix) the disciplinary history of the registered persons or associated persons, including a review of such person's customer complaints and Forms U4 and U5; and (x) the nature and extent of a registered person's or associated person's outside business activities, whether or not related to the securities business.

Opening of Accounts Rule 9.7 (a)-(e) No change. (f) Every member organization transacting business with the public in uncovered option contracts shall develop, implement and maintain specific written procedures governing the conduct of such business which shall include, at least, the following:


1. Specific criteria and standards to be used in evaluating the suitability of a customer for uncovered short option transactions;

2. Specific procedures for approval of accounts engaged in writing uncovered short option

contracts, including written approval of such accounts by a Registered Options Principal; 3. Designation of [the Senior Registered Options Principal and/or Compliance Registered Options

Principal] a specific Registered Options Principal qualified individual(s) as the person(s) responsible for approving accounts which do not meet the specific criteria and standards for writing uncovered short option transactions and for maintaining written records of the reasons for every account so approved;

4. Establishment of specific minimum net equity requirements for initial approval and

maintenance of customer uncovered option accounts; and 5. Requirements that customers approved for writing uncovered short options transactions be

provided with a special written description of the risks inherent in writing uncovered short option transactions, at or prior to the initial uncovered short option transaction. See Rule 9.15(c). …Interpretations and Policies: No Change.

Supervision of Accounts

Rule 9.8 (a) Duty to Supervise[; Senior Registered Options Principal]. The general partners or directors of [Every] each member organization that conducts a non-member customer business shall [develop and implement a written program for the review of the organization's non-member customer accounts and all orders in such accounts, insofar as such accounts and orders relate to option contracts.] provide for appropriate supervisory control and shall designate a general partner or executive officer, who shall be identified to the Exchange, to assume overall authority and responsibility for internal supervision and control of the organization and compliance with securities laws and regulations. This person, who may be the same individual designated pursuant to substantially similar New York Stock Exchange or National Association of Securities Dealers rules, shall:

1. Delegate to qualified employees responsibilities and authority for supervision and control of each office, department or business activity, and shall provide for appropriate written procedures of supervision and control.

2. Establish a separate system of follow-up and review to determine that the delegated authority

and responsibility is being properly exercised.

3. Develop and implement written policies and procedures reasonably designed to independently supervise the activities of accounts serviced by branch office managers, sales managers, regional/district sales managers or any person performing a similar supervisory function. Such supervisory reviews must be performed by a qualified Registered Options Principal who:

i. Is either senior to, or otherwise independent of, the producing manager under review.

For purposes of this Rule, an “otherwise independent” person: may not report either directly or indirectly to the producing manager under review; must be situated in an


office other than the office of the producing manager; must not otherwise have supervisory responsibility over the activity being reviewed; and must alternate such review responsibility with another qualified person every two years or less. Further, if a person designated to review a producing manager receives an override or other income derived from that producing manager’s customer activity that represents more than 10% of the designated person’s gross income derived from the member organization over the course of a rolling twelve-month period, the member organization must establish alternative senior or otherwise independent supervision of that producing manager to be conducted by a qualified Registered Options Principal other than the designated person receiving the income.

ii. If a member organization is so limited in size and resources that there is no qualified

Registered Options Principal senior to, or otherwise independent of, the producing manager to conduct the reviews pursuant to paragraph (a)(3)(i) of this Rule (for instance, the member organization has only one office, or an insufficient number of qualified personnel who can conduct reviews on a two-year rotation), the reviews may be conducted by a Registered Options Principal in compliance with paragraph (a)(3)(i) of this Rule to the extent practicable.

iii. A member organization relying on paragraph (a)(3)(ii) of this Rule must document

the factors used to determine that complete compliance with all of the provisions of paragraph (a)(3)(i) of this Rule is not possible, and that the required supervisory systems and procedures in place with respect to any producing manager comply with the provisions of paragraph (a)(3)(i) of this Rule to the extent practicable.

iv. A member organization that complies with requirements of the New York Stock

Exchange or the National Association of Securities Dealers that are substantially similar to the requirements in paragraphs (a)(3)(i), (a)(3)(ii) and (a)(3)(iii) of this Rule will be deemed to have met such requirements.

[This program shall be under the supervision of a designated Senior Registered Options Principal who is specifically identified to the Exchange and who is an officer (in the case of a corporation) or general partner (in the case of a partnership) of the member organization. Every member organization shall also develop and implement specific written procedures concerning the manner of supervision of customer accounts maintaining uncovered short (written) option positions and specifically providing for frequent supervisory review of such accounts.] [(b) Compliance Registered Options Principal. Every member organization shall designate and specifically identify to the Exchange a Compliance Registered Options Principal (who may be the Senior Registered Options Principal), who shall have no sales functions and shall be responsible to review and to propose appropriate action to secure the member organization's compliance with securities laws and regulations and Exchange rules in respect of its options business. The Compliance Registered Options Principal shall regularly furnish reports directly to the compliance officer (if the Compliance Registered Options Principal is not himself the compliance officer) and to other senior management of the member organization. The requirement that the Compliance Registered Options Principal shall have no sales functions does not apply to a member organization that has received less than $1,000,000 in gross commissions on options business as reflected in its FOCUS Report for either of the preceding two fiscal years or that currently has 10 or fewer Registered Representatives.] (b) [(c)] Maintenance of Customer Records.


1. Background and financial information of customers who have been approved for options transactions shall be maintained at both the branch office servicing the customer's account and the principal supervisory office having jurisdiction over that branch office. Copies of account statements of options customers shall be maintained at both the branch office supervising the accounts and the principal supervisory office having jurisdiction over that branch for the most recent six-month period. With respect to the record retention responsibility of principal supervisory offices, customer information and account statements may be maintained at a location off premises so long as the records are readily accessible and promptly retrievable. Other records necessary to the proper supervision of accounts shall be maintained at a place easily accessible both to the branch office servicing the customer's account and to the principal supervisory office having jurisdiction over that branch office.

2. Upon the written instructions of a customer, a member may hold mail for a customer who

will not be at his or her usual address for the period of his or her absence, but (A) not to exceed two months if the member is advised that such customer will be on vacation or traveling or (b) not to exceed three months if the customer is going abroad.

3. Before any customer order is executed, there must be placed upon the memorandum for each

transaction, the name or designation of the account (or accounts) for which such order is to be executed. No change in such account name(s) (including related accounts) or designation(s) (including error accounts) shall be made unless the change has been authorized by a member or a person(s) designated by the designated general partner or executive officer (pursuant to Rule 9.8). Such person must, prior to giving his or her approval of the account designation change, be personally informed of the essential facts relative thereto and indicate his or her approval of such change in writing on the order or other similar record of the member. The essential facts relied upon by the person approving the change must be documented in writing and preserved for a period of not less than three years, the first two years in an easily accessible place, as the term “easily accessible place” is used in SEC Rule 17a-4. For purposes of this paragraph (b)(3), a person(s) designated by the designated general partner or executive officer (pursuant to Rule 9.8) must be a Registered Options Principal.

(c) Internal Controls. (i) Member organizations must develop and maintain adequate controls over each of its business activities. Such controls must provide for the establishment of procedures for verification and testing of those business activities. An ongoing analysis, based upon appropriate criteria, may be employed to assess and prioritize those business activities requiring independent verification and testing. A review of each member organization’s efforts with respect to internal controls, including a summary of tests conducted and significant exceptions identified, must be included in the annual report required by paragraph (g) of this Rule. (ii) A member organization that complies with requirements of the New York Stock Exchange or the National Association of Securities Dealers that are substantially similar to the requirements in paragraph (c)(i) of this Rule will be deemed to have met such requirements. (d) Annual Branch Office Inspections.

1. Each branch office that supervises one or more non-branch locations must be inspected no less often than once each calendar year unless:


(i) it has been demonstrated to the satisfaction of the Exchange that because of proximity, special reporting or supervisory practice, other arrangements may satisfy this Rule’s requirements for a particular branch office; or

(ii) based upon the written policies and procedures of such member organization

providing for a systematic risk-based surveillance system, the member organization submits a proposal to the Exchange and receives, in writing, an exemption from this requirement pursuant to paragraph (e) of this Rule.

2. Every branch office, without exception, must be inspected at least once every three calendar-

years. All required inspections must be conducted by a person who is independent of the direct supervision and control of the branch office in question (i.e., not the branch office manager, or any person who directly or indirectly reports to such manager, or any person to whom such manager directly reports). Written reports reflecting the results of such inspections are to be maintained at the member organization for the longer of three years or until the next branch office inspection.

3. A member organization that complies with requirements of the New York Stock Exchange or

the National Association of Securities Dealers that are substantially similar to the requirements in paragraph (d)(1) and (d)(2) of this Rule as well as to related requirements in paragraphs (e) and (f) of this Rule will be deemed to have met such requirements.

(e) Risk –Based Surveillance and Branch Office Identification.

1. Any member organization seeking an exemption, pursuant to Rule 9.8(d)(1)(ii), from the annual branch office inspection requirement must submit to the Exchange written policies and procedures for systematic risk-based surveillance of its branch offices. Such policies and procedures should reflect, among other factors, the member organization's business model and product mix. Such policies and procedures must also, at a minimum, provide for:

(i) The inspection of branches where developments during the year require a

reconsideration of such branch’s exemption;

(ii) A requirement that no less than half of the branch offices inspected each year on a cycle basis be done on an unannounced basis; and

(iii) A system to enable employees to report compliance issues on a confidential basis

outside of the branch office chain of command.

2. For purposes of paragraph (e)(1) of this Rule, the risk-based factors to be considered should include, but not necessarily be limited to, the following:

(i) Number of Registered Representatives; (ii) A significant increase in the number of Registered Representatives; (iii) Number of customers and volume of transactions; (iv) A significant increase in branch office revenues; (v) Incidence of concentrated securities positions in customer’s accounts; (vi) Aggregate customer assets held; (vii) Nature of the business conducted and the sales practice risk to investors

associated with the products sold, and product mix (e.g. options, equities, mutual funds, annuities, etc.);


(viii) Numbers of accounts serviced on a discretionary basis; (ix) Compliance and regulatory history of the branch, including:

(A) Registered Representatives subject to special supervision by the member organization, self-regulatory authorities, state regulatory authorities or the Securities and Exchange Commission in years other than the previous or current year; (B) Complaints, arbitrations, internal discipline, or prior inspection findings; and (C) Persons subject to recent disciplinary actions by self-regulatory authorities, state regulatory authorities or the Securities and Exchange Commission.

(x) Operational factors, such as the number of errors and account designation

changes per Registered Representative; (xi) Incidence of accommodation mailing addresses (e.g., post office boxes and “care

of” accounts); (xii) Whether the branch office permits checks to be picked up by customers or hand

delivery of checks to customers; (xiii) Experience, function (producing or non-producing) and compensation structure

of branch office manager; (xiv) Branch offices recently opened or acquired; and (xv) Changes in branch location, status or management personnel.

3. Notwithstanding any policies or procedures implemented pursuant to this Rule, branch

offices that meet any of the following criteria must be inspected no less often than once each calendar year:

(i) Offices with one or more Registered Representatives subject to special

supervision as required by a self-regulatory authority or state regulatory authority during the current or immediately preceding year.

(ii) Offices with 25 or more registered individuals; (iii) Offices in the top 20% of production or customer assets for the member

organization; (iv) Any branch office not inspected within the previous two calendar years; and (v) Any branch office designated as exercising supervision over another branch

office. (f) Criteria for Inspection Programs. An annual branch office inspection program must include, but is not limited to, testing and independent verification of internal controls related to the following areas:

1. Safeguarding of customer funds and securities; 2. Maintaining books and records; 3. Supervision of customer accounts serviced by branch office managers; 4. Transmittal of funds between customers and Registered Representatives and between

customers and third parties; 5. Validation of customer address changes; and 6. Validation of changes in customer account information.


(g) Written Report. By April 1 of each year, each member organization that conducts a non-member customer business shall submit to the Exchange a written report on the member organization’s supervision and compliance effort during the preceding year and on the adequacy of the member organization's ongoing compliance processes and procedures. Each member organization that conducts a public customer options business shall also specifically include its options compliance program in the report. The report shall include, but not be limited to, the following:

1. A tabulation of customer complaints (including arbitrations and civil actions) and internal

investigations. 2. Identification and analysis of significant compliance problems, plans for future systems or

procedures to prevent and detect violations and problems, and an assessment of the proceeding year’s efforts of this nature.

3. Discussion of the preceding year’s compliance efforts, new procedures, educational programs, etc. in each of the following areas: (i) antifraud and trading practices; (ii) investment banking activities; (iii) sales practices; (iv) books and records; (v) finance and operations; (vi) supervision; (vii) internal controls, and (viii) anti-money laundering. If any of these areas do not apply to the member organization, the report shall so state.

4. For each member organization, the designation of a general partner or principal executive officer as Chief Compliance Officer (which designation shall be updated on Schedule A of Form BD).

5. A certification signed by the member organization’s Chief Executive Officer (or equivalent), that:

i. The member organization has in place processes to:

(A) establish and maintain policies and procedures reasonably designed to achieve compliance with applicable Exchange Rules and federal securities laws and regulations, (B) modify such policies and procedures as business, regulatory and legislative changes and events dictate, and (C) test the effectiveness of such policies and procedures on a periodic basis, the timing and extent of which is reasonably designed to ensure continuing compliance with Exchange Rules and federal securities laws and regulations.

(ii) In member organizations, the Chief Executive Officer (or equivalent officer) conducted one or more meetings with the organization’s Chief Compliance Officer during the preceding 12 months, and that they discussed and reviewed the matters described in this certification, including the organization’s prior compliance efforts, and identified and addressed significant compliance problems and plans for emerging business areas. (iii) In member organizations, the processes described in paragraph (g)(5)(i) of this Rule, are evidenced in a report reviewed by the Chief Executive Officer (or equivalent officer), Chief Compliance Officer and such other officers as the organization may deem necessary to make this certification, and submitted to the organization’s Board of Directors and Audit Committee (if such committee exists) on or before April 1st of each year.


(iv) In member organizations, the Chief Executive Officer (or equivalent officer) has consulted with the Chief Compliance Officer and other officers referenced in paragraph (g)(5)(iii) of this Rule and such other employees, outside consultants, lawyers and accountants, to the extent they deem appropriate, in order to attest to the statements made in this certification.

A member organization that specifically includes its options compliance program in a report that complies with substantially similar requirements of the New York Stock Exchange or the National Association of Securities Dealers will be deemed to have met the requirements of this Rule 9.8(g) and Rule 9.8(h). (h) Reports to Control Persons. By April 1 of each year, each member organization shall submit a copy of the report that Rule 9.8(g) requires the member organization to prepare to its one or more control persons or, if the member organization has no control person, to the Audit Committee of its Board of Directors or its equivalent committee or group. In the case of a control person that is an organization (a "controlling organization"), the member organization shall submit the report to the general counsel of the controlling organization and to the Audit Committee of the controlling organization's Board of Directors or its equivalent committee or group. For the purpose of this paragraph, "control person" means a person who controls the member organization within the meaning of Rule 1.1(k). …Interpretations and Policies: .01 [The Senior Registered Options Principal, in meeting his responsibility for supervision of non-member customers' accounts and orders, may delegate to qualified employees responsibility and authority for supervision and control of each branch office handling options transactions, provided that the Senior Registered Options Principal shall have overall authority and responsibility for establishing appropriate procedures of supervision and control over such employee.] [.02 Every] each member organization that conducts a non-member customer business shall establish, maintain, and enforce written procedures which detail the specific methods used to supervise all non-member customer accounts, and all orders in such accounts [, insofar as such accounts and orders relate to option contracts]. Such written procedures shall specifically identify the titles and positions of individuals who have been delegated authority and responsibility for an identified segment of the member organization’s business, including option compliance functions. The procedures shall also include the registration status and location of all such supervisory and compliance personnel. Each member organization shall also develop and implement specific written procedures concerning the manner of supervision of customer accounts maintaining uncovered short option positions, and specifically providing for frequent supervisory review of such accounts. .02 [.03] Each member organization shall maintain at the principal supervisory office having jurisdiction over the office servicing the customer's account, or shall have readily accessible and promptly retrievable, information to permit review of each customer's options account on a timely basis to determine (i) the compatibility of options transactions with investment objectives and with the types of transactions for which the account was approved; (ii) the size and frequency of options transactions; (iii) commission activity in the account; (iv) profit or loss in the account; (v) undue concentration in any options class or classes and (vi) compliance with the provisions of Regulation T of the Federal Reserve Board. .03 Documentation evidencing the annual written report required by paragraph (g) of this rule, must be maintained in a place that is easily accessible and shall be provided to the Exchange upon request.


Discretionary Accounts

Rule 9.10. (a) Authorization and Approval Required. No member organization shall exercise any discretionary power with respect to trading in options contracts in a customer's account unless such customer has given prior written authorization and the account has been accepted in writing by a Registered Options Principal. [The Senior Registered Options Principal] Each firm shall designate specific Registered Options Principal qualified individuals pursuant to Rule 9.8 to review discretionary accounts. A Registered Options Principal qualified person specifically delegated such responsibilities under Rule 9.8 (who is an individual other than the Registered Options Principal who accepted the account) shall review the acceptance of each discretionary account to determine that the Registered Options Principal accepting the account had a reasonable basis for believing that the customer was able to understand and bear the risks of the strategies or transactions proposed, and he shall maintain a record of the basis for his determination. [Each discretionary order shall be approved and initialed on the day entered by the branch office manager or other Registered Options Principal, provided that if the branch office manager is not a Registered Options Principal, his approval shall be confirmed within a reasonable time by a Registered Options Principal.] Every discretionary order shall be identified as discretionary on the order at the time of entry. Discretionary accounts shall receive frequent appropriate supervisory review by [the Compliance Registered Options Principal] a Registered Options Principal qualified person specifically delegated such responsibilities under Rule 9.8, who is not exercising the discretionary authority. (b) No change.

(c) No change. (d) Discretion as to Price or Time Excepted. This rule shall not apply to discretion as to the price at which or the time when an order given by a customer for the purchase or sale of a definite number of option contracts in a specified security shall be executed, except that the authority to exercise time and price discretion will be considered to be in effect only until the end of the business day on which the customer granted such discretion, absent a specific, written contrary indication signed and dated by the customer. This limitation shall not apply to time and price discretion exercised in an institutional account, as defined below, pursuant to valid Good-Till-Cancelled instructions issued on a “not held” basis. Any exercise of time and price discretion must be reflected on the order ticket. As used in this paragraph (d) the term “institutional account” shall mean the account of: (i) a bank, savings and loan association, insurance company, or registered investment company; (ii) an investment adviser registered either with the Securities and Exchange Commission under Section 203 of the Investment Advisers Act of 1940 or with a state securities commission (or any agency or office performing like functions); or (iii) any other entity (whether a natural person, corporation, partnership, trust or otherwise) with total assets of at least $50 million. (e) No change. …Interpretations and Policies: .01 Any member organization that does not utilize computerized surveillance tools for the frequent and appropriate review of discretionary account activity must establish and implement procedures to require Registered Options Principal qualified individuals who have been designated to review discretionary accounts to approve and initial each discretionary order on the day entered.

*****


Chapter XXVI

Market Baskets

Doing Business with the Public Rule 26.10 (a) Applicability of Rules. The provisions of Chapter IX of the Rules shall be applicable to market baskets except as set forth herein. Rule 9.2 (relating to the registration of options principals), Rule 9.7 (relating to the opening of customer accounts), Rules 9.15 and 9.21(d) (relating to the options disclosure document), Rule 9.9 (relating to the suitability of recommendations), Rule 9.11 (relating to the confirmation of transactions), and Rule 9.21 (relating to communications to customers) shall not be applicable to market basket contracts. Whenever Chapter IX of the Rules requires a particular function to be performed by a Registered Options Principal, [(including a Senior Registered Options Principal or Compliance Registered Options Principal),] that function may be performed in respect of market baskets by a principal of the member organization (including a branch office manager thereof) that is registered as such with a national securities exchange or a registered securities association. (b) - (d) No Change. …Interpretations and Policies: No change. _________________________________________________________________________________ SR-CBOE-2007-104 Range Options On August 21, 2007, the Exchange filed Rule Change File No. SR-CBOE-2007-104, which filing proposes to enable the listing and trading of Range Options that overlie any index eligible for options trading on the Exchange. Any questions regarding the rule change may be directed to Jennifer Klebes, Legal Division, at 312-786-7466. The rule text is shown below and the rule filing is available at http://www.cboe.org/publish/RuleFilingsSEC/SR-CBOE-2007-104.pdf.

Rule 6.1 – Days and Hours of Business RULE 6.1. No change . . . Interpretations and Policies: .01 No change. .02 The hours of trading for certain securities are set forth in the Rules listed below: Corporate Debt Security Options – Rule 28.9. Credit Default Options – Rule 20.11. Government Securities Options – Rule 21.10, Interpretation and Policy .01. Index Options – Rule 24.6 Range Options – Rule 20.2 Stocks, Warrants and Other Securities – Rule 30.4

* * * * *

Rule 12.3 – Margin Requirements RULE 12.3. (a) – (l) No change. (m) Reserved. (n) Range Options.



(1) Except as provided below, no Range Option carried for a customer shall be considered of any value for purposes of computing the margin requirement in the account of such customer. (2) Customer accounts having long positions in Range Options shall initially deposit a margin amount equal to at least 100% of the purchase price of such Range Option. (3) Except as provided below, the minimum margin amount on any Range Option carried “short” in a customer’s account shall be the difference between the Maximum Range Exercise Value times the contract multiplier and the proceeds (premium) received from the sale of the Range Option. (4) Except as provided below, each Range Option carried “short” in a customer’s account shall be margined separately. (5) When a Range Option is carried “short” against an existing “long” position in the same Range Option or the writer’s obligation is secured by a “specific deposit” or “escrow deposit” meeting the entire obligation of the Maximum Range Exercise Value times the contract multiplier under the Range Option, such position is deemed “covered” and therefore, no margin is required on the Range Option. …Interpretations and Policies: .01 – .19 No change.

* * * * *

Chapter XX – Range Option Contracts

Introduction The rules in this Chapter are applicable only to Range Options. Trading of Range Options

shall also be subject to the rules in Chapters I through XIX, XXIV, XXIVA, and XXIVB, in some cases supplemented by the rules in this Chapter, except for rules that have been replaced by rules in this Chapter and except where context otherwise requires.

Rule 20.1 Definitions

RULE 20.1. The following terms as used in this Chapter shall, unless the context otherwise indicates, have the meanings herein specified. Range Option (a) The term “Range Option” means a European-style, cash-settled option contract that pays an exercise settlement amount if the settlement value of the underlying index at expiration falls within the specified Range Length. Settlement Value (b) The term “settlement value” means the underlying index value at expiration of the Range Option. Range Length (c) The term “Range Length” means the entire length of the range of values of the underlying index for which the option pays a positive amount if the settlement value of the underlying index falls within the specific Range Length at expiration. The Exchange sets the Range Length at listing. Range Interval (d) The term “Range Interval” means an interval amount that determines the range increments of both the Low Range and the High Range. The minimum Range Interval amount is 5 index points. The Exchange sets the Range Interval at listing. Low Range and Low Range Exercise Value (e) The term “Low Range” means a segment of values along the Range Length (as determined by the Range Interval) that immediately precedes the Middle Range. For a Range Option, if the settlement value of the underlying index at expiration falls within the Low Range, the “Low Range Exercise Value” will be a variable amount that increases along the Low Range as the settlement value of the underlying index at expiration increases and is capped at the Maximum Range Exercise Value.


High Range and High Range Exercise Value (f) The term “High Range” means a segment of values along the Range Length (as determined by the Range Interval) that immediately succeeds the Middle Range. For a Range Option, if the settlement value of the underlying index at expiration falls within the High Range, the “High Range Exercise Value” will be a variable amount that decreases along the High Range as the settlement value of the underlying index increases and is capped at the Maximum Range Exercise Value. Middle Range and Maximum Range Exercise Value (g) The term “Middle Range” means a segment of values along the Range Length that lies between the Low Range and the High Range and its length is equal to the Range Length minus twice the Range Interval. For a Range Option, if the settlement value of the underlying index at expiration falls within the Middle Range, the “Maximum Range Exercise Value” will be a fixed amount that does not vary based on where in the Middle Range the settlement value of the underlying index falls and represents the maximum payout amount for Range Options. The Exchange sets the Maximum Range Exercise Value at listing. Contract Multiplier (h) The term “Contract Multiplier” as used in reference to Range Options means the multiple applied to the exercise value to arrive at the exercise settlement amount per contract. The contract multiplier is established on a class-by-class basis and shall be at least 1 and is expressed in a dollar amount.

Exercise Settlement Amount (i) The term “Exercise Settlement Amount” as used in reference to a Range Option means the amount of cash that a holder will receive and a writer will be obligated to pay upon automatic exercise of the contract. The Exercise Settlement Amount is equal to the exercise value times the contract multiplier.

Rule 20.2 – Days and Hours of Business

RULE 20.2. Transactions in Range Options may be effected during normal Exchange option trading hours for other options on the same index.

Rule 20.3 – Designation of Range Option Contracts RULE 20.3. (a) The Exchange may from time to time approve for listing and trading on the Exchange Range Option contracts that overlie any index that is eligible for options trading on the Exchange. (b) The Exchange may add new series of options of the same class as provided for by the rules governing options on the same underlying index. Additional series of Range Options may be opened for trading on the Exchange when the Exchange deems it necessary to maintain an orderly market or to meet customer demand. The opening of a new series of Range Options on the Exchange will not affect any other series of options of the same class previously opened.

Rule 20.4 – Maintenance Listing Standards RULE 20.4. The maintenance listing standards with respect to options on indexes set forth in Rule 24.2 and the Interpretations and Policies thereunder shall be applicable to Range Options on indexes.

Rule 20.5 – Limitation of Liability of Exchange and of Reporting Authority RULE 20.5. (a) Rule 6.7 shall be applicable in respect of any class of Range Options. (b) Rule 24.14 shall be applicable in respect of any reporting authority that is the source of values of any index underlying any class of Range Options.

Rule 20.6 Position Limits RULE 20.6. (a) In determining compliance with Rules 4.11, 24.4, 24.4A, and 24.4B, cash-settled Range Option contracts shall have a position limit equal to those for options on the same underlying index.


(b) In determining compliance with the position limits set forth in paragraph (a), Range Options shall not be aggregated with option contracts on the same underlying index.

Rule 20.7 – Reports Related to Position Limits and Liquidation of Positions RULE 20.7. Range Options shall be subject to the same reporting and other requirements triggered for options on the same underlying index. In computing reportable Range Options, Range Options shall not be aggregated with options on the same underlying index. In addition, Range Options of a given class shall not be aggregated with any other class of Range Options.

Rule 20.8 – Exercise Limits RULE 20.8. Exercise limits for Range Options shall be the same as those for options on the same underlying index.

Rule 20.9 – Determination of the Settlement Value of the Underlying Index

RULE 20.9. Range Options that are “in-the-money,” or “out-of-the-money” are a function of whether the settlement value of the underlying index at expiration falls within or outside of the Range Length.

Rule 20.10 – Premium Bids and Offers; Minimum Increments RULE 20.10. (a) All bids or offers made for Range Option contracts shall be deemed to be for one contract unless a specific number of option contracts is expressed in the bid or offer. A bid or offer for more than one option contract, which is not made all-or-none, shall be deemed to be for that amount or any lesser number of option contracts. An all-or-none bid or offer shall be deemed to be made only for the amount stated. (b) All bids or offers made for Range Option contracts shall be governed by the Rule 24.8.

Rule 20.11 – Automatic Exercise of Range Options RULE 20.11. Range Options will be automatically exercised at expiration if the settlement value of the underlying index falls within the Range Length.

Rule 20.12 – FLEX Trading

RULE 20.12. Range Options shall be eligible for trading as Flexible Exchange Options as provided for in Chapter XXIVA and XXIVB. For purposes of Rules 24A.4 and 24B.4, the parties shall designate the Range Length, Range Interval and Maximum Range Exercise Value. Rules 24A.9 and 24B.9, regarding the minimum quote width, shall not apply to Range Options. _________________________________________________________________________________ SR-CBOE-2007-103 iShares FTSE/Xinhua China 25 Index Fund On August 17, 2007, the Exchange filed Rule Change File No. SR-CBOE-2007-103, which filing proposes to trade the iShares FTSE/Xinhua China 25 Index Fund (FXI) pursuant to unlisted trading privileges. Any questions regarding the rule change may be directed to Angelo Evangelou, Legal Division, at 312-786-7464. The rule filing is available at: http://www.cboe.org/publish/RuleFilingsSEC/SR-CBOE-2007-103.pdf. _________________________________________________________________________________



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