CBOE2009Annual Report William J. Brodsky Chairman and Chief Executive Officer “CBOE’s focus on a for-profit strategy and adoption of a corporate structure like that of a for-profit business provides CBOE with the flexibility to respond to the demands of a rapidly changing business and regulatory environment.” The year 2009 was a time for the financial industry to take stock of its immediate past, while looking ahead to its future. Most significantly, in the aftermath of the 2008 financial crisis, legislators began crafting new regulations that would not only avert future meltdowns, but change the very framework of the financial system. However these reforms are ultimately designed, when enacted, they will most certainly alter the future course of the financial industry. The Chicago Board Options Exchange (CBOE) played a central role in the regulatory reform dialogue throughout the past year. The Exchange and its executives were sought regularly to provide their viewpoint on industry and market structure issues. CBOE embraces its role as the leading advocate on behalf of the options industry and will remain active on Capitol Hill as the reform initiatives begin to take shape. Just as critical to CBOE’s own future, however, were the major steps taken to complete its demutualization, a process whereby the Exchange is converting its business model from a member owned, non-stock corporation to a new stock corporation, CBOE Holdings, Inc. The transformation of CBOE’s business model is a strategic decision that will provide the agility and flexibility necessary to compete effectively in the options industry. CBOE is now preparing to write the next chapter in its illustrious history. In December 2009, CBOE’s Board of Directors approved plans to pursue an underwritten initial public offering (IPO) of common stock of CBOE Holdings, Inc. with the intent that CBOE’s demutualization and IPO take place concurrently. The goal is to complete both the demutualization and the IPO by the end of June 2010. This defining moment in the evolution of the Exchange would not have been possible without the determined and coordinated efforts of CBOE’s Board of Directors, members and staff. Although the Exchange is changing its corporate structure, it will continue to play an essential role in the global financial system. At its core, CBOE is a self-regulatory organization and it is committed to the goals of providing an open and liquid marketplace for buyers and sellers, providing fair and orderly markets and protecting investors by enforcing the securities laws and the rules that govern its marketplace. The dynamics of the business environment are changing—new rules will alter how global markets operate, while the competition in the U.S. options industry is expected to intensify. CBOE is positioning to meet these new realities. The transformation of CBOE’s business model, combined with its competitive strengths, will be the driving forces of the Exchange’s growth strategy in the years to come. 1 CBOE 20 09 Edward J. Joyce President and Chief Operating Officer Edward J. Joyce President and Chief Operating Officer “The letters ‘CBOE’ CBOE’s innovative spirit also fuels ongoing advancements in trading technology. CBOE have become synonymous with options trading and the Exchange’s leadership role in the industry is recognized worldwide.” CBOE has established itself as the global leader and innovator in the options industry. The Exchange’s expertise in product innovation, technological engineering and industry advocacy is unrivaled. CBOE continues to leverage these competitive strengths to meet the challenges of an evolving options landscape. New product development has been a signature of CBOE since its inception in 1973. The Exchange’s focus on innovation has resulted in a vast array of risk management tools that are essential to making sound investment decisions. CBOE has created numerous products that have shaped the industry—from index options, LEAPS and FLEX options, to its suite of volatility products, benchmarks and strategies—most notably, the CBOE Volatility Index (VIX). Among the recent new product highlights was the launch of options on the S&P 500 Dividend Index. A long list of industry “firsts,” numerous industry awards for innovation, and key index options contracts distinguish CBOE from its peers. owns, operates and maintains its core trading systems and information technology, all of which were built in-house. CBOE’s Hybrid Trading System, which integrates open outcry and electronic trading into a single market, offers customers more choices, a diverse pool of liquidity and the ability to execute complex strategies that may not be available on a screen-based trading system. The Exchange’s Hybrid Trading System is powered by CBOEdirect, one of the most advanced trading platforms in the world. CBOEdirect was designed to be scalable for both capacity and throughput; and can simultaneously support both screen and floor-based trading for multiple trading models, products and matching algorithms. The options trading environment at CBOE supports the activities of nearly 200 trading firms and approximately 1,000 members, representing leading financial and securities firms. This diverse pool of liquidity providers, in combination with the Exchange’s broad range of products and services, offers market participants the markets they require to effectively execute a broad range of trading strategies. Committed to advancing and growing the options industry, CBOE is dedicated to investor advocacy and education. CBOE regularly engages with policy makers on issues that impact the industry and its participants. As the foremost educational authority, the Exchange promotes the responsible use of options through a variety of different forums, including The Options Institute, the Exchange’s educational arm, which is celebrating its 25th anniversary in 2010; www.cboe.com, an award-winning website and the annual Risk Management Conference. 5 CBOE 20 09 2 CBOE 20 09 Edward T. Tilly Executive Vice Chairman “An exchange’s ability to participate in the ongoing growth of the derivatives markets will be driven, in great part, by the trading functionality, products and services that it offers to market participants.” exclusive products that meet the needs of the derivatives industry and enhance the CBOE brand. New, innovative products have the potential to drive trading volumes by attracting new customers to the Exchange and expanding the array of products available to existing customers. The Exchange seeks new opportunities to derive revenue from new and expanded service offerings. For example, through an arrangement with Standard & Poor’s, CBOE licenses the Exchange’s proprietary indexes and methodologies to firms, banks and other exchanges around the world. In March 2010, CBOE and CME Group entered into a license agreement that extends the reach of CBOE’s volatility franchise. CBOE is applying its proprietary CBOE Volatility Index (VIX) methodology to price data of, initially, up to five products listed on one or more of CME Group’s exchanges and is creating new volatility benchmark indexes that it has licensed for use to CME Group. A key component to CBOE’s growth strategy is a commitment to finding new applications As a result of the 2008 financial crisis, over- for its unique products and services that meet the-counter (OTC) market participants have the growing—and changing—needs of the been under pressure from regulators to move marketplace. Expanding the use and appeal much of their trading to an exchange-traded, of these offerings allows the Exchange to organically grow its business by tapping centrally cleared environment. CBOE has developed and refined products and strategies new market segments and reaching potential that target this market segment, including new customers. CFLEX, an internet-based, electronic system that allows participants to customize key CBOE continues to refine its market model and contract terms with the clearing guarantees of enhance its trading platform. CBOE is using its standardized listed options. In addition, CBOE strong in-house development capabilities to eliminated blackout dates for FLEX options in further augment the functionality and capacity 2009, allowing for options trading on dates of the Exchange’s trading environment. To near or on expiration Fridays, and early in 2010, this end, in 2008, CBOE shaped plans for the implemented two pilot programs that eliminate creation of a separate all-electronic options the minimum size values for all FLEX options market—C2 Options Exchange, capable and the PM-settlement restrictions for FLEX of trading all CBOE products. C2 received index options. regulatory approval in 2009 and is expected to launch in 2010, as CBOE awaits guidance from By taking steps to build the value of its business the SEC on several key market structure issues. and retain its leadership position in the industry, CBOE is building on its reputation as the CBOE is well-positioned to meet the challenges of 2010 and beyond. All market participants can industry architect for new product development be assured that CBOE is—and will remain—a by using licensed products, as well as CBOE vital necessity in the options industry. proprietary intellectual property, to create 3 CBOE 20 09 8 CBOE 20 09 CBOE Volume Highlights Total Options Volume In Millions Average Daily Volume In Millions Total Open Interest In Millions 2009 Market Share Total Industry Volume (3.6 billion contracts) 1,193 1,135 944 4.7 4.5 3.8 675 468 2.7 1.9 278 268 247 226 181 CBOE 31% ISE 27% NSDQ/ PHLX NSDQ/ NOM NYSE/ ARCA NYSE/ AMEX BOX 17% 3% 12% 7% 4% 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 CBOE Total Options Volume 2009 By Product (1.1 billion contracts) Total Equity Options Volume In Millions Total Index Options Volume In Millions Total ETF Options Volume In Millions 635 604 259 230 223 501 391 276 158 115 330 277 213 126 77 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 Equity 56% Index 20% ETF 24% 4 CBOE 20 09 CBOE Financial Highlights Total Operating Revenues In Millions Net Income In Millions $417 $426 $344 $83 $115 $106 $253 $201 $42 $11 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 Operating Margin Percentage Operating Income In Millions 44.9% 41.7% 39.6% $187 $178 $136 26.9% 10.4% $68 $21 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 5 CBOE 20 09 12 CBOE 20 09 Office of the Chairman William J. Brodsky Chairman of the Board and Chief Executive Officer Edward J. Joyce President and Chief Operating Officer Edward T. Tilly Executive Vice Chairman Bradley G. Griffith Vice Chairman (served January through July) 2009 Board of Directors Robert J. Birnbaum Public Director Former President New York Stock Exchange American Stock Exchange James R. Boris Public Director Lead Director Retired Chairman and Chief Executive Officer EVEREN Securities, Inc. Mark F. Duffy Floor Director Managing Member Cornerstone Trading, LLC General Partner Fugue David A. Fisher Off-Floor Director Chief Executive Officer optionsXpress Holdings, Inc. Chairman of the Board optionsXpress, Inc. Janet P. Froetscher Public Director President and Chief Executive Officer National Safety Council Paul Kepes At-Large Director Managing Director CTC, LLC Stuart J. Kipnes At-Large Director President Associated Options, Inc. Duane R. Kullberg Public Director Former Chief Executive Officer, 1980–1989 Arthur Andersen & Co., S.C. Benjamin R. Londergan Floor Director Chief Executive Officer Group One Trading, LP R. Eden Martin Public Director Of Counsel Sidley Austin LLP President The Commercial Club of Chicago Anthony D. McCormick Off-Floor Director (served January through September) Vice President Equities and Options Charles Schwab & Co., Inc. Kevin L. Murphy Off-Floor Director Managing Director Head of U.S. Broker Dealer Sales Citigroup Global Markets, Inc. Roderick Palmore Public Director Executive Vice President, General Counsel and Chief Compliance and Risk Management Officer General Mills Susan M. Phillips Public Director Former Governor Federal Reserve Board Dean School of Business and Public Management The George Washington University William R. Power Lessor Director Member Chicago Board Options Exchange 6 CBOE 20 09 Samuel K. Skinner Public Director Former Chairman of the Board USF Corporation Former Chief of Staff and Former U.S. Secretary of Transportation Under President George H.W. Bush John E. Smollen Floor Director Managing Director Goldman Sachs & Co. Carole E. Stone Public Director Former Director New York State Division of the Budget Howard L. Stone Public Director Retired Senior Managing Director American Express Tax and Business Services Eugene S. Sunshine Public Director Senior Vice President Business and Finance Northwestern University Jonathan B. Werts Off-Floor Director Managing Director Merrill Lynch, Pierce, Fenner & Smith Inc. Standing Committees of the Board Committees of the Membership Audit Committee R. Eden Martin Chair James R. Boris* David A. Fisher Duane R. Kullberg Roderick Palmore Carole E. Stone Compensation Committee Eugene S. Sunshine Chair James R. Boris Bradley G. Griffith R. Eden Martin Anthony D. McCormick† Kevin L. Murphy†† William R. Power Executive Committee William J. Brodsky Chair Robert J. Birnbaum James R. Boris Mark F. Duffy Bradley G. Griffith§ Stuart J. Kipnes R. Eden Martin William R. Power# Eugene S. Sunshine Jonathan B. Werts Floor Directors Committee Bradley G. Griffith§ Chair Mark F. Duffy Paul Kepes Stuart J. Kipnes Benjamin R. Londergan William R. Power** John E. Smollen Governance Committee Janet P. Froetscher Chair Robert J. Birnbaum James R. Boris Paul Kepes Benjamin R. Londergan Kevin L. Murphy William R. Power Samuel K. Skinner John E. Smollen Howard L. Stone Regulatory Oversight Committee Susan M. Phillips Chair Robert J. Birnbaum James R. Boris* Roderick Palmore Samuel K. Skinner Howard L. Stone Special Committee of Independent Directors R. Eden Martin Chair James R. Boris Duane R. Kullberg Eugene S. Sunshine *Ex Officio Non-Voting Member as Lead Director **Non-Voting Member †Served January through September †† Served in December §Served January through July # Served July through December Advisory/Managing Directors Committee Joseph Bile Oppenheimer & Co., Inc. Brian Falls Scottrade, Inc. Peter Bottini optionsXpress Holdings, Inc. Jack Boyle Penson Financial Services, Inc. James Fitzgibbons Susquehanna International Group, LLC Jay Hanlon Merrill Lynch Professional Anthony McCormick Charles Schwab & Co., Inc. (served January through September) Andrew McLeod Morgan Stanley & Co., Incorporated James Boyle UBS Securities, LLC Jeffrey Capretta JPMorgan Chase & Co. Patrick Carroll Compass Execution Services Joseph Dattolo Pershing LLC Michael Domka Interactive Brokers LLC Michael Juneman Citadel Investment Group, LLC Kurt Muller National Financial Services, LLC Andy Kolinsky Citadel Execution Services, LLC Kevin Murphy Citigroup Global Markets, Inc. Christopher Larkin E*Trade Securities, LLC Phillip Muscarella Pershing LLC Edward Lynn UBS Financial Services, Inc. Christopher Nagy Ameritrade/Advanced Clearing John O’Donnell RBC Dain Rauscher Christopher Sandel TradeKing Joseph Sellitto Susquehanna International Group, LLC Scott Spears Wachovia Securities, LLC Jonathan Werts Merrill Lynch, Pierce, Fenner & Smith Inc. J.P. Xenakis Goldman Sachs & Co. 7 CBOE 20 09 Membership Committee Mary Rita Ryder Chair Matthew J. Filpovich Robert B. Gianone Michael J. Guzy, Jr. John J. Kaminsky Stanley E. Leimer Leonard T. Musielak Steven Padley Stuart D. Saltzberg Thomas E. Stern Robert J. Wasserman Nominating Committee Aaron T. Leider Chair Richard W. Fuller, Jr. Howard D. Gillman Sean W. Haggerty Frank A. Hirsch Craig R. Luce Richard A. Lund Martin P. O’Connell Pamela Strobel Richard L. Thomas Product Development Committee Anthony J. Carone Chair Eric H. Chern Boris Furman R. Anderson Groover Robert A. Hocking Jeffrey J. Kupets Gary P. Lahey Joseph Levin Richard A. Lund Israel “Izzy” Nelken Martin P. O’Connell Mario Pelini Dominic J. Salvino Ilan J. Shalit Stephen Sullivan Appeals Committee B. Michael Kelly Chair Thomas R. Beehler Henry Y. Choi David J. Drummond Douglas H. Edelman Joseph A. Frehr Patrick V. Gleason Ann Grady Allen D. Greenberg Mark M. Grywacheski Paul J. Jiganti Richard J. Kevin Michael T. Lyons Patrick J. McDermott John B. Niemann Daniel J. O’Shea Douglas W. Prskalo James P. Rouzan J. David Short Antanas Shurna John Paul Stowick Joseph P. Sullivan, III Arbitration Committee Thomas R. Beehler Chair Alexander M. Ackerhalt Daniel Baldwin Henry Y. Choi Terrence E. Cullen Stephen P. Donahue Douglas C. Draeger David J. Drummond Douglas H. Edelman Brian H. Egert Mark R. Fluger Ann Grady Allen D. Greenberg Mark M. Grywacheski Thomas P. Halliday Thomas A. Hamilton Michael P. Held Andrew J. Hodgman Paul J. Jiganti Joseph G. Kinahan John A. Koltes Kevin Lawless Craig R. Luce Patrick J. McDermott Edward P. McFadden, III Thomas J. Mitchell Joseph D. Mueller Daniel W. Murphy James A. Myers, Jr. John V. Nash Sondra Rabin Duncan W. Robinson James P. Rouzan Bill Shimanek Thomas E. Stern Kevin S. Sullivan Fred Teichert Emily Zweifel Business Conduct Committee Bruce I. Andrews Chair John P. Brown Richard A. Bruder John M. Conway Douglas H. Edelman James P. Fitzgibbons Philip N. Hablutzel John J. Kaminsky Edward F. Kelly Wendy A. Massa Howard Plotkin Scott K. Shaw Margaret E. Wiermanski Election Committee Joanne Moffic-Silver Chair Jaime Galvan Stanley E. Leimer Equity Options Procedure Committee Stuart J. Kipnes Chair Daniel P. Carver Stephen M. Dillinger William J. Ellington Elizabeth Esposito Richard W. Fuller, Jr. Sean W. Haggerty Timothy Hender Eric J. Henschel Frank A. Hirsch Eric J. Levine William P. Lynn David F. Miller, Jr. Benjamin E. Parker Ethan H. Schwartz Eileen Smith Adam R. Walls Financial Planning Committee Bradley G. Griffith Chair Alan J. Dean Mark F. Duffy Paul Kepes Stuart J. Kipnes Benjamin R. Londergan William R. Power John E. Smollen Floor Officials Committee Craig R. Johnson Chair Richard W. Fuller, Jr. Vice Chair Patricia Bachman Edward Barry Michael J. Bartholomew James Corsey James D. Coughlan Robert B. Duddy Jeffery Fried John Haffner Michael J. Hayes Peter J. Heinz, Jr. John T. Kark Aaron T. Leider Sean P. Moran Burt J. Robinson Michael Todorofsky Kerry Winters Robert J. Zaremba Index Options Procedure Committee Benjamin R. Londergan Chair Richard E. Tobin Vice Chair Salvator J. Aiello Eoin T. Callery James D. Coughlan David J. Drummond Timothy P. Feeney Matthew J. Filpovich Howard D. Gillman Peter J. Heinz, Jr. Eric F. Jacobson Michael T. Juneman James W. Lynch Richard T. Marneris Timothy S. McGugan Brian L. Meister Anthony Montesano Terrence J. Moran Christopher Nevins Michael S. Sours Scott F. Tinervia Lessors Committee William R. Power Chair Brendan T.N. Caldwell Steve Fanady Victor C. Faraci James P. Fitzgibbons Ruth I. Kahn Jeffrey T. Kaufmann Jeffrey S. Kirsch Andrew J. Kurtz Richard A. Lund Martin P. O’Connell Michael J. Post Alan E. Ray Robert Silverstein J. Will Vicars Gary Weber Market Quality and Allocation Committee John E. Smollen Chair Paul Kepes Vice Chair Anthony J. Carone John J. Colletti Raymond P. Dempsey Richard S. Dooley James P. Fitzgibbons Joseph A. Frehr Thomas Hutchinson Michael T. Juneman I. Patrick Kernan Andrew Larsen Aaron T. Leider Benjamin R. Londergan Andrew B. Lowenthal Daniel C. Mandernach Gerald T. McNulty Sean P. Moran Kenneth D. Mueller Daniel O’Grady John P. O’Grady Daniel J. O’Shea Joseph P. Perona Matthew W. Scott Aaron Wahls J. Slade Winchester CBOE Clearing Member Firms Advantage Securities LLC Assent LLC Automated Trading Desk Financial Services, LLC Banc of America Securities LLC Barclays Capital, Inc. BNP Paribas Securities Corp. Charles Schwab & Co., Inc. CIBC World Markets Corp. Citadel Trading Group, LLC Citigroup Global Markets, Inc. Compass Professional Services LLC Credit Suisse Securities (USA) LLC Daiwa Securities America Inc. Deutsche Bank Securities Inc. Electronic Brokerage Systems, LLC First Clearing, LLC Fortis Clearing Americas, LLC Goldman Sachs & Co. Goldman Sachs Execution & Clearing LP HSBC Securities (USA) Inc. Interactive Brokers LLC J.J.B. Hilliard, W.L. Lyons, Inc. JPMorgan Clearing Corp. JPMorgan Securities, Inc. Lakeshore Securities, LP Lek Securities Corporation LiquidPoint, LLC Merrill Lynch, Pierce, Fenner & Smith Inc. Merrill Lynch Professional Clearing Corp. MF Global Inc. Morgan Stanley & Co., Incorporated National Financial Services, LLC Newedge USA, LLC Octeg, LLC Oppenheimer & Co. Inc. optionsXpress, Inc. Penson Financial Services, Inc. Pershing LLC Raymond James & Associates, Inc. RBC Capital Markets Corporation RBS Securities Inc. Ridge Clearing & Outsourcing Solutions, Inc. Robert W. Baird & Co. Incorporated SG Americas Securities, LLC Stephens Inc. Stifel, Nicolaus & Company, Incorporated Timber Hill LLC TradeLink LLC Tradestation Securities, Inc. UBS Financial Services, Inc. UBS Securities, LLC Vision Financial Markets, LLC Ziv Investment Company CBOE Futures Exchange (CFE) 2009 Board of Directors William J. Brodsky Chairman and Chief Executive Officer Chicago Board Options Exchange Chairman of the Board CBOE Futures Exchange Lawrence J. Blum Lessor Member Chicago Board Options Exchange Michael Gorham Professor of Finance Illinois Institute of Technology Former Director Division of Market Oversight Commodity Futures Trading Commission Edward J. Joyce President and Chief Operating Officer Chicago Board Options Exchange President CBOE Futures Exchange Bradley G. Griffith Vice Chairman Chicago Board Options Exchange Gerald T. McNulty Managing Director Merrill Lynch, Pierce, Fenner & Smith Inc. Susan M. Phillips Dean and Professor of Finance School of Business and Public Management The George Washington University Former Chairman Commodity Futures Trading Commission Vice Chairman CBOE Futures Exchange (served January through July) CBOE Futures Exchange (CFE) Clearing Member Firms CBOE Stock Exchange (CBSX) 2009 Board of Directors Edward L. Provost Executive Vice President Chicago Board Options Exchange James P. Fitzgibbons Director Susquehanna International Group, LLC Chairman of the Board CBOE Stock Exchange (CBSX) William J. (Chip) Burke III Chief Operating Officer LaBranche & Co., Inc. Bradley G. Griffith Vice Chairman Chicago Board Options Exchange (served January through July) David F. Harris Chief Executive Officer CBOE Stock Exchange (CBSX) Stuart J. Kipnes President Associated Options, Inc. (served September through December) Gerald T. O’Connell Executive Vice President and Chief Information Officer Chicago Board Options Exchange Jeffrey L. Shaw Vice President – Head of Trading Timber Hill LLC Edward T. Tilly Executive Vice Chairman Chicago Board Options Exchange William P. White Managing Director – Equities Division Barclays Capital Advantage Futures LLC Banc of America Securities Electronic Brokerage Systems, LLC Lek Securities Corporation Merrill Lynch, Pierce, Fenner Prudential Bache Commodities, LLC LLC Barclays Capital, Inc. BNP Paribas Securities Corp. Citigroup Global Markets, Inc. Credit Suisse Securities (USA) LLC Deutsche Bank Securities Inc. Fortis Clearing Americas, LLC Goldman Sachs & Co. Goldman Sachs Execution & Clearing LP Interactive Brokers LLC JPMorgan Clearing Corp. JPMorgan Futures, Inc. & Smith Inc. Merrill Lynch Professional Clearing Corp. MF Global Inc. Morgan Stanley & Co., Incorporated Newedge USA, LLC R.J. O'Brien & Associates LLC RBC Capital Markets Corporation Timber Hill LLC TradeLink LLC UBS Securities, LLC Vision Financial Markets, LLC CBOE Stock Exchange (CBSX) Clearing Member Firms Archipelago Securities LLC Assent LLC Banc of America Securities LLC Barclays Capital, Inc. BNP Paribas Securities Corp. BNY ConvergEx Execution Electronic Transaction Clearing, Inc. Essex Radez LLC First Clearing, LLC Fortis Clearing Americas, LLC Goldman Sachs & Co. Goldman Sachs Execution & Solutions LLC Clearing LP Calyon Securities (USA) Inc. Charles Schwab & Co., Inc. CIBC World Markets Corp. Citadel Trading Group, LLC Citigroup Global Markets, Inc. Credit Suisse Securities HSBC Securities (USA) Inc. ICAP Corporates, LLC Instinet, LLC Interactive Brokers LLC ITG Inc. Jefferies Execution Services, (USA) LLC Inc. Deutsche Bank Securities Inc. E*Trade Capital Markets, LLC Electronic Brokerage Systems, LLC JPMorgan Clearing Corp. JPMorgan Securities, Inc. Knight Clearing Services LLC LavaFlow, Inc. Lek Securities Corporation Merrill Lynch, Pierce, Fenner Ridge Clearing & Outsourcing Solutions, Inc. & Smith Inc. Sanford C. Bernstein & Co., Merrill Lynch Professional LLC Clearing Corp. MF Global Inc. Morgan Stanley & Co., Incorporated Nasdaq Execution Services, LLC National Financial Services, LLC Newedge USA, LLC Oppenheimer & Co. Inc. optionsXpress, Inc. Penson Financial Services, Inc. Pershing LLC RBC Capital Markets Corporation SG Americas Securities, LLC Southwest Securities, Inc. Stifel, Nicolaus & Company, Incorporated Timber Hill LLC UBS Financial Services, Inc. UBS Securities, LLC Wachovia Capital Markets, LLC Wachovia Securities, LLC Wedbush Morgan Securities, Inc. Wells Fargo Securities LLC 8 CBOE 20 09 Executive Officers and Staff Officials Executive William J. Brodsky Chairman and Chief Executive Officer Corporate Planning and Research Richard G. DuFour Executive Vice President Edward J. Joyce President and Chief Operating Officer Eric Frait Vice President Strategic Planning Regulatory Services Patrick Fay Senior Vice President Member and Regulatory Services Timothy H. Thompson Senior Vice President and Chief Regulatory Officer Lawrence J. Bresnahan Vice President Member Firm Regulation Daniel R. Hustad Vice President Market Quality Assurance and DPM Administration Margaret E. Williams Vice President Regulatory Services Division Joseph Levin Vice President Research and Product Development Finance and Administration Alan J. Dean Executive Vice President and Chief Financial Officer LuAnn O’Shea Vice President Facilities David S. Reynolds Chief Accounting Officer CBOE and CBOE Holdings, Inc. Systems Gerald T. O’Connell Executive Vice President and Chief Information Officer Mark S. Novak Vice President and Chief Technology Officer Systems Development Roberta J. Piwnicki Vice President Systems Development Gautam Roy Vice President Systems Software Curt Schumacher Vice President and Chief Technology Officer Systems Operations Donald R. Patton Controller and Vice President Accounting James P. Roche Vice President Market Data Services Deborah Woods Vice President Human Resources Legal Joanne Moffic-Silver Executive Vice President, General Counsel and Corporate Secretary Arthur B. Reinstein Deputy General Counsel J. Patrick Sexton Associate General Counsel Edward T. Tilly Executive Vice Chairman Bradley G. Griffith Vice Chairman (served January through July) Business Development Edward L. Provost Executive Vice President Thomas A. Brady Vice President Member Trading Services Cynthia Elsener Vice President Marketing and Educational Services Matthew T. Moran Vice President Institutional Marketing Debra L. Peters Vice President The Options Institute CBOE Futures Exchange Andrew B. Lowenthal Managing Director CBOE Futures Exchange Vice President Business Development, CBOE CBOE Stock Exchange David F. Harris Chief Executive Officer Corporate Communications Carol E. Kennedy Vice President 9 CBOE 20 09 Trading Operations Philip M. Slocum Executive Vice President John T. Johnston Vice President Execution and Reporting Services Thomas P. Knorring Vice President Trade Processing Anthony Montesano Vice President Trading Systems Development Michael Todorofsky Vice President Market Operations Timothy T. Watkins Vice President Trading Systems Development CBOE®, Chicago Board Options Exchange®, CBSX®, CBOE Stock Exchange®, CFE®, CBOEdirect®, Hybrid®, CBOE Volatility Index®, VIX®, LEAPS®, FLEX®, CFLEX® and The Options Institute® are registered trademarks, and C2SM and CBOE Futures ExchangeSM are servicemarks of Chicago Board Options Exchange, Incorporated. Standard & Poor’s®, S&P® and S&P 500® are registered trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by Chicago Board Options Exchange, Incorporated. Other names, logos, designs, titles, words or phrases in this publication may constitute trademarks, service marks, or trade names of Chicago Board Options Exchange, Incorporated or other entities and which may be registered in certain jurisdictions. ©2010 Chicago Board Options Exchange, Incorporated. All rights reserved. Design: Liska+Associates Photography: Tom Maday This annual report contains statements which may be considered forward-looking statements within the meaning of the Securities Exchange Act of 1934, including, without limitation, statements regarding operating strategies, future plans and financial results. Forward-looking statements may be accompanied by words such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “forecast”, “intend”, “may”, “possible”, “predict”, “project” or similar words, phrases or expressions. The Company does not undertake any obligation to update the information contained herein, which speaks only as of the date of this annual report. More detailed information about factors that may affect our performance may be found in our filings with the Securities and Exchange Commission, including our recent Registration Statement on Form S-4 (Registration No. 333-140574) under the heading “Forward-Looking Statements” and/ or “Risk Factors”. Such discussions regarding risk factors and forward-looking statements are incorporated herein by reference. This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state or jurisdiction in which an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. LaSalle at VanBuren Chicago, Illinois 60605 312.786.5600 61 Broadway, Suite 1301 New York, New York 10006 212.344.4110 www.cboe.com 21 CBOE 20 09 22 CBOE 20 09