CBOE Receives Approval From Securities And Exchange Commission For Hybrid 2.0 e-DPM Structure - And Announces New Market Maker Eligibility For Automatic Execution Access On Hybrid

The Chicago Board Options Exchange (CBOE), the world's largest options exchange, today announced that the Securities and Exchange Commission (SEC) has granted approval for the second phase of CBOE's Hybrid market model, Hybrid 2.0, including the creation of electronic-Designated Primary Market Makers (e-DPMs). Hybrid 2.0, building on the success of CBOE's existing Hybrid Trading System, will enable e-DPMs to stream quotes and trade electronically from any location. Implementation of Hybrid 2.0 will begin next Wednesday, July 21st. In a related Hybrid Trading System development, CBOE announced that, effective Monday, July 19th, orders from all options market makers are eligible for automatic execution access in all classes trading on the Hybrid Trading System.

Seven firms have been named to serve as e-DPMs at CBOE; they are:

Citadel Derivatives Group LLC
Citigroup Global Markets
Knight Financial Products
SLK-Hull Derivatives LLC
Susquehanna Investment Group
Timber Hill LLC
Wolverine Trading LLC

"We are very pleased to receive the green light from the SEC for Hybrid 2.0 and the e-DPM initiative," said CBOE Chairman and CEO William J. Brodsky. "We have already seen increased market access, liquidity and depth following the implementation of CBOE's Hybrid Trading System, and Hybrid 2.0 will take those advantages to the next level. The addition of an entirely new class of competing electronic members at CBOE adds a powerful dimension to our trading model, with obvious benefits for traders and customers alike."

The e-DPM designation was created to expand the benefits of the Hybrid Trading System by enabling a wider range of market participants to access the system. These e-DPMs will increase CBOE's universe of liquidity providers by allowing firms to stream quotes electronically into the CBOE Hybrid Trading System from any location.

Hybrid 2.0 also will include Remote Market Makers (RMMs) who will contribute to the CBOE pool of liquidity by remotely streaming quotes and trading electronically. The RMM designation is being created for market makers who prefer to operate solely from outside of the trading crowd. e-DPM and RMM quotes and liquidity will be consolidated with that of in-crowd market participants' through the Hybrid Trading System, resulting in a more robust marketplace with unparalleled liquidity. RMM rules will be subject to regulatory approval.

Market Maker Orders Now Eligible For Automatic Execution Access On Hybrid
In conjunction with the roll-out of Hybrid 2.0 and effective Monday, July 19th, orders from all options market makers (which includes CBOE and away market makers) will now be eligible for automatic execution access in all classes trading on the Hybrid Trading System.

CBOE developed its Hybrid Trading System to further blend the speed and efficiency of electronic trading with the benefits of a floor-based, auction market. The CBOE Hybrid Trading System was launched on June 12, 2003, creating a unique trading model unlike that of any other options exchange.

Currently, there are more than 930 active options classes available for trading via the Hybrid Trading System, representing approximately 95% of U.S. equity options trading volume. CBOE members approved the Hybrid 2.0 initiative through a vote held in December 2003, by a margin of 592 to 163 votes.

More information about the CBOE Hybrid Trading System can be found in a special section of CBOE's website at: http://www.cboe.com/hybrid.

CBOE, the world's largest options marketplace and the creator of listed options, is regulated by the Securities and Exchange Commission (SEC). For additional information about the CBOE and its products, visit the CBOE website at: http://www.cboe.com/.