Debbie Koopman - Edward Tilly - Executive Vice Chairman and Executive Vice Chairman of CBOE Alan Dean - Chief Financial Officer, Executive Vice President of Finance & Administration and Treasurer William Brodsky - Chairman, Chief Executive Officer, Chairman of Executive Committee, Chairman of Chicago Board Options Exchange Incorporated and Chief Executive Officer of Chicago Board Options Exchange Incorporated

Niamh Alexander - Keefe, Bruyette, & Woods, Inc. Matthew Heinz - Stifel, Nicolaus & Co., Inc. Alex Kramm - UBS Investment Bank Edward Ditmire - Macquarie Research Patrick O'Shaughnessy - Raymond James & Associates, Inc. Surinder Thind - Jefferies & Company, Inc. Rob Rutschow - Credit Agricole Securities (USA) Inc. Gaston Ceron - Morningstar Inc. Michael Carrier - Deutsche Bank AG Kenneth Worthington - JP Morgan Chase & Co Howard Chen - Crédit Suisse AG Richard Repetto - Sandler O'Neill + Partners, L.P. Jillian Miller - BMO Capital Markets U.S. Christopher Allen - Evercore Partners Inc. Roger Freeman - Barclays Capital Justin Schack - Rosenblatt Securities Daniel Harris - Goldman Sachs Group Inc.

Good day, ladies and gentlemen, and welcome to today's CBOE Holdings Second Quarter 2011 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. At this time for opening introductions, I would like to turn the call over to Ms. Debbie Koopman, Director of Investor Relations. Please go ahead.

Thank you. Good morning, and thank you for joining us on our second quarter conference call. On the call today, Bill Brodsky, our chairman and CEO, will discuss the quarter and our continued progress in executing our strategic initiatives; then Alan Dean, our Executive Vice President and CFO, will detail our second quarter 2011 financial results. Following their comments, we will open the call to Q&A. Also joining us for Q&A is our Executive Vice Chairman, Ed Tilly. In addition, I'd like to point out that this presentation will include the use of several slides. We will be showing the slides and providing commentary on each. A downloadable copy of the slide presentation is available on the Investor Relations portion of our website. As a preliminary note, you should be aware that this presentation contains forward-looking statements, which represent our current judgment on what the future may hold. And while we believe these judgments are reasonable, these forward-looking statements are not guarantees of future performance and involve certain assumptions, risks and uncertainties. Actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statements. Please refer to our filings with the SEC for a full discussion of the factors that may affect any forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise after this conference call. Now I'd like to turn the call over to Bill Brodsky.

Thank you, Debbie, and good morning. I'm very pleased to be here today to share outstanding results for CBOE Holdings Second Quarter 2011. Revenues were up 7%, net income allocated to common stockholders increased 32% and earnings per share grew 33% over the prior-year period. The company's operating margin was at its highest level in 10 quarters. Significantly, this strong performance was posted despite a general slowdown in the economic recovery in April and May that made for sluggish markets and depressed trading levels industry-wide. CBOE Holdings averaged 4.4 million option contracts per day in the second quarter of 2011, a significant decrease from the second quarter of 2010 when average daily volume spiked to 5.29 million contracts as a result primarily of the May 6 Flash Crash. As mentioned, U.S. markets generally languish in the second quarter of 2011, further compounding the challenging 2010 comparison. However, we were pleased to see trading volumes begin to pick up for the end of the quarter when in June, total option's average daily volume at CBOE Holdings increased 10% over June of 2010. Increased trading activity continued into the third quarter when option's average daily volume in July rose 19% over the same period last year. As a result, year-to-date option volume through July at CBOE Holdings is down just 2% from the close of July last year despite extraordinary volume spikes in May of 2010. Given the recent uptick in trading activity, we are optimistic that we can make up more ground during the remainder of 2011. The benefits of product diversification at CBOE play out against virtually any market backdrop, even amidst overall dampened volume levels in the second quarter, we still saw noteworthy bright spots. In the second quarter of 2011, trading of VIX futures increased 190% and trading…

Thank you, Bill, and good morning, everyone. As you saw from this morning's second quarter earnings release, we achieved another strong quarter, highlighted by a 33% increase in diluted earnings per share to $0.36 and increased cash flow from operations over the second quarter of 2010. This continued solid performance, along with the previously discussed actions to return significant cash to stockholders, is consistent with our optimism about CBOE's prospects and demonstrate our ongoing commitment to deliver value to stockholders. Now let me begin with an overview of our operating results. For the quarter, operating revenues were up 7%, operating income grew 35% and operating margins increased by 980 basis points to 46.9%, the highest in the last 10 quarters. Looking at the P&L in more detail, as shown on Slide 18, operating revenues increased to $120.3 million in the second quarter. This improvement resulted from a $14.7 million increase in access fees offset somewhat by a $7.8 million decrease in transaction fees. In addition, Other revenues increased primarily due to higher revenue from licensing fees and other miscellaneous items. The increase on access fees compared with last year's second quarter resulted primarily from the implementation of a new trading permit program following our demutualization in June of last year. Next quarter will mark the anniversary of the new access programs so the numbers will be more comparable. However, the year-over-year comparison will be impacted by the sliding fee scale we implemented in January, where market-maker trading permits used in multiple listed products, whereby our form was committed to a certain number of permits for the full year. We are holding our full year guidance of $65 million to $68 million for access fees. As I pointed out in our previous call, the demand for trading permits fluctuates with market…

At this point, we would be happy to take questions. We ask you that you please limit your questions to one per person to allow time to get to everyone, feel free to get back in the queue. And if time permits, we'll take second questions.

[Operator Instructions] Our first question is from Rich Repetto with Sandler O'Neil. Richard Repetto - Sandler O'Neill + Partners, L.P.: I hate to be so narrow on the question, but the trading incentives, Alan, so dramatically dropped. Your expenses were certainly -- drove a lot of upside here. Can you give us -- I know you revise the pricing when you have to route out. What was the difference quarter-to-quarter in the trading incentives? Volume incentives?

Yes. As I mentioned in my prepared remarks, volume was down in the multi-list products quarter-over-quarters, equity and ETF. When you compare the 2 product lines, that was down. So that accounted for a significant reduction in the line item. And as you insinuated, we reduced the threshold at which we will pay for the way exchange fees when we route a customer order to another exchange. So we've been working hard on this line item for a while, trying to trim it down as best we can while still doing what we think is best for our customers and the exchange in general. And so we're very happy with the results that we saw this quarter.

Our next question is from Chris Allen of Evercore.

Just wanted to ask on SPXpm. Obviously, it's in the SEC's hands. But I mean how are you addressing the push backs there and how do you think it's progressing? And if it does go against you, what's your backup plan in case you need to scrap SPXpm and go a different route?

First of all, the SEC is using a different process than they have used before. So what we've just been through has been a new thing. Quite frankly, I was pleased to see that there was only one negative comment letter, not surprisingly, from ISC because they tend to oppose anything we try to bring forward. But we addressed all of the comments in our rebuttal letter. So #1, it's moving along. The timing is such that the SEC has under the present procedure until June 6 to either approve it or disapprove it or extend its review by a final 60-day period. Having said that, delays in approval, historically, are not unusual. I remain cautiously optimistic about it. But that said, there are no guarantees. So we do have contingencies. But it would be premature to discuss them at this point.

Our next question is from Alex Kramm with UBS.

Just want to touch base quickly on the buyback here. Can you give us a little bit more color in how you seek to approach that over the next few quarters? I mean you've got $106 million in cash, you throw off like $25 million to $30 million a quarter. And maybe give us an update of how much cash you actually need on your balance sheet to run the business so we have a better idea of -- the stock, obviously, has come down a lot here. So I would expect you being a little bit more opportunistic right now.

I think, Alex, opportunistic is the key word. We plan to be opportunistic. And we do generate significant cash as you mentioned. We don't plan on borrowing nor will we borrow any money to fund the stock repurchase. We have adequate cash reserves on our balance sheet. And we'll generate additional cash in the future. We need about $40 million to $60 million in cash on our balance sheet to comfortably run the business. So with that level, you can see that we can easily come up with $100 million to do the stock repurchase.

Our next question is from Jillian Miller of BMO Capital.

So you mentioned in your comments that you have a number of new VIX products kind of in the pipeline to launch in the second half. I just wanted to get some more detail there on what those products might be.

We don't get into new products before we announce them. So if we haven't announced them yet -- we're not going to announce them at this time. But this is something -- we always have a pipeline. And one of the things that I think is terrific right now is that the marketplace is recognizing the value of the VIX product line, not only in terms of the index values that we disseminate, but also the products that we're trying to create through VIX. And as I said, we've launched a very heavy educational effort through our Options Institute, training people about VIX. So this is all part of a bigger package that as you come up with a whole new concept in trading, which is a volatility suite, we have to educate parallel to bringing on new products.

Our next question is from Howard Chen of Credit Suisse. Howard Chen - Crédit Suisse AG: My question's on the competitive landscape. Bill, I heard your comments loud and clear on balancing revenue growth with market share. But we are seeing others in recent quarters consolidate on some of their single equity options market share and now that you see AmEx potentially semi-mutualizing, I just wanted an update on how you're all thinking about the competitive landscape and some of the things that are coming off.

Howard, I think that what's important is that the industry really is broken into 2 groups: you have the commoditized products and you have the premium products. And we don't want to yield any market to anybody. But quite frankly, we continue to battle every day in the multiply listed area. But our growth story stems from our leadership role in index products and the volatility suite. So even in the lackluster quarter we just went through, we believe that we've knocked the cover of the bowl in the VIX and the futures and options. That's our growth edge. So we're going to be a competitive business. But we think we can add tremendous value by what we bring to the table that nobody else does.

Our next question is from Daniel Harris of Goldman Sachs.

I just want to go back to your commentary around the trading volume incentives and the earlier answers to the questions. So obviously, you made some changes this quarter. I just want to talk about the sustainability. Historically, that number has been roughly about 14% of the single-name and ETF fees that dropped about 7% this quarter. Is that sort of the run rate we should be looking for going forward or is there any sort of issues in the mix shift this quarter that drove that down?

No, nothing in the one-time nature this quarter that would make it an aberration going forward. To expand on my earlier answer, in the past, we would reimburse the way exchange fees if the size of the order was under 500 contracts. And so that cost us a lot of money. What we did during the quarter is we reduced that threshold from 500 contracts to 100 contracts. So if the order size is 100 or less, we paid the way exchange fees. And that reduction meant a lot for us combined with the reduction of volume.

Our next question is from Dan Fannon of Jefferies and Company. Surinder Thind - Jefferies & Company, Inc.: This is Surinder Thind calling in for Dan Fannon. I just wanted to follow up on the share repurchase program. Can you talk about the process and thinking that the program as being, perhaps, your best use of cash versus maybe being more aggressive in other areas or other investment possibilities, whether it's trying to find partnerships even outside the U.S.?

We exploit all the different issues. As Alan said, I think what's significant in this is that we continue to produce cash. So we do not look at this as precluding us from doing the kind of things you talked about. And we will be opportunistic in terms of how we use the cash that we continue to generate month in and month out. So this is not something that will exhaust our cash for the foreseeable future, just cash we built up since we have the IPO, even after the tender offer, even after the dividend payments. Alan?

Yes. Also, I want to say that this reaffirms what we've been saying all along in our quarterly earnings calls and meetings with investors is that our priority is making sure that we invest what we need to in our business to make sure it grows at the maximum level that it can. And beyond that, cash should be returned to shareholders unless we have a good reason to keep it. So we looked at all the possibilities, as Bill mentioned, and if something should come along on the acquisition side, some expansion of our business external, that is not organic, we have our balance sheet to lean on. And a debt-free balance sheet is a very good thing.

Our next question is from Matthew Heinz with Stifel, Nicolaus. Matthew Heinz - Stifel, Nicolaus & Co., Inc.: On C2. It looks like you've had some nice sequential momentum there after the May fee adjustment and you just rolled out some complex order functionality. So I guess where do you think you can take the ADV, both the SPXpm rollout, which may be sooner or later. But what levels of volume, I guess, would make you happy as a management team next year?

Bill Brodsky, Matt. The whole C2 rollout has been doing very, very well. And as you can see, we're tweaking the fee structure, and it's been very effective. So I think we'll continue to see a growth in C2. And when SPXpm comes on, that should change it. But until that happens, we're going to just keep growing as we have been organically. And it's always going to give you a little further insight.

So I think we see the potential. We gave guidance for this year in that 1 to 3 percentage range. We still haven't realized the full potential. As you point out, we're looking forward to an S&P 500 product certainly trading on an all-electronic fashion on C2. But pointing to the highlights in the slide that was in the deck, and we can see that in the SPDR and Q volume was pretty terrific for us. So it's certainly something that we'd be shooting for in the other multi-list classes, and it gives us confidence that we're onto the right model. C2 is performing well. The customer experience is a positive one. So I like those numbers. It's something to be shooting for. But we remain in our 1% to 3% range for the remainder of this year. And again, we look very much to launching the S&P 500 pm contract to really help us realize that goal. Matthew Heinz - Stifel, Nicolaus & Co., Inc.: Okay, that's helpful. And then any plans in the future to roll out VIX to C2?

The difference in structure in VIX and the debate whether or not there would be the full benefit that we anticipate for SPXpm is that our users of VIX contracts today can choose to trade VIX in an all-electronic fashion on CBOE's hybrid platform. That of course is different with the current SPXam contract when comparing that to the potential SPXpm all-electronic. So while we haven't ruled it out, the benefit certainly that we see with electrification in the S&P 500 may or may not be a huge benefit for us in VIX, but it's certainly a conversation we're having.

Our next question is from Michael Carrier of Deutsche Bank.

Alan, the tax rate this quarter dipped a bit. If you look across the exchanges, you guys are at the high end. I think one of your neighbors is talking about trying to figure out some initiatives to bring the tax rate down. Just wondering given the higher Illinois tax rate, what your thoughts are on that.

Michael, this is Bill Brodsky. Let me first respond to that and if Alan wants to augment it. We are in dialogue with the officials in the state at the highest level to help them better understand our tax situation, and work to create a better economic climate for business, obviously generally, but also for the kind of business that we're in. So this is a little early to tell you what might occur because as you know, this happened early this year without a lot of warning. And I can tell you I'm personally involved with the highest levels in the state government to see what we can do to help bring this down.

Our next question is from Ken Worthington of JPMorgan. Kenneth Worthington - JP Morgan Chase & Co: On CFE, it's been doing very well. But the volume is really concentrated in that core volatility, the core VIX product. You've launched some new products, you've got some really ones that I would think would be quite attractive, including that Gold VIX product. What's the strategy to build interest in them and kind of diversify the futures platform beyond just launching products? How do you get volume in them?

This is Bill, Ken. Building volume is an art as much as it is a science. In fact, it's more of an art. It's education. It's getting the right markets makers. It's interesting people who might be the more likely users. We are developing a major initiative to take the whole CFE to a new level. We now are trading at the rate of 1 million contracts a month at CFE. I would dare to say it's probably the most successful new futures of initiative in many, many years, and we are working on that. We have an Oil VIX product as well. So there's a whole host of things we're doing, including working with the futures community, which is different than our normal user base. So it will take time, but we know how to do it. We've launched products and it often takes a while to get it really where you want it to be. Kenneth Worthington - JP Morgan Chase & Co: Can you guess on timing?

Very hard to guess on timing on that as there are many factors. But I will tell you that we're seeing -- if you look at the VIX futures, in particular, that's being fueled by these ETNs, where we have literally dozens of ETNs near to the VIX. And we're working with the managed futures community, which we think is the next logical place to go to build interest because they understand the commodity-based VIX products better than the securities firms would understand the S&P 500 VIX products.

Our next question is from Justin Schack of Rosenblatt Securities.

On complex orders, there's a lot of focus on the industry on those different exchanges, instituting new pricing, you guys going on the Web [ph]. Can you give us a sense of what the size of the market is there, how much of the total options market comes from the complex options side?

I'm going to ask Ed Tilly to respond to that, Justin --

It is a growing interest here at CBOE. And I think someone mentioned earlier, we did add the functionality to C2, so that for the first time at CBOE Holdings, our market makers can actually rest orders in our complex order books. We think that's a huge value add for our market maker and liquidity base. But if we look at volume across the industry, I think we'd put it in the high teens, low 20s in the percentage, but of course, differs by product and primarily a statistic and a fine note here that it may not get into this morning. I'd be happy to furnish more numbers in complex orders looking forward. But rest assured it is a priority here and you can watch us as we roll out enhancements to that complex order book. And as I say again, I'll reiterate, most recently adding the functionality for market makers on C2, that's a first here for CBOE Holdings.

Our next question is from Gaston Ceron of MorningStar.

Just a quick follow-up on the SPXpm situation with the SEC. I know you guys took a few questions on that already, but if you would indulge me with one quick more. Just wondering, you said something to the effect of that you're seeing sort of a new process from the SEC or a different kind of a process in evaluating these product launches. How is that going to affect, not so much as the SPXpm because that's already in the pipeline well advanced, but more like product development going forward? I mean should we kind of assume that everything will take as long as this product has in the future or what's your guidance on that from the commission?

That's a great question and I don't have a great answer for you because we actually work hard with a couple other exchanges to get a provision in the Dodd-Frank legislation that's forced on the SEC specific hard deadlines. Because in the past, there were delays that would seem infinite. If this seems long for you, in the past they were longer. And so various exchanges got together and say, "This is not fair. We're going to give the SEC through the statute hard deadlines." So what you're seeing now is the statute being played out where the SEC is being -- actually has hard deadlines that they have not chosen, the statute imposes that on them. So this is kind of a test case. And I think it's going to be as much a function of the nature of the product and what we ask of them. So there may be products that don't create issues to them, that things will be a lot faster. This is related to, from our perspective, because we bring up more new products, more novel products, and we were frustrated that SEC was taking so long. So in a perverse way, we're now being -- this is now being used as it relates to us in the case of first impression. But it related very specifically to when we took -- it took 3.5 years for the SEC to approve GLD options. And so I helped lead the effort in Washington and say, "3.5 years? This is ridiculous, and look at the way that thing trades." So this is procedural. It could work for us, and I think in some respects, it's much more favorable for us because it has finite deadlines where in the past, it literally went on for years.

Our next question is from Patrick O'Shaughnessy from Raymond James. Patrick O'Shaughnessy - Raymond James & Associates, Inc.: So obviously, your overall rate per contract went out because of the makeshift towards indexes. But even in the index product group itself, we saw a nice sequential increase from the first quarter to the second quarter. How much of that is due to the VIX options contracts growing faster than the SPX? Or what else is taking place to make that index rate per contract go up?

Pat, that's probably a part of it, I don't have those numbers right in front of me. I'm sure it is part of it. But I think a significant reason why RPC went up beyond the change in the mix is that our sliding fee scales that we have in place. When volume is down, the average rate that we're paid goes up, and that just happens automatically. And so I think that also had a significant impact in the overall RPC.

Our next question is from Niamh Alexander of KBW. Niamh Alexander - Keefe, Bruyette, & Woods, Inc.: Earlier you said when and not if for the S&P going electronic. So I guess we'll watch the space. But my question was going to Alan on the expenses. Your guidance is carrying -- you're almost nearly $10 million ahead of where you're tracking. In the first quarter, you came in below the guidance and you said you'd kind of stick with the guidance. Here, you're bringing it down slightly. But it still looks like the expenses should go up. I mean what's driving up those expenses in the next few quarters?

It's easier to tell you what we reduced in the first half of this year rather than what will go up and maybe that will help you in coming to an answer. What we looked at is employee costs in the first half of the year. So hiring, incentive compensation, we focused on outside services dramatically for the first half of the year. Travel and promotion, another area that we looked at, very hard and training volume incentives also, there's a couple of questions on that so far this morning. So what we try to do is in periods where we see lackluster volume, we can dial down expenses somewhat, not completely, nor do I think we should it in a drastic way. These are short-term things that we're able to that in terms of delay or elimination or reduction. And we'll do it again if we see volume trail off. And I hope that gives you the color that you're looking for. Niamh Alexander - Keefe, Bruyette, & Woods, Inc.: Okay. Fair enough, Alan. So if volume kind of stays at similar levels, then you'll probably come in below the guidance then. Is that fair?

Well, I would say that if I -- I saw that July has been a very good month. August is starting out wonderfully. So current levels is -- I wouldn't compare current levels to what we saw in April and May, for instance. June was a little bit better. So no, current levels I think is a lot better than what we saw earlier in the year.

Our next question is from Ed Ditmire of Macquarie.

Because of a bifurcated financial market regulation in the U.S., you have to host your VIX futures on a separate platform or the term regulatory structure, et cetera. Can you quantify how much this has cost CBOE in terms of the costs that wouldn't exist if you could trade these products on your existing option exchanges?

This is Bill Brodsky. We host VIX futures on the same trade engine that we host CBOE. One, the basic option exchange, C2, the CFE. So we've built our electronic systems so that it could trade stocks, futures and options and it does that today. It was built that way. I would tell you that there's no significant cost because of the bifurcated situation. The bifurcated situation creates a problem for us when we try to do these different products, which is what I was referring to in the question a few minutes ago from the MorningStar gentleman. That's where this becomes an issue. That's why we actually put that language in Dodd-Frank bill because the hangup sometimes becomes SEC-FTC. So it tends to be more what I'll call, "regulatory rather than systems or operating expenses."

Maybe I'll just ask it in a different way. Do you think a large-scale incumbent futures player could make more money off these popular products than you could?

I don't know. Right now our margins are very good. We're very happy with where we are right now.

Our next question is from Rich Repetto of Sandler O'Neill. Richard Repetto - Sandler O'Neill + Partners, L.P.: Just a follow-up. Bill, you mentioned Dodd-Frank and the OTC derivative opportunity. I wonder if we get more specific what your opportunity, and I guess I'm looking at the S&P 500 options, the over-the-counter options and how your licensing might benefit you if the over-the-counter options and the S&P 500 have to be cleared and the arrangement with the DTCC.

Yes, Rich, I think there are a couple of things mixed up there. But fundamentally... Richard Repetto - Sandler O'Neill + Partners, L.P.: Excuse me, OCC.

Yes, OCC. So what we did last May, a year ago, before Dodd-Frank had even passed, is we amended our contract with S&P to the extent that if Dodd-Frank, that was then in process but hadn't been signed, were to require the clearing of OTC derivatives as it related to S&P 500 index options, which are the very commonly used in OTC derivatives, if the legislation were to require that they be centrally cleared, that CBOE would get a financial benefit. If we were clear at OTC or theoretically, some other clearinghouse, even if we didn't trade it, that was a major modification to our contract. It speaks to the relationship we have with S&P to be able to amend the contract when need be, and that sits there pending all the things that are going on in Washington now as it relates to what the rules and regulations will be on centralized clearing of OTC products. And in the equity derivative space, it's our understanding that the S&P 500 is the most commonly used vehicle for OTC option trading. Richard Repetto - Sandler O'Neill + Partners, L.P.: Okay, that's very helpful. So there is an agreement, I'm sure you're not going to outline it, but there is going to be revenue if it's forced to be cleared.

Right. And actually, we signed that right before IPO. It was in the S1.

Rich, this is Alan. The revenue structure in the agreement allows us to realize fees that are comparable to what we realize on our trading floor today for SPX. So we try to be -- structure the change in the contracts so that we wouldn't be negatively impacted.

Yes. And Ed Tilly wants to add one more aspect to that, Rich.

Rich, you asked a great question. We're focused a lot on the opportunities coming out of the rule-making process. And I don't want you to forget that if the incentives that come out of rule making, whether it's by margin or the handling required that OTC trades need to be exposed to a lit market, then CBOE's electronic flex mechanism leads the industry in its automation and its functionality. So we have the ability to automate exchange lookalike OTC contracts by using our CFLEX system. And then ultimately, as we continue to pound the table over the benefits of an SPXpm contract that can bench a pm settlement, was really attractive ultimately to OTC players. And it's one of our key focuses. So we think we have the 3 most obvious moves of OTC to listed, that being directly to OTC clearing, a lit market through our CBOE Flex system and then ultimately, the most transparent market in a pm settled all-electronic contract on C2.

Our next question is from Roger Freeman of Barclays Capital.

I know a lot's been covered. I just to come to 2 things hopefully haven't been fully vetted out. Just on the share buyback. I saw the comments about the cash, sort of minimum cash balance, you want to keep it. Just want a perspective, I'm thinking if from the members, right? The lockups are now over members a lot still. And is part of your thinking around buybacks at all tied to when you are getting indications that there may be built-up interest in selling and you want to try to help manage that process?

Roger, Alan here. No, that wasn't the motivator. We saw an increased selling pressure resulting from the last lockup. We evaluated all the alternatives available to us and decided on our approach of raising the dividend by 20%, which we did, and combining with the stock repurchase. So it wasn't motivated by that. We believe in the long-term prospects of CBOE and believe that this approach, this comprehensive approach, was in the best interest of our shareholders, all of them.

And I'll just add, Roger, whatever selling pressures there might have been in the past has been mitigated by institutional buyers, who I'm sure, recognize the long-term intrinsic value of our franchise.

Yes, absolutely, okay. And then the other thing is on the VIX product, not looking for specifics but just more generally speaking, do you have more interest from dealers, like what some of Barclays has done in terms of the, ETN, new dealers or existing ones that are looking to launch new products with you?

We have an ongoing dialogue with a variety of major players who recognize that they don't want to be recommending a Barclays product to their clients. They want to make their own products. There's continued interest in the area, notwithstanding the volatility of volatility.

So there's some more specific. There are 40 to 50 sponsored and licensed ETNs that track different ranges of volatility in the volatility curve, and the most successful, obviously, Barclays in that short-term volatility exposure. But there are others certainly, as Bills points out, roughly 40 to 50.

And do you think that when we get into -- we're in, obviously, a period of more volatility seeing the VIX move up again, and we had been in a declining period. Do you think that will spark more interest? I know it's just very short term here. But were that to persist, do you think that might generate more dialogue?

We can't help but do that. Again, I think that VIX, as a new frontier, we are just in the beginning stages. You can look at it from an institutional point of view. People now look at VIX, They can't not pay attention to it. But it is a learning curve, and we're going to be at the forefront of it. We just came with a new book on trading VIX. And volatility spikes tend to take the whole VIX thing to a new level. So we've seen this a couple of times. It grows even when there isn't volatility, but it's going to grow more when there is volatility.

I think you might have missed Bill's prepared comments. But launching the CBOE VIX Tail Hedge Index really plays to those that have already adapted VIX in their portfolio and need a benchmark to track their success. So we have details out on our website on that tail hedge index. And we think that's a tool that will bring even more visibility to the benefits of balancing the portfolio with the VIX components.

Our next question is from Rob Rutschow of CLSA. Rob Rutschow - Credit Agricole Securities (USA) Inc.: I wanted to follow up on the C2 launch of S&P. I'm wondering, I don't know if you can tell us the specifics of what the sticking points are with the SEC, but I'm wondering if you can give us a little color on your conversations with them and if you can give us any confidence that they won't delay the launch further given the operational issues that they're having.

Well, first of all, the sticking point, if we want to call it the sticking point, I think it's point of focus is the way I'd like to look at it, is the pm settlement because if you're old enough to remember, which I am, what it brought it about, it was for many, many decades ago, when the New York Stock Exchange specials basically had to close the stock and on Expiration Fridays, it was up against the world and it did not allow for easily handling of imbalances. And there've been incremental changes that have allowed many new products that we have brought on and others along the way that the SEC has allowed a pm settlement, but this product brought back a lot of those issues to them. And that's, if you want to call it a sticking point, that's the sticking point. So I can't tell you exactly what will happen. I can't promise that it will happen on September 3. I can't promise it will happen, period. But if you look at the letters that went out, the circular that they put out, the questions they asked and the lack of response in any meaningful way on the areas that they raised would give me a reason to believe that they now have done a very thorough vetting process. And if there are concerned commentators on these issues, they would've said something. Having said that, I'm in dialogue with the SEC. They are heavily loaded or overloaded on dealing with Dodd-Frank deadlines. That's not a secret. So to a large extent, I think if there are delays, I can't, again, guarantee the results. But I think some of the delays are not related to our issues. They're related to the fact that there's so many deadlines they have to meet.

Our next question is from Justin Schack of Rosenblatt Securities.

Just a quick follow-up on something you had talked about before with the electronic flex options process. Given that the OTC community or the dealers have been wanting to go on exchange with some of this stuff, have you guys considered launching a SEF that would take advantage of that technology?

It's a great question. I think in one of our comments, whether it was a quarterly or we've been public at one of the conferences, we're certainly watching the definitions first of swap dealers in considering building a SEF, whether or not that is an interest to pursue here at CBOE. I think like the rest of the industry, unfortunately, today the answers we're still waiting for definition and clarity on the regulation, even though July has come and gone as the target date. So certainly, we'll never rule that out. It's definitely on our radar. And the process here at CBOE and our technology is to consider SEF and the systems behind operating a SEF as well as, of course, the legal and regulatory hurdles. We will be looking at that and making further comments as definitions come out of the rule making and out of D.C.

I'm showing no further questions in queue at this time. I would now like to turn the call back over to Ms. Koopman for any further remarks.

Thanks to everybody for joining us today. If you have any questions, feel free to give me a call.

Ladies and gentlemen, thank you for your participation. That concludes the conference. You may disconnect, and have a wonderful day.