Good day, ladies and gentlemen, and welcome to the CBOE Holdings Fourth Quarter 2012 Earnings Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded. I would now turn the conference over to your host Debbie Koopman, please go ahead.

Thank you. Good morning, and thank you for joining us for our fourth quarter conference call. On the call today, Bill Brodsky, our Chairman and CEO, will discuss the quarter and our strategic initiatives for 2013; then Alan Dean, our Executive Vice President and CFO, will detail our fourth quarter 2012 financial results. Following their comments, we will open the call to Q&A. Also joining us for Q&A will be our President and COO, Ed Tilly; and our Executive Vice President and Chief Business Development Officer, Ed Provost. In addition, I would 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 would like to turn the call over to Bill Brodsky.

Thanks, Debbie. Good morning, and thank you for joining us today. I am pleased to report that CBOE Holdings posted record fourth quarter financial results, capping of a record setting performance for 2012, despite the year’s well known macro challenges. CBOE’s total options volume for 2012 was down 8% compared to volume declines of 12% in the US options industry, 14% in the US futures trading, and 19% in the US stock market. Our total options and futures average daily volume in the fourth quarter declined 4% from the same period in 2011, offset by 11% increase in average revenue per contract, driven by higher growth rates in our proprietary product lines. Our ability to leverage our higher margin products and to effectively manage our resources enabled CBOE to continue to invest in future growth initiatives and to return increased value to stockholders in 2012. I am pleased to report that our total stockholder return for 2012 was 19%, up from 15% in 2011. Moreover, we began 2013 well positioned to continue to grow and shape the options and volatility space. Alan will take you through the numbers, so the balance of my remarks will focus on how we intend to lead the industry’s secular growth and to further expand opportunities that are unique to CBOE. More than anything, a singular focus on options and volatility trading is what has enabled CBOE to continue to lead and define the industry it created 40 years ago this April. We remain at the forefront by providing investors with innovative solutions to meet their evolving investment needs. Helping customers to execute success is more than a tagline. It is a company-wide vision and mission that translates into customer and stockholder value through a sustained investment in three key areas, product development, trading technology,…

Thanks Bill. Good morning everyone and thank you for joining us. This morning I will take you through our fourth quarter results, as well as provide guidance on certain financial metrics for 2013. We ended 2012 on a strong note, posting record fourth quarter financial results. Our operating revenue for the fourth quarter was $130.1 million, up 8% compared with last year’s fourth quarter. Adjusted operating income was $64.9 million, representing a 49.9% of operating revenue, a 300 basis point improvement in operating margin. Adjusted net income allocated to common stockholders was $38.9 million, up 17% compared with the fourth quarter of 2011, which translates to adjusted diluted earnings per share of $0.45. Before I continue, let me point out that our GAAP results reported for the fourth quarter of 2012 and 2011 include certain unusual items that impact the comparison of our operating performance. These items are detailed in our non-GAAP information provided in the press release and in the appendix of our slide deck. Turning to the details of the quarter, as shown on this chart, the growth in operating revenue was driven by increases in transaction fees, exchange services, and other fees and regulatory fees, offset somewhat by lower access fees. Transaction fees increased $3.8 million, or 4% from last year’s fourth quarter, due to an 11% increase in average revenue per contract, or RPC, compared with last year’s fourth quarter, offset somewhat by a 6% decline in trading volume. If you recall, we lost two trading days in the fourth quarter when all US exchanges closed due to Hurricane Sandy. While total trading volume declined for the quarter, volume in our index options and VIX futures contracts increased, which had a favorable impact on RPC and transaction fees for the quarter. Our blended RPC, including options…

At this point, we would be happy to take questions. We ask 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 will take a second question.

(Operator Instructions) Our first question comes from Richard Repetto from Sandler O'Neill, your line is open.

Yes, good morning Bill, good morning Alan.

Good morning, Richard.

Good morning, Richard.

Congrats. I think this is the 10th straight quarter to be here but – if we are keeping track correctly.

We weren’t keeping track, but it’s nice to hear.

Alan, well – I will leave at that. My question is on – you did a good job, Bill, of outlining the changes in markets, what you are doing to respond to that. I guess, I just wanted to understand on Slide 12 a little bit more, this designated primary market maker model, how it differs and the spread-based pricing, how it differs from what – is that C2 and what’s that CBOE as well?

Yes. It’s really quite innovative. As I said, we are working with the industry to educate them. We had a big meeting with them last week and it was very well received. But I’ll ask Ed Tilly to give you a little bit more detail on that.

Hi, Rich. Good morning.

Good morning.

So, let me dive in to C2 and it is a different story. Just to remind you from our last earnings call that we told you we weren’t really happy with the C2 market share. Remind you that, we developed C2 as an alternative model. So, what you are seeing is completely new to the industry and I will give you a little bit of a highlights. As you pointed out, we saw the share moving from the – paying the liquidity provider to post, that maker-taker model, back to the traditional model that pays for flow. So, we had a choice. We could have got into the race VIP, that is just to continue to make payments from the exchange for orders or come up with something completely different, which is at the end of the day what we did. So we are trying to reward liquidity providers with lower fees for posting tighter markets and tying customer rebates to the width of the spread. So, that’s different than CBOE. So if a customer trades at a very tight market the liquidity provider pays very little deposit and the rebate is small. But if a customer trades in a light quote, we raise the rebate and raise the fee of the liquidity providers. And as Bill pointed out in the prepared comments, this is new to the industry, it’s going to take a little bit of time to get used to. But we think providing fee incentives for tighter markets we would reward either competitive quoting that aligns us with liquidity providers and customers. We didn’t want to continue to participate in the race of just purely paying for flow without offering incentive to tighter markets.

Got it. And C2 was a maker-taker, if I got it correctly?

It was, Richard, you are right, and it continues to be in EPF classes. We do actually quite well on C2 and maker-taker spider for example on IWM, this is really for the multi-list single name classes where we put in the industry’s leading liquidity providers as DPMs to lead the way.

Great. That’s very helpful, thank you.

Our next question comes from Jillian Miller from BMO Capital Markets, your line is open.

Thanks, good morning everyone.

Good morning, Jillian.

Good morning, Jillian.

I just wanted to get a little bit more detail hopefully on the pricing change that you made February 1st. Like what exactly did you change? I know in the past you guys have lowered multi-list fees and then kind of set that with higher index fees and that were kind of neutral in terms RPCs. I am not sure if that’s kind of what happened again this year. Any guidance on the 2013 rate per contract would be helpful?

Jillian, on February 1st, we modified our VIP rebate, increased the rebate and also modified a customer fee that we had in place for certain exchange traded products and for certain order sizes. That was February 1st. The way I am looking at RPC for the year, for 2013, is if volume is similar in the multi-list products for 2013 compared to 2012, I would expect RPC to be similar relative to two years. What if multi-list volume increases, I would expect RPC in those multi-list products to decline and if multi-list volume declines, I would expect RPC in those products to increase. CBOE is uniquely positioned with more than 70% of our transaction fees generated by our proprietary products. However, we must and we will remain competitive pricing on those multi-listed products. So the fee changes that we made on February 2nd were changes that we thought we had to make an order to remain competitive and defend our market share and also to defend other fee categories in our P&Ls, such as access fees, exchange services and other fees, and of course market data revenue was driven by market share. So, that gives you a recap of how I am looking at RPC and the changes we made on February 1st.

Okay. Just to clarify one thing. So there weren’t any direct changes made to the index category, it was all associated with the equity and ETF?

That is true.

Okay. Thank you.

On February 1st, yes.

Got it.

Our next question comes from Alex Blostein from Goldman Sachs, your line is open.

Great. Thanks good morning, everybody.

Good morning.

I was wondering if you guys could give us a little bit more color on the, obviously very significant volume growth you are seeing in VIX futures? You highlighted a number, I guess, new adapters and just kind of going through different users that are picking up the product. Maybe you could spend a little bit of time on kind of giving us more sense on who – which one of these, I guess, maybe, is driving the incremental market share and the outlook there?

Alex, this is Bill Brodsky. We are seeing, as I said, new users coming in. VIX has become the bench for volatility of equity markets globally. So, we are seeing business coming in from Europe. We are seeing business coming in from pension funds, from institutional investors in the US. We are seeing it coming in from CTAs. We have a team of people in our futures exchange that are geared to educating a whole variety of different types of users. As I said in my prepared remarks, we have our – I think it’s our 29th or 30th Annual Risk Management conference next month in California, and we will have a tremendous emphasis on the whole volatility line at that time.

Got you. But no specific category there you highlighted pretty broadly?

I would tell you, it’s a variety, but it’s institutional. When I say institutional, it’s a lot of professional type investors and I think Ed Tilly is going to add another aspect to this.

Yes, I think, Alex, what we have seen I think is most significant is the volume that we have shown you over the last couple of years, really starting about two years ago, introducing – when Barclays introduced the first ETP into the marketplace, a lot of the futures volume and a lot of the layoff business into the VIX options was really driven by the incredible growth in assets under management in that category. That’s no longer as in pass vote to the growth that we see on the CFE today. And as Bill points out, asset managers, hedge funds, everyone looking for any volatility exposure, the pure play, moving away from ETP is in our futures exchange. We have got retail traders coming into VIX futures and VIX options. It’s really an incredible story. ETP still play a very very important role but less and less a percent of our overall volume and less and less of a growth story in the recent last 6 months to 12 months.

Got it, yes, that’s helpful. That’s what I was trying to get to. On the fee side of the equation, it looks like the RPC ticked down sequentially, I think down about 10%. Is this just a function of volumes or there is something else going on, or I guess, how should we think about the rate per contract and the overall category volumes continue to creep higher?

Well, you are referring to RPC in 2012 compared to 2011?

No, just CFE for the fourth quarter.

CFE.

Oh, CFE. Alan, thank you. That had to do with certain aspects of our fees schedule in CFE related to day trading and also to CBOE permit holders who receive different rates than non-CBOE permit holders when they traded CFE. So, we saw higher activity in those two areas which had the effect of slightly lowering RPC in the futures exchange.

Got it. So the fourth quarter is a decent run rate you would say, actually when volume stay as robust as they have been.

I would say that would be a pretty good place to begin. Although if you look at our history of RPC and CFE, it’s been a little bit on lower demand. So, it is hard to predict, but not a bad place to start off.

Got you. The last from me, it’s just on capital. You obviously talked about back in the fourth quarter to make the special, still (inaudible) $35 million of cash. I think in the past you talked about $50 million working capital needs, is that still the number and I guess should we expect you guys to resume buyback in the first quarter?

Yes. What I said in the past is $40 million to $60 million of working capital is kind of our minimum, so that $50 million is right in the middle of that. Our share reauthorization of $103.3 million stands and we will – our approach towards that with share repurchase hasn’t changed. We are opportunistic and when the time is right we will resume.

Alex, you got a lot out of that one question.

Thanks, guys.

Okay.

Our next question comes from Ken Worthington from J.P. Morgan, your line is open.

Hi, good morning. I have got one question with ten different parts.

Is it the golden times J.P. Morgan kind of thing going on here?

Just on, really C2, I thought that the SPXpm product was kind of the flagship product. I may have misinterpreted that, but how does pulling that product kind of impact engagement on C2? I see the retooling and it’s innovative. But if the retooling doesn’t work, what are the levers do you have to pull to kind of jump start C2?

Let me just restate. SPXpm and C2 is actually perfect timing. We were looking for an electronic version of the S&P 500, the big macro $1,500 underlying product and we launched C2 in and around the same time when we were trying to compete with (inaudible) pricing model which is relatively new to the marketplace. So, it was more of a perfect storm than a flagship. The index complex here is our key driver, whether it’s on CBOE or C2. For our shareholders, it’s the same. So, what can we attract, how do we attract users to C2 if this big product moves to CBOE and are successful in the hybrid trading environment as we anticipate it will be. Well, we changed the market model. The anchor tenants now are our new DPMs and as I repeat, the biggest liquidity providers in the industry, that’s our new draw to C2, coupled with unique pricing that returns the incentive to liquidity providers for posting tight markets and still pays our customers when they interact with that flow. So, I don’t think I would over play the move of SPX for us, for CBOE, for Alan as he is looking to see how we doing. That’s going to be in our complex, rather it’s the importance that we place on naming these five big liquidity providers to our new pricing model on C2. And if it doesn’t work, to follow-up and answer your – or to complete the question, we will come up with something new and completely innovative just as we have done with this pricing scheme and we will keep you posted.

Awesome. Thank you very much.

Our next question comes from Patrick O'Shaughnessy from Raymond James, your line is open.

Hi, good morning, guys.

Good morning, Patrick.

Alan, a question for you. I feel like every quarter you kind of have a separate view of where exchange services and other fees are going to go and they keep kind of staying in there really really strongly. Do you have a view on kind of some of the non-transaction fees in 2013, what’s the outlook for those?

Well, we gave as much guidance as we could. Last year, we gave you guidance on exchange services and other fees because we dramatically changed the fees that we had in place for those items in 2012 compared to 2011 and I was conservative in my guidance and fortunately it turned out to be a lot better than we expected. There were no significant changes in exchange services and other fees in ’13 relative to ’12, so we didn’t give you any guidance. So, the only thing that can change there is utilization and that’s very difficult to predict. Other non-transactional revenue items, I think you need to focus on looking at our regulatory fees and I talked about that in my prepared remarks. If you look at our history of the options regulatory fee, it’s up dramatically from where it was a year ago and we implemented a options regulatory fee for C2, and that fee both of those fees, and every customer contract and every U.S. options exchange, so on a matter of word’s rate. So, that’s a significant change and we did that because our regulatory expenses are increasing, I talked about that in our core operating expenses as well as our CapEx is going up as well, we are capitalizing more software related to the enhancement of our regulatory systems. So, I think that’s an area that you should look at and focus, but it’s volume-based, you know, the regulatory fees. I can’t predict where that fee would be for 2013. Those are the two main items in the non-transaction. Access fees, we didn’t give you guidance on access fees. We didn’t make any fee changes at all to access fees for 2013, for 2012, so just like exchange services and others, that can only go up or down based on usage utilization. Utilization of access fees held pretty steady in 2012. I can’t predict, I don’t know how it will be for 2013. We hope it will be stable to grow, maintaining market share, certainly a foundation for that fee, and I have talked about that many times. And so, I think those are the material non-transactional line items on the revenue side. Hope that helps.

All right, very helpful, thank you.

Our next question comes from Chris Harris from Wells Fargo. Your line is open.

Good morning everybody and, Bill, congratulations on your retirement from the CEO post.

Thank you, Chris.

I want to follow-up here on the VIX, the institutional update that you guys kind of referenced here. Curious to get your perspective on what the appeal would be for an institutional investor to use the VIX as opposed to say hedging with S&P 500 puts, and then along that line, can growth in VIX here actually cannibalize your S&P 500 volumes overtime.

I am talking a shot at the first one. The guy that I look to in this business is really one of the leaders, Larry McMillan who wrote the foundation piece on this. I think there is a view by those who understand how to hedge macro portfolios, but you can hedge a portfolio much less expensively with VIX than you can with SPX puts. And so, this is part of the whole learning process that we are going through in terms of how you ensure if you're long, a large portfolio of equities and you want to protect it. You configure whether you are better off with out-of-the-money put or VIX. And this is part of the excitement of what we are doing in this product and that is that people are learning as they go along. And Larry wrote a very interesting comment there. I can't tell you exactly when it was specifically on that point.

And then, I would add from a traders’ perspective, the VIX, the future specifically eliminates some of the Greek exposure that traders may or may not want in their portfolio. The daily – the game of managing a position in SPX, if it’s just a pure volatility exposure, the VIX future is that, but then to your cannibalization issue, for us, at the end of the day, our professional traders know that VIX is driven by the strip of options in the S&P 500. So as they are trading and their portfolio includes SPX and VIX and VIX options, at the end of the day, they own or are assured the components that make up this strip and the pricing in the SPX and they drive the volume back and forth into from one complex to the other. Think of it just like the biggest customer in the CME futures contract and the S&P 500, other traders on the CBOE is not cannibalizing, that's their underlying. So, the same way the strip of options in SPX provides the pricing for the VIX futures and the VIX futures provides the pricing for VIX options.

Got it, okay. Thank you, guys.

Our next question comes from Roger Freeman from Barclays. Your line is open.

Hi, good morning. Just what would you say was the biggest obstacle that you face in getting the SPXpm to really take off on C2 and then let you to add it on the CBOE? And then, just quickly on VIP 2.0, can you clarify what the sort of adjustment is versus 1.0 that has gotten you some share than trailed off a bit? Is there a customer segment that you are targeting there?

So, Roger, let me start off on the first part, and Alan will do the second. The interesting thing about SPXpm is that we had decided to put it on C2 for a whole variety of reasons, but what was really happening parallel to this is we are waiting for the SEC to approve C2 weeklies, which we came up with the concept of trading a weekly option. We did it on the Hybrid system in CBOE and it took off bigger than anything we expected. So, a lot of the interest that might have been in SPXpm really started with the weeklies, and by the time we brought out SPXpm, the weeklies already had become a very popular thing. So, it's just more almost the accident of the sequencing of these events more than anything else. And we are very enthusiastic by the way, we are saying February 19th is when we are going to cut over and have SPXpm on CBOE. I think that will make a big difference.

Let me add a little bit Roger to what we see in the difference in how SPX is traded versus SPXpm, and compare that perhaps to a single name equity class. Very, very few of the orders that we see in SPX are single-line, meaning one strike at a time. Complex orders, orders that involve more than one strike or spreads are really the way in which people trade, customers trade SPX, the institutions trade SPX. Also, our customers reference the futures prices over at the CME and get engaged in these multi-leg strategies, very difficult to replicate on a screen, on SPX, on C2. So, we think by adding liquidity that's found in SPX on the trading floor, surrounding that contract in a hybrid form, meaning brokers can interact with the market makers who are also streaming quotes into the complex really gives us the best opportunity to test and to realize the demand for SPXpm. And then I think you had a VIP question –

The biggest change that we made on February 1st related to VIP that I think has the most effect and in the highest cost is that the prior version of what we did is when a firm reached a customer volume threshold, then they would begin earning a credit from that contract on, that was the old version. And the change we made on February 1st was a response to our competition. We said once the firm reaches the volumes threshold, we will give them that credit for that customer – for all the customer contracts not only after that, but the contract won during the month. But that change, which is a direct response to our competition, I think will have the biggest and is having the biggest impact in helping us recapture that lost market share.

Okay, thanks a lot.

Our next question comes from Niamh Alexander from KBW. Your line is open. Niamh Alexander – KBW: Hi, thanks for taking my question and for updating on the VIP 2.0. You made it clear that you don't like to see the declining market share, but also maybe that you want to be number one. Is that something that you still want to be? And then, just help me understand, when we have seen the publicly traded competitors, they have gained share, but their effective fees have actually been increasing, not decreasing. So, is it that it's a different customer that they seem to reporting away from you or help me better understand what is going on that they can kind of take share and raise fees as far you are kind of losing share and now you are, it seems like you are cutting fees a little bit.

Yes, this is a little bit of speculation, but I think while you might have seen the revenue per contract increase as they gain market share is because they switch from a maker-taker structure in which the spread that they were collecting was lower than their traditional structure. That’s I think was probably a catalyst and why an exchange would have switched from maker-taker to traditional, because they could drive an increase in RPC. And that's some speculation, but that's what I believe now. As far as staying number one in a multi-list side, I think it is important for CBOE to stay a leader in all options products categories. It’s a foundation – being number one is a foundation not only for transaction fees, but for all those other revenue items, line items that I talked about. And so, I think it is important for CBOE and it expands our leverage, the more contracts that we can pump through our trade engine lowers the per cost of that and of operating the system, the per contract cost. And so, yes, I still believe that, and that's our goal. Niamh Alexander – KBW: Will this new pricing will be effectively the lowest price in the market?

No. The way we are looking at is about equal with our competition. Niamh Alexander – KBW: Okay, thanks for taking question.

Our next question comes from Howard Chen from Credit Suisse. Your line is open.

Hi, good morning everyone. Bill, I guess I will throw out a boarding one that has been asked yet. This merger announcement between ICE and New York Stock Exchange Euronext, you have been all at this for a very long time, but from a competitive position, do you view this good or bad for you? And second, how does this impact you and the boards just participate in industry consolidation more in the near-term than the longer-term? Thanks,

As to your third find, I do not view the potential consolidation is having any major impact on us. We compete with MISC, two operations AMEX and Arca and I see that as basically no change.. I think you have to keep in mind that ICE's main motivation in the transaction was to get a hold of the life. That was their goal. So, we look at NYSE as a very vibrant competitor and we will continue to compete with them. What was the other question?

Your desire to participate in industry consolidations, just generally we have seen a couple of these deals in the industry come in clusters.

Sure. First of all I, think the general view is that we continue to outperform in our space by a variety of metrics, including total shareholder returned last year if you ignore the 30% premium that put on top of the NYSE's price on December 20th. But we are certainly always conscious of the fact that our size relative to our peers causes this kind of speculation. But there are always compelling reasons for consolidation. Our goal is to enhance shareholder value, but we also are very bullish in our own opportunity for organic growth and I think we continue to show that our organic growth continues to outstrip our peers.

Great, thanks for the thoughts.

Our next question comes from Ken Leon from S&P Capital IQ. Ken Leon - S&P Capital IQ: Thank you, and my question here is when you look at transaction fee revenue, particularly the fourth quarter year-over-year, your share of fee revenues coming from equity and ETPs have gone from 41% down to roughly 28%. So there's a lot of good positive things happening in the other products and the institutional market. But what does this speak to in terms of either your position, let's say, in ETPs or something about the retail market that impacts equity, where is it positioned possibly for future growth or we are seeing CBOE make a concerted transformation really with products more for institutional markets?

A lot of comments and a lot of questions there. I will give you my reaction to that shift in transaction fees. It used to be that 25% of our volume was indexes and it represented 50% of our transaction fee revenue and, of course, that metric has changed dramatically in the fourth quarter. And along with CFE, the VIX contract really growing incredibly. And some that's a function of two things. First of all, VIX both the future and the option growing incredibly, still on this hockey stick type growth curve, continued increasing interest from multiple users driving that volume. So, that has the impact of increasing the revenue from that category and that's good. On the other hand, if you look at revenue per contract in the multi-list category over the years and in our previous charts, we have a historical chart of our own RPC in a multi-list category, it's been a slow decline in RPC, and I think that will continue in the future because competition is so fierce in that category. And so, the combination of a lower RPC on a negative side, and on a positive side, the tremendous growth in VIX and a strong year on SPX really is the driver of that change. So, let me add on I think part of the question was how does CBOE position itself? Is this a deliberate move to move our mix from the multi-list classes into the proprietary complex? And I think we haven't spent any time this morning -- Ed Provost is here, if you want more detail, but our move to – eventually trade 24x5 to open up a hub in Slough, England to attract users outside of the U.S. trading hours is really directed right at that VIX futures volume, and it allows us to expand other proprietary products if we decide to do so in the future. But it is with that mix in mind and shifting being reliant so much on competitive products into what we do best and that is the institutional hedging exchange with the SPX complex and the volatility complex. But I just offer that, that this is the driving force behind increasing to 24x5 in the London hub. Ken Leon - S&P Capital IQ: Fairly understand. Thanks.

Our next question comes from Akhil Bhatia from Rosenblatt Securities. Your line is open.

Hi, good morning, do you guys, I know it’s early days, but do you have any color on the early adoption in the London hub and how it's being received?

Ed Provost here. So the London hub is up and ready for connectivity. We are engaged in discussions with a number of potential users. No one has established connectivity up to this point, but then again we've only been up and running for the last several days. So we are very optimistic given the enquiries we've received that we will see same connectivity in the very near future. We are very optimistic about it.

Okay, great, and just a last one, it looks like the BOX Exchange is trying to launch a S&P related linked contract. Any thoughts upon how that might violate your exclusive with S&P?

This is Bill Brodsky, we are looking at that as it relates to the site of products. We and S&P are always looking at whether there is a violation of the contract, but at this point, I am not going to get into it. It's a pending filing and we will decide whether we will comment on it or not.

I think we are more interested in the BOX filing from the investors' perspective and further fragmentation of liquidity in Spiders. As you know, the minis are going to start. That takes some time to get used to from an investor's perspective, changing the multipliers. We would prefer certainly to see how the retail community adjusts to trading minis before BOX launches a larger multiplier on their contract. We are very mindful of the slow and steady education process that's required around the minis, before we contemplate going to a large contract. So that's what we would prefer. As Bill says, we will be commenting, but in regard to S&P, it is a different issue. We are more concerned with the customers and their confusion and fragmentation of liquidity among different contracts representing the same exposure to S&P 500.

Okay, thanks you.

Our next question comes from Gaston Ceron from Morningstar Equity Research. Your line is open.

Hi, good morning. Hi, thanks for taking my question. Just real quick here, I know you spoke about the dividend policy a little bit at the beginning of the call. I am not sure if I missed there, or if you didn't mention this, but I was wondering, now that you have paid the special dividend last year, how will you think about that going forward, whether special dividends will remain part of the capital playbook or if it's something that you will review annually or if this was strictly a one-off?

It's certainly the tax issues that were in play at year-end. It was a key driver on the part of our Board in deciding to do what they will do. I cannot predict if we will do a special dividend every year or never again. But what I can tell you is that our stated policy for dividends, for returning capital to shareholders, what our Board has told me is that they want steady, sustainable regular dividends growth in that annual dividend, supplemented by stock repurchases and don't hang to cash unless we can communicate to shareholders why we are hanging on to that cash. So that fundamental belief policy hasn't changed.

And then, just very quickly. Just following up on the C2 questions. I was wondering, from now, going forward, what would be your approach to product launches on C2, I mean, how will you sort of use or market there. How as kind of your experience with SPXpm kind of altered and how any future products might deal on C2?

I think as just to kind of restate, C2 really provides us an opportunity to test different models and pricing. We get the broadest liquidity base really relying on the established CBOE. So, I at this point, don't see an exclusive launch for new products on the C2. The liquidity base and the liquidity providers in the penetration in the marketplace and all the major institutions on CBOE and a Hybrid trading model, which allows the interaction with brokers, their ability to query for debt outside of electronic markets, really are a better incubator for new products because of the interaction, the human factor with brokers able to provide liquidity in excess of what's found on the stream. So I don't look for us to launch exclusive on C2.

Okay, great. Good to know, thanks.

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Ed Alan here. While in a way we, capturing some of that revenue and the exchange services and other fees line item. And so, that's part of the same kind of similar revenue that building a big data center would generate courses on a much smaller scale than what you're seeing in New York or I believe in NASDAQ. I think the difference is that the underlying — the reason for building those data centers is you want to place your computers close to the computers of the host exchange that has the underlying security being traded. And that value we haven’t identified as a big potential for us, although I won't close it out in the future you never know. And yes, you're right we have tended to rent versus buy in our move of our data center off to the East Coast. And but if we have talked about that whole issue here in the past, haven't identified a big opportunity other than what we did in that revenue line item so far.

Okay, thank you.

Our next question is a follow-up Jillian Miller from BMO Capital Markets, your line is open.

In January, we've seen index volume very strong and ETF volume has been weaker like the S&P options up over 30% year-over-year and Spiders down 23%. Maybe you can just give us an insight into what's driving that market dynamic and whether that mix of business is sustainable longer-term because that kind of have a does kind of have a significant impact on your overall rate per contract?

Jillian, I don't know if we know of any certainty, but my guess is that we have in some respects, different user groups. The Spider tends to be much more retail. The SPX, as Ed Tilly, said is not only institutional, but it's very sophisticated where most of the trades are not single strike trades, but multiple legs and related to VIX and other things. So, I think we like to watch it over time, but again I think that there are just different user groups that use these things.

Okay, thanks.

Okay, thanks.

I am showing no further questions at this time. I will now turn the call back over the management for closing remarks.

Thank you. That completes our call this morning. We appreciate your time and continued interest in our company, and we look forward to speaking with you in the future. Thank you.

Thank you, ladies and gentlemen, it does conclude today’s conference. You may all disconnect and have a wonderful day.