Fourth Quarter Earnings Conference Call February 9, 2012 CBOE - PowerPoint PPT Presentation

Fourth Quarter Earnings Conference Call February 9, 2012 CBOE Holdings, Inc .

Agenda Strategic Review William Brodsky Chairman and CEO Financial Review Alan Dean Executive Vice President Executive Vice President CFO and Treasurer Willi William Brodsky B d k Questions and Answers Alan Dean Edward Tilly Edward Tilly President and Chief Operating Officer Edward Provost Executive Vice President Chi f B Chief Business Development Officer i D l t Offi p. 2 p. 2 p. 2 CBOE Holdings, Inc .

Forward Looking Statements This presentation may contain forward-looking statements, within the meaning of the ► Private Securities Litigation Reform Act of 1995. Forward-looking statements are those statements that reflect our expectations, assumptions or projections about the future and i involve a number of risks and uncertainties. These statements are only predictions based l b f i k d t i ti Th t t t l di ti b d on our current expectations and projections about future events. There are important factors that could cause actual results to differ materially from that expressed or implied by the forward-looking statements, including: legislative or regulatory changes; changes in law or government policy; increasing competition; loss of our exclusive licenses; decrease in trading volumes; an inability to introduce competitive new products and services; t di l i bilit t i t d titi d t d i competitive pressures on our existing products, services and trading access fees; changes in price levels and volatility in the derivatives and equity markets; economic, political and market conditions; increases in our fixed costs and expenses; loss of existing customers; difficulty developing strategic relationships and attracting new customers; increased costs related to or the loss of intellect al propert related to, or the loss of, intellectual property; rapid technological developments; increases rapid technological de elopments increases in trading volume and order transaction traffic that we cannot accommodate; our ability to maintain our growth effectively; damage to our reputation and brand name; loss of market data revenue; detrimental changes to our fee structure; failure to effectively monitor and manage our risks; customer consolidation; and changes to the tax treatment for options trading trading. More detailed information about factors that may affect our performance may be found in ► our filings with the SEC, including in our Annual Report on Form 10-K for the year ended December 31, 2010 and other filings made from time to time with the SEC. p. 3 p. 3 p. 3 CBOE Holdings, Inc .

Strategic Review William Brodsky Chairman and CEO p. 4 p. 4 p. 4 CBOE Holdings, Inc .

A Banner Year – Record Results Total ADV (thousands) Adjusted Operating Revenues ($mm)¹ Adjusted Diluted EPS¹ Adjusted Operating Margin¹ ¹Adjusted to reflect the impact of certain items. See “Non-GAAP Information.” p. 5 p. 5 CBOE Holdings, Inc .

Achieved Fourth Quarter Highs Adjusted Operating Revenues¹ ($mm) + 6% + 19% ¹Adjusted to reflect the impact of certain items. See “Non-GAAP Information.” p. 6 CBOE Holdings, Inc .

Mission and Strategy Create value for stockholders Develop New Products by offering a diversified portfolio of risk management portfolio of risk management products and services which Optimize generate industry leading profit Revenue and Market Share in margins and growth rates while margins and growth rates while Commoditized Products maintaining the highest standards of market regulation Broaden Customer Base p. 7 CBOE Holdings, Inc .

Leader in Product Innovation Focus on developing exclusive products that generate premium fees S&P 500 complex ► • Flagship SPX contract • SPX Weeklys • SPXpm VIX product line ► • Sector ETFs and single-stock VIX Sector ETFs and single stock VIX products New futures products on CFE ► CBOE Holdings, Inc . p. 8

SPX Drives Strong Index Volume SPX most actively traded cash index ► • 13% increase in 2011 versus 2010 SPX Weeklys important component of SPX comple x SPX W kl i t t t f SPX l ► • 283% increase in 2011 versus 2010 p. 9 CBOE Holdings, Inc .

SPXpm Broadens Customer Reach ► Convenience of screen trading on all-electronic C2 Options Exchange Options Exchange ► Lower cost method of accessing a p.m.-settled S&P contract ► Ten times larger than SPY options ► Cash settlement eliminates need for physical delivery ► Cash settlement eliminates need for physical delivery ► European exercise eliminates risk of early assignment SPXpm Provides Greater Efficiency, More Control and Lower Costs p y p. 10 CBOE Holdings, Inc .

Increasing Awareness and Understanding Ads present differences between SPXpm and other S&P 500 contracts p. 11 CBOE Holdings, Inc .

Strong Growth in Volatility Trading See strong future growth ► potential potential Education key to growth ► More than 24 VIX benchmarks ► and strategies Adding new VIX benchmarks ► and tradable products p p. 12 CBOE Holdings, Inc .

CBOE Volatility Benchmark Indexes CBOE Equity Index Volatility Indexes CBOE VIX Indexes on Individual Equities • CBOE Volatility Index (VIX) • Apple (VXAPL) • CBOE DJIA Volatility Index (VXD) • Amazon (VXAZN) • CBOE Nasdaq-100 Volatility Index (VXN) • Goldman Sachs (VXGS) • CBOE S&P 100 Volatility Index (RVX) • Google (VXGOG) • IBM (VXIBM) CBOE ETF VIX Indexes Other CBOE Volatility-Related Indexes • CBOE Crude Oil ETF Volatility Index (OVX) • CBOE EuroCurrency ETF Volatility Index (EVZ) • CBOE Tail Hedge Strategy Index (VXTH) • CBOE Emerging Markets ETF Volatility Index (VXEEM)* • CBOE S&P 500 SKEW Index (SKEW) • CBOE Silver ETF Volatility Index (VXSLV) • CBOE VIX Premium Strategy Index (VPD) • CBOE China ETF Volatility Index (VXFXI) • CBOE Capped VIX Premium Strategy Index (VPN) • CBOE Gold Miners ETF Volatility Index (VXGDX) • CBOE S&P 500 Implied Correlation Indexes • CBOE Brazil ETF Volatility Index (VXEWZ) (KCJ, ICJ, JCJ) • CBOE Energy Sector ETF Volatility Index (VXXLE) • CBOE Gold ETF Volatility Index (GVZ) ** *VXEM f t *VXEM futures began trading January 9, 2012; VXEEM options b t di J 9 2012 VXEEM ti began trading January 31, 2012 **Futures and options began trading in 2011 p. 13 CBOE Holdings, Inc .

Optimizing Revenue and Market Share in Commoditized Products Launched C2 to provide all-electronic, maker-taker model ► • Complements Hybrid model • Achieved target of 1% to 2% market share in first year • Adjusted fees on Nov. 1 to maximize market depth and liquidity p. 14 CBOE Holdings, Inc .

Optimizing Revenue and Market Share in Commoditized Products Modified fee schedule Jan. 3 ► • Increase market share in multi- listed products • Ensure optimal returns in p proprietary products Implemented volume incentive ► program “VIP” g • Provides credits to firms for certain types and levels of business Strong Initial Response to VIP Strong Initial Response to VIP p. 15 CBOE Holdings, Inc .

Expanding User Base Focus on customer segments with FLEX Index Options ADV ► greatest potential t t t ti l • Users of OTC market • Institutional investors • Volatility traders OTC-type trades migrating to ► CBOE CBOE • 21% growth in FLEX index products in 2011 p. 16 CBOE Holdings, Inc .

Equity Derivatives: OTC Versus Exchange-Traded In equity-linked options, the OTC markets’ notional value outstanding has declined in comparison to the listed markets Notional amounts outstanding in billions of US dollars 17 CBOE Holdings, Inc . Source: Bank of International Settlements (BIS)

Expand European Customer Base 28 th Annual Risk Management Conference March 2012 March 2012 First CBOE European Risk Management Conference Management Conference September 2012 p. 18 CBOE Holdings, Inc .