VIX is designed to reflect investors’ consensus view of expected stock market volatility.

The newly created CBOE Futures Exchange, LLC (CFE) opened for trading today. The CFE will debut by trading futures contracts on the CBOE Volatility Index (VIX) using an electronic, open access market model, with traders providing liquidity and making markets.

Susquehanna Investment Group is the Designated Primary Market Maker (DPM) for VIX Futures. Timber Hill, LLC and Knight Financial Products, LLC were also approved to serve as DPMs on the CFE.

‘CBOE is extremely proud to introduce the CFE and this new line of products based on volatility and variance. Futures on VIX will provide a powerful new risk management tool for money managers as well as new trading opportunities for investors,’ said CBOE Chairman and CEO William J. Brodsky. ‘CFE is opening the door to the future of risk management and a new financial landscape.’

VIX futures (ticker symbol VX) are based on the CBOE Volatility Index, which was first introduced in 1993 and quickly became the benchmark index of market sentiment. Derived from real-time S&P 500 Index option prices, VIX is designed to reflect investors’ consensus view of expected stock market volatility over the next 30 days.

Some market analysts consider VIX the ‘investor fear gauge’ because investors buy portfolio protection in the form of index options during periods of financial stress, which are often accompanied by market declines. A low VIX reading can be the result of a lack of demand for such insurance, thus indicating investor confidence or complacency.

CFE received approval as a designated contract market from the Commodity Futures Trading Commission (CFTC) in August 2003, clearing the way for CFE to offer this new class of asset and a straightforward means to trade volatility.

CFE, a wholly owned subsidiary of Chicago Board Options Exchange, Incorporated, is a new, all-electronic exchange, using CBOEdirect as the trading platform. CFE trades will be cleared by the triple-A rated Options Clearing Corporation (OCC).

www.cboe.com/CFE .

- CBOE Volatility Index (VIX) Futures ticker symbol: VX.

- Trading hours: 8:30 a.m. to 3:15 p.m. CST (Chicago Time).

- Underlying value: ten times the index value, disseminated by CBOE, through OPRA, under the symbol ‘VXB,’ and through the CFE under the symbol ‘VBI.’

- Contract size: $100 times VXB. For example, with a VIX value of 16.50, the VXB would be 165 and the contract size would be $16,500.

- Minimum tick size: 10 cents. Therefore, minimum value change will be in $10 intervals.

- Contract months: initially, May, June, August and November. Thereafter, two near-term and two additional months on the February quarterly cycle.

- Last trading date: usually the Tuesday prior to the third Friday of the month.

- Settlement date: usually the Wednesday prior to the third Friday of the month.

- VIX Futures are settled in cash.