CBOE Holdings, Inc. First Quarter Earnings Conference Call M May - - PowerPoint PPT Presentation

CBOE Holdings, Inc. First Quarter Earnings Conference Call M 5 2011

CBOE Holdings, Inc.

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May 5, 2011

Agenda

Strategic Review William J. Brodsky Chairman and CEO Financial Review Alan Dean Executive VP, CFO and Treasurer Questions and Answers William J Brodsky Questions and Answers William J. Brodsky Alan Dean Ed Tilly Executive Vice Chairman

CBOE Holdings, Inc.

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Forward Looking Statements

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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 l b f i k d t i ti Th t t t l di ti b d involve a number of risks and uncertainties. These statements are only predictions based

• n 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

• r government policy; increasing competition; loss of our exclusive licenses; decrease in

t di l i bilit t i t d titi d t d i trading volumes; an inability to introduce competitive new products and services; 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 rapid technological de elopments increases related to, or the loss of, intellectual property; rapid technological developments; 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

• ur 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.

CBOE Holdings, Inc.

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Strategic Review

William J. Brodsky Chairman and CEO

CBOE Holdings, Inc.

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Strong Top-Line & Bottom-Line Results

1Q11 Financial Results versus 1Q10

Operating Revenues

► Operating Revenues

• $124.0 Million, up 23%

► Adjusted Operating Margin¹

j p g g

• 46.7%, Highest in Nine Quarters

► Net Income Allocated to Common Stockholders

• $32.1 Million, up 42%

► Diluted Earnings Per Share

• $0.36, up 44%

CBOE Holdings, Inc.

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¹Adjusted to reflect the impact of certain items. See Appendix for “Non-GAAP Information.”

Competitive Landscape – U.S. Options

Holding Company Exchanges 1Q11 Market Share¹

28% 28% 25% 24% 18% 3% 2%

CBOE Holdings, Inc.

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2%

¹Excludes dividend trades

Competitive Landscape – U.S. Options

Holding Company Exchanges 1Q11 Market Share¹

28% 28% 25% 24% 18% 3% 2%

CBOE Holdings, Inc.

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2%

¹Excludes dividend trades

Competitive Landscape – U.S. Options

Holding Company Exchanges 1Q11 Market Share¹

28% 28% 25% 24% 18% 3% 2%

CBOE Holdings, Inc.

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2%

¹Excludes dividend trades

CBOE has Unique Strengths

►

Leader in innovation

►

Superior trading technology

►

Most unique and diverse offerings

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Proprietary products outpacing industry growth and generating higher returns

►

Committed to increasing high quality

►

Committed to increasing high quality market share

CBOE Holdings, Inc.

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Strong 1Q11 Financial Results

Results driven by: Higher revenue from access fees and

Adjusted Operating Revenues (in millions)1 $402 $433 $417 ► Higher revenue from access fees and

transaction fees

• Higher volume across every product

$402 $101 $124 $417 $344 $253

category

• Record volume reached in VIX options and

futures

$101 2006 2007 2008 2009 2010 1Q10 1Q11 Adj t d O ti I ► Disciplined cost control Adjusted Operating Income (in millions)1 $176 $156 $193 $39 $58 $156 $72 $140 CBOE Holdings, Inc.

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2006 2007 2008 2009 2010 1Q10 1Q11

¹Adjusted to reflect the impact of certain items. See Appendix for “Non-GAAP Information.”

Options ADV up 11% 1Q11 vs 1Q10

Equity Options 2.40 2.58 1.87 2.26 2.60

CBOE Holdings Quarterly Options ADV

(in millions)

1Q10 2Q10 3Q10 4Q10 1Q11

Index Options

5.04 4.23 3 71 5.29 4.55

Index Options 1.17 0.98 0.94 1.26 1.11

3.71

ETF Options 1Q10 2Q10 3Q10 4Q10 1Q11

1.26 0.99 0.91 1.45 1.04

1Q10 2 Q2 10 3 Q10 4 Q10 1Q11 CBOE Holdings, Inc.

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1Q10 2Q10 3Q10 4Q10 1Q11

CBOE is the Home of Volatility Franchise

VIX Options & Futures ADV (in thousands)

400 450 50 389 42 300 350 400

V

40 50 248 200 250 300

ions ADV

30

ures ADV

103 132 17 100 150 200

Opt

10 20

Futu

23 93 103 1 5 5 4 2 50 10

CBOE Holdings, Inc.

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2005 2006 2007 2008 2009 2010 2011 YTD VIX Options VIX Futures

¹YTD through 4/30/11

¹

1Q11 Market Share Data

3% 2%

Total Industry Volume

• Excl. Dividend Trades

3% 2%

CBOE C2 PHLX 11% 26% 5% 3%

31% 14%

11% 27% 5% 3%

ISE NYSE/Amex NYSE/Arca NOM 22% 17% 13% 1%

20% 18% 13% 1%

NOM BOX BATS

94% CBOE Holdings, Inc.

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Source: Options Clearing Corporation and CBOE ¹Excludes Dividend Trades YTD through 3/31/11

CBOE Consistent Market Share Leader

Sustained Market Share Without Sacrificing Revenue Per Contract

All Classes 35% 27% 25% 30% 35% CBOE AMEX

27%

20% 18%

15% 20% 25% ARCA PHLX ISE

20% 13% 19%

14% 11%

5% 10% 15% BOX NOM BATS C2

13% 12%

0% J a n M a r M a y J u l S e p N

• v

J a n M a r C2

CBOE Holdings, Inc.

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Source: CBOE

Differentiated Product Set

CBOE Trades…

Equity Options Index Options Options on ETFs CFE Futures Exchange

1Q10 vs 1Q11 8.7% 5.7% 21.4% 314%

Options Options ETFs Exchange

ADV Chg Percent of 1Q11 trading 51% 23% 25% 1% volume 3-month avg RPC thru 3/31/11 $0.160 $0.604 $0.207 $1.507 3/31/11

CBOE Holdings, Inc.

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C2 Achieving Steady Growth

► Averaged 162,500 contracts per day in 1Q11 and 174,600 in April ► Active market makers have nearly doubled since February

Capture rate from CBOE linkage volume continues to increase

► Capture rate from CBOE linkage volume continues to increase ► Adjusting fees and incentives to improve market quality ► Targeting 1-2% market share of U.S. multiply-listed options in first full year ► Launch of SPXpm, pending SEC approval

C2 Daily Volume 200,000 250,000 300,000 350,000 50,000 100,000 150,000

10 10 10 10 11 11 11 11 11 11

CBOE Holdings, Inc.

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11/02/1 11/21/1 12/10/1 12/29/1 01/17/1 02/05/1 02/24/1 03/15/1 04/03/1 04/22/1

SPXpm to Broaden Customer Reach

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Identical in structure to traditional SPX index option, except it will have a “p.m.” settlement p

►

Provides a settlement convention found in the OTC market while offering benefits and safeguards of exchange trading

►

Expect SPX and SPXpm to provide customers two deep pools

• f liquidity
• SPXpm – those seeking “point-and-click” exposure
• SPX – institutions conducting large complex trades via open outcry

►

Rule filing pending SEC approval

CBOE Holdings, Inc.

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Leveraging Expertise in Volatility Products

► Calculating volatility values on individual equities

“Stock VIXes ” introduced in January 2011 as volatility benchmarks include

• “Stock VIXes, introduced in January 2011 as volatility benchmarks, include

Apple, Amazon, Goldman Sachs, Google and IBM

• Filed for SEC approval to list options on “Stock VIXes,” futures to follow

► Launching options and futures on Exchange Traded Funds

• CBOE Crude Oil ETF Volatility Index (OVX)

Pending regulatory approval

• Pending regulatory approval

►

Working with S&P to expand VIX methodology

• Launched VIX Network in March

au c ed et o a c

CBOE Holdings, Inc.

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Regulatory Update

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CBOE continues to work with regulators on behalf of options customers and the industry

►

Dodd-Frank Bill continues to be foremost on agenda

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Bill introduced to delay implementation of Dodd-Frank by 18 months

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Expect Dodd-Frank will eventually result in most OTC-types of trades being traded on exchanges and/or centrally cleared Well positioned to benefit from OTC type opportunities

►

Well positioned to benefit from OTC-type opportunities

CBOE Holdings, Inc.

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2011 Initiatives

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With CBOE’s unique product mix, we are well-positioned to take advantage of long-term secular growth trends in the industry

►

Key Priorities:

• Extend the VIX product line
• Build on the success of C2

►

Financial strength gives us flexibility to invest in growth while continuing to reward stockholders to reward stockholders

CBOE Holdings, Inc.

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1Q11 Financial Overview

Adjusted Basis¹ 1Q11 1Q10 $ Change % Change

(in millions, except RPC and EPS)

T t l O ti R $124 0 $101 1 $ 22 9 23% Total Operating Revenues $124.0 $101.1 $ 22.9 23% Total Operating Expenses 66.1 62.4 $ 3.7 6% Operating Income $ 57.9 $ 38.7 $ 19.2 50% Operating Margin 46.7% 38.3% N/A 840 bps Other Income / (Expense) $ (0.2) $ (0.3) $ (0.1) 200% Income Before Income Taxes $ 57.7 $ 38.4 $ 19.3 50% Net Income $ 33.3 $ 22.7 $ 10.6 47% Net Income Allocated to Common Stockholders $ 32.5 $ 22.7 $ 9.8 43% Diluted EPS $ 0.36 $ 0.25 $ 0.11 44% Total Contracts Per Day 5.08 4.55 N/A 12 %

CBOE Holdings, Inc.

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Rate Per Contract (RPC) $0.285 $0.300 $0.015

• 5%

¹Adjusted to reflect the impact of certain items. See Appendix for “Non-GAAP Information.”

1Q11 Operating Revenues

Key Drivers:

Operating Revenues (in millions) 1Q 2011 1Q 2010 $ CHG % CHG

► Access fees

• Increase reflects implementation
• f new trading permit program

Transaction fees $ 89.9 $ 83.4 $ 6.5 8% Access fees 17 6 2 2 15 4 700%

• f new trading permit program

► Transaction fees

• 13% increase in trading volume

Access fees 17.6 2.2 15.4 700% Exchange services and other fees 4.7 4.4 0.3 7%

• 5% decrease in RPC to $0.285

► Regulatory fees

Market data fees 5.1 5.8 (0.7)

• 12%

Regulatory fees 5.0 3.8 1.2 32%

• Increase due to fee adjustment

and higher industry volume

Other Revenue 1.7 1.5 0.2 13% Total Operating Revenues $ 124.0 $ 101.1 $ 22.9 23%

CBOE Holdings, Inc.

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p g

Transaction Fees Driven by Volume and Rate Per Contract

Overall Transaction Fee per Contract (RPC) Overall Transaction Fee per Contract (RPC) Higher mix of

Thousands

RPC up 5 % Y-O-Y Sequential decline due RPC down due to lower mix of index

5,000 6,000 $0.300 $0.320

Higher mix of index options drove RPC growth

Thousands RPC

to lower mix of index

• ptions in 4Q vs 3Q
• ptions and fee caps

3 000 4,000 $0 260 $0.280 2,000 3,000 $0.240 $0.260 1,000 $0.200 $0.220 ADV (000s) 4 636 4 306 5 346 4 594 4 479 4 715 4 488 4 350 4 555 5 310 3 725 4 262 5 081 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11

CBOE Holdings, Inc.

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ADV (000s) 4,636 4,306 5,346 4,594 4,479 4,715 4,488 4,350 4,555 5,310 3,725 4,262 5,081 RPC ($) 0.292 0.279 0.289 0.291 0.292 0.273 0.266 0.278 0.300 0.281 0.306 0.293 0.285

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Average Transaction Fee Per Contract

1Q 2011 4Q 2010 3Q 2010 2Q 2010 1Q 2010 PRODUCT PRODUCT: Equities $0.160 $0.177 $0.182 $0.162 $0.184 Indexes 0.604 0.590 0.598 0.580 0.597 Indexes 0.604 0.590 0.598 0.580 0.597 Exchange-traded funds 0.207 0.224 0.236 0.217 0.236 Total Options RPC 0.275 0.284 0.300 0.277 0.297 Futures 1.507 1.679 1.661 1.717 1.952 Total RPC $0.285 $0.293 $0.306 $0.281 $0.300

CBOE Holdings, Inc.

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Options Trading Volume Mix

1Q 2011

1Q 2010

ETF 25%

ETF 23%

Equity 52% Index 25%

Index 24%

Equity 53%

23%

24%

Equity Options Index Options ETF Options Equity Options Index Options ETF Options

CBOE Holdings, Inc.

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p p p p

1Q11 Adjusted Operating Expenses

Key Drivers:

►Employee Costs

Adjusted Operating Expenses¹

(in millions)

1Q 2011 1Q 2010 $ CHG % CHG

• $3.1 million increase from continuing

stock-based compensation expense

►Depreciation and Amortization

Employee Costs $ 25.3 $ 23.1 $ 2.2 10% Depreciation and Amortization 8.7 7.3 1.4 19% Data Processing 4.4 5.1 (0.7)

• 14%
• Reflects startup of C2

►Outside Services

• Lower legal and consulting fees

Data Processing 4.4 5.1 (0.7) 14% Outside Services 6.6 8.1 (1.5)

• 19%

Royalty Fees 11.1 10.9 0.2 2%

Lower legal and consulting fees

►Royalty Fees

• Higher trading volume in index options

Trading Volume Incentives 5.8 3.7 2.1 57% Travel and Promotional Expenses 1.7 2.0 (0.3)

• 15%

►Trading Volume Incentives

• Higher volume in equity and ETF
• ptions

Facilities Costs 1.5 1.4 0.1 7% Other Expenses 1.0 0.8 0.2 25% Total Adjusted Operating Expenses $ 66.1 $ 62.4 $ 3.7 6%

CBOE Holdings, Inc.

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j p g p

¹Adjusted to reflect the impact of certain items. See Appendix for “Non-GAAP Information.”

1Q11 Core Operating Expenses Down 7% Excluding Impact of Stock Grants

(in thousands) 1Q 2011 1Q2010 $ CHG % CHG Total Operating Expenses $ 66 507 $ 62 352 $ 4 155 7% Total Operating Expenses $ 66,507 $ 62,352 $ 4,155 7% Less: Depreciation and amortization 8,696 7,301 1,395 19% Accelerated stock-based compensation expense 340

• 340

NM Volume-based expenses:

• R

lt f 11 146 10 898 248 2% Royalty fees 11,146 10,898 248 2% Trading volume incentives 5,759 3,696 2,063 56% Core Operating Expenses (non-GAAP): $ 40,566 $ 40,457 $ 109 0% Less: Continuing stock-based compensation expense (3,073)

• (3,073)

NM Core Operating Expenses Excluding Continuing Stock- Based Compensation (non GAAP) 37 493 $ 40 457 $ (2 964) $ 7% Based Compensation (non-GAAP) 37,493 $ 40,457 $ (2,964) $

• 7%

Detail of Core Operating Expenses Excluding Continuing Stock-Based Compensation (non-GAAP) Employee costs (excluding stock-based compensation expense) $ 22,323 $ 23,137 $ (814)

• 4%

Data processing 4,428 5,082 (654)

• 13%

p g , , ( ) Outside services 6,579 8,123 (1,544)

• 19%

Travel and promotional expenses 1,685 1,986 (301)

• 15%

Facilities costs 1,492 1,384 108 8% Other expenses 986 745 241 32% Total $ 37,493 $ 40,457 $ (2,964)

• 7%

CBOE Holdings, Inc.

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NM = not meaningful

Well Positioned to Deliver Higher Margins

$70.0 50.0%

Quarterly Adjusted Operating Income and Margin¹

($ in millions)

$ $60.0 46.0% 48.0% $40.0 $50.0 40 0% 42.0% 44.0% $20.0 $30.0 36.0% 38.0% 40.0% $10.0 32.0% 34.0%

CBOE Holdings, Inc.

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$0.0 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 30.0% Operating Income Margin

¹Adjusted to reflect the impact of certain items. See Appendix for “Non-GAAP Information.”

Guidance Summary for Full Year 2011

►

Revenue impact of 1/2/11 fee changes expected to be $3 to $5 million

►

Fee changes expected to increase RPC by $0.003 to $0.004 in 2011

►

Fee changes expected to increase RPC by $0.003 to $0.004 in 2011

►

Access fees in a range of $65 to $68 million

• Excludes access fees for SPXpm on C2

►

Core expenses in a range of $173 to $177 million

• Includes continuing stock-based compensation expense in a range of $12.2

to $12.7 million to $12.7 million

►

Accelerated stock-based compensation expense of approximately $500,000 (excluded from adjusted earnings)

►

Depreciation and amortization expense of $35 to $37 million

►

Capital expenditures of $30 to $35 million Eff ti t t dj t d t f 41 7% t 42 0% f

CBOE Holdings, Inc.

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►

Effective tax rate adjusted to a range of 41.7% to 42.0% from a range

• f 41.0% to 41.4%

Strong Debt-Free Balance Sheet

($ in thousands)

As of

• Sept. 30, 2010

As of

• Dec. 31, 2010

As of

• Mar. 31, 2011

Balance Sheet Data Balance Sheet Data Cash¹ $322,936 $ 53,789 $115,689 Total Assets 530,624 254,112 320,820 Total Liabilities 81,482 78,238 117,856 Total Stockholders’ Equity¹ 449,142 175,874 202,964 Other Data Working Capital² $332,378 $ 61,118 $ 93,479 C it l E dit

3

$ 15 049 $ 23 556 $ 7 134

►

No existing debt

Capital Expenditures3 $ 15,049 $ 23,556 $ 7,134

CBOE Holdings, Inc.

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• 1. Reduction from Sept 30, 2010 to Dec 31, 2010 reflects tender offers.
• 2. Current assets minus current liabilities.
• 3. Does not include new investments in affiliates or the disposition of interests in affiliates.

Well Positioned to Return Additional Capital to Stockholders

►

Generated more than $78 million in operating cash flow in 1Q11 Paid $9 2 million in dividends in first quarter

►

Paid $9.2 million in dividends in first quarter

• $0.10 per share

►

Board declared dividend of $0.10 per share for second quarter 2011

►

Board declared dividend of $0.10 per share for second quarter 2011

►

Committed to returning additional capital to stockholders

CBOE Holdings, Inc.

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Questions & Answers

CBOE Holdings, Inc.

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Appendix Materials

CBOE Holdings, Inc.

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Annual Financial Highlights

Options ADV (mm) Transaction Fees ($mm) RPC

4.7 4 5 4 5 Exchange-traded funds Indexes $0.309 $344 $330 1.9 2.7 3.8 4.5 24% 20% 22% 24% 23% 25% 24% 28% 23% 19% 4.5 Indexes Equities $0.282 $0.288 $0.288 $0.277 $0.294 $145 $190 $273 $315 $330 51% 56% 51% 53% 58% 59% 23% 25% 16% 2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010

Adjusted Operating Revenues ($mm)¹ Adjusted Pre-Tax Earnings ($mm)¹ Adjusted Operating Expenses ($mm)¹

$344 $417 $402 $433 $ $185 $208 $229 $246 $257 $136 $187 $155 $175 $201 $253 $180 $185 $21 $68

CBOE Holdings, Inc.

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2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010 $21 2005 2006 2007 2008 2009 2010 ¹Adjusted to reflect the impact of certain items. See “Non-GAAP Information.”

Historical Transaction Fee Drivers

For the Year Ended December 31, (in thousands, ‘06-’10 CAGR/ 3 Mos Ended Mar. 3 Mos Ended

• Mar. 31,

except rate per contract) 2006 2007 2008 2009 2010 CAGR/ Avg. Ended Mar. 31, 2010

• Mar. 31,

2011 Average Daily Volume Equities 1,556 1,996 2,387 2,519 2,273 10% 2,396 2,604 Indexes 628 918 1,026 884 1,071 14% 1,109 1,172 ETF’s 504 849 1,304 1,100 1,097 22% 1,040 1,263 Total Options 2,688 3,763 4,717 4,503 4,440 13% 4,545 5039 Futures 2 4 5 5 17 71% 10 42 Total 2,690 3,767 4,722 4,508 4,457 14% 4,555 5,081 , , , , , , , Rate Per Contract Equities $ 0.182 $ 0.180 $ 0.177 $ 0.181 $ 0.176 $ 0.179 $ 0.184 $ 0.160 Indexes 0.500 0.544 0.576 0.567 0.591 0.556 0.597 0.604 ETF’s 0 312 0 257 0 259 0 255 0 227 0 262 0 236 0 207 ETF s 0.312 0.257 0.259 0.255 0.227 0.262 0.236 0.207 Total Options $ 0.280 $ 0.286 $ 0.286 $ 0.275 $ 0.288 $ 0.286 $ 0.297 $ 0.275 Futures $ 1.974 $ 2.130 $ 1.860 $ 1.990 $ 1.723 $ 1.935 $ 1.952 $ 1.507 Total $ 0.282 $ 0.288 $ 0.288 $ 0.277 $ 0.294 $ 0.286 $0.300 $ 0.285 CBOE Holdings, Inc.

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Total Transaction Fees $190,224 $272,716 $ 343,779 $ 314,506 $ 330,264 15% $ 83,411 $ 89,939

CBOE Rolling 3-Month RPC

CBOE Rolling Three-Month Average Transaction Fee Per Contract 2011 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Equities $0.170 $0.164 $0.160 Indexes 0.592 0.601 0.604 Exchange-traded funds 0.223 0.215 0.207 Total options average 0.276 0.272 0.275 Futures 1.657 1.591 1.507 Total average transaction fee per contract $0.286 $0.282 $0.285 2010 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Equities $0.177 $0.180 $0.184 $0.172 $0.163 $0.162 $0.170 $0.180 $0.182 $0.180 $0.179 $0.177 Indexes 0 576 0 590 0 597 0 584 0 578 0 580 0 590 0 597 0 598 0 592 0 592 0 590 Indexes 0.576 0.590 0.597 0.584 0.578 0.580 0.590 0.597 0.598 0.592 0.592 0.590 Exchange-traded funds 0.234 0.237 0.236 0.225 0.215 0.217 0.222 0.233 0.236 0.228 0.228 0.224 Total options average 0.282 0.290 0.297 0.282 0.274 0.277 0.288 0.296 0.300 0.296 0.292 0.284 Futures 2.092 2.004 1.952 1.879 1.832 1.717 1.694 1.600 1.661 1.669 1.674 1.679 Total average transaction fee per contract $0.286 $0.294 $0.300 $0.286 $0.279 $0.281 $0.293 $0.301 $0.306 $0.302 $0.300 $0.293 2009 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec p y g p Equities $0.179 $0.188 $0.195 $0.188 $0.183 $0.188 $0.187 $0.181 $0.171 $0.168 $0.172 $0.172 Indexes 0.583 0.573 0.569 0.563 0.565 0.565 0.570 0.567 0.574 0.578 0.574 0.563 Exchange-traded funds 0.259 0.267 0.285 0.285 0.272 0.263 0.247 0.245 0.237 0.235 0.234 0.233 Total options average 0.287 0.287 0.292 0.282 0.273 0.272 0.272 0.270 0.264 0.266 0.273 0.274 Futures 1.728 1.696 1.689 1.657 1.670 1.738 1.819 1.927 1.938 2.077 2.106 2.186 Total average transaction fee per contract $0.288 $0.288 $0.292 $0.283 $0.274 $0.273 $0.273 $0.272 $0.266 $0.268 $0.277 $0.278 2008 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Equities $0.174 $0.183 $0.187 $0.187 $0.182 $0.176 $0.174 $0.179 $0.175 $0.178 $0.171 $0.169 Indexes 0.550 0.567 0.581 0.582 0.580 0.575 0.573 0.571 0.577 0.579 0.585 0.582 Exchange-traded funds 0.244 0.254 0.258 0.271 0.268 0.260 0.259 0.263 0.267 0.260 0.257 0.244 Total options average 0.277 0.284 0.290 0.292 0.285 0.277 0.275 0.280 0.287 0.298 0.297 0.290 Futures 1 937 2 085 1 835 1 842 1 926 1 919 1 874 1 851 1 898 1 904 1 855 1 763

CBOE Holdings, Inc.

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Futures 1.937 2.085 1.835 1.842 1.926 1.919 1.874 1.851 1.898 1.904 1.855 1.763 Total average transaction fee per contract $0.279 $0.286 $0.292 $0.293 $0.287 $0.279 $0.276 $0.282 $0.289 $0.299 $0.298 $0.291

Quarterly Core Operating Expenses

1Q 2011 Total Operating Expenses $66,507 54% $65,537 62% $71,082 67% $70,792 63% $62,352 62% Less: 3Q 2010 % rev % rev % rev % rev ($ in thousands) 2Q 2010 1Q 2010 4Q 2010 % rev Less: Depreciation and Amortization 8,696 7% 8,190 8% 7,099 7% 7,301 6% 7,301 7% Accelerated stock-based compensation 340

• 2,004

2% 10,965 10% Volume-based Expense: Royalty Fees 11,146 9% 9,710 9% 9,226 9% 11,519 10% 10,898 11% Trading Volume Incentives 5,759 5% 5,665 5% 4,594 4% 7,339 7% 3,696 4% Non Operating Items: Non-Operating Items: Exercise Right Appeal Settlement

• Core Operating Expenses (non-GAAP)¹:

$40,566 33% $39,968 38% $39,198 37% $44,633 40% $40,457 40% Less: Continuing stock-based compensation (3,073)

• 3%

(3,233)

• 3%

(3,963)

• 4%

(636)

• 1%

Core Operating Expenses excluding continuing stock-based compensation (non-GAAP)¹: $37,493 30% $36,735 35% $35,235 33% $43,997 39% $40,457 40% Expense Detail: Employee Costs $22,323 18% $20,586 19% $19,715 19% $22,004 20% $23,137 23% Data Processing 4,428 4% 4,960 5% 4,304 4% 5,155 5% 5,082 5% Outside Services 6,579 5% 6,788 6% 6,293 6% 10,041 9% 8,123 8% Travel and Promotion Expenses 1,685 1% 1,672 2% 2,702 3% 3,209 3% 1,986 2% Facilities Costs 1,492 1% 1,662 2% 1,440 1% 1,315 1% 1,384 1% Facilities Costs 1,492 1% 1,662 2% 1,440 1% 1,315 1% 1,384 1% Other Expenses 986 1% 1,067 1% 781 1% 2,273 2% 745 1% Number of Full Time Employees 582 581 591 593 597 ¹Please see our disclaimer regarding Non-GAAP financial measures. CBOE Holdings, Inc.

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2011 Calculation of Projected Weighted Average Shares

Shares Days Outstanding Total Days Weighted Avg Shares Days Outstanding Total Days Weighted Avg Unrestricted common stock 51 786 717 90 90 51 786 717 51 786 717 91 91 51 786 717 2Q 2011 (vested qtr) 1Q 2011 (pre-vesting) Unrestricted common stock 51,786,717 90 90 51,786,717 51,786,717 91 91 51,786,717 Class A-2 common stock (converts to unresticted 6/13/11) 38,297,994 90 90 38,297,994 38,297,994 91 91 38,297,994 Vesting of participating securities (restricted stock) on 6/15/11 548,905 16 91 96,511 Total weighted average shares - basic and diluted 90,084,711 90,181,222 Participating securities as of 3/31/11 2,195,621 90 90 2,195,621 2,195,621 91 91 2,195,621 25% vesting of participating securities (548 905) 16 91 (96 511) 25% vesting of participating securities (548,905) 16 91 (96,511) Weighted average shares including participating securities 92,280,332 92,280,332 Percentage of net income allocated to participating securities 2.379% 2.275% Shares Days Outstanding Total Days Weighted Avg Shares Days Outstanding Total Days Weighted Avg 3Q and 4Q 2011 (post-vesting) Full-Year 2011 Shares Outstanding Total Days Weighted Avg Shares Outstanding Total Days Weighted Avg Unrestricted common stock 51,786,717 92 92 51,786,717 51,786,717 365 365 51,786,717 Class A-2 common stock (converts to unresticted 6/13/11) 38,297,994 92 92 38,297,994 38,297,994 365 365 38,297,994 Vesting of participating securities (restricted stock) on 6/15/11 548,905 92 92 548,905 548,905 200 365 300,770 Total weighted average shares - basic and diluted 90,633,616 90,385,481 Participating securities as of 3/31/11 2,195,621 92 92 2,195,621 2,195,621 365 365 2,195,621 25% vesting of participating securities (548,905) 92 92 (548,905) (548,905) 200 365 (300,770) Weighted average shares including participating securities 92,280,332 92,280,332 Percentage of net income allocated to participating securities 1.784% 2.053% Net income allocated to common stockholders equals net income less the percentage of net income allocated to participating securities

CBOE Holdings, Inc.

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Net income allocated to common stockholders equals net income less the percentage of net income allocated to participating securities. GAAP EPS is calculated by dividing net income allocated to common stockholders by the total weighted average shares outstanding during the period for basic and diluted.

Quarterly Financial Highlights

Options ADV (mm) Transaction Fees ($mm) RPC

5.3 5.1 Equities Indexes Exchange-traded funds

$0 300 $0 306 $83 $94 $80 $90

24% 22% 19% 18% 20% 23% 25% 24% 23% 26% 4.5 3.7 4.2

$0.300 $0.281 $0.306 $0.293 $0.285 $ $73 $80

53% 53% 57% 59% 54% 1Q10 2Q10 3Q10 4Q10 1Q11

1Q10 2Q10 3Q10 4Q10 1Q11 1Q10 2Q10 3Q10 4Q10 1Q11

Adjusted Operating Revenue ($mm) Adjusted Pre-Tax Earnings ($mm) Adjusted Operating Expenses ($mm)

$101 $113 $106 $124 $97 $71 $66 $46 $58 $35 $62 $60 $62 $38 $42

CBOE Holdings, Inc.

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1Q10 2Q10 3Q10 4Q10 1Q11 1Q10 2Q10 3Q10 4Q10 1Q11 1Q10 2Q10 3Q10 4Q10 1Q11 ¹Adjusted to reflect the impact of certain items. See “Non-GAAP Information.”

GAAP to Non-GAAP Reconciliation

(in thousands, except per share amounts)

Three months ended March 31, 2011 Items Impacting Results Reported (GAAP) Accelerated stock-based compensation Impairment charge After Considering Items (non- GAAP) Items Impacting Results ( ) p g ) Total Operating Revenues 124,042 $ 124,042 $ Total Operating Expenses 66,507 (340) 66,167 Operating Income 57,535 340 57,875 Operating Margin 46 4% 46 7% Operating Margin 46.4% 46.7% Total Other Income /(Expense) (643) 459 (184) Income Before Income Taxes 56,892 340 459 57,691 Income Tax Provision 24,021 143 194 24,358 Net Income 32 871 $ 197 $ 265 $ 33 333 $ Net Income 32,871 $ 197 $ 265 $ 33,333 $ Net Income Allocated to Participating Securities (782) (5) (6) (793) Net Income Allocated to Common Stockholders 32,089 $ 192 $ 259 $ 32,540 $ Diluted Net Income per Share Allocated to Common Stockholders 0.36 $ 0.00 $ 0.00 $ 0.36 $

CBOE Holdings, Inc.

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NOTE: May not foot due to rounding

GAAP to Non-GAAP Reconciliation

(in thousands, ex cept per share amounts)

Items Impacting Results Items Impacting Results Reported (GAAP) Accelerated stock-based compensation After Considering Items (non- GAAP) Reported (GAAP) Recognition of prior-period revenue Accelerated stock-based compensation Impairment charge After Considering Items (non- GAAP) Total Operating Revenues 106,015 $

• $

106,015 $ 117,391 $ (4,406) $ 112,985 $ Three months ended September 30, 2010 Three months ended December 31, 2010 p g , , , ( , ) , Total Operating Expenses 71,082 (10,965) 60,117 65,537 (2,004) 63,533 Operating Income 34,933 10,965 45,898 51,854 (4,406) 2,004 49,452 Operating Margin 33.0% 43.3% 44.2% 43.8% Total Other Income /(Expense) (235) (235) (1,898) 1,620 (278) Income Before Income Taxes 34,698 10,965 45,663 49,956 (4,406) 2,004 1,620 49,174 Income Tax Provision 14,244 4,461 18,705 18,579 (1,638) 745 602 18,288 Net Income 20,454 $ 6,504 $ 26,958 $ 31,377 $ (2,768) $ 1,259 $ 1,018 $ 30,886 $ Net income allocated to Participating Securities (434) $ (138) $ (572) $ (690) $ 61 $ (28) $ (22) $ (679) $ Net Income Allocated to Common Stockholders 20,020 $ 6,366 $ 26,386 $ 30,687 $ (2,707) $ 1,231 $ 995 $ 30,206 $ Diluted Net Income Per Share Allocated to Common Stockholders 0.20 $ 0.06 $ 0.26 $ 0.31 $ (0.03) $ 0.01 $ 0.01 $ 0.31 $ Diluted Net Income Per Share for all Stockholders 0.20 $ 0.06 $ 0.26 $ 0.32 $ (0.03) $ 0.01 $ 0.01 $ 0.32 $

(in thousands, ex cept per share amounts)

Year ended December 31, 2009 Year ended December 31, 2010 Items Impacting Results Reported (GAAP) Recognition of prior-period revenue Accelerated stock-based compensation Impairment charge After Considering Items (non- GAAP) Reported (GAAP) Recognition of deferred access fee revenue Exercise right appeal settlement After Considering Items (non- GAAP) Total Operating Revenues 437,104 $ (4,406) $ 432,698 $ 426,082 $ (24,086) $ 401,996 $ Total Operating Expenses 269,763 (12,968) 256,795 248,498 (2,086) 246,412 O ti I 167 341 (4 406) 12 968 175 903 177 584 (24 086) 2 086 155 584 Items Impacting Results Operating Income 167,341 (4,406) 12,968 175,903 177,584 (24,086) 2,086 155,584 Operating Margin 38.3% 40.7% 41.7% 38.7% Total Other Income /(Expense) (2,718) 1,620 (1,098) (355) (355) Income Before Income Taxes 164,623 (4,406) 12,968 1,620 174,805 177,229 (24,086) 2,086 155,229 Income Tax Provision 65,227 (1,746) 5,138 642 69,261 70,778 (9,619) 833 61,992 Net Income 99,396 $ (2,660) $ 7,830 $ 978 $ 105,544 $ 106,451 $ (14,467) $ 1,253 $ 93,237 $ Net income allocated to Participating Securities (1,229) $ 33 $ (97) $ (12) $ (1,305) $

• $
• $
• $
• $

CBOE Holdings, Inc.

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Net Income Allocated to Common Stockholders 98,167 $ (2,627) $ 7,733 $ 966 $ 104,239 $ 106,451 $ (14,467) $ 1,253 $ 93,237 $ Diluted Net Income Per Share Allocated to Common Stockholders 1.03 $ (0.03) $ 0.08 $ 0.01 $ 1.09 $ 1.17 $ ($0.16) $0.01 1.03 $ Diluted Net Income Per Share for all Stockholders 1.04 $ (0.03) $ 0.08 $ 0.01 $ 1.10 $ 1.17 $ ($0.16) $0.01 1.03 $

NOTE: May not foot due to rounding

Non-GAAP Information

►

In addition to disclosing results determined in accordance with GAAP, CBOE Holdings has disclosed certain non-GAAP measures of operating

• performance. The non-GAAP measures provided in this presentation include

core operating expenses adjusted revenue adjusted operating expenses core operating expenses, adjusted revenue, adjusted operating expenses, adjusted operating income, adjusted operating margin, adjusted net income, adjusted net income allocated to common stockholders and adjusted diluted earnings per share. M t b li th t th GAAP fi i l t d i

►

Management believes that the non-GAAP financial measures presented in this press release, including adjusted net income and core operating expenses, provide useful and comparative information to assess trends in our core operations and a means to evaluate period-to-period comparisons. Non-GAAP financial measures disclosed by management including adjusted Non GAAP financial measures disclosed by management, including adjusted diluted EPS, are provided as additional information to investors in order to provide them with an alternative method for assessing our financial condition and operating results. These measures are not in accordance with, or a substitute for, GAAP, and may be different from or inconsistent with non- GAAP fi i l d b th i GAAP financial measures used by other companies.

►

Core operating expenses is the company’s operating expenses after excluding (i) volume-based expenses, (ii) depreciation and amortization expense, (iii) accelerated stock-based compensation expense and (iv) other

CBOE Holdings, Inc.

• p. 42

p , ( ) p p ( ) unusual or one-time expenses.

CBOE Holdings, Inc.

400 South LaSalle Street 400 South LaSalle Street Chicago, IL 60605

Debbie Koopman Director, Investor Relations koopman@cboe com koopman@cboe.com 312-786-7136

CBOE Holdings, Inc.

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