CBOE Holdings, Inc. Second Quarter Earnings Conference Call A - - PowerPoint PPT Presentation

CBOE Holdings, Inc. Second Quarter Earnings Conference Call A t 4 2011

CBOE Holdings, Inc.

• p. 1
• p. 1
• p. 1

August 4, 2011

Agenda

Strategic Review William Brodsky Chairman and CEO Financial Review Alan Dean Executive Vice President, CFO and Treasurer Questions and Answers William Brodsky Alan Dean Edward Tilly Executive Vice Chairman

CBOE Holdings, Inc.

• p. 2
• p. 2
• p. 2

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 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.

• p. 3
• p. 3
• p. 3

Strategic Review

William Brodsky Chairman and CEO

CBOE Holdings, Inc.

• p. 4
• p. 4
• p. 4

Strong Financial Results 2Q11 vs 2Q10

► Operating Revenues

• $120.3 Million, up 7%

Adjusted Operating Revenues1 (in millions) $402 $433 $417

$120.3 Million, up 7%

► Operating Margin

• 46 9% up 980 bps

$402 $214 $244 $ $344 $253

46.9%, up 980 bps

• Highest level in ten quarters

► Net Income Allocated to Common 2 6 2 7 2 8 2 9 2 1 Y T D 1 Y T D 1 1 Adj t d O ti I

1

► Net Income Allocated to Common

Stockholders

• $32.6 Million, up 32%

Adjusted Operating Income 1 (in millions) $176 $156 $187 ► Diluted Earnings Per Share

• $0.36, up 33%

$81 $114 $156 $68 $136 CBOE Holdings, Inc.

• p. 5
• p. 5
• p. 5

2 6 2 7 2 8 2 9 2 1 Y T D 1 Y T D 1 1

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

Options ADV Down 17% in 2Q11 Against Difficult 2Q10 Comparison

Equity Options

2.40 2.58 1.87 2.26 2.60 1.94

CBOE Holdings Quarterly Options ADV

(in millions) Includes May 6 “Flash Crash”

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

Index Options

4.55 5.29 4 23 5.04 4.40

Flash Crash Index Options

1.11 1.26 0.94 0.98 1.17 1.11

3.71 4.23

ETF Options

1 35 1 45

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

1.35 1.26 0.99 0.91 1.45 1.04

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

CBOE Holdings, Inc.

• p. 6
• p. 6
• p. 6

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

Options Volume Trends

Total Monthly Options Average Daily Volume

(in millions) May 6 “Flash Crash”

5.29 5.00 5.30 6.57 4.85 4.85 4.25 3.85 3.50 3.79 4.33 4.46 3.93 4.19 4.52 4.57 4.54 4.12 4.85 4.48 Jan Feb Mar April May Jun Jul Aug Sep Oct Nov Dec 2010 2011

CBOE Holdings, Inc.

• p. 7
• p. 7

Source: Company Data

VIX Trading Continues to Hit Record Highs

►

VIX futures increased 190%

VIX Options & Futures ADV (in thousands)

400

►

VIX futures increased 190% in 2Q11 versus 2Q10

►

VIX options increased 34% in

381 45 300 350 40 50

►

VIX options increased 34% in 2Q11 versus 2Q10

►

VIX futures surpassed

248 150 200 250

p tio n s A D V

20 30

u tu re s A D V

p 100,000 contracts on June 16

►

VIX futures monthly ADV set

23 93 103 132 1 5 17 50 100 150

O p

10 20

F u

a third consecutive record in July of 58,532 contracts

23 1 5 5 4 2 2005 2006 2007 2008 2009 2010 2011 YTD VIX Options VIX Futures

¹

CBOE Holdings, Inc.

• p. 8
• p. 8

¹YTD through 6/30/11

2Q11 Market Share Data

4%

Total Industry Volume

• Excl. Dividend Trades

3% 4%

CBOE C2 PHLX 10% 25% 4% 2%

31% 14%

10% 26% 4% 3%

ISE NYSE/Amex NYSE/Arca NOM 23% 17% 14% 1%

20% 18% 14% 1%

NOM BOX BATS

94% CBOE Holdings, Inc.

• p. 9
• p. 9
• p. 9

Source: Options Clearing Corporation and CBOE

Differentiated Product Set

CBOE Trades…

Equity Options Index Options Options on ETFs CFE Futures Exchange

2Q10 vs 2Q11

• 24.9%
• 7.0%
• 11.7%

194%

Options Options ETFs Exchange

ADV Chg % of 2Q11 Volume 44% 30% 25% 1% % of 2Q11

• Trans. Fees

24% 20% 51% 5% 2Q11 RPC $0.169 $0.202 $0.627 $1.477

CBOE Holdings, Inc.

• p. 10
• p. 10

C2 Achieving Steady Growth

► Averaged 191,200 contracts per day in 2Q11, up 18 percent from 1Q11 ► Active market makers have nearly doubled since February ► Adjusted fees and incentives on May 2 to improve market quality ► Introduced complex order functionality for all listed classes in July

C2 Monthly ADV

(contracts in thousands)

220 186 211 149 179 175 186 156 111 56 1

Oct-2010 Nov Dec Jan-2011 Feb Mar Apr May June July

CBOE Holdings, Inc.

• p. 11
• p. 11
• p. 11
• p. 11

Oct-2010 Nov Dec Jan-2011 Feb Mar Apr May June July

C2 Market Share Continues to Grow

C2 Market Share - Gains in SPY, QQQQ and Penny ETF

3.8%

4.0% 3.0% 3.5%

1 7% 2.5% 1.9% 2.2%

2.0% 2.5%

1.3% 0.8% 1.7% 1.0% 1.3% 1.5%

1.0% 1.5% 0.0% 0.5% Jan Feb Mar Apr May Jun Jul

CBOE Holdings, Inc.

• p. 12

p y

All Penny Penny ETF SPY QQQQ

SPXpm to Broaden Customer Reach

►

SEC extended its evaluation of SPXpm rule filing on June 3

• SEC must act by Sept 6 to
• Approve or disapprove
• Extend review period an additional and final 60 days

►

SEC’s extended review focuses on PM settlement

• PM settlement is a long established, logical settlement convention
• Used in many exchange-traded products

Used in many exchange traded products

• SPXpm provides a potential alternative to OTC trading
• Aligned with Dodd-Frank mandate to move more OTC trades onto

exchanges

►

Committed to working with the SEC to obtain approval to launch SPXpm

CBOE Holdings, Inc.

• p. 13
• p. 13
• p. 13

Leveraging Expertise in Volatility Products

► New Initiatives to further develop volatility

Introduced CBOE Tail Hedge Index

• Introduced CBOE Tail Hedge Index
• Tracks performance of a portfolio based on one-month out-of-the

money VIX calls

• Provides investor a benchmark for VIX-based tail hedge

strategies

• CBOE may also use index to create a tradable product or license

it to others for trading

• CBOE Options Institute launched new class devoted to VIX trading

CBOE Options Institute launched new class devoted to VIX trading

• CFE plans to launch futures contracts on several Radar Logic 28-Day

Real Estate Indexes (RPX), pending regulatory approval

CBOE Holdings, Inc.

• p. 14
• p. 14
• p. 14

Returning Capital to Stockholders

►

Board authorized a $100 million share repurchase program I d t l di id d b 20% t $0 12 f $0 10

►

Increased quarterly dividend by 20% to $0.12 from $0.10

►

Strong commitment to returning capital to stockholders

►

Confidence in long-term growth prospects for CBOE Holdings

CBOE Holdings, Inc.

• p. 15

2011 Initiatives

►

CBOE’s unique focus on options and volatility products leaves us well-positioned to take advantage of long-term secular growth trends

►

Key Priorities:

• Build on the success of C2
• Work for approval to launch SPXpm
• Expand product offerings, including VIX product line
• Position CBOE to benefit from regulatory reform

Position CBOE to benefit from regulatory reform

►

Strong operating cash flow and debt-free balance sheet provide us financial flexibility

• Invest in innovation
• Reward stockholders

CBOE Holdings, Inc.

• p. 16
• p. 16
• p. 16
• p. 16

2Q11 Financial Overview

2Q11 2Q10 $ Change % Change

(in millions, except RPC and EPS)

Total Operating Revenues $ 120.3 $ 112.6 $ 7.7 7% Total Operating Expenses 63.8 70.8 (7.0)

• 10%

Operating Income 56.5 41.8 14.7 35% Operating Margin Percentage 46.9% 37.1% N/A 980 bps Income Before Income Taxes 56.3 41.6 14.7 35% Net Income 33.4 24.9 8.5 34% Net Income Allocated to Common Stockholders 32.6 24.8 7.8 32% Diluted EPS $0.36 $0.27 $0.09 33% Total Contracts Per Day 4.45 5.31 N/A

• 16%

CBOE Holdings, Inc.

• p. 17
• p. 17
• p. 17
• p. 17

Rate Per Contract (RPC) $0.308 $0.281 $0.027 10%

2Q11 Operating Revenues

Key Drivers:

Operating Revenues (in millions) 2Q 2011 2Q 2010 $ CHG % CHG

► Access fees

• Increase reflects implementation
• f new trading permit program

Transaction fees $ 86.3 $ 94.1 $ (7.8)

• 8%

Access fees 17.0 2.3 14.7 639%

• f new trading permit program

► Transaction fees

• 16% decrease in trading volume

Access fees 17.0 2.3 14.7 639% Exchange services and other fees 4.3 4.5 (0.2)

• 4%

Market data fees 4.8 5.6 (0.8)

• 14%
• 10% increase in RPC to $0.308

► Other revenue

Market data fees 4.8 5.6 (0.8) 14% Regulatory fees 4.8 4.2 0.6 14% Other Revenue 3.1 1.9 1.2 63%

• Increase in licensing fees and
• ther miscellaneous items

Other Revenue 63% Total Operating Revenues $ 120.3 $ 112.6 $ 7.7 7%

CBOE Holdings, Inc.

• p. 18
• p. 18
• p. 18

Transaction Fees Driven by Volume and Rate Per Contract

Overall Transaction Fee per Contract (RPC) Overall Transaction Fee per Contract (RPC)

RPC up due to higher mix of index options and futures and lower volume discounts Thousands RPC down due to lower mix of index

• ptions and fee caps

5,000 6,000 $0.300 $0.320

Thousands RPC p p

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 4 447 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11

CBOE Holdings, Inc.

• p. 19
• p. 19

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 4,447 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 0.308

• p. 19

Options Trading Volume Mix

RPC Increased due to Mix Shift to Higher-Margin Index Options and Futures

2Q 2011

Futures, 1.1%

2Q 2010

ETF, 30.3% ETF, 27.3% Equity, 43.5% Index, 25.1% Equity, 48.6% Index, 23.8% 25.1%

CBOE Holdings, Inc.

• p. 20
• p. 20
• p. 20

2Q11 Operating Expenses

Key Drivers:

►Employee Costs

I i t k b d

Operating Expenses (in millions) 2Q 2011 2Q 2010 $ CHG % CHG

• Increase in stock-based

compensation; $2.5 million continuing expense and $0.1 million of accelerated

Employee Costs $ 24.5 $ 22.6 $ 1.9 8% Depreciation and Amortization 9.0 7.3 1.7 23% Data Processing 4 9 5 2 (0 3) 6%

►Depreciation and Amortization

• Reflects startup of C2 and

accelerated write-off of assets

O t id S i

Data Processing 4.9 5.2 (0.3)

• 6%

Outside Services 7.2 10.1 (2.9)

• 29%

Royalty Fees 10.4 11.5 (1.1)

• 10%

►Outside Services

• Lower legal and consulting fees

►Royalty Fees

Trading Volume Incentives 2.5 7.3 (4.8)

• 66%

Travel and Promotional Expenses 2.3 3.2 (0.9)

• 28%

F iliti C t 1 4 1 3 0 1 8%

• Lower volume in licensed index
• ptions

►Trading Volume Incentives

Facilities Costs 1.4 1.3 0.1 8% Other Expenses 1.6 2.3 (0.7)

• 30%

Total Operating Expenses $ 63.8 $ 70.8 $ (7.0)

• 10%

CBOE Holdings, Inc.

• p. 21
• p. 21
• p. 21
• Lower volume in equity and ETF
• ptions and change in incentive

program

2Q11 Core Operating Expenses Down 12% Excluding Impact of Stock Grants

(in thousands) 2Q11 2Q10 $ CHG % CHG T t l O ti E $ 63 838 $ 70 792 $ (6 954) 10% Total Operating Expenses $ 63,838 $ 70,792 $ (6,954)

• 10%

Less: Depreciation and amortization 8,996 7,301 1,695 23% Accelerated stock-based compensation expense 113

• 113

NM Volume-based expenses:

• 10 373

11 519 (1 146) Royalty fees 10,373 11,519 (1,146)

• 10%

Trading volume incentives 2,515 7,339 (4,824)

• 66%

Core Operating Expenses (non-GAAP): $ 41,841 $ 44,633 $ (2,792)

• 6%

Less: Continuing stock-based compensation expense (3,106) (636) (2,470) NM Core Operating Expenses Excluding Continuing Stock- Based Compensation (non GAAP) 38 735 $ 43 997 $ (5 262) $ 12% Based Compensation (non-GAAP) 38,735 $ 43,997 $ (5,262) $

• 12%

Detail of Core Operating Expenses Excluding Continuing Stock-Based Compensation (non-GAAP) Employee costs (excluding stock-based compensation expense) $ 21,285 $ 22,004 $ (719)

• 3%

Data processing 4,905 5,155 (250)

• 5%

Outside services 7,190 10,041 (2,851)

• 28%

Travel and promotional expenses 2,368 3,209 (841)

• 26%

Facilities costs 1,400 1,315 85 6% Other expenses 1,587 2,273 (686)

• 30%

Total $ 38,735 $ 43,997 $ (5,262)

• 12%

CBOE Holdings, Inc.

• p. 22
• p. 22

NM = not meaningful

Volume-based Expenses

(in thousands)

2Q11 2Q10 $ CHG % CHG

Volume-based expenses:

Royalty fees $ 10,373 $ 11,519 $ (1,146)

• 10%

Trading volume incentives 2,515 7,339 (4,824)

• 66%

Total $ 12,888 $ 18,858 $ (5,970)

• 32%

►

Royalty fees declined due to lower trading volume in licensed index products

►

Trading volume incentives down due to lower trading volume and changes in incentive program

• Equity options down 25% in 2Q11 versus 2Q10
• Equity options down 25% in 2Q11 versus 2Q10
• ETF options down 7% in 2Q11 versus 2Q10

CBOE Holdings, Inc.

• p. 23
• p. 23

Well Positioned to Deliver Higher Margins

$60.0 50.0%

Quarterly Adjusted Operating Income and Margin¹

($ in millions)

$50.0 46.0% 48.0% $30 0 $40.0 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.

• p. 24
• p. 24

$0.0 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 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

►

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

• Excludes access fees for SPXpm on C2

►

Core expenses adjusted to a range of $170 to $173 million from a range of $173 to $177 million

• Includes continuing stock-based compensation expense in a range of $12 2

Includes continuing stock based compensation expense in a range of $12.2 to $12.7 million

►

Accelerated stock-based compensation expense of $453,000 (excluded from adjusted earnings) from adjusted earnings)

►

Depreciation and amortization expense of $35 to $37 million Capital expenditures of $30 to $35 million

CBOE Holdings, Inc.

• p. 25
• p. 25
• p. 25

►

Capital expenditures of $30 to $35 million

►

Effective tax rate in a range of 41.7% to 42.0%

Strong Debt-Free Balance Sheet

($ in thousands)

As of

• Dec. 31, 2010

As of

• Mar. 31, 2011

As of June 30, 2011 S Balance Sheet Data Cash¹ $ 53,789 $115,689 $106,545 Total Assets $254,112 $320,820 $319,422 Total Assets $254,112 $320,820 $319,422 Total Liabilities $ 78,238 $117,856 $ 92,128 Total Stockholders’ Equity $175,874 $202,964 $227,294 Other Data Working Capital¹ $ 61,118 $ 93,479 $116,629

►

No existing debt

Working Capital $ 61,118 $ 93,479 $116,629 Capital Expenditures² $ 23,556 $ 7,134 $ 18,334

CBOE Holdings, Inc.

• p. 26
• p. 26
• p. 26
• 1. Current assets minus current liabilities.
• 2. Does not include new investments in affiliates or the disposition of interests in affiliates.

Strong Cash Flow and Return of Capital

►

Generated $14.3 million in operating cash flow for second quarter and $92.6 million year-to-date y

• 63% increase in 2Q11 compared with 2Q10
• 30% increase year-to-date 2011 versus 2010

►

Cash from operations expected to fund ongoing growth initiatives

►

Focused on short-term earnings performance while driving long- t t kh ld l term stockholder value

CBOE Holdings, Inc.

• p. 27

Questions & Answers

CBOE Holdings, Inc.

• p. 28
• p. 28
• p. 28

Appendix Materials

CBOE Holdings, Inc.

• p. 29
• p. 29
• p. 29

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 $193 $155 $175 $201 $253 $180 $185 $20 $72 $140 $155

CBOE Holdings, Inc.

• p. 30
• p. 30

2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010 $20 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/ 6 Mos Ended June 30, 6 Mos Ended June 30, except rate per contract) 2006 2007 2008 2009 2010 CAGR/ Avg. June 30, 2011 June 30, 2010 Average Daily Volume Equities 1,556 1,996 2,387 2,519 2,273 10% 2,267 2,489 Indexes 628 918 1,026 884 1,071 14% 1,143 1,187 ETF’s 504 849 1,304 1,100 1,097 22% 1,306 1,249 Total Options 2,688 3,763 4,717 4,503 4,440 13% 4,716 4,925 Futures 2 4 5 5 17 71% 46 13 Total 2,690 3,767 4,722 4,508 4,457 14% 4,762 4,938 , , , , , , , Rate Per Contract Equities $ 0.182 $ 0.180 $ 0.177 $ 0.181 $ 0.176 $ 0.179 $ 0.164 $ 0.172 Indexes 0.500 0.544 0.576 0.567 0.591 0.556 0.616 0.588 ETF’s 0 312 0 257 0 259 0 255 0 227 0 262 0 204 0 225 ETF s 0.312 0.257 0.259 0.255 0.227 0.262 0.204 0.225 Total Options $ 0.280 $ 0.286 $ 0.286 $ 0.275 $ 0.288 $ 0.286 $ 0.284 $ 0.286 Futures $ 1.974 $ 2.130 $ 1.860 $ 1.990 $ 1.723 $ 1.935 $ 1.491 $ 1.806 Total $ 0.282 $ 0.288 $ 0.288 $ 0.277 $ 0.294 $ 0.286 $0.296 $ 0.290 CBOE Holdings, Inc.

• p. 31

Total Transaction Fees $190,224 $272,716 $ 343,779 $ 314,506 $ 330,264 15% $ 176,179 $177,493

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 $0.163 $0.168 $0.169 Indexes 0.592 0.601 0.604 0.615 0.618 0.627 Exchange-traded funds 0.223 0.215 0.207 0.207 0.208 0.202 Total options average 0.276 0.272 0.275 0.282 0.289 0.295 Futures 1.657 1.591 1.507 1.493 1.514 1.477 Total average transaction fee per contract $0.286 $0.282 $0.285 $0.293 $0.301 $0.308 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 E iti $0 179 $0 188 $0 195 $0 188 $0 183 $0 188 $0 187 $0 181 $0 171 $0 168 $0 172 $0 172 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 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

CBOE Holdings, Inc.

• p. 32
• p. 32
• p. 32

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

2Q 2011 % rev 1Q 2011 % rev 4Q 2010 % rev 3Q 2010 % rev 2Q 2010 % rev Total Operating Expenses $63,838 53% $66,507 54% $65,537 62% $71,082 67% $70,792 63% Less: ($ in thousands) Less: Depreciation and Amortization 8,996 8% 8,696 7% 8,190 8% 7,099 7% 7,301 6% Accelerated stock-based compensation 113 - 340 - 2,004 2% 10,965 10% Volume-based Expense: Royalty Fees 10,373 9% 11,146 9% 9,710 9% 9,226 9% 11,519 10% Trading Volume Incentives 2,515 2% 5,759 5% 5,665 5% 4,594 4% 7,339 7% Non-Operating Items: p g Exercise Right Appeal Settlement

• Core Operating Expenses (non-GAAP)¹:

$41,841 35% $40,566 33% $39,968 38% $39,198 37% $44,633 40% Less: Continuing stock-based compensation (3,106)

• 3%

(3,073)

• 3%

(3,233)

• 3%

(3,963)

• 4%

(636)

• 1%

Core Operating Expenses excluding continuing stock-based compensation (non-GAAP)¹: $38,735 32% $37,493 30% $36,735 35% $35,235 33% $43,997 39% E D t il Expense Detail: Employee Costs $21,285 18% $22,323 18% $20,586 19% $19,715 19% $22,004 20% Data Processing 4,905 4% 4,428 4% 4,960 5% 4,304 4% 5,155 5% Outside Services 7,190 6% 6,579 5% 6,788 6% 6,293 6% 10,041 9% Travel and Promotion Expenses 2,368 2% 1,685 1% 1,672 2% 2,702 3% 3,209 3% Facilities Costs 1,400 1% 1,492 1% 1,662 2% 1,440 1% 1,315 1% Other Expenses 1 587 1% 986 1% 1 067 1% 781 1% 2 273 2% Other Expenses 1,587 1% 986 1% 1,067 1% 781 1% 2,273 2% Number of Full Time Employees 588 582 581 591 593 ¹Please see our disclaimer regarding Non-GAAP financial measures. CBOE Holdings, Inc.

• p. 33
• p. 33

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) , , , , , , , , 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 5/17/11 22,641 44 91 10,947 Vesting of participating securities (restricted stock) on 6/15/11 413,175 15 91 68,106 Total weighted average shares - basic and diluted 90,084,711 90,084,711 90,520,527 90,163,764 Participating securities as of quarter end 2,195,621 90 90 2,195,621 2,193,521 91 91 2,193,521 p g q Vesting of participating securities on 5/17/11 (22,641) 44 91 (10,947) Vesting of participating securities on 6/15/11 (542,550) 15 91 (89,431) Weighted average shares including participating securities 92,280,332 92,148,857 92,256,906 Percentage of net income allocated to participating securities 2.379% 2.269% 3Q and 4Q 2011 (post-vesting) Full-Year 2011 Shares Days Outstanding Total Days Weighted Avg Shares Days Outstanding Total Days Weighted Avg Unrestricted common stock 90,084,711 92 92 90,084,711 90,084,711 365 365 90,084,711 Vesting of participating securities (restricted stock) on 5/17/11 22,641 92 92 22,641 22,641 228 365 14,143 Vesting of participating securities (restricted stock) on 6/15/11 413,175 92 92 413,175 413,715 199 365 225,560 Total weighted average shares - basic and diluted 90,520,527 90,520,527 90,324,414 Participating securities as of 6/30/11 2,193,521 92 92 2,193,521 2,195,621 365 365 2,195,621 Vesting of participating securities (restricted stock) on 5/17/11 (22,641) 92 92 (22,641) (22,641) 228 365 (14,143) Vesting of participating securities (restricted stock) on 6/15/11 (542,550) 92 92 (542,550) (542,550) 199 365 (295,801) Weighted average shares including participating securities 92,148,857 92,505,892

CBOE Holdings, Inc.

• p. 34
• p. 34

Percentage of net income allocated to participating securities 1.767% 2.038%

Quarterly Financial Highlights

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

5.3 5.1 Equities Indexes Exchange-traded funds

$0 300 $0 306 $0.308 $83 $94 $80 $90 $86

24% 24% 22% 19% 18% 20% 27% 23% 25% 24% 23% 26% 4.5 3.7 4.2 4.4

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

49% 53% 53% 57% 59% 54% 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11

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

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

$101 $113 $106 $113 $124 $120 $71 $66 $46 $49 $58 $56 $62 $60 $64 $64 $39 $42

CBOE Holdings, Inc.

• p. 35
• p. 35

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

GAAP to Non-GAAP Reconciliation

CBOE Holdings, Inc. and Subsidiaries Reconciliation of GAAP to Non-GAAP Financial Measures For the Three Months Ended March 31 and June 30, 2011

(in thousands, except per share amounts)

Items Impacting Results After After Three months ended June 30, 2011 Three months ended March 31, 2011 Items Impacting Results Reported (GAAP) Accelerated stock-based compensation Impairment charge Considering Items (non- GAAP) Reported (GAAP) Accelerated stock-based compensation Considering Items (non- GAAP) Total Operating Revenues 124,042 $ 124,042 $ 120,290 $ 120,290 $ Total Operating Expenses 66,507 (340) 66,167 63,838 (113) 63,725 p g p ( ) ( ) Operating Income 57,535 340 57,875 56,452 113 56,565 Operating Margin 46.4% 46.7% 46.9% 47.0% Total Other Income /(Expense) (643) 459 (184) (162) (162) Income Before Income Taxes 56,892 340 459 57,691 56,290 113 56,403 Income Tax Provision 24,021 143 194 24,358 22,889 46 22,935 Net Income 32,871 $ 197 $ 265 $ 33,333 $ 33,401 $ 67 $ 33,468 $ Net Income Allocated to Participating Securities (782) (5) (6) (793) (792) (2) (794) Net Income Allocated to Common Stockholders 32,089 $ 192 $ 259 $ 32,540 $ 32,609 $ 65 $ 32,674 $ CBOE Holdings, Inc.

• p. 36
• p. 36
• p. 36

NOTE: May not foot due to rounding

Diluted Net Income per Share Allocated to Common Stockholders 0.36 $ 0.00 $ 0.00 $ 0.36 $ 0.36 $ 0.00 $ 0.36 $

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.

• p. 37
• p. 37
• p. 37

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 presentation, 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. 38
• p. 38

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.

• p. 39
• p. 39
• p. 39