What is an XPO?

XPOs are simply American-style options with no expiration date - they will trade at multiple strike prices, as
either calls or puts, on an exchange or over-the-counter. XPOs will trade on the Philadelphia Stock Exchange. The elimination of the risk associated with expiration while maintaining the structural benefits of options (including the tax benefits) creates a product with broad appeal to many different types of investors. In addition, XPOs are covered by multiple patents whose issued claims cover product, product by process, computer implementation and business method (additional domestic and international patents pending).

What are the Advantages of XPOs?

· They offer multiple prices at which to buy or sell versus the single price in the futures markets for a given    expiry date (they possess competitive advantages over futures).
· An XPO position (to buy or sell the underlying) does not possess the dual liability of futures.
· They create leverage without the time-risk of expiring options (they offer competitive advantages over expiring   options).
· They are a less expensive way to hedge, both risk in the underlying and against other positions, such as    expiring options.

In what markets will I be able to buy and sell XPOs?

The Philadelphia Stock Exchange will be the market to trade XPOs.

How will the market for XPOs affect the market for expiring options?

We expect the market for expiring options to remain robust because of the trading and arbitrage opportunities between expiring options and XPOs. XPOs will become the option product of choice to hedge long-term risk or risk of unknown duration and will replace expiring options activity for these uses.

How will the market for XPOs affect the market for the underlying instrument?

The underlying instrument should become even more heavily traded because of arbitrage and trading opportunities between the underlying instruments and the XPO. Typically, new product introductions tend to increase trading volume of underlying instruments.

How would I hedge my XPO position?

An XPO position is hedged with an offsetting position in the underlying or with another derivative instrument

How can I cover a short position?

Exactly like every other short position is covered: through a buy to close order or through delivery

What are the tax implications?

The treatment of gains and losses for options, even long-dated options, is well established and we expect that the tax treatment of XPOs to be similar, if not identical, to other long-term investments.

What about counter-party risk?

Like all exchange-traded instruments, there is no counter-party risk. The default risk will be insured by the clearing organization, the exchange and its members