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CBOE delays start of extended VIX trading until Oct. 21

* VIX futures trading hours to increase in two stages

* Start of first phase delayed from late September

* Second phase to start Oct. 28

By Tom Polansek and Doris Frankel

CHICAGO, Sept 30 (Reuters) - CBOE Holdings Inc said on Monday it has delayed the launch of expanded trading hours for futures on the CBOE Volatility Index for a second time, setting Oct. 21 as the new target start date.

CBOE, operator of the CBOE Futures Exchange and Chicago Board Options Exchange, said in July that the extension would begin in late September.

A CBOE spokeswoman had no immediate further comment on the delay.

The exchange operator is aiming to increase overseas trading of its lucrative CBOE Volatility Index by adding five hours and 45 minutes to the trading day in two stages. The biggest chunk of extra time will come during European trading hours.

The index, also known as the VIX, is a widely followed gauge that measures investors' sentiment.

The first phase of the extension will add a 45-minute post-settlement trading period to the current trading hours of 7:00 a.m. CT (1200 GMT) to 3:15 p.m CT (2015 GMT). Following the close of trading Monday to Thursday, the market will reopen for a new trading period from 3:30 p.m. CT (2030 GMT) to 4:15 p.m. CT (2115 GMT). Trading will then resume at 7:00 a.m. CT the following morning.

The second round of changes will begin on Oct. 28, CBOE said.

It will allow European-based customers to trade VIX futures during their local trading hours by beginning the current trading session at 2:00 a.m. CT Monday to Friday, instead of the current opening time of 7:00 a.m. CT.

"We are pleased to provide our European customers with the opportunity to trade VIX futures during local trading hours, but we also believe our entire global base of VIX users will benefit by extended trading hours," CBOE Holdings Chief Executive Officer Edward Tilly said in a statement.

CBOE in February opened a communications hub outside of London to facilitate VIX futures trading.

CBOE had initially planned to start extending the trading day in May. However, it delayed the increase after a half-day outage at the Chicago Board Options Exchange in April exposed software problems.

Exchanges, including CBOE, have since become more cautious about rolling out product offerings, changing market structure and adding trading hours because of a Nasdaq OMX Group outage last month, said Chris Allen, equity analyst for Evercore Partners.

Following the three-hour Nasdaq disruption, U.S. Securities and Exchange Commission Chair Mary Jo White met privately with top executives of the major exchanges, including CBOE executive chairman William Brodsky, to discuss market reforms.

"The SEC is very on top of all of the exchanges right now," Allen said.

CBOE shares were down 0.1 percent at 45.23.