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 Securities and Exchange Commission [Release No. 34-61478; File No. SR-CBOE-2010-009]
 Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”) [1]
                    
                     and Rule 19b-4 thereunder,[2]
                    
                     notice is hereby given that on January 29, 2010, the Chicago Board Options Exchange, Incorporated (“Exchange” or “CBOE”) filed with the Securities and Exchange Commission (the “Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange filed the proposal as a “non-controversial” proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act [3]
                    
                     and Rule 19b-4(f)(6) thereunder.[4]
                    
                     The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change CBOE proposes to amend [sic] its rules relating to the Penny Pilot Program. The text of the rule proposal is available on the Exchange's Web site (
                    *http://www.cboe.org/​legal*), at the Exchange's Office of the Secretary, at the Commission's Public Reference Room and on the Commission's Web site 
                    *http://www.sec.gov.* II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The self-regulatory organization has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose CBOE proposes to amend its rules in connection with the expansion of the Penny Pilot on February 1, 2010. Specifically, CBOE proposes to amend Rule 6.42 to provide that the minimum increment for all option series in the IWM and SPY option classes will be $0.01 effective February 1, 2010. Currently, the minimum increments in these two classes are $0.01 for all option series quoted below $3 (including LEAPS), and $0.05 for all option series $3 and above (including LEAPS). CBOE notes that the SEC recently approved an NYSEArca rule filing which provides that the minimum increment for all option series in the IWM and SPY option classes will be $0.01 effective February 1, 2010.[5] CBOE also proposes to identify the 75 option classes that will be added to the Penny Pilot Program beginning on February 1, 2010. CBOE recently extended and expanded the Penny Pilot Program through December 31, 2010.[6]
                    
                     As described in its filing, the Pilot 
                    ( print page 6763)
                    Program will be expanded by adding 300 option classes, in groups of 75 classes each quarter on the following dates: November 2, 2009, February 1, 2010, May 3, 2010, and August 2, 2010.[7]
                    
                     The option classes will be identified based on national average daily volume in the six calendar months preceding their addition to the Pilot Program using data compiled by The Options Clearing Corporation, except that the month immediately preceding their addition to the Pilot Program will not be utilized for purposes of the six-month analysis. The following 75 option classes will be added to the Pilot Program beginning on February 1, 2010: Symbol
Company name
Symbol
Company nameABT
Abbott Laboratories.
LEAP
Leap Wireless International Inc.AEM
Agnico-Eagle Mines Ltd.
LLY
Eli Lilly & Co.AET
Aetna Inc.
LO
Lorillard Inc.AFL
Aflac Inc.
LOW
Lowe's Cos Inc.AKAM
Akamai Technologies Inc.
M
Macy's IncAMAT
Applied Materials Inc.
MCO
Moody's Corp.AMR
AMR Corp.
MET
MetLife Inc.ANF
Abercrombie & Fitch Co.
MMM
3M Co.APC
Anadarko Petroleum Corp.
MU
Micron Technology Inc.ATVI
Activision Blizzard Inc.
NUE
Nucor Corp.BBD
Banco Bradesco SA.
OXY
Occidental Petroleum Corp.BCRX
BioCryst Pharmaceuticals Inc.
PARD
Poniard Pharmaceuticals Inc.BK
Bank of New York Mellon Corp/The.
PEP
PepsiCo Inc/NC.BRCM
Broadcom Corp.
PM
Philip Morris International Inc.BTU
Peabody Energy Corp.
PNC
PNC Financial Services Group Inc.BX
Blackstone Group LP.
QID
ProShares UltraShort QQQ.CAL
Continental Airlines Inc.
SHLD
Sears Holdings Corp.CF
CF Industries Holdings Inc.
SLM
SLM Corp.CMCSA
Comcast Corp.
SLW
Silver Wheaton Corp.CSX
CSX Corp.
SQNM
Sequenom Inc.CVS
CVS Caremark Corp.
STEC
STEC Inc.CX
Cemex SAB de CV.
STX
Seagate Technology.DD
EI du Pont de Nemours & Co.
SU
Suncor Energy Inc.ERTS
Electronic Arts Inc.
TCK
Teck Resources Ltd.EWJ
iShares MSCI Japan Index Fund.
TEVA
Teva Pharmaceutical Industries Ltd.FDX
FedEx Corp.
TLT
iShares Barclays 20+ Year Treasury Bond Fund.FNM
Federal National Mortgage Association.
TZA
Direxion Daily Small Cap Bear 3X Shares.FRE
Federal Home Loan Mortgage Corp.
UAUA
UAL Corp.GILD
Gilead Sciences Inc.
URE
ProShares Ultra Real Estate.GLW
Corning Inc.
UTX
United Technologies Corp.HBC
HSBC Holdings PLC.
WFR
MEMC Electronic Materials Inc.HES
Hess Corp.
WFT
Weatherford International Ltd.HL
Hecla Mining Co.
WLP
WellPoint Inc.HOG
Harley-Davidson Inc.
XLB
Materials Select Sector SPDR Fund.HON
Honeywell International Inc.
XRX
Xerox Corp.JOYG
Joy Global Inc.
XTO
XTO Energy Inc.JWN
Nordstrom Inc.
YRCW
YRC Worldwide Inc.KFT
Kraft Foods Inc.
 2. Statutory Basis The Exchange believes the rule proposal is consistent with the Securities Exchange Act of 1934 (the “Act”) and the rules and regulations under the Act applicable to a national securities exchange and, in particular, the requirements of Section 6(b) of the Act.[8]
                    
                     Specifically, the Exchange believes that the proposed rule change is consistent with the Section 6(b)(5) Act [9]
                    
                     requirements that the rules of an exchange be designed to promote just and equitable principles of trade, to prevent fraudulent and manipulative acts and, in general, to protect investors and the public interest. In particular, the proposed rule change allows for an expansion of the Penny Pilot Program for the benefit of market participants and identifies the option classes to be added to the Pilot Program in a manner consistent with CBOE's rule filing SR-CBOE-2009-76 to extend and expand the Pilot Program. The proposed rule change also allows for reductions in the minimum increments in IWM and SPY, which has been shown to reduce spreads. B. Self-Regulatory Organization's Statement on Burden on Competition CBOE does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative prior to 30 days from the date on which it was filed, or such shorter 
                    ( print page 6764)
                    time as the Commission may designate if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act [10]
                    
                     and Rule 19b-4(f)(6)(iii) thereunder. A proposed rule change filed under Rule 19b-4(f)(6) normally does not become operative for 30 days after the date of filing.[11]
                    
                     However, Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange requested that the Commission waive the 30-day operative delay, as specified in Rule 19b-4(f)(6)(iii),[12]
                    
                     which would make the rule change effective and operative upon filing. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because the proposal is based on a recent Commission-approved proposal submitted by another options exchange [13]
                    
                     and therefore does not raise any novel regulatory issues. Further, waiving the operative delay will allow the Exchange to commence quoting all series of IWM and SPY in increments of $0.01 effective February 1, 2010, contemporaneously with other options exchanges. Accordingly, the Commission designates the proposed rule change as operative upon filing with the Commission.[14] At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments Use the Commission's Internet comment form (*http://www.sec.gov/​rules/​sro.shtml*); or
Send an e-mail to*rule-comments@sec.gov*. Please include File Number SR-CBOE-2010-009 on the subject line. Paper Comments Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-CBOE-2010-009. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (
                    *http://www.sec.gov/​rules/​sro.shtml*). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the self-regulatory organization. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-CBOE-2010-009 and should be submitted on or before March 3, 2010. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.[15] Florence E. Harmon, Deputy Secretary.


# Footnotes

1.
    
                         15 U.S.C. 78s(b)(1). Back to Citation
 2.
    
                         17 CFR 240.19b-4. Back to Citation
 3.
    
                         15 U.S.C. 78s(b)(3)(A)(iii). Back to Citation
 4.
    
                         17 CFR 240.19b-4(f)(6). Back to Citation
 5.
    
                         
                        *See*
                         Securities Exchange Act Release No. 61061 (November 24, 2009), granting partial approval of SR-NYSEArca-2009-44, as modified by Amendment No. 4 thereto. Back to Citation
 6.
    
                         
                        *See*
                         Securities Exchange Act Release No. 60864 (October 22, 2009), granting immediate effectiveness to SR-CBOE-2009-76. Back to Citation
 7.
    
                         The classes to be added are among the most actively-traded, multiply-listed option classes that are not currently in the Pilot Program, excluding option classes with high premiums. An option class would be designated as “high premium” if, at the time of selection, the underlying security was priced at $200 per share or above, or the underlying index level was at 200 or above. Back to Citation
 8.
    
                         15 U.S.C. 78f(b). Back to Citation
 9.
    
                         15 U.S.C. 78f(b)(5). Back to Citation
 10.
    
                         15 U.S.C. 78s(b)(3)(A). Back to Citation
 11.
    
                         17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-4(f)(6)(iii) requires the self-regulatory organization to give the Commission notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. CBOE has satisfied this requirement. Back to Citation
 12.
    
                         17 CFR 240.19b-4(f)(6)(iii). Back to Citation
 13.
    
                         
                        *See supra*
                         note 5. Back to Citation
 14.
    
                         For purposes only of waiving the operative delay for this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 
                        *See*15 U.S.C. 78c(f). Back to Citation
 15.
    
                             17 CFR 200.30-3(a)(12). Back to Citation


[FR Doc. 2010-2865 Filed 2-9-10; 8:45 am] BILLING CODE 8011-01-P