Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of Proposed Rule Change Relating to the Penny Pilot Program, 69151-69153 [E6-20219]

Download as PDF Federal Register / Vol. 71, No. 229 / Wednesday, November 29, 2006 / Notices 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 inspection and copying in the Commission’s Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the CBOE. 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 No. SR–CBOE–2006–98 and should be submitted on or before December 20, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.9 Nancy M. Morris, Secretary. [FR Doc. E6–20214 Filed 11–28–06; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54805; File No. SR–CBOE– 2006–92] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of Proposed Rule Change Relating to the Penny Pilot Program jlentini on PROD1PC65 with NOTICES November 21, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on November 8, 2006, the Chicago Board Options Exchange, Incorporated (‘‘CBOE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and 15:37 Nov 28, 2006 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend its rules to implement a Pilot Program to quote and trade certain option classes in pennies. The text of the proposed rule change is available on the Exchange’s Web site at http://www.cboe.com, at the Office of the Secretary, CBOE, and at the Commission’s Public Reference Room. 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 CBOE 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 Exchange 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 Statutory Basis for, the Proposed Rule Change 1. Purpose CBOE proposes to amend its rules in connection with the Penny Pilot Program, which is scheduled to commence on January 26, 2007. Specifically, the following 12 classes 3 will participate in the Penny Pilot Program, which is scheduled initially to last for six months. IWM—Ishares Russell 2000 QQQQ—QQQQ SMH—SemiConductor Holders GE—General Electric AMD—Advanced Micro Devices MSFT—Microsoft INTC—Intel CAT—Caterpiller WFMI—Whole Foods TXN—Texas Instruments FLEX—Flextronics International SUNW—Sun Micro The minimum increments for all classes in the Penny Pilot Program, except for the QQQQs, will be $0.01 for all option series below $3 (including 3 CBOE understands that another option class will be added to the Penny Pilot Program to bring the total number of classes in the Penny Pilot Program to 13. 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 9 VerDate Aug<31>2005 III below, which Items have been substantially prepared by the CBOE. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. Jkt 211001 PO 00000 Frm 00055 Fmt 4703 Sfmt 4703 69151 LEAPS), and $0.05 for all option series $3 and above (including LEAPS). With respect to the QQQQs, the minimum increment will be $0.01 for all option series. For all other option classes not participating in the Penny Pilot Program, the current quoting and trading minimum increments will remain the same. In connection with the Penny Pilot Program, CBOE proposes to amend CBOE Rule 6.42 relating to the minimum increments for option classes. In particular, CBOE proposes to include a subparagraph stating that the decimal increments for bids and offers for all series of option classes participating in the Penny Pilot Program will be announced to the membership via Regulatory Circular and published by the Exchange on its Web site. Because the Penny Pilot Program is expected to commence on January 26, 2007, on a rolling basis with one or more Pilot classes beginning on that date and the other Pilot classes quoting and trading in penny increments shortly thereafter, CBOE believes it is more appropriate to notify its members as to the minimum increments for Pilot Classes and their start date in the Pilot Program via Regulatory Circular as opposed to codifying this information in CBOE Rule 6.42. CBOE has filed for Commission approval a copy of the proposed Regulatory Circular that it intends to issue. CBOE also proposes to amend CBOE Rule 6.54 relating to accommodation liquidations (‘‘cabinet trades’’) to state that the rule is not applicable to trading in option classes participating in the Penny Pilot Program. Currently, CBOE Rule 6.54 sets forth the terms and conditions in which cabinet trades can be executed on CBOE. Because cabinet trades involve orders priced at $1 per option contract, the specific terms and conditions for cabinet trading are not applicable to option classes participating in the Penny Pilot Program. Due to the anticipated demands on CBOE’s system capacity and the option industry’s capacity for processing quotations and transactions in penny increments, CBOE has implemented or intends to implement several quote mitigation strategies. • Limitation on Messages. Pursuant to CBOE Rule 6.23A, CBOE currently limits the number of messages sent by members accessing CBOE electronically in order to protect the integrity of the Hybrid Trading System. Limiting the number of messages sent by members accessing CBOE electronically reduces the number of quotations sent by CBOE E:\FR\FM\29NON1.SGM 29NON1 69152 Federal Register / Vol. 71, No. 229 / Wednesday, November 29, 2006 / Notices jlentini on PROD1PC65 with NOTICES to the Options Price Reporting Authority (‘‘OPRA’’). • Imposition of Fees. CBOE is developing an objective and fair method to encourage electronic quoters at CBOE to reduce the number of quotations that are sent to CBOE by imposing fees that will go into effect on February 1, 2007.4 • Amendment to Market-Maker Obligations. CBOE proposes to amend CBOE Rule 8.7 to modify the continuous electronic quoting obligation of MarketMakers and Remote Market-Makers (‘‘RMMs’’). Currently, as set forth in CBOE Rule 8.7(d)(ii) and (e), MarketMakers and RMMs, respectively, are obligated to provide continuous electronic quotes in 60% of the series of his/her appointed option class. CBOE proposes to amend these obligations to provide that Market-Makers and RMMs shall provide continuous electronic quotes in 60% of the series of his/her appointed class that have a time to expiration of less than nine months. CBOE believes that excluding series that are nine months or more to expiration, i.e., LEAPS, from Market-Makers’ and RMMs’ continuous quoting obligations should reduce the number of quotes CBOE disseminates to OPRA, while continuing to impose upon MarketMakers and RMMs significant quoting obligations. CBOE also notes that this proposed change is consistent with CBOE Rule 5.8 which provides that the continuity rules do not apply to option series until the time to expiration is less than nine months.5 • Delisting Policy. CBOE is adopting the following delisting policy: equity option classes with national average daily volume (‘‘ADV’’) of less than 20 contracts will be delisted. • Oversight of Member Quoting. CBOE continuously monitors the quotation activity of its members submitting electronic quotations to CBOE, and regularly notifies any member that appears to be disseminating significantly more quotations than other members. CBOE also regularly communicates with independent vendors who provide quotation services to members to encourage the vendors to modify their systems to provide efficient quotation systems and to alert them whenever it appears that users of their system appear to be submitting significantly more quotations than other members. 4 See Securities Exchange Act Release No. 54804 (November 21, 2006) (File No. SR–CBOE–2006–98). 5 The Commission recently approved a similar proposal from the Philadelphia Stock Exchange. See Securities Exchange Act Release No. 54648 (October 24, 2006), 71 FR 63375 (October 30, 2006) (SR– Phlx–2006–52). VerDate Aug<31>2005 15:37 Nov 28, 2006 Jkt 211001 Finally, CBOE, along with the other options exchanges, intends to submit to the Commission following the fourth month of the Penny Pilot Program (i.e., by the end of May 2007) a report analyzing the first three months of the Penny Pilot Program. In particular, CBOE anticipates that its report will assess the impact of the changes to the minimum increments during the first three months of the Program, including its effects on (i) Market participants and customers; (ii) market performance and quality, such as quoted spreads, effective spreads, and the displayed size in the Pilot classes; and (iii) OPRA, vendor and exchange capacity. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,6 in general, and furthers the objectives of Section 6(b)(5) of the Act,7 in particular, in that the proposed rule change is designed to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is 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 Written comments on the proposed rule change were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) As the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the Exchange consents, the Commission will: (A) By order approve such proposed rule change, or (B) Institute proceedings to determine whether the proposed rule change should be disapproved. 6 15 7 15 PO 00000 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 rulecomments@sec.gov. Please include File No. SR–CBOE–2006–92 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File No. SR–CBOE–2006–92. 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 at 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 inspection and copying in the Commission’s Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. 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 No. SR–CBOE–2006–92 and should be submitted on or before December 20, 2006. U.S.C. 78f(b). U.S.C. 78f(b)(5). Frm 00056 Fmt 4703 Sfmt 4703 E:\FR\FM\29NON1.SGM 29NON1 Federal Register / Vol. 71, No. 229 / Wednesday, November 29, 2006 / Notices For the Commission, by the Division of Market Regulation, pursuant to delegated authority.8 Nancy M. Morris, Secretary. [FR Doc. E6–20219 Filed 11–28–06; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54794; File No. SR–FICC– 2006–18] Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Certain Administrative Provisions of the Rules of the Government Securities Division and the MortgageBacked Securities Division November 20, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 notice is hereby given that on October 12, 2006, the Fixed Income Clearing Corporation (‘‘FICC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) and on October 17, 2006, amended2 the proposed rule change described in Items I, II, and III below, which items have been prepared primarily by FICC. FICC filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b–4(f)(3) 4 thereunder so that the proposal was effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the rule change from interested parties. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The purpose of the rule change is to amend certain administrative provisions of the rules of FICC’s Government Securities Division (‘‘GSD’’) and Mortgage-Backed Securities Division (‘‘MBSD’’) to create more uniformity between FICC’s rules and the rules of FICC’s affiliate, the National Securities Clearing Corporation (‘‘NSCC’’). FICC is also making technical amendments to the administrative rules of FICC. 8 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 The amendment deleted a proposal that would have enabled FICC to rely on signatures transmitted, recorded, or stored by any electronic, optical, or similar means because a substantively similar rule already exists. 3 15 U.S.C. 78s(b)(3)(A)(iii). 4 17 CFR 240.19b–4(f)(3). jlentini on PROD1PC65 with NOTICES 1 15 VerDate Aug<31>2005 15:37 Nov 28, 2006 Jkt 211001 II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, FICC 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. FICC has prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of these statements.5 (A) Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change FICC believes that amending certain administrative provisions of the rules of GSD and MBSD to create more uniformity between the rules of FICC and NSCC will provide more clarity to the members of FICC and NSCC. (i) Proposed GSD Rule Changes Rule 28—Forms Currently, GSD Rule 28 states that the delivery of forms of lists, notices, and other documents may be delivered by the use of any media, including magnetic tape, discs, or cards. FICC proposes to remove language referring to ‘‘magnetic tapes, discs, or cards’’ since these modes of delivery are outdated. Rule 29—Release of Clearing Data FICC proposes to amend GSD Rule 29 so that it is structured in a way that is similar to the analogous NSCC rule. Therefore, FICC proposes to delete numbered section subheadings and identify provisions going forward with the letters (a) through (g). FICC proposes to delete Section 7 of Rule 29 since FICC no longer follows this procedure. Rule 30—Lists To Be Maintained FICC proposes to amend GSD Rule 30 so that it includes Sponsored Members as a category of members for which FICC will maintain a list. Rule 31—Distribution Facilities Since FICC does not currently maintain distribution facilities, FICC proposes to amend GSD Rule 31 by including language indicating that ‘‘if deemed necessary’’ FICC will ‘‘establish’’ distribution facilities. FICC does not propose to alter the guidelines listed in the rule. 5 The Commission has modified the text of the summaries prepared by FICC. PO 00000 Frm 00057 Fmt 4703 Sfmt 4703 69153 (ii) Proposed MBSD Rule Changes Clearing Rule 8 and EPN Rule 8— Arbitration of Disputes FICC proposes to delete MBSD Clearing Rule 8 of Article V and MBSD EPN Rule 8 of Article X since the provisions are outdated and have never been invoked by MBSD. Clearing Rule 10 and EPN Rule 10— Amendment of Rules FICC proposes to revise MBSD Clearing Rule 10 of Article V and MBSD EPN Rule 10 of Article X with language similar to that of the GSD and NSCC rules.6 The rule will continue to provide for prompt notification to all participants, limited purpose participants, EPN users, and registered clearing agencies of proposals made to change, revise, add, or repeal any MBSD Rule. Participants may submit comments to FICC upon receipt of the notification. Clearing Rule 12 and EPN Rule 12— Waivers, Etc. FICC proposes to modify MBSD Clearing Rule 12 of Article V and MBSD EPN Rule 12 of Article X with language similar to that of the GSD and NSCC rules.7 Pursuant to the proposed rule, the Board of Directors or any FICC officer having a rank of Vice President or higher may waive or suspend times fixed by the rules or regulations issued by FICC whenever waiver or suspension is deemed necessary or expedient in his or her judgment. The waiver or suspension shall not continue in effect for more than sixty calendar-days unless approved by the Board of Directors within the sixty calendar-day period. (iii) MBSD Administrative Rule Additions FICC proposes to add certain provisions to MBSD Clearing Rules and MBSD EPN Rules that are currently contained in the rules of the GSD. FICC believes the additions will provide guidance to MBSD members on administrative matters. Clearing Rule 19 and EPN Rule 19— Forms FICC proposes to add a rule identical to GSD Rule 28 to MBSD Clearing Rules Article V and MBSD EPN Rules Article X allowing FICC to use forms of lists, notices, or other documents in connection with any transactions. Information required to be delivered to FICC may be delivered by the use of any media, to be prescribed by FICC from time to time. 6 GSD 7 GSD E:\FR\FM\29NON1.SGM Rule 33 and NSCC Rule 33. Rule 22 and NSCC Rule 42. 29NON1

Agencies

[Federal Register Volume 71, Number 229 (Wednesday, November 29, 2006)]
[Notices]
[Pages 69151-69153]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-20219]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54805; File No. SR-CBOE-2006-92]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing of Proposed Rule Change Relating to the 
Penny Pilot Program

November 21, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on November 8, 2006, the Chicago Board Options Exchange, Incorporated 
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been substantially 
prepared by the CBOE. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its rules to implement a Pilot 
Program to quote and trade certain option classes in pennies. The text 
of the proposed rule change is available on the Exchange's Web site at 
http://www.cboe.com, at the Office of the Secretary, CBOE, and at the 
Commission's Public Reference Room.

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 CBOE 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 Exchange 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    CBOE proposes to amend its rules in connection with the Penny Pilot 
Program, which is scheduled to commence on January 26, 2007. 
Specifically, the following 12 classes \3\ will participate in the 
Penny Pilot Program, which is scheduled initially to last for six 
months.
---------------------------------------------------------------------------

    \3\ CBOE understands that another option class will be added to 
the Penny Pilot Program to bring the total number of classes in the 
Penny Pilot Program to 13.

IWM--Ishares Russell 2000
QQQQ--QQQQ
SMH--SemiConductor Holders
GE--General Electric
AMD--Advanced Micro Devices
MSFT--Microsoft
INTC--Intel
CAT--Caterpiller
WFMI--Whole Foods
TXN--Texas Instruments
FLEX--Flextronics International
SUNW--Sun Micro

    The minimum increments for all classes in the Penny Pilot Program, 
except for the QQQQs, will be $0.01 for all option series below $3 
(including LEAPS), and $0.05 for all option series $3 and above 
(including LEAPS). With respect to the QQQQs, the minimum increment 
will be $0.01 for all option series. For all other option classes not 
participating in the Penny Pilot Program, the current quoting and 
trading minimum increments will remain the same.
    In connection with the Penny Pilot Program, CBOE proposes to amend 
CBOE Rule 6.42 relating to the minimum increments for option classes. 
In particular, CBOE proposes to include a subparagraph stating that the 
decimal increments for bids and offers for all series of option classes 
participating in the Penny Pilot Program will be announced to the 
membership via Regulatory Circular and published by the Exchange on its 
Web site. Because the Penny Pilot Program is expected to commence on 
January 26, 2007, on a rolling basis with one or more Pilot classes 
beginning on that date and the other Pilot classes quoting and trading 
in penny increments shortly thereafter, CBOE believes it is more 
appropriate to notify its members as to the minimum increments for 
Pilot Classes and their start date in the Pilot Program via Regulatory 
Circular as opposed to codifying this information in CBOE Rule 6.42. 
CBOE has filed for Commission approval a copy of the proposed 
Regulatory Circular that it intends to issue.
    CBOE also proposes to amend CBOE Rule 6.54 relating to 
accommodation liquidations (``cabinet trades'') to state that the rule 
is not applicable to trading in option classes participating in the 
Penny Pilot Program. Currently, CBOE Rule 6.54 sets forth the terms and 
conditions in which cabinet trades can be executed on CBOE. Because 
cabinet trades involve orders priced at $1 per option contract, the 
specific terms and conditions for cabinet trading are not applicable to 
option classes participating in the Penny Pilot Program.
    Due to the anticipated demands on CBOE's system capacity and the 
option industry's capacity for processing quotations and transactions 
in penny increments, CBOE has implemented or intends to implement 
several quote mitigation strategies.
     Limitation on Messages. Pursuant to CBOE Rule 6.23A, CBOE 
currently limits the number of messages sent by members accessing CBOE 
electronically in order to protect the integrity of the Hybrid Trading 
System. Limiting the number of messages sent by members accessing CBOE 
electronically reduces the number of quotations sent by CBOE

[[Page 69152]]

to the Options Price Reporting Authority (``OPRA'').
     Imposition of Fees. CBOE is developing an objective and 
fair method to encourage electronic quoters at CBOE to reduce the 
number of quotations that are sent to CBOE by imposing fees that will 
go into effect on February 1, 2007.\4\
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 54804 (November 21, 
2006) (File No. SR-CBOE-2006-98).
---------------------------------------------------------------------------

     Amendment to Market-Maker Obligations. CBOE proposes to 
amend CBOE Rule 8.7 to modify the continuous electronic quoting 
obligation of Market-Makers and Remote Market-Makers (``RMMs''). 
Currently, as set forth in CBOE Rule 8.7(d)(ii) and (e), Market-Makers 
and RMMs, respectively, are obligated to provide continuous electronic 
quotes in 60% of the series of his/her appointed option class. CBOE 
proposes to amend these obligations to provide that Market-Makers and 
RMMs shall provide continuous electronic quotes in 60% of the series of 
his/her appointed class that have a time to expiration of less than 
nine months. CBOE believes that excluding series that are nine months 
or more to expiration, i.e., LEAPS, from Market-Makers' and RMMs' 
continuous quoting obligations should reduce the number of quotes CBOE 
disseminates to OPRA, while continuing to impose upon Market-Makers and 
RMMs significant quoting obligations. CBOE also notes that this 
proposed change is consistent with CBOE Rule 5.8 which provides that 
the continuity rules do not apply to option series until the time to 
expiration is less than nine months.\5\
---------------------------------------------------------------------------

    \5\ The Commission recently approved a similar proposal from the 
Philadelphia Stock Exchange. See Securities Exchange Act Release No. 
54648 (October 24, 2006), 71 FR 63375 (October 30, 2006) (SR-Phlx-
2006-52).
---------------------------------------------------------------------------

     Delisting Policy. CBOE is adopting the following delisting 
policy: equity option classes with national average daily volume 
(``ADV'') of less than 20 contracts will be delisted.
     Oversight of Member Quoting. CBOE continuously monitors 
the quotation activity of its members submitting electronic quotations 
to CBOE, and regularly notifies any member that appears to be 
disseminating significantly more quotations than other members. CBOE 
also regularly communicates with independent vendors who provide 
quotation services to members to encourage the vendors to modify their 
systems to provide efficient quotation systems and to alert them 
whenever it appears that users of their system appear to be submitting 
significantly more quotations than other members.
    Finally, CBOE, along with the other options exchanges, intends to 
submit to the Commission following the fourth month of the Penny Pilot 
Program (i.e., by the end of May 2007) a report analyzing the first 
three months of the Penny Pilot Program. In particular, CBOE 
anticipates that its report will assess the impact of the changes to 
the minimum increments during the first three months of the Program, 
including its effects on (i) Market participants and customers; (ii) 
market performance and quality, such as quoted spreads, effective 
spreads, and the displayed size in the Pilot classes; and (iii) OPRA, 
vendor and exchange capacity.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\6\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\7\ in particular, in that the 
proposed rule change is designed to remove impediments to and perfect 
the mechanism of a free and open market and a national market system, 
and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is 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

    Written comments on the proposed rule change were neither solicited 
nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) As the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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 No. SR-CBOE-2006-92 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File No. SR-CBOE-2006-92. 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 at 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 inspection and 
copying in the Commission's Public Reference Room. Copies of such 
filing also will be available for inspection and copying at the 
principal office of the Exchange. 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 No. SR-CBOE-2006-92 and should be submitted on or before December 
20, 2006.


[[Page 69153]]


    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Nancy M. Morris,
Secretary.
[FR Doc. E6-20219 Filed 11-28-06; 8:45 am]
BILLING CODE 8011-01-P