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Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Add 75 Classes to the Penny Pilot Program

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Start Preamble November 6, 2009.

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 October 27, 2009, NASDAQ OMX BX, Inc. (the “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 prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.

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

NASDAQ OMX BX, Inc. (the “Exchange”) proposes to designate 75 options classes to be added to the Penny Pilot Program, as referenced in Chapter V, Section 33 of the Rules of the Boston Options Exchange Group, LLC (“BOX”). The Exchange intends to notify Participants of the classes to be added to the Penny Pilot Program via Regulatory Circular. The text of the proposed Regulatory Circular is attached as Exhibit 2.[3]

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 Statutory Basis for, the Proposed Rule Change

1. Purpose

On Monday, October 19, 2009 the Exchange submitted a proposed rule change with the Securities and Exchange Commission (“Commission”) to (i) extend the Penny Pilot Program in options classes (“Penny Pilot Program”) previously approved by the Commission through December 31, 2010; (ii) expand the number of classes included in the Penny Pilot Program; and (iii) replace on a semi-annual basis any Penny Pilot Program classes that have been delisted.[4]

The top 300 most actively traded multiply listed options classes in the prior six calendar months [5] preceding their addition to the Penny Pilot Program that are not yet included in the Penny Pilot Program will be phased-in to the Penny Pilot Program over four successive quarters with 75 classes added in each of November 2009, February 2010, May 2010, and August 2010.[6] Options classes with high premiums will be excluded for the quarterly additions.[7]

Based on trading activity for the six months ending September 30, 2009, the Exchange proposes to add the following 75 classes to the Penny Pilot Program on November 2, 2009:

Nat'l rankingSymbolCompany nameNat'l rankingSymbolCompany name
118ABXBarrick Gold Corp120MRKMerck & Co Inc/NJ.
134AUYYamana Gold Inc35MSMorgan Stanley.
48AXPAmerican Express Co73NLYAnnaly Capital Management Inc.
93BABoeing Co/The99NOKNokia OYJ.
115BBTBB&T Corp121NVDANvidia Corp.
111BBYBest Buy Co Inc80ORCLOracle Corp.
67CHKChesapeake Energy Corp37PBRPetroleo Brasileiro SA.
58CITCIT Group Inc85PGProcter & Gamble Co/The.
78COFCapital One Financial Corp41POTPotash Corp of Saskatchewan Inc.
68CVXChevron Corp74RFRegions Financial Corp.
130DEDeere & Co124RIGTransocean Ltd.
104DOWDow Chemical Co/The132RMBSRambus Inc.
49DRYSDryShips Inc103SSprint Nextel Corp.
88EFAiShares MSCI EAFE Index Fund83SDSProShares UltraShort S&P500.
64ETFCE*Trade Financial Corp122SKFProShares UltraShort Financials.
32EWZiShares MSCI Brazil Index Fund107SLBSchlumberger Ltd.
25FASDirexion Daily Financial Bull 3X Shares91SLViShares Silver Trust.
33FAZDirexion Daily Financial Bear 3X Shares84SRSProShares UltraShort Real Estate.
112FITBFifth Third Bancorp119SSOProShares Ultra S&P500.
70FSLRFirst Solar Inc101STISunTrust Banks Inc.
26FXIiShares FTSE/Xinhua China 25 Index Fund125SVNTSavient Pharmaceuticals Inc.
82GDXMarket Vectors—Gold Miners ETF92TBTProShares UltraShort 20+ Year Treasury.
127GGGoldcorp Inc14UNGUnited States Natural Gas Fund LP.
18GLDSPDR Gold Trust117UNHUnitedHealth Group Inc.
129HGSIHuman Genome Sciences Inc110UPSUnited Parcel Service Inc.
62HIGHartford Financial Services Group Inc81USBUS Bancorp.
72HPQHewlett-Packard Co44USOUnited States Oil Fund LP.
59IBMInternational Business Machines Corp60UYGProShares Ultra Financials.
45IYRiShares Dow Jones US Real Estate Index Fund96VVisa Inc.
105JNJJohnson & Johnson10WFCWells Fargo & Co.
131JNPRJuniper Networks Inc133WYNNWynn Resorts Ltd.
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98KOCoca-Cola Co/The52XUnited States Steel Corp.
39LVSLas Vegas Sands Corp114XHBSPDR S&P Homebuilders ETF.
87MCDMcDonald's Corp86XLIIndustrial Select Sector SPDR Fund.
71MGMMGM Mirage79XLUUtilities Select Sector SPDR Fund.
113MONMonsanto Co54XRTSPDR S&P Retail ETF.
63MOSMosaic Co/The

2. Statutory Basis

The Exchange believes that the proposal is consistent with the requirements of Section 6(b) of the Act,[8] in general, and Section 6(b)(5) of the Act,[9] in particular, in that it is designed to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism for a free and open market and a national market system and, in general, to protect investors and the public interest, by identifying the options classes added to the Pilot in a manner consistent with prior rule changes.

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 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

The Exchange has neither solicited nor received comments on the proposed rule change.

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

The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(i) of the Exchange Act [10] and Rule 19b-4(f)(1) thereunder,[11] because it constitutes a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing BOX rule. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate the rule change if it appears to the Commission that the action is necessary or appropriate in the public interest, for the protection of investors, or would otherwise further 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

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-BX-2009-069. 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 (​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, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. 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-BX-2009-069 and should be submitted on or before December 4, 2009.

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For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.[12]

Florence E. Harmon,

Deputy Secretary.

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3.  The Commission notes that the text of the proposed Regulatory Circular is attached at Exhibit 2 to the Form 19b-4, but is not attached to this Notice.

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4.  See Securities and Exchange Act Release No. 60886 (October 27, 2009) (SR-BX-2009-067). This proposal was effective immediately upon filing.

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5.  For purposes of assessing national average daily volume the Exchange will use data compiled and disseminated by the Options Clearing Corporation.

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6.  The quarterly additions will be effective on November 2, 2009, February 1, 2010, May 3, 2010 and August 2, 2010, respectively. For purposes of identifying the classes to be added per quarter, the Exchange shall use data from the prior six calendar months preceding the implementation month, except that the month immediately preceding their addition to the Pilot would not be utilized for purposes of the six month analysis. For example, the quarterly additions to be added on November 2, 2009 shall be determined using data from the six month period ending September 30, 2009.

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7.  The threshold for designation as “high priced” at the time of selection of new classes to be included in the Penny Pilot Program is $200 per share or a calculated index value of 200. The determination of whether a security is trading above $200 or above a calculated index value of 200 shall be based on the price at the close of trading on the Expiration Friday prior to being added to the Penny Pilot Program.

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10.  15 U.S.C. 78s(b)(3)(A)(i).

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[FR Doc. E9-27256 Filed 11-12-09; 8:45 am]