Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Adding 75 Options Classes to the Penny Pilot Program

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62040; File No. SR-CBOE-2010-040]

Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Adding 75 Options Classes to the Penny Pilot Program

May 5, 2010.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),

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and Rule 19b-4 thereunder,

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notice is hereby given that on April 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, II, and III below, which Items have been prepared by the Exchange. 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

CBOE proposes to amend 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 at

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 those 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 parts 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 identify the 75 option classes that will be added to the Penny Pilot Program on May 3, 2010, consistent with CBOE's rule filing to extend and expand the Program that was approved on October 22, 2010.

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As described in SR-CBOE-2009-76, the Pilot 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.

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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.

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See

Securities Exchange Act Release No. 60864 (October 22, 2009), granting immediate effectiveness to SR-CBOE-2009-76. The Commission notes that this proposed rule change was submitted pursuant to Section 19(b)(3)(A)(iii) of the Act and was, therefore, effective upon filing. The Commission does not approve proposed rule changes submitted pursuant to this section of the Act.

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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.

The following 75 option classes will be added to the Pilot Program beginning on May 3, 2010:

Symbol

Security name

Symbol

Security name

GFI

Gold Fields Ltd

JCP

JC Penney Co Inc.

XLV

Health Care Select Sector SPDR Fund

ACL

Alcon IncCo Inc.

CIEN

Ciena Corp

STP

Suntech Power Holdings Co Ltd.

AMLN

Amylin Pharmaceuticals Inc

TLB

Talbots Inc.

CTIC

Cell Therapeutics Inc

SYMC

Symantec Corp.

MDT

Medtronic Inc

AMED

Amedisys Inc.

TIVO

TiVo Inc

TM

Toyota Motor Corp.

MNKD

MannKind Corp

HK

Petrohawk Energy Corp.

MDVN

Medivation Inc

ENER

Energy Conversion Devices Inc.

BRKB

Berkshire Hathaway Inc

STT

State Street Corp.

APOL

Apollo Group Inc

BHP

BHP Billiton Ltd.

BSX

Boston Scientific Corp

NFLX

NetFlix Inc.

XLY

Consumer Discretionary Sel. Sec. SPDR Fund

LDK

LDK Solar Co Ltd.

CLF

Cliffs Natural Resources Inc

SPG

Simon Property Group Inc.

ZION

Zions Bancorporation

TIF

Tiffany & Co.

IOC

InterOil Corp

BUCY

Bucyrus International Inc.

ITMN

InterMune Inc

WAG

Walgreen Co.

GME

GameStop Corp

IP

International Paper Co.

XLK

Technology Select Sector SPDR Fund

XME

SPDR S&P Metals & Mining ETF.

AKS

AK Steel Holding Corp

KGC

Kinross Gold Corp.

GRMN

Garmin Ltd

EP

El Paso Corp.

MRVL

Marvell Technology Group Ltd

SEED

Origin Agritech Ltd.

XLP

Consumer Staples Select Sector SPDR Fund

WIN

Windstream Corp.

UNP

Union Pacific Corp

DHI

DR Horton Inc.

DTV

DIRECTV

ADBE

Adobe Systems Inc.

WMB

Williams Cos Inc/The

PCX

Patriot Coal Corp.

MEE

Massey Energy Co

SPWRA

SunPower Corp.

CELG

Celgene Corp

LCC

US Airways Group Inc.

GMCR

Green Mountain Coffee Roasters Inc

PRU

Prudential Financial Inc.

WDC

Western Digital Corp

LEN

Lennar Corp.

DAL

Delta Air Lines Inc

EWT

iShares MSCI Taiwan Index Fund.

FXE

CurrencyShares Euro Trust

KBH

KB Home.

COST

Costco Wholesale Corp

CREE

Cree Inc.

MJN

Mead Johnson Nutrition Co

SIRI

Sirius XM Radio Inc.

ALL

Allstate Corp/The

MMR

McMoRan Exploration Co.

SII

Smith International Inc

CENX

Century Aluminum Co.

RTN

Raytheon Co

MT

ArcelorMittal.

DVN

Devon Energy Corp

The minimum increments for all classes in the Penny Pilot (except for the QQQQs, IWM and SPY) are: $0.01 for all option series below $3 (including LEAPS), and $0.05 for all option series $3 and above (including LEAPS). The minimum increment for all option series in QQQQ, IWM and SPY is $.01.

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.

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Specifically, the Exchange believes that the proposed rule change is consistent with the Section 6(b)(5) Act

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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.

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15 U.S.C. 78f(b).

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15 U.S.C. 78f(b)(5).

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 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

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

The proposed rule change is filed for immediate effectiveness pursuant to Section 19(b)(3)(A)

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of the Securities Exchange Act of 1934 and Rule 19b-4(f)(1)

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thereunder as it constitutes a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule. 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.

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15 U.S.C. 78s(b)(3)(A).

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17 CFR 240.19b-4(f)(1).

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-2010-040 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-2010-040. 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 such filing also will be available for inspection and copying at CBOE's principal office and on its Web site at

http://www.cboe.com.

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-2010-040 and should be submitted on or before June 2, 2010.

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

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

Florence E. Harmon,

Deputy Secretary.

[FR Doc. 2010-11257 Filed 5-11-10; 8:45 am]

BILLING CODE 8010-01-P