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U.S. Securities and Exchange Commission

SEC Chairman Cox Urges Options Exchanges to Start Limited Penny Quoting


Washington, D.C., June 7, 2006 - SEC Chairman Christopher Cox today sent a letter to the six options exchanges urging them to begin quoting a limited number of options in pennies on a pilot basis beginning on Jan. 29, 2007. Options are currently quoted in increments of nickels and dimes.

"Quoting in penny increments will benefit investors by allowing options quotes and orders to be expressed at better prices, and has the potential to enhance further the already strong competition and innovation that exists in the options markets," Chairman Cox said.

Several of the options exchanges and their members recently have expressed interest in individually beginning to quote options in penny increments.

Quoting options in pennies will increase quote message traffic, which the systems of exchanges, market data vendors and securities firms must be able to manage. For this reason, quoting options in pennies would begin in a small number of options. Penny quoting could be expanded after the Commission and others have a chance to study its impact on market quality and systems capacity.

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Modified: 06/07/2006