[Federal Register Volume 59, Number 207 (Thursday, October 27, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-26643]


[[Page Unknown]]

[Federal Register: October 27, 1994]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-34860; International Series Release No. 733; File No. 
S7-8-90]

 

Order Approving Proposed Amendment to the Options Price Reporting 
Authority's National Market System Plan for the Purpose of Establishing 
a Fee To Be Paid by Persons Other Than Vendors Who Provide a Data 
Control Service to OPRA Subscribers

October 19, 1994.
    On June 27, 1994, the Options Price Reporting Authority 
(``OPRA'')\1\ filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') pursuant to Section 11Aa3-2 under the 
Securities Exchange Act of 1934 (``Act'')\2\ a proposed amendment to 
its National Market System Plan for the purpose of establishing a Data 
Control Service Agreement and a Control Service Fee for persons other 
than vendors who provide a data control service to OPRA subscribers and 
exempting subscribers who receive the feed from OPRA's Subscriber 
Indirect Access Fee. On August 30, 1994, OPRA filed with the Commission 
a letter amendment revising the amendment to clarify that OPRA vendors 
who provide data control services to their data feed customers are not 
considered to be Control Service Providers required to enter into a 
Data Control Service Agreement or pay a Control Service Fee.\3\ The 
proposed amendment was published for comment in the Federal 
Register.\4\ One comment letter was received. For the reasons discussed 
below, the Commission is approving the proposed amendment.
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    \1\OPRA is a National Market System Plan approved by the 
Commission pursuant to Section 11A of the Act and Rule 11Aa3-2. 
Securities Exchange Act Release No. 17638 (Mar. 18, 1981).
    The plan provides for the collection and dissemination of last 
sale and quotation information on options that are traded on the 
five member exchanges. The five exchanges which agreed to the OPRA 
Plan are the Philadelphia Stock Exchange (``PHLX''), the Chicago 
Board Options Exchange (``CBOE''), the American Stock Exchange 
(``AMEX''), the Pacific Stock Exchange (``PSE''), and the New York 
Stock Exchange (``NYSE'').
    \2\15 U.S.C. 78k-1.
    \3\See letter from Michael L. Meyer, Schiff Hardin & Waite, 
Attorney for OPRA, to Scott C. Kursman, Attorney, Division of Market 
Regulation, Commission (August 30, 1994).
    \4\Securities Exchange Act Release No. 34625 (September 1, 
1994), 59 FR 46679 (September 9, 1994).
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I. Background

    Recent developments in computer and communications technology have 
led an increasing number of OPRA subscribers to receive options 
information by means of high speed, data feed transmissions from 
vendors. Historically, OPRA vendors have provided a controlled and 
formatted transmission of options information to most subscribers, but 
have also provided an uncontrolled, bulk, data feed transmission to an 
increasing number of subscribers. As a result of the trend toward data 
feed transmission, a new type of service provider--the data control 
service provider--has appeared. Such a provider controls the access and 
entitlement of subscribers' devices in respect of market information 
received in the form of a data feed transmission. Unlike vendors, data 
control service providers are not currently subject to a contract with 
OPRA nor are they required to contribute toward OPRA's overall 
administrative costs, despite the fact that, like vendors, they are in 
the business of redistributing options information.

II. Description

    The proposed amendment establishes a Control Service Fee to be paid 
by persons other than vendors who provide a data control service to 
OPRA subscribers. The monthly fee of $2,800 is the same as that 
currently paid by vendors under their agreement with OPRA. The control 
service fee is intended to cover OPRA's additional administrative costs 
and to allocate a portion of OPRA's overall costs to those persons who 
utilize options market information for commercial purposes.
    The proposed amendment also establishes a Data Control Service 
Agreement that will serve as a contract between a Control Service 
Provider and OPRA. This agreement imposes requirements on Control 
Service Providers intended to assure the reliability and integrity of 
the services they provide. It will require Control Service Providers to 
provide OPRA with a complete description of the systems and procedures 
to be utilized by them in controlling subscribers' access to options 
information, as well as a current list of subscribers and their 
entitlements.
    The amendment also provides that OPRA's Subscriber Indirect Access 
Fee, which is payable by subscribers who receive uncontrolled data feed 
transmissions of options information from vendors, will not apply to 
subscribers whose receipt of a data feed transmission is under the 
control of a Control Service Provider.
    Finally, the Indirect (Vendor Pass-Through) Circuit Connection 
Rider to OPRA's Subscriber Agreement would be amended to relieve 
controlled data feed subscribers of the obligation to report device 
counts to OPRA. Since vendors and Control Service Providers are or will 
be required to provide this information to OPRA, there is no need to 
obtain it from the subscribers.

III. Summary of Comments

    As noted above, the Commission received one comment letter.\5\ 
Reuters, a vendor that distributes OPRA information, assumed that the 
purpose of the amendment was to replace the indirect access fee (paid 
by subscribers who receive an uncontrolled data feed of information 
from vendors) with a charge to vendors who control the data delivered 
to a subscriber. As the letter amendment (cited on page 2 of this 
order) makes clear, only data control service providers who are not 
vendors will be required to enter into a Data Control Service Agreement 
and pay the Control Service Fee. No new or additional fees are to be 
imposed on vendors under this amendment.
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    \5\Letter from Andrew McLean, Reuters, to Secretary, Commission 
(September 9, 1994).
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IV. Discussion

    The Commission believes the proposed amendment is consistent with 
the Act and the rules and regulations thereunder applicable to OPRA 
and, in particular, with Sections 11A(a)(1)(C)(ii) and (D) of the Act. 
Section 11A(a)(1)(C)(ii) provides for the availability to brokers, 
dealers, and investors of information with respect to quotations for 
and transactions in securities. Section 11A(a)(1)(D) provides for the 
linking of all markets for qualified securities through communications 
and data processing facilities to foster efficiency, enhance 
competition, increase the information available to brokers, dealers, 
and investors, facilitate the offsetting of investor's orders, and 
contribute to the best execution of such orders. Further, the 
Commission believes that the amendment is consistent with Rule 11Aa3-
2(c)(2) in that it is appropriate in the public interest, for the 
protection of investors and the maintenance of fair and orderly 
markets, to remove impediments to and perfect the mechanisms of, a 
national market system.
    The new Data Control Service Provider Agreement and accompanying 
fee will help OPRA to assure the reliability and integrity of the 
service that these providers offer OPRA customers. The Agreement will 
permit OPRA to know the exact number of entitlements a subscriber has 
arranged for with the Control Service Provider. This will eliminate the 
need for the Indirect Access Fee, currently paid by those subscribers 
who receive an uncontrolled data feed whether they have one entitlement 
or 100. The Control Service Fee, payable by the Provider, will be the 
same as the fee charged to vendors, thus promoting uniformity and 
equality in pricing options information.
    It is therefore ordered, pursuant to Section 11A(a)(3)(B) of the 
Act, that the amendments to the OPRA Plan be, and hereby are, approved.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority, 17 CFR 200.30-3(a)(29).
Jonathan G. Katz,
Secretary.
[FR Doc. 94-26643 Filed 10-26-94; 8:45 am]
BILLING CODE 8010-01-M