[Federal Register Volume 63, Number 202 (Tuesday, October 20, 1998)]
[Notices]
[Pages 56051-56052]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-28000]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40547; File No. SR-OPRA-98-1]


Options Price Reporting Authority; Notice of Filing of Amendment 
to OPRA Plan Adopting a New Rider to OPRA's Vendor Agreement To Permit 
Vendors To Utilize Electronic Contracts

October 13, 1998.
    Pursuant to Rule 11Aa3-2 under the Securities Exchange Act of 1934 
(``Exchange Act''),\1\ notice is hereby given that on September 18, 
1998, the Options Price Reporting Authority (``OPRA'') \2\ submitted to 
the Securities and Exchange Commission (``SEC'' or ``Commission'') an 
amendment to the Plan for Reporting of Consolidated Options Last Sale 
Reports and Quotation Information (``Plan''). The amendment adds a new 
Electronic Contract Rider (``Rider'') to OPRA's Vendor Agreement that 
would permit OPRA's vendors to utilize electronic contracts with 
certain categories of Internet or other on-line customers in 
satisfaction of the requirement of the Vendor Agreement for written 
agreements between vendors and their customers. The Commission is 
publishing this notice to solicit comments from interested persons on 
the proposed Plan amendment.
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    \1\ 17 CFR 240.11Aa3-2.
    \2\ OPRA is a National Market System Plan approved by the 
Commission pursuant to Section 11A of the Exchange Act and Rule 
11Aa3-2 thereunder. See 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 
member exchanges. The five exchanges which agreed to the OPRA Plan 
are the American Stock Exchange (``AMEX''), the Chicago Board 
Options Exchange (``CBOE''); the New York Stock Exchange (``NYSE''); 
the Pacific Exchange (``PCX''); and the Philadelphia Stock Exchange 
(``Phlx'').
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I. Description and Purpose of the Amendment

    The purpose of the amendment is to allow OPRA vendors who wish to 
offer Internet or other on-line access to options market information to 
Nonprofessional Subscribers or PC Dial-Up customers to make use of 
electronic contracts in satisfaction of the requirement of the Vendor 
Agreement that there be written agreements between OPRA's Vendors and 
those categories of customers. This amendment is proposed in response 
to requests from an increasing number of OPRA vendors (including some 
whose activities as vendors are in support of their primary function as 
electronic brokers) to be able to conduct all of their business with 
customers electronically, including contract administration.
    The Rider imposes conditions on the use of these electronic 
contracts by vendors. As a threshold matter, a vendor is permitted to 
use these electronic contracts only if the vendor's other agreements 
with its customers may be entered into electronically. In addition, the 
vendor is required to submit for OPRA's approval an ``Attachment A'' 
that describes the procedures and systems the vendor intends to utilize 
in administering its electronic contracts. The Rider requires vendors 
to use the forms of electronic contracts (one for Nonprofessional 
Subscribers and one for Dial-Up Customers), except that vendors are 
permitted to use their own forms of electronic contracts for Dial-Up 
Customers, subject to the approval of OPRA. In this respect the Rider 
is comparable to the existing Vendor Agreement, which requires the use 
of a specified form of written Nonprofessional Subscriber Agreement and 
requires OPRA's approval of each form of Dial-Up Agreement.
    The Rider imposes certain requirements on vendors concerning the 
manner in which they present electronic contracts to their customers 
and how customers indicate their assent to these contracts. These 
requirements are intended to assure that customers are given an 
opportunity to read the full text of each contract before they are 
asked to assent to it, and that procedures are in place to verify the 
identity of the customers who enter into agreements electronically and 
to confirm the terms of the electronic contracts to which they have 
agreed. Vendors are required to maintain detailed records of all 
electronic contracts entered into, and to make such records available 
for OPRA's inspection. Finally, each time a customer accesses the 
Options Information Service, the vendor must give the customer notice 
concerning the electronic contract and must make the text of that 
contract available for the customer's review. All of the above 
requirements are related to the dictates of current law or proposed 
legislation governing electronic contracts.
    Vendors are also required to indemnify OPRA against loss in the 
event electronic contracts are held to be invalid or unenforceable by 
reason of their having been entered into or administered 
electronically. Because the law on electronic contracts is still 
developing, OPRA believes it is reasonable to ask those vendors who 
wish to use electronic contracts to assume any risk that such contracts 
may be found to be unenforceable or invalid.
    The Rider also provides OPRA with the right to modify or terminate 
the electronic contracts in the event of changes in the law or industry 
practice concerning electronic contracts or if OPRA determines that the 
required electronic contracts are likely to be held unenforceable or 
invalid for any reason. In light of the continuing evolution of the law 
of electronic contracts, OPRA should be able to amend or withdraw 
permission to use electronic contracts if such contracts are likely to 
be held invalid or unenforceable or are otherwise found to be 
deficient.

II. Implementation of the Plan Amendment

    The proposed amendment is reflected in a Rider to the Vendor 
Agreement that will be made available to vendors who wish to utilize 
electronic contracts, subject to the Commission's approval of this 
filing.

III. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed Plan 
amendment is consistent with the Act. Persons making written 
submissions should file six copies thereof with the Secretary, 
Securities and Exchange Commission, 450 Fifth Street, NW., Washington, 
DC 20549. Copies of the submission, all subsequent amendments, and 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 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 the filing also will be 
available at the principal offices of OPRA. All submissions should 
refer to file number SR-OPRA-98-1 and should be submitted by November 
10, 1998.


[[Page 56052]]


    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\3\
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    \3\ 17 CFR 200.30-3(a)(29).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-28000 Filed 10-19-98; 8:45 am]
BILLING CODE 8010-01-M