[Federal Register Volume 65, Number 147 (Monday, July 31, 2000)]
[Notices]
[Pages 46752-46754]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-19229]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43063; File No. SR-OPRA-00-07]


Options Price Reporting Authority; Notice of Filing and Order 
Granting Temporary Effectiveness of Amendment to OPRA Plan Adopting a 
Capacity Allocation Plan

July 21, 2000.
    Pursuant to Rule 11Aa3-2 under the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on

[[Page 46753]]

July 20, 2000, 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 (``OPRA Plan''). 
The proposed OPRA Plan amendment would modify the current temporary 
capacity allocation plan for peak usage periods, which minimizes the 
likelihood that during this period the total number of messages 
generated by the OPRA participant exchanges will exceed the processor's 
(i.e., Securities Industry Automation Corporation (``SIAC'')) aggregate 
message handling capacity. The proposed amendment would revise the 
current temporary capacity allocation to account for the recent 
expansion of the message handling capacity of OPRA's processor. The 
Commission is publishing this notice and order to solicit comments from 
interested persons on the proposed OPRA Plan amendment and to grant 
temporary effectiveness to the proposed OPRA Plan amendment not to 
exceed 120 days.
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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 Act and Rule 11Aa3-2 
thereunder. See Securities Exchange Act Release No. 17638 (Mar. 18, 
1981).
    The OPRA Plan provides for the collection and dissemination of 
last sale and quotation information on options that are traded on 
the member exchanges. The six exchanges that are participants to the 
OPRA Plan are the American Stock Exchange, the Chicago Board Options 
Exchange, the International Securities Exchange, the New York Stock 
Exchange, the Pacific Exchange, and the Philadelphia Stock Exchange.
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I. Description and Purpose of the Amendment

    OPRA proposes to revise and extend the temporary allocation of the 
message handling capacity of its processor among the participant 
exchanges, which currently provides for the allocation of 3,540 
messages per second (``mps'') and is scheduled to end on August 24, 
2000. The revised capacity allocation now being proposed takes into 
account the recent expansion of the maximum message handling capacity 
of OPRA's processor to 5,000 mps. During the extension of the temporary 
allocation provided for in this amendment, the processor's maximum 
aggregate message-handling capacity will be allocated among the 
participants by automatically limiting the number of messages that each 
participant may input to the processor as follows:

American Stock Exchange:--1,320 mps
Chicago Board Options Exchange--1,715 mps
International Securities Exchange--355 mps
Pacific Exchange--875 mps
Philadelphia Stock Exchange--735 mps

    The above capacity allocation would commence on July 21, 2000, or 
as soon thereafter as this amendment can be implemented by OPRA's 
processor. It would continue in effect until the earlier of (i) the 
time when OPRA's processor implements the next planned capacity upgrade 
by converting from the current T1 output network to the exclusive use 
of a new T3 output network (currently scheduled to take place on or 
about September 18, 2000), or (ii) the close of business on October 12, 
2000.
    OPRA has determined to treat this proposed revision and extension 
of its temporary capacity allocation program as an amendment to its 
national market system plan, and accordingly is filing the proposed 
amendment for Commission review and approval pursuant to paragraph (b) 
of Rule 11Aa3-2 under the Act.
    The purpose of the proposed amendment is to revise and extend the 
current temporary allocation of OPRA's message handling capacity to 
take into account the recent expansion of the maximum message handling 
capacity of OPRA's processor, and to provide an allocation that will 
remain in effect until the next planned capacity upgrade or until the 
close of business on October 12, 2000, whichever is first to occur.

II. Implementation of the Plan Amendment

    OPRA believes the proposed modification of the temporary capacity 
allocation program is necessary and appropriate to avoid delays and 
queues in the dissemination of options market information, which in 
turn helps to achieve the objectives of Section 11A(a)(1)(C)(iii),\3\ 
including assuring the availability to brokers, dealers and investors 
of information with respect to quotations for and transactions in 
securities. Accordingly, OPRA requests the Commission to permit the 
modification of the proposed allocation program to be put into effect 
summarily upon publication of notice of this filing, pursuant to 
paragraph (c)(4) of Rule 11Aa3-2 of the Act,\4\ based on a finding by 
the Commission that such action is necessary or appropriate in the 
public interest, for the protection of investors or the maintenance of 
fair and orderly markets, to remove impediments to, and perfect the 
mechanisms of, a national market system, or is otherwise in furtherance 
of the purposes of the Act.
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    \3\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
    \4\ 17 CFR 240.11Aa3-2.
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III. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed OPRA 
Plan amendment is consistent with the Act. In particular, the 
Commission is soliciting comment on whether permanent approval of the 
amendment is appropriate and whether, in permanently approving such 
amendment, the Commission should modify the proposed amendment to 
remain effective until a later date than that set forth in the proposed 
amendment \5\ or such time as the Commission may adopt an allocation 
formula.\6\ Persons making written submissions should file six copies 
thereof with the Secretary, Securities and Exchange Commission, 450 
Fifth street, NW., Washington, DC 20549-0609. Copies of the submission, 
all subsequent amendments, and all written statements with respect to 
the proposed OPRA Plan amendment that are filed with the Commission, 
and all written communications relating to the proposed OPRA Plan 
amendment 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 No. 
SR-OPRA-00-07 and should be submitted by August 21, 2000.
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    \5\ See Rule 11Aa3-2(c)(2), 17 CFR 240.11Aa3-2(c)(2).
    \6\ The Commission has solicited comment on a proposed amendment 
to the OPRA Plan to adopt an objective capacity allocation formula. 
See Securities Exchange Act Release No. 42755 (May 4, 2000), 65 FR 
30148 (May 10, 2000) (File No. 4-434). The Commission notes that 
this temporary plan could be superseded prior to its expiration 
date. If the OPRA participant exchanges file with the Commission a 
capacity allocation plan for peak usage periods that is consistent 
with the Act, the Commission will act to substitute that proposal 
for this plan.
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IV. Commission's Findings and Order Granting Accelerated Approval 
of Proposed Plan Amendment

    After careful review, the Commission finds that the proposed OPRA 
Plan amendment is consistent with the requirements of the Act and the 
rules and regulations thereunder.\7\ Specifically, the Commission 
believes

[[Page 46754]]

that the proposed amendment, which allocates the limited capacity of 
the OPRA system among the options markets during peak usage periods, is 
consistent with Rule 11Aa3-2 under the Act \8\ in that it will 
contribute to the maintenance of fair and orderly markets and remove 
impediments to, and perfect the mechanisms of, a national market 
system.
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    \7\ In approving this proposed OPRA Plan amendment, the 
Commission has considered its impact on efficiency, competition, and 
capital formation. 15 U.S.C. 78c(f).
    \8\ 17 CFR 240.11Aa3-2.
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    The Commission notes that the aggregate message traffic generated 
by the options exchanges is rapidly approaching the outside limit of, 
and at times surpasses, OPRA's systems capacity. OPRA estimates that 
its current plans to expand OPRA systems capacity will not be completed 
until September, 2000. Consequently, the Commission is concerned that, 
absent a program to allocate systems capacity among the options 
markets, systems queuing of options quotes may be the norm, to the 
detriment of all investors and other participants in the options 
markets. The Commission believes that the agreed-upon allocation plan 
is a reasonable means to account for the recent increase in message 
handling capacity of OPRA's processor and to address potential strains 
on capacity.
    The Commission notes that the anticipated enhancements to the OPRA 
system should increase systems capacity to 8,000 mps. The Commission 
does not, however, believe that the enhancement will end the need for a 
capacity allocation \9\ as the imminent move to decimalization and the 
dissemination of quotations with size will continue to strain OPRA 
systems capacity.
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    \9\ See supra note 6.
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    The Commission finds good cause to accelerate effectiveness of the 
proposed OPRA Plan amendment prior to the date of publication in the 
Federal Register. The Commission notes that the proposed OPRA Plan 
amendment is intended to mitigate potential disruption to the orderly 
dissemination of options market information caused by the inability of 
the OPRA system to handle the anticipated quote message traffic. The 
Commission believes that approving the amendment will provide the 
options exchanges and OPRA with an immediate, short-term solution to a 
pressing problem, while giving the Commission and the options markets 
additional time to evaluate, and possibly implement, other quote 
mitigation strategies. In addition the limited time frame of this 
capacity allocation program provides the Commission and the options 
exchanges with greater flexibility to modify the program, as necessary, 
to ensure the fairness of the allocation process to all of the options 
markets going forward. The Commission finds, therefore, that granting 
temporary effectiveness of the proposed OPRA Plan amendment is 
appropriate and consistent with Section 11A of the Act.\10\
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    \10\ 15 U.S.C. 78k-1.
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V. Conclusion

    It is therefore ordered, pursuant to Section 11A of the Act \11\ 
and Rule 11Aa3-2 \12\ thereunder, that the proposed OPRA Plan amendment 
(SR-OPRA-00-07) is effective on a temporary basis not to exceed 120 
days.
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    \11\ 15 U.S.C. 78k-1.
    \12\ 17 CFR 240.11 Aa3-2.
    \13\ 17 CFR 200.30-3(a)(29).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority. \13\
Jonathan G. Katz,
Secretary.
[FR Doc. 00-19229 Filed 7-28-00; 8:45 am]
BILLING CODE 8010-01-M