[Federal Register Volume 65, Number 154 (Wednesday, August 9, 2000)]
[Notices]
[Pages 48769-48770]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-20097]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43109; File No. SR-OPRA-00-06]


Options Price Reporting Authority; Notice of Filing and Immediate 
Effectiveness of Amendment to OPRA Plan Establishing a Pilot to Permit 
Fee-Exempt Access to Market Data

August 2, 2000.
    Pursuant to Rule 11Aa3-2 under the Securities Exchange Act of 1934 
(``Act''), \1\ notice is hereby given that on May 26, 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 establish a two-year pilot period, scheduled to end on May 31, 
2002, during which off-floor market maker members of participant 
exchanges will be permitted to access options market data on a fee-
exempt basis. The proposed amendment also would codify current practice 
by providing that during this same two-year period, floor members of 
participant exchanges and the participant exchanges themselves are also 
permitted to access options market data on a fee-exempt basis. The 
Commission is publishing this notice to solicit comments from 
interested persons on the proposed OPRA Plan amendment.
---------------------------------------------------------------------------

    \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 (``Amex''); the Chicago 
Board Options Exchange (``CBOE''); the International Securities 
Exchange (``ISE''); the New York Exchange (``NYSE''); the Pacific 
Exchange (``PCX''); and the Philadelphia Stock Exchange (``Phlx'').
---------------------------------------------------------------------------

1. Description and Purpose of the Amendment

    OPRA is proposing amendments to the OPRA Plan to establish a two-
year pilot period, scheduled to expire on May 31, 2002, during which 
off-floor market maker members of participant exchanges would be 
permitted to access options market data on a fee-exempt basis. The 
proposed amendment also would codify current practice by providing that 
during this same two-year period, floor members of participant 
exchanges and the participant exchanges themselves would also be 
permitted to access options market data on a fee-exempt basis. The text 
of the proposed OPRA Plan amendment is available at the Commission and 
at OPRA.
    The purpose of the proposed OPRA Plan amendment is to clarify the 
conditions under which members of floor-based exchanges and their 
counterparts on electronic exchanges, as well as the exchange 
themselves, are permitted to access options market information over the 
OPRA system without thereby becoming liable to pay OPRA's subscriber 
fees.
    Currently, all persons, including members of participant exchanges, 
who have access to OPRA information at their places of business are 
subject to OPRA fees. However, members of participant exchanges who 
function as brokers or market markers on exchange floors and who have 
access to OPRA information over exchange-provided terminals on the 
floors are not subject to OPRA fees, and the participant exchanges 
themselves are not required to pay OPRA fees in respect of these 
terminals. On the ISE, market-making functions traditionally performed 
by exchange members on exchange floors are instead performed by 
exchange members acting as specialists or market-makers from trading 
desks at off-floor locations. Considerations of competitive fairness 
suggest either that these off-floor specialists and market markers 
should be exempt from OPRA fees so long as their floor-based 
counterpart are not subject to these fees, or that all such specialists 
and market-makers, both on-floor and off-floor, should be subject to 
OPRA fees. Although OPRA has not yet decided which of these two 
alternative approaches should be adopted as a permanent provision of 
the OPRA Plan, to provide equal treatment for the ISE, OPRA proposes to 
implement a two-year pilot program during which the market maker 
members of ISE (and similar off-floor market makers of any

[[Page 48770]]

other participant exchanges, including any other new participant 
exchange, that operates an electronic facility for the trading of 
options) would be permitted to access options market data on a fee-
exempt basis. \3\
---------------------------------------------------------------------------

    \3\ OPRA does not propose to extend this exemption to members of 
electronic exchanges who function as brokers but not as specialists 
or market makers. Unlike traditional floor-broker members, who are 
limited in number and represent customer orders typically received 
in the first instance at the members' off-floor locations where 
OPRA-enabled terminals are subject to OPRA fees, electronic access 
members may be unlimited in number, and will more likely receive 
orders directly from customers. In these respects, electronic access 
members perform a variety of functions, and they may be unlimited in 
number. One possible function is the direct receipt of customer 
orders, which is comparable to the function performed by those 
persons who today constitute the majority of OPRA's professional 
subscribers and provide the greater part of OPRA's total revenues.
---------------------------------------------------------------------------

    To accomplish this, OPRA is proposing to add new paragraph (vi) to 
Section VII(d) of the OPRA Plan that would provide an exemption from 
OPRA device charges for terminals used exclusively by members of 
participant exchanges who function as brokers or market makers on 
traditional exchange trading floors, or who function as specialists or 
other market makers on electronic exchanges or trading facilities. 
Although exempt from OPRA device charges, members who control data 
terminals located at their own places of business would be required to 
sign OPRA's professional subscriber agreements, which contain 
prohibitions on the retransmission of market data to unauthorized 
persons.
    OPRA also proposes to add new subsection (e) to Section V of the 
OPRA Plan, which for the duration of the two-year pilot will codify 
OPRA's current practice whereby the participant exchanges themselves 
are entitled to access OPRA information at their own places of business 
without being subject to OPRA's information fees, provided that the 
information is used by the exchanges in connection with the operation, 
surveillance or regulation of their respective exchange markets. This 
entitlement extends to any other self-regulatory organization that 
performs regulatory or surveillance functions for a participant 
exchange.

II. Implementation of the Plan Amendment

    Pursuant to paragraph (c)(3)(i) of Rule 11Aa3-2,\4\ OPRA designates 
this amendment as establishing or changing a fee or other charge 
collected on behalf of all of the OPRA participants in connection with 
access to or use of OPRA facilities, thereby qualifying for 
effectiveness upon filing. The Commission may summarily abrogate the 
amendment within 60 days of its filing and require refiling and 
approval of the amendment by Commission order pursuant to Rule 11Aa3-
2(c)(2),\5\ if it appears to the Commission that such action is 
necessary or 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; or otherwise in furtherance of the purposes of the Exchange 
Act.
---------------------------------------------------------------------------

    \4\ 17 CFR 240.11Aa3-2(c)(3)(i).
    \5\ 17 CFR 240.11Aa3-2(c)(2).
---------------------------------------------------------------------------

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. 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-00-06 and should be 
submitted by August 30, 2000.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\
---------------------------------------------------------------------------

    \6\ 17 CFR 200.30-3(a)(29).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-20097 Filed 8-8-00; 8:45 am]
BILLING CODE 8010-01-M