[Federal Register Volume 65, Number 192 (Tuesday, October 3, 2000)]
[Notices]
[Pages 59035-59036]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-25294]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43347; File No. SR-OPRA-00-08]


Options Price Reporting Authority; Notice of Filing of a Proposal 
To Amend the Options Price Reporting Authority Plan To Establish 
Standards for Determining a Participation Fee

September 26, 2000.
    Pursuant to Rule 11Aa3-2 under the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on September 12, 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 (``Plan''). The proposed Plan 
amendment would incorporate in the Plan factors to be considered by 
OPRA in determining the amount of the participating fee described in 
the current Plan as payable by each new party to the Plan.
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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 (March 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 six exchanges that are participants to the 
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

    The Plan currently provides that any national securities exchange 
or registered securities association whose rules governing the trading 
of standardized options have been approved by the Commission may become 
a party to the Plan, provided it agrees to conform to the terms and 
conditions of the Plan and pays a participation fee to OPRA. The Plan 
does not establish the amount of the participation fee, but instead, 
states that the amount of the fee will be determined by OPRA in 
connection with each new application for participation, based upon 
standards incorporated in the Plan.\3\ This approach provides 
sufficient flexibility to permit the determination of the fee to take 
into account the unique circumstances of each new application while, at 
the same time, assuring that the amount of the fee is based upon a set 
of established standards, thus enabling the fee to be administered in a 
fair and consistent manner. Under this structure, the amount of the 
participation fee will be determined in discussions with each applicant 
in light of the standards embodied in the Plan, under the general 
oversight of the Commission. This is the same general approach that is 
reflected in the Plans of other registered securities information 
processors, such as the Consolidated Tape Association and the 
Consolidated Quotation System.\4\
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    \3\ See Securities Exchange Act Release No. 42817 (May 24, 
2000), 65 FR 35149 (June 1, 2000) (SR-OPRA-99-01).
    \4\ See Section III(c) of the Second Restatement of the CTA Plan 
as restated December 1995, and Section III(c) of the Restatement of 
the CQ Plan as restated December 1995.
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    Although the Plan currently provides for a participation fee to be 
determined in the manner described above, it does not reflect the 
specific standards to be applied in determining the amount of the fee. 
Instead, the Plan contemplates that these standards will be 
incorporated in the Plan by means of a Plan amendment to be filed with 
and approved by the Commission prior to the determination of the 
participation fee to be paid by the International Securities Exchange, 
LLC (``ISE''), which at present is the only party to the Plan to which 
a fee based upon these standards will apply. This filing proposes to 
amend the Plan for the purpose of incorporating these standards in the 
Plan. As the Plan provides, ISE, as the only party subject to a 
participation fee to be determined on the basis of the standards now 
proposed, did not vote on the adoption of these standards, but it did 
participate in the discussion of the proposed standards.don
    The purpose of the participation fee is to require each new party 
to the Plan to pay a fair share of the costs previously paid by the 
other parties for the development, expansion, and maintenance of the 
OPRA system. Consistent with this purpose, the standards now proposed 
to be embodied in the Plan for the determination of the participation 
fee are for the most part

[[Page 59036]]

concerned with these categories of costs. Because OPRA, as an 
administrative committee of exchanges, does not account for any assets 
of its own, it does not capitalize any of its costs but instead, simply 
passes them on to the exchanges. However, OPRA believes that the 
concept of capitalized costs is an appropriate factor to be taken into 
account in determining what should be a proper participation fee. 
Accordingly, the first factor proposed to be included in the Plan for 
this purpose is to consider what would have been amortized as OPRA's 
capital expenditures over the past five years if OPRA were subject to 
generally accepted accounting principles. OPRA believes that five years 
is an appropriate time frame for this purpose not only because it 
represents a reasonable life for the kinds of computer hardware and 
software assets that make up the OPRA system, but also because it is a 
short enough period to provide a reasonable basis for determining how 
much of OPRA's past expenses should be shared by a new party.
    The next factor proposed to be considered is an assessment of costs 
incurred and to be incurred by OPRA in connection with any 
modifications to the OPRA system necessary to accommodate the new 
party, unless these costs have otherwise been paid or reimbursed by the 
new party. This, too, is a cost-based factor, and reflects that it is 
appropriate for a new party to pay the costs uniquely associated with 
its becoming a party.
    Finally, OPRA proposes that the determination of the participation 
fee would also take into account previous fees paid by other new 
parties. Of course, the closer in time any such prior fees were paid 
and the greater the similarity of the circumstances between the 
participation of the other parties and the party that is to pay the 
participation fee under consideration, the greater will be the weight 
given to this factor, in the interest of fairness and consistency.
    Although the participation fee to be paid by ISE will not be 
payable unless and until specific standards for determining the fee 
have been approved by the Commission, ISE and the other parties have 
had discussions concerning what would be the amount of the fee if the 
standards proposed in this amendment were approved, and they have 
reached agreement on both the amount of the fee and the terms of 
payment.

II. Implementation of the Plan Amendment

    OPRA intends to make the proposed amendment to the Plan reflected 
in this filing effective immediately upon the approval of the amendment 
by the Commission pursuant to Rule 11Aa3-2 under the Act.\5\
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    \5\ 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 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 Plan amendment that 
are filed with the Commission, and all written communications relating 
to the proposed 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-00-08 and should be 
submitted by October 24, 2000.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(29).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-25294 Filed 10-2-00; 8:45 am]
BILLING CODE 8010-01-M