[Federal Register Volume 67, Number 210 (Wednesday, October 30, 2002)]
[Notices]
[Pages 66184-66186]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-27577]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46674; File No. SR-OPRA-2002-05]


Options Price Reporting Authority; Notice of Filing and Immediate 
Effectiveness of Amendment to OPRA Plan Regarding Policies for Device-
Based Fees

October 17, 2002.
    Pursuant to Rule 11Aa3-2 under the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on October 4, 2002, 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 supplement OPRA's form of Professional Subscriber 
Agreement with a new document entitled ``Policies With Respect To 
Device-Based Fees'' (referred to in this filing as the ``Device-Based 
Fees Policies''). The Commission is publishing this notice to solicit 
comments from interested persons on the proposed OPRA 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 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 five participants to the OPRA Plan that 
operate an options market are the American Stock Exchange LLC, the 
Chicago Board Options Exchange, Inc., the International Securities 
Exchange LLC, the Pacific Exchange, Inc., and the Philadelphia Stock 
Exchange, Inc. The New York Stock Exchange, Inc. is a signatory to 
the OPRA Plan, but sold its options business to the CBOE in 1997. 
See Securities Exchange Act Release No. 38542 (April 23, 1997), 62 
FR 23521 (April 30, 1997).
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I. Description and Purpose of the Amendment

    The purpose of the proposed amendment to OPRA's national market 
system plan is to state in writing certain OPRA policies with respect 
to the way in which OPRA calculates ``device-based fees'' that are paid 
by Professional Subscribers.\3\ The policies reflect existing OPRA 
practice, but OPRA has not previously reduced them to writing. OPRA has 
developed the Device-Based Fees Policies to make information with 
respect to its calculation of device-based fees more easily accessible 
to Professional Subscribers. The Device-Based Fees Policies address 
four subjects relating to device-based fees:
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    \3\ In essence, an OPRA Professional Subscriber may pay fees for 
its receipt of OPRA data in one of three ways. The first two ways 
are available to a Professional Subscriber that enters into a 
Professional Subscriber Agreement directly with OPRA; such a 
Subscriber pays fees for the receipt of OPRA data directly to OPRA, 
with the fees calculated using either ``device-based'' rates (the 
subject of the Device-Based Fees Policies) or ``enterprise'' rates 
(rates that are calculated on the basis of the number of 
``registered representatives'' that work for the Professional 
Subscriber, subject to a monthly minimum). The third way is 
available to a Professional Subscriber that enters into an agreement 
with an OPRA vendor in a form prescribed by or that is acceptable to 
OPRA. In that case, the Vendor pays ``usage-based'' fees to OPRA 
(fees based on the volume of usage of OPRA data through the Vendor's 
service) for the Professional Subscriber's use of OPRA information, 
and the Professional Subscriber pays fees to the Vendor under the 
financial arrangements that they establish.
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(a) The Use of ``User IDs'' as a Surrogate or Supplement for Devices 
for Purposes of Calculating Device-Based Fees

    As the term ``device-based'' suggests, the basic method for 
calculating a Professional Subscriber's device-based fees is to 
determine the number of devices that the Professional Subscriber has 
that are capable of receiving OPRA information. However, OPRA permits 
Professional Subscribers to count ``User IDs'' as a surrogate or 
supplement for counting devices for purposes of calculating OPRA fees. 
A Professional Subscriber that wishes to count User IDs must comply 
with certain requirements, which are described in the Device-Based Fees 
Policies.

(b) The Manner in Which OPRA Bills for the Use of OPRA Data by Entities 
That Are Affiliated With Each Other

    OPRA's policy is to permit a parent entity's status as a 
Professional Subscriber to encompass its wholly-owned subsidiaries. In 
all other situations OPRA's policy is to conduct its relationships with 
Professional Subscribers and other persons on an ``entity-by-entity'' 
basis, and not on a ``family of affiliates'' basis. The Device-Based 
Fees Policies describe two specific ways in which these policies may 
apply to the calculation of device-based fees. The first has to do with 
the aggregation of devices and/or User IDs across affiliated entities 
for purposes of determining the applicable device-based rate. The 
second relates to the availability of OPRA's member rate schedule for 
OPRA's Basic Service in a situation where either a parent entity is a 
member of an OPRA Exchange but its wholly-owned subsidiary is not (in 
this case, the member rate schedule is available for the parent and the 
subsidiary) or the parent entity is not a member of an OPRA Exchange 
but its

[[Page 66185]]

wholly-owned subsidiary is (in this case, the member rate schedule is 
not available to either the parent or the subsidiary, although it would 
be available to the subsidiary if it entered into a separate Subscriber 
Agreement with OPRA in its own name).

(c) Policy With Respect to Devices and User IDs That Are Capable of 
Receiving OPRA Data From More Than One Source

    The Device-Based Fees Policies state OPRA's policy with respect to 
devices and User IDs that are capable of receiving OPRA data from more 
than one source; in essence the policy is that OPRA does not require 
that more than one fee be paid with respect to any device or User ID 
that is capable of receiving OPRA information, even if the device or 
User ID is capable of receiving OPRA information from more than one 
source or ``service.''

(d) Professional Subscriber's Responsibility to Verify Invoices

    The fourth subject addressed in the Device-Based Fees Policies is 
the responsibility of each Professional Subscriber to verify that the 
invoices it receives from OPRA are accurate, and particularly to verify 
that it is not being billed twice for the same device or User ID. The 
Device-Based Fees Policies state that OPRA's policy is to correct a 
current invoice if a Professional Subscriber informs OPRA that the 
invoice is not accurate, and to correct its records so that the 
inaccuracy does not continue to be reflected in future bills, but not 
to provide refunds or credits for a double billing or other inaccuracy 
for any period of time prior to the period covered by the Professional 
Subscriber's current invoice.
    The text of the proposed new document regarding policies with 
respect to Device-Based Fees is set forth below.
* * * * *
Policies With Respect To Device-Based Fees
    Professional Subscribers that enter into Professional Subscriber 
Agreements directly with OPRA pay fees for the use of OPRA information 
directly to OPRA. These fees may be calculated using either ``device-
based'' rates or ``enterprise'' rates. (A Professional Subscriber that 
enters into a Subscriber Agreement with a Vendor does not pay fees 
directly to OPRA. Instead, the Vendor pays usage-based fees to OPRA for 
the Professional Subscriber's use of OPRA information, and the 
Professional Subscriber pays fees to the Vendor under the financial 
arrangements that they establish.) The OPRA policies described in this 
document relate to device-based fees.
    As the term ``device-based'' suggests, the basic method for 
calculating a Professional Subscriber's device-based fees is to 
determine the number of devices that the Professional Subscriber has 
that are capable of receiving OPRA information. However, if a 
Professional Subscriber complies with the requirements described in the 
section of this document entitled ``System Requirements for Using User 
IDs to Calculate Device-based Fees,'' OPRA will permit the Professional 
Subscriber to count ``User IDs'' that are capable of receiving OPRA 
information as a surrogate for counting devices, and to pay fees based 
on the number of User IDs using the same Fee Schedule for Professional 
Subscribers that is used for device-based counts.
    A Professional Subscriber cannot mix device-based counting and User 
ID-based counting at the same location, but a Professional Subscriber 
may use one type of counting at one location and the other at another 
location. If a Professional Subscriber uses both types of counting, 
OPRA will simply add the totals together for purposes of determining 
the Subscriber's monthly fee in accordance with the Fee Schedule.

Billing for Affiliates

    OPRA's policy is to permit a parent entity to conduct business with 
OPRA on behalf of its wholly-owned subsidiaries as well as on its own 
behalf. In all other situations OPRA adheres to a general policy in its 
contract relationships with Professional Subscribers and other persons 
of conducting business on an ``entity-by-entity'' basis, and not on a 
``family of affiliates'' basis. Thus, for example, OPRA would permit a 
wholly-owned subsidiary of a company that is a Professional Subscriber 
to receive OPRA information on the subsidiary's devices under the terms 
of the parent's Professional Subscriber Agreement, i.e., without having 
a second Professional Subscriber Agreement in effect. But OPRA would 
require two entities that are ``sister'' affiliates of each other and 
that each wants to become a Professional Subscriber and to pay device-
based fees to each sign a Professional Subscriber Agreement with OPRA.
    This general policy is relevant to determinations of device-based 
fees in at least two respects:
    [sbull] OPRA permits a parent entity to aggregate the devices and/
or User IDs of its wholly-owned subsidiaries that are under the 
parent's Professional Subscriber Agreement with its own devices and/or 
User IDs for purposes of determining the applicable device-based rate, 
but does not permit any other aggregation of devices or User IDs--even 
by entities that are in other affiliate relationships with each other--
for purposes of determining the applicable device-based rate.
    [sbull] If a parent entity that has entered into a Professional 
Subscriber Agreement is entitled to use the ``Member'' rate schedule 
for OPRA's Basic Service (because it is a member or associate member in 
good standing of one of the OPRA Participant Exchanges), then the 
``Member'' rate schedule will also be available to the parent's wholly-
owned subsidiaries that are under the parent's Professional Subscriber 
Agreement. If a parent entity that has entered into a Professional 
Subscriber Agreement is not entitled to use the ``Member'' rate 
schedule, then the ``Member'' rate schedule would not be available to a 
wholly-owned subsidiary that is under the parent's Professional 
Subscriber Agreement even if the subsidiary is a member or associate 
member in good standing of one of the OPRA Participant Exchanges. (This 
might be a situation in which the subsidiary should enter into its own 
Professional Subscriber Agreement, since it would then be entitled to 
use the ``Member'' rate schedule.) Except in the case in which a parent 
entity is entitled to use the ``Member'' rate schedule for itself and 
its wholly-owned subsidiaries, the availability of the ``Member'' rate 
schedule to any entity may not be extended to any other entity, 
including any affiliate of the entity that is entitled to use the 
``Member'' rate schedule.

System Requirements for Using User IDs to Calculate Device-Based Fees

    If a Professional Subscriber wants to use User ID counts rather 
than device counts for purposes of determining device-based fees at a 
particular location, the system(s) that control User ID entitlement at 
the location must satisfy the following requirements:
    [sbull] The system(s) must assign a unique User ID to each person 
who will have access to OPRA information and must be capable of 
maintaining, for audit purposes, a record of the names of all users 
with access to the network together with their associated user IDs and 
their respective entitlements.
    [sbull] The system(s) must be configured to preclude simultaneous 
access by the same user ID from more than one terminal on the network.

[[Page 66186]]

    [sbull] The system(s) must have the ability to generate reports for 
the location detailing those persons entitled to access OPRA 
information, and to retain these reports for a period of three years 
for audit purposes.
    In addition, the Professional Subscriber must have a policy in 
place prohibiting the sharing of User IDs, and must have procedures in 
place to assure reasonable compliance with the policy.
    If any of these requirements is not satisfied (e.g., if the 
entitlement control system does not prohibit simultaneous access by the 
same User ID), device-based fees must be based on counting the devices 
that are capable of receiving OPRA information rather than on counting 
User IDs.

Counting Devices and User IDs

    OPRA does not require that more than one fee be paid with respect 
to any device, or any User ID, that is capable of receiving OPRA 
information, even if the device or User ID is capable of receiving OPRA 
information from more than one source or ``service.'' Thus, for 
example, if a particular device is receiving data from both a Vendor A 
service and a Vendor B service, OPRA does not require that the 
Professional Subscriber pay two device-based fees for that device. 
Similarly, if a particular device is receiving data from both a Vendor 
A service and a datafeed controlled by the Professional Subscriber 
itself, OPRA does not require that the Professional Subscriber pay two 
device-based fees for that device.

Professional Subscriber's Responsibility to Verify Invoices

    Each Professional Subscriber is responsible for verifying that the 
invoices it receives from OPRA are accurate. In particular, each 
Professional Subscriber is responsible for verifying that it is not 
being billed twice for the same device or User ID. OPRA invoices each 
Professional Subscriber that has elected to pay device-based fees based 
on information that OPRA receives from Vendors (with respect to devices 
and User IDs that are under Vendor control) and from the Professional 
Subscriber itself (with respect to devices and User IDs that are under 
the control of the Professional Subscriber). It can be difficult for 
OPRA to recognize that a device or User ID reported as receiving OPRA 
information by two different Vendors, or by a Vendor and the 
Professional Subscriber, is in fact the same device or User ID.
    If a Professional Subscriber informs OPRA that a current OPRA 
invoice double bills for a particular device or User ID or is otherwise 
inaccurate, OPRA will correct the current invoice and its records so 
that the double billing or other inaccuracy does not continue. However, 
OPRA's policy is to not provide refunds or credits for a double billing 
or other inaccuracy for any period of time prior to the period covered 
by the Professional Subscriber's current invoice.
* * * * *

II. Implementation of the OPRA Plan Amendment

    Pursuant to paragraph (c)(3)(i) of Rule 11Aa3-2 under the Act,\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 sixty days of its filing and require refiling and 
approval of the amendment by Commission order pursuant to Rule 11Aa3-
2(c)(2) under the Act,\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 Act. Further, OPRA intends to send a copy of the Policies to all 
current Professional Subscribers with the next monthly invoices that 
are sent out by OPRA following this filing, and to add the Policies to 
the package of materials that it supplies to vendors for distribution 
to persons intending to sign Professional Subscriber Agreements with 
OPRA. In addition, as soon as practicable OPRA intends to post a copy 
of the Policies on its website (www.opradata.com).
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    \4\ 17 CFR 240.11Aa3-2(c)(3)(i).
    \5\ 17 CFR 240.11Aa3-2(c)(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. 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-2002-05 and should be 
submitted by November 20, 2002. 
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    \6\ 17 CFR 200.30-3(a)(29).

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

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-27577 Filed 10-29-02; 8:45 am]
BILLING CODE 8010-01-P