[Federal Register Volume 67, Number 225 (Thursday, November 21, 2002)]
[Notices]
[Pages 70269-70271]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-29593]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46839; File No. SR-OPRA-2002-03]


Options Price Reporting Authority; Notice of Filing of a Proposal 
To Revise the Required Form of Vendor Agreement Under Section VII(b) of 
the OPRA Plan

November 14, 2002.
    Pursuant to Section 11A of the Securities Exchange Act of 1934 
(``Act'') and Rule 11Aa3-2 under,\1\ notice is hereby given that on 
July 12, 2002, the Options Price Reporting Authority (``OPRA''),\2\ 
submitted to the Securities and Exchange Commission (``Commission'') an 
amendment to the Plan for Reporting of Consolidated Options Last Sale 
Reports and Quotation Information (``OPRA Plan''). The amendment would 
revise the form of Vendor Agreement that is required to be entered into 
between OPRA and vendors of options information under Section VII(b) of 
the OPRA Plan. The Commission is publishing this notice to solicit 
comments on the proposed amendment to the OPRA Plan from interested 
persons.
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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, 15 U.S.C. 
78k-1, and Rule 11Aa3-2 thereunder, 17 CFR 240.11Aa3-2. See 
Securities Exchange Act Release No. 17638 (March 18, 1981), 22 
S.E.C. Docket 484 (March 31, 1981). The OPRA Plan provides for the 
collection and dissemination of last sale and quotation information 
on options that are traded on the participant exchanges. The five 
signatories to the OPRA Plan that currently operate an options 
market are the American Stock Exchange, the Chicago Board Options 
Exchange, the International Securities Exchange, the Pacific 
Exchange, and the Philadelphia Stock Exchange. The New York Stock 
Exchange is a signatory to the OPRA Plan, but sold its options 
business to the Chicago Board Options Exchange in 1997. See 
Securities Exchange Act Release No. 38542 (April 23, 1997), 62 FR 
23521 (April 30, 1997).

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[[Page 70270]]

I. Description and Purpose of the Amendment

    The purpose of the proposed amendment is to revise the form of 
Vendor Agreement that is required to be entered into between OPRA and 
vendors of options information under Section VII(b) of the Plan. The 
Vendor Agreement governs the terms and conditions under which vendors 
are permitted to redistribute options market data to subscribers and 
other end users of the information. The proposed revisions are intended 
to update the Vendor Agreement (and attachments to the Vendor 
Agreement) in light of changes in technology and other developments 
that have occurred since that agreement was last revised. These changes 
have previously been reflected in a series of riders to the Vendor 
Agreement, consisting of the ``Voice-Synthesized Market Data Service 
Rider'', the ``Radio-Paging Market Data Service Rider'', the ``Dial-up 
Market Data Service Rider'' and the ``Electronic Contract Rider.'' As 
technology has continued to develop, these riders have themselves 
become either irrelevant or outdated. The proposed amendment to the 
Vendor Agreement reflects the elimination of the Radio-Paging Rider, 
which is no longer in use, and the integration and updating of the 
other three riders in the body of the Vendor Agreement and in a new 
Attachment C to the Vendor Agreement.
    The proposed amendment also responds to the fact that, pursuant to 
procedures described in the existing Dial-up Market Data Service Rider 
as well as in provisions of the current Vendor Agreement applicable to 
nonprofessional subscribers, an increasing number of OPRA Subscribers 
enter into contracts directly, and in some cases electronically, with 
vendors for the receipt of options information, rather than entering 
into Professional Subscriber Agreements with OPRA. All nonprofessional 
subscribers contract directly with vendors, as do ``dial-up'' 
customers, whether professional or nonprofessional.\3\ Under the 
current Vendor Agreement and its riders, OPRA provides a form of 
Nonprofessional Subscriber Agreement and a form of electronic customer 
dial-up agreement for use by vendors in contracting with those of their 
customers to which these forms of agreement apply, and permits vendors 
to enter into other forms of agreements with their dial-up customers 
subject to OPRA's prior approval. The proposed revised Vendor Agreement 
consolidates these different forms of agreements between vendors and 
their customers into a single standard form ``Subscriber Agreement,'' 
without making any significant substantive changes to the current 
forms. Attachments B-1 and B-2 to the Vendor Agreement represent 
electronic and hard-copy versions of the Subscriber Agreement, 
respectively. OPRA proposes that these new standard versions of the 
Subscriber Agreement could be used by vendors to contract with 
professional or nonprofessional subscribers without any further 
approval by OPRA. Vendors would still be permitted to use their own 
customized agreements to contract with subscribers, which would 
continue to be subject to prior approval by OPRA. Those vendors who 
choose to use their own agreements would nevertheless benefit from the 
new preapproved standard versions, which may serve as models for 
drafting customized agreements that will satisfy OPRA's requirements.
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    \3\ The term ``dial-up'' customer is explained in the text 
below.
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    The proposed revised Vendor Agreement also updates certain 
terminology to reflect developments in technology. Specifically, the 
concept of a ``dial-up'' customer, which was an accurate description of 
the way many nonprofessional subscribers accessed options market data 
several years ago, has been eliminated in recognition of the 
transformation of the electronic distribution of information resulting 
from the availability of the Internet and other information networks. 
Although in practice OPRA has recognized this development by expanding 
its view of what constitutes ``dial-up'' access, the proposed amendment 
to the Vendor Agreement now codifies this practice in the language of 
the Agreement.
    The proposed revised Vendor Agreement continues to describe two 
categories of Subscribers: ``Professional Subscribers'' and 
``Nonprofessional Subscribers.'' As is currently the case, any 
Professional Subscriber who pays either OPRA's traditional device-based 
information fees or its flat ``enterprise rate'' fee in order to access 
options market data would enter into a Professional Subscriber 
Agreement directly with OPRA. As an alternative to these arrangements, 
such persons may enter into Subscriber Agreements with vendors, in 
which case the vendors would pay usage-based fees to OPRA. Also as is 
currently the case, Nonprofessional Subscribers would be required to 
enter into Subscriber Agreements with vendors pursuant to which vendors 
pay to OPRA either a reduced, flat-rate nonprofessional subscriber fee 
or a usage-based fee that is capped at the reduced flat-rate fee. 
Commonly, vendors pass through to their customers any access fees paid 
to OPRA by the vendors on their customers' behalf, although they are 
not required to do so. The proposed revised Vendor Agreement does not 
change the substance of these arrangements and does not propose to 
change the amount of OPRA's access fees, but it does provide a single, 
all-purpose form of Subscriber Agreement (in both electronic and hard-
copy versions) that may be used by vendors to contract directly with 
their customers.
    The proposed revised Vendor Agreement also includes new provisions 
to implement various aspects of OPRA's proposed new BBO (best bid and 
offer) Service, which is currently the subject of a separate proposed 
Plan amendment currently pending before the Commission.\4\ In this 
regard, the proposed revised Vendor Agreement provides that a vendor 
satisfies its obligation to include consolidated options market data in 
its market information service if, at a minimum, the service includes 
options last sale information and the consolidated BBO provided by 
OPRA. This would permit a vendor to include additional unconsolidated 
information in its service so long as this required minimum 
consolidated information is included. The proposed revised Vendor 
Agreement permits a vendor to exclude from its BBO service either the 
quote size or the market identifier associated with a BBO or both, so 
long as in excluding information the vendor does not discriminate on 
the basis of the market in which quotations are entered. Additionally, 
if a vendor excludes the market identifier associated with the BBO from 
a dynamically updated service, it would be required to make that 
information available to recipients of the dynamically updated service 
through an inquiry-only service provided without additional cost. Quote 
size and market identifier information included in a vendor's service 
would be required to be on as current a basis as the information is 
reported by OPRA. Because the proposed Plan amendment pertaining to 
OPRA's proposed BBO Service provides for the inclusion of an 
approximation of the size associated with the BBO rather than the 
actual size (in order to reduce the message-handling capacity needed to 
carry the BBO Service), the proposed revised Vendor Agreement requires 
any vendor that includes size in its BBO service to

[[Page 70271]]

disclose to its customers that the included size is an approximation of 
the actual size, and that the actual size is available on OPRA's full 
quotation service.
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    \4\ See Securities Exchange Act Release No. 45532 (March 11, 
2002), 67 FR 11727 (March 15, 2002) (File No. SR-OPRA-2002-01).
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    Finally, Attachment A to the proposed revised Vendor Agreement is 
OPRA's current fee schedule, revised only to reflect changes in 
terminology without any changes in the nature or amount of the fees 
themselves.
    The text of the proposed new Vendor Agreement, Fee Schedule, Form 
of Electronic subscriber Agreement, Form of Hardcopy Subscriber 
Agreement, and Conditions for Use of Electronic Subscriber Agreement, 
is available at the principal offices of OPRA, Commission's Public 
Reference Room, and on the Commission's Internet website (http://www.sec.gov/rules/sro/shtml).

II. Implementation of Plan Amendment

    OPRA proposes to begin to use the revised Vendor Agreement as soon 
as it has been approved by the Commission. Existing vendors would be 
expected to sign the revised Vendor Agreement to replace their existing 
Agreements with OPRA, but would continue to be able to act as vendors 
under their existing Vendor Agreements. Existing vendors that wish to 
take advantage of the provision of the revised Agreement that allows 
them to satisfy their obligation to provide consolidated options market 
information by furnishing only last sale information and the BBO would 
be required to sign the revised Agreement. All new vendors would be 
required to sign the revised Agreement. Existing customers of vendors 
that have previously entered into nonprofessional subscriber agreements 
or dial-up customer agreements with their vendors would not be required 
to re-sign the new form of subscriber agreement.

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 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 
will also be available at the principal offices of OPRA. All 
submissions should refer to File No. SR-OPRA-2002-03 and should be 
submitted by December 12, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-3(a)(29).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 02-29593 Filed 11-20-02; 8:45 am]
BILLING CODE 8010-01-U