[Federal Register Volume 68, Number 18 (Tuesday, January 28, 2003)]
[Notices]
[Pages 4259-4260]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-1880]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47230; File No. SR-OPRA-2002-03]


Options Price Reporting Authority; Order Approving an Amendment 
to the Options Price Reporting Authority Plan To Revise the Required 
Form of Vendor Agreement

January 22, 2003.

I. Introduction

    On July 12, 2002, the Options Price Reporting Authority (``OPRA'') 
submitted to the Securities and Exchange Commission (``SEC'' or 
``Commission''), pursuant to section 11A of the Securities Exchange Act 
of 1934 (``Act'')\1\ and rule 11Aa3-2 thereunder,\2\ an amendment to 
the Plan for Reporting of Consolidated Options Last Sale Reports and 
Quotation Information (``OPRA Plan'' or ``Plan'').\3\ 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. Notice of the proposal was published 
in the Federal Register on November 21, 2002.\4\ The Commission 
received no comment letters on the proposed OPRA Plan amendment. This 
order approves the proposal.
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    \1\ 15 U.S.C. 78k-1.
    \2\ 17 CFR 240.11Aa3-2.
    \3\ 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 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 participants to the OPRA Plan 
that operate an options market are the American Stock Exchange LLC, 
the Chicago Board Options Exchange, Inc. (``CBOE''), the 
International Securities Exchange, Inc., 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).
    \4\ See Securities Exchange Act Release No. 46839 (November 14, 
2002), 67 FR 70269.
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    OPRA's Vendor Agreement governs the terms and conditions under 
which vendors redistribute options market data to subscribers and other 
end users of the information. The proposed revisions would update the 
Vendor Agreement and consolidate a series of riders to the Vendor 
Agreement. In addition, the revised Vendor Agreement would consolidate 
several 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.
    The revised Vendor Agreement would also include new provisions to 
govern the redistribution by vendors of OPRA's new BBO (best bid and 
offer) Service.\5\ In this regard, the revised Vendor Agreement would 
permit a vendor to satisfy its obligation to include consolidated 
options market data in its market information service if, at a minimum, 
the service would include 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. Further, 
the revised Vendor Agreement would permit 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 
would not discriminate on the basis of the market in which quotations 
are entered. In addition, if a vendor were to exclude 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. Finally, because OPRA's BBO Service 
provides for the inclusion of an approximation of the size associated 
with the BBO rather than the actual size, the revised Vendor Agreement 
would require any vendor that includes size in its BBO service to 
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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    \5\ See Securities Exchange Act Release No. 47231 (January 22, 
2003) (File No. SR-OPRA-2002-01) (order granting permanent 
approval). See also Securities Exchange Act Release No. 46992 
(December 13, 2002), 67 FR 78031 (December 20, 2002).
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    After careful review, the Commission finds that the proposed OPRA 
Plan

[[Page 4260]]

amendment is consistent with the requirements of the Act and the rules 
and regulations thereunder.\6\ The Commission believes that the 
proposed OPRA Plan amendment is consistent with section 11A of the Act 
\7\ and rule 11Aa3-2 thereunder \8\ in that it is 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.
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    \6\ 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).
    \7\ 15 U.S.C. 78k-1.
    \8\ 17 CFR 240.11Aa3-2.
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    Specifically, the Commission notes that 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, and includes new provisions to implement various 
aspects of OPRA's best bid and offer (``BBO'') Service, which the 
Commission recently approved.\9\ In particular, the revised Vendor 
Agreement would allow a vendor, subject to certain limitations, to 
exclude information regarding quotation size and market identification 
from its redistribution of OPRA's BBO Service. The Commission notes 
that if a vendor excludes either the quotation size or market 
identifier from its service, or both, it must not discriminate on the 
basis of the market in which quotations were entered. In addition, 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. The 
Commission believes that this provision of the proposal is consistent 
with the purposes of section 11A of the Act because vendors would be 
required to make available to their subscribers the information 
investors need to make informed investment decisions.
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    \9\ See supra note .
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    It is therefore ordered, pursuant to section 11A of the Act,\10\ 
and rule 11Aa3-2 thereunder,\11\ that the proposed OPRA Plan amendment, 
(SR-OPRA-2002-03) is approved.
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    \10\ 15 U.S.C. 78k-1.
    \11\ 17 CFR 240.11Aa3-2.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
Margaret H. McFarland,
Deputy Secretary.
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    \12\ 17 CFR 200.30-3(29).
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[FR Doc. 03-1880 Filed 1-27-03; 8:45 am]
BILLING CODE 8010-01-P