[Federal Register Volume 68, Number 18 (Tuesday, January 28, 2003)]
[Notices]
[Pages 4258-4259]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-1883]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47231; File No. SR-OPRA-2002-01]


Options Price Reporting Authority; Order Granting Permanent 
Approval to an Amendment To Establish a Best Bid and Offer Market Data 
Service

January 22, 2003.
    On February 26, 2002, the Options Price Reporting Authority 
(``OPRA'') submitted to the Securities and Exchange Commission 
(``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 proposed 
amendment would add to the Plan terms governing the provision by OPRA 
of a best bid and offer (``BBO'') for each of the options series 
included in OPRA's market data service, and governing the use of the 
BBO by vendors.
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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).
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    Notice of the proposal was published in the Federal Register on 
March 15, 2002.\4\ The Commission received two comment letters on the 
proposed OPRA Plan amendment.\5\ On May 30, 2002, OPRA submitted 
Amendment No. 1 to the proposal.\6\ On June 13, 2002, OPRA submitted a 
letter in response to the comments.\7\ On October 4, 2002, OPRA 
submitted Amendment No. 2 to the proposal.\8\ On December 13, 2002, the 
Commission approved the proposal as modified by Amendment Nos. 1 and 2 
on a temporary basis for 120 days, and solicited comment on Amendment 
Nos. 1 and 2.\9\ The Commission received no comments on Amendment Nos. 
1 and 2. This order approves the OPRA Plan amendment, as modified by 
Amendment Nos. 1 and 2, on a permanent basis.
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    \4\ See Securities Exchange Act Release No. 45532 (March 11, 
2002), 67 FR 11727.
    \5\ See letters from Devin Wenig, President, Investment Banking 
and Brokerage, Reuters America Inc., dated April 19, 2002, and 
George W. Mann, Jr., Executive Vice President and General Counsel, 
Boston Stock Exchange Inc., dated May 1, 2002, to Jonathan G. Katz, 
Secretary, Commission.
    \6\ See letter from Joseph P. Corrigan, Executive Director, 
OPRA, to John Roeser, Special Counsel, Division of Market Regulation 
(``Division''), Commission, dated May 29, 2002 (``Amendment No. 
1'').
    \7\ See letter from Joseph P. Corrigan, Executive Director, 
OPRA, to John Roeser, Special Counsel, Division, Commission, dated 
June 12, 2002.
    \8\ See letter from Joseph P. Corrigan, Executive Director, 
OPRA, to John Roeser, Special Counsel, Division, Commission, dated 
October 2, 2002 (``Amendment No. 2'').
    \9\ See Securities Exchange Act Release No. 46992 (December 13, 
2002), 67 FR 78031 (December 20, 2002).
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    Under the proposed Plan amendment, OPRA proposes to add a 
consolidated BBO service that would disseminate the best bid and offer 
for each options series, and OPRA would prioritize the BBO on the basis 
of price, size, and time. In addition, OPRA's BBO service could reflect 
an approximation of the quotation size associated with the best bid or 
offer actually available.
    Under the proposal, OPRA vendors would have the option to 
disseminate to customers the consolidated BBO together with last sale 
reports for any series of options in place of OPRA's full market data 
service. In addition to the BBO service, OPRA would be obligated to 
continue to offer to vendors its full market data service, which 
includes the disseminated best bid and offer from each of OPRA's 
participant exchanges. The proposed amendment also would permit OPRA to 
contract with vendors separately for: (i) The last sale reports and the 
BBO; or (ii) for the last sale reports, the BBO, and quotation 
information from each market. OPRA also could contract separately with 
vendors for the full market data service that it currently offers.

[[Page 4259]]

    After careful review, the Commission finds that the proposed OPRA 
Plan amendment, as amended by Amendment Nos. 1 and 2, is consistent 
with the requirements of the Act and the rules and regulations 
thereunder.\10\ Specifically, the Commission believes that the proposed 
OPRA Plan amendment, as amended, which would permit OPRA to provide a 
best bid and offer market data service to vendors, is consistent with 
section 11A of the Act \11\ and rule 11Aa3-2 thereunder \12\ 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 or 
otherwise in furtherance of the purposes of the Act.
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    \10\ 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).
    \11\ 15 U.S.C. 78k-1.
    \12\ 17 CFR 240.11Aa3-2.
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    Specifically, the Commission believes that OPRA's proposal to 
permit vendors to disseminate last sale information and a BBO is 
consistent with section 11A of the Act \13\ because the combination of 
the consolidated BBO and the last sale reports would include the 
minimum essential pricing information market participants need to make 
informed investment decisions. Furthermore, the Commission notes that 
all markets would have an equal opportunity to be represented in the 
BBO. OPRA's proposed BBO service should make it easier for vendors to 
disseminate this minimum essential market information as an alternative 
to the full quotation information or in addition to such information.
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    \13\ 15 U.S.C. 78k-1.
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    Finally, the Commission notes that it is simultaneously approving 
OPRA's proposal to change its vendor agreement, which will affect the 
manner in which vendors may disseminate information to end users.\14\ 
Specifically, under OPRA's vendor agreement proposal, vendors could 
choose to disseminate only the BBO and last sale information and 
exclude from the BBO the quotation size, or the market identifier 
associated with a BBO, or both, so long as in excluding this 
information the vendor did not discriminate on the basis of the market 
in which quotations are entered.
    It is therefore ordered, pursuant to section 11A of the Act,\15\ 
and rule 11Aa3-2 thereunder,\16\ that the proposed OPRA Plan amendment, 
as modified by Amendment Nos. 1 and 2 (SR-OPRA-2002-01) be, and it 
hereby is, approved on a permanent basis.
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    \14\ See Securities Exchange Act Release No. 47230 (January 22, 
2003) (order approving File No. SR-OPRA-2002-03).
    \15\ 15 U.S.C. 78k-1.
    \16\ 17 CFR 240.11Aa3-2.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(29).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-1883 Filed 1-27-03; 8:45 am]
BILLING CODE 8010-01-U