[Federal Register Volume 69, Number 236 (Thursday, December 9, 2004)]
[Notices]
[Pages 71440-71442]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-3576]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50785; File No. SR-OPRA-2004-06]


Options Price Reporting Authority; Notice of Filing of Proposed 
Amendment to the Plan for Reporting of Consolidated Options Last Sale 
Reports and Quotation Information To Amend Guideline 2 of the Capacity 
Guidelines Adopted in Accordance With the Plan

December 2, 2004.
    Pursuant to Section 11A of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 11Aa3-2 thereunder,\2\ notice is hereby given 
that on October 19, 2004, the Options Price Reporting Authority 
(``OPRA'')\3\ submitted to the Securities and Exchange Commission 
(``Commission'') an amendment to the Plan for Reporting of Consolidated 
Options Last Sale Reports and Quotation Information (``Plan''). The 
proposed amendment would amend Guideline 2 of the Capacity Guidelines 
(``Guideline 2'') adopted in accordance with the Plan. The Commission 
is publishing this notice to solicit comments from interested persons 
on the proposed Plan amendment.
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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), 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 six participants to the OPRA Plan are 
the American Stock Exchange LLC, the Boston Stock Exchange, Inc., 
the Chicago Board Options Exchange, Inc., the International 
Securities Exchange, Inc., the Pacific Exchange, Inc., and the 
Philadelphia Stock Exchange, Inc.
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I. Description and Purpose of the Amendment

    OPRA states that there are two purposes to the proposed amendment 
to Guideline 2. Guideline 2 describes the process to be followed by the 
Independent System Capacity Advisor (``ISCA'') under the Plan in 
soliciting and considering capacity projections and requests from the 
parties to the Plan. Among other things, Guideline 2 requires the ISCA 
to repeat this process on a quarterly cycle. The first purpose of the 
proposed amendment to Guideline 2 is to reduce the frequency of the 
capacity review cycle to no less frequently than semi-annually. OPRA 
states that, based on the experience of the ISCA and the parties to the 
Plan with this process, it is now apparent that, by requiring the 
solicitation and review of capacity projections on a quarterly cycle, 
Guideline 2 fails to take into account that it takes more than 3 months 
for the complete cycle of solicitation, discussion, revision, and 
review of these projections to be completed.\4\ For this reason, the 
ISCA suggested, and the parties to the Plan agreed, that a six-month 
cycle for the capacity projection and review process would be more 
realistic. In the view of the ISCA and the parties to the Plan, a six-
month cycle for this process would provide the ISCA with sufficiently 
current capacity projections to assure that the OPRA System would be 
able to meet the capacity needs of the parties as they may change from 
time to time.
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    \4\ The ISCA's initial solicitation and review of capacity 
projections commenced in January 2004. Under the quarterly cycle 
required by Guideline 2, the second solicitation and review would 
have had to commence in April 2004. OPRA states that, when OPRA's 
Policy Committee met on March 1, 2004, it was plain that the January 
review would not be completed by April. Accordingly, OPRA waived the 
April 2004 solicitation and review and agreed that the next 
solicitation would call for projections to be furnished to the ISCA 
no later than July 1, 2004, which was done. According to OPRA, the 
Commission's representative at the March 1, 2004 meeting agreed that 
a one-time waiver of the ISCA's quarterly capacity review would not 
require a formal amendment of the Capacity Guidelines. OPRA believes 
that this suggests that waivers of quarterly reviews on a regular 
basis would require such an amendment, as this filing proposes.
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    The second purpose of the proposed amendment concerns the provision 
of Guideline 2 that requires the ISCA, once it has received capacity 
projections and requests from all of the parties and has estimated the 
cost of any modifications to the OPRA System necessary to accommodate 
these projections and requests, to furnish its cost estimates to each 
party requesting additional

[[Page 71441]]

capacity. After receiving the estimate, the party is able to reduce the 
amount of additional capacity it requested in light of the estimated 
cost, or to withdraw its request altogether. Guideline 2, however, does 
not contemplate that a party would be able to increase the amount of 
additional capacity it is requesting at this stage of the process. The 
ISCA has recommended to OPRA, and OPRA has concurred, that Guideline 2 
should be amended to permit a party either to reduce or increase the 
amount of additional capacity it is requesting once it has received the 
ISCA's initial cost estimates. OPRA believes that providing the parties 
to the Plan with this additional flexibility is justified not only 
because, by the time these estimates are received, there may be changes 
to a party's projection of the capacity it would need, but also because 
the ISCA's cost estimates may themselves be based on implementing 
changes to the system that would result in greater additional capacity 
being available than the aggregate amount of added capacity initially 
requested by the parties. In such an event, OPRA believes that the 
parties to the Plan should have an opportunity to adjust their requests 
upward if they so desire in order to receive an allocation of any 
additional capacity that may be available.\5\
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    \5\ OPRA states that, although Capacity Guideline 5(a) makes it 
clear that the ISCA is not authorized to implement system changes 
that would provide more capacity than has been requested by the 
parties unless the changes are approved by 75% of the parties, the 
ISCA may find it prudent for reasons of economy and efficiency to 
recommend modifying the system to provide more capacity than has 
been requested on the reasonable assumption that at least 75% of the 
parties would approve such a recommendation. Telephone conversation 
between Michael L. Meyer, Counsel to OPRA, Schiff Hardin LLP, and 
Karl Varner, Special Counsel, Division of Market Regulation 
(``Division''), Commission, and David Liu, Attorney, Division, 
Commission, on November 30, 2004.
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    The text of the proposed revised Capacity Guideline 2 is set forth 
below. Proposed new language is in italics; proposed deletions are in 
[brackets].
* * * * *
    2. Procedures and Timetable to be Followed by the ISCA; Reports to 
OPRA. The OPRA Plan requires each of the parties, independently and 
from time to time, to project the amount of system capacity it will 
need, and to communicate to the ISCA, privately and in writing, 
requests for system capacity based on its projections in accordance 
with procedures developed by the ISCA. An applicant to become a party 
will likewise have to inform the ISCA, at least six months prior to the 
time it proposes to commence trading, concerning the initial amount of 
system capacity it will need. The costs of providing initial system 
capacity to an applicant in accordance with its request, as determined 
by the ISCA, will be included in the applicant's Participation Fee 
payable under Section 1(b) of the OPRA Plan. The ISCA will describe to 
the parties (and to applicants to become parties) the specific 
information that it wishes to receive from them for this purpose, the 
format in which the information is to be presented, and when the 
information is to be provided, provided that the ISCA shall solicit and 
consider capacity projections and requests from the parties no less 
frequently than semi-annually [quarterly]. The ISCA may also request 
additional information pertaining to System capacity from the parties 
at any time, subject to the confidentiality requirements described 
above.
    As promptly as practicable after each due date for the receipt of 
capacity projections and requests from the parties, the ISCA will 
complete its review of the material furnished by the parties and any 
other information it deems relevant, and will present a written report 
to OPRA's Policy Committee concerning the extent and timing of any 
modifications to the OPRA System that it determines are necessary to 
meet the capacity needs of the parties in accordance with their 
requests. Whenever the ISCA believes it will not be able to meet this 
timetable for furnishing its report to OPRA, it will promptly notify 
the Executive Director of OPRA in writing, explaining why the timetable 
can not be met and providing a date when it believes the report will be 
available.
    Before presenting any report to OPRA that includes proposed 
modifications to the OPRA System, the ISCA shall discuss the proposed 
modifications with the OPRA Processor and with representatives of the 
parties (which may include OPRA's Policy Committee and its Technical 
Committee) individually or collectively, and it may also discuss the 
proposed modifications with other persons (such as OPRA's 
administrative officers, vendors and subscribers) whose views the ISCA 
believes may be of assistance. Among other things, the ISCA will 
furnish to each party that has submitted a request for additional 
capacity an estimate of the cost to that party of obtaining the 
capacity it has requested, following receipt of which, the party will 
be afforded an opportunity to increase or reduce the amount of 
additional capacity it is requesting or to withdraw its request in its 
entirety. Applicants to become parties shall also have an opportunity 
to discuss their initial capacity requests with the ISCA, to receive 
cost estimates, and to modify their initial requests. Persons with whom 
the ISCA discusses OPRA System capacity matters shall be required to 
agree in writing not to disclose to any of the other parties any 
information pertaining to a party's individual capacity projections or 
capacity requests, except in the form of aggregate capacity projections 
or requests that do not identify the individual capacity projections or 
requests of any of the parties.
* * * * *

II. Implementation of Plan Amendment

    The proposed amendment will be effective upon its approval by the 
Commission pursuant to Rule 11Aa3-2 of the Act.\6\
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    \6\ 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 OPRA 
Plan amendment is consistent with the Act. Comments may be submitted by 
any of the following methods:
    Electronic comments:
     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-OPRA-2004-06 on the subject line.
    Paper comments:
     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File Number SR-OPRA-2004-06. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, 
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 that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for inspection 
and copying in

[[Page 71442]]

the Commission's Public Reference Section, 450 Fifth Street, NW., 
Washington, DC 20549. Copies of such filing also will be available for 
inspection and copying at the principal office of OPRA. All comments 
received will be posted without change; the Commission does not edit 
personal identifying information from submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number SR-OPRA-2004-06 and should be 
submitted on or before December 27, 2004.
    For the Commission, by the Division of Market Regulation, pursuant 
to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(29).

Jill M. Peterson,
Assistant Secretary.
[FR Doc. E4-3576 Filed 12-8-04; 8:45 am]
BILLING CODE 8010-01-P