[Federal Register Volume 77, Number 121 (Friday, June 22, 2012)]
[Notices]
[Pages 37720-37722]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-15261]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67210; File No. SR-OPRA-2012-03]


Options Price Reporting Authority; Notice of Filing and Immediate 
Effectiveness of Proposed Amendment to the Plan To Revise the 
Definition of the Term ``Nonprofessional''

June 15, 2012.
    Pursuant to Section 11A of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 608 thereunder,\2\ notice is hereby given that 
on May 31, 2012, the Options Price Reporting Authority (``OPRA'') 
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'').\3\ The proposed 
amendment would revise OPRA's definition of the term 
``Nonprofessional.'' The Commission is publishing this notice to 
solicit comments from interested persons on the proposed OPRA Plan 
amendment.
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    \1\ 15 U.S.C. 78k-1.
    \2\ 17 CFR 242.608.
    \3\ The OPRA Plan is a national market system plan approved by 
the Commission pursuant to Section 11A of the Act and Rule 608 
thereunder (formerly Rule 11Aa3-2). See Securities Exchange Act 
Release No. 17638 (March 18, 1981), 22 SE.C. Docket 484 (March 31, 
1981). The full text of the OPRA Plan is available at http://www.opradata.com.
    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 ten participants to the OPRA Plan are 
BATS Exchange, Inc., BOX Options Exchange, LLC, Chicago Board 
Options Exchange, Incorporated, C2 Options Exchange, Incorporated, 
International Securities Exchange, LLC, NASDAQ OMX BX, Inc., NASDAQ 
OMX PHLX, Inc., NASDAQ Stock Market LLC, NYSE Amex, LLC n/k/a NYSE 
MKT LLC, and NYSE Arca, Inc.
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I. Description and Purpose of the Plan Amendment

    The purpose of the proposed amendment is to revise OPRA's 
definition of the term ``Nonprofessional.''
    A person may become an OPRA ``Subscriber'' in one of two ways.\4\ 
The first way is that the person may sign a ``Professional Subscriber 
Agreement'' directly with OPRA. In this case, the person pays fees 
directly to OPRA on the basis of the number of the person's ``devices'' 
and/or ``UserIDs.''
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    \4\ OPRA defines a ``Subscriber,'' in general, as an entity or 
person that receives OPRA Data for the person's own use.
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    The second way is that the person may enter into a ``Subscriber 
Agreement,'' not directly with OPRA, but with an OPRA ``Vendor''--an 
entity that has entered into a ``Vendor Agreement'' with OPRA 
authorizing the entity to redistribute OPRA Data to third persons. In 
this case, OPRA collects fees from the Vendor with respect to the 
receipt of the OPRA Data by the person entering into the Subscriber 
Agreement. If the person qualifies as a ``Nonprofessional Subscriber,'' 
OPRA caps the fee that it charges the Vendor, and the fees that the 
person is required to pay to the Vendor may be less than they would be 
if the person is classified as a ``Professional Subscriber.'' \5\
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    \5\ OPRA's Fee Schedule provides that a Vendor may determine the 
fee that it pays with respect to its distribution of current OPRA 
data to a Nonprofessional Subscriber in one of two ways: Either the 
Vendor may pay OPRA's flat monthly Nonprofessional Subscriber Fee 
(currently $1.25/month), or the Vendor may count the Nonprofessional 
Subscriber's queries for OPRA data and pay Usage-based Vendor Fees 
based on the actual usage of OPRA data by the Nonprofessional 
Subscriber, subject to a cap that OPRA has always set at the amount 
of the flat Nonprofessional Subscriber Fee.

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[[Page 37721]]

    OPRA's current definition of the term ``Nonprofessional'' is set 
out in an ``Addendum for Nonprofessionals'' that is attached to its 
Electronic Form of Subscriber Agreement and its Hardcopy Form of 
Subscriber Agreement. These two forms, in turn, are Attachments B-1 and 
B-2 to OPRA's form of Vendor Agreement.\6\
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    \6\ These forms are posted on OPRA's Web site, www.opradata.com. 
OPRA most recently amended them in File No. SR-OPRA-2008-02; Release 
No. 34-58434 (August 27, 2008).
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    One element of OPRA's current definition of the term 
``Nonprofessional'' specifies that to qualify as a ``Nonprofessional'' 
a person must not be ``a securities broker-dealer, investment advisor, 
futures commission merchant, commodities introducing broker or 
commodity trading advisor, member of a securities exchange or 
association or futures contract market, or an owner, partner, or 
associated person of any of the foregoing.'' \7\ For persons employed 
by securities broker-dealers, OPRA has interpreted the term 
``associated person'' in this language with reference to the definition 
of the term ``associated person of a broker or dealer'' in Section 
3(a)(18) of the Securities Exchange Act of 1934 (the ``Act'').\8\ That 
definition includes within its scope ``any employee'' of a broker or 
dealer, and accordingly employees of broker/dealers have not been 
eligible to be Nonprofessionals.
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    \7\ See Paragraph 1(c) in each Addendum for Nonprofessionals 
(emphasis added).
    \8\ The complete definition of the term ``associated person'' in 
the Act is: ``The term ``person associated with a broker or dealer'' 
or ``associated person of a broker or dealer'' means any partner, 
officer, director, or branch manager of such broker or dealer (or 
any person occupying a similar status or performing similar 
functions), any person directly or indirectly controlling, 
controlled by, or under common control with such broker or dealer, 
or any employee of such broker or dealer, except that any person 
associated with a broker or dealer whose functions are solely 
clerical or ministerial shall not be included in the meaning of such 
term for purposes of section 15(b) of this title (other than 
paragraph (6) thereof).'' (Emphasis added.)
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    Two inconsistencies created by this language have been brought to 
OPRA's attention. First, OPRA's language on this point is different 
from the counterpart language in the definition of ``Nonprofessional'' 
used by the Consolidated Tape Association (``CTA'') and the ``Joint 
Self-Regulatory Organization Plan Governing the Collection, 
Consolidation, and Dissemination of Quotation and Transaction 
Information for Nasdaq-Listed Securities Traded on Exchanges on an 
Unlisted Trading Privilege Basis'' (``Nasdaq/UTP Plan''). CTA and the 
Nasdaq/UTP Plan define the term ``Nonprofessional'' substantially 
identically, and by reference to whether the person seeking to qualify 
as a Nonprofessional is required to register in some capacity, not by 
reference to whether the person is an associated person of an entity or 
person that is required to register in some capacity.\9\ Second, 
because the definition of the term ``associated person'' is defined 
differently in the commodity futures industry, a person who is employed 
by a commodity futures merchant (subject to regulation under the 
Commodity Exchange Act) may be able to qualify as a Nonprofessional 
under the language of the current OPRA definition even though a person 
who is employed by a securities broker to perform identical functions 
cannot.\10\
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    \9\ The term ``Nonprofessional Subscriber'' is defined by CTA as 
follows:
    ``Nonprofessional Subscriber'' refers to any natural person who 
receives market data solely for his/her personal, non-business use 
and who is not a Securities Professional, meaning that the person 
is:
    (a) Not registered or qualified with the Securities and Exchange 
Commission, the Commodities Futures Trading Commission, any state 
securities agency, any securities exchange/association, or any 
commodities/futures contract market/association
    (b) Not engaged as an ``investment adviser,'' as that term is 
defined in Section 202(a)(11) of the Investment Advisers Act of 1940 
(whether or not registered or qualified under that Act); and
    (c) Not employed by a bank or other organization exempt from 
registration under Federal and/or state securities laws to perform 
functions that would require him/hr to be so registered or qualified 
if he/she were to perform such functions for an organization not so 
exempt.
    See the CTA ``Nonprofessional Subscriber Policy,'' available at 
http://www.nyxdata.com/Docs/Market-Data/Policies.
    \10\ For example, the term ``Associated Person'' is defined in 
the Regulations of the Commodity Futures Trading Commission (the 
``CFTC'') with respect to a futures commission merchant as follows:
    (aa) Associated person. This term means any natural person who 
is associated in any of the following capacities with:
    (1) A futures commission merchant as a partner, officer, or 
employee (or any natural person occupying a similar status or 
performing similar functions), in any capacity which involves (i) 
the solicitation or acceptance of customers' or option customers' 
orders (other than in a clerical capacity) or (ii) the supervision 
of any person or persons so engaged[.]
    17 CFR 1.3(aa). The definition defines the term ``associated 
person'' in a similar manner for natural persons associated with 
other entities that are subject to regulation under the Commodity 
Exchange Act.
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    In order to eliminate these inconsistencies, OPRA proposes to 
replace paragraphs 1(c) and 1(d) of each Addendum for Nonprofessionals 
with a new paragraph 1(c) that tracks the counterpart language used by 
CTA and the UTP/Nasdaq Plan. In essence the revised language will allow 
a person who is not himself or herself registered in some capacity with 
the Commission or the CFTC, but who is employed by an entity that is so 
registered, to qualify as a ``Nonprofessional'' for purposes of the 
person's personal, non-business-related, investment activities. OPRA 
believes that the changes that it is proposing in its definition of the 
term ``Nonprofessional'' will add clarity to the definition and more 
closely align the language of the definition with the definitions used 
by CTA and the UTP/Nasdaq Plan.
    OPRA believes that, in the vast majority of cases, its definition 
of the term ``Nonprofessional'' and those of CTA and the UTP/Nasdaq 
Plan have always classified Subscribers as Professionals or 
Nonprofessionals consistently. OPRA believes that revising its 
definition in the manner described in this filing will reduce the small 
subset of cases in which its definition and those of CTA and the UTP/
Nasdaq Plan generate different results.
    The text of the proposed amendment to the OPRA Plan is available at 
OPRA, the Commission's Public Reference Room, http://opradata.com, and 
on the Commission's Web site at www.sec.gov.

II. Implementation of the OPRA Plan Amendment

    OPRA is proposing to begin to permit Vendors to use revised 
versions of its Electronic Form of Subscriber Agreement and its 
Hardcopy Form of Subscriber Agreement as soon as this filing has been 
approved by the Commission in accordance with paragraph (b)(1) of Rule 
608 of Regulation NMS under the Securities Exchange Act of 1934. OPRA 
will send notice to Vendors advising them of the change and informing 
them that, if they believe that they have Subscribers who can be 
classified as Nonprofessionals under the revised definition, they may 
reclassify them after the Subscribers have agreed to a new Subscriber 
Agreement that includes a revised Addendum for Nonprofessionals. The 
change in the definition will not require Vendors to take any action 
with respect to their existing populations of Nonprofessionals, since 
all persons who qualify as Nonprofessionals under OPRA's current 
definition will continue to qualify under the revised definition.

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

[[Page 37722]]

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 email to [email protected]. Please include 
File No. SR-OPRA-2012-03 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-OPRA-2012-03. This file 
number should be included on the subject line if email 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 Web site 
viewing and printing in the Commission's Public Reference Room, 100 F 
Street NE., Washington, DC 20549, on official business days between the 
hours of 10 a.m. and 3 p.m. 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-2012-03 
and should be submitted on or before July 13, 2012.
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    \11\ 17 CFR 200.30-3(a)(29).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-15261 Filed 6-21-12; 8:45 am]
BILLING CODE 8011-01-P