[Federal Register Volume 77, Number 153 (Wednesday, August 8, 2012)]
[Notices]
[Pages 47459-47461]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-19416]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67589; File No. SR-OPRA-2012-03]


Options Price Reporting Authority; Order Approving an Amendment 
to the Plan for Reporting of Consolidated Options Last Sale Reports and 
Quotation Information To Revise the Definition of the Term 
``Nonprofessional''

August 2, 2012.

I. Introduction

    On May 31, 2012, 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 608 thereunder,\2\ an amendment to the Plan for 
Reporting of Consolidated Options Last Sale Reports

[[Page 47460]]

and Quotation Information (``OPRA Plan'').\3\ The proposed OPRA Plan 
amendment would revise OPRA's definition of the term 
``Nonprofessional.'' The proposed OPRA Plan amendment was published for 
comment in the Federal Register on June 22, 2012.\4\ The Commission 
received no comment letters in response to the Notice.
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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. 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 LLC, NASDAQ Stock Market LLC, NYSE Amex, LLC n/k/a NYSE MKT 
LLC, and NYSE Arca, Inc.
    \4\ See Securities Exchange Act Release No. 67210 (June 15, 
2012), 77 FR 37720 (``Notice'').
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    This order approves the proposed OPRA Plan amendment.

II. Description of the Proposal

    The purpose of the proposed amendment is to revise OPRA's 
definition of the term ``Nonprofessional.'' \5\
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    \5\ 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 (collectively, ``Addenda''). These two forms, 
in turn, are Attachments B-1 and B-2 to OPRA's form of Vendor 
Agreement. See www.opradata.com.
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    A person may become an OPRA ``Subscriber'' in one of two ways.\6\ 
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.'' 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.''
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    \6\ 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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    Under OPRA's current definition, 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'' by reference to the definition of the term 
``associated person of a broker or dealer'' in Section 3(a)(18) of the 
Act.\8\ According to OPRA, that definition includes ``any employee'' of 
a broker or dealer, and accordingly employees of broker-dealers have 
not been eligible to be treated as Nonprofessionals.
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    \7\ See Addenda, ] 1(c), supra note 5.
    \8\ Section 3(a)(18) of the Act provides as follows: ``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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    According to OPRA, two inconsistencies result from this language. 
First, OPRA's language on this point differs from 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''). The 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\ See the CTA ``Nonprofessional Subscriber Policy,'' available 
at http://www.nyxdata.com/Docs/Market-Data/Policies. See also 
Notice, supra, note 4 at 37721, n.9.
    \10\ See Notice, supra, note 4 at 37721, n.10.
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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 language used by the CTA and 
the UTP/Nasdaq Plan. The revised definition would 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. According to OPRA, the 
changes that it is proposing in its definition of the term 
``Nonprofessional'' will add clarity to the definition and more closely 
align the OPRA Plan definition with the definitions used by the CTA and 
the UTP/Nasdaq Plan.\11\
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    \11\ According to OPRA, in the vast majority of cases, its 
definition of the term ``Nonprofessional'' and those of the 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 the CTA and the UTP/Nasdaq Plan generate different results.
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III. Discussion

    After careful review, the Commission finds that the proposed OPRA 
Plan amendment is consistent with the requirements of the Act and the 
rules and regulations thereunder.\12\ Specifically, the Commission 
finds that the proposed OPRA Plan amendment is consistent with Section 
11A of the Act \13\ and Rule 608 thereunder \14\ in that it is 
appropriate in the public interest, for the protection of investors and 
the maintenance of fair and orderly markets, and to remove impediments 
to, and perfect the mechanism of, a national market system. The 
Commission notes that OPRA's proposed changes to the definition of the 
term ``Nonprofessional'' are designed to add clarity to the definition 
and eliminate any inconsistencies between OPRA's definition and the 
definitions used by the CTA and the UTP/Nasdaq Plan. The revised 
language would allow a person

[[Page 47461]]

who is not registered in some capacity with the Commission or the CFTC, 
but who is employed by an entity that is required to so register to 
qualify as a ``Nonprofessional'' and therefore gain access to OPRA data 
at a potentially reduced cost. Accordingly, the Commission believes 
that the proposal may increase certain market participant's ability to 
access OPRA data on a timely basis. Therefore, the Commission believes 
that OPRA's proposal is consistent with Section 11A of the Act \15\ and 
Rule 608 thereunder.\16\
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    \12\ 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).
    \13\ 15 U.S.C. 78k-1.
    \14\ 17 CFR 242.608.
    \15\ 15 U.S.C. 78k-1.
    \16\ 17 CFR 242.608.
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IV. Conclusion

    It is therefore ordered, pursuant to Section 11A of the Act,\17\ 
and Rule 608 hereunder,\18\ that the proposed OPRA Plan amendment (SR-
OPRA-2012-03) be, and it hereby is, approved.
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    \17\ 15 U.S.C. 78k-1.
    \18\ 17 CFR 242.608.
    \19\ 17 CFR 200.30-3(a)(29).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-19416 Filed 8-7-12; 8:45 am]
BILLING CODE 8011-01-P