[Federal Register Volume 77, Number 160 (Friday, August 17, 2012)]
[Notices]
[Pages 49837-49839]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-20263]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67648; File No. SR-OPRA-2012-04]


Options Price Reporting Authority; Notice of Filing and Immediate 
Effectiveness of Proposed Amendment to the Plan for Reporting of 
Consolidated Options Last Sale Reports and Quotation Information To 
Implement a New Fee for ``Non-Display Applications''

August 14, 2012.
    Pursuant to Section 11A of the Securities Exchange Act of 1934

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(``Act'') \1\ and Rule 608 thereunder,\2\ notice is hereby given that 
on August 1, 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 implement a new fee for ``Non-Display Applications.'' 
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 11A3-2). See Securities Exchange Act 
Release No. 17638 (March 18, 1981), 22 S.E.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.
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I. Description and Purpose of the Plan Amendment

    The purpose of the proposed amendment is to implement a new fee for 
``Non-Display Applications.'' OPRA proposes to define the term ``Non-
Display Application'' in a new footnote to its Fee Schedule. The 
definition would state that a ``Non-Display Application'' is an 
application used by a Professional Subscriber that: (i) Is capable of 
accessing OPRA market data, (ii) does not display the data in a form 
for direct use by a human being and (iii) is used for purposes of 
generating orders and/or quotations on an automated basis for purposes 
other than complying with the Rules of one or more of the OPRA 
Participant Exchanges. The definition would state that the term 
includes any application that is used for ``black box'' trading, 
automated trading, algorithmic trading and/or program trading. The 
definition would also state that the term does not include any 
application that is used only to generate two-sided continuous 
quotations, in fulfillment of the obligation to act in a market-making 
capacity pursuant to the Rules of one or more of the OPRA Participant 
Exchanges, of a Professional Subscriber that has been designated by 
such Exchange or Exchanges to act as a dealer/specialist for all 
purposes under the Securities Exchange Act of 1934 and the Rules and 
Regulations thereunder,\4\ and that the term also does not include an 
application that is used solely to perform surveillance, risk 
management or portfolio management functions in support of a firm's 
trading operations.\5\
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    \4\ Market-makers use ``autoquote'' applications to fulfill 
their obligation under Exchange rules to generate two-sided 
continuous quotations. These applications would be within the 
definition of the term ``Non-Display Application'' if this language 
were not included in the definition. OPRA believes that it would not 
be fair to market-makers to impose a new fee on them for performing 
an obligation that has existed for many years and that exists to 
provide liquidity to the markets of the Exchanges.
    \5\ OPRA believes that it would not be fair to impose a new fee 
on the use of applications that perform these support and monitoring 
functions.
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    The new fee would be payable by Professional Subscribers \6\ that 
receive access to OPRA Data via data feed transmission, either from an 
OPRA Vendor or from OPRA's processor, for use in a Non-Display 
Application.\7\ The fee would be payable on a ``per installation'' 
basis--that is, one fee would be payable for each Non-Display 
Application (sometimes referred to in this filing as a ``trading 
engine'') that receives a data feed transmission. The term 
``installation'' would be defined in a footnote to OPRA's Fee Schedule 
as follows: ``An `installation' is a system of one or more servers 
operating as a unit to generate orders and/or quotations. Multiple 
servers may operate together to constitute an `installation.' 
Conversely, two or more `installations' may reside on a single server 
or network if each generates a separate stream of orders and/or 
quotations.'' OPRA proposes that the new Non-Display Application Fee be 
$500/installation/month, with an ``Enterprise Fee'' alternative of 
$7500/month that would permit a Professional Subscriber to receive 
access to OPRA Data for use in an unlimited number of Non-Display 
Application installations.
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    \6\ OPRA defines a ``Subscriber,'' in general, as an entity or 
person that receives OPRA Data but does not redistribute it to third 
parties, and a ``Professional Subscriber'' as any Subscriber that 
does not qualify as a ``Nonprofessional Subscriber.'' In essence, a 
Nonprofessional Subscriber is an individual person that uses OPRA 
Data for personal, non-business use.
    \7\ To receive OPRA Data via a data feed transmission, a 
Subscriber must enter into a Professional Subscriber Agreement 
directly with OPRA and either a ``Direct Circuit Connection Rider to 
Professional Subscriber Agreement'' (if the Professional Subscriber 
receives the data feed transmission directly from OPRA's processor) 
or a ``Indirect (Vendor Pass-Through) Circuit Connection Rider to 
Professional Subscriber Agreement'' (if the Professional Subscriber 
receives the data feed transmission from an OPRA Vendor). OPRA's 
forms of Professional Subscriber Agreement, Direct Circuit 
Connection Rider to Professional Subscriber Agreement and Indirect 
(Vendor Pass-Through) Circuit Connection Rider to Professional 
Subscriber Agreement are all posted on OPRA's Web site, 
www.opradata.com.
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    Under OPRA's Fee Schedule as currently in effect, the OPRA fees 
that apply to a Non-Display Application would depend on the number of 
servers in the trading engine that receive OPRA Data, whether the 
trading engine receives OPRA Data directly from OPRA's processor (i.e., 
via a ``direct connect'') or from an OPRA Vendor (i.e., via, an 
``indirect connect'') and whether the Professional Subscriber is 
already paying the OPRA Indirect Access Fee. A typical trading engine 
may include multiple servers, several of which are enabled to receive 
access to OPRA Data. For example, if a trading engine is comprised of 
four servers and the Professional Subscriber is already paying the OPRA 
Indirect Access Fee, the OPRA fees that currently would apply would be 
$100/month (the device-based fee for four servers); if the trading 
engine is comprised of four servers and the Professional Subscriber is 
not already paying the OPRA Indirect Access Fee, the OPRA fees that 
currently would apply would be $700/month (the device-based fee for 
four servers plus an Indirect Access Fee for the datafeed of $600).
    Because the Non-Display Application Fee would be on a ``per 
installation'' basis, a Professional Subscriber that has multiple 
trading engines would pay a fee for each of them (up to fifteen, when 
the Enterprise Fee would be available). The Non-Display Application Fee 
for a trading engine would include the device-based fees with respect 
to the servers and other devices that comprise the trading engine, up 
to the amount of the Non-Display Application Fee. For example, for the 
trading engine described above comprised of four servers, in 2012 the 
total fees would be $500/month, not $600/month (the sum of $500 plus 
four times $25.00). For a trading engine comprised of 22 servers, the 
Professional Subscriber would be required to pay device-based fees in 
excess of the Non-Display Application Fee, and in 2012 the total fees 
for the trading engine would be $550/month. If a Professional 
Subscriber has three Non-Display Applications residing on a single 
server, each of them would be subject to the Non-Display Application 
Fee, and in 2012 the total Non-Display Application Fees for the three 
trading engines would be $1500/month. If a Professional Subscriber were 
receiving a data feed from an OPRA Vendor solely for use in one or more 
trading engines, the Professional Subscriber would not be obligated to 
pay the Indirect Access Fee in addition to the new fee.
    It would also be possible that a Professional Subscriber would 
connect a Non-Display Application to a ``direct''

[[Page 49839]]

data feed from OPRA's processor rather than an ``indirect'' data feed 
from an OPRA Vendor. In this case, the Professional Subscriber would be 
required to pay the Direct Access Fee as well as the Non-Display 
Application Fee, even if the direct data feed to the trading engine is 
the only data feed received by the Professional Subscriber.\8\
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    \8\ OPRA believes that it is fair and appropriate to charge a 
Direct Access Fee for a ``direct'' data feed connection to a Non-
Display Application, but not to charge an Indirect Access Fee for an 
``indirect'' data feed connection to a Non-Display Application, 
because of the differences in the Indirect Access Fee and the Direct 
Access Fee: The Indirect Access Fee is $600/month per Professional 
Subscriber, regardless of the number of indirect data feed 
connections that a particular Subscriber has, whereas the Direct 
Access Fee is $1,000/month for the first circuit connection, with no 
charge for one back-up circuit connection and a charge of $100 per 
connection for any additional connections. These differences, in 
turn, reflect that OPRA does not directly provide additional service 
when a Professional Subscriber adds additional indirect connections 
(because an OPRA Vendor is providing the additional connections), 
but that OPRA does provide additional service when a Professional 
Subscriber adds additional direct connections.
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    As noted above, any Professional Subscriber that wants to receive 
an indirect data feed of OPRA Data must sign an Indirect Access Rider 
to its Professional Subscriber Agreement, and any Professional 
Subscriber that wants to receive a direct data feed of OPRA data must 
sign an Direct Access Rider to its Professional Subscriber Agreement. 
In either case, the Professional Subscriber must provide OPRA with an 
``Exhibit A'' to the Rider, in which it describes its intended use of 
the OPRA data, and both Riders require Professional Subscribers to 
report their use of OPRA data on a monthly basis. These requirements 
would apply to a Professional Subscriber that wants to have a Non-
Display Application receive OPRA data. OPRA's current form of Exhibit A 
should provide OPRA staff with the information that it needs to 
generate invoices for the Non-Display Application Fee.
    OPRA believes that the use of Non-Display Applications by active 
trading firms is becoming increasingly common, and that this use has 
resulted, and will continue to result, in a significant reduction in 
the number of devices and user IDs that are reported to it.\9\ OPRA 
believes that its Fee Schedule as revised to include the new Non-
Display Application Fee will more fairly allocate to Non-Display 
Applications a share of the overall costs of OPRA and its member 
exchanges to which OPRA's fees may properly be applied.
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    \9\ In 2004, an average of 223,000 devices and User IDs were 
reported to OPRA in each month of the year. In 2011, an average of 
164,000 devices and User IDs were reported to OPRA in each month of 
the year, a reduction over that eight year period of approximately 
26%. OPRA does not have a basis for estimating the portion of that 
reduction that might be due to the use of Non-Display Applications, 
but does believe that the use of Non-Display Applications 
contributed to the reduction.
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    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 designated this amendment as qualified to be put into effect 
upon filing with the Commission in accordance with clause (i) of 
paragraph (b)(3) of Rule 608 under the Act.\10\ OPRA intends to 
implement the amendment on October 1, 2012.
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    \10\ 17 CFR 242.608(b)(3)(i).
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    The Commission may summarily abrogate the amendment within sixty 
days of its filing and require refiling and approval of the amendment 
by Commission order pursuant to Rule 608(b)(2) under the Act \11\ if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or 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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    \11\ 17 CFR 242.608(b)(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 email to [email protected]. Please include 
File No. SR-OPRA-2012-04 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-2012-04. 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 1 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-2012-04 and should be 
submitted on or before September 7, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(29).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2012-20263 Filed 8-16-12; 8:45 am]
BILLING CODE 8011-01-P