Options Price Reporting Authority: exempt access to market data; pilot plan,

[Federal Register: August 9, 2000 (Volume 65, Number 154)]

[Notices]

[Page 48769-48770]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr09au00-132]

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43109; File No. SR-OPRA-00-06]

Options Price Reporting Authority; Notice of Filing and Immediate Effectiveness of Amendment to OPRA Plan Establishing a Pilot to Permit Fee-Exempt Access to Market Data

August 2, 2000.

Pursuant to Rule 11Aa3-2 under the Securities Exchange Act of 1934 (``Act''), \1\ notice is hereby given that on May 26, 2000, the Options Price Reporting Authority (``OPRA''), \2\ submitted to the Securities and Exchange Commission (``SEC'' or ``Commission'') an amendment to the Plan for Reporting of Consolidated Options Last Sale Reports and Quotation Information (``OPRA Plan''). The proposed OPRA Plan amendment would establish a two-year pilot period, scheduled to end on May 31, 2002, during which off-floor market maker members of participant exchanges will be permitted to access options market data on a fee- exempt basis. The proposed amendment also would codify current practice by providing that during this same two-year period, floor members of participant exchanges and the participant exchanges themselves are also permitted to access options market data on a fee-exempt basis. The Commission is publishing this notice to solicit comments from interested persons on the proposed OPRA Plan amendment.

\1\ 17 CFR 240.11Aa3-2.

\2\ 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 (Mar. 18, 1981). The OPRA Plan provides for the collection and dissemination of last sale and quotation information on options that are traded on the member exchanges. The six exchanges that are participants to the OPRA Plan are the American Stock Exchange (``Amex''); the Chicago Board Options Exchange (``CBOE''); the International Securities Exchange (``ISE''); the New York Exchange (``NYSE''); the Pacific Exchange (``PCX''); and the Philadelphia Stock Exchange (``Phlx'').

1. Description and Purpose of the Amendment

OPRA is proposing amendments to the OPRA Plan to establish a two- year pilot period, scheduled to expire on May 31, 2002, during which off-floor market maker members of participant exchanges would be permitted to access options market data on a fee-exempt basis. The proposed amendment also would codify current practice by providing that during this same two-year period, floor members of participant exchanges and the participant exchanges themselves would also be permitted to access options market data on a fee-exempt basis. The text of the proposed OPRA Plan amendment is available at the Commission and at OPRA.

The purpose of the proposed OPRA Plan amendment is to clarify the conditions under which members of floor-based exchanges and their counterparts on electronic exchanges, as well as the exchange themselves, are permitted to access options market information over the OPRA system without thereby becoming liable to pay OPRA's subscriber fees.

Currently, all persons, including members of participant exchanges, who have access to OPRA information at their places of business are subject to OPRA fees. However, members of participant exchanges who function as brokers or market markers on exchange floors and who have access to OPRA information over exchange-provided terminals on the floors are not subject to OPRA fees, and the participant exchanges themselves are not required to pay OPRA fees in respect of these terminals. On the ISE, market-making functions traditionally performed by exchange members on exchange floors are instead performed by exchange members acting as specialists or market-makers from trading desks at off-floor locations. Considerations of competitive fairness suggest either that these off-floor specialists and market markers should be exempt from OPRA fees so long as their floor-based counterpart are not subject to these fees, or that all such specialists and market-makers, both on-floor and off-floor, should be subject to OPRA fees. Although OPRA has not yet decided which of these two alternative approaches should be adopted as a permanent provision of the OPRA Plan, to provide equal treatment for the ISE, OPRA proposes to implement a two-year pilot program during which the market maker members of ISE (and similar off-floor market makers of any

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other participant exchanges, including any other new participant exchange, that operates an electronic facility for the trading of options) would be permitted to access options market data on a fee- exempt basis. \3\

\3\ OPRA does not propose to extend this exemption to members of electronic exchanges who function as brokers but not as specialists or market makers. Unlike traditional floor-broker members, who are limited in number and represent customer orders typically received in the first instance at the members' off-floor locations where OPRA-enabled terminals are subject to OPRA fees, electronic access members may be unlimited in number, and will more likely receive orders directly from customers. In these respects, electronic access members perform a variety of functions, and they may be unlimited in number. One possible function is the direct receipt of customer orders, which is comparable to the function performed by those persons who today constitute the majority of OPRA's professional subscribers and provide the greater part of OPRA's total revenues.

To accomplish this, OPRA is proposing to add new paragraph (vi) to Section VII(d) of the OPRA Plan that would provide an exemption from OPRA device charges for terminals used exclusively by members of participant exchanges who function as brokers or market makers on traditional exchange trading floors, or who function as specialists or other market makers on electronic exchanges or trading facilities. Although exempt from OPRA device charges, members who control data terminals located at their own places of business would be required to sign OPRA's professional subscriber agreements, which contain prohibitions on the retransmission of market data to unauthorized persons.

OPRA also proposes to add new subsection (e) to Section V of the OPRA Plan, which for the duration of the two-year pilot will codify OPRA's current practice whereby the participant exchanges themselves are entitled to access OPRA information at their own places of business without being subject to OPRA's information fees, provided that the information is used by the exchanges in connection with the operation, surveillance or regulation of their respective exchange markets. This entitlement extends to any other self-regulatory organization that performs regulatory or surveillance functions for a participant exchange.

2. Implementation of the Plan Amendment

   Pursuant to paragraph (c)(3)(i) of Rule 11Aa3-2,\4\ OPRA designates this amendment as establishing or changing a fee or other charge collected on behalf of all of the OPRA participants in connection with access to or use of OPRA facilities, thereby qualifying for effectiveness upon filing. The Commission may summarily abrogate the amendment within 60 days of its filing and require refiling and approval of the amendment by Commission order pursuant to Rule 11Aa3- 2(c)(2),\5\ if it appears to the Commission that such action is necessary or 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 Exchange Act.

   \4\ 17 CFR 240.11Aa3-2(c)(3)(i).

   \5\ 17 CFR 240.11Aa3-2(c)(2).

3. 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. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. Copies of the submission, all subsequent amendments, and all written statements with respect to the proposed OPRA Plan amendment that are filedwith the Commission, and all written communications relating to the proposed OPRA Plan amendment between the Commission and any person, other than those withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of the filing also will be available at the principal offices of OPRA. All submissions should refer to File No. SR-OPRA-00-06 and should be submitted by August 30, 2000.

   For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\6\

   \6\ 17 CFR 200.30-3(a)(29).

   Margaret H. McFarland, Deputy Secretary.

   [FR Doc. 00-20097Filed8-8-00; 8:45 am]

   BILLING CODE 8010-01-M