[Federal Register Volume 66, Number 105 (Thursday, May 31, 2001)]
[Notices]
[Pages 29612-29613]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-13635]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44347; File No. SR-OPRA-2001-02]


Options Price Reporting Authority; Notice of Filing of Amendment 
to OPRA Plan to Permit Exchanges to Disseminate Unconsolidated Market 
Information to Certain of Their Members

May 24, 2001.
    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 April 12, 2001, the Options Price Reporting Authority 
(``OPRA''),\3\ 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 amendment would permit options exchanges to 
disseminate unconsolidated market information to certain of their 
members under certain circumstances.
---------------------------------------------------------------------------

    \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 Exchange Act, 15 U.S.C. 
78k-1, and Rule 11Aa3-2 thereunder, 17 CFR 240.11Aa3-2. See 
Securities Exchange Act Release No. 17638 (March 18, 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 five categories to the OPRA Plan that currently 
operate an options market are the American Stock Exchange, the 
Chicago Board Options Exchange (``CBOE''), the International 
Securities Exchange (``ISE''), the Pacific Exchange, and the 
Philadelphia Stock Exchange. The New York Stock Exchange is a 
signatory to the OPRA Plan, but sold its options business to the 
Chicago Board Options Exchange in 1997. See Securities Exchange Act 
Release No. 38542 (April 23, 1997), 62 FR 23521 (April 30, 1997).
---------------------------------------------------------------------------

I. Description and Purpose of the Amendment

    The purpose of the proposed amendment is to change the provision of 
the OPRA Plan that requires the parties to use the OPRA System as the 
exclusion means for the dissemination of options last sale reports and 
quotation information (the ``exclusivity clause''). The proposed 
amendment, in part, would modify the exclusivity clause to incorporate 
two conditional, temporary exemptions from the exclusivity clause that 
the Commission previously granted to the ISE and the CBOE.\4\ These 
exemptions, which expire on May 26, 2001, and which the Commission is 
extending today until September 1, 2001,\5\ permit these two exchanges 
to disseminate to all of their members, but not to other persons, 
unconsolidated market information pertaining to options traded in their 
respective markets by means of communication networks other than the 
OPRA System, subject to conditions.
---------------------------------------------------------------------------

    \4\ See Letters from Robert L.D. Colby, Deputy Director, 
Division of Market Regulation, Commission, to Michael J. Simon, 
Senior Vice President and General Counsel, ISE, dated May 25, 2000 
and Edward J. Joyce, President, CBOE, dated November 6, 2000.
    \5\ See Letters from Robert L.D. Colby, Deputy Director, 
Division of Market Regulation, Commission, to Michael J. Simon, 
Senior Vice President and General Counsel, ISE, and Edward J. Joyce, 
President, CBOE, dated May 24, 2001.
---------------------------------------------------------------------------

    The proposed amendment would modify the exclusivity clause so that 
each OPRA participant could disseminate its own market information by 
means of communication networks separate from the OPRA System under the 
following conditions. First, an OPRA participant could disseminate its 
own market information through means separate from the OPRA System only 
to other OPRA participants and to its members to display on terminals 
or workstations used by persons associated with such members who are 
authorized to enter or transmit orders or quotations in the options 
market maintained by the OPRA participant.\6\ This condition means that 
an exchange's market information could not be furnished to a customer 
of a member, whether over a terminal sponsored by a member or 
otherwise. Second, each member to which an OPRA participant 
disseminates its market information would be required to have 
equivalent access to consolidated options market information 
disseminated by OPRA for the same classes or series of options that are 
included in the market information.\7\ Access would be deemed to be 
``equivalent'' if the information were equally accessible on the same 
terminal or workstation. Both of these conditions are consistent with 
conditions set forth by the Commission in the exemption letters to the 
ISE and CBOE.
---------------------------------------------------------------------------

    \6\ See proposed OPRA Plan amendment, Section V.(c)(iii)(A).
    \7\ See proposed OPRA Plan amendment, Sectioin V.(c)(iii)(B).
---------------------------------------------------------------------------

    Finally, the proposed amendment would prohibit OPRA participants 
from disseminating their market information through means other than 
the OPRA System on a more timely basis than the same information is 
furnished to the OPRA System for inclusion in the consolidated 
information disseminated by OPRA.\8\ While this condition is similar to 
one set forth in the exemption letters, the proposed amendment differs 
materially from that in the exemption letters because it would not 
consider market information to be disseminated more timely than 
information is furnished to the OPRA System simply because the market 
information includes additional or more frequently updated information, 
so long as it does not include additional or more frequently updated 
price information in respect of the best bid or best offer for any 
series of options as compared with price information furnished to OPRA. 
Accordingly, the proposed amendment would permit an OPRA participant to 
provide market information through a network separate from the OPRA 
System that is in addition to or different from the information 
furnished to the OPRA System, including information concerning orders 
and quotations in the OPRA participants' market that do not represent 
the best bid and offer and size information that is not furnished to 
OPRA.
---------------------------------------------------------------------------

    \8\ See proposed OPRA Plan amendment, Section V.(c)(iii)(C).
---------------------------------------------------------------------------

    The Quote Rule \9\ requires that if an exchange collects from 
responsible brokers or dealers quotation sizes and aggregate quotation 
sizes in listed options, such exchange must make available the 
aggregate quotation sizes associated with the best bid and offer to 
quotation vendors. The Commission believes, and OPRA acknowledges, 
that, absent an exemption from the Quote Rule, an exchange may not make 
available aggregate quote size through a network separate from the OPRA 
System (i.e., make available to a quotation vendor) without also making 
such information available to other

[[Page 29613]]

quotation vendors through the OPRA System.
---------------------------------------------------------------------------

    \9\ Exchange Act Rule 11Ac1-1, 17 CFR 240.11Ac1-1.
---------------------------------------------------------------------------

    By modifying the OPRA Plan to incorporate the previously granted 
exemptions from the OPRA Plan's exclusivity clause, OPRA believes that 
the proposed amendment would place all of the parties to the OPRA Plan 
on equal footing with respect to the right to disseminate their market 
data to their members. OPRA believes that this would allow any of the 
parties to the OPRA Plan to make market information available to those 
of its members who enter or transmit orders or quotes in or to its 
market, while at the same time assuring that all persons who have 
access to market information also have equal access to consolidated 
market information disseminated by OPRA. OPRA represents that because 
parties that operate an electronic market or an electronic trading 
facility must be allowed to disseminate market information to their 
members who enter orders or quotes in their markets, the proposed 
amendment would provide parties who do not maintain such electronic 
facilities with the same right to disseminate market information to 
their members, thereby fostering fair and equal competition among all 
of the parties.

II. Implementation of Amendment

    The proposed amendment will be effective upon its approval by the 
Commission pursuant to Rule 11Aa3-2 of the Act.\10\
---------------------------------------------------------------------------

    \10\ 17 CFR 24.0.11Aa3-2. OPRA requested that the Commission 
approve the amendment prior to May 26, 2001, to avoid disrupting the 
markets of the two exchanges that are now operating under the 
previously granted temporary exemptions, which are scheduled to 
expire on that date. However, in order to allow for a full comment 
period on this proposal, the Commission has extended the previously 
granted temporary exemptions for another 90 days. See note 5, supra.
---------------------------------------------------------------------------

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. 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 filed with 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-2001-02 and should be 
submitted by June 21, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(29).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-13635 Filed 5-30-01; 8:45 am]
BILLING CODE 8010-01-M