62908 Federal Register / Vol. 60, No. 235 / Thursday, December 7, 1995 / Notices

1OPRA is a National Market System Plan

approved by the Commission pursuant to Section

11A of the Exchange Act and Rule 11Aa3–2

thereunder. Securities Exchange Act Release No.

17638 (Mar. 18, 1981).

The Plan provides for the collection

dissemination of last sale and quotation information

options that are traded on the five member

exchanges. The five exchanges which agreed to the

OPRA Plan are the American Stock Exchange

(‘‘AMEX’’); the Chicago Board Options Exchange

(‘‘CBOE’’); the New York Stock Exchange (‘‘NYSE’’);

the Pacific Stock Exchange (‘‘PSE’’); and the

Philadelphia Stock Exchange (‘‘PHLX’’).

2 17 CFR 240.11Aa3–2.

3 15 .S.C. 78K-1.

4Securities Exchange Act Release No. 35804

(June 5, 1995).

5 60 FR 30905 (June 12, 1995).

6Under the proposal, information becomes

‘‘historical’’ upon the opening of trading in the next

succeeding trading session of that same market. For

example, reports of transactions completed in a

trading session on Wednesday become historical

reports from and after the opening of trading on the

following Thursday.

7This $2800 monthly fee currently is payable by

every vendor and news service that receives options

information from another vendor on a current basis.

8Currently, the direct access charge is payable by

every vendor, subscriber or news service that has

been authorized by OPRA to receive options

information via the consolidated high-speed service

from OPRA’s Processor.

controlled by or under common control

with the Advisers. Moreover, none of

these directors is an officer, director,

partner, co-partner, or employee of any

Adviser, and the broker-dealers do not

share any common directors, officers, or

employees with the Advisers.

Applicants also state that the Distributor

is retained directly by the Companies.

Accordingly, the Companies’ retention

of the Distributor is not dependent on

the identity of, or transactions

involving, the Adviser. The Distributor’s

compensation for its services is based

on asset levels and/or the receipt of

sales loads, and it therefore has a direct

economic interest in having the SubAdvised Series prosper and grow. In

this respect, the Distributor’s interests

are consistent with the interests of the

shareholders of the Sub-Advised Series.

5. Applicants believe that the

requested exemption is consistent with

the protection of investors. WFNIA or

its successor will continue to offer

services at least comparable to those

currently performed by WFNIA, and

will be supported by the resources of

one of the largest international financial

services corporations. WFNIA or its

successor will continue operations with

WFNIA’s current management,

investment professionals, and resources

remaining essentially intact. The

services that WFNIA or its successor

will perform under the Proposed SubAdvisory Agreements will be identical

in all material respects to the services

currently performed by WFNIA, and the

fee levels for such services will remain

the same. Finally, applicants state that

each series will continue to be subject

to all other provisions of the Act

designed to protect the interests of

investors, including section 15(f)(1)(B),

and all four interested directors will

continue to be treated as interested

persons of the Companies and the

Advisers for all purposes other than

section 15(f)(1)(A).

6. Applicants also believe that the

requested exemption is consistent with

the purposes fairly intended by the

policies and provisions of the Act.

Applicants submit that the legislative

history of section 15(f) indicates that

Congress intended the SEC to deal

flexibly with situations where the

imposition of the 75 percent

requirement might pose an unnecessary

obstacle or burden on a fund.

Applicants argue that the SEC should

exercise this flexibility in situations

such as the proposed Transaction.

Further, applicants state that section

15(f) was intended to ensure that, where

there is a change in control of an

investment adviser, the interests of

investment company shareholders will

be protected and they will not be subject

to any unfair burden as a result of such

transaction. Applicants argue that the

proposed Transaction is structured to

protect the interests of the shareholders

of each Sub-Advised Series and that

shareholders will benefit from the

requested exemption.

Applicants’ Condition

Applicants agree that any order of the

SEC granting the requested relief will be

subject to the following condition:

If within three years of the completion of

the Transaction, it becomes necessary to

replace any director, that director will be

replaced by a director who is not an

interested person of Wells Fargo Bank,

WFNIA, or its successor within the meaning

of section 2(a)(19)(B) of the Act, unless at

least 75% of the directors at that time are not

interested persons of Wells Fargo Bank,

WFNIA, or its successor.

For the SEC, by the Division of Investment

Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–29916 Filed 12–4–95; 3:57 pm]

BILLING CODE 8010–01–M

[Release No. 34–36542; International Series

No. 896; File No. S7–8–90]

Order Approving Proposed

Amendment to the Options Price

Reporting Authority’s National Market

System Plan for the Purpose of

Updating the Current Fee Structure

and Eliminating the Use of Separate

News Service Agreements

November 30, 1995.

On April 25, 1995, the Options Price

Reporting Authority (‘‘OPRA’’) 1 filed

with the Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’)

pursuant to Rule 11Aa3–2 2 under the

Securities Exchange Act of 1934

(‘‘Exchange Act’’) 3 a proposed

amendment to its National Market

System Plan (‘‘OPRA Plan’’) for the

purpose of updating the current fee

structure and eliminating the use of

separate news service agreements.

Notice of the proposed amendment was

provided by issuance of a Commission

release 4 and by publication in the

Federal Register.5 The Commission

received 220 comment letters. For the

reasons discussed below, the

Commission is approving the proposed

amendment.

I. Description

OPRA proposes to establish a new

redistribution fee of $1800 per month

that will be payable by every vendor

that redistributes options market

information to nay person, whether on

a current or delayed basis. The

redistribution fee, however, will not

apply to a vendor whose redistribution

of options information is limited solely

to ‘‘historical’’ information.6 With the

introduction of the redistribution fee,

the amendment eliminates the vendor

and news service pass-through fee,

previously $2800.7 Further, OPRA

proposes to reduce the direct access

change from $2800 to $900 per month.8

In addition to restructuring its fees,

OPRA proposes to eliminate the

separate news service agreement.

Instead, OPRA will categorize news

services as vendor and will seek to have

news services sign vendor agreements.

OPRA also is proposing to make

conforming changes to the OPRA Plan.

II. Summary of Comments

As noted above, the Commission

received 220 comments letters regarding

the proposal. Most comments were

submitted by suers of delayed data,

primarily small investors who expressed

concern about the impact the

redistribution fee will have on their

owns fees. While some commenters did

not object to existing and proposed

OPRA fee for real-time data, virtually all

commenters opposed the proposed

redistribution fee as it applies to

delayed data. The commenters claimed

that the proposal will set a bad

precedent that will lead other markets

also to charge for delayed data.

Many commenters expressed a belief

that all market information should be
Federal Register / Vol. 60, No. 235 / Thursday, December 7, 1995 / Notices 62909

9See Letter from Carl Hendrix, to Jonathan G.

Katz, Secretary, SEC (June 27, 1995).

10See Letter from Michael L. Meyer, Schiff

Hardin & Waite, Attorney for OPRA, to David

Oestreicher, Attorney Division of Market

Regulation, SEC (August 1, 1995).

11For example, OPRA excludes non-professional

subscribes from its real-time data subscriber fees.

Instead, OPRA charges that vendor at $2.00 per

month fee for each non-professional subscriber that

receives real-time data from the vendor. Further,

OPRA imposes no fees on end users of telephone

dial-up services. Vendors of such services, however,

are charged a port-based fee.

12 15 U.S.C. 78k–1; S. Rep. No 75, 94th Cong, 1st

Sess. 9–12 (1975) (‘‘Senate Report’’).

13The Commission understands the concerns of

commenters, including the potential consequences

of fee increases. As a related matter, the

Commission believes that user comment on

proposed OPRA fees could be even more effective

if sought prior to filing such fees with the

Commission. The Commission encourages OPRA to

solicit comment on fee proposals before filing those

proposals for Commission review.

14See Securities Exchange Act Release No. 15372

(November 29, 1978) (‘‘OPRA Order’’).

15 Id.

16 Id. To date, the Commission has not exercised

its rulemaking authority under Section 11A(c) of

the Exchange Act with respect to the fees charged

by registered SIPs.

17See Securities Exchange Act Release No. 17161

(September 24, 1980) (Order approving proposed

amendment to the Consolidated Tape Plan).

available to the public at no charge.

Some equated market data to a form of

advertising for which markets should

not charge consumers. These

commenters argues that the Commission

should ensure the availability and

accessibility of market information; that

even a small increase in fees will force

them to give up access to delayed data

services; and that reduced access to

market data will reduce trading activity

by same investors. These commetners

argued, therefore, that the proposal will

reduce overall market liquidity.

Some commenters claimed that the

proposal discriminates against he small

investor because real-time data, while

far more useful than delayed data, in

their view is not affordable to the

average investor. They argued that the

effect of the redistribution fee on

vendors of delayed data will be to price

the small investor our of the information

market altogether.

A few commenters challenged

whether the exchanges have a

proprietary interest in quote or

transaction data. They claimed that

OPRA should not be entitled to charge

for information that OPRA does not

own. One commenter claimed that

while the manner in which the

information is displayed may be

protected under copyright laws, OPRA

has no exclusive right to the information

itself.9

OPRA responded to these comments

in a letter dated August 1, 1995.10 In its

letter, OPRA stated that the Exchange

Act contemplates the recovery of a

portion of the costs of operating and

maintaining exchange markets through

fair, reasonable and nondiscriminatory

fees for access to securities market

information, and that the proposal is

consistent with these standards. OPRA

claimed that the fair allocation of costs

among all persons that derive a

commercial benefit from options market

information will help level the playing

field for all users of market data by

eliminating an unintended subsidy for

redistributors of less useful delayed data

at the expense of more useful current

information. OPRA noted that the

proposal would not establish fees for

end users of market data. Instead, the

redistribution fee would apply to

vendors. OPRA acknowledged,

however, that vendors of securities

market information most often pass

their costs on the customers.

Nevertheless, in OPRA’s views, the

proposal would more fairly allocate

distribution fees and would reduce fees

payable by some vendors. OPRA stated

that the proposal would reduce fees

payable by vendors that receive direct

access to OPRA data from $2800

(current direct access charge) to $2700

per month (the $900 direct access

change plus the $1800 redistribution

fee). Further, fees payable by vendors

whose access includes indirect access to

real-time and delayed data will be

reduced from $2800 (the current passthrough fee) to $1800 per month

(redistribution fee). Only vendors whose

access is limited to indirect access to

delayed data would be subject to higher

fees (an increase from zero to $1800 per

month).

OPRA argued that most, if not all endusers will benefit from the proposed fee

changes, assuming vendors of real-time

data pass on their savings to real-time

and delayed data subscribers. OPRA

claimed that even customers of an

indirect access vendor whose business

is exclusively delayed data distribution

should not see any significant increase

in vendor charges. For example, OPRA

stated that is such a vendor has 1,000

subscribers, the vendor would have to

increase the subscriber charge by only

$1.80 per month in order to receiver the

entire redistribution fee. In addition,

OPRA claimed that the proposal would

not impose any fee on redistributors or

end-users of ‘‘historical’’ information,

facilitating the affordability and

availability of market data for long-term

monitoring and analysis. OPRA also

noted that it provides several methods

by which an individual investor may

access real-time data at a low cost.11

III. Discussion

Section 11A of the Exchange Act sets

forth the standards under which the

Commission must consider whether to

approve fees proposed by exclusive

securities information processors

(‘‘SIPs’’), such as the pending OPRA

proposal. Among other things, the

proposal must assure that exchange

members, brokers, dealers, SIPs, and

investors would be able to obtain

information with respect to quotations

for and transactions in securities

published or distributed by any selfregulatory organization or SIP on terms

that are not unfair, unreasonable, or

unreasonably discriminatory.12

The Commission believes that the

proposed fee changes satisfy the

standards set forth by Congress with

regard to the permissible terms for

access to market information and,

therefore, believes that the proposed

fees are consistent with the Exchange

Act. In this case, the proposal represents

a reduction in fees for several vendors;

the delayed data fees do not appear

unfairly to restrict access to market

information; and the reduction in fees

for access to current information will

further other statutory goals. In

addition, historical price information,

such as is used for academic and

analytical purposes, will continue to be

available exclusive of OPRA fees.13

In 1978, the Commission stated that

three sections of the Exchange Act

directly relate to the terms upon which

securities information is obtained: (1)

The standards set forth in Section

11A(b)(3) governing the registration of

SIPSs; (2) the standards set forth in

Section 11A(b)(5) for review of

prohibitions or limitations on access to

services of registered SIPS; and (3) the

standards set forth in the Commission’s

rule-making authority under Section

11A(c).14 The Commission found that

these sections permit a registered SIP to

impose terms of access on vendors,

including access fees.15 The

Commission also noted that the ability

to impose such terms is subject to

Commission review as to fairness and

reasonableness, and may be limited by

the Commission’s adoption of a rule

specifically prohibiting the terms or fees

as being unfair, unreasonable or

unreasonably discriminatory.16

The Commission also has addressed

the issue of whether, pursuant to a joint

industry plan, charges for the

retransmission, on a current and

continuing basis, of consolidated market

data are permissible.17 The Commission
62910 Federal Register / Vol. 60, No. 235 / Thursday, December 7, 1995 / Notices

18 Id. See also 17 CFR 240.11Aa3–1(d) (relating to

retransmission of transaction reports or last sale

data); 17 CFR 240.11Aa3–1(e) (permitting the

imposition of reasonable, uniform charges for the

distribution of transaction reports or last sale data).

19Securities Exchange Act release No. 20874

(April 17, 1984) (‘‘Instinet case’’).

20 Id. at 40–41.

21 Id. Although the fee restructuring proposal is

not cost-based in the sense described in the Instinet

case, the purpose of the restructured fee schedule

is fundamentally different. OPRA’s proposal is

designed to reallocate costs fairly and equitably

among all persons that derive a commercial benefit

from the information obtained from exchange

markets. Because ORPA is not in direct competition

with the vendors that will be subject to the

redistribution fee, the analysis applied in the

Instinet case is not strictly applicable. Although

OPRA’s posture with respect to the vendors that

will be affected by the redistribution fee is different

than the relationship between the NASD and

Instinet, the Commission continues to have the duty

to ensure that OPRA’s fees satisfy applicable

standards.

22 15 U.S.C. 78k–1(a)(3)(B).

23 17 CFR 240.30–3(a)(29).

1 15 U.S.C. 78s(b)(1) (1988).

2 17 CFR 240.19b–4 (1994).

3See Securities Exchange Act Release No. 36239

(September 15, 1995), 60 FR 49032.

4Option quote parameters govern the width of

market quotations, establishing the maximum

widths between the bid and the offer for an option

contract.

found a proposed Consolidated Tape

Association retransmission fee

consistent with the Exchange Act.18

In addition, the appropriate scope of

fees was addressed in a denial of access

petition filed by Instinet against the

National Association of Securities

Dealers, Inc. (‘‘NASD’’).19 The NASD

attempted to impose certain vendor and

subscriber fees on the quotation

information (referred to as the National

Quotation Data Service) sought by

Instinet. In its review of the denial of

access petition, the Commission noted

that in a situation where a monopolistic

supplier of market information is in

direct competition with vendors in

providing such information, there is the

potential for the supplier to erect

barriers to entry by charging higher fees

to vendors of competing information

services.20 The Commission

determined, therefore, that because

Instinet sought to distribute certain

quotation information in competition

with the NASD, an exclusive processor

of that information, the NASD’s

proposed fees were required to be costbased to ensure neutrality and

reasonableness of the vendor and

subscriber fees.21

OPRA’s proposal will encourage the

use of real-time data by reducing the

OPRA fees charged to vendors of realtime data. The Commission believes that

investment decisions should be based

on the most accurate, up-to-date

information available. Thus, this

proposal marks a step toward making

real-time data more accessible to a

greater number of market information

users. Recent technological innovations

have further enhanced the feasibility of

providing easy access to real-time

market data to a larger segment of the

investor community. The Commission

encourages OPRA to utilize these new

technologies to encourage additional

steps to promote the use of real-time

information on a fair, reasonable and

non-discriminatory basis.

The Commission recognizes that not

all subscribers can afford regular realtime service and, as noted by some

commenters, not all subscribers believe

their use of market data justifies the cost

of such service (even assuming that realtime vendors pass on their savings to

their subscribers). As to these

subscribers, there is a continued need

for access to affordable delayed data.

One adverse consequence of the fee

restructuring will be to increase the

costs to vendors of delayed data which,

in turn, may result in a modest increase

in the cost of delayed data to

subscribers. The Commission has long

been committed to protecting the

public’s right of access to market

information and believes that any

modest increase in costs to subscribers

of delayed data under OPRA’s proposed

fee restructuring will not act as a barrier

to fair and reasonable access to

information for those subscribers.

Competition among technology and

information providers continues to

thrive. Over the past few years,

individual inventors have enjoyed

unprecedented access to market data

through varied media, including CNN,

CNBC, satellite services, on-line

computer services, the World Wide

Web, and the Internet. The Commission

believes that those innovations will

continue to facilitate the fair and

reasonable distribution of delayed data

even though redistributors of delayed

options data will be required to pay a

redistribution fee.

It is therefore ordered, pursuant to

Section 11A(a)(3)(B) of the Act,22 that

the amendment (S7–8–90) to the OPRA

Plan be, and hereby is, approved.

For the Commission by the Division

of Market Regulation, pursuant to

delegated authority.23

Jonathan G. Katz,

Secretary.

[FR Doc. 95–29775 Filed 12–6–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–36539; International Series

Release No. 895; File No. SR–Phlx–95–47]

Self-Regulatory Organizations;

Philadelphia Stock Exchange, Inc.;

Order Approving Proposed Rule

Change Relating to Japanese Yen

Quote Spread Parameters

November 30, 1995.

I. Introduction

On August 22, 1995, the Philadelphia

Stock Exchange, Inc. (‘‘Phlx’’ or

‘‘Exchange’’) submitted to the Securities

and Exchange Commission

(‘‘Commission’’), pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Act’’) 1 and Rule 19b–4

thereunder,2 a proposal to widen the

quote spread parameters applicable to

Japanese yen options. The proposed rule

change was published for comment in

the Federal Register on September 21,

1995.3 No comments were received on

the proposed rule change. This order

approves the proposal.

II. Description of the Proposal

The Phlx seeks to widen the quotation

spread parameters (bid/ask differentials)

applicable to Japanese yen options in

light of the increased volatility and

value of the underlying currency, the

Japanese yen.4 The Exchange proposes

to change the parameters in Rule

1014(c)(ii) and Floor Procedure Advice

(‘‘Advice’’) F–6, Option Quote

Parameters, from $.000004, $.000006,

and $.000008 to $.000006, $.000009,

and $.000012. Under the proposal, the

new quote spread parameters will be

reflected in Rule 1014 as follows: no

more than $.000006 between the bid

and the offer for each option contract for

which the bid is $.000040 or less; no

more than $.000009 where the bid is

more than $.000040 but does not exceed

$.000160; and no more than $.000012

where the bid is more than $.000160.

In its proposal, the Phlx notes that as

the yen spot value has risen, the spreads

between the bid and the offer in the spot

price also have risen. For example, a

spot market of 101.50 (bid)–.60 (ask) yen

in January 1995 represented $.009852–

.009842 in American terms, which is ten

‘‘ticks’’ wide. Comparatively, a spot

market of 85.10–.20 yen in May 1995

represented $.011751–.011737, which is

14 ticks wide. Similarly, the Exchange

states that the spreads in Japanese yen