[Federal Register Volume 60, Number 54 (Tuesday, March 21, 1995)]
[Notices]
[Pages 14984-14985]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-6844]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-35487; International Series Release No. 792; File No. 
S7-8-90]


Order Approving Proposed Amendment to the Options Price Reporting 
Authority's National Market System Plan for the Purpose of Unbundling 
Services for Foreign Currency and Index Options

March 14, 1995.
    On September 19, 1994, the Options Price Reporting Authority 
(``OPRA'')\1\ filed with the Commission pursuant to Rule 11Aa3-2\2\ 
under the Securities Exchange Act of 1934 (``Act'')\3\ a proposed 
amendment to its National Market System Plan for the purpose of 
providing separate unbundled last sale and quotation services for 
foreign currency and index options, and to charge separately for access 
to each such service. Notice of the proposed amendment was provided by 
issuance of a Commission release\4\ and by publication in the Federal 
Register.\5\ One comment letter was received. For the reasons discussed 
below, the Commission is approving the proposed amendment.

    \1\OPRA is a National Market System Plan approved by the 
Securities and Exchange Commission (``Commission'' or ``SEC'') 
pursuant to Section 11A of the Act and Rule 11Aa3-2, thereunder. 
Securities Exchange Act Release No. 17638 (March 18, 1981).
    The Plan provides for the collection and dissemination of last 
sale quotation information on 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 U.S.C. 78k-1.
    \4\Securities Exchange Act Release No. 35049 (December 2, 1994).
    \5\59 FR 63843 (December 9, 1994).
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I. Description

    The proposed amendment permits OPRA to unbundle its market 
information services for foreign currency options (``FCOs'') and index 
options, and to impose separate charges for access to each service. The 
amendment provides for the establishment of separate accounting centers 
for equity, index and FCOs, on January 1, 1996. Each accounting center 
will be allocated revenues, costs and expenses associated with the 
receipt, processing and distribution of last sale and quotation 
information, as well as the costs of developing, operating and 
administering services and facilities associated with each accounting 
center. Such revenues, costs and expenses then will be further 
allocated among the parties providing a market in the securities 
included in each accounting center. The amendment also provides for 
special allocation of incremental costs associated with the operation 
of one or more services outside the regular trading hours. Finally, the 
amendment includes a few nonsubstantive, editorial changes to clarify 
the language of the Plan.
    The implementation of separate services for FCO and index option 
information requires certain systems modifications by OPRA's processor, 
Securities Industry Automation Corporation (``SIAC''). The 
implementation of separate services also will require advance notice to 
OPRA's vendors and subscribers of the changes to OPRA's fees and 
specifications, as well as changes in contractual provisions, in 
accordance with OPRA's agreements with those persons. Vendors will then 
be able to determine whether and how they wish to offer separate FCO 
and index option services to their customers, and to make any necessary 
modifications to their own systems and procedures associated with the 
unbundling of these services.

II. Summary of Comments

    As noted above, the Commission receive one comment letter. The 
[[Page 14985]] Securities Industry Association's (``SIA'')\6\ 
Telecommunications and Information Management Committee (``TIMC'')\7\ 
is opposed to the amendment to the OPRA Plan.\8\ TIMC anticipates the 
separate access charges that result from the unbundling of FCO and 
index options will constitute a substantial price increase for the data 
currently provided by OPRA. In addition, TIMC concluded that the 
establishment of separate accounting centers as well as the necessity 
for systems modifications by SIAC, vendors and some securities firms 
will result in additional costs to both the distribution and accounting 
systems used by securities firms to monitor OPRA's information 
services. TIMC concluded that the amendment, while generating 
additional costs, does not provide additional benefits to those 
entities that use OPRA's services.

    \6\The SIA is a trade association that represents the business 
interests of securities firms throughout North America. Its members 
include investments banks, brokers, dealers and mutual fund 
companies.
    \7\The TIMC focuses on issues pertaining to data processing, 
market data, telecommunications and related technology activities.
    \8\Letter from Heidi H. Heiden, Chairman, SIA TIMC, to Margaret 
H. McFarland, Deputy Secretary, SEC (September 9, 1994).
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III. Discussion

    The Commission has determined to approve the amendment to the OPRA 
Plan. The Commission finds that the proposed amendment is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to OPRA, including the requirements of Sections 
11A(a)(1) (C)(iii) and (D) of the Act.\9\ Section 11A(a)(1)(C)(iii) 
states that the availability of information to brokers, dealers and 
investors, with respect to quotations for and transactions in 
securities, is in the public interest and appropriate for the 
protection of investors and the maintenance of fair and orderly 
markets. Section 11A(a)(1)(D) provides for the linking of all markets 
for qualified securities through communications and data processing 
facilities to foster efficiency, enhance competition, increase the 
information available to brokers, dealers and investors, facilitate the 
offsetting of investors' orders, and contribute to the best execution 
of such orders. Further, the Commission believes that the amendment is 
consistent with Rule 11Aa3-2(c)(2)\10\ 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 
mechanisms of, a national market system.

    \9\15 U.S.C. 78k-1(a)(1) (C)(iii) and (D).
    \10\Supra, note 2 at (c)(2).
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    Although the Commission understands the concerns raised by TIMC, 
the Commission believes that the proposed amendment is consistent with 
the Act and the rules and regulations thereunder applicable to OPRA. As 
noted above in the summary of comments, TIMC is opposed to the Plan 
amendment. Generally, the basis for TIMC's opposition is its 
expectation that additional costs will accrue as a result of the 
proposal. The amendment, however, does not include a fee increase for 
the market data currently provided by OPRA. Instead, the amendment 
permits OPRA to unbundle its services pertaining to FCOs and index 
options and to change separately for such services on or after January 
1, 1996. Under the amendment, the decision to unbundle fees is subject 
to the conditions of the OPRA Plan and the requirements of Rule 11Aa3-
2.\11\ Any subsequent decision to change fees by OPRA, therefore, will 
be filed with the Commission. Further, while some entities may have to 
incur initial costs to accommodate the changes contemplated by the 
amendment, such changes will provide flexibility to both vendors and 
subscribers. Unbundling will allow OPRA market information services to 
be tailored to the individual needs of vendors and subscribers.

    \11\Supra, note 2.
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    It is therefore ordered, pursuant to Section 11A(a)(3)(B) of the 
Act,\12\ that the amendment (S7-8-90) to the OPRA Plan be, and hereby 
is, approved.

    \12\15 U.S.C. 78k-1(a)(3)(B).

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\13\

    \13\17 CFR 300.30-3(a)(29).
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Jonathan G. Katz,
Secretary.
[FR Doc. 95-6844 Filed 3-20-95; 8:45 am]
BILLING CODE 8010-01-M