Document ID: SEC-2008-1019-0001
Agency: sec
Document Type: Notice
Title: Filings: Options Price Reporting Authority
Posted Date: 2008-07-22T04:00Z

[Federal Register: July 22, 2008 (Volume 73, Number 141)]
[Notices]               
[Page 42631-42634]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22jy08-93]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58173; File No. SR-OPRA-2008-02]

 
Options Price Reporting Authority; Notice of Filing of Proposed 
Amendment to the Plan for Reporting of Consolidated Options Last Sale 
Reports and Quotation Information, as Modified by Amendment No. 1 
Thereto, To Amend OPRA's Vendor Agreement and Related Documents and 
Adopt a New Policy

July 16, 2008.
    Pursuant to Section 11A of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 608 thereunder,\2\ notice is hereby given that 
on May 30, 2008, 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\ On July 1, 2008, 
OPRA submitted Amendment No. 1 to the proposed Amendment to the OPRA 
Plan.\4\ The proposed OPRA Plan amendment, as modified by Amendment No. 
1, would modify OPRA's Vendor Agreement in several respects, including 
revising OPRA's definition of the term ``Nonprofessional.'' In 
connection with the revision of the term ``Nonprofessional,'' the 
proposed OPRA Plan amendment would also amend OPRA's ``Electronic Form 
of Subscriber Agreement'' and ``Hardcopy Form of Subscriber Agreement'' 
and adopt a new Policy. The Commission is publishing this notice to 
solicit comments from interested persons on the proposed OPRA Plan 
amendment, as modified by Amendment No. 1.
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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 11Aa3-2). 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 seven participants to the OPRA Plan 
are the American Stock Exchange LLC, the Boston Stock Exchange, 
Inc., the Chicago Board Options Exchange, Incorporated, the 
International Securities Exchange, LLC, the NASDAQ Stock Market LLC, 
the NYSE Arca, Inc., and the Philadelphia Stock Exchange, Inc.
    \4\ Amendment No. 1 replaced the original filing in its 
entirety.
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I. Description and Purpose of the Amendment

    The proposed Amendment to OPRA's Vendor Agreement has several 
purposes.

A. Section 5: Definition of ``Nonprofessional''; Revision of Forms of 
Subscriber Agreement; and New Policy

    OPRA proposes to revise its definition of the term 
``Nonprofessional.'' The definition currently appears in Section 5 of 
OPRA's Vendor Agreement and in OPRA's ``Electronic Form of Subscriber 
Agreement'' and ``Hardcopy Form of Subscriber Agreement.'' These two

[[Page 42632]]

forms are Attachments B-1 and B-2 to OPRA's form of Vendor 
Agreement.\5\
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    \5\ OPRA's form of Vendor Agreement and its forms of Subscriber 
Agreements are available on OPRA's Web site, http://
www.opradata.com.
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    A person may become an OPRA ``Subscriber'' in one of two ways. The 
first way is that the person may sign a ``Professional Subscriber 
Agreement'' with the OPRA exchanges. In this case, the person pays fees 
directly to OPRA on the basis of the number of the person's ``devices'' 
and/or ``UserIDs.''
    The second way is that the person may enter into a ``Subscriber 
Agreement,'' not with the OPRA exchanges, but with an OPRA ``Vendor''--
an entity that has entered into a Vendor Agreement with the OPRA 
exchanges that authorizes the entity to redistribute OPRA Data to third 
persons. In this case, OPRA collects ``usage-based'' fees from the 
Vendor, which are often passed through to the Subscriber by the Vendor. 
If a person qualifies as a ``Nonprofessional Subscriber,'' OPRA caps 
the fee that it charges the Vendor, and the fees that the Subscriber is 
required to pay to the Vendor may be less than they would be if the 
Subscriber is classified as a ``Professional Subscriber.'' \6\
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    \6\ More specifically, if a person qualifies as a 
``Nonprofessional'' and signs a Subscriber Agreement with a Vendor, 
OPRA either caps the ``usage-based fees'' that it charges the Vendor 
for the person's access to OPRA Data at the level specified in its 
Fee Schedule--currently $1.00/month--or, at the Vendor's option, 
simply charges the Vendor $1.00/month for the person's access to 
OPRA Data. If a person does not qualify as a ``Nonprofessional,'' 
the person may still sign a Subscriber Agreement with a Vendor, but 
OPRA either caps the ``usage-based fees'' that it charges the Vendor 
for the person's access to OPRA Data at the Professional Subscriber 
``per device'' rate (currently $21.00/month) or, at the Vendor's 
option, simply charges the Vendor the Professional Subscriber ``per 
device'' rate for the person's access to OPRA Data.
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    OPRA's current definition of the term ``Nonprofessional'' specifies 
that a person must be an ``individual'' in order to qualify as a 
Nonprofessional. OPRA has concluded that this aspect of the definition 
should be revised to state that a ``legal person'' may qualify as a 
Nonprofessional if the legal person is either an individual (a 
``natural person'') or a ``qualifying trust.'' The term ``qualifying 
trust'' is proposed to be defined essentially to refer to a trust 
established for the benefit of one or more members of the trustee's 
immediate family. OPRA is proposing changes to Section 5 of its form of 
Vendor Agreement and in its Electronic Form of Subscriber Agreement and 
Hardcopy Form of Subscriber Agreement to implement the revised 
definition.
    The Addendum for Nonprofessionals that is attached to OPRA's form 
of Subscriber Agreement also currently states that a person must use 
OPRA Data ``solely in connection with [the person's] individual 
personal investment activities'' in order to qualify as a 
Nonprofessional. OPRA has concluded that this language should be 
revised to clarify that a natural person may qualify as a 
Nonprofessional if the person uses OPRA Data for the person's own 
benefit and for the benefit of other members of the person's immediate 
family and qualifying trusts of which the person is the trustee or 
custodian, and to include a parallel statement with respect to 
qualifying trusts to the effect that a qualifying trust may constitute 
a Nonprofessional only if the trust uses OPRA Data only for the benefit 
of the trust.
    OPRA is also proposing to adopt a new policy entitled ``Policy with 
Respect to Definition of the Term `Nonprofessional'.'' The purpose of 
this document is to facilitate implementation of the revised definition 
of the term ``Nonprofessional'' as described below under the heading 
``Manner of Implementation of Amendment.''
    OPRA believes that the changes that it is proposing in its 
definition of the term ``Nonprofessional'' will add clarity to the 
definition and better align the language of the definition with the 
understanding of the definition on the part of Vendors and Subscribers 
who are affected by the definition.

B. Section 14: Reporting and Recordkeeping Requirements

    OPRA is proposing to change four provisions in Section 14 of the 
Vendor Agreement, which describes the reports and recordkeeping that 
OPRA requires of Vendors.
    Paragraph 14(a) would be revised for several purposes. The current 
language of the paragraph could be misunderstood as requiring a Vendor 
to provide either a complete list of all Subscribers, including 
Subscribers that have entered into Subscriber Agreements with the 
Vendor, or changes to the previous version of the list, on a monthly 
basis. The revised language makes clear that OPRA requires only summary 
information on a monthly basis with respect to Subscribers that have 
entered into Subscriber Agreements with the Vendor. The current 
language of the paragraph requires that a Vendor report monthly with 
respect to ``the number and type of devices'' of each Professional 
Subscriber that has entered into a Professional Subscriber Agreement 
with OPRA. OPRA has for many years permitted Professional Subscribers 
to pay fees on the basis of the number of ``devices'' or ``User IDs'' 
on which they receive OPRA Data,\7\ and accordingly the revised 
language requires that a Vendor report monthly with respect to ``the 
number of devices and/or User IDs'' of each such Professional 
Subscriber that receives OPRA Data on Vendor controlled services. The 
revised language also states specifically that a Vendor's reports to 
OPRA pursuant to paragraph 14(a) are to be provided electronically in a 
form reasonably satisfactory to OPRA.
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    \7\ This is reflected in footnote 2 of OPRA's Fee Schedule and 
in its ``Policies with respect to Device Based Fees,'' both of which 
are available on OPRA's Web site.
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    The purpose of the changes in the first sentence of paragraph 14(b) 
is to preserve the current meaning of the sentence in juxtaposition to 
revised paragraph 14(a). In addition to the reports called for by 
paragraph 14(a) (reports at least monthly), OPRA has the right to 
require more complete reports pursuant to paragraph 14(b). These 
reports are submitted no more frequently than quarterly. The revised 
first sentence of paragraph 14(b) continues to state that, whereas 
reports made pursuant to paragraph 14(a) may contain summary 
information with respect to Subscribers that have entered into 
Subscriber Agreements with the Vendor, reports made pursuant to 
paragraph 14(b) must include all information in the Vendor's list of 
Subscribers described in the first sentence of paragraph 14(a).
    The change in clause 14(c)(3) would revise the language to make 
clear that a Vendor is not required to retain hardcopy originals of 
signed hardcopy Subscriber Agreements and may instead retain copies, 
either in hardcopy form or in electronic form, provided that copies 
that are maintained electronically are maintained in a ``non-
rewriteable, non-eraseable format.'' \8\
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    \8\ This phrase is used in Rule 17a-4(f)(2)(ii)(A), 17 CFR Sec.  
240.17a-4(f)(2)(ii)(A). Rule 17a-4(f) describes the circumstances in 
which brokers and dealers may retain certain records in electronic 
form.
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    The changes in new paragraph 14(d) (replacing the final sentence of 
paragraph 14(c)) refine the statement of OPRA's record retention 
requirements to shorten OPRA's record retention requirement and to make 
a distinction between two types of records. The current language 
requires a Vendor to retain all records ``for at least six years after 
the date Vendor discontinues furnishing OPRA Data to such persons 
[i.e., Subscribers].'' That phrase is capable of being misunderstood to 
say that a Vendor must retain its records

[[Page 42633]]

with respect to all Subscribers for at least six years after it ceases 
furnishing OPRA Data to any Subscriber. As revised, the language 
requires a Vendor to retain records with respect to its agreements with 
a Subscriber (these are records described in clauses 14(c)(1), (2) and 
(3)) for at least three years after it discontinues furnishing OPRA 
Data to that Subscriber, and requires a Vendor to retain records with 
respect to the actual use of OPRA Data (these are records described in 
paragraph 14(a) and clause 14(c)(4)) for at least three years after the 
records are created. The revised language is placed in a new paragraph 
14(d), rather than being left in paragraph 14(c), to confirm that these 
record retention requirements apply to the Vendor's records with 
respect to Subscribers that are described in paragraph 14(a) as well as 
records described in paragraph 14(c).

C. Section 19: Provisions for Modifying the Vendor Agreement

    Paragraph 19(a) of the Vendor Agreement currently provides that, 
``[u]pon compliance with any applicable requirements of the Securities 
Exchange Act of 1934 (including any affirmative action by the SEC, if 
required),'' OPRA may modify the terms of the Vendor Agreement upon not 
less than 30 days notice to Vendor, and then states that: ``Within 
thirty (30) days of its receipt of any notice of modifications, Vendor 
shall notify OPRA in writing whether Vendor consents to the 
modifications. If Vendor does not consent to the modifications within 
thirty (30) days of its receipt of the notice, this Agreement shall 
immediately terminate.'' This language could be read to say that, if 
OPRA wishes to use paragraph 19(a) to implement a change in the Vendor 
Agreement after complying with the applicable requirements of the Act, 
a Vendor must affirmatively ``opt in'' to the change or its Vendor 
Agreement will be terminated. OPRA currently has over one hundred and 
eighty Vendors. It is not realistic to expect all of them to sign and 
return a written consent to a modification of the Vendor Agreement 
within thirty days of receipt, and not in the interests of either OPRA 
or a Vendor to permit the Vendor's Vendor Agreement to terminate 
automatically if the Vendor fails to meet the thirty-day deadline. To 
avoid this result, OPRA is proposing to change this language so that it 
clearly states that, if OPRA wishes to use paragraph 19(a) to implement 
a change in the Vendor Agreement after complying with the applicable 
requirements of the Act, OPRA must furnish written notice of the change 
to the Vendor, following which the Vendor need not ``opt in'' to the 
change in order to maintain its status as a Vendor, but may ``opt out'' 
of the change by terminating its Vendor Agreement if it is unwilling to 
accept the change. The revised paragraph makes clear that, if a Vendor 
timely gives notice of termination of its Vendor Agreement following 
its receipt of notice of a modification of the Vendor Agreement, the 
unmodified Vendor Agreement will constitute the agreement between the 
Vendor and OPRA until the effective date of the Vendor's termination.
    OPRA also proposes to delete current paragraphs 19(b) and 19(c) of 
the Vendor Agreement. Current paragraph 19(b) specifically addresses 
the possibility that OPRA might need to modify the provisions of the 
Vendor Agreement that relate to the Electronic Subscriber Agreement. 
Current paragraph 19(c) requires that all modifications to the Vendor 
Agreement other than those described in paragraph 19(a) (modifications 
subject to the procedure described in this filing) and 19(b) 
(modifications relating to Electronic Subscriber Agreements) must be 
signed by the Vendor. OPRA believes that it is no longer necessary to 
have a paragraph specifically with respect to modifications of the 
Electronic Subscriber Agreement and that it is consistent with the 
changes in paragraph 19(a) described in this filing to delete paragraph 
19(c).

D. Section 21: ``Assignment'' Provision

    Section 21 of the Vendor Agreement currently states that the Vendor 
may not assign the Vendor Agreement without the consent of OPRA 
``except to a successor corporation upon merger or consolidation of 
Vendor, or to a corporation acquiring all or substantially all of the 
property, assets and business of Vendor.'' OPRA is proposing to modify 
that language to accommodate other business entities in addition to 
corporations.
    The text of the proposed amendment to the OPRA Plan is available at 
OPRA, the Commission's Public Reference Room, and http://opradata.com. 

II. Implementation of the OPRA Plan Amendment

    Upon approval by the Commission pursuant to Section 11A of the Act 
\9\ and paragraph (b)(1) of Rule 608 thereunder,\10\ OPRA will 
implement a new standard form of Vendor Agreement incorporating the 
amendments proposed in this filing, and OPRA will require its current 
population of Vendors to sign either an Amendment in the form set forth 
as Exhibit I to its filing or the new standard form of Vendor 
Agreement. After a Vendor has signed either an Amendment or a new form 
of Agreement, OPRA will permit the Vendor to use the revised forms of 
Electronic Form of Subscriber Agreement and Hardcopy Form of Subscriber 
Agreement set forth in its filing as Exhibits III and IV.
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    \9\ 15 U.S.C. 78k-1.
    \10\ 17 CFR 242.608(b)(1).
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    OPRA is not proposing to require that OPRA Vendors replace the 
agreements that they currently have in place with Nonprofessional 
Subscribers. Instead, OPRA proposes to state in a new Policy, the form 
of which is attached as Exhibit V to its filing, that OPRA will 
interpret all Subscriber Agreements between Vendors and Nonprofessional 
Subscribers, including Subscriber Agreements that were entered into 
prior to the date on which this filing becomes effective, as if their 
language read as shown in Exhibits III and IV, respectively, to this 
filing. Following approval of this filing, OPRA intends to post the new 
Policy on its Web site and to send a copy of the new Policy to all 
current Vendors with the next monthly invoices that will be sent out by 
OPRA. The changes that OPRA is proposing may enable a person who is 
currently classified as a Professional to qualify as a Nonprofessional, 
but will not cause any person who currently qualifies to be a 
Nonprofessional to cease to be qualified to be a Nonprofessional. OPRA 
therefore believes that the changes will not work to the disadvantage 
of any OPRA Vendor or Subscriber. For this reason, it should not be 
necessary to require that any Subscriber enter into a new Agreement in 
order to have the benefit of the changes.

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 e-mail to rule-comments@sec.gov. Please include 
File No. SR-OPRA-2008-02 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange

[[Page 42634]]

Commission, 100 F Street, NE., Washington, DC 20549-1090.
    All submissions should refer to File Number SR-OPRA-2008-02. This 
file number should be included on the subject line if e-mail 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 inspection 
and copying in the Commission's Public Reference Room, 100 F Street, 
NE., Washington, DC 20549, on official business days between the hours 
of 10 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-2008-02 and should be 
submitted on or before August 12, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\17 CFR 200.30-3(a)(29).
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Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-16750 Filed 7-21-08; 8:45 am]

BILLING CODE 8010-01-P