[Federal Register Volume 59, Number 207 (Thursday, October 27, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-26643]
[[Page Unknown]]
[Federal Register: October 27, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34860; International Series Release No. 733; File No.
S7-8-90]
Order Approving Proposed Amendment to the Options Price Reporting
Authority's National Market System Plan for the Purpose of Establishing
a Fee To Be Paid by Persons Other Than Vendors Who Provide a Data
Control Service to OPRA Subscribers
October 19, 1994.
On June 27, 1994, the Options Price Reporting Authority
(``OPRA'')\1\ filed with the Securities and Exchange Commission
(``Commission'' or ``SEC'') pursuant to Section 11Aa3-2 under the
Securities Exchange Act of 1934 (``Act'')\2\ a proposed amendment to
its National Market System Plan for the purpose of establishing a Data
Control Service Agreement and a Control Service Fee for persons other
than vendors who provide a data control service to OPRA subscribers and
exempting subscribers who receive the feed from OPRA's Subscriber
Indirect Access Fee. On August 30, 1994, OPRA filed with the Commission
a letter amendment revising the amendment to clarify that OPRA vendors
who provide data control services to their data feed customers are not
considered to be Control Service Providers required to enter into a
Data Control Service Agreement or pay a Control Service Fee.\3\ The
proposed amendment was published for comment in the Federal
Register.\4\ One comment letter was received. For the reasons discussed
below, the Commission is approving the proposed amendment.
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\1\OPRA is a National Market System Plan approved by the
Commission pursuant to Section 11A of the Act and Rule 11Aa3-2.
Securities Exchange Act Release No. 17638 (Mar. 18, 1981).
The plan provides for the collection and dissemination of last
sale and quotation information on options that are traded on the
five member exchanges. The five exchanges which agreed to the OPRA
Plan are the Philadelphia Stock Exchange (``PHLX''), the Chicago
Board Options Exchange (``CBOE''), the American Stock Exchange
(``AMEX''), the Pacific Stock Exchange (``PSE''), and the New York
Stock Exchange (``NYSE'').
\2\15 U.S.C. 78k-1.
\3\See letter from Michael L. Meyer, Schiff Hardin & Waite,
Attorney for OPRA, to Scott C. Kursman, Attorney, Division of Market
Regulation, Commission (August 30, 1994).
\4\Securities Exchange Act Release No. 34625 (September 1,
1994), 59 FR 46679 (September 9, 1994).
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I. Background
Recent developments in computer and communications technology have
led an increasing number of OPRA subscribers to receive options
information by means of high speed, data feed transmissions from
vendors. Historically, OPRA vendors have provided a controlled and
formatted transmission of options information to most subscribers, but
have also provided an uncontrolled, bulk, data feed transmission to an
increasing number of subscribers. As a result of the trend toward data
feed transmission, a new type of service provider--the data control
service provider--has appeared. Such a provider controls the access and
entitlement of subscribers' devices in respect of market information
received in the form of a data feed transmission. Unlike vendors, data
control service providers are not currently subject to a contract with
OPRA nor are they required to contribute toward OPRA's overall
administrative costs, despite the fact that, like vendors, they are in
the business of redistributing options information.
II. Description
The proposed amendment establishes a Control Service Fee to be paid
by persons other than vendors who provide a data control service to
OPRA subscribers. The monthly fee of $2,800 is the same as that
currently paid by vendors under their agreement with OPRA. The control
service fee is intended to cover OPRA's additional administrative costs
and to allocate a portion of OPRA's overall costs to those persons who
utilize options market information for commercial purposes.
The proposed amendment also establishes a Data Control Service
Agreement that will serve as a contract between a Control Service
Provider and OPRA. This agreement imposes requirements on Control
Service Providers intended to assure the reliability and integrity of
the services they provide. It will require Control Service Providers to
provide OPRA with a complete description of the systems and procedures
to be utilized by them in controlling subscribers' access to options
information, as well as a current list of subscribers and their
entitlements.
The amendment also provides that OPRA's Subscriber Indirect Access
Fee, which is payable by subscribers who receive uncontrolled data feed
transmissions of options information from vendors, will not apply to
subscribers whose receipt of a data feed transmission is under the
control of a Control Service Provider.
Finally, the Indirect (Vendor Pass-Through) Circuit Connection
Rider to OPRA's Subscriber Agreement would be amended to relieve
controlled data feed subscribers of the obligation to report device
counts to OPRA. Since vendors and Control Service Providers are or will
be required to provide this information to OPRA, there is no need to
obtain it from the subscribers.
III. Summary of Comments
As noted above, the Commission received one comment letter.\5\
Reuters, a vendor that distributes OPRA information, assumed that the
purpose of the amendment was to replace the indirect access fee (paid
by subscribers who receive an uncontrolled data feed of information
from vendors) with a charge to vendors who control the data delivered
to a subscriber. As the letter amendment (cited on page 2 of this
order) makes clear, only data control service providers who are not
vendors will be required to enter into a Data Control Service Agreement
and pay the Control Service Fee. No new or additional fees are to be
imposed on vendors under this amendment.
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\5\Letter from Andrew McLean, Reuters, to Secretary, Commission
(September 9, 1994).
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IV. Discussion
The Commission believes the proposed amendment is consistent with
the Act and the rules and regulations thereunder applicable to OPRA
and, in particular, with Sections 11A(a)(1)(C)(ii) and (D) of the Act.
Section 11A(a)(1)(C)(ii) provides for the availability to brokers,
dealers, and investors of information with respect to quotations for
and transactions in securities. 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 investor's 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) in that it is 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.
The new Data Control Service Provider Agreement and accompanying
fee will help OPRA to assure the reliability and integrity of the
service that these providers offer OPRA customers. The Agreement will
permit OPRA to know the exact number of entitlements a subscriber has
arranged for with the Control Service Provider. This will eliminate the
need for the Indirect Access Fee, currently paid by those subscribers
who receive an uncontrolled data feed whether they have one entitlement
or 100. The Control Service Fee, payable by the Provider, will be the
same as the fee charged to vendors, thus promoting uniformity and
equality in pricing options information.
It is therefore ordered, pursuant to Section 11A(a)(3)(B) of the
Act, that the amendments to the OPRA Plan be, and hereby are, approved.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority, 17 CFR 200.30-3(a)(29).
Jonathan G. Katz,
Secretary.
[FR Doc. 94-26643 Filed 10-26-94; 8:45 am]
BILLING CODE 8010-01-M
