[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
