01-13635. Options Price Reporting Authority; Notice of Filing of Amendment to OPRA Plan to Permit Exchanges to Disseminate Unconsolidated Market Information to Certain of Their Members

May 24, 2001.

Pursuant to section 11A of the Securities Exchange Act of 1934 (“Act”),^[1] and Rule 11Aa3-2 thereunder,^[2] notice is hereby given that on April 12, 2001, the Options Price Reporting Authority (“OPRA”),^[3] submitted to the Securities and Exchange Commission (“SEC” or “Commission”) an amendment to the Plan for Reporting of Consolidated Options Last Sale Reports and Quotation Information (“OPRA Plan”). The amendment would permit options exchanges to disseminate unconsolidated market information to certain of their members under certain circumstances.

I. Description and Purpose of the Amendment

The purpose of the proposed amendment is to change the provision of the OPRA Plan that requires the parties to use the OPRA System as the exclusion means for the dissemination of options last sale reports and quotation information (the “exclusivity clause”). The proposed amendment, in part, would modify the exclusivity clause to incorporate two conditional, temporary exemptions from the exclusivity clause that the Commission previously granted to the ISE and the CBOE.^[4] These exemptions, which expire on May 26, 2001, and which the Commission is extending today until September 1, 2001,^[5] permit these two exchanges to disseminate to all of their members, but not to other persons, unconsolidated market information pertaining to options traded in their respective markets by means of communication networks other than the OPRA System, subject to conditions.

The proposed amendment would modify the exclusivity clause so that each OPRA participant could disseminate its own market information by means of communication networks separate from the OPRA System under the following conditions. First, an OPRA participant could disseminate its own market information through means separate from the OPRA System only to other OPRA participants and to its members to display on terminals or workstations used by persons associated with such members who are authorized to enter or transmit orders or quotations in the options market maintained by the OPRA participant.^[6] This condition means that an exchange's market information could not be furnished to a customer of a member, whether over a terminal sponsored by a member or otherwise. Second, each member to which an OPRA participant disseminates its market information would be required to have equivalent access to consolidated options market information disseminated by OPRA for the same classes or series of options that are included in the market information.^[7] Access would be deemed to be “equivalent” if the information were equally accessible on the same terminal or workstation. Both of these conditions are consistent with conditions set forth by the Commission in the exemption letters to the ISE and CBOE.

Finally, the proposed amendment would prohibit OPRA participants from disseminating their market information through means other than the OPRA System on a more timely basis than the same information is furnished to the OPRA System for inclusion in the consolidated information disseminated by OPRA.^[8] While this condition is similar to one set forth in the exemption letters, the proposed amendment differs materially from that in the exemption letters because it would not consider market information to be disseminated more timely than information is furnished to the OPRA System simply because the market information includes additional or more frequently updated information, so long as it does not include additional or more frequently updated price information in respect of the best bid or best offer for any series of options as compared with price information furnished to OPRA. Accordingly, the proposed amendment would permit an OPRA participant to provide market information through a network separate from the OPRA System that is in addition to or different from the information furnished to the OPRA System, including information concerning orders and quotations in the OPRA participants' market that do not represent the best bid and offer and size information that is not furnished to OPRA.

The Quote Rule ^[9] requires that if an exchange collects from responsible brokers or dealers quotation sizes and aggregate quotation sizes in listed options, such exchange must make available the aggregate quotation sizes associated with the best bid and offer to quotation vendors. The Commission believes, and OPRA acknowledges, that, absent an exemption from the Quote Rule, an exchange may not make available aggregate quote size through a network separate from the OPRA System (i.e., make available to a quotation vendor) without also making such information available to other quotation vendors through the OPRA System.

By modifying the OPRA Plan to incorporate the previously granted exemptions from the OPRA Plan's exclusivity clause, OPRA believes that the proposed amendment would place all of the parties to the OPRA Plan on equal footing with respect to the right to disseminate their market data to their members. OPRA believes that this would allow any of the parties to the OPRA Plan to make market information available to those of its members who enter or transmit orders or quotes in or to its market, while at the same time assuring that all persons who have access to market information also have equal access to consolidated market information disseminated by OPRA. OPRA represents that because parties that operate an electronic market or an electronic trading facility must be allowed to disseminate market information to their members who enter orders or quotes in their markets, the proposed amendment would provide parties who do not maintain such electronic facilities with the same right to disseminate market information to their members, thereby fostering fair and equal competition among all of the parties.

II. Implementation of Amendment

The proposed amendment will be effective upon its approval by the Commission pursuant to Rule 11Aa3-2 of the Act.^[10]

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. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. Copies of the submission, all subsequent amendments, and all written statements with respect to the proposed OPRA Plan amendment that are filed with the Commission, and all written communications relating to the proposed OPRA Plan amendment between the Commission and any person, other than those 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. Copies of the filing also will be available at the principal offices of OPRA. All submissions should refer to File No. SR-OPRA-2001-02 and should be submitted by June 21, 2001.

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.^[11]

Margaret H. McFarland,

Deputy Secretary.

Footnotes

1.  15 U.S.C. 78k-1.

2.  17 CFR 240.11Aa3-2.

3.  OPRA is a national market system plan approved by the Commission pursuant to Section 11A of the Exchange Act, 15 U.S.C. 78k-1, and Rule 11Aa3-2 thereunder, 17 CFR 240.11Aa3-2. See Securities Exchange Act Release No. 17638 (March 18, 1981). 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 five categories to the OPRA Plan that currently operate an options market are the American Stock Exchange, the Chicago Board Options Exchange (“CBOE”), the International Securities Exchange (“ISE”), the Pacific Exchange, and the Philadelphia Stock Exchange. The New York Stock Exchange is a signatory to the OPRA Plan, but sold its options business to the Chicago Board Options Exchange in 1997. See Securities Exchange Act Release No. 38542 (April 23, 1997), 62 FR 23521 (April 30, 1997).

4.  See Letters from Robert L.D. Colby, Deputy Director, Division of Market Regulation, Commission, to Michael J. Simon, Senior Vice President and General Counsel, ISE, dated May 25, 2000 and Edward J. Joyce, President, CBOE, dated November 6, 2000.

5.  See Letters from Robert L.D. Colby, Deputy Director, Division of Market Regulation, Commission, to Michael J. Simon, Senior Vice President and General Counsel, ISE, and Edward J. Joyce, President, CBOE, dated May 24, 2001.

6.  See proposed OPRA Plan amendment, Section V.(c)(iii)(A).

7.  See proposed OPRA Plan amendment, Sectioin V.(c)(iii)(B).

8.  See proposed OPRA Plan amendment, Section V.(c)(iii)(C).

9.  Exchange Act Rule 11Ac1-1, 17 CFR 240.11Ac1-1.

10.  17 CFR 24.0.11Aa3-2. OPRA requested that the Commission approve the amendment prior to May 26, 2001, to avoid disrupting the markets of the two exchanges that are now operating under the previously granted temporary exemptions, which are scheduled to expire on that date. However, in order to allow for a full comment period on this proposal, the Commission has extended the previously granted temporary exemptions for another 90 days. See note 5, supra.

11.  17 CFR 200.30-3(a)(29).