[Federal Register: September 4, 2008 (Volume 73, Number 172)]
[Notices]
[Page 51651-51652]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04se08-66]
[[Page 51651]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-58434; File No. SR-OPRA-2008-02]
Options Price Reporting Authority; Order Approving an Amendment,
as Modified by Amendment No. 1 Thereto, to the Plan for Reporting of
Consolidated Options Last Sale Reports and Quotation Information To
Amend OPRA's Vendor Agreement and Related Documents and To Adopt a New
Policy
August 27, 2008.
I. Introduction
On May 30, 2008, the Options Price Reporting Authority (``OPRA'')
submitted to the Securities and Exchange Commission (``Commission''),
pursuant to Section 11A of the Securities Exchange Act of 1934
(``Act'')\1\ and Rule 608 thereunder,\2\ 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. 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 proposed OPRA Plan amendment, as modified by Amendment
No. 1, was published for comment in the Federal Register on July 22,
2008.\4\ The Commission received no comment letters in response to the
Notice.
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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. See Securities Exchange Act Release No. 17638 (March 18,
1981), 22 SEC 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\ See Securities Exchange Act Release No. 58173 (July 16,
2008), 73 FR 42631 (``Notice'').
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This order approves the proposed OPRA Plan amendment, as modified
by Amendment No. 1.
II. Description of the Proposal
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.'' \5\ 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.'' \6\
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\5\ 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
forms are Attachments B-1 and B-2 to OPRA's form of Vendor
Agreement. OPRA's form of Vendor Agreement and its forms of
Subscriber Agreements are available on OPRA's Web site, http://
www.opradata.com. 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.
\6\ 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.
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The Addendum for Nonprofessionals that is attached to OPRA's form
of Subscriber Agreement 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 also 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.\7\
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\7\ OPRA is also proposing to adopt a new policy entitled
``Policy with Respect to Definition of the Term `Nonprofessional.'
''
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B. Section 14: Reporting and Record Keeping Requirements
OPRA also proposes clarifying changes to four provisions in Section
14 of the Vendor Agreement, which describes the reports and record
keeping that OPRA requires of Vendors. Specifically, the revised
language makes clear that: (1) Pursuant to paragraph 14(a), OPRA
requires only summary information on a monthly basis with respect to
Subscribers that have entered into Subscriber Agreements with the
Vendor; (2) a Vendor's reports to OPRA pursuant to paragraph 14(a) are
to be provided electronically in a form reasonably satisfactory to
OPRA; (3) 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); (4)
pursuant to 14(c)(3), 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\ and (5) a Vendor is
required to retain records with respect to its agreements with a
Subscriber 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 for at least three years
after the records are created.
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\8\ This phrase is used in Rule 17a-4(f)(2)(ii)(A), 17 CFR
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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C. Section 19: Provisions for Modifying the Vendor Agreement
OPRA is proposing to modify the language in paragraph 19(a) 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
[[Page 51652]]
Vendor and OPRA until the effective date of the Vendor's
termination.\9\
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\9\ OPRA also proposes to delete current paragraph 19(b)
(modifications relating Electronic Subscriber Agreement) and
paragraph 19(c).
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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.
III. Discussion
After careful review, the Commission finds that the proposed OPRA
Plan amendment, as modified by Amendment No. 1, is consistent with the
requirements of the Act and the rules and regulations thereunder.\10\
Specifically, the Commission finds that the proposed OPRA Plan
amendment is consistent with Section 11A of the Act \11\ and Rule 608
thereunder \12\ 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 mechanism of, a
national market system.
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\10\ In approving this proposed OPRA Plan Amendment, the
Commission has considered its impact on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).
\11\ 15 U.S.C. 78k-1.
\12\ 17 CFR 242.608.
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The Commission notes that OPRA's proposed changes to the definition
of the term ``Nonprofessional'' are designed to add clarity to the
definition and better align the definition language with Vendors' and
Subscribers' current understanding of the term. In addition, the
Commission notes that OPRA's proposed changes to Sections 14, 19, and
21 are designed to add clarity and specificity to these provisions. The
Commission believes that the proposed OPRA Plan amendment should help
to assure the availability of information with respect to quotations
and transactions in listed options and would thereby further one of the
principal objectives for a national market system set forth in Section
11A(a)(1)(C)(iii) of the Act. Therefore, the Commission believes that
OPRA's proposal is consistent with Section 11A of the Act \13\ and Rule
608 thereunder.\14\
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\13\ 15 U.S.C. 78k-1.
\14\ 17 CFR 242.608.
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IV. Conclusion
It is therefore ordered, pursuant to Section 11A of the Act,\15\
and Rule 608 thereunder,\16\ that the proposed OPRA Plan amendment (SR-
OPRA-2008-02), as modified by Amendment No. 1, be, and it hereby is,
approved.
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\15\ 15 U.S.C. 78k-1.
\16\ 17 CFR 242.608.
\17\ 17 CFR 200.30-3(a)(29).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-20469 Filed 9-3-08; 8:45 am]
BILLING CODE 8010-01-P