[Federal Register: October 20, 1998 (Volume 63, Number 202)] [Notices] [Page 56051-56052] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr20oc98-127] ======================================================================= ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-40547; File No. SR-OPRA-98-1] Options Price Reporting Authority; Notice of Filing of Amendment to OPRA Plan Adopting a New Rider to OPRA's Vendor Agreement To Permit Vendors To Utilize Electronic Contracts October 13, 1998. Pursuant to Rule 11Aa3-2 under the Securities Exchange Act of 1934 (``Exchange Act''),\1\ notice is hereby given that on September 18, 1998, the Options Price Reporting Authority (``OPRA'') \2\ 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 (``Plan''). The amendment adds a new Electronic Contract Rider (``Rider'') to OPRA's Vendor Agreement that would permit OPRA's vendors to utilize electronic contracts with certain categories of Internet or other on-line customers in satisfaction of the requirement of the Vendor Agreement for written agreements between vendors and their customers. The Commission is publishing this notice to solicit comments from interested persons on the proposed Plan amendment. --------------------------------------------------------------------------- \1\ 17 CFR 240.11Aa3-2. \2\ OPRA is a National Market System Plan approved by the Commission pursuant to Section 11A of the Exchange Act and Rule 11Aa3-2 thereunder. See 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 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 Exchange (``PCX''); and the Philadelphia Stock Exchange (``Phlx''). --------------------------------------------------------------------------- I. Description and Purpose of the Amendment The purpose of the amendment is to allow OPRA vendors who wish to offer Internet or other on-line access to options market information to Nonprofessional Subscribers or PC Dial-Up customers to make use of electronic contracts in satisfaction of the requirement of the Vendor Agreement that there be written agreements between OPRA's Vendors and those categories of customers. This amendment is proposed in response to requests from an increasing number of OPRA vendors (including some whose activities as vendors are in support of their primary function as electronic brokers) to be able to conduct all of their business with customers electronically, including contract administration. The Rider imposes conditions on the use of these electronic contracts by vendors. As a threshold matter, a vendor is permitted to use these electronic contracts only if the vendor's other agreements with its customers may be entered into electronically. In addition, the vendor is required to submit for OPRA's approval an ``Attachment A'' that describes the procedures and systems the vendor intends to utilize in administering its electronic contracts. The Rider requires vendors to use the forms of electronic contracts (one for Nonprofessional Subscribers and one for Dial-Up Customers), except that vendors are permitted to use their own forms of electronic contracts for Dial-Up Customers, subject to the approval of OPRA. In this respect the Rider is comparable to the existing Vendor Agreement, which requires the use of a specified form of written Nonprofessional Subscriber Agreement and requires OPRA's approval of each form of Dial-Up Agreement. The Rider imposes certain requirements on vendors concerning the manner in which they present electronic contracts to their customers and how customers indicate their assent to these contracts. These requirements are intended to assure that customers are given an opportunity to read the full text of each contract before they are asked to assent to it, and that procedures are in place to verify the identity of the customers who enter into agreements electronically and to confirm the terms of the electronic contracts to which they have agreed. Vendors are required to maintain detailed records of all electronic contracts entered into, and to make such records available for OPRA's inspection. Finally, each time a customer accesses the Options Information Service, the vendor must give the customer notice concerning the electronic contract and must make the text of that contract available for the customer's review. All of the above requirements are related to the dictates of current law or proposed legislation governing electronic contracts. Vendors are also required to indemnify OPRA against loss in the event electronic contracts are held to be invalid or unenforceable by reason of their having been entered into or administered electronically. Because the law on electronic contracts is still developing, OPRA believes it is reasonable to ask those vendors who wish to use electronic contracts to assume any risk that such contracts may be found to be unenforceable or invalid. The Rider also provides OPRA with the right to modify or terminate the electronic contracts in the event of changes in the law or industry practice concerning electronic contracts or if OPRA determines that the required electronic contracts are likely to be held unenforceable or invalid for any reason. In light of the continuing evolution of the law of electronic contracts, OPRA should be able to amend or withdraw permission to use electronic contracts if such contracts are likely to be held invalid or unenforceable or are otherwise found to be deficient. II. Implementation of the Plan Amendment The proposed amendment is reflected in a Rider to the Vendor Agreement that will be made available to vendors who wish to utilize electronic contracts, subject to the Commission's approval of this filing. III. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed 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. Copies of the submission, all subsequent amendments, and all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change 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 number SR-OPRA-98-1 and should be submitted by November 10, 1998. [[Page 56052]] For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\3\ --------------------------------------------------------------------------- \3\ 17 CFR 200.30-3(a)(29). --------------------------------------------------------------------------- Margaret H. McFarland, Deputy Secretary. [FR Doc. 98-28000 Filed 10-19-98; 8:45 am] BILLING CODE 8010-01-M