

[Federal Register: December 14, 2005 (Volume 70, Number 239)]
[Notices]               
[Page 74062]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14de05-106]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52900; File No. SR-OPRA-2005-04]

 
Options Price Reporting Authority; Order Approving an Amendment 
to the Plan for Reporting of Consolidated Options Last Sale Reports and 
Quotation Information (``OPRA Plan'') to Amend Guideline No. 1 of the 
Best Bid and Offer Guidelines Adopted Pursuant to the OPRA Plan

December 6, 2005.
    On October 31, 2005, 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\ The proposed amendment would 
amend Guideline No. 1 of the Best Bid and Offer Guidelines (``BBO 
Guidelines'') previously adopted by OPRA under section II (o) of the 
OPRA Plan and make a minor editorial correction to the introductory 
paragraph of the BBO Guidelines. Notice of the proposal was published 
in the Federal Register on November 7, 2005.\4\ The Commission received 
no comment letters on the proposed OPRA Plan amendment. This order 
approves the proposal.
---------------------------------------------------------------------------

    \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 (formerly Rule 11Aa3-2). See Securities Exchange Act 
Release No. 17638 (March 18, 1981), 22 S.E.C. 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 six 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, Inc., the Pacific Exchange, Inc., and the 
Philadelphia Stock Exchange, Inc.
    \4\ See Securities Exchange Act Release No. 52714 (November 1, 
2005), 70 FR 67501.
---------------------------------------------------------------------------

    The purpose of the proposed amendment is to amend Guideline No. 1 
of OPRA's BBO Guidelines to reduce from five cents to one cent the 
minimum price differential by which a bid or offer must improve a 
current quote in order to displace the current quote in the 
consolidated BBO. In addition, the proposed amendment will revise the 
introductory paragraph of the BBO Guidelines to correctly refer to the 
section of the OPRA Plan where the definition of ``BBO'' is set forth.
    Under the current rules of the exchanges that are parties to the 
OPRA Plan, the minimum quoting increment for options is five cents (ten 
cents for options quoted at $3 or higher), and no exchange currently 
quotes options in penny increments. In the absence of this amendment, 
if penny quoting were to be introduced on one or more exchange and if 
an exchange were to improve the current best quote on another exchange 
by less than five cents, the original quote and not the improved quote 
would continue to be disseminated over OPRA's BBO service as the 
``best'' even though a better quote would in fact be available. This 
amendment would assure that, in the event penny quoting is introduced 
in the options markets, OPRA's BBO service would disseminate the actual 
best-priced bids and offers at any given point in time.
    After careful review, the Commission finds that the proposed OPRA 
Plan amendment is consistent with the requirements of the Act and the 
rules and regulations thereunder.\5\ The Commission finds that the 
proposed OPRA Plan amendment is consistent with section 11A of the Act 
\6\ and Rule 608 thereunder \7\ 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 
mechanism of, a national market system. Specifically, the Commission 
finds that it is reasonable and appropriate to amend the BBO Guidelines 
at this time to ensure that, should the options exchanges receive 
Commission approval to quote options in penny increments, OPRA would be 
able to disseminate the actual best-priced bids and offers through its 
BBO service.
---------------------------------------------------------------------------

    \5\ 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).
    \6\ 15 U.S.C. 78k-1.
    \7\ 17 CFR 242.608.
---------------------------------------------------------------------------

    It Is therefore ordered, pursuant to section 11A of the Act,\8\ and 
Rule 608 thereunder,\9\ that the proposed OPRA Plan amendment (SR-OPRA-
2005-04) be, and it hereby is, approved.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
Jonathan G. Katz,
Secretary.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78k-1.
    \9\ 17 CFR 242.608.
    \10\ 17 CFR 200.30-3(a)(29).
---------------------------------------------------------------------------

 [FR Doc. E5-7304 Filed 12-13-05; 8:45 am]

BILLING CODE 8010-01-P
