
[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

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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
