Notice2024-01071
Options Price Reporting Authority; Notice of Filing of Proposed Amendment To Modify Section 5.2(c)(iii) of the OPRA Plan Relating to Dissemination of Exchange Proprietary Data Information
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
January 22, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 14 (Monday, January 22, 2024)</title>
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[Federal Register Volume 89, Number 14 (Monday, January 22, 2024)]
[Notices]
[Pages 3963-3968]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-01071]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99345; File No. 4-820]
Options Price Reporting Authority; Notice of Filing of Proposed
Amendment To Modify Section 5.2(c)(iii) of the OPRA Plan Relating to
Dissemination of Exchange Proprietary Data Information
January 16, 2024.
Pursuant to section 11A of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 608 thereunder,\2\ notice is hereby given that
on November 8, 2023,\3\ the Cboe BZX Exchange, Inc. (``BZX Options''),
Cboe Exchange, Inc. (``Cboe Options''), Cboe C2 Exchange, Inc. (``C2
Options'') and Cboe EDGX Exchange, Inc. (``EDGX Options'')
(collectively, the ``Sponsors'' or ``Cboe'') filed with the Securities
and Exchange Commission (``Commission'') a proposed amendment to the
Plan for Reporting of Consolidated Options Last Sale Reports and
Quotation Information (``OPRA Plan'').\4\
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\1\ 15 U.S.C. 78k-1.
\2\ 17 CFR 242.608.
\3\ See Letter from Corrine Klott, Cboe, to Vanessa A.
Countryman, Commission (Nov. 8, 2023) (``Transmittal Letter'').
\4\ 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 (Mar. 18,
1981), 22 SEC. Docket 484 (Mar. 31, 1981). The full text of the OPRA
Plan and a list of its participants are available at <a href="https://www.opraplan.com/">https://www.opraplan.com/</a>. The OPRA Plan provides for the collection and
dissemination of last sale and quotation information on options that
are traded on the participant exchanges.
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The Sponsors state that they have filed the Amendment pursuant to
Rule 608(a)(1) under Regulation NMS.\5\ Rule 608(a)(1) provides:
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\5\ 17 CFR 242.608(a)(1).
Any two or more self-regulatory organizations, acting jointly, .
. . may propose an amendment to an effective national market system
plan (``proposed amendment'') by submitting the text of the . . .
amendment to the Commission by email, together with a statement of
the purpose of such . . . amendment and, to the extent applicable,
the documents and information required by paragraphs (a)(4) and (5)
of this section.\6\
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\6\ Id.
Section 10.3 (Amendments) of the OPRA Plan, by contrast, provides that
the plan ``may be amended from time to time when authorized by the
affirmative vote of all of the Members, subject to the approval of the
Securities and Exchange Commission,'' \7\ and the affirmative vote of
all of the Members of the OPRA Plan has not been obtained on the
proposed amendment.
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\7\ See Limited Liability Company Agreement of Options Price
Reporting Authority, LLC, Art X, sec. 10.3.
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The Commission is publishing this notice to solicit comments from
interested persons on the proposed Amendment. Set forth below in
Section I, which is being published verbatim as filed by the Sponsors,
is the statement of the purpose and summary of the Amendment, along
with information pursuant to Rule 608(a) under the Act.\8\
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\8\ 17 CFR 242.801(a).
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[[Page 3964]]
I. Requirements Pursuant to Rule 608(a)
1. Statement of Purpose
Executive Summary
Access to high-quality, real-time market data is essential for
participation in the financial markets. For this reason, market
participants, regulators, and data providers are constantly working to
strike a balance between data quality and data expense. Cboe proposes
to amend the OPRA Plan in a manner in which it believes will better
enable all OPRA Members to expand the amount of proprietary data
available to users and consumers of such data, as well as spur
innovation and competition for market data. In particular, Cboe
believes that the proposed amendments would result in broadening the
availability of U.S. option market data to investors consistent with
the principles of Regulation NMS. The proposed amendment also will
promote transparency by facilitating the dissemination of market data
more widely through additional distribution channels, which will enable
investors to better monitor trading activity on the U.S. options
exchanges, support more informed trading and investment decisions, and
thereby serve the public interest. To be clear, Cboe firmly believes
that these amendments are simply clarifications of what the plain text
of the OPRA Plan currently says. But in light of disagreement over the
meaning of the current plan, Cboe seeks to make explicit the meaning of
the OPRA Plan.
In particular, the Exchange proposes to amend Section 5.2(c)(iii)
of the OPRA Plan (``Equivalent Access Provision'') which currently
provides that:
(iii) A Member may disseminate its Proprietary Information
pursuant to subparagraph (ii) of this paragraph (c) provided that:
(A) such dissemination is limited to other Members and to
persons who also have equivalent access to consolidated Options
Information disseminated by OPRA for the same classes or series of
options that are included in the Proprietary Information. For
purposes of this clause (A), ``consolidated Options Information''
means consolidated Last Sale Reports combined with either
consolidated Quotation Information or the BBO furnished by OPRA, and
access to consolidated Options Information and access to Proprietary
Information are deemed ``equivalent'' if both kinds of information
are equally accessible on the same terminal or work station; and
(B) a Member may not disseminate its Proprietary Information on
any more timely basis than the same information is furnished to the
OPRA System for inclusion in OPRA's consolidated dissemination of
Options Information.
Background
On July 20, 2001, the Commission approved an amendment to the OPRA
Plan which allowed exchanges to provide proprietary data to their
members under certain conditions, including a requirement that members
have ``equivalent access'' to consolidated options information.\9\
Prior to that amendment, OPRA was the exclusive provider of information
regarding options quotes and transactions.\10\ The Commission noted
that the proposed amendments to the OPRA Plan (i.e., adoption of the
Equivalent Access Provision) were intended to improve competition.\11\
On November 21, 2003, the SEC approved amendments to a number of
provisions of the OPRA Plan, including an amendment expanding the scope
of who could receive proprietary data to include other ``persons'' in
addition to exchange members.\12\ Non-substantive changes were made to
Section 5.2(c)(iii) when OPRA was reorganized as a limited liability
company effective on January 1, 2010, but the substance of the
Equivalent Access Provision has otherwise been unchanged since 2003.
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\9\ See Securities Exchange Act Release No. 44580 (July 20,
2001), 66 FR 39218 (July 27, 2001) (SR-OPRA-2001-02).
\10\ In 2000 and 2001, the Commission granted ISE and Cboe
Options temporary exemptions from the exclusivity requirement. Those
exemptions were granted pursuant to Exchange Act Rule 11Aa3-2(f), 17
CFR 240.11Aa3-2(f). 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 to Edward J. Joyce, President and Chief Executive Officer,
CBOE, dated November 6, 2000. These letters, originally drafted to
expire on May 26, 2001, were extended until September 1, 2002. 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 24, 2001 and to Edward J. Joyce,
President and Chief Executive Officer, CBOE, dated May 24, 2001.
\11\ Supra note [9].
\12\ See OPRA; Notice of Filing and Order Approving on a
Temporary Basis not to Exceed 120 Days a Proposed Amendment to the
Plan for Reporting of Consol. Options Last Sale Info. and Amendments
No. 1 and 2 Thereto to Revise the Manner in Which the OPRA Engages
in Capacity Planning and Allocates its Available Systems Capacity
Among the Parties to the Plan, Release No. 34-48822, 2003 WL
22767596[.]
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Cboe believes that, based on its plain language, subparagraph (A)
of the Equivalent Access Provision is satisfied where a recipient of an
exchange proprietary data product also is simultaneously authorized and
entitled to receive OPRA data in one of the ways that OPRA makes its
data available; that is, by maintaining a streaming subscription to the
OPRA feed or having the ability to query OPRA data on a usage-
basis,\13\ thereby preserving the Commission's intent to improve
competition through the 2001 amendments to the OPRA Plan.
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\13\ The ``Basic Service'' ``quote packets'' or ``options
chains'' made available by OPRA pursuant to the ``Usage-based Vendor
Fee'' option in OPRA's Fee Schedule meet the definition of
``consolidated Options Information.'' That ``Basic Service''
includes ``all last sale and quotations information pertaining to
equity options and index options, including foreign currency index
options.'' See OPRA Fee Schedule at 1 and n.1. In addition, the Fee
Schedule also states that a ``quote packet'' supplied in response to
a usage-based query ``consists of any one or more of the following
values: last sale, bid/ask, and related market data for a single
series of options or a related index'' and that an ``options chain''
supplied in response to a usage-based query ``consists of last sale,
bid/ask, and related market data for up to all series of put and
call options on the same underlying security or index.'' Therefore,
a person who has access to OPRA's usage-based data service on his or
her terminal or work station and can obtain quote packets and
options chains has, by definition, equivalent access to
``consolidated Options Information'' because that person will have
access to ``Last Sale Reports,'' ``Quotation Information,'' and the
``BBO.''
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Cboe strongly believes there are several bases that support its
reading of the current subparagraph (A) of the Equivalent Access
Provision including: the plain reading and unambiguous nature of the
language in Equivalent Access Provision; the nature of the current OPRA
audit protocols to ensure compliance with Equivalent Access Provision;
the language (or lack thereof) included in OPRA market data agreements,
policies and fees schedules relating to Equivalent Access and public
representations made by other OPRA members since the adoption of the
provision in 2001 that are inconsistent with a requirement that a
person receiving a proprietary data feed also receive streaming real-
time data from OPRA.\14\
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\14\ See Securities Exchange Act Release No. 32675 (June 30,
2009), 74 FR 32675 (July 8, 2009) (SR-Phlx-2009-54), in which Nasdaq
PHLX, LLC (``PHLX'') states: ``[T]he TOPO data feed offers a
competitive, lower-priced alternative to the consolidated data OPRA
feed for users and situations where consolidated data is unnecessary
. . . Additionally, to the extent users can substitute the lower-
priced TOPO data for the higher-priced consolidated data feed, those
users will have the opportunity to pass the savings on to investors
in the form of lower overall trading costs.'' (emphasis added); and
see Securities Exchange Act Release No. 68576 (January 3, 2013), 78
FR 1886 (January 9, 2013) (SRndash;Phlxndash;2012-145), in which two
years later PHLX states ``First, TOPO, TOPO Plus Orders, PHLX Orders
and PHLX Depth of Market data feed offer a comprehensive,
competitive alternative to the consolidated data OPRA feed for users
and situations where consolidated data is unnecessary'' (emphasis
added). See also Securities Exchange Act Release No. 79556 (December
14, 2016), 81 FR 92935 (December 20, 2016) (SR-NASDAQ-2016-167), in
which The Nasdaq Stock Market LLC stated: ``[m]any customers that
obtain information from OPRA do not also purchase ITTO and BONO, but
in cases where customers buy both products, they may shift the
extent to which they purchase one or the other based on price
changes. OPRA constrains the price of ITTO and BONO because no
purchaser would pay an excessive price for these products when
similar data is also available from OPRA.'' (emphasis added). See
also NYSE Technology FAQ and Best Practices: Options, Section 6.3 at
<a href="https://www.nyse.com/publicdocs/nyse/NYSE_Options_Technology_FAQ.pdf">https://www.nyse.com/publicdocs/nyse/NYSE_Options_Technology_FAQ.pdf</a>
which is a publicly available document posted by OPRA Members NYSE
American LLC and NYSE Arca, Inc. (collectively ``NYSE'') that
includes statements inconsistent with the adopted interpretation.
Particularly, in a section titled ``How do firms receive proprietary
market data'' NYSE states in relevant part: ``[I]in addition, the
Exchanges recommend that firms utilizing proprietary market data
feeds maintain a connection to OPRA, and have the ability to switch
between the proprietary market data feeds and the OPRA feed, in the
event that one or the other fails'' (emphasis added).
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[[Page 3965]]
In March 2023 however, other OPRA Members took a different view and
asserted that the Equivalent Access Provision can only be satisfied
where a recipient of an exchange proprietary data feed also maintains a
streaming subscription to the full OPRA feed (i.e., the ability to
query OPRA data on a usage-basis would not be deemed to satisfy the
Equivalent Access Provision). Following months of deliberation between
OPRA members, OPRA retained counsel, who ultimately provided his
interpretation that the Equivalent Access Provision requires a user
receiving a streaming, real-time exchange proprietary data product to
also receive the full feed of streaming, real-time data from OPRA. On
September 6, 2023, the OPRA Management Committee, by majority vote,
determined to adopt counsel's interpretation.\15\ Cboe believes that
the interpretation adopted by the OPRA Management Committee on
September 6, 2023 is legally and factually flawed and in opposition to
the Commission's intent of the 2001 OPRA amendment. As such, Cboe has
decided to propose an amendment that furthers the policy goals stated
above by amending the Equivalent Access Provision so it provides that
(1) access to OPRA data on a usage-basis will also satisfy the
Equivalent Access Provision and (2) impose certain display requirements
for both any proprietary market data and consolidated options
information.
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\15\ BZX Options, C2 Options, Cboe Options, and EDGX Options
voted to reject this interpretation.
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Proposal
Usage-Based Data Service
Cboe proposes to modify Section 5.2(c)(iii)(A) of the OPRA Plan to
clarify that access to consolidated Options Information and access to
Proprietary Information are deemed ``equivalent'' if ``Proprietary
Information'' and ``consolidated Options Information'' (as those terms
are defined in the OPRA Plan), are equally accessible on the same
terminal or work station, regardless of whether the OPRA data is
disseminated on a streaming or per usage basis. Specifically, Cboe
proposes to revise Section 5.2(c)(iii)(A) of the OPRA Plan to replace
the sentence the following sentence:
For purposes of this clause (A), ``consolidated Options
Information'' means consolidated Last Sale Reports combined with
either consolidated Quotation Information or the BBO furnished by
OPRA, and access to consolidated Options Information and access to
Proprietary Information are deemed ``equivalent'' if both kinds of
information are equally accessible on the same terminal or work
station.
with the following sentence:
For purposes of this clause (A), ``consolidated Options
Information'' means consolidated Last Sale Reports combined with
either consolidated Quotation Information or the BBO furnished by
OPRA, and access to consolidated Options Information and access to
Proprietary Information are deemed ``equivalent'' if Proprietary
Information and consolidated Options Information, whether
disseminated on a streaming- or per usage-basis, are equally
accessible on the same terminal or work station.
The new language would clarify that the Equivalent Access Provision
is satisfied if a recipient of an exchange proprietary data product
also is simultaneously authorized and entitled to receive OPRA data in
one of the ways that OPRA makes its data available; that is, by
maintaining a streaming subscription to the OPRA feed or having the
ability to query OPRA data on a usage-basis.
The current Equivalent Access Provision of the OPRA Plan, as
interpreted by OPRA, requires that vendors purchase a streaming
subscription to the full OPRA feed alongside any exchange proprietary
data product. That requirement could be cost-prohibitive or
technologically unfeasible when considering the growing and significant
bandwidth requirements associated with the full streaming OPRA data
feed.\16\ This is especially true where vendors or retail brokers are
providing such data to individual retail investors who are more likely
to be low volume users of market data and do not otherwise have the
same best execution obligations as professional users. For such users,
query-based access to OPRA data may be more suitable. Moreover, the
current interpretation of the Equal Access Provision could have the
practical effect of denying choice for individual data subscribers, as
compliance with it could be cost-prohibitive for the vendors or retail
brokers that support them, effectively leaving OPRA's feed as the only
data source for options market participants--even in scenarios where a
market participant decides that it does not need consolidated market
data for its purposes. Such a result ultimately denies choice for
individual data subscribers, which is antithetical to the SEC's
longstanding view on competition.
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\16\ See
64e8f2c76de012371925ee11_OPRA_Data_Dissemination_Expansion_from_48_to
_96-Line_Multicast_Network_Industry_Test_4.pdf (<a href="http://website-files.com">website-files.com</a>).
See also 64ada60d17c52b49eb5ee42c_OPRA_96-Line_Expansion_Frequently
Asked Questions v1.10_071023.pdf (<a href="http://website-files.com">website-files.com</a>).
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Indeed, when the National Association of Securities Dealers, Inc.
(``NASD'') first established a per-query fee structure for U.S.
equities, it noted its purpose was ``to provide retail customers with a
cost-effective alternative to calling their brokers for current market
information.'' \17\ As NASD explained, retail investors might not be
interested in subscribing to a costly service offered by a commercial
vendor which frequently might include analytic information, ticker
displays, and dynamically-updated quotation and transaction
information.\18\ NASD therefore reasoned that the adoption of a query-
based fee structure would provide individual investors a better ability
to monitor the value of a portfolio, track intra-day activity in a
given stock to facilitate an investment decision, or observe a market
trend based on periodic queries for the current level of a popular
stock index. When approving the proposed fee structure, the Commission
similarly acknowledged:
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\17\ See Securities Exchange Act Release No. 35393 (February 17,
1995), 60 FR 10625 (February 27, 1995) (SR-NASD-95-7).
\18\ Id.
[the proposed per-query fee structure] and related fee are designed
to accommodate the information needs of individual investors,
particularly small investors who do not require the breadth of
market data and analytic information that institutional investors
and market makers typically require. . . . this service will allow
firms and vendors to provide individual investors cost-effective
access to market data without requiring users to acquire expensive
hardware. . . . The NASD's experience is that [subscriber fees and
vendor suppled equipment] costs tend to discourage subscription by
low-volume users. . . The Commission believes that the $.01/query
fee is an equitable allocation of a reasonable fee and that it will
be affordable to individual investors. The Commission, therefore,
finds
[[Page 3966]]
that the proposal is consistent with the section 15A(b)(5) of the
Act.\19\
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\19\ See Securities Exchange Act Release No. 35721 (May 16,
1995), 60 FR 98 (May 22, 1995) (SR-NASD-95-7).
Although, the Commission's finding related to US equities pricing
data, the underlying rationale applies with equal force to the options
industry. OPRA's current interpretation of the Equal Access provision
is directly at odds with that SEC statement--instead of facilitating
cost effective access that will ``accommodate the information needs of
individual investors,'' it will disfavor small investors that do not
require--and may be unable to pay for or technologically accommodate--a
full feed of streaming, real-time data from OPRA.
In addition, when OPRA amended its rules to make usage based access
permanently available following a pilot, OPRA stated that ``the
availability of these alternative [usage-based] fees has not had any
significant negative impact on OPRA's overall revenues or on the fair
allocation of OPRA's basic service fees to persons who have access to
options market information.'' \20\ Therefore, the ability to choose the
manner in which OPRA data is received (i.e., either via a streaming
subscription or on a query basis) to satisfy the Equivalent Access
Provision will not harm OPRA's financial position, while at the same
time providing the possibility of lower overall costs for US options
market data users and permitting them to better evaluate the cost-to-
value ratio of obtaining different types of data. In sum, Cboe believes
that its proposal will further access to market data generally and will
equip investors, including retail investors, with the ability to make
informed investment decisions.
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\20\ See Securities Exchange Act Release No. 37686 (September
16, 1996), 61 FR 49801 (September 23, 1996) (emphasis added).
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Moreover, under Cboe's proposal, all investors receiving exchange
proprietary data will continue to have access to OPRA data should they
so choose. The only difference is that the proposed amendment will
provide subscribers with flexibility to choose the manner in which they
are able to view the data. More specifically, since OPRA's usage-based
data service allows market participants to obtain quote packets and
options chains on their terminal or work station, by definition, that
service will still provide equivalent access to ``consolidated Options
Information'' because that market participants will have access to
``Last Sale Reports,'' ``Quotation Information,'' and the ``BBO'', as
required under the current Equivalent Access Provision.
Cboe also believes absent its proposed amendment, there could be
discriminatory application of fees between market participants who
choose to subscribe to exchange proprietary data products and those who
do not. That discriminatory treatment arises because, absent the
proposed amendment, only those market participants who do not also
subscribe to exchange proprietary market data products may avail
themselves of OPRA's potentially more cost-effective usage-based data
service. That scenario only serves to penalize those market
participants who choose to subscribe to exchange proprietary data
products because such participants (unlike those who do not subscribe
to proprietary market data products) will be required to also subscribe
to, and pay for, the more expensive full streaming OPRA data feed
regardless of their needs. As noted, in some cases, retail investors
(or the retail brokers that support them) may not be able to afford or
technologically process the large size of the full streaming OPRA data;
effectively precluding this subset of retail investors from accessing
proprietary options data at all.
Finally, Cboe believes its proposal fosters pricing competition
because it provides users with more choices about what OPRA data to
subscribe to, and what, if any, exchange data to subscribe to. That
increased choice reduces that possibility that any one market data
provider, including OPRA, could charge non-competitive prices for its
data. In other words, that proposed amendment would result in a
situation where all exchanges, as well as OPRA, would have an incentive
to price their market data products based on the value relative to that
of other markets, as they would otherwise risk that market participants
would not subscribe to their products. As such, exchanges would have to
compete on the price or quality of their data (e.g., by offering
consistently better quotes) to generate potential subscriber interest
in their data. This added incentive to compete, in turn, could enhance
liquidity and have a beneficial effect on intermarket competition.
Display Requirement
Cboe also proposes to add a new paragraph to the Equivalent Access
Provision: proposed paragraph (C) of Section 5.2(c)(iii) of the OPRA
Plan. Proposed paragraph (C) would include two requirements. First,
Cboe proposes to require that dissemination of consolidated Options
Information for the same classes or series of options that are included
in the Proprietary Information must be displayed in a context in which
a trading or order-routing decision can be implemented (i.e., the point
of order entry or modification). Accordingly, Cboe proposes to add the
following requirement: ``dissemination of consolidated Options
Information for the same classes or series of options that are included
in the Proprietary Information must be displayed in a context in which
a trading or order-routing decision can be implemented (i.e., the point
of order entry or modification).'' Second, Cboe proposes that
consolidated Options Information must also be provided if a registered
representative of a broker-dealer provides a quotation to a customer
that can be used to assess the current market or the quality of trade
execution. Therefore, Cboe proposes to include in proposed paragraph
(C) of Section 5.2(c)(iii) the following requirement: that
``Consolidated Options Information must also be provided if a
registered representative of a broker- dealer provides a quotation to a
customer that can be used to assess the current market or the quality
of trade execution.''
Like the Vendor Display Rule \21\ that applies to equities market
data, Cboe proposes to amend the Equivalent Access Provision to also
require a display of consolidated Options Information when it is most
needed--when a trading or order-routing decision could be implemented.
Additionally, Cboe proposes to clarify in the text of new Section
5.2(c)(iii)(C) of the OPRA Plan that the time when a trading or order-
routing decision means at ``the point of order entry or modification.''
As is the case under the Vendor Display Rule, Cboe is not proposing
that a display of consolidated data be required when market data is
being provided on a purely informational website that does not offer
any trading or order-routing capability.
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\21\ 17 CFR 242.603.
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Cboe also proposes to make clear that OPRA ``consolidated Options
Information'' must also be provided if a registered representative of a
broker-dealer provides a quotation to a customer that can be used to
assess the current market or the quality of trade execution. The
foregoing requirement codifies guidance provided by the SEC in
connection with the Vendor Display Rule.\22\
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\22\ See Denial of No-Action Request under Rule 603(c) of
Regulation NMS, from Stephen Luparello, Director, Division of
Trading and Markets, SEC, to Eric Swanson, EVP, General Counsel &
Secretary BATS, dated July 22, 2015. The response letter from the
staff of the SEC's Division of Trading and Markets is available on
the SEC's website.
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[[Page 3967]]
When adopting the Vendor Display Rule, the Commission expressed its
view that the NBBO continues to provide a great deal of value for
retail investors in assessing the current market for small trades and
the quality of execution of such trades.\23\ Subsequently, in a 2015
Denial of No-Action Request under Rule 603(c) of Regulation NMS, SEC
staff stated their belief that when a registered representative of a
broker-dealer provides a quotation to a customer, it is typically done
in a context where the customer uses that information to make a trading
decision (including a decision regarding whether or not to trade, or
the terms of the trade such as a limit price).\24\ The SEC therefore
stated in its Denial of No-Action Request that it believed that a
quotation provided by a registered representative to a customer, which
the customer can use to assess the current market or the quality of
trade execution, is provided ``in a context in which a trading or
order- routing decision can be implemented'' for purposes of the Vendor
Display Rule.
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\23\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37567 (June 29, 2005) (``Regulation NMS Adopting
Release'').
\24\ Supra note [21].
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The proposed adoption of new subparagraph (C) under Section
5.2(c)(iii) of the OPRA Plan is designed to ensure continuing access to
real-time ``consolidated Options Information,'' a long-standing
requirement in the securities industry to display consolidated market
data at the times when it is most needed. With the recent growth in US
options trading, and a large portion of that growth coming from retail
investors, it is imperative to continue to empower those investors with
cost-effective U.S. options pricing information, along with the ability
to choose the manner in which they access such data in accordance with
their needs. Cboe believes its proposed display requirements, coupled
with the proposal to clarify that OPRA's usage-based data service
satisfies the Equivalent Access Provision, will achieve that objective
and therefore meets the standard of being appropriate in the public
interest, for the protection of investors and the maintenance of fair
and orderly markets, and removes impediments to, and perfects the
mechanism of, a national market system.\25\
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\25\ 17 CFR 242.608(b)(2).
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2. Text of Amendment
Cboe proposes to modify Section 5.2(c)(iii) of the OPRA Plan. The
existing OPRA Plan is available on the OPRA website, <a href="http://www.opraplan.com">www.opraplan.com</a>,
under the ``Document Library'' tab. The amendments that Cboe is
proposing are in attached Exhibit A.
3. Manner of Implementation of Amendment
The proposed amendment will be incorporated into the OPRA Plan
following Commission approval of the amendment pursuant to Rule
608(b)(1) and (b)(2) of Regulation NMS.
4. Phases of Development and Implementation
Not applicable.
5. Impact on Competition
Cboe believes that the proposed amendment will impose no burdens on
competition that are not justified in light of the purposes of the Act.
Rather, for the reasons discussed more fully above, Cboe believes the
proposed amendment furthers competition and incorporates what Cboe
believes to be the historical interpretation of the Equivalent Access
Provision by many market participants across the industry. The proposal
to clarify that OPRA's usage-based data services satisfies the
Equivalent Access Provision, coupled with the proposed display
requirements. would provide investors, particularly retail investors
and the retail brokers that support them, with cost- effective U.S.
options pricing information, along with the ability to choose the
manner in which they access such data in accordance with their needs.
Cboe believes that its proposal will further access to market data
generally and will equip investors, including retail investors, with
the ability to make informed investment decisions.
In particular, Cboe believes that the proposed amendments to the
OPRA Plan would avoid an interpretation that would limit access to
valuable options market data by imposing a cost prohibitive and/or
technologically unfeasible requirement on investors, particularly low
volume users like individual retail investors. The proposal also will
provide the possibility of lower overall costs for US options market
data users and permitting them to better evaluate the cost-to-value
ratio of obtaining different types of data. Moreover, the proposed
amendment would avoid rendering exchange proprietary market data
products redundant, effectively leaving OPRA's feed as the only data
source for options market participants such as retail investors.
Furthermore, Cboe does not believe that the ability to choose the
manner in which OPRA data is received (i.e., either via a streaming
subscription or on a query basis) to satisfy the Equivalent Access
Provision would harm OPRA's financial position, and therefore would not
have an adverse effect on consolidated market data for the options
industry.
6. Written Understandings or Agreements Among Plan Members
Not applicable.
7. Approval of Proposed Amendment
Not applicable.
8. Exhibits
Proposed amendments to the OPRA Plan set forth in Exhibit A.
9. Description of Operation of Facility Contemplated by the Proposed
Amendment
Not applicable.
10. Terms and Conditions of Access
Not applicable.
11. Method of Determination and Imposition, and Amount of, Fees and
Charges
Not applicable.
12. Method and Frequency of Processor Evaluation
Not applicable.
13. Dispute Resolution
The Plan does not include provisions regarding resolution of
disputes between or among the Members.
II. Proposed Revisions to OPRA Plan (Exhibit A to the Amendment)
Additions italicized; deletions [bracketed]
Limited Liability Company Agreement of Options Price Reporting
Authority, LLC a Delaware Limited Liability Company
* * * * *
Section 5.2. Collection and Dissemination of Options Last Sale
Reports and Quotation Information.
* * * * *
(c) Dissemination of Last Sale Reports, Quotation Information
and Other Information.
* * * * *
(iii) A Member may disseminate its Proprietary Information
pursuant to subparagraph (ii) of this paragraph (c) provided that:
(A) such dissemination is limited to other Members and to
persons who also have equivalent access to consolidated Options
Information disseminated by OPRA for the same classes or series of
options that are included in the Proprietary Information. For
[[Page 3968]]
purposes of this clause (A), ``consolidated Options Information''
means consolidated Last Sale Reports combined with either
consolidated Quotation Information or the BBO furnished by OPRA, and
access to consolidated Options Information and access to Proprietary
Information are deemed ``equivalent'' if Proprietary Information and
consolidated Options Information, whether disseminated on a
streaming- or per usage-basis, [both kinds of information] are
equally accessible on the same terminal or work station; [and]
(B) a Member may not disseminate its Proprietary Information on
any more timely basis than the same information is furnished to the
OPRA System for inclusion in OPRA's consolidated dissemination of
Options Information;[.] and
(C) dissemination of consolidated Options Information for the
same classes or series of options that are included in the
Proprietary Information must be displayed in a context in which a
trading or order-routing decision can be implemented (i.e., the
point of order entry or modification). Consolidated Options
Information must also be provided if a registered representative of
a broker-dealer provides a quotation to a customer that can be used
to assess the current market or the quality of trade execution.
* * * * *
III. Solicitation of Comments
The Commission seeks comment on the Amendment. Interested persons
are invited to submit written data, views and arguments concerning the
foregoing, including whether the proposed amendment is necessary or
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 mechanisms of, a national market system, or otherwise
in furtherance of the purposes of the Act. Comments may be submitted by
any of the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#7e0c0b121b531d1113131b100a0d3e0d1b1d50191108"><span class="__cf_email__" data-cfemail="c9bbbca5ace4aaa6a4a4aca7bdba89baacaae7aea6bf">[email protected]</span></a>. Please include
file number 4-820 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number 4-820. This file number
should be included on the subject line if email is used. To help the
Commission process and review your comments more efficiently, please
use only one method. The Commission will post all comments on the
Commission's internet website (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>).
Copies of the submission, all subsequent amendments, 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
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10 a.m. and 3
p.m. Copies of the filing also will be available for inspection and
copying at the principal offices of the Sponsors. Do not include
personal identifiable information in submissions; you should submit
only information that you wish to make available publicly. We may
redact in part or withhold entirely from publication submitted material
that is obscene or subject to copyright protection. All submissions
should refer to file number 4-820 and should be submitted on or before
February 12, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
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\26\ 17 CFR 200.30-3(a)(85).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-01071 Filed 1-19-24; 8:45 am]
BILLING CODE 8011-01-P
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