81 FR 75460 - Options Price Reporting Authority; Notice of Filing and Immediate Effectiveness of Proposed Amendment to the Plan for Reporting of Consolidated Options Last Sale Reports and Quotation Information To Amend OPRA's Non-Display Use Fees

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 210 (October 31, 2016)

[Federal Register Volume 81, Number 210 (Monday, October 31, 2016)]
[Notices]
[Pages 75460-75462]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-26136]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79153; File No. SR-OPRA-2016-02]


Options Price Reporting Authority; Notice of Filing and Immediate 
Effectiveness of Proposed Amendment to the Plan for Reporting of 
Consolidated Options Last Sale Reports and Quotation Information To 
Amend OPRA's Non-Display Use Fees

October 25, 2016.
    Pursuant to Section 11A of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 608 thereunder,\2\ notice is hereby given that 
on September 29, 2016, the Options Price Reporting Authority (``OPRA'') 
submitted to the Securities and Exchange Commission (``Commission'') an 
amendment to the Plan for Reporting of Consolidated Options Last Sale 
Reports and Quotation Information (``OPRA Plan'').\3\ The OPRA Plan 
Amendment would implement changes to OPRA's Non-Display Use Fees on 
November 1, 2016. The Commission is publishing this notice to provide 
interested persons an opportunity to submit written comments on the 
OPRA Plan amendment.
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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 fourteen participants to the OPRA Plan are BATS BZX Exchange, 
Inc., BATS EDGX Exchange, Inc., BOX Options Exchange, LLC, Chicago 
Board Options Exchange, Incorporated, C2 Options Exchange, 
Incorporated, International Securities Exchange, LLC, ISE Gemini, 
LLC, ISE Mercury, LLC, Miami International Securities Exchange, LLC, 
NASDAQ BX, Inc., NASDAQ PHLX LLC, The NASDAQ Stock Market LLC, NYSE 
MKT LLC, and NYSE Arca, Inc.
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I. Description and Purpose of the Plan Amendment

    OPRA proposes to amend footnotes 10 and 11 in the OPRA Fee Schedule 
to clarify the application of OPRA's ``Non-Display Use'' fees in 
certain respects.\4\ OPRA is not proposing any changes in the Non-
Display Use fees themselves, although OPRA does propose to add the word 
``Monthly'' to the first phrase in the Non-Display Use Fee entry in the 
Fee Schedule.
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    \4\ OPRA proposed its current Non-Display Use fees in Securities 
Exchange Act Release No. 77584 (April 12, 2016), 81 FR 22670 (April 
18, 2016) (File No. OPRA-2015-01).
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(a) Elimination of the Term ``Datafeed''

    OPRA proposes to eliminate the use of the term ``datafeed'' in 
footnotes 10 and 11. Some OPRA Vendors have argued that the use of the 
term ``datafeed'' in these footnotes provides a basis for saying that 
the Non-Display Use fees are not applicable to their downstream OPRA 
data recipients. That argument is based on a separate OPRA Policy 
entitled ``Datafeeds.'' \5\ In that Policy, the term ``datafeed'' is 
defined as ``any uncontrolled retransmission of OPRA market data.'' The 
argument has been that an OPRA Vendor and its downstream data 
recipients are not making Non-Display Use of OPRA data if the Vendor 
``controls''--that is, entitles--the server on which the Non-Display 
Use of the OPRA data is made.
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    \5\ This Policy is available on the OPRA Web site under the 
``Policies'' tab.
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    From OPRA's perspective, this is clearly incorrect. The Datafeeds 
Policy is directed to describing how OPRA data is received, in order to 
explain the circumstances in which an OPRA data recipient needs to be a 
party to a ``Vendor Agreement'', a ``Direct Access Rider'' and/or an 
``Indirect Access Rider''. The Datafeeds Policy is not relevant to the 
question of how OPRA data is used, specifically the question of whether 
a particular use of OPRA data constitutes ``Non-Display Use.'' OPRA 
believes that the Datafeeds Policy is irrelevant to the question of the 
applicability of Non-Display Use fees.
    Nonetheless, OPRA recognizes that the use of the term ``datafeed'' 
in separate OPRA documents with

[[Page 75461]]

different meanings carries the potential for confusion and that the 
description of OPRA's fees should be as clear as possible. Accordingly 
OPRA is proposing to amend footnotes 10 and 11 in its Fee Schedule so 
that the term ``datafeed'' is no longer used in the footnotes.

(b) Exception for Category 1 Non-Display Use by a Single UserID on 
Behalf of Certain Data Recipients

    OPRA also proposes to add a sentence in footnote 10 to state that 
the Category 1 Non-Display Use Fee \6\ does not apply to an OPRA data 
recipient during a calendar month if the data recipient: ``(i) has a 
single UserID that uses OPRA data for Non-Display Use and (ii) is not a 
broker-dealer and does not place more than 390 orders in listed options 
per day on average during the calendar month (counting orders for this 
purpose in accordance with the rules of the OPRA Participant exchanges 
to which it submits orders during the month) for its own beneficial 
account(s).'' This sentence is intended to provide relief from the 
Category 1 Non-Display Use Fee for a data recipient that has a single 
UserID (a single natural person) that uses OPRA data for Category 1 
Non-Display Use, unless the OPRA data recipient is acting as a broker-
dealer or is submitting orders to the OPRA Participant exchanges at a 
rate (390 orders per day on average over a calendar month) that 
indicates that it is making extensive use of OPRA data. Clause (ii) of 
this sentence is phrased to take advantage of language in the rules of 
the various OPRA Participant exchanges that uses the ``390 orders per 
day on average during the calendar month'' concept for purposes of 
determining whether a person submitting trades to the exchanges is 
subject to rules applicable to public customers or to professional 
traders. OPRA understands the rules of the various exchanges to be 
similar enough in substance to allow for effective and meaningful 
counting of orders sent to all of the OPRA Participant exchanges, even 
though these rules are not stated in identical language.\7\ OPRA 
believes that the same concept provides a reasonable basis for 
distinguishing data recipients that are appropriately exempted from the 
Category 1 Non-Display Use fee.\8\ OPRA believes that this exemption 
from the application of the Category 1 Non-Display Use Fee would be 
similar to one of the exemptions stated in the OPRA Fee Schedule from 
the Subscriber Indirect Access Fee, which states that the Subscriber 
Indirect Access Fee ``shall not apply to a subscriber . . . that 
receives a data feed transmission on a single, stand-alone computer for 
the sole purpose of providing a single-screen display of OPRA Data for 
the subscriber's internal use.''
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    \6\ ``Category 1'' Non-Display Use is defined in footnote 10 to 
refer to Non-Display Use of OPRA data by a recipient of the data 
``on its own behalf.''
    \7\ Although the precise language used by the various exchanges 
to make this distinction varies from one to the next, all of the 
exchanges use the ``390 orders per day on average during the 
calendar month'' concept, and their specific provisions for counting 
orders are similar enough to permit accurate counting of orders 
across exchanges for the purposes of the distinction described in 
the text. See, for example, Bats BZX Rules 16.1(a)(46) and 
Interpretations and Policies .01 to Rule 16.1; BOX Options Exchange 
LLC Rule 100(a)(50); CBOE Rule 1.1(ggg); ISE Rule 100(a)(37A) and 
Rule 100(a)(37C); MIAX Rule 100 (definition of ``Priority Customer'' 
including Interpretation and Policy .01); Nasdaq PHLX LLC Rule 
1000(b)(14); and NYSE Arca, Inc. Rule 6.1A(a)(4A).
    \8\ OPRA believes that it is not appropriate to make the same 
distinction for Category 2 Non-Display Use fees (Category 2 Non-
Display Use is Non-Display Use of OPRA data on behalf of clients of 
the OPRA data recipient) or for Category 3 Non-Display Use fees 
(Category 3 Non-Display Use is for the purpose of internally 
matching buy and sell orders within the OPRA data recipient).
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(c) Clarification With Respect to Non-Display Use Fees and Professional 
Subscriber Device-Based Fees

    OPRA is also proposing a separate change in footnote 10 to the OPRA 
Fee Schedule for a purpose relating to the administration of the Non-
Display Use Fees. A few OPRA data recipients have tried to suggest that 
if a device is subject to the Professional Subscriber Device-Based Fees 
it is immune from Non-Display Use Fees, and that therefore by attaching 
a display monitor to a server an OPRA data recipient can avoid payment 
of Non-Display Use Fees even if the server is used for Non-Display Use 
of OPRA data. OPRA believes that this is clearly incorrect, and that 
this can be clearly seen in the first sentence of footnote 10 in its 
current form (``Non-Display Use refers to the accessing, processing or 
consuming . . . of OPRA market data . . . for a purpose other than in 
support of the datafeed recipient's display or further internal or 
external redistribution.'' (Emphasis added.)) Nonetheless, OPRA 
believes that it is appropriate to make changes in footnote 10 to make 
clearer that a device is subject both to the Professional Subscriber 
Device-Based Fees and to Non-Display Use Fees if it is used both to 
display OPRA data and for Non-Display Use of OPRA data.

(d) Addition of the Word ``Monthly'' in the Non-Display Use Fee Entry 
in the Fee Schedule

    OPRA proposes to add the word ``Monthly'' to the heading of the 
Non-Display Use Fee entry in its Fee Schedule, so that the entry reads 
``Monthly Non-Display Use Fees.'' The absence of this word was recently 
brought to the attention of OPRA staff. The word is used in the other 
entries in OPRA's Fee Schedule that are for monthly fees, and OPRA 
believes that for clarity the word should be used in this entry as 
well.\9\ So far as OPRA staff is aware, no OPRA data recipient has 
relied on the absence of the word to conclude that the Non-Display Use 
fees are payable on any basis other than monthly.
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    \9\ OPRA's original filing for Non-Display Use did clearly 
identify the fees as monthly. See Securities Exchange Act Release 
No. 77584, 81 FR 22760 at 22762 (``The OPRA Plan amendment adopted 
fees for Non-Display Use as follows: A monthly fee of $2,000/
Enterprise for Category 1 . . .; a monthly fee of $2,000/Enterprise 
for Category 2 . . .; and a monthly fee of $2,000/Platform for 
Category 3 . . .'').
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(e) Effect on OPRA Revenue of Proposed Changes; Discussions With Data 
Recipients

    OPRA does not anticipate any material increase in its revenues as a 
result of the changes described in this filing--indeed, on balance, 
OPRA may not experience any increase at all in its revenues as a result 
of the changes described in this filing. A few OPRA data recipients 
that have resisted payment of Non-Display Use fees on the basis of the 
assertion that they are not receiving the data through ``datafeeds'' 
will no longer be able to make that assertion, possibly resulting in a 
small increase in OPRA's revenues. On the other hand, there may be 
recipients of OPRA data that have been paying Category 1 Non-Display 
Use fees and that may no longer pay them as a result of the express 
exemption from Category 1 Non-Display Use fees for certain data 
recipients with a single UserID that use OPRA data for Category 1 Non-
Display Use. OPRA believes that the change described in this filing to 
make more explicit that payment of Device-based Fees does not make Non-
Display Use fees inapplicable will have no material effect on its 
revenues.
    OPRA believes that the most important of these changes is the 
deletion of the term ``datafeed'' in the footnotes to its Fee Schedule, 
not because of its effect on OPRA revenues, but because of concerns 
expressed to OPRA staff by data recipients that have been paying the 
Non-Display Use fees

[[Page 75462]]

and have recently been told that their competitors may not be paying 
the fees on the basis of the ``datafeed'' argument. OPRA recognizes 
that equal treatment for persons similarly situated is an essential 
aspect of its operations, and believes that elimination of the word 
``datafeed'' is important to providing equal treatment for persons 
making Non-Display Use of OPRA data. Similarly, OPRA believes that it 
is appropriate to provide relief from the Non-Display Fee for all data 
recipients that make limited Category 1 Non-Display Use of OPRA data 
within the scope of the exception. Finally, OPRA believes that it is 
appropriate to reinforce the concept that Non-Display Use Fees would be 
applicable if Non-Display Use is being made of OPRA data, even if the 
Non-Display Use is being made on a device that is subject to 
Professional Subscriber Device-Based Fees, again in furtherance of the 
fundamental concept that persons similarly situated should be treated 
equally.
    The text of the amendment to the OPRA Plan is available at OPRA, 
the Commission's Public Reference Room, the OPRA Web site at http://opradata.com, and on the Commission's Web site at www.sec.gov.

II. Implementation of the OPRA Plan Amendment

    Pursuant to paragraph (b)(3)(i) of Rule 608 of Regulation NMS under 
the Act, OPRA designated this amendment as establishing or changing 
fees or other charges collected on behalf of all of the OPRA 
Participant exchanges in connection with access to or use of OPRA 
facilities. OPRA proposes to implement the revisions in the Non-Display 
Use Fee footnotes that are described in this amendment on November 1, 
2016. According to OPRA, implementation of the revisions as of that 
date will permit OPRA to provide persons that may be affected by these 
changes with thirty days' notice of the changes.
    The Commission may summarily abrogate the amendment within sixty 
days of its filing and require refiling and approval of the amendment 
by Commission order pursuant to Rule 608(b)(2) under the Act \10\ if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or 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.\11\
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    \10\ See 17 CFR 242.608(b)(2).
    \11\ See 17 CFR 242.608(b)(3)(iii).
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III. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the OPRA Plan 
amendment is consistent with the Act. Comments may be submitted by any 
of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File No. SR-OPRA-2016-02 on the subject line.

Paper Comments

     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 SR-OPRA-2016-02. 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 Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the OPRA Plan amendment that are 
filed with the Commission, and all written communications relating to 
the OPRA Plan amendment 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 Web site 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 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at the principal office of OPRA. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-OPRA-2016-02 and should be 
submitted on or before November 21, 2016.

    By the Commission.
Brent J. Fields,
Secretary.
[FR Doc. 2016-26136 Filed 10-28-16; 8:45 am]
 BILLING CODE 8011-01-P