[Federal Register Volume 63, Number 202 (Tuesday, October 20, 1998)]
[Notices]
[Pages 56051-56052]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-28000]
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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.
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\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'').
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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\
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\3\ 17 CFR 200.30-3(a)(29).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-28000 Filed 10-19-98; 8:45 am]
BILLING CODE 8010-01-M