LexisNexis Corporate & Securities Law Community 2011 Top 50 Blogs

Bon mots

"You can observe a lot just by watching." Yogi Berra

"We do not distain to borrow wit or wisdom from any man who is capable of lending us either." Henry Fielding, Tom Jones

"In our complex society the accountant's certificate and the lawyer's opinion can be instruments for inflicting pecuniary loss more potent than the chisel or the crowbar." United States v. Benjamin, 328 F.2d 854, 862 (2d Cir. 1964)

Boston Options Exchange Petition For Review Dismissed

Boston Options Exchange Group, LLC, Exchange Act Rel. 59927, May 14, 2009

Boston Options Exchange Group (BOX) applied to the Commission for review of a $2.3 million participation fee assessed upon it by the Options Price Reporting Authority when the Boston Stock Exchange sought to join OPRA. The Commission dismissed the proceeding.

OPRA is a National Market System Plan approved by the Commission under Exchange Act Section 11A. OPRA governs the process by which options market data are collected from participants, and disseminated.

OPRA sets participation fees for new members. When BSE sought to join OPRA the most recent new participant paid a $1.3 million. BSE joined OPRA in 2002 and was assessed a $2.3 million fee. In 2007 OPRA charged Nasdaq a similar $2.3 million participation fee. Nasdaq appealed that fee to the Commission, but reached a settlement that resulted in a $1.75 million fee. In 2007 BOX applied to OPRA for a reduction in its fee based on the settlement with Nasdaq. OPRA refused to provide BOX with a detailed explanation of how the fee was arrived at and denied the request for a reduction.

BOX's sought Commission review under Exchange Act Section 11A(b)(5) and Rule 608(d). The rule authorizes the Commission to in its discretion "entertain appeals in connection with . . . implementation or operation" of a national market system plan.

The Commission ruled that since appeals must be filed within thirty days and the fee was imposed in 2002 the BOX action was untimely since it was not filed until 2008. Under the most charitable view of the facts, the Commission noted that BOX waited at least four months to file after the last possible action by OPRA (when it declined to review the previous fee following the decision on its attempt to have the fee reduced in light of the settlement with Nasdaq) that could arguably be appealed.