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U.S. options market seeks bidders for key system processor
December 21, 2013 / 2:56 AM / in 4 years

U.S. options market seeks bidders for key system processor

NEW YORK (Reuters) - The authority that oversees the consolidated dissemination of data on the last sale and latest quotations from all 12 U.S. options markets is seeking bidders to run a system whose brief outage in September is one of a number of recent mishaps to mar trading.

Traders in the S&P 500 options pit at the Chicago Board Options Exchange signal orders shortly after the Federal Reserve's decision to leave short-term interest rates untouched between zero and 0.25 percent in Chicago, April 27, 2011. REUTERS/Frank Polich

The request for proposals from the Options Price Reporting Authority LLC, or OPRA, was sparked by demands for higher fees to run the service by IntercontinentalExchange Group Inc (ICE.N), which recently merged with NYSE Euronext, two sources said.

According to these sources, ICE was surprised to learn that the NYSE Euronext unit that managed OPRA’s securities information processor (SIP) ran the service at cost. ICE wants to make a profit from the service, the two sources said.

A spokesman for ICE declined to comment.

A third source said the issuance of an RFP is a way to tamp down ICE’s demands.

“This is simply OPRA telling ICE to get their act together and to pay better attention,” this source said.

Bidding for the contract will be managed by Jordan & Jordan, which released news of the RFP on Thursday.

SIPs saw little scrutiny until a three-hour trading halt on the Nasdaq in August after its SIP was clogged with stock quotes. The outage was the latest glitch to bedevil exchanges over the past two years, and led the Securities and Exchange Commission to order stronger SIPs in September.

The SEC’s mandate still has not been resolved. In September, options trading was halted across all U.S. markets after a coding change to make message processing more efficient at OPRA’s SIP.


One of the three sources said Nasdaq OMX Group Inc (NDAQ.O) also is demanding higher fees to run the SIP to meet costs imposed by the SEC’s mandate following the halt on August 22.

The committee of stock exchanges that oversees the Nasdaq SIP plan an RFP, too, according to this source. Nasdaq did not immediately respond to a request for comment.

The service contracts for the OPRA and Nasdaq SIPs expire by year’s end. OPRA’s contract will automatically renew for a two-year period, as does Nasdaq‘s. The value of the current service contract have not been published.

Reporting by Herbert Lash. Editing by Andre Grenon

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