The Options Price Reporting Authority, a computer system that consolidates and disseminates quotes from 12 US options exchanges to traders, brokers and data vendors, is looking for a new service provider.
Yesterday, OPRA said it’s preparing to send out a request-for-proposal (RFP) to evaluate service providers to replace its existing contract. The deadline for submitting a bid letter is January 14, 2013 with the RFP responses due by February 14.
The move to seek bids on the contract is happening just as OPRA’s contract with its current service provider for technical operations and maintenance of the OPRA systems is soon to expire. OPRA is currently managed by SIAC, a unit of NYSE, which was recently acquired by the InterContinental Exchange.
“Basically, OPRA is doing their due diligence,” said Janet Early, industry consultant with Jordan and Jordan, which was hired to prepare the proposal and manage the selection process. With the contract coming due soon, “they needed to renew or take some action, and they thought it was prudent to see what may be available in the marketplace,” said Early, in an interview today.“
OPRA’s search for a new service provider also follows a series of technical glitches culminating with an outage at the Nasdaq -operated SIP for US equities on Aug. 22 that pointed to fragility in the plumbing of the equity and options markets.
OPRA suffered a glitch on Sept. 16 option trading in which options trading was halted sporadically across all US options exchanges due to an unexplained problem with OPRA’s consolidated data feed. At the time, an NYSE spokesman indicated the problem related to some overnight systems changes, which impacted quote processing. However, the market data utility did not failover to a back-up system, which raised concerns. However, Early praised SIAC’s record and said the outage was not the reason why OPRA is seeking outside bidders.
“They’ve had a very solid, very good performance as a provider up until this point. It’s not as though there is a complaint. That is not the motivation here. It’s that the contract is due and it’s appropriate to see who might be possible alternative providers at this point,” she said. The decision to consider alternative providers may have preceded the outage, she said.
Potential bidders could include other exchanges, technology providers or companies that offer services in this area, said Early. According to Early, OPRA officials” are open to any firm that would have a credible, viable offering in this space.” It’s just really a matter of who can put together a credible solid bid for all the functions and characteristics that are required for this process, she said.
The end-to-end service includes providing connections to the participants and data recipients, providing the application and the processors to host that service.
One of the issues under discussion in the industry is whether the architecture of the SIPs is a single point of failure and whether it should be more distributed. “The bidder has freedom to propose a design or the configurations that they think are best,” said Early, adding that there are stringent characteristics for stability, reliability and responsiveness that must also be included in any offering. “What you will hope you will see is different possible solutions that may bring some new or improved services,” said Early. But one of the challenges any new provider will have with OPRA is handling mammoth quote and message volumes. “It’s [a] continual increase in volume and with very good performance and reliability. That’s the challenge with this system," said Early.
—For more information about the RFP, send inquiries to email@example.com
Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio