After RFP, OPRA Renews SIAC SIP Deal

The OPRA SIP collects data from US options exchanges, calculates the best bid and offer, and distributes OPRA’s consolidated feed of options trade and quote data. OPRA began the tender at the end of last year, and enlisted consultancy Jordan & Jordan to issue a Request for Proposal (RFP) and run the selection process (IMD, Dec. 20, 2013).

The OPRA Committee made its final decision to re-sign with SIAC on Tuesday, May 20, sources say, after a process that began with nine “credible” bids, initially presented anonymously, and was whittled down over the past month to an initial shortlist of five, which was decided without the participation of any exchange Committee participants that had also submitted bids, then to a list of three finalists—SIAC, the International Securities Exchange, and the MIAX Options Exchange—which was decided by all participants, including all exchanges. The Committee then gave the finalists a week to review and resubmit their bids, after which it took another vote, bringing the finalists down to just ISE and SIAC.

The new deal is for a period of five years, beginning once the two-year interim support agreement—signed to cover any development and transition period for a new provider, since the original SIAC deal ran out at the end of last year—expires at the end of 2016.

Sources say that as a result of the tender process, OPRA was able to secure better commercial terms than it would have otherwise received under a straightforward renewal, and with guarantees of service delivery enhancements—though full terms are yet to be finalized, which is expected in the next couple of months. For example, the new deal includes provision to increase OPRA’s bandwidth from handling 13 million messages per second (mps) at present to sufficient capacity to handle up to 80 million mps without associated price increases, as well as provisions for ongoing latency reduction. A source familiar with the situation says the deal also has reliability provisions—though the source says outages have been minimal—as well as the advantage that service will continue without any interruption.

Tom Jordan, president and chief executive of Jordan & Jordan, says the bids were “very impressive and credible… and it was a very competitive process. It wasn’t apparent that SIAC would win.”

“It certainly wasn’t a task to get better pricing from SIAC,” Jordan adds. “Our job was to present good alternatives, and it was a sincere evaluation. People spent a lot of time on this. Did OPRA end up getting better latency, network and commercial terms from SIAC that they may not have otherwise? Yes, but that’s what happens when you have competition.”