Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing of Proposed Rule Change To Amend Fees for Optional Wireless Connectivity for Co-Located Clients, 61362-61364 [2014-24206]
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61362
Federal Register / Vol. 79, No. 197 / Friday, October 10, 2014 / Notices
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–73305; File No. SR–BX–
2014–047]
Self-Regulatory Organizations;
NASDAQ OMX BX, Inc.; Notice of Filing
of Proposed Rule Change To Amend
Fees for Optional Wireless
Connectivity for Co-Located Clients
October 6, 2014.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on
September 30, 2014, NASDAQ OMX
BX, Inc. (‘‘BX’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The Exchange is proposing a rule
change to amend fees assessed to clients
for wireless connectivity that enables
clients to receive data from BX.
Specifically, the Exchange proposes to
amend fees assessed for remote multicast ITCH (‘‘MITCH’’) Wave Ports for
clients co-located at other third-party
data centers, through which BX
TotalView ITCH market data will be
distributed after delivery to those data
centers via wireless network. The text of
the proposed rule change is available at
https://nasdaqomxbx.cchwallstreet.com,
at the Exchange’s principal office, and at
the Commission’s Public Reference
Room.
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II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in Sections A, B, and C below, of
the most significant aspects of such
statements.
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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1. Purpose
BX is proposing to amend fees
assessed under BX Rule 7015 for remote
MITCH Wave Ports for clients colocated at other third-party data centers,
through which BX TotalView ITCH
market data will be distributed after
delivery to those data centers via
wireless network.
BX offers optional wireless
connectivity to clients who had
requested such connectivity for other
markets’ data. BX uses network vendors
to supply wireless connectivity from the
Carteret, NJ data center to the data
centers of other exchanges.3 The vendor
installs, tests and maintains the
necessary communication equipment
for this wireless network between the
data centers. The wireless connectivity
is an optional alternative to fiber optic
network connectivity, providing lower
latency because the wireless signals
travel a straight, unimpeded line and
because light waves travel faster through
air than through glass (fiber optics).
Because wireless transmission of such
data requires an unimpeded line of sight
between Carteret and the data center of
the market to which it is connecting, BX
and its vendors incur costs associated
with maintaining hardware and leasing
towers on which its microwave dishes
and the associated hardware are
mounted, which generally increase as
distance between data centers increase.4
BX originally planned to create
wireless connections to a data center in
Newark used by NYSE as a SFTI
Network Point of Presence, which is
approximately 15 miles from BX’s
Carteret data center. In 2013, NYSE
began to allow wireless vendors and
telco vendors to connect directly to its
data center in Mahwah, NJ,5 which is
approximately 40 miles from Carteret.
Because the wireless data feeds are
designed to offer high-speed and low
latency,6 BX determined to direct its
wireless vendors to connect to the
Mahwah data center instead of the
3 NASDAQ OMX acts as re-distributor of these
third-party market data feeds, capturing the data at
the originating data centers and transporting the
data to the Carteret data center.
4 Because direct line of sight between Carteret and
the data centers of other exchanges is not possible,
BX’s vendors lease as many towers and associated
equipment as needed to ensure an unbroken line of
sight between individual towers, repeating the
signal until it arrives at its destination.
5 See https://www1.nyse.com/press/
1337855269042.html.
6 Wireless connectivity is an optional alternative
to higher latency fiber optic network connectivity.
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Newark SFTI Point of Presence. As a
consequence, BX is proposing to
increase the fees assessed under Rule
7015 for MITCH Wave Ports relating to
connectivity to data received wirelessly
to and from Mahwah, which will help
offset greater costs incurred in leasing
towers, and purchasing and maintaining
wireless equipment to cover the
increased distance as well as the higher
costs to house equipment and
connections within the Mahwah data
center.7
BX currently assesses an installation
charge for the remote port, at each of the
data center locations, of $2,500 for
installation, and $5,000 as a monthly
recurring fee.8 Each of the data centers
that a client may subscribe to is
approximately the same distance from
the Carteret data center. As discussed
above, BX will be providing a direct
connection to NYSE’s data center in
Mahwah, which is significantly farther
from Carteret. The Exchange incurs
higher costs for housing its equipment
at Mahwah, including higher fees for
power, cabinets and connections.
Moreover and as noted above, the
Exchange and its vendors incur higher
costs in leasing towers and equipment
to connect Carteret to Mahwah. As a
consequence, BX is proposing to
increase the one-time installation charge
to $5,000, and the monthly recurring fee
to $7,500.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 9 in general, and with
Sections 6(b)(4) and (b)(5) of the Act,10
in particular, in that it provides for the
equitable allocation of reasonable dues,
fees and other charges among members
and issuers and other persons using any
facility or system which the Exchange
operates or controls, and is designed to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and, in general to protect
investors and the public interest.
The Exchange operates in a highly
competitive market in which exchanges
offer co-location services as a means to
facilitate the trading activities of those
7 The Exchange notes that The NASDAQ Stock
Market LLC recently increased fees assessed for its
MITCH Wave Ports that connect to Mahwah. See
Securities Exchange Act Release No. 73132
(September 17, 2014), 79 FR 56836 (September 23,
2014) (SR–NASDAQ–2014–092).
8 Clients opting to pay for the remote MITCH
Wave Ports will continue to be fee liable for the
applicable market data fees as described in BX
Rules 7019, 7023, and 7026.
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(4) and (5).
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Federal Register / Vol. 79, No. 197 / Friday, October 10, 2014 / Notices
members who believe that co-location
enhances the efficiency of their trading.
Accordingly, fees charged for colocation services are constrained by the
active competition for the order flow of
such members. If a particular exchange
charges excessive fees for co-location
services, affected members will opt to
terminate their co-location arrangements
with that exchange, and adopt a
possible range of alternative strategies,
including co-locating with a different
exchange, placing their servers in a
physically proximate location outside
the exchange’s data center, or pursuing
trading strategies not dependent upon
co-location. Accordingly, the exchange
charging excessive fees would stand to
lose not only co-location revenues but
also revenues associated with the
execution of orders routed to it by
affected members.
Moreover, the Exchange believes the
proposed increased fees are reasonable
because they are based on the
Exchange’s increased costs incurred in
connecting to Mahwah. As discussed,
the greater distance between Carteret
and Mahwah results in greater costs
incurred by the Exchange and its
vendors, and the Exchange is assessed
higher charges for housing its
equipment at Mahwah as compared to
other exchanges’ locations. The
proposed fees allow the Exchange to
recoup these costs and make a profit,
while providing clients the ability to
reduce latency in the transmission of
data by connecting directly to NYSE’s
data center wirelessly.
The Exchange believes the proposed
increased fees are equitably allocated in
that all clients that voluntarily select
connectivity to, and to receive data
from, BX through this service is [sic]
charged the same amount for the same
services. Although the proposed fee is
higher than the fees charged for
connectivity to other exchanges’ data
centers, they are reflective of the
increased costs associated with
connecting to the Mahwah data center.
Accordingly, the increased fees are
allocated equitably on those that receive
the benefit of the connectivity.
The Exchange’s proposal is also
consistent with the requirement of
Section 6(b)(5) of the Act that Exchange
rules be designed to promote just and
equitable principles of trade [sic] to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade [sic], to
foster cooperation and coordination
with persons engaged in regulating,
clearing, settling, processing
information with respect to, and
facilitating transactions in securities, to
remove impediments to and perfect the
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61363
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest; and are not designed to
permit unfair discrimination between
clients, issuers, brokers, or dealers. The
proposal is consistent with these
requirements because it provides
optional connectivity that promotes
low-latency transfer of data to market
participants. As is true of all co-location
services, all co-located clients have the
option to select this voluntary
connectivity option, and there is no
differentiation among clients with
regard to the fees charged for the
wireless connectivity to, and wirelesslyreceived data from Mahwah.
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
BX does not believe that the proposed
rule change will result in any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act, as amended. To the
contrary, this proposal will promote
competition for distribution of market
data by offering an optional direct
connection to the NYSE data center,
which will improve the latency of the
connection to BX data that would be
available through NYSE’s STFI Point of
Presence in Newark. As discussed
above, the Exchange believes that fees
for co-location services, including those
proposed for microwave connectivity,
are constrained by the robust
competition for order flow among
exchanges and non-exchange markets,
because co-location exists to advance
that competition. Further, excessive fees
for co-location services, including for
wireless technology, would serve to
impair an exchange’s ability to compete
for order flow rather than burdening
competition.
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
BX–2014–047 on the subject line.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing change has become
effective pursuant to Section 19(b)(3)(A)
of the Act,11 and paragraph (f) 12 of Rule
19b–4, thereunder. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
11 15
12 17
PO 00000
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
Frm 00089
Fmt 4703
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IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–BX–2014–047. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, 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 that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
offices of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–BX–
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Federal Register / Vol. 79, No. 197 / Friday, October 10, 2014 / Notices
2014–047 and should be submitted on
or before October 31, 2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–24206 Filed 10–9–14; 8:45 am]
BILLING CODE 8011–01–P
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–73308; File No. SR–ISE–
2014–45]
1. Purpose
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change To Add a Reference to
Exchange Act Rule 10C–1 in the
Exchange’s Rules Concerning Unlisted
Trading Privileges
October 6, 2014.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on
September 22, 2014 the International
Securities Exchange, LLC (the
‘‘Exchange’’ or the ‘‘ISE’’) filed with the
Securities and Exchange Commission
the proposed rule change, as described
in Items I, II, and III below, which items
have been prepared by the selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
mstockstill on DSK4VPTVN1PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The ISE proposes to add language to
Rule 2101(a), entitled ‘‘Unlisted Trading
Privileges,’’ that will make clear that the
Exchange will not list equity securities
without first ensuring that its rules
comply with Rule 10C–1 under the Act
(‘‘Rule 10C–1’’).3 The text of the
proposed rule change is available on the
Exchange’s Web site (https://
www.ise.com), at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
13 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 17 CFR 240.10C–1.
1 15
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statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of these statements may be examined at
the places specified in Item IV below.
The self-regulatory organization has
prepared summaries, set forth in
sections A, B and C below, of the most
significant aspects of such statements.
The Exchange is proposing to add
language to Rule 2101(a), which will
clarify the fact that the Exchange will
not list equity securities without first
ensuring that Exchange Rules comply
with Rule 10C–1, as described below.4
On March 30, 2011, to implement
Section 10C of the Act,5 as added by
Section 952 of the Dodd-Frank Wall
Street Reform and Consumer Protection
Act of 2010 (‘‘Dodd-Frank Act’’),6 the
Commission proposed Rule 10C–1
under the Act,7 which directs each
national securities exchange to prohibit
the listing of any equity security of any
issuer, with certain exceptions, that
does not comply with the rule’s
requirements regarding compensation
committees of listed issuers and related
requirements regarding compensation
advisers. On June 20, 2012, the
Commission adopted Rule 10C–1.8 Rule
10C–1 obligates the Exchange to
establish listing standards that require
each member of a listed issuer’s
compensation committee to be a
member of the issuer’s board and to be
independent, as well as establish certain
factors that an issuer must consider
when evaluating the independence of a
director.9 Rule 10C–1 also requires the
Exchange to establish standards for
evaluating the independence of a
compensation consultant, legal counsel,
or other adviser (‘‘Compensation
Consultant’’) and requires a Company to
provide funding to a compensation
committee to retain such Compensation
Consultant.10
4 Id.
5 15
U.S.C. 78j–3.
Law 111–203, 124 Stat. 1900 (2010).
7 See Securities Act Release No. 9199, Securities
Exchange Act Release No. 64149 (March 30, 2011),
76 FR 18966 (April 6, 2011) (‘‘Rule 10C–1
Proposing Release’’).
8 See Securities Act Release No. 9330, Securities
Exchange Act Release No. 67220 (June 20, 2012), 77
FR 38422 (June 27, 2012) (‘‘Rule 10C–1 Adopting
Release’’).
9 17 CFR 240.10C–1.
10 Id.
6 Public
PO 00000
Frm 00090
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The Exchange does not currently list
any equity securities as a primary listing
market. Consistent with this fact,
Exchange Rule 2101(a) currently states
that all equity securities traded on the
ISE Stock Exchange 11 are traded
pursuant to unlisted trading privileges
and that the Exchange will not list any
such securities before first filing and
obtaining Commission approval of rules
that incorporate qualitative listing
criteria and comply with Rule 10A–3
under the Act.12 To make clear the
Exchange’s intention to comply with the
requirements of Rule 10C–1, the
Exchange proposes to amend Rule
2101(a) to state that no equity securities
will be listed on the ISE Stock Exchange
until Exchange Rules have been
amended to also comply with Rule 10C–
1. Because the Exchange does not
presently list any equity securities, the
Exchange does not believe it is
necessary to make any further
amendments in response Section 952 of
the Dodd-Frank Act at this time.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with the
requirements of the Act and the rules
and regulations thereunder that are
applicable to a national securities
exchange, and, in particular, with the
requirements of Section 6(b) of the
Act.13 Specifically, the proposal is
consistent with Section 6(b)(5) of the
Act,14 which requires exchange rules to
promote just and equitable principles of
trade, remove impediments to, and
perfect the mechanism of, a free and
open market and a national market
system, and, in general, protect
investors and the public interest. The
Exchange believes the proposed rule
change fulfills these requirements
because it will add language to Rule
2101(a) that clarifies the fact that the
Exchange will not list equity securities
without first ensuring that its rules
comply with Rule 10C–1, which
implements Section 10C of the Act.15
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange believes the proposal is
consistent with Section 6(b)(8) of the
Act 16 in that it does not impose any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange notes that the proposed rule
11 The ISE Stock Exchange is the Exchange’s
facility for trading equity securities.
12 17 CFR 240.10A–3.
13 15 U.S.C. 78f(b).
14 15 U.S.C. 78f(b)(5).
15 15 U.S.C. 78j–3.
16 15 U.S.C. 78f(b)(8).
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Agencies
[Federal Register Volume 79, Number 197 (Friday, October 10, 2014)]
[Notices]
[Pages 61362-61364]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-24206]
[[Page 61362]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73305; File No. SR-BX-2014-047]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing of Proposed Rule Change To Amend Fees for Optional Wireless
Connectivity for Co-Located Clients
October 6, 2014.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on September 30, 2014, NASDAQ OMX BX, Inc. (``BX'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been prepared by the Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange is proposing a rule change to amend fees assessed to
clients for wireless connectivity that enables clients to receive data
from BX. Specifically, the Exchange proposes to amend fees assessed for
remote multi-cast ITCH (``MITCH'') Wave Ports for clients co-located at
other third-party data centers, through which BX TotalView ITCH market
data will be distributed after delivery to those data centers via
wireless network. The text of the proposed rule change is available at
https://nasdaqomxbx.cchwallstreet.com, at the Exchange's principal
office, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
BX is proposing to amend fees assessed under BX Rule 7015 for
remote MITCH Wave Ports for clients co-located at other third-party
data centers, through which BX TotalView ITCH market data will be
distributed after delivery to those data centers via wireless network.
BX offers optional wireless connectivity to clients who had
requested such connectivity for other markets' data. BX uses network
vendors to supply wireless connectivity from the Carteret, NJ data
center to the data centers of other exchanges.\3\ The vendor installs,
tests and maintains the necessary communication equipment for this
wireless network between the data centers. The wireless connectivity is
an optional alternative to fiber optic network connectivity, providing
lower latency because the wireless signals travel a straight, unimpeded
line and because light waves travel faster through air than through
glass (fiber optics). Because wireless transmission of such data
requires an unimpeded line of sight between Carteret and the data
center of the market to which it is connecting, BX and its vendors
incur costs associated with maintaining hardware and leasing towers on
which its microwave dishes and the associated hardware are mounted,
which generally increase as distance between data centers increase.\4\
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\3\ NASDAQ OMX acts as re-distributor of these third-party
market data feeds, capturing the data at the originating data
centers and transporting the data to the Carteret data center.
\4\ Because direct line of sight between Carteret and the data
centers of other exchanges is not possible, BX's vendors lease as
many towers and associated equipment as needed to ensure an unbroken
line of sight between individual towers, repeating the signal until
it arrives at its destination.
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BX originally planned to create wireless connections to a data
center in Newark used by NYSE as a SFTI Network Point of Presence,
which is approximately 15 miles from BX's Carteret data center. In
2013, NYSE began to allow wireless vendors and telco vendors to connect
directly to its data center in Mahwah, NJ,\5\ which is approximately 40
miles from Carteret. Because the wireless data feeds are designed to
offer high-speed and low latency,\6\ BX determined to direct its
wireless vendors to connect to the Mahwah data center instead of the
Newark SFTI Point of Presence. As a consequence, BX is proposing to
increase the fees assessed under Rule 7015 for MITCH Wave Ports
relating to connectivity to data received wirelessly to and from
Mahwah, which will help offset greater costs incurred in leasing
towers, and purchasing and maintaining wireless equipment to cover the
increased distance as well as the higher costs to house equipment and
connections within the Mahwah data center.\7\
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\5\ See https://www1.nyse.com/press/1337855269042.html.
\6\ Wireless connectivity is an optional alternative to higher
latency fiber optic network connectivity.
\7\ The Exchange notes that The NASDAQ Stock Market LLC recently
increased fees assessed for its MITCH Wave Ports that connect to
Mahwah. See Securities Exchange Act Release No. 73132 (September 17,
2014), 79 FR 56836 (September 23, 2014) (SR-NASDAQ-2014-092).
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BX currently assesses an installation charge for the remote port,
at each of the data center locations, of $2,500 for installation, and
$5,000 as a monthly recurring fee.\8\ Each of the data centers that a
client may subscribe to is approximately the same distance from the
Carteret data center. As discussed above, BX will be providing a direct
connection to NYSE's data center in Mahwah, which is significantly
farther from Carteret. The Exchange incurs higher costs for housing its
equipment at Mahwah, including higher fees for power, cabinets and
connections. Moreover and as noted above, the Exchange and its vendors
incur higher costs in leasing towers and equipment to connect Carteret
to Mahwah. As a consequence, BX is proposing to increase the one-time
installation charge to $5,000, and the monthly recurring fee to $7,500.
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\8\ Clients opting to pay for the remote MITCH Wave Ports will
continue to be fee liable for the applicable market data fees as
described in BX Rules 7019, 7023, and 7026.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \9\ in general, and with Sections 6(b)(4) and (b)(5) of
the Act,\10\ in particular, in that it provides for the equitable
allocation of reasonable dues, fees and other charges among members and
issuers and other persons using any facility or system which the
Exchange operates or controls, and is designed to promote just and
equitable principles of trade, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general to protect investors and the public interest.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange operates in a highly competitive market in which
exchanges offer co-location services as a means to facilitate the
trading activities of those
[[Page 61363]]
members who believe that co-location enhances the efficiency of their
trading. Accordingly, fees charged for co-location services are
constrained by the active competition for the order flow of such
members. If a particular exchange charges excessive fees for co-
location services, affected members will opt to terminate their co-
location arrangements with that exchange, and adopt a possible range of
alternative strategies, including co-locating with a different
exchange, placing their servers in a physically proximate location
outside the exchange's data center, or pursuing trading strategies not
dependent upon co-location. Accordingly, the exchange charging
excessive fees would stand to lose not only co-location revenues but
also revenues associated with the execution of orders routed to it by
affected members.
Moreover, the Exchange believes the proposed increased fees are
reasonable because they are based on the Exchange's increased costs
incurred in connecting to Mahwah. As discussed, the greater distance
between Carteret and Mahwah results in greater costs incurred by the
Exchange and its vendors, and the Exchange is assessed higher charges
for housing its equipment at Mahwah as compared to other exchanges'
locations. The proposed fees allow the Exchange to recoup these costs
and make a profit, while providing clients the ability to reduce
latency in the transmission of data by connecting directly to NYSE's
data center wirelessly.
The Exchange believes the proposed increased fees are equitably
allocated in that all clients that voluntarily select connectivity to,
and to receive data from, BX through this service is [sic] charged the
same amount for the same services. Although the proposed fee is higher
than the fees charged for connectivity to other exchanges' data
centers, they are reflective of the increased costs associated with
connecting to the Mahwah data center. Accordingly, the increased fees
are allocated equitably on those that receive the benefit of the
connectivity.
The Exchange's proposal is also consistent with the requirement of
Section 6(b)(5) of the Act that Exchange rules be designed to promote
just and equitable principles of trade [sic] to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade [sic], to foster cooperation and coordination with
persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general, to
protect investors and the public interest; and are not designed to
permit unfair discrimination between clients, issuers, brokers, or
dealers. The proposal is consistent with these requirements because it
provides optional connectivity that promotes low-latency transfer of
data to market participants. As is true of all co-location services,
all co-located clients have the option to select this voluntary
connectivity option, and there is no differentiation among clients with
regard to the fees charged for the wireless connectivity to, and
wirelessly-received data from Mahwah.
B. Self-Regulatory Organization's Statement on Burden on Competition
BX does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as amended. To the contrary,
this proposal will promote competition for distribution of market data
by offering an optional direct connection to the NYSE data center,
which will improve the latency of the connection to BX data that would
be available through NYSE's STFI Point of Presence in Newark. As
discussed above, the Exchange believes that fees for co-location
services, including those proposed for microwave connectivity, are
constrained by the robust competition for order flow among exchanges
and non-exchange markets, because co-location exists to advance that
competition. Further, excessive fees for co-location services,
including for wireless technology, would serve to impair an exchange's
ability to compete for order flow rather than burdening competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing change has become effective pursuant to Section
19(b)(3)(A) of the Act,\11\ and paragraph (f) \12\ of Rule 19b-4,
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-BX-2014-047 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-BX-2014-047. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, 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 that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal offices of the Exchange.
All comments received will be posted without change; the Commission
does not edit personal identifying information from submissions. You
should submit only information that you wish to make available
publicly. All submissions should refer to File Number SR-BX-
[[Page 61364]]
2014-047 and should be submitted on or before October 31, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-24206 Filed 10-9-14; 8:45 am]
BILLING CODE 8011-01-P