Self-Regulatory Organizations; The Chicago Stock Exchange, Inc.; Order Approving a Proposed Rule Change To Amend Its Co-Location Fees, 12590-12591 [2010-5659]

Download as PDF 12590 Federal Register / Vol. 75, No. 50 / Tuesday, March 16, 2010 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 Florence E. Harmon, Deputy Secretary. premises, equipment that generally is used for the transmission of order and execution messages and market data information between co-locaters and the Exchange’s trading facilities or other destinations. Charges for space are [FR Doc. 2010–5658 Filed 3–15–10; 8:45 am] based upon the number of ‘‘U’’ (a BILLING CODE 8011–01–P commonly accepted unit of measurement of data center space) of SECURITIES AND EXCHANGE shelf space used to store the equipment. COMMISSION Additionally, CHX charges a co-location fee for the network connections [Release No. 34–61680; File No. SR–CHX– equipment used to connect to the CHX 2009–18] network. According to CHX, these charges are intended to offset, at least in Self-Regulatory Organizations; The part, the costs borne by the Exchange for Chicago Stock Exchange, Inc.; Order Approving a Proposed Rule Change To rent, utilities and maintenance of the space occupied by the co-located Amend Its Co-Location Fees equipment.6 In its filing, CHX proposes March 10, 2010. to increase the periodic charge for colocation of network connections I. Introduction equipment from $50 per month to $100 On December 22, 2009, the Chicago per month. Stock Exchange, Inc. (‘‘CHX’’ or According to CHX, co-location ‘‘Exchange’’) filed with the Securities services are offered on an equal and and Exchange Commission non-discriminatory basis. Although the (‘‘Commission’’), pursuant to Section Exchange acknowledges that those who 19(b)(1) of the Securities Exchange Act co-locate would normally expect lower of 1934 (‘‘Act’’) 1 and Rule 19b–4 latencies and faster message turnaround 2 a proposed rule change thereunder, times because of the physical proximity relating to charges for co-location services. The proposed rule change was of their equipment to CHX systems, the Exchange represents that, as far as published for comment in the Federal possible, it has architected its systems to 3 The Register on January 14, 2010. eliminate or reduce differences between Commission received no comment co-located users and other co-located letters on the proposal. This order users, and between co-located users and approves the proposed rule change. non co-located users. Further, CHX II. Description notes that Participants that enter orders As described more fully in the Notice, through co-located equipment access its CHX states that it makes space available network via the same common connections or gateway as Participants at its data center for the storage of that do not co-locate.7 Finally, the Participants’ and non-Participants’ Exchange represents that it has computer hardware and the sufficient space at its data center to maintenance of connections equipment accommodate all requests to co-locate to the CHX network, services generally referred to as ‘‘co-location.’’ 4 Since 2004, computer equipment and that it will the Exchange has charged fees for its co- continue to do so for the foreseeable future. If for some reason the Exchange’s location services.5 These fees cover the capacity were exceeded, CHX represents physical space associated with cothat it would file a rule proposal with locating computer hardware and the Commission seeking to adopt a fair network equipment on the Exchange’s and neutral policy to accommodate 12 17 CFR 200.30–3(a)(12). requests to co-locate. sroberts on DSKD5P82C1PROD with NOTICES 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 61304 (January 6, 2010), 75 FR 2175 (‘‘Notice’’). 4 A ‘‘Participant’’ means any Participant Firm that holds a valid Trading Permit and any person associated with a Participant Firm who is registered with the Exchange under Article VI as a floor broker, co-specialist or market maker. See CHX Article 1, Rule 1(s). 5 See Securities Exchange Act Release No. 49728 (May 19, 2004), 69 FR 29988 (May 26, 2004) (SR– CHX–2004–15) (establishing fees for co-located computer hardware and network equipment); see also Securities Exchange Act Release No. 54657 (October 26, 2006), 71 FR 64590 (November 4, 2006) (SR–CHX–2006–29) (broadening the scope of such fees). VerDate Nov<24>2008 16:33 Mar 15, 2010 Jkt 220001 III. Discussion and Commission’s Findings After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national 6 The CHX does not separately charge for the electricity used to power the Participant’s equipment, or rent and other utilities associated with the space. 7 This description applies equally to both inbound messages (e.g., new orders) and outbound messages (e.g., execution reports). PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 securities exchange.8 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(4) of the Act,9 which requires that the rules of a national securities exchange provide for the equitable allocation of reasonable dues, fees and other charges among its members and issuers and other persons using its facilities, and with Section 6(b)(5) of the Act,10 which requires, among other things, that that the rules of a national securities exchange be 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, and not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The Commission believes that the proposed co-location fees are reasonable and equitably allocated insofar as they are designed to offset the Exchange’s expenses involved in providing colocation services and are applied on the same terms to similarly-situated market participants. In addition, the Commission believes that the colocation services described in the proposed rule change are not unfairly discriminatory because: (1) Co-location services are offered to all interested market participants who request them and pay the appropriate fees; (2) as represented by CHX, the Exchange has architected its systems so as to, as much as possible, reduce or eliminate differences among users of its systems, whether co-located or not; and (3) the Exchange has stated that it has sufficient space to accommodate new co-locaters and would file a proposed rule change to adopt a fair and neutral policy to allocate space should it become limited in the future. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,11 that the proposed rule change (SR–CHX–2009– 18) be, and hereby is, approved. 8 In approving this proposal, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 9 15 U.S.C. 78f(b)(4). 10 15 U.S.C. 78f(b)(5). 11 15 U.S.C. 78s(b)(2). E:\FR\FM\16MRN1.SGM 16MRN1 Federal Register / Vol. 75, No. 50 / Tuesday, March 16, 2010 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–5659 Filed 3–15–10; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–61681; File No. SR– NASDAQ–2010–033] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Amend Rule 3121 To Reflect Changes To Corresponding FINRA Rule and a Clerical Change to NASDAQ’s Rules March 10, 2010. 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 March 5, 2010, The NASDAQ Stock Market LLC (the ‘‘Exchange’’ or ‘‘NASDAQ’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange has designated the proposed rule change as constituting a noncontroversial rule change under Rule 19b–4(f)(6) under the Act,3 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. sroberts on DSKD5P82C1PROD with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange is filing this proposed rule change to amend NASDAQ Rule 3121 to reflect recent changes to a corresponding rule of the Financial Industry Regulatory Authority (‘‘FINRA’’), and to make clerical corrections to the NASDAQ rulebook. 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. 12 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 17 CFR 240.19b–4(f)(6). VerDate Nov<24>2008 16:33 Mar 15, 2010 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 Many of NASDAQ’s rules are based on rules of FINRA (formerly the National Association of Securities Dealers (‘‘NASD’’)). During 2008, FINRA embarked on an extended process of moving rules formerly designated as ‘‘NASD Rules’’ into a consolidated FINRA rulebook. In most cases, FINRA has renumbered these rules, and in some cases has substantively amended them. Accordingly, NASDAQ also proposes to initiate a process of modifying its rulebook to ensure that NASDAQ rules corresponding to FINRA rules continue to mirror them as closely as practicable. In some cases, it will not be possible for the rule numbers of NASDAQ rules to mirror corresponding FINRA rule numbers, because existing or planned NASDAQ rules make use of those numbers. However, wherever possible, NASDAQ plans to update its rules to reflect changes to corresponding FINRA rules. This filing addresses NASDAQ Rule 3121, which formerly corresponded to NASD Rule 3121. In SR–FINRA–2009– 080,4 FINRA redesignated NASD Rule 3121 as FINRA Rule 4570 with minor technical changes. FINRA Rule 4570 requires a member to designate, as the custodian of its required books and records on Form BDW, a person who is associated with the firm at the time Form BDW is filed. The rule is intended to enhance the SRO’s ability to obtain required books and record [sic] from firms that are no longer conducting business and to ensure that the custodian of the books and records has been subject to certain background checks. The FINRA Rule 4570 text 4 Securities Exchange Act Release No. 61332 (January 12, 2010), 75 FR 12 [sic] (January 20, 2010) (SR–FINRA–2009–080). Jkt 220001 PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 12591 makes minor technical changes by adopting terminology consistent with that used in Form BDW. NASDAQ is adopting the new FINRA rule in full, and redesignating NASDAQ Rule 3121 to be NASDAQ Rule 4570, so as to correspond to the new FINRA rule number. NASDAQ is also proposing to make a clerical correction to the NASDAQ rulebook. Specifically, NASDAQ proposes to renumber NASDAQ Rule 2310 to NASDAQ Rule 2310A. This change will correct an error in a prior rule filing,5 which inadvertently did not include the intended ‘‘A’’ in the rule number and text, resulting in two rules labeled as Rule 2310 in NASDAQ’s rulebook. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,6 in general, and with Sections 6(b)(5) of the Act,7 in particular, in that the proposal is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, 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. The proposed changes will conform NASDAQ Rule 3121 to recent changes made to a corresponding FINRA rule, to promote application of consistent regulatory standards. The proposed change to NASDAQ Rule 2310 will correct a clerical error in the NASDAQ rulebook. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange 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. 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. 5 Securities Exchange Act Release No. 61321 (January 8, 2010), 75 FR 14 [sic] (January 22, 2010)(SR–NASDAQ–2010–002). 6 15 U.S.C. 78f. 7 15 U.S.C. 78f(b)(5). E:\FR\FM\16MRN1.SGM 16MRN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 75, Number 50 (Tuesday, March 16, 2010)]
[Notices]
[Pages 12590-12591]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-5659]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61680; File No. SR-CHX-2009-18]


Self-Regulatory Organizations; The Chicago Stock Exchange, Inc.; 
Order Approving a Proposed Rule Change To Amend Its Co-Location Fees

March 10, 2010.

I. Introduction

    On December 22, 2009, the Chicago Stock Exchange, Inc. (``CHX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change relating to charges for co-location services. The 
proposed rule change was published for comment in the Federal Register 
on January 14, 2010.\3\ The Commission received no comment letters on 
the proposal. This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 61304 (January 6, 
2010), 75 FR 2175 (``Notice'').
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II. Description

    As described more fully in the Notice, CHX states that it makes 
space available at its data center for the storage of Participants' and 
non-Participants' computer hardware and the maintenance of connections 
equipment to the CHX network, services generally referred to as ``co-
location.'' \4\ Since 2004, the Exchange has charged fees for its co-
location services.\5\ These fees cover the physical space associated 
with co-locating computer hardware and network equipment on the 
Exchange's premises, equipment that generally is used for the 
transmission of order and execution messages and market data 
information between co-locaters and the Exchange's trading facilities 
or other destinations. Charges for space are based upon the number of 
``U'' (a commonly accepted unit of measurement of data center space) of 
shelf space used to store the equipment. Additionally, CHX charges a 
co-location fee for the network connections equipment used to connect 
to the CHX network. According to CHX, these charges are intended to 
offset, at least in part, the costs borne by the Exchange for rent, 
utilities and maintenance of the space occupied by the co-located 
equipment.\6\ In its filing, CHX proposes to increase the periodic 
charge for co-location of network connections equipment from $50 per 
month to $100 per month.
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    \4\ A ``Participant'' means any Participant Firm that holds a 
valid Trading Permit and any person associated with a Participant 
Firm who is registered with the Exchange under Article VI as a floor 
broker, co-specialist or market maker. See CHX Article 1, Rule 1(s).
    \5\ See Securities Exchange Act Release No. 49728 (May 19, 
2004), 69 FR 29988 (May 26, 2004) (SR-CHX-2004-15) (establishing 
fees for co-located computer hardware and network equipment); see 
also Securities Exchange Act Release No. 54657 (October 26, 2006), 
71 FR 64590 (November 4, 2006) (SR-CHX-2006-29) (broadening the 
scope of such fees).
    \6\ The CHX does not separately charge for the electricity used 
to power the Participant's equipment, or rent and other utilities 
associated with the space.
---------------------------------------------------------------------------

    According to CHX, co-location services are offered on an equal and 
non-discriminatory basis. Although the Exchange acknowledges that those 
who co-locate would normally expect lower latencies and faster message 
turnaround times because of the physical proximity of their equipment 
to CHX systems, the Exchange represents that, as far as possible, it 
has architected its systems to eliminate or reduce differences between 
co-located users and other co-located users, and between co-located 
users and non co-located users. Further, CHX notes that Participants 
that enter orders through co-located equipment access its network via 
the same common connections or gateway as Participants that do not co-
locate.\7\ Finally, the Exchange represents that it has sufficient 
space at its data center to accommodate all requests to co-locate 
computer equipment and that it will continue to do so for the 
foreseeable future. If for some reason the Exchange's capacity were 
exceeded, CHX represents that it would file a rule proposal with the 
Commission seeking to adopt a fair and neutral policy to accommodate 
requests to co-locate.
---------------------------------------------------------------------------

    \7\ This description applies equally to both inbound messages 
(e.g., new orders) and outbound messages (e.g., execution reports).
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III. Discussion and Commission's Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\8\ 
In particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\9\ which requires that the 
rules of a national securities exchange provide for the equitable 
allocation of reasonable dues, fees and other charges among its members 
and issuers and other persons using its facilities, and with Section 
6(b)(5) of the Act,\10\ which requires, among other things, that that 
the rules of a national securities exchange be 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, and not 
be designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
---------------------------------------------------------------------------

    \8\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    \9\ 15 U.S.C. 78f(b)(4).
    \10\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that the proposed co-location fees are 
reasonable and equitably allocated insofar as they are designed to 
offset the Exchange's expenses involved in providing co-location 
services and are applied on the same terms to similarly-situated market 
participants. In addition, the Commission believes that the co-location 
services described in the proposed rule change are not unfairly 
discriminatory because: (1) Co-location services are offered to all 
interested market participants who request them and pay the appropriate 
fees; (2) as represented by CHX, the Exchange has architected its 
systems so as to, as much as possible, reduce or eliminate differences 
among users of its systems, whether co-located or not; and (3) the 
Exchange has stated that it has sufficient space to accommodate new co-
locaters and would file a proposed rule change to adopt a fair and 
neutral policy to allocate space should it become limited in the 
future.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\11\ that the proposed rule change (SR-CHX-2009-18) be, and hereby 
is, approved.
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    \11\ 15 U.S.C. 78s(b)(2).


[[Page 12591]]


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    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-5659 Filed 3-15-10; 8:45 am]
BILLING CODE 8011-01-P

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