Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change Amending the NYSE Arca Equities Schedule of Fees and Charges for Exchange Services To Provide for Additional Co-location Services and Establish Related fees, 39305-39309 [2012-16133]
Download as PDF
<![CDATA[
39305
Federal Register / Vol. 77, No. 127 / Monday, July 2, 2012 / Notices
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office 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–EDGA–
2012–23 and should be submitted on or
before July 23, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–16135 Filed 6–29–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–67263; File No. SR–
NYSEArca–2012–62]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change Amending the NYSE Arca
Equities Schedule of Fees and
Charges for Exchange Services To
Provide for Additional Co-location
Services and Establish Related fees
June 26, 2012.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on June 13,
2012, NYSE Arca, Inc. (the ‘‘Exchange’’
or ‘‘NYSE Arca’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I, II and III
below, which Items have been prepared
by the self-regulatory organization. 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 Substance of
the Proposed Rule Change
The Exchange proposes to amend the
NYSE Arca Equities Schedule of Fees
and Charges for Exchange Services
(‘‘Fee Schedule’’) to provide for
additional co-location services and
establish related fees. The text of the
proposed rule change is available on the
Exchange’s Web site at www.nyse.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
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 those 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 parts of such
statements.
6 Cross Connects ...................................................................................................................
12 Cross Connects .................................................................................................................
18 Cross Connects .................................................................................................................
24 Cross Connects .................................................................................................................
23 17
CFR 200.30–3(a)(12).
U.S.C.78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
4 See Securities Exchange Act Release No. 63275
(November 8, 2010), 75 FR 70048 (November 16,
2010) (SR–NYSEArca–2010–100) (the ‘‘Original Colocation Notice’’). See also Securities Exchange Act
Release No. 65970 (December 15, 2011), 76 FR
79242 (December 21, 2011) (SR–NYSEArca–2011–
74). The Exchange operates a data center in
Mahwah, New Jersey (‘‘data center’’) from which it
provides co-location services to Users. The
Exchange’s co-location services allow Users to rent
space in the data center in order that they may
locate their electronic servers in close physical
proximity to the Exchange’s trading and execution
system. See Original Co-location Notice at 70049.
For purposes of its co-location services, the term
‘‘User’’ includes (i) ETP Holders and Sponsored
Participants who are authorized to obtain access to
the NYSE Arca Marketplace pursuant to Rule 7.29
(see Rule 1.1(yy)); and (ii) non-ETP Holder broker-
mstockstill on DSK4VPTVN1PROD with NOTICES
1 15
VerDate Mar<15>2010
17:22 Jun 29, 2012
Jkt 226001
$500
$500
$500
$500
dealers and vendors that request to receive colocation services directly from the Exchange.
5 The Exchange notes that fees for a cross connect
would be the same, regardless of whether the cross
connect is between the cabinets of a single User or
between the cabinets of separate Users within the
data center. The Exchange further notes that only
the User requesting the cross connect would be
charged the related initial and monthly fees; the
other User would simply be required to give
permission for the cross connection. This proposed
change would require that the existing cross
connect fee in the Fee Schedule be amended to
reflect that it is no longer applicable only to cross
connects between a single User’s cabinets.
6 All multiple cross connects within the bundle
would be installed at once and only in multiples
of six, regardless of the number of cross connects
the User utilizes. This proposed change would
require that the existing cross connect fee in the Fee
Schedule be amended to reflect that it is applicable
only for a single cross connect (i.e., not for bundled
cross connects). A User could still elect to purchase
individual cross connects, but once the User
PO 00000
Frm 00098
Fmt 4703
Sfmt 4703
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
Fee Schedule to provide for additional
co-location services and establish
related fees.4
Cabinet Cross Connects
A User that has more than one cabinet
within the data center is currently able
to purchase one or more fiber cross
connects between its cabinets.
Currently, a $500 initial fee and a $500
monthly fee are charged per cross
connect. The Exchange proposes that
each User be permitted to purchase
cross connects between its own
cabinets, as is currently permitted, as
well as between its cabinet(s) and the
cabinets of separate Users within the
data center.5 A cross connect would be
used to connect cabinets of separate
Users when, for example, a User
receives technical support, order routing
and/or market data delivery services
from another User in the data center.
Cross connects may be bundled (i.e.,
multiple cross connects within a single
sheath) such that a single sheath can
hold either one cross connect or several
cross connects in multiples of six (e.g.,
six or 12 cross connects). The Exchange
is proposing fees for bundled cross
connects 6 that correspond to the
number of cross connects in the bundle,
as follows: 7
initial
initial
initial
initial
charge
charge
charge
charge
plus
plus
plus
plus
$1,500
$2,500
$3,200
$3,900
monthly
monthly
monthly
monthly
charge.
charge.
charge.
charge.
anticipates utilizing four cross connects, it would
be more economical to purchase a bundle of six
(with two unused) for a $500 initial charge plus a
$1,500 monthly charge, which would be less than
the $500 initial charge and $2,000 monthly charge
for purchasing four cross connects individually.
The additional unused cross connects in the bundle
would not result in any additional internal costs or
Exchange fees for the User.
7 The Exchange has made bundled cross connects
available for a User to connect its cabinets within
the data center beginning with the availability of colocation services in the data center in September
2010. In certain circumstances, the Exchange
charged certain Users that purchased bundled cross
connects a monthly per cross connect fee that was
equal to the monthly fees proposed herein and
therefore less than the $500 fee per cross connect
that is currently reflected within the Fee Schedule.
The Exchange has granted credits to the other Users
that purchased bundled cross connects such that all
Users have been charged the monthly fees proposed
herein.
E:\FR\FM\02JYN1.SGM
02JYN1
39306
Federal Register / Vol. 77, No. 127 / Monday, July 2, 2012 / Notices
The Exchange’s initial cost for
installing bundled cross connects is
generally consistent with the cost of
installing a single cross connect. The
Exchange therefore proposes that the
same $500 initial fee apply to install
bundled cross connects as is currently
applicable to a single cross connect.
However, the Exchange’s cost for
ongoing maintenance of cross connects
decreases on a per cross connect basis
as the number of cross connects within
a sheath increases. Accordingly, the
monthly fees proposed for bundled
cross connects would likewise decrease
on a per cross connect basis as the
number of cross connects within a
sheath increases, as reflected in the
amended Fee Schedule.8
10 Gb LCN Connections
Users are currently able to purchase
access to the Exchange’s Liquidity
Center Network (‘‘LCN’’), a local area
network that is available in the data
center. LCN access is available in either
one or 10 gigabit (‘‘Gb’’) capacities, for
which Users incur an initial and
monthly fee per connection. The
Exchange proposes that a User that
purchases five 10 Gb LCN connections
would only be charged the initial fee for
a sixth 10 Gb LCN connection and
would not be charged the monthly fee
that would otherwise be applicable.9
This would apply to a User that
purchases six 10 Gb LCN connections at
one time as well as to a User that
purchases six 10 Gb LCN connections at
separate times.10
LCN CSP Connections
A User is currently able to act as a
content service provider (a ‘‘CSP’’ User)
and deliver services to another User in
the data center (a ‘‘Subscribing’’ User).
These services could include, for
example, order routing/brokerage
services and/or market data delivery
services. Many of these services can be
provided via direct cross connect
between the User providing a service
and the User receiving it. However,
using direct cross connects would
require the User providing the service to
have a direct cross connect with each
User receiving it and would require the
User providing the service to send the
LCN CSP Access ............................
1 Gb Circuit ...................................
LCN CSP Access ............................
10 Gb Circuit .................................
CSP Subscriber ...............................
........................................................
same data multiple times, i.e., once per
receiving User.
LCN CSP connections address this
issue by allowing the CSP User to send
data to, and communicate with, all the
properly authorized Subscribing Users
at once, via a specific, dedicated LCN
connection (an ‘‘LCN CSP’’
connection); 11 the Subscribing User
must also have an LCN connection in
order to communicate with the LCN
CSP.12 The LCN CSP connection used
by the CSP User may only be used for
providing services to, and
communicating with, Subscribing Users
and is separate and distinct from any
LCN connection used by the CSP User
to access the Exchange.13 Conversely,
the Subscribing User receives the
services via its standard LCN
connection 14 and is charged an initial
and monthly fee that reflects the benefit
of receiving services from the CSP User
in the data center in this manner.
Accordingly, the Exchange proposes the
following fees for LCN CSP connections
and Subscribing Users: 15
$6,000 per connection initial charge plus $500 monthly per connection.
$10,000 per connection initial charge plus $5,000 monthly per connection.
$950 per LCN CSP initial charge plus $300 monthly per LCN CSP.
mstockstill on DSK4VPTVN1PROD with NOTICES
The Exchange notes that the proposed
initial fee for an LCN CSP connection is
the same as the existing fee for a
standard LCN connection, both for the
1 Gb and 10 Gb capacities. This is
because an LCN CSP connection is
physically the same as a standard LCN
connection. However, the proposed
monthly fee for an LCN CSP connection
is less than the existing monthly fee for
a standard LCN connection, both for the
1 Gb and 10 Gb capacities. This is
because an LCN CSP connection is
functionally limited as compared to a
standard LCN connection—as noted
above, an LCN CSP connection may
only be used for providing services to
Subscribing Users and may not be used
for accessing the Exchange or for other
purposes.
A User is currently able to purchase
a cage to house its cabinets within the
data center.16 A cage would typically be
purchased by a User that has several
cabinets within the data center and that
wishes to enhance privacy around its
cabinets, e.g., so that other Users cannot
see what type of hardware is being
utilized. The Exchange charges fees for
cages based on the size of the cage,
which directly corresponds to the
number of cabinets housed therein. The
Exchange is proposing the following
fees for cages: 17
8 For example, a single cross connect currently
has a corresponding monthly fee of $500. However,
as proposed, a bundle of 6 cross connects would
have a monthly fee of $1,500 ($250 monthly fee per
cross connect), a bundle of 12 cross connects would
have a monthly fee of $2,500 ($208 monthly fee per
cross connect), a bundle of 18 cross connects would
have a monthly fee of $3,200 ($178 monthly fee per
cross connect), and a bundle of 24 cross connects
would have a monthly fee of $3,900 ($162 monthly
fee per cross connect). Because the cross connects
are bundled, the proposed change would not apply
to incremental cross connects.
9 Beginning with the availability of co-location
services in the data center in September 2010, the
Exchange charged certain Users that purchased a
sixth LCN connection as proposed herein, i.e., the
Exchange charged the initial fee but not the
monthly fee. The Exchange has granted credits to
those other Users that purchased a sixth LCN
connection and were charged the monthly fee for
such connection.
10 A User would be charged an initial and
monthly fee according to the Fee Schedule for any
additional 10 Gb LCN connections it purchases
(e.g., a seventh or eighth 10 Gb LCN connection).
Additionally, a User that cancels a 10 Gb LCN
connection, such that the User is no longer paying
for at least five 10 Gb LCN connections, would
thereafter be charged the monthly fee for what had
been its free sixth 10 Gb LCN connection.
11 A single LCN CSP connection may be used to
provide services to more than one Subscribing User.
A CSP User’s LCN CSP connection may be used to
receive data or communications from a Subscribing
User.
12 The Subscribing User’s LCN connection is the
standard LCN connection that is described in the
preceding section.
13 Thus, in order to access the Exchange, the CSP
User is required to maintain an existing standard
LCN connection. As above, the current fees in the
Fee Schedule are applicable to such connection,
e.g., a $10,000 initial fee and $12,000 monthly fee
for a 10 Gb LCN connection.
14 The current fees in the Fee Schedule are
applicable, e.g., a $10,000 initial fee and $12,000
monthly fee for a 10 Gb LCN connection. If the
Subscribing User does not have an existing LCN
connection, it is required to purchase one in order
to receive services from a CSP User over the LCN.
15 The Exchange has made LCN CSP connections
available to Users beginning with the availability of
co-location services in the data center in September
2010. During this time, three Users have purchased
LCN CSP connections and have been charged the
related LCN CSP fee proposed herein. Also, one
User has become a Subscribing User and has been
charged the CSP subscriber fee proposed herein.
16 The Exchange has made cages available to
Users beginning with the availability of co-location
services in the data center in September 2010.
17 The Exchange currently charges cage fees to
Users at the levels proposed herein.
VerDate Mar<15>2010
17:22 Jun 29, 2012
Jkt 226001
Cages
PO 00000
Frm 00099
Fmt 4703
Sfmt 4703
E:\FR\FM\02JYN1.SGM
02JYN1
Federal Register / Vol. 77, No. 127 / Monday, July 2, 2012 / Notices
1–14 Cabinets ....................................................................................................................
15–28 Cabinets ..................................................................................................................
29+ Cabinets ......................................................................................................................
The Exchange’s initial cost to
construct a cage is directly related to the
size of the cage, which is determined by
the number of the User’s cabinets that
are to be housed therein. The initial fees
proposed for a cage would accordingly
increase on a proportional basis as the
number of cabinets housed in the cage
increases, as reflected in the amended
Fee Schedule.18 The monthly fee would
reflect the opportunity cost to the
Exchange of giving up floor space in the
data center for the cage’s physical
footprint and the value of such space to
the User; such floor space otherwise
could be utilized for additional cabinets
for the same or other Users or other
Exchange purposes. Accordingly, the
monthly fees proposed for a cage would
increase on a marginal basis as the
number of cabinets housed in the cage
increases, as reflected in the amended
Fee Schedule.19
mstockstill on DSK4VPTVN1PROD with NOTICES
Change Fee
A User is currently able to arrange for
the Exchange to reconfigure, modify, or
otherwise change a co-location service
that the Exchange has already
established and completed for the User.
In this regard, the Exchange notes that
the Fee Schedule includes several colocation services for which an initial fee
is applicable in addition to an ongoing
monthly fee.20 These initial fees are
related to the Exchange’s initial cost of
establishing or installing the particular
co-location service for the User. The
Exchange proposes to charge a User a
18 For example, a cage housing between one and
14 cabinets would have a corresponding initial fee
of $5,000. However, a cage housing between 15 and
28 cabinets—as many as twice the number of
cabinets—would have a corresponding initial fee of
$10,000. Similarly, a cage housing 29 or more
cabinets—possibly as many as three times the
number of cabinets as the lowest tier—would have
a corresponding initial fee of $15,000.
19 For example, a cage housing between one and
14 cabinets would have a corresponding monthly
fee of $2,700 ($193 per cabinet when housing 14
cabinets). However, a cage housing between 15 and
28 cabinets—as many as twice the number of
cabinets—would have a corresponding monthly fee
of $4,100 (an additional monthly cost that is
slightly greater than 150% of the lowest tier and
$146 per cabinet when housing 28 cabinets).
Similarly, a cage housing 29 or more cabinets—
which could be as many as three times the number
of cabinets as the lowest tier—would have a
corresponding monthly fee of $5,500 (an additional
monthly cost that is slightly greater than 200% of
the lowest tier and $131 per cabinet when housing,
for example, 42 cabinets). As the cage size
increases, its physical footprint on the data center
floor correspondingly increases.
20 For example, the initial 1 Gb LCN Access fee
is $6,000 per connection and the ongoing monthly
fee is $5,000.
VerDate Mar<15>2010
17:22 Jun 29, 2012
Jkt 226001
$5,000 initial charge plus $2,700 monthly charge.
$10,000 initial charge plus $4,100 monthly charge.
$15,000 initial charge plus $5,500 monthly charge.
fee of $950 per order if the User requests
a change to one or more existing colocation services that the Exchange has
already established or completed for the
User (‘‘Change Fee’’).21 For example, the
initial installation of an LCN connection
would include establishing and
configuring market data services
requested by the User, which would be
covered by the initial install fee.
However, if a User requests that the
Exchange establish and configure
additional market data services for its
LCN connection, the User would be
charged a one-time Change Fee of $950
for that request. If a User orders two or
more services at one time (for example,
through submitting an order form
requesting multiple services) the User
would be charged a one-time Change
Fee of $950, which would cover the
multiple services.
Expedite Fee
A User is currently able to request
that the Exchange expedite the
completion of co-location services
purchased or ordered by the User. The
Exchange proposes to charge Users
$4,000 for expedited completion of colocation services (‘‘Expedite Fee’’).22 At
the time that services are ordered, the
Exchange informs the User of the
expected completion date; if a User
wishes to obtain the services on an
expedited basis, the Exchange would
inform the User of the earlier
completion date that could be expected
with payment of the Expedite Fee. The
time saved would vary depending on
the type(s) of service(s) being ordered,
but the Expedite Fee would always be
a flat $4,000, allowing the User to
determine if the expected time savings
warrants payment of the fee. The
Expedite Fee relates to the Exchange’s
cost of expediting the services. For
example, the expedited service may
require that work be completed on the
weekend or after normal business hours,
thereby resulting in the Exchange
providing overtime compensation to
data center staff.23
21 The Exchange has uniformly charged this $950
Change Fee to Users beginning with the availability
of co-location services at the data center in
September 2010.
22 The Exchange has made the option of
expedited services available to Users beginning
with the availability of co-location services in the
data center in September 2010. Three Users have
requested expedited services and have been charged
the $4,000 Expedite Fee, beginning in April 2011.
23 Offering expedited services would not have any
impact on the normal delivery time for all other
PO 00000
Frm 00100
Fmt 4703
Sfmt 4703
39307
Power Not Utilized Fee
A User is currently able to obtain
space in the data center for future use
of currently available, unused cabinet
space in proximity to the User’s existing
cabinet space—i.e., space that the User
does not anticipate using until some
point in the future and therefore is
reserved but not currently utilized. The
applicable fee for this space in which
power is not utilized (‘‘PNU Fee’’) was
described within the Original Colocation Notice.24 Such description
provided that the PNU Fee would be
40% of the applicable monthly per
kilowatt (‘‘kW’’) fee. The Exchange now
proposes to provide for the PNU Fee
within the Fee Schedule as $360 per
month, which is 40% of the lowest per
kW monthly cabinet fee that is specified
in the Fee Schedule.
General
As is the case with all Exchange colocation arrangements, neither a User
nor any of the User’s customers would
be permitted to submit orders directly to
the Exchange unless such User or
customer is an ETP Holder, a Sponsored
Participant or an agent thereof (e.g., a
service bureau providing order entry
services). Additionally, as is the case
with existing co-location services, use of
the co-location services proposed herein
would be completely voluntary and
would be available to all Users on a
non-discriminatory basis.25
2. Statutory Basis
The Exchange believes that the
proposed change is consistent with
pending co-location work orders. In other words,
Users that do not elect to pay the Expedite Fee
would not be disadvantaged by those who do. The
Exchange does not guarantee that any work is
completed by a specific date under either normal
or expedited delivery time, but rather does all work
on a best efforts basis.
24 See Original Co-location Notice at 70049, note
7. Except for the PNU Fee, Users are not charged
for PNU cabinets until power is activated, at which
point the fees applicable to other cabinets are
charged (i.e., the $5,000 initial fee per cabinet and
the per kilowatt fee).
25 As is currently the case, Users that receive colocation services from the Exchange will not receive
any means of access to the Exchange’s trading and
execution systems that is separate from, or superior
to, that of other Users. In this regard, all orders sent
to the Exchange enter the Exchange’s trading and
execution systems through the same order gateway,
regardless of whether the sender is co-located in the
data center or not. In addition, co-located Users do
not receive any market data or data service product
that is not available to all Users, although Users that
receive co-location services normally would expect
reduced latencies in sending orders to, and
receiving market data from, the Exchange.
E:\FR\FM\02JYN1.SGM
02JYN1
mstockstill on DSK4VPTVN1PROD with NOTICES
39308
Federal Register / Vol. 77, No. 127 / Monday, July 2, 2012 / Notices
Section 6(b) of the Securities Exchange
Act of 1934 (the ‘‘Act’’),26 in general,
and furthers the objectives of Section
6(b)(4) of the Act,27 in particular,
because it provides for the equitable
allocation of reasonable dues, fees, and
other charges among its members,
issuers and other persons using its
facilities.
The Exchange proposes to offer the
additional services described herein as
a convenience to Users, but in doing so
will incur certain costs, including costs
related to the data center facility,
hardware and equipment and costs
related to personnel required for initial
installation and ongoing monitoring,
support and maintenance of such
services. As with fees for existing colocation services, the fees proposed
herein would be charged only to those
Users that voluntarily select the related
services, which would be available to all
Users. Accordingly, the Exchange
believes that the proposed change is
equitable because it will result in fees
being charged only to Users that
voluntarily select to receive the
corresponding services and because
those services will be available to all
Users.
The Exchange believes that the
proposed fees are reasonable because,
for example, where the Exchange
anticipates incurring a lower marginal
monthly cost per cross connect or with
respect to cages, the Exchange has
proposed to apply a corresponding
lower marginal monthly fee.
Additionally, the Exchange believes that
the Change Fee is reasonable because it
would permit the Exchange to offset the
expense of completing changes to colocation services that the Exchange has
previously already established/
completed for a User. Furthermore, the
Exchange believes that the Expedite Fee
is reasonable because it would permit
the Exchange to charge a User for the
expedited completion of the delivery of
a co-location service, which could
require that the Exchange expend
increased resources (e.g., overtime labor
costs) above what would otherwise be
required for non-expedited service.
Users that do not elect expedited service
would not be disadvantaged by the
offering of that service as it would not
affect normal delivery times for services.
The Exchange also believes that the
proposed change regarding the sixth 10
Gb LCN connection is reasonable
because it would incentivize Users to
request at least five connections. The
Exchange understands that other
exchanges and self-regulatory
26 15
27 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4).
VerDate Mar<15>2010
17:22 Jun 29, 2012
Jkt 226001
organizations charge their members for
certain similar co-location services.28
Additionally, the Exchange believes that
the fees for LCN CSP Access and CSP
Subscribing Users are reasonable
because they directly relate to how
Users are permitted to utilize these
connections and the value to each party
to get the benefit of this service in the
data center without having to set up
individual cross connections or
experience the latency that could be
present if the service were only offered
outside the data center. The Exchange
also believes that listing the PNU Fee
within the Fee Schedule at $360 per
month, rather than as a formula, will
add clarity to the Fee Schedule.
The Exchange believes that the
services and fees proposed herein are
not unfairly discriminatory and are
equitably allocated because, in addition
to the services being completely
voluntary, they are available to all Users
on an equal basis (i.e., the same range
of products and services are available to
all Users and there is no differentiation
among Users with regard to the fees
charged for a particular product, service,
or piece of equipment). In this regard,
the proposed change would not unfairly
discriminate between or among market
participants that are otherwise capable
of satisfying any applicable co-location
fees, requirements, terms and conditions
established from time to time by the
Exchange.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the self-regulatory
organization consents, the Commission
will:
(A) by order approve or disapprove
the proposed rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
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
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–NYSEArca–2012–62 on the
subject line.
Paper Comments
28 For example, similar to cross connects between
cabinets of different Users in the data center,
NASDAQ Stock Market LLC (‘‘NASDAQ’’) Rule
7034 (Co-location Services) provides for ‘‘External
Telco/Inter-Cabinet Connectivity’’ and includes
charges corresponding thereto. See Securities
Exchange Act Release No. 64060 (March 8, 2011),
76 FR 13686 (March 14, 2011) (SR–NASDAQ–2011–
035). Additionally, similar to the proposed Expedite
Fee, NASDAQ Rule 7034 provides for a ‘‘Telco
Connectivity Expedite Fee.’’ See Securities
Exchange Act Release No. 62397 (June 28, 2010), 75
FR 38860 (July 6, 2010) (SR–NASDAQ–2010–019).
Also, similar to the proposed fees for cages,
NASDAQ Rule 7034 provides for ‘‘Cabinet Caging.’’
See Securities Exchange Act Release No. 63189
(October 27, 2010), 75 FR 67414 (November 2, 2010)
(SR–NASDAQ–2010–135). NASDAQ Rule 7034 also
provides for discounts for NASDAQ’s co-location
customers that receive more than one unit of a
particular service.
PO 00000
Frm 00101
Fmt 4703
Sfmt 4703
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–NYSEArca–2012–62. 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
E:\FR\FM\02JYN1.SGM
02JYN1
Federal Register / Vol. 77, No. 127 / Monday, July 2, 2012 / Notices
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 Streetm NE.,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office 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–
NYSEArca–2012–62 and should be
submitted on or before July 23, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.29
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–16133 Filed 6–29–12; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–67261; File No. SR–
NYSEMKT–2012–10]
Self-Regulatory Organizations; NYSE
MKT LLC; Notice of Filing of Proposed
Rule Change Amending the NYSE MKT
Price List To Provide for Additional CoLocation Services and Establish
Related Fees
June 26, 2012.
mstockstill on DSK4VPTVN1PROD with NOTICES
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’),2 and Rule 19b-4 thereunder,3
notice is hereby given that on June 13,
2012, NYSE MKT LLC (the ‘‘Exchange’’
or ‘‘NYSE MKT’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the self-regulatory
organization. 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 Substance of
the Proposed Rule Change
The Exchange proposes to amend its
Price List to provide for additional coCFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
VerDate Mar<15>2010
19:14 Jun 29, 2012
Jkt 226001
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
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 those 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
used to connect cabinets of separate
Users when, for example, a User
receives technical support, order routing
and/or market data delivery services
from another User in the data center.
Cross connects may be bundled (i.e.,
multiple cross connects within a single
sheath) such that a single sheath can
hold either one cross connect or several
cross connects in multiples of six (e.g.,
six or 12 cross connects). The Exchange
is proposing fees for bundled cross
connects 6 that correspond to the
number of cross connects in the bundle,
as follows:7
6 Cross Connects
12 Cross Connects.
18 Cross Connects.
24 Cross Connects.
$500 initial charge
$1,500 monthly
charge.
$500 initial charge
$2,500 monthly
charge.
$500 initial charge
$3,200 monthly
charge.
$500 initial charge
$3,900 monthly
charge.
plus
plus
plus
plus
1. Purpose
The Exchange proposes to amend its
Price List to provide for additional colocation services and establish related
fees.4
SECURITIES AND EXCHANGE
COMMISSION
29 17
location services and establish related
fees. The text of the proposed rule
change is available on the Exchange’s
Web site at www.nyse.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
39309
The Exchange’s initial cost for
installing bundled cross connects is
generally consistent with the cost of
Cabinet Cross Connects
A User that has more than one cabinet
within the data center is currently able
to purchase one or more fiber cross
connects between its cabinets.
Currently, a $500 initial fee and a $500
monthly fee are charged per cross
connect. The Exchange proposes that
each User be permitted to purchase
cross connects between its own
cabinets, as is currently permitted, as
well as between its cabinet(s) and the
cabinets of separate Users within the
data center.5 A cross connect would be
connect is between the cabinets of a single User or
between the cabinets of separate Users within the
data center. The Exchange further notes that only
the User requesting the cross connect would be
charged the related initial and monthly fees; the
other User would simply be required to give
permission for the cross connection. This proposed
change would require that the existing cross
connect fee in the Price List be amended to reflect
that it is no longer applicable only to cross connects
between a single User’s cabinets.
6 All multiple cross connects within the bundle
would be installed at once and only in multiples
of six, regardless of the number of cross connects
the User utilizes. This proposed change would
require that the existing cross connect fee in the
Price List be amended to reflect that it is applicable
only for a single cross connect (i.e., not for bundled
cross connects). A User could still elect to purchase
individual cross connects, but once the User
anticipates utilizing four cross connects, it would
be more economical to purchase a bundle of six
(with two unused) for a $500 initial charge plus a
$1,500 monthly charge, which would be less than
the $500 initial charge and $2,000 monthly charge
for purchasing four cross connects individually.
The additional unused cross connects in the bundle
would not result in any additional internal costs or
Exchange fees for the User.
7 The Exchange has made bundled cross connects
available for a User to connect its cabinets within
the data center beginning with the availability of colocation services in the data center in September
2010. In certain circumstances, the Exchange
charged certain Users that purchased bundled cross
connects a monthly per cross connect fee that was
equal to the monthly fees proposed herein and
therefore less than the $500 fee per cross connect
that is currently reflected within the Price List. The
Exchange has granted credits to the other Users that
purchased bundled cross connects such that all
Users have been charged the monthly fees proposed
herein.
4 See Securities Exchange Act Release No. 62961
(September 21, 2010), 75 FR 59299 (September 27,
2010) (SR–NYSEAmex–2010–80) (the ‘‘Original Colocation Approval’’). See also Securities Exchange
Act Release No. 65974 (December 15, 2011), 76 FR
79249 (December 21, 2011) (SR–NYSEAmex–2011–
81). The Exchange operates a data center in
Mahwah, New Jersey (‘‘data center’’) from which it
provides co-location services to Users. The
Exchange’s co-location services allow Users to rent
space in the data center in order that they may
locate their electronic servers in close physical
proximity to the Exchange’s trading and execution
system. See Original Co-location Approval at 59299.
For purposes of its co-location services, the term
‘‘User’’ includes (i) member organizations, as that
term is defined in Rule 2(b)—Equities; (ii)
Sponsored Participants, as that term is defined in
Rule 123B.30(a)(ii)(B)—Equities; and (iii) nonmember organization broker-dealers and vendors
that request to receive co-location services directly
from the Exchange.
5 The Exchange notes that fees for a cross connect
would be the same, regardless of whether the cross
PO 00000
Frm 00102
Fmt 4703
Sfmt 4703
E:\FR\FM\02JYN1.SGM
02JYN1
]]>Agencies
[Federal Register Volume 77, Number 127 (Monday, July 2, 2012)]
[Notices]
[Pages 39305-39309]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-16133]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67263; File No. SR-NYSEArca-2012-62]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change Amending the NYSE Arca Equities Schedule of
Fees and Charges for Exchange Services To Provide for Additional Co-
location Services and Establish Related fees
June 26, 2012.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on June 13, 2012, NYSE Arca, Inc. (the ``Exchange'' or
``NYSE Arca'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II
and III below, which Items have been prepared by the self-regulatory
organization. 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\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the NYSE Arca Equities Schedule of
Fees and Charges for Exchange Services (``Fee Schedule'') to provide
for additional co-location services and establish related fees. The
text of the proposed rule change is available on the Exchange's Web
site at www.nyse.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 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 those 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 parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Fee Schedule to provide for
additional co-location services and establish related fees.\4\
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 63275 (November 8,
2010), 75 FR 70048 (November 16, 2010) (SR-NYSEArca-2010-100) (the
``Original Co-location Notice''). See also Securities Exchange Act
Release No. 65970 (December 15, 2011), 76 FR 79242 (December 21,
2011) (SR-NYSEArca-2011-74). The Exchange operates a data center in
Mahwah, New Jersey (``data center'') from which it provides co-
location services to Users. The Exchange's co-location services
allow Users to rent space in the data center in order that they may
locate their electronic servers in close physical proximity to the
Exchange's trading and execution system. See Original Co-location
Notice at 70049. For purposes of its co-location services, the term
``User'' includes (i) ETP Holders and Sponsored Participants who are
authorized to obtain access to the NYSE Arca Marketplace pursuant to
Rule 7.29 (see Rule 1.1(yy)); and (ii) non-ETP Holder broker-dealers
and vendors that request to receive co-location services directly
from the Exchange.
---------------------------------------------------------------------------
Cabinet Cross Connects
A User that has more than one cabinet within the data center is
currently able to purchase one or more fiber cross connects between its
cabinets. Currently, a $500 initial fee and a $500 monthly fee are
charged per cross connect. The Exchange proposes that each User be
permitted to purchase cross connects between its own cabinets, as is
currently permitted, as well as between its cabinet(s) and the cabinets
of separate Users within the data center.\5\ A cross connect would be
used to connect cabinets of separate Users when, for example, a User
receives technical support, order routing and/or market data delivery
services from another User in the data center.
---------------------------------------------------------------------------
\5\ The Exchange notes that fees for a cross connect would be
the same, regardless of whether the cross connect is between the
cabinets of a single User or between the cabinets of separate Users
within the data center. The Exchange further notes that only the
User requesting the cross connect would be charged the related
initial and monthly fees; the other User would simply be required to
give permission for the cross connection. This proposed change would
require that the existing cross connect fee in the Fee Schedule be
amended to reflect that it is no longer applicable only to cross
connects between a single User's cabinets.
---------------------------------------------------------------------------
Cross connects may be bundled (i.e., multiple cross connects within
a single sheath) such that a single sheath can hold either one cross
connect or several cross connects in multiples of six (e.g., six or 12
cross connects). The Exchange is proposing fees for bundled cross
connects \6\ that correspond to the number of cross connects in the
bundle, as follows: \7\
---------------------------------------------------------------------------
\6\ All multiple cross connects within the bundle would be
installed at once and only in multiples of six, regardless of the
number of cross connects the User utilizes. This proposed change
would require that the existing cross connect fee in the Fee
Schedule be amended to reflect that it is applicable only for a
single cross connect (i.e., not for bundled cross connects). A User
could still elect to purchase individual cross connects, but once
the User anticipates utilizing four cross connects, it would be more
economical to purchase a bundle of six (with two unused) for a $500
initial charge plus a $1,500 monthly charge, which would be less
than the $500 initial charge and $2,000 monthly charge for
purchasing four cross connects individually. The additional unused
cross connects in the bundle would not result in any additional
internal costs or Exchange fees for the User.
\7\ The Exchange has made bundled cross connects available for a
User to connect its cabinets within the data center beginning with
the availability of co-location services in the data center in
September 2010. In certain circumstances, the Exchange charged
certain Users that purchased bundled cross connects a monthly per
cross connect fee that was equal to the monthly fees proposed herein
and therefore less than the $500 fee per cross connect that is
currently reflected within the Fee Schedule. The Exchange has
granted credits to the other Users that purchased bundled cross
connects such that all Users have been charged the monthly fees
proposed herein.
6 Cross Connects...................... $500 initial charge plus $1,500 monthly charge.
12 Cross Connects..................... $500 initial charge plus $2,500 monthly charge.
18 Cross Connects..................... $500 initial charge plus $3,200 monthly charge.
24 Cross Connects..................... $500 initial charge plus $3,900 monthly charge.
[[Page 39306]]
The Exchange's initial cost for installing bundled cross connects
is generally consistent with the cost of installing a single cross
connect. The Exchange therefore proposes that the same $500 initial fee
apply to install bundled cross connects as is currently applicable to a
single cross connect. However, the Exchange's cost for ongoing
maintenance of cross connects decreases on a per cross connect basis as
the number of cross connects within a sheath increases. Accordingly,
the monthly fees proposed for bundled cross connects would likewise
decrease on a per cross connect basis as the number of cross connects
within a sheath increases, as reflected in the amended Fee Schedule.\8\
---------------------------------------------------------------------------
\8\ For example, a single cross connect currently has a
corresponding monthly fee of $500. However, as proposed, a bundle of
6 cross connects would have a monthly fee of $1,500 ($250 monthly
fee per cross connect), a bundle of 12 cross connects would have a
monthly fee of $2,500 ($208 monthly fee per cross connect), a bundle
of 18 cross connects would have a monthly fee of $3,200 ($178
monthly fee per cross connect), and a bundle of 24 cross connects
would have a monthly fee of $3,900 ($162 monthly fee per cross
connect). Because the cross connects are bundled, the proposed
change would not apply to incremental cross connects.
---------------------------------------------------------------------------
10 Gb LCN Connections
Users are currently able to purchase access to the Exchange's
Liquidity Center Network (``LCN''), a local area network that is
available in the data center. LCN access is available in either one or
10 gigabit (``Gb'') capacities, for which Users incur an initial and
monthly fee per connection. The Exchange proposes that a User that
purchases five 10 Gb LCN connections would only be charged the initial
fee for a sixth 10 Gb LCN connection and would not be charged the
monthly fee that would otherwise be applicable.\9\ This would apply to
a User that purchases six 10 Gb LCN connections at one time as well as
to a User that purchases six 10 Gb LCN connections at separate
times.\10\
---------------------------------------------------------------------------
\9\ Beginning with the availability of co-location services in
the data center in September 2010, the Exchange charged certain
Users that purchased a sixth LCN connection as proposed herein,
i.e., the Exchange charged the initial fee but not the monthly fee.
The Exchange has granted credits to those other Users that purchased
a sixth LCN connection and were charged the monthly fee for such
connection.
\10\ A User would be charged an initial and monthly fee
according to the Fee Schedule for any additional 10 Gb LCN
connections it purchases (e.g., a seventh or eighth 10 Gb LCN
connection). Additionally, a User that cancels a 10 Gb LCN
connection, such that the User is no longer paying for at least five
10 Gb LCN connections, would thereafter be charged the monthly fee
for what had been its free sixth 10 Gb LCN connection.
---------------------------------------------------------------------------
LCN CSP Connections
A User is currently able to act as a content service provider (a
``CSP'' User) and deliver services to another User in the data center
(a ``Subscribing'' User). These services could include, for example,
order routing/brokerage services and/or market data delivery services.
Many of these services can be provided via direct cross connect between
the User providing a service and the User receiving it. However, using
direct cross connects would require the User providing the service to
have a direct cross connect with each User receiving it and would
require the User providing the service to send the same data multiple
times, i.e., once per receiving User.
LCN CSP connections address this issue by allowing the CSP User to
send data to, and communicate with, all the properly authorized
Subscribing Users at once, via a specific, dedicated LCN connection (an
``LCN CSP'' connection); \11\ the Subscribing User must also have an
LCN connection in order to communicate with the LCN CSP.\12\ The LCN
CSP connection used by the CSP User may only be used for providing
services to, and communicating with, Subscribing Users and is separate
and distinct from any LCN connection used by the CSP User to access the
Exchange.\13\ Conversely, the Subscribing User receives the services
via its standard LCN connection \14\ and is charged an initial and
monthly fee that reflects the benefit of receiving services from the
CSP User in the data center in this manner. Accordingly, the Exchange
proposes the following fees for LCN CSP connections and Subscribing
Users: \15\
---------------------------------------------------------------------------
\11\ A single LCN CSP connection may be used to provide services
to more than one Subscribing User. A CSP User's LCN CSP connection
may be used to receive data or communications from a Subscribing
User.
\12\ The Subscribing User's LCN connection is the standard LCN
connection that is described in the preceding section.
\13\ Thus, in order to access the Exchange, the CSP User is
required to maintain an existing standard LCN connection. As above,
the current fees in the Fee Schedule are applicable to such
connection, e.g., a $10,000 initial fee and $12,000 monthly fee for
a 10 Gb LCN connection.
\14\ The current fees in the Fee Schedule are applicable, e.g.,
a $10,000 initial fee and $12,000 monthly fee for a 10 Gb LCN
connection. If the Subscribing User does not have an existing LCN
connection, it is required to purchase one in order to receive
services from a CSP User over the LCN.
\15\ The Exchange has made LCN CSP connections available to
Users beginning with the availability of co-location services in the
data center in September 2010. During this time, three Users have
purchased LCN CSP connections and have been charged the related LCN
CSP fee proposed herein. Also, one User has become a Subscribing
User and has been charged the CSP subscriber fee proposed herein.
------------------------------------------------------------------------
------------------------------------------------------------------------
LCN CSP Access................ 1 Gb Circuit..... $6,000 per connection
initial charge plus
$500 monthly per
connection.
LCN CSP Access................ 10 Gb Circuit.... $10,000 per
connection initial
charge plus $5,000
monthly per
connection.
CSP Subscriber................ ................. $950 per LCN CSP
initial charge plus
$300 monthly per LCN
CSP.
------------------------------------------------------------------------
The Exchange notes that the proposed initial fee for an LCN CSP
connection is the same as the existing fee for a standard LCN
connection, both for the 1 Gb and 10 Gb capacities. This is because an
LCN CSP connection is physically the same as a standard LCN connection.
However, the proposed monthly fee for an LCN CSP connection is less
than the existing monthly fee for a standard LCN connection, both for
the 1 Gb and 10 Gb capacities. This is because an LCN CSP connection is
functionally limited as compared to a standard LCN connection--as noted
above, an LCN CSP connection may only be used for providing services to
Subscribing Users and may not be used for accessing the Exchange or for
other purposes.
Cages
A User is currently able to purchase a cage to house its cabinets
within the data center.\16\ A cage would typically be purchased by a
User that has several cabinets within the data center and that wishes
to enhance privacy around its cabinets, e.g., so that other Users
cannot see what type of hardware is being utilized. The Exchange
charges fees for cages based on the size of the cage, which directly
corresponds to the number of cabinets housed therein. The Exchange is
proposing the following fees for cages: \17\
---------------------------------------------------------------------------
\16\ The Exchange has made cages available to Users beginning
with the availability of co-location services in the data center in
September 2010.
\17\ The Exchange currently charges cage fees to Users at the
levels proposed herein.
[[Page 39307]]
1-14 Cabinets....................... $5,000 initial charge plus $2,700 monthly charge.
15-28 Cabinets...................... $10,000 initial charge plus $4,100 monthly charge.
29+ Cabinets........................ $15,000 initial charge plus $5,500 monthly charge.
The Exchange's initial cost to construct a cage is directly related
to the size of the cage, which is determined by the number of the
User's cabinets that are to be housed therein. The initial fees
proposed for a cage would accordingly increase on a proportional basis
as the number of cabinets housed in the cage increases, as reflected in
the amended Fee Schedule.\18\ The monthly fee would reflect the
opportunity cost to the Exchange of giving up floor space in the data
center for the cage's physical footprint and the value of such space to
the User; such floor space otherwise could be utilized for additional
cabinets for the same or other Users or other Exchange purposes.
Accordingly, the monthly fees proposed for a cage would increase on a
marginal basis as the number of cabinets housed in the cage increases,
as reflected in the amended Fee Schedule.\19\
---------------------------------------------------------------------------
\18\ For example, a cage housing between one and 14 cabinets
would have a corresponding initial fee of $5,000. However, a cage
housing between 15 and 28 cabinets--as many as twice the number of
cabinets--would have a corresponding initial fee of $10,000.
Similarly, a cage housing 29 or more cabinets--possibly as many as
three times the number of cabinets as the lowest tier--would have a
corresponding initial fee of $15,000.
\19\ For example, a cage housing between one and 14 cabinets
would have a corresponding monthly fee of $2,700 ($193 per cabinet
when housing 14 cabinets). However, a cage housing between 15 and 28
cabinets--as many as twice the number of cabinets--would have a
corresponding monthly fee of $4,100 (an additional monthly cost that
is slightly greater than 150% of the lowest tier and $146 per
cabinet when housing 28 cabinets). Similarly, a cage housing 29 or
more cabinets--which could be as many as three times the number of
cabinets as the lowest tier--would have a corresponding monthly fee
of $5,500 (an additional monthly cost that is slightly greater than
200% of the lowest tier and $131 per cabinet when housing, for
example, 42 cabinets). As the cage size increases, its physical
footprint on the data center floor correspondingly increases.
---------------------------------------------------------------------------
Change Fee
A User is currently able to arrange for the Exchange to
reconfigure, modify, or otherwise change a co-location service that the
Exchange has already established and completed for the User. In this
regard, the Exchange notes that the Fee Schedule includes several co-
location services for which an initial fee is applicable in addition to
an ongoing monthly fee.\20\ These initial fees are related to the
Exchange's initial cost of establishing or installing the particular
co-location service for the User. The Exchange proposes to charge a
User a fee of $950 per order if the User requests a change to one or
more existing co-location services that the Exchange has already
established or completed for the User (``Change Fee'').\21\ For
example, the initial installation of an LCN connection would include
establishing and configuring market data services requested by the
User, which would be covered by the initial install fee. However, if a
User requests that the Exchange establish and configure additional
market data services for its LCN connection, the User would be charged
a one-time Change Fee of $950 for that request. If a User orders two or
more services at one time (for example, through submitting an order
form requesting multiple services) the User would be charged a one-time
Change Fee of $950, which would cover the multiple services.
---------------------------------------------------------------------------
\20\ For example, the initial 1 Gb LCN Access fee is $6,000 per
connection and the ongoing monthly fee is $5,000.
\21\ The Exchange has uniformly charged this $950 Change Fee to
Users beginning with the availability of co-location services at the
data center in September 2010.
---------------------------------------------------------------------------
Expedite Fee
A User is currently able to request that the Exchange expedite the
completion of co-location services purchased or ordered by the User.
The Exchange proposes to charge Users $4,000 for expedited completion
of co-location services (``Expedite Fee'').\22\ At the time that
services are ordered, the Exchange informs the User of the expected
completion date; if a User wishes to obtain the services on an
expedited basis, the Exchange would inform the User of the earlier
completion date that could be expected with payment of the Expedite
Fee. The time saved would vary depending on the type(s) of service(s)
being ordered, but the Expedite Fee would always be a flat $4,000,
allowing the User to determine if the expected time savings warrants
payment of the fee. The Expedite Fee relates to the Exchange's cost of
expediting the services. For example, the expedited service may require
that work be completed on the weekend or after normal business hours,
thereby resulting in the Exchange providing overtime compensation to
data center staff.\23\
---------------------------------------------------------------------------
\22\ The Exchange has made the option of expedited services
available to Users beginning with the availability of co-location
services in the data center in September 2010. Three Users have
requested expedited services and have been charged the $4,000
Expedite Fee, beginning in April 2011.
\23\ Offering expedited services would not have any impact on
the normal delivery time for all other pending co-location work
orders. In other words, Users that do not elect to pay the Expedite
Fee would not be disadvantaged by those who do. The Exchange does
not guarantee that any work is completed by a specific date under
either normal or expedited delivery time, but rather does all work
on a best efforts basis.
---------------------------------------------------------------------------
Power Not Utilized Fee
A User is currently able to obtain space in the data center for
future use of currently available, unused cabinet space in proximity to
the User's existing cabinet space--i.e., space that the User does not
anticipate using until some point in the future and therefore is
reserved but not currently utilized. The applicable fee for this space
in which power is not utilized (``PNU Fee'') was described within the
Original Co-location Notice.\24\ Such description provided that the PNU
Fee would be 40% of the applicable monthly per kilowatt (``kW'') fee.
The Exchange now proposes to provide for the PNU Fee within the Fee
Schedule as $360 per month, which is 40% of the lowest per kW monthly
cabinet fee that is specified in the Fee Schedule.
---------------------------------------------------------------------------
\24\ See Original Co-location Notice at 70049, note 7. Except
for the PNU Fee, Users are not charged for PNU cabinets until power
is activated, at which point the fees applicable to other cabinets
are charged (i.e., the $5,000 initial fee per cabinet and the per
kilowatt fee).
---------------------------------------------------------------------------
General
As is the case with all Exchange co-location arrangements, neither
a User nor any of the User's customers would be permitted to submit
orders directly to the Exchange unless such User or customer is an ETP
Holder, a Sponsored Participant or an agent thereof (e.g., a service
bureau providing order entry services). Additionally, as is the case
with existing co-location services, use of the co-location services
proposed herein would be completely voluntary and would be available to
all Users on a non-discriminatory basis.\25\
---------------------------------------------------------------------------
\25\ As is currently the case, Users that receive co-location
services from the Exchange will not receive any means of access to
the Exchange's trading and execution systems that is separate from,
or superior to, that of other Users. In this regard, all orders sent
to the Exchange enter the Exchange's trading and execution systems
through the same order gateway, regardless of whether the sender is
co-located in the data center or not. In addition, co-located Users
do not receive any market data or data service product that is not
available to all Users, although Users that receive co-location
services normally would expect reduced latencies in sending orders
to, and receiving market data from, the Exchange.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that the proposed change is consistent with
[[Page 39308]]
Section 6(b) of the Securities Exchange Act of 1934 (the ``Act''),\26\
in general, and furthers the objectives of Section 6(b)(4) of the
Act,\27\ in particular, because it provides for the equitable
allocation of reasonable dues, fees, and other charges among its
members, issuers and other persons using its facilities.
---------------------------------------------------------------------------
\26\ 15 U.S.C. 78f(b).
\27\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
The Exchange proposes to offer the additional services described
herein as a convenience to Users, but in doing so will incur certain
costs, including costs related to the data center facility, hardware
and equipment and costs related to personnel required for initial
installation and ongoing monitoring, support and maintenance of such
services. As with fees for existing co-location services, the fees
proposed herein would be charged only to those Users that voluntarily
select the related services, which would be available to all Users.
Accordingly, the Exchange believes that the proposed change is
equitable because it will result in fees being charged only to Users
that voluntarily select to receive the corresponding services and
because those services will be available to all Users.
The Exchange believes that the proposed fees are reasonable
because, for example, where the Exchange anticipates incurring a lower
marginal monthly cost per cross connect or with respect to cages, the
Exchange has proposed to apply a corresponding lower marginal monthly
fee. Additionally, the Exchange believes that the Change Fee is
reasonable because it would permit the Exchange to offset the expense
of completing changes to co-location services that the Exchange has
previously already established/completed for a User. Furthermore, the
Exchange believes that the Expedite Fee is reasonable because it would
permit the Exchange to charge a User for the expedited completion of
the delivery of a co-location service, which could require that the
Exchange expend increased resources (e.g., overtime labor costs) above
what would otherwise be required for non-expedited service. Users that
do not elect expedited service would not be disadvantaged by the
offering of that service as it would not affect normal delivery times
for services. The Exchange also believes that the proposed change
regarding the sixth 10 Gb LCN connection is reasonable because it would
incentivize Users to request at least five connections. The Exchange
understands that other exchanges and self-regulatory organizations
charge their members for certain similar co-location services.\28\
Additionally, the Exchange believes that the fees for LCN CSP Access
and CSP Subscribing Users are reasonable because they directly relate
to how Users are permitted to utilize these connections and the value
to each party to get the benefit of this service in the data center
without having to set up individual cross connections or experience the
latency that could be present if the service were only offered outside
the data center. The Exchange also believes that listing the PNU Fee
within the Fee Schedule at $360 per month, rather than as a formula,
will add clarity to the Fee Schedule.
---------------------------------------------------------------------------
\28\ For example, similar to cross connects between cabinets of
different Users in the data center, NASDAQ Stock Market LLC
(``NASDAQ'') Rule 7034 (Co-location Services) provides for
``External Telco/Inter-Cabinet Connectivity'' and includes charges
corresponding thereto. See Securities Exchange Act Release No. 64060
(March 8, 2011), 76 FR 13686 (March 14, 2011) (SR-NASDAQ-2011-035).
Additionally, similar to the proposed Expedite Fee, NASDAQ Rule 7034
provides for a ``Telco Connectivity Expedite Fee.'' See Securities
Exchange Act Release No. 62397 (June 28, 2010), 75 FR 38860 (July 6,
2010) (SR-NASDAQ-2010-019). Also, similar to the proposed fees for
cages, NASDAQ Rule 7034 provides for ``Cabinet Caging.'' See
Securities Exchange Act Release No. 63189 (October 27, 2010), 75 FR
67414 (November 2, 2010) (SR-NASDAQ-2010-135). NASDAQ Rule 7034 also
provides for discounts for NASDAQ's co-location customers that
receive more than one unit of a particular service.
---------------------------------------------------------------------------
The Exchange believes that the services and fees proposed herein
are not unfairly discriminatory and are equitably allocated because, in
addition to the services being completely voluntary, they are available
to all Users on an equal basis (i.e., the same range of products and
services are available to all Users and there is no differentiation
among Users with regard to the fees charged for a particular product,
service, or piece of equipment). In this regard, the proposed change
would not unfairly discriminate between or among market participants
that are otherwise capable of satisfying any applicable co-location
fees, requirements, terms and conditions established from time to time
by the Exchange.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) by order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
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-NYSEArca-2012-62 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEArca-2012-62. 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
[[Page 39309]]
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 Streetm NE., Washington, DC 20549, on official
business days between the hours of 10 a.m. and 3 p.m. Copies of the
filing also will be available for inspection and copying at the
principal office 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-NYSEArca-2012-62 and should be submitted on or before
July 23, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\29\
---------------------------------------------------------------------------
\29\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-16133 Filed 6-29-12; 8:45 am]
BILLING CODE 8011-01-P
