Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Rent Cabinet Space to Telecommunication Vendors in the Exchange's Backup Datacenter, 79051-79053 [2013-30963]
Download as PDF
Federal Register / Vol. 78, No. 249 / Friday, December 27, 2013 / Notices
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Section, 100 F Street NE.,
Washington, DC 20549–1090. Copies of
the filing will also be available for
inspection and copying at the NYSE’s
principal office and on its Internet Web
site at www.nyse.com. 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–
NYSEMKT–2013–104 and should be
submitted on or before January 17, 2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–30940 Filed 12–26–13; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–71160; File No. SR–ISE–
2013–60]
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change To Rent Cabinet Space to
Telecommunication Vendors in the
Exchange’s Backup Datacenter
December 20, 2013.
tkelley on DSK3SPTVN1PROD with NOTICES
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on December
13, 2013, the International Securities
Exchange, LLC (the ‘‘Exchange’’ or the
‘‘ISE’’) filed with the Securities and
Exchange Commission the proposed
rule change, as described in Items I and
II 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 ISE proposes to provide cabinet
space in its backup datacenter to
telecommunication vendors to replace
substantially similar services currently
provided by the Exchange’s third party
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
VerDate Mar<15>2010
23:48 Dec 26, 2013
Jkt 232001
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 these statements may be examined at
the places specified in Item IV below.
The self-regulatory organization has
prepared summaries, set forth in
sections A, B and C below, of the most
significant aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
SECURITIES AND EXCHANGE
COMMISSION
17 17
datacenter operator in connection with
the move of this datacenter to an ISE
facility, and to adopt a corresponding
disaster recovery network fee. The text
of the proposed rule change is available
on the Exchange’s Web site (https://
www.ise.com), at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
1. Purpose
ISE is in the process of moving its
backup datacenter from the current
third-party site in New Jersey (‘‘Telx’’)
to the Exchange’s headquarters in New
York, and, in connection with this
move, is proposing to allow
telecommunication vendors to rent
cabinet space in the ISE facility, and to
adopt a corresponding disaster recovery
network fee.
Currently, market participants,
including members and non-members,
may rent cabinet space in the backup
datacenter run by Telx in order to
maintain connectivity to the Exchange
in the event that the ISE’s primary
datacenter is not operational. As the
Exchange is moving its hardware to an
ISE-run facility, the Exchange proposes
to offer this service itself. In particular,
the ISE proposes to facilitate
connectivity to the backup datacenter by
providing telecommunication vendors
with cabinet space,3 in either half
cabinet or full cabinet options, along
with power and cooling in a secure,
controlled environment.4 The proposed
services are substantially the same as
3 Cabinet space will be provided in industry
standard 19″ open air racks, which will be secured
in a caged meet-me-room that is controlled by 24×7
access based on a registration process for access.
4 This service is being provided as a means of
establishing connectivity to the backup datacenter.
Renting cabinet space does not entitle
telecommunications vendors to receive or
redistribute market data.
PO 00000
Frm 00242
Fmt 4703
Sfmt 4703
79051
services currently provided through
Telx to market participants that wish to
connect to the ISE’s backup datacenter.
The Exchange believes that it is
important that it continue to provide
these services so that market
participants may connect to the backup
datacenter in the event that the ISE’s
primary datacenter is not operational.
Like the ISE’s third party datacenter
operator, the Exchange intends to charge
a fee to telecommunication vendors that
wish to rent cabinet space in the ISE’s
backup datacenter when it is moved to
the new facility. Operating the backup
datacenter takes a significant amount of
ISE resources, and the proposed
‘‘disaster recovery network fee’’ will
allow the Exchange to recoup associated
expenses. As explained above, the
proposed fee will entitle vendors to
obtain cabinet space in the datacenter,
along with power and cooling. The fees
assessed will reflect the amount of
cabinet space used by each vendor, and
will be $2,300 per month for a halfcabinet and $2,800 per month for a full
cabinet. The Exchange will not charge
any installation or other fees to
telecommunication vendors for
connecting to the backup datacenter.
As proposed, firms that currently
connect to the backup datacenter at Telx
will be able to continue to do so through
telecommunication vendors who have
entered into a contractual agreement
with the Exchange to provide these
services, and who will be responsible
for redistributing connectivity to market
participants that desire access. This
would include members that currently
connect to Telx in order to maintain
connectivity in the event that the
Exchange must operate using its backup
datacenter.5 It would also include nonmembers (e.g., extranet providers) that
currently connect to Telx in order to
redistribute that connectivity to others.6
For operational reasons, market
participants will not be permitted to
connect directly to the backup
datacenter at the ISE facility, and must
go through a telecommunication vendor.
The Exchange believes that this
provides a more efficient means of
managing connectivity to the backup
datacenter as the ISE would not need to
set up and maintain many separate
connections from market participants.
The Exchange expects that initially
four telecommunication vendors will
provide connectivity to the backup
5 Members are not required to establish
connectivity to the Exchange’s backup datacenter,
which is purely voluntary.
6 An ‘‘extranet provider’’ is a technology provider
that connects with ISE systems and in turn provides
such connectivity to market participants that do not
connect directly with the Exchange.
E:\FR\FM\27DEN1.SGM
27DEN1
79052
Federal Register / Vol. 78, No. 249 / Friday, December 27, 2013 / Notices
tkelley on DSK3SPTVN1PROD with NOTICES
datacenter to market participants. Each
of these vendors currently rents cabinet
space in the Telx datacenter, and will
continue to provide market participants
with access to the backup datacenter
when it is moved to the ISE facility. The
ISE is not affiliated with any of these
telecommunication vendors, and has no
financial interest in, and will not be
involved in billing or collecting, fees
that the vendors may charge their
customers to connect to the backup
datacenter.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the provisions of Section 6 of the
Securities Exchange Act of 1934 (the
‘‘Act’’),7 in general, and with Section
6(b)(5) of the Act,8 in particular, in that
it is designed to promote just and
equitable principles of trade, to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest. The Exchange also
believes that the proposed rule change
furthers the objectives of Section 6(b)(4)
of the Act,9 in that it provides for the
equitable allocation of reasonable dues,
fees and other charges among Exchange
members and other persons using its
facilities.
The Exchange believes that it is
necessary in the public interest that it
facilitate connectivity to the backup
datacenter in order to minimize any
potential disruption and market impact
that may otherwise occur if the ISE’s
primary datacenter is not operational.
The proposed services will replace
services currently provided by Telx in
connection with the move of the
Exchange’s backup datacenter to an ISEoperated facility. The Exchange believes
that it is important to continue to
provide the proposed services, which
will provide a robust, efficient, and, as
discussed below, cost effective means of
facilitating access to the ISE’s backup
datacenter.
Furthermore, the Exchange believes
that the proposed disaster recovery
network fee, which will replace fees
currently charged by Telx, is fair and
equitable as it compares favorably with
the fees charged by other options
exchanges that rent cabinet space in
their datacenters. For example,
NASDAQ OMX PHLX, LLC (‘‘PHLX’’)
charges members that rent space in its
datacenter a fee of $3,000 per month for
a half cabinet and between $4,000 per
7 15
U.S.C. 78f.
U.S.C. 78f(b)(5).
9 15 U.S.C. 78f(b)(4).
8 15
VerDate Mar<15>2010
23:48 Dec 26, 2013
Jkt 232001
month to $13,000 per month for a full
cabinet depending on the options that
members of that exchange specify.10
Moreover, telecommunication vendors
are expected to recoup the cost of the
proposed fee, plus a premium, by
redistributing connectivity to market
participants. Similarly, the Exchange
expects that telecommunication vendors
will spread the cost of this service
among their clients, resulting in a lower
overall fee to market participants that
establish connectivity through such
vendors. Since all market participants
must connect through a
telecommunications vendor rather than
establishing a direct connection to the
backup datacenter, the Exchange
believes that its proposed fee will
ultimately be spread among many
parties, resulting in a significantly lower
cost of connecting to the disaster
recovery network. The Exchange also
believes the proposed disaster recovery
network fee is equitably allocated in
that all telecommunication vendors will
be charged the same amount to maintain
a connection. Moreover, the Exchange
believes the proposed fee is not unfairly
discriminatory in that there is no
differentiation among vendors with
regard to the fees charged for
connectivity to the Exchange’s backup
datacenter.
Exchange’s third party datacenter
operator for a fee that will now be
replaced by an ISE fee. The Exchange
notes that while, for operational
reasons, it is only renting cabinet space
to telecommunications vendors, this
will have no impact on competition
because these vendors are tasked with
redistributing this connectivity to
market participants as they currently do
today. The Exchange believes that
selecting multiple telecommunications
vendors to provide connectivity to the
backup datacenter will allow market
participants to also benefit from
competition between such vendors. The
Exchange will not discriminate in
contracting with telecommunication
vendors to connect to the backup
datacenter, and all contracted vendors
will be charged the same fees and
granted the same level of access to the
backup datacenter at the ISE facility.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
In accordance with Section 6(b)(8) of
the Act,11 the Exchange believes that the
proposed rule change will not impose
any burden on intermarket or
intramarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange believes that the proposed
rule change will enhance intermarket
competition by enabling the Exchange
to continue to provide an important
competitive service to market
participants. The Exchange believes that
it is important that market participants
are able to connect to the backup
datacenter in the event that the ISE’s
primary datacenter is not operational,
and is proposing to offer services that
would allow market participants to
establish such connectivity. Facilitating
this connectivity will not have any
impact on intramarket competition as
the services are substantially the same
as services currently provided by the
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (1) Significantly affect
the protection of investors or the public
interest; (2) impose any significant
burden on competition; and (3) by its
terms does not become operative for 30
days after the date of this filing, or such
shorter time as the Commission may
designate if consistent with the
protection of investors and the public
interest, the proposed rule change has
become effective pursuant to Section
19(b)(3)(A) of the Act 12 and Rule 19b–
4(f)(6) thereunder.13
A proposed rule change filed under
Rule 19b–4(f)(6) 14 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),15 the
Commission may designate a shorter
10 See PHLX Pricing Schedule, Co-Location
Services, Cabinets; Securities Exchange Act Release
No. 62395 (June 28, 2010), 75 FR 38584 (July 2,
2010) (PHLX–2010–18) (order approving initial
cabinet fees). In addition to the monthly fee PHLX
also charges an installation fee that ranges from
$3,500 to $7,000 depending on the type of cabinet.
11 15 U.S.C. 78f(b)(8).
PO 00000
Frm 00243
Fmt 4703
Sfmt 4703
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has not solicited, and
does not intend to solicit, comments on
this proposed rule change. The
Exchange has not received any
unsolicited written comments from
members or other interested parties.
12 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
provide the Commission with written notice of its
intent to file the proposed rule change, along with
a brief description and text of the proposed rule
change, at least five business days prior to the date
of filing of the proposed rule change, or such
shorter time as designated by the Commission. The
Exchange has met this requirement.
14 17 CFR 240.19b–4(f)(6).
15 17 CFR 240.19b–4(f)(6)(iii).
13 17
E:\FR\FM\27DEN1.SGM
27DEN1
Federal Register / Vol. 78, No. 249 / Friday, December 27, 2013 / Notices
tkelley on DSK3SPTVN1PROD with NOTICES
time if such action is consistent with the
protection of investors and the public
interest. The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposal may
become operative immediately upon
filing noting that it is in the public
interest that the Exchange facilitate
connectivity to the backup datacenter in
order to minimize any potential
disruption and market impact that may
otherwise occur if the Exchange’s
primary datacenter is not operational.
The Exchange further represents that the
waiver is necessary to permit the
Exchange to continue to facilitate access
to its backup datacenter when it is
moved over to an ISE-operated facility.
The Exchange stated that it is vital that
market participants be able to access the
ISE through the Exchange’s backup
datacenter should the need arise.
Moreover, the Exchange believes that its
proposal, which will allow market
participants to access the backup
datacenter through one of multiple
telecommunication vendors, provides a
robust, efficient, and cost effective
means of facilitating this access. For the
above reasons, the Commission believes
that waiving the 30 day operative delay
is consistent with the protection of
investors and the public interest in that
the Exchange may immediately provide
connectivity to the backup datacenter to
minimize any disruption to the market
in case ISE’s primary datacenter is not
operational. Accordingly, the
Commission hereby grants the
Exchange’s request and designates the
proposal operative upon filing.16
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
under Section 19(b)(2)(B) 17 of the Act to
determine whether the proposed rule
change should be approved or
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.
16 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
17 15 U.S.C. 78s(b)(2)(B).
VerDate Mar<15>2010
23:48 Dec 26, 2013
Jkt 232001
Comments may be submitted by any of
the following methods:
79053
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
• 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–ISE–2013–60 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–ISE–2013–60. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
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–ISE–
2013–60 and should be submitted on or
before January 17, 2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Kevin M. O’Neill,
Deputy Secretary.
[Release No. 34–71165; File No. SR–
NYSEMKT–2013–102]
Self-Regulatory Organizations; NYSE
MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Offer Risk
Management Tools Designed To Allow
Member Organizations To Monitor and
Address Exposure to Risk
December 20, 2013.
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 December
12, 2013, 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 and II 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 offer risk
management tools designed to allow
equity member organizations to monitor
and address exposure to risk. 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.
[FR Doc. 2013–30963 Filed 12–26–13; 8:45 am]
BILLING CODE 8011–01–P
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
18 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00244
Fmt 4703
Sfmt 4703
E:\FR\FM\27DEN1.SGM
27DEN1
Agencies
[Federal Register Volume 78, Number 249 (Friday, December 27, 2013)]
[Notices]
[Pages 79051-79053]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-30963]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71160; File No. SR-ISE-2013-60]
Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change To Rent Cabinet Space to Telecommunication Vendors in the
Exchange's Backup Datacenter
December 20, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on December 13, 2013, the International Securities Exchange, LLC
(the ``Exchange'' or the ``ISE'') filed with the Securities and
Exchange Commission the proposed rule change, as described in Items I
and II 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\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The ISE proposes to provide cabinet space in its backup datacenter
to telecommunication vendors to replace substantially similar services
currently provided by the Exchange's third party datacenter operator in
connection with the move of this datacenter to an ISE facility, and to
adopt a corresponding disaster recovery network fee. The text of the
proposed rule change is available on the Exchange's Web site (https://www.ise.com), at the principal office of the Exchange, and at the
Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of these statements may be examined at
the places specified in Item IV below. The self-regulatory organization
has prepared summaries, set forth in sections A, B and C below, of the
most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
ISE is in the process of moving its backup datacenter from the
current third-party site in New Jersey (``Telx'') to the Exchange's
headquarters in New York, and, in connection with this move, is
proposing to allow telecommunication vendors to rent cabinet space in
the ISE facility, and to adopt a corresponding disaster recovery
network fee.
Currently, market participants, including members and non-members,
may rent cabinet space in the backup datacenter run by Telx in order to
maintain connectivity to the Exchange in the event that the ISE's
primary datacenter is not operational. As the Exchange is moving its
hardware to an ISE-run facility, the Exchange proposes to offer this
service itself. In particular, the ISE proposes to facilitate
connectivity to the backup datacenter by providing telecommunication
vendors with cabinet space,\3\ in either half cabinet or full cabinet
options, along with power and cooling in a secure, controlled
environment.\4\ The proposed services are substantially the same as
services currently provided through Telx to market participants that
wish to connect to the ISE's backup datacenter. The Exchange believes
that it is important that it continue to provide these services so that
market participants may connect to the backup datacenter in the event
that the ISE's primary datacenter is not operational.
---------------------------------------------------------------------------
\3\ Cabinet space will be provided in industry standard 19''
open air racks, which will be secured in a caged meet-me-room that
is controlled by 24x7 access based on a registration process for
access.
\4\ This service is being provided as a means of establishing
connectivity to the backup datacenter. Renting cabinet space does
not entitle telecommunications vendors to receive or redistribute
market data.
---------------------------------------------------------------------------
Like the ISE's third party datacenter operator, the Exchange
intends to charge a fee to telecommunication vendors that wish to rent
cabinet space in the ISE's backup datacenter when it is moved to the
new facility. Operating the backup datacenter takes a significant
amount of ISE resources, and the proposed ``disaster recovery network
fee'' will allow the Exchange to recoup associated expenses. As
explained above, the proposed fee will entitle vendors to obtain
cabinet space in the datacenter, along with power and cooling. The fees
assessed will reflect the amount of cabinet space used by each vendor,
and will be $2,300 per month for a half-cabinet and $2,800 per month
for a full cabinet. The Exchange will not charge any installation or
other fees to telecommunication vendors for connecting to the backup
datacenter.
As proposed, firms that currently connect to the backup datacenter
at Telx will be able to continue to do so through telecommunication
vendors who have entered into a contractual agreement with the Exchange
to provide these services, and who will be responsible for
redistributing connectivity to market participants that desire access.
This would include members that currently connect to Telx in order to
maintain connectivity in the event that the Exchange must operate using
its backup datacenter.\5\ It would also include non-members (e.g.,
extranet providers) that currently connect to Telx in order to
redistribute that connectivity to others.\6\ For operational reasons,
market participants will not be permitted to connect directly to the
backup datacenter at the ISE facility, and must go through a
telecommunication vendor. The Exchange believes that this provides a
more efficient means of managing connectivity to the backup datacenter
as the ISE would not need to set up and maintain many separate
connections from market participants.
---------------------------------------------------------------------------
\5\ Members are not required to establish connectivity to the
Exchange's backup datacenter, which is purely voluntary.
\6\ An ``extranet provider'' is a technology provider that
connects with ISE systems and in turn provides such connectivity to
market participants that do not connect directly with the Exchange.
---------------------------------------------------------------------------
The Exchange expects that initially four telecommunication vendors
will provide connectivity to the backup
[[Page 79052]]
datacenter to market participants. Each of these vendors currently
rents cabinet space in the Telx datacenter, and will continue to
provide market participants with access to the backup datacenter when
it is moved to the ISE facility. The ISE is not affiliated with any of
these telecommunication vendors, and has no financial interest in, and
will not be involved in billing or collecting, fees that the vendors
may charge their customers to connect to the backup datacenter.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Securities Exchange Act of 1934
(the ``Act''),\7\ in general, and with Section 6(b)(5) of the Act,\8\
in particular, in that it is designed to promote just and equitable
principles of trade, to remove impediments to and perfect the mechanism
of a free and open market and a national market system, and, in
general, to protect investors and the public interest. The Exchange
also believes that the proposed rule change furthers the objectives of
Section 6(b)(4) of the Act,\9\ in that it provides for the equitable
allocation of reasonable dues, fees and other charges among Exchange
members and other persons using its facilities.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78f.
\8\ 15 U.S.C. 78f(b)(5).
\9\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
The Exchange believes that it is necessary in the public interest
that it facilitate connectivity to the backup datacenter in order to
minimize any potential disruption and market impact that may otherwise
occur if the ISE's primary datacenter is not operational. The proposed
services will replace services currently provided by Telx in connection
with the move of the Exchange's backup datacenter to an ISE-operated
facility. The Exchange believes that it is important to continue to
provide the proposed services, which will provide a robust, efficient,
and, as discussed below, cost effective means of facilitating access to
the ISE's backup datacenter.
Furthermore, the Exchange believes that the proposed disaster
recovery network fee, which will replace fees currently charged by
Telx, is fair and equitable as it compares favorably with the fees
charged by other options exchanges that rent cabinet space in their
datacenters. For example, NASDAQ OMX PHLX, LLC (``PHLX'') charges
members that rent space in its datacenter a fee of $3,000 per month for
a half cabinet and between $4,000 per month to $13,000 per month for a
full cabinet depending on the options that members of that exchange
specify.\10\ Moreover, telecommunication vendors are expected to recoup
the cost of the proposed fee, plus a premium, by redistributing
connectivity to market participants. Similarly, the Exchange expects
that telecommunication vendors will spread the cost of this service
among their clients, resulting in a lower overall fee to market
participants that establish connectivity through such vendors. Since
all market participants must connect through a telecommunications
vendor rather than establishing a direct connection to the backup
datacenter, the Exchange believes that its proposed fee will ultimately
be spread among many parties, resulting in a significantly lower cost
of connecting to the disaster recovery network. The Exchange also
believes the proposed disaster recovery network fee is equitably
allocated in that all telecommunication vendors will be charged the
same amount to maintain a connection. Moreover, the Exchange believes
the proposed fee is not unfairly discriminatory in that there is no
differentiation among vendors with regard to the fees charged for
connectivity to the Exchange's backup datacenter.
---------------------------------------------------------------------------
\10\ See PHLX Pricing Schedule, Co-Location Services, Cabinets;
Securities Exchange Act Release No. 62395 (June 28, 2010), 75 FR
38584 (July 2, 2010) (PHLX-2010-18) (order approving initial cabinet
fees). In addition to the monthly fee PHLX also charges an
installation fee that ranges from $3,500 to $7,000 depending on the
type of cabinet.
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\11\ the Exchange
believes that the proposed rule change will not impose any burden on
intermarket or intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
believes that the proposed rule change will enhance intermarket
competition by enabling the Exchange to continue to provide an
important competitive service to market participants. The Exchange
believes that it is important that market participants are able to
connect to the backup datacenter in the event that the ISE's primary
datacenter is not operational, and is proposing to offer services that
would allow market participants to establish such connectivity.
Facilitating this connectivity will not have any impact on intramarket
competition as the services are substantially the same as services
currently provided by the Exchange's third party datacenter operator
for a fee that will now be replaced by an ISE fee. The Exchange notes
that while, for operational reasons, it is only renting cabinet space
to telecommunications vendors, this will have no impact on competition
because these vendors are tasked with redistributing this connectivity
to market participants as they currently do today. The Exchange
believes that selecting multiple telecommunications vendors to provide
connectivity to the backup datacenter will allow market participants to
also benefit from competition between such vendors. The Exchange will
not discriminate in contracting with telecommunication vendors to
connect to the backup datacenter, and all contracted vendors will be
charged the same fees and granted the same level of access to the
backup datacenter at the ISE facility.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any unsolicited written comments from members or other interested
parties.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (1)
Significantly affect the protection of investors or the public
interest; (2) impose any significant burden on competition; and (3) by
its terms does not become operative for 30 days after the date of this
filing, or such shorter time as the Commission may designate if
consistent with the protection of investors and the public interest,
the proposed rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \12\ and Rule 19b-4(f)(6) thereunder.\13\
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to provide the Commission
with written notice of its intent to file the proposed rule change,
along with a brief description and text of the proposed rule change,
at least five business days prior to the date of filing of the
proposed rule change, or such shorter time as designated by the
Commission. The Exchange has met this requirement.
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\15\ the Commission
may designate a shorter
[[Page 79053]]
time if such action is consistent with the protection of investors and
the public interest. The Exchange has asked the Commission to waive the
30-day operative delay so that the proposal may become operative
immediately upon filing noting that it is in the public interest that
the Exchange facilitate connectivity to the backup datacenter in order
to minimize any potential disruption and market impact that may
otherwise occur if the Exchange's primary datacenter is not
operational. The Exchange further represents that the waiver is
necessary to permit the Exchange to continue to facilitate access to
its backup datacenter when it is moved over to an ISE-operated
facility. The Exchange stated that it is vital that market participants
be able to access the ISE through the Exchange's backup datacenter
should the need arise. Moreover, the Exchange believes that its
proposal, which will allow market participants to access the backup
datacenter through one of multiple telecommunication vendors, provides
a robust, efficient, and cost effective means of facilitating this
access. For the above reasons, the Commission believes that waiving the
30 day operative delay is consistent with the protection of investors
and the public interest in that the Exchange may immediately provide
connectivity to the backup datacenter to minimize any disruption to the
market in case ISE's primary datacenter is not operational.
Accordingly, the Commission hereby grants the Exchange's request and
designates the proposal operative upon filing.\16\
---------------------------------------------------------------------------
\14\ 17 CFR 240.19b-4(f)(6).
\15\ 17 CFR 240.19b-4(f)(6)(iii).
\16\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \17\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------
\17\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
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-ISE-2013-60 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-ISE-2013-60. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal 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-ISE-2013-60 and should be
submitted on or before January 17, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
---------------------------------------------------------------------------
\18\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-30963 Filed 12-26-13; 8:45 am]
BILLING CODE 8011-01-P