Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Provide That the Co-Location Services Offered by the Exchange Include 40 Gigabit Internet Protocol Network Connections in the Exchange's Data Center and To Amend the Exchange's Price List To Implement Fees for the New Services, 70039-70042 [2015-28689]

Download as PDF Federal Register / Vol. 80, No. 218 / Thursday, November 12, 2015 / Notices information that you wish to make available publicly. All submissions should refer to File Number SR–Phlx–2015–90 and should be submitted on or before December 3, 2015. Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 Robert W. Errett, Deputy Secretary. IV. Solicitation of Comments [FR Doc. 2015–28698 Filed 11–10–15; 8:45 am] 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– Phlx–2015–90 on the subject line. mstockstill on DSK4VPTVN1PROD with NOTICES Paper Comments • Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–Phlx–2015–90. 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 VerDate Sep<11>2014 18:15 Nov 10, 2015 Jkt 238001 BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–76372; File No. SR– NYSEARCA–2015–105] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Provide That the CoLocation Services Offered by the Exchange Include 40 Gigabit Internet Protocol Network Connections in the Exchange’s Data Center and To Amend the Exchange’s Price List To Implement Fees for the New Services November 5, 2015. 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 October 28, 2015, 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 selfregulatory 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 the Substance of the Proposed Rule Change The Exchange proposes to change its rules to provide that the co-location services offered by the Exchange include 40 gigabit (‘‘Gb’’) Internet protocol (‘‘IP’’) network connections in the Exchange’s data center. The Exchange proposes to amend the NYSE Arca Options Fee Schedule (the ‘‘Options Fee Schedule’’) and, through its wholly owned subsidiary NYSE Arca Equities, Inc. (‘‘NYSE Arca Equities’’), the NYSE Arca Equities Schedule of Fees and Charges for Exchange Services 22 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. 1 15 PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 70039 (the ‘‘Equities Fee Schedule’’ and, together with the Options Fee Schedule, the ‘‘Fee Schedules’’) to implement fees for the new service. 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 change its rules to provide that the co-location 4 services offered by the Exchange include 40 Gb IP network connections in the Exchange’s data center. The Exchange proposes to amend the Fee Schedules to implement fees for the new service effective. Currently, the Exchange’s co-location services offer Users 5 access to two local area networks available in the data center: The IP network and the Liquidity Center Network (‘‘LCN’’).6 IP 4 The Exchange initially filed rule changes relating to its co-location services with the Securities and Exchange Commission (‘‘Commission’’) in 2010. See Securities Exchange Act Release No. 63275 (November 8, 2010), 75 FR 70048 (November 16, 2010) (SR–NYSEArca–2010– 100) (the ‘‘Original Co-location Filing’’). The Exchange operates a data center in Mahwah, New Jersey (the ‘‘data center’’) from which it provides co-location services to Users. 5 For purposes of the Exchange’s co-location services, a ‘‘User’’ means any market participant that requests to receive co-location services directly from the Exchange. See Securities Exchange Act Release No. 76010 (September 29, 2015), 80 FR 60197 (October 5, 2015) (SR–NYSEArca–2015–82). As specified in the Fee Schedules, a User that incurs co-location fees for a particular co-location service pursuant thereto would not be subject to colocation fees for the same co-location service charged by the Exchange’s affiliates New York Stock Exchange LLC and NYSE MKT LLC. See Securities Exchange Act Release No. 70173 (August 13, 2013), 78 FR 50459 (August 19, 2013) (SR– NYSEArca–2013–80). 6 See Original Co-location Filing, at 70049 and Securities Exchange Act Release No. 74219 Continued E:\FR\FM\12NON1.SGM 12NON1 70040 Federal Register / Vol. 80, No. 218 / Thursday, November 12, 2015 / Notices network access is currently available in 1 and 10 Gb capacities. The Exchange also offers 1, 10, and 40 Gb LCN network access and LCN 10 Gb LX network access.7 The IP network and LCN provide Users with access to the Exchange’s trading and execution systems and to the Exchange’s proprietary market data products. The IP network also provides Users with access to away market data products. There is greater latency in the transmission of data between Users and the Exchange for the IP Network than for the LCN. The IP network provides Users that do not need the lower latency of the LCN with a less costly data center network option. Having another data center network also provides Users with the option to create redundancy in their infrastructure. The proposed rule change would allow Users to purchase 40 Gb IP network connections in the data center. The offering of a 40 Gb IP network connection in addition to the existing 1 and 10 Gb IP network connections would provide a User more choices regarding the bandwidth of its IP network connections, allowing it to select the option that best corresponds to its needs and is most cost-effective for that User. The 40 Gb IP network connection is expected to be available no later than April 15, 2016. The Exchange will announce the date that the 40 Gb IP network connection will be available through a customer notice. The Exchange proposes to establish the following fees for 40 Gb IP network connections: Type of service Description Amount of charge IP Network Access .......................... 40 Gb circuit .................................. $10,000 per connection initial charge plus $17,000 monthly per connection. mstockstill on DSK4VPTVN1PROD with NOTICES By comparison, the 1 Gb IP network connection costs $2,500 per connection initial charge plus $2,500 monthly per connection and the 10 Gb IP network connection costs $10,000 per connection initial charge plus $10,000 monthly per connection. The 40 Gb LCN circuit costs $15,000 per connection initial charge plus $20,000 monthly per connection. As is the case with all Exchange colocation arrangements, (i) 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 a member organization, a Sponsored Participant or an agent thereof (e.g., a service bureau providing order entry services); (ii) use of the colocation services proposed herein would be completely voluntary and available to all Users on a non-discriminatory basis; 8 and (iii) a User would only incur one charge for the particular co-location service described herein, regardless of whether the User connects only to the Exchange or to the Exchange and one or both of its affiliates.9 The proposed change is not otherwise intended to address any other issues relating to co-location services and/or related fees, and the Exchange is not aware of any problems that Users would have in complying with the proposed change. (February 6, 2015), 80 FR 7899 (February 12, 2015) (SR–NYSEArca–2015–03) (notice of filing and immediate effectiveness of proposed rule change to include IP network connections). 7 See Original Co-location Filing, at 70050 and Securities Exchange Act Release No. 70887 (November 15, 2013), 78 FR 69897 (November 21, 2013) (SR–NYSEArca–2013–123) (notice of filing and immediate effectiveness of proposed rule change to include LCN 10 Gb LX connection). VerDate Sep<11>2014 18:15 Nov 10, 2015 Jkt 238001 The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,10 in general, and furthers the objectives of Sections 6(b)(5) of the Act,11 in particular, because it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to, and perfect the mechanisms of, a free and open market and a national market system and, in general, to protect investors and the public interest and because it is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The Exchange believes that the proposed 40 Gb IP network connection is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers because it would make a service available to Users that require the increased IP network bandwidth, but Users that do not require the increased bandwidth could continue to request an existing lowerbandwidth IP network connection. Users that require lower latency levels may utilize LCN connections. The Exchange believes that the proposed service would remove impediments to, and perfect the mechanisms of, a free and open market and a national market system and, in general, protect investors and the public interest because the offering of a 40 Gb IP network connection in addition to the existing 1 and 10 Gb IP network connections would provide a User more choices regarding the bandwidth of its IP network connections, allowing it to select the option that best corresponds to its needs and is most cost-effective for that User. The Exchange also believes that the proposed rule change is consistent with Section 6(b)(4) of the Act,12 in particular, because it provides for the equitable allocation of reasonable dues, fees, and other charges among its member organizations, issuers and other persons using its facilities and does not unfairly discriminate between customers, issuers, brokers or dealers. Overall, the Exchange believes that the proposed fees for the proposed 40 Gb IP network connection are reasonable because the Exchange proposes to offer the service 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, 8 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. 9 See SR–NYSEArca–2013–80, supra note 5 at 50459. The Exchange’s affiliates have also submitted the same proposed rule change to propose the changes described herein. See SR– NYSE–2015–54 and SR–NYSEMKT–2015–90. 10 15 U.S.C. 78f(b). 11 15 U.S.C. 78f(b)(5). 12 15 U.S.C. 78f(b)(4). 2. Statutory Basis PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 E:\FR\FM\12NON1.SGM 12NON1 mstockstill on DSK4VPTVN1PROD with NOTICES Federal Register / Vol. 80, No. 218 / Thursday, November 12, 2015 / Notices support and maintenance of such service. The Exchange further believes that the proposed change is reasonable because the proposed fees directly relate to the level of services provided by the Exchange and, in turn, received by the User. In this regard, the fees proposed for 40 Gb IP network connections are higher than, for example, the fees for 10 Gb IP network connections because costs for the initial purchase and ongoing maintenance of the 40 IP network connections are generally higher than those of the lowerbandwidth connections. However, these costs are not anticipated to be four times higher than the existing 10 Gb IP network connection. The Exchange therefore notes that while the proposed bandwidth of the 40 Gb IP network connection is four times greater than the existing 10 Gb IP connection, the proposed fees for the 40 Gb IP network connection are significantly less than four times the fees for the 10 Gb IP connection. Specifically, the proposed initial charge of $10,000 is the same as the initial charge for the existing 10 Gb IP network connection and the proposed monthly recurring charge of $17,000 is less than double the $10,000 monthly charge for the existing 10 Gb IP network connection. The Exchange believes that this supports a finding that the proposed pricing is reasonable because the Exchange anticipates realizing efficiencies as customers adopt higherbandwidth connections, and, in turn, reflecting such efficiencies in the pricing for such connections. As with fees for existing co-location services, the fees proposed herein would be charged only to those Users that voluntarily select the 40 Gb IP network connection, which would be available to all Users. Accordingly, the Exchange believes that the proposed change is equitable and not unfairly discriminatory 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. Furthermore, 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 products and services are available to all Users). All Users that voluntarily select the proposed 40 Gb IP network service will be charged the same amount for the service. For the reasons above, the proposed change would not unfairly discriminate VerDate Sep<11>2014 18:15 Nov 10, 2015 Jkt 238001 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. Finally, the Exchange believes that it is subject to significant competitive forces, as described below in the Exchange’s statement regarding the burden on competition. For these reasons, the Exchange believes that the proposal is consistent with the Act. B. Self-Regulatory Organization's Statement on Burden on Competition In accordance with Section 6(b)(8) of the Act,13 the Exchange believes that the proposed rule change will not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act because, in addition to the proposed service being completely voluntary, it will be available to all Users on an equal basis (i.e. the same products and services are available to all Users). The Exchange believes that allowing Users to purchase 40 Gb IP network connections will not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act because such service will be available to Users that require the increased IP network bandwidth, but Users that do not require the increased bandwidth could continue to request an existing lowerbandwidth IP network connection. The offering of a 40 Gb IP network connection in addition to the existing 1 and 10 Gb IP network connections would provide a User more choices regarding the bandwidth of its IP network connections, allowing it to select the option that best corresponds to its needs and is most cost-effective for that User. In addition, the Exchange believes that the proposed change will enhance competition, in that The NASDAQ Stock Market LLC (‘‘NASDAQ’’) similarly makes a 40 Gb fiber connection available to users of its co-location facilities.14 Finally, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive. In such an environment, the Exchange must continually review, and consider adjusting, its services and related fees and credits to remain competitive with other exchanges. For the reasons described above, the Exchange believes that the proposed rule change reflects this competitive environment. 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 The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 15 and Rule 19b–4(f)(6) thereunder.16 Because the proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative prior to 30 days from the date on which it was filed, 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 and Rule 19b–4(f)(6)(iii) thereunder. A proposed rule change filed under Rule 19b–4(f)(6) 17 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b4(f)(6)(iii),18 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. 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) 19 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 15 15 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). 17 17 CFR 240.19b–4(f)(6). 18 17 CFR 240.19b–4(f)(6)(iii). 19 15 U.S.C. 78s(b)(2)(B). 16 17 13 15 U.S.C. 78f(b)(8). NASDAQ Rule 7034 for a description of NASDAQ’s co-location services. 14 See PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 70041 E:\FR\FM\12NON1.SGM 12NON1 70042 Federal Register / Vol. 80, No. 218 / Thursday, November 12, 2015 / Notices change is consistent with the Act. Comments may be submitted by any of the following methods: SECURITIES AND EXCHANGE COMMISSION and C below, of the most significant aspects of such statements. Electronic Comments [Release No. 34–76360; File No. SR–FINRA– 2015–046] A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change • 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 No. SR– NYSEARCA–2015–105 on the subject line. Paper Comments mstockstill on DSK4VPTVN1PROD with NOTICES • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File No. SR–NYSEARCA–2015–105. 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 such 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 No. SR– NYSEARCA–2015–105, and should be submitted on or before December 3, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.20 Robert W. Errett, Deputy Secretary. [FR Doc. 2015–28689 Filed 11–10–15; 8:45 am] BILLING CODE 8011–01–P Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Mandatory Participation in Business Continuity and Disaster Recovery Testing Under Regulation SCI November 5, 2015. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on October 30, 2015, Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by FINRA. FINRA has designated the proposed rule change as constituting a ‘‘non-controversial’’ rule change under paragraph (f)(6) of Rule 19b–4 under the Act,3 which renders the proposal effective upon receipt of this filing by the Commission. 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 FINRA is proposing to adopt FINRA Rule 4380 related to mandatory participation in business continuity and disaster recovery (‘‘BC/DR’’) testing under Regulation Systems Compliance and Integrity (‘‘Regulation SCI’’). The text of the proposed rule change is available on FINRA’s Web site at https://www.finra.org, at the principal office of FINRA 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, FINRA 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. FINRA has prepared summaries, set forth in sections A, B, 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 17 CFR 240.19b–4(f)(6). 2 17 20 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 18:15 Nov 10, 2015 Jkt 238001 PO 00000 Frm 00108 Fmt 4703 Sfmt 4703 1. Purpose Regulation SCI was adopted by the Commission on November 19, 2014, with the objective of strengthening the technology infrastructure of the U.S. securities markets.4 The regulation applies to ‘‘SCI entities,’’ which includes FINRA, the national securities exchanges and equity alternative trading systems (‘‘ATSs’’) that meet specified volume thresholds.5 One topic of several Regulation SCI rule requirements is BC/DR testing. Rule 1004 of SEC Regulation SCI requires FINRA, as an SCI entity, to do the following with respect to its BC/DR plan: (1) Establish standards to designate the members that FINRA reasonably determines are, taken as a whole, the minimum necessary for the maintenance of fair and orderly markets in the event of the activation of its BC/ DR plan; (2) designate members pursuant to its established standards and require them to participate in scheduled functional and performance testing of the operation of FINRA’s BC/ DR plan, in the manner and frequency specified by FINRA, provided the frequency is no less than once every 12 months; and (3) coordinate the testing of FINRA’s BC/DR plan on an industry- or sector-wide basis with other SCI entities. Consistent with Regulation SCI, FINRA proposes to adopt Rule 4380 to establish authority to designate members for mandatory participation in its BC/DR testing. As noted in proposed Rule 4380(a), FINRA will designate members according to established criteria that are designed to ensure participation by those members that FINRA reasonably determines are, taken as a whole, the minimum necessary for the maintenance of fair and orderly markets in the event of the activation of its BC/DR plan. As further noted in proposed Rule 4380(a), FINRA’s criteria will consider volume of activity on a FINRA market system over a specified period of time.6 FINRA will communicate to members its criteria for designation under this Rule, and any 4 See Securities Exchange Act Release No. 73639 (November 19, 2014), 79 FR 72252, 72254 (December 5, 2014) (‘‘SCI Adopting Release’’). 5 Rule 1000 of SEC Regulation SCI. 6 Volume-based criteria may contemplate quoting, trading, or reportable order events, depending on the type of activity conducted on a FINRA system. E:\FR\FM\12NON1.SGM 12NON1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 80, Number 218 (Thursday, November 12, 2015)]
[Notices]
[Pages 70039-70042]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-28689]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76372; File No. SR-NYSEARCA-2015-105]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Provide That the
Co-Location Services Offered by the Exchange Include 40 Gigabit
Internet Protocol Network Connections in the Exchange's Data Center and
To Amend the Exchange's Price List To Implement Fees for the New
Services

November 5, 2015.
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 October 28, 2015, 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 the
Substance of the Proposed Rule Change

The Exchange proposes to change its rules to provide that the co-
location services offered by the Exchange include 40 gigabit (``Gb'')
Internet protocol (``IP'') network connections in the Exchange's data
center. The Exchange proposes to amend the NYSE Arca Options Fee
Schedule (the ``Options Fee Schedule'') and, through its wholly owned
subsidiary NYSE Arca Equities, Inc. (``NYSE Arca Equities''), the NYSE
Arca Equities Schedule of Fees and Charges for Exchange Services (the
``Equities Fee Schedule'' and, together with the Options Fee Schedule,
the ``Fee Schedules'') to implement fees for the new service. 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 change its rules to provide that the co-
location \4\ services offered by the Exchange include 40 Gb IP network
connections in the Exchange's data center. The Exchange proposes to
amend the Fee Schedules to implement fees for the new service
effective.
---------------------------------------------------------------------------

\4\ The Exchange initially filed rule changes relating to its
co-location services with the Securities and Exchange Commission
(``Commission'') in 2010. See Securities Exchange Act Release No.
63275 (November 8, 2010), 75 FR 70048 (November 16, 2010) (SR-
NYSEArca-2010-100) (the ``Original Co-location Filing''). The
Exchange operates a data center in Mahwah, New Jersey (the ``data
center'') from which it provides co-location services to Users.
---------------------------------------------------------------------------

Currently, the Exchange's co-location services offer Users \5\
access to two local area networks available in the data center: The IP
network and the Liquidity Center Network (``LCN'').\6\ IP

[[Page 70040]]

network access is currently available in 1 and 10 Gb capacities. The
Exchange also offers 1, 10, and 40 Gb LCN network access and LCN 10 Gb
LX network access.\7\
---------------------------------------------------------------------------

\5\ For purposes of the Exchange's co-location services, a
``User'' means any market participant that requests to receive co-
location services directly from the Exchange. See Securities
Exchange Act Release No. 76010 (September 29, 2015), 80 FR 60197
(October 5, 2015) (SR-NYSEArca-2015-82). As specified in the Fee
Schedules, a User that incurs co-location fees for a particular co-
location service pursuant thereto would not be subject to co-
location fees for the same co-location service charged by the
Exchange's affiliates New York Stock Exchange LLC and NYSE MKT LLC.
See Securities Exchange Act Release No. 70173 (August 13, 2013), 78
FR 50459 (August 19, 2013) (SR-NYSEArca-2013-80).
\6\ See Original Co-location Filing, at 70049 and Securities
Exchange Act Release No. 74219 (February 6, 2015), 80 FR 7899
(February 12, 2015) (SR-NYSEArca-2015-03) (notice of filing and
immediate effectiveness of proposed rule change to include IP
network connections).
\7\ See Original Co-location Filing, at 70050 and Securities
Exchange Act Release No. 70887 (November 15, 2013), 78 FR 69897
(November 21, 2013) (SR-NYSEArca-2013-123) (notice of filing and
immediate effectiveness of proposed rule change to include LCN 10 Gb
LX connection).
---------------------------------------------------------------------------

The IP network and LCN provide Users with access to the Exchange's
trading and execution systems and to the Exchange's proprietary market
data products. The IP network also provides Users with access to away
market data products. There is greater latency in the transmission of
data between Users and the Exchange for the IP Network than for the
LCN. The IP network provides Users that do not need the lower latency
of the LCN with a less costly data center network option. Having
another data center network also provides Users with the option to
create redundancy in their infrastructure.
The proposed rule change would allow Users to purchase 40 Gb IP
network connections in the data center. The offering of a 40 Gb IP
network connection in addition to the existing 1 and 10 Gb IP network
connections would provide a User more choices regarding the bandwidth
of its IP network connections, allowing it to select the option that
best corresponds to its needs and is most cost-effective for that User.
The 40 Gb IP network connection is expected to be available no
later than April 15, 2016. The Exchange will announce the date that the
40 Gb IP network connection will be available through a customer
notice.
The Exchange proposes to establish the following fees for 40 Gb IP
network connections:

------------------------------------------------------------------------
Type of service Description Amount of charge
------------------------------------------------------------------------
IP Network Access............. 40 Gb circuit.... $10,000 per
connection initial
charge plus $17,000
monthly per
connection.
------------------------------------------------------------------------

By comparison, the 1 Gb IP network connection costs $2,500 per
connection initial charge plus $2,500 monthly per connection and the 10
Gb IP network connection costs $10,000 per connection initial charge
plus $10,000 monthly per connection. The 40 Gb LCN circuit costs
$15,000 per connection initial charge plus $20,000 monthly per
connection.
As is the case with all Exchange co-location arrangements, (i)
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
a member organization, a Sponsored Participant or an agent thereof
(e.g., a service bureau providing order entry services); (ii) use of
the co-location services proposed herein would be completely voluntary
and available to all Users on a non-discriminatory basis; \8\ and (iii)
a User would only incur one charge for the particular co-location
service described herein, regardless of whether the User connects only
to the Exchange or to the Exchange and one or both of its
affiliates.\9\
---------------------------------------------------------------------------

\8\ 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.
\9\ See SR-NYSEArca-2013-80, supra note 5 at 50459. The
Exchange's affiliates have also submitted the same proposed rule
change to propose the changes described herein. See SR-NYSE-2015-54
and SR-NYSEMKT-2015-90.
---------------------------------------------------------------------------

The proposed change is not otherwise intended to address any other
issues relating to co-location services and/or related fees, and the
Exchange is not aware of any problems that Users would have in
complying with the proposed change.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\10\ in general, and furthers the
objectives of Sections 6(b)(5) of the Act,\11\ in particular, because
it is designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to, and
perfect the mechanisms of, a free and open market and a national market
system and, in general, to protect investors and the public interest
and because it is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

The Exchange believes that the proposed 40 Gb IP network connection
is not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers because it would make a service available
to Users that require the increased IP network bandwidth, but Users
that do not require the increased bandwidth could continue to request
an existing lower-bandwidth IP network connection. Users that require
lower latency levels may utilize LCN connections.
The Exchange believes that the proposed service would remove
impediments to, and perfect the mechanisms of, a free and open market
and a national market system and, in general, protect investors and the
public interest because the offering of a 40 Gb IP network connection
in addition to the existing 1 and 10 Gb IP network connections would
provide a User more choices regarding the bandwidth of its IP network
connections, allowing it to select the option that best corresponds to
its needs and is most cost-effective for that User.
The Exchange also believes that the proposed rule change is
consistent with Section 6(b)(4) of the Act,\12\ in particular, because
it provides for the equitable allocation of reasonable dues, fees, and
other charges among its member organizations, issuers and other persons
using its facilities and does not unfairly discriminate between
customers, issuers, brokers or dealers.
---------------------------------------------------------------------------

\12\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

Overall, the Exchange believes that the proposed fees for the
proposed 40 Gb IP network connection are reasonable because the
Exchange proposes to offer the service 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,

[[Page 70041]]

support and maintenance of such service.
The Exchange further believes that the proposed change is
reasonable because the proposed fees directly relate to the level of
services provided by the Exchange and, in turn, received by the User.
In this regard, the fees proposed for 40 Gb IP network connections are
higher than, for example, the fees for 10 Gb IP network connections
because costs for the initial purchase and ongoing maintenance of the
40 IP network connections are generally higher than those of the lower-
bandwidth connections. However, these costs are not anticipated to be
four times higher than the existing 10 Gb IP network connection. The
Exchange therefore notes that while the proposed bandwidth of the 40 Gb
IP network connection is four times greater than the existing 10 Gb IP
connection, the proposed fees for the 40 Gb IP network connection are
significantly less than four times the fees for the 10 Gb IP
connection. Specifically, the proposed initial charge of $10,000 is the
same as the initial charge for the existing 10 Gb IP network connection
and the proposed monthly recurring charge of $17,000 is less than
double the $10,000 monthly charge for the existing 10 Gb IP network
connection. The Exchange believes that this supports a finding that the
proposed pricing is reasonable because the Exchange anticipates
realizing efficiencies as customers adopt higher-bandwidth connections,
and, in turn, reflecting such efficiencies in the pricing for such
connections.
As with fees for existing co-location services, the fees proposed
herein would be charged only to those Users that voluntarily select the
40 Gb IP network connection, which would be available to all Users.
Accordingly, the Exchange believes that the proposed change is
equitable and not unfairly discriminatory 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. Furthermore, 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 products and services are available to all Users). All Users that
voluntarily select the proposed 40 Gb IP network service will be
charged the same amount for the service.
For the reasons above, 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.
Finally, the Exchange believes that it is subject to significant
competitive forces, as described below in the Exchange's statement
regarding the burden on competition.
For these reasons, the Exchange believes that the proposal is
consistent with the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

In accordance with Section 6(b)(8) of the Act,\13\ the Exchange
believes that the proposed rule change will not impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act because, in addition to the proposed service being
completely voluntary, it will be available to all Users on an equal
basis (i.e. the same products and services are available to all Users).
---------------------------------------------------------------------------

\13\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

The Exchange believes that allowing Users to purchase 40 Gb IP
network connections will not impose any burden on competition that is
not necessary or appropriate in furtherance of the purposes of the Act
because such service will be available to Users that require the
increased IP network bandwidth, but Users that do not require the
increased bandwidth could continue to request an existing lower-
bandwidth IP network connection. The offering of a 40 Gb IP network
connection in addition to the existing 1 and 10 Gb IP network
connections would provide a User more choices regarding the bandwidth
of its IP network connections, allowing it to select the option that
best corresponds to its needs and is most cost-effective for that User.
In addition, the Exchange believes that the proposed change will
enhance competition, in that The NASDAQ Stock Market LLC (``NASDAQ'')
similarly makes a 40 Gb fiber connection available to users of its co-
location facilities.\14\
---------------------------------------------------------------------------

\14\ See NASDAQ Rule 7034 for a description of NASDAQ's co-
location services.
---------------------------------------------------------------------------

Finally, the Exchange notes that it operates in a highly
competitive market in which market participants can readily favor
competing venues if they deem fee levels at a particular venue to be
excessive. In such an environment, the Exchange must continually
review, and consider adjusting, its services and related fees and
credits to remain competitive with other exchanges. For the reasons
described above, the Exchange believes that the proposed rule change
reflects this competitive environment.

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

The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \15\ and Rule 19b-4(f)(6) thereunder.\16\
Because the proposed rule change does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, 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 and Rule 19b-
4(f)(6)(iii) thereunder.
---------------------------------------------------------------------------

\15\ 15 U.S.C. 78s(b)(3)(A)(iii).
\16\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b4(f)(6)(iii),\18\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest.
---------------------------------------------------------------------------

\17\ 17 CFR 240.19b-4(f)(6).
\18\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

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) \19\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------

\19\ 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

[[Page 70042]]

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 No. SR-NYSEARCA-2015-105 on the subject line.

Paper Comments

Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File No. SR-NYSEARCA-2015-105. 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 such 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 No. SR-NYSEARCA-2015-105, and should
be submitted on or before December 3, 2015.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
---------------------------------------------------------------------------

\20\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-28689 Filed 11-10-15; 8:45 am]
BILLING CODE 8011-01-P

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.