Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change to Its Rules To Provide That the Co-Location Services Offered by the Exchange Include Three Time Feeds and Four Bundles of Co-Location Services, 78269-78275 [2015-31576]
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Federal Register / Vol. 80, No. 241 / Wednesday, December 16, 2015 / Notices
(ii) as to which the Exchange consents,
the Commission shall: (a) By order
approve or disapprove such proposed
rule change, or (b) institute proceedings
to determine whether the proposed rule
change should be disapproved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.28
Brent J. Fields,
Secretary.
IV. Solicitation of Comments
BILLING CODE 8011–01–P
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 No. SR–
NYSEMKT–2015–89 on the subject line.
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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–NYSEMKT–2015–89. 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–NYSEMKT–
2015–89, and should be submitted on or
before January 6, 2016.
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[FR Doc. 2015–31577 Filed 12–15–15; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–76612; File No. SR–NYSE–
2015–53]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing of Proposed Rule Change to Its
Rules To Provide That the Co-Location
Services Offered by the Exchange
Include Three Time Feeds and Four
Bundles of Co-Location Services
December 10, 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
November 27, 2015, New York Stock
Exchange LLC (‘‘NYSE’’ or the
‘‘Exchange’’) 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 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 three time feeds and four
bundles of co-location services (‘‘Partial
Cabinet Solution bundles’’). The
Exchange proposes to amend the
Exchange’s Price List (‘‘Price List’’) to
reflect the time feeds and the Partial
Cabinet Solution bundles.
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
28 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
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78269
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 three time feeds and four new
Partial Cabinet Solution bundles. In
addition, the Exchange proposes to
amend the Price List to reflect the time
feeds and the Partial Cabinet Solution
bundles. The Exchange proposes to offer
the Partial Cabinet Solution bundles
beginning January 1, 2016.
Time Feeds
The proposed rule change would
provide that Users 5 may purchase
access to three time feeds, each of which
provides a feed with the current time of
day using one of three different time
protocols: GPS Time Source, the
Network Time Protocol feed (‘‘NTP’’),
and Precision Timing Protocol (‘‘PTP’’).6
Time feeds are used to receive time
and to synchronize clocks between
computer systems or throughout a
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. 62960 (September 21, 2010), 75 FR
59310 (September 27, 2010) (SR–NYSE–2010–56)
(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, a ‘‘Hosting User’’ means a User
that hosts a Hosted Customer in the User’s colocation space, and a ‘‘Hosted Customer’’ means a
customer of a Hosting User that is hosted in a
Hosting User’s co-location space. See Securities
Exchange Act Release No. 76008 (September 29,
2015), 80 FR 60190 (October 5, 2015) (SR–NYSE–
2015–40). As specified in the Price List, 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 NYSE MKT
LLC and NYSE Arca, Inc. See Securities Exchange
Act Release No. 70206 (August 15, 2013), 78 FR
51765 (August 21, 2013) (SR–NYSE–2013–59).
6 The time feeds are unrelated to trading on the
Exchange or the Exchange’s data feeds. A User does
not require connectivity to a time feed to trade on
the Exchange, and usage of a time feed has no effect
on a User’s orders going to, or trade data coming
from, the Exchange.
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Federal Register / Vol. 80, No. 241 / Wednesday, December 16, 2015 / Notices
computer network. A User may opt to
connect to a time feed for various
reasons, including record keeping or
measuring response times.7 The
proposed connectivity to time feeds
would provide Users a convenient way
to access time protocols.
The proposed change includes three
time feeds. Global Positioning System
(‘‘GPS’’) is a time and location system
maintained by the United States
government. The Exchange accesses the
GPS Time Source feed through
dedicated equipment and subscribing
Users connect to the feed over dedicated
cables. For the NTP and PTP time feeds,
the Exchange routes the GPS data
through dedicated equipment that
reformats the GPS data into NTP and
PTP.8 Subscribing Users connect to PTP
over dedicated cables and NTP over the
Liquidity Center Network (‘‘LCN’’), a
local area network available in the data
center.
Currently, the Exchange’s co-location
services allow a User to request a
physical cabinet to house its servers and
other equipment in the data center. A
User has the option of receiving an
entire cabinet that is dedicated solely to
that User (‘‘dedicated cabinet’’) or a
partial cabinet available in increments
of eight-rack units of space (‘‘partial
cabinet’’).9 Connectivity to all three time
protocols would be available for
dedicated cabinets. Due to technical
limitations, connectivity to the NTP and
PTP would be available for partial
cabinets, but connectivity to GPS would
not.10
The Exchange proposes to amend its
Price List to reflect fees related to these
services, as follows:
Connection to Time Protocol Feed ...................
Network Time Protocol Feed (Note: LCN only)
Precision Time Protocol ...................................
GPS Time Source (Note: dedicated cabinets
only).
$300 initial charge plus $100 monthly.
$1,000 initial charge plus $250 monthly.
$3,000 initial charge plus $400 monthly.
Users that order the proposed time
feed services will be subject to a 12month minimum commitment, after
which period they are subject to a 60day rolling time period.11
The Exchange proposes to offer four
Partial Cabinet Solution bundles
intended to make it more cost effective
for smaller Users to utilize co-location.
These proposed Partial Cabinet Solution
bundles would provide smaller Users a
convenient way to create a colocation
environment, by including in each
Partial Cabinet Solution bundle cabinet
space, network access, fiber connections
(‘‘cross connects’’), and the choice of
either the NTP or PTP time feed. The
Exchange expects that such Users would
include those with minimal power or
cabinet space demands and Users for
which the costs attendant with having a
dedicated cabinet or greater network
connection bandwidth are too
burdensome. The Exchange expects that
the majority of Users that purchase a
Partial Cabinet Solution bundle will not
previously have been a User or Hosted
Customer, but recognizes that it is
possible that purchasing Users may
include entities that otherwise would be
Hosted Customers. The Exchange
proposes to offer the Partial Cabinet
Solution bundles beginning January 1,
2016.
As noted above, currently a User may
opt to receive a partial cabinet available
in increments of eight-rack units of
space. Each partial cabinet is allocated
up to two kilowatts (‘‘kWs’’) of power.
In addition, the Exchange offers Users
access to two local area networks
available in the data center: The LCN
and the internet protocol (‘‘IP’’)
network.12 The Exchange offers 1 and 10
gigabit (‘‘Gb’’) IP network access, 1, 10,
and 40 Gb LCN network access, and
LCN 10 Gb LX network access.13
Users may use cross connects to
connect cabinets within the data center,
including between a User’s cabinet and
a non-User’s equipment within the data
center. For example, a User may utilize
a cross connect with a non-User to
connect to a carrier’s equipment in
order to access the carrier’s network
outside the data center.14
The Exchange proposes to offer four
Partial Cabinet Solution bundles.
Because the Partial Cabinet Solution
bundles are intended to make it more
cost effective for smaller Users to utilize
co-location, the Exchange proposes only
to provide access to a Partial Cabinet
Solution bundle to a User that meets the
following conditions: (1) The User
purchases only one Partial Cabinet
Solution bundle; (2) the User and its
Affiliates 15 do not currently have a
Partial Cabinet Solution bundle; and (3)
after the purchase of the Partial Cabinet
Solution bundle, the User, together with
its Affiliates, will have an aggregate
cabinet footprint of no more than 2
kW.16 A User’s aggregate cabinet
footprint is the total kW of its cabinets,
including both partial and dedicated
7 For example, a User may connect to a time feed
for record keeping purposes if it uses that specific
time protocol for all its activities, both inside and
out of the data center.
8 The reformatting equipment is programmed by
the vendor to generate NTP and PTP time feeds that
comply with industry standards. The Exchange
does not program or manage the reformatting of the
GPS data into NTP and PTP.
9 See Original Co-location Filing, at 59310 and
Securities Exchange Act Release No. 71122
(December 18, 2013), 78 FR 77739 (December 24,
2013) (SR–NYSE–2013–81) (notice of filing and
immediate effectiveness of proposed rule change to
offer partial cabinets).
10 The Exchange does not propose to make
connectivity to GPS available for partial cabinets
because the proximity of the GPS and power
connections into a partial cabinet would expose
GPS to interference from the cable power
connections, interfering with the delivery of the
GPS data.
11 The Exchange believes that the 12-month
minimum period is common practice for colocation
offerings. See, e.g., Securities Exchange Act Release
No. 68735 (January 25, 2013), 78 FR 6842 (January
31, 2013) (SR–NASDAQ–2012–119) (noting that
NASDAQ represented that the lock-in feature ‘‘is
common practice for colocation offerings’’). If a
User upgrades a service (i.e., goes from a 10 Gb to
a 40 Gb LCN circuit), it will not be held to the
minimum period for the first service, but will be
subject to a 12-month minimum period for the
upgraded service, starting from the date of the
upgrade.
12 See Original Co-location Filing, at 59311 and
Securities Exchange Act Release Nos. 74222
(February 6, 2015), 80 FR 7888 (February 12, 2015)
(SR–NYSE–2015–05) (notice of filing and
immediate effectiveness of proposed rule change to
include IP network connections and fiber cross
connects between a User’s cabinet and a non-User’s
equipment) (‘‘Release No. 74222’’) and 70888
(November 15, 2013), 78 FR 69907 (November 21,
2013) (SR–NYSE–2013–73) (notice of filing and
immediate effectiveness of proposed rule change to
include LCN 10 Gb LX connection).
13 The Exchange also proposes to provide 40 Gb
IP network access. 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. See Securities
Exchange Act Release No. 76369 (November 5,
2015), 80 FR 70027 (November 12, 2015) (SR–
NYSE–2015–54) (notice of filing and immediate
effectiveness of proposed rule change to include IP
40 Gb network connections).
14 See Release No. 74222, supra note 12.
15 For purposes of the Partial Cabinet Solution
bundles, an ‘‘Affiliate’’ of a User would be any other
User or a Hosted Customer that is under 50% or
greater common ownership or control of the first
User.
16 For example, a User with a 4 kW dedicated
cabinet would not be eligible for a Partial Cabinet
Solution bundle, as its aggregate cabinet footprint
would be either 5 kW or 6 kW once a Partial
Cabinet Solution bundle was added.
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Partial Cabinet Solution Bundles
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Federal Register / Vol. 80, No. 241 / Wednesday, December 16, 2015 / Notices
cabinets, and a Hosted Customer’s
aggregate cabinet footprint is the total
kW of the portion of the Hosting User’s
cabinet, whether partial or dedicated,
allocated to such Hosted Customer.17
The Exchange proposes to aggregate
the aggregate cabinet footprint of a User
of a Partial Cabinet Solution bundle
with the aggregate cabinet footprint of
its Affiliates for purposes of determining
whether the User has satisfied the
conditions in order to avoid disparate
treatment of Users that have divided
their various business activities between
separate corporate entities, including
between a User and a Hosted Customer,
as compared to Users that operate those
business activities within a single
corporate entity. Accordingly, the
Exchange proposes that a User
requesting a Partial Cabinet Solution
bundle be required to represent to the
Exchange (a) whether it has any
Affiliates that are Users or Hosted
Customers, and (b) that its aggregate
cabinet footprint, together with the
aggregate cabinet footprint of its
Affiliates that are also Users or Hosted
Customers and the cabinet footprint of
the Partial Cabinet Solution bundle, will
not exceed 2 kW. In addition, the User
of a Partial Cabinet Solution bundle
would be required to inform the
Exchange immediately of any event that
causes another User or Hosted Customer
to become an Affiliate.18 The Exchange
proposes to revise the Price List
accordingly.
If a User of a Partial Cabinet Solution
bundle became Affiliated with one or
more other Users or Hosted Customers
and thereby no longer met the
conditions for access to the Partial
Cabinet Solution bundle, or if the User
otherwise ceased to meet the conditions
for access, the Exchange would no
78271
longer offer access to the Partial Cabinet
Solution bundle to such User. Once the
User ceased to meet the conditions for
access to the Partial Cabinet Solution
bundle, it would be charged for each of
the services individually, at the price for
each such service set out in the Price
List. Such price change would be
effective as of the date that the User
ceased to meet the conditions.
The Exchange proposes that Users
that purchase a Partial Cabinet Solution
bundle would be charged a nonrecurring initial charge (‘‘NRC’’) and a
monthly recurring charge (‘‘MRC’’).19
The Exchange proposes that Users that
order a Partial Cabinet Solution bundle
on or before December 31, 2016 would
have their MRC reduced by 50% for the
first 12 months.
The Exchange proposes to amend its
Price List to reflect fees related to these
new services, as follows:
Type of service
Description
Amount of charge
Partial Cabinet Solution bundles (effective from January 1, 2016).
Note: A User and its Affiliates are limited to one Partial Cabinet Solution
bundle at a time. A User and its Affiliates must have an aggregate cabinet footprint of 2 kW or less to qualify for a Partial Cabinet Solution bundle.
Option A: ..............................................
1 kW partial cabinet, 1 LCN connection (1 Gb), 1 IP network connection
(1 Gb), 2 fiber cross connections
and either the Network Time Protocol Feed or Precision Timing Protocol.
$7,500 initial charge per bundle plus monthly charge per bundle as follows:
• For Users that order on or before December 31, 2016:
$3,000 monthly for first 12 months of service, and $6,000
monthly thereafter.
• For Users that order after December 31, 2016: $6,000
monthly.
Option B:
2 kW partial cabinet, 1 LCN connection (1 Gb), 1 IP network connection
(1 Gb), 2 fiber cross connections
and either the Network Time Protocol Feed or Precision Timing Protocol.
Option C:
1 kW partial cabinet, 1 LCN connection (10 Gb), 1 IP network connection (10 Gb), 2 fiber cross connections and either the Network Time
Protocol Feed or Precision Timing
Protocol.
Option D:
2 kW partial cabinet, 1 LCN connection (10 Gb), 1 IP network connection (10 Gb), 2 fiber cross connections and either the Network Time
Protocol Feed or Precision Timing
Protocol.
$7,500 initial charge per bundle plus monthly charge per bundle as follows:
• For Users that order on or before December 31, 2016:
$3,500 monthly for first 12 months of service, and $7,000
monthly thereafter.
• For Users that order after December 31, 2016: $7,000
monthly.
$10,000 initial charge per bundle plus monthly charge per
bundle as follows:
• For Users that order on or before December 31, 2016:
$7,000 monthly for first 12 months of service, and $14,000
monthly thereafter.
• For Users that order after December 31, 2016: $14,000
monthly.
$10,000 initial charge per bundle plus monthly charge per
bundle as follows:
• For Users that order on or before December 31, 2016:
$7,500 monthly for first 12 months of service, and $15,000
monthly thereafter.
• For Users that order after December 31, 2016: $15,000
monthly.
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Each proposed Partial Cabinet
Solution bundle is made up of a number
of different services. If a User purchased
each of the components of a Partial
Cabinet Solution bundle, whether over
several purchases or in one order, and
met the conditions described above for
access to the Partial Cabinet Solution
bundle, the Exchange would
automatically treat the User’s services as
a Partial Cabinet Solution bundle and,
effective the date of installation of the
17 The Exchange similarly aggregates eligible
activity of member organization affiliates for
purposes of charges or credits based on volume. See
Securities Exchange Act Release No. 74640 (April
2, 2015), 80 FR 18873 (April 8, 2015) (SR–NYSE–
2015–13). The threshold percentage used in the
definition of ‘‘affiliate’’ for purposes of charges or
credits based on volume is 75%. Id. The Exchange
proposes a lower threshold in the present case in
order to discourage any User from taking deliberate
advantage of the proposed Partial Cabinet Solution
bundle by setting up separate corporate entities to
act as Users or Hosted Customers.
18 The Exchange would review available
information regarding the entities and may request
additional information to verify the Affiliate status
of a User or Hosted Customer. The Exchange would
approve a request for a Partial Cabinet Solution
bundle unless it determines that the certification is
not accurate.
19 A User that changes its Partial Cabinet Solution
bundle would not be subject to a second NRC.
Rather, it would pay the difference, if any, between
the NRCs. For example, a User that buys an Option
A Partial Cabinet Solution bundle would pay a
$7,500 NRC. If it then opted to change to Option
C, it would pay $2,500, i.e. the difference between
the Option A and Option C NRCs of $7,500 and
$10,000, respectively.
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Federal Register / Vol. 80, No. 241 / Wednesday, December 16, 2015 / Notices
final component, reduce the User’s MRC
to the MRC for the relevant bundle.20
Finally, the Exchange proposes to
make non-substantive changes to the
Price List to add subheadings under
‘‘Co-Location Fees’’ for ‘‘Definitions’’
and ‘‘General Notes’’. Definitions of
aggregate cabinet footprint and Affiliate
would be added under ‘‘Definitions’’.
The existing note stating that a User that
incurs co-location fees for a particular
co-location service would not be subject
to co-location fees for the same colocation service charged by the
Exchange’s affiliates would become note
one under ‘‘General Notes’’ and the
proposed provisions regarding aggregate
cabinet footprints and what portion of
an NRC, if any, a User would be subject
to if it changed bundles would become
note two.21
Users that purchase a proposed Partial
Cabinet Solution bundle would not be
subject to the 12-month minimum
commitment, but rather would be
subject to a 90-day commitment, after
which period they would be subject to
the 60-day rolling time period. As noted
above, the Exchange anticipates that
Users of the Partial Cabinet Solution
bundles would include those with
minimum power or cabinet space
demands and Users for which the costs
attendant with having a dedicated
cabinet or greater network connection
bandwidth are too burdensome. The
Exchange proposes to have a reduced
minimum commitment period for the
Partial Cabinet Solution bundle to
further reduce the cost commitment for
such Users.
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General
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; 22 and (iii) a User would only
20 The Exchange proposes to implement the
proposed Partial Cabinet Solution bundle changes
effective January 1, 2016. If as of that date a User
already had each of the components of a Partial
Cabinet Solution bundle and met the conditions
described above for access to the Partial Cabinet
Solution bundle, the Exchange would automatically
treat the User’s services as a Partial Cabinet
Solution bundle and reduce the User’s MRC to the
MRC for the relevant bundle, effective January 1,
2016.
21 See note 18, supra.
22 As is currently the case, Users that receive colocation services from the Exchange will not receive
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incur one charge for the particular colocation service described herein,
regardless of whether the User connects
only to the Exchange or to the Exchange
and one or both of its affiliates.23
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,24 in general, and
furthers the objectives of Sections
6(b)(5) of the Act,25 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 providing
connectivity to time feeds is not
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers because the
service would offer connectivity to
different time feed options, allowing a
User that opts to connect to a time feed
to select the time protocol that best suits
its needs, helping it tailor its data center
operations to the requirements of its
business operations. The time feeds are
unrelated to trading on the Exchange or
the Exchange’s data feeds. A User does
not require connectivity to a time feed
to trade on the Exchange, and usage of
a time feed has no effect on a User’s
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.
23 See SR–NYSE–2013–59, supra note 5 at 51766.
The Exchange’s affiliates have also submitted the
same proposed rule change to propose the changes
described herein. See SR–NYSEMKT–2015–89 and
SR–NYSEArca–2015–102.
24 15 U.S.C. 78f(b).
25 15 U.S.C. 78f(b)(5).
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orders going to, or trade data coming
from, the Exchange.
The Exchange believes that providing
connectivity to GPS for dedicated
cabinets but not partial cabinets and to
NTP through the LCN but not the IP
network is not designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers because the
Exchange proposes to offer connectivity
to time feeds, including GPS and NTP,
as a convenience to Users, and usage of
a time feed has no effect on a User’s
orders going to, or trade data coming
from, the Exchange. Regarding GPS, the
proximity of GPS and power
connections into a partial cabinet would
expose GPS to interference from the
cable power connections, interfering
with the delivery of the GPS data, and
so the Exchange is not able to offer
connectivity to GPS for partial cabinets.
A User that requires connectivity to GPS
could opt to purchase a dedicated
cabinet or become a Hosted Customer of
a Hosting User with a dedicated cabinet.
Regarding NTP, the Exchange has opted
to offer the NTP only over the LCN due
to a lack of demand for the NTP over the
IP network. A User that requires
connectivity to NTP could connect to
the LCN.
The Exchange believes that the Partial
Cabinet Solution bundles are not
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers because the
Partial Cabinet Solution bundles would
offer four different Partial Cabinet
Solution bundles with options with
respect to cabinet footprint and network
connections. Users that require other
sizes or combinations of cabinets,
network connections and cross connects
could still request them.
The Exchange believes that its
proposal would remove impediments to,
and perfects the mechanisms of, a free
and open market and a national market
system and, in general, protects
investors and the public interest
because the proposed connectivity to
time feeds would provide Users a
convenient way to access time
protocols. Having different time feed
options would allow a User with a
dedicated cabinet to select the time
protocol that suits its needs, and for a
User with a partial cabinet to select
between the NTP and PTP.
In addition, the Exchange believes
that its proposal would remove
impediments to, and perfects the
mechanisms of, a free and open market
and a national market system and, in
general, protects investors and the
public interest because the proposed
Partial Cabinet Solution bundles would
make it more cost effective for Users
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that meet the conditions described
above for access to the Partial Cabinet
Solution bundle to utilize co-location by
creating a convenient way to create a
colocation environment, through four
Partial Cabinet Solution bundles with
options with respect to cabinet footprint
and network connections. The Exchange
expects that such Users would include
those with minimal power or cabinet
space demands and Users for which the
costs attendant with having a dedicated
cabinet or greater network connection
bandwidth are too burdensome. Such
Users may choose to pass on such cost
savings to their customers. The
Exchange expects that the majority of
Users that purchase a Partial Cabinet
Solution bundle will not previously
have been a User or Hosted Customer,
but recognizes that it is possible that
purchasing Users may include entities
that otherwise would be Hosted
Customers.
The Exchange also believes that the
proposed rule change is consistent with
Section 6(b)(4) of the Act,26 in
particular, because it provides for the
equitable allocation of reasonable dues,
fees, and other charges among its
members, issuers and other persons
using its facilities and does not unfairly
discriminate between customers,
issuers, brokers or dealers. Overall, the
Exchange believes that the proposed
fees for the time feed connectivity and
Partial Cabinet Solution bundles are
reasonable because the Exchange
proposes to offer the services 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 monitoring, support
and maintenance of such services. The
higher fee in connection with the GPS
reflects the greater costs for its
equipment, installation and
maintenance in comparison with the
other time feeds. The Exchange believes
that submitting Users that order the
proposed time feed services to a 12month minimum commitment, after
which period they would be subject a
60-day rolling time period, is
reasonable, as it reflects the investment
the Exchange incurs in order to provide
the service. The Exchange believes that
the 12-month minimum period is
common practice for colocation
offerings.
In addition, the Exchange believes
that its proposal to limit access to
Partial Cabinet Solution bundles to a
User that meets the conditions
described above, specifically, that (1)
26 15
U.S.C. 78f(b)(4).
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the User purchases only one Partial
Cabinet Solution bundle, (2) the User
and its Affiliates do not currently have
a Partial Cabinet Solution bundle, and,
(3) after the purchase of a Partial
Cabinet Solution bundle, the User,
together with its Affiliates, will have an
aggregate cabinet footprint of no more
than 2 kW, is reasonable, because the
Partial Cabinet Solution bundles are
intended to make it more cost effective
for smaller Users to utilize co-location.
All Users would be subject to the same
limits on the number of Partial Cabinet
Solution bundles and aggregate cabinet
footprint. The Exchange believes that
the proposal is reasonable because it
establishes a manner for the Exchange to
treat Users for purposes of assessing
aggregate cabinet footprint. The
provision is equitable because all Users
seeking to purchase a Partial Cabinet
Solution bundle would be subject to the
same parameters. The Exchange further
notes that the proposal would serve to
reduce any potential for confusion on
how cabinet footprint can be aggregated
or what entities would constitute
Affiliates.
The Exchange believes that, by
aggregating the aggregate cabinet
footprint of a User with the aggregate
cabinet footprint of its Affiliates for
purposes of determining whether the
User has satisfied the conditions, the
proposed rule change avoids disparate
treatment of Users that have divided
their various business activities between
separate corporate entities, including
between a User and a Hosted Customer,
as compared to Users that operate those
business activities within a single
corporate entity. The Exchange believes
that setting the common ownership or
control threshold in the definition of
Affiliates at 50% is reasonable because
it will discourage any User from taking
deliberate advantage of the proposed
Partial Cabinet Solution bundle by
setting up separate corporate entities to
act as Users or Hosted Customers.
The Exchange believes that it is
reasonable that Users that order a Partial
Cabinet Solution bundle on or before
December 31, 2016 would have their
MRC reduced by 50% for the first 12
months because the Partial Cabinet
Solution bundles are a new service, and
so it is reasonable to offer such
reduction as an incentive to Users to
utilize the new service. Similarly, the
Exchange believes that submitting Users
that purchase the propose Partial
Cabinet Solution bundle to a 90-day
commitment, rather than the 12-month
minimum commitment, after which
period they would be subject to the 60day rolling time period, is reasonable.
As noted above, the Exchange
PO 00000
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78273
anticipates that Users of the Partial
Cabinet Solution bundles would include
those with minimum power or cabinet
space demands and Users for which the
costs attendant with having a dedicated
cabinet or greater network connection
bandwidth are too burdensome. The
Exchange believes that it is reasonable
to have a reduced minimum
commitment period for the Partial
Cabinet Solution bundle to further
reduce the cost commitment for such
Users as an incentive to Users to utilize
the new service.
The Exchange believes that it is
reasonable not to charge a User that
changes its Partial Cabinet Solution
bundle a second NRC, but instead
charge the difference, if any, between
the NRCs, because the cost to the
Exchange of modifying the service to
move a User to a different Partial
Cabinet Solution bundle is lower than
the cost of the initial installation of a
Partial Cabinet Solution bundle.
The Exchange also believes that the
services and fees proposed herein for
Partial Cabinet Solution bundles are
reasonable because if a User purchased
each of the components of a Partial
Cabinet Solution bundle, whether over
several purchases or in one order, and
met the conditions described above for
access to the Partial Cabinet Solution
bundle, the Exchange would
automatically treat the User’s services as
a Partial Cabinet Solution bundle and,
effective the date of installation of the
final component, reduce the User’s MRC
to the MRC for the relevant bundle.
The Exchange believes that the
proposed change to provide Users
access to time feeds 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
connectivity to time feeds being
completely voluntary, it is available to
all Users on an equal basis (i.e., the
same connectivity to time feed products
and services is available to all Users,
and the same conditions described
above for access to the Partial Cabinet
Solution bundles would apply to all
Users). All Users that voluntarily select
connectivity to one or more of the
proposed time feeds would be charged
the same amount for the same services.
The Exchange believes that the
proposed change to provide Partial
Cabinet Solution bundles is equitable
and not unfairly discriminatory because
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it would be available to all Users that
meet the conditions described above for
access to the Partial Cabinet Solution
bundle and would result in fees being
charged only to such Users that
voluntarily select to receive the
corresponding service.
The Exchange believes that the
proposed change to provide Partial
Cabinet Solution bundles provides for
the equitable allocation of reasonable
dues, fees, and other charges among its
members, issuers and other persons
using its facilities. As previously stated,
the proposal would make it more cost
effective for Users that meet the
conditions described above for access to
the Partial Cabinet Solution bundle to
utilize co-location. While the Exchange
expects that the majority of Users that
purchase a Partial Cabinet Solution
bundle will not previously have been a
User or Hosted Customer, it recognizes
that it is possible that purchasing Users
may include entities that otherwise
would be Hosted Customers. However,
it notes that being a Hosted Customer
and being a User with a Partial Cabinet
Solution bundle are not fungible. A
Hosting User manages the service
provided to the Hosted Customer, which
services may include, for example,
supporting the Hosted Customer’s
technology, whether hardware or
software. The Hosted Customer has no
relationship with the Exchange. A User
with a Partial Cabinet Solution bundle,
by contrast, is responsible for
supporting its own technology and is in
a direct contractual relationship with
the Exchange. Providing entities with
the additional option of the Partial
Cabinet Solution bundle will allow
them to select the relationship and type
of service that better corresponds to
their needs and resources.
Furthermore, the Exchange believes
that the Partial Cabinet Solution bundle
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, and the same conditions
described above for access to the Partial
Cabinet Solution bundles would apply
to all Users). All Users that voluntarily
select the proposed Partial Cabinet
Solution bundle service would be
subject to the same limits on the number
of Partial Cabinet Solution bundles and
aggregate cabinet footprint. The
Exchange believes that, by aggregating
the aggregate cabinet footprint of a User
with the aggregate cabinet footprint of
its Affiliates for purposes of determining
whether the User has satisfied the
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17:21 Dec 15, 2015
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conditions, the proposed limit on
aggregate cabinet footprint avoids
disparate treatment of Users that have
divided their various business activities
between separate corporate entities,
including between a User and a Hosted
Customer, as compared to Users that
operate those business activities within
a single corporate entity. Finally, all
Users that order a bundle on or before
December 31, 2016 would have their
MRC reduced by 50% for the first 12
months.
The Exchange believes that it is
equitable and not unfairly
discriminatory to not charge a User that
changes its Partial Cabinet Solution
bundle a second NRC, but instead
charge the difference, if any, between
the NRCs, because the cost to the
Exchange of modifying the service to
move a User to a different Partial
Cabinet Solution bundle is lower than
the cost of the initial installation of a
Partial Cabinet Solution bundle.
The Exchange also believes that the
services and fees proposed herein for
Partial Cabinet Solution bundles are not
unfairly discriminatory and are
equitably allocated because if a User
purchased each of the components of a
Partial Cabinet Solution bundle,
whether over several purchases or in
one order, and met the conditions
described above for access to the Partial
Cabinet Solution bundle, the Exchange
would automatically treat the User’s
services as a Partial Cabinet Solution
bundle and, effective the date of
installation of the final component,
reduce the User’s MRC to the MRC for
the relevant bundle.
For the reasons above, the proposed
changes do 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,27 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
27 15
PO 00000
U.S.C. 78f(b)(8).
Frm 00114
Fmt 4703
Sfmt 4703
addition to the proposed 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, and the same conditions
described above for access to the Partial
Cabinet Solution bundles would apply
to all Users).
The Exchange believes that providing
Users with connectivity to time feeds
will not impose any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act because such
connectivity satisfies User demand for a
convenient way to access time
protocols. Having connectivity to
different time feed options would allow
a User with a dedicated cabinet to select
the time protocol that best suits its
needs, and for a User with a partial
cabinet to select between the NTP and
PTP, helping Users tailor their data
center operations to the requirements of
their business operations. In addition,
the Exchange believes that providing
connectivity to GPS for dedicated
cabinets but not partial cabinets and to
NTP through the LCN but not the IP
network will not impose any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act because the
Exchange proposes to offer connectivity
to time feeds, including GPS and NTP,
as a convenience to Users, and usage of
a time feed has no effect on a User’s
orders going to, or trade data coming
from, the Exchange.
The Exchange believes that allowing
Users to purchase Partial Cabinet
Solution bundles will not impose any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act because such
access will satisfy User demand for cost
effective options for smaller Users that
choose to utilize co-location. All Users
that meet the conditions described
above for access to the Partial Cabinet
Solution bundle would be subject to the
same limits on the number of Partial
Cabinet Solution bundles and aggregate
cabinet footprint, all Users that order a
bundle on or before December 31, 2016
would have their MRC reduced by 50%
for the first 12 months, and all Users
that change Partial Cabinet Solution
bundles would not be charged a second
NRC, but instead charged the difference,
if any, between the NRCs.
The Exchange believes that allowing
Users to purchase Partial Cabinet
Solution bundles will not impose any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act because, as
previously stated, the proposal would
make it more cost effective for Users
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that meet the conditions described
above for access to the Partial Cabinet
Solution bundle to utilize co-location.
While the Exchange expects that the
majority of Users that purchase a Partial
Cabinet Solution bundle will not
previously have been a User or Hosted
Customer, it recognizes that it is
possible that purchasing Users may
include entities that otherwise would be
Hosted Customers. However, it notes
that being a Hosted Customer and being
a User with a Partial Cabinet Solution
bundle are not fungible. A Hosting User
manages the service provided to the
Hosted Customer, which services may
include, for example, supporting the
Hosted Customer’s technology, whether
hardware or software. The Hosted
Customer has no relationship with the
Exchange. A User with a Partial Cabinet
Solution bundle, by contrast, is
responsible for supporting its own
technology and is in a direct contractual
relationship with the Exchange.
Providing entities with the additional
option of the Partial Cabinet Solution
bundle will allow them to select the
relationship and type of service that
better corresponds to their needs and
resources.
The proposed changes will also
enhance competition by making it more
cost effective for Users that meet the
conditions described above for access to
the Partial Cabinet Solution bundle to
utilize co-location by creating a
convenient way to create a colocation
environment, through Partial Cabinet
Solution bundles with options with
respect to cabinet footprint and network
connections. Such Users may choose to
pass on such cost savings to their
customers.
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.
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III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the Exchange consents,
the Commission shall: (a) By order
approve or disapprove such proposed
rule change, or (b) institute proceedings
to determine whether the proposed rule
change should be disapproved.
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 No. SR–
NYSE–2015–53 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–NYSE–2015–53. 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
Frm 00115
Fmt 4703
Sfmt 4703
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–NYSE–
2015–53, and should be submitted on or
before January 6, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.28
Brent J. Fields,
Secretary.
[FR Doc. 2015–31576 Filed 12–15–15; 8:45 am]
BILLING CODE 8011–01–P
IV. Solicitation of Comments
PO 00000
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–76616; File No. SR–
NYSEARCA–2015–102]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change to Its Rules To Provide
That the Co-location Services Offered
by the Exchange Include Three Time
Feeds and Four Bundles of Co-location
Services
December 10, 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
November 27, 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 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 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 three time feeds and four
bundles of co-location services (‘‘Partial
Cabinet Solution bundles’’). 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
28 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
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]]>Agencies
[Federal Register Volume 80, Number 241 (Wednesday, December 16, 2015)]
[Notices]
[Pages 78269-78275]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-31576]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76612; File No. SR-NYSE-2015-53]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing of Proposed Rule Change to Its Rules To Provide That
the Co-Location Services Offered by the Exchange Include Three Time
Feeds and Four Bundles of Co-Location Services
December 10, 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 November 27, 2015, New York Stock Exchange LLC (``NYSE''
or the ``Exchange'') 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.
---------------------------------------------------------------------------
\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 three time feeds and
four bundles of co-location services (``Partial Cabinet Solution
bundles''). The Exchange proposes to amend the Exchange's Price List
(``Price List'') to reflect the time feeds and the Partial Cabinet
Solution bundles.
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 three time feeds
and four new Partial Cabinet Solution bundles. In addition, the
Exchange proposes to amend the Price List to reflect the time feeds and
the Partial Cabinet Solution bundles. The Exchange proposes to offer
the Partial Cabinet Solution bundles beginning January 1, 2016.
---------------------------------------------------------------------------
\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.
62960 (September 21, 2010), 75 FR 59310 (September 27, 2010) (SR-
NYSE-2010-56) (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.
---------------------------------------------------------------------------
Time Feeds
The proposed rule change would provide that Users \5\ may purchase
access to three time feeds, each of which provides a feed with the
current time of day using one of three different time protocols: GPS
Time Source, the Network Time Protocol feed (``NTP''), and Precision
Timing Protocol (``PTP'').\6\
---------------------------------------------------------------------------
\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, a ``Hosting User''
means a User that hosts a Hosted Customer in the User's co-location
space, and a ``Hosted Customer'' means a customer of a Hosting User
that is hosted in a Hosting User's co-location space. See Securities
Exchange Act Release No. 76008 (September 29, 2015), 80 FR 60190
(October 5, 2015) (SR-NYSE-2015-40). As specified in the Price List,
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 NYSE MKT LLC and NYSE Arca, Inc. See Securities Exchange
Act Release No. 70206 (August 15, 2013), 78 FR 51765 (August 21,
2013) (SR-NYSE-2013-59).
\6\ The time feeds are unrelated to trading on the Exchange or
the Exchange's data feeds. A User does not require connectivity to a
time feed to trade on the Exchange, and usage of a time feed has no
effect on a User's orders going to, or trade data coming from, the
Exchange.
---------------------------------------------------------------------------
Time feeds are used to receive time and to synchronize clocks
between computer systems or throughout a
[[Page 78270]]
computer network. A User may opt to connect to a time feed for various
reasons, including record keeping or measuring response times.\7\ The
proposed connectivity to time feeds would provide Users a convenient
way to access time protocols.
---------------------------------------------------------------------------
\7\ For example, a User may connect to a time feed for record
keeping purposes if it uses that specific time protocol for all its
activities, both inside and out of the data center.
---------------------------------------------------------------------------
The proposed change includes three time feeds. Global Positioning
System (``GPS'') is a time and location system maintained by the United
States government. The Exchange accesses the GPS Time Source feed
through dedicated equipment and subscribing Users connect to the feed
over dedicated cables. For the NTP and PTP time feeds, the Exchange
routes the GPS data through dedicated equipment that reformats the GPS
data into NTP and PTP.\8\ Subscribing Users connect to PTP over
dedicated cables and NTP over the Liquidity Center Network (``LCN''), a
local area network available in the data center.
---------------------------------------------------------------------------
\8\ The reformatting equipment is programmed by the vendor to
generate NTP and PTP time feeds that comply with industry standards.
The Exchange does not program or manage the reformatting of the GPS
data into NTP and PTP.
---------------------------------------------------------------------------
Currently, the Exchange's co-location services allow a User to
request a physical cabinet to house its servers and other equipment in
the data center. A User has the option of receiving an entire cabinet
that is dedicated solely to that User (``dedicated cabinet'') or a
partial cabinet available in increments of eight-rack units of space
(``partial cabinet'').\9\ Connectivity to all three time protocols
would be available for dedicated cabinets. Due to technical
limitations, connectivity to the NTP and PTP would be available for
partial cabinets, but connectivity to GPS would not.\10\
---------------------------------------------------------------------------
\9\ See Original Co-location Filing, at 59310 and Securities
Exchange Act Release No. 71122 (December 18, 2013), 78 FR 77739
(December 24, 2013) (SR-NYSE-2013-81) (notice of filing and
immediate effectiveness of proposed rule change to offer partial
cabinets).
\10\ The Exchange does not propose to make connectivity to GPS
available for partial cabinets because the proximity of the GPS and
power connections into a partial cabinet would expose GPS to
interference from the cable power connections, interfering with the
delivery of the GPS data.
---------------------------------------------------------------------------
The Exchange proposes to amend its Price List to reflect fees
related to these services, as follows:
------------------------------------------------------------------------
------------------------------------------------------------------------
Connection to Time Protocol Feed Network Time $300 initial
Protocol Feed charge plus $100
(Note: LCN only). monthly.
Precision Time $1,000 initial
Protocol. charge plus $250
monthly.
GPS Time Source $3,000 initial
(Note: dedicated charge plus $400
cabinets only). monthly.
------------------------------------------------------------------------
Users that order the proposed time feed services will be subject to
a 12-month minimum commitment, after which period they are subject to a
60-day rolling time period.\11\
---------------------------------------------------------------------------
\11\ The Exchange believes that the 12-month minimum period is
common practice for colocation offerings. See, e.g., Securities
Exchange Act Release No. 68735 (January 25, 2013), 78 FR 6842
(January 31, 2013) (SR-NASDAQ-2012-119) (noting that NASDAQ
represented that the lock-in feature ``is common practice for
colocation offerings''). If a User upgrades a service (i.e., goes
from a 10 Gb to a 40 Gb LCN circuit), it will not be held to the
minimum period for the first service, but will be subject to a 12-
month minimum period for the upgraded service, starting from the
date of the upgrade.
---------------------------------------------------------------------------
Partial Cabinet Solution Bundles
The Exchange proposes to offer four Partial Cabinet Solution
bundles intended to make it more cost effective for smaller Users to
utilize co-location. These proposed Partial Cabinet Solution bundles
would provide smaller Users a convenient way to create a colocation
environment, by including in each Partial Cabinet Solution bundle
cabinet space, network access, fiber connections (``cross connects''),
and the choice of either the NTP or PTP time feed. The Exchange expects
that such Users would include those with minimal power or cabinet space
demands and Users for which the costs attendant with having a dedicated
cabinet or greater network connection bandwidth are too burdensome. The
Exchange expects that the majority of Users that purchase a Partial
Cabinet Solution bundle will not previously have been a User or Hosted
Customer, but recognizes that it is possible that purchasing Users may
include entities that otherwise would be Hosted Customers. The Exchange
proposes to offer the Partial Cabinet Solution bundles beginning
January 1, 2016.
As noted above, currently a User may opt to receive a partial
cabinet available in increments of eight-rack units of space. Each
partial cabinet is allocated up to two kilowatts (``kWs'') of power. In
addition, the Exchange offers Users access to two local area networks
available in the data center: The LCN and the internet protocol
(``IP'') network.\12\ The Exchange offers 1 and 10 gigabit (``Gb'') IP
network access, 1, 10, and 40 Gb LCN network access, and LCN 10 Gb LX
network access.\13\
---------------------------------------------------------------------------
\12\ See Original Co-location Filing, at 59311 and Securities
Exchange Act Release Nos. 74222 (February 6, 2015), 80 FR 7888
(February 12, 2015) (SR-NYSE-2015-05) (notice of filing and
immediate effectiveness of proposed rule change to include IP
network connections and fiber cross connects between a User's
cabinet and a non-User's equipment) (``Release No. 74222'') and
70888 (November 15, 2013), 78 FR 69907 (November 21, 2013) (SR-NYSE-
2013-73) (notice of filing and immediate effectiveness of proposed
rule change to include LCN 10 Gb LX connection).
\13\ The Exchange also proposes to provide 40 Gb IP network
access. 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. See Securities Exchange Act Release No. 76369
(November 5, 2015), 80 FR 70027 (November 12, 2015) (SR-NYSE-2015-
54) (notice of filing and immediate effectiveness of proposed rule
change to include IP 40 Gb network connections).
---------------------------------------------------------------------------
Users may use cross connects to connect cabinets within the data
center, including between a User's cabinet and a non-User's equipment
within the data center. For example, a User may utilize a cross connect
with a non-User to connect to a carrier's equipment in order to access
the carrier's network outside the data center.\14\
---------------------------------------------------------------------------
\14\ See Release No. 74222, supra note 12.
---------------------------------------------------------------------------
The Exchange proposes to offer four Partial Cabinet Solution
bundles. Because the Partial Cabinet Solution bundles are intended to
make it more cost effective for smaller Users to utilize co-location,
the Exchange proposes only to provide access to a Partial Cabinet
Solution bundle to a User that meets the following conditions: (1) The
User purchases only one Partial Cabinet Solution bundle; (2) the User
and its Affiliates \15\ do not currently have a Partial Cabinet
Solution bundle; and (3) after the purchase of the Partial Cabinet
Solution bundle, the User, together with its Affiliates, will have an
aggregate cabinet footprint of no more than 2 kW.\16\ A User's
aggregate cabinet footprint is the total kW of its cabinets, including
both partial and dedicated
[[Page 78271]]
cabinets, and a Hosted Customer's aggregate cabinet footprint is the
total kW of the portion of the Hosting User's cabinet, whether partial
or dedicated, allocated to such Hosted Customer.\17\
---------------------------------------------------------------------------
\15\ For purposes of the Partial Cabinet Solution bundles, an
``Affiliate'' of a User would be any other User or a Hosted Customer
that is under 50% or greater common ownership or control of the
first User.
\16\ For example, a User with a 4 kW dedicated cabinet would not
be eligible for a Partial Cabinet Solution bundle, as its aggregate
cabinet footprint would be either 5 kW or 6 kW once a Partial
Cabinet Solution bundle was added.
\17\ The Exchange similarly aggregates eligible activity of
member organization affiliates for purposes of charges or credits
based on volume. See Securities Exchange Act Release No. 74640
(April 2, 2015), 80 FR 18873 (April 8, 2015) (SR-NYSE-2015-13). The
threshold percentage used in the definition of ``affiliate'' for
purposes of charges or credits based on volume is 75%. Id. The
Exchange proposes a lower threshold in the present case in order to
discourage any User from taking deliberate advantage of the proposed
Partial Cabinet Solution bundle by setting up separate corporate
entities to act as Users or Hosted Customers.
---------------------------------------------------------------------------
The Exchange proposes to aggregate the aggregate cabinet footprint
of a User of a Partial Cabinet Solution bundle with the aggregate
cabinet footprint of its Affiliates for purposes of determining whether
the User has satisfied the conditions in order to avoid disparate
treatment of Users that have divided their various business activities
between separate corporate entities, including between a User and a
Hosted Customer, as compared to Users that operate those business
activities within a single corporate entity. Accordingly, the Exchange
proposes that a User requesting a Partial Cabinet Solution bundle be
required to represent to the Exchange (a) whether it has any Affiliates
that are Users or Hosted Customers, and (b) that its aggregate cabinet
footprint, together with the aggregate cabinet footprint of its
Affiliates that are also Users or Hosted Customers and the cabinet
footprint of the Partial Cabinet Solution bundle, will not exceed 2 kW.
In addition, the User of a Partial Cabinet Solution bundle would be
required to inform the Exchange immediately of any event that causes
another User or Hosted Customer to become an Affiliate.\18\ The
Exchange proposes to revise the Price List accordingly.
---------------------------------------------------------------------------
\18\ The Exchange would review available information regarding
the entities and may request additional information to verify the
Affiliate status of a User or Hosted Customer. The Exchange would
approve a request for a Partial Cabinet Solution bundle unless it
determines that the certification is not accurate.
---------------------------------------------------------------------------
If a User of a Partial Cabinet Solution bundle became Affiliated
with one or more other Users or Hosted Customers and thereby no longer
met the conditions for access to the Partial Cabinet Solution bundle,
or if the User otherwise ceased to meet the conditions for access, the
Exchange would no longer offer access to the Partial Cabinet Solution
bundle to such User. Once the User ceased to meet the conditions for
access to the Partial Cabinet Solution bundle, it would be charged for
each of the services individually, at the price for each such service
set out in the Price List. Such price change would be effective as of
the date that the User ceased to meet the conditions.
The Exchange proposes that Users that purchase a Partial Cabinet
Solution bundle would be charged a non-recurring initial charge
(``NRC'') and a monthly recurring charge (``MRC'').\19\ The Exchange
proposes that Users that order a Partial Cabinet Solution bundle on or
before December 31, 2016 would have their MRC reduced by 50% for the
first 12 months.
---------------------------------------------------------------------------
\19\ A User that changes its Partial Cabinet Solution bundle
would not be subject to a second NRC. Rather, it would pay the
difference, if any, between the NRCs. For example, a User that buys
an Option A Partial Cabinet Solution bundle would pay a $7,500 NRC.
If it then opted to change to Option C, it would pay $2,500, i.e.
the difference between the Option A and Option C NRCs of $7,500 and
$10,000, respectively.
---------------------------------------------------------------------------
The Exchange proposes to amend its Price List to reflect fees
related to these new services, as follows:
------------------------------------------------------------------------
Type of service Description Amount of charge
------------------------------------------------------------------------
Partial Cabinet Solution Option A:......... $7,500 initial
bundles (effective from 1 kW partial charge per bundle
January 1, 2016). cabinet, 1 LCN plus monthly
Note: A User and its Affiliates connection (1 charge per bundle
are limited to one Partial Gb), 1 IP network as follows:
Cabinet Solution bundle at a connection (1 For Users
time. A User and its Gb), 2 fiber that order on or
Affiliates must have an cross connections before December
aggregate cabinet footprint of and either the 31, 2016: $3,000
2 kW or less to qualify for a Network Time monthly for first
Partial Cabinet Solution Protocol Feed or 12 months of
bundle. Precision Timing service, and
Protocol. $6,000 monthly
thereafter.
For Users
that order after
December 31, 2016:
$6,000 monthly.
Option B: $7,500 initial
2 kW partial charge per bundle
cabinet, 1 LCN plus monthly
connection (1 charge per bundle
Gb), 1 IP network as follows:
connection (1 For Users
Gb), 2 fiber that order on or
cross connections before December
and either the 31, 2016: $3,500
Network Time monthly for first
Protocol Feed or 12 months of
Precision Timing service, and
Protocol. $7,000 monthly
thereafter.
For Users
that order after
December 31, 2016:
$7,000 monthly.
Option C: $10,000 initial
1 kW partial charge per bundle
cabinet, 1 LCN plus monthly
connection (10 charge per bundle
Gb), 1 IP network as follows:
connection (10 For Users
Gb), 2 fiber that order on or
cross connections before December
and either the 31, 2016: $7,000
Network Time monthly for first
Protocol Feed or 12 months of
Precision Timing service, and
Protocol. $14,000 monthly
thereafter.
For Users
that order after
December 31, 2016:
$14,000 monthly.
Option D: $10,000 initial
2 kW partial charge per bundle
cabinet, 1 LCN plus monthly
connection (10 charge per bundle
Gb), 1 IP network as follows:
connection (10 For Users
Gb), 2 fiber that order on or
cross connections before December
and either the 31, 2016: $7,500
Network Time monthly for first
Protocol Feed or 12 months of
Precision Timing service, and
Protocol. $15,000 monthly
thereafter.
For Users
that order after
December 31, 2016:
$15,000 monthly.
------------------------------------------------------------------------
Each proposed Partial Cabinet Solution bundle is made up of a
number of different services. If a User purchased each of the
components of a Partial Cabinet Solution bundle, whether over several
purchases or in one order, and met the conditions described above for
access to the Partial Cabinet Solution bundle, the Exchange would
automatically treat the User's services as a Partial Cabinet Solution
bundle and, effective the date of installation of the
[[Page 78272]]
final component, reduce the User's MRC to the MRC for the relevant
bundle.\20\
---------------------------------------------------------------------------
\20\ The Exchange proposes to implement the proposed Partial
Cabinet Solution bundle changes effective January 1, 2016. If as of
that date a User already had each of the components of a Partial
Cabinet Solution bundle and met the conditions described above for
access to the Partial Cabinet Solution bundle, the Exchange would
automatically treat the User's services as a Partial Cabinet
Solution bundle and reduce the User's MRC to the MRC for the
relevant bundle, effective January 1, 2016.
---------------------------------------------------------------------------
Finally, the Exchange proposes to make non-substantive changes to
the Price List to add subheadings under ``Co-Location Fees'' for
``Definitions'' and ``General Notes''. Definitions of aggregate cabinet
footprint and Affiliate would be added under ``Definitions''. The
existing note stating that a User that incurs co-location fees for a
particular co-location service would not be subject to co-location fees
for the same co-location service charged by the Exchange's affiliates
would become note one under ``General Notes'' and the proposed
provisions regarding aggregate cabinet footprints and what portion of
an NRC, if any, a User would be subject to if it changed bundles would
become note two.\21\
---------------------------------------------------------------------------
\21\ See note 18, supra.
---------------------------------------------------------------------------
Users that purchase a proposed Partial Cabinet Solution bundle
would not be subject to the 12-month minimum commitment, but rather
would be subject to a 90-day commitment, after which period they would
be subject to the 60-day rolling time period. As noted above, the
Exchange anticipates that Users of the Partial Cabinet Solution bundles
would include those with minimum power or cabinet space demands and
Users for which the costs attendant with having a dedicated cabinet or
greater network connection bandwidth are too burdensome. The Exchange
proposes to have a reduced minimum commitment period for the Partial
Cabinet Solution bundle to further reduce the cost commitment for such
Users.
General
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; \22\ 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.\23\
---------------------------------------------------------------------------
\22\ 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.
\23\ See SR-NYSE-2013-59, supra note 5 at 51766. The Exchange's
affiliates have also submitted the same proposed rule change to
propose the changes described herein. See SR-NYSEMKT-2015-89 and SR-
NYSEArca-2015-102.
---------------------------------------------------------------------------
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,\24\ in general, and furthers the
objectives of Sections 6(b)(5) of the Act,\25\ 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.
---------------------------------------------------------------------------
\24\ 15 U.S.C. 78f(b).
\25\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that providing connectivity to time feeds is
not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers because the service would offer
connectivity to different time feed options, allowing a User that opts
to connect to a time feed to select the time protocol that best suits
its needs, helping it tailor its data center operations to the
requirements of its business operations. The time feeds are unrelated
to trading on the Exchange or the Exchange's data feeds. A User does
not require connectivity to a time feed to trade on the Exchange, and
usage of a time feed has no effect on a User's orders going to, or
trade data coming from, the Exchange.
The Exchange believes that providing connectivity to GPS for
dedicated cabinets but not partial cabinets and to NTP through the LCN
but not the IP network is not designed to permit unfair discrimination
between customers, issuers, brokers, or dealers because the Exchange
proposes to offer connectivity to time feeds, including GPS and NTP, as
a convenience to Users, and usage of a time feed has no effect on a
User's orders going to, or trade data coming from, the Exchange.
Regarding GPS, the proximity of GPS and power connections into a
partial cabinet would expose GPS to interference from the cable power
connections, interfering with the delivery of the GPS data, and so the
Exchange is not able to offer connectivity to GPS for partial cabinets.
A User that requires connectivity to GPS could opt to purchase a
dedicated cabinet or become a Hosted Customer of a Hosting User with a
dedicated cabinet. Regarding NTP, the Exchange has opted to offer the
NTP only over the LCN due to a lack of demand for the NTP over the IP
network. A User that requires connectivity to NTP could connect to the
LCN.
The Exchange believes that the Partial Cabinet Solution bundles are
not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers because the Partial Cabinet Solution
bundles would offer four different Partial Cabinet Solution bundles
with options with respect to cabinet footprint and network connections.
Users that require other sizes or combinations of cabinets, network
connections and cross connects could still request them.
The Exchange believes that its proposal would remove impediments
to, and perfects the mechanisms of, a free and open market and a
national market system and, in general, protects investors and the
public interest because the proposed connectivity to time feeds would
provide Users a convenient way to access time protocols. Having
different time feed options would allow a User with a dedicated cabinet
to select the time protocol that suits its needs, and for a User with a
partial cabinet to select between the NTP and PTP.
In addition, the Exchange believes that its proposal would remove
impediments to, and perfects the mechanisms of, a free and open market
and a national market system and, in general, protects investors and
the public interest because the proposed Partial Cabinet Solution
bundles would make it more cost effective for Users
[[Page 78273]]
that meet the conditions described above for access to the Partial
Cabinet Solution bundle to utilize co-location by creating a convenient
way to create a colocation environment, through four Partial Cabinet
Solution bundles with options with respect to cabinet footprint and
network connections. The Exchange expects that such Users would include
those with minimal power or cabinet space demands and Users for which
the costs attendant with having a dedicated cabinet or greater network
connection bandwidth are too burdensome. Such Users may choose to pass
on such cost savings to their customers. The Exchange expects that the
majority of Users that purchase a Partial Cabinet Solution bundle will
not previously have been a User or Hosted Customer, but recognizes that
it is possible that purchasing Users may include entities that
otherwise would be Hosted Customers.
The Exchange also believes that the proposed rule change is
consistent with Section 6(b)(4) of the Act,\26\ in particular, because
it provides for the equitable allocation of reasonable dues, fees, and
other charges among its members, issuers and other persons using its
facilities and does not unfairly discriminate between customers,
issuers, brokers or dealers. Overall, the Exchange believes that the
proposed fees for the time feed connectivity and Partial Cabinet
Solution bundles are reasonable because the Exchange proposes to offer
the services 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 monitoring, support and maintenance of such
services. The higher fee in connection with the GPS reflects the
greater costs for its equipment, installation and maintenance in
comparison with the other time feeds. The Exchange believes that
submitting Users that order the proposed time feed services to a 12-
month minimum commitment, after which period they would be subject a
60-day rolling time period, is reasonable, as it reflects the
investment the Exchange incurs in order to provide the service. The
Exchange believes that the 12-month minimum period is common practice
for colocation offerings.
---------------------------------------------------------------------------
\26\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
In addition, the Exchange believes that its proposal to limit
access to Partial Cabinet Solution bundles to a User that meets the
conditions described above, specifically, that (1) the User purchases
only one Partial Cabinet Solution bundle, (2) the User and its
Affiliates do not currently have a Partial Cabinet Solution bundle,
and, (3) after the purchase of a Partial Cabinet Solution bundle, the
User, together with its Affiliates, will have an aggregate cabinet
footprint of no more than 2 kW, is reasonable, because the Partial
Cabinet Solution bundles are intended to make it more cost effective
for smaller Users to utilize co-location. All Users would be subject to
the same limits on the number of Partial Cabinet Solution bundles and
aggregate cabinet footprint. The Exchange believes that the proposal is
reasonable because it establishes a manner for the Exchange to treat
Users for purposes of assessing aggregate cabinet footprint. The
provision is equitable because all Users seeking to purchase a Partial
Cabinet Solution bundle would be subject to the same parameters. The
Exchange further notes that the proposal would serve to reduce any
potential for confusion on how cabinet footprint can be aggregated or
what entities would constitute Affiliates.
The Exchange believes that, by aggregating the aggregate cabinet
footprint of a User with the aggregate cabinet footprint of its
Affiliates for purposes of determining whether the User has satisfied
the conditions, the proposed rule change avoids disparate treatment of
Users that have divided their various business activities between
separate corporate entities, including between a User and a Hosted
Customer, as compared to Users that operate those business activities
within a single corporate entity. The Exchange believes that setting
the common ownership or control threshold in the definition of
Affiliates at 50% is reasonable because it will discourage any User
from taking deliberate advantage of the proposed Partial Cabinet
Solution bundle by setting up separate corporate entities to act as
Users or Hosted Customers.
The Exchange believes that it is reasonable that Users that order a
Partial Cabinet Solution bundle on or before December 31, 2016 would
have their MRC reduced by 50% for the first 12 months because the
Partial Cabinet Solution bundles are a new service, and so it is
reasonable to offer such reduction as an incentive to Users to utilize
the new service. Similarly, the Exchange believes that submitting Users
that purchase the propose Partial Cabinet Solution bundle to a 90-day
commitment, rather than the 12-month minimum commitment, after which
period they would be subject to the 60-day rolling time period, is
reasonable. As noted above, the Exchange anticipates that Users of the
Partial Cabinet Solution bundles would include those with minimum power
or cabinet space demands and Users for which the costs attendant with
having a dedicated cabinet or greater network connection bandwidth are
too burdensome. The Exchange believes that it is reasonable to have a
reduced minimum commitment period for the Partial Cabinet Solution
bundle to further reduce the cost commitment for such Users as an
incentive to Users to utilize the new service.
The Exchange believes that it is reasonable not to charge a User
that changes its Partial Cabinet Solution bundle a second NRC, but
instead charge the difference, if any, between the NRCs, because the
cost to the Exchange of modifying the service to move a User to a
different Partial Cabinet Solution bundle is lower than the cost of the
initial installation of a Partial Cabinet Solution bundle.
The Exchange also believes that the services and fees proposed
herein for Partial Cabinet Solution bundles are reasonable because if a
User purchased each of the components of a Partial Cabinet Solution
bundle, whether over several purchases or in one order, and met the
conditions described above for access to the Partial Cabinet Solution
bundle, the Exchange would automatically treat the User's services as a
Partial Cabinet Solution bundle and, effective the date of installation
of the final component, reduce the User's MRC to the MRC for the
relevant bundle.
The Exchange believes that the proposed change to provide Users
access to time feeds 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 connectivity to time feeds being completely voluntary,
it is available to all Users on an equal basis (i.e., the same
connectivity to time feed products and services is available to all
Users, and the same conditions described above for access to the
Partial Cabinet Solution bundles would apply to all Users). All Users
that voluntarily select connectivity to one or more of the proposed
time feeds would be charged the same amount for the same services.
The Exchange believes that the proposed change to provide Partial
Cabinet Solution bundles is equitable and not unfairly discriminatory
because
[[Page 78274]]
it would be available to all Users that meet the conditions described
above for access to the Partial Cabinet Solution bundle and would
result in fees being charged only to such Users that voluntarily select
to receive the corresponding service.
The Exchange believes that the proposed change to provide Partial
Cabinet Solution bundles provides for the equitable allocation of
reasonable dues, fees, and other charges among its members, issuers and
other persons using its facilities. As previously stated, the proposal
would make it more cost effective for Users that meet the conditions
described above for access to the Partial Cabinet Solution bundle to
utilize co-location. While the Exchange expects that the majority of
Users that purchase a Partial Cabinet Solution bundle will not
previously have been a User or Hosted Customer, it recognizes that it
is possible that purchasing Users may include entities that otherwise
would be Hosted Customers. However, it notes that being a Hosted
Customer and being a User with a Partial Cabinet Solution bundle are
not fungible. A Hosting User manages the service provided to the Hosted
Customer, which services may include, for example, supporting the
Hosted Customer's technology, whether hardware or software. The Hosted
Customer has no relationship with the Exchange. A User with a Partial
Cabinet Solution bundle, by contrast, is responsible for supporting its
own technology and is in a direct contractual relationship with the
Exchange. Providing entities with the additional option of the Partial
Cabinet Solution bundle will allow them to select the relationship and
type of service that better corresponds to their needs and resources.
Furthermore, the Exchange believes that the Partial Cabinet
Solution bundle 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, and the same conditions described above for access to the
Partial Cabinet Solution bundles would apply to all Users). All Users
that voluntarily select the proposed Partial Cabinet Solution bundle
service would be subject to the same limits on the number of Partial
Cabinet Solution bundles and aggregate cabinet footprint. The Exchange
believes that, by aggregating the aggregate cabinet footprint of a User
with the aggregate cabinet footprint of its Affiliates for purposes of
determining whether the User has satisfied the conditions, the proposed
limit on aggregate cabinet footprint avoids disparate treatment of
Users that have divided their various business activities between
separate corporate entities, including between a User and a Hosted
Customer, as compared to Users that operate those business activities
within a single corporate entity. Finally, all Users that order a
bundle on or before December 31, 2016 would have their MRC reduced by
50% for the first 12 months.
The Exchange believes that it is equitable and not unfairly
discriminatory to not charge a User that changes its Partial Cabinet
Solution bundle a second NRC, but instead charge the difference, if
any, between the NRCs, because the cost to the Exchange of modifying
the service to move a User to a different Partial Cabinet Solution
bundle is lower than the cost of the initial installation of a Partial
Cabinet Solution bundle.
The Exchange also believes that the services and fees proposed
herein for Partial Cabinet Solution bundles are not unfairly
discriminatory and are equitably allocated because if a User purchased
each of the components of a Partial Cabinet Solution bundle, whether
over several purchases or in one order, and met the conditions
described above for access to the Partial Cabinet Solution bundle, the
Exchange would automatically treat the User's services as a Partial
Cabinet Solution bundle and, effective the date of installation of the
final component, reduce the User's MRC to the MRC for the relevant
bundle.
For the reasons above, the proposed changes do 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,\27\ 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 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, and
the same conditions described above for access to the Partial Cabinet
Solution bundles would apply to all Users).
---------------------------------------------------------------------------
\27\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------
The Exchange believes that providing Users with connectivity to
time feeds will not impose any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Act
because such connectivity satisfies User demand for a convenient way to
access time protocols. Having connectivity to different time feed
options would allow a User with a dedicated cabinet to select the time
protocol that best suits its needs, and for a User with a partial
cabinet to select between the NTP and PTP, helping Users tailor their
data center operations to the requirements of their business
operations. In addition, the Exchange believes that providing
connectivity to GPS for dedicated cabinets but not partial cabinets and
to NTP through the LCN but not the IP network will not impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act because the Exchange proposes to
offer connectivity to time feeds, including GPS and NTP, as a
convenience to Users, and usage of a time feed has no effect on a
User's orders going to, or trade data coming from, the Exchange.
The Exchange believes that allowing Users to purchase Partial
Cabinet Solution bundles will not impose any burden on competition that
is not necessary or appropriate in furtherance of the purposes of the
Act because such access will satisfy User demand for cost effective
options for smaller Users that choose to utilize co-location. All Users
that meet the conditions described above for access to the Partial
Cabinet Solution bundle would be subject to the same limits on the
number of Partial Cabinet Solution bundles and aggregate cabinet
footprint, all Users that order a bundle on or before December 31, 2016
would have their MRC reduced by 50% for the first 12 months, and all
Users that change Partial Cabinet Solution bundles would not be charged
a second NRC, but instead charged the difference, if any, between the
NRCs.
The Exchange believes that allowing Users to purchase Partial
Cabinet Solution bundles will not impose any burden on competition that
is not necessary or appropriate in furtherance of the purposes of the
Act because, as previously stated, the proposal would make it more cost
effective for Users
[[Page 78275]]
that meet the conditions described above for access to the Partial
Cabinet Solution bundle to utilize co-location. While the Exchange
expects that the majority of Users that purchase a Partial Cabinet
Solution bundle will not previously have been a User or Hosted
Customer, it recognizes that it is possible that purchasing Users may
include entities that otherwise would be Hosted Customers. However, it
notes that being a Hosted Customer and being a User with a Partial
Cabinet Solution bundle are not fungible. A Hosting User manages the
service provided to the Hosted Customer, which services may include,
for example, supporting the Hosted Customer's technology, whether
hardware or software. The Hosted Customer has no relationship with the
Exchange. A User with a Partial Cabinet Solution bundle, by contrast,
is responsible for supporting its own technology and is in a direct
contractual relationship with the Exchange. Providing entities with the
additional option of the Partial Cabinet Solution bundle will allow
them to select the relationship and type of service that better
corresponds to their needs and resources.
The proposed changes will also enhance competition by making it
more cost effective for Users that meet the conditions described above
for access to the Partial Cabinet Solution bundle to utilize co-
location by creating a convenient way to create a colocation
environment, through Partial Cabinet Solution bundles with options with
respect to cabinet footprint and network connections. Such Users may
choose to pass on such cost savings to their customers.
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
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission shall: (a) By order approve
or disapprove such proposed rule change, or (b) institute proceedings
to determine whether the proposed rule change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File No. SR-NYSE-2015-53 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-NYSE-2015-53. 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-NYSE-2015-53, and should be
submitted on or before January 6, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
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\28\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-31576 Filed 12-15-15; 8:45 am]
BILLING CODE 8011-01-P
