Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 1, Establishing Procedures for the Allocation of Cages to Its Co-Located Users, Including the Waiver of Certain Fees, and To Amend the Visitor Security Escort Requirements and Fee, 12981-12986 [2016-05435]

Download as PDF Federal Register / Vol. 81, No. 48 / Friday, March 11, 2016 / Notices Paper Comments: B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change is not designed to address any competitive issues, but rather to provide for how the Exchange would determine an Official Closing Price for Exchange-listed securities if it is impaired and cannot conduct a closing transaction due to a systems or technical issue. The proposal has been crafted with input from market participants, Nasdaq, and the SIPs, and is designed to reduce the burden on competition by having similar back-up procedures across all primary listing exchanges if such exchange is is [sic] impaired and cannot conduct a closing transaction. 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 up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove the proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. asabaliauskas on DSK3SPTVN1PROD with NOTICES 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: • Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSE–2016–18. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSE– 2016–18 and should be submitted on or before April 1, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.11 Robert W. Errett, Deputy Secretary. [FR Doc. 2016–05436 Filed 3–10–16; 8:45 am] BILLING CODE 8011–01–P • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSE–2016–18 on the subject line. VerDate Sep<11>2014 17:56 Mar 10, 2016 Jkt 238001 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–77304; File No. SR– NYSEMKT–2016–17] Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 1, Establishing Procedures for the Allocation of Cages to Its Co-Located Users, Including the Waiver of Certain Fees, and To Amend the Visitor Security Escort Requirements and Fee March 7, 2016. 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 February 23, 2016, NYSE MKT LLC (the ‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. On March 1, 2016, the Exchange filed Amendment No. 1 to the proposed rule change.4 The Commission is publishing this notice to solicit comments on the proposed rule change, as modified by Amendment No. 1, from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the Proposed Rule Change The Exchange proposes to establish procedures for the allocation of cages to its co-located Users, including the waiver of certain fees, and to amend the visitor security escort requirements and fee. The Exchange proposes to amend the NYSE MKT Equities Price List (‘‘Price List’’) and the NYSE Amex Options Fee Schedule (‘‘Fee Schedule’’) to reflect the changes. The proposed 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. 1 15 U.S.C.78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 4 In Amendment No. 1, the Exchange clarified the proposal to specify that the visitor escort fee is equitable because all Users of the Exchange’s Data Center would be charged the same fee. The Exchange also clarified the proposal to specify that while an individual User is on the waitlist for a cabinet, it will be granted a fee waiver for 2 bundles of 24 cross connects to be used to connect that User’s non-contiguous cabinets. 2 15 Electronic Comments 11 17 PO 00000 CFR 200.30–3(a)(12). Frm 00124 Fmt 4703 Sfmt 4703 12981 E:\FR\FM\11MRN1.SGM 11MRN1 12982 Federal Register / Vol. 81, No. 48 / Friday, March 11, 2016 / Notices 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 establish procedures for the allocation of cages to Users, including the waiver of certain fees, and to amend the visitor security escort requirements.5 The Exchange proposes to amend the Price List and Fee Schedule to reflect the changes. Proposed Cage Allocation Procedure asabaliauskas on DSK3SPTVN1PROD with NOTICES A User is able to purchase a cage to house its cabinets within the Data Center.6 A cage would typically be purchased by a User that has several cabinets within the Data Center and wishes to arrange its cabinets contiguously while also enhancing privacy around its cabinets. The Exchange offers three sizes of cages corresponding to the number of cabinets housed therein, and charges fees for the 5 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. 62961 (September 21, 2010), 75 FR 59299 (September 27, 2010) (SR–NYSEAmex-2010– 80) (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. 6 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. 76009 (September 29, 2015), 80 FR 60213 (October 5, 2015) (SR– NYSEMKT–2015–67). As specified in the Price List and the Fee Schedule, a User that incurs co-location fees for a particular co-location service pursuant thereto would not be subject to co-location fees for the same co-location service charged by the Exchange’s affiliates New York Stock Exchange LLC and NYSE Arca, Inc. See Securities Exchange Act Release No. 70176 (August 13, 2013), 78 FR 50471 (August 19, 2013) (SR–NYSEMKT–2013–67. VerDate Sep<11>2014 17:56 Mar 10, 2016 Jkt 238001 cages based on the size.7 The physical footprint of each cage is greater than that of the cabinets that it houses, as each cage is constructed so as to include aisles around the purchasing User’s cabinets, for accessibility and in compliance with safety regulations.8 Accordingly, in order to provide a User with a cage, the Data Center must have sufficient contiguous open space available for the cage. The Exchange allocates cages on a first come/first serve basis. The Data Center opened in 2010, and at that time, the Exchange represented that it offers co-location space based on availability and that it had sufficient space in the Data Center to accommodate demand on an equitable basis for the foreseeable future.9 The Exchange continues to believe that there is sufficient space in the Data Center to accommodate demand. However, much of the space currently available for co-location is in smaller segments, resulting from an increasing number of Users, multiple moves within the Data Center, and changes to Users’ space requirements—both increases and decreases—since 2010. Accordingly, in 2015, the Exchange determined that, to continue to be able to meet its obligation to accommodate demand, and in particular to make available more contiguous, larger spaces for new and existing Users, it would exercise its right to move some Users’ equipment within the Data Center (the ‘‘Migration’’).10 The Exchange put procedures in place to manage the process for the Migration, and is implementing them. While the Migration will make available more contiguous, larger spaces for new and existing Users, the Exchange believes that even after the Migration such contiguous open space will be limited, and may become more limited over time. Accordingly, the Exchange proposes to put procedures in place for the allocation of cages if the available open contiguous space in the Data Center is not sufficient to house a new cage or the open contiguous space available is sufficiently limited that the Exchange cannot both provide new 7 See Securities Exchange Act Release No. 67665 (August 15, 2012), 77 FR 50734 (August 22, 2012) (SR–NYSEMKT–2012–11) (‘‘2012 Release’’). A User must have at least two cabinets in the Data Center to purchase a cage. See Securities Exchange Act Release No. 72719 (July 30, 2014), 79 FR 45502 (August 5, 2014) (SR–NYSEMKT–2014–61) (‘‘2014 Release’’). 8 For example, a cage for 20 cabinets takes up as much floor space as 33 cabinets. 9 See Original Co-Location Filing, at 59299. 10 See Securities Exchange Act Release No. 76268 (October 26, 2015), 80 FR 66947 (October 30, 2015) SR–NYSEMKT–2015–70 (‘‘Migration Release’’). PO 00000 Frm 00125 Fmt 4703 Sfmt 4703 cages and satisfy all User demand for other co-location services. The proposed procedures are as follows: • The Exchange will place Users seeking new cages on a waitlist. The order of Users on the list will be based on the date the Exchange receives signed orders for the cages from each User. • Once the list is established, Users, on a rolling basis, will be allocated a cage each time one becomes available.11 • If a cage becomes available and the User that is at the top of the waitlist turns it down because it requested a different size cage, the Exchange will offer the available cage to the next Users on the list, in order, until a User accepts it. A User that turns down a cage because it is not the correct size will remain on the waitlist. A User that turns down a cage that is the size that it requested will be removed from the waitlist. • If a User requests two cages, after receiving the first cage it will move to the bottom of the waitlist. In connection with the above procedure, the Exchange proposes to waive certain fees for Users that have requested a cage and have been added to the waitlist pursuant to the allocation procedure. The Exchange expects that, while on the waitlist for a cage or for a larger cage, a User may have to use noncontiguous cabinets and/or cages, in which case it would connect the cabinets with cross connects, which are fiber connections used to connect cabinets within the Data Center.12 In such circumstances, the Exchange proposes to waive the initial and monthly fee for two bundles of 24 cross connects between the User’s non11 A cage may become available, for example, if a User terminates use of an existing cage or if contiguous cabinets become vacant, opening up contiguous space. The Exchange believes that the proposed procedures are consistent with the NASDAQ procedures for allocating cabinets if NASDAQ’s inventory shrinks to zero. See Securities Exchange Act Release No. 62397 (June 28, 2010), 75 FR 38860 (July 6, 2010) (SR–NASDAQ–2010–019). 12 A User is able to purchase cross connects individually or in bundles (i.e., multiple cross connects within a single sheath) of six, 12, 18 or 24 cross connects. The Commission approved the fee for cross connects between a single User’s cabinets within the data center in the Original CoLocation Filing. See Original Co-Location Filing, at 59299. The use of cross connects was subsequently revised to allow each User to purchase cross connects between its cabinet(s) and the cabinets of separate Users or a non-User’s equipment within the Data Center. See 2012 Release, at 50735, and Securities Exchange Act Release No. 74220 (February 6, 2015), 80 FR 7894 (February 12, 2015) (SR–NYSEMKT–2015–08). The Exchange notes that a User with a cage may request a new cage, either to add a second cage or to change cages. In such a case, the cross connects would be between the cabinets within the cage and the non-contiguous cabinets outside the cage. E:\FR\FM\11MRN1.SGM 11MRN1 Federal Register / Vol. 81, No. 48 / Friday, March 11, 2016 / Notices contiguous cabinets. Once the User is allocated a cage through the allocation procedure or is no longer on the waitlist, the Exchange would cease to waive the fee. As noted above, a User that turns down a cage that is the size that it requested will be removed from the waitlist. If such User asks to be added back onto the waitlist, the Exchange will add the User to the bottom of the waitlist, but will not provide the proposed fee waiver a second time. The Exchange proposes to amend the Price List and Fee Schedule to add a new General Note 3 to the fee to furnish and install a bundle of 24 cross connects, as follows: The initial and monthly charge for 2 bundles of 24 cross connects will be waived for Users that are waitlisted for a cage for the duration of the waitlist period, provided that the cross connects may only be used to connect the Users’ non-contiguous cabinets. The charge will no longer be waived once a User is removed from the waitlist. • If a waitlist is created, a User seeking a new cage will be placed on the waitlist based on the date a signed order for the cage is received. • A User that turns down a cage because it is not the correct size will remain on the waitlist. A User that requests to be removed or that turns down a cage that is the size that it requested will be removed from the waitlist. • A User that is removed from the waitlist but subsequently requests a cage will be added back to the bottom of the waitlist, provided that, if the User was removed from the waitlist because it turned down a cage that is the size that it requested, it will not receive a second waiver of the charge. Visitor Security Escorts asabaliauskas on DSK3SPTVN1PROD with NOTICES Currently, all User representatives are required to have a visitor security escort during visits to the Data Center, including User representatives who have a permanent Data Center site access badge.13 The Exchange proposes to amend the description of the visitor security escort fee to provide that it would not apply to User representatives 13 See Securities Exchange Act Release No. 62731 (August 16, 2010), 75 FR 51515 (August 20, 2010) (SR–NYSEAmex–2010–80) (notice of proposed rule change amending price list to reflect fees charged for co-location services); see also Original Colocation Filing, at 59299. Fees for visitor security escorts for the move of a User’s equipment within the Data Center are waived when incurred in connection with such a move required by the Exchange as part of the Migration. See Migration Release, at 66945. VerDate Sep<11>2014 17:56 Mar 10, 2016 Jkt 238001 visiting the User’s cage and to provide that the cost is $75 per visit. The Exchange requires visitor security escorts for security purposes, primarily to ensure that a visitor does not interfere with the cabinets of other Users or Exchange equipment. The Exchange believes it is not necessary to have a User representative accompanied by a visitor security escort when the representative is visiting the User’s cage, because the User representative would only have access to that User’s cabinets, which would be in the confined area within the locked cage. The User representative would not have access to the cabinets of other Users or Exchange equipment, which are locked as well. By comparison, Users that do not have cages share colocation space with other Users. While such spaces are locked, more than one User may have cabinets within a given locked space, and so a visitor security escort is warranted. The Exchange proposes to make several additional non-substantive changes to the description of the visitor security escort fee, to reduce redundancy and increase clarity. The current description is as follows: NYSE employee escort, which is required during User visits to the data center. (Note: all User representatives are required to have a visitor security escort during visits to the data center, including User representatives who have a permanent data center site access badge.) The proposed description of the visitor escort fee would read as follows: All User representatives are required to be accompanied by a visitor security escort during visits to the data center unless visiting the User’s cage. Requirement includes User representatives who have a permanent data center site access badge. The Exchange proposes to remove the first clause, with its reference to the visitor security escort as an ‘‘NYSE employee escort,’’ because it is redundant with the parenthetical and because the reference to ‘‘NYSE employees’’ could be potentially confusing, given that not just the New York Stock Exchange LLC but also its affiliates, the Exchange and NYSE Arca, Inc., provide co-location services at the Data Center. In addition, the Exchange proposes to use ‘‘accompanied by a visitor security escort’’ rather than ‘‘have a visitor security escort’’ because it believes that ‘‘accompanied’’ makes it more clear that the escort will accompany the User representative. The Price List and Fee Schedule include a Visitor Security Escort fee of $75 per hour. The Exchange proposes to amend the Price List and Fee Schedule to charge Users $75 per visit for such PO 00000 Frm 00126 Fmt 4703 Sfmt 4703 12983 visitor security escorts. Based on the Exchange’s experience, currently many of the escorted visits last an hour or less, and for Users that do not have a cage, escorted visits are typically about an hour. 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; 14 and (iii) a User would only 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.15 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,16 in general, and furthers the objectives of sections 6(b)(5) of the Act,17 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 14 As is currently the case, Users that receive colocation services from the Exchange will not receive any means of access to the Exchange’s trading and execution systems that is separate from, or superior to, that of others with access to the Exchange’s trading and execution systems. 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, colocated Users do not receive any market data or data service product that is not available to users that have access to the Exchange’s trading and execution systems, although Users that receive co-location services normally would expect reduced latencies in sending orders to, and receiving market data from, the Exchange. 15 See SR–NYSEMKT–2013–67, supra note 5 at 50471. The Exchange’s affiliates have also submitted substantially the same proposed rule change. See SR–NYSE–2016–13 and SR–NYSEArca2016–21. 16 15 U.S.C. 78f(b). 17 15 U.S.C. 78f(b)(5). E:\FR\FM\11MRN1.SGM 11MRN1 asabaliauskas on DSK3SPTVN1PROD with NOTICES 12984 Federal Register / Vol. 81, No. 48 / Friday, March 11, 2016 / Notices remove impediments to, and perfect the mechanisms of, a free and open market and a national market system and, in general, to protect investors and the public interest and because it is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The Exchange believes that the proposed procedure for allocating cages is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers because the proposal would establish rational, objective procedures that would be applied uniformly by the Exchange to Users that requested cages and would not unfairly discriminate among similarly situated Users of co-location services. All Users seeking to purchase a cage would be subject to the same procedures. The Exchange believes that the proposed procedure would serve to reduce any potential for confusion on how cages would be allocated should it become necessary. In addition, the proposed allocation procedure would assist the Exchange to ensure that it has sufficient space in the Data Center to accommodate demand for co-location services on an equitable basis for the foreseeable future. The Exchange believes that the proposal to waive fees for two bundles of 24 cross connects between a waitlisted User’s non-contiguous cabinets is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers because the waiver would be applied uniformly by the Exchange to all waitlisted Users and would not unfairly discriminate among similarly situated Users of co-location services. A waitlisted User would only require cross connects between its noncontiguous cabinets due to the waitlist. If, instead of being put on the waitlist, the User had received the cage it requested, the User would not require the cross connects. In addition, the Exchange proposes that the cross connects could only be used to connect the User’s non-contiguous cabinets. The waiver would help to alleviate the inconvenience for the waitlisted User of having cabinets in non-contiguous space by directly addressing, for the time period during which the User is waitlisted, a cost directly related to being on the waitlist. Once the User was allocated a cage through the allocation procedure or was removed from the waitlist, the Exchange would cease to waive the fee. The Exchange believes that the proposed amendment to the visitor security escort fee is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers VerDate Sep<11>2014 17:56 Mar 10, 2016 Jkt 238001 because the escort fee would be applied uniformly by the Exchange to all Users unless a User representative was visiting the User’s cage, and would not unfairly discriminate among similarly situated Users of co-location services. The Exchange also believes that the proposed rule change is consistent with section 6(b)(4),18 in particular, in that 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. The Exchange believes that the proposed procedure for allocating cages is equitable and not unfairly discriminatory because the cages are offered simply as a convenience to Users. A User does not require a cage to trade on the Exchange, and usage of a cage has no effect on a User’s orders going to, or trade data coming from, the Exchange, or the User’s ability to utilize other co-location services. The proposed allocation procedure would assist the Exchange to ensure that it has sufficient space in the Data Center to accommodate demand for co-location services on an equitable basis for the foreseeable future. The Exchange believes that the proposal to waive fees for two bundles of 24 cross connects between a waitlisted User’s non-contiguous cabinets is equitable and not unfairly discriminatory because a waitlisted User would only require the cross connects due to the waitlist. If, instead of being put on the waitlist, the User had received the cage it requested, the User would not require the cross connects. In addition, the Exchange proposes that the cross connects could only be used to connect the User’s non-contiguous cabinets. The waiver would help to alleviate the inconvenience for the waitlisted User of having cabinets in non-contiguous space by directly addressing, for the time period during which the User is waitlisted, a cost directly related to being on the waitlist. Once the User was allocated a cage through the allocation procedure or was removed from the waitlist, the Exchange would cease to waive the fee. The Exchange believes that the proposed amendment to the visitor security escort fee is equitable and not unfairly discriminatory because the escort fee would be applied uniformly by the Exchange to all Users unless a User representative was visiting the User’s cage, and would not unfairly discriminate among similarly situated Users of co-location services. The same 18 15 PO 00000 U.S.C. 78f(b)(4), (5). Frm 00127 Fmt 4703 Sfmt 4703 requirements and fees would be applied uniformly to all Users. The Exchange believes that the amendment is equitable because the security purposes that lead the Exchange to require visitor security escorts, namely to ensure that a visitor does not interfere with the cabinets of other Users or Exchange equipment, are not present when a User representative is visiting the User’s cage, because the User representative would only have access to the Users’ cabinets, which would be in the confined area within the locked cage. The User representative would not have access to the cabinets of other Users or Exchange equipment, which are locked as well. The Exchange believes that the proposed allocation procedure for cages is reasonable because the proposal would establish rational, objective procedures that would be applied uniformly by the Exchange to Users. All Users seeking to purchase a cage would be subject to the same procedures. In addition, the Exchange believes that the proposed procedure would serve to reduce any potential for confusion on how cages would be allocated should it become necessary. The Exchange believes that the proposal to waive fees for two bundles of 24 cross connects between a waitlisted User’s non-contiguous cabinets is reasonable because the waitlisted User would only require the cross connects due to the waitlist. If, instead of being put on the waitlist, the User had received the cage it requested, the User would not require the cross connects. In addition, the Exchange proposes that the cross connects could only be used to connect the User’s noncontiguous cabinets. The waiver would help to alleviate the inconvenience for the waitlisted User of having cabinets in non-contiguous space by directly addressing, for the time period during which the User is waitlisted, a cost directly related to being on the waitlist. In addition, the Exchange believes that the proposal is reasonable because once the User was allocated a cage through the allocation procedure or was removed from the waitlist, the Exchange would cease to waive the fee. The Exchange also believes that, if a User is removed from the waitlist because it turned down a cage that is the size that it requested, it is reasonable not to provide the User a second waiver of the fee if the User subsequently requests a cage. To provide a second waiver would create an incentive for a User to use the waitlist to avoid paying the waived fees for cross connects despite being given an opportunity to get off the waitlist. E:\FR\FM\11MRN1.SGM 11MRN1 Federal Register / Vol. 81, No. 48 / Friday, March 11, 2016 / Notices asabaliauskas on DSK3SPTVN1PROD with NOTICES The Exchange believes that the proposed amendments to the visitor security escort fee are reasonable, because the security purposes that lead the Exchange to visitor security escorts, namely to ensure that a visitor does not interfere with the cabinets of other Users or Exchange equipment, are not present when a User representative is visiting the User’s cage, because the User representative would only have access to the Users’ cabinets, which would be in the confined area within the locked cage. The User representative would not have access to the cabinets of other Users or Exchange equipment, which are locked as well. Finally, the Exchange believes that its nonsubstantive changes to the description of the visitor security escort fee are reasonable, because they would reduce redundancy and increase clarity in the description. The Exchange believes that the proposed rate of $75 per visit for the Visitor Security Escort, as opposed to $75 per hour, is reasonable because all Users would be subject to the same fee. The Exchange believes that charging a flat fee per visit is consistent with fees for other services performed by data center staff, including Change Fees and Initial Install Services.19 The proposed rate of $75 per visit for the Visitor Security Escort would be a fee reduction for any visit that lasted more than an hour, and so it would reduce the burden placed on Users that are still subject to the fee. 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,20 the Exchange believes that the proposed rule change will not impose any burden on competition that is not necessary or appropriate in furtherance 19 See 2012 Release, supra note 6, at 50735, and 2014 Release, supra note 6, at 45503. Change Fees are charged per request and Initial Install Services fees are charged per cabinet or eight-rack unit in a partial cabinet. 20 15 U.S.C. 78f(b)(8). VerDate Sep<11>2014 17:56 Mar 10, 2016 Jkt 238001 of the purposes of the Act. The Exchange believes that the proposed allocation procedures for cages would not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act because the proposed allocation procedure would assist the Exchange to ensure that it has sufficient space in the Data Center to accommodate demand for co-location services on an equitable basis for the foreseeable future. Similarly, the Exchange believes that the proposed fee waiver would facilitate the proposed allocation procedure, which would in turn facilitate use of the Data Center and provide access to the Data Center to current and additional market participants. In addition, because a User does not require a cage to trade on the Exchange, and usage of a cage has no effect on a User’s orders going to, or trade data coming from, the Exchange, or the User’s ability to utilize other co-location services, the Exchange believes that being waitlisted for a cage will not impose a burden on a User’s ability to compete. The Exchange believes that the proposed allocation procedure would establish rational, objective procedures that would reduce any potential for User confusion on how cages would be allocated should it become necessary. The Exchange believes that the proposed amendment to the visitor security escort fee would not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act because it would eliminate an unnecessary requirement, as the security purposes that lead the Exchange to visitor security escorts are not present when a User representative is visiting the User’s cage, because the User representative would only have access to the Users’ cabinets, which would be in the confined area within the locked cage. The User representative would not have access to the cabinets of other Users or Exchange equipment, which are locked as well. The proposed rate of $75 per visit for the Visitor Security Escort would be a fee reduction for any visit that lasted more than an hour, and so it would reduce the burden placed on Users that are still subject to the fee. 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 PO 00000 Frm 00128 Fmt 4703 Sfmt 4703 12985 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– NYSEMKT–2016–17 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–NYSEMKT–2016–17. 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 E:\FR\FM\11MRN1.SGM 11MRN1 12986 Federal Register / Vol. 81, No. 48 / Friday, March 11, 2016 / Notices 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– 2016–17, and should be submitted on or before April 1, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.21 Robert W. Errett, Deputy Secretary. [FR Doc. 2016–05435 Filed 3–10–16; 8:45 am] BILLING CODE 8011–01–P I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Rule 123C—Equities to provide for how the Exchange would determine an Official Closing Price if the Exchange is unable to conduct a closing transaction. 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. SECURITIES AND EXCHANGE COMMISSION A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change [Release No. 34–77306; File No. SR– NYSEMKT–2016–31] 1. Purpose Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of Proposed Rule Change Amending Rule 123C— Equities To Provide for How the Exchange Would Determine an Official Closing Price if the Exchange Is Unable To Conduct a Closing Transaction asabaliauskas on DSK3SPTVN1PROD with NOTICES March 7, 2016. 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 February 25, 2016, NYSE MKT LLC (the ‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the selfregulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 21 17 CFR 200.30–3(a)(12). U.S.C.78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 4 See NYSE press release dated July 22, 2015, available here: https://ir.theice.com/press-andpublications/press-releases/all-categories/2015/0722-2015.aspx. 1 15 VerDate Sep<11>2014 17:56 Mar 10, 2016 The Exchange is proposing to amend its rules to specify back-up procedures for determining an Official Closing Price for Exchange-listed securities if it is unable to conduct a closing transaction in one or more securities due to a systems or technical issue.4 Specifically, the Exchange proposes to amend Rule 123C—Equities (‘‘Rule 123C’’) to provide for how the Exchange would determine an Official Closing Price if the Exchange is impaired. The Exchange developed this proposal in consultation with its affiliated exchanges, NYSE Arca, Inc. (‘‘NYSE Arca’’) and New York Stock Exchange LLC (‘‘NYSE’’), and the NASDAQ Stock Market LLC (‘‘Nasdaq’’), and took into consideration feedback from discussions with industry participants, including meeting the following key goals important to market participants: • Providing a pre-determined, consistent solution that would result in a closing print to the applicable securities information processor (‘‘SIP’’) Jkt 238001 PO 00000 Frm 00129 Fmt 4703 Sfmt 4703 within a reasonable time frame from the normal closing time; • Minimizing the need for industry participants to modify their processing of data from the SIPs; and • Providing advance notification of the applicable closing contingency plan to provide sufficient time for industry participants to route any closing interest to an alternate venue to participate in that venue’s closing auction. Background The Exchange recently amended Rule 123C to add the definition of ‘‘Official Closing Price’’ for all Exchange-listed securities and, once implemented, will disseminate to the SIP the Official Closing Price as an ‘‘M’’ value.5 In that filing, the Exchange amended Rule 123C(1)(e)(i) to define the ‘‘Official Closing Price’’ of a security listed on the Exchange as the price established in a closing transaction under paragraphs (7) and (8) of Rule 123C of one round lot or more. If there is no closing transaction in a security or if a closing transaction is less than one round lot, the Official Closing Price will be the most recent last-sale eligible trade in such security on the Exchange on that trading day. The Exchange further amended Rule 123C(1)(e)(ii) to provide for how the Exchange would determine an Official Closing Price if the Exchange is unable to conduct a closing transaction in a security or securities due to a systems or technical issue. In such case, the Official Closing Price will be the last consolidated last-sale eligible trade for such security during regular trading hours on that trading day. The rule further provides that if there were no consolidated last-sale eligible trades in a security on a trading day when the Exchange is unable to conduct a closing transaction in a security or securities due to a systems or technical issue, the Official Closing Price of such security will be the prior day’s Official Closing Price. The Exchange also amended Rule 440B(b)—Equities to provide that Exchange systems will not execute or display a short sale order with respect to a covered security at a price that is less than or equal to the current national best bid if the price of that security decreases by 10% or more, as 5 See Securities Exchange Act Release No. 76601 (Dec. 9, 2015), 80 FR 77680 (Dec. 15, 2015) (SR– NYSEMKT–2015–98). For a description of all sale conditions that are reportable to the SIP, including the ‘‘M’’ value, see the Consolidated Tape System Participant Communications Interface Specification, dated November 16, 2015, at 86, available here: https://www.ctaplan.com/ publicdocs/ctaplan/notifications/trader-update/ cts_input_spec.pdf. E:\FR\FM\11MRN1.SGM 11MRN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 81, Number 48 (Friday, March 11, 2016)]
[Notices]
[Pages 12981-12986]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-05435]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77304; File No. SR-NYSEMKT-2016-17]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of
Proposed Rule Change, as Modified by Amendment No. 1, Establishing
Procedures for the Allocation of Cages to Its Co-Located Users,
Including the Waiver of Certain Fees, and To Amend the Visitor Security
Escort Requirements and Fee

March 7, 2016.
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 February 23, 2016, NYSE MKT LLC (the ``Exchange'' or
``NYSE MKT'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. On March 1, 2016, the Exchange filed Amendment No. 1 to
the proposed rule change.\4\ The Commission is publishing this notice
to solicit comments on the proposed rule change, as modified by
Amendment No. 1, from interested persons.
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\1\ 15 U.S.C.78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
\4\ In Amendment No. 1, the Exchange clarified the proposal to
specify that the visitor escort fee is equitable because all Users
of the Exchange's Data Center would be charged the same fee. The
Exchange also clarified the proposal to specify that while an
individual User is on the waitlist for a cabinet, it will be granted
a fee waiver for 2 bundles of 24 cross connects to be used to
connect that User's non-contiguous cabinets.
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change

The Exchange proposes to establish procedures for the allocation of
cages to its co-located Users, including the waiver of certain fees,
and to amend the visitor security escort requirements and fee. The
Exchange proposes to amend the NYSE MKT Equities Price List (``Price
List'') and the NYSE Amex Options Fee Schedule (``Fee Schedule'') to
reflect the changes. The proposed 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.

[[Page 12982]]

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 establish procedures for the allocation of
cages to Users, including the waiver of certain fees, and to amend the
visitor security escort requirements.\5\ The Exchange proposes to amend
the Price List and Fee Schedule to reflect the changes.
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\5\ 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.
62961 (September 21, 2010), 75 FR 59299 (September 27, 2010) (SR-
NYSEAmex-2010-80) (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.
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Proposed Cage Allocation Procedure
A User is able to purchase a cage to house its cabinets within the
Data Center.\6\ A cage would typically be purchased by a User that has
several cabinets within the Data Center and wishes to arrange its
cabinets contiguously while also enhancing privacy around its cabinets.
The Exchange offers three sizes of cages corresponding to the number of
cabinets housed therein, and charges fees for the cages based on the
size.\7\ The physical footprint of each cage is greater than that of
the cabinets that it houses, as each cage is constructed so as to
include aisles around the purchasing User's cabinets, for accessibility
and in compliance with safety regulations.\8\ Accordingly, in order to
provide a User with a cage, the Data Center must have sufficient
contiguous open space available for the cage. The Exchange allocates
cages on a first come/first serve basis.
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\6\ 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. 76009 (September 29, 2015), 80 FR 60213
(October 5, 2015) (SR-NYSEMKT-2015-67). As specified in the Price
List and the Fee Schedule, a User that incurs co-location fees for a
particular co-location service pursuant thereto would not be subject
to co-location fees for the same co-location service charged by the
Exchange's affiliates New York Stock Exchange LLC and NYSE Arca,
Inc. See Securities Exchange Act Release No. 70176 (August 13,
2013), 78 FR 50471 (August 19, 2013) (SR-NYSEMKT-2013-67.
\7\ See Securities Exchange Act Release No. 67665 (August 15,
2012), 77 FR 50734 (August 22, 2012) (SR-NYSEMKT-2012-11) (``2012
Release''). A User must have at least two cabinets in the Data
Center to purchase a cage. See Securities Exchange Act Release No.
72719 (July 30, 2014), 79 FR 45502 (August 5, 2014) (SR-NYSEMKT-
2014-61) (``2014 Release'').
\8\ For example, a cage for 20 cabinets takes up as much floor
space as 33 cabinets.
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The Data Center opened in 2010, and at that time, the Exchange
represented that it offers co-location space based on availability and
that it had sufficient space in the Data Center to accommodate demand
on an equitable basis for the foreseeable future.\9\ The Exchange
continues to believe that there is sufficient space in the Data Center
to accommodate demand.
---------------------------------------------------------------------------

\9\ See Original Co-Location Filing, at 59299.
---------------------------------------------------------------------------

However, much of the space currently available for co-location is
in smaller segments, resulting from an increasing number of Users,
multiple moves within the Data Center, and changes to Users' space
requirements--both increases and decreases--since 2010. Accordingly, in
2015, the Exchange determined that, to continue to be able to meet its
obligation to accommodate demand, and in particular to make available
more contiguous, larger spaces for new and existing Users, it would
exercise its right to move some Users' equipment within the Data Center
(the ``Migration'').\10\ The Exchange put procedures in place to manage
the process for the Migration, and is implementing them.
---------------------------------------------------------------------------

\10\ See Securities Exchange Act Release No. 76268 (October 26,
2015), 80 FR 66947 (October 30, 2015) SR-NYSEMKT-2015-70
(``Migration Release'').
---------------------------------------------------------------------------

While the Migration will make available more contiguous, larger
spaces for new and existing Users, the Exchange believes that even
after the Migration such contiguous open space will be limited, and may
become more limited over time. Accordingly, the Exchange proposes to
put procedures in place for the allocation of cages if the available
open contiguous space in the Data Center is not sufficient to house a
new cage or the open contiguous space available is sufficiently limited
that the Exchange cannot both provide new cages and satisfy all User
demand for other co-location services. The proposed procedures are as
follows:
The Exchange will place Users seeking new cages on a
waitlist. The order of Users on the list will be based on the date the
Exchange receives signed orders for the cages from each User.
Once the list is established, Users, on a rolling basis,
will be allocated a cage each time one becomes available.\11\
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\11\ A cage may become available, for example, if a User
terminates use of an existing cage or if contiguous cabinets become
vacant, opening up contiguous space. The Exchange believes that the
proposed procedures are consistent with the NASDAQ procedures for
allocating cabinets if NASDAQ's inventory shrinks to zero. See
Securities Exchange Act Release No. 62397 (June 28, 2010), 75 FR
38860 (July 6, 2010) (SR-NASDAQ-2010-019).
---------------------------------------------------------------------------

If a cage becomes available and the User that is at the
top of the waitlist turns it down because it requested a different size
cage, the Exchange will offer the available cage to the next Users on
the list, in order, until a User accepts it. A User that turns down a
cage because it is not the correct size will remain on the waitlist. A
User that turns down a cage that is the size that it requested will be
removed from the waitlist.
If a User requests two cages, after receiving the first
cage it will move to the bottom of the waitlist.
In connection with the above procedure, the Exchange proposes to
waive certain fees for Users that have requested a cage and have been
added to the waitlist pursuant to the allocation procedure. The
Exchange expects that, while on the waitlist for a cage or for a larger
cage, a User may have to use non-contiguous cabinets and/or cages, in
which case it would connect the cabinets with cross connects, which are
fiber connections used to connect cabinets within the Data Center.\12\
In such circumstances, the Exchange proposes to waive the initial and
monthly fee for two bundles of 24 cross connects between the User's
non-

[[Page 12983]]

contiguous cabinets. Once the User is allocated a cage through the
allocation procedure or is no longer on the waitlist, the Exchange
would cease to waive the fee.
---------------------------------------------------------------------------

\12\ A User is able to purchase cross connects individually or
in bundles (i.e., multiple cross connects within a single sheath) of
six, 12, 18 or 24 cross connects. The Commission approved the fee
for cross connects between a single User's cabinets within the data
center in the Original Co-Location Filing. See Original Co-Location
Filing, at 59299. The use of cross connects was subsequently revised
to allow each User to purchase cross connects between its cabinet(s)
and the cabinets of separate Users or a non-User's equipment within
the Data Center. See 2012 Release, at 50735, and Securities Exchange
Act Release No. 74220 (February 6, 2015), 80 FR 7894 (February 12,
2015) (SR-NYSEMKT-2015-08). The Exchange notes that a User with a
cage may request a new cage, either to add a second cage or to
change cages. In such a case, the cross connects would be between
the cabinets within the cage and the non-contiguous cabinets outside
the cage.
---------------------------------------------------------------------------

As noted above, a User that turns down a cage that is the size that
it requested will be removed from the waitlist. If such User asks to be
added back onto the waitlist, the Exchange will add the User to the
bottom of the waitlist, but will not provide the proposed fee waiver a
second time.
The Exchange proposes to amend the Price List and Fee Schedule to
add a new General Note 3 to the fee to furnish and install a bundle of
24 cross connects, as follows:
The initial and monthly charge for 2 bundles of 24 cross connects
will be waived for Users that are waitlisted for a cage for the
duration of the waitlist period, provided that the cross connects may
only be used to connect the Users' non-contiguous cabinets. The charge
will no longer be waived once a User is removed from the waitlist.
If a waitlist is created, a User seeking a new cage will
be placed on the waitlist based on the date a signed order for the cage
is received.
A User that turns down a cage because it is not the
correct size will remain on the waitlist. A User that requests to be
removed or that turns down a cage that is the size that it requested
will be removed from the waitlist.
A User that is removed from the waitlist but subsequently
requests a cage will be added back to the bottom of the waitlist,
provided that, if the User was removed from the waitlist because it
turned down a cage that is the size that it requested, it will not
receive a second waiver of the charge.
Visitor Security Escorts
Currently, all User representatives are required to have a visitor
security escort during visits to the Data Center, including User
representatives who have a permanent Data Center site access badge.\13\
The Exchange proposes to amend the description of the visitor security
escort fee to provide that it would not apply to User representatives
visiting the User's cage and to provide that the cost is $75 per visit.
---------------------------------------------------------------------------

\13\ See Securities Exchange Act Release No. 62731 (August 16,
2010), 75 FR 51515 (August 20, 2010) (SR-NYSEAmex-2010-80) (notice
of proposed rule change amending price list to reflect fees charged
for co-location services); see also Original Co-location Filing, at
59299. Fees for visitor security escorts for the move of a User's
equipment within the Data Center are waived when incurred in
connection with such a move required by the Exchange as part of the
Migration. See Migration Release, at 66945.
---------------------------------------------------------------------------

The Exchange requires visitor security escorts for security
purposes, primarily to ensure that a visitor does not interfere with
the cabinets of other Users or Exchange equipment. The Exchange
believes it is not necessary to have a User representative accompanied
by a visitor security escort when the representative is visiting the
User's cage, because the User representative would only have access to
that User's cabinets, which would be in the confined area within the
locked cage. The User representative would not have access to the
cabinets of other Users or Exchange equipment, which are locked as
well. By comparison, Users that do not have cages share colocation
space with other Users. While such spaces are locked, more than one
User may have cabinets within a given locked space, and so a visitor
security escort is warranted.
The Exchange proposes to make several additional non-substantive
changes to the description of the visitor security escort fee, to
reduce redundancy and increase clarity. The current description is as
follows:

NYSE employee escort, which is required during User visits to
the data center. (Note: all User representatives are required to
have a visitor security escort during visits to the data center,
including User representatives who have a permanent data center site
access badge.)

The proposed description of the visitor escort fee would read as
follows:

All User representatives are required to be accompanied by a
visitor security escort during visits to the data center unless
visiting the User's cage. Requirement includes User representatives
who have a permanent data center site access badge.

The Exchange proposes to remove the first clause, with its
reference to the visitor security escort as an ``NYSE employee
escort,'' because it is redundant with the parenthetical and because
the reference to ``NYSE employees'' could be potentially confusing,
given that not just the New York Stock Exchange LLC but also its
affiliates, the Exchange and NYSE Arca, Inc., provide co-location
services at the Data Center. In addition, the Exchange proposes to use
``accompanied by a visitor security escort'' rather than ``have a
visitor security escort'' because it believes that ``accompanied''
makes it more clear that the escort will accompany the User
representative.
The Price List and Fee Schedule include a Visitor Security Escort
fee of $75 per hour. The Exchange proposes to amend the Price List and
Fee Schedule to charge Users $75 per visit for such visitor security
escorts. Based on the Exchange's experience, currently many of the
escorted visits last an hour or less, and for Users that do not have a
cage, escorted visits are typically about an hour.
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; \14\ 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.\15\
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\14\ 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 others with access to the Exchange's trading
and execution systems. 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 users that have access to the Exchange's trading and
execution systems, although Users that receive co-location services
normally would expect reduced latencies in sending orders to, and
receiving market data from, the Exchange.
\15\ See SR-NYSEMKT-2013-67, supra note 5 at 50471. The
Exchange's affiliates have also submitted substantially the same
proposed rule change. See SR-NYSE-2016-13 and SR-NYSEArca-2016-21.
---------------------------------------------------------------------------

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,\16\ in general, and furthers the
objectives of sections 6(b)(5) of the Act,\17\ 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

[[Page 12984]]

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.
---------------------------------------------------------------------------

\16\ 15 U.S.C. 78f(b).
\17\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

The Exchange believes that the proposed procedure for allocating
cages is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers because the proposal would
establish rational, objective procedures that would be applied
uniformly by the Exchange to Users that requested cages and would not
unfairly discriminate among similarly situated Users of co-location
services. All Users seeking to purchase a cage would be subject to the
same procedures. The Exchange believes that the proposed procedure
would serve to reduce any potential for confusion on how cages would be
allocated should it become necessary. In addition, the proposed
allocation procedure would assist the Exchange to ensure that it has
sufficient space in the Data Center to accommodate demand for co-
location services on an equitable basis for the foreseeable future.
The Exchange believes that the proposal to waive fees for two
bundles of 24 cross connects between a waitlisted User's non-contiguous
cabinets is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers because the waiver would be
applied uniformly by the Exchange to all waitlisted Users and would not
unfairly discriminate among similarly situated Users of co-location
services. A waitlisted User would only require cross connects between
its non-contiguous cabinets due to the waitlist. If, instead of being
put on the waitlist, the User had received the cage it requested, the
User would not require the cross connects. In addition, the Exchange
proposes that the cross connects could only be used to connect the
User's non-contiguous cabinets. The waiver would help to alleviate the
inconvenience for the waitlisted User of having cabinets in non-
contiguous space by directly addressing, for the time period during
which the User is waitlisted, a cost directly related to being on the
waitlist. Once the User was allocated a cage through the allocation
procedure or was removed from the waitlist, the Exchange would cease to
waive the fee.
The Exchange believes that the proposed amendment to the visitor
security escort fee is not designed to permit unfair discrimination
between customers, issuers, brokers, or dealers because the escort fee
would be applied uniformly by the Exchange to all Users unless a User
representative was visiting the User's cage, and would not unfairly
discriminate among similarly situated Users of co-location services.
The Exchange also believes that the proposed rule change is
consistent with section 6(b)(4),\18\ in particular, in that 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.
---------------------------------------------------------------------------

\18\ 15 U.S.C. 78f(b)(4), (5).
---------------------------------------------------------------------------

The Exchange believes that the proposed procedure for allocating
cages is equitable and not unfairly discriminatory because the cages
are offered simply as a convenience to Users. A User does not require a
cage to trade on the Exchange, and usage of a cage has no effect on a
User's orders going to, or trade data coming from, the Exchange, or the
User's ability to utilize other co-location services. The proposed
allocation procedure would assist the Exchange to ensure that it has
sufficient space in the Data Center to accommodate demand for co-
location services on an equitable basis for the foreseeable future.
The Exchange believes that the proposal to waive fees for two
bundles of 24 cross connects between a waitlisted User's non-contiguous
cabinets is equitable and not unfairly discriminatory because a
waitlisted User would only require the cross connects due to the
waitlist. If, instead of being put on the waitlist, the User had
received the cage it requested, the User would not require the cross
connects. In addition, the Exchange proposes that the cross connects
could only be used to connect the User's non-contiguous cabinets. The
waiver would help to alleviate the inconvenience for the waitlisted
User of having cabinets in non-contiguous space by directly addressing,
for the time period during which the User is waitlisted, a cost
directly related to being on the waitlist. Once the User was allocated
a cage through the allocation procedure or was removed from the
waitlist, the Exchange would cease to waive the fee.
The Exchange believes that the proposed amendment to the visitor
security escort fee is equitable and not unfairly discriminatory
because the escort fee would be applied uniformly by the Exchange to
all Users unless a User representative was visiting the User's cage,
and would not unfairly discriminate among similarly situated Users of
co-location services. The same requirements and fees would be applied
uniformly to all Users. The Exchange believes that the amendment is
equitable because the security purposes that lead the Exchange to
require visitor security escorts, namely to ensure that a visitor does
not interfere with the cabinets of other Users or Exchange equipment,
are not present when a User representative is visiting the User's cage,
because the User representative would only have access to the Users'
cabinets, which would be in the confined area within the locked cage.
The User representative would not have access to the cabinets of other
Users or Exchange equipment, which are locked as well.
The Exchange believes that the proposed allocation procedure for
cages is reasonable because the proposal would establish rational,
objective procedures that would be applied uniformly by the Exchange to
Users. All Users seeking to purchase a cage would be subject to the
same procedures. In addition, the Exchange believes that the proposed
procedure would serve to reduce any potential for confusion on how
cages would be allocated should it become necessary.
The Exchange believes that the proposal to waive fees for two
bundles of 24 cross connects between a waitlisted User's non-contiguous
cabinets is reasonable because the waitlisted User would only require
the cross connects due to the waitlist. If, instead of being put on the
waitlist, the User had received the cage it requested, the User would
not require the cross connects. In addition, the Exchange proposes that
the cross connects could only be used to connect the User's non-
contiguous cabinets. The waiver would help to alleviate the
inconvenience for the waitlisted User of having cabinets in non-
contiguous space by directly addressing, for the time period during
which the User is waitlisted, a cost directly related to being on the
waitlist. In addition, the Exchange believes that the proposal is
reasonable because once the User was allocated a cage through the
allocation procedure or was removed from the waitlist, the Exchange
would cease to waive the fee.
The Exchange also believes that, if a User is removed from the
waitlist because it turned down a cage that is the size that it
requested, it is reasonable not to provide the User a second waiver of
the fee if the User subsequently requests a cage. To provide a second
waiver would create an incentive for a User to use the waitlist to
avoid paying the waived fees for cross connects despite being given an
opportunity to get off the waitlist.

[[Page 12985]]

The Exchange believes that the proposed amendments to the visitor
security escort fee are reasonable, because the security purposes that
lead the Exchange to visitor security escorts, namely to ensure that a
visitor does not interfere with the cabinets of other Users or Exchange
equipment, are not present when a User representative is visiting the
User's cage, because the User representative would only have access to
the Users' cabinets, which would be in the confined area within the
locked cage. The User representative would not have access to the
cabinets of other Users or Exchange equipment, which are locked as
well. Finally, the Exchange believes that its non-substantive changes
to the description of the visitor security escort fee are reasonable,
because they would reduce redundancy and increase clarity in the
description.
The Exchange believes that the proposed rate of $75 per visit for
the Visitor Security Escort, as opposed to $75 per hour, is reasonable
because all Users would be subject to the same fee. The Exchange
believes that charging a flat fee per visit is consistent with fees for
other services performed by data center staff, including Change Fees
and Initial Install Services.\19\ The proposed rate of $75 per visit
for the Visitor Security Escort would be a fee reduction for any visit
that lasted more than an hour, and so it would reduce the burden placed
on Users that are still subject to the fee.
---------------------------------------------------------------------------

\19\ See 2012 Release, supra note 6, at 50735, and 2014 Release,
supra note 6, at 45503. Change Fees are charged per request and
Initial Install Services fees are charged per cabinet or eight-rack
unit in a partial cabinet.
---------------------------------------------------------------------------

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,\20\ 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. The Exchange believes that the proposed allocation
procedures for cages would not impose any burden on competition that is
not necessary or appropriate in furtherance of the purposes of the Act
because the proposed allocation procedure would assist the Exchange to
ensure that it has sufficient space in the Data Center to accommodate
demand for co-location services on an equitable basis for the
foreseeable future. Similarly, the Exchange believes that the proposed
fee waiver would facilitate the proposed allocation procedure, which
would in turn facilitate use of the Data Center and provide access to
the Data Center to current and additional market participants. In
addition, because a User does not require a cage to trade on the
Exchange, and usage of a cage has no effect on a User's orders going
to, or trade data coming from, the Exchange, or the User's ability to
utilize other co-location services, the Exchange believes that being
waitlisted for a cage will not impose a burden on a User's ability to
compete. The Exchange believes that the proposed allocation procedure
would establish rational, objective procedures that would reduce any
potential for User confusion on how cages would be allocated should it
become necessary.
---------------------------------------------------------------------------

\20\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

The Exchange believes that the proposed amendment to the visitor
security escort fee would not impose any burden on competition that is
not necessary or appropriate in furtherance of the purposes of the Act
because it would eliminate an unnecessary requirement, as the security
purposes that lead the Exchange to visitor security escorts are not
present when a User representative is visiting the User's cage, because
the User representative would only have access to the Users' cabinets,
which would be in the confined area within the locked cage. The User
representative would not have access to the cabinets of other Users or
Exchange equipment, which are locked as well. The proposed rate of $75
per visit for the Visitor Security Escort would be a fee reduction for
any visit that lasted more than an hour, and so it would reduce the
burden placed on Users that are still subject to the fee.
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-NYSEMKT-2016-17 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-NYSEMKT-2016-17. 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

[[Page 12986]]

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-2016-17, and should be
submitted on or before April 1, 2016.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
---------------------------------------------------------------------------

\21\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-05435 Filed 3-10-16; 8:45 am]
BILLING CODE 8011-01-P

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