Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change Amending the Co-location Services Offered by the Exchange To Add Certain Access and Connectivity Fees, 54877-54887 [2016-19586]
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Federal Register / Vol. 81, No. 159 / Wednesday, August 17, 2016 / Notices
The Exchange does not believe that
the proposed rule change will impose
any burden on intramarket competition
that is not necessary or appropriate in
furtherance of the purposes of the Act
because, while different fees are
assessed in some circumstances, these
different fees are not based on the type
of Member entering the orders that
match but on the type of order entered
and all Members can submit any type of
order. Further, the proposed fees are
intended to encourage market
participants to bring increased volume
to the Exchange, which benefits all
market participants.
Regulatory Fees
IEX does not believe that the
proposed rule change will result in any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. Specifically,
the Exchange believes that the proposed
fees will result in the same regulatory
fees being charged to all Members
required to report information to the
CRD system and for services performed
by FINRA, regardless of whether or not
such Members are FINRA members.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 32 and paragraph (f) of Rule
19b–4 33 thereunder. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act.
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IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
IEX–2016–09 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
Number SR–IEX–2016–09. 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–IEX–
2016–09, and should be submitted on or
before September 7, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.34
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–19581 Filed 8–16–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78556; File No. SR–NYSE–
2016–45]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing of Proposed Rule Change
Amending the Co-location Services
Offered by the Exchange To Add
Certain Access and Connectivity Fees
August 11, 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 July 29,
2016, 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, II, and III below, which Items
have been prepared by the selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The Exchange proposes to amend the
co-location services offered by the
Exchange as follows: (1) To provide
additional information regarding the
access to trading and execution services
and connectivity to data provided to
Users with local area networks available
in the data center; and (2) to establish
fees relating to User’s access to trading
and execution services; connectivity to
data feeds and to testing and
certification feeds; access to clearing;
and other services. In addition, this
proposed rule change reflects changes to
the Exchange’s Price List related to
these co-location services. 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
1 15
32 15
U.S.C. 78s(b)(3)(A).
33 17 CFR 240.19b–4(f).
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U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
34 17
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Federal Register / Vol. 81, No. 159 / Wednesday, August 17, 2016 / Notices
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
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1. Purpose
The Exchange proposes to amend the
co-location 4 services offered by the
Exchange as follows: (1) To provide
additional information regarding the
access to trading and execution services
and connectivity to data provided to
Users 5 with local area networks
available in the data center; and (2) to
establish fees relating to Users’ access to
trading and execution services;
connectivity to data feeds and to testing
and certification feeds; access to
clearing; and other services.
More specifically, the Exchange
proposes to revise the Price List to
include:
a. A more detailed description of the
access to the trading and execution
systems of the Exchange and its Affiliate
SROs (the ‘‘Exchange Systems’’) and
connectivity to certain market data
products (the ‘‘Included Data Products’’)
that Users receive with connections to
the Liquidity Center Network (‘‘LCN’’)
and internet protocol (‘‘IP’’) network,
local area networks available in the data
center;
b. fees for connectivity to:
• Certain other market data products
of the Exchange and its Affiliate SROs
(the ‘‘Premium NYSE Data Products’’
and, together with the Included Data
Products, the ‘‘NYSE Data Products’’);
• access to the execution systems of
third party markets and other content
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. 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 colocation 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 (‘‘NYSE
MKT’’) and NYSE Arca, Inc. (‘‘NYSE Arca’’ and,
together with NYSE MKT, the ‘‘Affiliate SROs’’).
See Securities Exchange Act Release No. 70206
(August 15, 2013), 78 FR 51765 (August 21, 2013)
(SR–NYSE–2013–59).
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service providers (‘‘Third Party
Systems’’);
• data feeds from third party markets
and other content service providers (the
‘‘Third Party Data Feeds’’);
• third party testing and certification
feeds;
• Depository Trust & Clearing
Corporation (‘‘DTCC’’) services; and
c. fees for virtual control circuits
(‘‘VCCs’’) between two Users. VCCs are
unicast connections between two
participants over dedicated bandwidth.6
The Exchange provides access to the
Exchange Systems and Third Party
Systems (together, ‘‘Access’’) and
connectivity to NYSE Data Products,
Third Party Data Feeds, third party
testing and certification feeds, and
DTCC (collectively, ‘‘Connectivity’’) as
conveniences to Users. Use of Access or
Connectivity is completely voluntary,
and several other access and
connectivity options are available to a
User. As alternatives to using the Access
and Connectivity provided by the
Exchange, a User may access or connect
to such services and products through
another User or through a connection to
an Exchange access center outside the
data center, third party access center, or
third party vendor. The User may make
such connection through a third party
telecommunication provider, third party
wireless network, the Exchange’s Secure
Financial Transaction Infrastructure
(‘‘SFTI’’) network, or a combination
thereof.
Similarly, the Exchange provides
VCCs as a convenience to Users. Use of
a VCC is completely voluntary. As an
alternative to an Exchange-provided
VCC, a User may connect to another
User through a fiber connection (‘‘cross
connect’’).7
Access to Exchange Systems and
Connectivity to Included Data Products
As the Exchange has previously
stated, a User’s connection to the LCN
or IP network provides it access to the
Exchange Systems and Exchange market
data products.8 More specifically, when
6 Information flows over existing network
connections in two formats: ‘‘unicast’’ format,
which is a format that allows one-to-one
communication, similar to a phone line, in which
information is sent to and from the Exchange; and
‘‘multicast’’ format, which is a format in which
information is sent one-way from the Exchange to
multiple recipients at once, like a radio broadcast.
7 See Original Co-location Filing, supra note 4, at
59311 and Securities Exchange Act Release No.
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 non-User’s
equipment as co-location services) (the ‘‘IP Network
Release’’).
8 See Original Co-location Filing, supra note 4, at
59311 (‘‘According to NYSE, SFTI and LCN both
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a User purchases access to the LCN or
IP network through purchase of a 1, 10,
or 40 Gb LCN circuit, a 10 Gb LX
Circuit, bundled network access, Partial
Cabinet Solution bundle, or 1, 10 or 40
Gb IP network access,9 as part of the
purchase it receives access to the
Exchange Systems and connectivity to
any Included Data Products that it
selects.10 The Exchange proposes to
revise the Price List to provide a more
detailed description of the access to the
Exchange Systems and connectivity to
Included Data Products that comes with
connections to the LCN or IP network.11
Access to certification and testing
feeds comes with the purchase of access
to the Exchange Systems and
connectivity to many of the NYSE Data
Products. Such feeds, which are solely
used for certification and testing and do
not carry live production data, are only
available over the IP network.12
Certification feeds are used to certify
that a User conforms to any relevant
technical requirements for receipt of
data or access to Exchange Systems.
Test feeds provide Users an
environment in which to conduct tests
with non-live data, including testing for
upcoming Exchange releases and
product enhancements or the User’s
own software development.
The Exchange offers connectivity to
NYSE Data Products in three forms: as
provide Users with access to the Exchange’s trading
and execution systems and to the Exchange’s
proprietary market data products.’’) and IP Network
Release, supra note 7, at 7889 (‘‘Like the LCN, the
IP network provides Users with access to the
Exchange’s trading and execution systems and to
the Exchanges’ proprietary market data products.’’).
The IP network was previously sometimes referred
to as SFTI. See id.
9 See Securities Exchange Act Release Nos. 70888
(November 15, 2013), 78 FR 69907 (November 21,
2013) (SR–NYSE–2013–73); 72721 (July 30, 2014),
79 FR 45562 (August 5, 2014) (SR–NYSE–2014–37);
76369 (November 5, 2015), 80 FR 70027 (November
12, 2015) (SR–NYSE–2015–54); and 77072
(February 5, 2016), 81 FR 7394 (February 11, 2016)
(SR–NYSE–2015–53).
10 As discussed below, in order to connect to an
Included Data Product, a User must have entered
into a contract with the provider of the data feed.
Similarly, in order to access an Exchange System,
the User must have authorization from the
Exchange or the relevant Affiliate SRO.
11 Because each Included Data Product uses part
of a User’s bandwidth, a User may wish to limit the
number of Included Data Products that it receives
to those that it requires. The Exchange notes that
connectivity to the LCN and IP network also
includes connectivity to Exchange Systems, as
discussed under ‘‘Connectivity to Exchange
Systems,’’ below. See also note 8, supra.
12 A User that does not have an IP network
connection may obtain an IP network circuit for
purposes of testing and certification for free for
three months. See IP Network Release, supra note
7, at 7889. A User that opted to obtain connectivity
to NYSE Data Products through another User, a
telecommunication provider, third party wireless
network, or the SFTI network would receive the
corresponding testing and certification feeds.
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a resilient feed, as ‘‘Feed A’’ or as ‘‘Feed
B.’’ Resilient feeds include two copies of
the same feed, for redundancy purposes.
Feed A and Feed B are identical feeds.13
Connectivity to Exchange Systems
As the Exchange has previously
stated, Users’ connections to the LCN or
IP networks include access to Exchange
Systems.14 Accordingly, the Exchange
proposes to add language to its Price
List stating the following:
When a User purchases access to the LCN
or IP network, it receives the ability to
connect to the trading and execution systems
of the NYSE, NYSE MKT and NYSE Arca
(Exchange Systems), subject, in each case, to
authorization by the NYSE, NYSE MKT or
NYSE Arca, as applicable. Such connectivity
includes access to the customer gateways that
provide for order entry, order receipt (i.e.
confirmation that an order has been
received), receipt of drop copies and trade
reporting (i.e. whether a trade is executed or
cancelled), as well as for sending information
to shared data services for clearing and
settlement. A User can change the
connections it receives at any time, subject to
authorization. A User does not have to
purchase access to the LCN or IP network in
order to obtain connectivity to Exchange
Systems.
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Connectivity to Included Data Products
Currently, there are three categories of
data feeds for which the Exchange offers
Users connectivity: Included Data
Products; Premium NYSE Data
Products; and Third Party Data.15
The Included Data Products include
the data feeds disseminated by the
Consolidated Tape Association (‘‘CTA’’)
(such data feeds, the ‘‘NMS feeds’’).
CTA is responsible for disseminating
consolidated, real-time trade and quote
information in NYSE listed securities
(Network A) and NYSE MKT, NYSE
Arca and other regional exchanges’
listed securities (Network B) pursuant to
a national market system plan.16 The
NMS feeds include the Consolidated
13 A User that wants redundancy would either
choose a resilient feed or connect to both Feed A
and Feed B using two different ports. A User may
opt to connect both Feed A and Feed B to the same
port, the effect of which would be the same as if
the User had connected to a resilient feed.
14 See note 8, supra.
15 The NYSE Data Products and Third Party Data
Feeds do not provide access or order entry to the
Exchange’s execution system.
16 The Included Data Products do not include
connectivity to the data feeds disseminated
pursuant to the ‘‘Joint Self-Regulatory Organization
Plan Governing the Collection, Consolidation and
Dissemination of Quotation and Transaction
Information for Nasdaq-Listed Securities Traded on
Exchanges on an Unlisted Trading Privilege Basis’’
(the ‘‘UTP Plan’’). The UTP Plan is responsible for
disseminating consolidated, real-time trade and
quote information in Nasdaq Stock Exchange LLC
listed securities (Network C). Connectivity to data
disseminated pursuant to the UTP Plan is available
as a Third Party Data Feed.
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Tape System and Consolidated Quote
System data streams, as well as Options
Price Reporting Authority feeds.
In order to connect to an Included
Data Product, a User enters into a
contract with the provider of such data,
pursuant to which the User is charged
for the Included Data Product. After the
User and data provider enter into the
contract and the Exchange receives
authorization from the provider of the
data feed, the Exchange provides the
User with connectivity to the Included
Data Product over the User’s LCN or IP
network port. The Exchange does not
charge the User separately for such
connectivity to the Included Data
Product, as it is included in the
purchase of the access to the LCN or IP
network.
The Included Data Products are
available over both the LCN and IP
network.17 For a User that purchases
access to the LCN and IP network, the
Exchange works with such User to
allocate its connectivity to Included
Data Products between its LCN and IP
network connections. Some Included
Data Products require a network
connection with a minimum gigabyte
(‘‘Gb’’) size in order to accommodate the
feed. Users may connect to an Included
Data Product as a resilient feed or as
individual Feeds A and B.
The Included Data Products are as
follows:
NMS FEEDS
NYSE:
NYSE Alerts
NYSE BBO
NYSE OpenBook
NYSE Order Imbalances
NYSE Trades
NYSE Amex Options
NYSE Arca:
NYSE ArcaBook
NYSE Arca BBO
NYSE Arca Order Imbalances
NYSE Arca Trades
NYSE Arca Options
NYSE Bonds
NYSE MKT:
NYSE MKT Alerts
NYSE MKT BBO
NYSE MKT OpenBook
NYSE MKT Order Imbalances
NYSE MKT Trades
In addition to the above list of
Included Data Products, the Exchange
proposes to add the following language
to the Price List:
When a User purchases access to the
LCN or IP network it receives
connectivity to any of the Included Data
17 As noted above, certification and testing feeds
included with an Included Data Product are only
available over the IP network.
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54879
Products that it selects, subject to any
technical provisioning requirements and
authorization from the provider of the
data feed. Market data fees for the
Included Data Products are charged by
the provider of the data feed. A User can
change the Included Data Products to
which it receives connectivity at any
time, subject to authorization from the
provider of the data feed. The Exchange
is not the exclusive method to connect
to the Included Data Products.
Connectivity
Connectivity to Premium NYSE Data
Products
The Exchange offers Users
connectivity to Premium NYSE Data
Products from the Exchange and its
Affiliate SROs over Users’ LCN and IP
network connections. The Exchange
proposes to revise the Price List to
specify the connectivity fees for
Premium NYSE Data Products.
The Premium NYSE Data Products are
equity market data products that are
variants of the equity Included Data
Products that integrate, or include data
elements from, several Included Data
Products.18 For example, the NYSE
Integrated Feed includes, among other
things, information available from three
of the equity Included Data Products:
NYSE OpenBook, NYSE Trades, and
NYSE Order Imbalances.19 The NYSE
BQT data feed includes, among other
things, certain data elements from six of
the equity Included Data Products:
NYSE Trades, NYSE BBO, NYSE Arca
Trades, NYSE Arca BBO, NYSE MKT
Trades, and NYSE MKT BBO.20
By contrast, while some of the
Included Data Products include data
elements from other Included Data
Products, no single Included Data
Product includes as much data as a
Premium NYSE Data Product. With the
exception of NYSE Arca Order
Imbalances, the equity Included Data
18 The rule changes establishing the NYSE
Integrated Feed and NYSE MKT Integrated Feed
were immediately effective in 2015, and the rule
change establishing the NYSE Arca Integrated Data
Feed was immediately effective in 2011. The NYSE
Best Quote & Trades (‘‘NYSE BQT’’) data feed was
approved in 2014. See Securities Exchange Act
Release Nos. 74128 (Jan. 23, 2015), 80 FR 4951 (Jan.
29, 2015) (SR–NYSE–2015–03) (establishing the
NYSE Integrated Feed); 74127 (Jan. 23, 2015), 80 FR
4956 (Jan. 29, 2015) (SR–NYSEMKT–2015–06)
(establishing the NYSE MKT Integrated Feed);
65669 (Nov. 2, 2011), 76 FR 69311 (Nov. 8, 2011)
(SR–NYSEArca–2011–78) (establishing the NYSE
Arca Integrated Feed); and 73553 (Nov. 6, 2014), 79
FR 67491 (Nov. 13, 2014) (SR–NYSE–2014–40)
(establishing the NYSE Best Quote & Trades Data
Feed).
19 See SR–NYSE–2015–03, supra note 18, at 4952.
20 See SR–NYSE–2014–40, supra note 18, at
67491.
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Products are older feeds than the
Premium Data Products.21
In order to connect to a Premium
NYSE Data Product, a User enters into
a contract with the provider of such
data, pursuant to which it is charged for
the Premium NYSE Data Product. After
the data provider and User enter into
the contract and the Exchange receives
authorization from the data provider,
the Exchange provides the User with
connectivity to the Premium NYSE Data
Product over the User’s LCN or IP
network port. The Exchange charges the
User for the connectivity to the
Premium NYSE Data Product. A User
only receives, and is only charged for,
connectivity to the Premium NYSE Data
Product feeds that it selects.
The Premium NYSE Data Products are
available over both the LCN and IP
network.22 For a User that purchases
access to the LCN and IP network, the
Exchange works with such User to
allocate its connectivity to Premium
NYSE Data Products between its LCN
and IP network connections. Some
Premium NYSE Data Products require a
network connection with a minimum
Gb size in order to accommodate the
feed.23
A User can opt to connect to a
Premium NYSE Data Product as a
resilient feed or as Feed A or Feed B.
Connectivity to the two identical Feeds
A and B is only available on the IP
network.
The Exchange charges a monthly
recurring fee for connectivity to
Premium NYSE Data Products. The
following table shows the Premium
NYSE Data Products and corresponding
monthly recurring connectivity fees.
Monthly
recurring
connectivity
fee per feed
Premium NYSE data product
Feed
NYSE Arca Integrated Feed .....................
Feed A, IP network only ..............................................................................................
Feed B, IP network only ..............................................................................................
Resilient, IP network only ............................................................................................
Resilient, LCN only ......................................................................................................
Feed A, IP network only ..............................................................................................
Feed B, IP network only ..............................................................................................
Resilient, IP network only ............................................................................................
Resilient, LCN only ......................................................................................................
Feed A, IP network only ..............................................................................................
Feed B, IP network only ..............................................................................................
Resilient, IP network only ............................................................................................
Resilient, LCN only ......................................................................................................
Feed A, IP network only ..............................................................................................
Feed B, IP network only ..............................................................................................
Resilient, IP network only ............................................................................................
Resilient, LCN only ......................................................................................................
NYSE Best Quote and Trades (BQT) ......
NYSE Integrated Feed .............................
NYSE MKT Integrated Feed .....................
The Exchange proposes to revise the
Price List to clarify that Users may
obtain connectivity to Third Party
Systems of multiple third party markets
and other content service providers for
a fee. Users connect to Third Party
Systems over the IP network.24 The
Exchange selects what connectivity to
Third Party Systems to offer in the data
center based on User demand.
In order to obtain access to a Third
Party System, a User enters into an
agreement with the relevant third party
content service provider, pursuant to
which the third party content service
provider charges the User for access to
the Third Party System. The Exchange
then establishes a unicast connection
between the User and the relevant third
party content service provider over the
IP network. The Exchange charges the
21 See Securities Exchange Act Release Nos.
44138 (December 7, 2001), 66 FR 64895 (December
14, 2001) (SR–NYSE–2001–42) (establishing fees for
NYSE OpenBook); 50844 (December 13, 2004), 69
FR 76806 (December 22, 2004) (SR–NYSE–2004–53)
(establishing fee for NYSE Alerts); 59543 (March 9,
2009), 74 FR 11159 (March 16, 2009) (establishing
fee for NYSE Order Imbalances); 59290 (January 23,
2009) 74 FR 5707 (January 30, 2009) (SR–NYSE–
2009–05) (establishing pilot program for NYSE
Trades); and 62181 (May 26, 2010), 75 FR 31488
(June 3, 2010) (SR–NYSE–2010–30) (establishing
NYSE BBO). See also Securities Exchange Act
Release No. 76968 (January 22, 2016), 81 FR 4689
(January 27, 2016) (establishing NYSE Arca Order
Imbalances).
22 As noted above, certification and testing feeds
included with a Premium NYSE Data Product are
only available over the IP network.
23 For example, a User connecting to the NYSE
Arca Integrated Feed, NYSE Integrated Feed or
NYSE MKT Integrated Feed would need a dedicated
connection in order to connect to the A Feed or B
Feed using a 1 Gb IP network connection. In order
to connect to the resilient feeds, the User would
require an LCN or IP network connection of at least
10 Gb.
In addition to the connectivity fees,
the Exchange proposes to add the
following language to its Price List:
Pricing for Premium NYSE Data
Products is for connectivity only.
Connectivity to Premium NYSE Data
Products is subject to any technical
provisioning requirements and
authorization from the provider of the
data feed. Market data fees for the
Premium NYSE Data Products are
charged by the provider of the data feed.
The Exchange is not the exclusive
method to connect to Premium NYSE
Data Products.
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Connectivity to Third Party Systems
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$1,500
1,500
3,000
1,500
500
500
1,000
500
1,500
1,500
3,000
1,500
300
300
600
300
User for the connectivity to the Third
Party System. A User only receives, and
is only charged for, access to Third
Party Systems for which it enters into
agreements with the third party content
service provider.
With the exception of the ICE feed,25
the Exchange has no ownership interest
in the Third Party Systems. Establishing
a User’s access to a Third Party System
does not give the Exchange any right to
use the Third Party Systems.
Connectivity to a Third Party System
does not provide access or order entry
to the Exchange’s execution system, and
a User’s connection to a Third Party
System is not through the Exchange’s
execution system.26
24 See
IP Network Release, supra note 7, at 7889.
is owned by the Exchange’s ultimate
parent, Intercontinental Exchange, Inc., and so the
Exchange has an indirect interest in the ICE feeds.
The ICE feeds include both market data and trading
and clearing services, but the Exchange includes it
as a Third Party Data Feed. In order for a User to
receive an ICE feed, ICE must provide authorization
for the User to receive both data and trading and
clearing services.
26 The Exchange has a dedicated network
connection to each of the Third Party Systems.
25 ICE
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The Exchange charges a monthly
recurring fee for connectivity to a Third
Party System. Specifically, when a User
requests access to a Third Party System,
it identifies the applicable third party
market or other content service provider
and what bandwidth connection it
requires.
The monthly recurring fee the
Exchange charges Users for unicast
connectivity to each Third Party System
varies by the bandwidth of the
connection, as follows:
Bandwidth of connection
to Third Party System
Monthly recurring
fee per connection to Third
Party System
1Mb ...................................
3Mb ...................................
5Mb ...................................
10Mb .................................
25Mb .................................
50Mb .................................
100Mb ...............................
200 Mb ..............................
1 Gb ..................................
$200
400
500
800
1,200
1,800
2,500
3,000
3,500
The Exchange provides connectivity
to the following Third Party Systems:
Americas Trading Group (ATG)
BATS
Boston Options Exchange (BOX)
Chicago Board Options Exchange
(CBOE)
Credit Suisse
International Securities Exchange (ISE)
Nasdaq
National Stock Exchange
NYFIX Marketplace
In addition to the connectivity fees,
the Exchange proposes to add language
to its Price List stating the following:
Pricing for access to the execution systems
of third party markets and other service
providers (Third Party Systems) is for
connectivity only. Connectivity to Third
Party Systems is subject to any technical
provisioning requirements and authorization
from the provider of the data feed.
Connectivity to Third Party Systems is over
the IP network. Any applicable fees are
charged independently by the relevant third
party content service provider. The Exchange
is not the exclusive method to connect to
Third Party Systems.
mstockstill on DSK3G9T082PROD with NOTICES
Connectivity to Third Party Data Feeds
The Exchange proposes to revise the
Price List to clarify that Users may
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obtain connectivity to Third Party Data
Feeds for a fee. The Exchange receives
Third Party Data Feeds from multiple
national securities exchanges and other
content service providers at its data
center. It then provides connectivity to
that data to Users for a fee. With the
exceptions of Global OTC and NYSE
Global Index, Users connect to Third
Party Data Feeds over the IP network.27
The Exchange notes that charging
Users a monthly fee for connectivity to
Third Party Data Feeds is consistent
with the monthly fee Nasdaq charges its
co-location customers for connectivity
to third party data. For instance, Nasdaq
charges its co-location customers
monthly fees of $1,500 and $4,000 for
connectivity to BATS Y and BATS,
respectively, and of $2,500 for
connectivity to EDGA or EDGX.28
In order to connect to a Third Party
Data Feed, a User enters into a contract
with the relevant third party market or
other content service provider, pursuant
to which the content service provider
charges the User for the Third Party
Data Feed. The Exchange receives the
Third Party Data Feed over its fiber
optic network and, after the data
provider and User enter into the
contract and the Exchange receives
authorization from the data provider,
the Exchange re-transmits the data to
the User over the User’s port. The
Exchange charges the User for the
connectivity to the Third Party Data
Feed. A User only receives, and is only
charged for, connectivity to the Third
Party Data Feeds for which it enters into
contracts.
With the exception of the
Intercontinental Exchange (‘‘ICE’’),
Global OTC and NYSE Global Index
feeds,29 the Exchange has no affiliation
27 See IP Network Release, supra note 7, at 7889.
Users can connect to Global OTC and NYSE Global
Index over the IP network or LCN.
28 See Nasdaq Stock Market Rule 7034.
29 ICE and the Global OTC alternative trading
system are both owned by the Exchange’s ultimate
parent, Intercontinental Exchange, Inc., and so the
Exchange has an indirect interest in the ICE and
Global OTC feeds. The NYSE Global Index feed
includes index and exchange traded product
valuations data, with data drawn from the
Exchange, the Affiliate SROs, and third party
exchanges. Because it includes third party data, the
NYSE Global Index feed is considered a Third Party
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54881
with the sellers of the Third Party Data
Feeds. It has no right to use the Third
Party Data Feeds other than as a
redistributor of the data. The Third
Party Data Feeds do not provide access
or order entry to the Exchange’s
execution system. With the exception of
the ICE feeds, the Third Party Data
Feeds do not provide access or order
entry to the execution systems of the
third party generating the feed.30 The
Exchange receives Third Party Data
Feeds via arms-length agreements and it
has no inherent advantage over any
other distributor of such data.
The Exchange charges a monthly
recurring fee for connectivity to each
Third Party Data Feed. The monthly
recurring fee is per Third Party Data
Feed, with the exception that the
monthly recurring feed for SuperFeed
and MSCI varies by the bandwidth of
the connection. Depending on its needs
and bandwidth, a User may opt to
receive all or some of the feeds or
services included in a Third Party Data
Feed.
The following table shows the feeds
that connectivity to each Third Party
Data Feed provides, together with the
applicable monthly recurring fee.
Data Feed. As with all Third Party Data Feeds, the
Exchange is not the exclusive method to connect to
the ICE, Global OTC or NYSE Global Index feeds.
30 Unlike other Third Party Data Feeds, the ICE
feeds include both market data and trading and
clearing services. In order to receive the ICE feeds,
a User must receive authorization from ICE to
receive both market data and trading and clearing
services.
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Monthly
recurring
connectivity
fee per third
party data
feed
Third party data feed
Bats BZX Exchange (BZX) and Bats BYX Exchange (BYX) ..............................................................................................................
Bats EDGX Exchange (EDGX) and Bats EDGA Exchange (EDGA) .................................................................................................
Chicago Board Options Exchange (CBOE) ........................................................................................................................................
Chicago Stock Exchange (CHX) .........................................................................................................................................................
Euronext ...............................................................................................................................................................................................
Financial Industry Regulatory Authority (FINRA) ................................................................................................................................
Global OTC ..........................................................................................................................................................................................
Intercontinental Exchange (ICE) ..........................................................................................................................................................
´
Montreal Exchange (MX) .....................................................................................................................................................................
MSCI 5 Mb ...........................................................................................................................................................................................
MSCI 20 Mb .........................................................................................................................................................................................
NASDAQ Stock Market .......................................................................................................................................................................
NASDAQ OMX Global Index Data Service .........................................................................................................................................
NASDAQ OMDF ..................................................................................................................................................................................
NASDAQ UQDF & UTDF ....................................................................................................................................................................
NYSE Global Index ..............................................................................................................................................................................
OTC Markets Group ............................................................................................................................................................................
SR Labs—SuperFeed ≤ 500 Mb .........................................................................................................................................................
SR Labs—SuperFeed >500 Mb to ≤ 1.25 Gb ....................................................................................................................................
SR Labs—SuperFeed >1.25 Gb .........................................................................................................................................................
TMX Group ..........................................................................................................................................................................................
In addition to the above connectivity
fees, the Exchange proposes to add the
following language to its Price List:
mstockstill on DSK3G9T082PROD with NOTICES
Pricing for data feeds from third party
markets and other content service providers
(Third Party Data Feeds) is for connectivity
only. Connectivity to Third Party Data Feeds
is subject to any technical provisioning
requirements and authorization from the
provider of the data feed. Connectivity to
Third Party Data Feeds is over the IP
network, with the exception that Users can
connect to Global OTC and NYSE Global
Index over the IP network or LCN. Market
data fees are charged independently by the
relevant third party market or content service
provider. The Exchange is not the exclusive
method to connect to Third Party Data Feeds.
Third Party Data Feed providers may
charge redistribution fees, such as
Nasdaq’s Extranet Access Fees and OTC
Markets Group’s Access Fees.31 When
the Exchange receives a redistribution
fee, it passes through the charge to the
User, without change to the fee. The fee
is labeled as a pass-through of a
redistribution fee on the User’s invoice.
The Exchange proposes to add language
to the Price List accordingly.
The Exchange provides third party
markets or content providers that are
also Users connectivity to their own
Third Party Data Feeds. The Exchange
does not charge Users that are third
party markets or content providers for
31 See NASDAQ Stock Market LLC Rule 7025,
‘‘Extranet Access Fee’’, and OTC Markets Market
Data Distribution Agreement Appendix B, ‘‘Fees’’ at
https://www.otcmarkets.com/content/doc/marketdata-fees-2016.pdf. See also Securities Exchange
Act Release No. 74040 (January 13, 2015), 80 FR
2460 (January 16, 2015) (SR–NASDAQ–2015–003).
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connectivity to their own feeds, as in
the Exchange’s experience such parties
generally receive their own feeds for
purposes of diagnostics and testing. The
Exchange proposes to add language to
the Price List accordingly.
Connectivity to Third Party Testing and
Certification Feeds
The Exchange offers Users
connectivity to third party certification
and testing feeds. Certification feeds are
used to certify that a User conforms to
any of the relevant content service
provider’s requirements for accessing
Third Party Systems or receiving Third
Party Data, while testing feeds provide
Users an environment in which to
conduct tests with non-live data.32 Such
feeds, which are solely used for
certification and testing and do not
carry live production data, are available
over the IP network.
The Exchange proposes to revise the
Price List to include connectivity to
third party certification and testing
feeds. The Exchange charges a
connectivity fee of $100 per month per
feed.
The Exchange proposes to add the
following connectivity fees and
language to its Price List:
Connectivity to third
party certification
and testing feeds.
$100 monthly recurring fee per feed
32 For example, a User that trades on a third party
exchange may wish to test the exchange’s upcoming
releases and product releases or may wish to test
a new algorithm in a testing environment prior to
making it live.
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$2,000
2,000
2,000
400
600
500
100
1,500
1,000
500
2,000
2,000
100
100
500
100
1,000
250
800
1,000
2,500
The Exchange provides connectivity
to third party testing and certification
feeds provided by third party markets
and other content service providers.
Pricing for third party testing and
certification feeds is for connectivity
only. Connectivity to third party testing
and certification feeds is subject to any
technical provisioning requirements and
authorization from the provider of the
data feed. Connectivity to third party
testing and certification feeds is over the
IP network. Any applicable fees are
charged independently by the relevant
third party market or content service
provider. The Exchange is not the
exclusive method to connect to third
party testing and certification feeds.
Connectivity to DTCC
The Exchange provides Users
connectivity to DTCC for clearing, fund
transfer, insurance, and settlement
services.33 The Exchange proposes to
revise the Price List to include
connectivity to DTCC. The Exchange
charges a connectivity fee of $500 per
month for connections to DTCC of 5 Mb
and $2,500 for connections of 50 Mb.
Connectivity to DTCC is available over
the IP network.
In order to connect to DTCC, a User
enters into a contract with DTCC,
pursuant to which DTCC charges the
User for the services provided. The
33 Such connectivity to DTCC is distinct from the
access to shared data services for clearing and
settlement services that a User receives when it
purchases access to the LCN or IP network. The
shared data services allow Users and other entities
with access to the Trading Systems to post files for
settlement and clearing services to access.
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Exchange receives the DTCC feed over
its fiber optic network and, after DTCC
and the User enter into the services
contract and the Exchange receives
authorization from DTCC, the Exchange
provides connectivity to DTCC to the
User over the User’s IP network port.
The Exchange charges the User for the
connectivity to DTCC.
Connectivity to DTCC does not
provide access or order entry to the
Exchange’s execution system, and a
User’s connection to DTCC is not
through the Exchange’s execution
system.
The Exchange proposes to add the
following connectivity fees and
language to its Price List:
5 Mb connection to
DTCC.
50 Mb connection to
DTCC.
Pricing for connectivity to DTCC feeds
is for connectivity only. Connectivity to
DTCC feeds is subject to any technical
provisioning requirements and
authorization from DTCC. Connectivity
to DTCC feeds is over the IP network.
Any applicable fees are charged
independently by DTCC. The Exchange
is not the exclusive method to connect
to DTCC feeds.
Type of service
mstockstill on DSK3G9T082PROD with NOTICES
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; 34 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 Affiliate SROs.35
The proposed change is not otherwise
intended to address any other issues
relating to co-location services and/or
34 As is currently the case, Users that receive colocation services from the Exchange will not receive
any means of access to the Exchange’s trading and
execution systems that is separate from, or superior
to, that of other Users. In this regard, all orders sent
to the Exchange enter the Exchange’s trading and
execution systems through the same order gateway,
regardless of whether the sender is co-located in the
data center or not. In addition, co-located Users do
not receive any market data or data service product
that is not available to all Users, although Users that
receive co-location services normally would expect
reduced latencies in sending orders to, and
receiving market data from, the Exchange.
35 See SR–NYSE–2013–59, supra note 5 at 51766.
The Affiliate SROs have also submitted
substantially the same proposed rule change to
propose the changes described herein. See SR–
NYSEMKT–2016–63 and SR–NYSEArca-2016–89.
16:39 Aug 16, 2016
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Virtual Control Circuits
Finally, the Exchange proposes to
revise the Price List to offer VCCs
between two Users. VCCs are
connections between two points over
dedicated bandwidth using the IP
network. A VCC (previously called a
‘‘peer to peer’’ connection) is a two-way
connection which the two participants
can use for any purpose.
The Exchange bills the User
requesting the VCC, but will not set up
a VCC until the other User confirms that
it wishes to have the VCC set up.
The Exchange proposes to revise the
Price List to include VCCs between two
Users. The fee for VCCs is based on the
bandwidth utilized, as follows:
Description
Virtual Control Circuit between two Users ..................................
VerDate Sep<11>2014
$500 monthly recurring fee
$2,500 monthly recurring fee
1Mb
3Mb
5Mb
10Mb
25Mb
50Mb
100Mb
Amount of charge
$200 monthly charge.
$400 monthly charge.
$500 monthly charge.
$800 monthly charge.
$1,200 monthly charge.
$1,800 monthly charge.
$2,500 monthly charge.
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,36 in general, and
furthers the objectives of sections 6(b)(5)
of the Act,37 in particular, because it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
regulating, clearing, settling, processing
information with respect to, and
facilitating transactions in securities, to
remove impediments to, and perfect the
mechanisms of, a free and open market
and a national market system and, in
general, to protect investors and the
public interest and because it is not
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
The Exchange believes that the
proposed changes remove impediments
to, and perfect the mechanisms of, a free
and open market and a national market
system and, in general, protect investors
and the public interest because a User
is provided choices with respect to its
Access and Connectivity, helping it
tailor its data center operations to the
36 15
37 15
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U.S.C. 78f(b)(5).
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requirements of its business operations
by allowing it to select the form and
latency of connectivity that best suits its
needs. The Exchange provides the
Access and Connectivity as
conveniences to Users. Use of Access or
Connectivity is completely voluntary,
and is one of several connectivity
options available to a User. As
alternatives to using the Access and
Connectivity provided by the Exchange,
a User may access or connect to such
services and products through another
User or through a connection to an
Exchange access center outside the data
center, third party access center, or third
party vendor. The User may make such
connection through a third party
telecommunication provider, third party
wireless network, the SFTI network, or
a combination thereof.
The Exchange believes that revising
the Price List to provide a more detailed
description of the access to the
Exchange Systems and connectivity to
Included Data Products that Users are
provided with their purchase of access
to the LCN or IP network would remove
impediments to, and perfect the
mechanisms of, a free and open market
and a national market system and, in
general, protect investors and the public
interest because the proposed changes
would make the descriptions of access
to the LCN and IP network more
accessible and transparent, thereby
providing market participants with
clarity as to what connectivity is
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included in the purchase of access to
the LCN and IP network.
The Exchange believes that providing
a more detailed description of the access
to Third Party Systems and related fees,
as well as the connectivity and related
fees for Premium NYSE Data Products,
Third Party Data Feeds, third party
testing and certification feeds and
DTCC, would remove impediments to,
and perfect the mechanisms of, a free
and open market and a national market
system and, in general, protect investors
and the public interest because the
proposed changes would make the
descriptions of market participants’
connectivity options more accessible
and transparent, thereby providing
market participants with clarity as to
what options for connectivity are
available to them and what the related
costs are.
In addition, the Exchange believes
that providing connectivity to third
party testing and certification feeds
removes 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 such feeds
provide Users an environment in which
to conduct tests with non-live data,
including testing for upcoming releases
and product enhancements or the User’s
own software development, and allow
Users to certify conformance to any
applicable technical requirements.
Similarly, the Exchange believes that
providing connectivity to DTCC
removes 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 it provides
efficient connection to clearing, fund
transfer, insurance, and settlement
services.
The Exchange believes that providing
Users with VCCs removes impediments
to, and perfects the mechanisms of, a
free and open market and a national
market system because VCCs provide
each User with an additional option for
connectivity to another User, helping it
tailor its data center operations to the
requirements of its business operations
by allowing it to select the form of
connectivity that best suits its needs.
The Exchange provides VCCs as a
convenience to Users. Use of a VCC is
completely voluntary. As an alternative
to an Exchange-provided VCC, a User
may connect to another User through a
cross connect.
The Exchange also believes that the
proposed rule change is consistent with
section 6(b)(4) of the Act,38 in
38 15
U.S.C. 78f(b)(4).
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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.
The Exchange believes that the
proposed fees changes are consistent
with section 6(b)(4) of the Act for
multiple reasons. The Exchange
operates in a highly competitive market
in which exchanges offer co-location
services as a means to facilitate the
trading and other market activities of
those market participants who believe
that co-location enhances the efficiency
of their operations. Accordingly, fees
charged for co-location services are
constrained by the active competition
for the order flow of, and other business
from, such market participants. If a
particular exchange charges excessive
fees for co-location services, affected
market participants will opt to terminate
their co-location arrangements with that
exchange, and adopt a possible range of
alternative strategies, including placing
their servers in a physically proximate
location outside the exchange’s data
center (which could be a competing
exchange), or pursuing strategies less
dependent upon the lower exchange-toparticipant latency associated with colocation. Accordingly, the exchange
charging excessive fees would stand to
lose not only co-location revenues but
also the liquidity of the formerly colocated trading firms, which could have
additional follow-on effects on the
market share and revenue of the affected
exchange.
The Exchange believes that the
services and fees proposed herein are
equitably allocated and not unfairly
discriminatory because, in addition to
the services being completely voluntary,
they are available to all Users on an
equal basis (i.e., the same products and
services are available to all Users). All
Users that voluntarily select to access
the Exchange Systems or connect to
Included Data Products would not be
subject to a charge above and beyond
the fee paid for the relevant LCN or IP
network access. All Users that
voluntarily select to receive access to
Third Party Systems, connectivity to
Premium NYSE Data Products, Third
Party Data Feeds, third party testing and
certification feeds and DTCC, or a VCC
would be charged the same amount for
the same services.
The Exchange believes that the
services and fees proposed herein are
reasonable, equitably allocated and not
unfairly discriminatory because the
Exchange provides Access and
Connectivity as conveniences to Users.
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Use of Access or Connectivity is
completely voluntary, and is one of
several connectivity options available to
a User. As alternatives to using the
Access and Connectivity provided by
the Exchange, a User may access or
connect to such services and products
through another User or through a
connection to an Exchange access center
outside the data center, third party
access center, or third party vendor. The
User may make such connection
through a third party
telecommunication provider, third party
wireless network, the SFTI network, or
a combination thereof. Users that opt to
use Access or Connectivity would not
receive access or connectivity that is not
available to all Users, as all market
participants that contract with the
relevant market or content provider may
receive access or connectivity.
Similarly, the Exchange provides VCCs
between Users as a convenience to
Users. Use of a VCC is completely
voluntary. As an alternative to an
Exchange-provided VCC, a User may
connect to another User through a cross
connect.
Overall, the Exchange believes that
the proposed charges are reasonable,
equitably allocated and not unfairly
discriminatory because the Exchange
offers Access, Connectivity, and VCCs
as conveniences to Users, and in doing
so incurs certain costs. The expenses
incurred and resources expended by the
Exchange generally include costs related
to the data center facility hardware and
technology infrastructure; maintenance
and operational costs, such as the costs
of responding to any production issues;
and the costs related to the personnel
required for initial installation and
administration, monitoring, support and
maintenance of such services. Since the
inception of co-location, the Exchange
has made numerous improvements to
the network hardware and technology
infrastructure and has established
additional administrative controls. The
Exchange has expanded the network
infrastructure to keep pace with the
increased number of services available
to Users, including the increasing
bandwidth required for Access and
Connectivity, including resilient and
redundant feeds. For example, the
Exchange must ensure that the network
infrastructure has the necessary
bandwidth for the Included Data
Products as well as the Premium NYSE
Data Products, which generally require
greater bandwidth. In addition, the
Exchange incurs certain costs specific to
providing connectivity to Third Party
Data Feeds, Third Party Systems, third
party testing and certification feeds and
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DTCC, including the costs of
maintaining multiple connections to
each Third Party Data Feed, Third Party
System, and DTCC, allowing the
Exchange to provide resilient and
redundant connections; adapting to any
changes made by the relevant third
party; and covering any applicable fees
(other than redistribution fees) charged
by the relevant third party, such as port
fees.
Co-location was created to permit
Users ‘‘to rent space on premises
controlled by the Exchange in order that
they may locate their electronic servers
in close physical proximity to the
Exchange’s trading and execution
systems.’’ 39 The expectation was that
normally Users sending orders to the
Exchange would have reduced
latencies.40 Accordingly, the Exchange
believes that including access to the
Exchange Systems with the purchase of
access to the LCN or IP network is
reasonable because such access is
directly related to the purpose of colocation.
The Exchange believes that including
connectivity to the Included Data
products with the purchase of access to
the LCN or IP network is reasonable and
not unfairly discriminatory because
Users are not required to use any of
their bandwidth to access Exchange
Systems or connect to an Included Data
Product unless they wish to do so.
Rather, a User only receives access to
the Exchange Systems and connectivity
to the Included Data Products that it
selects, and a User can change which of
such access or connections it receives at
any time, subject to authorization from
the data provider or relevant Exchange
or Affiliate SRO. Including connectivity
to the Included Data products with the
purchase of access to the LCN or IP
network is a commercial decision. As
noted above, the Exchange operates in a
highly competitive market. If a
particular exchange charges excessive
fees for co-location services—such as
excessive fees for access to the local area
network within the exchange’s
colocation space—affected market
participants will opt to terminate their
co-location arrangements with that
exchange, and adopt a possible range of
alternative strategies. The Exchange
believes that including connectivity to
Included Data Products with the
purchase of access to the LCN or IP
network is consistent with Nasdaq’s
colocation service, which, apart from an
installation fee, does not charge its co39 Original Co-Location Filing, supra note 4, at
59310.
40 Id., at 59311.
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located customers for connectivity to
Nasdaq data.41
The Exchange believes that its fees for
connectivity to Premium NYSE Data
Products are reasonable because they
allow the Exchange to defray or cover
the costs associated with offering Users
connectivity to Premium NYSE Data
Products while providing Users the
benefit of reduced latency when
connecting to data feeds that integrate,
or include data elements from, several
Included Data Products. Charging
separate connectivity fees for Premium
NYSE Data Products is a commercial
decision. As noted above, the Exchange
operates in a highly competitive market.
If a particular exchange charges
excessive fees for co-location services—
such as excessive fees for connectivity
to the exchange’s market data—affected
market participants will opt to terminate
their co-location arrangements with that
exchange, and adopt a possible range of
alternative strategies. Although Nasdaq
does not include connectivity to any of
the Premium NYSE Data Products in its
co-location services, the Exchange
believes that the proposed fees are
generally consistent with the fees that a
Nasdaq co-location customer would pay
for connectivity to the individual feeds
included in a Premium NYSE Data
Product. For example, the NYSE
Integrated Feed includes, among other
things, information available from three
of the Included Data Products: NYSE
OpenBook, NYSE Trades, and NYSE
Order Imbalances. Nasdaq offers
connectivity to two of those feeds,
OpenBook Ultra and NYSE Trades, for
which it would charge a co-located
customer a combined monthly fee of
$2,600.42 The Exchange believes that it
is reasonable to charge less for
connectivity to the resilient Premium
NYSE Data Products on the LCN than
over the IP network, because Users do
not have the option to connect to the A
or B Feed over the LCN.
The Exchange believes that charging
separate connectivity fees for Third
Party Data Feeds and access to Third
Party Systems, third party testing and
certification feeds and connectivity to
DTCC is reasonable and not unfairly
discriminatory because, in the
Exchange’s experience, not all Users
connect to Third Party Data Feeds,
Third Party Systems, third party testing
and certification feeds or DTCC. By
charging only those Users that receive
such connectivity, only the Users that
directly benefit from it support its cost.
The Exchange believes the fees for
connectivity to Third Party Data Feeds
41 See
PO 00000
are reasonable because they allow the
Exchange to defray or cover the costs
associated with offering Users
connectivity to Third Party Data Feeds
while providing Users the convenience
of receiving such Third Party Data Feeds
within co-location, helping them tailor
their data center operations to the
requirements of their business
operations by allowing them to select
the form and latency of connectivity
that best suits their needs. The
Exchange believes that its proposed
charges for connectivity to Third Party
Data Feeds are similar to the
connectivity fees Nasdaq imposes on its
co-location customers. For instance,
Nasdaq charges its co-location
customers monthly fees of $1,500 and
$4,000 for connectivity to BATS Y and
BATS, respectively, and of $2,500 for
connectivity to EDGA or EDGX.43
The Exchange believes that its
connectivity fees for access to Third
Party Systems are reasonable because
they allow the Exchange to defray or
cover the costs associated with offering
such access while providing Users the
convenience of being able to access such
Third Party Systems, helping them
tailor their data center operations to the
requirements of their business
operations by allowing them to select
the form and latency of connectivity
that best suits their needs. Similarly, the
Exchange believes that its fees for
connectivity to DTCC are reasonable
because they allow the Exchange to
defray or cover the costs associated with
offering such access while providing
Users the benefit of an efficient
connection to clearing, fund transfer,
insurance, and settlement services. The
Exchange further believes the fees for
connectivity to Third Party Systems and
DTCC are reasonable because the
monthly recurring fee the Exchange
charges Users for connectivity to each
Third Party System and DTCC varies by
the bandwidth of the connection, and so
is generally proportional to the
bandwidth required.
The Exchange also believes that its
connectivity fees for access to third
party testing and certification feeds are
reasonable because they allow the
Exchange to defray or cover the costs
associated with offering such access
while providing Users the benefit of
having an environment in which to
conduct tests with non-live data,
including testing for upcoming releases
and product enhancements or the User’s
own software development, and to
certify conformance to any applicable
technical requirements.
Nasdaq Stock Market Rule 7034.
42 Id.
Frm 00100
43 See
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The Exchange believes it is reasonable
that redistribution fees charged by
providers of Third Party Data Feeds are
passed through to the User, without
change to the fee. If not passed through,
the cost of the re-distribution fees would
be factored into the proposed fees for
connectivity to Third Party Data Feeds.
The Exchange believes that passing
through the fees makes them more
transparent to the User, allowing the
User to better assess the cost of the
connectivity to a Third Party Data Feed
by seeing the individual components of
the cost, i.e. the Exchange’s fee and the
redistribution fee.
The Exchange believes that it is
reasonable that it does not charge third
party markets or content providers for
connectivity to their own Third Party
Data Feeds, as in the Exchange’s
experience such parties generally
receive their own feeds for purposes of
diagnostics and testing. The Exchange
believes that it removes 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 to
facilitate such diagnostics and testing.
Finally, the Exchange also believes
that its fees for VCCs between two Users
are reasonable because they allow the
Exchange to defray or cover the costs
associated with offering such VCCs
while providing Users the benefit of an
additional option for connectivity to
another User, helping them tailor their
data center operations to the
requirements of their business
operations by allowing them to select
the form of connectivity that best suits
their needs. As an alternative to an
Exchange-provided VCC, a User may
connect to another User through a cross
connect.
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.
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,44 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
44 15
U.S.C. 78f(b)(8).
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Jkt 238001
completely voluntary, they are available
to all Users on an equal basis (i.e. the
same products and services are available
to all Users).
The Exchange believes that providing
Users with access to the Exchange
Systems and Third Party Systems and
connectivity to NYSE Data Products,
Third Party Data Feeds, third party
testing and certification feeds, and
DTCC does not impose any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act because such
Access and Connectivity satisfies User
demand for access and connectivity
options, and several other access and
connectivity options are available to a
User. As alternatives to using the Access
and Connectivity provided by the
Exchange, a User may access or connect
to such services and products through
another User or through a connection to
an Exchange access center outside the
data center, third party access center, or
third party vendor. The User may make
such connection through a third party
telecommunication provider, third party
wireless network, the SFTI network, or
a combination thereof. Users that opt to
use Access or Connectivity would not
receive access or connectivity that is not
available to all Users, as all market
participants that contract with the
relevant market or content provider may
receive access or connectivity. In this
way, the proposed changes would
enhance competition by helping Users
tailor their Access and Connectivity to
the needs of their business operations
by allowing them to select the form and
latency of access and connectivity that
best suits their needs.
Similarly, the Exchange believes that
providing VCCs between Users does not
impose any burden on competition that
is not necessary or appropriate in
furtherance of the purposes of the Act
because providing VCCs satisfies User
demand for an alternative to cross
connects.
The Exchange believes that revising
the Price List to provide a more detailed
description of the Access and
Connectivity available to Users would
make such descriptions more accessible
and transparent, thereby providing
market participants with clarity as to
what Access and Connectivity is
available to them and what the related
costs are, thereby enhancing
competition by ensuring that all Users
have access to the same information
regarding Access and Connectivity.
Finally, the Exchange operates in a
highly competitive market in which
exchanges offer co-location services as a
means to facilitate the trading and other
market activities of those market
PO 00000
Frm 00101
Fmt 4703
Sfmt 4703
participants who believe that colocation enhances the efficiency of their
operations. Accordingly, fees charged
for co-location services are constrained
by the active competition for the order
flow of, and other business from, such
market participants. If a particular
exchange charges excessive fees for colocation services, affected market
participants will opt to terminate their
co-location arrangements with that
exchange, and adopt a possible range of
alternative strategies, including placing
their servers in a physically proximate
location outside the exchange’s data
center (which could be a competing
exchange), or pursuing strategies less
dependent upon the lower exchange-toparticipant latency associated with colocation. Accordingly, the exchange
charging excessive fees would stand to
lose not only co-location revenues but
also the liquidity of the formerly colocated trading firms, which could have
additional follow-on effects on the
market share and revenue of the affected
exchange. 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 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.
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:
E:\FR\FM\17AUN1.SGM
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Federal Register / Vol. 81, No. 159 / Wednesday, August 17, 2016 / Notices
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–2016–45 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
mstockstill on DSK3G9T082PROD with NOTICES
All submissions should refer to File No.
SR–NYSE–2016–45. 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–
2016–45, and should be submitted on or
before September 7, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.45
Robert W. Errett,
Deputy Secretary.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78548; File No. SR–
NYSEMKT–2016–74]
Self-Regulatory Organizations; NYSE
MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Change To Modify the NYSE Amex
Options Fee Schedule
August 11, 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 August
1, 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to modify the
NYSE Amex Options Fee Schedule
(‘‘Fee Schedule’’). The Exchange
proposes to implement the fee change
effective August 1, 2016. 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.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
[FR Doc. 2016–19586 Filed 8–16–16; 8:45 am]
BILLING CODE 8011–01–P
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
45
17 CFR 200.30–3(a)(12).
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PO 00000
Frm 00102
Fmt 4703
Sfmt 4703
54887
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of this filing is to amend
section I. A. of the Fee Schedule to
adjust certain Marketing Charges for
Electronic Executions in standard
options contracts, effective on August 1,
2016.4
The Exchange assesses a Marketing
Charge to all NYSE Amex Options
Market Makers, which includes
Specialists, e-Specialists and Directed
Order Market Makers (collectively,
‘‘Market Makers’’) for contracts they
execute Electronically when the contraparty to the execution is a Customer.5
Currently, the Exchange collects a
Marketing Charge from Market Makers
of $0.25 per contract in Penny Pilot
Issues, and $0.65 per contract on in nonPenny Pilot Issues.6 The Exchange
proposes to modify the Marketing
Charge for transactions in non-Penny
Pilot Issues to $0.70 per contract, which
is comparable to the marketing fees
charged by competing options
exchanges.7
The Exchange also proposes to correct
certain typographical errors in Note 3 to
section I.A. of the Fee Schedule, which
would add clarity and transparency to
the Fee Schedule.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
section 6(b) of the Act,8 in general, and
furthers the objectives of sections 6(b)(4)
and (5) of the Act,9 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
4 See Fee Schedule, section I. A. (Rates for
Standard Options Transactions), available here,
https://www.nyse.com/publicdocs/nyse/markets/
amex-options/NYSE_Amex_Options_Fee_
Schedule.pdf.
5 As specified in the Fee Schedule, the Exchange
acts as an administrator in collecting and redistributing all monies collected from the Marketing
Charges. See id., Note 3 to Section I. A.
6 The term ‘‘non-Penny Pilot Issues’’ applies to
those option issues that are not in the Penny Pilot
pursuant to Rule 960NY, Commentary .02.
7 See, e.g., Chicago Board Options Exchange
(‘‘CBOE’’) fee schedule, available here, https://
www.cboe.com/publish/feeschedule/
CBOEFeeSchedule.pdf (charging a marketing fee of
$0.70 per contract for non-Penny Pilot Issues);
Nasdaq OMX PHLX (‘‘PHLX’’) fee schedule,
available here, https://www.nasdaqtrader.com/
Micro.aspx?id=phlxpricing (same).
8 15 U.S.C. 78f(b).
9 15 U.S.C. 78f(b)(4) and (5).
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]]>Agencies
[Federal Register Volume 81, Number 159 (Wednesday, August 17, 2016)]
[Notices]
[Pages 54877-54887]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-19586]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-78556; File No. SR-NYSE-2016-45]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing of Proposed Rule Change Amending the Co-location
Services Offered by the Exchange To Add Certain Access and Connectivity
Fees
August 11, 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 July 29, 2016, 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,
II, and III below, which Items have been prepared by the self-
regulatory organization. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange proposes to amend the co-location services offered by
the Exchange as follows: (1) To provide additional information
regarding the access to trading and execution services and connectivity
to data provided to Users with local area networks available in the
data center; and (2) to establish fees relating to User's access to
trading and execution services; connectivity to data feeds and to
testing and certification feeds; access to clearing; and other
services. In addition, this proposed rule change reflects changes to
the Exchange's Price List related to these co-location services. 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
[[Page 54878]]
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend the co-location \4\ services offered
by the Exchange as follows: (1) To provide additional information
regarding the access to trading and execution services and connectivity
to data provided to Users \5\ with local area networks available in the
data center; and (2) to establish fees relating to Users' access to
trading and execution services; connectivity to data feeds and to
testing and certification feeds; access to clearing; and other
services.
---------------------------------------------------------------------------
\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. 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 (``NYSE MKT'') and NYSE Arca, Inc. (``NYSE
Arca'' and, together with NYSE MKT, the ``Affiliate SROs''). See
Securities Exchange Act Release No. 70206 (August 15, 2013), 78 FR
51765 (August 21, 2013) (SR-NYSE-2013-59).
---------------------------------------------------------------------------
More specifically, the Exchange proposes to revise the Price List
to include:
a. A more detailed description of the access to the trading and
execution systems of the Exchange and its Affiliate SROs (the
``Exchange Systems'') and connectivity to certain market data products
(the ``Included Data Products'') that Users receive with connections to
the Liquidity Center Network (``LCN'') and internet protocol (``IP'')
network, local area networks available in the data center;
b. fees for connectivity to:
Certain other market data products of the Exchange and its
Affiliate SROs (the ``Premium NYSE Data Products'' and, together with
the Included Data Products, the ``NYSE Data Products'');
access to the execution systems of third party markets and
other content service providers (``Third Party Systems'');
data feeds from third party markets and other content
service providers (the ``Third Party Data Feeds'');
third party testing and certification feeds;
Depository Trust & Clearing Corporation (``DTCC'')
services; and
c. fees for virtual control circuits (``VCCs'') between two Users.
VCCs are unicast connections between two participants over dedicated
bandwidth.\6\
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\6\ Information flows over existing network connections in two
formats: ``unicast'' format, which is a format that allows one-to-
one communication, similar to a phone line, in which information is
sent to and from the Exchange; and ``multicast'' format, which is a
format in which information is sent one-way from the Exchange to
multiple recipients at once, like a radio broadcast.
---------------------------------------------------------------------------
The Exchange provides access to the Exchange Systems and Third
Party Systems (together, ``Access'') and connectivity to NYSE Data
Products, Third Party Data Feeds, third party testing and certification
feeds, and DTCC (collectively, ``Connectivity'') as conveniences to
Users. Use of Access or Connectivity is completely voluntary, and
several other access and connectivity options are available to a User.
As alternatives to using the Access and Connectivity provided by the
Exchange, a User may access or connect to such services and products
through another User or through a connection to an Exchange access
center outside the data center, third party access center, or third
party vendor. The User may make such connection through a third party
telecommunication provider, third party wireless network, the
Exchange's Secure Financial Transaction Infrastructure (``SFTI'')
network, or a combination thereof.
Similarly, the Exchange provides VCCs as a convenience to Users.
Use of a VCC is completely voluntary. As an alternative to an Exchange-
provided VCC, a User may connect to another User through a fiber
connection (``cross connect'').\7\
---------------------------------------------------------------------------
\7\ See Original Co-location Filing, supra note 4, at 59311 and
Securities Exchange Act Release No. 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 non-User's equipment as co-location services) (the ``IP
Network Release'').
---------------------------------------------------------------------------
Access to Exchange Systems and Connectivity to Included Data Products
As the Exchange has previously stated, a User's connection to the
LCN or IP network provides it access to the Exchange Systems and
Exchange market data products.\8\ More specifically, when a User
purchases access to the LCN or IP network through purchase of a 1, 10,
or 40 Gb LCN circuit, a 10 Gb LX Circuit, bundled network access,
Partial Cabinet Solution bundle, or 1, 10 or 40 Gb IP network
access,\9\ as part of the purchase it receives access to the Exchange
Systems and connectivity to any Included Data Products that it
selects.\10\ The Exchange proposes to revise the Price List to provide
a more detailed description of the access to the Exchange Systems and
connectivity to Included Data Products that comes with connections to
the LCN or IP network.\11\
---------------------------------------------------------------------------
\8\ See Original Co-location Filing, supra note 4, at 59311
(``According to NYSE, SFTI and LCN both provide Users with access to
the Exchange's trading and execution systems and to the Exchange's
proprietary market data products.'') and IP Network Release, supra
note 7, at 7889 (``Like the LCN, the IP network provides Users with
access to the Exchange's trading and execution systems and to the
Exchanges' proprietary market data products.''). The IP network was
previously sometimes referred to as SFTI. See id.
\9\ See Securities Exchange Act Release Nos. 70888 (November 15,
2013), 78 FR 69907 (November 21, 2013) (SR-NYSE-2013-73); 72721
(July 30, 2014), 79 FR 45562 (August 5, 2014) (SR-NYSE-2014-37);
76369 (November 5, 2015), 80 FR 70027 (November 12, 2015) (SR-NYSE-
2015-54); and 77072 (February 5, 2016), 81 FR 7394 (February 11,
2016) (SR-NYSE-2015-53).
\10\ As discussed below, in order to connect to an Included Data
Product, a User must have entered into a contract with the provider
of the data feed. Similarly, in order to access an Exchange System,
the User must have authorization from the Exchange or the relevant
Affiliate SRO.
\11\ Because each Included Data Product uses part of a User's
bandwidth, a User may wish to limit the number of Included Data
Products that it receives to those that it requires. The Exchange
notes that connectivity to the LCN and IP network also includes
connectivity to Exchange Systems, as discussed under ``Connectivity
to Exchange Systems,'' below. See also note 8, supra.
---------------------------------------------------------------------------
Access to certification and testing feeds comes with the purchase
of access to the Exchange Systems and connectivity to many of the NYSE
Data Products. Such feeds, which are solely used for certification and
testing and do not carry live production data, are only available over
the IP network.\12\ Certification feeds are used to certify that a User
conforms to any relevant technical requirements for receipt of data or
access to Exchange Systems. Test feeds provide Users an environment in
which to conduct tests with non-live data, including testing for
upcoming Exchange releases and product enhancements or the User's own
software development.
---------------------------------------------------------------------------
\12\ A User that does not have an IP network connection may
obtain an IP network circuit for purposes of testing and
certification for free for three months. See IP Network Release,
supra note 7, at 7889. A User that opted to obtain connectivity to
NYSE Data Products through another User, a telecommunication
provider, third party wireless network, or the SFTI network would
receive the corresponding testing and certification feeds.
---------------------------------------------------------------------------
The Exchange offers connectivity to NYSE Data Products in three
forms: as
[[Page 54879]]
a resilient feed, as ``Feed A'' or as ``Feed B.'' Resilient feeds
include two copies of the same feed, for redundancy purposes. Feed A
and Feed B are identical feeds.\13\
---------------------------------------------------------------------------
\13\ A User that wants redundancy would either choose a
resilient feed or connect to both Feed A and Feed B using two
different ports. A User may opt to connect both Feed A and Feed B to
the same port, the effect of which would be the same as if the User
had connected to a resilient feed.
---------------------------------------------------------------------------
Connectivity to Exchange Systems
As the Exchange has previously stated, Users' connections to the
LCN or IP networks include access to Exchange Systems.\14\ Accordingly,
the Exchange proposes to add language to its Price List stating the
following:
---------------------------------------------------------------------------
\14\ See note 8, supra.
When a User purchases access to the LCN or IP network, it
receives the ability to connect to the trading and execution systems
of the NYSE, NYSE MKT and NYSE Arca (Exchange Systems), subject, in
each case, to authorization by the NYSE, NYSE MKT or NYSE Arca, as
applicable. Such connectivity includes access to the customer
gateways that provide for order entry, order receipt (i.e.
confirmation that an order has been received), receipt of drop
copies and trade reporting (i.e. whether a trade is executed or
cancelled), as well as for sending information to shared data
services for clearing and settlement. A User can change the
connections it receives at any time, subject to authorization. A
User does not have to purchase access to the LCN or IP network in
order to obtain connectivity to Exchange Systems.
Connectivity to Included Data Products
Currently, there are three categories of data feeds for which the
Exchange offers Users connectivity: Included Data Products; Premium
NYSE Data Products; and Third Party Data.\15\
---------------------------------------------------------------------------
\15\ The NYSE Data Products and Third Party Data Feeds do not
provide access or order entry to the Exchange's execution system.
---------------------------------------------------------------------------
The Included Data Products include the data feeds disseminated by
the Consolidated Tape Association (``CTA'') (such data feeds, the ``NMS
feeds''). CTA is responsible for disseminating consolidated, real-time
trade and quote information in NYSE listed securities (Network A) and
NYSE MKT, NYSE Arca and other regional exchanges' listed securities
(Network B) pursuant to a national market system plan.\16\ The NMS
feeds include the Consolidated Tape System and Consolidated Quote
System data streams, as well as Options Price Reporting Authority
feeds.
---------------------------------------------------------------------------
\16\ The Included Data Products do not include connectivity to
the data feeds disseminated pursuant to the ``Joint Self-Regulatory
Organization Plan Governing the Collection, Consolidation and
Dissemination of Quotation and Transaction Information for Nasdaq-
Listed Securities Traded on Exchanges on an Unlisted Trading
Privilege Basis'' (the ``UTP Plan''). The UTP Plan is responsible
for disseminating consolidated, real-time trade and quote
information in Nasdaq Stock Exchange LLC listed securities (Network
C). Connectivity to data disseminated pursuant to the UTP Plan is
available as a Third Party Data Feed.
---------------------------------------------------------------------------
In order to connect to an Included Data Product, a User enters into
a contract with the provider of such data, pursuant to which the User
is charged for the Included Data Product. After the User and data
provider enter into the contract and the Exchange receives
authorization from the provider of the data feed, the Exchange provides
the User with connectivity to the Included Data Product over the User's
LCN or IP network port. The Exchange does not charge the User
separately for such connectivity to the Included Data Product, as it is
included in the purchase of the access to the LCN or IP network.
The Included Data Products are available over both the LCN and IP
network.\17\ For a User that purchases access to the LCN and IP
network, the Exchange works with such User to allocate its connectivity
to Included Data Products between its LCN and IP network connections.
Some Included Data Products require a network connection with a minimum
gigabyte (``Gb'') size in order to accommodate the feed. Users may
connect to an Included Data Product as a resilient feed or as
individual Feeds A and B.
---------------------------------------------------------------------------
\17\ As noted above, certification and testing feeds included
with an Included Data Product are only available over the IP
network.
---------------------------------------------------------------------------
The Included Data Products are as follows:
NMS Feeds
------------------------------------------------------------------------
-------------------------------------------------------------------------
NYSE:
NYSE Alerts
NYSE BBO
NYSE OpenBook
NYSE Order Imbalances
NYSE Trades
NYSE Amex Options
NYSE Arca:
NYSE ArcaBook
NYSE Arca BBO
NYSE Arca Order Imbalances
NYSE Arca Trades
NYSE Arca Options
NYSE Bonds
NYSE MKT:
NYSE MKT Alerts
NYSE MKT BBO
NYSE MKT OpenBook
NYSE MKT Order Imbalances
NYSE MKT Trades
------------------------------------------------------------------------
In addition to the above list of Included Data Products, the
Exchange proposes to add the following language to the Price List:
When a User purchases access to the LCN or IP network it receives
connectivity to any of the Included Data Products that it selects,
subject to any technical provisioning requirements and authorization
from the provider of the data feed. Market data fees for the Included
Data Products are charged by the provider of the data feed. A User can
change the Included Data Products to which it receives connectivity at
any time, subject to authorization from the provider of the data feed.
The Exchange is not the exclusive method to connect to the Included
Data Products.
Connectivity
Connectivity to Premium NYSE Data Products
The Exchange offers Users connectivity to Premium NYSE Data
Products from the Exchange and its Affiliate SROs over Users' LCN and
IP network connections. The Exchange proposes to revise the Price List
to specify the connectivity fees for Premium NYSE Data Products.
The Premium NYSE Data Products are equity market data products that
are variants of the equity Included Data Products that integrate, or
include data elements from, several Included Data Products.\18\ For
example, the NYSE Integrated Feed includes, among other things,
information available from three of the equity Included Data Products:
NYSE OpenBook, NYSE Trades, and NYSE Order Imbalances.\19\ The NYSE BQT
data feed includes, among other things, certain data elements from six
of the equity Included Data Products: NYSE Trades, NYSE BBO, NYSE Arca
Trades, NYSE Arca BBO, NYSE MKT Trades, and NYSE MKT BBO.\20\
---------------------------------------------------------------------------
\18\ The rule changes establishing the NYSE Integrated Feed and
NYSE MKT Integrated Feed were immediately effective in 2015, and the
rule change establishing the NYSE Arca Integrated Data Feed was
immediately effective in 2011. The NYSE Best Quote & Trades (``NYSE
BQT'') data feed was approved in 2014. See Securities Exchange Act
Release Nos. 74128 (Jan. 23, 2015), 80 FR 4951 (Jan. 29, 2015) (SR-
NYSE-2015-03) (establishing the NYSE Integrated Feed); 74127 (Jan.
23, 2015), 80 FR 4956 (Jan. 29, 2015) (SR-NYSEMKT-2015-06)
(establishing the NYSE MKT Integrated Feed); 65669 (Nov. 2, 2011),
76 FR 69311 (Nov. 8, 2011) (SR-NYSEArca-2011-78) (establishing the
NYSE Arca Integrated Feed); and 73553 (Nov. 6, 2014), 79 FR 67491
(Nov. 13, 2014) (SR-NYSE-2014-40) (establishing the NYSE Best Quote
& Trades Data Feed).
\19\ See SR-NYSE-2015-03, supra note 18, at 4952.
\20\ See SR-NYSE-2014-40, supra note 18, at 67491.
---------------------------------------------------------------------------
By contrast, while some of the Included Data Products include data
elements from other Included Data Products, no single Included Data
Product includes as much data as a Premium NYSE Data Product. With the
exception of NYSE Arca Order Imbalances, the equity Included Data
[[Page 54880]]
Products are older feeds than the Premium Data Products.\21\
---------------------------------------------------------------------------
\21\ See Securities Exchange Act Release Nos. 44138 (December 7,
2001), 66 FR 64895 (December 14, 2001) (SR-NYSE-2001-42)
(establishing fees for NYSE OpenBook); 50844 (December 13, 2004), 69
FR 76806 (December 22, 2004) (SR-NYSE-2004-53) (establishing fee for
NYSE Alerts); 59543 (March 9, 2009), 74 FR 11159 (March 16, 2009)
(establishing fee for NYSE Order Imbalances); 59290 (January 23,
2009) 74 FR 5707 (January 30, 2009) (SR-NYSE- 2009-05) (establishing
pilot program for NYSE Trades); and 62181 (May 26, 2010), 75 FR
31488 (June 3, 2010) (SR-NYSE-2010-30) (establishing NYSE BBO). See
also Securities Exchange Act Release No. 76968 (January 22, 2016),
81 FR 4689 (January 27, 2016) (establishing NYSE Arca Order
Imbalances).
---------------------------------------------------------------------------
In order to connect to a Premium NYSE Data Product, a User enters
into a contract with the provider of such data, pursuant to which it is
charged for the Premium NYSE Data Product. After the data provider and
User enter into the contract and the Exchange receives authorization
from the data provider, the Exchange provides the User with
connectivity to the Premium NYSE Data Product over the User's LCN or IP
network port. The Exchange charges the User for the connectivity to the
Premium NYSE Data Product. A User only receives, and is only charged
for, connectivity to the Premium NYSE Data Product feeds that it
selects.
The Premium NYSE Data Products are available over both the LCN and
IP network.\22\ For a User that purchases access to the LCN and IP
network, the Exchange works with such User to allocate its connectivity
to Premium NYSE Data Products between its LCN and IP network
connections. Some Premium NYSE Data Products require a network
connection with a minimum Gb size in order to accommodate the feed.\23\
---------------------------------------------------------------------------
\22\ As noted above, certification and testing feeds included
with a Premium NYSE Data Product are only available over the IP
network.
\23\ For example, a User connecting to the NYSE Arca Integrated
Feed, NYSE Integrated Feed or NYSE MKT Integrated Feed would need a
dedicated connection in order to connect to the A Feed or B Feed
using a 1 Gb IP network connection. In order to connect to the
resilient feeds, the User would require an LCN or IP network
connection of at least 10 Gb.
---------------------------------------------------------------------------
A User can opt to connect to a Premium NYSE Data Product as a
resilient feed or as Feed A or Feed B. Connectivity to the two
identical Feeds A and B is only available on the IP network.
The Exchange charges a monthly recurring fee for connectivity to
Premium NYSE Data Products. The following table shows the Premium NYSE
Data Products and corresponding monthly recurring connectivity fees.
------------------------------------------------------------------------
Monthly
recurring
Premium NYSE data product Feed connectivity
fee per feed
------------------------------------------------------------------------
NYSE Arca Integrated Feed...... Feed A, IP network only $1,500
Feed B, IP network only 1,500
Resilient, IP network 3,000
only.
Resilient, LCN only.... 1,500
NYSE Best Quote and Trades Feed A, IP network only 500
(BQT).
Feed B, IP network only 500
Resilient, IP network 1,000
only.
Resilient, LCN only.... 500
NYSE Integrated Feed........... Feed A, IP network only 1,500
Feed B, IP network only 1,500
Resilient, IP network 3,000
only.
Resilient, LCN only.... 1,500
NYSE MKT Integrated Feed....... Feed A, IP network only 300
Feed B, IP network only 300
Resilient, IP network 600
only.
Resilient, LCN only.... 300
------------------------------------------------------------------------
In addition to the connectivity fees, the Exchange proposes to add
the following language to its Price List:
Pricing for Premium NYSE Data Products is for connectivity only.
Connectivity to Premium NYSE Data Products is subject to any technical
provisioning requirements and authorization from the provider of the
data feed. Market data fees for the Premium NYSE Data Products are
charged by the provider of the data feed. The Exchange is not the
exclusive method to connect to Premium NYSE Data Products.
Connectivity to Third Party Systems
The Exchange proposes to revise the Price List to clarify that
Users may obtain connectivity to Third Party Systems of multiple third
party markets and other content service providers for a fee. Users
connect to Third Party Systems over the IP network.\24\ The Exchange
selects what connectivity to Third Party Systems to offer in the data
center based on User demand.
---------------------------------------------------------------------------
\24\ See IP Network Release, supra note 7, at 7889.
---------------------------------------------------------------------------
In order to obtain access to a Third Party System, a User enters
into an agreement with the relevant third party content service
provider, pursuant to which the third party content service provider
charges the User for access to the Third Party System. The Exchange
then establishes a unicast connection between the User and the relevant
third party content service provider over the IP network. The Exchange
charges the User for the connectivity to the Third Party System. A User
only receives, and is only charged for, access to Third Party Systems
for which it enters into agreements with the third party content
service provider.
With the exception of the ICE feed,\25\ the Exchange has no
ownership interest in the Third Party Systems. Establishing a User's
access to a Third Party System does not give the Exchange any right to
use the Third Party Systems. Connectivity to a Third Party System does
not provide access or order entry to the Exchange's execution system,
and a User's connection to a Third Party System is not through the
Exchange's execution system.\26\
---------------------------------------------------------------------------
\25\ ICE is owned by the Exchange's ultimate parent,
Intercontinental Exchange, Inc., and so the Exchange has an indirect
interest in the ICE feeds. The ICE feeds include both market data
and trading and clearing services, but the Exchange includes it as a
Third Party Data Feed. In order for a User to receive an ICE feed,
ICE must provide authorization for the User to receive both data and
trading and clearing services.
\26\ The Exchange has a dedicated network connection to each of
the Third Party Systems.
---------------------------------------------------------------------------
[[Page 54881]]
The Exchange charges a monthly recurring fee for connectivity to a
Third Party System. Specifically, when a User requests access to a
Third Party System, it identifies the applicable third party market or
other content service provider and what bandwidth connection it
requires.
The monthly recurring fee the Exchange charges Users for unicast
connectivity to each Third Party System varies by the bandwidth of the
connection, as follows:
------------------------------------------------------------------------
Monthly
recurring fee
Bandwidth of connection to Third Party System per connection
to Third Party
System
------------------------------------------------------------------------
1Mb................................................... $200
3Mb................................................... 400
5Mb................................................... 500
10Mb.................................................. 800
25Mb.................................................. 1,200
50Mb.................................................. 1,800
100Mb................................................. 2,500
200 Mb................................................ 3,000
1 Gb.................................................. 3,500
------------------------------------------------------------------------
The Exchange provides connectivity to the following Third Party
Systems:
Americas Trading Group (ATG)
BATS
Boston Options Exchange (BOX)
Chicago Board Options Exchange (CBOE)
Credit Suisse
International Securities Exchange (ISE)
Nasdaq
National Stock Exchange
NYFIX Marketplace
In addition to the connectivity fees, the Exchange proposes to add
language to its Price List stating the following:
Pricing for access to the execution systems of third party
markets and other service providers (Third Party Systems) is for
connectivity only. Connectivity to Third Party Systems is subject to
any technical provisioning requirements and authorization from the
provider of the data feed. Connectivity to Third Party Systems is
over the IP network. Any applicable fees are charged independently
by the relevant third party content service provider. The Exchange
is not the exclusive method to connect to Third Party Systems.
Connectivity to Third Party Data Feeds
The Exchange proposes to revise the Price List to clarify that
Users may obtain connectivity to Third Party Data Feeds for a fee. The
Exchange receives Third Party Data Feeds from multiple national
securities exchanges and other content service providers at its data
center. It then provides connectivity to that data to Users for a fee.
With the exceptions of Global OTC and NYSE Global Index, Users connect
to Third Party Data Feeds over the IP network.\27\
---------------------------------------------------------------------------
\27\ See IP Network Release, supra note 7, at 7889. Users can
connect to Global OTC and NYSE Global Index over the IP network or
LCN.
---------------------------------------------------------------------------
The Exchange notes that charging Users a monthly fee for
connectivity to Third Party Data Feeds is consistent with the monthly
fee Nasdaq charges its co-location customers for connectivity to third
party data. For instance, Nasdaq charges its co-location customers
monthly fees of $1,500 and $4,000 for connectivity to BATS Y and BATS,
respectively, and of $2,500 for connectivity to EDGA or EDGX.\28\
---------------------------------------------------------------------------
\28\ See Nasdaq Stock Market Rule 7034.
---------------------------------------------------------------------------
In order to connect to a Third Party Data Feed, a User enters into
a contract with the relevant third party market or other content
service provider, pursuant to which the content service provider
charges the User for the Third Party Data Feed. The Exchange receives
the Third Party Data Feed over its fiber optic network and, after the
data provider and User enter into the contract and the Exchange
receives authorization from the data provider, the Exchange re-
transmits the data to the User over the User's port. The Exchange
charges the User for the connectivity to the Third Party Data Feed. A
User only receives, and is only charged for, connectivity to the Third
Party Data Feeds for which it enters into contracts.
With the exception of the Intercontinental Exchange (``ICE''),
Global OTC and NYSE Global Index feeds,\29\ the Exchange has no
affiliation with the sellers of the Third Party Data Feeds. It has no
right to use the Third Party Data Feeds other than as a redistributor
of the data. The Third Party Data Feeds do not provide access or order
entry to the Exchange's execution system. With the exception of the ICE
feeds, the Third Party Data Feeds do not provide access or order entry
to the execution systems of the third party generating the feed.\30\
The Exchange receives Third Party Data Feeds via arms-length agreements
and it has no inherent advantage over any other distributor of such
data.
---------------------------------------------------------------------------
\29\ ICE and the Global OTC alternative trading system are both
owned by the Exchange's ultimate parent, Intercontinental Exchange,
Inc., and so the Exchange has an indirect interest in the ICE and
Global OTC feeds. The NYSE Global Index feed includes index and
exchange traded product valuations data, with data drawn from the
Exchange, the Affiliate SROs, and third party exchanges. Because it
includes third party data, the NYSE Global Index feed is considered
a Third Party Data Feed. As with all Third Party Data Feeds, the
Exchange is not the exclusive method to connect to the ICE, Global
OTC or NYSE Global Index feeds.
\30\ Unlike other Third Party Data Feeds, the ICE feeds include
both market data and trading and clearing services. In order to
receive the ICE feeds, a User must receive authorization from ICE to
receive both market data and trading and clearing services.
---------------------------------------------------------------------------
The Exchange charges a monthly recurring fee for connectivity to
each Third Party Data Feed. The monthly recurring fee is per Third
Party Data Feed, with the exception that the monthly recurring feed for
SuperFeed and MSCI varies by the bandwidth of the connection. Depending
on its needs and bandwidth, a User may opt to receive all or some of
the feeds or services included in a Third Party Data Feed.
The following table shows the feeds that connectivity to each Third
Party Data Feed provides, together with the applicable monthly
recurring fee.
[[Page 54882]]
------------------------------------------------------------------------
Monthly
recurring
connectivity
Third party data feed fee per third
party data
feed
------------------------------------------------------------------------
Bats BZX Exchange (BZX) and Bats BYX Exchange (BYX)..... $2,000
Bats EDGX Exchange (EDGX) and Bats EDGA Exchange (EDGA). 2,000
Chicago Board Options Exchange (CBOE)................... 2,000
Chicago Stock Exchange (CHX)............................ 400
Euronext................................................ 600
Financial Industry Regulatory Authority (FINRA)......... 500
Global OTC.............................................. 100
Intercontinental Exchange (ICE)......................... 1,500
Montr[eacute]al Exchange (MX)........................... 1,000
MSCI 5 Mb............................................... 500
MSCI 20 Mb.............................................. 2,000
NASDAQ Stock Market..................................... 2,000
NASDAQ OMX Global Index Data Service.................... 100
NASDAQ OMDF............................................. 100
NASDAQ UQDF & UTDF...................................... 500
NYSE Global Index....................................... 100
OTC Markets Group....................................... 1,000
SR Labs--SuperFeed <= 500 Mb............................ 250
SR Labs--SuperFeed >500 Mb to <= 1.25 Gb................ 800
SR Labs--SuperFeed >1.25 Gb............................. 1,000
TMX Group............................................... 2,500
------------------------------------------------------------------------
In addition to the above connectivity fees, the Exchange proposes
to add the following language to its Price List:
Pricing for data feeds from third party markets and other
content service providers (Third Party Data Feeds) is for
connectivity only. Connectivity to Third Party Data Feeds is subject
to any technical provisioning requirements and authorization from
the provider of the data feed. Connectivity to Third Party Data
Feeds is over the IP network, with the exception that Users can
connect to Global OTC and NYSE Global Index over the IP network or
LCN. Market data fees are charged independently by the relevant
third party market or content service provider. The Exchange is not
the exclusive method to connect to Third Party Data Feeds.
Third Party Data Feed providers may charge redistribution fees,
such as Nasdaq's Extranet Access Fees and OTC Markets Group's Access
Fees.\31\ When the Exchange receives a redistribution fee, it passes
through the charge to the User, without change to the fee. The fee is
labeled as a pass-through of a redistribution fee on the User's
invoice. The Exchange proposes to add language to the Price List
accordingly.
---------------------------------------------------------------------------
\31\ See NASDAQ Stock Market LLC Rule 7025, ``Extranet Access
Fee'', and OTC Markets Market Data Distribution Agreement Appendix
B, ``Fees'' at https://www.otcmarkets.com/content/doc/market-data-fees-2016.pdf. See also Securities Exchange Act Release No. 74040
(January 13, 2015), 80 FR 2460 (January 16, 2015) (SR-NASDAQ-2015-
003).
---------------------------------------------------------------------------
The Exchange provides third party markets or content providers that
are also Users connectivity to their own Third Party Data Feeds. The
Exchange does not charge Users that are third party markets or content
providers for connectivity to their own feeds, as in the Exchange's
experience such parties generally receive their own feeds for purposes
of diagnostics and testing. The Exchange proposes to add language to
the Price List accordingly.
Connectivity to Third Party Testing and Certification Feeds
The Exchange offers Users connectivity to third party certification
and testing feeds. Certification feeds are used to certify that a User
conforms to any of the relevant content service provider's requirements
for accessing Third Party Systems or receiving Third Party Data, while
testing feeds provide Users an environment in which to conduct tests
with non-live data.\32\ Such feeds, which are solely used for
certification and testing and do not carry live production data, are
available over the IP network.
---------------------------------------------------------------------------
\32\ For example, a User that trades on a third party exchange
may wish to test the exchange's upcoming releases and product
releases or may wish to test a new algorithm in a testing
environment prior to making it live.
---------------------------------------------------------------------------
The Exchange proposes to revise the Price List to include
connectivity to third party certification and testing feeds. The
Exchange charges a connectivity fee of $100 per month per feed.
The Exchange proposes to add the following connectivity fees and
language to its Price List:
------------------------------------------------------------------------
------------------------------------------------------------------------
Connectivity to third party certification $100 monthly recurring fee
and testing feeds. per feed
------------------------------------------------------------------------
The Exchange provides connectivity to third party testing and
certification feeds provided by third party markets and other content
service providers. Pricing for third party testing and certification
feeds is for connectivity only. Connectivity to third party testing and
certification feeds is subject to any technical provisioning
requirements and authorization from the provider of the data feed.
Connectivity to third party testing and certification feeds is over the
IP network. Any applicable fees are charged independently by the
relevant third party market or content service provider. The Exchange
is not the exclusive method to connect to third party testing and
certification feeds.
Connectivity to DTCC
The Exchange provides Users connectivity to DTCC for clearing, fund
transfer, insurance, and settlement services.\33\ The Exchange proposes
to revise the Price List to include connectivity to DTCC. The Exchange
charges a connectivity fee of $500 per month for connections to DTCC of
5 Mb and $2,500 for connections of 50 Mb. Connectivity to DTCC is
available over the IP network.
---------------------------------------------------------------------------
\33\ Such connectivity to DTCC is distinct from the access to
shared data services for clearing and settlement services that a
User receives when it purchases access to the LCN or IP network. The
shared data services allow Users and other entities with access to
the Trading Systems to post files for settlement and clearing
services to access.
---------------------------------------------------------------------------
In order to connect to DTCC, a User enters into a contract with
DTCC, pursuant to which DTCC charges the User for the services
provided. The
[[Page 54883]]
Exchange receives the DTCC feed over its fiber optic network and, after
DTCC and the User enter into the services contract and the Exchange
receives authorization from DTCC, the Exchange provides connectivity to
DTCC to the User over the User's IP network port. The Exchange charges
the User for the connectivity to DTCC.
Connectivity to DTCC does not provide access or order entry to the
Exchange's execution system, and a User's connection to DTCC is not
through the Exchange's execution system.
The Exchange proposes to add the following connectivity fees and
language to its Price List:
------------------------------------------------------------------------
------------------------------------------------------------------------
5 Mb connection to DTCC................... $500 monthly recurring fee
50 Mb connection to DTCC.................. $2,500 monthly recurring fee
------------------------------------------------------------------------
Pricing for connectivity to DTCC feeds is for connectivity only.
Connectivity to DTCC feeds is subject to any technical provisioning
requirements and authorization from DTCC. Connectivity to DTCC feeds is
over the IP network. Any applicable fees are charged independently by
DTCC. The Exchange is not the exclusive method to connect to DTCC
feeds.
Virtual Control Circuits
Finally, the Exchange proposes to revise the Price List to offer
VCCs between two Users. VCCs are connections between two points over
dedicated bandwidth using the IP network. A VCC (previously called a
``peer to peer'' connection) is a two-way connection which the two
participants can use for any purpose.
The Exchange bills the User requesting the VCC, but will not set up
a VCC until the other User confirms that it wishes to have the VCC set
up.
The Exchange proposes to revise the Price List to include VCCs
between two Users. The fee for VCCs is based on the bandwidth utilized,
as follows:
------------------------------------------------------------------------
Type of service Description Amount of charge
------------------------------------------------------------------------
Virtual Control Circuit between 1Mb $200 monthly charge.
two Users.
3Mb $400 monthly charge.
5Mb $500 monthly charge.
10Mb $800 monthly charge.
25Mb $1,200 monthly charge.
50Mb $1,800 monthly charge.
100Mb $2,500 monthly charge.
------------------------------------------------------------------------
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; \34\ 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 Affiliate
SROs.\35\
---------------------------------------------------------------------------
\34\ 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.
\35\ See SR-NYSE-2013-59, supra note 5 at 51766. The Affiliate
SROs have also submitted substantially the same proposed rule change
to propose the changes described herein. See SR-NYSEMKT-2016-63 and
SR-NYSEArca-2016-89.
---------------------------------------------------------------------------
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,\36\ in general, and furthers the
objectives of sections 6(b)(5) of the Act,\37\ 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.
---------------------------------------------------------------------------
\36\ 15 U.S.C. 78f(b).
\37\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that the proposed changes remove impediments
to, and perfect the mechanisms of, a free and open market and a
national market system and, in general, protect investors and the
public interest because a User is provided choices with respect to its
Access and Connectivity, helping it tailor its data center operations
to the requirements of its business operations by allowing it to select
the form and latency of connectivity that best suits its needs. The
Exchange provides the Access and Connectivity as conveniences to Users.
Use of Access or Connectivity is completely voluntary, and is one of
several connectivity options available to a User. As alternatives to
using the Access and Connectivity provided by the Exchange, a User may
access or connect to such services and products through another User or
through a connection to an Exchange access center outside the data
center, third party access center, or third party vendor. The User may
make such connection through a third party telecommunication provider,
third party wireless network, the SFTI network, or a combination
thereof.
The Exchange believes that revising the Price List to provide a
more detailed description of the access to the Exchange Systems and
connectivity to Included Data Products that Users are provided with
their purchase of access to the LCN or IP network would remove
impediments to, and perfect the mechanisms of, a free and open market
and a national market system and, in general, protect investors and the
public interest because the proposed changes would make the
descriptions of access to the LCN and IP network more accessible and
transparent, thereby providing market participants with clarity as to
what connectivity is
[[Page 54884]]
included in the purchase of access to the LCN and IP network.
The Exchange believes that providing a more detailed description of
the access to Third Party Systems and related fees, as well as the
connectivity and related fees for Premium NYSE Data Products, Third
Party Data Feeds, third party testing and certification feeds and DTCC,
would remove impediments to, and perfect the mechanisms of, a free and
open market and a national market system and, in general, protect
investors and the public interest because the proposed changes would
make the descriptions of market participants' connectivity options more
accessible and transparent, thereby providing market participants with
clarity as to what options for connectivity are available to them and
what the related costs are.
In addition, the Exchange believes that providing connectivity to
third party testing and certification feeds removes 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 such feeds provide Users an environment in which to
conduct tests with non-live data, including testing for upcoming
releases and product enhancements or the User's own software
development, and allow Users to certify conformance to any applicable
technical requirements. Similarly, the Exchange believes that providing
connectivity to DTCC removes 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 it
provides efficient connection to clearing, fund transfer, insurance,
and settlement services.
The Exchange believes that providing Users with VCCs removes
impediments to, and perfects the mechanisms of, a free and open market
and a national market system because VCCs provide each User with an
additional option for connectivity to another User, helping it tailor
its data center operations to the requirements of its business
operations by allowing it to select the form of connectivity that best
suits its needs. The Exchange provides VCCs as a convenience to Users.
Use of a VCC is completely voluntary. As an alternative to an Exchange-
provided VCC, a User may connect to another User through a cross
connect.
The Exchange also believes that the proposed rule change is
consistent with section 6(b)(4) of the Act,\38\ 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.
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\38\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that the proposed fees changes are consistent
with section 6(b)(4) of the Act for multiple reasons. The Exchange
operates in a highly competitive market in which exchanges offer co-
location services as a means to facilitate the trading and other market
activities of those market participants who believe that co-location
enhances the efficiency of their operations. Accordingly, fees charged
for co-location services are constrained by the active competition for
the order flow of, and other business from, such market participants.
If a particular exchange charges excessive fees for co-location
services, affected market participants will opt to terminate their co-
location arrangements with that exchange, and adopt a possible range of
alternative strategies, including placing their servers in a physically
proximate location outside the exchange's data center (which could be a
competing exchange), or pursuing strategies less dependent upon the
lower exchange-to-participant latency associated with co-location.
Accordingly, the exchange charging excessive fees would stand to lose
not only co-location revenues but also the liquidity of the formerly
co-located trading firms, which could have additional follow-on effects
on the market share and revenue of the affected exchange.
The Exchange believes that the services and fees proposed herein
are equitably allocated and not unfairly discriminatory because, in
addition to the services being completely voluntary, they are available
to all Users on an equal basis (i.e., the same products and services
are available to all Users). All Users that voluntarily select to
access the Exchange Systems or connect to Included Data Products would
not be subject to a charge above and beyond the fee paid for the
relevant LCN or IP network access. All Users that voluntarily select to
receive access to Third Party Systems, connectivity to Premium NYSE
Data Products, Third Party Data Feeds, third party testing and
certification feeds and DTCC, or a VCC would be charged the same amount
for the same services.
The Exchange believes that the services and fees proposed herein
are reasonable, equitably allocated and not unfairly discriminatory
because the Exchange provides Access and Connectivity as conveniences
to Users. Use of Access or Connectivity is completely voluntary, and is
one of several connectivity options available to a User. As
alternatives to using the Access and Connectivity provided by the
Exchange, a User may access or connect to such services and products
through another User or through a connection to an Exchange access
center outside the data center, third party access center, or third
party vendor. The User may make such connection through a third party
telecommunication provider, third party wireless network, the SFTI
network, or a combination thereof. Users that opt to use Access or
Connectivity would not receive access or connectivity that is not
available to all Users, as all market participants that contract with
the relevant market or content provider may receive access or
connectivity. Similarly, the Exchange provides VCCs between Users as a
convenience to Users. Use of a VCC is completely voluntary. As an
alternative to an Exchange-provided VCC, a User may connect to another
User through a cross connect.
Overall, the Exchange believes that the proposed charges are
reasonable, equitably allocated and not unfairly discriminatory because
the Exchange offers Access, Connectivity, and VCCs as conveniences to
Users, and in doing so incurs certain costs. The expenses incurred and
resources expended by the Exchange generally include costs related to
the data center facility hardware and technology infrastructure;
maintenance and operational costs, such as the costs of responding to
any production issues; and the costs related to the personnel required
for initial installation and administration, monitoring, support and
maintenance of such services. Since the inception of co-location, the
Exchange has made numerous improvements to the network hardware and
technology infrastructure and has established additional administrative
controls. The Exchange has expanded the network infrastructure to keep
pace with the increased number of services available to Users,
including the increasing bandwidth required for Access and
Connectivity, including resilient and redundant feeds. For example, the
Exchange must ensure that the network infrastructure has the necessary
bandwidth for the Included Data Products as well as the Premium NYSE
Data Products, which generally require greater bandwidth. In addition,
the Exchange incurs certain costs specific to providing connectivity to
Third Party Data Feeds, Third Party Systems, third party testing and
certification feeds and
[[Page 54885]]
DTCC, including the costs of maintaining multiple connections to each
Third Party Data Feed, Third Party System, and DTCC, allowing the
Exchange to provide resilient and redundant connections; adapting to
any changes made by the relevant third party; and covering any
applicable fees (other than redistribution fees) charged by the
relevant third party, such as port fees.
Co-location was created to permit Users ``to rent space on premises
controlled by the Exchange in order that they may locate their
electronic servers in close physical proximity to the Exchange's
trading and execution systems.'' \39\ The expectation was that normally
Users sending orders to the Exchange would have reduced latencies.\40\
Accordingly, the Exchange believes that including access to the
Exchange Systems with the purchase of access to the LCN or IP network
is reasonable because such access is directly related to the purpose of
co-location.
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\39\ Original Co-Location Filing, supra note 4, at 59310.
\40\ Id., at 59311.
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The Exchange believes that including connectivity to the Included
Data products with the purchase of access to the LCN or IP network is
reasonable and not unfairly discriminatory because Users are not
required to use any of their bandwidth to access Exchange Systems or
connect to an Included Data Product unless they wish to do so. Rather,
a User only receives access to the Exchange Systems and connectivity to
the Included Data Products that it selects, and a User can change which
of such access or connections it receives at any time, subject to
authorization from the data provider or relevant Exchange or Affiliate
SRO. Including connectivity to the Included Data products with the
purchase of access to the LCN or IP network is a commercial decision.
As noted above, the Exchange operates in a highly competitive market.
If a particular exchange charges excessive fees for co-location
services--such as excessive fees for access to the local area network
within the exchange's colocation space--affected market participants
will opt to terminate their co-location arrangements with that
exchange, and adopt a possible range of alternative strategies. The
Exchange believes that including connectivity to Included Data Products
with the purchase of access to the LCN or IP network is consistent with
Nasdaq's colocation service, which, apart from an installation fee,
does not charge its co-located customers for connectivity to Nasdaq
data.\41\
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\41\ See Nasdaq Stock Market Rule 7034.
---------------------------------------------------------------------------
The Exchange believes that its fees for connectivity to Premium
NYSE Data Products are reasonable because they allow the Exchange to
defray or cover the costs associated with offering Users connectivity
to Premium NYSE Data Products while providing Users the benefit of
reduced latency when connecting to data feeds that integrate, or
include data elements from, several Included Data Products. Charging
separate connectivity fees for Premium NYSE Data Products is a
commercial decision. As noted above, the Exchange operates in a highly
competitive market. If a particular exchange charges excessive fees for
co-location services--such as excessive fees for connectivity to the
exchange's market data--affected market participants will opt to
terminate their co-location arrangements with that exchange, and adopt
a possible range of alternative strategies. Although Nasdaq does not
include connectivity to any of the Premium NYSE Data Products in its
co-location services, the Exchange believes that the proposed fees are
generally consistent with the fees that a Nasdaq co-location customer
would pay for connectivity to the individual feeds included in a
Premium NYSE Data Product. For example, the NYSE Integrated Feed
includes, among other things, information available from three of the
Included Data Products: NYSE OpenBook, NYSE Trades, and NYSE Order
Imbalances. Nasdaq offers connectivity to two of those feeds, OpenBook
Ultra and NYSE Trades, for which it would charge a co-located customer
a combined monthly fee of $2,600.\42\ The Exchange believes that it is
reasonable to charge less for connectivity to the resilient Premium
NYSE Data Products on the LCN than over the IP network, because Users
do not have the option to connect to the A or B Feed over the LCN.
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\42\ Id.
---------------------------------------------------------------------------
The Exchange believes that charging separate connectivity fees for
Third Party Data Feeds and access to Third Party Systems, third party
testing and certification feeds and connectivity to DTCC is reasonable
and not unfairly discriminatory because, in the Exchange's experience,
not all Users connect to Third Party Data Feeds, Third Party Systems,
third party testing and certification feeds or DTCC. By charging only
those Users that receive such connectivity, only the Users that
directly benefit from it support its cost.
The Exchange believes the fees for connectivity to Third Party Data
Feeds are reasonable because they allow the Exchange to defray or cover
the costs associated with offering Users connectivity to Third Party
Data Feeds while providing Users the convenience of receiving such
Third Party Data Feeds within co-location, helping them tailor their
data center operations to the requirements of their business operations
by allowing them to select the form and latency of connectivity that
best suits their needs. The Exchange believes that its proposed charges
for connectivity to Third Party Data Feeds are similar to the
connectivity fees Nasdaq imposes on its co-location customers. For
instance, Nasdaq charges its co-location customers monthly fees of
$1,500 and $4,000 for connectivity to BATS Y and BATS, respectively,
and of $2,500 for connectivity to EDGA or EDGX.\43\
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\43\ See Nasdaq Stock Market Rule 7034.
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The Exchange believes that its connectivity fees for access to
Third Party Systems are reasonable because they allow the Exchange to
defray or cover the costs associated with offering such access while
providing Users the convenience of being able to access such Third
Party Systems, helping them tailor their data center operations to the
requirements of their business operations by allowing them to select
the form and latency of connectivity that best suits their needs.
Similarly, the Exchange believes that its fees for connectivity to DTCC
are reasonable because they allow the Exchange to defray or cover the
costs associated with offering such access while providing Users the
benefit of an efficient connection to clearing, fund transfer,
insurance, and settlement services. The Exchange further believes the
fees for connectivity to Third Party Systems and DTCC are reasonable
because the monthly recurring fee the Exchange charges Users for
connectivity to each Third Party System and DTCC varies by the
bandwidth of the connection, and so is generally proportional to the
bandwidth required.
The Exchange also believes that its connectivity fees for access to
third party testing and certification feeds are reasonable because they
allow the Exchange to defray or cover the costs associated with
offering such access while providing Users the benefit of having an
environment in which to conduct tests with non-live data, including
testing for upcoming releases and product enhancements or the User's
own software development, and to certify conformance to any applicable
technical requirements.
[[Page 54886]]
The Exchange believes it is reasonable that redistribution fees
charged by providers of Third Party Data Feeds are passed through to
the User, without change to the fee. If not passed through, the cost of
the re-distribution fees would be factored into the proposed fees for
connectivity to Third Party Data Feeds. The Exchange believes that
passing through the fees makes them more transparent to the User,
allowing the User to better assess the cost of the connectivity to a
Third Party Data Feed by seeing the individual components of the cost,
i.e. the Exchange's fee and the redistribution fee.
The Exchange believes that it is reasonable that it does not charge
third party markets or content providers for connectivity to their own
Third Party Data Feeds, as in the Exchange's experience such parties
generally receive their own feeds for purposes of diagnostics and
testing. The Exchange believes that it removes 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 to facilitate such diagnostics and testing.
Finally, the Exchange also believes that its fees for VCCs between
two Users are reasonable because they allow the Exchange to defray or
cover the costs associated with offering such VCCs while providing
Users the benefit of an additional option for connectivity to another
User, helping them tailor their data center operations to the
requirements of their business operations by allowing them to select
the form of connectivity that best suits their needs. As an alternative
to an Exchange-provided VCC, a User may connect to another User through
a cross connect.
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.
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,\44\ 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).
---------------------------------------------------------------------------
\44\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------
The Exchange believes that providing Users with access to the
Exchange Systems and Third Party Systems and connectivity to NYSE Data
Products, Third Party Data Feeds, third party testing and certification
feeds, and DTCC does not impose any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Act
because such Access and Connectivity satisfies User demand for access
and connectivity options, and several other access and connectivity
options are available to a User. As alternatives to using the Access
and Connectivity provided by the Exchange, a User may access or connect
to such services and products through another User or through a
connection to an Exchange access center outside the data center, third
party access center, or third party vendor. The User may make such
connection through a third party telecommunication provider, third
party wireless network, the SFTI network, or a combination thereof.
Users that opt to use Access or Connectivity would not receive access
or connectivity that is not available to all Users, as all market
participants that contract with the relevant market or content provider
may receive access or connectivity. In this way, the proposed changes
would enhance competition by helping Users tailor their Access and
Connectivity to the needs of their business operations by allowing them
to select the form and latency of access and connectivity that best
suits their needs.
Similarly, the Exchange believes that providing VCCs between Users
does not impose any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act because providing
VCCs satisfies User demand for an alternative to cross connects.
The Exchange believes that revising the Price List to provide a
more detailed description of the Access and Connectivity available to
Users would make such descriptions more accessible and transparent,
thereby providing market participants with clarity as to what Access
and Connectivity is available to them and what the related costs are,
thereby enhancing competition by ensuring that all Users have access to
the same information regarding Access and Connectivity.
Finally, the Exchange operates in a highly competitive market in
which exchanges offer co-location services as a means to facilitate the
trading and other market activities of those market participants who
believe that co-location enhances the efficiency of their operations.
Accordingly, fees charged for co-location services are constrained by
the active competition for the order flow of, and other business from,
such market participants. If a particular exchange charges excessive
fees for co-location services, affected market participants will opt to
terminate their co-location arrangements with that exchange, and adopt
a possible range of alternative strategies, including placing their
servers in a physically proximate location outside the exchange's data
center (which could be a competing exchange), or pursuing strategies
less dependent upon the lower exchange-to-participant latency
associated with co-location. Accordingly, the exchange charging
excessive fees would stand to lose not only co-location revenues but
also the liquidity of the formerly co-located trading firms, which
could have additional follow-on effects on the market share and revenue
of the affected exchange. 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 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.
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:
[[Page 54887]]
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-2016-45 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File No. SR-NYSE-2016-45. 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-2016-45, and should be
submitted on or before September 7, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\45\
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\45\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-19586 Filed 8-16-16; 8:45 am]
BILLING CODE 8011-01-P
