Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE Arca Options Fee Schedule and the NYSE Arca Equities Schedule of Fees and Charges for Exchange Services To Modify the Fees Related to Four Bundles of Co-Location Services in Connection With the Exchange's Co-Location Services, 1774-1777 [2016-32039]
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<![CDATA[
1774
Federal Register / Vol. 82, No. 4 / Friday, January 6, 2017 / Notices
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–
NYSEARCA–2016–166, and should be
submitted on or before January 27, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2016–32036 Filed 1–5–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–79716; File No. SR–
NYSEArca–2016–168]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the NYSE Arca
Options Fee Schedule and the NYSE
Arca Equities Schedule of Fees and
Charges for Exchange Services To
Modify the Fees Related to Four
Bundles of Co-Location Services in
Connection With the Exchange’s CoLocation Services
December 30, 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 December
19, 2016, NYSE Arca, Inc. (the
‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with
the Securities and Exchange
14 17
CFR 200.30–3(a)(12).
15 U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
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I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The Exchange proposes to amend the
NYSE Arca Options Fee Schedule (the
‘‘Options Fee Schedule’’) and the NYSE
Arca Equities Schedule of Fees and
Charges for Exchange Services (the
‘‘Equities Fee Schedule’’ and, together
with the Options Fee Schedule, the ‘‘Fee
Schedules’’) to modify the fees related
to four bundles of co-location services
(‘‘Partial Cabinet Solution bundles’’) in
connection with the Exchange’s colocation services. The Exchange
proposes to implement the fee changes
effective January 1, 2017. The proposed
rule change is available on the
Exchange’s Web site at www.nyse.com,
at the principal office of the Exchange,
and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend the
Exchange’s Fee Schedules to modify the
1
VerDate Sep<11>2014
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.
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fees related to Partial Cabinet Solution
bundles in connection with the
Exchange’s co-location services.4
Currently, the Exchange offers Users 5
that purchase a Partial Cabinet Solution
bundle on or before December 31, 2016
a 50% reduction in the monthly
recurring charges (‘‘MRC’’) for the first
12 months.6 The Exchange now
proposes to extend that 50% reduction
until December 31, 2017. The Exchange
proposes to implement the fee changes
effective January 1, 2017.
The Exchange offers the four Partial
Cabinet Solution bundles in order to
attract smaller Users, including those
with minimal power or cabinet space
demands or those for which the costs
attendant with having a dedicated
cabinet or greater network connection
bandwidth are too burdensome.7 Under
the proposed change, such smaller
Users will be able to avail themselves of
the reduction until December 31, 2017.
Specifically, the Exchange proposes to
modify its Fee Schedules so that they
read as follows:
4 The Exchange initially filed rule changes
relating to its co-location services with the
Securities and Exchange Commission
(‘‘Commission’’) in 2010. See Securities Exchange
Act Release No. 63275 (November 8, 2010), 75 FR
70048 (November 16, 2010) (SR–NYSEArca–2010–
100) (the ‘‘Original Co-location Filing’’). The
Exchange operates a data center in Mahwah, New
Jersey (the ‘‘data center’’) from which it provides
co-location services to Users.
5 For purposes of the Exchange’s co-location
services, a ‘‘User’’ means any market participant
that requests to receive co-location services directly
from the Exchange. See Securities Exchange Act
Release No. 76010 (September 29, 2015), 80 FR
60197 (October 5, 2015) (SR–NYSEArca–2015–82).
As specified in the Fee Schedules, a User that
incurs co-location fees for a particular co-location
service pursuant thereto would not be subject to colocation fees for the same co-location service
charged by the Exchange’s affiliates New York
Stock Exchange LLC (‘‘NYSE LLC’’) and NYSE MKT
LLC (‘‘NYSE MKT and, together with NYSE LLC,
the ‘‘Affiliate SROs’’). See Securities Exchange Act
Release No. 70173 (August 13, 2013), 78 FR 50459
(August 19, 2013) (SR–NYSEArca–2013–80).
6 See Securities Exchange Act Release No. 77070
(Feb. 5, 2016), 81 FR 7401 (Feb. 11, 2016) (SR–
NYSEArca–2015–102).
7 See id at 7402.
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1775
Type of service
Description
Amount of charge
Partial Cabinet Solution bundles .....
Note: A User and its Affiliates are
limited to one Partial Cabinet Solution bundle at a time. A User
and its Affiliates must have an
Aggregate Cabinet Footprint of 2
kW or less to qualify for a Partial
Cabinet Solution bundle. See
Note 2 under ‘‘General Notes’’.
Option A: 1 kW partial cabinet, 1
LCN connection (1 Gb), 1 IP
network connection (1 Gb), 2
fiber cross connections and either the Network Time Protocol
Feed or Precision Timing Protocol.
Option B: 2 kW partial cabinet, 1
LCN connection (1 Gb), 1 IP
network connection (1 Gb), 2
fiber cross connections and either the Network Time Protocol
Feed or Precision Timing Protocol.
Option C: 1 kW partial cabinet, 1
LCN connection (10 Gb), 1 IP
network connection (10 Gb), 2
fiber cross connections and either the Network Time Protocol
Feed or Precision Timing Protocol.
Option D: 2 kW partial cabinet, 1
LCN connection (10 Gb), 1 IP
network connection (10 Gb), 2
fiber cross connections and either the Network Time Protocol
Feed or Precision Timing Protocol.
$7,500 initial charge per bundle plus monthly charge per bundle as
follows:
• For Users that order on or before December 31, 2017: $3,000
monthly for first 12 months of service, and $6,000 monthly
thereafter.
• For Users that order after December 31, 2017: $6,000 monthly.
$7,500 initial charge per bundle plus monthly charge per bundle as
follows:
• For Users that order on or before December 31, 2017: $3,500
monthly for first 12 months of service, and $7,000 monthly
thereafter.
• For Users that order after December 31, 2017: $7,000 monthly.
$10,000 initial charge per bundle plus monthly charge per bundle as
follows:
• For Users that order on or before December 31, 2017: $7,000
monthly for first 12 months of service, and $14,000 monthly
thereafter.
• For Users that order after December 31, 2017: $14,000
monthly.
$10,000 initial charge per bundle plus monthly charge per bundle as
follows:
• For Users that order on or before December 31, 2017: $7,500
monthly for first 12 months of service, and $15,000 monthly
thereafter.
• For Users that order after December 31, 2017: $15,000
monthly.
The Exchange is not proposing any
other changes to the Partial Cabinet
Solution bundles other than this
proposed extension of the 50%
reduction in the MRC. Users that
purchase a Partial Cabinet Solution
bundle would still be subject to a 90-day
minimum commitment, after which
period they are subject to a 60-day
rolling time period.8
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; 9 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
8 See
id.
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.
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9 As
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18:06 Jan 05, 2017
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Exchange or to the Exchange and one or
both of its affiliates.10
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,11 in general, and
furthers the objectives of Sections
6(b)(5) of the Act,12 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 rule changes provide for the
equitable allocation of reasonable dues,
fees, and other charges among its
members, issuers and other persons
using its facilities, and are not designed
10 See SR–NYSEArca–2013–80, supra note 5, at
50459. The Exchange’s affiliates have also
submitted substantially the same proposed rule
change to propose the changes described herein.
See SR–NYSE–2016–91 and SR–NYSEMKT–2016–
123.
11 15 U.S.C. 78f(b).
12 15 U.S.C. 78f(b)(5).
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to permit unfair discrimination between
customers, issuers, brokers, or dealers,
because the Exchange proposes to offer
the 50% reduction in the MRC to all
Users equally. As is currently the case,
the purchase of any colocation service
(including Partial Cabinet Solution
bundles) is completely voluntary. All
Users that order a bundle on or before
December 31, 2017 would have their
MRC reduced by 50% for the first 12
months.
The Exchange believes that extending
the 50% reduction in the MRC for
Partial Cabinet Solution bundles is not
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers because the
Partial Cabinet Solution bundles would
continue to offer four different Partial
Cabinet Solution bundles with options
with respect to cabinet footprint and
network connections. Users that require
other sizes or combinations of cabinets,
network connections and cross connects
could still request them.
In addition, the Exchange believes
that its proposal would remove
impediments to, and perfects the
mechanisms of, a free and open market
and a national market system and, in
general, protects investors and the
public interest because the proposed
extension of the 50% reduction in MRC
would continue to make it more cost
effective for Users to utilize co-location
by creating a convenient way to create
a colocation environment, through four
Partial Cabinet Solution bundles with
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options with respect to cabinet footprint
and network connections. The Exchange
expects that such Users would include
those with minimal power or cabinet
space demands and Users for which the
costs attendant with having a dedicated
cabinet or greater network connection
bandwidth are too burdensome.
The Exchange also believes that the
proposed rule change is consistent with
Section 6(b)(4) of the Act,13 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.
The Exchange believes that it is
reasonable that Users that order a Partial
Cabinet Solution bundle on or before
December 31, 2017 would have their
MRC reduced by 50% for the first 12
months because it is reasonable to
continue to offer such reduction as an
incentive to Users to utilize the service.
As noted above, the Exchange
anticipates that Users of the Partial
Cabinet Solution bundles would include
those with minimum power or cabinet
space demands and Users for which the
costs attendant with having a dedicated
cabinet or greater network connection
bandwidth are too burdensome. The
Exchange believes that it is reasonable
to continue to have a reduced minimum
commitment period for the Partial
Cabinet Solution bundle to further
reduce the cost commitment for such
Users as a continued incentive to Users
to utilize the new service.
For the reasons above, the proposed
changes do not unfairly discriminate
between or among market participants
that are otherwise capable of satisfying
any applicable co-location fees,
requirements, terms and conditions
established from time to time by the
Exchange.
Finally, the Exchange believes that it
is subject to significant competitive
forces, as described below in the
Exchange’s statement regarding the
burden on competition.
For these reasons, the Exchange
believes that the proposal is consistent
with the Act.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
In accordance with Section 6(b)(8) of
the Act,14 26 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
15 U.S.C. 78f(b)(4).
14 15 U.S.C. 78f(b)(8).
13
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18:06 Jan 05, 2017
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because, in addition to the proposed
services being completely voluntary,
they are available to all Users on an
equal basis (i.e. the same products and
services are available to all Users, and
the extension of the 50% reduction for
the MRC for the Partial Cabinet Solution
bundles would apply to all Users).
The Exchange believes that extending
the 50% reduction in the MRC will not
impose any burden on competition that
is not necessary or appropriate in
furtherance of the purposes of the Act
because such access will continue to
satisfy User demand for cost effective
options for smaller Users that choose to
utilize co-location. All Users that order
a bundle on or before December 31,
2017 would have their MRC reduced by
50% for the first 12 months. Providing
entities with the additional option of the
Partial Cabinet Solution bundle will
allow them to select the relationship
and type of service that better
corresponds to their needs and
resources.
The proposed changes will also
enhance competition by making it more
cost effective for Users that purchase a
Partial Cabinet Solution bundle to
utilize co-location by creating a
convenient way to create a colocation
environment, through Partial Cabinet
Solution bundles with options with
respect to cabinet footprint and network
connections at a reduced MRC for the
first 12 months. Such Users may choose
to pass on such cost savings to their
customers.
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 colocation 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
PO 00000
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market share and revenue of the affected
exchange. In such an environment, the
Exchange must continually review, and
consider adjusting, its services and
related fees and credits to remain
competitive with other exchanges.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective
upon filing pursuant to Section
19(b)(3)(A) 15 of the Act and
subparagraph (f)(2) of Rule 19b–4 16
thereunder, because it establishes a due,
fee, or other charge imposed by the
Exchange.
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
under Section 19(b)(2)(B) 17 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File No. SR–
NYSEArca–2016–168 on the subject
line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File No.
SR–NYSEArca–2016–168. This file
15 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
17 15 U.S.C. 78s(b)(2)(B).
16 17
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Federal Register / Vol. 82, No. 4 / Friday, January 6, 2017 / Notices
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File No. SR–NYSEArca–
2016–168, and should be submitted on
or before January 27, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2016–32039 Filed 1–5–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–79715; File No. SR–NYSE–
2016–91]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change to Amend the
Exchange’s Price List to Modify the
Fees Related to Four Bundles of CoLocation Services in Connection with
the Exchange’s Co-Location Services
December 30, 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 December
19, 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
Exchange’s Price List to modify the fees
related to four bundles of co-location
services (‘‘Partial Cabinet Solution
bundles’’) in connection with the
Exchange’s co-location services. The
Exchange proposes to implement the fee
changes effective January 1, 2017. 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.
sradovich on DSK3GMQ082PROD with NOTICES
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
18 17
CFR 200.30–3(a)(12).
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1777
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
Exchange’s Price List to modify the fees
related to Partial Cabinet Solution
bundles in connection with the
Exchange’s co-location services.4
Currently, the Exchange offers Users 5
that purchase a Partial Cabinet Solution
bundle on or before December 31, 2016
a 50% reduction in the monthly
recurring charges (‘‘MRC’’) for the first
12 months.6 The Exchange now
proposes to extend that 50% reduction
until December 31, 2017. The Exchange
proposes to implement the fee changes
effective January 1, 2017.
The Exchange offers the four Partial
Cabinet Solution bundles in order to
attract smaller Users, including those
with minimal power or cabinet space
demands or those for which the costs
attendant with having a dedicated
cabinet or greater network connection
bandwidth are too burdensome.7 Under
the proposed change, such smaller
Users will be able to avail themselves of
the reduction until December 31, 2017.
Specifically, the Exchange proposes to
modify its Price List so that it reads as
follows:
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 (Sept. 21, 2010), 75 FR 59310
(Sept. 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 (Sept. 29, 2015), 80 FR 60190
(Oct. 5, 2015) (SR–NYSE–2015–40). As specified in
the Price List, a User that incurs co-location fees for
a particular co-location service pursuant thereto
would not be subject to co-location fees for the
same co-location service charged by the Exchange’s
affiliates NYSE MKT LLC and NYSE Arca, Inc. See
Securities Exchange Act Release No. 70206 (Aug.
15, 2013), 78 FR 51765 (Aug. 21, 2013) (SR–NYSE–
2013–59).
6 See Securities Exchange Act Release No. 77072
(Feb. 5, 2016), 81 FR 7394 (Feb. 11, 2016) (SR–
NYSE–2015–53).
7 See id at 7396.
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]]>Agencies
[Federal Register Volume 82, Number 4 (Friday, January 6, 2017)]
[Notices]
[Pages 1774-1777]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-32039]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-79716; File No. SR-NYSEArca-2016-168]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE
Arca Options Fee Schedule and the NYSE Arca Equities Schedule of Fees
and Charges for Exchange Services To Modify the Fees Related to Four
Bundles of Co-Location Services in Connection With the Exchange's Co-
Location Services
December 30, 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 December 19, 2016, NYSE Arca, Inc. (the ``Exchange'' or
``NYSE Arca'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange proposes to amend the NYSE Arca Options Fee Schedule
(the ``Options Fee Schedule'') and the NYSE Arca Equities Schedule of
Fees and Charges for Exchange Services (the ``Equities Fee Schedule''
and, together with the Options Fee Schedule, the ``Fee Schedules'') to
modify the fees related to four bundles of co-location services
(``Partial Cabinet Solution bundles'') in connection with the
Exchange's co-location services. The Exchange proposes to implement the
fee changes effective January 1, 2017. The proposed rule change is
available on the Exchange's Web site at www.nyse.com, at the principal
office of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend the Exchange's Fee Schedules to
modify the fees related to Partial Cabinet Solution bundles in
connection with the Exchange's co-location services.\4\ Currently, the
Exchange offers Users \5\ that purchase a Partial Cabinet Solution
bundle on or before December 31, 2016 a 50% reduction in the monthly
recurring charges (``MRC'') for the first 12 months.\6\ The Exchange
now proposes to extend that 50% reduction until December 31, 2017. The
Exchange proposes to implement the fee changes effective January 1,
2017.
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\4\ The Exchange initially filed rule changes relating to its
co-location services with the Securities and Exchange Commission
(``Commission'') in 2010. See Securities Exchange Act Release No.
63275 (November 8, 2010), 75 FR 70048 (November 16, 2010) (SR-
NYSEArca-2010-100) (the ``Original Co-location Filing''). The
Exchange operates a data center in Mahwah, New Jersey (the ``data
center'') from which it provides co-location services to Users.
\5\ For purposes of the Exchange's co-location services, a
``User'' means any market participant that requests to receive co-
location services directly from the Exchange. See Securities
Exchange Act Release No. 76010 (September 29, 2015), 80 FR 60197
(October 5, 2015) (SR-NYSEArca-2015-82). As specified in the Fee
Schedules, a User that incurs co-location fees for a particular co-
location service pursuant thereto would not be subject to co-
location fees for the same co-location service charged by the
Exchange's affiliates New York Stock Exchange LLC (``NYSE LLC'') and
NYSE MKT LLC (``NYSE MKT and, together with NYSE LLC, the
``Affiliate SROs''). See Securities Exchange Act Release No. 70173
(August 13, 2013), 78 FR 50459 (August 19, 2013) (SR-NYSEArca-2013-
80).
\6\ See Securities Exchange Act Release No. 77070 (Feb. 5,
2016), 81 FR 7401 (Feb. 11, 2016) (SR-NYSEArca-2015-102).
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The Exchange offers the four Partial Cabinet Solution bundles in
order to attract smaller Users, including those with minimal power or
cabinet space demands or those for which the costs attendant with
having a dedicated cabinet or greater network connection bandwidth are
too burdensome.\7\ Under the proposed change, such smaller Users will
be able to avail themselves of the reduction until December 31, 2017.
Specifically, the Exchange proposes to modify its Fee Schedules so that
they read as follows:
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\7\ See id at 7402.
[[Page 1775]]
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Type of service Description Amount of charge
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Partial Cabinet Solution Option A: 1 kW $7,500 initial charge
bundles. partial cabinet, per bundle plus
Note: A User and its 1 LCN connection monthly charge per
Affiliates are limited to one (1 Gb), 1 IP bundle as follows:
Partial Cabinet Solution network For Users
bundle at a time. A User and connection (1 that order on or
its Affiliates must have an Gb), 2 fiber before December 31,
Aggregate Cabinet Footprint cross 2017: $3,000 monthly
of 2 kW or less to qualify connections and for first 12 months
for a Partial Cabinet either the of service, and
Solution bundle. See Note 2 Network Time $6,000 monthly
under ``General Notes''. Protocol Feed or thereafter.
Precision Timing For Users
Protocol. that order after
Option B: 2 kW December 31, 2017:
partial cabinet, $6,000 monthly.
1 LCN connection $7,500 initial charge
(1 Gb), 1 IP per bundle plus
network monthly charge per
connection (1 bundle as follows:
Gb), 2 fiber For Users
cross that order on or
connections and before December 31,
either the 2017: $3,500 monthly
Network Time for first 12 months
Protocol Feed or of service, and
Precision Timing $7,000 monthly
Protocol. thereafter.
For Users
that order after
December 31, 2017:
$7,000 monthly.
Option C: 1 kW $10,000 initial
partial cabinet, charge per bundle
1 LCN connection plus monthly charge
(10 Gb), 1 IP per bundle as
network follows:
connection (10 For Users
Gb), 2 fiber that order on or
cross before December 31,
connections and 2017: $7,000 monthly
either the for first 12 months
Network Time of service, and
Protocol Feed or $14,000 monthly
Precision Timing thereafter.
Protocol. For Users
that order after
December 31, 2017:
$14,000 monthly.
Option D: 2 kW $10,000 initial
partial cabinet, charge per bundle
1 LCN connection plus monthly charge
(10 Gb), 1 IP per bundle as
network follows:
connection (10 For Users
Gb), 2 fiber that order on or
cross before December 31,
connections and 2017: $7,500 monthly
either the for first 12 months
Network Time of service, and
Protocol Feed or $15,000 monthly
Precision Timing thereafter.
Protocol. For Users
that order after
December 31, 2017:
$15,000 monthly.
------------------------------------------------------------------------
The Exchange is not proposing any other changes to the Partial
Cabinet Solution bundles other than this proposed extension of the 50%
reduction in the MRC. Users that purchase a Partial Cabinet Solution
bundle would still be subject to a 90-day minimum commitment, after
which period they are subject to a 60-day rolling time period.\8\
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\8\ See id.
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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; \9\ and (iii)
a User would only incur one charge for the particular co-location
service described herein, regardless of whether the User connects only
to the Exchange or to the Exchange and one or both of its
affiliates.\10\
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\9\ 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.
\10\ See SR-NYSEArca-2013-80, supra note 5, at 50459. The
Exchange's affiliates have also submitted substantially the same
proposed rule change to propose the changes described herein. See
SR-NYSE-2016-91 and SR-NYSEMKT-2016-123.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\11\ in general, and furthers the
objectives of Sections 6(b)(5) of the Act,\12\ 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.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed rule changes provide for
the equitable allocation of reasonable dues, fees, and other charges
among its members, issuers and other persons using its facilities, and
are not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers, because the Exchange proposes to offer
the 50% reduction in the MRC to all Users equally. As is currently the
case, the purchase of any colocation service (including Partial Cabinet
Solution bundles) is completely voluntary. All Users that order a
bundle on or before December 31, 2017 would have their MRC reduced by
50% for the first 12 months.
The Exchange believes that extending the 50% reduction in the MRC
for Partial Cabinet Solution bundles is not designed to permit unfair
discrimination between customers, issuers, brokers, or dealers because
the Partial Cabinet Solution bundles would continue to offer four
different Partial Cabinet Solution bundles with options with respect to
cabinet footprint and network connections. Users that require other
sizes or combinations of cabinets, network connections and cross
connects could still request them.
In addition, the Exchange believes that its proposal would remove
impediments to, and perfects the mechanisms of, a free and open market
and a national market system and, in general, protects investors and
the public interest because the proposed extension of the 50% reduction
in MRC would continue to make it more cost effective for Users to
utilize co-location by creating a convenient way to create a colocation
environment, through four Partial Cabinet Solution bundles with
[[Page 1776]]
options with respect to cabinet footprint and network connections. The
Exchange expects that such Users would include those with minimal power
or cabinet space demands and Users for which the costs attendant with
having a dedicated cabinet or greater network connection bandwidth are
too burdensome.
The Exchange also believes that the proposed rule change is
consistent with Section 6(b)(4) of the Act,\13\ 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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\13\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that it is reasonable that Users that order a
Partial Cabinet Solution bundle on or before December 31, 2017 would
have their MRC reduced by 50% for the first 12 months because it is
reasonable to continue to offer such reduction as an incentive to Users
to utilize the service. As noted above, the Exchange anticipates that
Users of the Partial Cabinet Solution bundles would include those with
minimum power or cabinet space demands and Users for which the costs
attendant with having a dedicated cabinet or greater network connection
bandwidth are too burdensome. The Exchange believes that it is
reasonable to continue to have a reduced minimum commitment period for
the Partial Cabinet Solution bundle to further reduce the cost
commitment for such Users as a continued incentive to Users to utilize
the new service.
For the reasons above, the proposed changes do not unfairly
discriminate between or among market participants that are otherwise
capable of satisfying any applicable co-location fees, requirements,
terms and conditions established from time to time by the Exchange.
Finally, the Exchange believes that it is subject to significant
competitive forces, as described below in the Exchange's statement
regarding the burden on competition.
For these reasons, the Exchange believes that the proposal is
consistent with the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\14\ 26 the Exchange
believes that the proposed rule change will not impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act because, in addition to the proposed services being
completely voluntary, they are available to all Users on an equal basis
(i.e. the same products and services are available to all Users, and
the extension of the 50% reduction for the MRC for the Partial Cabinet
Solution bundles would apply to all Users).
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\14\ 15 U.S.C. 78f(b)(8).
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The Exchange believes that extending the 50% reduction in the MRC
will not impose any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act because such
access will continue to satisfy User demand for cost effective options
for smaller Users that choose to utilize co-location. All Users that
order a bundle on or before December 31, 2017 would have their MRC
reduced by 50% for the first 12 months. Providing entities with the
additional option of the Partial Cabinet Solution bundle will allow
them to select the relationship and type of service that better
corresponds to their needs and resources.
The proposed changes will also enhance competition by making it
more cost effective for Users that purchase a Partial Cabinet Solution
bundle to utilize co-location by creating a convenient way to create a
colocation environment, through Partial Cabinet Solution bundles with
options with respect to cabinet footprint and network connections at a
reduced MRC for the first 12 months. Such Users may choose to pass on
such cost savings to their customers.
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. In such an environment, the Exchange must
continually review, and consider adjusting, its services and related
fees and credits to remain competitive with other exchanges.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A) \15\ of the Act and subparagraph (f)(2) of Rule
19b-4 \16\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 17 CFR 240.19b-4(f)(2).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \17\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\17\ 15 U.S.C. 78s(b)(2)(B).
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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 No. SR-NYSEArca-2016-168 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File No. SR-NYSEArca-2016-168. This
file
[[Page 1777]]
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File No. SR-NYSEArca-2016-168, and should
be submitted on or before January 27, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
Eduardo A. Aleman,
Assistant Secretary.
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\18\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2016-32039 Filed 1-5-17; 8:45 am]
BILLING CODE 8011-01-P
