Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to the Co-Location Services Offered by the Exchange Adding a Wireless Connection to Toronto Stock Exchange (TSX) Third Party Data, 12663-12667 [2017-04200]
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Federal Register / Vol. 82, No. 42 / Monday, March 6, 2017 / Notices
asabaliauskas on DSK3SPTVN1PROD with NOTICES
stated in the Application. Among
others, the Adviser, through a
designated committee, would
administer the facility as a disinterested
fiduciary as part of its duties under the
investment management and
administrative agreements with the
Funds and would receive no additional
fee as compensation for its services in
connection with the administration of
the facility. The facility would be
subject to oversight and certain
approvals by the Funds’ Board,
including, among others, approval of the
interest rate formula and of the method
for allocating loans across Funds, as
well as review of the process in place to
evaluate the liquidity implications for
the Funds. A Fund’s aggregate
outstanding interfund loans will not
exceed 15% of its net assets, and the
Fund’s loans to any one Fund will not
exceed 5% of the lending Fund’s net
assets.3
4. Applicants assert that the facility
does not raise the concerns underlying
section 12(d)(1) of the Act given that the
Funds are part of the same group of
investment companies and there will be
no duplicative costs or fees to the
Funds.4 Applicants also assert that the
proposed transactions do not raise the
concerns underlying sections 17(a)(1),
17(a)(3), 17(d) and 21(b) of the Act as
the Funds would not engage in lending
transactions that unfairly benefit
insiders or are detrimental to the Funds.
Applicants state that the facility will
offer both reduced borrowing costs and
enhanced returns on loaned funds to all
participating Funds and each Fund
would have an equal opportunity to
borrow and lend on equal terms based
on an interest rate formula that is
objective and verifiable. With respect to
the relief from section 17(a)(2) of the
Act, applicants note that any collateral
pledged to secure an interfund loan
would be subject to the same conditions
imposed by any other lender to a Fund
that imposes conditions on the quality
of or access to collateral for a borrowing
(if the lender is another Fund) or the
same or better conditions (in any other
circumstance).5
5. Applicants also believe that the
limited relief from section 18(f)(1) of the
Act that is necessary to implement the
facility (because the lending Funds are
not banks) is appropriate in light of the
conditions and safeguards described in
the application and because the Funds
would remain subject to the
requirement of section 18(f)(1) that all
borrowings of a Fund, including
combined interfund loans and bank
borrowings, have at least 300% asset
coverage.
6. Section 6(c) of the Act permits the
Commission to exempt any persons or
transactions from any provision of the
Act if such exemption is necessary or
appropriate in the public interest and
consistent with the protection of
investors and the purposes fairly
intended by the policy and provisions of
the Act. Section 12(d)(1)(J) of the Act
provides that the Commission may
exempt any person, security, or
transaction, or any class or classes of
persons, securities, or transactions, from
any provision of section 12(d)(1) if the
exemption is consistent with the public
interest and the protection of investors.
Section 17(b) of the Act authorizes the
Commission to grant an order
permitting a transaction otherwise
prohibited by section 17(a) if it finds
that (a) the terms of the proposed
transaction are fair and reasonable and
do not involve overreaching on the part
of any person concerned; (b) the
proposed transaction is consistent with
the policies of each registered
investment company involved; and (c)
the proposed transaction is consistent
with the general purposes of the Act.
Rule 17d–1(b) under the Act provides
that in passing upon an application filed
under the rule, the Commission will
consider whether the participation of
the registered investment company in a
joint enterprise, joint arrangement or
profit sharing plan on the basis
proposed is consistent with the
provisions, policies and purposes of the
Act and the extent to which such
participation is on a basis different from
or less advantageous than that of the
other participants.
3 Under certain circumstances, a borrowing Fund
will be required to pledge collateral to secure the
loan.
4 Applicants state that the obligation to repay an
interfund loan could be deemed to constitute a
security for the purposes of sections 17(a)(1) and
12(d)(1) of the Act.
5 Applicants state that any pledge of securities to
secure an interfund loan could constitute a
purchase of securities for purposes of section
17(a)(2) of the Act.
[FR Doc. 2017–04209 Filed 3–3–17; 8:45 am]
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For the Commission, by the Division of
Investment Management, under delegated
authority.
Eduardo A. Aleman,
Assistant Secretary.
BILLING CODE 8011–01–P
PO 00000
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80116; File No. SR–
NYSEArca–2017–18]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change to the Co-Location
Services Offered by the Exchange
Adding a Wireless Connection to
Toronto Stock Exchange (TSX) Third
Party Data
February 28, 2017.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on February
15, 2017, NYSE Arca, Inc. (the
‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The Exchange proposes to change the
co-location services offered by the
Exchange to include a means for colocated Users to receive the Toronto
Stock Market market data feed through
a wireless connection. In addition, the
proposed rule change reflects changes to
the NYSE Arca Options Fee Schedule
(the ‘‘Options Fee Schedule’’) and,
through its wholly owned subsidiary
NYSE Arca Equities, Inc. (‘‘NYSE Arca
Equities’’), the NYSE Arca Equities
Schedule of Fees and Charges for
Exchange Services (the ‘‘Equities Fee
Schedule’’ and, together with the
Options Fee Schedule, the ‘‘Fee
Schedules’’) related to the proposed
service. 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
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
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Federal Register / Vol. 82, No. 42 / Monday, March 6, 2017 / Notices
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
asabaliauskas on DSK3SPTVN1PROD with NOTICES
The Exchange proposes to change the
co-location 4 services offered by the
Exchange to include a means for Users 5
to have access to the Toronto Stock
Exchange market data feed through a
wireless connection. In addition, the
proposed rule change reflects changes to
the Exchange’s Fee Schedules related to
the proposed service.
The Exchange provides Users with
wireless connections to seven market
data feeds or combinations of feeds from
third party markets (the ‘‘Existing Third
Party Data’’).6 The Exchange now
proposes to add to the Fee Schedules a
new market data feed from the Toronto
Stock Exchange (such feed, ‘‘TSX’’ and,
together with the Existing Third Party
Data, the ‘‘Third Party Data’’).
Through a new affiliate, the Exchange
would provide the proposed wireless
connection to TSX through wireless
connections into the colocation center
in the Data Center. The proposed rule
change would become operative when
the Exchange acquires such new affiliate
(the ‘‘Acquisition’’), expected to be no
later than June 30, 2017. The Exchange
will announce the date that the wireless
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 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’’). 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 Nos. 76749
(December 23, 2015), 80 FR 81640 (December 30,
2015) (SR–NYSEArca–2015–99) (‘‘Wireless
Approval Release’’); 78377 (July 21, 2016), 81 FR
49327 (July 27, 2016) (SR–NYSEArca–2016–99).
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connection to the TSX will be available
through a customer notice.
To receive TSX, the User would enter
into a contract with the Toronto Stock
Exchange, which would charge the User
the applicable market data fees for TSX.
The Exchange would charge the User
fees for the wireless connection for
TSX.7
For each wireless connection to TSX,
a User would be charged a $5,000 nonrecurring initial charge and a monthly
recurring charge (‘‘MRC’’) of $8,500. The
Exchange proposes to revise the Fee
Schedules to reflect fees related to the
connection to TSX.
As with the Existing Third Party Data,
if a User purchased two wireless
connections, it would pay two nonrecurring initial charges. The wireless
connection would include the use of
one port for connectivity to TSX. A User
would not pay a fee for the use of such
port. However, a User would not be able
to use the same port that it uses for
connectivity to TSX to connect to
Existing Third Party Data. Accordingly,
a User that connects to both TSX and
Existing Third Party Data would have at
least two ports.8
As with the previously approved
wireless connections to Third Party
Data, the Exchange proposes to waive
the first month’s MRC, to allow Users to
test the receipt of TSX for a month
before incurring any MRCs.
The company which the Exchange
expects to acquire in the Acquisition
currently provides wireless connections
to TSX to customers who are also Users
(the ‘‘Existing Customers’’). The
Exchange would not charge such
Existing Customers the non-recurring
initial charge or waive the first month’s
MRC for their wireless connection to
TSX.
The Exchange proposes to offer the
wireless connection to provide Users
with an alternative means of
connectivity for TSX. For example,
Users may receive connections to TSX
from another User, through a
telecommunications provider, or over
the Internet protocol (‘‘IP’’) network.9
7 A User would only receive TSX if it had entered
into a contract with the Toronto Stock Exchange.
8 If a User purchases a wireless connection to
TSX, that connection would include the use of one
port for connectivity to TSX. If the same User
connects to Existing Third Party Data, it would
receive the use of one port for connectivity to the
Existing Third Party Data. It would not be
separately charged for such ports. A User only
requires one port to connect to the Existing Third
Party Data, irrespective of how many of the wireless
connections it orders. It may purchase additional
ports. See Wireless Approval Release, at 81641.
9 The IP network is a local area network available
in the data center. See Securities Exchange Act
Release No. 74219 (February 6, 2015), 80 FR 7899
(February 12, 2015) (SR–NYSEArca–2015–03)
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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; 10 and (iii) a User would only
incur one charge for the particular colocation service described herein,
regardless of whether the User connects
only to the Exchange or to the Exchange
and one or both of its affiliates.11
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,12 in general, and
furthers the objectives of Section 6(b)(5)
of the Act,13 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
(notice of filing and immediate effectiveness of
proposed rule change to include IP network
connections).
10 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.
11 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–2017–05 and SR–NYSEMKT–2017–
09.
12 15 U.S.C. 78f(b).
13 15 U.S.C. 78f(b)(4), (5).
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discrimination between customers,
issuers, brokers, or dealers.
The Exchange believes that the
proposed service is not designed to
permit unfair discrimination between
customers, issuers, brokers, or dealers
because the wireless connection to TSX
would provide Users with an alternative
means of connectivity to TSX. Users
that do not opt to utilize the Exchange’s
proposed wireless connections would
still be able to obtain TSX through other
methods. For example, Users may
receive connections to TSX from
another User, through a
telecommunications provider, or over
the IP network. Users that opt to use
wireless connections to TSX would
receive the TSX that is available to all
Users, as all market participants that
contract with Toronto Stock Exchange
for TSX may receive it.
The Exchange believes that this
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 would
provide Users with choices with respect
to the form and optimal latency of the
connectivity they use to receive TSX,
allowing a User that opts to receive TSX
to select the connectivity and number of
ports that better suit its needs, helping
it tailor its Data Center operations to the
requirements of its business operations.
The Exchange also believes that the
proposed rule change is consistent with
Section 6(b)(4) of the Act,14 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 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
14 15
U.S.C. 78f(b)(4).
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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
proposed change is equitable and not
unfairly discriminatory because it will
result in fees being charged only to
Users that voluntarily select to receive
the corresponding services and because
those services will be available to all
Users. Furthermore, the Exchange
believes that the services and fees
proposed herein are not unfairly
discriminatory and are equitably
allocated because, in addition to the
services being completely voluntary,
they are available to all Users on an
equal basis (i.e., the same products and
services are available to all Users). All
Users that voluntarily select wireless
connections to TSX would be charged
the same amount for the same services
and would have their first month MRC
for wireless connections waived.
The Exchange believes that the
proposed charges are reasonable,
equitably allocated and not unfairly
discriminatory because the Exchange
proposes to offer the wireless
connection to TSX described herein as
a convenience to Users, but in order to
do so must provide, maintain and
operate the Data Center facility
hardware and technology infrastructure.
The Exchange must handle the
installation, administration, monitoring,
support and maintenance of such
services, including by responding to any
production issues. 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.
Specifically, in order to offer wireless
connections, the Exchange must install,
test, maintain and operate the wireless
equipment.
The Exchange believes that it is
reasonable and not unfairly
discriminatory that a User that has
already purchased wireless connections
to other Third Party Data would be
charged a non-recurring charge when it
purchases a wireless connection to TSX,
PO 00000
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12665
because it would allow the Exchange to
defray or cover certain costs it incurs in
installing the wireless connection to
TSX, which costs it incurs irrespective
of whether the User has existing
wireless connections to Third Party
Data, while providing the User the
benefit of the installation, which would
allow it to receive TSX within colocation and with a lower latency over
the fiber optics option. To do the initial
installation, the Exchange must provide
the personnel required for initial
installation and testing. The costs
associated with installing wireless
connections are incrementally higher
than those associated with installing
fiber optics-based solutions.
The Exchange believes that it is
reasonable and not unfairly
discriminatory that an Existing
Customer would not be subject to the
non-recurring initial charge, because
such User’s wireless connection to TSX
would be in place at the time of the
Acquisition, and the Exchange would
not have to install the wireless
connection.
The Exchange believes that it is
reasonable and not unfairly
discriminatory that a User that connects
to both TSX and Existing Third Party
Data may not use the same port for
connectivity to both, and so would have
at least two ports, because the proposed
wireless connection would include the
use of one port for connectivity to TSX
and the Existing Third Party Data
includes the use of one port for
connectivity to Existing Third Party
Data. A User would not pay a separate
fee for using such ports.
The Exchange believes the proposed
pricing for the wireless connection to
TSX is reasonable because it would
allow the Exchange to defray or cover
the costs associated with offering Users
a wireless connection to TSX while
providing Users the benefit of receiving
TSX within co-location and with a
lower latency over the fiber optics
option. The wireless connection for TSX
allows Users to select the TSX
connectivity option that better suits
their needs.
The Exchange believes that the
proposed waiver of the first month’s
MRC is reasonable and not unfairly
discriminatory as it would allow Users
to test the receipt of TSX for a month
before incurring any monthly recurring
fees and may act as an incentive to
Users to connect to TSX. The Exchange
believes that it is reasonable and not
unfairly discriminatory that an Existing
Customer would not have its first
month’s MRC for the wireless
connection waived, as such User’s
wireless connection to TSX would be in
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place prior to the Acquisition, and
therefore would not need to be tested.
From the perspective of the Existing
Customer, the wireless connection to
TSX would continue without
interruption, before and after the
Acquisition.
Moreover, the fees are equitably
allocated, reasonable and not unfairly
discriminatory because the wireless
connection for TSX would provide
Users with an alternative means of
connectivity for TSX. Users that do not
opt to utilize the Exchange’s proposed
wireless connections would still be able
to obtain TSX through other methods.
For example, Users may receive
connections to TSX from another User,
through a telecommunications provider,
or over the IP network. Users that opt
to use wireless connections for TSX
would receive the TSX that is available
to all Users, as all market participants
that contract with the Toronto Stock
Exchange for TSX may receive it.
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 proposed fees are
reasonable, equitable, and not unfairly
discriminatory.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
In accordance with Section 6(b)(8) of
the Act,15 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).
The Exchange believes that allowing
Users to receive TSX through a wireless
connection will not impose any burden
on competition that is not necessary or
appropriate in furtherance of the
purposes of the Act because such access
will satisfy User demand for additional
options for connectivity to TSX. The
proposed wireless connection to TSX
would compete with fiber optic network
connections to TSX, which may be more
15 15
U.S.C. 78f(b)(8).
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attractive to some Users as they are
more reliable and less susceptible to
weather conditions. Users that do not
opt to utilize the proposed wireless
connection would be able to obtain TSX
through other methods, including, for
example, from another User, through a
telecommunications provider, or over
the IP network.16 In this way, the
proposed changes would enhance
competition by helping Users tailor
their connectivity for TSX to the needs
of their business operations by allowing
them to select the form and optimal
latency of the connectivity they use to
receive TSX that best suits their needs,
helping them tailor their Data Center
operations to the requirements of their
business operations.
Through an affiliate, the Exchange
would provide the proposed wireless
connection to TSX through wireless
connections into the co-location center
in the Data Center. The proposed
connection to TSX will not traverse
through the pole on the grounds of the
Data Center utilized for the Existing
Third Party Data, as the wireless
network utilized for the Existing Third
Party Data has exclusive rights to
operate wireless equipment on the Data
Center pole.17
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 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
16 Currently, at least four third party vendors offer
Users wireless network connections using wireless
equipment installed on towers and buildings near
the data center. The Exchange does not believe that
any of such vendors offer Users connections to TSX,
but is not aware of any impediment to a third party
wireless network doing so.
17 The Exchange will not sell rights to third
parties to operate wireless equipment on the Data
Center pole due to space limitations, security
concerns, and the interference that would arise
between equipment placed too closely together. In
addition to space issues, there are contractual
restrictions on the use of the roof that the Exchange
has determined would not be met if it offered space
on the roof for third party wireless equipment.
Moreover, access to the pole or roof is not required
for third parties to establish wireless networks that
can compete with the Exchange’s proposed service,
as witnessed by the existing wireless networks
currently serving Users.
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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
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A)(iii) of the Act 18 and
subparagraph (f)(6) of Rule 19b–4
thereunder.19 A proposed rule change
filed under Rule 19b–4(f)(6) normally
does not become operative prior to 30
days after the date of filing.20 Rule 19b–
4(f)(6)(iii), however, permits the
Commission to designate a shorter time
if such action is consistent with the
protection of investors and the public
interest.21
The Exchange has requested that the
Commission waive the 30-day operative
delay so that the proposal may become
operative immediately upon filing. The
Exchange notes that waiver of the
operative delay will ensure that Existing
Customers are able to continue their
existing wireless connectivity to TSX
after the Acquisition, without any
cessation of service. The Commission
believes that it is consistent with the
18 15
U.S.C. 78s(b)(3)(a)(iii).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
20 17 CFR 240.19b–4(f)(6)(iii).
21 Id.
19 17
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Federal Register / Vol. 82, No. 42 / Monday, March 6, 2017 / Notices
protection of investors and the public
interest to waive the 30-day operative
delay and hereby waives the 30-day
operative delay and designates the
proposal operative upon filing.22
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) of the Act 23 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:
asabaliauskas on DSK3SPTVN1PROD with 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–
NYSEArca–2017–18 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–2017–18. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
22 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
23 15 U.S.C. 78s(b)(2)(B).
VerDate Sep<11>2014
19:24 Mar 03, 2017
Jkt 241001
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–
2017–18, and should be submitted on or
before March 27, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.24
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–04200 Filed 3–3–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80123; File No. SR–CBOE–
2017–010]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing of a
Proposed Rule Change Related to
Unusual Market Conditions
February 28, 2017.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on February
15, 2017, Chicago Board Options
Exchange, Incorporated (the ‘‘Exchange’’
or ‘‘CBOE’’) 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 Exchange. 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 seeks to amend Rule
6.6. The text of the proposed rule
change is provided below (additions are
italicized; deletions are [bracketed]).
*
*
*
*
*
24 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00135
Fmt 4703
Sfmt 4703
Chicago Board Options Exchange,
Incorporated Rules
*
*
*
*
*
Rule 6.6. Unusual Market Conditions
(a) Whenever in the judgment of any
two Floor Officials (one of which is an
Exchange employee), because of an
influx of orders or other unusual
conditions or circumstances, such as,
for example, extraordinary market
volatility, the interest of maintaining a
fair and orderly market so requires,
those Floor Officials may declare the
market in one or more classes of option
contracts to be ‘‘fast.’’ It may be in the
interest of fair and orderly markets to
declare a fast market when one or more
of the following conditions have been
met: (i) The previous day’s closing price
of the S&P 500 Index is more than 2%
away from the previous day’s opening
price; (ii) the front-month E-mini S&P
500 Future (symbol ES/1) is trading
more than 20 points above or below the
previous day’s closing values by 8:00
a.m. CT; or (iii) the intraday price of the
S&P 500 Index moves more than 1% in
any one hour interval during regular
trading hours.
(b) If a market is declared fast, any
two Floor Officials shall have the power
to do one or more of the following with
respect to the class or classes
involved[.]: (i) [Assign one or more
classes or series of options traded at the
post to Order Book Officials at other
posts. (ii) Authorize Order Book Official
clerks to execute transactions. (iii)]
Direct that one or more trading rotations
be employed pursuant to Rules 6.2, 6.2A
or 6.2B, as appropriate. [(iv)] (ii)
Suspend the firm quote requirement as
permitted under Rule 8.51. (iii) Suspend
the requirement in Rule 6.24 to
systematize a non-electronic order prior
to its representation on the trading floor.
(iv) [(v) Turn off the Retail Automatic
Execution System (‘‘RAES’’). (vi)] Take
such other actions as are deemed
necessary in the interest of maintaining
a fair and orderly market.
(c)–(d) No change.
[(e) A Post Director or Order Book
Official (‘‘OBO’’) at a station at a trading
post may turn off RAES for a class or
classes of options contracts traded at
that station for a period of time not to
exceed five minutes if, because of an
influx of orders or other unusual
conditions or circumstances in respect
of such options or their underlying
securities, the Post Director or OBO
determines that such action is
appropriate in the interest of
maintaining a fair and orderly market.
Whenever such action is taken, notice
thereof shall immediately be given to
E:\FR\FM\06MRN1.SGM
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]]>Agencies
[Federal Register Volume 82, Number 42 (Monday, March 6, 2017)]
[Notices]
[Pages 12663-12667]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-04200]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-80116; File No. SR-NYSEArca-2017-18]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change to the Co-Location
Services Offered by the Exchange Adding a Wireless Connection to
Toronto Stock Exchange (TSX) Third Party Data
February 28, 2017.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on February 15, 2017, NYSE Arca, Inc. (the ``Exchange'' or
``NYSE Arca'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange proposes to change the co-location services offered by
the Exchange to include a means for co-located Users to receive the
Toronto Stock Market market data feed through a wireless connection. In
addition, the proposed rule change reflects changes to the NYSE Arca
Options Fee Schedule (the ``Options Fee Schedule'') and, through its
wholly owned subsidiary NYSE Arca Equities, Inc. (``NYSE Arca
Equities''), the NYSE Arca Equities Schedule of Fees and Charges for
Exchange Services (the ``Equities Fee Schedule'' and, together with the
Options Fee Schedule, the ``Fee Schedules'') related to the proposed
service. 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
[[Page 12664]]
and discussed any comments it received on the proposed rule change. The
text of those statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant parts of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to change the co-location \4\ services
offered by the Exchange to include a means for Users \5\ to have access
to the Toronto Stock Exchange market data feed through a wireless
connection. In addition, the proposed rule change reflects changes to
the Exchange's Fee Schedules related to the proposed service.
---------------------------------------------------------------------------
\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 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''). See Securities Exchange Act Release No.
70173 (August 13, 2013), 78 FR 50459 (August 19, 2013) (SR-NYSEArca-
2013-80).
---------------------------------------------------------------------------
The Exchange provides Users with wireless connections to seven
market data feeds or combinations of feeds from third party markets
(the ``Existing Third Party Data'').\6\ The Exchange now proposes to
add to the Fee Schedules a new market data feed from the Toronto Stock
Exchange (such feed, ``TSX'' and, together with the Existing Third
Party Data, the ``Third Party Data'').
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release Nos. 76749 (December 23,
2015), 80 FR 81640 (December 30, 2015) (SR-NYSEArca-2015-99)
(``Wireless Approval Release''); 78377 (July 21, 2016), 81 FR 49327
(July 27, 2016) (SR-NYSEArca-2016-99).
---------------------------------------------------------------------------
Through a new affiliate, the Exchange would provide the proposed
wireless connection to TSX through wireless connections into the
colocation center in the Data Center. The proposed rule change would
become operative when the Exchange acquires such new affiliate (the
``Acquisition''), expected to be no later than June 30, 2017. The
Exchange will announce the date that the wireless connection to the TSX
will be available through a customer notice.
To receive TSX, the User would enter into a contract with the
Toronto Stock Exchange, which would charge the User the applicable
market data fees for TSX. The Exchange would charge the User fees for
the wireless connection for TSX.\7\
---------------------------------------------------------------------------
\7\ A User would only receive TSX if it had entered into a
contract with the Toronto Stock Exchange.
---------------------------------------------------------------------------
For each wireless connection to TSX, a User would be charged a
$5,000 non-recurring initial charge and a monthly recurring charge
(``MRC'') of $8,500. The Exchange proposes to revise the Fee Schedules
to reflect fees related to the connection to TSX.
As with the Existing Third Party Data, if a User purchased two
wireless connections, it would pay two non-recurring initial charges.
The wireless connection would include the use of one port for
connectivity to TSX. A User would not pay a fee for the use of such
port. However, a User would not be able to use the same port that it
uses for connectivity to TSX to connect to Existing Third Party Data.
Accordingly, a User that connects to both TSX and Existing Third Party
Data would have at least two ports.\8\
---------------------------------------------------------------------------
\8\ If a User purchases a wireless connection to TSX, that
connection would include the use of one port for connectivity to
TSX. If the same User connects to Existing Third Party Data, it
would receive the use of one port for connectivity to the Existing
Third Party Data. It would not be separately charged for such ports.
A User only requires one port to connect to the Existing Third Party
Data, irrespective of how many of the wireless connections it
orders. It may purchase additional ports. See Wireless Approval
Release, at 81641.
---------------------------------------------------------------------------
As with the previously approved wireless connections to Third Party
Data, the Exchange proposes to waive the first month's MRC, to allow
Users to test the receipt of TSX for a month before incurring any MRCs.
The company which the Exchange expects to acquire in the
Acquisition currently provides wireless connections to TSX to customers
who are also Users (the ``Existing Customers''). The Exchange would not
charge such Existing Customers the non-recurring initial charge or
waive the first month's MRC for their wireless connection to TSX.
The Exchange proposes to offer the wireless connection to provide
Users with an alternative means of connectivity for TSX. For example,
Users may receive connections to TSX from another User, through a
telecommunications provider, or over the Internet protocol (``IP'')
network.\9\
---------------------------------------------------------------------------
\9\ The IP network is a local area network available in the data
center. See Securities Exchange Act Release No. 74219 (February 6,
2015), 80 FR 7899 (February 12, 2015) (SR-NYSEArca-2015-03) (notice
of filing and immediate effectiveness of proposed rule change to
include IP network connections).
---------------------------------------------------------------------------
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; \10\ 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.\11\
---------------------------------------------------------------------------
\10\ 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.
\11\ 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-2017-05 and SR-NYSEMKT-2017-09.
---------------------------------------------------------------------------
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,\12\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\13\ 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
[[Page 12665]]
discrimination between customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(4), (5).
---------------------------------------------------------------------------
The Exchange believes that the proposed service is not designed to
permit unfair discrimination between customers, issuers, brokers, or
dealers because the wireless connection to TSX would provide Users with
an alternative means of connectivity to TSX. Users that do not opt to
utilize the Exchange's proposed wireless connections would still be
able to obtain TSX through other methods. For example, Users may
receive connections to TSX from another User, through a
telecommunications provider, or over the IP network. Users that opt to
use wireless connections to TSX would receive the TSX that is available
to all Users, as all market participants that contract with Toronto
Stock Exchange for TSX may receive it.
The Exchange believes that this 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 would provide Users with choices with respect to
the form and optimal latency of the connectivity they use to receive
TSX, allowing a User that opts to receive TSX to select the
connectivity and number of ports that better suit its needs, helping it
tailor its Data Center operations to the requirements of its business
operations.
The Exchange also believes that the proposed rule change is
consistent with Section 6(b)(4) of the Act,\14\ 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.
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
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 proposed change is equitable and not
unfairly discriminatory because it will result in fees being charged
only to Users that voluntarily select to receive the corresponding
services and because those services will be available to all Users.
Furthermore, the Exchange believes that the services and fees proposed
herein are not unfairly discriminatory and are equitably allocated
because, in addition to the services being completely voluntary, they
are available to all Users on an equal basis (i.e., the same products
and services are available to all Users). All Users that voluntarily
select wireless connections to TSX would be charged the same amount for
the same services and would have their first month MRC for wireless
connections waived.
The Exchange believes that the proposed charges are reasonable,
equitably allocated and not unfairly discriminatory because the
Exchange proposes to offer the wireless connection to TSX described
herein as a convenience to Users, but in order to do so must provide,
maintain and operate the Data Center facility hardware and technology
infrastructure. The Exchange must handle the installation,
administration, monitoring, support and maintenance of such services,
including by responding to any production issues. 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. Specifically, in order to offer wireless
connections, the Exchange must install, test, maintain and operate the
wireless equipment.
The Exchange believes that it is reasonable and not unfairly
discriminatory that a User that has already purchased wireless
connections to other Third Party Data would be charged a non-recurring
charge when it purchases a wireless connection to TSX, because it would
allow the Exchange to defray or cover certain costs it incurs in
installing the wireless connection to TSX, which costs it incurs
irrespective of whether the User has existing wireless connections to
Third Party Data, while providing the User the benefit of the
installation, which would allow it to receive TSX within co-location
and with a lower latency over the fiber optics option. To do the
initial installation, the Exchange must provide the personnel required
for initial installation and testing. The costs associated with
installing wireless connections are incrementally higher than those
associated with installing fiber optics-based solutions.
The Exchange believes that it is reasonable and not unfairly
discriminatory that an Existing Customer would not be subject to the
non-recurring initial charge, because such User's wireless connection
to TSX would be in place at the time of the Acquisition, and the
Exchange would not have to install the wireless connection.
The Exchange believes that it is reasonable and not unfairly
discriminatory that a User that connects to both TSX and Existing Third
Party Data may not use the same port for connectivity to both, and so
would have at least two ports, because the proposed wireless connection
would include the use of one port for connectivity to TSX and the
Existing Third Party Data includes the use of one port for connectivity
to Existing Third Party Data. A User would not pay a separate fee for
using such ports.
The Exchange believes the proposed pricing for the wireless
connection to TSX is reasonable because it would allow the Exchange to
defray or cover the costs associated with offering Users a wireless
connection to TSX while providing Users the benefit of receiving TSX
within co-location and with a lower latency over the fiber optics
option. The wireless connection for TSX allows Users to select the TSX
connectivity option that better suits their needs.
The Exchange believes that the proposed waiver of the first month's
MRC is reasonable and not unfairly discriminatory as it would allow
Users to test the receipt of TSX for a month before incurring any
monthly recurring fees and may act as an incentive to Users to connect
to TSX. The Exchange believes that it is reasonable and not unfairly
discriminatory that an Existing Customer would not have its first
month's MRC for the wireless connection waived, as such User's wireless
connection to TSX would be in
[[Page 12666]]
place prior to the Acquisition, and therefore would not need to be
tested. From the perspective of the Existing Customer, the wireless
connection to TSX would continue without interruption, before and after
the Acquisition.
Moreover, the fees are equitably allocated, reasonable and not
unfairly discriminatory because the wireless connection for TSX would
provide Users with an alternative means of connectivity for TSX. Users
that do not opt to utilize the Exchange's proposed wireless connections
would still be able to obtain TSX through other methods. For example,
Users may receive connections to TSX from another User, through a
telecommunications provider, or over the IP network. Users that opt to
use wireless connections for TSX would receive the TSX that is
available to all Users, as all market participants that contract with
the Toronto Stock Exchange for TSX may receive it.
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 proposed fees are
reasonable, equitable, and not unfairly discriminatory.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\15\ 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).
---------------------------------------------------------------------------
\15\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------
The Exchange believes that allowing Users to receive TSX through a
wireless connection will not impose any burden on competition that is
not necessary or appropriate in furtherance of the purposes of the Act
because such access will satisfy User demand for additional options for
connectivity to TSX. The proposed wireless connection to TSX would
compete with fiber optic network connections to TSX, which may be more
attractive to some Users as they are more reliable and less susceptible
to weather conditions. Users that do not opt to utilize the proposed
wireless connection would be able to obtain TSX through other methods,
including, for example, from another User, through a telecommunications
provider, or over the IP network.\16\ In this way, the proposed changes
would enhance competition by helping Users tailor their connectivity
for TSX to the needs of their business operations by allowing them to
select the form and optimal latency of the connectivity they use to
receive TSX that best suits their needs, helping them tailor their Data
Center operations to the requirements of their business operations.
---------------------------------------------------------------------------
\16\ Currently, at least four third party vendors offer Users
wireless network connections using wireless equipment installed on
towers and buildings near the data center. The Exchange does not
believe that any of such vendors offer Users connections to TSX, but
is not aware of any impediment to a third party wireless network
doing so.
---------------------------------------------------------------------------
Through an affiliate, the Exchange would provide the proposed
wireless connection to TSX through wireless connections into the co-
location center in the Data Center. The proposed connection to TSX will
not traverse through the pole on the grounds of the Data Center
utilized for the Existing Third Party Data, as the wireless network
utilized for the Existing Third Party Data has exclusive rights to
operate wireless equipment on the Data Center pole.\17\
---------------------------------------------------------------------------
\17\ The Exchange will not sell rights to third parties to
operate wireless equipment on the Data Center pole due to space
limitations, security concerns, and the interference that would
arise between equipment placed too closely together. In addition to
space issues, there are contractual restrictions on the use of the
roof that the Exchange has determined would not be met if it offered
space on the roof for third party wireless equipment. Moreover,
access to the pole or roof is not required for third parties to
establish wireless networks that can compete with the Exchange's
proposed service, as witnessed by the existing wireless networks
currently serving Users.
---------------------------------------------------------------------------
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
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \18\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\19\ A proposed rule
change filed under Rule 19b-4(f)(6) normally does not become operative
prior to 30 days after the date of filing.\20\ Rule 19b-4(f)(6)(iii),
however, permits the Commission to designate a shorter time if such
action is consistent with the protection of investors and the public
interest.\21\
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\18\ 15 U.S.C. 78s(b)(3)(a)(iii).
\19\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
\20\ 17 CFR 240.19b-4(f)(6)(iii).
\21\ Id.
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The Exchange has requested that the Commission waive the 30-day
operative delay so that the proposal may become operative immediately
upon filing. The Exchange notes that waiver of the operative delay will
ensure that Existing Customers are able to continue their existing
wireless connectivity to TSX after the Acquisition, without any
cessation of service. The Commission believes that it is consistent
with the
[[Page 12667]]
protection of investors and the public interest to waive the 30-day
operative delay and hereby waives the 30-day operative delay and
designates the proposal operative upon filing.\22\
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\22\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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) of the Act \23\ to determine whether the proposed
rule change should be approved or disapproved.
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\23\ 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-2017-18 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-2017-18. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of 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-2017-18, and should be
submitted on or before March 27, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
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\24\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-04200 Filed 3-3-17; 8:45 am]
BILLING CODE 8011-01-P
