Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of Partial Amendment No. 4 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment Nos. 1 Through 4, To Amend the Co-Location Services Offered by the Exchange To Add Certain Access and Connectivity Fees, 15725-15733 [2017-06256]
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Federal Register / Vol. 82, No. 60 / Thursday, March 30, 2017 / Notices
the proposed information collection to
U.S. Office of Personnel Management,
Retirement Services, 1900 E Street NW.,
Room 2347–E, Washington, DC 20415,
Attention: Alberta Butler or sent via
electronic mail to Alberta.Butler@
opm.gov.
A
copy of this ICR, with applicable
supporting documentation, may be
obtained by contacting the Retirement
Services Publications Team, U.S. Office
of Personnel Management, 1900 E Street
NW., Room 3316–L, Washington, DC
20415, Attention: Cyrus S. Benson or
sent via electronic mail to
Cyrus.Benson@opm.gov or faxed to
(202) 606–0910.
FOR FURTHER INFORMATION CONTACT:
As
required by the Paperwork Reduction
Act of 1995, (Pub. L. 104–13, 44 U.S.C.
chapter 35) as amended by the ClingerCohen Act (Pub. L. 104–106), OPM is
soliciting comments for this collection
(OBM No 3206–0226). The Office of
Management and Budget is particularly
interested in comments that:
1. Evaluate whether the proposed
collection of information is necessary
for the proper performance of functions
of the agency, including whether the
information will have practical utility;
2. Evaluate the accuracy of the
agency’s estimate of the burden of the
proposed collection of information,
including the validity of the
methodology and assumptions used;
3. Enhance the quality, utility, and
clarity of the information to be
collected; and
4. Minimize the burden of the
collection of information on those who
are to respond, including through the
use of appropriate automated,
electronic, mechanical, or other
technological collection techniques or
other forms of information technology,
e.g., permitting electronic submissions
of responses.
Form RI 38–128 is primarily used by
OPM to give recent retirees the
opportunity to waive Direct Deposit of
their annuity payments. The form is
sent only if the separating agency did
not give the retiring employee this
election opportunity. This form may
also be used to enroll in Direct Deposit,
which was its primary use before Public
Law 104–134 was passed. This law
requires OPM to make all recurring
benefits payments electronically to
beneficiaries who live where Direct
Deposit is available. Beneficiaries who
do not enroll in the Direct Deposit
Program will be enrolled in Direct
Express.
asabaliauskas on DSK3SPTVN1PROD with NOTICES
SUPPLEMENTARY INFORMATION:
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Analysis
Agency: Retirement Operations,
Retirement Services, Office of Personnel
Management.
Title: It’s Time To Sign Up for Direct
Deposit or Direct Express.
OMB Number: 3206–0226.
Frequency: On occasion.
Affected Public: Individuals or
Households.
Number of Respondents: 20,000.
Estimated Time per Respondent: 30
minutes.
Total Burden Hours: 10,000.
U.S. Office of Personnel Management.
Kathleen M. McGettigan,
Acting Director.
[FR Doc. 2017–06306 Filed 3–29–17; 8:45 am]
BILLING CODE 6325–38–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80309; File No. SR–
NYSEMKT–2016–63]
Self-Regulatory Organizations; NYSE
MKT LLC; Notice of Filing of Partial
Amendment No. 4 and Order Granting
Accelerated Approval of a Proposed
Rule Change, as Modified by
Amendment Nos. 1 Through 4, To
Amend the Co-Location Services
Offered by the Exchange To Add
Certain Access and Connectivity Fees
March 24, 2017.
I. Introduction
On August 16, 2016, NYSE MKT LLC
(the ‘‘Exchange’’ or ‘‘NYSE MKT’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to amend the co-location
services offered by the Exchange to add
certain access and connectivity fees,
applicable to Users 3 in the Exchange’s
data center in Mahwah, NJ (‘‘Data
Center’’). The Exchange proposed to: (1)
Provide additional information
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 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. 76009 (September 29, 2015), 80 FR
60213 (October 5, 2015) (SR–NYSEMKT–2015–67).
As specified in the Price List and Fee Schedule, a
User that incurs co-location fees for a particular colocation 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’’) and NYSE
Arca, Inc. (‘‘NYSE Arca’’). See Securities Exchange
Act Release No. 70176 (August 13, 2013), 78 FR
50471 (August 19, 2013) (SR–NYSEMKT–2013–67).
2 17
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15725
regarding access to the trading and
execution systems of the Exchange and
its affiliated SROs, and establish fees for
connectivity to certain NYSE, NYSE
Arca, and NYSE MKT market data feeds;
and (2) provide and establish fees for
connectivity to data feeds from third
party markets and other content service
providers (‘‘Third Party Data Feeds’’);
access to the trading and execution
services of Third Party markets and
other content service providers (‘‘Third
Party Systems’’); connectivity to
Depository Trust & Clearing Corporation
(‘‘DTCC’’) services; connectivity to third
party testing and certification feeds; and
the use of virtual control circuits
(‘‘VCCs’’).
The Commission published the
proposed rule change for comment in
the Federal Register on August 26,
2016.4 The Commission received no
comments in response to the proposed
rule change.5 On October 4, 2016, the
Commission extended the time period
within which to approve the proposed
rule change, disapprove the proposed
rule change, or institute proceedings to
determine whether to approve or
disapprove the proposed rule change to
November 24, 2016.6
On November 2, 2016, the Exchange
filed partial Amendment No. 1 to the
proposed rule change.7 On November
29, 2016, the Commission instituted
proceedings (‘‘Order Instituting
Proceedings’’ or ‘‘OIP’’) to determine
whether to approve or disapprove the
4 See Securities Exchange Act Release No. 34–
78629 (August 22, 2016), 81 FR 58992 (‘‘Notice’’).
5 The Commission notes that it received one
comment letter on a related filing by NYSE (NYSE–
2016–45, the ‘‘NYSE Companion Filing’’), which is
equally relevant to this filing. See letter to Brent J.
Fields, Secretary, Commission, from John Ramsay,
Chief Market Policy Officer, Investors Exchange
LLC (IEX), dated September 9, 2016 (‘‘IEX I Letter’’).
Responding to the IEX I Letter, see letter to Brent
J. Fields, Commission, from Martha Redding,
Associate General Counsel and Assistant Secretary,
NYSE, dated September 23, 2016 (‘‘Response Letter
I’’), available at https://www.sec.gov/comments/srnyse-2016-45/nyse201645-3.pdf. In note 3 of
Response Letter I, the NYSE states that its response
is also applicable to the Exchange’s filing,
Securities Exchange Act Release No. 78629 (August
22, 2016), 81 FR 58992 (August 26, 2016) (SR–
NYSEMKT–2016–63). Accordingly, Response Letter
I is referred to as the Exchange’s response.
6 See Securities Exchange Act Release No. 34–
78968 (September 28, 2016), 81 FR 68493.
7 In partial Amendment No. 1 the Exchange
addressed (1) the benefits offered by the Premium
NYSE Data Products that are not present in the
Included Data Products (2) how Premium NYSE
Data Products are related to the purpose of colocation, (3) the similarity of charging for
connectivity to Third Party Systems and DTCC and
charging for connectivity to Premium NYSE Data
Products and (4) the costs incurred by the Exchange
in providing connectivity to Premium NYSE Data
Products to Users in the Data Center. Amendment
No. 1 is available on the Commission’s Web site at
https://www.sec.gov/comments/sr-nysemkt-201663/nysemkt201663-1.pdf.
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proposed rule change, as modified by
Amendment No. 1.8 The proposed rule
change, as modified by Amendment No.
1, is referred to as the ‘‘Prior Proposal.’’
On December 9, 2016, the Exchange
filed Amendment No. 2 to the proposed
rule change and on December 13, 2016
also filed Amendment No. 3 to the
proposed rule change.9 Amendment
Nos. 2 and 3, which, together
superseded and replaced the Prior
Proposal in its entirety, were published
for comment in the Federal Register on
December 29, 2016.10
The Commission received additional
comment letters following publication
of the Order Instituting Proceedings.11
Some of these comment letters
addressed only the Prior Proposal, and
some addressed the Prior Proposal, as
modified by Amendment Nos. 2 and 3.
NYSE, on behalf of the Exchange,
responded to the comment letters
submitted after the OIP in letters dated
January 17, 2017 and February 13,
2017.12 On February 7, 2017, the
8 See Securities Exchange Act Release 34–79378
(November 22, 2016), 81 FR 86050.
9 The Commission notes that the Exhibit 5 filed
with Amendment No. 2 contained erroneous rule
text and therefore was corrected in Amendment No.
3. Amendment Nos. 2 and 3 are available at https://
www.sec.gov/comments/sr-nysemkt-2016–63/
nysemkt201663.shtml.
10 See Securities Exchange Act Release No. 34–
79672 (December 22, 2016), 81 FR 96080 (‘‘Notice
of Amendment Nos. 2 and 3’’).
11 See letter to Brent J. Fields, Commission, from
Melissa MacGregor, Managing Director and
Associate General Counsel, SIFMA, dated December
12, 2016 (‘‘SIFMA I Letter’’); letter to Brent J. Fields,
Commission, from Joe Wald, Chief Executive
Officer, Clearpool Group, dated December 16, 2016
(‘‘Clearpool Letter’’); letter to Brent J. Fields,
Secretary, Commission, from John Ramsay, Chief
Market Policy Officer, Investors Exchange LLC
(IEX), dated December 21, 2016 (‘‘IEX II Letter’’);
letter to Brent J. Fields, Commission, from Melissa
MacGregor, Managing Director and Associate
General Counsel, SIFMA, dated February 6, 2017
(‘‘SIFMA II Letter’’). All comments received by the
Commission on the proposed rule change are
available on the Commission’s Web site at: https://
www.sec.gov/comments/sr-nysemkt-2016-63/
nysemkt201663.shtml.
The Commission received additional comment
letters on the NYSE Companion Filing which are
equally relevant to this filing. See letter to Brent J.
Fields, Commission, from Adam C. Cooper, Senior
Managing Director and Chief Legal Officer, Citadel
Securities, dated December 12, 2016 (‘‘Citadel
Letter’’); letter to Brent J. Fields, Commission, from
David L. Cavicke, Chief Legal Officer, Wolverine
LLC (‘‘Wolverine Letter’’); letter to Bent J. Fields,
Secretary, Commission, from Stefano Durdic,
Managing Director, R2G Services, LLC, dated
January 21, 2017 (‘‘R2G Letter’’). All comments
received by the Commission on the NYSE
Companion Filing are available on the
Commission’s Web site at: https://www.sec.gov/
comments/sr-nyse-2016-45/nyse201645.shtml.
12 See letter to Brent J. Fields, Commission, from
Martha Redding, Associate General Counsel and
Assistant Secretary, NYSE, dated January 17, 2017;
letter to Brent J. Fields, Commission, from Martha
Redding, Associate General Counsel and Assistant
Secretary, NYSE, dated February 13, 2017
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Exchange filed partial Amendment No.
4 to the proposed rule change.13 On
February 27, 2017, pursuant to Section
19(b)(2) of the Act,14 the Commission
designated a longer period for
Commission action on proceedings to
determine whether to disapprove the
proposed rule change, as modified by
Amendment Nos. 1 through 4.15 The
Commission is publishing this notice to
solicit comment on partial Amendment
No. 4 and, is approving the proposed
rule change, as modified by Amendment
Nos. 1 through 4, on an accelerated
basis.
II. Description of the Proposed Rule
Change, as Modified by Amendment
Nos. 1 Through 4
A. Background: Prior Proposal and the
Order Instituting Proceedings
In the proposed rule change, as
modified by Amendment Nos. 1 through
4 (also referred to as the ‘‘Current
Proposal’’), the Exchange proposes to
amend the co-location services offered
by the Exchange to add certain access
and connectivity services and establish
fees applicable to Users in the Data
Center. Specifically, the Exchange
proposes to provide and establish fees
for connectivity to: (i) Third Party Data
Feeds, (ii) Third Party Systems, (iii)
DTCC services, (iv) third party testing
and certification feeds; and for the use
of VCCs.16
In the Prior Proposal (i.e., prior to
filing Amendment Nos. 2 and 3), the
Exchange also had proposed to provide
(‘‘Response Letter II’’ and ‘‘Response Letter III,’’
respectively), available at https://www.sec.gov/
comments/sr-nysemkt-2016-63/
nysemkt201663.shtml. In Response Letter II, note 4,
and Response Letter III, note 2, respectively, the
NYSE states that its response to comments on the
NYSE Companion Filing are equally applicable to
this filing. Accordingly, Response Letters II and III
are referred to as the Exchange’s response.
13 In partial Amendment No. 4 the Exchange
proposes to (1) remove reference to the National
Stock Exchange from its list of Third Party Systems,
and (2) provide and establish fees for connectivity
to three additional Third Party Data Feeds—ICE
Data Services Consolidated Feed, ICE Data Services
PRD, and ICE Data Services PRD CEP, which are
feeds owned by the Exchange’s ultimate parent, but
not by the Exchange or its affiliated self-regulatory
organizations, NYSE MKT or NYSE. Partial
Amendment No. 4, as filed by the Exchange, is
available at https://www.sec.gov/comments/srnysemkt-2016-63/nysemkt201663-1570727131699.pdf.
14 15 U.S.C. 78s(b)(2).
15 See Securities Exchange Act Release No. 34–
80077 (February 22, 2017), 82 FR 11959. The
Commission designated April 23, 2017 as the date
by which it should determine whether to
disapprove the proposed rule change.
16 See Notice of Amendment Nos. 2 and 3, supra
note 10, 81 FR at 96081, and partial Amendment
No. 4 supra note 13. A VCC is a unicast connection
between two Users over dedicated bandwidth using
the IP network. See Notice of Amendment Nos. 2
and 3, supra note 10, 81 FR at 96081.
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additional information about access to
NYSE, NYSE Arca, and NYSE MKT
trading and execution services, and to
establish fees for connectivity to certain
proprietary market data feeds.17
Specifically, the Exchange had proposed
that connectivity to most of the
Exchange’s and its affiliated SROs’
proprietary market data products would
be included in the purchase price of an
LCN/IP network connection in the Data
Center, but that an additional
connectivity fee (‘‘Premium NYSE
Product Connectivity Fee’’) would apply
to the NYSE Integrated Feed, NYSE
Arca Integrated Feed, NYSE MKT
Integrated Feed, and the NYSE Best
Quote and Trades (BQT) feed
(‘‘Premium NYSE Data Products’’).18 As
a result, the purchase of access to NYSE,
NYSE Arca, and NYSE MKT trading and
execution services, would not include
connectivity to every purchased
proprietary data product; and whereas
the Exchange would charge no
additional fees for connectivity to most
of the Exchange’s and its affiliated
SROs’ data products, it would charge
additional fees for connectivity to
Premium NYSE Data Products.
The Commission specifically
requested comment on this aspect of the
Prior Proposal in the OIP. In particular,
in the OIP, the Commission expressed
concern that the Exchange had not
identified a distinction between the
provision of connectivity to Premium
NYSE Data Products and the Exchange’s
and its affiliated SROs’ other data
products, and noted that the Premium
NYSE Data Products are similar to such
other data products.19 In addition, the
Commission requested comment on
whether charging fees for connectivity
to Premium NYSE Data Products in a
different manner from other Exchange
and affiliated SRO proprietary market
data products was consistent with
Section 6(b)(4) of the Act.20 The
Commission also sought comment on
whether Users would have viable
alternatives to paying the Exchange a
connectivity fee for the Premium NYSE
Data Products.21 As discussed below,
several commenters stated that it was
inequitable for the Exchange to charge a
separate and additional connectivity fee
for some Exchange and affiliated SRO
proprietary market data products and
not others, and that receiving the
Premium NYSE Data Products from an
17 For a detailed description of the Prior Proposal,
see the Notice, supra note 4, and the OIP,
discussing Amendment No. 2, supra note 8.
18 See the Notice, supra note 4, and the OIP,
discussing Amendment No. 1, supra note 8.
19 See OIP, supra note 8, 81 FR at 86054.
20 See id.
21 See id.
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Federal Register / Vol. 82, No. 60 / Thursday, March 30, 2017 / Notices
alternative source was not a viable
option.22
In Amendment Nos. 2 and 3, the
Exchange eliminated the Premium
NYSE Product Connectivity Fee from
the Current Proposal, and that fee is
therefore no longer presented to the
Commission for consideration.
B. Description of the Current Proposal
As stated above and more fully
described in the Notice of Amendment
Nos. 2 and 3, as partially modified by
Amendment No. 4, the Exchange
proposes to provide and establish fees
for connectivity to: (i) Third Party Data
Feeds, (ii) Third Party Systems, (iii)
DTCC services, (iv) third party testing
and certification feeds; and for the use
of VCCs.23
Regarding Third Party Data Feeds, the
Exchange proposes to offer Users the
option to connect to Third Party Data
Feeds in the Data Center for a monthly
connectivity fee per feed.24 The
Exchange states that it receives Third
Party Data Feeds in the Data Center from
multiple national securities exchanges
and other content service providers
which it then provides to requesting
Users for a fee.25 The Exchange states
that its proposal to charge Users a
monthly fee for connectivity to Third
Party Data Feeds is consistent with the
monthly connectivity fee Nasdaq
charges its co-location customers for
connectivity to third party data.26
According to the Exchange, the
proposed fees ‘‘allow the Exchange to
defray or cover the costs associated with
offering Users connectivity to Third
Party Data Feeds while providing Users
the convenience of receiving such Third
Party Data Feeds within co-location.’’ 27
Additionally, the Exchange noted that
some of the proposed fees vary
depending on the bandwidth
considerations and, in cases where the
bandwidth requirements are the same as
other proposed services such as Third
Party Systems or VCCs, the prices reflect
‘‘the competitive considerations and the
22 See
infra notes 69–71 and accompanying text.
Notice of Amendment Nos. 2 and 3, supra
note 10, 81 FR at 96081 and partial Amendment No.
4 supra note 13.
24 See Notice of Amendment Nos. 2 and 3, supra
note 10, 81 FR at 96082.
25 See id.
26 See id. The Exchange notes that Nasdaq charges
monthly fees of $1,500 and $4,000 for connectivity
to BATS Y and BATS data feeds, respectively, and
of $2,500 for connectivity to EDGA or EDGX. See
id.
27 See Notice of Amendment Nos. 2 and 3, supra
note 10, 81 FR at 96085; partial Amendment No. 4,
supra note 13.
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23 See
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costs the Exchange incurs in providing
such connections.’’ 28
To connect to a Third Party Data
Feed, a User must enter into a contract
with the relevant third party market or
content service provider, under which
the third party market or content service
provider charges the User for the data
feed.29 The Exchange receives these
Third Party Data Feeds over its fiber
optic network and, after the data
provider and User enter into a contract
and the Exchange receives authorization
from the data provider, the Exchange retransmits the data to the User’s port.30
Users only receive, and are only charged
for, the feed(s) for which they have
entered into contracts.31 Additionally,
the Exchange notes that Third Party
Data Feeds do not provide access or
order entry to its execution system or
access to the execution system of the
third party generating the feed.32 The
Exchange proposes to charge a set
monthly recurring connectivity fee per
Third Party Data Feed, as set forth in its
proposed Price List and Fee Schedule
(‘‘Fee Schedules’’).33 A User is free to
receive all or some of the feeds included
in its Fee Schedules.34 The Exchange
notes that Third Party Data Feed
providers may charge redistribution
fees, such as Nasdaq’s Extranet Access
Fees and OTC Markets Group’s Access
Fees, which the Exchange will pass
through to the User in addition to
charging the applicable connectivity
fee.35
The Exchange represents that ‘‘as
alternatives to using the [proposed
connectivity to Third Party Data Feeds]
provided by the Exchange, a User may
access or connect to such . . . products
through another User or through a
connection to an Exchange access center
outside the data center, third party
access center, or third party vendor. The
User may make such connection
through a third party
telecommunication provider, third party
28 See Notice of Amendment Nos. 2 and 3, supra
note 10, 81 FR at 96085; partial Amendment No. 4,
supra note 13.
29 See Notice of Amendment Nos. 2 and 3, supra
note 10, 81 FR at 96082.
30 See id.
31 See id.
32 See id. The Exchange notes that there is one
exception to this for the ICE feeds which include
both market data and trading and clearing services.
In order to receive the ICE feeds, a User must
receive authorization from ICE to receive both
market data and trading and clearing services. See
id.
33 See id., as modified by partial Amendment No.
4, supra note 13 (adding additional Third Party
Data Feeds).
34 See Notice of Amendment Nos. 2 and 3, supra
note 10, 81 FR at 96082.
35 See id.
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15727
wireless network, the SFTI network, or
a combination thereof.’’ 36
As more fully described in the Notice
of Amendment Nos. 2 and 3, as
modified by partial Amendment No. 4,
the Exchange also proposes to provide
and establish fees for connectivity (also
referred to as ‘‘Access’’) to Third Party
Systems,37 to DTCC services,38 and to
third party certification and testing
feeds, and charge a monthly recurring
fee.39 The Exchange proposes to amend
its Fee Schedules to provide and
establish fees for connectivity to these
service providers and certification/
testing feeds.40 The Exchange states that
connectivity is dependent on a User
meeting the necessary technical
requirements, paying the applicable
fees, and the Exchange receiving
authorization from the relevant third
party service provider to make the
connection.41
For each service, a User must execute
a contract with the respective third
party service provider pursuant to
which a User pays each the associated
fee(s) for their services.42 Once the
Exchange receives authorization from
the third party service provider, the
Exchange will enable a User to connect
to the service provider and/or third
party certification and testing feed(s)
over the IP Network.43 The proposed
36 See
id. at 96085.
Exchange states that it selects what
connectivity to Third Party Systems to offer in the
Data Center based on User demand. See id. at
96081. In partial Amendment No. 4, the Exchange
removed the National Stock Exchange from the list
of Third Party Systems, noting that it is now owned
by the Exchange’s parent. See partial Amendment
No. 4, supra note 13. Establishing a User’s access
to a Third Party System does not give the Exchange
any right to use the Third Party Systems;
connectivity to a Third Party System does not
provide access or order entry to the Exchange’s
execution system, and a User’s connection to a
Third Party System is not through the Exchange’s
execution system. See Notice of Amendment Nos.
2 and 3, supra note 10, 81 FR at 96081.
38 The Exchange states that connectivity to DTCC
‘‘is distinct from the access to shared data services
for clearing and settlement services that a User
receives when it purchases access to the LCN or IP
network. The shared data services allow Users and
other entities with access to the Trading Systems to
post files for settlement and clearing services to
access.’’ See Notice of Amendment Nos. 2 and 3,
supra note 10, 81 FR at 96083 n. 25.
39 Certification feeds certify that a User conforms
to any of the relevant content service providers’
requirements for accessing Third Party Systems or
receiving Third Party Data, whereas testing feeds
provide Users an environment in which to conduct
system tests with non-live data. See Notice of
Amendment Nos. 2 and 3, supra note 10, 81 FR at
96083.
40 See Notice of Amendment Nos. 2 and 3, supra
note 10, 81 FR at 96081–96083.
41 See id.
42 See id.
43 See id. For Third Party Systems, once the
Exchange receives the authorization from the
37 The
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recurring monthly fees for connectivity
to Third Party Systems and DTCC are
based upon the bandwidth requirements
per system.44
The Exchange represents that as
alternatives to using the proposed
connectivity to Third Party Systems, to
DTCC services, and to third party
certification and testing feeds offered by
the Exchange, ‘‘a User may access or
connect to such services and products
through another User or through a
connection to an Exchange access center
outside the data center, third party
access center, or third party vendor. The
User may make such connection
through a third party
telecommunication provider, third party
wireless network, the SFTI network, or
a combination thereof.’’ 45
Finally, as more fully described in the
Notice of Amendment Nos. 2 and 3, as
partially modified by partial
Amendment No. 4, the Exchange also
proposes to provide and establish fees
for VCCs.46 A VCC (previously called a
‘‘peer to peer’’ connection) is a unicast
connection through which two
participants can establish a connection
between two points over dedicated
bandwidth using the IP network to be
used for any purpose.47 The proposed
recurring monthly fees for VCCs are
based upon the bandwidth requirements
per VCC connection between two
Users.48 Connectivity to VCCs will
similarly require permission from the
other User before the Exchange will
establish the connection.49 As an
alternative to using a VCC, Users can
connect to other Users through a crossconnect.50
The Exchange states in reference to all
of the proposed services that in adding
the fees it seeks to defray or cover its
costs in providing these voluntary
services to Users, and that in order to
provide these services it must, among
other things, provide, maintain and
operate the data center facility hardware
and technology infrastructure; and
handle the installation, administration,
monitoring, support and maintenance of
such services, including by responding
respective third party it establishes a unicast
connection between the User and the relevant third
party over the IP network. See id. at 96081. For the
DTCC, ‘‘[t]he Exchange receives the DTCC feed over
its fiber optic network and, after DTCC and the User
enter into the services contract and the Exchange
receives authorization from DTCC, the Exchange
provides connectivity to DTCC to the User over the
User’s IP network port.’’ See id. at 96083.
44 See id. at 96081, 96083.
45 See id. at 96084–96085.
46 See id. at 96083.
47 See id.
48 See id.
49 See id.
50 See id. at 96084.
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to any production issues.51 The
Exchange also states that the fees
charged for co-location services are
constrained by the active competition
for the order flow and other business
from such market participants,52 and
that charging excessive fees would make
it stand to lose not only co-location
revenues but also the liquidity of the
formerly co-located trading firms.53
Additionally, the Exchange states that
Users have alternatives if they believe
the fees are excessive.54 Specifically, the
Exchange notes that a User could
terminate its co-location arrangement
with the Exchange ‘‘and adopt a
possible range of alternative strategies,
including placing their servers in a
physically proximate location outside
the exchange’s [D]ata [C]enter (which
could be a competing exchange), or
pursuing strategies less dependent upon
the lower exchange-to-participant
latency associated with colocation.’’ 55
III. Summary of Comments Received
and Exchange Responses
The Commission received four
comment letters on the proposed rule
change, as modified by Amendment
Nos. 1 through 4, and an additional four
comment letters on the NYSE
Companion Filing.56 The Exchange
submitted three letters in response to
the comments.57
A. Comment Submitted Prior to the OIP
The Commission received one
comment letter prior to publication of
the OIP.58 The initial commenter
requested that the Exchange provide
additional information on the history of
all of the proposed fees (which the
commenter believed were already in
effect), and the relationship between the
fees and the Exchange’s costs to
maintain the Data Center and provide
co-location services.59 The commenter
urged ‘‘additive transparency’’ to enable
members to evaluate the fixed costs of
exchange membership and whether fees
were applied equitably.60 This
51 See
id. at 96085.
id. at 96084.
53 See id.
54 See id.
55 See id.
56 See supra notes 5 and 11. Because the
additional letters on NYSE Companion Filing
address the same issues, all eight letters are
considered as submitted in response to the
proposed rule change, as modified by Amendment
Nos. 1 through 4, and are discussed herein. In
addition, one commenter noted that it filed a denial
of access petition on the proposal. See SIFMA I
Letter at 1 and SIFMA II Letter at 3.
57 See Response Letters I, II, and III, supra notes
5 and 12.
58 See IEX I Letter, supra note 5.
59 See id. at 1–2.
60 See id.
52 See
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commenter also stated that brokerdealers ‘‘may be practically required to
buy and consume proprietary market
data feeds directly from exchanges in
order to provide competitive products
for those clients, and that the trading
environment ‘‘imposes a form of trading
tax on all members by offering different
methods of access to different
members.’’ 61 The commenter
questioned whether ‘‘there are any true
alternatives that are practically available
to various types of participants who are
seeking to compete with those who are
paying exchanges for co-location and
data services,’’ and urged that the
Exchange provide information and
analysis on how its ability to set colocation fees is constrained by market
forces for a ‘‘comparable product.’’ 62
In response, the Exchange replied that
historical information about the
development of its product offerings is
‘‘not required by the Act and is not
relevant to [] the substance of the
Proposal–which is, by definition,
forward looking . . . .’’ 63 The Exchange
added that costs are not its only
consideration in setting prices, but
rather that prices ‘‘include the
competitive landscape; whether Users
would be required to utilize a given
service; the alternatives available to
Users; and, significantly, the benefits
Users obtain from the services.’’ 64 In
response to the commenter’s argument
regarding different methods of access to
trading, the Exchange stated that ‘‘it is
a vendor of fair and non-discriminatory
access, and like any vendor with
multiple product offerings, different
purchasers may make different choices
regarding which products they wish to
purchase.’’ 65 The Exchange further
stated that co-location fees are not fixed
costs to members, but costs to any User
who voluntarily chooses to purchase
such services based upon ‘‘[t]he form
and latency of access and connectivity
that bests suits a User’s needs.’’ 66 The
Exchange added that Users do not
require the Exchange’s access or
connectivity offerings in co-location to
trade on the Exchange and can instead
use alternative access and connectivity
options for trading if they choose.67
61 See
id. at 2.
id.
63 See Response Letter I, supra note 5, at 3.
64 See id.
65 See id. at 5.
66 See id. at 4.
67 See id.
62 See
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B. Comments Following Publication of
the OIP
(i) Comments on the Premium NYSE
Product Connectivity Fee and
Cumulative Fees Generally
As noted above, the Commission
specifically requested comment on the
Premium NYSE Product Connectivity
Fee in the OIP.68 In response, some
commenters objected to the
establishment of a separate connectivity
fee for Premium NYSE Data Products as
duplicative of fees already charged for
bandwidth and access to the market
data product itself, and therefore that
this fee would result in an inequitable
allocation of fees, inconsistent with
Section 6(b)(4) of the Act.69 Another
commenter similarly objected to an
additional connectivity/bandwidth
charge for each Premium NYSE Data
Product as an example of ‘‘double
dipping,’’ and a fee having ‘‘no merit’’
on its own.70 Additionally, some
commenters objected to the
reasonableness of the proposed
Premium NYSE Product Connectivity
Fee on the basis that there was no viable
alternative to paying the fee to obtain
connectivity to the Premium NYSE Data
Products.71
In response to comments on the
Premium NYSE Product Connectivity
Fee, the Exchange noted that it was no
longer proposing that fee and that the
questions posed in the OIP about that
fee were moot.72
Some commenters opposed to the
Premium NYSE Product Connectivity
Fee also expressed broader concern
about ‘‘layered’’ and cumulative fees
charged by the Exchange to access
market data.73 Some of these
commenters believe that the rising costs
related to the receipt of market data in
68 See
OIP, supra note 8, and Section II.A. supra.
Citadel Letter at 2; Clearpool Letter at 4.
70 See Wolverine Letter at 3. See also Citadel
Letter at 2; R2G Letter at 3 (each expressing concern
about cumulative fees).
71 See Citadel Letter at 3 (‘‘there is no readily
available substitute or equivalent means of access
to the Premium NYSE Data Products’’); Wolverine
Letter at 3 (objecting to the statement ‘‘the Exchange
is not the exclusive method to connect to Premium
NYSE Data Products’’ noting that it is ‘‘misleading
at best.’’). See also R2G Letter at 1–2 (stating, its
view that the Prior Proposal ‘‘raises serious
concerns’’ under the Exchange Act, but that
‘‘Amendment No. 3 adequately addresses the
original concerns,’’ and adding that it would,
however, object if the Exchange similarly sought to
apply the logic of Amendment No. 3 regarding
Third Party Systems to any ‘‘NYSE Proprietary
Product’’).
72 See Response Letter II at 4, 7–8. The Exchange
also stated, as discussed further below, that it did
not agree with commenters suggesting that a
connectivity fee is indistinguishable from a market
data fee.
73 See Wolverine Letter at 1–3; Clearpool Letter at
3; Citadel Letter at 3; R2G Letter 1, 3–6.
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co-location over time effectively impose
a barrier to entry for smaller brokerdealers and new entrants, and are a
burden on competition.74 For example,
Wolverine stated that it has an aggregate
cost of ‘‘$123,750 per month of fixed
costs in co-location, port, and access
fees today, solely for access to NYSE
controlled markets,’’ which is ‘‘an
amount which presents a steep barrier
to entry for new participants.’’ 75
Wolverine also estimated that its NYSE
market data costs have increased ‘‘over
700% over 8 years.’’ 76 Citadel similarly
stated that ‘‘additive and layered fees
are a persistent problem with exchange
fees more generally,’’ and urged scrutiny
of the aggregate impact of fees, ‘‘in
particular with respect to market data
products where exchanges have a
monopoly as the initial distributors.’’ 77
Clearpool stated, among other things,
that market participants are beholden to
the exchanges for market data; that it is
not feasible for broker-dealers with best
execution obligations to rely on SIP data
as an alternative to exchange proprietary
data feeds; and that the role and cost of
using SIP and proprietary feeds should
be considered in connection with
Commission proposals to improve
Regulation NMS Rules 605 and 606
reporting.78 Clearpool advocated for the
Commission to ‘‘thoroughly review the
issues around market data’’ and to
ensure that it is priced more
competitively and equitably for all
market participants.79 Clearpool also
stated that high costs prevent new
innovative technology services,
including order routing, risk
management, and transaction cost
analysis services, from entering the
market, and further, that increasing fees
significantly reduce the margin that
smaller broker-dealers can earn on a
transaction, putting them at a
disadvantage to larger firms that can
absorb these costs.80
In response to these comments, the
Exchange challenged Wolverine’s
assessment that Exchange fees have
increased by 700% over the past eight
years, explaining that it was a
mischaracterization and did not
represent a true comparison of the fees
paid for particular data feeds in 2008 as
compared to fees paid for those specific
74 See Wolverine Letter at 1–3; Clearpool Letter at
3; Citadel Letter at 3.
75 See Wolverine Letter at 3.
76 See id. at 1 (also objecting to port and other
charges (outside the scope of the Current Proposal)
as unreasonable); see also R2G Letter at 3
(expressing agreement with Wolverine).
77 See Citadel Letter at 2.
78 See Clearpool Letter at 2–4.
79 See id. at 1, 4.
80 See id. at 3.
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feeds today.81 The Exchange also
rejected Wolverine’s argument that all of
its costs–including the optional cage
surrounding its cabinets, power, cross
connects, network ports and
connectivity—should be treated as costs
related to market access.82 The
Exchange stated, that ‘‘however selfservingly [Wolverine] tries to
characterize them, these listed costs,
like rent and employee compensation
and benefits, are simply costs associated
with Wolverine’s business activities.
These business activities and
Wolverine’s business judgment—not the
Exchange—determine the most effective
way for Wolverine to select the products
and services it uses.’’ 83
Regarding comments about market
data and co-location fees more
generally, the Exchange responded that
a User that chooses to receive market
data within co-location will incur
several costs in addition to the cost a
market data provider will charge for its
data, including the costs associated with
the LCN or IP network port, power,
cross connects, and connectivity, but
the need for equipment and connections
to enable receipt of a market data feed
within co-location does not convert the
costs of such equipment and
connections into market data fees.84 The
Exchange also stated that some
commenters were using the Prior
Proposal as a ‘‘departure point to
discuss broader issues related to market
data.’’ 85 The Exchange catalogued
comments about exchange fees for
proprietary market data products, the
effect of Commission proposals to
improve disclosure of order execution
and order routing information under
Rules 605 and 606 of Regulation NMS,
and the payment of rebates for posted
liquidity as comments beyond the scope
of the Current Proposal, as well as the
fees any one exchange might propose.86
The Exchange also stated that market
participants are not required to co-locate
with or subscribe to proprietary market
data products from an exchange,
emphasizing that firms using exchange
market data products in co-location
‘‘have chosen to build business models
based on speed.’’ 87
81 See
Response Letter II at 10 and n.27.
id. at 10.
83 See id.
84 See id. at 5.
85 See id.
86 See id. at 5–6. See also infra notes 114–127,
discussing SIFMA’s comments characterizing a
variety of fees as market data fees and the
Exchange’s response.
87 See Response Letter II at 11–12.
82 See
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(ii) Comments Regarding Competition
and Alternatives to the Proposed CoLocation Services
Some commenters addressing both
the Prior Proposal and Amendment Nos.
2 and 3 suggested that co-location
services in general are not optional.88 In
the context of whether the Current
Proposal’s connectivity fees are
reasonable, some of these commenters
argued that there is a lack of
competition for the Exchange’s colocation and data services generally, and
suggested a lack of viable alternatives to
the Current Proposal’s proposed
connectivity services and fees in
particular.89 For instance, SIFMA
argued that the Exchange’s ability to set
co-location fees is not constrained by
market forces because there is ‘‘no
comparable connectivity or product,’’
and low-latency alternatives to these
services do not exist.90 SIFMA stated
that ‘‘[a]ny alternative with severely
increased latencies would not be a
viable alternative.’’ 91 Similarly, IEX
argued that if co-location services are
optional, and therefore need not be
purchased if the fees are excessive, then
the Exchange should demonstrate how
firms are not placed at a competitive
disadvantage if they elect to not receive
such services from the Exchange.92 In
particular, IEX suggested that the
Exchange provide data on the expected
latency (or range of latencies) in
receiving data or transmitting orders
directly from the Exchange, compared to
the equivalent latency (or range) for
firms that rely on a third party access
88 See IEX I Letter at 2 (best execution requires
broker-dealer to have ‘‘effective access’’ to
exchanges); SIFMA II Letter at 4 (‘‘brokers are
legally obligated to seek best execution for their
customers. They are required to consider the
likelihood that a trade will be executed and
whether there is an opportunity to obtain a price
better than what is currently quoted.’’) See also
Citadel Letter at 3 (stating that ‘‘competitive
pressures oblige broker-dealers to seek the most
efficient access to markets and market data to
execute orders . . . ,’’ creating a risk for those firms
that elect to trade with ‘‘slower and less efficient
access.’’); R2G Letter at 3 (referring to an ‘‘ever
increasing need for speed’’); Wolverine Letter at 1
(stating that it is ‘‘required to subscribe to the
lowest latency NYSE market data products and
services’’).
89 See IEX I Letter at 2, IEX II Letter at 1–3,
SIFMA I Letter at 2 and SIFMA II Letter at 2.
Compare with comments alleging a lack of viable
alternatives to connectivity to Premium NYSE Data
Products, supra note 73.
90 See SIFMA I Letter at 2. According to SIFMA,
‘‘the mere presence of the IEX Letter in the
comment file’’ evidences of a lack of competitive
market forces to constrain pricing, because IEX is
a competitor to the Exchange. See id. at 3.
91 See SIFMA I Letter at 3 (also stating ‘‘different
fees are charged for the different types of
connectivity, with no rational basis, [is] unfairly
discriminatory between customers.’’)
92 See IEX II Letter at 2.
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center.93 IEX requested that the NYSE
‘‘explain whether it believes that this
difference would not affect the ability of
electronic market makers and other
trading firms and active agency brokers
to compete with firms in the same
businesses that have faster access, and
if so how it reached this conclusion.’’ 94
IEX also disputed that competition for
order flow constrains pricing of colocation services, arguing that NYSE
often displays protected quotes for
certain stocks, a status it achieves by
paying a high number of rebates for
liquidity, and firms are forced to
interact with it to avoid tradethroughs.95 Both IEX and SIFMA argued
that in the absence of competition for
the proposed services and fees (which,
in SIFMA’s view are indistinguishable
from market data fees), the Exchange
should be required to discuss the
relationship between the proposed fees
and increasing Data Center costs, or
detail how the fee increases relate to the
costs of providing the service, in order
to justify the proposed fees as
reasonable.96
In contrast, two commenters
acknowledged the existence of
alternatives to some Exchange colocation services.97 One of these
commenters noted that alternatives are
present for Third Party System
connectivity as evidenced by the fact
that it ‘‘finds NYSE’s third part[y]
system costs out of line and does not
subscribe to this NYSE offering, instead
implementing this connectivity
internally using a proprietary
network.’’ 98 Another commenter stated
that it ‘‘directly competes with NYSE for
these [Third Party Systems] services and
does so at prices significantly lower
than the fees NYSE has proposed.’’ 99
In response to comments that
competitive forces do not constrain colocation fees and that alternatives to colocation services are lacking, the
Exchange defended its representations
that the proposed services are offered as
a convenience to Users, are voluntary,
and that Users have viable alternatives
to the proposed services.100 The
Exchange stated that additional latency
in an alternative means of connectivity
93 See
id.
id.
95 See id. at 3. See also SIFMA II Letter at 2
(expressing general agreement); see also SIFMA I
Letter at 3 (stating that the presence of a comment
letter from IEX cuts against the argument that
competition for order flow constrains fees). See also
Citadel Letter at 2 (urging greater transparency
regarding the Exchange’s Data Center costs).
96 See IEX II Letter at 3; SIFMA II Letter at 2.
97 See Wolverine Letter at 3; R2G Letter at 1–2.
98 See Wolverine Letter at 3.
99 See R2G Letter at 1–2.
100 See Response Letter II at 6.
94 See
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does not negate the viability of that
alternative,101 and that commenters
arguing that only an ‘‘equivalent’’
latency alternative is a viable alternative
are misguided.102 The Exchange stated
that, ‘‘the Act does not require that there
be at least one third party option
available that has exactly the same
characteristics as a proposed service
before a national securities exchange
can impose or change a fee for a
service,’’ adding that such a requirement
would be ‘‘untenable, as every exchange
would have to have an exact duplicate
before it could charge a fee.’’ 103 Rather,
the relevant question is whether a
proposed fee would be ‘‘an equitable
allocation of reasonable dues, fees, and
other charges among Users in the data
center; does not unfairly discriminate
between customers, issuers, brokers, or
dealers; and does not impose a burden
on competition which is not necessary
or appropriate in furtherance of the
purposes of the Act.’’ 104 The Exchange
noted that it did not represent that the
connectivity alternatives available to colocated Users (including alternatives for
connectivity to Premium NYSE Data
Products) are exactly the same as those
proposed, but rather that the cited
alternatives show that Users have the
option ‘‘to receive the same market data,
or make the same trades, in other
manners.’’ 105 The Exchange added that
its cited alternatives ‘‘offer distinct
services and pricing structures that
some Users may find more attractive
than those proposed by the Exchange,’’
and that these alternatives are ‘‘real,’’
even if not all Users will find them
equally attractive for their individual
business model.106 The Exchange stated
that the viability of alternatives is
‘‘underscored by the Wolverine Letter,
which explicitly states that it does not
object to the proposed fees for access to
Third Party Systems in the Current
Proposal on the basis that firms may
contract with other parties or contract
101 See
id. at 7–8.
id. at 7.
103 See id. at 8.
104 See id.
105 See id. The Exchange also noted that
Clearpool is not a co-location customer of the
Exchange, which the Exchange believes illustrates
that market participants can and do avail
themselves of alternatives for connecting to NYSE
market data products. See id.
106 See id. In addition, in response to IEX’s
suggestion that the Exchange provide data on the
expected latency (or range of latencies) in receiving
data or transmitting orders directly from the Data
Center, compared to the expected latency (or range)
for firms that rely on a third party access center, the
Exchange stated it could not do so without having
access to the latency data of third parties, or each
User’s specific system configuration and latency
needs and therefore could not satisfy IEX’s
‘‘deliberately impossible requirement.’’ See id. at 7.
102 See
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directly with network providers.’’ 107
The Exchange added that, ‘‘[I]t is the
Exchange’s understanding that a User
could access Third Party Systems and
connect to Third Party Data Feeds, third
party testing and certification feeds, and
DTCC using one or more of the listed
alternatives without increasing its
latency levels—and, in many cases, the
alternatives would offer lower
latency.’’ 108
Further, the Exchange emphasized
that while some commenters focus
exclusively on latency as the only
relevant consideration, ‘‘Users with
different investment strategies or
business models may focus on other
characteristics, including redundancy,
resiliency, cost, and the services that
third parties offer but the Exchange does
not, such as managed services.’’ 109 The
Exchange stated that alternatives exist
as evidenced by the fact that ‘‘there are
at least six Users within the co-location
hall that offer other Users or hosted
customers access to trading or
connectivity to market data, including
the two other exchanges that are colocated with the Exchange, as well as
the fact that Users may contract with
any of the 15 telecommunication
providers—including five third party
wireless networks—available to Users to
connect to third party vendors.’’ 110 The
Exchange also noted that the
alternatives are possible in part because
the Exchange voluntarily allows Users
to provide services to other Users and
third parties out of the Exchange’s colocation facility—that is, to compete
with the Exchange using the Exchange’s
own facilities.111 For example,
according to the Exchange, ‘‘a User that
wished to receive Nasdaq market data
could connect directly to the Nasdaq
server within co-location.’’ 112
Therefore, the Exchange believes that
contrary to commenters’ beliefs, the
Exchange’s cited alternatives offer
comparable services that can be used in
lieu of receiving Exchange offered
services, and that there are competitive
forces constraining pricing.113
SIFMA raised additional arguments.
SIFMA urged that ‘‘[t]he proposed
connectivity fees should be reviewed in
a manner consistent with the decisions
of the United States Court of Appeals for
the District of Columbia Circuit’’ in
NetCoalition v. SEC, because says
107 See id. at 9. The Exchange did not similarly
address the R2G Letter.
108 See id. at 9–10.
109 See id. at 8 n.16.
110 See id. at 9.
111 See id.
112 See id. at 10 n.24.
113 See id. at 9.
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SIFMA, they are market data fees.114
SIFMA took the position that under
NetCoalition I (615 F.3d 525 (D.C. Cir.
2010)) an exchange’s assertion that
order flow competition constrains
pricing of data is insufficient.115 More
specifically, in SIFMA’s view ‘‘port,
power, cross connect, connectivity and
cage fees, which are necessary in order
to obtain the market data from NYSE,’’
‘‘however labeled, are market data
fees.’’ 116 SIFMA also noted that it had
submitted a ‘‘properly filed 19(d) denial
of access petition on the proposal,’’ but
had requested that it be ‘‘held in
abeyance pending the decision in the
NetCoalition follow-on proceedings . . .
.’’ 117 SIFMA urged however, that such
petition, despite its abeyance, not be
ignored.118
In response to SIFMA on these points,
the Exchange stated that, ‘‘NetCoalition
addressed the standards governing
proprietary market data fees,’’ and that
it is ‘‘incorrect’’ to characterize the
Current Proposal as establishing market
data fees.119 The Exchange stated:
the fact that a User needs to have a port,
power, and connectivity in place in order to
be able to receive a market data feed within
co-location does not convert the costs of such
equipment and connections into market data
fees. Rather, they are costs associated with
the User’s business activities. If a User opts
to put a cage around its servers in the
colocation hall, the cage fee it pays is a cost
it chooses to incur in connection with the
way it has chosen to do business, not a
market data fee.120
The Exchange distinguished the
services and fees proposed in the
Current Proposal from market data fees,
emphasizing that they are connectivity
fees or access fees applicable when a
User chooses to utilize connectivity or
access services within co-location.121
The Exchange noted that two of the
proposed fees are for services that
facilitate Users’ trading activities, and
have nothing to do with market data: a
114 See SIFMA II Letter at 2–3 (citing NetCoalition
I, 615 F.3d 525 (D.C. Cir. 2010); NetCoalition II, 715
F.3d 342 (D.C. Cir. 2013)).
115 SIFMA I Letter at 3 (noting that ‘‘[t]he Court’s
NetCoalition decisions, the controlling law on this
subject, rejected this order flow argument because,
like here, there was no support for the assertion that
order flow competition constrained the ability of
the exchange to charge supracompetitive prices for
data.’’).
116 See SIFMA II Letter at 3. See also SIFMA I
Letter at 4 (stating that market data fees, port fees,
hardware fees and connectivity fees are all ‘‘within
the ambit of the NetCoalition decisions.’’)
117 See SIFMA I Letter at 1; SIFMA II Letter at 3.
118 See SIFMA II Letter at 3.
119 See Response Letter III at 3–4.
120 See id. at 4 (emphasis in original).
121 See id. at 5–6. The Exchange noted that
SIFMA did not address VCC fees. See id. at 5,
n. 17.
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proposed fee for access within colocation to the execution systems of
third party markets and other content
service providers, and a proposed fee for
connectivity within co-location to DTCC
services, such as clearing, fund transfer,
insurance, and settlement services.122
The Exchange similarly distinguished
the proposed connectivity fee for third
party testing and certification feeds as
not equivalent to providing a customer
with market data.123 Addressing the
proposed connectivity fee for Third
Party Data Feeds within co-location, the
Exchange noted that this proposed fee
‘‘has more often been mistaken for a
market data fee,’’ but distinguished the
service of providing a User with
connectivity to Third Party Data Feeds
from the service that the third party
providing the market data provides by
sending the data over the connection,
noting that the third party content
service provider charges the User the
market data fee.124
The Exchange did not agree with
SIFMA’s contention that the Current
Proposal would establish market data
fees, nor agree that NetCoalition
standard was applicable to the Current
Proposal,125 but instead stated, ‘‘[t]here
is significant competition for the
connectivity relevant to the Current
Proposal;’’ and ‘‘even if the NetCoalition
standard did apply, the Current
Proposal satisfies it.’’ 126
Regarding SIFMA’s denial of access
petition, the Exchange responded that a
denial of access petition is not a
comment letter, and should not be
treated as such given that SIFMA itself
has requested that its denial of access
petition on fee filings be held in
abeyance pending a decision in the
NetCoalition follow-on proceedings.127
122 See id. at 5–6 (also noting that fees for Third
Party System and DTCC connectivity vary by
bandwidth and are generally proportional to the
bandwidth required).
123 See id. at 5 (also noting that fees for
connectivity to third party testing and certification
feeds reflect that bandwidth requirements are
generally not large, and the relatively low fee may
encourage Users to conduct tests and certify
conformance, which the Exchange believes
generally benefits the markets).
124 See id. at 5–6 (also noting that the fees for
Third Party Data Feeds vary because Third Party
Data Feeds vary in bandwidth; proximity to the
Exchange, requiring different circuit lengths; fees
charged by the third party provider, such as port
feeds; and levels of User demand).
125 See id. at 3. See also Response Letter II at 13.
126 See Response Letter III at 3. See also Response
Letter II at 13.
127 See Response Letter III at 3. See also Response
Letter II at 13; SIFMA Letter II at 3 (noting that
‘‘SIFMA’s 19(d)s will be held in abeyance pending
the decision in the NetCoalition follow-on
proceedings . . .’’).
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IV. Discussion and Commission
Findings
After careful consideration of the
proposed rule change, as modified by
Amendment Nos. 1 through 4, the
comments received, and the Exchange’s
responses to the comments, the
Commission finds that the proposed
rule change, as modified by Amendment
Nos. 1 through 4, is consistent with the
requirements of the Act and the rules
and regulations thereunder applicable to
a national securities exchange. In
particular, the Commission finds that
the proposed rule change is consistent
with Section 6(b)(4) of the Act,128 which
requires that an exchange have rules
that provide for the equitable allocation
of reasonable dues, fees and other
charges among its members, issuers and
other persons using its facilities; Section
6(b)(5) of the Act,129 which requires that
the rules of an exchange be designed,
among other things, to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system and, in
general, to protect investors and the
public interest, and not be designed to
permit unfair discrimination between
customers, issuers, brokers or dealers;
and Section 6(b)(8) of the Act,130 which
prohibits any exchange rule from
imposing any burden on competition
that is not necessary or appropriate in
furtherance of the Act.131
As discussed more fully above, some
commenters oppose the proposed colocation fees on the basis that viable
alternatives to the Exchange’s colocation services are lacking, and
particularly that similar low-latency
alternatives to the Exchange’s colocation services do not exist.132
According to these commenters, the lack
of viable alternatives means that
competitive forces do not constrain
Exchange pricing of co-location
services, and the Exchange’s proposed
fees should be subject to a cost-based
assessment.133
In response to these comments, the
Exchange counters that co-location
Users have several alternatives to the
Exchange’s proposed services, both
128 15
U.S.C. 78f(b)(4).
U.S.C. 78f(b)(5).
130 15 U.S.C. 78f(b)(8).
131 In approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
132 See supra notes 62, 88–94, and accompanying
text.
133 See supra notes 62, 96, 114–116 and
accompanying text.
129 15
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inside and outside the Data Center. The
Exchange explains that as alternatives to
using the access to Third Party Systems,
and connectivity to Third Party Data
Feeds, third party testing and
certification feeds, and DTCC, provided
by the Exchange, a User may access or
connect to such services and products
through an Exchange access center,
third party access center, or a third
party vendor outside the Data Center,
and may do so using a third party
telecommunication provider, a third
party wireless network, the Secure
Financial Transaction Infrastructure
(SFTI) network, or a combination
thereof.134 Furthermore, the Exchange
points out that alternatives to the
Exchange’s access and connectivity
services also exist inside the Data
Center, as evidenced by the fact that
‘‘there are at least six Users within the
co-location hall that offer other Users or
hosted customers access to trading or
connectivity to market data, including
the two other exchanges that are colocated with the Exchange, as well as
the fact that Users may contract with
any of the 15 telecommunication
providers—including five third party
wireless networks—available to Users to
connect to third party vendors.’’ 135 The
Exchange notes that these alternatives
are possible because the Exchange
allows Users to provide services to other
Users and third parties out of the
Exchange’s co-location facility—that is,
to compete with the Exchange using the
Exchange’s own facilities.136
The Commission has carefully
considered the comments and the
Exchange’s response concerning the
availability of alternatives to the
Exchange’s proposed access and
connectivity services. In addition, the
Commission notes that two commenters
expressed the view that viable
alternative means of accessing Third
Party Systems are available.137 The
Commission believes that viable
alternatives to the Exchange’s proposed
co-location services are available which
bring competitive forces to bear on the
fees set forth in the Current Proposal.138
134 See
Response Letter II at 6.
id. at 9.
136 See id.
137 See supra notes 97–99. One of these
commenters also stated its view that Amendment
No. 3 addressed the concerns raised in the OIP. See
supra note 71. Furthermore, the Exchange’s
proposal with respect to connectivity to Third Party
Data Feeds is not novel, given that Nasdaq similarly
charges connectivity fees for third party data feeds,
as reflected on its co-location fee schedule. See
Nasdaq Rule 7034.
138 See also Securities Exchange Act Release No.
34–62397 (June 28, 2010); Securities Exchange Act
Release No. 34–66013 (December 20, 2011), 76 FR
80992 (December 27, 2011) (noting ‘‘that members
135 See
PO 00000
Frm 00048
Fmt 4703
Sfmt 4703
Also, as discussed above, some
commenters expressed concern that the
proposed fees would impose a barrier to
entry on smaller broker-dealers and new
entrants, and a burden on
competition.139 The Commission does
not believe that the Current Proposal
would impose a burden on competition
inconsistent with the Act because, as
discussed above, viable alternatives to
the Exchange’s proposed services exist,
both inside and outside the Data Center.
Finally, the Commission notes that
several commenters believed the
originally proposed NYSE Premium
Connectivity Fee to be duplicative and
an inequitable allocation of fees.140
Because the Exchange eliminated that
fee in Amendment Nos. 2 and 3, the
Commission believes that these
concerns have been addressed.141
Accordingly, the Commission finds
that the Current Proposal is consistent
with the Act.
V. Solicitation of Comments on Partial
Amendment No. 4
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether partial Amendment
No. 4 is consistent with the Exchange
Act. Comments may be submitted by
any of the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File No. SR–
NYSEMKT–2016–63 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File No.
SR–NYSEMKT–2016–63. This file
number should be included on the
may choose not to obtain low latency network
connectivity through the Exchange and instead
negotiate connectivity options separately through
other vendors on site’’); Securities Exchange Act
Release No. 34–76748 (finding the establishment of
an exclusive wireless connection consistent with
the Act because, among other reasons, the
alternatives suggested provided the same or similar
speeds as compared to the NYSE’s wireless
connectivity); Securities Exchange Act Release No.
34–68735 (finding the establishment of an exclusive
wireless connection consistent with the Act
because, among other reasons, the alternatives
suggested provided the same or similar speeds as
compared to Nasdaq’s wireless connectivity).
139 See supra notes 74–80 and accompanying text.
140 See supra notes 69–70 and accompanying text.
141 The Commission believes that comments
expressing concerns about proprietary market data
fees more generally are outside the scope of the
Current Proposal.
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asabaliauskas on DSK3SPTVN1PROD with NOTICES
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 20549–1090, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing will also be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File No. SR–NYSEMKT–
2016–63 and should be submitted on or
before April 20, 2017.
VI. Accelerated Approval of Proposed
Rule Change, as Modified by
Amendment Nos. 1–4
The Commission finds good cause to
approve the proposed rule change, as
modified by Amendment Nos 1–4, prior
to the thirtieth day after the date of
publication of notice of the amended
proposal in the Federal Register. The
revisions made to the proposal in partial
Amendment No. 4 142 (1) removed
reference to the National Stock
Exchange (NSX) from its list of Third
Party Systems, (2) added three
additional Third Party Data Feeds—ICE
Data Services Consolidated Feed, ICE
Data Services PRD, and ICE Data
Services PRD CEP, (3) added
connectivity fees for each of the newly
added Third Party Data feeds. With
respect to NSX, the Exchange represents
that NSX was acquired by the NYSE
Group on January 31, 2017, making it no
longer a Third Party System. The
Commission believes this
characterization is consistent with the
NYSE Group’s similarly situated
affiliated exchanges, NYSEMKT and
NYSE, which, like NSX are solely
within the NYSE Group’s control.
142 See
partial Amendment No. 4, supra note 13.
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15733
Regarding the ICE Data Services feeds,
the Exchange notes that it has an
indirect interest in these feeds because
ICE Data Services is owned by the
Exchange’s ultimate parent,
Intercontinental Exchange, Inc. As
represented in partial Amendment No.
4, the Exchange considers the ICE Data
Services Consolidated Feed (like the
NYSE Global Index feed), a Third Party
Data Feed because it includes third
party market data rather than
exclusively the proprietary market data
of the Exchange and its affiliated SROs,
NYSE and NYSE Arca.143 The
Commission believes that partial
Amendment No. 4 does not raise issues
not previously raised in the proposed
rule change, as modified Amendment
Nos. 1–3, and addressed in Exchange
Response Letters I, II, and III.
Accordingly, the Commission finds
good cause, pursuant to Section 19(b)(2)
of the Act,144 to approve the proposed
rule change, as modified by Amendment
Nos. 1–4, on an accelerated basis.
Securities and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change
(SR–ICEEU–2017–002) to amend the ICE
Clear Europe Clearing Rules (‘‘Rules’’)
relating to the application of default
provisions in the event of a resolution
proceeding.3 The proposed rule change
was published for comment in the
Federal Register on February 15, 2017.4
On February 8, 2017, ICE Clear Europe
filed Amendment No. 1 to the proposed
rule change and on February 10, 2017,
ICE Clear Europe filed Amendment No.
2 to the proposed rule change.5 The
Commission received no comment
letters regarding the proposed change.
The Commission is publishing this
notice to solicit comment on
Amendment Nos. 1 and 2 from
interested persons and, for the reasons
stated below, is approving the proposed
rule change, as modified by Amendment
Nos. 1 and 2, on an accelerated basis.
VII. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,145 that the
proposed rule change (SR–NYSEMKT–
2016–63) be, and hereby is, approved on
an accelerated basis.
II. Description of the Proposed Rule
Change
The principal purpose of the
proposed rule change, as modified by
Amendment Nos. 1 and 2, is to amend
the Rules to clarify that the default
remedies enumerated in the Rules are
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.146
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–06256 Filed 3–29–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80304; File No. SR–ICEEU–
2017–002]
Self-Regulatory Organizations; ICE
Clear Europe Limited; Notice of Filing
Amendment Nos. 1 and 2 and Order
Granting Accelerated Approval of
Proposed Rule Change, as Modified by
Amendment Nos. 1 and 2, To Revise
the ICE Clear Europe Clearing Rules
Relating to the Application of Default
Provisions in the Event of a Resolution
Proceeding
March 24, 2017.
I. Introduction
On January 25, 2017, ICE Clear
Europe Limited (‘‘ICE Clear Europe’’ or
‘‘Clearing House’’) filed with the
143 See
id.
U.S.C. 78s(b)(2).
145 See id.
146 17 CFR 200.30–3(a)(12).
144 15
PO 00000
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Fmt 4703
Sfmt 4703
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Capitalized terms used in this order, but not
defined herein, have the meanings specified in ICE
Clear Europe Clearing Rules.
4 Securities Exchange Act Release No. 34–79999
(February 9, 2017), 82 FR 10848 (February 15, 2017)
(SR–ICEEU–2017–002).
5 Amendment Nos. 1 and 2 are technical
amendments to ICE Clear Europe’s filing with
respect to comments on the proposed rule change
received by ICE Clear Europe.
In its filing on January 25, 2017, ICE Clear Europe
represented that it had published a prior version of
the proposed amendments for consultation with its
clearing members, two clearing members had
inquired about the regulatory process surrounding
the proposed change, and one clearing member
suggested that certain additional clarifications be
made to limit the application of other aspects of the
‘‘Insolvency’’ definition in the Rules. ICE Clear
Europe further represented its conclusion that these
suggested clarifications were not necessary or
appropriate and that ICE Clear Europe would not
make these requested clarifications.
In Amendment No. 1, on February 8, 2017, ICE
Clear Europe amended the filing (1) to note that no
written comments were received in response to its
prior consultation publication (Circular C16/018,
available at https://www.theice.com/clear-europe/
circulars (February 22, 2016)), (2) to include
Circular C16/018 as Exhibit 2, and (3) to add a
footnote that ‘‘Capitalized terms used [in the notice]
but not defined [t]herein have the meanings
specified in the [ ] Rules.’’ However, Exhibit 2 was
not referenced in Item 9 of ICE Clear Europe’s
amended filing. Subsequently, ICE Clear Europe
filed Amendment No. 2 on February 10, 2017. In
Amendment No. 2, ICE Clear Europe referenced
Exhibit 2 in Item 9 of its filing and corrected a
pagination error in Amendment No. 1.
2 17
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]]>Agencies
[Federal Register Volume 82, Number 60 (Thursday, March 30, 2017)]
[Notices]
[Pages 15725-15733]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-06256]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-80309; File No. SR-NYSEMKT-2016-63]
Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of
Partial Amendment No. 4 and Order Granting Accelerated Approval of a
Proposed Rule Change, as Modified by Amendment Nos. 1 Through 4, To
Amend the Co-Location Services Offered by the Exchange To Add Certain
Access and Connectivity Fees
March 24, 2017.
I. Introduction
On August 16, 2016, NYSE MKT LLC (the ``Exchange'' or ``NYSE MKT'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
amend the co-location services offered by the Exchange to add certain
access and connectivity fees, applicable to Users \3\ in the Exchange's
data center in Mahwah, NJ (``Data Center''). The Exchange proposed to:
(1) Provide additional information regarding access to the trading and
execution systems of the Exchange and its affiliated SROs, and
establish fees for connectivity to certain NYSE, NYSE Arca, and NYSE
MKT market data feeds; and (2) provide and establish fees for
connectivity to data feeds from third party markets and other content
service providers (``Third Party Data Feeds''); access to the trading
and execution services of Third Party markets and other content service
providers (``Third Party Systems''); connectivity to Depository Trust &
Clearing Corporation (``DTCC'') services; connectivity to third party
testing and certification feeds; and the use of virtual control
circuits (``VCCs'').
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 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. 76009 (September 29, 2015), 80 FR 60213
(October 5, 2015) (SR-NYSEMKT-2015-67). As specified in the Price
List and Fee Schedule, a User that incurs co-location fees for a
particular co-location service pursuant thereto would not be subject
to co-location fees for the same co-location service charged by the
Exchange's affiliates New York Stock Exchange LLC (``NYSE'') and
NYSE Arca, Inc. (``NYSE Arca''). See Securities Exchange Act Release
No. 70176 (August 13, 2013), 78 FR 50471 (August 19, 2013) (SR-
NYSEMKT-2013-67).
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The Commission published the proposed rule change for comment in
the Federal Register on August 26, 2016.\4\ The Commission received no
comments in response to the proposed rule change.\5\ On October 4,
2016, the Commission extended the time period within which to approve
the proposed rule change, disapprove the proposed rule change, or
institute proceedings to determine whether to approve or disapprove the
proposed rule change to November 24, 2016.\6\
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\4\ See Securities Exchange Act Release No. 34-78629 (August 22,
2016), 81 FR 58992 (``Notice'').
\5\ The Commission notes that it received one comment letter on
a related filing by NYSE (NYSE-2016-45, the ``NYSE Companion
Filing''), which is equally relevant to this filing. See letter to
Brent J. Fields, Secretary, Commission, from John Ramsay, Chief
Market Policy Officer, Investors Exchange LLC (IEX), dated September
9, 2016 (``IEX I Letter'').
Responding to the IEX I Letter, see letter to Brent J. Fields,
Commission, from Martha Redding, Associate General Counsel and
Assistant Secretary, NYSE, dated September 23, 2016 (``Response
Letter I''), available at https://www.sec.gov/comments/sr-nyse-2016-45/nyse201645-3.pdf. In note 3 of Response Letter I, the NYSE states
that its response is also applicable to the Exchange's filing,
Securities Exchange Act Release No. 78629 (August 22, 2016), 81 FR
58992 (August 26, 2016) (SR-NYSEMKT-2016-63). Accordingly, Response
Letter I is referred to as the Exchange's response.
\6\ See Securities Exchange Act Release No. 34-78968 (September
28, 2016), 81 FR 68493.
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On November 2, 2016, the Exchange filed partial Amendment No. 1 to
the proposed rule change.\7\ On November 29, 2016, the Commission
instituted proceedings (``Order Instituting Proceedings'' or ``OIP'')
to determine whether to approve or disapprove the
[[Page 15726]]
proposed rule change, as modified by Amendment No. 1.\8\ The proposed
rule change, as modified by Amendment No. 1, is referred to as the
``Prior Proposal.''
---------------------------------------------------------------------------
\7\ In partial Amendment No. 1 the Exchange addressed (1) the
benefits offered by the Premium NYSE Data Products that are not
present in the Included Data Products (2) how Premium NYSE Data
Products are related to the purpose of co-location, (3) the
similarity of charging for connectivity to Third Party Systems and
DTCC and charging for connectivity to Premium NYSE Data Products and
(4) the costs incurred by the Exchange in providing connectivity to
Premium NYSE Data Products to Users in the Data Center. Amendment
No. 1 is available on the Commission's Web site at https://www.sec.gov/comments/sr-nysemkt-2016-63/nysemkt201663-1.pdf.
\8\ See Securities Exchange Act Release 34-79378 (November 22,
2016), 81 FR 86050.
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On December 9, 2016, the Exchange filed Amendment No. 2 to the
proposed rule change and on December 13, 2016 also filed Amendment No.
3 to the proposed rule change.\9\ Amendment Nos. 2 and 3, which,
together superseded and replaced the Prior Proposal in its entirety,
were published for comment in the Federal Register on December 29,
2016.\10\
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\9\ The Commission notes that the Exhibit 5 filed with Amendment
No. 2 contained erroneous rule text and therefore was corrected in
Amendment No. 3. Amendment Nos. 2 and 3 are available at https://www.sec.gov/comments/sr-nysemkt-2016-63/nysemkt201663.shtml.
\10\ See Securities Exchange Act Release No. 34-79672 (December
22, 2016), 81 FR 96080 (``Notice of Amendment Nos. 2 and 3'').
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The Commission received additional comment letters following
publication of the Order Instituting Proceedings.\11\ Some of these
comment letters addressed only the Prior Proposal, and some addressed
the Prior Proposal, as modified by Amendment Nos. 2 and 3. NYSE, on
behalf of the Exchange, responded to the comment letters submitted
after the OIP in letters dated January 17, 2017 and February 13,
2017.\12\ On February 7, 2017, the Exchange filed partial Amendment No.
4 to the proposed rule change.\13\ On February 27, 2017, pursuant to
Section 19(b)(2) of the Act,\14\ the Commission designated a longer
period for Commission action on proceedings to determine whether to
disapprove the proposed rule change, as modified by Amendment Nos. 1
through 4.\15\ The Commission is publishing this notice to solicit
comment on partial Amendment No. 4 and, is approving the proposed rule
change, as modified by Amendment Nos. 1 through 4, on an accelerated
basis.
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\11\ See letter to Brent J. Fields, Commission, from Melissa
MacGregor, Managing Director and Associate General Counsel, SIFMA,
dated December 12, 2016 (``SIFMA I Letter''); letter to Brent J.
Fields, Commission, from Joe Wald, Chief Executive Officer,
Clearpool Group, dated December 16, 2016 (``Clearpool Letter'');
letter to Brent J. Fields, Secretary, Commission, from John Ramsay,
Chief Market Policy Officer, Investors Exchange LLC (IEX), dated
December 21, 2016 (``IEX II Letter''); letter to Brent J. Fields,
Commission, from Melissa MacGregor, Managing Director and Associate
General Counsel, SIFMA, dated February 6, 2017 (``SIFMA II
Letter''). All comments received by the Commission on the proposed
rule change are available on the Commission's Web site at: https://www.sec.gov/comments/sr-nysemkt-2016-63/nysemkt201663.shtml.
The Commission received additional comment letters on the NYSE
Companion Filing which are equally relevant to this filing. See
letter to Brent J. Fields, Commission, from Adam C. Cooper, Senior
Managing Director and Chief Legal Officer, Citadel Securities, dated
December 12, 2016 (``Citadel Letter''); letter to Brent J. Fields,
Commission, from David L. Cavicke, Chief Legal Officer, Wolverine
LLC (``Wolverine Letter''); letter to Bent J. Fields, Secretary,
Commission, from Stefano Durdic, Managing Director, R2G Services,
LLC, dated January 21, 2017 (``R2G Letter''). All comments received
by the Commission on the NYSE Companion Filing are available on the
Commission's Web site at: https://www.sec.gov/comments/sr-nyse-2016-45/nyse201645.shtml.
\12\ See letter to Brent J. Fields, Commission, from Martha
Redding, Associate General Counsel and Assistant Secretary, NYSE,
dated January 17, 2017; letter to Brent J. Fields, Commission, from
Martha Redding, Associate General Counsel and Assistant Secretary,
NYSE, dated February 13, 2017 (``Response Letter II'' and ``Response
Letter III,'' respectively), available at https://www.sec.gov/comments/sr-nysemkt-2016-63/nysemkt201663.shtml. In Response Letter
II, note 4, and Response Letter III, note 2, respectively, the NYSE
states that its response to comments on the NYSE Companion Filing
are equally applicable to this filing. Accordingly, Response Letters
II and III are referred to as the Exchange's response.
\13\ In partial Amendment No. 4 the Exchange proposes to (1)
remove reference to the National Stock Exchange from its list of
Third Party Systems, and (2) provide and establish fees for
connectivity to three additional Third Party Data Feeds--ICE Data
Services Consolidated Feed, ICE Data Services PRD, and ICE Data
Services PRD CEP, which are feeds owned by the Exchange's ultimate
parent, but not by the Exchange or its affiliated self-regulatory
organizations, NYSE MKT or NYSE. Partial Amendment No. 4, as filed
by the Exchange, is available at https://www.sec.gov/comments/sr-nysemkt-2016-63/nysemkt201663-1570727-131699.pdf.
\14\ 15 U.S.C. 78s(b)(2).
\15\ See Securities Exchange Act Release No. 34-80077 (February
22, 2017), 82 FR 11959. The Commission designated April 23, 2017 as
the date by which it should determine whether to disapprove the
proposed rule change.
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II. Description of the Proposed Rule Change, as Modified by Amendment
Nos. 1 Through 4
A. Background: Prior Proposal and the Order Instituting Proceedings
In the proposed rule change, as modified by Amendment Nos. 1
through 4 (also referred to as the ``Current Proposal''), the Exchange
proposes to amend the co-location services offered by the Exchange to
add certain access and connectivity services and establish fees
applicable to Users in the Data Center. Specifically, the Exchange
proposes to provide and establish fees for connectivity to: (i) Third
Party Data Feeds, (ii) Third Party Systems, (iii) DTCC services, (iv)
third party testing and certification feeds; and for the use of
VCCs.\16\
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\16\ See Notice of Amendment Nos. 2 and 3, supra note 10, 81 FR
at 96081, and partial Amendment No. 4 supra note 13. A VCC is a
unicast connection between two Users over dedicated bandwidth using
the IP network. See Notice of Amendment Nos. 2 and 3, supra note 10,
81 FR at 96081.
---------------------------------------------------------------------------
In the Prior Proposal (i.e., prior to filing Amendment Nos. 2 and
3), the Exchange also had proposed to provide additional information
about access to NYSE, NYSE Arca, and NYSE MKT trading and execution
services, and to establish fees for connectivity to certain proprietary
market data feeds.\17\ Specifically, the Exchange had proposed that
connectivity to most of the Exchange's and its affiliated SROs'
proprietary market data products would be included in the purchase
price of an LCN/IP network connection in the Data Center, but that an
additional connectivity fee (``Premium NYSE Product Connectivity Fee'')
would apply to the NYSE Integrated Feed, NYSE Arca Integrated Feed,
NYSE MKT Integrated Feed, and the NYSE Best Quote and Trades (BQT) feed
(``Premium NYSE Data Products'').\18\ As a result, the purchase of
access to NYSE, NYSE Arca, and NYSE MKT trading and execution services,
would not include connectivity to every purchased proprietary data
product; and whereas the Exchange would charge no additional fees for
connectivity to most of the Exchange's and its affiliated SROs' data
products, it would charge additional fees for connectivity to Premium
NYSE Data Products.
---------------------------------------------------------------------------
\17\ For a detailed description of the Prior Proposal, see the
Notice, supra note 4, and the OIP, discussing Amendment No. 2, supra
note 8.
\18\ See the Notice, supra note 4, and the OIP, discussing
Amendment No. 1, supra note 8.
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The Commission specifically requested comment on this aspect of the
Prior Proposal in the OIP. In particular, in the OIP, the Commission
expressed concern that the Exchange had not identified a distinction
between the provision of connectivity to Premium NYSE Data Products and
the Exchange's and its affiliated SROs' other data products, and noted
that the Premium NYSE Data Products are similar to such other data
products.\19\ In addition, the Commission requested comment on whether
charging fees for connectivity to Premium NYSE Data Products in a
different manner from other Exchange and affiliated SRO proprietary
market data products was consistent with Section 6(b)(4) of the
Act.\20\ The Commission also sought comment on whether Users would have
viable alternatives to paying the Exchange a connectivity fee for the
Premium NYSE Data Products.\21\ As discussed below, several commenters
stated that it was inequitable for the Exchange to charge a separate
and additional connectivity fee for some Exchange and affiliated SRO
proprietary market data products and not others, and that receiving the
Premium NYSE Data Products from an
[[Page 15727]]
alternative source was not a viable option.\22\
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\19\ See OIP, supra note 8, 81 FR at 86054.
\20\ See id.
\21\ See id.
\22\ See infra notes 69-71 and accompanying text.
---------------------------------------------------------------------------
In Amendment Nos. 2 and 3, the Exchange eliminated the Premium NYSE
Product Connectivity Fee from the Current Proposal, and that fee is
therefore no longer presented to the Commission for consideration.
B. Description of the Current Proposal
As stated above and more fully described in the Notice of Amendment
Nos. 2 and 3, as partially modified by Amendment No. 4, the Exchange
proposes to provide and establish fees for connectivity to: (i) Third
Party Data Feeds, (ii) Third Party Systems, (iii) DTCC services, (iv)
third party testing and certification feeds; and for the use of
VCCs.\23\
---------------------------------------------------------------------------
\23\ See Notice of Amendment Nos. 2 and 3, supra note 10, 81 FR
at 96081 and partial Amendment No. 4 supra note 13.
---------------------------------------------------------------------------
Regarding Third Party Data Feeds, the Exchange proposes to offer
Users the option to connect to Third Party Data Feeds in the Data
Center for a monthly connectivity fee per feed.\24\ The Exchange states
that it receives Third Party Data Feeds in the Data Center from
multiple national securities exchanges and other content service
providers which it then provides to requesting Users for a fee.\25\ The
Exchange states that its proposal to charge Users a monthly fee for
connectivity to Third Party Data Feeds is consistent with the monthly
connectivity fee Nasdaq charges its co-location customers for
connectivity to third party data.\26\ According to the Exchange, the
proposed fees ``allow the Exchange to defray or cover the costs
associated with offering Users connectivity to Third Party Data Feeds
while providing Users the convenience of receiving such Third Party
Data Feeds within co-location.'' \27\ Additionally, the Exchange noted
that some of the proposed fees vary depending on the bandwidth
considerations and, in cases where the bandwidth requirements are the
same as other proposed services such as Third Party Systems or VCCs,
the prices reflect ``the competitive considerations and the costs the
Exchange incurs in providing such connections.'' \28\
---------------------------------------------------------------------------
\24\ See Notice of Amendment Nos. 2 and 3, supra note 10, 81 FR
at 96082.
\25\ See id.
\26\ See id. The Exchange notes that Nasdaq charges monthly fees
of $1,500 and $4,000 for connectivity to BATS Y and BATS data feeds,
respectively, and of $2,500 for connectivity to EDGA or EDGX. See
id.
\27\ See Notice of Amendment Nos. 2 and 3, supra note 10, 81 FR
at 96085; partial Amendment No. 4, supra note 13.
\28\ See Notice of Amendment Nos. 2 and 3, supra note 10, 81 FR
at 96085; partial Amendment No. 4, supra note 13.
---------------------------------------------------------------------------
To connect to a Third Party Data Feed, a User must enter into a
contract with the relevant third party market or content service
provider, under which the third party market or content service
provider charges the User for the data feed.\29\ The Exchange receives
these Third Party Data Feeds over its fiber optic network and, after
the data provider and User enter into a contract and the Exchange
receives authorization from the data provider, the Exchange re-
transmits the data to the User's port.\30\ Users only receive, and are
only charged for, the feed(s) for which they have entered into
contracts.\31\ Additionally, the Exchange notes that Third Party Data
Feeds do not provide access or order entry to its execution system or
access to the execution system of the third party generating the
feed.\32\ The Exchange proposes to charge a set monthly recurring
connectivity fee per Third Party Data Feed, as set forth in its
proposed Price List and Fee Schedule (``Fee Schedules'').\33\ A User is
free to receive all or some of the feeds included in its Fee
Schedules.\34\ The Exchange notes that Third Party Data Feed providers
may charge redistribution fees, such as Nasdaq's Extranet Access Fees
and OTC Markets Group's Access Fees, which the Exchange will pass
through to the User in addition to charging the applicable connectivity
fee.\35\
---------------------------------------------------------------------------
\29\ See Notice of Amendment Nos. 2 and 3, supra note 10, 81 FR
at 96082.
\30\ See id.
\31\ See id.
\32\ See id. The Exchange notes that there is one exception to
this for the ICE feeds which include both market data and trading
and clearing services. In order to receive the ICE feeds, a User
must receive authorization from ICE to receive both market data and
trading and clearing services. See id.
\33\ See id., as modified by partial Amendment No. 4, supra note
13 (adding additional Third Party Data Feeds).
\34\ See Notice of Amendment Nos. 2 and 3, supra note 10, 81 FR
at 96082.
\35\ See id.
---------------------------------------------------------------------------
The Exchange represents that ``as alternatives to using the
[proposed connectivity to Third Party Data Feeds] provided by the
Exchange, a User may access or connect to such . . . products through
another User or through a connection to an Exchange access center
outside the data center, third party access center, or third party
vendor. The User may make such connection through a third party
telecommunication provider, third party wireless network, the SFTI
network, or a combination thereof.'' \36\
---------------------------------------------------------------------------
\36\ See id. at 96085.
---------------------------------------------------------------------------
As more fully described in the Notice of Amendment Nos. 2 and 3, as
modified by partial Amendment No. 4, the Exchange also proposes to
provide and establish fees for connectivity (also referred to as
``Access'') to Third Party Systems,\37\ to DTCC services,\38\ and to
third party certification and testing feeds, and charge a monthly
recurring fee.\39\ The Exchange proposes to amend its Fee Schedules to
provide and establish fees for connectivity to these service providers
and certification/testing feeds.\40\ The Exchange states that
connectivity is dependent on a User meeting the necessary technical
requirements, paying the applicable fees, and the Exchange receiving
authorization from the relevant third party service provider to make
the connection.\41\
---------------------------------------------------------------------------
\37\ The Exchange states that it selects what connectivity to
Third Party Systems to offer in the Data Center based on User
demand. See id. at 96081. In partial Amendment No. 4, the Exchange
removed the National Stock Exchange from the list of Third Party
Systems, noting that it is now owned by the Exchange's parent. See
partial Amendment No. 4, supra note 13. Establishing a User's access
to a Third Party System does not give the Exchange any right to use
the Third Party Systems; connectivity to a Third Party System does
not provide access or order entry to the Exchange's execution
system, and a User's connection to a Third Party System is not
through the Exchange's execution system. See Notice of Amendment
Nos. 2 and 3, supra note 10, 81 FR at 96081.
\38\ The Exchange states that connectivity to DTCC ``is distinct
from the access to shared data services for clearing and settlement
services that a User receives when it purchases access to the LCN or
IP network. The shared data services allow Users and other entities
with access to the Trading Systems to post files for settlement and
clearing services to access.'' See Notice of Amendment Nos. 2 and 3,
supra note 10, 81 FR at 96083 n. 25.
\39\ Certification feeds certify that a User conforms to any of
the relevant content service providers' requirements for accessing
Third Party Systems or receiving Third Party Data, whereas testing
feeds provide Users an environment in which to conduct system tests
with non-live data. See Notice of Amendment Nos. 2 and 3, supra note
10, 81 FR at 96083.
\40\ See Notice of Amendment Nos. 2 and 3, supra note 10, 81 FR
at 96081-96083.
\41\ See id.
---------------------------------------------------------------------------
For each service, a User must execute a contract with the
respective third party service provider pursuant to which a User pays
each the associated fee(s) for their services.\42\ Once the Exchange
receives authorization from the third party service provider, the
Exchange will enable a User to connect to the service provider and/or
third party certification and testing feed(s) over the IP Network.\43\
The proposed
[[Page 15728]]
recurring monthly fees for connectivity to Third Party Systems and DTCC
are based upon the bandwidth requirements per system.\44\
---------------------------------------------------------------------------
\42\ See id.
\43\ See id. For Third Party Systems, once the Exchange receives
the authorization from the respective third party it establishes a
unicast connection between the User and the relevant third party
over the IP network. See id. at 96081. For the DTCC, ``[t]he
Exchange receives the DTCC feed over its fiber optic network and,
after DTCC and the User enter into the services contract and the
Exchange receives authorization from DTCC, the Exchange provides
connectivity to DTCC to the User over the User's IP network port.''
See id. at 96083.
\44\ See id. at 96081, 96083.
---------------------------------------------------------------------------
The Exchange represents that as alternatives to using the proposed
connectivity to Third Party Systems, to DTCC services, and to third
party certification and testing feeds offered by the Exchange, ``a User
may access or connect to such services and products through another
User or through a connection to an Exchange access center outside the
data center, third party access center, or third party vendor. The User
may make such connection through a third party telecommunication
provider, third party wireless network, the SFTI network, or a
combination thereof.'' \45\
---------------------------------------------------------------------------
\45\ See id. at 96084-96085.
---------------------------------------------------------------------------
Finally, as more fully described in the Notice of Amendment Nos. 2
and 3, as partially modified by partial Amendment No. 4, the Exchange
also proposes to provide and establish fees for VCCs.\46\ A VCC
(previously called a ``peer to peer'' connection) is a unicast
connection through which two participants can establish a connection
between two points over dedicated bandwidth using the IP network to be
used for any purpose.\47\ The proposed recurring monthly fees for VCCs
are based upon the bandwidth requirements per VCC connection between
two Users.\48\ Connectivity to VCCs will similarly require permission
from the other User before the Exchange will establish the
connection.\49\ As an alternative to using a VCC, Users can connect to
other Users through a cross-connect.\50\
---------------------------------------------------------------------------
\46\ See id. at 96083.
\47\ See id.
\48\ See id.
\49\ See id.
\50\ See id. at 96084.
---------------------------------------------------------------------------
The Exchange states in reference to all of the proposed services
that in adding the fees it seeks to defray or cover its costs in
providing these voluntary services to Users, and that in order to
provide these services it must, among other things, provide, maintain
and operate the data center facility hardware and technology
infrastructure; and handle the installation, administration,
monitoring, support and maintenance of such services, including by
responding to any production issues.\51\ The Exchange also states that
the fees charged for co-location services are constrained by the active
competition for the order flow and other business from such market
participants,\52\ and that charging excessive fees would make it stand
to lose not only co-location revenues but also the liquidity of the
formerly co-located trading firms.\53\ Additionally, the Exchange
states that Users have alternatives if they believe the fees are
excessive.\54\ Specifically, the Exchange notes that a User could
terminate its co-location arrangement with the Exchange ``and adopt a
possible range of alternative strategies, including placing their
servers in a physically proximate location outside the exchange's
[D]ata [C]enter (which could be a competing exchange), or pursuing
strategies less dependent upon the lower exchange-to-participant
latency associated with colocation.'' \55\
---------------------------------------------------------------------------
\51\ See id. at 96085.
\52\ See id. at 96084.
\53\ See id.
\54\ See id.
\55\ See id.
---------------------------------------------------------------------------
III. Summary of Comments Received and Exchange Responses
The Commission received four comment letters on the proposed rule
change, as modified by Amendment Nos. 1 through 4, and an additional
four comment letters on the NYSE Companion Filing.\56\ The Exchange
submitted three letters in response to the comments.\57\
---------------------------------------------------------------------------
\56\ See supra notes 5 and 11. Because the additional letters on
NYSE Companion Filing address the same issues, all eight letters are
considered as submitted in response to the proposed rule change, as
modified by Amendment Nos. 1 through 4, and are discussed herein. In
addition, one commenter noted that it filed a denial of access
petition on the proposal. See SIFMA I Letter at 1 and SIFMA II
Letter at 3.
\57\ See Response Letters I, II, and III, supra notes 5 and 12.
---------------------------------------------------------------------------
A. Comment Submitted Prior to the OIP
The Commission received one comment letter prior to publication of
the OIP.\58\ The initial commenter requested that the Exchange provide
additional information on the history of all of the proposed fees
(which the commenter believed were already in effect), and the
relationship between the fees and the Exchange's costs to maintain the
Data Center and provide co-location services.\59\ The commenter urged
``additive transparency'' to enable members to evaluate the fixed costs
of exchange membership and whether fees were applied equitably.\60\
This commenter also stated that broker-dealers ``may be practically
required to buy and consume proprietary market data feeds directly from
exchanges in order to provide competitive products for those clients,
and that the trading environment ``imposes a form of trading tax on all
members by offering different methods of access to different members.''
\61\ The commenter questioned whether ``there are any true alternatives
that are practically available to various types of participants who are
seeking to compete with those who are paying exchanges for co-location
and data services,'' and urged that the Exchange provide information
and analysis on how its ability to set co-location fees is constrained
by market forces for a ``comparable product.'' \62\
---------------------------------------------------------------------------
\58\ See IEX I Letter, supra note 5.
\59\ See id. at 1-2.
\60\ See id.
\61\ See id. at 2.
\62\ See id.
---------------------------------------------------------------------------
In response, the Exchange replied that historical information about
the development of its product offerings is ``not required by the Act
and is not relevant to [] the substance of the Proposal-which is, by
definition, forward looking . . . .'' \63\ The Exchange added that
costs are not its only consideration in setting prices, but rather that
prices ``include the competitive landscape; whether Users would be
required to utilize a given service; the alternatives available to
Users; and, significantly, the benefits Users obtain from the
services.'' \64\ In response to the commenter's argument regarding
different methods of access to trading, the Exchange stated that ``it
is a vendor of fair and non-discriminatory access, and like any vendor
with multiple product offerings, different purchasers may make
different choices regarding which products they wish to purchase.''
\65\ The Exchange further stated that co-location fees are not fixed
costs to members, but costs to any User who voluntarily chooses to
purchase such services based upon ``[t]he form and latency of access
and connectivity that bests suits a User's needs.'' \66\ The Exchange
added that Users do not require the Exchange's access or connectivity
offerings in co-location to trade on the Exchange and can instead use
alternative access and connectivity options for trading if they
choose.\67\
---------------------------------------------------------------------------
\63\ See Response Letter I, supra note 5, at 3.
\64\ See id.
\65\ See id. at 5.
\66\ See id. at 4.
\67\ See id.
---------------------------------------------------------------------------
[[Page 15729]]
B. Comments Following Publication of the OIP
(i) Comments on the Premium NYSE Product Connectivity Fee and
Cumulative Fees Generally
As noted above, the Commission specifically requested comment on
the Premium NYSE Product Connectivity Fee in the OIP.\68\ In response,
some commenters objected to the establishment of a separate
connectivity fee for Premium NYSE Data Products as duplicative of fees
already charged for bandwidth and access to the market data product
itself, and therefore that this fee would result in an inequitable
allocation of fees, inconsistent with Section 6(b)(4) of the Act.\69\
Another commenter similarly objected to an additional connectivity/
bandwidth charge for each Premium NYSE Data Product as an example of
``double dipping,'' and a fee having ``no merit'' on its own.\70\
Additionally, some commenters objected to the reasonableness of the
proposed Premium NYSE Product Connectivity Fee on the basis that there
was no viable alternative to paying the fee to obtain connectivity to
the Premium NYSE Data Products.\71\
---------------------------------------------------------------------------
\68\ See OIP, supra note 8, and Section II.A. supra.
\69\ See Citadel Letter at 2; Clearpool Letter at 4.
\70\ See Wolverine Letter at 3. See also Citadel Letter at 2;
R2G Letter at 3 (each expressing concern about cumulative fees).
\71\ See Citadel Letter at 3 (``there is no readily available
substitute or equivalent means of access to the Premium NYSE Data
Products''); Wolverine Letter at 3 (objecting to the statement ``the
Exchange is not the exclusive method to connect to Premium NYSE Data
Products'' noting that it is ``misleading at best.''). See also R2G
Letter at 1-2 (stating, its view that the Prior Proposal ``raises
serious concerns'' under the Exchange Act, but that ``Amendment No.
3 adequately addresses the original concerns,'' and adding that it
would, however, object if the Exchange similarly sought to apply the
logic of Amendment No. 3 regarding Third Party Systems to any ``NYSE
Proprietary Product'').
---------------------------------------------------------------------------
In response to comments on the Premium NYSE Product Connectivity
Fee, the Exchange noted that it was no longer proposing that fee and
that the questions posed in the OIP about that fee were moot.\72\
---------------------------------------------------------------------------
\72\ See Response Letter II at 4, 7-8. The Exchange also stated,
as discussed further below, that it did not agree with commenters
suggesting that a connectivity fee is indistinguishable from a
market data fee.
---------------------------------------------------------------------------
Some commenters opposed to the Premium NYSE Product Connectivity
Fee also expressed broader concern about ``layered'' and cumulative
fees charged by the Exchange to access market data.\73\ Some of these
commenters believe that the rising costs related to the receipt of
market data in co-location over time effectively impose a barrier to
entry for smaller broker-dealers and new entrants, and are a burden on
competition.\74\ For example, Wolverine stated that it has an aggregate
cost of ``$123,750 per month of fixed costs in co-location, port, and
access fees today, solely for access to NYSE controlled markets,''
which is ``an amount which presents a steep barrier to entry for new
participants.'' \75\ Wolverine also estimated that its NYSE market data
costs have increased ``over 700% over 8 years.'' \76\ Citadel similarly
stated that ``additive and layered fees are a persistent problem with
exchange fees more generally,'' and urged scrutiny of the aggregate
impact of fees, ``in particular with respect to market data products
where exchanges have a monopoly as the initial distributors.'' \77\
---------------------------------------------------------------------------
\73\ See Wolverine Letter at 1-3; Clearpool Letter at 3; Citadel
Letter at 3; R2G Letter 1, 3-6.
\74\ See Wolverine Letter at 1-3; Clearpool Letter at 3; Citadel
Letter at 3.
\75\ See Wolverine Letter at 3.
\76\ See id. at 1 (also objecting to port and other charges
(outside the scope of the Current Proposal) as unreasonable); see
also R2G Letter at 3 (expressing agreement with Wolverine).
\77\ See Citadel Letter at 2.
---------------------------------------------------------------------------
Clearpool stated, among other things, that market participants are
beholden to the exchanges for market data; that it is not feasible for
broker-dealers with best execution obligations to rely on SIP data as
an alternative to exchange proprietary data feeds; and that the role
and cost of using SIP and proprietary feeds should be considered in
connection with Commission proposals to improve Regulation NMS Rules
605 and 606 reporting.\78\ Clearpool advocated for the Commission to
``thoroughly review the issues around market data'' and to ensure that
it is priced more competitively and equitably for all market
participants.\79\ Clearpool also stated that high costs prevent new
innovative technology services, including order routing, risk
management, and transaction cost analysis services, from entering the
market, and further, that increasing fees significantly reduce the
margin that smaller broker-dealers can earn on a transaction, putting
them at a disadvantage to larger firms that can absorb these costs.\80\
---------------------------------------------------------------------------
\78\ See Clearpool Letter at 2-4.
\79\ See id. at 1, 4.
\80\ See id. at 3.
---------------------------------------------------------------------------
In response to these comments, the Exchange challenged Wolverine's
assessment that Exchange fees have increased by 700% over the past
eight years, explaining that it was a mischaracterization and did not
represent a true comparison of the fees paid for particular data feeds
in 2008 as compared to fees paid for those specific feeds today.\81\
The Exchange also rejected Wolverine's argument that all of its costs-
including the optional cage surrounding its cabinets, power, cross
connects, network ports and connectivity--should be treated as costs
related to market access.\82\ The Exchange stated, that ``however self-
servingly [Wolverine] tries to characterize them, these listed costs,
like rent and employee compensation and benefits, are simply costs
associated with Wolverine's business activities. These business
activities and Wolverine's business judgment--not the Exchange--
determine the most effective way for Wolverine to select the products
and services it uses.'' \83\
---------------------------------------------------------------------------
\81\ See Response Letter II at 10 and n.27.
\82\ See id. at 10.
\83\ See id.
---------------------------------------------------------------------------
Regarding comments about market data and co-location fees more
generally, the Exchange responded that a User that chooses to receive
market data within co-location will incur several costs in addition to
the cost a market data provider will charge for its data, including the
costs associated with the LCN or IP network port, power, cross
connects, and connectivity, but the need for equipment and connections
to enable receipt of a market data feed within co-location does not
convert the costs of such equipment and connections into market data
fees.\84\ The Exchange also stated that some commenters were using the
Prior Proposal as a ``departure point to discuss broader issues related
to market data.'' \85\ The Exchange catalogued comments about exchange
fees for proprietary market data products, the effect of Commission
proposals to improve disclosure of order execution and order routing
information under Rules 605 and 606 of Regulation NMS, and the payment
of rebates for posted liquidity as comments beyond the scope of the
Current Proposal, as well as the fees any one exchange might
propose.\86\
---------------------------------------------------------------------------
\84\ See id. at 5.
\85\ See id.
\86\ See id. at 5-6. See also infra notes 114-127, discussing
SIFMA's comments characterizing a variety of fees as market data
fees and the Exchange's response.
---------------------------------------------------------------------------
The Exchange also stated that market participants are not required
to co-locate with or subscribe to proprietary market data products from
an exchange, emphasizing that firms using exchange market data products
in co-location ``have chosen to build business models based on speed.''
\87\
---------------------------------------------------------------------------
\87\ See Response Letter II at 11-12.
---------------------------------------------------------------------------
[[Page 15730]]
(ii) Comments Regarding Competition and Alternatives to the Proposed
Co-Location Services
Some commenters addressing both the Prior Proposal and Amendment
Nos. 2 and 3 suggested that co-location services in general are not
optional.\88\ In the context of whether the Current Proposal's
connectivity fees are reasonable, some of these commenters argued that
there is a lack of competition for the Exchange's co-location and data
services generally, and suggested a lack of viable alternatives to the
Current Proposal's proposed connectivity services and fees in
particular.\89\ For instance, SIFMA argued that the Exchange's ability
to set co-location fees is not constrained by market forces because
there is ``no comparable connectivity or product,'' and low-latency
alternatives to these services do not exist.\90\ SIFMA stated that
``[a]ny alternative with severely increased latencies would not be a
viable alternative.'' \91\ Similarly, IEX argued that if co-location
services are optional, and therefore need not be purchased if the fees
are excessive, then the Exchange should demonstrate how firms are not
placed at a competitive disadvantage if they elect to not receive such
services from the Exchange.\92\ In particular, IEX suggested that the
Exchange provide data on the expected latency (or range of latencies)
in receiving data or transmitting orders directly from the Exchange,
compared to the equivalent latency (or range) for firms that rely on a
third party access center.\93\ IEX requested that the NYSE ``explain
whether it believes that this difference would not affect the ability
of electronic market makers and other trading firms and active agency
brokers to compete with firms in the same businesses that have faster
access, and if so how it reached this conclusion.'' \94\ IEX also
disputed that competition for order flow constrains pricing of co-
location services, arguing that NYSE often displays protected quotes
for certain stocks, a status it achieves by paying a high number of
rebates for liquidity, and firms are forced to interact with it to
avoid trade-throughs.\95\ Both IEX and SIFMA argued that in the absence
of competition for the proposed services and fees (which, in SIFMA's
view are indistinguishable from market data fees), the Exchange should
be required to discuss the relationship between the proposed fees and
increasing Data Center costs, or detail how the fee increases relate to
the costs of providing the service, in order to justify the proposed
fees as reasonable.\96\
---------------------------------------------------------------------------
\88\ See IEX I Letter at 2 (best execution requires broker-
dealer to have ``effective access'' to exchanges); SIFMA II Letter
at 4 (``brokers are legally obligated to seek best execution for
their customers. They are required to consider the likelihood that a
trade will be executed and whether there is an opportunity to obtain
a price better than what is currently quoted.'') See also Citadel
Letter at 3 (stating that ``competitive pressures oblige broker-
dealers to seek the most efficient access to markets and market data
to execute orders . . . ,'' creating a risk for those firms that
elect to trade with ``slower and less efficient access.''); R2G
Letter at 3 (referring to an ``ever increasing need for speed'');
Wolverine Letter at 1 (stating that it is ``required to subscribe to
the lowest latency NYSE market data products and services'').
\89\ See IEX I Letter at 2, IEX II Letter at 1-3, SIFMA I Letter
at 2 and SIFMA II Letter at 2. Compare with comments alleging a lack
of viable alternatives to connectivity to Premium NYSE Data
Products, supra note 73.
\90\ See SIFMA I Letter at 2. According to SIFMA, ``the mere
presence of the IEX Letter in the comment file'' evidences of a lack
of competitive market forces to constrain pricing, because IEX is a
competitor to the Exchange. See id. at 3.
\91\ See SIFMA I Letter at 3 (also stating ``different fees are
charged for the different types of connectivity, with no rational
basis, [is] unfairly discriminatory between customers.'')
\92\ See IEX II Letter at 2.
\93\ See id.
\94\ See id.
\95\ See id. at 3. See also SIFMA II Letter at 2 (expressing
general agreement); see also SIFMA I Letter at 3 (stating that the
presence of a comment letter from IEX cuts against the argument that
competition for order flow constrains fees). See also Citadel Letter
at 2 (urging greater transparency regarding the Exchange's Data
Center costs).
\96\ See IEX II Letter at 3; SIFMA II Letter at 2.
---------------------------------------------------------------------------
In contrast, two commenters acknowledged the existence of
alternatives to some Exchange co-location services.\97\ One of these
commenters noted that alternatives are present for Third Party System
connectivity as evidenced by the fact that it ``finds NYSE's third
part[y] system costs out of line and does not subscribe to this NYSE
offering, instead implementing this connectivity internally using a
proprietary network.'' \98\ Another commenter stated that it ``directly
competes with NYSE for these [Third Party Systems] services and does so
at prices significantly lower than the fees NYSE has proposed.'' \99\
---------------------------------------------------------------------------
\97\ See Wolverine Letter at 3; R2G Letter at 1-2.
\98\ See Wolverine Letter at 3.
\99\ See R2G Letter at 1-2.
---------------------------------------------------------------------------
In response to comments that competitive forces do not constrain
co-location fees and that alternatives to co-location services are
lacking, the Exchange defended its representations that the proposed
services are offered as a convenience to Users, are voluntary, and that
Users have viable alternatives to the proposed services.\100\ The
Exchange stated that additional latency in an alternative means of
connectivity does not negate the viability of that alternative,\101\
and that commenters arguing that only an ``equivalent'' latency
alternative is a viable alternative are misguided.\102\ The Exchange
stated that, ``the Act does not require that there be at least one
third party option available that has exactly the same characteristics
as a proposed service before a national securities exchange can impose
or change a fee for a service,'' adding that such a requirement would
be ``untenable, as every exchange would have to have an exact duplicate
before it could charge a fee.'' \103\ Rather, the relevant question is
whether a proposed fee would be ``an equitable allocation of reasonable
dues, fees, and other charges among Users in the data center; does not
unfairly discriminate between customers, issuers, brokers, or dealers;
and does not impose a burden on competition which is not necessary or
appropriate in furtherance of the purposes of the Act.'' \104\ The
Exchange noted that it did not represent that the connectivity
alternatives available to co-located Users (including alternatives for
connectivity to Premium NYSE Data Products) are exactly the same as
those proposed, but rather that the cited alternatives show that Users
have the option ``to receive the same market data, or make the same
trades, in other manners.'' \105\ The Exchange added that its cited
alternatives ``offer distinct services and pricing structures that some
Users may find more attractive than those proposed by the Exchange,''
and that these alternatives are ``real,'' even if not all Users will
find them equally attractive for their individual business model.\106\
The Exchange stated that the viability of alternatives is ``underscored
by the Wolverine Letter, which explicitly states that it does not
object to the proposed fees for access to Third Party Systems in the
Current Proposal on the basis that firms may contract with other
parties or contract
[[Page 15731]]
directly with network providers.'' \107\ The Exchange added that,
``[I]t is the Exchange's understanding that a User could access Third
Party Systems and connect to Third Party Data Feeds, third party
testing and certification feeds, and DTCC using one or more of the
listed alternatives without increasing its latency levels--and, in many
cases, the alternatives would offer lower latency.'' \108\
---------------------------------------------------------------------------
\100\ See Response Letter II at 6.
\101\ See id. at 7-8.
\102\ See id. at 7.
\103\ See id. at 8.
\104\ See id.
\105\ See id. The Exchange also noted that Clearpool is not a
co-location customer of the Exchange, which the Exchange believes
illustrates that market participants can and do avail themselves of
alternatives for connecting to NYSE market data products. See id.
\106\ See id. In addition, in response to IEX's suggestion that
the Exchange provide data on the expected latency (or range of
latencies) in receiving data or transmitting orders directly from
the Data Center, compared to the expected latency (or range) for
firms that rely on a third party access center, the Exchange stated
it could not do so without having access to the latency data of
third parties, or each User's specific system configuration and
latency needs and therefore could not satisfy IEX's ``deliberately
impossible requirement.'' See id. at 7.
\107\ See id. at 9. The Exchange did not similarly address the
R2G Letter.
\108\ See id. at 9-10.
---------------------------------------------------------------------------
Further, the Exchange emphasized that while some commenters focus
exclusively on latency as the only relevant consideration, ``Users with
different investment strategies or business models may focus on other
characteristics, including redundancy, resiliency, cost, and the
services that third parties offer but the Exchange does not, such as
managed services.'' \109\ The Exchange stated that alternatives exist
as evidenced by the fact that ``there are at least six Users within the
co-location hall that offer other Users or hosted customers access to
trading or connectivity to market data, including the two other
exchanges that are co-located with the Exchange, as well as the fact
that Users may contract with any of the 15 telecommunication
providers--including five third party wireless networks--available to
Users to connect to third party vendors.'' \110\ The Exchange also
noted that the alternatives are possible in part because the Exchange
voluntarily allows Users to provide services to other Users and third
parties out of the Exchange's co-location facility--that is, to compete
with the Exchange using the Exchange's own facilities.\111\ For
example, according to the Exchange, ``a User that wished to receive
Nasdaq market data could connect directly to the Nasdaq server within
co-location.'' \112\ Therefore, the Exchange believes that contrary to
commenters' beliefs, the Exchange's cited alternatives offer comparable
services that can be used in lieu of receiving Exchange offered
services, and that there are competitive forces constraining
pricing.\113\
---------------------------------------------------------------------------
\109\ See id. at 8 n.16.
\110\ See id. at 9.
\111\ See id.
\112\ See id. at 10 n.24.
\113\ See id. at 9.
---------------------------------------------------------------------------
SIFMA raised additional arguments. SIFMA urged that ``[t]he
proposed connectivity fees should be reviewed in a manner consistent
with the decisions of the United States Court of Appeals for the
District of Columbia Circuit'' in NetCoalition v. SEC, because says
SIFMA, they are market data fees.\114\ SIFMA took the position that
under NetCoalition I (615 F.3d 525 (D.C. Cir. 2010)) an exchange's
assertion that order flow competition constrains pricing of data is
insufficient.\115\ More specifically, in SIFMA's view ``port, power,
cross connect, connectivity and cage fees, which are necessary in order
to obtain the market data from NYSE,'' ``however labeled, are market
data fees.'' \116\ SIFMA also noted that it had submitted a ``properly
filed 19(d) denial of access petition on the proposal,'' but had
requested that it be ``held in abeyance pending the decision in the
NetCoalition follow-on proceedings . . . .'' \117\ SIFMA urged however,
that such petition, despite its abeyance, not be ignored.\118\
---------------------------------------------------------------------------
\114\ See SIFMA II Letter at 2-3 (citing NetCoalition I, 615
F.3d 525 (D.C. Cir. 2010); NetCoalition II, 715 F.3d 342 (D.C. Cir.
2013)).
\115\ SIFMA I Letter at 3 (noting that ``[t]he Court's
NetCoalition decisions, the controlling law on this subject,
rejected this order flow argument because, like here, there was no
support for the assertion that order flow competition constrained
the ability of the exchange to charge supracompetitive prices for
data.'').
\116\ See SIFMA II Letter at 3. See also SIFMA I Letter at 4
(stating that market data fees, port fees, hardware fees and
connectivity fees are all ``within the ambit of the NetCoalition
decisions.'')
\117\ See SIFMA I Letter at 1; SIFMA II Letter at 3.
\118\ See SIFMA II Letter at 3.
---------------------------------------------------------------------------
In response to SIFMA on these points, the Exchange stated that,
``NetCoalition addressed the standards governing proprietary market
data fees,'' and that it is ``incorrect'' to characterize the Current
Proposal as establishing market data fees.\119\ The Exchange stated:
---------------------------------------------------------------------------
\119\ See Response Letter III at 3-4.
the fact that a User needs to have a port, power, and connectivity
in place in order to be able to receive a market data feed within
co-location does not convert the costs of such equipment and
connections into market data fees. Rather, they are costs associated
with the User's business activities. If a User opts to put a cage
around its servers in the colocation hall, the cage fee it pays is a
cost it chooses to incur in connection with the way it has chosen to
do business, not a market data fee.\120\
---------------------------------------------------------------------------
\120\ See id. at 4 (emphasis in original).
The Exchange distinguished the services and fees proposed in the
Current Proposal from market data fees, emphasizing that they are
connectivity fees or access fees applicable when a User chooses to
utilize connectivity or access services within co-location.\121\ The
Exchange noted that two of the proposed fees are for services that
facilitate Users' trading activities, and have nothing to do with
market data: a proposed fee for access within co-location to the
execution systems of third party markets and other content service
providers, and a proposed fee for connectivity within co-location to
DTCC services, such as clearing, fund transfer, insurance, and
settlement services.\122\ The Exchange similarly distinguished the
proposed connectivity fee for third party testing and certification
feeds as not equivalent to providing a customer with market data.\123\
Addressing the proposed connectivity fee for Third Party Data Feeds
within co-location, the Exchange noted that this proposed fee ``has
more often been mistaken for a market data fee,'' but distinguished the
service of providing a User with connectivity to Third Party Data Feeds
from the service that the third party providing the market data
provides by sending the data over the connection, noting that the third
party content service provider charges the User the market data
fee.\124\
---------------------------------------------------------------------------
\121\ See id. at 5-6. The Exchange noted that SIFMA did not
address VCC fees. See id. at 5, n. 17.
\122\ See id. at 5-6 (also noting that fees for Third Party
System and DTCC connectivity vary by bandwidth and are generally
proportional to the bandwidth required).
\123\ See id. at 5 (also noting that fees for connectivity to
third party testing and certification feeds reflect that bandwidth
requirements are generally not large, and the relatively low fee may
encourage Users to conduct tests and certify conformance, which the
Exchange believes generally benefits the markets).
\124\ See id. at 5-6 (also noting that the fees for Third Party
Data Feeds vary because Third Party Data Feeds vary in bandwidth;
proximity to the Exchange, requiring different circuit lengths; fees
charged by the third party provider, such as port feeds; and levels
of User demand).
---------------------------------------------------------------------------
The Exchange did not agree with SIFMA's contention that the Current
Proposal would establish market data fees, nor agree that NetCoalition
standard was applicable to the Current Proposal,\125\ but instead
stated, ``[t]here is significant competition for the connectivity
relevant to the Current Proposal;'' and ``even if the NetCoalition
standard did apply, the Current Proposal satisfies it.'' \126\
---------------------------------------------------------------------------
\125\ See id. at 3. See also Response Letter II at 13.
\126\ See Response Letter III at 3. See also Response Letter II
at 13.
---------------------------------------------------------------------------
Regarding SIFMA's denial of access petition, the Exchange responded
that a denial of access petition is not a comment letter, and should
not be treated as such given that SIFMA itself has requested that its
denial of access petition on fee filings be held in abeyance pending a
decision in the NetCoalition follow-on proceedings.\127\
---------------------------------------------------------------------------
\127\ See Response Letter III at 3. See also Response Letter II
at 13; SIFMA Letter II at 3 (noting that ``SIFMA's 19(d)s will be
held in abeyance pending the decision in the NetCoalition follow-on
proceedings . . .'').
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[[Page 15732]]
IV. Discussion and Commission Findings
After careful consideration of the proposed rule change, as
modified by Amendment Nos. 1 through 4, the comments received, and the
Exchange's responses to the comments, the Commission finds that the
proposed rule change, as modified by Amendment Nos. 1 through 4, is
consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange. In
particular, the Commission finds that the proposed rule change is
consistent with Section 6(b)(4) of the Act,\128\ which requires that an
exchange have rules that provide for the equitable allocation of
reasonable dues, fees and other charges among its members, issuers and
other persons using its facilities; Section 6(b)(5) of the Act,\129\
which requires that the rules of an exchange be designed, among other
things, to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system and, in general, to protect investors and the public
interest, and not be designed to permit unfair discrimination between
customers, issuers, brokers or dealers; and Section 6(b)(8) of the
Act,\130\ which prohibits any exchange rule from imposing any burden on
competition that is not necessary or appropriate in furtherance of the
Act.\131\
---------------------------------------------------------------------------
\128\ 15 U.S.C. 78f(b)(4).
\129\ 15 U.S.C. 78f(b)(5).
\130\ 15 U.S.C. 78f(b)(8).
\131\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
---------------------------------------------------------------------------
As discussed more fully above, some commenters oppose the proposed
co-location fees on the basis that viable alternatives to the
Exchange's co-location services are lacking, and particularly that
similar low-latency alternatives to the Exchange's co-location services
do not exist.\132\ According to these commenters, the lack of viable
alternatives means that competitive forces do not constrain Exchange
pricing of co-location services, and the Exchange's proposed fees
should be subject to a cost-based assessment.\133\
---------------------------------------------------------------------------
\132\ See supra notes 62, 88-94, and accompanying text.
\133\ See supra notes 62, 96, 114-116 and accompanying text.
---------------------------------------------------------------------------
In response to these comments, the Exchange counters that co-
location Users have several alternatives to the Exchange's proposed
services, both inside and outside the Data Center. The Exchange
explains that as alternatives to using the access to Third Party
Systems, and connectivity to Third Party Data Feeds, third party
testing and certification feeds, and DTCC, provided by the Exchange, a
User may access or connect to such services and products through an
Exchange access center, third party access center, or a third party
vendor outside the Data Center, and may do so using a third party
telecommunication provider, a third party wireless network, the Secure
Financial Transaction Infrastructure (SFTI) network, or a combination
thereof.\134\ Furthermore, the Exchange points out that alternatives to
the Exchange's access and connectivity services also exist inside the
Data Center, as evidenced by the fact that ``there are at least six
Users within the co-location hall that offer other Users or hosted
customers access to trading or connectivity to market data, including
the two other exchanges that are co-located with the Exchange, as well
as the fact that Users may contract with any of the 15
telecommunication providers--including five third party wireless
networks--available to Users to connect to third party vendors.'' \135\
The Exchange notes that these alternatives are possible because the
Exchange allows Users to provide services to other Users and third
parties out of the Exchange's co-location facility--that is, to compete
with the Exchange using the Exchange's own facilities.\136\
---------------------------------------------------------------------------
\134\ See Response Letter II at 6.
\135\ See id. at 9.
\136\ See id.
---------------------------------------------------------------------------
The Commission has carefully considered the comments and the
Exchange's response concerning the availability of alternatives to the
Exchange's proposed access and connectivity services. In addition, the
Commission notes that two commenters expressed the view that viable
alternative means of accessing Third Party Systems are available.\137\
The Commission believes that viable alternatives to the Exchange's
proposed co-location services are available which bring competitive
forces to bear on the fees set forth in the Current Proposal.\138\
---------------------------------------------------------------------------
\137\ See supra notes 97-99. One of these commenters also stated
its view that Amendment No. 3 addressed the concerns raised in the
OIP. See supra note 71. Furthermore, the Exchange's proposal with
respect to connectivity to Third Party Data Feeds is not novel,
given that Nasdaq similarly charges connectivity fees for third
party data feeds, as reflected on its co-location fee schedule. See
Nasdaq Rule 7034.
\138\ See also Securities Exchange Act Release No. 34-62397
(June 28, 2010); Securities Exchange Act Release No. 34-66013
(December 20, 2011), 76 FR 80992 (December 27, 2011) (noting ``that
members may choose not to obtain low latency network connectivity
through the Exchange and instead negotiate connectivity options
separately through other vendors on site''); Securities Exchange Act
Release No. 34-76748 (finding the establishment of an exclusive
wireless connection consistent with the Act because, among other
reasons, the alternatives suggested provided the same or similar
speeds as compared to the NYSE's wireless connectivity); Securities
Exchange Act Release No. 34-68735 (finding the establishment of an
exclusive wireless connection consistent with the Act because, among
other reasons, the alternatives suggested provided the same or
similar speeds as compared to Nasdaq's wireless connectivity).
---------------------------------------------------------------------------
Also, as discussed above, some commenters expressed concern that
the proposed fees would impose a barrier to entry on smaller broker-
dealers and new entrants, and a burden on competition.\139\ The
Commission does not believe that the Current Proposal would impose a
burden on competition inconsistent with the Act because, as discussed
above, viable alternatives to the Exchange's proposed services exist,
both inside and outside the Data Center.
---------------------------------------------------------------------------
\139\ See supra notes 74-80 and accompanying text.
---------------------------------------------------------------------------
Finally, the Commission notes that several commenters believed the
originally proposed NYSE Premium Connectivity Fee to be duplicative and
an inequitable allocation of fees.\140\ Because the Exchange eliminated
that fee in Amendment Nos. 2 and 3, the Commission believes that these
concerns have been addressed.\141\
---------------------------------------------------------------------------
\140\ See supra notes 69-70 and accompanying text.
\141\ The Commission believes that comments expressing concerns
about proprietary market data fees more generally are outside the
scope of the Current Proposal.
---------------------------------------------------------------------------
Accordingly, the Commission finds that the Current Proposal is
consistent with the Act.
V. Solicitation of Comments on Partial Amendment No. 4
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether partial Amendment
No. 4 is consistent with the Exchange Act. Comments may be submitted by
any of the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File No. SR-NYSEMKT-2016-63 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File No. SR-NYSEMKT-2016-63. This file
number should be included on the
[[Page 15733]]
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 20549-1090, on official business days between the hours of 10:00
a.m. and 3:00 p.m. Copies of such filing will also be available for
inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File No. SR-NYSEMKT-2016-63 and should be
submitted on or before April 20, 2017.
VI. Accelerated Approval of Proposed Rule Change, as Modified by
Amendment Nos. 1-4
The Commission finds good cause to approve the proposed rule
change, as modified by Amendment Nos 1-4, prior to the thirtieth day
after the date of publication of notice of the amended proposal in the
Federal Register. The revisions made to the proposal in partial
Amendment No. 4 \142\ (1) removed reference to the National Stock
Exchange (NSX) from its list of Third Party Systems, (2) added three
additional Third Party Data Feeds--ICE Data Services Consolidated Feed,
ICE Data Services PRD, and ICE Data Services PRD CEP, (3) added
connectivity fees for each of the newly added Third Party Data feeds.
With respect to NSX, the Exchange represents that NSX was acquired by
the NYSE Group on January 31, 2017, making it no longer a Third Party
System. The Commission believes this characterization is consistent
with the NYSE Group's similarly situated affiliated exchanges, NYSEMKT
and NYSE, which, like NSX are solely within the NYSE Group's control.
Regarding the ICE Data Services feeds, the Exchange notes that it has
an indirect interest in these feeds because ICE Data Services is owned
by the Exchange's ultimate parent, Intercontinental Exchange, Inc. As
represented in partial Amendment No. 4, the Exchange considers the ICE
Data Services Consolidated Feed (like the NYSE Global Index feed), a
Third Party Data Feed because it includes third party market data
rather than exclusively the proprietary market data of the Exchange and
its affiliated SROs, NYSE and NYSE Arca.\143\ The Commission believes
that partial Amendment No. 4 does not raise issues not previously
raised in the proposed rule change, as modified Amendment Nos. 1-3, and
addressed in Exchange Response Letters I, II, and III. Accordingly, the
Commission finds good cause, pursuant to Section 19(b)(2) of the
Act,\144\ to approve the proposed rule change, as modified by Amendment
Nos. 1-4, on an accelerated basis.
---------------------------------------------------------------------------
\142\ See partial Amendment No. 4, supra note 13.
\143\ See id.
\144\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------
VII. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\145\ that the proposed rule change (SR-NYSEMKT-2016-63) be, and
hereby is, approved on an accelerated basis.
---------------------------------------------------------------------------
\145\ See id.
\146\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\146\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-06256 Filed 3-29-17; 8:45 am]
BILLING CODE 8011-01-P
