Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE Arca Options Fees and Charges and the NYSE Arca Equities Fees and Charges To Modify the Fees Related to Four Bundles of Co-Location Services in Connection With the Exchange's Co-Location Services, 58462-58465 [2017-26688]
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58462
Federal Register / Vol. 82, No. 237 / Tuesday, December 12, 2017 / Notices
Comments may be submitted by any of
the following methods:
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
[Release No. 34–82226; File No. SR–
NYSEARCA–2017–134]
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSE–2017–62 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.
ethrower on DSK3G9T082PROD with NOTICES
All submissions should refer to File
Number SR–NYSE–2017–62. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (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 website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NYSE–2017–62 and should
be submitted on or before January 2,
2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–26685 Filed 12–11–17; 8:45 am]
BILLING CODE 8011–01–P
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the NYSE Arca
Options Fees and Charges and the
NYSE Arca Equities Fees and Charges
To Modify the Fees Related to Four
Bundles of Co-Location Services in
Connection With the Exchange’s CoLocation Services
December 6, 2017.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on
November 22, 2017, NYSE Arca, Inc.
(‘‘Exchange’’ or ‘‘NYSE Arca’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
NYSE Arca Options Fees and Charges
(the ‘‘Options Fee Schedule’’) and the
NYSE Arca Equities Fees and Charges
(the ‘‘Equities Fee Schedule’’ and,
together with the Options Fee Schedule,
the ‘‘Fee Schedules’’) to modify the fees
related to four bundles of co-location
services (‘‘Partial Cabinet Solution
bundles’’) in connection with the
Exchange’s co-location services. The
Exchange proposes to implement the fee
changes effective January 1, 2018. The
proposed rule change is available on the
Exchange’s website at www.nyse.com, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
19 17
CFR 200.30–3(a)(12).
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of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend the
Exchange’s Fee Schedules to modify the
fees related to Partial Cabinet Solution
bundles in connection with the
Exchange’s co-location services.4
The Exchange offers the four Partial
Cabinet Solution bundles in order to
attract smaller Users, including those
with minimal power or cabinet space
demands or those for which the costs
attendant with having a dedicated
cabinet or greater network connection
bandwidth are too burdensome.5
Currently, the Exchange offers Users 6
that purchase a Partial Cabinet Solution
bundle on or before December 31, 2017
a 50% reduction in the monthly
recurring charges (‘‘MRC’’) for the first
12 months.7 The Exchange now
proposes to:
• Extend the 50% reduction to those
Users that purchase a Partial Cabinet
Solution bundle on or before December
31, 2018; and
• increase the duration of the
reduction from 12 months to 24 months.
The Exchange also proposes that
Users that already purchased a Partial
Cabinet Solution bundle have the
4 The Exchange initially filed rule changes
relating to its co-location services with the
Securities and Exchange Commission
(‘‘Commission’’) in 2010. See Securities Exchange
Act Release No. 63275 (November 8, 2010), 75 FR
70048 (November 16, 2010) (SR–NYSEArca–2010–
100) (the ‘‘Original Co-location Filing’’). The
Exchange operates a data center in Mahwah, New
Jersey (the ‘‘data center’’) from which it provides
co-location services to Users.
5 See Securities Exchange Act Release No. 77070
(Feb. 5, 2016), 81 FR 7401 (Feb. 11, 2016) (SR–
NYSEArca–2015–102).
6 For purposes of the Exchange’s co-location
services, a ‘‘User’’ means any market participant
that requests to receive co-location services directly
from the Exchange. See Securities Exchange Act
Release No. 76010 (September 29, 2015), 80 FR
60197 (October 5, 2015) (SR–NYSEArca–2015–82).
As specified in the Fee Schedules, a User that
incurs co-location fees for a particular co-location
service pursuant thereto would not be subject to colocation fees for the same co-location service
charged by the Exchange’s affiliates New York
Stock Exchange LLC (‘‘NYSE LLC’’) and NYSE MKT
LLC (‘‘NYSE MKT’’ and, together with NYSE LLC,
the ‘‘Affiliate SROs’’). See Securities Exchange Act
Release No. 70173 (August 13, 2013), 78 FR 50459
(August 19, 2013) (SR–NYSEArca–2013–80).
7 See Securities Exchange Act Release No. 79716
(Dec. 30, 2016), 82 FR 1774 (Jan. 6, 2017) (SR–
NYSEArca–2016–168).
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Federal Register / Vol. 82, No. 237 / Tuesday, December 12, 2017 / Notices
duration of their 50% reduction
increased from 12 months to 24 months
as well.8
The Exchange proposes to implement
the fee changes effective January 1,
2018.
58463
Specifically, the Exchange proposes to
modify its Fee Schedules so that they
read as follows:
Type of service
Description
Amount of charge
Partial Cabinet Solution bundles ........................
Note: A User and its Affiliates are limited to
one Partial Cabinet Solution bundle at a time.
A User and its Affiliates must have an Aggregate Cabinet Footprint of 2 kW or less to
qualify for a Partial Cabinet Solution bundle.
See Note 2 under ‘‘General Notes.’’.
Option A: ..........................................................
1 kW partial cabinet, 1 LCN connection (1
Gb), 1 IP network connection (1 Gb), 2 fiber
cross connections and either the Network
Time Protocol Feed or Precision Timing
Protocol.
$7,500 initial charge per bundle plus monthly
charge per bundle as follows:
• For Users that order on or before December 31, 2018: $3,000 monthly for
first 24 months of service, and $6,000
monthly thereafter.
• For Users that order after December
31, 2018: $6,000 monthly.
$7,500 initial charge per bundle plus monthly
charge per bundle as follows:
• For Users that order on or before December 31, 2018: $3,500 monthly for
first 24 months of service, and $7,000
monthly thereafter.
• For Users that order after December
31, 2018: $7,000 monthly.
$10,000 initial charge per bundle plus monthly
charge per bundle as follows:
• For Users that order on or before December 31, 2018: $7,000 monthly for
first 24 months of service, and $14,000
monthly thereafter.
• For Users that order after December
31, 2018: $14,000 monthly.
$10,000 initial charge per bundle plus monthly
charge per bundle as follows:
• For Users that order on or before December 31, 2018: $7,500 monthly for
first 24 months of service, and $15,000
monthly thereafter.
• For Users that order after December
31, 2018: $15,000 monthly.
Option B: ..........................................................
2 kW partial cabinet, 1 LCN connection (1
Gb), 1 IP network connection (1 Gb), 2 fiber
cross connections and either the Network
Time Protocol Feed or Precision Timing
Protocol.
Option C: ..........................................................
1 kW partial cabinet, 1 LCN connection (10
Gb), 1 IP network connection (10 Gb), 2
fiber cross connections and either the Network Time Protocol Feed or Precision Timing Protocol.
Option D: ..........................................................
2 kW partial cabinet, 1 LCN connection (10
Gb), 1 IP network connection (10 Gb), 2
fiber cross connections and either the Network Time Protocol Feed or Precision Timing Protocol.
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The Exchange is not proposing any
other changes to the Partial Cabinet
Solution bundles.9
As is the case with all Exchange colocation arrangements, (i) neither a User
nor any of the User’s customers would
be permitted to submit orders directly to
the Exchange unless such User or
customer is a member organization, a
Sponsored Participant or an agent
thereof (e.g., a service bureau providing
order entry services); (ii) use of the colocation services proposed herein would
be completely voluntary and available
to all Users on a non-discriminatory
basis; 10 and (iii) a User would only
incur one charge for the particular colocation service described herein,
regardless of whether the User connects
8 For each User that is currently benefitting from
the 50% reduction, the additional 12 month period
with the reduced price would begin when its
current 12-month period ended. For each User
whose 12-month period with the reduced price has
ended, the additional 12-month period would begin
upon the implementation of the proposed fee
changes.
9 The Commission notes that previous filings
stated that Users that purchase a Partial Cabinet
Solution bundle would be subject to a 90-day
minimum commitment, after which period they are
subject to a 60-day rolling time period. The
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only to the Exchange or to the Exchange
and one or both of its affiliates.11
2. Statutory Basis
The Exchange believes that the
proposed rule changes are consistent
with Section 6(b) of the Act,12 in
general, and furthers the objectives of
Sections 6(b)(5) of the Act,13 in
particular, because it is designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in regulating, clearing,
settling, processing information with
respect to, and facilitating transactions
in securities, to remove impediments to,
and perfect the mechanisms of, a free
and open market and a national market
Exchange has represented to Commission staff that
these provisions have not changed.
10 As is currently the case, Users that receive colocation services from the Exchange will not receive
any means of access to the Exchange’s trading and
execution systems that is separate from, or superior
to, that of other Users. In this regard, all orders sent
to the Exchange enter the Exchange’s trading and
execution systems through the same order gateway,
regardless of whether the sender is co-located in the
data center or not. In addition, co-located Users do
not receive any market data or data service product
that is not available to all Users, although Users that
PO 00000
Frm 00086
Fmt 4703
Sfmt 4703
system and, in general, to protect
investors and the public interest and
because it is not designed to permit
unfair discrimination between
customers, issuers, brokers, or dealers.
The Exchange believes that the
proposed rule changes provide for the
equitable allocation of reasonable dues,
fees, and other charges among its
members, issuers and other persons
using its facilities, and are not designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers,
because the Exchange proposes to offer
the 50% reduction in the MRC, and the
increase in the duration of the reduction
from 12 months to 24 months, to all
Users equally. As is currently the case,
the purchase of any co-location service
(including Partial Cabinet Solution
receive co-location services normally would expect
reduced latencies in sending orders to, and
receiving market data from, the Exchange.
11 See SR–NYSEArca–2013–80, supra note 6, at
50459. The Exchange’s affiliates have also
submitted substantially the same proposed rule
change to propose the changes described herein.
See SR–NYSE–2017–62 and SR–NYSEAMER–
2017–35.
12 15 U.S.C. 78f(b).
13 15 U.S.C. 78f(b)(5).
E:\FR\FM\12DEN1.SGM
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Federal Register / Vol. 82, No. 237 / Tuesday, December 12, 2017 / Notices
bundles) is completely voluntary. All
Users that order a bundle on or before
December 31, 2018 would have their
MRC reduced by 50% for the first 24
months.
The Exchange believes that extending
the 50% reduction in the MRC for
Partial Cabinet Solution bundles, and
increasing the duration of the reduction,
is not designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers because the
Partial Cabinet Solution bundles would
continue to offer four different Partial
Cabinet Solution bundles with options
with respect to cabinet footprint and
network connections. Users that require
other sizes or combinations of cabinets,
network connections and cross connects
could still request them.
In addition, the Exchange believes
that its proposal would remove
impediments to, and perfects the
mechanisms of, a free and open market
and a national market system and, in
general, protects investors and the
public interest because the proposed
extension of the 50% reduction in MRC
and the proposed increase in the
duration of the reduction would
continue to make it more cost effective
for Users to utilize co-location by
creating a convenient way to create a colocation environment, through four
Partial Cabinet Solution bundles with
options with respect to cabinet footprint
and network connections. The Exchange
expects that such Users would include
those with minimal power or cabinet
space demands and Users for which the
costs attendant with having a dedicated
cabinet or greater network connection
bandwidth are too burdensome.
The Exchange believes that the
proposed change to have Users that
already purchased a Partial Cabinet
Solution bundle have the duration of
their 50% reduction increased from 12
months to 24 months is designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in regulating, clearing,
settling, processing information with
respect to, and facilitating transactions
in securities, to remove impediments to,
and perfect the mechanisms of, a free
and open market and a national market
system and, in general, to protect
investors and the public interest and
because it is not designed to permit
unfair discrimination between
customers, issuers, brokers, or dealers,
because it would ensure that all Users
that purchase a Partial Cabinet Solution
bundle prior to December 31, 2018
benefit from the 50% reduction for a
total of 24 months.
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The Exchange also believes that the
proposed rule changes are consistent
with Section 6(b)(4) of the Act,14 in
particular, because it provides for the
equitable allocation of reasonable dues,
fees, and other charges among its
members, issuers and other persons
using its facilities and does not unfairly
discriminate between customers,
issuers, brokers or dealers.
The Exchange believes that it is
reasonable that Users that order a Partial
Cabinet Solution bundle on or before
December 31, 2018 would have their
MRC reduced by 50% for the first 24
months because it is reasonable to
continue to offer such reduction as an
incentive to Users to utilize the service,
including both new and past Users of
bundles. As noted above, the Exchange
anticipates that Users of the Partial
Cabinet Solution bundles would include
those with minimum power or cabinet
space demands and Users for which the
costs attendant with having a dedicated
cabinet or greater network connection
bandwidth are too burdensome.
For the reasons above, the proposed
changes do not unfairly discriminate
between or among market participants
that are otherwise capable of satisfying
any applicable co-location fees,
requirements, terms and conditions
established from time to time by the
Exchange.
Finally, the Exchange believes that it
is subject to significant competitive
forces, as described below in the
Exchange’s statement regarding the
burden on competition.
For these reasons, the Exchange
believes that the proposal is consistent
with the Act.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
In accordance with Section 6(b)(8) of
the Act,15 the Exchange believes that the
proposed rule changes will not impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act because, in
addition to the proposed services being
completely voluntary, they are available
to all Users on an equal basis (i.e. the
same products and services are available
to all Users, and the extension of the
50% reduction for the MRC for the
Partial Cabinet Solution bundles, and
the increased duration of the reduction,
would apply to all Users).
The Exchange believes that extending
the 50% reduction in the MRC and
increasing the duration of the reduction
will not impose any burden on
competition that is not necessary or
14 15
15 15
PO 00000
U.S.C. 78f(b)(4).
U.S.C. 78f(b)(8).
Frm 00087
Fmt 4703
Sfmt 4703
appropriate in furtherance of the
purposes of the Act because such access
will continue to satisfy User demand for
cost effective options for smaller Users
that choose to utilize co-location. All
Users that order a bundle on or before
December 31, 2018 would have their
MRC reduced by 50% for the first 24
months. The Exchange believes that the
proposed change to have Users that
already purchased a Partial Cabinet
Solution bundle have the duration of
their 50% reduction increased from 12
months to 24 months would ensure that
all Users that purchase a Partial Cabinet
Solution bundle prior to December 31,
2018 benefit from the 50% reduction for
a total of 24 months.
The proposed changes will also
enhance competition by making it more
cost effective for Users that purchase a
Partial Cabinet Solution bundle to
utilize co-location by creating a
convenient way to create a co-location
environment, through Partial Cabinet
Solution bundles with options with
respect to cabinet footprint and network
connections at a reduced MRC for the
first 24 months. Such Users may choose
to pass on such cost savings to their
customers.
The Exchange operates in a highly
competitive market in which exchanges
offer co-location services as a means to
facilitate the trading and other market
activities of those market participants
who believe that co-location enhances
the efficiency of their operations.
Accordingly, fees charged for colocation services are constrained by the
active competition for the order flow of,
and other business from, such market
participants. If a particular exchange
charges excessive fees for co-location
services, affected market participants
will opt to terminate their co-location
arrangements with that exchange, and
adopt a possible range of alternative
strategies, including placing their
servers in a physically proximate
location outside the exchange’s data
center (which could be a competing
exchange), or pursuing strategies less
dependent upon the lower exchange-toparticipant latency associated with colocation. Accordingly, the exchange
charging excessive fees would stand to
lose not only co-location revenues but
also the liquidity of the formerly colocated trading firms, which could have
additional follow-on effects on the
market share and revenue of the affected
exchange. In such an environment, the
Exchange must continually review, and
consider adjusting, its services and
related fees and credits to remain
competitive with other exchanges.
For the reasons described above, the
Exchange believes that the proposed
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Federal Register / Vol. 82, No. 237 / Tuesday, December 12, 2017 / Notices
rule changes reflect this competitive
environment.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A) 16 of the Act and
subparagraph (f)(2) of Rule 19b–4 17
thereunder. At any time within 60 days
of the filing of such proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
under Section 19(b)(2)(B) 18 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSEARCA–2017–134 on the subject
line.
ethrower on DSK3G9T082PROD with NOTICES
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSEARCA–2017–134.
This file number should be included on
the subject line if email is used. To help
the Commission process and review
your comments more efficiently, please
use only one method. The Commission
will post all comments on the
Commission’s internet website (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 website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NYSEARCA–2017–134 and
should be submitted on or before
January 2, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–26688 Filed 12–11–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–82224; File No. SR–
NYSEAMER–2017–35]
Self-Regulatory Organizations; NYSE
American LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Change To Amend the NYSE American
Equities Price List and the NYSE
American Options Fee Schedule To
Modify the Fees Related to Four
Bundles of Co-Location Services in
Connection With the Exchange’s CoLocation Services
December 6, 2017.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on
November 22, 2017, NYSE American
19 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
16 15
U.S.C. 78s(b)(3)(A).
17 17 CFR 240.19b–4(f)(2).
18 15 U.S.C. 78s(b)(2)(B).
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58465
LLC (‘‘Exchange’’ or ‘‘NYSE American’’)
filed with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
NYSE American Equities Price List
(‘‘Price List’’) and the NYSE American
Options Fee Schedule (‘‘Fee Schedule’’)
to modify the fees related to four
bundles of co-location services (‘‘Partial
Cabinet Solution bundles’’) in
connection with the Exchange’s colocation services. The Exchange
proposes to implement the fee changes
effective January 1, 2018. The proposed
change is available on the Exchange’s
website at www.nyse.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend the
Exchange’s Price List and Fee Schedule
to modify the fees related to Partial
Cabinet Solution bundles in connection
with the Exchange’s co-location
services.4
4 The Exchange initially filed rule changes
relating to its co-location services with the
Securities and Exchange Commission
(‘‘Commission’’) in 2010. See Securities Exchange
Act Release No. 62961 (September 21, 2010), 75 FR
59299 (September 27, 2010) (SR–NYSEAmex–2010–
80) (the ‘‘Original Co-location Filing’’). The
Exchange operates a data center in Mahwah, New
Jersey (the ‘‘data center’’) from which it provides
co-location services to Users.
E:\FR\FM\12DEN1.SGM
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]]>Agencies
[Federal Register Volume 82, Number 237 (Tuesday, December 12, 2017)]
[Notices]
[Pages 58462-58465]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-26688]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-82226; File No. SR-NYSEARCA-2017-134]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE
Arca Options Fees and Charges and the NYSE Arca Equities Fees and
Charges To Modify the Fees Related to Four Bundles of Co-Location
Services in Connection With the Exchange's Co-Location Services
December 6, 2017.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on November 22, 2017, NYSE Arca, Inc. (``Exchange'' or ``NYSE
Arca'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the NYSE Arca Options Fees and
Charges (the ``Options Fee Schedule'') and the NYSE Arca Equities Fees
and Charges (the ``Equities Fee Schedule'' and, together with the
Options Fee Schedule, the ``Fee Schedules'') to modify the fees related
to four bundles of co-location services (``Partial Cabinet Solution
bundles'') in connection with the Exchange's co-location services. The
Exchange proposes to implement the fee changes effective January 1,
2018. The proposed rule change is available on the Exchange's website
at www.nyse.com, at the principal office of the Exchange, and at the
Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend the Exchange's Fee Schedules to
modify the fees related to Partial Cabinet Solution bundles in
connection with the Exchange's co-location services.\4\
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\4\ The Exchange initially filed rule changes relating to its
co-location services with the Securities and Exchange Commission
(``Commission'') in 2010. See Securities Exchange Act Release No.
63275 (November 8, 2010), 75 FR 70048 (November 16, 2010) (SR-
NYSEArca-2010-100) (the ``Original Co-location Filing''). The
Exchange operates a data center in Mahwah, New Jersey (the ``data
center'') from which it provides co-location services to Users.
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The Exchange offers the four Partial Cabinet Solution bundles in
order to attract smaller Users, including those with minimal power or
cabinet space demands or those for which the costs attendant with
having a dedicated cabinet or greater network connection bandwidth are
too burdensome.\5\
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\5\ See Securities Exchange Act Release No. 77070 (Feb. 5,
2016), 81 FR 7401 (Feb. 11, 2016) (SR-NYSEArca-2015-102).
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Currently, the Exchange offers Users \6\ that purchase a Partial
Cabinet Solution bundle on or before December 31, 2017 a 50% reduction
in the monthly recurring charges (``MRC'') for the first 12 months.\7\
The Exchange now proposes to:
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\6\ For purposes of the Exchange's co-location services, a
``User'' means any market participant that requests to receive co-
location services directly from the Exchange. See Securities
Exchange Act Release No. 76010 (September 29, 2015), 80 FR 60197
(October 5, 2015) (SR-NYSEArca-2015-82). As specified in the Fee
Schedules, a User that incurs co-location fees for a particular co-
location service pursuant thereto would not be subject to co-
location fees for the same co-location service charged by the
Exchange's affiliates New York Stock Exchange LLC (``NYSE LLC'') and
NYSE MKT LLC (``NYSE MKT'' and, together with NYSE LLC, the
``Affiliate SROs''). See Securities Exchange Act Release No. 70173
(August 13, 2013), 78 FR 50459 (August 19, 2013) (SR-NYSEArca-2013-
80).
\7\ See Securities Exchange Act Release No. 79716 (Dec. 30,
2016), 82 FR 1774 (Jan. 6, 2017) (SR-NYSEArca-2016-168).
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Extend the 50% reduction to those Users that purchase a
Partial Cabinet Solution bundle on or before December 31, 2018; and
increase the duration of the reduction from 12 months to
24 months.
The Exchange also proposes that Users that already purchased a
Partial Cabinet Solution bundle have the
[[Page 58463]]
duration of their 50% reduction increased from 12 months to 24 months
as well.\8\
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\8\ For each User that is currently benefitting from the 50%
reduction, the additional 12 month period with the reduced price
would begin when its current 12-month period ended. For each User
whose 12-month period with the reduced price has ended, the
additional 12-month period would begin upon the implementation of
the proposed fee changes.
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The Exchange proposes to implement the fee changes effective
January 1, 2018.
Specifically, the Exchange proposes to modify its Fee Schedules so
that they read as follows:
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Type of service Description Amount of charge
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Partial Cabinet Solution Option A:........... $7,500 initial
bundles. 1 kW partial charge per bundle
Note: A User and its cabinet, 1 LCN plus monthly charge
Affiliates are limited to connection (1 Gb), per bundle as
one Partial Cabinet 1 IP network follows:
Solution bundle at a time. connection (1 Gb), For Users
A User and its Affiliates 2 fiber cross that order on or
must have an Aggregate connections and before December 31,
Cabinet Footprint of 2 kW either the Network 2018: $3,000
or less to qualify for a Time Protocol Feed monthly for first
Partial Cabinet Solution or Precision Timing 24 months of
bundle. See Note 2 under Protocol. service, and $6,000
``General Notes.''. monthly thereafter.
For Users
that order after
December 31, 2018:
$6,000 monthly.
Option B:........... $7,500 initial
2 kW partial charge per bundle
cabinet, 1 LCN plus monthly charge
connection (1 Gb), per bundle as
1 IP network follows:
connection (1 Gb), For Users
2 fiber cross that order on or
connections and before December 31,
either the Network 2018: $3,500
Time Protocol Feed monthly for first
or Precision Timing 24 months of
Protocol. service, and $7,000
monthly thereafter.
For Users
that order after
December 31, 2018:
$7,000 monthly.
Option C:........... $10,000 initial
1 kW partial charge per bundle
cabinet, 1 LCN plus monthly charge
connection (10 Gb), per bundle as
1 IP network follows:
connection (10 Gb), For Users
2 fiber cross that order on or
connections and before December 31,
either the Network 2018: $7,000
Time Protocol Feed monthly for first
or Precision Timing 24 months of
Protocol. service, and
$14,000 monthly
thereafter.
For Users
that order after
December 31, 2018:
$14,000 monthly.
Option D:........... $10,000 initial
2 kW partial charge per bundle
cabinet, 1 LCN plus monthly charge
connection (10 Gb), per bundle as
1 IP network follows:
connection (10 Gb), For Users
2 fiber cross that order on or
connections and before December 31,
either the Network 2018: $7,500
Time Protocol Feed monthly for first
or Precision Timing 24 months of
Protocol. service, and
$15,000 monthly
thereafter.
For Users
that order after
December 31, 2018:
$15,000 monthly.
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The Exchange is not proposing any other changes to the Partial
Cabinet Solution bundles.\9\
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\9\ The Commission notes that previous filings stated that Users
that purchase a Partial Cabinet Solution bundle would be subject to
a 90-day minimum commitment, after which period they are subject to
a 60-day rolling time period. The Exchange has represented to
Commission staff that these provisions have not changed.
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As is the case with all Exchange co-location arrangements, (i)
neither a User nor any of the User's customers would be permitted to
submit orders directly to the Exchange unless such User or customer is
a member organization, a Sponsored Participant or an agent thereof
(e.g., a service bureau providing order entry services); (ii) use of
the co-location services proposed herein would be completely voluntary
and available to all Users on a non-discriminatory basis; \10\ and
(iii) a User would only incur one charge for the particular co-location
service described herein, regardless of whether the User connects only
to the Exchange or to the Exchange and one or both of its
affiliates.\11\
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\10\ As is currently the case, Users that receive co-location
services from the Exchange will not receive any means of access to
the Exchange's trading and execution systems that is separate from,
or superior to, that of other Users. In this regard, all orders sent
to the Exchange enter the Exchange's trading and execution systems
through the same order gateway, regardless of whether the sender is
co-located in the data center or not. In addition, co-located Users
do not receive any market data or data service product that is not
available to all Users, although Users that receive co-location
services normally would expect reduced latencies in sending orders
to, and receiving market data from, the Exchange.
\11\ See SR-NYSEArca-2013-80, supra note 6, at 50459. The
Exchange's affiliates have also submitted substantially the same
proposed rule change to propose the changes described herein. See
SR-NYSE-2017-62 and SR-NYSEAMER-2017-35.
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2. Statutory Basis
The Exchange believes that the proposed rule changes are consistent
with Section 6(b) of the Act,\12\ in general, and furthers the
objectives of Sections 6(b)(5) of the Act,\13\ in particular, because
it is designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to, and
perfect the mechanisms of, a free and open market and a national market
system and, in general, to protect investors and the public interest
and because it is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed rule changes provide for
the equitable allocation of reasonable dues, fees, and other charges
among its members, issuers and other persons using its facilities, and
are not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers, because the Exchange proposes to offer
the 50% reduction in the MRC, and the increase in the duration of the
reduction from 12 months to 24 months, to all Users equally. As is
currently the case, the purchase of any co-location service (including
Partial Cabinet Solution
[[Page 58464]]
bundles) is completely voluntary. All Users that order a bundle on or
before December 31, 2018 would have their MRC reduced by 50% for the
first 24 months.
The Exchange believes that extending the 50% reduction in the MRC
for Partial Cabinet Solution bundles, and increasing the duration of
the reduction, is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers because the Partial Cabinet
Solution bundles would continue to offer four different Partial Cabinet
Solution bundles with options with respect to cabinet footprint and
network connections. Users that require other sizes or combinations of
cabinets, network connections and cross connects could still request
them.
In addition, the Exchange believes that its proposal would remove
impediments to, and perfects the mechanisms of, a free and open market
and a national market system and, in general, protects investors and
the public interest because the proposed extension of the 50% reduction
in MRC and the proposed increase in the duration of the reduction would
continue to make it more cost effective for Users to utilize co-
location by creating a convenient way to create a co-location
environment, through four Partial Cabinet Solution bundles with options
with respect to cabinet footprint and network connections. The Exchange
expects that such Users would include those with minimal power or
cabinet space demands and Users for which the costs attendant with
having a dedicated cabinet or greater network connection bandwidth are
too burdensome.
The Exchange believes that the proposed change to have Users that
already purchased a Partial Cabinet Solution bundle have the duration
of their 50% reduction increased from 12 months to 24 months is
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to, and perfect the
mechanisms of, a free and open market and a national market system and,
in general, to protect investors and the public interest and because it
is not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers, because it would ensure that all Users
that purchase a Partial Cabinet Solution bundle prior to December 31,
2018 benefit from the 50% reduction for a total of 24 months.
The Exchange also believes that the proposed rule changes are
consistent with Section 6(b)(4) of the Act,\14\ in particular, because
it provides for the equitable allocation of reasonable dues, fees, and
other charges among its members, issuers and other persons using its
facilities and does not unfairly discriminate between customers,
issuers, brokers or dealers.
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\14\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that it is reasonable that Users that order a
Partial Cabinet Solution bundle on or before December 31, 2018 would
have their MRC reduced by 50% for the first 24 months because it is
reasonable to continue to offer such reduction as an incentive to Users
to utilize the service, including both new and past Users of bundles.
As noted above, the Exchange anticipates that Users of the Partial
Cabinet Solution bundles would include those with minimum power or
cabinet space demands and Users for which the costs attendant with
having a dedicated cabinet or greater network connection bandwidth are
too burdensome.
For the reasons above, the proposed changes do not unfairly
discriminate between or among market participants that are otherwise
capable of satisfying any applicable co-location fees, requirements,
terms and conditions established from time to time by the Exchange.
Finally, the Exchange believes that it is subject to significant
competitive forces, as described below in the Exchange's statement
regarding the burden on competition.
For these reasons, the Exchange believes that the proposal is
consistent with the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\15\ the Exchange
believes that the proposed rule changes will not impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act because, in addition to the proposed services being
completely voluntary, they are available to all Users on an equal basis
(i.e. the same products and services are available to all Users, and
the extension of the 50% reduction for the MRC for the Partial Cabinet
Solution bundles, and the increased duration of the reduction, would
apply to all Users).
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\15\ 15 U.S.C. 78f(b)(8).
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The Exchange believes that extending the 50% reduction in the MRC
and increasing the duration of the reduction will not impose any burden
on competition that is not necessary or appropriate in furtherance of
the purposes of the Act because such access will continue to satisfy
User demand for cost effective options for smaller Users that choose to
utilize co-location. All Users that order a bundle on or before
December 31, 2018 would have their MRC reduced by 50% for the first 24
months. The Exchange believes that the proposed change to have Users
that already purchased a Partial Cabinet Solution bundle have the
duration of their 50% reduction increased from 12 months to 24 months
would ensure that all Users that purchase a Partial Cabinet Solution
bundle prior to December 31, 2018 benefit from the 50% reduction for a
total of 24 months.
The proposed changes will also enhance competition by making it
more cost effective for Users that purchase a Partial Cabinet Solution
bundle to utilize co-location by creating a convenient way to create a
co-location environment, through Partial Cabinet Solution bundles with
options with respect to cabinet footprint and network connections at a
reduced MRC for the first 24 months. Such Users may choose to pass on
such cost savings to their customers.
The Exchange operates in a highly competitive market in which
exchanges offer co-location services as a means to facilitate the
trading and other market activities of those market participants who
believe that co-location enhances the efficiency of their operations.
Accordingly, fees charged for co-location services are constrained by
the active competition for the order flow of, and other business from,
such market participants. If a particular exchange charges excessive
fees for co-location services, affected market participants will opt to
terminate their co-location arrangements with that exchange, and adopt
a possible range of alternative strategies, including placing their
servers in a physically proximate location outside the exchange's data
center (which could be a competing exchange), or pursuing strategies
less dependent upon the lower exchange-to-participant latency
associated with co-location. Accordingly, the exchange charging
excessive fees would stand to lose not only co-location revenues but
also the liquidity of the formerly co-located trading firms, which
could have additional follow-on effects on the market share and revenue
of the affected exchange. In such an environment, the Exchange must
continually review, and consider adjusting, its services and related
fees and credits to remain competitive with other exchanges.
For the reasons described above, the Exchange believes that the
proposed
[[Page 58465]]
rule changes reflect this competitive environment.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) \16\ of the Act and subparagraph (f)(2) of Rule 19b-4 \17\
thereunder. At any time within 60 days of the filing of such proposed
rule change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \18\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 17 CFR 240.19b-4(f)(2).
\18\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSEARCA-2017-134 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEARCA-2017-134. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (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 website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSEARCA-2017-134 and should be
submitted on or before January 2, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-26688 Filed 12-11-17; 8:45 am]
BILLING CODE 8011-01-P
