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 Schedule and the NYSE Arca Equities Fees and Charges Schedule Relating to Co-location Services To Implement a Fee Change for Fiber Cross Connects, 60082-60085 [2017-27145]

Download as PDF 60082 Federal Register / Vol. 82, No. 241 / Monday, December 18, 2017 / Notices is not unreasonably discriminatory because the process for assigning add and remove values is equally applied to all Members. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange believes the proposed amendment to its fee schedule would not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that the proposed change to add language to the Exchange’s fee schedule burdens competition, but instead, improves the transparency and clarity of the Exchange’s fee schedule. Further, the Exchange does not believe that the assignment of status as adder or remover burdens competition as between Members that submit orders to the Exchange that post to the Exchange’s order book and Members that submit orders that initiate COAs because the process of assigning adder and remover status is clearly delineated in the fee schedule and is reasonable for the reasons described above. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any written comments from members or other interested parties. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 12 and paragraph (f) of Rule 19b–4 thereunder.13 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. daltland on DSKBBV9HB2PROD with NOTICES 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 (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– CboeEDGX–2017–004 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-CboeEDGX–2017–004. 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 (http://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 such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. 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–CboeEDGX–2017–004, and should be submitted on or before January 8, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Robert W. Errett, Deputy Secretary. [FR Doc. 2017–27147 Filed 12–15–17; 8:45 am] BILLING CODE 8011–01–P U.S.C. 78s(b)(3)(A). 13 17 CFR 240.19b–4(f). 17:53 Dec 15, 2017 [Release No. 34–82298; File No. SR– NYSEARCA–2017–135] 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 Schedule and the NYSE Arca Equities Fees and Charges Schedule Relating to Colocation Services To Implement a Fee Change for Fiber Cross Connects December 12, 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 29, 2017, NYSE Arca, Inc. (‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with the Securities and Exchange Commission (‘‘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 schedule and the NYSE Arca Equities Fees and Charges schedule (together, the ‘‘Fee Schedules’’) relating to co-location services to implement a fee change for fiber cross connects. The Exchange proposes to implement the proposed change on 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, 1 15 12 15 VerDate Sep<11>2014 SECURITIES AND EXCHANGE COMMISSION U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 14 17 Jkt 244001 PO 00000 CFR 200.30–3(a)(12). Frm 00083 Fmt 4703 Sfmt 4703 E:\FR\FM\18DEN1.SGM 18DEN1 Federal Register / Vol. 82, No. 241 / Monday, December 18, 2017 / Notices 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 daltland on DSKBBV9HB2PROD with NOTICES The Exchange proposes to amend its Fee Schedules relating to co-location 4 services that the Exchange offers Users 5 to implement a fee change for fiber cross connects. The Exchange proposes to implement the proposed change on January 1, 2018. Cross connects are fiber connections used to connect cabinets and equipment within the data center. Cross connects may be used between a User’s own cabinets, between its cabinet(s) and those of another User, and between a User’s cabinet and a non-User’s equipment within the data center.6 For example, a cross connect may be used to connect cabinets of separate Users when a User receives technical support, order routing and/or market data delivery services from another User in the data center. Similarly, a User may utilize a cross connect with a non-User to connect to a carrier’s equipment in order to access the carrier’s network outside the data center.7 A User is able to purchase cross connects individually or in bundles (i.e., multiple cross connects within a single sheath) of six, 12, 18 or 24 cross connects. Since 2010, the initial charge for individual cross connects has been $500 and the monthly charge $500.8 The pricing for bundled cross connects has 4 The Exchange initially filed rule changes relating to its co-location services with the Commission in 2010. See Securities Exchange Act Release No. 63275 (November 8, 2010), 75 FR 70048 (November 16, 2010) (SR–NYSEArca–2010–100). The Exchange operates a data center in Mahwah, New Jersey (the ‘‘data center’’) from which it provides co-location services to Users. 5 For purposes of the Exchange’s co-location services, a ‘‘User’’ means any market participant that requests to receive co-location services directly from the Exchange. See Securities Exchange Act Release No. 76010 (September 29, 2015), 80 FR 60197 (October 5, 2015) (SR–NYSEArca–2015–82). As specified in the Fee Schedules, a User that incurs co-location fees for a particular co-location service pursuant thereto would not be subject to colocation fees for the same co-location service charged by the Exchange’s affiliates New York Stock Exchange LLC (‘‘NYSE LLC’’) and NYSE American LLC (‘‘NYSE American’’ and, together with NYSE LLC, the ‘‘Affiliate SROs’’). See Securities Exchange Act Release No. 70173 (August 13, 2013), 78 FR 50459 (August 19, 2013) (SR– NYSEArca–2013–80). 6 See Securities Exchange Act Release No. 74219 (February 6, 2015), 80 FR 7899 (February 12, 2015) (SR–NYSEArca–2015–03). 7 Id. at 7900. 8 See 75 FR 70048, supra note 3, at 70050. VerDate Sep<11>2014 17:53 Dec 15, 2017 Jkt 244001 not changed since their introduction in 2012.9 The Exchange proposes to amend the Fee Schedules to increase the monthly recurring charges of the individual and bundled cross connects. More specifically, for individual cross connects, the monthly charge would be $600; for a bundle of six cross connects, the monthly charge would be $1,800; 12 cross connects would be $3,000 per month; 18 cross connects would be $3,840 per month; and 24 cross connects would be $4,680 per month. The Exchange does not propose to amend the initial charges. As is the case with all Exchange colocation arrangements, (i) neither a User nor any of the User’s customers would be permitted to submit orders directly to the Exchange unless such User or customer is a member organization, a Sponsored Participant or an agent thereof (e.g., a service bureau providing order entry services); (ii) use of the colocation services proposed herein would be completely voluntary and available to all Users on a non-discriminatory basis; 10 and (iii) a User would only incur one charge for the particular colocation service described herein, regardless of whether the User connects only to the Exchange or to the Exchange and one or both the Affiliate SROs.11 The proposed change is not otherwise intended to address any other issues relating to co-location services and/or related fees, and the Exchange is not aware of any problems that Users would have in complying with the proposed change. 60083 because it provides for the equitable allocation of reasonable dues, fees, and other charges among its members, issuers and other persons using its facilities and does not unfairly discriminate between customers, issuers, brokers or dealers. The Exchange believes that the proposed fee changes are consistent with Section 6(b)(4) of the Act for multiple reasons. The Exchange operates in a highly competitive market in which exchanges offer co-location services as a means to facilitate the trading and other market activities of those market participants who believe that co-location enhances the efficiency of their operations. Accordingly, fees charged for co-location services are constrained by the active competition for the order flow of, and other business from, such market participants. If a particular exchange charges excessive fees for co-location services, affected market participants will opt to terminate their co-location arrangements with that exchange, and adopt a possible range of alternative strategies, including placing their servers in a physically proximate location outside the exchange’s data center (which could be a competing exchange), or pursuing strategies less dependent upon the lower exchange-toparticipant latency associated with colocation. Accordingly, the exchange charging excessive fees would stand to lose not only co-location revenues but also the liquidity of the formerly colocated trading firms, which could have additional follow-on effects on the market share and revenue of the affected exchange. 2. Statutory Basis The Exchange believes that the proposed increase in the monthly The Exchange believes that the proposed rule change is consistent with recurring charge for cross connects Section 6(b) of the Act,12 in general, and would be reasonable, equitably allocated and not unfairly furthers the objectives of Sections 6(b)(4) and (5) of the Act,13 in particular, discriminatory because, in addition to the use of cross connects being 9 See Securities Exchange Act Release No. 67667 completely voluntary, cross connects (August 15, 2012), 77 FR 50743 (August 22, 2012) would continue to be available to all (SR–NYSEArca–2012–63). Users on an equal basis (i.e., the same 10 As is currently the case, Users that receive coproducts and services would be location services from the Exchange will not receive available to all Users). All Users that any means of access to the Exchange’s trading and execution systems that is separate from, or superior voluntarily selected to purchase cross to, that of other Users. In this regard, all orders sent connects would be charged the same to the Exchange enter the Exchange’s trading and amount for the same services. execution systems through the same order gateway, The Exchange believes that the regardless of whether the sender is co-located in the proposed fee change would be data center or not. In addition, co-located Users do not receive any market data or data service product reasonable, equitably allocated and not that is not available to all Users, although Users that unfairly discriminatory because the receive co-location services normally would expect Exchange offers the cross connects as reduced latencies in sending orders to, and conveniences to Users, but in order to receiving market data from, the Exchange. 11 See 78 FR 50459, supra note 5, at 50459. The do so must provide, maintain and Affiliate SROs have also submitted substantially the operate the data center facility hardware same proposed rule change to propose the changes and technology infrastructure. The described herein. See SR–NYSE–2017–63 and Exchange must handle the installation, SR–NYSEAmer–2017–36. 12 15 U.S.C. 78f(b). administration, monitoring, support and 13 15 U.S.C. 78f(b)(4) and (5). maintenance of co-location services, PO 00000 Frm 00084 Fmt 4703 Sfmt 4703 E:\FR\FM\18DEN1.SGM 18DEN1 60084 Federal Register / Vol. 82, No. 241 / Monday, December 18, 2017 / Notices daltland on DSKBBV9HB2PROD with NOTICES including by responding to any production issues. Since the inception of co-location, the Exchange has made numerous improvements to the network hardware and technology infrastructure and has established additional administrative controls. The Exchange has expanded the network infrastructure to keep pace with the increased number of services available to Users. The Exchange believes the proposed increased monthly recurring fee for cross connects would be reasonable because it would allow the Exchange to defray or cover the costs associated with offering Users cross connects, individually and in bundles, while providing each User the convenience of receiving cross connects that may be used between the User’s own cabinets, between its cabinet(s) and those of another User, and between a User’s cabinet and a non-User’s equipment within the data center, helping Users tailor their data center operations to the requirements of their business operations. The Exchange believes that the proposed increase is representative of the value provided to Users of cross connects. The Exchange notes that it has not increased the fee for individual cross connects since 2010 or for bundled cross connects since their introduction in 2012.14 The proposed increase would provide for an equitable allocation of the reasonable cost among Users that choose to use individual cross connects. For the reasons above, the proposed changes would not unfairly discriminate between or among market participants that are otherwise capable of satisfying any applicable co-location fees, requirements, terms and conditions established from time to time by the Exchange. For these reasons, the Exchange believes that the proposal is consistent with the Act. B. Self-Regulatory Organization’s Statement on Burden on Competition In accordance with Section 6(b)(8) of the Act,15 the Exchange believes that the proposed rule change will not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act because, in addition to the proposed services being completely voluntary, they are available to all Users on an equal basis (i.e. the same products and services are available to all Users). The Exchange believes that the proposed fee change for cross connects 14 See 75 FR 70048, supra note 3, and 77 FR 50743, supra note 9. 15 15 U.S.C. 78f(b)(8). VerDate Sep<11>2014 17:53 Dec 15, 2017 Jkt 244001 would 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 use of cross connects being completely voluntary, cross connects would continue to be available to all Users on an equal basis (i.e., the same products and services would be available to all Users). All Users that voluntarily selected to purchase cross connects would be charged the same amount for the same services. Each User would have the convenience of receiving cross connects that may be used between the User’s own cabinets, between its cabinet(s) and those of another User, and between a User’s cabinet and a non-User’s equipment within the data center, helping Users tailor their data center operations to the requirements of their business operations. The Exchange believes that the proposed increase is representative of the value provided to Users of cross connects. The Exchange notes that it has not increased the fee for individual cross connects since 2010 or for bundled cross connects since their introduction in 2012.16 The proposed increase would provide for an equitable allocation of the reasonable cost among Users that choose to use individual cross connects. 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. For the reasons described above, the Exchange believes that the proposed rule change reflects this competitive environment. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) 17 of the Act and subparagraph (f)(2) of Rule 19b–4 18 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) 19 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 (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSEARCA–2017–135 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–2017–135. 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 17 15 16 See 75 FR 70048, supra note 3, and 77 FR 50743, supra note 9. PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). 19 15 U.S.C. 78s(b)(2)(B). 18 17 E:\FR\FM\18DEN1.SGM 18DEN1 Federal Register / Vol. 82, No. 241 / Monday, December 18, 2017 / Notices will post all comments on the Commission’s internet website (http:// 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–2017–135 and should be submitted on or before January 8, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.20 Robert W. Errett, Deputy Secretary. [FR Doc. 2017–27145 Filed 12–15–17; 8:45 am] BILLING CODE 8011–01–P [Release No. 34–82302; File No. SR– NASDAQ–2017–126] Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange Fees at Rules 7023, 7044, 7045 and 7048 To Withdraw Four Rarely-Purchased Products From Sale daltland on DSKBBV9HB2PROD with NOTICES December 12, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on November 30, 2017, The Nasdaq Stock Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule 20 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 17:53 Dec 15, 2017 Jkt 244001 change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. firms understand how to minimize price impact with large orders. Information is useful for historical analysis, and does not reveal information about reserve size posted by any specific market participant. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the Exchange’s fees at Rules 7023, 7044, 7045 and 7048 to withdraw four rarelypurchased products from sale: Historical ModelView Information, Nasdaq Custom Data Feeds, the Nasdaq Market Pathfinders Service, and the PORTAL Reference Database. The text of the proposed rule change is available on the Exchange’s website at http://nasdaq.cchwallstreet.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. Nasdaq Custom Data Feeds Nasdaq Custom Data Feeds, described at Rule 7048, is a data feed service that allows Nasdaq to accommodate individual subscribers’ requests for market data feeds containing a specified combination of data elements that would otherwise be delivered on multiple data feeds. These customized data feeds provide each customer with the ability to receive a unique combination of functionality and content. 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 Exchange 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 these 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 aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change SECURITIES AND EXCHANGE COMMISSION 60085 1. Purpose The purpose of the proposed rule change is to withdraw four rarelypurchased products from sale— Historical ModelView Information, Nasdaq Custom Data Feeds, the Nasdaq Market Pathfinders Service, and the PORTAL Reference Database—as the Exchange performs an ongoing review of its product offerings. ModelView Historical ModelView Information (‘‘ModelView’’), set forth in Rule 7023(f), provides historical information regarding aggregate displayed and hidden liquidity at each price level in the Nasdaq Market Center on a T+10 basis. The information is aggregated at each price level and is designed to be used by developers of automated trading and order-routing models to improve Nasdaq trading efficiency and help PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 Pathfinders As set forth in Rule 7044, the Nasdaq Market Pathfinders Service (‘‘Pathfinders’’) is ‘‘a real time data product that tracks the aggregated market activity of certain market participants who are aggressively buying and/or selling.’’ The product identifies bullish or bearish positions taken by three or more market participants over an extended period of time and captures the aggregate sentiment of this well-informed group by indicating the number of Pathfinders bullish versus bearish in a particular stock, as well as the ratio of shares bought versus sold. PORTAL Reference Database PORTAL securities are restricted securities.3 The PORTAL Reference Database, set forth in Rule 7045, is an electronic reference database of information culled from PORTAL offering documents and applications submitted to Nasdaq since 1990. The 3 PORTAL securities are defined in the text of Rule 7045 as ‘‘restricted securities, as defined in SEC Rule 144(a)(3) under the Securities Act; or securities that, pursuant to contract or through terms of the security, upon issuance and continually thereafter only can be sold pursuant to Regulation S under the Securities Act, SEC Rule 144A, or SEC Rule 144 under the Securities Act, or in a transaction exempt from the registration requirements of the Securities Act pursuant to Section 4 thereof and not involving any public offering that were designated for inclusion in the PORTAL Market by Nasdaq. PORTAL equity securities are PORTAL securities that represent an ownership interest in a legal entity, including but not limited to any common, capital, ordinary, preferred stock, or warrant for any of the foregoing, shares of beneficial interest, or the equivalent thereof (regardless of whether voting or non-voting, convertible or non-convertible, exchangeable or non-exchangeable, exercisable or nonexercisable, callable or non-callable, redeemable or nonredeemable). PORTAL debt securities are PORTAL securities that are United States dollar denominated debt securities issued by United States and/or foreign private corporations.’’ E:\FR\FM\18DEN1.SGM 18DEN1

Agencies

[Federal Register Volume 82, Number 241 (Monday, December 18, 2017)]
[Notices]
[Pages 60082-60085]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-27145]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82298; File No. SR-NYSEARCA-2017-135]


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 Schedule and the NYSE Arca Equities Fees 
and Charges Schedule Relating to Co-location Services To Implement a 
Fee Change for Fiber Cross Connects

December 12, 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 29, 2017, NYSE Arca, Inc. (``Exchange'' or ``NYSE 
Arca'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the NYSE Arca Options Fees and 
Charges schedule and the NYSE Arca Equities Fees and Charges schedule 
(together, the ``Fee Schedules'') relating to co-location services to 
implement a fee change for fiber cross connects. The Exchange proposes 
to implement the proposed change on 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,

[[Page 60083]]

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 its Fee Schedules relating to co-
location \4\ services that the Exchange offers Users \5\ to implement a 
fee change for fiber cross connects. The Exchange proposes to implement 
the proposed change on January 1, 2018.
---------------------------------------------------------------------------

    \4\ The Exchange initially filed rule changes relating to its 
co-location services with the Commission in 2010. See Securities 
Exchange Act Release No. 63275 (November 8, 2010), 75 FR 70048 
(November 16, 2010) (SR-NYSEArca-2010-100). The Exchange operates a 
data center in Mahwah, New Jersey (the ``data center'') from which 
it provides co-location services to Users.
    \5\ For purposes of the Exchange's co-location services, a 
``User'' means any market participant that requests to receive co-
location services directly from the Exchange. See Securities 
Exchange Act Release No. 76010 (September 29, 2015), 80 FR 60197 
(October 5, 2015) (SR-NYSEArca-2015-82). As specified in the Fee 
Schedules, a User that incurs co-location fees for a particular co-
location service pursuant thereto would not be subject to co-
location fees for the same co-location service charged by the 
Exchange's affiliates New York Stock Exchange LLC (``NYSE LLC'') and 
NYSE American LLC (``NYSE American'' 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).
---------------------------------------------------------------------------

    Cross connects are fiber connections used to connect cabinets and 
equipment within the data center. Cross connects may be used between a 
User's own cabinets, between its cabinet(s) and those of another User, 
and between a User's cabinet and a non-User's equipment within the data 
center.\6\ For example, a cross connect may be used to connect cabinets 
of separate Users when a User receives technical support, order routing 
and/or market data delivery services from another User in the data 
center. Similarly, a User may utilize a cross connect with a non-User 
to connect to a carrier's equipment in order to access the carrier's 
network outside the data center.\7\
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 74219 (February 6, 
2015), 80 FR 7899 (February 12, 2015) (SR-NYSEArca-2015-03).
    \7\ Id. at 7900.
---------------------------------------------------------------------------

    A User is able to purchase cross connects individually or in 
bundles (i.e., multiple cross connects within a single sheath) of six, 
12, 18 or 24 cross connects. Since 2010, the initial charge for 
individual cross connects has been $500 and the monthly charge $500.\8\ 
The pricing for bundled cross connects has not changed since their 
introduction in 2012.\9\
---------------------------------------------------------------------------

    \8\ See 75 FR 70048, supra note 3, at 70050.
    \9\ See Securities Exchange Act Release No. 67667 (August 15, 
2012), 77 FR 50743 (August 22, 2012) (SR-NYSEArca-2012-63).
---------------------------------------------------------------------------

    The Exchange proposes to amend the Fee Schedules to increase the 
monthly recurring charges of the individual and bundled cross connects. 
More specifically, for individual cross connects, the monthly charge 
would be $600; for a bundle of six cross connects, the monthly charge 
would be $1,800; 12 cross connects would be $3,000 per month; 18 cross 
connects would be $3,840 per month; and 24 cross connects would be 
$4,680 per month. The Exchange does not propose to amend the initial 
charges.
    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 the Affiliate 
SROs.\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 78 FR 50459, supra note 5, at 50459. The Affiliate SROs 
have also submitted substantially the same proposed rule change to 
propose the changes described herein. See SR-NYSE-2017-63 and SR-
NYSEAmer-2017-36.
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    The proposed change is not otherwise intended to address any other 
issues relating to co-location services and/or related fees, and the 
Exchange is not aware of any problems that Users would have in 
complying with the proposed change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\12\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\13\ in particular, 
because it provides for the equitable allocation of reasonable dues, 
fees, and other charges among its members, issuers and other persons 
using its facilities and does not unfairly discriminate between 
customers, issuers, brokers or dealers.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed fee changes are consistent 
with Section 6(b)(4) of the Act for multiple reasons. The Exchange 
operates in a highly competitive market in which exchanges offer co-
location services as a means to facilitate the trading and other market 
activities of those market participants who believe that co-location 
enhances the efficiency of their operations. Accordingly, fees charged 
for co-location services are constrained by the active competition for 
the order flow of, and other business from, such market participants. 
If a particular exchange charges excessive fees for co-location 
services, affected market participants will opt to terminate their co-
location arrangements with that exchange, and adopt a possible range of 
alternative strategies, including placing their servers in a physically 
proximate location outside the exchange's data center (which could be a 
competing exchange), or pursuing strategies less dependent upon the 
lower exchange-to-participant latency associated with co-location. 
Accordingly, the exchange charging excessive fees would stand to lose 
not only co-location revenues but also the liquidity of the formerly 
co-located trading firms, which could have additional follow-on effects 
on the market share and revenue of the affected exchange.
    The Exchange believes that the proposed increase in the monthly 
recurring charge for cross connects would be reasonable, equitably 
allocated and not unfairly discriminatory because, in addition to the 
use of cross connects being completely voluntary, cross connects would 
continue to be available to all Users on an equal basis (i.e., the same 
products and services would be available to all Users). All Users that 
voluntarily selected to purchase cross connects would be charged the 
same amount for the same services.
    The Exchange believes that the proposed fee change would be 
reasonable, equitably allocated and not unfairly discriminatory because 
the Exchange offers the cross connects as conveniences to Users, but in 
order to do so must provide, maintain and operate the data center 
facility hardware and technology infrastructure. The Exchange must 
handle the installation, administration, monitoring, support and 
maintenance of co-location services,

[[Page 60084]]

including by responding to any production issues. Since the inception 
of co-location, the Exchange has made numerous improvements to the 
network hardware and technology infrastructure and has established 
additional administrative controls. The Exchange has expanded the 
network infrastructure to keep pace with the increased number of 
services available to Users.
    The Exchange believes the proposed increased monthly recurring fee 
for cross connects would be reasonable because it would allow the 
Exchange to defray or cover the costs associated with offering Users 
cross connects, individually and in bundles, while providing each User 
the convenience of receiving cross connects that may be used between 
the User's own cabinets, between its cabinet(s) and those of another 
User, and between a User's cabinet and a non-User's equipment within 
the data center, helping Users tailor their data center operations to 
the requirements of their business operations. The Exchange believes 
that the proposed increase is representative of the value provided to 
Users of cross connects. The Exchange notes that it has not increased 
the fee for individual cross connects since 2010 or for bundled cross 
connects since their introduction in 2012.\14\ The proposed increase 
would provide for an equitable allocation of the reasonable cost among 
Users that choose to use individual cross connects.
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    \14\ See 75 FR 70048, supra note 3, and 77 FR 50743, supra note 
9.
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    For the reasons above, the proposed changes would not unfairly 
discriminate between or among market participants that are otherwise 
capable of satisfying any applicable co-location fees, requirements, 
terms and conditions established from time to time by the Exchange.
    For these reasons, the Exchange believes that the proposal is 
consistent with the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\15\ the Exchange 
believes that the proposed rule change will not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act because, in addition to the proposed services being 
completely voluntary, they are available to all Users on an equal basis 
(i.e. the same products and services are available to all Users).
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    \15\ 15 U.S.C. 78f(b)(8).
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    The Exchange believes that the proposed fee change for cross 
connects would 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 use of cross connects being completely 
voluntary, cross connects would continue to be available to all Users 
on an equal basis (i.e., the same products and services would be 
available to all Users). All Users that voluntarily selected to 
purchase cross connects would be charged the same amount for the same 
services. Each User would have the convenience of receiving cross 
connects that may be used between the User's own cabinets, between its 
cabinet(s) and those of another User, and between a User's cabinet and 
a non-User's equipment within the data center, helping Users tailor 
their data center operations to the requirements of their business 
operations. The Exchange believes that the proposed increase is 
representative of the value provided to Users of cross connects. The 
Exchange notes that it has not increased the fee for individual cross 
connects since 2010 or for bundled cross connects since their 
introduction in 2012.\16\ The proposed increase would provide for an 
equitable allocation of the reasonable cost among Users that choose to 
use individual cross connects.
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    \16\ See 75 FR 70048, supra note 3, and 77 FR 50743, supra note 
9.
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    The Exchange operates in a highly competitive market in which 
exchanges offer co-location services as a means to facilitate the 
trading and other market activities of those market participants who 
believe that co-location enhances the efficiency of their operations. 
Accordingly, fees charged for co-location services are constrained by 
the active competition for the order flow of, and other business from, 
such market participants. If a particular exchange charges excessive 
fees for co-location services, affected market participants will opt to 
terminate their co-location arrangements with that exchange, and adopt 
a possible range of alternative strategies, including placing their 
servers in a physically proximate location outside the exchange's data 
center (which could be a competing exchange), or pursuing strategies 
less dependent upon the lower exchange-to-participant latency 
associated with co-location. Accordingly, the exchange charging 
excessive fees would stand to lose not only co-location revenues but 
also the liquidity of the formerly co-located trading firms, which 
could have additional follow-on effects on the market share and revenue 
of the affected exchange. For the reasons described above, the Exchange 
believes that the proposed rule change reflects this competitive 
environment.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) \17\ of the Act and subparagraph (f)(2) of Rule 19b-4 \18\ 
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) \19\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b-4(f)(2).
    \19\ 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSEARCA-2017-135 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-2017-135. 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

[[Page 60085]]

will post all comments on the Commission's internet website (http://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-2017-135 and should be submitted on or before January 8, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-27145 Filed 12-15-17; 8:45 am]
 BILLING CODE 8011-01-P