Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Pricing Schedule, 16157-16161 [2018-07672]
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Federal Register / Vol. 83, No. 72 / Friday, April 13, 2018 / Notices
continued listing requirements and,
pursuant to its obligations under
Section 19(g)(1) of the Act, the Exchange
will surveil for compliance with the
continued listing requirements. If the
Fund or the Shares are not in
compliance with the applicable listing
requirements, the Exchange will
commence delisting procedures under
Exchange Rule 14.12.
This approval order is based on all of
the Exchange’s statements and
representations, including those set
forth above and in Amendment No. 2 to
the proposed rule change.
For the foregoing reasons, the
Commission finds that the proposed
rule change, as modified by Amendment
No. 2, is consistent with Section 6(b)(5)
of the Act 52 and Section
11A(a)(1)(C)(iii) of the Act 53 and the
rules and regulations thereunder
applicable to a national securities
exchange.
IV. Solicitation of Comments on
Amendment No. 2 to the Proposed Rule
Change
Interested persons are invited to
submit written data, views, and
arguments concerning whether
Amendment No. 2 is consistent with the
Act. Comments may be submitted by
any of the following methods:
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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–
CboeBZX–2017–023 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–CboeBZX–2017–023. 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–CboeBZX–2017–023, and
should be submitted on or before May
4, 2018.
V. Accelerated Approval of Proposed
Rule Change, as Modified by
Amendment No. 2
The Commission finds good cause to
approve the proposed rule change, as
modified by Amendment No. 2, prior to
the thirtieth day after the date of
publication of notice of the filing of
Amendment No. 2 in the Federal
Register. The Commission notes that
Amendment No. 2 clarified the
application of Exchange Rule 14.11(i) to
the Fund’s investments. Amendment
No. 2 also provided other clarifications
and additional information to the
proposed rule change. The changes and
additional information in Amendment
No. 2 assisted the Commission in
finding that the proposal is consistent
with the Act. Accordingly, the
Commission finds good cause, pursuant
to Section 19(b)(2) of the Act,54 to
approve the proposed rule change, as
modified by Amendment No. 2, on an
accelerated basis.
VI. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,55 that the
proposed rule change (SR–CboeBZX–
2017–023), as modified by Amendment
No. 2 be, and it hereby is, approved on
an accelerated basis.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.56
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–07670 Filed 4–12–18; 8:45 am]
BILLING CODE 8011–01–P
54 15
52 15
U.S.C. 78f(b)(5).
53 15 U.S.C. 78k–1(a)(1)(C)(iii).
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83016; File No. SR–Phlx–
2018–26]
Self-Regulatory Organizations; Nasdaq
PHLX LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the
Exchange’s Pricing Schedule
April 9, 2018.
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 March 27,
2018, Nasdaq PHLX LLC (‘‘Phlx’’ or
‘‘Exchange’’) 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 Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Sections VIII, X, and XI of the
Exchange’s Pricing Schedule, as
described below.
The text of the proposed rule change
is available on the Exchange’s website at
https://nasdaqphlx.cchwallstreet.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
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
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
several sections of its Pricing Schedule
to harmonize its colocation,
U.S.C. 78s(b)(2).
55 Id.
1 15
CFR 200.30–3(a)(12).
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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connectivity, and direct connectivity
services and fees with the rules of
Nasdaq BX, Inc. (‘‘BX’’). The Exchange
also proposes to update or eliminate
certain obsolete or extraneous language
from its Pricing Schedule.
The Exchange, along with its sister
exchanges, BX, The Nasdaq Stock
Market LLC (‘‘Nasdaq’’), Nasdaq ISE,
LLC (‘‘Nasdaq ISE’’), Nasdaq MRX, LLC
(‘‘Nasdaq MRX’’), and Nasdaq GEMX,
LLC (‘‘Nasdaq GEMX’’) (collectively, the
‘‘Nasdaq, Inc. Exchanges’’), offer certain
colocation, connectivity, and direct
connectivity services to their customers
on a shared basis, meaning that a
customer may utilize theses services to
gain access to any or all of the Nasdaq,
Inc. Exchanges. The Nasdaq, Inc.
Exchanges only charge customers once
for these shared services, even to the
extent that customers use the services to
connect to more than one of the Nasdaq,
Inc. Exchanges.
The amendments that the Exchange
proposes herein are intended
principally to ensure that the shared
services that the Exchange offers, and
the fees that it charges for such services,
are uniform across the Nasdaq, Inc.
Exchanges’ rulebooks and reflect
relevant changes that have been made
already to the rules of BX. The
amendments also update or remove
certain language from the Exchange’s
Pricing Schedule that refers to obsolete
terms or expired time-limited programs
or that is otherwise extraneous.
The first amendment that the
Exchange proposes is to Section VIII of
its Pricing Schedule, entitled ‘‘NASDAQ
PSX FEES.’’ The Exchange proposes to
amend the text under the heading
‘‘Testing Facilities’’ to eliminate
extraneous provisions that were
inadvertently and erroneously included
in the Rule but have no intended
meaning or purpose there. These
provisions are subsections (b) and (c).
Subsection (b) defines terms,
specifically ‘‘Active Connection,’’ ‘‘Idle
Connection,’’ and ‘‘Period of Inactivity,’’
that are not utilized elsewhere in the
Rule. Subsection (c) lists exceptions to
the testing fees and these exceptions are
not applicable to the Exchange’s Test
Facility. The Exchange proposes that
existing subsection (d) be renumbered
as new subsection (b). The Exchange
also proposes that new subsection (b)
delete reference to an obsolete waiver of
installation fees for installations ordered
prior to March 2014. Furthermore, the
Exchange proposes to remove obsolete
references to the Exchange having two
testing environments—one located in
Carteret, New Jersey and another located
in Ashburn, Virginia—because the
Ashburn environment has been
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decommissioned. Lastly, the Exchange
proposes to specify that connectivity to
the Exchange’s testing facility will also
provide for connectivity to the testing
facilities of any or all of the other
Nasdaq, Inc. Exchanges, including those
of not only Nasdaq and BX, but also
Nasdaq ISE, Nasdaq MRX, and Nasdaq
GEMX.3
Second, the Exchange proposes to
amend Section X, which lists the
schedule of fees that the Exchange
charges for colocation services, to
harmonize that schedule with BX Rule
7034. The proposed changes are as
follows:
• The Exchange proposes to amend
Section X(a), under the heading
‘‘Cabinet with Power,’’ to update the
installation and monthly fees it charges
to customers to rent powered cabinet
space in its colocation facilities. The
proposed changes are as follows: (i) For
super high density cabinets, the
Exchange proposes to decrease its
installation fee from $7,000 to $4,500
and its monthly fee from $13,000 to
$8,000; (ii) for high density cabinets, it
proposes to decrease its monthly fee
from $7,000 to $4,500; (iii) for mediumhigh density cabinets, it proposes to
decrease its monthly fees from $6,000 to
$3,500; (iv) for medium density
cabinets, it proposes to decrease its
monthly fees from $5,000 to $2,500; (v)
for low density cabinets, it proposes to
decrease its monthly fees from $4,000 to
$2,000; and (vi) for half cabinets, it
proposes to decrease its monthly fees
from $3,000 to $2,000. These changes
will render this subsection of the
Pricing Schedule consistent with BX
Rule 7034(a).
• The Exchange proposes to amend
Section X(a) to remove the paragraph
entitled ‘‘Temporary Fee Reduction for
Cabinets with Power,’’ as this fee
reduction program has expired.
• The Exchange proposes to amend
Section X(a), under the heading ‘‘MultiFirm Cabinet Charge,’’ to state that the
additional charge is per cabinet, per
firm, which will render this provision
consistent with a corresponding
provision in Nasdaq Rule 7034(a).
• The Exchange proposes to amend
Section X(b), under the heading
‘‘External Telco/Inter-Cabinet
Connectivity,’’ to update the monthly
fees it charges for external
telecommunications and inter-cabinet
connectivity, as follows: (i) for a
category 6 cable patch, a DS–3
connection, and a fiber connection, the
Exchange proposes to increase its
monthly fees from $300 to $350; and (ii)
3 The Exchange proposes to amend Section VII.E
of the Pricing Schedule to make a similar change.
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for a POTS Line, the Exchange proposes
to increase the monthly fee from $0 to
$50. These changes will render this
paragraph of the Pricing Schedule
consistent with a corresponding
paragraph in BX Rule 7034(b).
• The Exchange proposes to amend
Section X(b), under the heading
‘‘Connectivity to Phlx,’’ to update the
fees it charges for fiber connectivity to
the Exchange, as follows: (i) For a 10Gb
fiber connection to the Exchange, the
Exchange proposes to increase the
monthly fee from $5,000 to $10,000; (ii)
for a 40Gb fiber connection to the
Exchange, it proposes to increase the
monthly fee from $15,000 to $20,000;
(iii) for a 1Gb fiber connection to the
Exchange, it proposes to increase the
monthly fee from $1,000 to $2,500; (iv)
for a 1Gb copper connection to the
Exchange, it proposes to increase the
monthly fee from $1,000 to $2,500; (v)
the Exchange proposes to add a 1Gb
Ultra fiber connection to the Exchange
for an installation fee of $1,500 and a
monthly fee of $2,500; and (vi) the
Exchange proposes to remove obsolete
language regarding an expired fee
waiver program. These changes will
render this paragraph of the Pricing
Schedule consistent with corresponding
paragraphs in BX Rule 7034(b). The
Exchange also proposes an amendment
to this provision to specify that
connectivity to the Exchange will also
provide for connectivity to any or all of
the other Nasdaq, Inc. Exchanges,
including not only to Nasdaq and BX,
but also to Nasdaq ISE, LLC, Nasdaq
MRX, LLC, and Nasdaq GEMX, LLC.
This proposal mirrors existing language
in Rule BX Rule 7034(b).
• The Exchange proposes to amend
Section X(b) to add a new paragraph
under a heading entitled ‘‘Connectivity
to Third Party Services.’’ This proposed
paragraph will provide for connectivity
via colocation to market data feeds from
other markets and exchanges,4
Securities Information Processors
(‘‘SIPs’’) 5 data, and other non-exchange
services. The proposed connectivity and
associated fees are as follows: (i) For a
10Gb Ultra fiber connection, the
Exchange proposes to charge a $1,500
4 For example, Third Party Connectivity will
support connectivity to the FINRA/Nasdaq Trade
Reporting Facility, BZX and BYX Depth Feeds, and
NYSE Feeds. A customer must separately subscribe
to the third party services to which it connects with
a Third Party Connectivity subscription.
5 The SIPs link the U.S. markets by processing
and consolidating all protected bid/ask quotes and
trades from every registered exchange trading venue
and FINRA into a single data feed, and they
disseminate and calculate critical regulatory
information, including the National Best Bid and
Offer, Limit Up Limit Down price bands, short sale
restrictions and regulatory halts.
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installation fee and an ongoing monthly
fee of $5,000; (ii) for a 1Gb Ultra fiber
connection, it proposes to charge a
$1,500 installation fee and an ongoing
monthly fee of $2,000; and (iii) for a 1Gb
Ultra or a 10Gb Ultra connection for
UTP only, it proposes to charge a $100
installation fee and an ongoing monthly
fee of $100. All of the foregoing fees will
be waived for two connections per
client to UTP SIP feeds only (UQDF and
UTDF). The Exchange notes that the
proposed paragraph parallels BX Rule
7034(b).
• The Exchange proposes to amend
Section X(b), under the heading ‘‘Market
Data Connectivity,’’ to add prefatory
language that exists in the analogous
portion of BX Rule 7034(b). The
language merely notes that the Market
Data feeds listed in the provision are
delivered to the Nasdaq Data Center via
a fiber optic network. Additionally, the
Exchange proposes to re-categorize and
update the names of the certain CBOE/
Bats/Direct Edge data feeds because the
names listed in the current Pricing
Schedule are obsolete. Similarly, the
Exchange proposes to delete a $1,000
installation fee that presently applies to
the Direct Edge feeds because the Direct
Edge feeds are now offerings of CBOE,
along with the BZX and BYX feeds.
Going forward, a single, one-time $1,000
installation fee will apply to subscribers
to any or all of the CBOE data feeds.
Finally, the Exchange proposes to delete
from the asterisked footnote to this
paragraph the word ‘‘telco’’ from the
phrase ‘‘Pricing is for telco connectivity
only.’’ These proposals will render this
paragraph consistent with
corresponding text in BX and Nasdaq
Rules 7034(b).
• The Exchange proposes to amend
Section X(b) to add a new paragraph
that will provide for multicast market
data feeds from other markets to be
delivered to the Nasdaq Data Center via
wireless microwave or millimeter wave
networks. The Exchange notes that
Nasdaq already provides such data feeds
to its customers. The proposed data
feeds, and their corresponding
installation and monthly fees, are as
follows: (i) NYSE Equities (Arca
Integrated), for an installation fee of
$5,000 and a monthly fee of $10,000; (ii)
NYSE Equities (NYSE Integrated), for an
installation fee of $5,000 and a monthly
fee of $10,000; (iii) BATS Multicast
PITCH (BZX and BYZ), for an
installation fee of $2,500 and a monthly
fee of $7,500; (iv) Direct EDGE Depth of
Book (EDGA, EDGX), for an installation
fee of $2,500 and a monthly fee of
$7,500; (v) CME Multicast Total
(including CME Equities Futures Data,
CME Fixed Income Futures Data, and
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17:41 Apr 12, 2018
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CME Metal Futures Data), for an
installation fee of $5,000 and a monthly
fee of $23,500; (vi) CME Equities
Futures Data Only, for a $5,000
installation fee and a monthly fee of
$10,000; (vii) CME Fixed Income
Futures Data Only, for a $5,000
installation fee and a monthly fee of
$10,000; and (viii) CME Metals Futures
Data Only, for a $5,000 installation fee
and a monthly fee of $3,500.6 As to the
monthly fee for these services, the
proposal provides that subscribers will
receive discounts based upon the
number of subscriptions they maintain.7
The Exchange proposes to add this
paragraph to render this paragraph of
Section X(b) consistent with
corresponding paragraphs in BX Rule
7034(b).
• The Exchange proposes to amend
Section X(d), under the heading
‘‘Additional Charges/Services,’’ to
update the installation fee it charges for
super high density cabinet kits.
Specifically, the Exchange proposes to
decrease the fee from $7,000 to $4,500.
The Exchange also proposes to amend
the installation fee for Copper Patch
Cords that is set forth in this paragraph
from $4.50 + ‘‘$1.50’’ per ‘‘meter’’ to
$4.50 + ‘‘$0.50’’ per ‘‘foot.’’ These
changes will render this paragraph of
the Schedule of Fees consistent with the
corresponding paragraph in BX Rule
7034(d).
Third, the Exchange proposes to
amend Section XI of the Exchange’s
Pricing Schedule, entitled ‘‘Direct
Connectivity to Phlx.’’ This Section of
the Pricing Schedule describes the
means by which customers may connect
directly to the Exchange’s main or
satellite data centers via a third party
vendor’s telecommunications circuit.
The proposed changes to this Section
are as follows:
• The Exchange proposes to update
the structure of Chapter XI so that it will
parallel the structure of BX Rule 7051.
Specifically, the Exchange proposes to
6 The Exchange proposes to charge subscribers to
any or all of the CME Data Feeds a single $5,000
installation fee. In other words, a subscriber to the
CME Fixed Income Futures Data Feed and the CME
Metals Futures Data Feed will only pay a single
$5,000 installation fee for access to both feeds.
7 The proposed Rule paragraph provides that
subscribers with three to five microwave or
millimeter wave wireless subscriptions under
Section X(b) will receive a 5% discount on all such
subscriptions. Meanwhile, subscribers with six to
ten microwave or millimeter wave wireless
subscriptions under Section X(b) will receive a 10%
discount on all such subscriptions. Subscribers
with eleven to fourteen microwave or millimeter
wave wireless subscriptions under Section X(b) will
receive a 15% discount on all such subscriptions.
Finally, subscribers with fifteen or more microwave
or millimeter wave wireless subscriptions under
Section X(b) will receive a 20% discount on all
such subscriptions.
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place the existing text of Section XI into
a subsection (a), to be entitled ‘‘Direct
Circuit Connection to Phlx.’’ It also
proposes to add two additional
subsections, as described below.
• The Exchange proposes to amend
the text of Chapter XI (as reorganized in
proposed subsection (a) and re-titled
‘‘Direct Circuit Connection to Phlx’’) so
that it is fully consistent with BX Rule
7051(a) in terms of both the direct
circuit connections that it offers to its
customers as well as the associated fees
that it charges for such connections. The
proposed changes are as follows: (i) For
10Gb direct circuit connections to Phlx,
the Exchange proposes to increase the
installation fee from $1,000 to $1,500
and the monthly fee from $5,000 to
$7,500; (ii) for 1Gb direct circuit
connections to Phlx, the Exchange
proposes to increase the installation fee
from $1,000 to $1,500 and the monthly
fee from $1,000 to $2,500; (iii) the
Exchange proposes to add a 1Gb Ultra
direct circuit connection for an
installation fee of $1,500 and a monthly
fee of $2,500; and (iv) the Exchange
proposes to specify that direct circuit
connectivity to the Exchange will also
provide for direct circuit connectivity to
any or all of the other Nasdaq, Inc.
Exchanges, including not only Nasdaq
and BX, but also Nasdaq ISE, Nasdaq
MRX, and Nasdaq GEMX.
• The Exchange proposes to add a
new subsection (b) to Section XI,
entitled ‘‘Direct Circuit Connection to
Third Party Services.’’ Through this
subsection, which is an analogue to BX
Rule 7051(b), the Exchange will offer its
customers direct circuit connections to
third party services, including the same
third party services to which it proposes
to connect customers through
colocation, as set forth in proposed
Section X(b) (described above).
Specifically, the Exchange proposes to
offer the following services and charge
the following fees for them: (i) A 10Gb
Ultra direct circuit connection for an
installation fee of $1,500 and a monthly
fee of $5,000; (ii) a 1Gb Ultra direct
circuit connection for an installation fee
of $1,500 and a monthly fee of $2,000;
(iii) a 1Gb Ultra or 10Gb Ultra direct
circuit connection (for UTP only) for an
installation fee of $100 and a monthly
fee of $100; (iv) an optional cable router
for a $925 installation fee; and (v) a
monthly fee of $150 per ‘‘U’’ of cabinet
space rented.8 For direct circuit
connectivity to UTP SIP feeds only, the
installation and monthly fees will be
8 These fees will be based on a height unit of
approximately 1.75 inches high, commonly called
a ‘‘U’’ space and a maximum power of 125 Watts
per U space.
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waived for the first two connections per
client.
The Exchange proposes to add a new
subsection (c) to Section XI, entitled
‘‘Point of Presence (POP) Connectivity.’’
This subsection, which is an analogue to
BX Rule 7051(c), provides for customers
to connect directly to the Exchange
through a ‘‘Point of Presence’’ or ‘‘POP’’
that is located at one of the Exchange’s
satellite data centers, rather than in the
Exchange’s main data center. Each such
POP, in turn, has a fully redundant
connection to the Exchange’s primary
data center. The proposed services and
associated fees are as follows: (i) The
Exchange proposes to offer a 10Gb POP
connection to Phlx for an installation
fee of $1,500 and a monthly fee of
$7,500; (ii) it proposes to offer a 1Gb
Ultra POP connection to Phlx for an
installation fee of $1,500 and a monthly
fee of $2,500; and (iii) the Exchange
proposes to state that the POP
connectivity provided under this
subsection also provides POP
connectivity to any or all of the other
Nasdaq, Inc. Exchanges.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,9 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,10 in particular, in that it
provides for the equitable allocation of
reasonable dues, fees and other charges
among members and issuers and other
persons using any facility, and is not
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
The Exchange believes that its
proposals to update its schedule of
shared connectivity, direct circuit
connectivity, and colocation services
that it provides in concert with its sister
Nasdaq, Inc. Exchanges, and for which
the Nasdaq, Inc. Exchanges charge a
single fee, is reasonable because the
proposals will ensure that the
Exchange’s Pricing Schedule, as it
applies to such services and fees, will be
consistent with the applicable schedules
and rules of the other Nasdaq, Inc.
Exchanges. The Exchange also notes
that the proposals will provide
consistencies across the Nasdaq, Inc.
Exchanges for the same services. The
proposed amendments to the
Exchange’s Pricing Schedule reflect
changes and updates that have been
made already to the BX Rules. For
example, each of the proposed changes
to the Exchange’s connectivity, direct
connectivity, and colocation fees will
9 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
10 15
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harmonize the Exchange’s fees with
those of BX.
The Exchange believes that the
foregoing proposals provide for the
equitable allocation of fees because the
connectivity and colocation services to
which these fees apply are shared
services for which customers pay once,
regardless of whether the customers
choose to use these services to connect
only to Phlx or also to any or all of the
other Nasdaq, Inc. Exchanges. Moreover,
the other Nasdaq, Inc. Exchanges
already offer these shared services to
their customers and do so at the same
prices that the Exchange now proposes
to charge. As such, the proposals will
ensure that the fees that the Exchanges
charges its customers for shared services
are the same fees that the other Nasdaq,
Inc. Exchanges charge their customers
(including their customers who are also
Phlx Members) for the same shared
services. In other words, the proposals
would ensure that a customer of the
Exchange that wishes to, say, purchase
direct connectivity to all of the Nasdaq,
Inc. Exchanges will not pay more to do
so through Phlx than it would pay if it
purchased that same connectivity from
Nasdaq, and vice versa.
The proposed fees and fee changes,
moreover, are equitably allocated
because the proposals align these fees
with the costs that the Exchange incurs
to provide the shared services,
including the costs of developing,
installing, maintaining, and upgrading
equipment and systems relating to
connectivity and colocation services.
Finally, the proposed fees are equitably
allocated because all member firms that
subscribe to a particular connectivity
option under the amended Rules will be
assessed the same fee.
The proposals, similarly, are not
unfairly discriminatory because the
shared services they entail will be
available to all similarly situated clients,
while the fees and fee changes they
entail will apply uniformly to such
clients to the extent that they choose to
utilize the shared services.
The Exchange’s proposal to eliminate
the $1,000 installation fee that presently
applies to the Direct Edge feeds is
reasonable because the Direct Edge
feeds are now offerings of CBOE, along
with the BZX and BYX feeds. The
Exchange believes it is equitable, going
forward, to charge a single, one-time
$1,000 installation fee to subscribers to
any or all of the CBOE data feeds,
including the BZX Depth, BYX Depth,
EDGA Depth, and EDGX Depth feeds.
This proposal is not unfairly
discriminatory because it will apply to
all similarly situated customers of the
CBOE data feeds.
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Lastly, the Exchange’s other
proposals—to eliminate certain
language from the Exchange’s Pricing
Schedule that is extraneous, eliminate
references to expired fee reduction or
waiver programs, and update references
to third party data feeds to reflect their
current names—are consistent with
Section 6(b) of the Act,11 in general, and
further the objectives of Section 6(b)(5)
of the Act,12 in particular, in that they
are designed to promote just and
equitable principles of trade, to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general to protect investors and the
public interest. These proposals are
non-controversial because maintaining a
current and accurate Pricing Schedule
serves the interests of the public and
investors and because the proposals will
not impact competition or limit access
to or availability of the Exchange or its
systems. The proposals also reflect
changes that BX has already made to its
rulebook.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act.
In terms of inter-market competition,
the Exchange notes that it operates in a
highly competitive market in which
market participants can readily favor
competing venues if they deem fee
levels at a particular venue to be
excessive, or rebate opportunities
available at other venues to be more
favorable. In such an environment, the
Exchange must continually adjust its
fees to remain competitive with other
exchanges and with alternative trading
systems that have been exempted from
compliance with the statutory standards
applicable to exchanges. Because
competitors are free to modify their own
fees in response, and because market
participants may connect to third
parties instead of directly connecting to
the Exchange, the Exchange believes
that the degree to which fee changes in
this market may impose any burden on
competition is extremely limited.
In this instance, the proposed changes
to the charges assessed for colocation,
connectivity, and direct circuit
connectivity are consistent with the fees
already assessed by other Nasdaq, Inc.
Exchanges for the same shared services.
The Exchange does not believe that the
proposed changes will impair the ability
11 15
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U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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of members or competing order
execution venues to maintain their
competitive standing in the financial
markets.
Furthermore, the Exchange does not
expect that its proposals to eliminate or
replace expired or obsolete language
from its Rulebook or to eliminate an
obsolete $1,000 Direct Edge installation
fee will have any impact on
competition.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 13 and Rule 19b–
4(f)(6) thereunder.14
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 15 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 16
permits the Commission to designate a
shorter time if such action is consistent
with the protection of investors and the
public interest. The Exchange has
requested that the Commission waive
the 30-day operative delay so that the
proposed rule change may become
operative upon filing. The Commission
notes that the proposal updates the
Exchange’s rules to reflect current and
accurate information with respect to the
Exchange’s services and fees. The
Commission also notes that the proposal
harmonizes the Exchange’s services and
fees with those of the other Nasdaq, Inc.
Exchanges, and that BX recently made
similar changes to its rules.17 Therefore,
13 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
15 17 CFR 240.19b–4(f)(6).
16 17 CFR 240.19b–4(f)(6)(iii).
17 See Securities Exchange Act Release No. 82628
(February 5, 2018), 83 FR 5818 (February 9, 2018)
(SR–BX–2018–006).
daltland on DSKBBV9HB2PROD with NOTICES
14 17
VerDate Sep<11>2014
17:41 Apr 12, 2018
Jkt 244001
the Commission believes that waiver of
the 30-day operative delay is consistent
with the protection of investors and the
public interest. Accordingly, the
Commission hereby waives the
operative delay and designates the
proposed rule change operative upon
filing.18
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. If the
Commission takes such action, the
Commission shall institute proceedings
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–
Phlx–2018–26 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–Phlx–2018–26. 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
18 For purposes only of waiving the 30-day
operative delay, the Commission also has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
PO 00000
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Fmt 4703
Sfmt 4703
16161
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–Phlx–2018–26, and should
be submitted on or before May 4, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–07672 Filed 4–12–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83015; File No. SR–
CboeEDGX–2018–010]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change Related to Fees
for Use on the Exchange’s Equity
Options Platform
April 9, 2018.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on April 2,
2018, Cboe EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II and III
below, which Items have been prepared
by the Exchange. The Exchange has
designated the proposed rule change as
one establishing or changing a member
due, fee, or other charge imposed by the
Exchange under Section 19(b)(3)(A)(ii)
of the Act 3 and Rule 19b–4(f)(2)
thereunder,4 which renders the
proposed rule change effective upon
filing with the Commission. The
Commission is publishing this notice to
19 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(ii).
4 17 CFR 240.19b–4(f)(2).
1 15
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]]>Agencies
[Federal Register Volume 83, Number 72 (Friday, April 13, 2018)]
[Notices]
[Pages 16157-16161]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-07672]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-83016; File No. SR-Phlx-2018-26]
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the
Exchange's Pricing Schedule
April 9, 2018.
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 March 27, 2018, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') 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 Exchange. 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\ 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 Sections VIII, X, and XI of the
Exchange's Pricing Schedule, as described below.
The text of the proposed rule change is available on the Exchange's
website at https://nasdaqphlx.cchwallstreet.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 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
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend several sections of its Pricing
Schedule to harmonize its colocation,
[[Page 16158]]
connectivity, and direct connectivity services and fees with the rules
of Nasdaq BX, Inc. (``BX''). The Exchange also proposes to update or
eliminate certain obsolete or extraneous language from its Pricing
Schedule.
The Exchange, along with its sister exchanges, BX, The Nasdaq Stock
Market LLC (``Nasdaq''), Nasdaq ISE, LLC (``Nasdaq ISE''), Nasdaq MRX,
LLC (``Nasdaq MRX''), and Nasdaq GEMX, LLC (``Nasdaq GEMX'')
(collectively, the ``Nasdaq, Inc. Exchanges''), offer certain
colocation, connectivity, and direct connectivity services to their
customers on a shared basis, meaning that a customer may utilize theses
services to gain access to any or all of the Nasdaq, Inc. Exchanges.
The Nasdaq, Inc. Exchanges only charge customers once for these shared
services, even to the extent that customers use the services to connect
to more than one of the Nasdaq, Inc. Exchanges.
The amendments that the Exchange proposes herein are intended
principally to ensure that the shared services that the Exchange
offers, and the fees that it charges for such services, are uniform
across the Nasdaq, Inc. Exchanges' rulebooks and reflect relevant
changes that have been made already to the rules of BX. The amendments
also update or remove certain language from the Exchange's Pricing
Schedule that refers to obsolete terms or expired time-limited programs
or that is otherwise extraneous.
The first amendment that the Exchange proposes is to Section VIII
of its Pricing Schedule, entitled ``NASDAQ PSX FEES.'' The Exchange
proposes to amend the text under the heading ``Testing Facilities'' to
eliminate extraneous provisions that were inadvertently and erroneously
included in the Rule but have no intended meaning or purpose there.
These provisions are subsections (b) and (c). Subsection (b) defines
terms, specifically ``Active Connection,'' ``Idle Connection,'' and
``Period of Inactivity,'' that are not utilized elsewhere in the Rule.
Subsection (c) lists exceptions to the testing fees and these
exceptions are not applicable to the Exchange's Test Facility. The
Exchange proposes that existing subsection (d) be renumbered as new
subsection (b). The Exchange also proposes that new subsection (b)
delete reference to an obsolete waiver of installation fees for
installations ordered prior to March 2014. Furthermore, the Exchange
proposes to remove obsolete references to the Exchange having two
testing environments--one located in Carteret, New Jersey and another
located in Ashburn, Virginia--because the Ashburn environment has been
decommissioned. Lastly, the Exchange proposes to specify that
connectivity to the Exchange's testing facility will also provide for
connectivity to the testing facilities of any or all of the other
Nasdaq, Inc. Exchanges, including those of not only Nasdaq and BX, but
also Nasdaq ISE, Nasdaq MRX, and Nasdaq GEMX.\3\
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\3\ The Exchange proposes to amend Section VII.E of the Pricing
Schedule to make a similar change.
---------------------------------------------------------------------------
Second, the Exchange proposes to amend Section X, which lists the
schedule of fees that the Exchange charges for colocation services, to
harmonize that schedule with BX Rule 7034. The proposed changes are as
follows:
The Exchange proposes to amend Section X(a), under the
heading ``Cabinet with Power,'' to update the installation and monthly
fees it charges to customers to rent powered cabinet space in its
colocation facilities. The proposed changes are as follows: (i) For
super high density cabinets, the Exchange proposes to decrease its
installation fee from $7,000 to $4,500 and its monthly fee from $13,000
to $8,000; (ii) for high density cabinets, it proposes to decrease its
monthly fee from $7,000 to $4,500; (iii) for medium-high density
cabinets, it proposes to decrease its monthly fees from $6,000 to
$3,500; (iv) for medium density cabinets, it proposes to decrease its
monthly fees from $5,000 to $2,500; (v) for low density cabinets, it
proposes to decrease its monthly fees from $4,000 to $2,000; and (vi)
for half cabinets, it proposes to decrease its monthly fees from $3,000
to $2,000. These changes will render this subsection of the Pricing
Schedule consistent with BX Rule 7034(a).
The Exchange proposes to amend Section X(a) to remove the
paragraph entitled ``Temporary Fee Reduction for Cabinets with Power,''
as this fee reduction program has expired.
The Exchange proposes to amend Section X(a), under the
heading ``Multi-Firm Cabinet Charge,'' to state that the additional
charge is per cabinet, per firm, which will render this provision
consistent with a corresponding provision in Nasdaq Rule 7034(a).
The Exchange proposes to amend Section X(b), under the
heading ``External Telco/Inter-Cabinet Connectivity,'' to update the
monthly fees it charges for external telecommunications and inter-
cabinet connectivity, as follows: (i) for a category 6 cable patch, a
DS-3 connection, and a fiber connection, the Exchange proposes to
increase its monthly fees from $300 to $350; and (ii) for a POTS Line,
the Exchange proposes to increase the monthly fee from $0 to $50. These
changes will render this paragraph of the Pricing Schedule consistent
with a corresponding paragraph in BX Rule 7034(b).
The Exchange proposes to amend Section X(b), under the
heading ``Connectivity to Phlx,'' to update the fees it charges for
fiber connectivity to the Exchange, as follows: (i) For a 10Gb fiber
connection to the Exchange, the Exchange proposes to increase the
monthly fee from $5,000 to $10,000; (ii) for a 40Gb fiber connection to
the Exchange, it proposes to increase the monthly fee from $15,000 to
$20,000; (iii) for a 1Gb fiber connection to the Exchange, it proposes
to increase the monthly fee from $1,000 to $2,500; (iv) for a 1Gb
copper connection to the Exchange, it proposes to increase the monthly
fee from $1,000 to $2,500; (v) the Exchange proposes to add a 1Gb Ultra
fiber connection to the Exchange for an installation fee of $1,500 and
a monthly fee of $2,500; and (vi) the Exchange proposes to remove
obsolete language regarding an expired fee waiver program. These
changes will render this paragraph of the Pricing Schedule consistent
with corresponding paragraphs in BX Rule 7034(b). The Exchange also
proposes an amendment to this provision to specify that connectivity to
the Exchange will also provide for connectivity to any or all of the
other Nasdaq, Inc. Exchanges, including not only to Nasdaq and BX, but
also to Nasdaq ISE, LLC, Nasdaq MRX, LLC, and Nasdaq GEMX, LLC. This
proposal mirrors existing language in Rule BX Rule 7034(b).
The Exchange proposes to amend Section X(b) to add a new
paragraph under a heading entitled ``Connectivity to Third Party
Services.'' This proposed paragraph will provide for connectivity via
colocation to market data feeds from other markets and exchanges,\4\
Securities Information Processors (``SIPs'') \5\ data, and other non-
exchange services. The proposed connectivity and associated fees are as
follows: (i) For a 10Gb Ultra fiber connection, the Exchange proposes
to charge a $1,500
[[Page 16159]]
installation fee and an ongoing monthly fee of $5,000; (ii) for a 1Gb
Ultra fiber connection, it proposes to charge a $1,500 installation fee
and an ongoing monthly fee of $2,000; and (iii) for a 1Gb Ultra or a
10Gb Ultra connection for UTP only, it proposes to charge a $100
installation fee and an ongoing monthly fee of $100. All of the
foregoing fees will be waived for two connections per client to UTP SIP
feeds only (UQDF and UTDF). The Exchange notes that the proposed
paragraph parallels BX Rule 7034(b).
---------------------------------------------------------------------------
\4\ For example, Third Party Connectivity will support
connectivity to the FINRA/Nasdaq Trade Reporting Facility, BZX and
BYX Depth Feeds, and NYSE Feeds. A customer must separately
subscribe to the third party services to which it connects with a
Third Party Connectivity subscription.
\5\ The SIPs link the U.S. markets by processing and
consolidating all protected bid/ask quotes and trades from every
registered exchange trading venue and FINRA into a single data feed,
and they disseminate and calculate critical regulatory information,
including the National Best Bid and Offer, Limit Up Limit Down price
bands, short sale restrictions and regulatory halts.
---------------------------------------------------------------------------
The Exchange proposes to amend Section X(b), under the
heading ``Market Data Connectivity,'' to add prefatory language that
exists in the analogous portion of BX Rule 7034(b). The language merely
notes that the Market Data feeds listed in the provision are delivered
to the Nasdaq Data Center via a fiber optic network. Additionally, the
Exchange proposes to re-categorize and update the names of the certain
CBOE/Bats/Direct Edge data feeds because the names listed in the
current Pricing Schedule are obsolete. Similarly, the Exchange proposes
to delete a $1,000 installation fee that presently applies to the
Direct Edge feeds because the Direct Edge feeds are now offerings of
CBOE, along with the BZX and BYX feeds. Going forward, a single, one-
time $1,000 installation fee will apply to subscribers to any or all of
the CBOE data feeds. Finally, the Exchange proposes to delete from the
asterisked footnote to this paragraph the word ``telco'' from the
phrase ``Pricing is for telco connectivity only.'' These proposals will
render this paragraph consistent with corresponding text in BX and
Nasdaq Rules 7034(b).
The Exchange proposes to amend Section X(b) to add a new
paragraph that will provide for multicast market data feeds from other
markets to be delivered to the Nasdaq Data Center via wireless
microwave or millimeter wave networks. The Exchange notes that Nasdaq
already provides such data feeds to its customers. The proposed data
feeds, and their corresponding installation and monthly fees, are as
follows: (i) NYSE Equities (Arca Integrated), for an installation fee
of $5,000 and a monthly fee of $10,000; (ii) NYSE Equities (NYSE
Integrated), for an installation fee of $5,000 and a monthly fee of
$10,000; (iii) BATS Multicast PITCH (BZX and BYZ), for an installation
fee of $2,500 and a monthly fee of $7,500; (iv) Direct EDGE Depth of
Book (EDGA, EDGX), for an installation fee of $2,500 and a monthly fee
of $7,500; (v) CME Multicast Total (including CME Equities Futures
Data, CME Fixed Income Futures Data, and CME Metal Futures Data), for
an installation fee of $5,000 and a monthly fee of $23,500; (vi) CME
Equities Futures Data Only, for a $5,000 installation fee and a monthly
fee of $10,000; (vii) CME Fixed Income Futures Data Only, for a $5,000
installation fee and a monthly fee of $10,000; and (viii) CME Metals
Futures Data Only, for a $5,000 installation fee and a monthly fee of
$3,500.\6\ As to the monthly fee for these services, the proposal
provides that subscribers will receive discounts based upon the number
of subscriptions they maintain.\7\ The Exchange proposes to add this
paragraph to render this paragraph of Section X(b) consistent with
corresponding paragraphs in BX Rule 7034(b).
---------------------------------------------------------------------------
\6\ The Exchange proposes to charge subscribers to any or all of
the CME Data Feeds a single $5,000 installation fee. In other words,
a subscriber to the CME Fixed Income Futures Data Feed and the CME
Metals Futures Data Feed will only pay a single $5,000 installation
fee for access to both feeds.
\7\ The proposed Rule paragraph provides that subscribers with
three to five microwave or millimeter wave wireless subscriptions
under Section X(b) will receive a 5% discount on all such
subscriptions. Meanwhile, subscribers with six to ten microwave or
millimeter wave wireless subscriptions under Section X(b) will
receive a 10% discount on all such subscriptions. Subscribers with
eleven to fourteen microwave or millimeter wave wireless
subscriptions under Section X(b) will receive a 15% discount on all
such subscriptions. Finally, subscribers with fifteen or more
microwave or millimeter wave wireless subscriptions under Section
X(b) will receive a 20% discount on all such subscriptions.
---------------------------------------------------------------------------
The Exchange proposes to amend Section X(d), under the
heading ``Additional Charges/Services,'' to update the installation fee
it charges for super high density cabinet kits. Specifically, the
Exchange proposes to decrease the fee from $7,000 to $4,500. The
Exchange also proposes to amend the installation fee for Copper Patch
Cords that is set forth in this paragraph from $4.50 + ``$1.50'' per
``meter'' to $4.50 + ``$0.50'' per ``foot.'' These changes will render
this paragraph of the Schedule of Fees consistent with the
corresponding paragraph in BX Rule 7034(d).
Third, the Exchange proposes to amend Section XI of the Exchange's
Pricing Schedule, entitled ``Direct Connectivity to Phlx.'' This
Section of the Pricing Schedule describes the means by which customers
may connect directly to the Exchange's main or satellite data centers
via a third party vendor's telecommunications circuit. The proposed
changes to this Section are as follows:
The Exchange proposes to update the structure of Chapter
XI so that it will parallel the structure of BX Rule 7051.
Specifically, the Exchange proposes to place the existing text of
Section XI into a subsection (a), to be entitled ``Direct Circuit
Connection to Phlx.'' It also proposes to add two additional
subsections, as described below.
The Exchange proposes to amend the text of Chapter XI (as
reorganized in proposed subsection (a) and re-titled ``Direct Circuit
Connection to Phlx'') so that it is fully consistent with BX Rule
7051(a) in terms of both the direct circuit connections that it offers
to its customers as well as the associated fees that it charges for
such connections. The proposed changes are as follows: (i) For 10Gb
direct circuit connections to Phlx, the Exchange proposes to increase
the installation fee from $1,000 to $1,500 and the monthly fee from
$5,000 to $7,500; (ii) for 1Gb direct circuit connections to Phlx, the
Exchange proposes to increase the installation fee from $1,000 to
$1,500 and the monthly fee from $1,000 to $2,500; (iii) the Exchange
proposes to add a 1Gb Ultra direct circuit connection for an
installation fee of $1,500 and a monthly fee of $2,500; and (iv) the
Exchange proposes to specify that direct circuit connectivity to the
Exchange will also provide for direct circuit connectivity to any or
all of the other Nasdaq, Inc. Exchanges, including not only Nasdaq and
BX, but also Nasdaq ISE, Nasdaq MRX, and Nasdaq GEMX.
The Exchange proposes to add a new subsection (b) to
Section XI, entitled ``Direct Circuit Connection to Third Party
Services.'' Through this subsection, which is an analogue to BX Rule
7051(b), the Exchange will offer its customers direct circuit
connections to third party services, including the same third party
services to which it proposes to connect customers through colocation,
as set forth in proposed Section X(b) (described above). Specifically,
the Exchange proposes to offer the following services and charge the
following fees for them: (i) A 10Gb Ultra direct circuit connection for
an installation fee of $1,500 and a monthly fee of $5,000; (ii) a 1Gb
Ultra direct circuit connection for an installation fee of $1,500 and a
monthly fee of $2,000; (iii) a 1Gb Ultra or 10Gb Ultra direct circuit
connection (for UTP only) for an installation fee of $100 and a monthly
fee of $100; (iv) an optional cable router for a $925 installation fee;
and (v) a monthly fee of $150 per ``U'' of cabinet space rented.\8\ For
direct circuit connectivity to UTP SIP feeds only, the installation and
monthly fees will be
[[Page 16160]]
waived for the first two connections per client.
---------------------------------------------------------------------------
\8\ These fees will be based on a height unit of approximately
1.75 inches high, commonly called a ``U'' space and a maximum power
of 125 Watts per U space.
---------------------------------------------------------------------------
The Exchange proposes to add a new subsection (c) to Section XI,
entitled ``Point of Presence (POP) Connectivity.'' This subsection,
which is an analogue to BX Rule 7051(c), provides for customers to
connect directly to the Exchange through a ``Point of Presence'' or
``POP'' that is located at one of the Exchange's satellite data
centers, rather than in the Exchange's main data center. Each such POP,
in turn, has a fully redundant connection to the Exchange's primary
data center. The proposed services and associated fees are as follows:
(i) The Exchange proposes to offer a 10Gb POP connection to Phlx for an
installation fee of $1,500 and a monthly fee of $7,500; (ii) it
proposes to offer a 1Gb Ultra POP connection to Phlx for an
installation fee of $1,500 and a monthly fee of $2,500; and (iii) the
Exchange proposes to state that the POP connectivity provided under
this subsection also provides POP connectivity to any or all of the
other Nasdaq, Inc. Exchanges.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\9\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\10\ in particular, in that it provides
for the equitable allocation of reasonable dues, fees and other charges
among members and issuers and other persons using any facility, and is
not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes that its proposals to update its schedule of
shared connectivity, direct circuit connectivity, and colocation
services that it provides in concert with its sister Nasdaq, Inc.
Exchanges, and for which the Nasdaq, Inc. Exchanges charge a single
fee, is reasonable because the proposals will ensure that the
Exchange's Pricing Schedule, as it applies to such services and fees,
will be consistent with the applicable schedules and rules of the other
Nasdaq, Inc. Exchanges. The Exchange also notes that the proposals will
provide consistencies across the Nasdaq, Inc. Exchanges for the same
services. The proposed amendments to the Exchange's Pricing Schedule
reflect changes and updates that have been made already to the BX
Rules. For example, each of the proposed changes to the Exchange's
connectivity, direct connectivity, and colocation fees will harmonize
the Exchange's fees with those of BX.
The Exchange believes that the foregoing proposals provide for the
equitable allocation of fees because the connectivity and colocation
services to which these fees apply are shared services for which
customers pay once, regardless of whether the customers choose to use
these services to connect only to Phlx or also to any or all of the
other Nasdaq, Inc. Exchanges. Moreover, the other Nasdaq, Inc.
Exchanges already offer these shared services to their customers and do
so at the same prices that the Exchange now proposes to charge. As
such, the proposals will ensure that the fees that the Exchanges
charges its customers for shared services are the same fees that the
other Nasdaq, Inc. Exchanges charge their customers (including their
customers who are also Phlx Members) for the same shared services. In
other words, the proposals would ensure that a customer of the Exchange
that wishes to, say, purchase direct connectivity to all of the Nasdaq,
Inc. Exchanges will not pay more to do so through Phlx than it would
pay if it purchased that same connectivity from Nasdaq, and vice versa.
The proposed fees and fee changes, moreover, are equitably
allocated because the proposals align these fees with the costs that
the Exchange incurs to provide the shared services, including the costs
of developing, installing, maintaining, and upgrading equipment and
systems relating to connectivity and colocation services. Finally, the
proposed fees are equitably allocated because all member firms that
subscribe to a particular connectivity option under the amended Rules
will be assessed the same fee.
The proposals, similarly, are not unfairly discriminatory because
the shared services they entail will be available to all similarly
situated clients, while the fees and fee changes they entail will apply
uniformly to such clients to the extent that they choose to utilize the
shared services.
The Exchange's proposal to eliminate the $1,000 installation fee
that presently applies to the Direct Edge feeds is reasonable because
the Direct Edge feeds are now offerings of CBOE, along with the BZX and
BYX feeds. The Exchange believes it is equitable, going forward, to
charge a single, one-time $1,000 installation fee to subscribers to any
or all of the CBOE data feeds, including the BZX Depth, BYX Depth, EDGA
Depth, and EDGX Depth feeds. This proposal is not unfairly
discriminatory because it will apply to all similarly situated
customers of the CBOE data feeds.
Lastly, the Exchange's other proposals--to eliminate certain
language from the Exchange's Pricing Schedule that is extraneous,
eliminate references to expired fee reduction or waiver programs, and
update references to third party data feeds to reflect their current
names--are consistent with Section 6(b) of the Act,\11\ in general, and
further the objectives of Section 6(b)(5) of the Act,\12\ in
particular, in that they are designed to promote just and equitable
principles of trade, to remove impediments to and perfect the mechanism
of a free and open market and a national market system, and, in general
to protect investors and the public interest. These proposals are non-
controversial because maintaining a current and accurate Pricing
Schedule serves the interests of the public and investors and because
the proposals will not impact competition or limit access to or
availability of the Exchange or its systems. The proposals also reflect
changes that BX has already made to its rulebook.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
In terms of inter-market competition, the Exchange notes that it
operates in a highly competitive market in which market participants
can readily favor competing venues if they deem fee levels at a
particular venue to be excessive, or rebate opportunities available at
other venues to be more favorable. In such an environment, the Exchange
must continually adjust its fees to remain competitive with other
exchanges and with alternative trading systems that have been exempted
from compliance with the statutory standards applicable to exchanges.
Because competitors are free to modify their own fees in response, and
because market participants may connect to third parties instead of
directly connecting to the Exchange, the Exchange believes that the
degree to which fee changes in this market may impose any burden on
competition is extremely limited.
In this instance, the proposed changes to the charges assessed for
colocation, connectivity, and direct circuit connectivity are
consistent with the fees already assessed by other Nasdaq, Inc.
Exchanges for the same shared services. The Exchange does not believe
that the proposed changes will impair the ability
[[Page 16161]]
of members or competing order execution venues to maintain their
competitive standing in the financial markets.
Furthermore, the Exchange does not expect that its proposals to
eliminate or replace expired or obsolete language from its Rulebook or
to eliminate an obsolete $1,000 Direct Edge installation fee will have
any impact on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \13\ and Rule 19b-
4(f)(6) thereunder.\14\
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \15\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \16\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has requested that the Commission waive the 30-day operative delay so
that the proposed rule change may become operative upon filing. The
Commission notes that the proposal updates the Exchange's rules to
reflect current and accurate information with respect to the Exchange's
services and fees. The Commission also notes that the proposal
harmonizes the Exchange's services and fees with those of the other
Nasdaq, Inc. Exchanges, and that BX recently made similar changes to
its rules.\17\ Therefore, the Commission believes that waiver of the
30-day operative delay is consistent with the protection of investors
and the public interest. Accordingly, the Commission hereby waives the
operative delay and designates the proposed rule change operative upon
filing.\18\
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\15\ 17 CFR 240.19b-4(f)(6).
\16\ 17 CFR 240.19b-4(f)(6)(iii).
\17\ See Securities Exchange Act Release No. 82628 (February 5,
2018), 83 FR 5818 (February 9, 2018) (SR-BX-2018-006).
\18\ For purposes only of waiving the 30-day operative delay,
the Commission also has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of 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. If the Commission
takes such action, the Commission shall institute proceedings 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 [email protected]. Please include
File Number SR-Phlx-2018-26 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-Phlx-2018-26. 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-Phlx-2018-26, and should be submitted on
or before May 4, 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. 2018-07672 Filed 4-12-18; 8:45 am]
BILLING CODE 8011-01-P
