Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE Arca Options Fees and Charges and the NYSE Arca Equities Fees and Charges, 36980-36984 [2018-16276]

Download as PDF 36980 Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Notices Amendment No.: 304. A publiclyavailable version is in ADAMS under Accession No. ML18171A337; documents related to this amendment are listed in the Safety Evaluation enclosed with the amendment. Renewed Facility Operating License No. DPR–33: Amendment revised the Unit 1 operating license. Date of initial notice in Federal Register: The license amendment request was originally noticed in the Federal Register on April 10, 2018 (83 FR 15418). The supplement dated April 19, 2018, was noticed on May 8, 2018 (83 FR 20862), which superseded the original notice in its entirety. The Commission’s related evaluation of the amendment is contained in the Safety Evaluation dated July 10, 2018. No significant hazards consideration comments received: No. Dated at Rockville, Maryland, this 18th day of July 2018. For the Nuclear Regulatory Commission. Tara Inverso, Acting Deputy Director, Division of Operating Reactor Licensing, Office of Nuclear Reactor Regulation. [FR Doc. 2018–15682 Filed 7–30–18; 8:45 am] BILLING CODE 7590–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–83708; File No. SR– NYSEARCA–2018–52] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE Arca Options Fees and Charges and the NYSE Arca Equities Fees and Charges daltland on DSKBBV9HB2PROD with NOTICES July 25, 2018. 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 July 13, 2018, 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). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 VerDate Sep<11>2014 18:30 Jul 30, 2018 Jkt 244001 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the NYSE Arca Options Fees and Charges (the ‘‘Options Fee Schedule’’) and the NYSE Arca Equities Fees and Charges (the ‘‘Equities Fee Schedule’’ and, together with the Options Fee Schedule, the ‘‘Fee Schedules’’) related to colocation to provide Users with access to the systems, and connectivity to the data feeds, of various additional third parties. In addition, the Exchange proposes to amend its Fee Schedules to update the names of certain third parties to reflect their current names. The proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend the co-location 4 services offered by the Exchange to provide Users 5 with access 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’’), NYSE National, Inc. (‘‘NYSE National’’), and NYSE American LLC (‘‘NYSE American and, together with NYSE LLC and NYSE National, the ‘‘Affiliate PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 to the systems, and connectivity to the data feeds, of various additional third parties. In addition, the Exchange proposes to amend its Fee Schedules to update the names of certain third parties to reflect their current names. The Exchange proposes to make the corresponding amendments to the Exchange’s Fee Schedules related to these co-location services to reflect these proposed changes. As set forth in the Fee Schedules, the Exchange charges fees for connectivity to the execution systems of third party markets and other content service providers (‘‘Third Party Systems’’), and data feeds from third party markets and other content service providers (‘‘Third Party Data Feeds’’).6 The lists of Third Party Systems and Third Party Data Feeds are set forth in the Fee Schedules. The Exchange proposes to provide access to BM&F Bovespa, Canadian Securities Exchange (‘‘CSE’’), ITG TriAct MatchNow, NASDAQ Canada, Neo Aequitas, Omega, and OTC Markets Group as additional Third Party Systems (‘‘Proposed Third Party Systems’’). In addition, it proposes to provide connectivity to the same third parties’ data feeds, with the exception of the OTC Markets Group 7 (‘‘Proposed Third Party Data Feeds’’). BM&F Bovespa is a Brazilian national securities exchange. CSE and Neo Aequitas are Canadian national securities exchanges. NASDAQ Canada, also Canadian national securities exchange, operates three trading books for trading in Canadian securities: CXC, CXD, and CX2. ITG TriAct MatchNow and Omega are Canadian alternative markets that match customer orders in Canadian securities. OTC Markets Group operates trading platforms for over-the-counter securities. The Exchange would provide access to the Proposed Third Party Systems (‘‘Access’’), and connectivity to the Proposed Third Party Data Feeds (‘‘Connectivity’’), as conveniences to Users. Use of Access or Connectivity would be completely voluntary. The Exchange is not aware of any impediment to third parties offering Access or Connectivity. The Exchange does not have visibility into whether third parties currently offer, or intend to offer, Users access to the Proposed Third Party Systems and 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. 80310 (March 24, 2017), 82 FR 15763 (March 30, 2017) (SR–NYSEArca–2016–89). 7 The Exchange currently provides connectivity to the OTC Markets Group data feed as a Third Party Data Feed. E:\FR\FM\31JYN1.SGM 31JYN1 Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Notices connectivity to the Proposed Third Party Data Feeds, as such third parties are not required to make that information public. However, if one or more third parties presently offer, or in the future opt to offer, such Access and Connectivity to Users, a User may utilize the Secure Financial Transaction Infrastructure (‘‘SFTI’’) network, a third party telecommunication network, third party wireless network, a cross connect, or a combination thereof to access such services and products through a connection to an access center outside the data center (which could be a SFTI access center, a third-party access center, or both), another User, or a third party vendor. daltland on DSKBBV9HB2PROD with NOTICES Access to the Proposed Third Party Systems The Exchange proposes to revise the Fee Schedules to provide that Users may obtain connectivity to the Proposed Third Party Systems for a fee. As with the current Third Party Systems, Users would connect to the Proposed Third Party Systems over the internet protocol (‘‘IP’’) network, a local area network available in the data center.8 As with the current Third Party Systems, in order to obtain access to a Proposed Third Party System, the User would enter into an agreement with the relevant Proposed Third Party, pursuant to which the third party content service provider would charge the User for access to the Proposed Third Party System. The Exchange would then establish a unicast connection between the User and the Proposed Third Party System over the IP network.9 The Exchange would charge the User for the connectivity to the Proposed Third Party System. A User would only receive, and only be charged for, access to the Proposed Third Party System for which it enters into agreements with the third party content service provider. The Exchange has no ownership interest in any of the Proposed Third Party Systems. Establishing a User’s access to a Proposed Third Party System would not give the Exchange any right to use the Proposed Third Party System. Connectivity to a Proposed Third Party System would not provide access or 8 See Securities Exchange Act Release No. 74219 (February 6, 2015), 80 FR 7899 (February 12, 2015) (SR–NYSEArca2015–03) (notice of filing and immediate effectiveness of proposed rule change to include IP network connections). 9 Information flows over existing network connections in two formats: ‘‘unicast’’ format, which is a format that allows one-to-one communication, similar to a phone line, in which information is sent to and from the Exchange; and ‘‘multicast’’ format, which is a format in which information is sent one-way from the Exchange to multiple recipients at once, like a radio broadcast. VerDate Sep<11>2014 18:30 Jul 30, 2018 Jkt 244001 order entry to the Exchange’s execution system, and a User’s connection to the Proposed Third Party System would not be through the Exchange’s execution system. As with the existing connections to Third Party Systems, the Exchange proposes to charge a monthly recurring fee for connectivity to the Proposed Third Party Systems. Specifically, when a User requests access to a Proposed Third Party System, it would identify the applicable content service provider and what bandwidth connection it required. The Exchange proposes to modify its Fee Schedules to add the Proposed Third Party Systems to its existing list of Third Party Systems. The Exchange does not propose to change the monthly recurring fee the Exchange charges Users for unicast connectivity to each Third Party System, including the Proposed Third Party Systems. Connectivity to the Proposed Third Party Data Feeds The Exchange proposes to revise the Fee Schedules to provide that Users may obtain connectivity to the Proposed Third Party Data Feeds for a fee. The Exchange would receive a Proposed Third Party Data Feed from the content service provider at the Exchange’s data center. The Exchange would then provide connectivity to that data to Users for a fee. Users would connect to the Proposed Third Party Data Feeds over the IP network.10 The Proposed Third Party Data Feeds would include trading information concerning the securities that are traded on the relevant Proposed Third Party Systems. In order to connect to a Proposed Third Party Data Feed, a User would enter into a contract with the content service provider, pursuant to which the content service provider would charge the User for the data feed. The Exchange would receive the Proposed Third Party Data Feed over its fiber optic network and, after the content service provider and User entered into the contract and the Exchange received authorization from the content service provider, the Exchange would re-transmit the data to the User over the User’s port. The Exchange would charge the User for the connectivity to the Proposed Third Party Data Feed. A User would only receive, and would only be charged for, connectivity to a Proposed Third Party Data Feed for which it entered into a contract. 10 See supra note 8, at 7899 (‘‘The IP network also provides Users with access to away market data products’’). PO 00000 Frm 00110 Fmt 4703 Sfmt 4703 36981 The Exchange has no affiliation with the sellers of the Proposed Third Party Data Feeds. It would have no right to use the Proposed Third Party Data Feeds other than as a redistributor of the data. The Proposed Third Party Data Feeds would not provide access or order entry to the Exchange’s execution system. The Proposed Third Party Data Feeds would not provide access or order entry to the execution systems of the third parties generating the feeds. The Exchange would receive the Proposed Third Party Data Feeds via arms-length agreements and it would have no inherent advantage over any other distributor of such data. As it does with the existing Third Party Data Feeds, the Exchange proposes to charge a monthly recurring fee for connectivity to the Proposed Third Party Data Feeds. Depending on its needs and bandwidth, a User may opt to receive all or some of the feeds or services included in the Proposed Third Parties’ Data Feeds. The Exchange proposes to add the following fees for connectivity to the Proposed Third Party Data Feeds to its existing list in the Fee Schedules: (i) A $3,000 per month fee for BM&F Bovespa; (ii) a $1,500 per month fee for NASDAQ Canada; (iii) a $1,200 fee for Neo Aequitas; and (iv) a $1,000 per month fee for each of the CSE, ITG TriAct MatchNow and Omega. Name Changes The Exchange proposes to update references to the International Securities Exchange, LLC (‘‘ISE’’) to reflect its acquisition by NASDAQ, Inc. (‘‘NASDAQ’’).11 The Exchange also proposes to update references to Bats and Chicago Board Options Exchange (‘‘Cboe’’) to reflect their business combination and name changes.12 In the sections entitled, ‘‘Connectivity to Third Party Systems’’ and ‘‘Connectivity to Third Party Data Feeds’’, the Exchange proposes to replace references to ‘‘International Securities Exchange (ISE)’’ with ‘‘NASDAQ ISE’’. The 11 See Securities Exchange Act Release No. 78119 (June 27, 2016), 81 FR 41611 (SR–ISE2016–11; SR– ISE Gemini–2016–05; SR–ISE Mercury–2016–10) (Order Granting Accelerated Approval of Proposed Rule Changes, Each as Modified by Amendment No. 1 Thereto, Relating to a Corporate Transaction in Which Nasdaq, Inc. Will Become the Indirect Parent of ISE, ISE Gemini, and ISE Mercury). See also Securities Exchange Act Release No. 80325 (March 29, 2017), 82 FR 16445 (April 4, 2017) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Rename the Exchange as Nasdaq ISE, LLC). 12 See, e.g., Securities Exchange Act Release No. 81981 (October 30, 2017), 82 FR 51309 (November 3, 2017) (SR–CBOE–2017–066); and 81962 (October 26, 2017), 82 FR 50711 (November 1, 2017) (SR– BatsBZX–2017–70). E:\FR\FM\31JYN1.SGM 31JYN1 36982 Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Notices Exchange also proposes to delete a reference to ‘‘BATS’’ and replace it with ‘‘Cboe BYX Exchange (CboeBYX), Cboe BZX Exchange (CboeBZX), Cboe EDGA Exchange (CboeEDGA), and Cboe EDGX Exchange (CboeEDGX)’’ and to replace references to ‘‘Chicago Board Options Exchange (CBOE)’’ with ‘‘Cboe Exchange (Cboe) and Cboe C2 Exchange (C2)’’. In each case, the names would be updated to their current names, clearly delineating the third parties to which the Exchange provides connectivity and access. In a non-substantive change, the Exchange proposes to reorganize the table of Third Party Systems to ensure it remains alphabetical in light of the proposed name changes. The Exchange does not propose to amend any fee related to connectivity to ISE or Cboe systems or access to ISE or Cboe data. General daltland on DSKBBV9HB2PROD with NOTICES 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; 13 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 more of the Affiliate SROs.14 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. 13 As is currently the case, Users that receive colocation services from the Exchange will not receive any means of access to the Exchange’s trading and execution systems that is separate from, or superior to, that of other Users. In this regard, all orders sent to the Exchange enter the Exchange’s trading and execution systems through the same order gateway, regardless of whether the sender is co-located in the data center or not. In addition, co-located Users do not receive any market data or data service product that is not available to all Users, although Users that receive co-location services normally would expect reduced latencies in sending orders to, and receiving market data from, the Exchange. 14 See SR–NYSEArca–2013–80, supra note 6 at 50459. The Affiliate SROs have also submitted substantially the same proposed rule change to propose the changes described herein. See SR– NYSE–2018–32, SR–NYSEAmerican–2018–35, and SR–NYSENat–2018–15. VerDate Sep<11>2014 18:30 Jul 30, 2018 Jkt 244001 2. Statutory Basis The Exchange believes that the proposed fee change is consistent with Section 6(b) of the Act,15 in general, and furthers the objectives of Sections 6(b)(5) of the Act,16 in particular, because it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to, and perfect the mechanisms of, a free and open market and a national market system and, in general, to protect investors and the public interest and because it is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The Exchange believes that the proposed changes would remove impediments to, and perfect the mechanisms of, a free and open market and a national market system and, in general, protect investors and the public interest because, by offering additional services, the Exchange would give each User additional options for addressing its access and connectivity needs, responding to User demand for access and connectivity options. Providing additional services would help each User tailor its data center operations to the requirements of its business operations by allowing it to select the form and latency of access and connectivity that best suits its needs. The Exchange would provide Access and Connectivity as conveniences to Users. Use of Access or Connectivity would be completely voluntary. The Exchange is not aware of any impediment to third parties offering Access or Connectivity. The Exchange does not have visibility into whether third parties currently offer, or intend to offer, Users access to the Proposed Third Party Systems and connectivity to the Proposed Third Party Data Feeds. However, if one or more third parties presently offer, or in the future opt to offer, such access and connectivity to Users, a User may utilize the SFTI network, a third party telecommunication network, third party wireless network, a cross connect, or a combination thereof to access such services and products through a connection to an access center outside the data center (which could be a SFTI access center, a third-party access PO 00000 15 15 16 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). Frm 00111 Fmt 4703 center, or both), another User, or a third party vendor. The Exchange believes that the proposed changes would remove impediments to, and perfect the mechanisms of, a free and open market and a national market system and, in general, protect investors and the public interest because, by offering Access and Connectivity to Users when available, the Exchange would give Users additional options for connectivity and access to new services as soon as they are available, responding to User demand for access and connectivity options. The Exchange also believes that the proposed fee change is consistent with Section 6(b)(4) of the Act,17 in particular, because it provides for the equitable allocation of reasonable dues, fees, and other charges among its members, issuers and other persons using its facilities and does not unfairly discriminate between customers, issuers, brokers or dealers. The Exchange believes that the proposed 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. The Exchange believes that the additional services and fees proposed herein would be equitably allocated and not unfairly discriminatory because, in addition to the services being completely voluntary, they would be 17 15 Sfmt 4703 E:\FR\FM\31JYN1.SGM U.S.C. 78f(b)(4). 31JYN1 daltland on DSKBBV9HB2PROD with NOTICES Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Notices 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 receive Access or Connectivity would be charged the same amount for the same services. Users that opted to use Access or Connectivity would not receive access or connectivity that is not available to all Users, as all market participants that contracted with the relevant market or content provider would receive access or connectivity. The Exchange believes that the proposed charges would be reasonable, equitably allocated and not unfairly discriminatory because the Exchange would offer the Access and Connectivity 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 such services, including by responding to any production issues. Since the inception of co-location, the Exchange has made numerous improvements to the network hardware and technology infrastructure and has established additional administrative controls. The Exchange has expanded the network infrastructure to keep pace with the increased number of services available to Users, including resilient and redundant feeds. In addition, in order to provide Access and Connectivity, the Exchange would maintain multiple connections to each Proposed Third Party Data Feed and Proposed Third Party System, allowing the Exchange to provide resilient and redundant connections; adapt to any changes made by the relevant third party; and cover any applicable fees charged by the relevant third party, such as port fees. In addition, Users would not be required to use any of their bandwidth for Access and Connectivity unless they wish to do so. The Exchange believes the proposed fees for Access and Connectivity would be reasonable because they would allow the Exchange to defray or cover the costs associated with offering Users Access and Connectivity while providing Users the convenience of receiving such Access and Connectivity within co-location, helping them tailor their data center operations to the requirements of their business operations. 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 VerDate Sep<11>2014 18:30 Jul 30, 2018 Jkt 244001 established from time to time by the Exchange. The Exchange also believes that the proposal to update the names of ISE, Bats and Cboe removes impediments to, and perfects the mechanisms of, a free and open market and a national market system. The Exchange does not propose to amend any fee related to connectivity to ISE or Cboe systems or access to ISE or Cboe data. The Exchange simply proposes to update its Fee Schedules to accurately reflect NASDAQ’s acquisition of ISE and the business combination and name change of Bats and Cboe. Therefore, the Exchange believes the proposed rule change would avoid any potential investor confusion regarding the third parties to which the Exchange provides access and connectivity. The Exchange believes that the nonsubstantive change to ensure the names in the table of Third Party Systems are in alphabetical order would remove impediments to, and perfect the mechanisms of, a free and open market and a national market system and, in general, protect investors and the public interest because the amendment would clarify Exchange rules and make it easier for market participants to find Third Party Systems in the table. The Exchange believes that this proposed non-substantive change is reasonable because the change would have no impact on pricing or services offered. Rather, the change would alleviate possible market participant confusion by making it easier to find NASDAQ, ISE and Cboe in the table. 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,18 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 all of the proposed services are completely voluntary. The Exchange believes that providing Users with additional options for connectivity and access to new services would not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act because such proposed Access and Connectivity would satisfy User demand for access and connectivity options. The Exchange would provide Access and Connectivity as conveniences equally to all Users. PO 00000 18 15 U.S.C. 78f(b)(8). Frm 00112 Fmt 4703 Sfmt 4703 36983 The Exchange does not have visibility into whether third parties currently offer, or intend to offer, Users access to the Proposed Third Party Systems and connectivity to the Proposed Third Party Data Feeds, as third parties are not required to make that information public. However, if one or more third parties presently offer, or in the future opt to offer, such access and connectivity to Users, a User may utilize the SFTI network, a third party telecommunication network, third party wireless network, a cross connect, or a combination thereof to access such services and products through a connection to an access center outside the data center (which could be a SFTI access center, a third-party access center, or both), another User, or a third party vendor. Users that opt to use the proposed Access or Connectivity would not receive access or connectivity that is not available to all Users, as all market participants that contract with the content provider may receive access or connectivity. In this way, the proposed changes would enhance competition by helping Users tailor their Access and Connectivity to the needs of their business operations by allowing them to select the form and latency of access and connectivity that best suits their needs. 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 E:\FR\FM\31JYN1.SGM 31JYN1 36984 Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Notices proposed rule change reflects this competitive environment. The Exchange believes that the proposal to update the name of ISE to reflect its acquisition by NASDAQ and Bats and Cboe to reflect their business combination and name change will not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposal is ministerial in nature and is not designed to have any competitive impact. It simply seeks to update the Fee Schedules to accurately reference these markets in light of their recent name changes. The Exchange believes that the proposed non-substantive change to ensure the names in the table of Third Party Systems are in alphabetical order would not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act because the change would have no impact on pricing or the services offered. Rather, the change would alleviate possible market participant confusion by making it easier to find Third Party Systems in the table. 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. daltland on DSKBBV9HB2PROD with NOTICES III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 19 and Rule 19b–4(f)(6) thereunder.20 Because the 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 prior to 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b–4(f)(6)(iii) thereunder.21 19 15 U.S.C. 78s(b)(3)(A)(iii). 20 17 CFR 240.19b–4(f)(6). 21 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. VerDate Sep<11>2014 18:30 Jul 30, 2018 Jkt 244001 A proposed rule change filed under Rule 19b–4(f)(6) 22 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b–4(f)(6)(iii),23 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange requests that the Commission waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Exchange represents that the proposed rule changes present no new or novel issues. According to the Exchange, waiver of the operative delay would allow Users to access the Proposed Third Party Systems and the Proposed Third Party Data Feeds without delay, which would assist Users in tailoring their data center operations to the requirements of their business operations. The Exchange also represents that the proposed changes to the Price List would provide Users with more complete information regarding their Access and Connectivity options. The Exchange further asserts that waiver of the operative delay would help avoid potential investor confusion by allowing the Exchange to immediately update the names of the exchanges noted above to reflect recent business combinations and name changes. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. Accordingly, the Commission waives the 30-day operative delay and designates the proposed rule change operative upon filing.24 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) 25 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 CFR 240.19b–4(f)(6). CFR 240.19–4(f)(6)(iii). 24 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 25 15 U.S.C. 78s(b)(2)(B). PO 00000 22 17 23 17 Frm 00113 Fmt 4703 Sfmt 4703 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–2018–52 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–2018–52. 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 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–2018–52 and should be submitted on or before August 21, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.26 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018–16276 Filed 7–30–18; 8:45 am] BILLING CODE 8011–01–P 26 17 E:\FR\FM\31JYN1.SGM CFR 200.30–3(a)(12). 31JYN1

Agencies

[Federal Register Volume 83, Number 147 (Tuesday, July 31, 2018)]
[Notices]
[Pages 36980-36984]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-16276]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83708; File No. SR-NYSEARCA-2018-52]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE 
Arca Options Fees and Charges and the NYSE Arca Equities Fees and 
Charges

July 25, 2018.
    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 July 13, 2018, 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 (the ``Options Fee Schedule'') and the NYSE Arca Equities Fees 
and Charges (the ``Equities Fee Schedule'' and, together with the 
Options Fee Schedule, the ``Fee Schedules'') related to colocation to 
provide Users with access to the systems, and connectivity to the data 
feeds, of various additional third parties. In addition, the Exchange 
proposes to amend its Fee Schedules to update the names of certain 
third parties to reflect their current names. The proposed rule change 
is available on the Exchange's website at www.nyse.com, at the 
principal office of the Exchange, and at the Commission's Public 
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the co-location \4\ services offered 
by the Exchange to provide Users \5\ with access to the systems, and 
connectivity to the data feeds, of various additional third parties. In 
addition, the Exchange proposes to amend its Fee Schedules to update 
the names of certain third parties to reflect their current names. The 
Exchange proposes to make the corresponding amendments to the 
Exchange's Fee Schedules related to these co-location services to 
reflect these proposed changes.
---------------------------------------------------------------------------

    \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''), 
NYSE National, Inc. (``NYSE National''), and NYSE American LLC 
(``NYSE American and, together with NYSE LLC and NYSE National, the 
``Affiliate SROs''). See Securities Exchange Act Release No. 70173 
(August 13, 2013), 78 FR 50459 (August 19, 2013) (SR-NYSEArca-2013-
80).
---------------------------------------------------------------------------

    As set forth in the Fee Schedules, the Exchange charges fees for 
connectivity to the execution systems of third party markets and other 
content service providers (``Third Party Systems''), and data feeds 
from third party markets and other content service providers (``Third 
Party Data Feeds'').\6\ The lists of Third Party Systems and Third 
Party Data Feeds are set forth in the Fee Schedules.
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 80310 (March 24, 
2017), 82 FR 15763 (March 30, 2017) (SR-NYSEArca-2016-89).
---------------------------------------------------------------------------

    The Exchange proposes to provide access to BM&F Bovespa, Canadian 
Securities Exchange (``CSE''), ITG TriAct MatchNow, NASDAQ Canada, Neo 
Aequitas, Omega, and OTC Markets Group as additional Third Party 
Systems (``Proposed Third Party Systems''). In addition, it proposes to 
provide connectivity to the same third parties' data feeds, with the 
exception of the OTC Markets Group \7\ (``Proposed Third Party Data 
Feeds'').
---------------------------------------------------------------------------

    \7\ The Exchange currently provides connectivity to the OTC 
Markets Group data feed as a Third Party Data Feed.
---------------------------------------------------------------------------

    BM&F Bovespa is a Brazilian national securities exchange. CSE and 
Neo Aequitas are Canadian national securities exchanges. NASDAQ Canada, 
also Canadian national securities exchange, operates three trading 
books for trading in Canadian securities: CXC, CXD, and CX2. ITG TriAct 
MatchNow and Omega are Canadian alternative markets that match customer 
orders in Canadian securities. OTC Markets Group operates trading 
platforms for over-the-counter securities.
    The Exchange would provide access to the Proposed Third Party 
Systems (``Access''), and connectivity to the Proposed Third Party Data 
Feeds (``Connectivity''), as conveniences to Users. Use of Access or 
Connectivity would be completely voluntary. The Exchange is not aware 
of any impediment to third parties offering Access or Connectivity.
    The Exchange does not have visibility into whether third parties 
currently offer, or intend to offer, Users access to the Proposed Third 
Party Systems and

[[Page 36981]]

connectivity to the Proposed Third Party Data Feeds, as such third 
parties are not required to make that information public. However, if 
one or more third parties presently offer, or in the future opt to 
offer, such Access and Connectivity to Users, a User may utilize the 
Secure Financial Transaction Infrastructure (``SFTI'') network, a third 
party telecommunication network, third party wireless network, a cross 
connect, or a combination thereof to access such services and products 
through a connection to an access center outside the data center (which 
could be a SFTI access center, a third-party access center, or both), 
another User, or a third party vendor.
Access to the Proposed Third Party Systems
    The Exchange proposes to revise the Fee Schedules to provide that 
Users may obtain connectivity to the Proposed Third Party Systems for a 
fee. As with the current Third Party Systems, Users would connect to 
the Proposed Third Party Systems over the internet protocol (``IP'') 
network, a local area network available in the data center.\8\
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    \8\ See Securities Exchange Act Release No. 74219 (February 6, 
2015), 80 FR 7899 (February 12, 2015) (SR-NYSEArca2015-03) (notice 
of filing and immediate effectiveness of proposed rule change to 
include IP network connections).
---------------------------------------------------------------------------

    As with the current Third Party Systems, in order to obtain access 
to a Proposed Third Party System, the User would enter into an 
agreement with the relevant Proposed Third Party, pursuant to which the 
third party content service provider would charge the User for access 
to the Proposed Third Party System. The Exchange would then establish a 
unicast connection between the User and the Proposed Third Party System 
over the IP network.\9\ The Exchange would charge the User for the 
connectivity to the Proposed Third Party System. A User would only 
receive, and only be charged for, access to the Proposed Third Party 
System for which it enters into agreements with the third party content 
service provider.
---------------------------------------------------------------------------

    \9\ Information flows over existing network connections in two 
formats: ``unicast'' format, which is a format that allows one-to-
one communication, similar to a phone line, in which information is 
sent to and from the Exchange; and ``multicast'' format, which is a 
format in which information is sent one-way from the Exchange to 
multiple recipients at once, like a radio broadcast.
---------------------------------------------------------------------------

    The Exchange has no ownership interest in any of the Proposed Third 
Party Systems. Establishing a User's access to a Proposed Third Party 
System would not give the Exchange any right to use the Proposed Third 
Party System. Connectivity to a Proposed Third Party System would not 
provide access or order entry to the Exchange's execution system, and a 
User's connection to the Proposed Third Party System would not be 
through the Exchange's execution system.
    As with the existing connections to Third Party Systems, the 
Exchange proposes to charge a monthly recurring fee for connectivity to 
the Proposed Third Party Systems. Specifically, when a User requests 
access to a Proposed Third Party System, it would identify the 
applicable content service provider and what bandwidth connection it 
required.
    The Exchange proposes to modify its Fee Schedules to add the 
Proposed Third Party Systems to its existing list of Third Party 
Systems. The Exchange does not propose to change the monthly recurring 
fee the Exchange charges Users for unicast connectivity to each Third 
Party System, including the Proposed Third Party Systems.
Connectivity to the Proposed Third Party Data Feeds
    The Exchange proposes to revise the Fee Schedules to provide that 
Users may obtain connectivity to the Proposed Third Party Data Feeds 
for a fee. The Exchange would receive a Proposed Third Party Data Feed 
from the content service provider at the Exchange's data center. The 
Exchange would then provide connectivity to that data to Users for a 
fee. Users would connect to the Proposed Third Party Data Feeds over 
the IP network.\10\ The Proposed Third Party Data Feeds would include 
trading information concerning the securities that are traded on the 
relevant Proposed Third Party Systems.
---------------------------------------------------------------------------

    \10\ See supra note 8, at 7899 (``The IP network also provides 
Users with access to away market data products'').
---------------------------------------------------------------------------

    In order to connect to a Proposed Third Party Data Feed, a User 
would enter into a contract with the content service provider, pursuant 
to which the content service provider would charge the User for the 
data feed. The Exchange would receive the Proposed Third Party Data 
Feed over its fiber optic network and, after the content service 
provider and User entered into the contract and the Exchange received 
authorization from the content service provider, the Exchange would re-
transmit the data to the User over the User's port. The Exchange would 
charge the User for the connectivity to the Proposed Third Party Data 
Feed. A User would only receive, and would only be charged for, 
connectivity to a Proposed Third Party Data Feed for which it entered 
into a contract.
    The Exchange has no affiliation with the sellers of the Proposed 
Third Party Data Feeds. It would have no right to use the Proposed 
Third Party Data Feeds other than as a redistributor of the data. The 
Proposed Third Party Data Feeds would not provide access or order entry 
to the Exchange's execution system. The Proposed Third Party Data Feeds 
would not provide access or order entry to the execution systems of the 
third parties generating the feeds. The Exchange would receive the 
Proposed Third Party Data Feeds via arms-length agreements and it would 
have no inherent advantage over any other distributor of such data.
    As it does with the existing Third Party Data Feeds, the Exchange 
proposes to charge a monthly recurring fee for connectivity to the 
Proposed Third Party Data Feeds. Depending on its needs and bandwidth, 
a User may opt to receive all or some of the feeds or services included 
in the Proposed Third Parties' Data Feeds.
    The Exchange proposes to add the following fees for connectivity to 
the Proposed Third Party Data Feeds to its existing list in the Fee 
Schedules: (i) A $3,000 per month fee for BM&F Bovespa; (ii) a $1,500 
per month fee for NASDAQ Canada; (iii) a $1,200 fee for Neo Aequitas; 
and (iv) a $1,000 per month fee for each of the CSE, ITG TriAct 
MatchNow and Omega.
Name Changes
    The Exchange proposes to update references to the International 
Securities Exchange, LLC (``ISE'') to reflect its acquisition by 
NASDAQ, Inc. (``NASDAQ'').\11\ The Exchange also proposes to update 
references to Bats and Chicago Board Options Exchange (``Cboe'') to 
reflect their business combination and name changes.\12\ In the 
sections entitled, ``Connectivity to Third Party Systems'' and 
``Connectivity to Third Party Data Feeds'', the Exchange proposes to 
replace references to ``International Securities Exchange (ISE)'' with 
``NASDAQ ISE''. The

[[Page 36982]]

Exchange also proposes to delete a reference to ``BATS'' and replace it 
with ``Cboe BYX Exchange (CboeBYX), Cboe BZX Exchange (CboeBZX), Cboe 
EDGA Exchange (CboeEDGA), and Cboe EDGX Exchange (CboeEDGX)'' and to 
replace references to ``Chicago Board Options Exchange (CBOE)'' with 
``Cboe Exchange (Cboe) and Cboe C2 Exchange (C2)''. In each case, the 
names would be updated to their current names, clearly delineating the 
third parties to which the Exchange provides connectivity and access.
---------------------------------------------------------------------------

    \11\ See Securities Exchange Act Release No. 78119 (June 27, 
2016), 81 FR 41611 (SR-ISE2016-11; SR-ISE Gemini-2016-05; SR-ISE 
Mercury-2016-10) (Order Granting Accelerated Approval of Proposed 
Rule Changes, Each as Modified by Amendment No. 1 Thereto, Relating 
to a Corporate Transaction in Which Nasdaq, Inc. Will Become the 
Indirect Parent of ISE, ISE Gemini, and ISE Mercury). See also 
Securities Exchange Act Release No. 80325 (March 29, 2017), 82 FR 
16445 (April 4, 2017) (Notice of Filing and Immediate Effectiveness 
of Proposed Rule Change To Rename the Exchange as Nasdaq ISE, LLC).
    \12\ See, e.g., Securities Exchange Act Release No. 81981 
(October 30, 2017), 82 FR 51309 (November 3, 2017) (SR-CBOE-2017-
066); and 81962 (October 26, 2017), 82 FR 50711 (November 1, 2017) 
(SR-BatsBZX-2017-70).
---------------------------------------------------------------------------

    In a non-substantive change, the Exchange proposes to reorganize 
the table of Third Party Systems to ensure it remains alphabetical in 
light of the proposed name changes. The Exchange does not propose to 
amend any fee related to connectivity to ISE or Cboe systems or access 
to ISE or Cboe data.
General
    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; \13\ 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 more of the Affiliate 
SROs.\14\
---------------------------------------------------------------------------

    \13\ 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.
    \14\ See SR-NYSEArca-2013-80, supra note 6 at 50459. The 
Affiliate SROs have also submitted substantially the same proposed 
rule change to propose the changes described herein. See SR-NYSE-
2018-32, SR-NYSEAmerican-2018-35, and SR-NYSENat-2018-15.
---------------------------------------------------------------------------

    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 fee change is consistent 
with Section 6(b) of the Act,\15\ in general, and furthers the 
objectives of Sections 6(b)(5) of the Act,\16\ in particular, because 
it is designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to, and 
perfect the mechanisms of, a free and open market and a national market 
system and, in general, to protect investors and the public interest 
and because it is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed changes would remove 
impediments to, and perfect the mechanisms of, a free and open market 
and a national market system and, in general, protect investors and the 
public interest because, by offering additional services, the Exchange 
would give each User additional options for addressing its access and 
connectivity needs, responding to User demand for access and 
connectivity options. Providing additional services would help each 
User tailor its data center operations to the requirements of its 
business operations by allowing it to select the form and latency of 
access and connectivity that best suits its needs.
    The Exchange would provide Access and Connectivity as conveniences 
to Users. Use of Access or Connectivity would be completely voluntary. 
The Exchange is not aware of any impediment to third parties offering 
Access or Connectivity. The Exchange does not have visibility into 
whether third parties currently offer, or intend to offer, Users access 
to the Proposed Third Party Systems and connectivity to the Proposed 
Third Party Data Feeds. However, if one or more third parties presently 
offer, or in the future opt to offer, such access and connectivity to 
Users, a User may utilize the SFTI network, a third party 
telecommunication network, third party wireless network, a cross 
connect, or a combination thereof to access such services and products 
through a connection to an access center outside the data center (which 
could be a SFTI access center, a third-party access center, or both), 
another User, or a third party vendor.
    The Exchange believes that the proposed changes would remove 
impediments to, and perfect the mechanisms of, a free and open market 
and a national market system and, in general, protect investors and the 
public interest because, by offering Access and Connectivity to Users 
when available, the Exchange would give Users additional options for 
connectivity and access to new services as soon as they are available, 
responding to User demand for access and connectivity options.
    The Exchange also believes that the proposed fee change is 
consistent with Section 6(b)(4) of the Act,\17\ 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.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    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 additional services and fees 
proposed herein would be equitably allocated and not unfairly 
discriminatory because, in addition to the services being completely 
voluntary, they would be

[[Page 36983]]

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 receive Access or Connectivity would be charged the same 
amount for the same services. Users that opted to use Access or 
Connectivity would not receive access or connectivity that is not 
available to all Users, as all market participants that contracted with 
the relevant market or content provider would receive access or 
connectivity.
    The Exchange believes that the proposed charges would be 
reasonable, equitably allocated and not unfairly discriminatory because 
the Exchange would offer the Access and Connectivity 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 such services, including by responding to 
any production issues. Since the inception of co-location, the Exchange 
has made numerous improvements to the network hardware and technology 
infrastructure and has established additional administrative controls. 
The Exchange has expanded the network infrastructure to keep pace with 
the increased number of services available to Users, including 
resilient and redundant feeds. In addition, in order to provide Access 
and Connectivity, the Exchange would maintain multiple connections to 
each Proposed Third Party Data Feed and Proposed Third Party System, 
allowing the Exchange to provide resilient and redundant connections; 
adapt to any changes made by the relevant third party; and cover any 
applicable fees charged by the relevant third party, such as port fees. 
In addition, Users would not be required to use any of their bandwidth 
for Access and Connectivity unless they wish to do so.
    The Exchange believes the proposed fees for Access and Connectivity 
would be reasonable because they would allow the Exchange to defray or 
cover the costs associated with offering Users Access and Connectivity 
while providing Users the convenience of receiving such Access and 
Connectivity within co-location, helping them tailor their data center 
operations to the requirements of their business operations.
    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.
    The Exchange also believes that the proposal to update the names of 
ISE, Bats and Cboe removes impediments to, and perfects the mechanisms 
of, a free and open market and a national market system. The Exchange 
does not propose to amend any fee related to connectivity to ISE or 
Cboe systems or access to ISE or Cboe data. The Exchange simply 
proposes to update its Fee Schedules to accurately reflect NASDAQ's 
acquisition of ISE and the business combination and name change of Bats 
and Cboe. Therefore, the Exchange believes the proposed rule change 
would avoid any potential investor confusion regarding the third 
parties to which the Exchange provides access and connectivity.
    The Exchange believes that the non-substantive change to ensure the 
names in the table of Third Party Systems are in alphabetical order 
would remove impediments to, and perfect the mechanisms of, a free and 
open market and a national market system and, in general, protect 
investors and the public interest because the amendment would clarify 
Exchange rules and make it easier for market participants to find Third 
Party Systems in the table. The Exchange believes that this proposed 
non-substantive change is reasonable because the change would have no 
impact on pricing or services offered. Rather, the change would 
alleviate possible market participant confusion by making it easier to 
find NASDAQ, ISE and Cboe in the table.
    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,\18\ 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 all of the proposed services are completely 
voluntary.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

    The Exchange believes that providing Users with additional options 
for connectivity and access to new services would not impose any burden 
on competition that is not necessary or appropriate in furtherance of 
the purposes of the Act because such proposed Access and Connectivity 
would satisfy User demand for access and connectivity options. The 
Exchange would provide Access and Connectivity as conveniences equally 
to all Users. The Exchange does not have visibility into whether third 
parties currently offer, or intend to offer, Users access to the 
Proposed Third Party Systems and connectivity to the Proposed Third 
Party Data Feeds, as third parties are not required to make that 
information public. However, if one or more third parties presently 
offer, or in the future opt to offer, such access and connectivity to 
Users, a User may utilize the SFTI network, a third party 
telecommunication network, third party wireless network, a cross 
connect, or a combination thereof to access such services and products 
through a connection to an access center outside the data center (which 
could be a SFTI access center, a third-party access center, or both), 
another User, or a third party vendor. Users that opt to use the 
proposed Access or Connectivity would not receive access or 
connectivity that is not available to all Users, as all market 
participants that contract with the content provider may receive access 
or connectivity. In this way, the proposed changes would enhance 
competition by helping Users tailor their Access and Connectivity to 
the needs of their business operations by allowing them to select the 
form and latency of access and connectivity that best suits their 
needs.
    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

[[Page 36984]]

proposed rule change reflects this competitive environment.
    The Exchange believes that the proposal to update the name of ISE 
to reflect its acquisition by NASDAQ and Bats and Cboe to reflect their 
business combination and name change will not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. The proposal is ministerial in nature and is not 
designed to have any competitive impact. It simply seeks to update the 
Fee Schedules to accurately reference these markets in light of their 
recent name changes.
    The Exchange believes that the proposed non-substantive change to 
ensure the names in the table of Third Party Systems are in 
alphabetical order would not impose any burden on competition that is 
not necessary or appropriate in furtherance of the purposes of the Act 
because the change would have no impact on pricing or the services 
offered. Rather, the change would alleviate possible market participant 
confusion by making it easier to find Third Party Systems in the table.

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 Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \19\ and Rule 19b-4(f)(6) thereunder.\20\ 
Because the 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 prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\21\
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    \19\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \20\ 17 CFR 240.19b-4(f)(6).
    \21\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \22\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\23\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange requests 
that the Commission waive the 30-day operative delay so that the 
proposal may become operative immediately upon filing. The Exchange 
represents that the proposed rule changes present no new or novel 
issues. According to the Exchange, waiver of the operative delay would 
allow Users to access the Proposed Third Party Systems and the Proposed 
Third Party Data Feeds without delay, which would assist Users in 
tailoring their data center operations to the requirements of their 
business operations. The Exchange also represents that the proposed 
changes to the Price List would provide Users with more complete 
information regarding their Access and Connectivity options. The 
Exchange further asserts that waiver of the operative delay would help 
avoid potential investor confusion by allowing the Exchange to 
immediately update the names of the exchanges noted above to reflect 
recent business combinations and name changes. The Commission believes 
that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest. Accordingly, the 
Commission waives the 30-day operative delay and designates the 
proposed rule change operative upon filing.\24\
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    \22\ 17 CFR 240.19b-4(f)(6).
    \23\ 17 CFR 240.19-4(f)(6)(iii).
    \24\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \25\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \25\ 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-2018-52 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-2018-52. 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 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-2018-52 and should be submitted 
on or before August 21, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\26\
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    \26\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-16276 Filed 7-30-18; 8:45 am]
 BILLING CODE 8011-01-P