Self-Regulatory Organizations; NYSE National, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Schedule of Fees and Rebates, 37028-37033 [2018-16277]
Download as PDF
<![CDATA[
37028
Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Notices
processes to new matters that are
initiated on or after that implementation
date. Any matters initiated prior to the
implementation date will be completed
using the current processes. As a
consequence, the Exchange will delete
the applicable portions of Chapters 15–
17 from the Exchange’s Rulebook, but it
will maintain a transitional Rulebook on
the Exchange’s public rules website
(https://nasdaqmrx.cchwallstreet.com/),
which will contain the Exchange Rules
as they are at the time of filing this rule
change.52 These transitional Rules will
apply exclusively to the matters
initiated prior to the implementation
date. Upon conclusion of the last matter
to which the transitional rules apply,
the Exchange will remove the defunct
transitional rules from its public rules
website. Thus, the transition will be
conducted in a fair, orderly, and
transparent manner.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will result in
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as amended
[sic]. The proposed rule change is not
intended to address competitive issues,
but it should reduce burdens on
Members, [sic] and Associated Persons.
Specifically and as described in detail
above, the Exchange believes that this
change will bring efficiency and
consistency in application of the
investigative, disciplinary, and
adjudicatory processes, thereby
reducing the burden on Members and
Associated Persons who are also
members of BX and the other Nasdaq,
Inc. Exchanges.
daltland on DSKBBV9HB2PROD with NOTICES
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
52 The posting of the transitional rules on the
public rules website will make it clear what
disciplinary proceedings are governed by the
transitional rules (i.e., matters initiated prior to the
implementation date).
VerDate Sep<11>2014
18:30 Jul 30, 2018
Jkt 244001
become effective pursuant to Section
19(b)(3)(A)(iii) of the Act 53 and
subparagraph (f)(6) of Rule 19b–4
thereunder.54
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: (i) Necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) 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
should be approved or disapproved.
IV. Solicitation of Comments
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–MRX–2018–23 and should
be submitted on or before August 21,
2018.
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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.55
Eduardo A. Aleman,
Assistant Secretary.
Electronic Comments
[FR Doc. 2018–16273 Filed 7–30–18; 8:45 am]
• 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–
MRX–2018–23 on the subject line.
BILLING CODE 8011–01–P
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–MRX–2018–23. 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
U.S.C. 78s(b)(3)(A)(iii).
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.
PO 00000
53 15
54 17
Frm 00157
Fmt 4703
Sfmt 4703
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83709; File No. SR–
NYSENAT–2018–15]
Self-Regulatory Organizations; NYSE
National, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Its Schedule of
Fees and Rebates
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 National, Inc. (‘‘Exchange’’
or ‘‘NYSE National’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
Schedule of Fees and Rebates (the
‘‘Price List’’) related to colocation to
provide Users with access to the
55 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
E:\FR\FM\31JYN1.SGM
31JYN1
Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Notices
systems, and connectivity to the data
feeds, of various additional third
parties. In addition, the Exchange
proposes to amend its Price List 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
daltland on DSKBBV9HB2PROD with NOTICES
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 Price List 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 Price List related to these colocation services to reflect these
proposed changes.
As set forth in the Price List, the
Exchange charges fees for connectivity
4 The Exchange initially filed rule changes
relating to its co-location services with the
Commission on May 18, 2018. See Securities
Exchange Act Release No. 83351 (May 31, 2018), 83
FR 26314 (June 6, 2018) (SR–NYSENAT–2018–07).
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 id. at note 9. As specified
in the Price List, 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 NYSE American LLC (‘‘NYSE American’’),
New York Stock Exchange LLC (‘‘NYSE’’), and
NYSE Arca, Inc. (‘‘NYSE Arca’’ and, together with
NYSE American and NYSE, the ‘‘Affiliate SROs’’).
See id. at note 11.
VerDate Sep<11>2014
18:30 Jul 30, 2018
Jkt 244001
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 Price List.
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
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
supra note 4.
Exchange currently provides connectivity to
the OTC Markets Group data feed as a Third Party
Data Feed.
PO 00000
6 See
7 The
Frm 00158
Fmt 4703
Sfmt 4703
37029
center, or both), another User, or a third
party vendor.
Access to the Proposed Third Party
Systems
The Exchange proposes to revise the
Price List 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
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
Price List to add the Proposed Third
Party Systems to its existing list of Third
Party Systems. The Exchange does not
8 See
supra note 4.
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.
9 Information
E:\FR\FM\31JYN1.SGM
31JYN1
37030
Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Notices
daltland on DSKBBV9HB2PROD with NOTICES
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
Price List 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.
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
10 See
supra note 4, at 26315, 26316.
VerDate Sep<11>2014
18:30 Jul 30, 2018
Jkt 244001
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 Price List: (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
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.
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).
PO 00000
Frm 00159
Fmt 4703
Sfmt 4703
General
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.
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
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–NYSENAT–2018–07, supra note 4 at
26314. The Affiliate SROs have also submitted
substantially the same proposed rule change to
propose the changes described herein. See SR–
NYSEArca–2018–52, SR–NYSEAmerican–2018–35,
and SR–NYSE–2018–32.
15 15 U.S.C. 78f(b).
16 15 U.S.C. 78f(b)(5).
E:\FR\FM\31JYN1.SGM
31JYN1
daltland on DSKBBV9HB2PROD with NOTICES
Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Notices
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
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
17 15
U.S.C. 78f(b)(4).
VerDate Sep<11>2014
18:30 Jul 30, 2018
Jkt 244001
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
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
PO 00000
Frm 00160
Fmt 4703
Sfmt 4703
37031
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 Price List 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
E:\FR\FM\31JYN1.SGM
31JYN1
37032
Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Notices
daltland on DSKBBV9HB2PROD with NOTICES
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.
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
18 15
U.S.C. 78f(b)(8).
VerDate Sep<11>2014
18:30 Jul 30, 2018
Jkt 244001
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
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 Price List 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
PO 00000
Frm 00161
Fmt 4703
Sfmt 4703
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
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
19 15
U.S.C. 78s(b)(3)(A)(iii).
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.
22 17 CFR 240.19b–4(f)(6).
23 17 CFR 240.19b–4(f)(6)(iii).
20 17
E:\FR\FM\31JYN1.SGM
31JYN1
Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Notices
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.
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–NYSENAT–2018–15 and
should be submitted on or before
August 21, 2018.
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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.26
Eduardo A. Aleman,
Assistant Secretary.
daltland on DSKBBV9HB2PROD with NOTICES
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–
NYSENAT–2018–15 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–NYSENAT–2018–15. 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
[FR Doc. 2018–16277 Filed 7–30–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83706; File No. SR–NYSE–
2018–32]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend Its
Price List Related to Colocation
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, New York Stock Exchange LLC
(‘‘NYSE’’ 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 self-regulatory organization. The
Commission is publishing this notice to
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).
VerDate Sep<11>2014
18:30 Jul 30, 2018
Jkt 244001
PO 00000
26 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
Frm 00162
Fmt 4703
Sfmt 4703
37033
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 its
Price List 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 Price List 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
4 The Exchange initially filed rule changes
relating to its co-location services with the
Commission in 2010. See Securities Exchange Act
Release No. 62960 (September 21, 2010), 75 FR
59310 (September 27, 2010) (SR–NYSE–2010–56).
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. 76008 (September 29, 2015), 80 FR
60190 (October 5, 2015) (SR–NYSE–2015–40). As
specified in the Price List, a User that incurs colocation 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 NYSE American LLC (‘‘NYSE
American’’), NYSE National, Inc. (‘‘National’’), and
NYSE Arca, Inc. (‘‘NYSE Arca’’ and, together with
NYSE American and NYSE National, the ‘‘Affiliate
SROs’’). See Securities Exchange Act Release No.
70206 (August 15, 2013), 78 FR 51765 (August 21,
2013) (SR–NYSE–2013–59).
E:\FR\FM\31JYN1.SGM
31JYN1
]]>Agencies
[Federal Register Volume 83, Number 147 (Tuesday, July 31, 2018)]
[Notices]
[Pages 37028-37033]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-16277]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-83709; File No. SR-NYSENAT-2018-15]
Self-Regulatory Organizations; NYSE National, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its
Schedule of Fees and Rebates
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 National, Inc. (``Exchange'' or ``NYSE
National'') 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 its Schedule of Fees and Rebates
(the ``Price List'') related to colocation to provide Users with access
to the
[[Page 37029]]
systems, and connectivity to the data feeds, of various additional
third parties. In addition, the Exchange proposes to amend its Price
List 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 Price List 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 Price List 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 on May 18, 2018. See
Securities Exchange Act Release No. 83351 (May 31, 2018), 83 FR
26314 (June 6, 2018) (SR-NYSENAT-2018-07). 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 id. at note 9. As
specified in the Price List, 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 NYSE American LLC (``NYSE American''),
New York Stock Exchange LLC (``NYSE''), and NYSE Arca, Inc. (``NYSE
Arca'' and, together with NYSE American and NYSE, the ``Affiliate
SROs''). See id. at note 11.
---------------------------------------------------------------------------
As set forth in the Price List, 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 Price List.
---------------------------------------------------------------------------
\6\ See supra note 4.
---------------------------------------------------------------------------
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 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 Price List 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\
---------------------------------------------------------------------------
\8\ See supra note 4.
---------------------------------------------------------------------------
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 Price List to add the Proposed
Third Party Systems to its existing list of Third Party Systems. The
Exchange does not
[[Page 37030]]
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 Price List 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 4, at 26315, 26316.
---------------------------------------------------------------------------
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 Price
List: (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 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-NYSENAT-2018-07, supra note 4 at 26314. The
Affiliate SROs have also submitted substantially the same proposed
rule change to propose the changes described herein. See SR-
NYSEArca-2018-52, SR-NYSEAmerican-2018-35, and SR-NYSE-2018-32.
---------------------------------------------------------------------------
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
[[Page 37031]]
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 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 Price List 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
[[Page 37032]]
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 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
Price List 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\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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
[[Page 37033]]
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\
---------------------------------------------------------------------------
\22\ 17 CFR 240.19b-4(f)(6).
\23\ 17 CFR 240.19b-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).
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\25\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
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-NYSENAT-2018-15 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-NYSENAT-2018-15. 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-NYSENAT-2018-15 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\
---------------------------------------------------------------------------
\26\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-16277 Filed 7-30-18; 8:45 am]
BILLING CODE 8011-01-P
