Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Options Fee Schedule and Equities Price List To Extend for One Year a Fee Discount for the Partial Cabinet Solution Bundles Offered in Connection With the Exchange's Co-Location Services, 67754-67757 [2018-28399]
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67754
Federal Register / Vol. 83, No. 249 / Monday, December 31, 2018 / Notices
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NASDAQ–2018–105, and
should be submitted on or before
January 22, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Brent J. Fields,
Secretary.
[FR Doc. 2018–28394 Filed 12–28–18; 8:45 am]
Items I, II, and III below, which Items
have been prepared by the selfregulatory 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
Options Fee Schedule (the ‘‘Options Fee
Schedule’’) and Equities Price List (the
‘‘Equities Fee Schedule’’, together with
the Options Fee Schedule, the ‘‘Fee
Schedules’’) to extend for one year a fee
discount for the Partial Cabinet Solution
bundles offered in connection with the
Exchange’s co-location services. The
proposed change is available on the
Exchange’s website at www.nyse.com, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
BILLING CODE 8011–01–P
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–84925; File No. SR–
NYSEAMER–2018–55]
Self-Regulatory Organizations; NYSE
American LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Its Options
Fee Schedule and Equities Price List
To Extend for One Year a Fee Discount
for the Partial Cabinet Solution
Bundles Offered in Connection With
the Exchange’s Co-Location Services
December 21, 2018.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on December
20, 2018, NYSE American LLC (the
‘‘Exchange’’ or ‘‘NYSE American’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
12 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.
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend the
Exchange’s Fee Schedules to extend a
fee discount for the Partial Cabinet
Solution bundles offered in connection
with the Exchange’s co-location
services.4 The Exchange offers the four
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4 The Exchange initially filed rule changes
relating to its co-location services with the
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Partial Cabinet Solution bundles to
attract smaller Users, such as those with
minimal power or cabinet space
demands, or those for which the
attendant costs of having a dedicated
cabinet and related connectivity are too
burdensome.5
The Exchange offers Users 6 that
purchase a Partial Cabinet Solution
bundle on or before December 31, 2018
a 50% reduction in the monthly
recurring charges (‘‘MRC’’) for the first
24 months.7 The Exchange proposes to
extend the 50% fee reduction to those
Users that purchase a Partial Cabinet
Solution bundle on or before December
31, 2019.8 The Exchange does not
propose to amend the length of the
discount period.
The amended portions of the Fee
Schedules would read as follows:
Commission in 2010. See Securities Exchange Act
Release No. 62961 (September 21, 2010), 75 FR
59299 (September 27, 2010) (SR–NYSEAmex–2010–
80) (the ‘‘Original Co-location Filing’’). The
Exchange operates a data center in Mahwah, New
Jersey (the ‘‘data center’’) from which it provides
co-location services to Users.
5 See Securities Exchange Act Release No. 77071
(February 5, 2016), 81 FR 7382 (February 11, 2016)
(SR–NYSEMKT–2015–89).
6 For purposes of the Exchange’s co-location
services, a ‘‘User’’ means any market participant
that requests to receive co-location services directly
from the Exchange. See Securities Exchange Act
Release No. 76009 (September 29, 2015), 80 FR
60213 (October 5, 2015) (SR–NYSEMKT–2015–67).
As specified in the Price List and Fee Schedule, a
User that incurs co-location fees for a particular colocation 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’’), NYSE Arca,
Inc. (‘‘NYSE Arca’’) and NYSE National, Inc.
(‘‘NYSE National’’ and, together, the ‘‘Affiliate
SROs’’). See Securities Exchange Act Release No.
70176 (August 13, 2013), 78 FR 50471 (August 19,
2013) (SR–NYSEMKT–2013–67).
7 See Securities Exchange Act Release No. 79717
(December 30, 2016), 82 FR 1767 (January. 6, 2017)
(SR–NYSEMKT–2016–123).
8 The Exchange previously extended the MRC
reduction for one year. See Securities Exchange Act
Release No. 82224 (December 6, 2017), 82 FR 58465
(December 12, 2017) (SR–NYSEAmer–2017–35).
See also Securities Exchange Act Release Nos.
82223 (December 6, 2017) 82 FR 58459 (December
12, 2017) (SR–NYSE–2017–62), and 82226
(December 6, 2017), 82 FR 58462 (December 12,
2017) (SR–NYSEArca–2017–134).
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Federal Register / Vol. 83, No. 249 / Monday, December 31, 2018 / Notices
Type of service
Description
Amount of charge
Partial Cabinet Solution bundles. Note: A User
and its Affiliates are limited to one Partial
Cabinet Solution bundle at a time. A User
and its Affiliates must have an Aggregate
Cabinet Footprint of 2 kW or less to qualify
for a Partial Cabinet Solution bundle. See
Note 2 under ‘‘General Notes.’’.
Option A: 1 kW partial cabinet, 1 LCN connection (1 Gb), 1 IP network connection (1
Gb), 2 fiber cross connections and either
the Network Time Protocol Feed or Precision Timing Protocol.
$7,500 initial charge per bundle plus monthly
charge per bundle as follows:
• For Users that order on or before December 31, 2019: $3,000 monthly for
first 24 months of service, and $6,000
monthly thereafter.
• For Users that order after December
31, 2019: $6,000 monthly.
Option B: 2 kW partial cabinet, 1 LCN connection (1 Gb), 1 IP network connection (1
Gb), 2 fiber cross connections and either
the Network Time Protocol Feed or Precision Timing Protocol.
$7,500 initial charge per bundle plus monthly
charge per bundle as follows:
• For Users that order on or before December 31, 2019: $3,500 monthly for
first 24 months of service, and $7,000
monthly thereafter.
• For Users that order after December
31, 2019: $7,000 monthly.
Option C: 1 kW partial cabinet, 1 LCN connection (10 Gb), 1 IP network connection
(10 Gb), 2 fiber cross connections and either the Network Time Protocol Feed or
Precision Timing Protocol.
$10,000 initial charge per bundle plus monthly
charge per bundle as follows:
• For Users that order on or before December 31, 2019: $7,000 monthly for
first 24 months of service, and $14,000
monthly thereafter.
• For Users that order after December
31, 2019: $14,000 monthly.
Option D: 2 kW partial cabinet, 1 LCN connection (10 Gb), 1 IP network connection
(10 Gb), 2 fiber cross connections and either the Network Time Protocol Feed or
Precision Timing Protocol.
$10,000 initial charge per bundle plus monthly
charge per bundle as follows:
• For Users that order on or before December 31, 2019: $7,500 monthly for
first 24 months of service, and $15,000
monthly thereafter.
• For Users that order after December
31, 2019: $15,000 monthly.
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; 9 and (iii) a User would only incur
one charge for the particular co-location
service described herein, regardless of
whether the User connects only to the
Exchange or to the Exchange and one or
both of its affiliates.10
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67755
9 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.
10 See SR–NYSEMKT–2013–67, supra note 6 at
50471. The Exchange’s affiliates have also
submitted substantially the same proposed rule
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2. Statutory Basis
The Exchange believes that the
proposal is consistent with Section 6(b)
of the Act,11 in general, and furthers the
objectives of Sections 6(b)(4) 12 and
6(b)(5) 13 of the Act, in particular. The
proposal is consistent with Section
6(b)(4) of the Act 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 Proposal
is also consistent with Section 6(b)(5) of
the Act because it is designed to
promote just and equitable principles of
trade, remove impediments to, and
perfect the mechanisms of, a free and
open market and a national market
system and is not designed to permit
unfair discrimination between
customers, issuers, brokers, or dealers.
The Exchange believes that the
proposal provides for the equitable
allocation of reasonable dues, fees, and
change to propose the changes described herein.
See SR–NYSE–2018–63 and SR–NYSEArca–2018–
93, and SR–NYSENAT–2018–26.
11 15 U.S.C. 78f(b).
12 15 U.S.C. 78f(b)(4).
13 15 U.S.C. 78f(b)(5).
PO 00000
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other charges because it would extend
the existing eligibility for a 50% MRC
reduction for another year, providing
smaller Users with minimal power or
cabinet space demands with additional
time to purchase a Partial Cabinet
Solution at a discounted rate. The
Exchange believes that it is reasonable
to continue to offer the fee reduction as
an incentive to Users to utilize the
service, including both new and past
Users. As is currently the case, the
purchase of any colocation service
(including Partial Cabinet Solution
bundles) is completely voluntary. All
Users that order a bundle on or before
December 31, 2019 would have their
MRC reduced by 50% for the first 24
months.
The proposal would remove
impediments to, and perfects the
mechanisms of, a free and open market
and a national market system because
extending the 50% MRC reduction
would continue to make it more cost
effective for Users to utilize co-location
by offering a cost effective, convenient
way to create a colocation environment,
through the choice of four Partial
Cabinet Solution bundles with different
cabinet footprints and network
connections options. As mentioned
E:\FR\FM\31DEN1.SGM
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Federal Register / Vol. 83, No. 249 / Monday, December 31, 2018 / Notices
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above, the Exchange expects that such
Users would include those with
minimal power or cabinet space
demands and Users for which the costs
attendant with having a dedicated
cabinet or greater network connection
bandwidth are too burdensome.
The proposal would not unfairly
discriminate between customers,
issuers, brokers or dealers because it
would apply to all Users equally. The
Exchange would continue to offer the
same four different Partial Cabinet
Solution bundles with different cabinet
footprints and network connections
options. Users that require other sizes or
combinations of cabinets, network
connections and cross connects could
still request them.
For the reasons above, the proposed
changes do not unfairly discriminate
between or among market participants
that are otherwise capable of satisfying
any applicable co-location fees,
requirements, terms and conditions
established from time to time by the
Exchange.
Finally, the Exchange believes that it
is subject to significant competitive
forces, as described below in the
Exchange’s statement regarding the
burden on competition.
For these reasons, the Exchange
believes that the proposal is consistent
with the Act.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The proposed rule changes will not
impose any burden on competition that
is not necessary or appropriate in
furtherance of the purposes of Section
6(b)(8) of the Act.14 The proposal
changes will enhance competition by
continuing to offer cost effective options
for Users to create a colocation
environment through four Partial
Cabinet Solution bundles. Partial
Cabinet Solution bundles allow Users to
select their desired cabinet footprint and
network connections at a reduced MRC
for the first 24 months. Such Users may
choose, in turn, to pass on such cost
savings to their customers. In addition
to the proposed services being
completely voluntary, they are available
to all Users on an equal basis (i.e., the
same products and services are available
to all Users, and the extension of the
50% reduction for the MRC for the
Partial Cabinet Solution bundles, would
apply to all Users).
The Exchange operates in a highly
competitive market in which exchanges
offer co-location services as a means to
facilitate the trading and other market
activities of those market participants
who believe that co-location enhances
the efficiency of their operations.
Accordingly, fees charged for colocation services are constrained by the
active competition for the order flow of,
and other business from, such market
participants. If a particular exchange
charges excessive fees for co-location
services, affected market participants
will opt to terminate their co-location
arrangements with that exchange, and
adopt a possible range of alternative
strategies, including placing their
servers in a physically proximate
location outside the exchange’s data
center (which could be a competing
exchange), or pursuing strategies less
dependent upon the lower exchange-toparticipant latency associated with colocation. Accordingly, the exchange
charging excessive fees would stand to
lose not only co-location revenues but
also the liquidity of the formerly colocated trading firms, which could have
additional follow-on effects on the
market share and revenue of the affected
exchange. In such an environment, the
Exchange must continually review, and
consider adjusting, its services and
related fees and credits to remain
competitive with other exchanges.
For the reasons described above, the
Exchange believes that the proposed
rule changes reflect this competitive
environment.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective
upon filing pursuant to Section
19(b)(3)(A) 15 of the Act and
subparagraph (f)(2) of Rule 19b–4 16
thereunder, because it establishes a due,
fee, or other charge imposed by the
Exchange.
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
15 15
14 15
U.S.C. 78f(b)(8).
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16:24 Dec 28, 2018
16 17
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PO 00000
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
Frm 00045
Fmt 4703
Sfmt 4703
under Section 19(b)(2)(B) 17 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSEAMER–2018–55 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–NYSEAMER–2018–55. 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–NYSEAMER–2018–55 and
17 15
E:\FR\FM\31DEN1.SGM
U.S.C. 78s(b)(2)(B).
31DEN1
Federal Register / Vol. 83, No. 249 / Monday, December 31, 2018 / Notices
should be submitted on or before
January 22, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Brent J. Fields,
Secretary.
[FR Doc. 2018–28399 Filed 12–28–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–84946; File No. SR–
CboeEDGX–2018–061]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change to Rule 21.5,
Minimum Increments, To Extend the
Penny Pilot Program
December 21, 2018.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on December
20, 2018, Cboe EDGX Exchange, Inc.
(the ‘‘Exchange’’ or ‘‘EDGX’’) filed with
the Securities Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Exchange has
designated this proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A) of the
Act 3 and Rule 19b–4(f)(6)(iii)
thereunder,4 which renders it effective
upon filing with the Commission. 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 filed a proposal for the
EDGX Options Market (‘‘EDGX
Options’’) to extend through June 30,
2019 the Penny Pilot Program (‘‘Penny
Pilot’’) in options classes in certain
issues (‘‘Pilot Program’’) previously
approved by the Commission.5
The text of the proposed rule change
is available at the Exchange’s website at
18 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6)(iii).
5 The rules of EDGX Options, including rules
applicable to EDGX Options’ participation in the
Penny Pilot, were approved on August 7, 2015. See
Securities Exchange Act Release No. 75650 (August
7, 2015), 80 FR 48600 (August 13, 2015) (SR–
EDGX–2015–18). EDGX Options commenced
operations on November 2, 2015.
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1 15
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Jkt 247001
www.markets.cboe.com, at the principal
office of the Exchange, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in Sections A, B, and C below, of
the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of this filing is to extend
the Penny Pilot, which was previously
approved by the Commission, through
June 30, 2019, and to provide revised
dates for adding replacement issues to
the Pilot Program. The Exchange
proposes that any Pilot Program issues
that have been delisted may be replaced
on the second trading day following
January 1, 2019. The replacement issues
will be selected based on trading
activity for the most recent six month
period excluding the month
immediately preceding the replacement
(i.e., beginning June 1, 2018, and ending
November 30, 2018).
The Exchange represents that the
Exchange has the necessary system
capacity to continue to support
operation of the Penny Pilot. The
Exchange believes the benefits to public
customers and other market participants
who will be able to express their true
prices to buy and sell options have been
demonstrated to outweigh the increase
in quote traffic.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with the
requirements of the Act and the rules
and regulations thereunder that are
applicable to a national securities
exchange, and, in particular, with the
requirements of Section 6(b) of the Act.6
In particular, the proposal is consistent
with Section 6(b)(5) of the Act 7 because
it would promote just and equitable
principles of trade, remove
impediments to, and perfect the
6 15
7 15
PO 00000
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
Frm 00046
Fmt 4703
mechanism of, a free and open market
and a national market system. The
Exchange believes that the Pilot
Program promotes just and equitable
principles of trade by enabling public
customers and other market participants
to express their true prices to buy and
sell options. Accordingly, the Exchange
believes that the proposal is consistent
with the Act because it will allow the
Exchange to extend the Pilot Program
prior to its expiration on December 31,
2018. The Exchange notes that this
proposal does not propose any new
policies or provisions that are unique or
unproven, but instead relates to the
continuation of an existing program that
operates on a pilot basis.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. In this
regard, the Exchange notes that the rule
change is being proposed in order to
continue the Pilot Program, which is a
competitive response to analogous
programs offered by other options
exchanges. The Exchange believes this
proposed rule change is necessary to
permit fair competition among the
options exchanges.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
The Exchange has not solicited, and
does not intend to solicit, comments on
this proposed rule change. The
Exchange has not received any written
comments from members or other
interested parties.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A) of the Act 8 and Rule 19b–
4(f)(6) 9 thereunder. 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 after the date of
the filing, 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 19(b)(3)(A) of the
8 15
9 17
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E:\FR\FM\31DEN1.SGM
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
31DEN1
]]>Agencies
[Federal Register Volume 83, Number 249 (Monday, December 31, 2018)]
[Notices]
[Pages 67754-67757]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-28399]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-84925; File No. SR-NYSEAMER-2018-55]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its
Options Fee Schedule and Equities Price List To Extend for One Year a
Fee Discount for the Partial Cabinet Solution Bundles Offered in
Connection With the Exchange's Co-Location Services
December 21, 2018.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on December 20, 2018, NYSE American LLC (the ``Exchange''
or ``NYSE American'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule change as described in Items I,
II, and III 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 Options Fee Schedule (the
``Options Fee Schedule'') and Equities Price List (the ``Equities Fee
Schedule'', together with the Options Fee Schedule, the ``Fee
Schedules'') to extend for one year a fee discount for the Partial
Cabinet Solution bundles offered in connection with the Exchange's co-
location services. The proposed change is available on the Exchange's
website at www.nyse.com, at the principal office of the Exchange, and
at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend the Exchange's Fee Schedules to
extend a fee discount for the Partial Cabinet Solution bundles offered
in connection with the Exchange's co-location services.\4\ The Exchange
offers the four Partial Cabinet Solution bundles to attract smaller
Users, such as those with minimal power or cabinet space demands, or
those for which the attendant costs of having a dedicated cabinet and
related connectivity are too burdensome.\5\
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\4\ The Exchange initially filed rule changes relating to its
co-location services with the Commission in 2010. See Securities
Exchange Act Release No. 62961 (September 21, 2010), 75 FR 59299
(September 27, 2010) (SR-NYSEAmex-2010-80) (the ``Original Co-
location Filing''). The Exchange operates a data center in Mahwah,
New Jersey (the ``data center'') from which it provides co-location
services to Users.
\5\ See Securities Exchange Act Release No. 77071 (February 5,
2016), 81 FR 7382 (February 11, 2016) (SR-NYSEMKT-2015-89).
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The Exchange offers Users \6\ that purchase a Partial Cabinet
Solution bundle on or before December 31, 2018 a 50% reduction in the
monthly recurring charges (``MRC'') for the first 24 months.\7\ The
Exchange proposes to extend the 50% fee reduction to those Users that
purchase a Partial Cabinet Solution bundle on or before December 31,
2019.\8\ The Exchange does not propose to amend the length of the
discount period.
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\6\ For purposes of the Exchange's co-location services, a
``User'' means any market participant that requests to receive co-
location services directly from the Exchange. See Securities
Exchange Act Release No. 76009 (September 29, 2015), 80 FR 60213
(October 5, 2015) (SR-NYSEMKT-2015-67). As specified in the Price
List and Fee Schedule, 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''), NYSE
Arca, Inc. (``NYSE Arca'') and NYSE National, Inc. (``NYSE
National'' and, together, the ``Affiliate SROs''). See Securities
Exchange Act Release No. 70176 (August 13, 2013), 78 FR 50471
(August 19, 2013) (SR-NYSEMKT-2013-67).
\7\ See Securities Exchange Act Release No. 79717 (December 30,
2016), 82 FR 1767 (January. 6, 2017) (SR-NYSEMKT-2016-123).
\8\ The Exchange previously extended the MRC reduction for one
year. See Securities Exchange Act Release No. 82224 (December 6,
2017), 82 FR 58465 (December 12, 2017) (SR-NYSEAmer-2017-35). See
also Securities Exchange Act Release Nos. 82223 (December 6, 2017)
82 FR 58459 (December 12, 2017) (SR-NYSE-2017-62), and 82226
(December 6, 2017), 82 FR 58462 (December 12, 2017) (SR-NYSEArca-
2017-134).
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The amended portions of the Fee Schedules would read as follows:
[[Page 67755]]
------------------------------------------------------------------------
Type of service Description Amount of charge
------------------------------------------------------------------------
Partial Cabinet Solution Option A: 1 kW $7,500 initial
bundles. Note: A User and partial cabinet, 1 charge per bundle
its Affiliates are limited LCN connection (1 plus monthly charge
to one Partial Cabinet Gb), 1 IP network per bundle as
Solution bundle at a time. connection (1 Gb), follows:
A User and its Affiliates 2 fiber cross For Users
must have an Aggregate connections and that order on or
Cabinet Footprint of 2 kW either the Network before December 31,
or less to qualify for a Time Protocol Feed 2019: $3,000
Partial Cabinet Solution or Precision Timing monthly for first
bundle. See Note 2 under Protocol. 24 months of
``General Notes.''. service, and $6,000
monthly thereafter.
For Users
that order after
December 31, 2019:
$6,000 monthly.
-------------------------------------------
Option B: 2 kW $7,500 initial
partial cabinet, 1 charge per bundle
LCN connection (1 plus monthly charge
Gb), 1 IP network per bundle as
connection (1 Gb), follows:
2 fiber cross For Users
connections and that order on or
either the Network before December 31,
Time Protocol Feed 2019: $3,500
or Precision Timing monthly for first
Protocol. 24 months of
service, and $7,000
monthly thereafter.
For Users
that order after
December 31, 2019:
$7,000 monthly.
-------------------------------------------
Option C: 1 kW $10,000 initial
partial cabinet, 1 charge per bundle
LCN connection (10 plus monthly charge
Gb), 1 IP network per bundle as
connection (10 Gb), follows:
2 fiber cross For Users
connections and that order on or
either the Network before December 31,
Time Protocol Feed 2019: $7,000
or Precision Timing monthly for first
Protocol. 24 months of
service, and
$14,000 monthly
thereafter.
For Users
that order after
December 31, 2019:
$14,000 monthly.
-------------------------------------------
Option D: 2 kW $10,000 initial
partial cabinet, 1 charge per bundle
LCN connection (10 plus monthly charge
Gb), 1 IP network per bundle as
connection (10 Gb), follows:
2 fiber cross For Users
connections and that order on or
either the Network before December 31,
Time Protocol Feed 2019: $7,500
or Precision Timing monthly for first
Protocol. 24 months of
service, and
$15,000 monthly
thereafter.
For Users
that order after
December 31, 2019:
$15,000 monthly.
------------------------------------------------------------------------
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; \9\ and (iii)
a User would only incur one charge for the particular co-location
service described herein, regardless of whether the User connects only
to the Exchange or to the Exchange and one or both of its
affiliates.\10\
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\9\ 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.
\10\ See SR-NYSEMKT-2013-67, supra note 6 at 50471. The
Exchange's affiliates have also submitted substantially the same
proposed rule change to propose the changes described herein. See
SR-NYSE-2018-63 and SR-NYSEArca-2018-93, and SR-NYSENAT-2018-26.
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2. Statutory Basis
The Exchange believes that the proposal is consistent with Section
6(b) of the Act,\11\ in general, and furthers the objectives of
Sections 6(b)(4) \12\ and 6(b)(5) \13\ of the Act, in particular. The
proposal is consistent with Section 6(b)(4) of the Act 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 Proposal is also consistent with
Section 6(b)(5) of the Act because it is designed to promote just and
equitable principles of trade, remove impediments to, and perfect the
mechanisms of, a free and open market and a national market system and
is not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(4).
\13\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposal provides for the equitable
allocation of reasonable dues, fees, and other charges because it would
extend the existing eligibility for a 50% MRC reduction for another
year, providing smaller Users with minimal power or cabinet space
demands with additional time to purchase a Partial Cabinet Solution at
a discounted rate. The Exchange believes that it is reasonable to
continue to offer the fee reduction as an incentive to Users to utilize
the service, including both new and past Users. As is currently the
case, the purchase of any colocation service (including Partial Cabinet
Solution bundles) is completely voluntary. All Users that order a
bundle on or before December 31, 2019 would have their MRC reduced by
50% for the first 24 months.
The proposal would remove impediments to, and perfects the
mechanisms of, a free and open market and a national market system
because extending the 50% MRC reduction would continue to make it more
cost effective for Users to utilize co-location by offering a cost
effective, convenient way to create a colocation environment, through
the choice of four Partial Cabinet Solution bundles with different
cabinet footprints and network connections options. As mentioned
[[Page 67756]]
above, the Exchange expects that such Users would include those with
minimal power or cabinet space demands and Users for which the costs
attendant with having a dedicated cabinet or greater network connection
bandwidth are too burdensome.
The proposal would not unfairly discriminate between customers,
issuers, brokers or dealers because it would apply to all Users
equally. The Exchange would continue to offer the same four different
Partial Cabinet Solution bundles with different cabinet footprints and
network connections options. Users that require other sizes or
combinations of cabinets, network connections and cross connects could
still request them.
For the reasons above, the proposed changes do not unfairly
discriminate between or among market participants that are otherwise
capable of satisfying any applicable co-location fees, requirements,
terms and conditions established from time to time by the Exchange.
Finally, the Exchange believes that it is subject to significant
competitive forces, as described below in the Exchange's statement
regarding the burden on competition.
For these reasons, the Exchange believes that the proposal is
consistent with the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
The proposed rule changes will not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
Section 6(b)(8) of the Act.\14\ The proposal changes will enhance
competition by continuing to offer cost effective options for Users to
create a colocation environment through four Partial Cabinet Solution
bundles. Partial Cabinet Solution bundles allow Users to select their
desired cabinet footprint and network connections at a reduced MRC for
the first 24 months. Such Users may choose, in turn, to pass on such
cost savings to their customers. In addition to the proposed services
being completely voluntary, they are available to all Users on an equal
basis (i.e., the same products and services are available to all Users,
and the extension of the 50% reduction for the MRC for the Partial
Cabinet Solution bundles, would apply to all Users).
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\14\ 15 U.S.C. 78f(b)(8).
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The Exchange operates in a highly competitive market in which
exchanges offer co-location services as a means to facilitate the
trading and other market activities of those market participants who
believe that co-location enhances the efficiency of their operations.
Accordingly, fees charged for co-location services are constrained by
the active competition for the order flow of, and other business from,
such market participants. If a particular exchange charges excessive
fees for co-location services, affected market participants will opt to
terminate their co-location arrangements with that exchange, and adopt
a possible range of alternative strategies, including placing their
servers in a physically proximate location outside the exchange's data
center (which could be a competing exchange), or pursuing strategies
less dependent upon the lower exchange-to-participant latency
associated with co-location. Accordingly, the exchange charging
excessive fees would stand to lose not only co-location revenues but
also the liquidity of the formerly co-located trading firms, which
could have additional follow-on effects on the market share and revenue
of the affected exchange. In such an environment, the Exchange must
continually review, and consider adjusting, its services and related
fees and credits to remain competitive with other exchanges.
For the reasons described above, the Exchange believes that the
proposed rule changes reflect this competitive environment.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A) \15\ of the Act and subparagraph (f)(2) of Rule
19b-4 \16\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 17 CFR 240.19b-4(f)(2).
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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) \17\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\17\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NYSEAMER-2018-55 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-NYSEAMER-2018-55. 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-NYSEAMER-2018-55 and
[[Page 67757]]
should be submitted on or before January 22, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2018-28399 Filed 12-28-18; 8:45 am]
BILLING CODE 8011-01-P
