Self-Regulatory Organizations; NYSE National, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Schedule of Fees and Rebates Related to Co-Location Services, 13324-13328 [2019-06507]
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Federal Register / Vol. 84, No. 65 / Thursday, April 4, 2019 / Notices
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Eric R. Oesterle,
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[FR Doc. 2019–06612 Filed 4–3–19; 8:45 am]
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Elizabeth Reed,
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[FR Doc. 2019–06532 Filed 4–3–19; 8:45 am]
POSTAL SERVICE
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CP2019–123.
SUMMARY:
Elizabeth Reed,
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[FR Doc. 2019–06531 Filed 4–3–19; 8:45 am]
BILLING CODE 7710–12–P
POSTAL SERVICE
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SUMMARY:
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Self-Regulatory Organizations; NYSE
National, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Its Schedule of
Fees and Rebates Related to CoLocation Services
March 29, 2019.
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 March
15, 2019, NYSE National, Inc. (the
‘‘Exchange’’ or ‘‘NYSE National’’) filed
with the Securities and Exchange
Commission (the ‘‘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 co-location
services to provide access to the
execution system of Global OTC. 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,
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
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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
Price List related to co-location 4
services offered by the Exchange to
provide Users 5 with access to the
execution system of Global OTC (the
‘‘Global OTC System’’). Global OTC is
an alternative trading system (‘‘ATS’’)
that facilitates transactions in over-thecounter equity securities.6
The Exchange proposes to implement
the rule change on the first day of the
month after it becomes operative. The
Exchange will announce the
implementation date through a
customer notice.
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’’).7 The
Exchange has an indirect interest in
Global OTC because it is owned by the
Exchange’s ultimate parent,
Intercontinental Exchange, Inc.8 The
Exchange proposes to treat Global OTC
as a Third Party System and add it to
the list of Third Party Systems set forth
in the Price List.
As with the current Third Party
Systems, in order to obtain access to the
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 the New York Stock Exchange (‘‘NYSE’’),
NYSE American LLC (‘‘NYSE American’’), and
NYSE Arca, Inc. (‘‘NYSE Arca’’ and together, the
‘‘Affiliate SROs’’). See id. at note 11.
6 See 17 CFR 242.300(a). An ATS is a trading
system that meets the definition of ‘‘exchange’’
under federal securities laws but is not required to
register as a national securities exchange if the ATS
operates under an exemption provided under the
Act.
7 See 83 FR 26314, supra note 4, at 26322.
8 See id.
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Global OTC System, the User would
enter into an agreement with Global
OTC, pursuant to which Global OTC
would charge the User for access to the
Global OTC System. Once the Exchange
receives authorization from Global OTC,
the Exchange would establish a
connection between the User and the
Global OTC System.9
As with the existing connections to
Third Party Systems, the Exchange
proposes to charge a monthly recurring
fee for connectivity to the Global OTC
System. The Exchange does not propose
to change the current fee, which is for
connectivity only.10
Currently, connectivity to the Third
Party Systems is over the internet
protocol (‘‘IP’’) network, a local area
network available in the data center.11
Users would have two options for
connecting to the OTC Global System:
Over the IP network or the Liquidity
Center Network (‘‘LCN’’), the other local
area network available in the data
center.12 Accordingly, the Exchange
proposes to amend the third sentence of
the paragraph under ‘‘Connectivity to
Third Party Systems’’ in the Price List
to state that ‘‘[c]onnectivity to Third
Party Systems is over the IP network,
with the exception that Users can
connect to Global OTC over the IP
network or LCN.’’
The proposed treatment of Global
OTC would be consistent with its
treatment in other contexts. The
Exchange also treats Global OTC as a
third party with respect to connectivity
to data feeds from third party markets
and other content service providers (the
‘‘Third Party Data Feeds’’).13 The
Exchange proposes that Users could
connect to the Global OTC System over
the IP network or LCN: This is
substantially the same as with Third
Party Data Feeds, where ‘‘[c]onnectivity
. . . is over the IP network, with the
exception that Users can connect to
Global OTC and ICE Data Global Index
over the IP network or LCN.’’ 14
The Exchange would provide access
to the Global OTC System (‘‘Access’’) as
a convenience to Users. Use of Access
is completely voluntary, and it is the
Exchange’s understanding that currently
third party options are available to a
User to access the Global OTC System.
The Exchange is not aware of any
impediment to additional third parties
offering such access. With respect to
9 See
id.
id.
11 See id. at 26316.
12 See id.
13 See id. at 26322–26323.
14 Price List, at 17; see 83 FR 26314, supra note
4, at 26323.
10 See
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third parties that presently offer, or in
the future opt to offer, access to the
Global OTC Systems, a User may access
such services through 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.
Establishing a User’s access to the
Global OTC System would not give the
Exchange any right to use the Global
OTC System. Connectivity to the Global
OTC System would not provide access
or order entry to the Exchange’s
execution system, and a User’s
connection to the Global OTC System
would not be through the Exchange’s
execution system.
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; 15 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.16
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.
15 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.
16 See id. at 26315. NYSE, NYSE American, and
NYSE Arca have submitted substantially the same
proposed rule change to propose the changes
described herein. See SR–NYSE–2019–07, SR–
NYSEAmer–2019–03, and SR–NYSEArca–2019–07.
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2. Statutory Basis
The Exchange believes that the
proposed fee change is consistent with
Section 6(b) of the Act,17 in general, and
furthers the objectives of Sections
6(b)(5) of the Act,18 in particular,
because it is designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to,
and perfect the mechanisms of, a free
and open market and a national market
system and, in general, to protect
investors and the public interest and
because it is not designed to permit
unfair discrimination between
customers, issuers, brokers, or dealers.
The Exchange believes that the
proposed changes would remove
impediments to, and perfect the
mechanisms of, a free and open market
and a national market system and, in
general, protect investors and the public
interest because, by offering access to
the Global OTC System, the Exchange
would give each User additional options
for addressing its access needs,
responding to User demand for access
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
that best suits its needs.
The Exchange would provide Access
as a convenience to Users. Use of Access
is completely voluntary, and it is the
Exchange’s understanding that currently
third party options are available to a
User to access the Global OTC System.
The Exchange is not aware of any
impediment to additional third parties
offering such access. With respect to
third parties that presently offer, or in
the future opt to offer, access to the
Global OTC Systems, a User may access
such services through 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 change would remove
impediments to, and perfect the
mechanisms of, a free and open market
17 15
18 15
E:\FR\FM\04APN1.SGM
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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Federal Register / Vol. 84, No. 65 / Thursday, April 4, 2019 / Notices
and a national market system and, in
general, protect investors and the public
interest because the proposed treatment
of Global OTC would be consistent with
its treatment in other contexts. The
Exchange also treats Global OTC as a
third party with respect to connectivity
to Third Party Data Feeds.19 The
Exchange proposes that Users could
connect to the Global OTC System over
the IP network or LCN: This is
substantially the same as with Third
Party Data Feeds, where connectivity is
over the IP network, with the exception
that Users can connect to Global OTC
and one other Third Party Data Feed
over the IP network or LCN.20
The Exchange also believes that the
proposed fee change is consistent with
Section 6(b)(4) of the Act,21 in
particular, because it provides for the
equitable allocation of reasonable dues,
fees, and other charges among its
members, issuers and other persons
using its facilities and does not unfairly
discriminate between customers,
issuers, brokers or dealers.
The Exchange believes that the
proposed fee change is 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 colocation 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 colocation 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
proposed charges would be reasonable,
equitably allocated and not unfairly
19 Supra
note 13.
note 14.
21 15 U.S.C. 78f(b)(4).
22 Credit Suisse and OTC Markets have ATSs. See
Commission list of ATSs at https://www.sec.gov/
foia/docs/atslist.htm.
20 Supra
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17:25 Apr 03, 2019
discriminatory because it would treat
connectivity to the Global OTC System
the same as connectivity to the
execution system of other ATSs.
Currently, the Third Party Systems
include two ATSs.22
The Exchange believes that the
additional service proposed herein
would be equitably allocated and not
unfairly discriminatory because, in
addition to Access being completely
voluntary, it would be available to all
Users on an equal basis (i.e., the same
Access would be available to all Users).
All Users that voluntarily selected to
receive Access would be charged the
same amount for the same service. Users
that opted to use Access would not
receive access that is not available to all
Users, as all market participants that
contracted with Global OTC would
receive access.
The Exchange believes that the
proposed charges would be reasonable,
equitably allocated and not unfairly
discriminatory because the Exchange
would offer the Access as a convenience
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, the Exchange would
maintain multiple connections to the
Global OTC System, allowing the
Exchange to provide resilient and
redundant connections; adapt to any
changes made by Global OTC; and cover
any applicable fees charged by Global
OTC, such as port fees. In addition,
Users would not be required to use any
of their bandwidth for Access unless
they wish to do so.
The Exchange believes the fees for
Access are reasonable because they
allow the Exchange to defray or cover
the costs associated with offering Users
Access while providing Users the
convenience of receiving such Access
within co-location, helping them tailor
their data center operations to the
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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.
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,23 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 access
to the Global OTC Systems 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 would
satisfy User demand for access options.
The Exchange would provide Access as
a convenience to Users. Use of Access
is completely voluntary, and it is the
Exchange’s understanding that currently
third party options are available to a
User to access the Global OTC System.
The Exchange is not aware of any
impediment to additional third parties
offering such access. With respect to
third parties that presently offer, or in
the future opt to offer, access to the
Global OTC Systems, a User may access
such services through 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 would not receive access that is
not available to all Users, as all market
participants that contract with Global
OTC may receive access. In this way,
the proposed changes would enhance
competition by helping Users tailor
their Access 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.
23 15
E:\FR\FM\04APN1.SGM
U.S.C. 78f(b)(8).
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The Exchange believes that the
proposed change would not impose any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act because it
would treat connectivity to the Global
OTC System the same as connectivity to
the execution system of other ATSs.
Specifically, they would all be Third
Party Systems subject to the same fees.
In addition, the proposed treatment of
Global OTC would be consistent with its
treatment in other contexts. The
Exchange also treats Global OTC as a
third party with respect to connectivity
to Third Party Data Feeds.24
Currently, connectivity to the Third
Party Systems is over the IP network.
The Exchange believes that allowing
Users to connect to the Global OTC
System over either the IP network or
LCN would not impose any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act. Currently, the
Third Party Systems include two ATS,
of which the Exchange believes OTC
Markets is the most comparable to
Global OTC, although Global OTC is
substantially the smaller of the two.25
While an LCN connection provides
lower latency than the IP network, that
latency difference is relevant, as a
practical matter, only for connections
within the Mahwah data center, where
the Global OTC System is located. When
connecting to a comparable, competing
ATS located in another data center,
such as OTC Markets, Users within the
Mahwah data center would incur
geographical latency that would dwarf
any differences between the IP network
and LCN. Furthermore, it is the
Exchange’s understanding that market
participants trading in non-NMS
securities tend to be less latency
sensitive due to the smaller pools of
liquidity in the over-the-counter
markets.
Allowing Users to connect to the
Global OTC System would be consistent
with the treatment of Third Party Data
Feeds, where connectivity is over the IP
network, with the exception that Users
can connect to Global OTC and one
other Third Party Data Feed over the IP
network or LCN.26
The Exchange operates in a highly
competitive market in which exchanges
24 Supra
note 13.
Global OTC and the OTC Markets are
inter-dealer quotation systems. The third is the OTC
Bulletin Board, a facility of the Financial Industry
Regulatory Authority. Global OTC’s market share is
approximately 10% of average daily volume of
trades of over-the-counter equities, compared to
OTC Markets’ market share of approximately 90%
of average daily volume of trades. See https://
www.globalotc.com/brokers/market-share.
26 Supra note 14.
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offer co-location services as a means to
facilitate the trading and other market
activities of those market participants
who believe that co-location enhances
the efficiency of their operations.
Accordingly, fees charged for colocation services are constrained by the
active competition for the order flow of,
and other business from, such market
participants. If a particular exchange
charges excessive fees for co-location
services, affected market participants
will opt to terminate their co-location
arrangements with that exchange, and
adopt a possible range of alternative
strategies, including placing their
servers in a physically proximate
location outside the exchange’s data
center (which could be a competing
exchange), or pursuing strategies less
dependent upon the lower exchange-toparticipant latency associated with colocation. Accordingly, the exchange
charging excessive fees would stand to
lose not only co-location revenues but
also the liquidity of the formerly colocated trading firms, which could have
additional follow-on effects on the
market share and revenue of the affected
exchange. For the reasons described
above, the Exchange believes that the
proposed rule change reflects this
competitive environment.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 27 and Rule
19b–4(f)(6) thereunder.28 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.29
27 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
29 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires the Exchange to give the
Commission written notice of its intent to file the
proposed rule change, along with a brief description
28 17
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13327
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) 30 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–
NYSENAT–2019–03 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–2019–03. 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
and text of the proposed rule change, at least five
business days prior to the date of filing of the
proposed rule change, or such shorter time as
designated by the Commission. The Exchange has
satisfied this requirement.
30 15 U.S.C. 78s(b)(2)(B).
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Federal Register / Vol. 84, No. 65 / Thursday, April 4, 2019 / Notices
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–2019–03 and
should be submitted on or before April
25, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.31
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–06507 Filed 4–3–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–85470; File No. SR–FICC–
2018–013]
Self-Regulatory Organizations; Fixed
Income Clearing Corporation; Order
Approving a Proposed Rule Change To
Expand Sponsoring Member Eligibility
in the Government Securities Division
Rulebook and Make Other Changes
March 29, 2019.
I. Introduction
On December 13, 2018, Fixed Income
Clearing Corporation (‘‘FICC’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 proposed rule
change SR–FICC–2018–013 to expand
sponsoring member eligibility and make
other changes.3 The proposed rule
31 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 On December 13, 2018, FICC also filed the
proposal contained in the proposed rule change as
advance notice SR–FICC–2018–802 with the
Commission pursuant to Section 806(e)(1) of the
Dodd-Frank Wall Street Reform and Consumer
Protection Act entitled the Payment, Clearing, and
Settlement Supervision Act of 2010 (‘‘Clearing
Supervision Act’’), 12 U.S.C. 5465(e)(1), and Rule
19b–4(n)(1)(i) of the Act, 17 CFR 240.19b–4(n)(1)(i).
As of February 11, 2019, pursuant to Section
806(e)(1) of the Clearing Supervision Act, the
advance notice was deemed to not have been
objected to by the Commission. 12 U.S.C.
5465(e)(1); see Memorandum, Division of Trading
and Markets, U.S. Securities and Exchange
Commission, to File No. SR–FICC–2018–802,
available at https://www.sec.gov/rules/sro/ficc-an/
2019/ficc-2018-802-memo-deemed-approved.pdf.
jbell on DSK30RV082PROD with NOTICES
1 15
VerDate Sep<11>2014
17:25 Apr 03, 2019
Jkt 247001
change was published for comment in
the Federal Register on December 31,
2018.4 On February 14, 2019, the
Commission designated a longer period
within which to approve the proposed
rule change, disapprove the proposed
rule change, or institute proceedings to
determine whether to approve or
disapprove the proposed rule change
and reopened the period for comment
on the proposed rule change.5 The
Commission received five comment
letters to the proposed rule change,6
including a response letter from FICC.
For the reasons discussed below, the
Commission is approving the proposed
rule change.
II. Description of the Proposed Rule
Change
FICC proposes to amend the FICC
Government Securities Division
(‘‘GSD’’) Rulebook (‘‘Rules’’) 7 to (i)
allow a broader group of GSD Netting
Members 8 to participate in FICC as
Sponsoring Members,9 (ii) allow
4 Securities Exchange Act Release No. 84951
(December 21, 2018), 83 FR 67801 (December 31,
2018) (SR–FICC–2018–013) (‘‘Notice’’).
5 Securities Exchange Act Release No. 85137
(February 14, 2019), 84 FR 5523 (February 21, 2019)
(SR–FICC–2018–013).
6 See letter from Robert E. Pooler, Jr., Chief
Financial Officer, Ronin Capital, LLC, dated January
18, 2019, to Brent J. Fields, Secretary, Commission
(‘‘Ronin Letter’’); letter from James Tabacchi,
Chairman, Independent Dealer and Trade
Association, dated January 22, 2019, to Brent J.
Fields, Secretary, Commission (‘‘IDTA Letter’’);
letter from Robert Toomey, Managing Director and
Associate General Counsel, Securities Industry and
Financial Markets Association, dated January 22,
2019, to Brent J. Fields, Secretary, Commission
(‘‘SIFMA Letter’’); letter from Stephen John Berger,
Managing Director, Government & Regulatory
Policy, Citadel, dated January 30, 2019, to Brent J.
Fields, Secretary, Commission (‘‘Citadel Letter’’);
and letter from Murray Pozmanter, Managing
Director, DTCC, dated February 4, 2019, to Brent J.
Fields, Secretary, Commission (‘‘FICC Response
Letter’’). See comments on the proposed rule
change (SR–FICC–2018–013), available at https://
www.sec.gov/comments/sr-ficc-2018-013/
srficc2018013.htm. Because the proposal contained
in the proposed rule change was also filed as an
advance notice, supra note 3, the Commission is
considering all public comments received on the
proposal regardless of whether the comments were
submitted to the advance notice or the proposed
rule change.
7 Available at https://www.dtcc.com/∼/media/
Files/Downloads/legal/rules/ficc_gov_rules.pdf.
8 The term ‘‘Netting Member’’ is defined in FICC’s
GSD Rule 1 as a Member of FICC’s Comparison
System (i.e., the system of reporting, validating, and
matching the long and short sides of securities
trades to ensure that the details of such trades are
in agreement between the parties) and FICC’s
Netting System (i.e., the system for aggregating and
matching offsetting obligations resulting from
trades).
9 ‘‘Sponsoring Membership’’ is an existing
program that allows well-capitalized bank members
to sponsor their eligible clients into GSD
Membership. Sponsored membership at GSD offers
eligible clients the ability to lend cash or eligible
collateral via FICC-cleared deliver-versus payment
PO 00000
Frm 00086
Fmt 4703
Sfmt 4703
Sponsored Members to transact with
Netting Members that are not the
Sponsoring Member through a certain
omnibus account maintained by the
Sponsoring Member, and (iii) make
certain conforming and technical
changes.
A. The Proposed Expansion of
Sponsored Member Eligibility
FICC proposes to broaden the group of
GSD Netting Members that may
participate in FICC as Sponsoring
Members. Currently, GSD Bank Netting
Members that are well-capitalized with
at least $5 billion in equity capital are
permitted to serve as Sponsoring
Members (‘‘Category 1 Sponsoring
Members’’) and sponsor certain
institutional firms into GSD
membership as Sponsored Members.10
A Sponsoring Member is permitted to
submit to FICC for comparison,
novation, and netting certain types of
eligible transactions between itself and
its Sponsored Members (‘‘Sponsored
Member Trades’’).11 For operational and
administrative purposes, FICC interacts
solely with the Sponsoring Member as
agent for purposes of the day-to-day
satisfaction of its Sponsored Members’
obligations to FICC, including the
Sponsored Members’ securities and
funds-only settlement obligations.12
FICC proposes to add a second
category of Netting Members eligible to
become Sponsoring Members. This
second category would include Netting
Members that are Tier One Netting
Members (‘‘Category 2 Sponsoring
Members’’),13 except for Inter-Dealer
Broker (‘‘IDB’’) Netting Members and
Non-IDB Repo Brokers with respect to
activity in their segregated repo
accounts.14 Category 2 Sponsoring
Members could include, for example,
dealer Netting Members, Futures
Commission Merchant Netting
Members, and foreign Netting
Members.15
repo throughout the day. Sponsoring Member banks
facilitate their sponsored clients’ GSD trading
activity and act as processing agents on their behalf
for all operational functions, including trade
submission and settlement with FICC.
10 Notice, 83 FR at 67802; Rule 3A, Section 2,
supra note 7.
11 Notice, 83 FR at 67802. FICC requires the
Sponsoring Member to establish an omnibus
account at FICC for all of its Sponsored Members’
FICC-cleared activity (‘‘Sponsoring Member
Omnibus Account’’), which is separate from the
Sponsoring Member’s regular netting account. Rule
1; Rule 3A, Section 10, supra note 7.
12 Notice, 83 FR at 67802; see Rule 3A, Sections
5, 6, 7, 8 and 9, supra note 7.
13 The term ‘‘Tier One Netting Member’’ is
designated in FICC’s GSD Rule 2A, supra note 7,
as a non-registered investment company Netting
Member.
14 Notice, 83 FR at 67802.
15 Id.
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]]>Agencies
[Federal Register Volume 84, Number 65 (Thursday, April 4, 2019)]
[Notices]
[Pages 13324-13328]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-06507]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85449; File No. SR-NYSENAT-2019-03]
Self-Regulatory Organizations; NYSE National, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its
Schedule of Fees and Rebates Related to Co-Location Services
March 29, 2019.
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 March 15, 2019, NYSE National, Inc. (the ``Exchange'' or
``NYSE National'') filed with the Securities and Exchange Commission
(the ``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 co-location services to provide access
to the execution system of Global OTC. 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 Price List related to co-
location \4\ services offered by the Exchange to provide Users \5\ with
access to the execution system of Global OTC (the ``Global OTC
System''). Global OTC is an alternative trading system (``ATS'') that
facilitates transactions in over-the-counter equity securities.\6\
---------------------------------------------------------------------------
\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 the New York Stock Exchange (``NYSE''),
NYSE American LLC (``NYSE American''), and NYSE Arca, Inc. (``NYSE
Arca'' and together, the ``Affiliate SROs''). See id. at note 11.
\6\ See 17 CFR 242.300(a). An ATS is a trading system that meets
the definition of ``exchange'' under federal securities laws but is
not required to register as a national securities exchange if the
ATS operates under an exemption provided under the Act.
---------------------------------------------------------------------------
The Exchange proposes to implement the rule change on the first day
of the month after it becomes operative. The Exchange will announce the
implementation date through a customer notice.
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'').\7\ The Exchange
has an indirect interest in Global OTC because it is owned by the
Exchange's ultimate parent, Intercontinental Exchange, Inc.\8\ The
Exchange proposes to treat Global OTC as a Third Party System and add
it to the list of Third Party Systems set forth in the Price List.
---------------------------------------------------------------------------
\7\ See 83 FR 26314, supra note 4, at 26322.
\8\ See id.
---------------------------------------------------------------------------
As with the current Third Party Systems, in order to obtain access
to the
[[Page 13325]]
Global OTC System, the User would enter into an agreement with Global
OTC, pursuant to which Global OTC would charge the User for access to
the Global OTC System. Once the Exchange receives authorization from
Global OTC, the Exchange would establish a connection between the User
and the Global OTC System.\9\
---------------------------------------------------------------------------
\9\ See id.
---------------------------------------------------------------------------
As with the existing connections to Third Party Systems, the
Exchange proposes to charge a monthly recurring fee for connectivity to
the Global OTC System. The Exchange does not propose to change the
current fee, which is for connectivity only.\10\
---------------------------------------------------------------------------
\10\ See id.
---------------------------------------------------------------------------
Currently, connectivity to the Third Party Systems is over the
internet protocol (``IP'') network, a local area network available in
the data center.\11\ Users would have two options for connecting to the
OTC Global System: Over the IP network or the Liquidity Center Network
(``LCN''), the other local area network available in the data
center.\12\ Accordingly, the Exchange proposes to amend the third
sentence of the paragraph under ``Connectivity to Third Party Systems''
in the Price List to state that ``[c]onnectivity to Third Party Systems
is over the IP network, with the exception that Users can connect to
Global OTC over the IP network or LCN.''
---------------------------------------------------------------------------
\11\ See id. at 26316.
\12\ See id.
---------------------------------------------------------------------------
The proposed treatment of Global OTC would be consistent with its
treatment in other contexts. The Exchange also treats Global OTC as a
third party with respect to connectivity to data feeds from third party
markets and other content service providers (the ``Third Party Data
Feeds'').\13\ The Exchange proposes that Users could connect to the
Global OTC System over the IP network or LCN: This is substantially the
same as with Third Party Data Feeds, where ``[c]onnectivity . . . is
over the IP network, with the exception that Users can connect to
Global OTC and ICE Data Global Index over the IP network or LCN.'' \14\
---------------------------------------------------------------------------
\13\ See id. at 26322-26323.
\14\ Price List, at 17; see 83 FR 26314, supra note 4, at 26323.
---------------------------------------------------------------------------
The Exchange would provide access to the Global OTC System
(``Access'') as a convenience to Users. Use of Access is completely
voluntary, and it is the Exchange's understanding that currently third
party options are available to a User to access the Global OTC System.
The Exchange is not aware of any impediment to additional third parties
offering such access. With respect to third parties that presently
offer, or in the future opt to offer, access to the Global OTC Systems,
a User may access such services through 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.
Establishing a User's access to the Global OTC System would not
give the Exchange any right to use the Global OTC System. Connectivity
to the Global OTC System would not provide access or order entry to the
Exchange's execution system, and a User's connection to the Global OTC
System would not be through the Exchange's execution system.
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; \15\ 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.\16\
---------------------------------------------------------------------------
\15\ 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.
\16\ See id. at 26315. NYSE, NYSE American, and NYSE Arca have
submitted substantially the same proposed rule change to propose the
changes described herein. See SR-NYSE-2019-07, SR-NYSEAmer-2019-03,
and SR-NYSEArca-2019-07.
---------------------------------------------------------------------------
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,\17\ in general, and furthers the
objectives of Sections 6(b)(5) of the Act,\18\ in particular, because
it is designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to, and
perfect the mechanisms of, a free and open market and a national market
system and, in general, to protect investors and the public interest
and because it is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------
\17\ 15 U.S.C. 78f(b).
\18\ 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 access to the Global OTC System,
the Exchange would give each User additional options for addressing its
access needs, responding to User demand for access 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 that best suits its needs.
The Exchange would provide Access as a convenience to Users. Use of
Access is completely voluntary, and it is the Exchange's understanding
that currently third party options are available to a User to access
the Global OTC System. The Exchange is not aware of any impediment to
additional third parties offering such access. With respect to third
parties that presently offer, or in the future opt to offer, access to
the Global OTC Systems, a User may access such services through 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 change would remove
impediments to, and perfect the mechanisms of, a free and open market
[[Page 13326]]
and a national market system and, in general, protect investors and the
public interest because the proposed treatment of Global OTC would be
consistent with its treatment in other contexts. The Exchange also
treats Global OTC as a third party with respect to connectivity to
Third Party Data Feeds.\19\ The Exchange proposes that Users could
connect to the Global OTC System over the IP network or LCN: This is
substantially the same as with Third Party Data Feeds, where
connectivity is over the IP network, with the exception that Users can
connect to Global OTC and one other Third Party Data Feed over the IP
network or LCN.\20\
---------------------------------------------------------------------------
\19\ Supra note 13.
\20\ Supra note 14.
---------------------------------------------------------------------------
The Exchange also believes that the proposed fee change is
consistent with Section 6(b)(4) of the Act,\21\ 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.
---------------------------------------------------------------------------
\21\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
The Exchange believes that the proposed fee change is consistent
with Section 6(b)(4) of the Act for multiple reasons. The Exchange
operates in a highly competitive market in which exchanges offer co-
location services as a means to facilitate the trading and other market
activities of those market participants who believe that co-location
enhances the efficiency of their operations. Accordingly, fees charged
for co-location services are constrained by the active competition for
the order flow of, and other business from, such market participants.
If a particular exchange charges excessive fees for co-location
services, affected market participants will opt to terminate their co-
location arrangements with that exchange, and adopt a possible range of
alternative strategies, including placing their servers in a physically
proximate location outside the exchange's data center (which could be a
competing exchange), or pursuing strategies less dependent upon the
lower exchange-to-participant latency associated with co-location.
Accordingly, the exchange charging excessive fees would stand to lose
not only co-location revenues but also the liquidity of the formerly
co-located trading firms, which could have additional follow-on effects
on the market share and revenue of the affected exchange.
The Exchange believes that the proposed charges would be
reasonable, equitably allocated and not unfairly discriminatory because
it would treat connectivity to the Global OTC System the same as
connectivity to the execution system of other ATSs. Currently, the
Third Party Systems include two ATSs.\22\
---------------------------------------------------------------------------
\22\ Credit Suisse and OTC Markets have ATSs. See Commission
list of ATSs at https://www.sec.gov/foia/docs/atslist.htm.
---------------------------------------------------------------------------
The Exchange believes that the additional service proposed herein
would be equitably allocated and not unfairly discriminatory because,
in addition to Access being completely voluntary, it would be available
to all Users on an equal basis (i.e., the same Access would be
available to all Users). All Users that voluntarily selected to receive
Access would be charged the same amount for the same service. Users
that opted to use Access would not receive access that is not available
to all Users, as all market participants that contracted with Global
OTC would receive access.
The Exchange believes that the proposed charges would be
reasonable, equitably allocated and not unfairly discriminatory because
the Exchange would offer the Access as a convenience 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,
the Exchange would maintain multiple connections to the Global OTC
System, allowing the Exchange to provide resilient and redundant
connections; adapt to any changes made by Global OTC; and cover any
applicable fees charged by Global OTC, such as port fees. In addition,
Users would not be required to use any of their bandwidth for Access
unless they wish to do so.
The Exchange believes the fees for Access are reasonable because
they allow the Exchange to defray or cover the costs associated with
offering Users Access while providing Users the convenience of
receiving such Access 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.
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,\23\ 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.
---------------------------------------------------------------------------
\23\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------
The Exchange believes that providing Users with additional options
for access to the Global OTC Systems 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 would satisfy User
demand for access options. The Exchange would provide Access as a
convenience to Users. Use of Access is completely voluntary, and it is
the Exchange's understanding that currently third party options are
available to a User to access the Global OTC System. The Exchange is
not aware of any impediment to additional third parties offering such
access. With respect to third parties that presently offer, or in the
future opt to offer, access to the Global OTC Systems, a User may
access such services through 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 would not receive access
that is not available to all Users, as all market participants that
contract with Global OTC may receive access. In this way, the proposed
changes would enhance competition by helping Users tailor their Access
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.
[[Page 13327]]
The Exchange believes that the proposed change would not impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act because it would treat
connectivity to the Global OTC System the same as connectivity to the
execution system of other ATSs. Specifically, they would all be Third
Party Systems subject to the same fees. In addition, the proposed
treatment of Global OTC would be consistent with its treatment in other
contexts. The Exchange also treats Global OTC as a third party with
respect to connectivity to Third Party Data Feeds.\24\
---------------------------------------------------------------------------
\24\ Supra note 13.
---------------------------------------------------------------------------
Currently, connectivity to the Third Party Systems is over the IP
network. The Exchange believes that allowing Users to connect to the
Global OTC System over either the IP network or LCN would not impose
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. Currently, the Third Party
Systems include two ATS, of which the Exchange believes OTC Markets is
the most comparable to Global OTC, although Global OTC is substantially
the smaller of the two.\25\ While an LCN connection provides lower
latency than the IP network, that latency difference is relevant, as a
practical matter, only for connections within the Mahwah data center,
where the Global OTC System is located. When connecting to a
comparable, competing ATS located in another data center, such as OTC
Markets, Users within the Mahwah data center would incur geographical
latency that would dwarf any differences between the IP network and
LCN. Furthermore, it is the Exchange's understanding that market
participants trading in non-NMS securities tend to be less latency
sensitive due to the smaller pools of liquidity in the over-the-counter
markets.
---------------------------------------------------------------------------
\25\ Both Global OTC and the OTC Markets are inter-dealer
quotation systems. The third is the OTC Bulletin Board, a facility
of the Financial Industry Regulatory Authority. Global OTC's market
share is approximately 10% of average daily volume of trades of
over-the-counter equities, compared to OTC Markets' market share of
approximately 90% of average daily volume of trades. See https://www.globalotc.com/brokers/market-share.
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Allowing Users to connect to the Global OTC System would be
consistent with the treatment of Third Party Data Feeds, where
connectivity is over the IP network, with the exception that Users can
connect to Global OTC and one other Third Party Data Feed over the IP
network or LCN.\26\
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\26\ Supra note 14.
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The Exchange operates in a highly competitive market in which
exchanges offer co-location services as a means to facilitate the
trading and other market activities of those market participants who
believe that co-location enhances the efficiency of their operations.
Accordingly, fees charged for co-location services are constrained by
the active competition for the order flow of, and other business from,
such market participants. If a particular exchange charges excessive
fees for co-location services, affected market participants will opt to
terminate their co-location arrangements with that exchange, and adopt
a possible range of alternative strategies, including placing their
servers in a physically proximate location outside the exchange's data
center (which could be a competing exchange), or pursuing strategies
less dependent upon the lower exchange-to-participant latency
associated with co-location. Accordingly, the exchange charging
excessive fees would stand to lose not only co-location revenues but
also the liquidity of the formerly co-located trading firms, which
could have additional follow-on effects on the market share and revenue
of the affected exchange. For the reasons described above, the Exchange
believes that the proposed rule change reflects this competitive
environment.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \27\ and Rule 19b-4(f)(6) thereunder.\28\
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.\29\
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\27\ 15 U.S.C. 78s(b)(3)(A)(iii).
\28\ 17 CFR 240.19b-4(f)(6).
\29\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires the Exchange to give the Commission written notice of its
intent to file the proposed rule change, along with a brief
description and text of the proposed rule change, at least five
business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
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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) \30\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\30\ 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 [email protected]. Please include
File Number SR-NYSENAT-2019-03 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-2019-03. 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
[[Page 13328]]
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-2019-03 and should be submitted on or before April 25, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\31\
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\31\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-06507 Filed 4-3-19; 8:45 am]
BILLING CODE 8011-01-P
