Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE Arca Options Fees and Charges and the NYSE Arca Equities Fees and Charges Related to Co-Location Services, 25858-25862 [2019-11558]
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25858
Federal Register / Vol. 84, No. 107 / Tuesday, June 4, 2019 / Notices
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–NYSE–2019–30 and should
be submitted on or before June 25, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–11560 Filed 6–3–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–85958; File No. SR–
NYSEARCA–2019–40]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the NYSE Arca
Options Fees and Charges and the
NYSE Arca Equities Fees and Charges
Related to Co-Location Services
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May 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 May 21,
2019, NYSE Arca, Inc. (‘‘NYSE Arca’’ or
the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
11 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
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(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 the
NYSE Arca Options Fees and Charges
(the ‘‘Options Fee Schedule’’) and the
NYSE Arca Equities Fees and Charges
(the ‘‘Equities Fee Schedule’’ and,
together with the Options Fee Schedule,
the ‘‘Fee Schedules’’) related to colocation services to update the
description of the access to trading and
execution systems provided with the
purchase of access to the co-location
local area networks. 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
Fee Schedules related to co-location 4
services offered by the Exchange to
update the description of the access to
trading and execution services and
connectivity to data provided to Users 5
4 The Exchange initially filed rule changes
relating to its co-location services with the
Securities and Exchange Commission
(‘‘Commission’’) in 2010. See Securities Exchange
Act Release No. 63275 (November 8, 2010), 75 FR
70048 (November 16, 2010) (SR–NYSEArca–2010–
100). The Exchange operates a data center in
Mahwah, New Jersey (the ‘‘data center’’) from
which it provides co-location services to Users.
5 For purposes of the Exchange’s co-location
services, a ‘‘User’’ means any market participant
that requests to receive co-location services directly
from the Exchange. See Securities Exchange Act
PO 00000
Frm 00129
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with connections to the Liquidity Center
Network (‘‘LCN’’) and internet protocol
(‘‘IP’’) network, local area networks
available in the data center.
To implement the changes, the
Exchange proposes to amend paragraph
one of General Note 4, which describes
the access to trading and execution
systems which a User receives when it
purchases access to the LCN or IP
network.6
The Exchange will announce the
implementation date through a
customer notice.
As set forth in the first paragraph of
General Note 4, when a User purchases
access to the LCN or IP network, it
receives the ability to access the trading
and execution systems of the Exchange
and the SRO Affiliates (together, the
‘‘Exchange Systems’’), provided the
User has authorization from the
Exchange or relevant Affiliate SRO.7
The Exchange proposes to revise such
paragraph to reflect that a User that
purchases access to the LCN or IP
network also receives the ability to
access the trading and execution
systems of Global OTC (‘‘Global OTC
System’’), subject to authorization by
Global OTC.
In order to obtain access to the Global
OTC System, the User would enter into
an agreement with Global OTC,
pursuant to which Global OTC would
charge the User any applicable fees
charged to its subscribers by Global
OTC. Once the Exchange receives
authorization from Global OTC, the
Exchange would establish a connection
between the User and the Global OTC
System.
The Exchange provides Users access
to the Global OTC System and the
Exchange Systems (‘‘Access’’) as a
convenience to Users. Use of Access is
completely voluntary. The Exchange is
not aware of any impediment to third
Release No. 76010 (September 29, 2015), 80 FR
60197 (October 5, 2015) (SR–NYSEArca–2015–82).
As specified in the Fee Schedules, a User that
incurs co-location fees for a particular co-location
service pursuant thereto would not be subject to colocation fees for the same co-location service
charged by the Exchange’s affiliates New York
Stock Exchange LLC (‘‘NYSE’’), NYSE American
LLC (‘‘NYSE American’’), and NYSE National, Inc.
(‘‘NYSE National’’ and, together with NYSE, NYSE
American and NYSE Chicago, Inc., the ‘‘Affiliate
SROs’’).See Securities Exchange Act Release No.
70173 (August 13, 2013), 78 FR 50459 (August 19,
2013) (SR–NYSEArca–2013–80).
6 See Securities Exchange Act Release No. 79729
(January 4, 2017), 82 FR 3061 (January 10, 2017)
(SR–NYSEArca–2016–172) (notice of filing and
immediate effectiveness of proposed rule change
amending the Exchange’s Fee Schedules related to
co-location services to increase LCN and IP network
fees and add a description of access to trading and
execution services and connectivity to Included
Data Products).
7 See id.
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Federal Register / Vol. 84, No. 107 / Tuesday, June 4, 2019 / Notices
parties offering Access. As alternatives
to using the Access to the Global OTC
System provided by the Exchange, 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.
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Global OTC
Global OTC is an affiliate of the
Exchange, which has an indirect interest
in Global OTC because it is owned by
the Exchange’s ultimate parent,
Intercontinental Exchange, Inc.8
Unlike the NYSE Exchanges, Global
OTC is not a national securities
exchange registered with the Securities
and Exchange Commission
(‘‘Commission’’) under Section 6 of the
Act.9 Rather, Global OTC is an
alternative trading system (‘‘ATS’’) 10
operated by a broker-dealer, a member
of the Financial Industry Regulatory
Authority. It facilitates transactions in
over-the-counter (‘‘OTC’’) equity
securities, providing publicly displayed,
firm, auto-executable prices in the OTC
securities marketplace. There is no
overlap in the securities traded on the
NYSE Exchanges and Global OTC:
Members trade National Market System
(‘‘NMS’’) securities on the NYSE
Exchanges,11 but Global OTC
subscribers cannot trade NMS securities
on Global OTC.
The Exchange charges fees for
connectivity to the execution systems of
third party markets and other content
service providers, including two
ATSs.12 Of those, the Exchange believes
8 See Securities Exchange Act Release No. 79672
(December 22, 2016), 81 FR 96080 (December 29,
2016) (SR–NYSEMKT–2016–63), fn. 21. Global OTC
is operated by Archipelago Trading Services, Inc.,
which is a broker-dealer subsidiary of NYSE Group,
Inc. (‘‘NYSE Group’’). NYSE Group is also the
parent company of the Exchange.
9 15 U.S.C. 78f. Global OTC is not required to
register as a national securities exchange because it
operates under an exemption from the requirement
to register as an exchange. See 17 CFR 240.3a1–1(a)
and 17 CFR 240.300 through 304.
10 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.
11 See 17 CFR 242.600.
12 See Securities Exchange Act Release No. 80309
(March 24, 2017), 82 FR 15725 (March 30, 2017)
(SR–NYSEMKT–2016–63) (notice of filing of Partial
Amendment No. 4 and order granting accelerated
approval of a proposed rule change, as modified by
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the OTC Markets ATS is the most
comparable to Global OTC.13 Both are
inter-dealer quotation systems for OTC
securities.14 Global OTC and the OTC
Markets’ ATS are not fungible, however.
The OTC Markets’ ATS is a trade
messaging system that displays market
makers quotes and does not offer
automatic executions. While Global
OTC provides a limit order book,
displays participants’ orders, and
executes orders pursuant to price/time
priority, OTC Markets’ ATS displays
market makers’ quotes by price priority,
not time priority. In sum, OTC Markets’
ATS is a market maker intermediary,
whereas Global OTC is a trading
platform.
The Proposed Amendments
To implement the change, the
Exchange proposes to revise the first
paragraph of General Note 4 as follows:
• Amend the first sentence to state
that when a User purchases access to
the LCN or IP network, it receives the
ability to access the Global OTC System
as well as the Exchange Systems, subject
to authorization by Global OTC, the
Exchange or Affiliate Exchange, as
applicable;
• Amend the third sentence to note
that a User can change the access to the
Global OTC System that it receives at
any time, subject to authorization by
Global OTC; and
• Add a new fifth sentence stating
that ‘‘Global OTC offers access to the
Global OTC System to its subscribers,
such that a User does not have to
purchase access to the LCN or IP
network to obtain access to the Global
OTC 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 coAmendment Nos. 1 through 4, to amend the colocation services offered by the Exchange to add
certain access and connectivity fees). Credit Suisse
and OTC Markets have ATSs. See Commission list
of ATSs at https://www.sec.gov/foia/docs/
atslist.htm.
13 The OTC Markets’ ATS is OTC Link. Global
OTC is substantially smaller than OTC Markets’
ATS: Global OTC’s market share is approximately
10% of average daily volume of trades of over-thecounter equities, compared to OTC Markets’ ATS
market share of approximately 90% of average daily
volume of trades. See https://www.globalotc.com/
brokers/market-share.
14 The third inter-dealer quotation system is the
OTC Bulletin Board, a facility of the Financial
Industry Regulatory Authority.
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25859
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 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.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,17 in general, and
furthers the objectives of Section 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 rule change 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 it would allow Users to
connect to the Global OTC System,
thereby increasing Users’ ability to tailor
their data center operations to the
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, as compared to Users that are not
co-located, in sending orders to, and receiving
market data from, the Exchange.
16 See 78 FR 50471, supra note 5, at 50471. NYSE,
NYSE Arca and NYSE National have submitted
substantially the same proposed rule change to
propose the changes described herein. See SR–
NYSE–2019–31, SR–NYSEAmer–2019–21, and SR–
NYSENAT–2019–13.
17 15 U.S.C. 78f(b).
18 15 U.S.C. 78f(b)(5).
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requirements of their business
operations by allowing them to select
the form and latency of access that best
suits their needs. Global OTC provides
publicly displayed, firm, autoexecutable prices in the OTC securities
marketplace, and the Exchange believes
that allowing Users to connect to the
Global OTC System would promote
price discovery and transparency in the
OTC market, benefiting participants in
such market. At the same time, Users
are not required to use any of their
bandwidth to access the Global OTC
System unless they wish to do so.
Rather, a User only receives the Access
that it selects, and a User can change
what Access it receives at any time,
subject to authorization from the
Exchange, Affiliate SRO or Global OTC,
as applicable.
The Exchange provides Access as a
convenience to Users. Use of Access is
completely voluntary, and each User
has several other access options
available to it. As alternatives to using
the Access to the Global OTC System
provided by the Exchange, a User may
access the Global OTC System through
the SFTI network, a third party
telecommunication network, third party
wireless network, a cross connect, or a
combination thereof to access the Global
OTC System 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 revisions to General Note 4
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 they
would make the description of Access
more accessible and transparent by
including Global OTC, thereby
providing market participants with
clarity as to what connectivity is
included in the purchase of access to
the LCN and IP network, avoiding any
potential investor confusion. The
proposed revisions to General Note 4
would provide a more detailed and
accurate description of the Access Users
receive with their purchase of access to
the LCN or IP network. The proposed
rule change would also make clear that
Access to each of the Exchange Systems
and the Global OTC System is provided
on the same terms. All Users that
voluntarily select to access the LCN or
IP network receive Access to the
Exchange Systems and the Global OTC
System, and are not subject to a charge
for such Access above and beyond the
fee paid for the relevant LCN or IP
network access.
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The Exchange also believes that the
proposed rule changes are consistent
with Section 6(b)(4) of the Act,19 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
changes are consistent with Section
6(b)(4) of the Act for multiple reasons.
The proposed rule change is
reasonable and equitable because, as
stated above, it would also make clear
that Access to each of the Exchange
Systems and Global OTC System is
provided on the same terms. The
Exchange further believes that the
Access to the Global OTC System
described herein is equitably allocated
and not unfairly discriminatory because
all Users that voluntarily select to access
the LCN or IP network receive the same
Access, and are not subject to a charge
for Access to Global OTC above and
beyond the fee paid for the relevant LCN
or IP network access. Users are not
required to use any of their bandwidth
to access the Global OTC System unless
they wish to do so. Rather, a User only
receives the Access that it selects, and
a User can change what Access it
receives at any time, subject to
authorization from the Exchange,
Affiliate SRO or Global OTC, as
applicable. In addition to the service
being completely voluntary, it is
available to all Users on an equal basis.
Users that opted to Access the Global
OTC System would not receive access
that is not available to all Users.
The Exchange believes that the
proposed rule change does not unfairly
discriminate between customers,
issuers, brokers or dealers in not
charging Users an additional fee to
access Global OTC while charging a
connectivity fee to access OTC Markets,
because Global OTC and the OTC
Markets ATS are not fungible. A User
that opted to access Global OTC or OTC
Markets would choose between them
based on a variety of factors, including
not just the reasonableness of fees
charged, but also the extent to which it
wished to have publicly displayed, firm,
auto-executable prices. In addition, the
Exchange is not the sole method a User
can use to access the OTC Markets ATS.
A User may use the SFTI network, a
third party telecommunication network,
a cross connect, or a combination
thereof to access the OTC Markets ATS
through a connection to an access center
outside the data center (which could be
19 15
PO 00000
U.S.C. 78f(b)(4).
Frm 00131
Fmt 4703
a SFTI access center, a third-party
access center, or both), another User, or
a third party vendor.
The Exchange operates in a highly
competitive market in which exchanges
offer co-location services as a means to
facilitate the trading and other market
activities of those market participants
who believe that co-location enhances
the efficiency of their operations.
Accordingly, fees charged for colocation services are constrained by the
active competition for the order flow of,
and other business from, such market
participants. If a particular exchange
charges excessive fees for co-location
services, affected market participants
will opt to terminate their co-location
arrangements with that exchange, and
adopt a possible range of alternative
strategies, including placing their
servers in a physically proximate
location outside the exchange’s data
center (which could be a competing
exchange), or pursuing strategies less
dependent upon the lower exchange-toparticipant latency associated with colocation. Accordingly, the exchange
charging excessive fees would stand to
lose not only co-location revenues but
also the liquidity of the formerly colocated trading firms, which could have
additional follow-on effects on the
market share and revenue of the affected
exchange.
For the reasons 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.
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,20 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, 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). The Exchange believes that
the proposed changes are reasonable
and designed to be fair and equitable,
and therefore, will not unduly burden
any particular group of Users.
The Exchange believes that providing
Users that purchase access to the LCN
or IP network with Access to the Global
20 15
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U.S.C. 78f(b)(8).
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OTC System does not impose any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act because, by
offering Access to the Global OTC
System, the Exchange gives each User
additional options for addressing its
access needs, responding to User
demand for access options. The
Exchange provides Access as a
convenience to Users. Use of Access is
completely voluntary, and each User
has several other access options
available to it. As alternatives to using
the Access to the Global OTC System
provided by the Exchange, a User may
access the Global OTC System through
the SFTI network, a third party
telecommunication network, third party
wireless network, a cross connect, or a
combination thereof to access the Global
OTC System 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 Access the Global OTC
System 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.
The Exchange believes that the
proposed rule change does not unfairly
discriminate between customers,
issuers, brokers or dealers in not
charging Users an additional fee to
access Global OTC while charging a
connectivity fee to access OTC Markets,
because Global OTC and the OTC
Markets ATS are not fungible. A User
that opted to access Global OTC or OTC
Markets would choose between them
based on a variety of factors, including
not just the reasonableness of fees
charged, but also the extent to which it
wished to have publicly displayed, firm,
auto-executable prices. In addition, the
Exchange is not the sole method a User
can use to access the OTC Markets ATS.
A User may use the SFTI network, a
third party telecommunication network,
a cross connect, or a combination
thereof to access the OTC Markets ATS
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 revisions to General Note 4
would provide a more detailed and
accurate description of the Access Users
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17:16 Jun 03, 2019
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receive with their purchase of access to
the LCN or IP network, thereby
enhancing competition by ensuring that
all Users have access to the same
information regarding Access.
The Exchange operates in a highly
competitive market in which exchanges
offer co-location services as a means to
facilitate the trading and other market
activities of those market participants
who believe that co-location enhances
the efficiency of their operations.
Accordingly, fees charged for colocation services are constrained by the
active competition for the order flow of,
and other business from, such market
participants. If a particular exchange
charges excessive fees for co-location
services, affected market participants
will opt to terminate their co-location
arrangements with that exchange, and
adopt a possible range of alternative
strategies, including placing their
servers in a physically proximate
location outside the exchange’s data
center (which could be a competing
exchange), or pursuing strategies less
dependent upon the lower exchange-toparticipant latency associated with colocation. Accordingly, the exchange
charging excessive fees would stand to
lose not only co-location revenues but
also the liquidity of the formerly colocated trading firms, which could have
additional follow-on effects on the
market share and revenue of the affected
exchange.
For the reasons described above, the
Exchange believes that the proposed
rule change reflects this competitive
environment.
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 21 and Rule
19b–4(f)(6) thereunder.22 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
21 15
22 17
PO 00000
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
Frm 00132
Fmt 4703
Sfmt 4703
25861
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. 23
A proposed rule change filed under
Rule 19b–4(f)(6) 24 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),25 the
Commission may designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. The Exchange requests that the
Commission waive the 30-day operative
delay so that the proposal may become
operative immediately upon filing. The
Exchange believes that waiver of the
operative delay would allow Users to
have access to the Global OTC System
during the operative delay period and
would provide Users with options for
connectivity to trading and execution
services and the availability of products
and services. The Commission believes
that waiving the 30-day operative delay
is consistent with the protection of
investors and the public interest.
Accordingly, the Commission waives
the 30-day operative delay and
designates the proposed rule change
operative upon filing.26
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) 27 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.
23 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
24 17 CFR 240.19b–4(f)(6).
25 17 CFR 240.19b–4(f)(6)(iii).
26 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
27 15 U.S.C. 78s(b)(2)(B).
E:\FR\FM\04JNN1.SGM
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25862
Federal Register / Vol. 84, No. 107 / Tuesday, June 4, 2019 / Notices
Comments may be submitted by any of
the following methods:
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
[Investment Company Act Release No.
33495; 812–14791]
• 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–
NYSEARCA–2019–40 on the subject
line.
Paper Comments
khammond on DSKBBV9HB2PROD with NOTICES
• Send paper comments in triplicate
to: Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSEARCA–2019–40. 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–NYSEARCA–2019–40 and
should be submitted on or before June
25, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.28
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–11558 Filed 6–3–19; 8:45 am]
BILLING CODE 8011–01–P
28 17
17:16 Jun 03, 2019
May 30, 2019.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice.
AGENCY:
Notice of an application under section
6(c) of the Investment Company Act of
1940 (‘‘Act’’) for an exemption from
section 15(a) of the Act and rule 18f–2
under the Act, as well as from certain
disclosure requirements in rule 20a–1
under the Act, Item 19(a)(3) of Form N–
1A, Items 22(c)(1)(ii), 22(c)(1)(iii),
22(c)(8) and 22(c)(9) of Schedule 14A
under the Securities Exchange Act of
1934, and Sections 6–07(2)(a), (b), and
(c) of Regulation S–X (‘‘Disclosure
Requirements’’). The requested
exemption would permit an investment
adviser to hire and replace certain subadvisers without shareholder approval
and grant relief from the Disclosure
Requirements as they relate to fees paid
to the sub-advisers. The requested order
would supersede a prior order.1
Applicants: Columbia Funds Series
Trust, Columbia Funds Series Trust I,
Columbia Funds Series Trust II,
Columbia Funds Variable Insurance
Trust, Columbia Funds Variable Series
Trust II, Columbia ETF Trust, Columbia
ETF Trust I, and Columbia ETF Trust II
(each, a ‘‘Trust’’ and collectively, the
‘‘Trusts’’), each a Delaware statutory
trust or a Massachusetts business trust
registered under the Act as an open-end
management investment company with
multiple series (each a ‘‘Series’’), and
Columbia Management Investment
Advisers, LLC (the ‘‘Adviser’’), a
Minnesota limited liability company
registered as an investment adviser
under the Investment Advisers Act of
1940.
Filing Dates: The application was
filed on June 28, 2017 and amended on
December 11, 2017, September 28, 2018,
March 7, 2019, and May 17, 2019.
Hearing or Notification of Hearing: An
order granting the application will be
issued unless the Commission orders a
hearing. Interested persons may request
a hearing by writing to the
Commission’s Secretary and serving
applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on June 25, 2019, and
1 AXP Market Advantage Series, Inc., et al.,
Investment Company Act Release Nos. 25619 (June
19, 2002) (notice) and 25664 (July 16, 2002) (order).
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
Columbia Funds Series Trust, et al.
Jkt 247001
PO 00000
Frm 00133
Fmt 4703
Sfmt 4703
should be accompanied by proof of
service on applicants, in the form of an
affidavit or, for lawyers, a certificate of
service. Pursuant to rule 0–5 under the
Act, hearing requests should state the
nature of the writer’s interest, any facts
bearing upon the desirability of a
hearing on the matter, the reason for the
request, and the issues contested.
Persons who wish to be notified of a
hearing may request notification by
writing to the Commission’s Secretary.
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, 100 F Street
NE, Washington, DC 20549–1090.
Applicants: Ryan C. Larrenaga, Esq.,
Columbia Management Investment
Advisers, LLC, 225 Franklin Street,
Boston, MA 02110.
FOR FURTHER INFORMATION CONTACT:
Laura J. Riegel, Senior Counsel, at (202)
551–3038, or Trace W. Rakestraw,
Branch Chief, at (202) 551–6821
(Division of Investment Management,
Chief Counsel’s Office).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
website by searching for the file
number, or for an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Summary of the Application
1. The Adviser serves as the
investment adviser to each Series,
pursuant to an investment management
agreement with the applicable Trust
(‘‘Investment Management
Agreement’’).2 Under the terms of the
Investment Management Agreement, the
Adviser, subject to the supervision of
the board of trustees of the applicable
Trust (‘‘Board’’), provides continuous
investment management of the assets of
2 Applicants request relief with respect to the
named Applicants, as well as to any future Series,
and any other existing or future registered open-end
management investment company or series thereof
that, in each case, (i) is advised by the Adviser or
any entity controlling, controlled by, or under
common control with, the Adviser or its successors
(each, also an ‘‘Adviser’’), (ii) uses the multimanager structure described in the application, and
(iii) complies with the terms and conditions set
forth in the application (each, a ‘‘Subadvised
Series’’). For purposes of the requested order,
‘‘successor’’ is limited to an entity that results from
a reorganization into another jurisdiction or a
change in the type of business organization. Future
Subadvised Series may be operated as a masterfeeder structure pursuant to section 12(d)(1)(E) of
the Act. In such a structure, certain series of the
applicable Trust (each, a ‘‘Feeder Fund’’) may
invest substantially all of their assets in a
Subadvised Series (a ‘‘Master Fund’’) pursuant to
section 12(d)(1)(E) of the Act. No Feeder Fund will
engage any sub-advisers other than through
approving the engagement of one or more of the
Master Fund’s sub-advisers.
E:\FR\FM\04JNN1.SGM
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]]>Agencies
[Federal Register Volume 84, Number 107 (Tuesday, June 4, 2019)]
[Notices]
[Pages 25858-25862]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-11558]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85958; File No. SR-NYSEARCA-2019-40]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE
Arca Options Fees and Charges and the NYSE Arca Equities Fees and
Charges Related to Co-Location Services
May 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 May 21, 2019, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') 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 the NYSE Arca Options Fees and
Charges (the ``Options Fee Schedule'') and the NYSE Arca Equities Fees
and Charges (the ``Equities Fee Schedule'' and, together with the
Options Fee Schedule, the ``Fee Schedules'') related to co-location
services to update the description of the access to trading and
execution systems provided with the purchase of access to the co-
location local area networks. 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 Fee Schedules related to co-
location \4\ services offered by the Exchange to update the description
of the access to trading and execution services and connectivity to
data provided to Users \5\ with connections to the Liquidity Center
Network (``LCN'') and internet protocol (``IP'') network, local area
networks available in the data center.
---------------------------------------------------------------------------
\4\ The Exchange initially filed rule changes relating to its
co-location services with the Securities and Exchange Commission
(``Commission'') in 2010. See Securities Exchange Act Release No.
63275 (November 8, 2010), 75 FR 70048 (November 16, 2010) (SR-
NYSEArca-2010-100). The Exchange operates a data center in Mahwah,
New Jersey (the ``data center'') from which it provides co-location
services to Users.
\5\ For purposes of the Exchange's co-location services, a
``User'' means any market participant that requests to receive co-
location services directly from the Exchange. See Securities
Exchange Act Release No. 76010 (September 29, 2015), 80 FR 60197
(October 5, 2015) (SR-NYSEArca-2015-82). As specified in the Fee
Schedules, a User that incurs co-location fees for a particular co-
location service pursuant thereto would not be subject to co-
location fees for the same co-location service charged by the
Exchange's affiliates New York Stock Exchange LLC (``NYSE''), NYSE
American LLC (``NYSE American''), and NYSE National, Inc. (``NYSE
National'' and, together with NYSE, NYSE American and NYSE Chicago,
Inc., the ``Affiliate SROs'').See Securities Exchange Act Release
No. 70173 (August 13, 2013), 78 FR 50459 (August 19, 2013) (SR-
NYSEArca-2013-80).
---------------------------------------------------------------------------
To implement the changes, the Exchange proposes to amend paragraph
one of General Note 4, which describes the access to trading and
execution systems which a User receives when it purchases access to the
LCN or IP network.\6\
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 79729 (January 4,
2017), 82 FR 3061 (January 10, 2017) (SR-NYSEArca-2016-172) (notice
of filing and immediate effectiveness of proposed rule change
amending the Exchange's Fee Schedules related to co-location
services to increase LCN and IP network fees and add a description
of access to trading and execution services and connectivity to
Included Data Products).
---------------------------------------------------------------------------
The Exchange will announce the implementation date through a
customer notice.
As set forth in the first paragraph of General Note 4, when a User
purchases access to the LCN or IP network, it receives the ability to
access the trading and execution systems of the Exchange and the SRO
Affiliates (together, the ``Exchange Systems''), provided the User has
authorization from the Exchange or relevant Affiliate SRO.\7\ The
Exchange proposes to revise such paragraph to reflect that a User that
purchases access to the LCN or IP network also receives the ability to
access the trading and execution systems of Global OTC (``Global OTC
System''), subject to authorization by Global OTC.
---------------------------------------------------------------------------
\7\ See id.
---------------------------------------------------------------------------
In order to obtain access to the Global OTC System, the User would
enter into an agreement with Global OTC, pursuant to which Global OTC
would charge the User any applicable fees charged to its subscribers by
Global OTC. Once the Exchange receives authorization from Global OTC,
the Exchange would establish a connection between the User and the
Global OTC System.
The Exchange provides Users access to the Global OTC System and the
Exchange Systems (``Access'') as a convenience to Users. Use of Access
is completely voluntary. The Exchange is not aware of any impediment to
third
[[Page 25859]]
parties offering Access. As alternatives to using the Access to the
Global OTC System provided by the Exchange, 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.
Global OTC
Global OTC is an affiliate of the Exchange, which has an indirect
interest in Global OTC because it is owned by the Exchange's ultimate
parent, Intercontinental Exchange, Inc.\8\
---------------------------------------------------------------------------
\8\ See Securities Exchange Act Release No. 79672 (December 22,
2016), 81 FR 96080 (December 29, 2016) (SR-NYSEMKT-2016-63), fn. 21.
Global OTC is operated by Archipelago Trading Services, Inc., which
is a broker-dealer subsidiary of NYSE Group, Inc. (``NYSE Group'').
NYSE Group is also the parent company of the Exchange.
---------------------------------------------------------------------------
Unlike the NYSE Exchanges, Global OTC is not a national securities
exchange registered with the Securities and Exchange Commission
(``Commission'') under Section 6 of the Act.\9\ Rather, Global OTC is
an alternative trading system (``ATS'') \10\ operated by a broker-
dealer, a member of the Financial Industry Regulatory Authority. It
facilitates transactions in over-the-counter (``OTC'') equity
securities, providing publicly displayed, firm, auto-executable prices
in the OTC securities marketplace. There is no overlap in the
securities traded on the NYSE Exchanges and Global OTC: Members trade
National Market System (``NMS'') securities on the NYSE Exchanges,\11\
but Global OTC subscribers cannot trade NMS securities on Global OTC.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78f. Global OTC is not required to register as a
national securities exchange because it operates under an exemption
from the requirement to register as an exchange. See 17 CFR 240.3a1-
1(a) and 17 CFR 240.300 through 304.
\10\ 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.
\11\ See 17 CFR 242.600.
---------------------------------------------------------------------------
The Exchange charges fees for connectivity to the execution systems
of third party markets and other content service providers, including
two ATSs.\12\ Of those, the Exchange believes the OTC Markets ATS is
the most comparable to Global OTC.\13\ Both are inter-dealer quotation
systems for OTC securities.\14\ Global OTC and the OTC Markets' ATS are
not fungible, however. The OTC Markets' ATS is a trade messaging system
that displays market makers quotes and does not offer automatic
executions. While Global OTC provides a limit order book, displays
participants' orders, and executes orders pursuant to price/time
priority, OTC Markets' ATS displays market makers' quotes by price
priority, not time priority. In sum, OTC Markets' ATS is a market maker
intermediary, whereas Global OTC is a trading platform.
---------------------------------------------------------------------------
\12\ See Securities Exchange Act Release No. 80309 (March 24,
2017), 82 FR 15725 (March 30, 2017) (SR-NYSEMKT-2016-63) (notice of
filing of Partial Amendment No. 4 and order granting accelerated
approval of a proposed rule change, as modified by Amendment Nos. 1
through 4, to amend the co-location services offered by the Exchange
to add certain access and connectivity fees). Credit Suisse and OTC
Markets have ATSs. See Commission list of ATSs at https://www.sec.gov/foia/docs/atslist.htm.
\13\ The OTC Markets' ATS is OTC Link. Global OTC is
substantially smaller than OTC Markets' ATS: Global OTC's market
share is approximately 10% of average daily volume of trades of
over-the-counter equities, compared to OTC Markets' ATS market share
of approximately 90% of average daily volume of trades. See https://www.globalotc.com/brokers/market-share.
\14\ The third inter-dealer quotation system is the OTC Bulletin
Board, a facility of the Financial Industry Regulatory Authority.
---------------------------------------------------------------------------
The Proposed Amendments
To implement the change, the Exchange proposes to revise the first
paragraph of General Note 4 as follows:
Amend the first sentence to state that when a User
purchases access to the LCN or IP network, it receives the ability to
access the Global OTC System as well as the Exchange Systems, subject
to authorization by Global OTC, the Exchange or Affiliate Exchange, as
applicable;
Amend the third sentence to note that a User can change
the access to the Global OTC System that it receives at any time,
subject to authorization by Global OTC; and
Add a new fifth sentence stating that ``Global OTC offers
access to the Global OTC System to its subscribers, such that a User
does not have to purchase access to the LCN or IP network to obtain
access to the Global OTC 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, as compared to
Users that are not co-located, in sending orders to, and receiving
market data from, the Exchange.
\16\ See 78 FR 50471, supra note 5, at 50471. NYSE, NYSE Arca
and NYSE National have submitted substantially the same proposed
rule change to propose the changes described herein. See SR-NYSE-
2019-31, SR-NYSEAmer-2019-21, and SR-NYSENAT-2019-13.
---------------------------------------------------------------------------
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 rule change is consistent
with Section 6(b) of the Act,\17\ in general, and furthers the
objectives of Section 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 rule change 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 it would allow Users to connect to the Global
OTC System, thereby increasing Users' ability to tailor their data
center operations to the
[[Page 25860]]
requirements of their business operations by allowing them to select
the form and latency of access that best suits their needs. Global OTC
provides publicly displayed, firm, auto-executable prices in the OTC
securities marketplace, and the Exchange believes that allowing Users
to connect to the Global OTC System would promote price discovery and
transparency in the OTC market, benefiting participants in such market.
At the same time, Users are not required to use any of their bandwidth
to access the Global OTC System unless they wish to do so. Rather, a
User only receives the Access that it selects, and a User can change
what Access it receives at any time, subject to authorization from the
Exchange, Affiliate SRO or Global OTC, as applicable.
The Exchange provides Access as a convenience to Users. Use of
Access is completely voluntary, and each User has several other access
options available to it. As alternatives to using the Access to the
Global OTC System provided by the Exchange, a User may access the
Global OTC System through the SFTI network, a third party
telecommunication network, third party wireless network, a cross
connect, or a combination thereof to access the Global OTC System
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 revisions to General Note 4
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 they would make the
description of Access more accessible and transparent by including
Global OTC, thereby providing market participants with clarity as to
what connectivity is included in the purchase of access to the LCN and
IP network, avoiding any potential investor confusion. The proposed
revisions to General Note 4 would provide a more detailed and accurate
description of the Access Users receive with their purchase of access
to the LCN or IP network. The proposed rule change would also make
clear that Access to each of the Exchange Systems and the Global OTC
System is provided on the same terms. All Users that voluntarily select
to access the LCN or IP network receive Access to the Exchange Systems
and the Global OTC System, and are not subject to a charge for such
Access above and beyond the fee paid for the relevant LCN or IP network
access.
The Exchange also believes that the proposed rule changes are
consistent with Section 6(b)(4) of the Act,\19\ 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
changes are consistent with Section 6(b)(4) of the Act for multiple
reasons.
---------------------------------------------------------------------------
\19\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
The proposed rule change is reasonable and equitable because, as
stated above, it would also make clear that Access to each of the
Exchange Systems and Global OTC System is provided on the same terms.
The Exchange further believes that the Access to the Global OTC System
described herein is equitably allocated and not unfairly discriminatory
because all Users that voluntarily select to access the LCN or IP
network receive the same Access, and are not subject to a charge for
Access to Global OTC above and beyond the fee paid for the relevant LCN
or IP network access. Users are not required to use any of their
bandwidth to access the Global OTC System unless they wish to do so.
Rather, a User only receives the Access that it selects, and a User can
change what Access it receives at any time, subject to authorization
from the Exchange, Affiliate SRO or Global OTC, as applicable. In
addition to the service being completely voluntary, it is available to
all Users on an equal basis. Users that opted to Access the Global OTC
System would not receive access that is not available to all Users.
The Exchange believes that the proposed rule change does not
unfairly discriminate between customers, issuers, brokers or dealers in
not charging Users an additional fee to access Global OTC while
charging a connectivity fee to access OTC Markets, because Global OTC
and the OTC Markets ATS are not fungible. A User that opted to access
Global OTC or OTC Markets would choose between them based on a variety
of factors, including not just the reasonableness of fees charged, but
also the extent to which it wished to have publicly displayed, firm,
auto-executable prices. In addition, the Exchange is not the sole
method a User can use to access the OTC Markets ATS. A User may use the
SFTI network, a third party telecommunication network, a cross connect,
or a combination thereof to access the OTC Markets ATS 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 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 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.
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,\20\ 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, 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). The
Exchange believes that the proposed changes are reasonable and designed
to be fair and equitable, and therefore, will not unduly burden any
particular group of Users.
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\20\ 15 U.S.C. 78f(b)(8).
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The Exchange believes that providing Users that purchase access to
the LCN or IP network with Access to the Global
[[Page 25861]]
OTC System does not impose any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Act
because, by offering Access to the Global OTC System, the Exchange
gives each User additional options for addressing its access needs,
responding to User demand for access options. The Exchange provides
Access as a convenience to Users. Use of Access is completely
voluntary, and each User has several other access options available to
it. As alternatives to using the Access to the Global OTC System
provided by the Exchange, a User may access the Global OTC System
through the SFTI network, a third party telecommunication network,
third party wireless network, a cross connect, or a combination thereof
to access the Global OTC System 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 Access the Global OTC System 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.
The Exchange believes that the proposed rule change does not
unfairly discriminate between customers, issuers, brokers or dealers in
not charging Users an additional fee to access Global OTC while
charging a connectivity fee to access OTC Markets, because Global OTC
and the OTC Markets ATS are not fungible. A User that opted to access
Global OTC or OTC Markets would choose between them based on a variety
of factors, including not just the reasonableness of fees charged, but
also the extent to which it wished to have publicly displayed, firm,
auto-executable prices. In addition, the Exchange is not the sole
method a User can use to access the OTC Markets ATS. A User may use the
SFTI network, a third party telecommunication network, a cross connect,
or a combination thereof to access the OTC Markets ATS 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 revisions to General Note 4
would provide a more detailed and accurate description of the Access
Users receive with their purchase of access to the LCN or IP network,
thereby enhancing competition by ensuring that all Users have access to
the same information regarding Access.
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 \21\ and Rule 19b-4(f)(6) thereunder.\22\
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. \23\
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\21\ 15 U.S.C. 78s(b)(3)(A)(iii).
\22\ 17 CFR 240.19b-4(f)(6).
\23\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \24\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\25\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange requests
that the Commission waive the 30-day operative delay so that the
proposal may become operative immediately upon filing. The Exchange
believes that waiver of the operative delay would allow Users to have
access to the Global OTC System during the operative delay period and
would provide Users with options for connectivity to trading and
execution services and the availability of products and services. The
Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest.
Accordingly, the Commission waives the 30-day operative delay and
designates the proposed rule change operative upon filing.\26\
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\24\ 17 CFR 240.19b-4(f)(6).
\25\ 17 CFR 240.19b-4(f)(6)(iii).
\26\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \27\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\27\ 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.
[[Page 25862]]
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-NYSEARCA-2019-40 on the subject line.
Paper Comments
Send paper comments in triplicate to: Secretary,
Securities and Exchange Commission, 100 F Street NE, Washington, DC
20549-1090.
All submissions should refer to File Number SR-NYSEARCA-2019-40. 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-NYSEARCA-2019-40 and should be submitted
on or before June 25, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
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\28\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-11558 Filed 6-3-19; 8:45 am]
BILLING CODE 8011-01-P
