Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of Filing of Proposed Rule Change To Amend the Schedule of Wireless Connectivity Fees and Charges To Add Wireless Connectivity Services, 10795-10803 [2020-03641]

Download as PDF Federal Register / Vol. 85, No. 37 / Tuesday, February 25, 2020 / Notices 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. jbell on DSKJLSW7X2PROD with NOTICES Summary of the Application 1. Applicants request an order to permit (a) each Fund 1 (and each a ‘‘Fund of Funds’’) to acquire shares of Underlying Funds 2 in excess of the limits in sections 12(d)(1)(A) and (C) of the Act, and (b) each Underlying Fund that is a registered open-end management investment company or series thereof, their principal underwriters, and any broker or dealer registered under the 1934 Act to sell shares of the Underlying Funds to the Fund of Funds in excess of the limits in section 12(d)(1)(B) of the Act.3 Applicants also request that the Commission issue an order under sections 6(c) and 17(b) of the Act from the prohibition on certain affiliated transactions in section 17(a) of the Act to the extent necessary to permit the Underlying Funds to sell their shares to, and redeem their shares from, the Funds of Funds.4 Applicants state that such 1 Applicants request that the order apply not only to the existing series of the Trust (the ‘‘Existing Funds’’), but that the order also extend to any future series of the Trust and any other existing or future registered open-end management investment companies and any series thereof that are part of the same ‘‘group of investment companies,’’ as defined in section 12(d)(1)(G)(ii) of the Act, as the Trust are, or may in the future be, advised by the Adviser or any other investment adviser controlling, controlled by, or under common control with the Adviser (together with the Existing Funds, each series a ‘‘Fund,’’ and collectively, the ‘‘Funds’’). For purposes of the request for relief, the term ‘‘group of investment companies’’ means any two or more registered investment companies, including closedend investment companies and BDCs, that hold themselves out to investors as related companies for purposes of investment and investor services. 2 Certain of the Underlying Funds registered under the Act as either UITs or open-end management investment companies may have requested and obtained exemptions from the Commission necessary to permit their shares to be listed and traded on a national securities exchange at negotiated prices and, accordingly, to operate as exchange-traded funds (collectively, ‘‘ETFs’’ and each an ‘‘ETF’’). 3 Applicants are not requesting relief for a Fund of Funds to invest in BDCs and registered closedend investment companies that are not listed and traded on a national securities exchange. 4 A Fund of Funds generally would purchase and sell shares of an Underlying Fund that operates as an ETF or closed-end fund through secondary market transactions rather than through principal transactions with the Underlying Fund. Applicants nevertheless request relief from sections 17(a)(1) and (2) to permit each ETF or closed-end fund that is an affiliated person, or an affiliated person of an affiliated person, as defined in section 2(a)(3) of the Act, of a Fund of Funds, to sell shares to or redeem shares from the Fund of Funds. This includes, in the case of sales and redemptions of shares of ETFs, the in-kind transactions that accompany such sales and redemptions. Applicants are not seeking relief from section 17(a) for, and the requested relief will VerDate Sep<11>2014 20:34 Feb 24, 2020 Jkt 250001 transactions will be consistent with the policies of each Fund of Funds and each Underlying Fund and with the general purposes of the Act and will be based on the net asset values of the Underlying Funds. 2. Applicants agree that any order granting the requested relief will be subject to the terms and conditions stated in the application. Such terms and conditions are designed to, among other things, help prevent any potential (i) undue influence over an Underlying Fund that is not in the same ‘‘group of investment companies’’ as the Fund of Funds through control or voting power, or in connection with certain services, transactions, and underwritings, (ii) excessive layering of fees, and (iii) overly complex fund structures, which are the concerns underlying the limits in sections 12(d)(1)(A), (B), and (C) of the Act. 3. Section 12(d)(1)(J) of the Act provides that the Commission may exempt any person, security, or transaction, or any class or classes of persons, securities, or transactions, from any provision of section 12(d)(1) if the exemption is consistent with the public interest and the protection of investors. Section 17(b) of the Act authorizes the Commission to grant an order permitting a transaction otherwise prohibited by section 17(a) if it finds that (a) the terms of the proposed transaction are fair and reasonable and do not involve overreaching on the part of any person concerned; (b) the proposed transaction is consistent with the policies of each registered investment company involved; and (c) the proposed transaction is consistent with the general purposes of the Act. Section 6(c) of the Act permits the Commission to exempt any persons, securities, or transactions from any provision of the Act if such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. For the Commission, by the Division of Investment Management, pursuant to delegated authority. Jill M. Peterson, Assistant Secretary. [FR Doc. 2020–03638 Filed 2–24–20; 8:45 am] BILLING CODE 8011–01–P not apply to, transactions where an ETF, BDC, or closed-end fund could be deemed an affiliated person, or an affiliated person of an affiliated person, of a Fund of Funds because an investment adviser to the ETF, BDC, or closed-end fund, or an entity controlling, controlled by, or under common control with the investment adviser to the ETF, BDC, or closed-end fund, is also an investment adviser to the Fund of Funds. PO 00000 Frm 00149 Fmt 4703 Sfmt 4703 10795 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–88240; File No. SR– NYSECHX–2020–05] Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of Filing of Proposed Rule Change To Amend the Schedule of Wireless Connectivity Fees and Charges To Add Wireless Connectivity Services February 19, 2020. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (‘‘Act’’),2 and Rule 19b–4 thereunder,3 notice is hereby given that on February 11, 2020, the NYSE Chicago, Inc. (‘‘NYSE Chicago’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. 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 add wireless connectivity services that transport the market data of certain affiliates of the Exchange to the schedule of Wireless Connectivity Fees and Charges (the ‘‘Wireless Fee Schedule’’). The proposed change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 E:\FR\FM\25FEN1.SGM 25FEN1 10796 Federal Register / Vol. 85, No. 37 / Tuesday, February 25, 2020 / Notices A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to add wireless connectivity services that transport market data of three Exchange affiliates, New York Stock Exchange LLC (‘‘NYSE’’), NYSE Arca, Inc. (‘‘NYSE Arca’’) and NYSE National, Inc. (‘‘NYSE National’’) to the Wireless Fee Schedule.4 A market participant is not able to use the wireless connectivity services to connect to Exchange market data. The wireless connections can be purchased by market participants in three data centers that are owned and operated by third parties unaffiliated with the Exchange: (1) Carteret, New Jersey, (2) Secaucus, New Jersey, and (3) Markham, Canada (collectively, the ‘‘Third Party Data Centers’’). A market participant in a Third Party Data Center that purchases a wireless connection (‘‘Wireless Market Data Connection’’) receives connectivity to certain NYSE, NYSE Arca and NYSE National market data feeds (collectively, the ‘‘Selected Market Data’’) 5 distributed from the Mahwah, New Jersey data center. Customers that purchase a wireless connection to Selected Market Data are charged an initial and monthly fee for the service of transporting the Selected Market Data. The Exchange does not believe that the present proposed change is a change to the ‘‘rules of an exchange’’ 6 required to be filed with the Commission under the Act. The definition of ‘‘exchange’’ under the Act includes ‘‘the market facilities maintained by such jbell on DSKJLSW7X2PROD with NOTICES 4 The NYSE, NYSE American LLC, NYSE Arca, and NYSE National are national securities exchanges that are affiliates of the Exchange (collectively, the ‘‘Affiliate SROs’’). The wireless connectivity services described in this filing do not transport the market data of the Exchange or NYSE American LLC. The Exchange filed a proposed rule change that would establish the Wireless Fee Schedule. See SR–NYSECHX–2020–02 (January 30, 2020). Should such filing be approved before the present filing, the changes to the Wireless Fee Schedule proposed herein would appear at the end of the Wireless Fee Schedule, after the text proposed in the January, 2020 filing. In such case, the Exchange will amend the present filing if required. 5 In the Carteret and Secaucus Third Party Data Centers, a market participant may use a Wireless Market Data Connection to connect to the NYSE Integrated Feed data feed, the NYSE Arca Integrated Feed data feed, and the NYSE National Integrated Feed data feed. In the Markham, Canada Third Party Data Center, a market participant may use a Wireless Market Data Connection to connect to the NYSE BBO and Trades data feeds and the NYSE Arca BBO and Trades data feeds. 6 See 15 U.S.C. 78c(a)(27) (defining the term ‘‘rules of an exchange’’). VerDate Sep<11>2014 21:38 Feb 24, 2020 Jkt 250001 exchange.’’ 7 Based on its review of the relevant facts and circumstances, and as discussed further below, the Exchange has concluded that the Wireless Market Data Connections are not facilities of the Exchange within the meaning of the Act, and therefore do not need to be included in its rules. The Exchange is making the current proposal solely because the Staff of the Commission has advised the Exchange that it believes the Wireless Market Data Connections are facilities of the Exchange and so must be filed as part of its rules.8 The Staff has not set forth the basis of its conclusion beyond verbally noting that the Wireless Market Data Connections are provided by an affiliate of the Exchange and a market participant could use a Wireless Market Data Connection to connect to market data feeds of Affiliate SROs.9 The Exchange expects the proposed change to be operative 60 days after the present filing becomes effective. and the Affiliate SROs, including futures markets, as well as six clearing houses. Among others, the ICE Affiliates are subject to the jurisdiction of regulators in the U.S., U.K., E.U., the Netherlands, Canada and Singapore.10 In all, the ICE Affiliates include hundreds of ICE subsidiaries, including more than thirty that are significant legal entity subsidiaries as defined by Commission rule.11 Through its ICE Data Services (‘‘IDS’’) business,12 ICE operates the ICE Global Network, a global connectivity network whose infrastructure provides access to over 150 global markets, including the Exchange and Affiliate SROs, and over 750 data sources. All the ICE Affiliates are ultimately controlled by ICE, as the indirect parent company, but generally they do not control each other. In the present case, it is IDS, not the Exchange, that provides the Wireless Market Data Connections to market participants. The Exchange does not control IDS. The Exchange and the ICE Affiliates To understand the Exchange’s conclusion that the Wireless Market Data Connections are not facilities of the Exchange within the meaning of the Act, it is important to understand the very real distinction between the Exchange and its corporate affiliates (the ‘‘ICE Affiliates’’). The Exchange is an indirect subsidiary of Intercontinental Exchange, Inc. (‘‘ICE’’). Around the world, ICE operates seven regulated exchanges in addition to the Exchange The Wireless Market Data Connections As noted above, if a market participant in one of the Third Party Data Centers wishes to connect to one or more of the data feeds of the Affiliate SROs that make up the Selected Market Data,13 it may opt to purchase a Wireless Market Data Connection to the data. The Selected Market Data is generated at the Mahwah data center in the trading and execution systems of the NYSE, NYSE Arca and NYSE National (collectively, the ‘‘SRO Systems’’). In each case, the NYSE, NYSE Arca or NYSE National, as applicable, files with the Commission for the Selected Market Data it generates, and the related fees.14 7 15 U.S.C. 78c(a)(1). See 15 U.S.C. 78c(a)(2) (defining the term ‘‘facility’’ as applied to an exchange). 8 Telephone conversation between Commission staff and representatives of the Exchange, December 12, 2019. 9 Id. The Commission has previously stated that services were facilities of an exchange subject to the rule filing requirements without fully explaining its reasoning. In 2010, the Commission stated that exchanges had to file proposed rule changes with respect to co-location because ‘‘[t]he Commission views co-location services as being a material aspect of the operation of the facilities of an exchange.’’ The Commission did not specify why it reached that conclusion. See Securities Exchange Act Release No. 61358 (January 14, 2010), 75 FR 3594 (January 21, 2010), at note 76. In addition, in 2014, the Commission instituted proceedings to determine whether to disapprove a proposed rule change by The NASDAQ Stock Market LLC (‘‘Nasdaq’’) on the basis that Nasdaq’s ‘‘provision of third-party market data feeds to colocated clients appears to be an integral feature of its co-location program, and co-location programs are subject to the rule filing process.’’ Securities Exchange Act Release No. 72654 (July 22, 2014), 79 FR 43808 (July 28, 2014) (SR–NASDAQ–2014–034). In its order, the Commission did not explain why it believed that the provision of third party data was an integral feature of co-location, or if it believed that it was a facility of Nasdaq, although the Nasdaq filing analyzed each prong of the definition of facility in turn. See Securities Exchange Act Release No. 71990 (April 22, 2014), 79 FR 23389 (April 28, 2014) (SR–NASDAQ–2014–034). PO 00000 Frm 00150 Fmt 4703 Sfmt 4703 10 Intercontinental Exchange, Inc. Annual Report on Form 10–K for the year ended December 31, 2018, Exhibit 21.1 (filed February 7, 2019), at 15– 16. 11 Id. at Exhibit 21.1. 12 The IDS business operates through several different ICE Affiliates, including NYSE Technologies Connectivity, Inc., an indirect subsidiary of the NYSE. 13 See note 5, supra for a list of the Selected Market Data available in each Third Party Data Center. 14 See Securities Exchange Act Release Nos. 74128 (January 23, 2015), 80 FR 4951 (January 29, 2015) (SR–NYSE–2015–03) (notice of filing and immediate effectiveness of proposed rule change establishing the NYSE Integrated Feed data feed); 76485 (November 20, 2015), 80 FR 74158 (November 27, 2015) (SR–NYSE–2015–57) (notice of filing and immediate effectiveness of a proposed rule change establishing fees for the NYSE Integrated Feed); 62181 (May 26, 2010), 75 FR 31488 (June 3, 2010) (SR–NYSE–2010–30) (order approving proposed rule change to establish the NYSE BBO service); 59290 (January 23, 2009), 74 FR 5707 (January 30, 2009) (SR–NYSE–2009–05) (notice of filing and immediate effectiveness of proposed rule change to introduce a pilot program for NYSE Trades); 59606 (March 19, 2009), 74 FR E:\FR\FM\25FEN1.SGM 25FEN1 Federal Register / Vol. 85, No. 37 / Tuesday, February 25, 2020 / Notices jbell on DSKJLSW7X2PROD with NOTICES The filed market data fees apply to all Selected Market Data customers no matter what connectivity provider they use. When a market participant wants to connect to Selected Market Data, it requests a connection from the provider of its choice. All providers, including ICE Affiliates, may only provide the market participant with connectivity once the provider receives confirmation from the NYSE, NYSE Arca or NYSE National, as applicable, that the market participant is authorized to receive the requested Selected Market Data. Accordingly, when a market participant requests a Wireless Market Data Connection, IDS’s first step is to obtain authorization.15 IDS’s next step is to set up the Wireless Market Data Connection for the market participant. In the connection, IDS collects the Selected Market Data, then sends it over the Wireless Market Data Connection to the IDS access center located in the Third Party Data Center. The customer connects to the Selected Market Data at the Third Party Data Center.16 The customer is charged by IDS an initial and monthly fee for the Wireless Market Data Connection. By contrast, IDS will not bill the customer for the 13293 (March 26, 2009) (SR–NYSE–2009–04) (order approving proposed rule change to establish fees for NYSE Trades); 62188 (May 27, 2010), 75 FR 31484 (June 3, 2010) (SR–NYSEArca–2010–23) (order approving proposed rule change to modify the fees for NYSE Arca Trades, to establish the NYSE Arca BBO service and related fees, and to provide an alternative unit-of-count methodology for those services); 59289 (January 23, 2009), 74 FR 5711 (January 30, 2009) (SR–NYSEArca–2009–06) (notice of filing and immediate effectiveness of proposed rule change to introduce a pilot program for NYSE Arca Trades); 59598 (March 18, 2009), 74 FR 12919 (March 25, 2009) (SR–NYSEArca–2009–05) (order approving proposed rule change to establish fees for NYSE Arca Trades); 65669 (November 2, 2011), 76 FR 69311 (November 8, 2011) (SR–NYSEArca– 2011–78) (notice of filing and immediate effectiveness of proposed rule change offering the NYSE Arca Integrated Feed); 66128 (January 10, 2012), 77 FR 2331 (January 17, 2012) (SR– NYSEArca–2011–96) (notice of filing and immediate effectiveness of a proposed rule change establishing fees for NYSE Arca Integrated Feed); 83350 (May 31, 2018), 83 FR 26332 (June 6, 2018) (SR–NYSENAT–2018–09) (notice of filing and immediate effectiveness of proposed rule change establishing the NYSE National Integrated Feed data feed); and 87797 (December 18, 2019), 84 FR 71025 (December 26, 2019) (SR–NYSENAT–2019– 31) (notice of filing and immediate effectiveness of proposed rule change to establish fees for the NYSE National Integrated Feed). 15 When requesting authorization from the NYSE, NYSE Arca or NYSE National to provide a customer with Selected Market Data, the ICE Affiliate providing the Wireless Market Data Connection uses the same on-line tool as all data vendors. 16 A cable connects the IDS and customer equipment in the Markham Third Party Data Center. If the customer is located in either the Carteret or Secaucus Third Party Data Center, the customer buys a cross connect from IDS. VerDate Sep<11>2014 20:34 Feb 24, 2020 Jkt 250001 Selected Market Data: The NYSE, NYSE Arca or NYSE National, as applicable, bill market data subscribers directly, irrespective of whether the market data subscribers receive the Selected Market Data over a Wireless Market Data Connection or from another connectivity provider. Market participants in the Third Party Data Centers that want to connect to Selected Market Data have options, as other providers offer connectivity to Selected Market Data.17 A market participant in the Carteret or Secaucus Third Party Data Center may purchase a wireless connection to the NYSE and NYSE Arca Integrated Feed data feeds from at least two other providers of wireless connectivity. A market participant in any of the Third Party Data Centers or the Mahwah data center also may create a proprietary wireless market data connection, connect through another market participant, or utilize fiber connections offered by the Exchange, ICE Affiliates, and other service providers and third party telecommunications providers. The Wireless Market Data Connections Are Not Facilities of the Exchange The Definition of ‘‘Exchange’’ The definition of ‘‘exchange’’ focuses on the exchange entity and what it does: 18 The term ‘‘exchange’’ means any organization, association, or group of persons, whether incorporated or unincorporated, which constitutes, maintains, or provides a market place or facilities for bringing together purchasers and sellers of securities or for otherwise performing with respect to securities the functions commonly performed by a stock exchange as that term is generally understood, and includes the market place and the market facilities maintained by such exchange. If the ‘‘exchange’’ definition included all of an exchange’s affiliates, the ‘‘Exchange’’ would encompass a global network of futures markets, clearing houses, and data providers, and all of those entities worldwide would be subject to regulation by the Commission. That, however, is not what the definition in the Act provides. The Exchange and the Affiliate SROs fall squarely within the Act’s definition of an ‘‘exchange’’: They each provide a market place to bring together purchasers and sellers of securities and perform with respect to securities the 17 The other providers obtain Selected Market Data from IDS at the Mahwah data center and send it over their own networks, fiber or wireless, to the Third Party Data Centers. 18 15 U.S.C. 78c(a)(1). PO 00000 Frm 00151 Fmt 4703 Sfmt 4703 10797 functions commonly performed by a stock exchange. That is not true for the non-exchange ICE Affiliates. Those ICE Affiliates do not provide such a marketplace or perform ‘‘with respect to securities the functions commonly performed by a stock exchange,’’ and therefore they are not an ‘‘exchange’’ or part of the ‘‘Exchange’’ for purposes of the Act. Accordingly, in conducting its analysis, the Exchange does not automatically collapse the ICE Affiliates into the Exchange. The Wireless Market Data Connections are also not part of the Exchange, as they are services, and as such cannot be part of an ‘‘organization, association or group of persons’’ with the Exchange. In Rule 3b–16 the Commission further defined the term ‘‘exchange’’ under the Act, stating that: 19 (a) An organization, association, or group of persons shall be considered to constitute, maintain, or provide ‘‘a market place or facilities for bringing together purchasers and sellers of securities or for otherwise performing with respect to securities the functions commonly performed by a stock exchange,’’ as those terms are used in section 3(a)(1) of the Act . . . if such organization, association, or group of persons: (1) Brings together the orders for securities of multiple buyers and sellers; and (2) Uses established, non-discretionary methods (whether by providing a trading facility or by setting rules) under which such orders interact with each other, and the buyers and sellers entering such orders agree to the terms of a trade. The non-exchange ICE Affiliates do not bring ‘‘together orders for securities of multiple buyers and sellers,’’ and so are not an ‘‘exchange’’ or part of the ‘‘Exchange’’ for purposes of Rule 3b–16. Indeed, it is not possible to use a Wireless Market Data Connection to effect a transaction on the Exchange. Rather, they are one-way connections away from the Mahwah data center. The relevant question, then, is whether the Wireless Market Data Connections are ‘‘facilities’’ of the Exchange. The Definition of ‘‘Facility’’ The Act defines a ‘‘facility’’ 20 as follows: The term ‘‘facility’’ when used with respect to an exchange includes [1] its premises, [2] tangible or intangible property whether on the premises or not, [3] any right to the use of such premises or property or any service thereof for the purpose of effecting or reporting a transaction on an exchange (including, among other things, any system of communication to or from the exchange, by 19 17 20 15 E:\FR\FM\25FEN1.SGM CFR 240.3b–16(a). U.S.C. 78c(a)(2). 25FEN1 10798 Federal Register / Vol. 85, No. 37 / Tuesday, February 25, 2020 / Notices ticker or otherwise, maintained by or with the consent of the exchange), and [4] any right of the exchange to the use of any property or service. jbell on DSKJLSW7X2PROD with NOTICES In 2015 the Commission noted that whether something is a ‘‘facility’’ is not always black and white, as ‘‘any determination as to whether a service or other product is a facility of an exchange requires an analysis of the particular facts and circumstances.’’ 21 Accordingly, the Exchange understands that the specific facts and circumstances of the Wireless Market Data Connections must be assessed before a determination can be made regarding whether or not they are facilities of the Exchange.22 The first prong of the definition is that ‘‘facility,’’ when used with respect to an exchange, includes ‘‘its premises.’’ That prong is not applicable in this case, because the Wireless Market Data Connections are not premises of the Exchange. The term ‘‘premises’’ is generally defined as referring to an entity’s building, land, and appurtenances.23 The wireless network that runs from the Mahwah data center to the Third Party Data Centers, much of which is actually owned, operated and maintained by a non-ICE entity,24 is not the premises of the Exchange. The portion of the Mahwah data center where the ‘‘exchange’’ functions are performed—i.e. the SRO Systems that bring together purchasers and sellers of securities and perform with respect to securities the functions commonly performed by a stock exchange—could be construed as the ‘‘premises’’ of the 21 Securities Exchange Act Release No. 76127 (October 9, 2015), 80 FR 62584 (October 16, 2015) (SR–NYSE–2015–36), at note 9 (order approving proposed rule change amending Section 907.00 of the Listed Company Manual). See also 79 FR 23389, supra note 9, at note 4 (noting that that the definition of the term ‘‘facility’’ has not changed since it was originally adopted) and 23389 (stating that the SEC ‘‘has not separately interpreted the definition of ‘facility’’’). 22 As with the definition of ‘‘exchange,’’ the ICE Affiliates do not automatically fall within the definition of a ‘‘facility.’’ The definition focuses on ownership and the right to use properties and services, not corporate relationships. Indeed, if the term ‘‘exchange’’ in the definition of a facility included ‘‘an exchange and its affiliates,’’ then the rest of the functional prongs of the facility definition would be meaningless. Fundamental rules of statutory construction dictate that statutes be interpreted to give effect to each of their provisions, so as not to render sections of the statute superfluous. 23 See, e.g., definition of ‘‘premises’’ in MiriamWebster Dictionary, at https://www.merriamwebster.com/dictionary/premises, and Cambridge English Dictionary, at https:// dictionary.cambridge.org/us/dictionary/english/ premises. 24 A non-ICE entity owns, operates and maintains the wireless network between the Mahwah data center and the Carteret and Secaucus Third Party Data Centers pursuant to a contract between the non-ICE entity and an ICE Affiliate. VerDate Sep<11>2014 20:34 Feb 24, 2020 Jkt 250001 Exchange, but the same is not true for a wireless network that is almost completely outside of the Mahwah data center. The second prong of the definition of ‘‘facility’’ provides that a facility includes the exchange’s ‘‘tangible or intangible property whether on the premises or not.’’ The Wireless Market Data Connections are not the property of the Exchange: They are services. The underlying wireless network is owned by ICE Affiliates and a non-ICE entity. As noted, the Act does not automatically collapse affiliates into the definition of an ‘‘exchange.’’ A review of the facts set forth above shows that there is a real distinction between the Exchange and its ICE Affiliates with respect to the Wireless Market Data Connections, and so something owned by an ICE Affiliate is not owned by the Exchange. The third prong of the definition of ‘‘facility’’ provides that a facility includes any right to the use of such premises or property or any service thereof for the purpose of effecting or reporting a transaction on an exchange (including, among other things, any system of communication to or from the exchange, by ticker or otherwise, maintained by or with the consent of the exchange).25 This prong does not capture the Wireless Market Data Connections because the Exchange does not have the right to use the Wireless Market Data Connections to effect or report a transaction on the Exchange. ICE Affiliates and a non-ICE entity own and maintain the wireless network underlying the Wireless Market Data Connections, and ICE Affiliates, not the Exchange, offer and provide the Wireless Market Data Connections to customers. The Exchange does not know whether or when a customer has entered into an agreement for a Wireless Market Data Connection and has no right to approve or disapprove of the provision of a Wireless Market Data Connection, any more than it would if the provider was a third party.26 It does not put the Selected Market Data content onto the Wireless Market Data Connections or send it to customers. A market participant cannot use a Wireless Market Data Connection to connect to 25 15 U.S.C. 78c(a)(2). relevant Affiliate SRO provides confirmation to IDS that a customer is authorized to receive the relevant Selected Market Data, as noted above, but does not know how or where that customer receives it. If the customer is already taking the relevant Selected Market Data through another medium or at a different site, IDS does not need to seek approval from the relevant Affiliate SRO. 26 The PO 00000 Frm 00152 Fmt 4703 Sfmt 4703 Exchange market data. When a customer terminates a Wireless Market Data Connection, the Exchange does not consent to the termination. In fact, it is not possible to use a Wireless Market Data Connection to effect a transaction on the Exchange: They are one-way connections away from the Mahwah data center. Customers cannot use them to send trading orders or information of any sort to the SRO Systems, and the Exchange does not use them to send confirmations of trades. Instead, Wireless Market Data Connections solely carry Selected Market Data, which does not include Exchange market data. The Exchange believes the example in the parenthetical in the third prong of the definition of ‘‘facility’’ cannot be read as an independent prong of the definition. Such a reading would ignore that the parentheses and the word ‘‘including’’ clearly indicate that ‘‘any system of communication to or from an exchange . . . maintained by or with the consent of the exchange’’ is explaining the preceding text. By its terms, the parenthetical is providing a non-exclusive example of the type of property or service to which the prong refers, and does not remove the requirement that there must be a right to use the premises, property or service to effect or report a transaction on an exchange. It is making sure the reader understands that ‘‘facility’’ includes a ticker system that an exchange has the right to use, not creating a new fifth prong to the definition. In fact, if the ‘‘right to use’’ requirement were ignored, every communication provider that connected to an exchange, including any broker-dealer system and telecommunication network, would become a facility of that exchange so long as the exchange consented to the connection, whether or not the connection was used to trade or report a trade, and whether or not the exchange had any right at all to the use of the connection. The fourth prong of the definition provides that a facility includes ‘‘any right of the exchange to the use of any property or service.’’ As described above, the Exchange does not have the right to use the Wireless Market Data Connections. Instead, the Wireless Market Data Connections are used by market participants who decide to use that service. Accordingly, for all the reasons discussed above, the wireless connectivity to Selected Market Data provided by ICE Affiliates is not a facility of the Exchange. The legal conclusion that the Wireless Market Data Connections are not E:\FR\FM\25FEN1.SGM 25FEN1 Federal Register / Vol. 85, No. 37 / Tuesday, February 25, 2020 / Notices facilities of the Exchange is strongly supported by the facts. The Wireless Market Data Connections are neither necessary for, nor integrally connected to, the operations of the Exchange. They are one-way connections away from the Mahwah data center. A market participant cannot use a Wireless Market Data Connection to send trading orders or information to the SRO Systems or to connect to Exchange market data. In this context, IDS simply acts as a vendor, selling connectivity to Selected Market Data just like the other vendors that offer wireless connections in the Carteret and Secaucus Third Party Data Centers and fiber connections to all the Third Party Data Centers. The fact that in this case it is ICE Affiliates that offer the Wireless Market Data Connections does not make the Wireless Market Data Connections facilities of the Exchange any more than are the connections offered by other parties. Further, the Exchange believes that requiring it to file this proposed rule change is not necessary in order for the Commission to ensure that the Exchange is satisfying its requirements under the Act. Because, as described above, the Wireless Market Data Connections are not necessary for, nor connected to, the operations of the Exchange, and customers are not required to use the Wireless Market Data Connections, holding the Wireless Market Data Connections to the statutory standards in Section 6(b) serves no purpose. Instead, the sole impact of the requirement that the Exchange file the Wireless Market Data Connections is to place an undue burden on competition on the ICE Affiliates that offer the market data connections, compared to their market competitors. This filing requirement, thus, itself is inconsistent with the requirement under Section 6(b)(8) of the Act that the rules of the exchange not ‘‘impose any burden on competition not necessary or appropriate in furtherance of the purposes of [the Act].’’ 27 This burden on competition arises because IDS would be unable, for example, to offer a client or potential client a connection to a new data feed it requests, without the delay and uncertainty of a filing, but its competitors will. Similarly, if a competitor decides to undercut IDS’ fees because IDS, unlike the competitor, has to make its fees public, IDS will not be able to respond quickly, if at all. Indeed, because its competitors are not required to make their services or fees public, and are not subject to a Commission determination of whether such services Type of service NYSE Arca Integrated Feed: Wireless Connection in Carteret access center. NYSE National Integrated Feed: Wireless Connection in Carteret access center. NYSE Integrated Feed and NYSE Arca Integrated Feed: Wireless Connection in Carteret access center. NYSE Integrated Feed, NYSE Arca Integrated Feed, and NYSE National Integrated Feed: Wireless Connection in Carteret access center. NYSE Integrated Feed: Wireless Connection in Secaucus access center. NYSE Arca Integrated Feed: Wireless Connection in Secaucus access center. NYSE National Integrated Feed: Wireless Connection in Secaucus access center. NYSE Integrated Feed and NYSE Arca Integrated Feed: Wireless Connection in Secaucus access center. NYSE Integrated Feed, NYSE Arca Integrated Feed, and NYSE National Integrated Feed: Wireless Connection in Secaucus access center. NYSE BBO and Trades: Wireless Connection in Markham, Canada access center. NYSE Arca BBO and Trades: Wireless Connection in Markham, Canada access center. jbell on DSKJLSW7X2PROD with NOTICES or fees are ‘‘not unfairly discriminatory’’ or equitably allocated, IDS is at a competitive disadvantage from the very start. The Proposed Service and Fees As noted above, the Exchange proposes to add to its rules the Wireless Market Data Connections to Selected Market Data, for an initial and monthly fee. A market participant would be charged a $5,000 non-recurring initial charge for each Wireless Market Data Connection and a monthly recurring charge (‘‘MRC’’) per connection that would vary depending upon the feed and the location of the connection. The proposal would waive the first month’s MRC, to allow customers to test a new Wireless Market Data Connection for a month before incurring any MRCs, and the Exchange proposes to add text to the Wireless Fee Schedule accordingly. The Exchange proposes to add a section to the Wireless Fee Schedule under the heading ‘‘B. Wireless Connectivity to Market Data’’ to set forth the fees charged by IDS related to the Wireless Market Data Connections, as follows: Amount of charge NYSE Integrated Feed: Wireless Connection in Carteret access center There is limited bandwidth available on the wireless network to the Markham, Canada Third Party Data Center. Accordingly, such Wireless Market Data Connections do not 27 15 $5,000 per connection tion of $10,500. $5,000 per connection tion of $10,500. $5,000 per connection tion of $5,250. $5,000 per connection tion of $18,500. $5,000 per connection tion of $21,000. $5,000 per connection tion of $10,500. $5,000 per connection tion of $10,500. $5,000 per connection tion of $5,250. $5,000 per connection tion of $18,500. $5,000 per connection tion of $21,000. initial charge plus monthly charge per connecinitial charge plus monthly charge per connecinitial charge plus monthly charge per connecinitial charge plus monthly charge per connecinitial charge plus monthly charge per connecinitial charge plus monthly charge per connecinitial charge plus monthly charge per connecinitial charge plus monthly charge per connecinitial charge plus monthly charge per connecinitial charge plus monthly charge per connec- $5,000 per connection initial charge plus monthly charge per connection of $6,500. $5,000 per connection initial charge plus monthly charge per connection of $6,500. transport information for all of the symbols included in the NYSE BBO and Trades and NYSE Arca BBO and Trades data feeds. Rather, IDS provides connectivity to a selection of such data feeds, including the data for which IDS believes there is demand. When a market participant requests a Wireless Market Data Connection to Markham, it receives connectivity to the portions of U.S.C. 78f(b)(8). VerDate Sep<11>2014 20:34 Feb 24, 2020 Jkt 250001 10799 PO 00000 Frm 00153 Fmt 4703 Sfmt 4703 E:\FR\FM\25FEN1.SGM 25FEN1 10800 Federal Register / Vol. 85, No. 37 / Tuesday, February 25, 2020 / Notices the NYSE BBO and Trades and NYSE Arca BBO and Trades data that IDS transmits wirelessly. The customer then determines the symbols for which it will receive data. The Exchange does not have visibility into which portion of the data feed a given customer receives. jbell on DSKJLSW7X2PROD with NOTICES Application and Impact of the Proposed Change The proposed change would apply to all customers equally. The proposed change would not apply differently to distinct types or sizes of market participants. Customers that require other types or sizes of network connections between the Mahwah data center and the access centers could still request them. As is currently the case, the purchase of any connectivity service is completely voluntary and the Wireless Fee Schedule is applied uniformly to all customers. Competitive Environment Other providers offer connectivity to Selected Market Data in the Third Party Data Centers.28 Based on the information available to it, the Exchange believes that a market participant in the Carteret or Secaucus Third Party Data Center may purchase a wireless connection to the NYSE and NYSE Arca Integrated Feed data feeds from at least two other providers of wireless connectivity. The Exchange believes that the wireless connections offered by non-ICE entities provide connectivity at the same or similar speed as the Wireless Market Data Connections, and at the same or similar cost. The Exchange believes the Wireless Market Data Connections between the Mahwah data center and the Markham Third Party Data Center are the first public, commercially available wireless connections for Selected Market Data between the two points, creating a new connectivity option for customers in Markham. A market participant in any of the Third Party Data Centers or the Mahwah data center also may create a proprietary wireless market data connection, connect through another market participant, or utilize fiber connections offered by the Exchange, ICE Affiliates, and other service providers and third party telecommunications providers. Wireless connections involve beaming signals through the air between antennas that are within sight of one another. Because the signals travel a straight, unimpeded line, and because light waves travel faster through air than 28 Third party providers obtain Selected Market Data from IDS at the Mahwah data center and send it over their own networks, fiber or wireless, to the Third Party Data Centers. VerDate Sep<11>2014 20:34 Feb 24, 2020 Jkt 250001 through glass (fiber optics), wireless messages have lower latency than messages travelling through fiber optics.29 At the same time, as a general rule wireless networks have less uptime than fiber networks. Wireless networks are directly and immediately affected by adverse weather conditions, which can cause message loss and outage periods. Wireless networks cannot be configured with redundancy in the same way that fiber networks can. As a result, an equipment or weather issue at any one location on the network will cause the entire network to have an outage. In addition, maintenance can take longer than it would with a fiber based network, as the relevant tower may be in a hard to reach location, or weather conditions may present safety issues, delaying technicians servicing equipment. Even under normal conditions, a wireless network will have a higher error rate than a fiber network of the same length. The proposed Wireless Market Data Connections traverse through a series of towers equipped with wireless equipment, including, in the case of the Carteret and Secaucus connections, a pole on the grounds of the Mahwah data center. With the exception of the nonICE entity that owns the wireless network used for the Wireless Connections to Secaucus and Carteret,30 third parties do not have access to such pole. However, access to such pole is not required for third parties to establish wireless networks that can compete with the Wireless Market Data Connections to the Carteret and Secaucus Third Party Data Centers, as witnessed by the existing wireless connections offered by non-ICE entities competitors. In addition, proximity to a data center is not the only determinant of a wireless network’s latency. Rather, the latency of a wireless network depends on several factors. Variables include the wireless equipment utilized; the route of, and number of towers or buildings in, the network; and the fiber equipment used at either end of the connection. Moreover, latency is not the only consideration that a customer may have in selecting a wireless network to connect to Selected Market Data. Other considerations may include the amount of network uptime; the equipment that the network uses; the cost of the 29 See Securities Exchange Act Release No. 76748 (December 23, 2015), 80 FR 81609 (December 30, 2015) (SR–NYSE–2015–52) (order approving offering of a wireless connection to allow Users to receive market data feeds from third party markets and to reflect changes to the Exchange’s price list related to these services). 30 See note 24, supra. PO 00000 Frm 00154 Fmt 4703 Sfmt 4703 connection; and the applicable contractual provisions. Indeed, fiber network connections may be more attractive to some market participants as they are more reliable and less susceptible to weather conditions. 2. Statutory Basis Although the Exchange does not believe that the present proposed change is a change to the ‘‘rules of an exchange’’ 31 required to be filed with the Commission under the Act, the Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,32 in general, and furthers the objectives of Section 6(b)(5) of the Act,33 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 does not unfairly discriminate between customers, issuers, brokers, or dealers. The Exchange also believes that the proposed rule change is consistent with Section 6(b)(4) of the Act,34 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 Proposed Change Is Reasonable The Exchange believes its proposal is reasonable. Based on the information available to it, the Exchange believes that a market participant in the Carteret or Secaucus Third Party Data Center may purchase a wireless connection to the NYSE and NYSE Arca Integrated Feed data feeds from at least two other providers of wireless connectivity. The Exchange believes that the wireless connections offered by non-ICE entities provide connectivity at the same or similar speed as the Wireless Market Data Connections, and at the same or similar cost. The Exchange believes the Wireless Market Data Connections between the Mahwah data center and the Markham Third Party Data Center 31 See 15 U.S.C. 78c(a)(27) (defining the term ‘‘rules of an exchange’’). 32 15 U.S.C. 78f(b). 33 15 U.S.C. 78f(b)(5). 34 15 U.S.C. 78f(b)(4). E:\FR\FM\25FEN1.SGM 25FEN1 jbell on DSKJLSW7X2PROD with NOTICES Federal Register / Vol. 85, No. 37 / Tuesday, February 25, 2020 / Notices are the first public, commercially available wireless connections for Selected Market Data between the two points, creating a new connectivity option for customers in Markham. A market participant in any of the Third Party Data Centers or the Mahwah data center also may create a proprietary wireless market data connection, connect through another market participant, or utilize fiber connections offered by the Exchange, ICE Affiliates, and other service providers and third party telecommunications providers. Market participants’ considerations in determining what connectivity to purchase may include latency; the amount of network uptime; the equipment that the network uses; the cost of the connection; and the applicable contractual provisions. Indeed, fiber network connections may be more attractive to some market participants as they are more reliable and less susceptible to weather conditions. The Exchange believes that the proposed pricing for the Wireless Market Data Connections is reasonable because it allows customers to select the connectivity option that best suits their needs. A market participant that opts for Wireless Market Data Connections would be able to select the specific Selected Market Data feed that it wants to receive in accordance with its needs, thereby helping it tailor its operations to the requirements of its business operations. The fees also reflect the benefit received by market participants in terms of lower latency over the fiber optics options. There is limited bandwidth available on the wireless network to the Markham, Canada Third Party Data Center. Accordingly, the Exchange believes that it is reasonable not to transport information for all of the symbols included in the NYSE BBO and Trades and NYSE Arca BBO and Trades data feeds to Markham, but rather to transport a subset of that data. Limiting the feeds to the data regarding securities for which IDS believes there is demand allows customers in Canada to receive the relevant Selected Market Data over a wireless network. The customer then determines those symbols for which it will receive data. Only market participants that voluntarily select to receive Wireless Market Data Connections are charged for them, and those services are available to all market participants with a presence in the relevant Third Party Data Center. Furthermore, the Exchange believes that the services and fees proposed herein are reasonable because, in addition to the services being completely voluntary, VerDate Sep<11>2014 20:34 Feb 24, 2020 Jkt 250001 they are available to all market participants on an equal basis (i.e., the same products and services are available to all market participants). All market participants that voluntarily select a Wireless Market Data Connection would be charged the same amount for the same service and would have their first month’s MRC for the Wireless Market Data Connection waived. Overall, the Exchange believes that the proposed change is reasonable because the Wireless Market Data Connections described herein are offered as a convenience to market participants, but offering them requires the provision, maintenance and operation of the Mahwah data center, wireless networks and access centers in the Third Party Data Centers, including the installation and monitoring, support and maintenance of the services. The Exchange believes that the proposed waiver of the first month’s MRC is reasonable as it would allow market participants to test a Wireless Market Data Connection for a month before incurring any monthly recurring fees and may act as an incentive to market participants to connect to a Wireless Market Data Connection. The Proposed Change Is an Equitable Allocation of Fees and Credits The Exchange believes its proposal equitably allocates its fees among its market participants. The proposed change would not apply differently to distinct types or sizes of market participants. Rather, it would apply to all market participants equally. As is currently the case, the purchase of any connectivity service, including Wireless Market Data Connections, would be completely voluntary. The Exchange believes that it is equitable to not to transport information for all of the symbols included in the NYSE BBO and Trades and NYSE Arca BBO and Trades data feeds to Markham, but rather to transport a subset of that data. There is limited bandwidth available on the wireless network to the Markham, Canada Third Party Data Center. Limiting the feeds to the data regarding securities for which IDS believes there is demand allows customers in Canada to receive the relevant Selected Market Data over a wireless network. The customer then determines those symbols for which it will receive data. Without this proposed rule change, market participants with a presence in the Third Party Data Centers would have fewer options for connectivity to Selected Market Data. With it, market participants have more choices with PO 00000 Frm 00155 Fmt 4703 Sfmt 4703 10801 respect to the form and price of connectivity to Selected Market Data they use, allowing a market participant that opts for a Wireless Market Data Connection to select the specific Selected Market Data feed that it wants to receive in accordance with what best suits its needs, thereby helping it tailor its operations to the requirements of its business operations. The Proposed Change Is Not Unfairly Discriminatory The Exchange believes its proposal is not unfairly discriminatory. The proposed change would not apply differently to distinct types or sizes of market participants. Rather, it would apply to all market participants equally. As is currently the case, the purchase of any connectivity service, including Wireless Market Data Connections, would be completely voluntary. A market participant in the Carteret or Secaucus Third Party Data Center may purchase a wireless connection to the NYSE and NYSE Arca Integrated Feed data feeds from at least two other providers of wireless connectivity. A market participant in any of the Third Party Data Centers or the Mahwah data center also may create a proprietary wireless market data connection, connect through another market participant, or utilize fiber connections offered by the Exchange, ICE Affiliates, and other service providers and third party telecommunications providers. Without this proposed rule change, market participants with a presence in the Third Party Data Centers would have fewer options for connectivity to Selected Market Data. With it, market participants have more choices with respect to the form and price of connectivity to Selected Market Data they use, allowing a market participant that opts for a Wireless Market Data Connection to select the specific Selected Market Data feed that it wants to receive in accordance with what best suits its needs, thereby helping it tailor its operations to the requirements of its business operations. The Wireless Market Data Connections provide customers in the Secaucus and Carteret access centers with one means of connectivity to Selected Market Data, but based on the information available to it, the Exchange believes that a market participant in the Carteret or Secaucus Third Party Data Center may purchase a wireless connection to the NYSE and NYSE Arca Integrated Feed data feeds from at least two other providers of wireless connectivity. The Exchange believes that the wireless connections offered by E:\FR\FM\25FEN1.SGM 25FEN1 10802 Federal Register / Vol. 85, No. 37 / Tuesday, February 25, 2020 / Notices jbell on DSKJLSW7X2PROD with NOTICES non-ICE entities provide connectivity at the same or similar speed as the Wireless Market Data Connections, and at the same or similar cost. The Exchange believes the Wireless Market Data Connections between the Mahwah data center and the Markham Third Party Data Center are the first public, commercially available wireless connections for Selected Market Data between the two points, creating a new connectivity option for customers in Markham. For these reasons, the Exchange believes that the proposal is consistent with the Act. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange believes that the only burden on competition of the proposed change is on IDS and other commercial connectivity providers. Solely because IDS is wholly owned by the same parent company as the Exchange, IDS will be at a competitive disadvantage to its commercial competitors, and its commercial competitors, without a filing requirement, will be at a relative competitive advantage to IDS. By permitting IDS to continue to offer the Wireless Market Data Connectivity, approval of the proposed changes would contribute to competition by allowing IDS to compete with other connectivity providers, and thus provides market participants another connectivity option. For this reason, the proposed rule changes will not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of Section 6(b)(8) of the Act.35 Based on the information available to it, the Exchange believes that a market participant in the Carteret or Secaucus Third Party Data Center may purchase a wireless connection to the NYSE and NYSE Arca Integrated Feed data feeds from at least two other providers of wireless connectivity. The Exchange believes that the wireless connections offered by non-ICE entities provide connectivity at the same or similar speed as the Wireless Market Data Connections, and at the same or similar cost. The Exchange believes the Wireless Market Data Connections between the Mahwah data center and the Markham Third Party Data Center are the first public, commercially available wireless connections for Selected Market Data between the two points, creating a new connectivity option for customers in Markham. The Exchange does not control the Third Party Data Centers and could not 35 15 U.S.C. 78f(b)(8). VerDate Sep<11>2014 20:34 Feb 24, 2020 preclude other parties from creating new wireless or fiber connections to Selected Market Data in any of the Third Party Data Centers. The Wireless Market Data Connections provide customers in the Secaucus and Carteret Third Party Data Centers with one means of connectivity to Selected Market Data, but substitute products are available, as witnessed by the existing wireless connections offered by non-ICE entities. A market participant in the Carteret or Secaucus Third Party Data Center may purchase a wireless connection to the NYSE and NYSE Arca Integrated Feed data feeds from at least two other providers of wireless connectivity. A market participant in any of the Third Party Data Centers or the Mahwah data center may also create a proprietary wireless market data connection, connect through another market participant, or utilize fiber connections offered by the Exchange, ICE Affiliates, and other service providers and third party telecommunications providers. The Exchange notes that the proposed Wireless Market Data Connections compete not just with other wireless connections to Selected Market Data, but also with fiber network connections, which may be more attractive to some market participants as they are more reliable and less susceptible to weather conditions. Market participants’ considerations in determining what connectivity to purchase may include latency; the amount of network uptime; the equipment that the network uses; the cost of the connection; and the applicable contractual provisions. A market participant in the Carteret or Secaucus Third Party Data Center may purchase a wireless connection to the NYSE and NYSE Arca Integrated Feed data feeds from at least two other providers of wireless connectivity. A market participant also may create a proprietary wireless market data connection, connect through another market participant, or utilize fiber connections offered by the Exchange, ICE Affiliates, and other service providers and third party telecommunications providers. The proposed Wireless Market Data Connections traverse through a series of towers equipped with wireless equipment, including, in the case of the Carteret and Secaucus Wireless Market Data Connections, a pole on the grounds of the Mahwah data center. With the exception of the non-ICE entity that owns the wireless network used for the Wireless Connections to Secaucus and Carteret,36 third parties do not have 36 See Jkt 250001 PO 00000 note 24, supra. Frm 00156 Fmt 4703 Sfmt 4703 access to such pole, as the IDS wireless network has exclusive rights to operate wireless equipment on the Mahwah data center pole. IDS does not sell rights to third parties to operate wireless equipment on the pole, due to space limitations, security concerns, and the interference that would arise between equipment placed too closely together. However, access to such pole is not required for other parties to establish wireless networks that can compete with the Wireless Market Data Connections, as witnessed by the existing wireless connections offered by non-ICE entities. Proximity to a data center is not the only determinant of a wireless network’s latency. Rather, the latency of a wireless network depends on several factors. Variables include the wireless equipment utilized; the route of, and number of towers or buildings in, the network; and the fiber equipment used at either end of the connection. Moreover, latency is not the only consideration that a customer may have in selecting a wireless network to connect to Selected Market Data. Other considerations may include the amount of network uptime; the equipment that the network uses; the cost of the connection; and the applicable contractual provisions. Indeed, fiber network connections may be more attractive to some market participants as they are more reliable and less susceptible to weather conditions. The proposed change does not affect competition among national securities exchanges or among members of the Exchange, but rather between IDS and its commercial competitors. For the reasons described above, the Exchange believes that the proposed rule changes reflect this competitive environment. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove the proposed rule change, or E:\FR\FM\25FEN1.SGM 25FEN1 Federal Register / Vol. 85, No. 37 / Tuesday, February 25, 2020 / Notices (B) institute proceedings to determine whether the proposed rule change should be 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: [FR Doc. 2020–03641 Filed 2–24–20; 8:45 am] Electronic Comments AGENCY: • 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– NYSECHX–2020–05 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. jbell on DSKJLSW7X2PROD with NOTICES For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.37 Jill M. Peterson, Assistant Secretary. All submissions should refer to File Number SR–NYSECHX–2020–05. 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–NYSECHX–2020–05, and should be submitted on or before March 17, 2020. VerDate Sep<11>2014 20:34 Feb 24, 2020 Jkt 250001 BILLING CODE 8011–01–P SMALL BUSINESS ADMINISTRATION SBA Guidance Documents U.S. Small Business Administration. SUMMARY: In accordance with Executive Order 13891, Promoting the Rule of Law Through Improved Agency Guidance Documents, the U.S. Small Business Administration (‘‘SBA’’) is publishing this notice to advise the public of the availability of SBA Guidance Documents on its website and inform them that by February 28, 2020, all guidance documents may be found there. DATES: SBA’s Guidance Document web page will be available beginning February 28, 2020. ADDRESSES: The guidance documents of the SBA are available at www.sba.gov/ guidance. FOR FURTHER INFORMATION CONTACT: Questions regarding the Guidance Document web page should be directed to Jeffrey Davis, Information Specialist, Office of Communications and Public Liaison; phone: (202) 401–8214; email: Jeffrey.Davis@sba.gov. SUPPLEMENTARY INFORMATION: As set forth in Executive Order 13891, Promoting the Rule of Law Through Improved Agency Guidance Documents, 84 FR 55235 (October 15, 2019) (‘‘Executive Order 13891’’), Americans deserve an open and fair regulatory process that imposes new obligations on the public only when consistent with applicable law and after an agency follows appropriate procedures. Therefore, it is the policy of the executive branch, to the extent consistent with applicable law, to increase transparency by taking public input into account when appropriate in formulating guidance documents, and making guidance documents readily available to the public. Unless otherwise provided in statute, regulation, or contract/agreement, guidance documents lack the force and effect of law. The term ‘‘guidance documents’’ is defined as any statement of agency policy or interpretation concerning a statute, regulation, or technical matter 10803 within the jurisdiction of the agency that is intended to have general applicability and future effect, but which is not intended to have the force or effect of law in its own. For SBA, ‘‘guidance documents’’ includes externally facing Standard Operating Procedures, Policy Notices, Procedural Notices, and some miscellaneous documents, such as certain Program Guides, and other general guidance. This Notice is published in accordance with Executive Order 13891 and OMB Memorandum #M–20–02, Guidance Implementing Executive Order 13891, Titled ‘‘Promoting the Rule of Law Through Improved Agency Guidance Documents’’ (October 31, 2019), available at https:// www.whitehouse.gov/wp-content/ uploads/2019/10/M-20-02-GuidanceMemo.pdf (‘‘OMB Memorandum’’). The purpose of Executive Order 13891 is to provide greater transparency to the public of an agency’s policies and procedures and provide one convenient site where all of the agency’s guidance documents may easily be found. To accomplish this, Executive Order 13891 requires all Agencies and Departments to establish or maintain on their website a single, searchable, indexed database that contains or links to all guidance documents in effect from such agency or component. For each guidance document published on SBA’s guidance web page, we will include the following information: • A concise name for the guidance document; • The guidance document’s effective date; • An agency unique identifier; • A hyperlink to the guidance document; • The general topic addressed by the guidance document; and • One or two sentences summarizing the guidance document’s content. At the same time as publication in the Federal Register, SBA is also making the this notice available on the new guidance web page and making it available to its stakeholders through its normal means of distributing important announcements. Dated: February 19, 2020. Sean Crean, Director, Office of Executive Management, Installations, and Support Services. [FR Doc. 2020–03679 Filed 2–24–20; 8:45 am] 37 17 PO 00000 CFR 200.30–3(a)(12). Frm 00157 Fmt 4703 Sfmt 9990 BILLING CODE 8026–03–P E:\FR\FM\25FEN1.SGM 25FEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 85, Number 37 (Tuesday, February 25, 2020)]
[Notices]
[Pages 10795-10803]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-03641]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88240; File No. SR-NYSECHX-2020-05]


Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of 
Filing of Proposed Rule Change To Amend the Schedule of Wireless 
Connectivity Fees and Charges To Add Wireless Connectivity Services

February 19, 2020.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act''),\2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that on February 11, 2020, the NYSE Chicago, Inc. (``NYSE Chicago'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to add wireless connectivity services that 
transport the market data of certain affiliates of the Exchange to the 
schedule of Wireless Connectivity Fees and Charges (the ``Wireless Fee 
Schedule''). The proposed change is available on the Exchange's website 
at www.nyse.com, at the principal office of the Exchange, and at the 
Commission's Public Reference Room.

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

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

[[Page 10796]]

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

1. Purpose
    The Exchange proposes to add wireless connectivity services that 
transport market data of three Exchange affiliates, New York Stock 
Exchange LLC (``NYSE''), NYSE Arca, Inc. (``NYSE Arca'') and NYSE 
National, Inc. (``NYSE National'') to the Wireless Fee Schedule.\4\ A 
market participant is not able to use the wireless connectivity 
services to connect to Exchange market data.
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    \4\ The NYSE, NYSE American LLC, NYSE Arca, and NYSE National 
are national securities exchanges that are affiliates of the 
Exchange (collectively, the ``Affiliate SROs''). The wireless 
connectivity services described in this filing do not transport the 
market data of the Exchange or NYSE American LLC. The Exchange filed 
a proposed rule change that would establish the Wireless Fee 
Schedule. See SR-NYSECHX-2020-02 (January 30, 2020). Should such 
filing be approved before the present filing, the changes to the 
Wireless Fee Schedule proposed herein would appear at the end of the 
Wireless Fee Schedule, after the text proposed in the January, 2020 
filing. In such case, the Exchange will amend the present filing if 
required.
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    The wireless connections can be purchased by market participants in 
three data centers that are owned and operated by third parties 
unaffiliated with the Exchange: (1) Carteret, New Jersey, (2) Secaucus, 
New Jersey, and (3) Markham, Canada (collectively, the ``Third Party 
Data Centers''). A market participant in a Third Party Data Center that 
purchases a wireless connection (``Wireless Market Data Connection'') 
receives connectivity to certain NYSE, NYSE Arca and NYSE National 
market data feeds (collectively, the ``Selected Market Data'') \5\ 
distributed from the Mahwah, New Jersey data center. Customers that 
purchase a wireless connection to Selected Market Data are charged an 
initial and monthly fee for the service of transporting the Selected 
Market Data.
---------------------------------------------------------------------------

    \5\ In the Carteret and Secaucus Third Party Data Centers, a 
market participant may use a Wireless Market Data Connection to 
connect to the NYSE Integrated Feed data feed, the NYSE Arca 
Integrated Feed data feed, and the NYSE National Integrated Feed 
data feed. In the Markham, Canada Third Party Data Center, a market 
participant may use a Wireless Market Data Connection to connect to 
the NYSE BBO and Trades data feeds and the NYSE Arca BBO and Trades 
data feeds.
---------------------------------------------------------------------------

    The Exchange does not believe that the present proposed change is a 
change to the ``rules of an exchange'' \6\ required to be filed with 
the Commission under the Act. The definition of ``exchange'' under the 
Act includes ``the market facilities maintained by such exchange.'' \7\ 
Based on its review of the relevant facts and circumstances, and as 
discussed further below, the Exchange has concluded that the Wireless 
Market Data Connections are not facilities of the Exchange within the 
meaning of the Act, and therefore do not need to be included in its 
rules.
---------------------------------------------------------------------------

    \6\ See 15 U.S.C. 78c(a)(27) (defining the term ``rules of an 
exchange'').
    \7\ 15 U.S.C. 78c(a)(1). See 15 U.S.C. 78c(a)(2) (defining the 
term ``facility'' as applied to an exchange).
---------------------------------------------------------------------------

    The Exchange is making the current proposal solely because the 
Staff of the Commission has advised the Exchange that it believes the 
Wireless Market Data Connections are facilities of the Exchange and so 
must be filed as part of its rules.\8\ The Staff has not set forth the 
basis of its conclusion beyond verbally noting that the Wireless Market 
Data Connections are provided by an affiliate of the Exchange and a 
market participant could use a Wireless Market Data Connection to 
connect to market data feeds of Affiliate SROs.\9\
---------------------------------------------------------------------------

    \8\ Telephone conversation between Commission staff and 
representatives of the Exchange, December 12, 2019.
    \9\ Id. The Commission has previously stated that services were 
facilities of an exchange subject to the rule filing requirements 
without fully explaining its reasoning. In 2010, the Commission 
stated that exchanges had to file proposed rule changes with respect 
to co-location because ``[t]he Commission views co-location services 
as being a material aspect of the operation of the facilities of an 
exchange.'' The Commission did not specify why it reached that 
conclusion. See Securities Exchange Act Release No. 61358 (January 
14, 2010), 75 FR 3594 (January 21, 2010), at note 76.
    In addition, in 2014, the Commission instituted proceedings to 
determine whether to disapprove a proposed rule change by The NASDAQ 
Stock Market LLC (``Nasdaq'') on the basis that Nasdaq's ``provision 
of third-party market data feeds to co-located clients appears to be 
an integral feature of its co-location program, and co-location 
programs are subject to the rule filing process.'' Securities 
Exchange Act Release No. 72654 (July 22, 2014), 79 FR 43808 (July 
28, 2014) (SR-NASDAQ-2014-034). In its order, the Commission did not 
explain why it believed that the provision of third party data was 
an integral feature of co-location, or if it believed that it was a 
facility of Nasdaq, although the Nasdaq filing analyzed each prong 
of the definition of facility in turn. See Securities Exchange Act 
Release No. 71990 (April 22, 2014), 79 FR 23389 (April 28, 2014) 
(SR-NASDAQ-2014-034).
---------------------------------------------------------------------------

    The Exchange expects the proposed change to be operative 60 days 
after the present filing becomes effective.
The Exchange and the ICE Affiliates
    To understand the Exchange's conclusion that the Wireless Market 
Data Connections are not facilities of the Exchange within the meaning 
of the Act, it is important to understand the very real distinction 
between the Exchange and its corporate affiliates (the ``ICE 
Affiliates''). The Exchange is an indirect subsidiary of 
Intercontinental Exchange, Inc. (``ICE''). Around the world, ICE 
operates seven regulated exchanges in addition to the Exchange and the 
Affiliate SROs, including futures markets, as well as six clearing 
houses. Among others, the ICE Affiliates are subject to the 
jurisdiction of regulators in the U.S., U.K., E.U., the Netherlands, 
Canada and Singapore.\10\ In all, the ICE Affiliates include hundreds 
of ICE subsidiaries, including more than thirty that are significant 
legal entity subsidiaries as defined by Commission rule.\11\
---------------------------------------------------------------------------

    \10\ Intercontinental Exchange, Inc. Annual Report on Form 10-K 
for the year ended December 31, 2018, Exhibit 21.1 (filed February 
7, 2019), at 15-16.
    \11\ Id. at Exhibit 21.1.
---------------------------------------------------------------------------

    Through its ICE Data Services (``IDS'') business,\12\ ICE operates 
the ICE Global Network, a global connectivity network whose 
infrastructure provides access to over 150 global markets, including 
the Exchange and Affiliate SROs, and over 750 data sources. All the ICE 
Affiliates are ultimately controlled by ICE, as the indirect parent 
company, but generally they do not control each other. In the present 
case, it is IDS, not the Exchange, that provides the Wireless Market 
Data Connections to market participants. The Exchange does not control 
IDS.
---------------------------------------------------------------------------

    \12\ The IDS business operates through several different ICE 
Affiliates, including NYSE Technologies Connectivity, Inc., an 
indirect subsidiary of the NYSE.
---------------------------------------------------------------------------

The Wireless Market Data Connections
    As noted above, if a market participant in one of the Third Party 
Data Centers wishes to connect to one or more of the data feeds of the 
Affiliate SROs that make up the Selected Market Data,\13\ it may opt to 
purchase a Wireless Market Data Connection to the data.
---------------------------------------------------------------------------

    \13\ See note 5, supra for a list of the Selected Market Data 
available in each Third Party Data Center.
---------------------------------------------------------------------------

    The Selected Market Data is generated at the Mahwah data center in 
the trading and execution systems of the NYSE, NYSE Arca and NYSE 
National (collectively, the ``SRO Systems''). In each case, the NYSE, 
NYSE Arca or NYSE National, as applicable, files with the Commission 
for the Selected Market Data it generates, and the related fees.\14\

[[Page 10797]]

The filed market data fees apply to all Selected Market Data customers 
no matter what connectivity provider they use.
---------------------------------------------------------------------------

    \14\ See Securities Exchange Act Release Nos. 74128 (January 23, 
2015), 80 FR 4951 (January 29, 2015) (SR-NYSE-2015-03) (notice of 
filing and immediate effectiveness of proposed rule change 
establishing the NYSE Integrated Feed data feed); 76485 (November 
20, 2015), 80 FR 74158 (November 27, 2015) (SR-NYSE-2015-57) (notice 
of filing and immediate effectiveness of a proposed rule change 
establishing fees for the NYSE Integrated Feed); 62181 (May 26, 
2010), 75 FR 31488 (June 3, 2010) (SR-NYSE-2010-30) (order approving 
proposed rule change to establish the NYSE BBO service); 59290 
(January 23, 2009), 74 FR 5707 (January 30, 2009) (SR-NYSE-2009-05) 
(notice of filing and immediate effectiveness of proposed rule 
change to introduce a pilot program for NYSE Trades); 59606 (March 
19, 2009), 74 FR 13293 (March 26, 2009) (SR-NYSE-2009-04) (order 
approving proposed rule change to establish fees for NYSE Trades); 
62188 (May 27, 2010), 75 FR 31484 (June 3, 2010) (SR-NYSEArca-2010-
23) (order approving proposed rule change to modify the fees for 
NYSE Arca Trades, to establish the NYSE Arca BBO service and related 
fees, and to provide an alternative unit-of-count methodology for 
those services); 59289 (January 23, 2009), 74 FR 5711 (January 30, 
2009) (SR-NYSEArca-2009-06) (notice of filing and immediate 
effectiveness of proposed rule change to introduce a pilot program 
for NYSE Arca Trades); 59598 (March 18, 2009), 74 FR 12919 (March 
25, 2009) (SR-NYSEArca-2009-05) (order approving proposed rule 
change to establish fees for NYSE Arca Trades); 65669 (November 2, 
2011), 76 FR 69311 (November 8, 2011) (SR-NYSEArca-2011-78) (notice 
of filing and immediate effectiveness of proposed rule change 
offering the NYSE Arca Integrated Feed); 66128 (January 10, 2012), 
77 FR 2331 (January 17, 2012) (SR-NYSEArca-2011-96) (notice of 
filing and immediate effectiveness of a proposed rule change 
establishing fees for NYSE Arca Integrated Feed); 83350 (May 31, 
2018), 83 FR 26332 (June 6, 2018) (SR-NYSENAT-2018-09) (notice of 
filing and immediate effectiveness of proposed rule change 
establishing the NYSE National Integrated Feed data feed); and 87797 
(December 18, 2019), 84 FR 71025 (December 26, 2019) (SR-NYSENAT-
2019-31) (notice of filing and immediate effectiveness of proposed 
rule change to establish fees for the NYSE National Integrated 
Feed).
---------------------------------------------------------------------------

    When a market participant wants to connect to Selected Market Data, 
it requests a connection from the provider of its choice. All 
providers, including ICE Affiliates, may only provide the market 
participant with connectivity once the provider receives confirmation 
from the NYSE, NYSE Arca or NYSE National, as applicable, that the 
market participant is authorized to receive the requested Selected 
Market Data. Accordingly, when a market participant requests a Wireless 
Market Data Connection, IDS's first step is to obtain 
authorization.\15\
---------------------------------------------------------------------------

    \15\ When requesting authorization from the NYSE, NYSE Arca or 
NYSE National to provide a customer with Selected Market Data, the 
ICE Affiliate providing the Wireless Market Data Connection uses the 
same on-line tool as all data vendors.
---------------------------------------------------------------------------

    IDS's next step is to set up the Wireless Market Data Connection 
for the market participant. In the connection, IDS collects the 
Selected Market Data, then sends it over the Wireless Market Data 
Connection to the IDS access center located in the Third Party Data 
Center. The customer connects to the Selected Market Data at the Third 
Party Data Center.\16\
---------------------------------------------------------------------------

    \16\ A cable connects the IDS and customer equipment in the 
Markham Third Party Data Center. If the customer is located in 
either the Carteret or Secaucus Third Party Data Center, the 
customer buys a cross connect from IDS.
---------------------------------------------------------------------------

    The customer is charged by IDS an initial and monthly fee for the 
Wireless Market Data Connection. By contrast, IDS will not bill the 
customer for the Selected Market Data: The NYSE, NYSE Arca or NYSE 
National, as applicable, bill market data subscribers directly, 
irrespective of whether the market data subscribers receive the 
Selected Market Data over a Wireless Market Data Connection or from 
another connectivity provider.
    Market participants in the Third Party Data Centers that want to 
connect to Selected Market Data have options, as other providers offer 
connectivity to Selected Market Data.\17\ A market participant in the 
Carteret or Secaucus Third Party Data Center may purchase a wireless 
connection to the NYSE and NYSE Arca Integrated Feed data feeds from at 
least two other providers of wireless connectivity. A market 
participant in any of the Third Party Data Centers or the Mahwah data 
center also may create a proprietary wireless market data connection, 
connect through another market participant, or utilize fiber 
connections offered by the Exchange, ICE Affiliates, and other service 
providers and third party telecommunications providers.
---------------------------------------------------------------------------

    \17\ The other providers obtain Selected Market Data from IDS at 
the Mahwah data center and send it over their own networks, fiber or 
wireless, to the Third Party Data Centers.
---------------------------------------------------------------------------

The Wireless Market Data Connections Are Not Facilities of the Exchange
The Definition of ``Exchange''
    The definition of ``exchange'' focuses on the exchange entity and 
what it does: \18\
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78c(a)(1).

    The term ``exchange'' means any organization, association, or 
group of persons, whether incorporated or unincorporated, which 
constitutes, maintains, or provides a market place or facilities for 
bringing together purchasers and sellers of securities or for 
otherwise performing with respect to securities the functions 
commonly performed by a stock exchange as that term is generally 
understood, and includes the market place and the market facilities 
---------------------------------------------------------------------------
maintained by such exchange.

    If the ``exchange'' definition included all of an exchange's 
affiliates, the ``Exchange'' would encompass a global network of 
futures markets, clearing houses, and data providers, and all of those 
entities worldwide would be subject to regulation by the Commission. 
That, however, is not what the definition in the Act provides.
    The Exchange and the Affiliate SROs fall squarely within the Act's 
definition of an ``exchange'': They each provide a market place to 
bring together purchasers and sellers of securities and perform with 
respect to securities the functions commonly performed by a stock 
exchange.
    That is not true for the non-exchange ICE Affiliates. Those ICE 
Affiliates do not provide such a marketplace or perform ``with respect 
to securities the functions commonly performed by a stock exchange,'' 
and therefore they are not an ``exchange'' or part of the ``Exchange'' 
for purposes of the Act. Accordingly, in conducting its analysis, the 
Exchange does not automatically collapse the ICE Affiliates into the 
Exchange. The Wireless Market Data Connections are also not part of the 
Exchange, as they are services, and as such cannot be part of an 
``organization, association or group of persons'' with the Exchange.
    In Rule 3b-16 the Commission further defined the term ``exchange'' 
under the Act, stating that: \19\
---------------------------------------------------------------------------

    \19\ 17 CFR 240.3b-16(a).

    (a) An organization, association, or group of persons shall be 
considered to constitute, maintain, or provide ``a market place or 
facilities for bringing together purchasers and sellers of 
securities or for otherwise performing with respect to securities 
the functions commonly performed by a stock exchange,'' as those 
terms are used in section 3(a)(1) of the Act . . . if such 
organization, association, or group of persons:
    (1) Brings together the orders for securities of multiple buyers 
and sellers; and
    (2) Uses established, non-discretionary methods (whether by 
providing a trading facility or by setting rules) under which such 
orders interact with each other, and the buyers and sellers entering 
such orders agree to the terms of a trade.

    The non-exchange ICE Affiliates do not bring ``together orders for 
securities of multiple buyers and sellers,'' and so are not an 
``exchange'' or part of the ``Exchange'' for purposes of Rule 3b-16. 
Indeed, it is not possible to use a Wireless Market Data Connection to 
effect a transaction on the Exchange. Rather, they are one-way 
connections away from the Mahwah data center.
    The relevant question, then, is whether the Wireless Market Data 
Connections are ``facilities'' of the Exchange.
The Definition of ``Facility''
    The Act defines a ``facility'' \20\ as follows:
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 78c(a)(2).

    The term ``facility'' when used with respect to an exchange 
includes [1] its premises, [2] tangible or intangible property 
whether on the premises or not, [3] any right to the use of such 
premises or property or any service thereof for the purpose of 
effecting or reporting a transaction on an exchange (including, 
among other things, any system of communication to or from the 
exchange, by

[[Page 10798]]

ticker or otherwise, maintained by or with the consent of the 
exchange), and [4] any right of the exchange to the use of any 
---------------------------------------------------------------------------
property or service.

    In 2015 the Commission noted that whether something is a 
``facility'' is not always black and white, as ``any determination as 
to whether a service or other product is a facility of an exchange 
requires an analysis of the particular facts and circumstances.'' \21\ 
Accordingly, the Exchange understands that the specific facts and 
circumstances of the Wireless Market Data Connections must be assessed 
before a determination can be made regarding whether or not they are 
facilities of the Exchange.\22\
---------------------------------------------------------------------------

    \21\ Securities Exchange Act Release No. 76127 (October 9, 
2015), 80 FR 62584 (October 16, 2015) (SR-NYSE-2015-36), at note 9 
(order approving proposed rule change amending Section 907.00 of the 
Listed Company Manual). See also 79 FR 23389, supra note 9, at note 
4 (noting that that the definition of the term ``facility'' has not 
changed since it was originally adopted) and 23389 (stating that the 
SEC ``has not separately interpreted the definition of 
`facility''').
    \22\ As with the definition of ``exchange,'' the ICE Affiliates 
do not automatically fall within the definition of a ``facility.'' 
The definition focuses on ownership and the right to use properties 
and services, not corporate relationships. Indeed, if the term 
``exchange'' in the definition of a facility included ``an exchange 
and its affiliates,'' then the rest of the functional prongs of the 
facility definition would be meaningless. Fundamental rules of 
statutory construction dictate that statutes be interpreted to give 
effect to each of their provisions, so as not to render sections of 
the statute superfluous.
---------------------------------------------------------------------------

    The first prong of the definition is that ``facility,'' when used 
with respect to an exchange, includes ``its premises.'' That prong is 
not applicable in this case, because the Wireless Market Data 
Connections are not premises of the Exchange. The term ``premises'' is 
generally defined as referring to an entity's building, land, and 
appurtenances.\23\ The wireless network that runs from the Mahwah data 
center to the Third Party Data Centers, much of which is actually 
owned, operated and maintained by a non-ICE entity,\24\ is not the 
premises of the Exchange. The portion of the Mahwah data center where 
the ``exchange'' functions are performed--i.e. the SRO Systems that 
bring together purchasers and sellers of securities and perform with 
respect to securities the functions commonly performed by a stock 
exchange--could be construed as the ``premises'' of the Exchange, but 
the same is not true for a wireless network that is almost completely 
outside of the Mahwah data center.
---------------------------------------------------------------------------

    \23\ See, e.g., definition of ``premises'' in Miriam-Webster 
Dictionary, at https://www.merriam-webster.com/dictionary/premises, 
and Cambridge English Dictionary, at https://dictionary.cambridge.org/us/dictionary/english/premises.
    \24\ A non-ICE entity owns, operates and maintains the wireless 
network between the Mahwah data center and the Carteret and Secaucus 
Third Party Data Centers pursuant to a contract between the non-ICE 
entity and an ICE Affiliate.
---------------------------------------------------------------------------

    The second prong of the definition of ``facility'' provides that a 
facility includes the exchange's ``tangible or intangible property 
whether on the premises or not.'' The Wireless Market Data Connections 
are not the property of the Exchange: They are services. The underlying 
wireless network is owned by ICE Affiliates and a non-ICE entity. As 
noted, the Act does not automatically collapse affiliates into the 
definition of an ``exchange.'' A review of the facts set forth above 
shows that there is a real distinction between the Exchange and its ICE 
Affiliates with respect to the Wireless Market Data Connections, and so 
something owned by an ICE Affiliate is not owned by the Exchange.
    The third prong of the definition of ``facility'' provides that a 
facility includes

    any right to the use of such premises or property or any service 
thereof for the purpose of effecting or reporting a transaction on 
an exchange (including, among other things, any system of 
communication to or from the exchange, by ticker or otherwise, 
maintained by or with the consent of the exchange).\25\
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 78c(a)(2).

    This prong does not capture the Wireless Market Data Connections 
because the Exchange does not have the right to use the Wireless Market 
Data Connections to effect or report a transaction on the Exchange. ICE 
Affiliates and a non-ICE entity own and maintain the wireless network 
underlying the Wireless Market Data Connections, and ICE Affiliates, 
not the Exchange, offer and provide the Wireless Market Data 
Connections to customers. The Exchange does not know whether or when a 
customer has entered into an agreement for a Wireless Market Data 
Connection and has no right to approve or disapprove of the provision 
of a Wireless Market Data Connection, any more than it would if the 
provider was a third party.\26\ It does not put the Selected Market 
Data content onto the Wireless Market Data Connections or send it to 
customers. A market participant cannot use a Wireless Market Data 
Connection to connect to Exchange market data. When a customer 
terminates a Wireless Market Data Connection, the Exchange does not 
consent to the termination.
---------------------------------------------------------------------------

    \26\ The relevant Affiliate SRO provides confirmation to IDS 
that a customer is authorized to receive the relevant Selected 
Market Data, as noted above, but does not know how or where that 
customer receives it. If the customer is already taking the relevant 
Selected Market Data through another medium or at a different site, 
IDS does not need to seek approval from the relevant Affiliate SRO.
---------------------------------------------------------------------------

    In fact, it is not possible to use a Wireless Market Data 
Connection to effect a transaction on the Exchange: They are one-way 
connections away from the Mahwah data center. Customers cannot use them 
to send trading orders or information of any sort to the SRO Systems, 
and the Exchange does not use them to send confirmations of trades. 
Instead, Wireless Market Data Connections solely carry Selected Market 
Data, which does not include Exchange market data.
    The Exchange believes the example in the parenthetical in the third 
prong of the definition of ``facility'' cannot be read as an 
independent prong of the definition. Such a reading would ignore that 
the parentheses and the word ``including'' clearly indicate that ``any 
system of communication to or from an exchange . . . maintained by or 
with the consent of the exchange'' is explaining the preceding text. By 
its terms, the parenthetical is providing a non-exclusive example of 
the type of property or service to which the prong refers, and does not 
remove the requirement that there must be a right to use the premises, 
property or service to effect or report a transaction on an exchange. 
It is making sure the reader understands that ``facility'' includes a 
ticker system that an exchange has the right to use, not creating a new 
fifth prong to the definition. In fact, if the ``right to use'' 
requirement were ignored, every communication provider that connected 
to an exchange, including any broker-dealer system and 
telecommunication network, would become a facility of that exchange so 
long as the exchange consented to the connection, whether or not the 
connection was used to trade or report a trade, and whether or not the 
exchange had any right at all to the use of the connection.
    The fourth prong of the definition provides that a facility 
includes ``any right of the exchange to the use of any property or 
service.'' As described above, the Exchange does not have the right to 
use the Wireless Market Data Connections. Instead, the Wireless Market 
Data Connections are used by market participants who decide to use that 
service.
    Accordingly, for all the reasons discussed above, the wireless 
connectivity to Selected Market Data provided by ICE Affiliates is not 
a facility of the Exchange.
    The legal conclusion that the Wireless Market Data Connections are 
not

[[Page 10799]]

facilities of the Exchange is strongly supported by the facts. The 
Wireless Market Data Connections are neither necessary for, nor 
integrally connected to, the operations of the Exchange. They are one-
way connections away from the Mahwah data center. A market participant 
cannot use a Wireless Market Data Connection to send trading orders or 
information to the SRO Systems or to connect to Exchange market data. 
In this context, IDS simply acts as a vendor, selling connectivity to 
Selected Market Data just like the other vendors that offer wireless 
connections in the Carteret and Secaucus Third Party Data Centers and 
fiber connections to all the Third Party Data Centers. The fact that in 
this case it is ICE Affiliates that offer the Wireless Market Data 
Connections does not make the Wireless Market Data Connections 
facilities of the Exchange any more than are the connections offered by 
other parties.
    Further, the Exchange believes that requiring it to file this 
proposed rule change is not necessary in order for the Commission to 
ensure that the Exchange is satisfying its requirements under the Act. 
Because, as described above, the Wireless Market Data Connections are 
not necessary for, nor connected to, the operations of the Exchange, 
and customers are not required to use the Wireless Market Data 
Connections, holding the Wireless Market Data Connections to the 
statutory standards in Section 6(b) serves no purpose.
    Instead, the sole impact of the requirement that the Exchange file 
the Wireless Market Data Connections is to place an undue burden on 
competition on the ICE Affiliates that offer the market data 
connections, compared to their market competitors. This filing 
requirement, thus, itself is inconsistent with the requirement under 
Section 6(b)(8) of the Act that the rules of the exchange not ``impose 
any burden on competition not necessary or appropriate in furtherance 
of the purposes of [the Act].'' \27\ This burden on competition arises 
because IDS would be unable, for example, to offer a client or 
potential client a connection to a new data feed it requests, without 
the delay and uncertainty of a filing, but its competitors will. 
Similarly, if a competitor decides to undercut IDS' fees because IDS, 
unlike the competitor, has to make its fees public, IDS will not be 
able to respond quickly, if at all. Indeed, because its competitors are 
not required to make their services or fees public, and are not subject 
to a Commission determination of whether such services or fees are 
``not unfairly discriminatory'' or equitably allocated, IDS is at a 
competitive disadvantage from the very start.
---------------------------------------------------------------------------

    \27\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

The Proposed Service and Fees
    As noted above, the Exchange proposes to add to its rules the 
Wireless Market Data Connections to Selected Market Data, for an 
initial and monthly fee.
    A market participant would be charged a $5,000 non-recurring 
initial charge for each Wireless Market Data Connection and a monthly 
recurring charge (``MRC'') per connection that would vary depending 
upon the feed and the location of the connection. The proposal would 
waive the first month's MRC, to allow customers to test a new Wireless 
Market Data Connection for a month before incurring any MRCs, and the 
Exchange proposes to add text to the Wireless Fee Schedule accordingly.
    The Exchange proposes to add a section to the Wireless Fee Schedule 
under the heading ``B. Wireless Connectivity to Market Data'' to set 
forth the fees charged by IDS related to the Wireless Market Data 
Connections, as follows:

------------------------------------------------------------------------
            Type of service                      Amount of charge
------------------------------------------------------------------------
NYSE Integrated Feed: Wireless           $5,000 per connection initial
 Connection in Carteret access center.    charge plus monthly charge per
                                          connection of $10,500.
NYSE Arca Integrated Feed: Wireless      $5,000 per connection initial
 Connection in Carteret access center.    charge plus monthly charge per
                                          connection of $10,500.
NYSE National Integrated Feed: Wireless  $5,000 per connection initial
 Connection in Carteret access center.    charge plus monthly charge per
                                          connection of $5,250.
NYSE Integrated Feed and NYSE Arca       $5,000 per connection initial
 Integrated Feed: Wireless Connection     charge plus monthly charge per
 in Carteret access center.               connection of $18,500.
NYSE Integrated Feed, NYSE Arca          $5,000 per connection initial
 Integrated Feed, and NYSE National       charge plus monthly charge per
 Integrated Feed: Wireless Connection     connection of $21,000.
 in Carteret access center.
NYSE Integrated Feed: Wireless           $5,000 per connection initial
 Connection in Secaucus access center.    charge plus monthly charge per
                                          connection of $10,500.
NYSE Arca Integrated Feed: Wireless      $5,000 per connection initial
 Connection in Secaucus access center.    charge plus monthly charge per
                                          connection of $10,500.
NYSE National Integrated Feed: Wireless  $5,000 per connection initial
 Connection in Secaucus access center.    charge plus monthly charge per
                                          connection of $5,250.
NYSE Integrated Feed and NYSE Arca       $5,000 per connection initial
 Integrated Feed: Wireless Connection     charge plus monthly charge per
 in Secaucus access center.               connection of $18,500.
NYSE Integrated Feed, NYSE Arca          $5,000 per connection initial
 Integrated Feed, and NYSE National       charge plus monthly charge per
 Integrated Feed: Wireless Connection     connection of $21,000.
 in Secaucus access center.
NYSE BBO and Trades: Wireless            $5,000 per connection initial
 Connection in Markham, Canada access     charge plus monthly charge per
 center.                                  connection of $6,500.
NYSE Arca BBO and Trades: Wireless       $5,000 per connection initial
 Connection in Markham, Canada access     charge plus monthly charge per
 center.                                  connection of $6,500.
------------------------------------------------------------------------

    There is limited bandwidth available on the wireless network to the 
Markham, Canada Third Party Data Center. Accordingly, such Wireless 
Market Data Connections do not transport information for all of the 
symbols included in the NYSE BBO and Trades and NYSE Arca BBO and 
Trades data feeds. Rather, IDS provides connectivity to a selection of 
such data feeds, including the data for which IDS believes there is 
demand. When a market participant requests a Wireless Market Data 
Connection to Markham, it receives connectivity to the portions of

[[Page 10800]]

the NYSE BBO and Trades and NYSE Arca BBO and Trades data that IDS 
transmits wirelessly. The customer then determines the symbols for 
which it will receive data. The Exchange does not have visibility into 
which portion of the data feed a given customer receives.
Application and Impact of the Proposed Change
    The proposed change would apply to all customers equally. The 
proposed change would not apply differently to distinct types or sizes 
of market participants. Customers that require other types or sizes of 
network connections between the Mahwah data center and the access 
centers could still request them. As is currently the case, the 
purchase of any connectivity service is completely voluntary and the 
Wireless Fee Schedule is applied uniformly to all customers.
Competitive Environment
    Other providers offer connectivity to Selected Market Data in the 
Third Party Data Centers.\28\ Based on the information available to it, 
the Exchange believes that a market participant in the Carteret or 
Secaucus Third Party Data Center may purchase a wireless connection to 
the NYSE and NYSE Arca Integrated Feed data feeds from at least two 
other providers of wireless connectivity. The Exchange believes that 
the wireless connections offered by non-ICE entities provide 
connectivity at the same or similar speed as the Wireless Market Data 
Connections, and at the same or similar cost. The Exchange believes the 
Wireless Market Data Connections between the Mahwah data center and the 
Markham Third Party Data Center are the first public, commercially 
available wireless connections for Selected Market Data between the two 
points, creating a new connectivity option for customers in Markham. A 
market participant in any of the Third Party Data Centers or the Mahwah 
data center also may create a proprietary wireless market data 
connection, connect through another market participant, or utilize 
fiber connections offered by the Exchange, ICE Affiliates, and other 
service providers and third party telecommunications providers.
---------------------------------------------------------------------------

    \28\ Third party providers obtain Selected Market Data from IDS 
at the Mahwah data center and send it over their own networks, fiber 
or wireless, to the Third Party Data Centers.
---------------------------------------------------------------------------

    Wireless connections involve beaming signals through the air 
between antennas that are within sight of one another. Because the 
signals travel a straight, unimpeded line, and because light waves 
travel faster through air than through glass (fiber optics), wireless 
messages have lower latency than messages travelling through fiber 
optics.\29\ At the same time, as a general rule wireless networks have 
less uptime than fiber networks. Wireless networks are directly and 
immediately affected by adverse weather conditions, which can cause 
message loss and outage periods. Wireless networks cannot be configured 
with redundancy in the same way that fiber networks can. As a result, 
an equipment or weather issue at any one location on the network will 
cause the entire network to have an outage. In addition, maintenance 
can take longer than it would with a fiber based network, as the 
relevant tower may be in a hard to reach location, or weather 
conditions may present safety issues, delaying technicians servicing 
equipment. Even under normal conditions, a wireless network will have a 
higher error rate than a fiber network of the same length.
---------------------------------------------------------------------------

    \29\ See Securities Exchange Act Release No. 76748 (December 23, 
2015), 80 FR 81609 (December 30, 2015) (SR-NYSE-2015-52) (order 
approving offering of a wireless connection to allow Users to 
receive market data feeds from third party markets and to reflect 
changes to the Exchange's price list related to these services).
---------------------------------------------------------------------------

    The proposed Wireless Market Data Connections traverse through a 
series of towers equipped with wireless equipment, including, in the 
case of the Carteret and Secaucus connections, a pole on the grounds of 
the Mahwah data center. With the exception of the non-ICE entity that 
owns the wireless network used for the Wireless Connections to Secaucus 
and Carteret,\30\ third parties do not have access to such pole. 
However, access to such pole is not required for third parties to 
establish wireless networks that can compete with the Wireless Market 
Data Connections to the Carteret and Secaucus Third Party Data Centers, 
as witnessed by the existing wireless connections offered by non-ICE 
entities competitors.
---------------------------------------------------------------------------

    \30\ See note 24, supra.
---------------------------------------------------------------------------

    In addition, proximity to a data center is not the only determinant 
of a wireless network's latency. Rather, the latency of a wireless 
network depends on several factors. Variables include the wireless 
equipment utilized; the route of, and number of towers or buildings in, 
the network; and the fiber equipment used at either end of the 
connection. Moreover, latency is not the only consideration that a 
customer may have in selecting a wireless network to connect to 
Selected Market Data. Other considerations may include the amount of 
network uptime; the equipment that the network uses; the cost of the 
connection; and the applicable contractual provisions. Indeed, fiber 
network connections may be more attractive to some market participants 
as they are more reliable and less susceptible to weather conditions.
2. Statutory Basis
    Although the Exchange does not believe that the present proposed 
change is a change to the ``rules of an exchange'' \31\ required to be 
filed with the Commission under the Act, the Exchange believes that the 
proposed rule change is consistent with Section 6(b) of the Act,\32\ in 
general, and furthers the objectives of Section 6(b)(5) of the Act,\33\ 
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 does not unfairly 
discriminate between customers, issuers, brokers, or dealers. The 
Exchange also believes that the proposed rule change is consistent with 
Section 6(b)(4) of the Act,\34\ 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.
---------------------------------------------------------------------------

    \31\ See 15 U.S.C. 78c(a)(27) (defining the term ``rules of an 
exchange'').
    \32\ 15 U.S.C. 78f(b).
    \33\ 15 U.S.C. 78f(b)(5).
    \34\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

The Proposed Change Is Reasonable
    The Exchange believes its proposal is reasonable.
    Based on the information available to it, the Exchange believes 
that a market participant in the Carteret or Secaucus Third Party Data 
Center may purchase a wireless connection to the NYSE and NYSE Arca 
Integrated Feed data feeds from at least two other providers of 
wireless connectivity. The Exchange believes that the wireless 
connections offered by non-ICE entities provide connectivity at the 
same or similar speed as the Wireless Market Data Connections, and at 
the same or similar cost. The Exchange believes the Wireless Market 
Data Connections between the Mahwah data center and the Markham Third 
Party Data Center

[[Page 10801]]

are the first public, commercially available wireless connections for 
Selected Market Data between the two points, creating a new 
connectivity option for customers in Markham. A market participant in 
any of the Third Party Data Centers or the Mahwah data center also may 
create a proprietary wireless market data connection, connect through 
another market participant, or utilize fiber connections offered by the 
Exchange, ICE Affiliates, and other service providers and third party 
telecommunications providers.
    Market participants' considerations in determining what 
connectivity to purchase may include latency; the amount of network 
uptime; the equipment that the network uses; the cost of the 
connection; and the applicable contractual provisions. Indeed, fiber 
network connections may be more attractive to some market participants 
as they are more reliable and less susceptible to weather conditions.
    The Exchange believes that the proposed pricing for the Wireless 
Market Data Connections is reasonable because it allows customers to 
select the connectivity option that best suits their needs. A market 
participant that opts for Wireless Market Data Connections would be 
able to select the specific Selected Market Data feed that it wants to 
receive in accordance with its needs, thereby helping it tailor its 
operations to the requirements of its business operations. The fees 
also reflect the benefit received by market participants in terms of 
lower latency over the fiber optics options.
    There is limited bandwidth available on the wireless network to the 
Markham, Canada Third Party Data Center. Accordingly, the Exchange 
believes that it is reasonable not to transport information for all of 
the symbols included in the NYSE BBO and Trades and NYSE Arca BBO and 
Trades data feeds to Markham, but rather to transport a subset of that 
data. Limiting the feeds to the data regarding securities for which IDS 
believes there is demand allows customers in Canada to receive the 
relevant Selected Market Data over a wireless network. The customer 
then determines those symbols for which it will receive data.
    Only market participants that voluntarily select to receive 
Wireless Market Data Connections are charged for them, and those 
services are available to all market participants with a presence in 
the relevant Third Party Data Center. Furthermore, the Exchange 
believes that the services and fees proposed herein are reasonable 
because, in addition to the services being completely voluntary, they 
are available to all market participants on an equal basis (i.e., the 
same products and services are available to all market participants). 
All market participants that voluntarily select a Wireless Market Data 
Connection would be charged the same amount for the same service and 
would have their first month's MRC for the Wireless Market Data 
Connection waived.
    Overall, the Exchange believes that the proposed change is 
reasonable because the Wireless Market Data Connections described 
herein are offered as a convenience to market participants, but 
offering them requires the provision, maintenance and operation of the 
Mahwah data center, wireless networks and access centers in the Third 
Party Data Centers, including the installation and monitoring, support 
and maintenance of the services.
    The Exchange believes that the proposed waiver of the first month's 
MRC is reasonable as it would allow market participants to test a 
Wireless Market Data Connection for a month before incurring any 
monthly recurring fees and may act as an incentive to market 
participants to connect to a Wireless Market Data Connection.
The Proposed Change Is an Equitable Allocation of Fees and Credits
    The Exchange believes its proposal equitably allocates its fees 
among its market participants.
    The proposed change would not apply differently to distinct types 
or sizes of market participants. Rather, it would apply to all market 
participants equally. As is currently the case, the purchase of any 
connectivity service, including Wireless Market Data Connections, would 
be completely voluntary.
    The Exchange believes that it is equitable to not to transport 
information for all of the symbols included in the NYSE BBO and Trades 
and NYSE Arca BBO and Trades data feeds to Markham, but rather to 
transport a subset of that data. There is limited bandwidth available 
on the wireless network to the Markham, Canada Third Party Data Center. 
Limiting the feeds to the data regarding securities for which IDS 
believes there is demand allows customers in Canada to receive the 
relevant Selected Market Data over a wireless network. The customer 
then determines those symbols for which it will receive data.
    Without this proposed rule change, market participants with a 
presence in the Third Party Data Centers would have fewer options for 
connectivity to Selected Market Data. With it, market participants have 
more choices with respect to the form and price of connectivity to 
Selected Market Data they use, allowing a market participant that opts 
for a Wireless Market Data Connection to select the specific Selected 
Market Data feed that it wants to receive in accordance with what best 
suits its needs, thereby helping it tailor its operations to the 
requirements of its business operations.
The Proposed Change Is Not Unfairly Discriminatory
    The Exchange believes its proposal is not unfairly discriminatory.
    The proposed change would not apply differently to distinct types 
or sizes of market participants. Rather, it would apply to all market 
participants equally. As is currently the case, the purchase of any 
connectivity service, including Wireless Market Data Connections, would 
be completely voluntary.
    A market participant in the Carteret or Secaucus Third Party Data 
Center may purchase a wireless connection to the NYSE and NYSE Arca 
Integrated Feed data feeds from at least two other providers of 
wireless connectivity. A market participant in any of the Third Party 
Data Centers or the Mahwah data center also may create a proprietary 
wireless market data connection, connect through another market 
participant, or utilize fiber connections offered by the Exchange, ICE 
Affiliates, and other service providers and third party 
telecommunications providers.
    Without this proposed rule change, market participants with a 
presence in the Third Party Data Centers would have fewer options for 
connectivity to Selected Market Data. With it, market participants have 
more choices with respect to the form and price of connectivity to 
Selected Market Data they use, allowing a market participant that opts 
for a Wireless Market Data Connection to select the specific Selected 
Market Data feed that it wants to receive in accordance with what best 
suits its needs, thereby helping it tailor its operations to the 
requirements of its business operations.
    The Wireless Market Data Connections provide customers in the 
Secaucus and Carteret access centers with one means of connectivity to 
Selected Market Data, but based on the information available to it, the 
Exchange believes that a market participant in the Carteret or Secaucus 
Third Party Data Center may purchase a wireless connection to the NYSE 
and NYSE Arca Integrated Feed data feeds from at least two other 
providers of wireless connectivity. The Exchange believes that the 
wireless connections offered by

[[Page 10802]]

non-ICE entities provide connectivity at the same or similar speed as 
the Wireless Market Data Connections, and at the same or similar cost. 
The Exchange believes the Wireless Market Data Connections between the 
Mahwah data center and the Markham Third Party Data Center are the 
first public, commercially available wireless connections for Selected 
Market Data between the two points, creating a new connectivity option 
for customers in Markham.
    For these reasons, the Exchange believes that the proposal is 
consistent with the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the only burden on competition of the 
proposed change is on IDS and other commercial connectivity providers. 
Solely because IDS is wholly owned by the same parent company as the 
Exchange, IDS will be at a competitive disadvantage to its commercial 
competitors, and its commercial competitors, without a filing 
requirement, will be at a relative competitive advantage to IDS.
    By permitting IDS to continue to offer the Wireless Market Data 
Connectivity, approval of the proposed changes would contribute to 
competition by allowing IDS to compete with other connectivity 
providers, and thus provides market participants another connectivity 
option. For this reason, the proposed rule changes will not impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of Section 6(b)(8) of the Act.\35\
---------------------------------------------------------------------------

    \35\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

    Based on the information available to it, the Exchange believes 
that a market participant in the Carteret or Secaucus Third Party Data 
Center may purchase a wireless connection to the NYSE and NYSE Arca 
Integrated Feed data feeds from at least two other providers of 
wireless connectivity. The Exchange believes that the wireless 
connections offered by non-ICE entities provide connectivity at the 
same or similar speed as the Wireless Market Data Connections, and at 
the same or similar cost. The Exchange believes the Wireless Market 
Data Connections between the Mahwah data center and the Markham Third 
Party Data Center are the first public, commercially available wireless 
connections for Selected Market Data between the two points, creating a 
new connectivity option for customers in Markham. The Exchange does not 
control the Third Party Data Centers and could not preclude other 
parties from creating new wireless or fiber connections to Selected 
Market Data in any of the Third Party Data Centers.
    The Wireless Market Data Connections provide customers in the 
Secaucus and Carteret Third Party Data Centers with one means of 
connectivity to Selected Market Data, but substitute products are 
available, as witnessed by the existing wireless connections offered by 
non-ICE entities. A market participant in the Carteret or Secaucus 
Third Party Data Center may purchase a wireless connection to the NYSE 
and NYSE Arca Integrated Feed data feeds from at least two other 
providers of wireless connectivity. A market participant in any of the 
Third Party Data Centers or the Mahwah data center may also create a 
proprietary wireless market data connection, connect through another 
market participant, or utilize fiber connections offered by the 
Exchange, ICE Affiliates, and other service providers and third party 
telecommunications providers.
    The Exchange notes that the proposed Wireless Market Data 
Connections compete not just with other wireless connections to 
Selected Market Data, but also with fiber network connections, which 
may be more attractive to some market participants as they are more 
reliable and less susceptible to weather conditions. Market 
participants' considerations in determining what connectivity to 
purchase may include latency; the amount of network uptime; the 
equipment that the network uses; the cost of the connection; and the 
applicable contractual provisions. A market participant in the Carteret 
or Secaucus Third Party Data Center may purchase a wireless connection 
to the NYSE and NYSE Arca Integrated Feed data feeds from at least two 
other providers of wireless connectivity. A market participant also may 
create a proprietary wireless market data connection, connect through 
another market participant, or utilize fiber connections offered by the 
Exchange, ICE Affiliates, and other service providers and third party 
telecommunications providers.
    The proposed Wireless Market Data Connections traverse through a 
series of towers equipped with wireless equipment, including, in the 
case of the Carteret and Secaucus Wireless Market Data Connections, a 
pole on the grounds of the Mahwah data center. With the exception of 
the non-ICE entity that owns the wireless network used for the Wireless 
Connections to Secaucus and Carteret,\36\ third parties do not have 
access to such pole, as the IDS wireless network has exclusive rights 
to operate wireless equipment on the Mahwah data center pole. IDS does 
not sell rights to third parties to operate wireless equipment on the 
pole, due to space limitations, security concerns, and the interference 
that would arise between equipment placed too closely together.
---------------------------------------------------------------------------

    \36\ See note 24, supra.
---------------------------------------------------------------------------

    However, access to such pole is not required for other parties to 
establish wireless networks that can compete with the Wireless Market 
Data Connections, as witnessed by the existing wireless connections 
offered by non-ICE entities. Proximity to a data center is not the only 
determinant of a wireless network's latency. Rather, the latency of a 
wireless network depends on several factors. Variables include the 
wireless equipment utilized; the route of, and number of towers or 
buildings in, the network; and the fiber equipment used at either end 
of the connection. Moreover, latency is not the only consideration that 
a customer may have in selecting a wireless network to connect to 
Selected Market Data. Other considerations may include the amount of 
network uptime; the equipment that the network uses; the cost of the 
connection; and the applicable contractual provisions. Indeed, fiber 
network connections may be more attractive to some market participants 
as they are more reliable and less susceptible to weather conditions.
    The proposed change does not affect competition among national 
securities exchanges or among members of the Exchange, but rather 
between IDS and its commercial competitors.
    For the reasons described above, the Exchange believes that the 
proposed rule changes reflect this competitive environment.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or up to 90 days (i) as the Commission may designate 
if it finds such longer period to be appropriate and publishes its 
reasons for so finding or (ii) as to which the self-regulatory 
organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or

[[Page 10803]]

    (B) institute proceedings to determine whether the proposed rule 
change should be 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 [email protected]. Please include 
File Number SR-NYSECHX-2020-05 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-NYSECHX-2020-05. 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-NYSECHX-2020-05, and should be submitted 
on or before March 17, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\37\
---------------------------------------------------------------------------

    \37\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2020-03641 Filed 2-24-20; 8:45 am]
 BILLING CODE 8011-01-P

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