Self-Regulatory Organizations; NYSE American LLC; Notice of Filing of Proposed Rule Change To Amend the Schedule of Wireless Connectivity Fees and Charges To Add Wireless Connectivity Services, 10776-10784 [2020-03647]
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Federal Register / Vol. 85, No. 37 / Tuesday, February 25, 2020 / Notices
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Early Withdrawal Charges
1. Section 23(c) of the Act provides,
in relevant part, that no registered
closed-end investment company shall
purchase securities of which it is the
issuer, except: (a) On a securities
exchange or other open market; (b)
pursuant to tenders, after reasonable
opportunity to submit tenders given to
all holders of securities of the class to
be purchased; or (c) under other
circumstances as the Commission may
permit by rules and regulations or
orders for the protection of investors.
2. Rule 23c–3 under the Act permits
an interval fund to make repurchase
offers of between five and twenty-five
percent of its outstanding shares at net
asset value at periodic intervals
pursuant to a fundamental policy of the
interval fund. Rule 23c–3(b)(1) under
the Act permits an interval fund to
deduct from repurchase proceeds only a
repurchase fee, not to exceed two
percent of the proceeds, that is paid to
the interval fund and is reasonably
intended to compensate the fund for
expenses directly related to the
repurchase. A Fund will not impose a
repurchase fee on investors who
purchase and tender their shares.
3. Section 23(c)(3) provides that the
Commission may issue an order that
would permit a closed-end investment
company to repurchase its shares in
circumstances in which the repurchase
is made in a manner or on a basis that
does not unfairly discriminate against
any holders of the class or classes of
securities to be purchased.
4. Applicants request relief under
section 6(c), discussed above, and
section 23(c)(3) from rule 23c–3 to the
extent necessary for the Funds to
impose EWCs on shares of the Funds
submitted for repurchase that have been
held for less than a specified period.
5. Applicants state that the EWCs they
intend to impose are functionally
similar to CDSLs imposed by open-end
investment companies under rule 6c–10
under the Act. Rule 6c–10 permits openend investment companies to impose
CDSLs, subject to certain conditions.
Applicants note that rule 6c–10 is
grounded in policy considerations
supporting the employment of CDSLs
where there are adequate safeguards for
the investor and state that the same
policy considerations support
imposition of EWCs in the interval fund
context. In addition, applicants state
that EWCs may be necessary for the
distributor to recover distribution costs.
Applicants represent that any EWC
imposed by the Funds will comply with
rule 6c–10 under the Act as if the rule
were applicable to closed-end
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investment companies. The Funds will
disclose EWCs in accordance with the
requirements of Form N–1A concerning
CDSLs.
Asset-Based Distribution and/or Service
Fees
1. Section 17(d) of the Act and rule
17d–1 under the Act prohibit an
affiliated person of a registered
investment company, or an affiliated
person of such person, acting as
principal, from participating in or
effecting any transaction in connection
with any joint enterprise or joint
arrangement in which the investment
company participates unless the
Commission issues an order permitting
the transaction. In reviewing
applications submitted under section
17(d) and rule 17d–1, the Commission
considers whether the participation of
the investment company in a joint
enterprise or joint arrangement is
consistent with the provisions, policies
and purposes of the Act, and the extent
to which the participation is on a basis
different from or less advantageous than
that of other participants.
2. Rule 17d–3 under the Act provides
an exemption from section 17(d) and
rule 17d–1 to permit open-end
investment companies to enter into
distribution arrangements pursuant to
rule 12b–1 under the Act. Applicants
request an order under section 17(d) and
rule 17d–1 under the Act to the extent
necessary to permit the Funds to impose
asset-based distribution and/or service
fees. Applicants have agreed to comply
with rules 12b–1 and 17d–3 as if those
rules applied to closed-end investment
companies, which they believe will
resolve any concerns that might arise in
connection with a Fund financing the
distribution of its shares through assetbased distribution and/or service fees.
3. For the reasons stated above,
applicants submit that the exemptions
requested under section 6(c) are
necessary and appropriate in the public
interest and are consistent with the
protection of investors and the purposes
fairly intended by the policy and
provisions of the Act. Applicants further
submit that the relief requested
pursuant to section 23(c)(3) will be
consistent with the protection of
investors and will insure that applicants
do not unfairly discriminate against any
holders of the class of securities to be
purchased. Finally, applicants state that
the Funds’ imposition of asset-based
distribution and/or service fees is
consistent with the provisions, policies,
and purposes of the Act and does not
involve participation on a basis different
from or less advantageous than that of
other participants.
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Applicants’ Condition
Applicants agree that any order
granting the requested relief will be
subject to the following condition:
Each Fund relying on the order will
comply with the provisions of rules 6c–
10, 12b–1, 17d–3, 18f–3, 22d–1, and,
where applicable, 11a–3 under the Act,
as amended from time to time, as if
those rules applied to closed-end
management investment companies,
and will comply with the Sales Charge
Rule, as amended from time to time, as
if that rule applied to all closed-end
management investment companies.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2020–03676 Filed 2–24–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88238; File No. SR–
NYSEAMER–2020–10]
Self-Regulatory Organizations; NYSE
American LLC; 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
12, 2020, NYSE American LLC (‘‘NYSE
American’’ 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 rule change
is available on the Exchange’s website at
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
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www.nyse.com, at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
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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
4 The NYSE, NYSE Arca, NYSE National, and
NYSE Chicago, Inc. 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
Chicago, Inc. The Exchange filed a proposed rule
change that would establish the Wireless Fee
Schedule. See SR–NYSEAmer–2020–05 (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
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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
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
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’’).
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
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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
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 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
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).
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.
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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
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
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).
15 When requesting authorization from the NYSE,
NYSE Arca or NYSE National to provide a customer
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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
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.
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.
The Wireless Market Data Connections
Are Not Facilities of the Exchange
(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 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
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.
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).
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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
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.
19 17
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CFR 240.3b–16(a).
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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
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
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
20 15
U.S.C. 78c(a)(2).
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
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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.
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
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.
25 15 U.S.C. 78c(a)(2).
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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.
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
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.
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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
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
Type of service
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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
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.
27 15
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.
$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 connec-
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 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.
U.S.C. 78f(b)(8).
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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
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.
jbell on DSKJLSW7X2PROD with NOTICES
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
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.
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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
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
29 See Securities Exchange Act Release No. 76750
(December 23, 2015), 80 FR 81648 (December 30,
2015) (SR–NYSEMKT–2015–85) (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
and fee schedule related to these services).
30 See note 24, supra.
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10781
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
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).
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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
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
VerDate Sep<11>2014
20:34 Feb 24, 2020
Jkt 250001
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
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Fmt 4703
Sfmt 4703
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
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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
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
35 15
U.S.C. 78f(b)(8).
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20:34 Feb 24, 2020
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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
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10783
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.
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.
36 See
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note 24, supra.
25FEN1
10784
Federal Register / Vol. 85, No. 37 / Tuesday, February 25, 2020 / Notices
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
(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:
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NYSEAMER–2020–10, 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
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2020–03647 Filed 2–24–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSEAMER–2020–10 on the subject
line.
jbell on DSKJLSW7X2PROD with NOTICES
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSEAMER–2020–10. 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
VerDate Sep<11>2014
20:34 Feb 24, 2020
Jkt 250001
[Release No. 34–88235; File No. SR–CBOE–
2020–012]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Amending its Financial
Incentive Programs for Global Trading
Hours (GTH) Lead Market-Makers
(LMMs) in VIX Options
February 19, 2020.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on February
10, 2020, Cboe Exchange, Inc. (the
‘‘Exchange’’ or ‘‘Cboe Options’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
37 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00138
Fmt 4703
Sfmt 4703
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe Exchange, Inc. (the ‘‘Exchange’’
or ‘‘Cboe Options’’) proposes to amend
its financial incentive programs for
Global Trading Hours (‘‘GTH’’) Lead
Market-Makers (‘‘LMMs’’) in VIX
options. The text of the proposed rule
change is provided in Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://www.cboe.com/
AboutCBOE/
CBOELegalRegulatoryHome.aspx), at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
GTH VIX LMMs Incentive Program,
effective February 10, 2020.
By way of background, pursuant to
the Fees Schedule, an LMM in VIX will
receive a rebate for that month in the
amount of a pro-rata share of a
compensation pool equal to $20,000
times the number of LMMs in that class
(or pro-rated amount if an appointment
begins after the first trading day of the
month or ends prior to the last trading
day of the month) if the LMM(s):
provide continuous electronic quotes
during GTH that meet or exceed the
following heightened quoting standards
in at least 99% of the VIX series 90%
of the time in a given month:
Premium level
$0.00–$100.00 ............................
$100.01–$200.00 ........................
Greater than $200.000 ...............
E:\FR\FM\25FEN1.SGM
25FEN1
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allowable
width
$10.00
$16.00
$24.00
]]>Agencies
[Federal Register Volume 85, Number 37 (Tuesday, February 25, 2020)]
[Notices]
[Pages 10776-10784]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-03647]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88238; File No. SR-NYSEAMER-2020-10]
Self-Regulatory Organizations; NYSE American LLC; 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 12, 2020, NYSE American LLC (``NYSE American'' 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to 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 rule change is available on the Exchange's
website at
[[Page 10777]]
www.nyse.com, at the principal office of the Exchange, and at the
Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
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.
---------------------------------------------------------------------------
\4\ The NYSE, NYSE Arca, NYSE National, and NYSE Chicago, Inc.
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 Chicago, Inc. The Exchange filed
a proposed rule change that would establish the Wireless Fee
Schedule. See SR-NYSEAmer-2020-05 (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.
---------------------------------------------------------------------------
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
[[Page 10778]]
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\ 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.
[[Page 10779]]
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 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
[[Page 10780]]
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 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.
------------------------------------------------------------------------
[[Page 10781]]
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 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. 76750 (December 23,
2015), 80 FR 81648 (December 30, 2015) (SR-NYSEMKT-2015-85) (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 and fee schedule 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).
---------------------------------------------------------------------------
[[Page 10782]]
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 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
[[Page 10783]]
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 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.
[[Page 10784]]
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
(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-NYSEAMER-2020-10 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEAMER-2020-10. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSEAMER-2020-10, 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\
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\37\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2020-03647 Filed 2-24-20; 8:45 am]
BILLING CODE 8011-01-P
