Self-Regulatory Organizations; New York Stock Exchange LLC, NYSE American LLC, NYSE Arca, Inc., NYSE Chicago, Inc., and NYSE National, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove Proposed Rule Changes To Establish a Wireless Fee Schedule Setting Forth Available Wireless Bandwidth Connections and Wireless Market Data Connections and Associated Fees, 31273-31281 [2020-11045]
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Federal Register / Vol. 85, No. 100 / Friday, May 22, 2020 / Notices
Act 43 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 44
permits the Commission to designate a
shorter time if such action is consistent
with the protection of investors and the
public interest. The Exchange has asked
the Commission to waive the 30-day
operative delay so that the proposed
rule change may become operative upon
filing. The Exchange states that waiver
of the operative delay would be
consistent with the protection of
investors and the public interest
because it will ensure fair competition
among the exchanges by allowing the
Exchange to immediately increase the
position limits for the products subject
to this proposal, which the Exchange
believes will provide consistency for
BOX Participants that are also members
at CBOE where these increased position
limits are currently in place. For this
reason, the Commission believes that
waiver of the 30-day operative delay is
consistent with the protection of
investors and the public interest.
Therefore, the Commission hereby
waives the operative delay and
designates the proposal as operative
upon filing.45
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
BOX–2020–13 on the subject line.
CFR 240.19b–4(f)(6).
CFR 240.19b–4(f)(6)(iii).
45 For purposes only of waiving the 30-day
operative delay, the Commission also has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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–BOX–2020–13. 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 such
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–BOX–2020–13, and should
be submitted on or before June 12, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.46
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–11041 Filed 5–21–20; 8:45 am]
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88901; File Nos. SR–NYSE–
2020–05, SR–NYSEAMER–2020–05, SR–
NYSEArca–2020–08, SR–NYSECHX–2020–
02, SR–NYSENAT–2020–03, SR–NYSE–
2020–11, SR–NYSEAMER–2020–10, SR–
NYSEArca–2020–15, SR–NYSECHX–2020–
05, SR–NYSENAT–2020–08]
Self-Regulatory Organizations; New
York Stock Exchange LLC, NYSE
American LLC, NYSE Arca, Inc., NYSE
Chicago, Inc., and NYSE National, Inc.;
Order Instituting Proceedings To
Determine Whether To Approve or
Disapprove Proposed Rule Changes
To Establish a Wireless Fee Schedule
Setting Forth Available Wireless
Bandwidth Connections and Wireless
Market Data Connections and
Associated Fees
May 18, 2020.
I. Introduction
On January 30, 2020, New York Stock
Exchange LLC (‘‘NYSE’’), NYSE
American LLC (‘‘NYSE American’’),
NYSE Arca, Inc. (‘‘NYSE Arca’’), NYSE
Chicago, Inc. (‘‘NYSE Chicago’’), and
NYSE National, Inc. (‘‘NYSE National’’)
(collectively, the ‘‘Exchanges’’) each
filed with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Exchange Act’’
or ‘‘Act’’) 1 and Rule 19b–4 thereunder,2
a proposed rule change to establish a
schedule of Wireless Connectivity Fees
and Charges (‘‘Wireless Fee Schedule’’)
listing available wireless connections
between the Mahwah, New Jersey data
center (‘‘Mahwah Data Center’’) and
other data centers. The proposed rule
changes (collectively, ‘‘Wireless I’’) were
published for comment in the Federal
Register on February 18, 2020.3 On
April 1, 2020, pursuant to Section
19(b)(2) of the Act,4 the Commission
designated a longer period within which
to either approve the Wireless I
proposed rule changes, disapprove the
proposed rule changes, or institute
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release Nos. 88168
(February 11, 2020), 85 FR 8938 (February 18, 2020)
(SR–NYSE–2020–05) (‘‘Wireless I Notice’’); 88169
(February 11, 2020), 85 FR 8946 (February 18, 2020)
(SR–NYSEAMER–2020–05); 88170 (February 11,
2020), 85 FR 8956 (February 18, 2020) (SR–
NYSEArca–2020–08); 88172 (February 11, 2020), 85
FR 8923 (February 18, 2020) (SR–NYSECHX–2020–
02); and 88171 (February 11, 2020), 85 FR 8930
(February 18, 2020) (SR–NYSENAT–2020–03)
(collectively, the ‘‘Wireless I Notices’’). Comments
received on the Wireless I Notices are available on
the Commission’s website at: https://www.sec.gov/
comments/sr-nyse-2020-05/srnyse202005.htm.
4 15 U.S.C. 78s(b)(2).
2 17
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Federal Register / Vol. 85, No. 100 / Friday, May 22, 2020 / Notices
proceedings to determine whether to
disapprove the proposed rule changes.5
On February 11, 2020, NYSE, NYSE
Arca, NYSE Chicago, and NYSE
National each filed with the
Commission, pursuant to Section
19(b)(1) of the Act 6 and Rule 19b–4
thereunder,7 a proposed rule change to
amend the Wireless Fee Schedule to add
wireless connections for the transport of
certain market data of the Exchanges.
NYSE American filed with the
Commission a substantively identical
filing on February 12, 2020. The
proposed rule changes (collectively,
‘‘Wireless II’’) were published for
comment in the Federal Register on
February 25, 2020.8 On April 1, 2020,
pursuant to Section 19(b)(2) of the Act,9
the Commission designated a longer
period within which to either approve
the Wireless II proposed rule changes,
disapprove the proposed rule changes,
or institute proceedings to determine
whether to disapprove the proposed
rule changes.10
This order institutes proceedings
under Section 19(b)(2)(B) of the
Exchange Act 11 to determine whether to
approve or disapprove the Wireless I
and Wireless II proposed rule changes.
II. Description of the Proposed Rule
Changes
A. Wireless I
In Wireless I, the Exchanges propose
to establish the Wireless Fee Schedule,
setting forth options for market
participants to establish wireless
connections for specified fees between
the Mahwah Data Center and three data
centers that are owned and operated by
third parties unaffiliated with the
Exchanges: (1) Carteret, New Jersey; (2)
Secaucus, New Jersey; and (3) Markham,
Canada (collectively, the ‘‘Third Party
Data Centers’’).12 As more fully set forth
in the Wireless I Notices, the Exchanges
state that a market participant opting to
establish a wireless connection between
the Mahwah Data Center and a Third
Party Data Center may do so by
requesting one from ICE Data Services
(‘‘IDS’’).13 The Exchanges state that IDS
operates through several different
Intercontinental Exchange, Inc. (‘‘ICE’’)
affiliates, including NYSE Technologies
Connectivity, Inc., an indirect
subsidiary of NYSE.14
According to the Exchanges, once
requested, IDS establishes the wireless
connection (herein a ‘‘Wireless
Bandwidth Connection’’) between IDS’s
equipment in the Third Party Data
Center and IDS’s equipment in the
Mahwah Data Center.15 IDS uses its own
wireless network between the Markham
Third Party Data Center and the
Mahwah Data Center.16 IDS contracts
with a non-ICE entity to provide
Wireless Bandwidth Connections
between the Secaucus and Carteret
Third Party Data Centers and the
Mahwah Data Center through a series of
towers equipped with wireless
equipment.17 With respect to
connections between the Secaucus and
Carteret Third Party Data Centers and
the Mahwah Data Center, these towers
Type of service
Wireless Connection between
Secaucus access center.
Wireless Connection between
Secaucus access center.
Wireless Connection between
Secaucus access center.
Wireless Connection between
Secaucus access center.
Wireless Connection between
Carteret access center.
18:07 May 21, 2020
Mahwah Data Center and
10 Mb Circuit ..
Mahwah Data Center and
50 Mb Circuit ..
Mahwah Data Center and
100 Mb Circuit
Mahwah Data Center and
200 Mb Circuit
Mahwah Data Center and
10 Mb Circuit ..
Jkt 250001
Proposed Wireless Fee Schedule
(Wireless I)
The Exchanges propose that IDS
would assess a non-recurring initial
charge and a monthly recurring charge
(‘‘MRC’’) for the Wireless Bandwidth
Connections, with variations depending
upon bandwidth size and the location of
the connection. The proposed schedule
set forth by the Exchanges is as
follows: 25
Description
5 See Securities Exchange Act Release No. 88539
(April 1, 2020), 85 FR 19553 (April 7, 2020). The
Commission designated May 18, 2020, as the date
by which it should approve, disapprove, or institute
proceedings to determine whether to disapprove the
proposed rule changes.
6 15 U.S.C. 78s(b)(1).
7 17 CFR 240.19b–4.
8 See Securities Exchange Act Release Nos. 88237
(February 19, 2020), 85 FR 10752 (February 25,
2020) (SR–NYSE–2020–11) (‘‘Wireless II Notice’’);
88238 (February 19, 2020), 85 FR 10776 (February
25, 2020) (SR–NYSEAMER–2020–10); 88239
(February 19, 2020), 85 FR 10786 (February 25,
2020) (SR–NYSEArca–2020–15); 88240 (February
19, 2020), 85 FR 10795 (February 25, 2020) (SR–
NYSECHX–2020–05); and 88241 (February 19,
2020), 85 FR 10738 (February 25, 2020) (SR–
NYSENAT–2020–08) (collectively, the ‘‘Wireless II
VerDate Sep<11>2014
include a pole on the grounds of the
Mahwah Data Center property, to which
access is restricted.18 At each end of the
Wireless Bandwidth Connection, the
customer uses a cross connect or other
cable to connect its own equipment to
the IDS equipment.19 Cross connects in
the Mahwah Data Center lead to the
customer’s server in co-location.20
As discussed further below,21 the
Exchanges take the position that the
Wireless Bandwidth Connections are
not ‘‘facilities of an exchange’’ within
the meaning of Section 3(a)(1) of the Act
(defining ‘‘exchange’’) and Section
3(a)(2) of the Act (defining ‘‘facility’’).22
The Exchanges thus take the position
that the proposed Wireless Fee
Schedule is not required to be filed with
the Commission, and not subject to
review for determination of consistency
with Act standards.23 The Exchanges
seek approval of the Wireless Fee
Schedule, however, stating that they
have filed the current proposals ‘‘solely
because the Staff of the Commission’’
has advised that filing is required.24
Amount of charge
$10,000 per connection initial
connection of $9,000.
$10,000 per connection initial
connection of $13,500.
$10,000 per connection initial
connection of $23,000.
$10,000 per connection initial
connection of $44,000.
$10,000 per connection initial
connection of $10,000.
Notices’’). Comments received on the Wireless II
Notices are available on the Commission’s website
at: https://www.sec.gov/comments/sr-nyse-2020-11/
srnyse202011.htm.
9 15 U.S.C. 78s(b)(2).
10 See Securities Exchange Act Release No. 88540
(April 1, 2020), 85 FR 19562 (April 7, 2020). The
Commission designated May 25, 2020, as the date
by which it should approve, disapprove, or institute
proceedings to determine whether to disapprove the
proposed rule changes.
11 15 U.S.C. 78s(b)(2)(B).
12 See Wireless I Notice, supra note 3, at 8938.
13 See id. at 8939.
14 See id. at 8939 n.11. The Exchanges themselves
are indirect subsidiaries of ICE. See id. at 8939.
15 See id. See also infra note 47 and
accompanying text (further summarizing how the
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charge plus monthly charge per
charge plus monthly charge per
charge plus monthly charge per
charge plus monthly charge per
charge plus monthly charge per
Exchanges describe the function and purpose of
these connections).
16 See id. at 8939.
17 See id. at 8939.
18 See id. at 8943.
19 See id.
20 See id. Proposed rule changes regarding such
cross connects in the Mahwah Data Center are filed
with the Commission. See id. at 8939 n.12 (citing
Securities Exchange Act Release No. 67666 (August
15, 2012), 77 FR 50742 (August 22, 2012) (SR–
NYSE–2012–18)).
21 See Section II.C.1. infra.
22 See Wireless I Notice, supra note 3, at 8939–
41.
23 See id. at 8938–39.
24 See id. at 8939.
25 See id. at 8941–42.
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31275
Type of service
Description
Amount of charge
Wireless Connection between Mahwah Data Center and
Carteret access center.
Wireless Connection between Mahwah Data Center and
Carteret access center.
Wireless Connection between Mahwah Data Center and
Carteret access center.
Wireless Connections between (a) Mahwah Data Center and
Carteret access center and (b) Mahwah Data Center and
Secaucus Data Center.
Wireless Connection between Mahwah Data Center and Markham access center.
Wireless Connection between Mahwah Data Center and Markham access center.
Wireless Connection between Mahwah Data Center and Markham access center.
50 Mb Circuit ..
$10,000 per connection initial charge plus monthly charge per
connection of $15,000.
$10,000 per connection initial charge plus monthly charge per
connection of $25,000.
$10,000 per connection initial charge plus monthly charge per
connection of $45,000.
$15,000 initial charge for both connections plus monthly
charge for both connections of $22,000.
As an incentive, the first month’s
MRC would be waived.26 In addition,
the Exchanges propose to include a
General Note on the Wireless Fee
Schedule, stating that a market
participant that obtains a Wireless
Bandwidth Connection will not be
charged more than once for that service,
irrespective of whether it is a member
of one, some or none of the Exchanges.27
B. Wireless II
In Wireless II, the Exchanges propose
to include additional connectivity
options on the Wireless Fee Schedule
for specified fees; namely, wireless
connections for the transport of certain
market data feeds (‘‘Wireless Market
Data Connections’’) from the Mahwah
Data Center to Third Party Data
Centers.28 The market data feeds
available via the Wireless Market Data
Connections (the ‘‘Selected Market
Data’’) are certain proprietary market
data feeds offered by NYSE, NYSE Arca,
and/or NYSE National.29
26 See
id. at 8942. If a customer had an existing
Wireless Bandwidth Connection and opted to
upgrade or downgrade to a different size circuit
connecting to the same Third Party Access Center,
it would not be subject to the initial charge. See id.
27 The proposed General Note would be
consistent with the first general note in the colocation section of each Exchange’s price list and
fee schedule. See id. at 8942 (citing Securities
Exchange Act Release Nos. 70206 (August 15,
2013), 78 FR 51765 (August 21, 2013) (SR–NYSE–
2013–59); 70176 (August 13, 2013), 78 FR 50471
(August 19, 2013) (SR–NYSEMKT–2013–67); 70173
(August 13, 2013), 78 FR 50459 (August 19, 2013)
(SR–NYSEArca–2013–80); 83351 (May 31, 2018), 83
FR 26314 (June 6, 2018) (SR–NYSENAT–2018–07;
and 87408 (October 28, 2019), 84 FR 58778
(November 1, 2019) (SR–NYSECHX–2019–12)). The
Exchanges also note that similar language appears
in the Nasdaq Stock Market rules. See id. (citing
The Nasdaq Stock Market General Equity and
Options Rules, General 8, Section 1).
28 See Wireless II Notice, supra note 8, at 10753.
29 The Exchanges state that the Selected Market
Data is generated at the Mahwah Data Center in the
trading and execution systems of NYSE, NYSE Arca
and NYSE National. See id. In each case, NYSE,
NYSE Arca, or NYSE National, as applicable, files
with the Commission for the Selected Market Data
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18:07 May 21, 2020
Jkt 250001
100 Mb Circuit
200 Mb Circuit
50 Mb Circuits
1 Mb Circuit ....
5 Mb Circuit ....
10 Mb Circuit ..
$10,000 per connection initial charge plus monthly charge per
connection of $6,000.
$10,000 per connection initial charge plus monthly charge per
connection of $15,500.
$10,000 per connection initial charge plus monthly charge per
connection of $23,000.
As more fully set forth in the Wireless
II Notices, the Exchanges explain that a
market participant seeking connectivity
to a Selected Market Data feed chooses
a connectivity provider.30 In the case of
the proposed Wireless Market Data
Connections, market participants would
be choosing IDS as wireless connectivity
provider.31 Upon selection, IDS would
first need to obtain authorization from
the provider of the relevant Selected
Market Data feed.32 Then, IDS would set
up the Wireless Market Data Connection
for the market participant by collecting
the Selected Market Data and sending it
over the Wireless Market Data
Connection to the IDS access center in
the Third Party Data Center, where the
customer would then connect to the
Selected Market Data at the Third Party
Data Center.33
As discussed further below,34 the
Exchanges maintain that the Wireless
Market Data Connections are not
‘‘facilities of an exchange’’ within the
meaning of Section 3(a)(1) of the Act
(defining ‘‘exchange’’) and Section
3(a)(2) of the Act (defining the term
‘‘facility’’).35 They thus take the position
that the proposed Wireless Fee
it generates, and the related fees. See id. The filed
market data fees apply to all Selected Market Data
customers no matter what connectivity provider
they use. See id. at 10754.
30 See id.
31 See id. at 10754 n.17. See also infra note 48 and
accompanying text (further summarizing how the
Exchanges describe the function and purpose of
these connections).
32 See id. at 10754. 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 online tool
as all data vendors. See id. at 10754 n.15.
33 See id. at 10754. 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. See id. at
10754 n.16.
34 See Section II.C.1. infra.
35 See Wireless II Notice, supra note 8, at 10754–
56.
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Sfmt 4703
Schedule itemizing the available
Wireless Market Data Connections and
associated fees are not proposed rules of
an exchange, are not required to be filed
with the Commission, and are not
subject to review for determination of
consistency with Act standards.36 The
Exchanges seek approval of the addition
of Wireless Market Data Connections to
the Wireless Fee Schedule, however,
stating that they have filed the current
proposals ‘‘solely because the Staff of
the Commission’’ has advised that filing
is required.37
Proposed Additions to the Wireless Fee
Schedule (Wireless II)
The Exchanges propose that IDS
would assess a non-recurring initial
charge and MRC for the Wireless Market
Data Connections, with the variations
depending upon the type of fees and
location of the connection, set forth by
the Exchanges as follows: 38
36 See
id. at 10753.
id.
38 See id. at 10756. The Exchanges note that the
customer is charged by IDS an initial and monthly
fee for the Wireless Market Data Connection
(whereas the applicable Exchange bills 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). See id. at
10754.
The Exchanges further explain that 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
Exchanges do not have visibility into which portion
of the data feed a given customer receives. See id.
at 10756.
37 See
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Federal Register / Vol. 85, No. 100 / Friday, May 22, 2020 / Notices
Type of service
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.
C. Exchanges’ Justification and
Comments Received
1. Facilities of an Exchange
As noted above, the Exchanges take
the position that the Wireless Fee
Schedule is not a proposed rule change
required to be filed with the
Commission because the Wireless
Bandwidth Connections and Wireless
Market Data Connections (collectively,
‘‘Wireless Connections’’) are not
‘‘facilities of an exchange.’’ 39 In sum,
they urge that the Wireless Connections
are not facilities of an exchange because
they are services that are not offered by
the Exchanges, nor are they offered by
a group of persons constituting an
exchange (within the definition of
‘‘exchange’’ in Section 3(a)(1) of the
Act),40 and further, that the Wireless
Connections are not within the meaning
39 See
Wireless I Notice, supra note 3, at 8938–
39; Wireless II Notice, supra note 8, at 10753.
40 Exchange Act Section 3(a)(1) defines the term
‘‘exchange’’ as: ‘‘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.’’ 15 U.S.C. 78c(a)(1).
According to the Exchanges, the ICE affiliates are
not an exchange, or part of the Exchange(s) because
they do not provide a marketplace for bringing
together purchasers and sellers. See Wireless I
Notice, supra note 3, at 8940; Wireless II Notice,
supra note 8, at 10754.
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18:07 May 21, 2020
Jkt 250001
$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.
41 Under Exchange Act Section 3(a)(2): ‘‘The term
‘facility’ when used with respect to an exchange
includes ‘‘its premises, tangible or intangible
property whether on the premises or not, 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 any right of the exchange to the use of any
property or service.’’ 15 U.S.C. 78c(a)(2).
42 See Wireless I Notice, supra note 3, at 8940
(using bracketed numbers placed by the Exchanges);
Wireless II Notice, supra note 8, at 10754–55
(same).
For a full recitation of the Exchanges’ analysis of
why the Wireless Bandwidth Connections and
Wireless Market Data Connections are not, in their
view, facilities of an exchange, see Wireless I
Notice, supra note 3, at 8939–41; Wireless II Notice,
supra note 8, at 10754–56 (same).
43 See Wireless I Notice, supra note 3, at 8940
(also stating with respect to the Wireless Bandwidth
Connections that the network does not connect to
Exchange trading and execution systems); Wireless
II Notice, supra note 8, at 10755. They add that the
portion of the Mahwah Data Center where the
Frm 00142
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initial charge plus monthly charge per connecinitial charge plus monthly charge per connecinitial charge plus monthly charge per connecinitial charge plus monthly charge per connecinitial charge plus monthly charge per connecinitial charge plus monthly charge per connecinitial charge plus monthly charge per connecinitial charge plus monthly charge per connecinitial charge plus monthly charge per 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.
of the definition of ‘‘facility’’ in Section
3(a)(2) of the Act.41
With respect to the definition of
facility, the Exchanges state that the
definition has four ‘‘prongs,’’ none of
which describes the Wireless
Connections.42 First, the Exchanges take
the position that the Wireless
Connections are not the ‘‘premises’’ of
the Exchanges, reasoning that the
network that runs between IDS’s
equipment in the Mahwah Data Center
and IDS’s equipment in Third Party
Data Centers, much of which is actually
owned, operated, and maintained by a
non-ICE entity, do not constitute
‘‘premises.’’ 43
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Sfmt 4703
Second, the Exchanges state that the
Wireless Connections are not the
‘‘property’’ of the Exchanges because
they are ‘‘services,’’ and the underlying
network is owned by ICE affiliates and
a non-ICE entity.44 Drawing further
distinctions between the Exchanges and
IDS, they also state that the Wireless
Connections are a service offered strictly
by IDS, over which the Exchanges lack
control.45
Third, the Exchanges maintain that
the Wireless Connections do not
constitute ‘‘any right to the use of such
premises or property or service thereof
for the purpose of effecting or reporting
a transaction on an exchange,’’ because
the Exchanges do not have the right to
use the Wireless Connections to effect or
report a transaction on the Exchanges.46
In support of this position, the
Exchanges note that the Wireless
Bandwidth Connections do not connect
‘‘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. See id.
44 See Wireless I Notice, supra note 3, at 8940;
Wireless II Notice, supra note 8, at 10755. The
Exchanges add that the Act does not automatically
collapse affiliates into the definition of an
‘‘exchange,’’ and something owned by an ICE
affiliate is not owned by the Exchanges. Id.
45 See Wireless I Notice, supra note 3 at 8939;
Wireless II Notice, supra note 8, at 10755. The
Exchanges state that although all ICE affiliates are
ultimately controlled by ICE (as the indirect parent
company), the Exchanges do not control IDS. See
id.
46 See id.
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directly to the Exchanges’ trading and
execution systems 47 and the Wireless
Market Data Connections are provided
without the Exchanges involvement.48
Fourth, the Exchanges state that ‘‘any
right of the exchange to the use of any
property or service’’ does not describe
the Wireless Connections because the
Exchanges do not have the right to use
the Wireless Connections.49
The Commission has received several
comment letters expressing opposition
to the Exchanges’ position that the
Wireless Bandwidth and/or Wireless
Market Data Connections are not
facilities of an exchange.50 Broadly,
47 See Wireless I Notice, supra note 3, at 8939–
41. The Exchanges urge that these connections are
not provided for ‘‘the purpose of effecting or
reporting a transaction on’’ the Exchanges, but
rather are provided to facilitate the customer’s
interaction with itself—that these connections are
essentially an ‘‘empty pipe’’ that a customer can use
to communicate between its equipment in colocation and its equipment in the Third Party Data
Center. Id. The Exchanges also state that they have
no control over these connections, and put no
content on them. Rather, customers have control
over the data that flows over these connections,
which may include the sending of trading orders to
their equipment in co-location; the relay of
Exchange market data, third party market data, and
public quote feeds; as well as risk management,
billing, compliance, or other market information. Id.
48 See Wireless II Notice, supra note 8, at 10755.
The Exchanges state that they do not know whether
or when a customer has entered into an agreement
for a Wireless Market Data Connection; have no
right to approve or disapprove of the provision of
a Wireless Market Data Connection, any more than
it would if the provider were a third party; do not
put the Selected Market Data content onto the
Wireless Market Data Connections or send it to
customers; and do not need to consent when a
customer terminates a Wireless Market Data
Connection. The Exchanges further state that it is
not possible to use a Wireless Market Data
Connection to effect a transaction on the Exchange,
because they are one-way connections away from
the Mahwah Data Center; that customers cannot use
them to send trading orders or information of any
sort to the Exchanges; and that the Exchanges do
not use them to send confirmations of trades, and
that they solely carry Selected Market Data. See id.
In addition, the Exchanges state that the statute’s
parenthetical language—‘‘(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)’’—is not an
independent prong of the facility definition, but
explains the preceding text. See Wireless I Notice,
supra note 3, at 8941; Wireless II Notice, supra note
8, at 10755.
49 See id.
50 See Letter from Tyler Gellasch, Executive
Director, Healthy Markets to Vanessa Countryman,
Secretary, Commission, dated March 9, 2020
(‘‘Healthy Markets Letter’’); Letters from Jim
Considine, Chief Financial Officer, McKay Brothers,
LLC to Vanessa Countryman, Secretary,
Commission, dated March 10, 2020 (‘‘McKay Letter
I’’); Letter from Thomas M. Merritt, Deputy General
Counsel, Virtu Financial to Vanessa Countryman,
Secretary, Commission, dated March 10, 2020
(‘‘Virtu Letter’’); Letter from Gregory Babyak, Global
Head of Regulatory Affairs, Bloomberg L.P. to
Vanessa Countryman, Secretary, Commission, dated
March 10, 2020 (‘‘Bloomberg Letter’’) (the
Bloomberg Letter addresses Wireless I specifically);
Letter from Andrew Stevens, General Counsel, IMC
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Jkt 250001
commenters express the view that the
Wireless Connections are designed to
provide market participants the fastest
means of communication into and out of
the Exchanges to facilitate more
competitive trading on the Exchanges,
and that the Exchanges’ analysis is one
of form over substance.51 More
specifically, one commenter states that
there can be ‘‘no dispute that both the
private bandwidth and market data
wireless connectivity offerings
constitute systems of communication
100% controlled and maintained by
NYSE, for its own benefit and the
benefit of its customers,’’ and are
therefore exchange facilities.52
Other commenters state that the
Wireless Connections rely on the
Exchanges’ premises and property to
effectuate systems of communication to
and from the Exchanges,53 and that they
Financial Markets to Vanessa Countryman,
Secretary, Commission, dated March 12, 2020
(‘‘IMC Letter’’); Letters from Matt Haraburda,
President, XR Securities LLC to Vanessa
Countryman, Secretary, Commission, dated March
18, 2020 (‘‘XRS Letter’’) (the XRS Letter addresses
Wireless I specifically); Letters from Jim Considine,
Chief Financial Officer, McKay Brothers, LLC to
Vanessa Countryman, Secretary, Commission, dated
March 17, 2020 (‘‘McKay Letter II’’); Letter from
Ellen Greene, Managing Director, Securities
Industry and Financial Markets Association, to
Vanessa Countryman, Secretary, Commission, dated
April 3, 2020 (‘‘SIFMA Letter’’) (the SIFMA Letter
addresses Wireless II more specifically); Letter from
Joanna Mallers, Secretary, FIA Principal Traders
Group, to Vanessa Countryman, Secretary,
Commission, dated April 27, 2020 (regarding SR–
NYSENAT–2020–03); Letter from Joanna Mallers,
Secretary, FIA Principal Traders Group, to Vanessa
Countryman, Secretary, Commission, dated May 8,
2020 (regarding Wireless I and Wireless II) (‘‘FIA
Letter’’).
51 See e.g., Virtu Letter at 4–6 (stating that the
‘‘only purpose’’ of the Wireless Connections is to
facilitate faster connections for more competitive
trading, and ‘‘[c]ustomers paying for the Wireless
Connections are clearly doing so only in order to
competitively trade on the NYSE exchanges’’). See
also Healthy Markets Letter at 8 (stating that the
Exchanges’ analysis ignores the plain meaning of
the Act); McKay Letter I at 4 (characterizing the
Exchanges’ facility analysis as superficial and
flawed); IMC Letter at 2 (stating that ‘‘the NYSE
Pole offers direct access to [the NYSE] data center
and thus its matching engine for purposes of
transmitting data or orders)’’; XRS Letter at 3
(stating that ‘‘the Wireless Connections have the
fastest means of access to the Exchange[] via the onpremises pole.’’).
52 See Virtu Letter at 5. According to this
commenter, the contention that (i) the Wireless
Bandwidth Connections are offered without the
Exchanges knowing how they are used ‘‘ignores the
reality of market connectivity,’’ and (ii) the
Exchanges’ do not have the right to use the Wireless
Market Data Connections, is ‘‘nonsensical,’’ because
the Exchanges’ have ‘‘control over the data
transmission.’’ See id. at 7.
53 See e.g., McKay Letter I at 4–7 (stating that the
Wireless Connections are facilities of the Exchanges
because they use the pole located on the premises
of the Exchanges, and also intangible property in
the form of technical specifications relating to the
Wireless Connections, available through NYSE’s
website and branded with NYSE’s trademark and
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31277
are designed for the purpose of effecting
transactions on the Exchanges.54
According to one of these commenters,
the fact that orders and market data
have to traverse a cross connect at the
Mahwah Data Center before reaching the
Exchanges’ trading execution systems is
an insufficient basis on which to
conclude the Wireless Connections are
not part of the facilities of an
exchange.55 This commenter expresses
concern that the Exchanges are
attempting to circumvent categorizing a
product or service as a facility by
moving ownership to a parent company
or an affiliate of the Exchanges.56
Another commenter urges that the
Exchanges should not be able to defeat
the operation of Exchange Act filing
requirements by ‘‘interpositioning’’ an
affiliate to provide connectivity to
customers instead of providing it
directly.57
The Exchanges submitted a response
to these comment letters.58 As an initial
matter, the Exchanges urge that treating
the Wireless Connections as ‘‘facilities
of an exchange’’ would place an undue
competitive burden on the ICE affiliates,
as they would be required to make their
services and fees public and subject to
a Commission determination for
consistency with the Act, whereas
logo). See also Bloomberg Letter at 4 (noting that
the Wireless Connections are physically located on
the property of the Mahwah Data Center); Healthy
Markets Letter at 6 (noting that the Wireless
Connections have access to the Exchanges’ physical
facility); IMC Letter at 2 (noting that the pole offers
direct access to each Exchange’s data center for
purposes of transmitting data or orders).
54 See Bloomberg Letter at 4 (‘‘[I]t is clear that this
is a system of communication to or from the
exchange for ‘effecting or reporting a transaction of
the exchange.’’’); McKay Letter I, at 6 (stating that
‘‘The Wireless [Bandwidth] Connections are also
facilities of the Exchange under the third prong of
the definition because they may be used to effect
transactions on the Exchange (and report
transactions or other market data disseminated from
the Exchange) using Exchange Property (e.g., the
NYSE Private Pole).’’); IMC Letter at 2 (citing the
McKay Letter I) (‘‘The Wireless Connections are
facilities of the Exchange, in that they use the
Exchange’s tangible and intangible property and are
used for effecting or reporting a transaction.’’). See
also SIFMA Letter at 2 (opining that the Wireless
Market Data Connections are akin to a ‘‘ticker’
system,’’ but not conceding that that these
connections do not meet other parts of the
definition of facility).
55 See McKay Letter I at 6.
56 See id. at 5 n.20.
57 See Healthy Markets Letter at 3–8. This
commenter in particular expresses concern about
Wireless Connections originating from the roof of
Mahwah Data Center, which as noted below, the
Exchanges state is not what is proposed. See infra
note 95 and accompanying text.
58 Letter from Elizabeth K. King, Chief Regulatory
Officer, ICE, General Counsel & Corporate Secretary,
NYSE, to Vanessa Countryman, Secretary,
Commission, dated May 8, 2020, responding to
comments on Wireless I and Wireless II (‘‘NYSE
Response’’).
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competitors are not subject to such
requirements.59 The Exchanges
maintain that IDS acts independently of
the Exchanges in offering the Wireless
Connections, and that it is a vendor
selling connectivity, just like other
vendors.60 In addition to reiterating the
rationale provided in the Wireless I and
Wireless II Notices, the Exchanges
further state that, contrary to
commenters’ beliefs, they do not have a
right to use the Wireless Connections to
effect or report a transaction or
otherwise, nor do they own the Mahwah
Data Center or the pole on its grounds.61
2. Proposed Wireless Fee Schedule
In support of the proposed Wireless
Fee Schedule, the Exchanges state that
the Wireless I and Wireless II proposals
are reasonable, equitable, and not
unfairly discriminatory because use of
the Wireless Connections is voluntary
and alternatives to the Wireless
Connections are available.62 Addressing
the competitive environment, the
Exchanges state that there are at least
three other vendors that offer market
participants wireless network
connections between the Mahwah Data
Center and the Secaucus and Carteret
Third Party Access Centers using
wireless equipment installed on towers
and buildings near the Mahwah Data
Center.63 With respect to the Wireless
Market Data Connections specifically,
they state that other providers offer
connectivity to Selected Market Data in
the Third Party Data Centers, and
believe 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.64 The Exchanges believe
that competing wireless connections
offered by non-ICE entities provide
connectivity at the ‘‘same or similar
speed’’ as the Wireless Connections, and
at the ‘‘same or similar cost.’’ 65 In
59 See
id. at 3.
60 See id. at 8–16.
61 See id. at 8–15. See also id. at 11 (‘‘The
definition of facility focuses on ownership and the
right to use properties and services, not corporate
relationships.’’).
62 See Wireless I Notice, supra note 3, at 8943–
44; Wireless II Notice, supra note 8, at 10757–59.
63 See Wireless I Notice, supra note 3, at 8942;
Wireless II Notice, supra note 8, at 10757. The
Exchanges acknowledge that they believe the
Wireless Bandwidth Connections between the
Mahwah Data Center and the Markham Third Party
Data Center to be the first public, commercially
available wireless connections between the two
points, creating a new connectivity option for
customers in Markham. See id.
64 See Wireless II Notice, supra note 8, at 10757.
65 See Wireless I Notice, supra note 3, at 8943;
Wireless II Notice, supra note 8, at 10757.
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addition, the Exchanges state that some
market participants have their own
proprietary wireless networks, and that
market participants may create a new
proprietary wireless connection,
connect through another market
participant, or use fiber connections
offered by the Exchanges, ICE affiliates,
other service providers, and third party
telecommunications providers.66
The Exchanges acknowledge that the
Wireless Connections traverse wireless
connections 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,
and that third party access to the pole
is restricted.67 However, the Exchanges
state that access to the pole is not
required for third parties to establish
wireless networks that can compete.68
The Exchanges discount the significance
of the location of the pole and the
restrictions on access, urging that
proximity to a data center is not the
only determinant of a wireless
network’s speed.69 The Exchanges also
assert that latency is not the only
consideration that a market participant
may have in selecting a wireless
network,70 and that fiber network
connections may sometimes be more
attractive since they are more reliable
and less susceptible to weather
conditions.71
The Exchanges state that the proposed
pricing is reasonable because the
services are voluntary, market
participants may to select the
connectivity options that best suit their
needs, and the fees reflect the benefit
received by customers in term of lower
latency over the fiber optics options.72
The Exchanges believe that the
proposals involve an equitable
allocation of fees among market
participants because such fees would
66 See
id.
Wireless I Notice, supra note 3, at 8943;
Wireless II Notice, supra note 8, at 10759. The
Exchanges state that 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. See id.
68 See id.
69 See id. According to the Exchanges, other
relevant 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. See id.
70 See id. According to the Exchanges, other
considerations may include the bandwidth of the
offered connection; amount of network uptime; the
equipment that the network uses; the cost of the
connection; and the applicable contractual
provisions. See id.
71 See Wireless I Notice, supra note 3, at 8943;
Wireless II Notice, supra note 8, at 10757.
72 See Wireless I Notice, supra note 3, at 8943–
44; Wireless II Notice, supra note 8, at 10757–58.
67 See
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apply to all market participants equally
and would not apply differently to
distinct types or sizes of market
participants.73 In addition, the services
are ‘‘completely voluntary,’’ and the
various options proposed offer market
participants additional choices that they
can select to best suit their needs.74
The Exchanges also state that, because
numerous substitute connectivity
providers are available, the proposals do
not impose an unnecessary or
inappropriate burden on competition.75
According to the Exchanges, the
proposals do not affect competition
among national securities exchanges or
between members of Exchanges, but
rather that the Exchanges’ filing of the
proposals puts IDS at a competitive
disadvantage relative to its commercial
competitors that are not subject to filing
requirements of Section 19(b) of the
Act.76
Commenters disagree, arguing that the
Exchanges have not met their burden of
demonstrating that the Wireless
Connections are consistent with the
Act.77 Broadly, commenters express
concern that the Wireless Connections
(those to the Secaucus and Carteret
Third Party Data Centers) begin and end
at an antenna on the grounds of the
Mahwah Data Center, whereas
competing services are not allowed on
the Mahwah Data Center grounds to
install wireless equipment and must
instead end their wireless connections
outside the grounds and use a wired
connection into the Mahwah Data
Center.78 According to commenters, this
difference means that the Wireless
Connections have an insurmountable
exclusive geographic latency advantage
enabling the fastest possible access to
the Exchanges that no competing service
can offer.79
One commenter observes that
‘‘conspicuously absent’’ from the
Exchanges’ description of the Wireless
Connections is that the pole on the
73 See Wireless I Notice, supra note 3, at 8944;
Wireless II Notice, supra note 8, at 10758.
74 See id.
75 See Wireless I Notice, supra note 3, at 8944–
45; Wireless II Notice, supra note 8, at 10759.
76 See id.
77 See e.g., McKay Letter I at 7–11; Bloomberg
Letter at 4–5; XRS Letter at 2–4; Healthy Markets
Letter at 8–10; IMC Letter at 2; Virtu Letter at 2–
3. One commenter states that the Exchanges provide
‘‘almost none’’ of the information needed to
establish that the Wireless Connections are
consistent with the Act. See Healthy Markets Letter
at 10.
78 See, e.g., McKay Letter I at 8; Virtu Letter at 3;
IMC Letter at 2; XRS Letter at 1–2 (all generally
questioning the basis of the disparity in access in
to the Mahwah Data Center pole).
79 See, e.g., McKay Letter I at 8–10; McKay Letter
II at 3; Bloomberg Letter at 4; IMC Letter at 2; XRS
Letter at 1–2; Virtu Letter at 8–10; FIA Letter at 3.
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Mahwah Data Center grounds is
‘‘approximately 700 feet closer to the
NYSE matching engine than the closest
public poles available to all other
wireless connectivity vendors.’’ 80 This
commenter underscores that ‘‘timely
receipt of market data is essential to
trading competitively in today’s
markets,’’ 81 and while it may not seem
like a significant distance, ‘‘the delay of
data through 700 feet of fiber is
meaningful in today’s markets.’’ 82 This
commenter objects that the Exchanges
have designed the Wireless Connections
with a geographic latency advantage,
enabling these connectivity offerings to
be the fastest means of access to the
Exchanges, and have not provided
factual details sufficient to demonstrate
why this advantage is not unfairly
discriminatory and an inappropriate
burden on competition.83 Another
commenter agrees that a 700 foot
difference is material, and states that
without details regarding (among other
things) the magnitude of the latency
advantage, its availability, and its
impact on participants who are unable
to avail themselves of the Wireless
Connections, the Commission and the
public will be unable to reasonably
determine whether the proposed rule
changes do not unfairly discriminate
against market participants or unduly
burden competition.84 An additional
commenter states that the contention
that there is competition for exchange
connectivity, and that other providers
can offer the same or similar access and
latency is ‘‘simply false.’’ 85 Some
commenters express concern that the
latency advantage that is unavailable to
competing providers unfairly
discriminates against market
80 See McKay Letter I at 8–11 (also noting that its
distance estimate is a good-faith, educated guess,
but that additional transparency on the matter is
needed). This commenter also states that
distribution of Selected Market Data via the
Wireless Market Data Connections is discriminatory
because it is distributed in a different manner than
Selected Market Data obtained otherwise than via
the Wireless Connections. See McKay Letter II at 2–
3.
81 Id. at 3.
82 See McKay Letter I at 8.
83 See McKay Letter I at 2, 8–12; McKay Letter II
at 2–3.
84 See IMC Letter at 2. This commenter states, ‘‘In
a market where equidistant cabling is required for
connections between a participant’s co-located
customer equipment to the Exchange’s matching
engine, NYSE’s suggestion that the 700 foot
difference between the NYSE Pole and others
outside the their premises is immaterial is
ludicrous.’’ Id.
85 See Virtu Letter at 9. This commenter also
contrasts exclusive access to the private pole with
the Exchanges’ offering third-party firms the option
to co-locate on their premises through other means.
See id. at 2.
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participants that do not choose to use
the Wireless Connections.86
Commenters also address the
proposed fees. One commenter states
that IDS’s exclusive geographic latency
advantage establishes a monopoly
service that enables it to charge
‘‘exorbitant fees.’’ 87 Another commenter
states that given the exclusivity of the
service, it would be difficult for the
Exchanges to demonstrate how the
proposed fees are fair and reasonable
without providing an in-depth
assessment of the costs of the service,
and ‘‘more difficult’’ to justify how the
fees are not unfairly discriminatory.88
One commenter states that some market
participants would be forced to
purchase the fastest connectivity
services to meet regulatory obligations,
without regard to the price of such
services.89
In the NYSE Response, the Exchanges
maintain that the Wireless Connections
are subject to competition, and state that
the subject services are not new and
have been provided since 2016.90 In
their view, the fact that competition has
continued to proliferate over the
intervening years demonstrates that use
of the pole on the Mahwah Data Center
grounds is not required for third parties
to compete with the Wireless
Connections.91 Moreover, they assert
that market participants have for years
had a choice about what wireless
services to use, ‘‘and often choose not to
use IDS.’’ 92 The Exchanges state that
disapproval of the proposals would
result in less competition by reducing
the availability of wireless connections
between Mahwah and Secaucus or
Carteret, because service would be
available from only the two remaining
commercial providers or would require
customers to purchase space on a
proprietary data network, if available.93
For those customers seeking
connections to Markham, Canada, the
Exchanges believe that disapproval
would mean that customers would be
86 See FIA Letter at 2; McKay Letter I at 11; XRS
Letter at 2–3.
87 See Virtu Letter at 2.
88 See Bloomberg Letter at 5 (adding that the
‘‘little to no attempt’’ is made to discuss the
implications of the exclusive privilege afforded to
IDS to operate the Wireless Connections that are on
the Mahwah Data Center property).
89 See SIFMA Letter at 2–3 (addressing the
Wireless Market Data Connections specifically, and
stating that broker-dealers with best execution
obligation may, for regulatory and competitive
reasons, feel they must purchase the fastest
connectivity services to remain in business).
90 See NYSE Response at 6.
91 See id.
92 Id.
93 See id. at 2.
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left with no wireless connectivity
services.94
In response to comments that the
Wireless Connections are offered on
terms that are unfairly discriminatory
because the Exchanges possess an
exclusive geographic latency advantage
that competitors cannot overcome, the
Exchanges state that although having
the pole 700 feet closer to the facility is
a ‘‘positive factor for latency,’’ it is just
one in a list of factors that determine the
network’s latency levels.95 The
Exchanges also defend IDS’s choice to
limit access to the Mahwah Data Center
pole, noting that it is smaller than
commercial poles and that space
limitations, security concerns, and
interference are practical factors that are
a ‘‘real concern.’’ 96 They also state that
IDS does not believe that its wireless
network offers the fastest commercial
option, and that market participants
have chosen not to use it.97
In response to comments that they
should provide additional information
regarding the geographic latency
advantage, the Exchanges characterize
these requests as ‘‘disingenuous’’
because IDS cannot describe the
magnitude of a geographic latency
advantage it does not believe it has, and
it is not privy to its competitors’ latency
information.98
III. Proceedings To Determine Whether
To Approve or Disapprove the
Proposed Rule Changes
The Commission is instituting
proceedings pursuant to Section
19(b)(2)(B) of the Act to determine
whether the Exchanges’ proposed rule
changes should be approved or
disapproved.99 Institution of
proceedings does not indicate that the
Commission has reached any
conclusions with respect to any of the
issues involved. Rather, the Commission
seeks and encourages interested persons
to provide additional comment on the
proposed rule changes (Wireless I and
Wireless II) to inform the Commission’s
analysis of whether to approve or
disapprove the proposed rule changes.
94 See
id.
id. at 6. The Exchanges note that contrary
to the suggestion of several commenters, the
Wireless Connections do not use the Mahwah Data
Center roof, nor does IDS expect to put any
equipment on the roof for any services it offers or
allow others to do so. See id. at 5.
96 See id. at 7.
97 See id. at 5, 13. The Exchanges represent that
there are 11 current customers with Wireless
Bandwidth Connections and 11 current customers
with Wireless Market Data Connections. See id. at
2.
98 See id. at 17, 18–19.
99 15 U.S.C. 78s(b)(2)(B).
95 See
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Pursuant to Section 19(b)(2)(B) of the
Act,100 the Commission is providing
notice of the grounds for possible
disapproval under consideration:
• Whether the Exchanges have
demonstrated how the proposals are
consistent with Section 6(b)(4) of the
Act, which requires that the rules of a
national securities exchange ‘‘provide
for the equitable allocation of reasonable
dues, fees, and other charges among its
members and issuers and other persons
using its facilities;’’ 101
• Whether the Exchanges have
demonstrated how the proposals are
consistent with Section 6(b)(5) of the
Act, which requires, among other
things, that the rules of a national
securities exchange be ‘‘designed to
perfect the operation of a free and open
market and a national market system’’
and ‘‘protect investors and the public
interest,’’ and not be ‘‘designed to
permit unfair discrimination between
customers, issuers, brokers, or
dealers;’’ 102 and
• Whether the Exchanges have
demonstrated how the proposals are
consistent with Section 6(b)(8) of the
Act, which requires that the rules of a
national securities exchange ‘‘not
impose any burden on competition not
necessary or appropriate in furtherance
of the purposes of [the Act].’’ 103
As discussed in Section II above, the
Exchanges made various arguments in
support of the Wireless I and Wireless
II proposals and the Commission
received comment letters that expressed
concerns regarding the proposals,
including that the Exchanges did not
provide sufficient information to
establish that the proposals are
consistent with the Act and the rules
thereunder.
Under the Commission’s Rules of
Practice, the ‘‘burden to demonstrate
that a proposed rule change is
consistent with the Exchange Act and
the rules and regulations issued
thereunder . . . is on the self-regulatory
organization [‘SRO’] that proposed the
rule change.’’ 104 The description of a
proposed rule change, its purpose and
operation, its effect, and a legal analysis
100 Id. Section 19(b)(2)(B) of the Act also provides
that proceedings to determine whether to
disapprove a proposed rule change must be
concluded within 180 days of the date of
publication of notice of the filing of the proposed
rule change. See id. The time for conclusion of the
proceedings may be extended for up to 60 days if
the Commission finds good cause for such
extension and publishes its reasons for so finding,
or if the exchange consents to the longer period. See
id.
101 15 U.S.C. 78f(b)(4).
102 15 U.S.C. 78f(b)(5).
103 15 U.S.C. 78f(b)(8).
104 17 CFR 201.700(b)(3).
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18:07 May 21, 2020
Jkt 250001
of its consistency with applicable
requirements must all be sufficiently
detailed and specific to support an
affirmative Commission finding.105 Any
failure of an SRO to provide this
information may result in the
Commission not having a sufficient
basis to make an affirmative finding that
a proposed rule change is consistent
with the Act and the applicable rules
and regulations.106
The Commission is instituting
proceedings to allow for additional
consideration and comment on the
issues raised herein, including as to
whether the proposals are consistent
with the Act, specifically, with its
requirements that the rules of a national
securities exchange provide for the
equitable allocation of reasonable dues,
fees, and other charges among its
members, issuers, and other persons
using its facilities; are designed to
perfect the operation of a free and open
market and a national market system,
and to protect investors and the public
interest; are not designed to permit
unfair discrimination between
customers, issuers, brokers, or dealers;
and do not impose any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act; 107 as well as any
other provision of the Act, or the rules
and regulations thereunder.
IV. Commission’s Solicitation of
Comments
The Commission requests written
views, data, and arguments with respect
to the concerns identified above as well
as any other relevant concerns. Such
comments should be submitted by June
12, 2020. Rebuttal comments should be
submitted by June 26, 2020. Although
there do not appear to be any issues
relevant to approval or disapproval that
would be facilitated by an oral
presentation of views, data, and
arguments, the Commission will
consider, pursuant to Rule 19b–4, any
request for an opportunity to make an
oral presentation.108
The Commission asks that
commenters address the sufficiency and
merit of the Exchanges’ statements in
support of the proposal, in addition to
105 See
id.
id.
107 See 15 U.S.C. 78f(b)(4), (5), and (8).
108 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act
grants the Commission flexibility to determine what
type of proceeding—either oral or notice and
opportunity for written comments—is appropriate
for consideration of a particular proposal by an
SRO. See Securities Acts Amendments of 1975,
Report of the Senate Committee on Banking,
Housing and Urban Affairs to Accompany S. 249,
S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975).
106 See
PO 00000
Frm 00146
Fmt 4703
Sfmt 4703
any other comments they may wish to
submit about the proposed rule change.
Interested persons are invited to
submit written data, views, and
arguments concerning the proposed rule
changes, including whether the Wireless
I and Wireless II proposals are
consistent with the Act. Comments may
be submitted by any of the following
methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Nos. SR–
NYSE–2020–05, SR–NYSEAMER–2020–
05, SR–NYSEArca–2020–08, SR–
NYSECHX–2020–02, SR–NYSENAT–
2020–03, SR–NYSE–2020–11, SR–
NYSEAMER–2020–10, SR–NYSEArca–
2020–15, SR–NYSECHX–2020–05, SR–
NYSENAT–2020–08 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
Nos. SR–NYSE–2020–05, SR–
NYSEAMER–2020–05, SR–NYSEArca–
2020–08, SR–NYSECHX–2020–02, SR–
NYSENAT–2020–03, SR–NYSE–2020–
11, SR–NYSEAMER–2020–10, SR–
NYSEArca–2020–15, SR–NYSECHX–
2020–05, and SR–NYSENAT–2020–08.
The file numbers 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 such
filing also will be available for
inspection and copying at the principal
office of the Exchanges. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
E:\FR\FM\22MYN1.SGM
22MYN1
Federal Register / Vol. 85, No. 100 / Friday, May 22, 2020 / Notices
personal identifying information from
comment submissions. You should
submit only information that you wish
to make publicly available. All
submissions should refer to File Nos.
SR–NYSE–2020–05, SR–NYSEAMER–
2020–05, SR–NYSEArca–2020–08, SR–
NYSECHX–2020–02, SR–NYSENAT–
2020–03, SR–NYSE–2020–11, SR–
NYSEAMER–2020–10, SR–NYSEArca–
2020–15, SR–NYSECHX–2020–05, and
SR–NYSENAT–2020–08 and should be
submitted on or before June 12, 2020.
Rebuttal comments should be submitted
by June 26, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.109
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–11045 Filed 5–21–20; 8:45 am]
BILLING CODE 8011–01–P
DEPARTMENT OF TRANSPORTATION
Federal Railroad Administration
[Docket No. FRA–2020–0027–N–10]
Proposed Agency Information
Collection Activities; Comment
Request
Federal Railroad
Administration (FRA), U.S. Department
of Transportation (DOT).
ACTION: Notice of information collection;
request for comment.
AGENCY:
Under the Paperwork
Reduction Act of 1995 (PRA) and its
implementing regulations, this notice
announces that FRA is forwarding the
Information Collection Requests (ICRs)
abstracted below to the Office of
Management and Budget (OMB) for
review and comment. These ICRs
describe the information collections and
their expected burdens. On March 16,
2020, FRA published a notice providing
a 60-day period for public comment on
the ICRs.
DATES: Interested persons are invited to
submit comments on or before June 22,
2020.
ADDRESSES: Written comments and
recommendations for the proposed ICRs
should be sent within 30 days of
publication of this notice to
www.reginfo.gov/public/do/PRAMain.
Find the particular ICR by selecting
‘‘Currently under 30-day Review—Open
for Public Comments’’ or by using the
search function.
FOR FURTHER INFORMATION CONTACT: Ms.
Hodan Wells, Information Collection
SUMMARY:
109 17
CFR 200.30–3(a)(57).
VerDate Sep<11>2014
18:07 May 21, 2020
Jkt 250001
Clearance Officer, Office of Railroad
Safety, Regulatory Analysis Division,
Federal Railroad Administration, 1200
New Jersey Avenue SE, Washington, DC
20590.
SUPPLEMENTARY INFORMATION: The PRA,
44 U.S.C. 3501–3520, and its
implementing regulations, 5 CFR part
1320, require Federal agencies to issue
two notices seeking public comment on
information collection activities before
OMB may approve paperwork packages.
See 44 U.S.C. 3506, 3507; 5 CFR 1320.8
through 1320.12. On March 16, 2020,
FRA published a 60-day notice in the
Federal Register soliciting comment on
the ICRs for which it is now seeking
OMB approval. See 85 FR 15020. FRA
received no comments in response to
this notice.
Before OMB decides whether to
approve these proposed collections of
information, it must provide 30 days for
public comment. Federal law requires
OMB to approve or disapprove
paperwork packages between 30 and 60
days after the 30-day notice is
published. 44 U.S.C. 3507(b)–(c); 5 CFR
1320.12(d); see also 60 FR 44978, 44983,
Aug. 29, 1995. OMB believes the 30-day
notice informs the regulated community
to file relevant comments and affords
the agency adequate time to digest
public comments before it renders a
decision. 60 FR 44983, Aug. 29, 1995.
Therefore, respondents should submit
their respective comments to OMB
within 30 days of publication to best
ensure having their full effect.
Comments are invited on the
following ICRs regarding: (1) Whether
the information collection activities are
necessary for FRA to properly execute
its functions, including whether the
information will have practical utility;
(2) the accuracy of FRA’s estimates of
the burden of the information collection
activities, including the validity of the
methodology and assumptions used to
determine the estimates; (3) ways for
FRA to enhance the quality, utility, and
clarity of the information being
collected; and (4) ways to minimize the
burden of information collection
activities on the public, including the
use of automated collection techniques
or other forms of information
technology.
The summaries below describe the
ICRs that FRA will submit for OMB
clearance as the PRA requires:
Title: Railroad Communications.
OMB Control Number: 2130–0524.
Abstract: This collection of
information is used by FRA to promote
safety in rail operations and to ensure
compliance by railroads and their
employees with all the requirements set
PO 00000
Frm 00147
Fmt 4703
Sfmt 4703
31281
forth in 49 CFR part 220. FRA amended
its radio standards and procedures to
promote compliance by making the
regulations more flexible; require
wireless communications devices,
including radios, for specified
classifications of railroad operations and
roadway workers; and retitle this part to
reflect its coverage of other means of
wireless communications, such as
cellular telephones and data radio
terminals, to convey emergency and
need-to-know information. The
amended rule established safe, uniform
procedures covering the use of radio
and other wireless communications
within the railroad industry.
Type of Request: Extension with
change (revised estimates) of a currently
approved collection.
Affected Public: Businesses.
Form(s): N/A.
Respondent Universe: 746 railroads.
Frequency of Submission: On
occasion.
Total Estimated Annual Responses:
4,119,004.
Total Estimated Annual Burden:
95,902 hours.
Total Estimated Annual Burden Hour
Dollar Cost Equivalent: $7,288,552.
Title: Passenger Train Emergency
Systems.
OMB Control Number: 2130–0576.
Abstract: This information collection
is due to passenger train emergency
systems regulations under 49 CFR part
238. The purpose of this part is to
prevent collisions, derailments, and
other occurrences involving railroad
passenger equipment that cause injury
or death to railroad employees, railroad
passengers, or the general public, and to
mitigate the consequences of such
occurrences to the extent they cannot be
prevented.
In its final rule issued on November
29, 2013 (see 78 FR 71785), FRA added
requirements for emergency passage
through vestibule and other interior
passageway doors and enhanced
emergency egress and rescue signage
requirements. FRA also established
requirements for low-location
emergency exit path markings to assist
occupants in reaching and operating
emergency exits, particularly under
conditions of limited visibility.
Moreover, FRA added standards to
ensure emergency lighting systems are
provided in all passenger cars and
enhanced requirements for the
survivability of emergency lighting
systems in new passenger cars.
Type of Request: Extension with
change (revised estimates) of a currently
approved collection.
Affected Public: Businesses
(railroads).
E:\FR\FM\22MYN1.SGM
22MYN1
]]>Agencies
[Federal Register Volume 85, Number 100 (Friday, May 22, 2020)]
[Notices]
[Pages 31273-31281]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-11045]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88901; File Nos. SR-NYSE-2020-05, SR-NYSEAMER-2020-05,
SR-NYSEArca-2020-08, SR-NYSECHX-2020-02, SR-NYSENAT-2020-03, SR-NYSE-
2020-11, SR-NYSEAMER-2020-10, SR-NYSEArca-2020-15, SR-NYSECHX-2020-05,
SR-NYSENAT-2020-08]
Self-Regulatory Organizations; New York Stock Exchange LLC, NYSE
American LLC, NYSE Arca, Inc., NYSE Chicago, Inc., and NYSE National,
Inc.; Order Instituting Proceedings To Determine Whether To Approve or
Disapprove Proposed Rule Changes To Establish a Wireless Fee Schedule
Setting Forth Available Wireless Bandwidth Connections and Wireless
Market Data Connections and Associated Fees
May 18, 2020.
I. Introduction
On January 30, 2020, New York Stock Exchange LLC (``NYSE''), NYSE
American LLC (``NYSE American''), NYSE Arca, Inc. (``NYSE Arca''), NYSE
Chicago, Inc. (``NYSE Chicago''), and NYSE National, Inc. (``NYSE
National'') (collectively, the ``Exchanges'') each filed with the
Securities and Exchange Commission (``Commission''), pursuant to
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Exchange
Act'' or ``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule
change to establish a schedule of Wireless Connectivity Fees and
Charges (``Wireless Fee Schedule'') listing available wireless
connections between the Mahwah, New Jersey data center (``Mahwah Data
Center'') and other data centers. The proposed rule changes
(collectively, ``Wireless I'') were published for comment in the
Federal Register on February 18, 2020.\3\ On April 1, 2020, pursuant to
Section 19(b)(2) of the Act,\4\ the Commission designated a longer
period within which to either approve the Wireless I proposed rule
changes, disapprove the proposed rule changes, or institute
[[Page 31274]]
proceedings to determine whether to disapprove the proposed rule
changes.\5\
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release Nos. 88168 (February 11,
2020), 85 FR 8938 (February 18, 2020) (SR-NYSE-2020-05) (``Wireless
I Notice''); 88169 (February 11, 2020), 85 FR 8946 (February 18,
2020) (SR-NYSEAMER-2020-05); 88170 (February 11, 2020), 85 FR 8956
(February 18, 2020) (SR-NYSEArca-2020-08); 88172 (February 11,
2020), 85 FR 8923 (February 18, 2020) (SR-NYSECHX-2020-02); and
88171 (February 11, 2020), 85 FR 8930 (February 18, 2020) (SR-
NYSENAT-2020-03) (collectively, the ``Wireless I Notices'').
Comments received on the Wireless I Notices are available on the
Commission's website at: https://www.sec.gov/comments/sr-nyse-2020-05/srnyse202005.htm.
\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 88539 (April 1,
2020), 85 FR 19553 (April 7, 2020). The Commission designated May
18, 2020, as the date by which it should approve, disapprove, or
institute proceedings to determine whether to disapprove the
proposed rule changes.
---------------------------------------------------------------------------
On February 11, 2020, NYSE, NYSE Arca, NYSE Chicago, and NYSE
National each filed with the Commission, pursuant to Section 19(b)(1)
of the Act \6\ and Rule 19b-4 thereunder,\7\ a proposed rule change to
amend the Wireless Fee Schedule to add wireless connections for the
transport of certain market data of the Exchanges. NYSE American filed
with the Commission a substantively identical filing on February 12,
2020. The proposed rule changes (collectively, ``Wireless II'') were
published for comment in the Federal Register on February 25, 2020.\8\
On April 1, 2020, pursuant to Section 19(b)(2) of the Act,\9\ the
Commission designated a longer period within which to either approve
the Wireless II proposed rule changes, disapprove the proposed rule
changes, or institute proceedings to determine whether to disapprove
the proposed rule changes.\10\
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78s(b)(1).
\7\ 17 CFR 240.19b-4.
\8\ See Securities Exchange Act Release Nos. 88237 (February 19,
2020), 85 FR 10752 (February 25, 2020) (SR-NYSE-2020-11) (``Wireless
II Notice''); 88238 (February 19, 2020), 85 FR 10776 (February 25,
2020) (SR-NYSEAMER-2020-10); 88239 (February 19, 2020), 85 FR 10786
(February 25, 2020) (SR-NYSEArca-2020-15); 88240 (February 19,
2020), 85 FR 10795 (February 25, 2020) (SR-NYSECHX-2020-05); and
88241 (February 19, 2020), 85 FR 10738 (February 25, 2020) (SR-
NYSENAT-2020-08) (collectively, the ``Wireless II Notices'').
Comments received on the Wireless II Notices are available on the
Commission's website at: https://www.sec.gov/comments/sr-nyse-2020-11/srnyse202011.htm.
\9\ 15 U.S.C. 78s(b)(2).
\10\ See Securities Exchange Act Release No. 88540 (April 1,
2020), 85 FR 19562 (April 7, 2020). The Commission designated May
25, 2020, as the date by which it should approve, disapprove, or
institute proceedings to determine whether to disapprove the
proposed rule changes.
---------------------------------------------------------------------------
This order institutes proceedings under Section 19(b)(2)(B) of the
Exchange Act \11\ to determine whether to approve or disapprove the
Wireless I and Wireless II proposed rule changes.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
II. Description of the Proposed Rule Changes
A. Wireless I
In Wireless I, the Exchanges propose to establish the Wireless Fee
Schedule, setting forth options for market participants to establish
wireless connections for specified fees between the Mahwah Data Center
and three data centers that are owned and operated by third parties
unaffiliated with the Exchanges: (1) Carteret, New Jersey; (2)
Secaucus, New Jersey; and (3) Markham, Canada (collectively, the
``Third Party Data Centers'').\12\ As more fully set forth in the
Wireless I Notices, the Exchanges state that a market participant
opting to establish a wireless connection between the Mahwah Data
Center and a Third Party Data Center may do so by requesting one from
ICE Data Services (``IDS'').\13\ The Exchanges state that IDS operates
through several different Intercontinental Exchange, Inc. (``ICE'')
affiliates, including NYSE Technologies Connectivity, Inc., an indirect
subsidiary of NYSE.\14\
---------------------------------------------------------------------------
\12\ See Wireless I Notice, supra note 3, at 8938.
\13\ See id. at 8939.
\14\ See id. at 8939 n.11. The Exchanges themselves are indirect
subsidiaries of ICE. See id. at 8939.
---------------------------------------------------------------------------
According to the Exchanges, once requested, IDS establishes the
wireless connection (herein a ``Wireless Bandwidth Connection'')
between IDS's equipment in the Third Party Data Center and IDS's
equipment in the Mahwah Data Center.\15\ IDS uses its own wireless
network between the Markham Third Party Data Center and the Mahwah Data
Center.\16\ IDS contracts with a non-ICE entity to provide Wireless
Bandwidth Connections between the Secaucus and Carteret Third Party
Data Centers and the Mahwah Data Center through a series of towers
equipped with wireless equipment.\17\ With respect to connections
between the Secaucus and Carteret Third Party Data Centers and the
Mahwah Data Center, these towers include a pole on the grounds of the
Mahwah Data Center property, to which access is restricted.\18\ At each
end of the Wireless Bandwidth Connection, the customer uses a cross
connect or other cable to connect its own equipment to the IDS
equipment.\19\ Cross connects in the Mahwah Data Center lead to the
customer's server in co-location.\20\
---------------------------------------------------------------------------
\15\ See id. See also infra note 47 and accompanying text
(further summarizing how the Exchanges describe the function and
purpose of these connections).
\16\ See id. at 8939.
\17\ See id. at 8939.
\18\ See id. at 8943.
\19\ See id.
\20\ See id. Proposed rule changes regarding such cross connects
in the Mahwah Data Center are filed with the Commission. See id. at
8939 n.12 (citing Securities Exchange Act Release No. 67666 (August
15, 2012), 77 FR 50742 (August 22, 2012) (SR-NYSE-2012-18)).
---------------------------------------------------------------------------
As discussed further below,\21\ the Exchanges take the position
that the Wireless Bandwidth Connections are not ``facilities of an
exchange'' within the meaning of Section 3(a)(1) of the Act (defining
``exchange'') and Section 3(a)(2) of the Act (defining
``facility'').\22\ The Exchanges thus take the position that the
proposed Wireless Fee Schedule is not required to be filed with the
Commission, and not subject to review for determination of consistency
with Act standards.\23\ The Exchanges seek approval of the Wireless Fee
Schedule, however, stating that they have filed the current proposals
``solely because the Staff of the Commission'' has advised that filing
is required.\24\
---------------------------------------------------------------------------
\21\ See Section II.C.1. infra.
\22\ See Wireless I Notice, supra note 3, at 8939-41.
\23\ See id. at 8938-39.
\24\ See id. at 8939.
---------------------------------------------------------------------------
Proposed Wireless Fee Schedule (Wireless I)
The Exchanges propose that IDS would assess a non-recurring initial
charge and a monthly recurring charge (``MRC'') for the Wireless
Bandwidth Connections, with variations depending upon bandwidth size
and the location of the connection. The proposed schedule set forth by
the Exchanges is as follows: \25\
---------------------------------------------------------------------------
\25\ See id. at 8941-42.
------------------------------------------------------------------------
Type of service Description Amount of charge
------------------------------------------------------------------------
Wireless Connection between 10 Mb Circuit.... $10,000 per
Mahwah Data Center and connection initial
Secaucus access center. charge plus monthly
charge per
connection of
$9,000.
Wireless Connection between 50 Mb Circuit.... $10,000 per
Mahwah Data Center and connection initial
Secaucus access center. charge plus monthly
charge per
connection of
$13,500.
Wireless Connection between 100 Mb Circuit... $10,000 per
Mahwah Data Center and connection initial
Secaucus access center. charge plus monthly
charge per
connection of
$23,000.
Wireless Connection between 200 Mb Circuit... $10,000 per
Mahwah Data Center and connection initial
Secaucus access center. charge plus monthly
charge per
connection of
$44,000.
Wireless Connection between 10 Mb Circuit.... $10,000 per
Mahwah Data Center and connection initial
Carteret access center. charge plus monthly
charge per
connection of
$10,000.
[[Page 31275]]
Wireless Connection between 50 Mb Circuit.... $10,000 per
Mahwah Data Center and connection initial
Carteret access center. charge plus monthly
charge per
connection of
$15,000.
Wireless Connection between 100 Mb Circuit... $10,000 per
Mahwah Data Center and connection initial
Carteret access center. charge plus monthly
charge per
connection of
$25,000.
Wireless Connection between 200 Mb Circuit... $10,000 per
Mahwah Data Center and connection initial
Carteret access center. charge plus monthly
charge per
connection of
$45,000.
Wireless Connections between 50 Mb Circuits... $15,000 initial
(a) Mahwah Data Center and charge for both
Carteret access center and connections plus
(b) Mahwah Data Center and monthly charge for
Secaucus Data Center. both connections of
$22,000.
Wireless Connection between 1 Mb Circuit..... $10,000 per
Mahwah Data Center and connection initial
Markham access center. charge plus monthly
charge per
connection of
$6,000.
Wireless Connection between 5 Mb Circuit..... $10,000 per
Mahwah Data Center and connection initial
Markham access center. charge plus monthly
charge per
connection of
$15,500.
Wireless Connection between 10 Mb Circuit.... $10,000 per
Mahwah Data Center and connection initial
Markham access center. charge plus monthly
charge per
connection of
$23,000.
------------------------------------------------------------------------
As an incentive, the first month's MRC would be waived.\26\ In
addition, the Exchanges propose to include a General Note on the
Wireless Fee Schedule, stating that a market participant that obtains a
Wireless Bandwidth Connection will not be charged more than once for
that service, irrespective of whether it is a member of one, some or
none of the Exchanges.\27\
---------------------------------------------------------------------------
\26\ See id. at 8942. If a customer had an existing Wireless
Bandwidth Connection and opted to upgrade or downgrade to a
different size circuit connecting to the same Third Party Access
Center, it would not be subject to the initial charge. See id.
\27\ The proposed General Note would be consistent with the
first general note in the co-location section of each Exchange's
price list and fee schedule. See id. at 8942 (citing Securities
Exchange Act Release Nos. 70206 (August 15, 2013), 78 FR 51765
(August 21, 2013) (SR-NYSE-2013-59); 70176 (August 13, 2013), 78 FR
50471 (August 19, 2013) (SR-NYSEMKT-2013-67); 70173 (August 13,
2013), 78 FR 50459 (August 19, 2013) (SR-NYSEArca-2013-80); 83351
(May 31, 2018), 83 FR 26314 (June 6, 2018) (SR-NYSENAT-2018-07; and
87408 (October 28, 2019), 84 FR 58778 (November 1, 2019) (SR-
NYSECHX-2019-12)). The Exchanges also note that similar language
appears in the Nasdaq Stock Market rules. See id. (citing The Nasdaq
Stock Market General Equity and Options Rules, General 8, Section
1).
---------------------------------------------------------------------------
B. Wireless II
In Wireless II, the Exchanges propose to include additional
connectivity options on the Wireless Fee Schedule for specified fees;
namely, wireless connections for the transport of certain market data
feeds (``Wireless Market Data Connections'') from the Mahwah Data
Center to Third Party Data Centers.\28\ The market data feeds available
via the Wireless Market Data Connections (the ``Selected Market Data'')
are certain proprietary market data feeds offered by NYSE, NYSE Arca,
and/or NYSE National.\29\
---------------------------------------------------------------------------
\28\ See Wireless II Notice, supra note 8, at 10753.
\29\ The Exchanges state that the Selected Market Data is
generated at the Mahwah Data Center in the trading and execution
systems of NYSE, NYSE Arca and NYSE National. See id. In each case,
NYSE, NYSE Arca, or NYSE National, as applicable, files with the
Commission for the Selected Market Data it generates, and the
related fees. See id. The filed market data fees apply to all
Selected Market Data customers no matter what connectivity provider
they use. See id. at 10754.
---------------------------------------------------------------------------
As more fully set forth in the Wireless II Notices, the Exchanges
explain that a market participant seeking connectivity to a Selected
Market Data feed chooses a connectivity provider.\30\ In the case of
the proposed Wireless Market Data Connections, market participants
would be choosing IDS as wireless connectivity provider.\31\ Upon
selection, IDS would first need to obtain authorization from the
provider of the relevant Selected Market Data feed.\32\ Then, IDS would
set up the Wireless Market Data Connection for the market participant
by collecting the Selected Market Data and sending it over the Wireless
Market Data Connection to the IDS access center in the Third Party Data
Center, where the customer would then connect to the Selected Market
Data at the Third Party Data Center.\33\
---------------------------------------------------------------------------
\30\ See id.
\31\ See id. at 10754 n.17. See also infra note 48 and
accompanying text (further summarizing how the Exchanges describe
the function and purpose of these connections).
\32\ See id. at 10754. 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 online tool as all data
vendors. See id. at 10754 n.15.
\33\ See id. at 10754. 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. See id. at 10754 n.16.
---------------------------------------------------------------------------
As discussed further below,\34\ the Exchanges maintain that the
Wireless Market Data Connections are not ``facilities of an exchange''
within the meaning of Section 3(a)(1) of the Act (defining
``exchange'') and Section 3(a)(2) of the Act (defining the term
``facility'').\35\ They thus take the position that the proposed
Wireless Fee Schedule itemizing the available Wireless Market Data
Connections and associated fees are not proposed rules of an exchange,
are not required to be filed with the Commission, and are not subject
to review for determination of consistency with Act standards.\36\ The
Exchanges seek approval of the addition of Wireless Market Data
Connections to the Wireless Fee Schedule, however, stating that they
have filed the current proposals ``solely because the Staff of the
Commission'' has advised that filing is required.\37\
---------------------------------------------------------------------------
\34\ See Section II.C.1. infra.
\35\ See Wireless II Notice, supra note 8, at 10754-56.
\36\ See id. at 10753.
\37\ See id.
---------------------------------------------------------------------------
Proposed Additions to the Wireless Fee Schedule (Wireless II)
The Exchanges propose that IDS would assess a non-recurring initial
charge and MRC for the Wireless Market Data Connections, with the
variations depending upon the type of fees and location of the
connection, set forth by the Exchanges as follows: \38\
---------------------------------------------------------------------------
\38\ See id. at 10756. The Exchanges note that the customer is
charged by IDS an initial and monthly fee for the Wireless Market
Data Connection (whereas the applicable Exchange bills 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). See id. at
10754.
The Exchanges further explain that 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 Exchanges do not have visibility into which
portion of the data feed a given customer receives. See id. at
10756.
[[Page 31276]]
------------------------------------------------------------------------
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.
------------------------------------------------------------------------
C. Exchanges' Justification and Comments Received
1. Facilities of an Exchange
As noted above, the Exchanges take the position that the Wireless
Fee Schedule is not a proposed rule change required to be filed with
the Commission because the Wireless Bandwidth Connections and Wireless
Market Data Connections (collectively, ``Wireless Connections'') are
not ``facilities of an exchange.'' \39\ In sum, they urge that the
Wireless Connections are not facilities of an exchange because they are
services that are not offered by the Exchanges, nor are they offered by
a group of persons constituting an exchange (within the definition of
``exchange'' in Section 3(a)(1) of the Act),\40\ and further, that the
Wireless Connections are not within the meaning of the definition of
``facility'' in Section 3(a)(2) of the Act.\41\
---------------------------------------------------------------------------
\39\ See Wireless I Notice, supra note 3, at 8938-39; Wireless
II Notice, supra note 8, at 10753.
\40\ Exchange Act Section 3(a)(1) defines the term ``exchange''
as: ``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.'' 15 U.S.C. 78c(a)(1). According to the Exchanges, the ICE
affiliates are not an exchange, or part of the Exchange(s) because
they do not provide a marketplace for bringing together purchasers
and sellers. See Wireless I Notice, supra note 3, at 8940; Wireless
II Notice, supra note 8, at 10754.
\41\ Under Exchange Act Section 3(a)(2): ``The term `facility'
when used with respect to an exchange includes ``its premises,
tangible or intangible property whether on the premises or not, 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 any right of the exchange to
the use of any property or service.'' 15 U.S.C. 78c(a)(2).
---------------------------------------------------------------------------
With respect to the definition of facility, the Exchanges state
that the definition has four ``prongs,'' none of which describes the
Wireless Connections.\42\ First, the Exchanges take the position that
the Wireless Connections are not the ``premises'' of the Exchanges,
reasoning that the network that runs between IDS's equipment in the
Mahwah Data Center and IDS's equipment in Third Party Data Centers,
much of which is actually owned, operated, and maintained by a non-ICE
entity, do not constitute ``premises.'' \43\
---------------------------------------------------------------------------
\42\ See Wireless I Notice, supra note 3, at 8940 (using
bracketed numbers placed by the Exchanges); Wireless II Notice,
supra note 8, at 10754-55 (same).
For a full recitation of the Exchanges' analysis of why the
Wireless Bandwidth Connections and Wireless Market Data Connections
are not, in their view, facilities of an exchange, see Wireless I
Notice, supra note 3, at 8939-41; Wireless II Notice, supra note 8,
at 10754-56 (same).
\43\ See Wireless I Notice, supra note 3, at 8940 (also stating
with respect to the Wireless Bandwidth Connections that the network
does not connect to Exchange trading and execution systems);
Wireless II Notice, supra note 8, at 10755. They add that 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. See id.
---------------------------------------------------------------------------
Second, the Exchanges state that the Wireless Connections are not
the ``property'' of the Exchanges because they are ``services,'' and
the underlying network is owned by ICE affiliates and a non-ICE
entity.\44\ Drawing further distinctions between the Exchanges and IDS,
they also state that the Wireless Connections are a service offered
strictly by IDS, over which the Exchanges lack control.\45\
---------------------------------------------------------------------------
\44\ See Wireless I Notice, supra note 3, at 8940; Wireless II
Notice, supra note 8, at 10755. The Exchanges add that the Act does
not automatically collapse affiliates into the definition of an
``exchange,'' and something owned by an ICE affiliate is not owned
by the Exchanges. Id.
\45\ See Wireless I Notice, supra note 3 at 8939; Wireless II
Notice, supra note 8, at 10755. The Exchanges state that although
all ICE affiliates are ultimately controlled by ICE (as the indirect
parent company), the Exchanges do not control IDS. See id.
---------------------------------------------------------------------------
Third, the Exchanges maintain that the Wireless Connections do not
constitute ``any right to the use of such premises or property or
service thereof for the purpose of effecting or reporting a transaction
on an exchange,'' because the Exchanges do not have the right to use
the Wireless Connections to effect or report a transaction on the
Exchanges.\46\ In support of this position, the Exchanges note that the
Wireless Bandwidth Connections do not connect
[[Page 31277]]
directly to the Exchanges' trading and execution systems \47\ and the
Wireless Market Data Connections are provided without the Exchanges
involvement.\48\
---------------------------------------------------------------------------
\46\ See id.
\47\ See Wireless I Notice, supra note 3, at 8939-41. The
Exchanges urge that these connections are not provided for ``the
purpose of effecting or reporting a transaction on'' the Exchanges,
but rather are provided to facilitate the customer's interaction
with itself--that these connections are essentially an ``empty
pipe'' that a customer can use to communicate between its equipment
in co-location and its equipment in the Third Party Data Center. Id.
The Exchanges also state that they have no control over these
connections, and put no content on them. Rather, customers have
control over the data that flows over these connections, which may
include the sending of trading orders to their equipment in co-
location; the relay of Exchange market data, third party market
data, and public quote feeds; as well as risk management, billing,
compliance, or other market information. Id.
\48\ See Wireless II Notice, supra note 8, at 10755. The
Exchanges state that they do not know whether or when a customer has
entered into an agreement for a Wireless Market Data Connection;
have no right to approve or disapprove of the provision of a
Wireless Market Data Connection, any more than it would if the
provider were a third party; do not put the Selected Market Data
content onto the Wireless Market Data Connections or send it to
customers; and do not need to consent when a customer terminates a
Wireless Market Data Connection. The Exchanges further state that it
is not possible to use a Wireless Market Data Connection to effect a
transaction on the Exchange, because they are one-way connections
away from the Mahwah Data Center; that customers cannot use them to
send trading orders or information of any sort to the Exchanges; and
that the Exchanges do not use them to send confirmations of trades,
and that they solely carry Selected Market Data. See id.
In addition, the Exchanges state that the statute's
parenthetical language--``(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)''--is not an
independent prong of the facility definition, but explains the
preceding text. See Wireless I Notice, supra note 3, at 8941;
Wireless II Notice, supra note 8, at 10755.
---------------------------------------------------------------------------
Fourth, the Exchanges state that ``any right of the exchange to the
use of any property or service'' does not describe the Wireless
Connections because the Exchanges do not have the right to use the
Wireless Connections.\49\
---------------------------------------------------------------------------
\49\ See id.
---------------------------------------------------------------------------
The Commission has received several comment letters expressing
opposition to the Exchanges' position that the Wireless Bandwidth and/
or Wireless Market Data Connections are not facilities of an
exchange.\50\ Broadly, commenters express the view that the Wireless
Connections are designed to provide market participants the fastest
means of communication into and out of the Exchanges to facilitate more
competitive trading on the Exchanges, and that the Exchanges' analysis
is one of form over substance.\51\ More specifically, one commenter
states that there can be ``no dispute that both the private bandwidth
and market data wireless connectivity offerings constitute systems of
communication 100% controlled and maintained by NYSE, for its own
benefit and the benefit of its customers,'' and are therefore exchange
facilities.\52\
---------------------------------------------------------------------------
\50\ See Letter from Tyler Gellasch, Executive Director, Healthy
Markets to Vanessa Countryman, Secretary, Commission, dated March 9,
2020 (``Healthy Markets Letter''); Letters from Jim Considine, Chief
Financial Officer, McKay Brothers, LLC to Vanessa Countryman,
Secretary, Commission, dated March 10, 2020 (``McKay Letter I'');
Letter from Thomas M. Merritt, Deputy General Counsel, Virtu
Financial to Vanessa Countryman, Secretary, Commission, dated March
10, 2020 (``Virtu Letter''); Letter from Gregory Babyak, Global Head
of Regulatory Affairs, Bloomberg L.P. to Vanessa Countryman,
Secretary, Commission, dated March 10, 2020 (``Bloomberg Letter'')
(the Bloomberg Letter addresses Wireless I specifically); Letter
from Andrew Stevens, General Counsel, IMC Financial Markets to
Vanessa Countryman, Secretary, Commission, dated March 12, 2020
(``IMC Letter''); Letters from Matt Haraburda, President, XR
Securities LLC to Vanessa Countryman, Secretary, Commission, dated
March 18, 2020 (``XRS Letter'') (the XRS Letter addresses Wireless I
specifically); Letters from Jim Considine, Chief Financial Officer,
McKay Brothers, LLC to Vanessa Countryman, Secretary, Commission,
dated March 17, 2020 (``McKay Letter II''); Letter from Ellen
Greene, Managing Director, Securities Industry and Financial Markets
Association, to Vanessa Countryman, Secretary, Commission, dated
April 3, 2020 (``SIFMA Letter'') (the SIFMA Letter addresses
Wireless II more specifically); Letter from Joanna Mallers,
Secretary, FIA Principal Traders Group, to Vanessa Countryman,
Secretary, Commission, dated April 27, 2020 (regarding SR-NYSENAT-
2020-03); Letter from Joanna Mallers, Secretary, FIA Principal
Traders Group, to Vanessa Countryman, Secretary, Commission, dated
May 8, 2020 (regarding Wireless I and Wireless II) (``FIA Letter'').
\51\ See e.g., Virtu Letter at 4-6 (stating that the ``only
purpose'' of the Wireless Connections is to facilitate faster
connections for more competitive trading, and ``[c]ustomers paying
for the Wireless Connections are clearly doing so only in order to
competitively trade on the NYSE exchanges''). See also Healthy
Markets Letter at 8 (stating that the Exchanges' analysis ignores
the plain meaning of the Act); McKay Letter I at 4 (characterizing
the Exchanges' facility analysis as superficial and flawed); IMC
Letter at 2 (stating that ``the NYSE Pole offers direct access to
[the NYSE] data center and thus its matching engine for purposes of
transmitting data or orders)''; XRS Letter at 3 (stating that ``the
Wireless Connections have the fastest means of access to the
Exchange[] via the on-premises pole.'').
\52\ See Virtu Letter at 5. According to this commenter, the
contention that (i) the Wireless Bandwidth Connections are offered
without the Exchanges knowing how they are used ``ignores the
reality of market connectivity,'' and (ii) the Exchanges' do not
have the right to use the Wireless Market Data Connections, is
``nonsensical,'' because the Exchanges' have ``control over the data
transmission.'' See id. at 7.
---------------------------------------------------------------------------
Other commenters state that the Wireless Connections rely on the
Exchanges' premises and property to effectuate systems of communication
to and from the Exchanges,\53\ and that they are designed for the
purpose of effecting transactions on the Exchanges.\54\ According to
one of these commenters, the fact that orders and market data have to
traverse a cross connect at the Mahwah Data Center before reaching the
Exchanges' trading execution systems is an insufficient basis on which
to conclude the Wireless Connections are not part of the facilities of
an exchange.\55\ This commenter expresses concern that the Exchanges
are attempting to circumvent categorizing a product or service as a
facility by moving ownership to a parent company or an affiliate of the
Exchanges.\56\ Another commenter urges that the Exchanges should not be
able to defeat the operation of Exchange Act filing requirements by
``interpositioning'' an affiliate to provide connectivity to customers
instead of providing it directly.\57\
---------------------------------------------------------------------------
\53\ See e.g., McKay Letter I at 4-7 (stating that the Wireless
Connections are facilities of the Exchanges because they use the
pole located on the premises of the Exchanges, and also intangible
property in the form of technical specifications relating to the
Wireless Connections, available through NYSE's website and branded
with NYSE's trademark and logo). See also Bloomberg Letter at 4
(noting that the Wireless Connections are physically located on the
property of the Mahwah Data Center); Healthy Markets Letter at 6
(noting that the Wireless Connections have access to the Exchanges'
physical facility); IMC Letter at 2 (noting that the pole offers
direct access to each Exchange's data center for purposes of
transmitting data or orders).
\54\ See Bloomberg Letter at 4 (``[I]t is clear that this is a
system of communication to or from the exchange for `effecting or
reporting a transaction of the exchange.'''); McKay Letter I, at 6
(stating that ``The Wireless [Bandwidth] Connections are also
facilities of the Exchange under the third prong of the definition
because they may be used to effect transactions on the Exchange (and
report transactions or other market data disseminated from the
Exchange) using Exchange Property (e.g., the NYSE Private Pole).'');
IMC Letter at 2 (citing the McKay Letter I) (``The Wireless
Connections are facilities of the Exchange, in that they use the
Exchange's tangible and intangible property and are used for
effecting or reporting a transaction.''). See also SIFMA Letter at 2
(opining that the Wireless Market Data Connections are akin to a
``ticker' system,'' but not conceding that that these connections do
not meet other parts of the definition of facility).
\55\ See McKay Letter I at 6.
\56\ See id. at 5 n.20.
\57\ See Healthy Markets Letter at 3-8. This commenter in
particular expresses concern about Wireless Connections originating
from the roof of Mahwah Data Center, which as noted below, the
Exchanges state is not what is proposed. See infra note 95 and
accompanying text.
---------------------------------------------------------------------------
The Exchanges submitted a response to these comment letters.\58\ As
an initial matter, the Exchanges urge that treating the Wireless
Connections as ``facilities of an exchange'' would place an undue
competitive burden on the ICE affiliates, as they would be required to
make their services and fees public and subject to a Commission
determination for consistency with the Act, whereas
[[Page 31278]]
competitors are not subject to such requirements.\59\ The Exchanges
maintain that IDS acts independently of the Exchanges in offering the
Wireless Connections, and that it is a vendor selling connectivity,
just like other vendors.\60\ In addition to reiterating the rationale
provided in the Wireless I and Wireless II Notices, the Exchanges
further state that, contrary to commenters' beliefs, they do not have a
right to use the Wireless Connections to effect or report a transaction
or otherwise, nor do they own the Mahwah Data Center or the pole on its
grounds.\61\
---------------------------------------------------------------------------
\58\ Letter from Elizabeth K. King, Chief Regulatory Officer,
ICE, General Counsel & Corporate Secretary, NYSE, to Vanessa
Countryman, Secretary, Commission, dated May 8, 2020, responding to
comments on Wireless I and Wireless II (``NYSE Response'').
\59\ See id. at 3.
\60\ See id. at 8-16.
\61\ See id. at 8-15. See also id. at 11 (``The definition of
facility focuses on ownership and the right to use properties and
services, not corporate relationships.'').
---------------------------------------------------------------------------
2. Proposed Wireless Fee Schedule
In support of the proposed Wireless Fee Schedule, the Exchanges
state that the Wireless I and Wireless II proposals are reasonable,
equitable, and not unfairly discriminatory because use of the Wireless
Connections is voluntary and alternatives to the Wireless Connections
are available.\62\ Addressing the competitive environment, the
Exchanges state that there are at least three other vendors that offer
market participants wireless network connections between the Mahwah
Data Center and the Secaucus and Carteret Third Party Access Centers
using wireless equipment installed on towers and buildings near the
Mahwah Data Center.\63\ With respect to the Wireless Market Data
Connections specifically, they state that other providers offer
connectivity to Selected Market Data in the Third Party Data Centers,
and believe 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.\64\ The Exchanges believe that competing
wireless connections offered by non-ICE entities provide connectivity
at the ``same or similar speed'' as the Wireless Connections, and at
the ``same or similar cost.'' \65\ In addition, the Exchanges state
that some market participants have their own proprietary wireless
networks, and that market participants may create a new proprietary
wireless connection, connect through another market participant, or use
fiber connections offered by the Exchanges, ICE affiliates, other
service providers, and third party telecommunications providers.\66\
---------------------------------------------------------------------------
\62\ See Wireless I Notice, supra note 3, at 8943-44; Wireless
II Notice, supra note 8, at 10757-59.
\63\ See Wireless I Notice, supra note 3, at 8942; Wireless II
Notice, supra note 8, at 10757. The Exchanges acknowledge that they
believe the Wireless Bandwidth Connections between the Mahwah Data
Center and the Markham Third Party Data Center to be the first
public, commercially available wireless connections between the two
points, creating a new connectivity option for customers in Markham.
See id.
\64\ See Wireless II Notice, supra note 8, at 10757.
\65\ See Wireless I Notice, supra note 3, at 8943; Wireless II
Notice, supra note 8, at 10757.
\66\ See id.
---------------------------------------------------------------------------
The Exchanges acknowledge that the Wireless Connections traverse
wireless connections 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, and that
third party access to the pole is restricted.\67\ However, the
Exchanges state that access to the pole is not required for third
parties to establish wireless networks that can compete.\68\ The
Exchanges discount the significance of the location of the pole and the
restrictions on access, urging that proximity to a data center is not
the only determinant of a wireless network's speed.\69\ The Exchanges
also assert that latency is not the only consideration that a market
participant may have in selecting a wireless network,\70\ and that
fiber network connections may sometimes be more attractive since they
are more reliable and less susceptible to weather conditions.\71\
---------------------------------------------------------------------------
\67\ See Wireless I Notice, supra note 3, at 8943; Wireless II
Notice, supra note 8, at 10759. The Exchanges state that 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. See id.
\68\ See id.
\69\ See id. According to the Exchanges, other relevant
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. See id.
\70\ See id. According to the Exchanges, other considerations
may include the bandwidth of the offered connection; amount of
network uptime; the equipment that the network uses; the cost of the
connection; and the applicable contractual provisions. See id.
\71\ See Wireless I Notice, supra note 3, at 8943; Wireless II
Notice, supra note 8, at 10757.
---------------------------------------------------------------------------
The Exchanges state that the proposed pricing is reasonable because
the services are voluntary, market participants may to select the
connectivity options that best suit their needs, and the fees reflect
the benefit received by customers in term of lower latency over the
fiber optics options.\72\ The Exchanges believe that the proposals
involve an equitable allocation of fees among market participants
because such fees would apply to all market participants equally and
would not apply differently to distinct types or sizes of market
participants.\73\ In addition, the services are ``completely
voluntary,'' and the various options proposed offer market participants
additional choices that they can select to best suit their needs.\74\
---------------------------------------------------------------------------
\72\ See Wireless I Notice, supra note 3, at 8943-44; Wireless
II Notice, supra note 8, at 10757-58.
\73\ See Wireless I Notice, supra note 3, at 8944; Wireless II
Notice, supra note 8, at 10758.
\74\ See id.
---------------------------------------------------------------------------
The Exchanges also state that, because numerous substitute
connectivity providers are available, the proposals do not impose an
unnecessary or inappropriate burden on competition.\75\ According to
the Exchanges, the proposals do not affect competition among national
securities exchanges or between members of Exchanges, but rather that
the Exchanges' filing of the proposals puts IDS at a competitive
disadvantage relative to its commercial competitors that are not
subject to filing requirements of Section 19(b) of the Act.\76\
---------------------------------------------------------------------------
\75\ See Wireless I Notice, supra note 3, at 8944-45; Wireless
II Notice, supra note 8, at 10759.
\76\ See id.
---------------------------------------------------------------------------
Commenters disagree, arguing that the Exchanges have not met their
burden of demonstrating that the Wireless Connections are consistent
with the Act.\77\ Broadly, commenters express concern that the Wireless
Connections (those to the Secaucus and Carteret Third Party Data
Centers) begin and end at an antenna on the grounds of the Mahwah Data
Center, whereas competing services are not allowed on the Mahwah Data
Center grounds to install wireless equipment and must instead end their
wireless connections outside the grounds and use a wired connection
into the Mahwah Data Center.\78\ According to commenters, this
difference means that the Wireless Connections have an insurmountable
exclusive geographic latency advantage enabling the fastest possible
access to the Exchanges that no competing service can offer.\79\
---------------------------------------------------------------------------
\77\ See e.g., McKay Letter I at 7-11; Bloomberg Letter at 4-5;
XRS Letter at 2-4; Healthy Markets Letter at 8-10; IMC Letter at 2;
Virtu Letter at 2-3. One commenter states that the Exchanges provide
``almost none'' of the information needed to establish that the
Wireless Connections are consistent with the Act. See Healthy
Markets Letter at 10.
\78\ See, e.g., McKay Letter I at 8; Virtu Letter at 3; IMC
Letter at 2; XRS Letter at 1-2 (all generally questioning the basis
of the disparity in access in to the Mahwah Data Center pole).
\79\ See, e.g., McKay Letter I at 8-10; McKay Letter II at 3;
Bloomberg Letter at 4; IMC Letter at 2; XRS Letter at 1-2; Virtu
Letter at 8-10; FIA Letter at 3.
---------------------------------------------------------------------------
One commenter observes that ``conspicuously absent'' from the
Exchanges' description of the Wireless Connections is that the pole on
the
[[Page 31279]]
Mahwah Data Center grounds is ``approximately 700 feet closer to the
NYSE matching engine than the closest public poles available to all
other wireless connectivity vendors.'' \80\ This commenter underscores
that ``timely receipt of market data is essential to trading
competitively in today's markets,'' \81\ and while it may not seem like
a significant distance, ``the delay of data through 700 feet of fiber
is meaningful in today's markets.'' \82\ This commenter objects that
the Exchanges have designed the Wireless Connections with a geographic
latency advantage, enabling these connectivity offerings to be the
fastest means of access to the Exchanges, and have not provided factual
details sufficient to demonstrate why this advantage is not unfairly
discriminatory and an inappropriate burden on competition.\83\ Another
commenter agrees that a 700 foot difference is material, and states
that without details regarding (among other things) the magnitude of
the latency advantage, its availability, and its impact on participants
who are unable to avail themselves of the Wireless Connections, the
Commission and the public will be unable to reasonably determine
whether the proposed rule changes do not unfairly discriminate against
market participants or unduly burden competition.\84\ An additional
commenter states that the contention that there is competition for
exchange connectivity, and that other providers can offer the same or
similar access and latency is ``simply false.'' \85\ Some commenters
express concern that the latency advantage that is unavailable to
competing providers unfairly discriminates against market participants
that do not choose to use the Wireless Connections.\86\
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\80\ See McKay Letter I at 8-11 (also noting that its distance
estimate is a good-faith, educated guess, but that additional
transparency on the matter is needed). This commenter also states
that distribution of Selected Market Data via the Wireless Market
Data Connections is discriminatory because it is distributed in a
different manner than Selected Market Data obtained otherwise than
via the Wireless Connections. See McKay Letter II at 2-3.
\81\ Id. at 3.
\82\ See McKay Letter I at 8.
\83\ See McKay Letter I at 2, 8-12; McKay Letter II at 2-3.
\84\ See IMC Letter at 2. This commenter states, ``In a market
where equidistant cabling is required for connections between a
participant's co-located customer equipment to the Exchange's
matching engine, NYSE's suggestion that the 700 foot difference
between the NYSE Pole and others outside the their premises is
immaterial is ludicrous.'' Id.
\85\ See Virtu Letter at 9. This commenter also contrasts
exclusive access to the private pole with the Exchanges' offering
third-party firms the option to co-locate on their premises through
other means. See id. at 2.
\86\ See FIA Letter at 2; McKay Letter I at 11; XRS Letter at 2-
3.
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Commenters also address the proposed fees. One commenter states
that IDS's exclusive geographic latency advantage establishes a
monopoly service that enables it to charge ``exorbitant fees.'' \87\
Another commenter states that given the exclusivity of the service, it
would be difficult for the Exchanges to demonstrate how the proposed
fees are fair and reasonable without providing an in-depth assessment
of the costs of the service, and ``more difficult'' to justify how the
fees are not unfairly discriminatory.\88\ One commenter states that
some market participants would be forced to purchase the fastest
connectivity services to meet regulatory obligations, without regard to
the price of such services.\89\
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\87\ See Virtu Letter at 2.
\88\ See Bloomberg Letter at 5 (adding that the ``little to no
attempt'' is made to discuss the implications of the exclusive
privilege afforded to IDS to operate the Wireless Connections that
are on the Mahwah Data Center property).
\89\ See SIFMA Letter at 2-3 (addressing the Wireless Market
Data Connections specifically, and stating that broker-dealers with
best execution obligation may, for regulatory and competitive
reasons, feel they must purchase the fastest connectivity services
to remain in business).
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In the NYSE Response, the Exchanges maintain that the Wireless
Connections are subject to competition, and state that the subject
services are not new and have been provided since 2016.\90\ In their
view, the fact that competition has continued to proliferate over the
intervening years demonstrates that use of the pole on the Mahwah Data
Center grounds is not required for third parties to compete with the
Wireless Connections.\91\ Moreover, they assert that market
participants have for years had a choice about what wireless services
to use, ``and often choose not to use IDS.'' \92\ The Exchanges state
that disapproval of the proposals would result in less competition by
reducing the availability of wireless connections between Mahwah and
Secaucus or Carteret, because service would be available from only the
two remaining commercial providers or would require customers to
purchase space on a proprietary data network, if available.\93\ For
those customers seeking connections to Markham, Canada, the Exchanges
believe that disapproval would mean that customers would be left with
no wireless connectivity services.\94\
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\90\ See NYSE Response at 6.
\91\ See id.
\92\ Id.
\93\ See id. at 2.
\94\ See id.
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In response to comments that the Wireless Connections are offered
on terms that are unfairly discriminatory because the Exchanges possess
an exclusive geographic latency advantage that competitors cannot
overcome, the Exchanges state that although having the pole 700 feet
closer to the facility is a ``positive factor for latency,'' it is just
one in a list of factors that determine the network's latency
levels.\95\ The Exchanges also defend IDS's choice to limit access to
the Mahwah Data Center pole, noting that it is smaller than commercial
poles and that space limitations, security concerns, and interference
are practical factors that are a ``real concern.'' \96\ They also state
that IDS does not believe that its wireless network offers the fastest
commercial option, and that market participants have chosen not to use
it.\97\
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\95\ See id. at 6. The Exchanges note that contrary to the
suggestion of several commenters, the Wireless Connections do not
use the Mahwah Data Center roof, nor does IDS expect to put any
equipment on the roof for any services it offers or allow others to
do so. See id. at 5.
\96\ See id. at 7.
\97\ See id. at 5, 13. The Exchanges represent that there are 11
current customers with Wireless Bandwidth Connections and 11 current
customers with Wireless Market Data Connections. See id. at 2.
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In response to comments that they should provide additional
information regarding the geographic latency advantage, the Exchanges
characterize these requests as ``disingenuous'' because IDS cannot
describe the magnitude of a geographic latency advantage it does not
believe it has, and it is not privy to its competitors' latency
information.\98\
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\98\ See id. at 17, 18-19.
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III. Proceedings To Determine Whether To Approve or Disapprove the
Proposed Rule Changes
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act to determine whether the Exchanges' proposed
rule changes should be approved or disapproved.\99\ Institution of
proceedings does not indicate that the Commission has reached any
conclusions with respect to any of the issues involved. Rather, the
Commission seeks and encourages interested persons to provide
additional comment on the proposed rule changes (Wireless I and
Wireless II) to inform the Commission's analysis of whether to approve
or disapprove the proposed rule changes.
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\99\ 15 U.S.C. 78s(b)(2)(B).
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[[Page 31280]]
Pursuant to Section 19(b)(2)(B) of the Act,\100\ the Commission is
providing notice of the grounds for possible disapproval under
consideration:
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\100\ Id. Section 19(b)(2)(B) of the Act also provides that
proceedings to determine whether to disapprove a proposed rule
change must be concluded within 180 days of the date of publication
of notice of the filing of the proposed rule change. See id. The
time for conclusion of the proceedings may be extended for up to 60
days if the Commission finds good cause for such extension and
publishes its reasons for so finding, or if the exchange consents to
the longer period. See id.
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Whether the Exchanges have demonstrated how the proposals
are consistent with Section 6(b)(4) of the Act, which requires that the
rules of a national securities exchange ``provide for the equitable
allocation of reasonable dues, fees, and other charges among its
members and issuers and other persons using its facilities;'' \101\
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\101\ 15 U.S.C. 78f(b)(4).
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Whether the Exchanges have demonstrated how the proposals
are consistent with Section 6(b)(5) of the Act, which requires, among
other things, that the rules of a national securities exchange be
``designed to perfect the operation of a free and open market and a
national market system'' and ``protect investors and the public
interest,'' and not be ``designed to permit unfair discrimination
between customers, issuers, brokers, or dealers;'' \102\ and
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\102\ 15 U.S.C. 78f(b)(5).
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Whether the Exchanges have demonstrated how the proposals
are consistent with Section 6(b)(8) of the Act, which requires that the
rules of a national securities exchange ``not impose any burden on
competition not necessary or appropriate in furtherance of the purposes
of [the Act].'' \103\
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\103\ 15 U.S.C. 78f(b)(8).
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As discussed in Section II above, the Exchanges made various
arguments in support of the Wireless I and Wireless II proposals and
the Commission received comment letters that expressed concerns
regarding the proposals, including that the Exchanges did not provide
sufficient information to establish that the proposals are consistent
with the Act and the rules thereunder.
Under the Commission's Rules of Practice, the ``burden to
demonstrate that a proposed rule change is consistent with the Exchange
Act and the rules and regulations issued thereunder . . . is on the
self-regulatory organization [`SRO'] that proposed the rule change.''
\104\ The description of a proposed rule change, its purpose and
operation, its effect, and a legal analysis of its consistency with
applicable requirements must all be sufficiently detailed and specific
to support an affirmative Commission finding.\105\ Any failure of an
SRO to provide this information may result in the Commission not having
a sufficient basis to make an affirmative finding that a proposed rule
change is consistent with the Act and the applicable rules and
regulations.\106\
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\104\ 17 CFR 201.700(b)(3).
\105\ See id.
\106\ See id.
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The Commission is instituting proceedings to allow for additional
consideration and comment on the issues raised herein, including as to
whether the proposals are consistent with the Act, specifically, with
its requirements that the rules of a national securities exchange
provide for the equitable allocation of reasonable dues, fees, and
other charges among its members, issuers, and other persons using its
facilities; are designed to perfect the operation of a free and open
market and a national market system, and to protect investors and the
public interest; are not designed to permit unfair discrimination
between customers, issuers, brokers, or dealers; and do not impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act; \107\ as well as any other
provision of the Act, or the rules and regulations thereunder.
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\107\ See 15 U.S.C. 78f(b)(4), (5), and (8).
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IV. Commission's Solicitation of Comments
The Commission requests written views, data, and arguments with
respect to the concerns identified above as well as any other relevant
concerns. Such comments should be submitted by June 12, 2020. Rebuttal
comments should be submitted by June 26, 2020. Although there do not
appear to be any issues relevant to approval or disapproval that would
be facilitated by an oral presentation of views, data, and arguments,
the Commission will consider, pursuant to Rule 19b-4, any request for
an opportunity to make an oral presentation.\108\
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\108\ 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act grants
the Commission flexibility to determine what type of proceeding--
either oral or notice and opportunity for written comments--is
appropriate for consideration of a particular proposal by an SRO.
See Securities Acts Amendments of 1975, Report of the Senate
Committee on Banking, Housing and Urban Affairs to Accompany S. 249,
S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975).
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The Commission asks that commenters address the sufficiency and
merit of the Exchanges' statements in support of the proposal, in
addition to any other comments they may wish to submit about the
proposed rule change.
Interested persons are invited to submit written data, views, and
arguments concerning the proposed rule changes, including whether the
Wireless I and Wireless II proposals are 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 Nos. SR-NYSE-2020-05, SR-NYSEAMER-2020-05, SR-NYSEArca-2020-08,
SR-NYSECHX-2020-02, SR-NYSENAT-2020-03, SR-NYSE-2020-11, SR-NYSEAMER-
2020-10, SR-NYSEArca-2020-15, SR-NYSECHX-2020-05, SR-NYSENAT-2020-08 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 Nos. SR-NYSE-2020-05, SR-NYSEAMER-
2020-05, SR-NYSEArca-2020-08, SR-NYSECHX-2020-02, SR-NYSENAT-2020-03,
SR-NYSE-2020-11, SR-NYSEAMER-2020-10, SR-NYSEArca-2020-15, SR-NYSECHX-
2020-05, and SR-NYSENAT-2020-08. The file numbers 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
such filing also will be available for inspection and copying at the
principal office of the Exchanges. All comments received will be posted
without change. Persons submitting comments are cautioned that we do
not redact or edit
[[Page 31281]]
personal identifying information from comment submissions. You should
submit only information that you wish to make publicly available. All
submissions should refer to File Nos. SR-NYSE-2020-05, SR-NYSEAMER-
2020-05, SR-NYSEArca-2020-08, SR-NYSECHX-2020-02, SR-NYSENAT-2020-03,
SR-NYSE-2020-11, SR-NYSEAMER-2020-10, SR-NYSEArca-2020-15, SR-NYSECHX-
2020-05, and SR-NYSENAT-2020-08 and should be submitted on or before
June 12, 2020. Rebuttal comments should be submitted by June 26, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\109\
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\109\ 17 CFR 200.30-3(a)(57).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-11045 Filed 5-21-20; 8:45 am]
BILLING CODE 8011-01-P
