Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Partial Amendment No. 1 To Proposed Rule Change To Amend the Schedule of Wireless Connectivity Fees and Charges To Add Wireless Connectivity Services, 48045-48049 [2020-17248]

Download as PDF Federal Register / Vol. 85, No. 153 / Friday, August 7, 2020 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–89458; File No. SR–NYSE– 2020–11] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Partial Amendment No. 1 To Proposed Rule Change To Amend the Schedule of Wireless Connectivity Fees and Charges To Add Wireless Connectivity Services August 3, 2020. I. Introduction On February 11, 2020, New York Stock Exchange LLC (‘‘NYSE’’ or ‘‘Exchange’’) 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 (SR–NYSE–2020–11) to amend the schedule of Wireless Connectivity Fees and Charges (‘‘Wireless Fee Schedule’’) to add wireless connectivity services that transport the market data of the Exchange and certain affiliates. The Commission published the proposed rule change for public comment in the Federal Register on February 25, 2020.3 The Commission received several comments on the proposed rule change, and a response from the Exchange.4 On April 1, 2020, pursuant to Section 19(b)(2) of the Act,5 the Commission designated a longer period within which to either approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change.6 On May 18, 2020, the Commission instituted proceedings to determine whether to approve or disapprove the jbell on DSKJLSW7X2PROD with NOTICES 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 88237 (February 19, 2020), 85 FR 10752 (February 25, 2020) (SR–NYSE–2020–11) (‘‘Wireless II Notice’’). See also Securities Exchange Act Release Nos. 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). 4 Comments received on the Wireless II Notice and the Exchange’s response are available on the Commission’s website at: https://www.sec.gov/ comments/sr-nyse-2020-11/srnyse202011.htm. 5 15 U.S.C. 78s(b)(2). 6 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. VerDate Sep<11>2014 20:25 Aug 06, 2020 Jkt 250001 proposed rule change.7 The Commission received additional comments in response to the Order Instituting Proceedings.8 On July 27, 2020, the Exchange filed Partial Amendment No. 1 to the proposed rule change in response to certain comments on the proposed rule change. Partial Amendment No. 1 is described in Item II below, which has been substantially prepared by the Exchange.9 The Commission is publishing this notice to solicit comments on Partial Amendment No. 1 from interested persons.10 II. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Amendment New York Stock Exchange LLC (‘‘NYSE’’ or the ‘‘Exchange’’) hereby submits this Partial Amendment No. 1 to the above-referenced filing (‘‘Filing’’) in connection with the proposed rule change to add wireless connectivity that transport the market data of the Exchange and certain affiliates to the schedule of Wireless Connectivity Fees and Charges (the ‘‘Wireless Fee Schedule’’). With this Partial Amendment No. 1, the Exchange proposes a new rule to place restrictions on the use of a pole on the grounds of the Mahwah, New Jersey data center that is used for wireless connectivity services that transport the market data of the Exchange and certain of its affiliates. The Exchange proposes the following amendments to the Filing: 1. The Exchange proposes to amend the first paragraph in Item 1(a) on page 3 of the Filing: The Exchange proposes to amend the first paragraph of Item 1(a) on page 3 of the Filing to add ‘‘(a)’’ before ‘‘wireless connectivity services’’ and add new text 7 See Securities Exchange Act Release No. 88901 (May 18, 2020), 85 FR 31273 (May 22, 2020) in which the Commission instituted proceedings (‘‘Order Instituting Proceedings’’ or ‘‘OIP’’). 8 Comments received on the Wireless II Notice following the OIP also are available on the Commission’s website at: https://www.sec.gov/ comments/sr-nyse-2020-11/srnyse202011.htm. 9 The Commission has reformatted the Exchange’s presentation of the footnotes. 10 Partial Amendment No. 1 is also available on the Commission’s website at: https://www.sec.gov/ comments/sr-nyse-2020-11/srnyse202011.htm. The Commission also refers interested persons to Securities Exchange Act Release No. 88168 (February 11, 2020), 85 FR 8938 (February 18, 2020) (SR–NYSE–2020–05) (wherein the Exchange filed a proposed rule change to establish the Wireless Fee Schedule listing available wireless bandwidth connections between the Mahwah, New Jersey data center and other data centers (‘‘Wireless I’’) and concurrently proposes to partially amend Wireless I). Partial Amendment No. 1 to Wireless I is available on the Commission’s website at: https:// www.sec.gov/comments/sr-nyse-2020-05/ srnyse202005.htm. PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 48045 at the end of the paragraph to describe the proposed rule change, as follows (new text italicized): Pursuant to the provisions of Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’) 1 and Rule 19b–4 thereunder,2 New York Stock Exchange LLC (‘‘NYSE’’ or the ‘‘Exchange’’) proposes to add (a) wireless connectivity services that transport the market data of the Exchange and certain affiliates to the schedule of Wireless Connectivity Fees and Charges (the ‘‘Wireless Fee Schedule’’); and (b) a new rule to place restrictions on the use of a pole on the grounds of the Mahwah, New Jersey data center that is used for such wireless connectivity services. 2. The Exchange proposes to amend the carryover paragraph on pages 3 and 4 of the Filing (second full paragraph on page 24 of the Exhibit 1): The Exchange proposes to add amend the carryover paragraph on pages 3 and 4 of the Filing (second full paragraph on page 24 of the Exhibit 1) to add ‘‘(a)’’ before ‘‘wireless connectivity services’’ and add new text to describe the proposed rule change, as follows (new text italicized, deletion in [brackets]): The Exchange proposes to add (a) wireless connectivity services that transport market data of the Exchange and its affiliates NYSE Arca, Inc. (‘‘NYSE Arca’’) and NYSE National, Inc. (‘‘NYSE National’’) to the Wireless Fee Schedule[.],3/4 and (b) a new rule to place restrictions on the use of a pole on the grounds of the Mahwah, New Jersey data center that is used for such wireless connectivity services. 3. The Exchange proposes to add a new section titled ‘‘Proposed New Rule’’ and accompanying footnotes after the first full paragraph on page 14 of the Filing (first full paragraph on page 39 of the Exhibit 1): The Exchange proposes a new rule to place restrictions on the use of a pole on the grounds of the Mahwah, New Jersey data center that is used for wireless connectivity services. Accordingly, the Exchange proposes to add a new section titled ‘‘Proposed New Rule’’ and accompanying footnotes (subsequent footnotes would be renumbered in a conforming change) after the first full paragraph on page 14 of the Filing (first full paragraph on page 39 of the Exhibit 1), after the end of the section titled ‘‘The Proposed Service and Fees,’’ as follows (all text is new): Proposed New Rule Since 2016, IDS has had the use of a pole on the grounds of the Mahwah data center.27/28 The data center pole is part of the network utilized for the Wireless Market Data Connections to the Carteret and Secaucus Third Party Data Centers.28/29 At the data center pole, the wireless connection to the Third Party Data Centers converts to a fiber connection, and the fiber connection travels E:\FR\FM\07AUN1.SGM 07AUN1 jbell on DSKJLSW7X2PROD with NOTICES 48046 Federal Register / Vol. 85, No. 153 / Friday, August 7, 2020 / Notices from the data center pole into the Mahwah data center.29/30 The equipment on the data center pole belongs to IDS and Anova Technologies, LLC (‘‘Anova’’), the non-ICE entity that owns the wireless network used for the Wireless Market Data Connections to Secaucus and Carteret.30/31 Other third parties that offer wireless services utilize commercial poles located outside the grounds of the Mahwah, New Jersey data center for their wireless networks. A third party’s wireless connections to the Third Party Data Center convert to fiber connections at the commercial pole, and the fiber connects the commercial pole to the Mahwah data center. Several such third parties have objected to the use of the data center pole for the Wireless Market Data Connections. They argue that IDS has an advantage over its competitors because third parties are not allowed access to the data center pole,31/32 and the data center pole is closer to the Mahwah data center than any commercial pole.32/33 At least one third party has raised the additional concern that the Wireless Market Data Connections may benefit from ‘‘less obvious and more discreet types of latency advantages’’ due to infrastructure inside the Mahwah data center, noting that ‘‘some connections may have a longer fiber route than others within a data center or may have to go through various equipment or meet me rooms that an affiliate or preferred provider of an exchange do not.’’ 33/34 The Exchange is proposing a new Rule 3.14 (Data Center Pole Latency Restrictions— Connectivity to Production of Exchange Market Data) that would require that the length of the connection from the data center pole to the point inside the Mahwah data center where Exchange market data is produced be no less than the length of the connection from the closest commercial pole to the same point. By requiring that the compared connections both extend to where Exchange market data is produced, the proposed rule would take distances within the Mahwah data center into account. The proposed rule would include the following definitions: • ‘‘Commercial Pole’’ would mean a pole (a) on which one or more third parties locate wireless equipment used to offer wireless connectivity to other third parties, and (b) from which a fiber connection extends from third party equipment on the pole to the Data Center. • ‘‘Data Center’’ would mean the Mahwah, New Jersey data center where the Exchange’s matching engine is located, or its successor. • ‘‘Data Center Pole’’ would mean a pole that (a) holds wireless equipment, (b) is located within the grounds of the Data Center, and (c) cannot be used by third parties other than third parties with which the Exchange or an ICE Affiliate has an agreement to provide services in the name of the Exchange or an ICE Affiliate. • ‘‘ICE Affiliate’’ would mean Intercontinental Exchange, Inc. (‘‘ICE’’) and any entity that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with ICE, where ‘‘control’’ means that one entity possesses, directly or indirectly, voting VerDate Sep<11>2014 20:25 Aug 06, 2020 Jkt 250001 control of the other entity either through ownership of capital stock or other equity securities or through majority representation on the board of directors or other management body of such entity. The proposed rule would require that: the length of the connection between (a) the base of the Data Center Pole and (b) the point inside the Data Center where Exchange market data is produced shall be no less than the length of the connection between (x) the base of the closest Commercial Pole and (y) the point inside the Data Center where Exchange market data is produced. 27/28 See Securities Exchange Act Release No. 76748 (December 23, 3015), 80 FR 81609 (December 30, 2015) (SR–NYSE–2015– 52) (order approving proposed rule change to the co-location services offered by the NYSE (the offering of a wireless connection to allow users to receive market data feeds from third party markets) and to reflect changes to the NYSE’s price list related to these services). 28/29 The Wireless Market Data Connections with Markham, Canada do not use equipment on the data center pole. 29/30 The wireless network similarly converts to a fiber connection for its connection into the Third Party Data Centers. 30/31 Equipment for services Anova offers under its own name is not allowed on the data center pole. 31/32 IDS does not sell rights to third parties to operate wireless equipment on the data center pole due to space limitations, security concerns, and the interference that would arise between equipment placed too closely together. 32/33 See letter from Gregory Babyak, Global Head of Regulatory Affairs, Bloomberg L.P., to Ms. Vanessa Countryman, Secretary, Securities and Exchange Commission (‘‘Commission’’), dated June 12, 2020; letter from Stephen John Berger, Managing Director, Global Head of Government and Regulatory Policy, Citadel Securities, to Ms. Vanessa Countryman, Secretary, Commission, dated June 12, 2020; letter from Jim Considine, Chief Financial Officer, McKay Brothers LLC (‘‘McKay Brothers’’), to Ms. Vanessa Countryman, Secretary, Commission, dated June 12, 2020 (‘‘McKay Letter’’); and letter from Thomas M. Merritt, Deputy General Counsel, Virtu Financial, Inc. to Ms. Vanessa Countryman, Secretary, Commission, dated March 10, 2020. 33/34 McKay Letter, supra note 32/33, at 9. 4. The Exchange proposes to add new text after the first full paragraph on page 16 of the Filing (first full paragraph on page 41 of the Exhibit 1): The Exchange proposes to amend the Filing to include additional analysis on the competitive environment for wireless connections. Accordingly, the Exchange proposes to add a paragraph and accompanying footnotes (subsequent footnotes would be renumbered in a conforming change) PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 after the first full paragraph on page 16 of the Filing (first full paragraph on page 41 of the Exhibit 1), as follows (all text is new): Such competitors can offer wireless connectivity to Selected Market Data or other Exchange market data in the Third Party Data Centers by obtaining the market data at the Mahwah data center and sending it over their wireless network to the Third Party Data Centers.37/38 The Exchange believes that its competitors’ wireless connections provide connectivity at the same or similar speed as the Wireless Market Data Connections, and at the same or similar cost. Indeed, the McKay Letter acknowledges that McKay Brothers has the fastest wireless network.38/39 37/38 A market participant in any of the Third Party Data Centers or the Mahwah data center also may create a proprietary wireless market data connection, connect through another market participant, or utilize fiber connections offered by the Exchange, ICE Affiliates, and other service providers and third party telecommunications providers. 38/39 McKay Letter, supra note 32/33, at 4. 5. The Exchange proposes to amend the Statutory Basis section of the Filing after the third full paragraph on page 18 of the Filing (second full paragraph on page 45 of the Exhibit 1): The Exchange proposes to include information in the Filing regarding why it believes the proposed new rule is reasonable. The Exchange proposes to amend the Statutory Basis section of the Filing to add new paragraphs and accompanying footnotes (subsequent footnotes would be renumbered in a conforming change) after the third full paragraph on page 18 of the Filing (second full paragraph on page 45 of the Exhibit 1), at the end of the section titled ‘‘The Proposed Change is Reasonable,’’ as follows (all text is new): The Exchange believes that the proposed new Rule 3.14 would be reasonable as, pursuant to the rule, the networks for the Wireless Market Data Connections, and future wireless connections that use a Data Center Pole, would ‘‘operat[e] in the same manner as competitors do today without a latency subsidy or other advantage provided by the Exchanges. . . .’’ 43/44 Accordingly, the proposed new rule would promote just and equitable principles of trade and, in general, protect investors and the public interest by ensuring that the subscribers to services using the IDS wireless network do not benefit from any physical proximity ‘‘on the segment [of the network] closest to the Exchanges’ data center that no competitor can replicate.’’ 44/45 By ending both of the compared connections at the point inside the Data Center where Exchange market data is produced, the proposed rule would take distances within the Mahwah data center into account.45/46 The proposed new rule would not apply differently to distinct types or sizes of market participants. The Exchange would be E:\FR\FM\07AUN1.SGM 07AUN1 Federal Register / Vol. 85, No. 153 / Friday, August 7, 2020 / Notices jbell on DSKJLSW7X2PROD with NOTICES required to ensure that the length of the connection between (a) the base of the Data Center Pole and (b) the point inside the Data Center where Exchange market data is produced, would be no less than the length of the connection between (x) the base of the closest Commercial Pole and (y) the point inside the Data Center where Exchange market data is produced. The Exchange believes that the proposed definition of ‘‘Commercial Pole’’ is reasonable and would promote just and equitable principles of trade because it would encompass any pole on which a third party locates its wireless equipment in order to offer wireless connectivity to customers. The Exchange believes that such third parties are the direct competitors for the Wireless Market Data Connections, as they also offer wireless connections to customers. If a third party used a pole for a proprietary wireless network and that pole does not have one or more third parties’ wireless equipment used to offer wireless connectivity to other third parties, that pole would not fall within the scope of the definition of Commercial Pole. The Exchange believes that the proposed definition of ‘‘Data Center’’ is reasonable and would promote just and equitable principles of trade because it would capture any data center to which the Exchange locates its matching engine. The Exchange believes that the proposed definition of ‘‘Data Center Pole’’ is reasonable and would promote just and equitable principles of trade because it would encompass not just the current pole, but also any additional or successor pole on the grounds of the Data Center, so long as such pole could not be used by third parties other than third parties with which the Exchange or an ICE Affiliate had an agreement to provide services in the name of the Exchange or an ICE Affiliate, such as Anova. The Exchange believes that the definition of ‘‘ICE Affiliate’’ is reasonable and would promote just and equitable principles of trade because the same definition is used in NYSE Rule 497 (Additional Requirements for Listed Securities Issued by Intercontinental Exchange, Inc. or its Affiliates),46/47 and so using it would add transparency, clarity and internal consistency to Exchange rules. 43/44 McKay Letter, supra note 32/33, at 7. 44/45 Id, at note 33. 45/46 Each of the Affiliate SROs is filing for a rule change that is substantially similar to the proposed Exchange rule. Assuming such filings are approved by the Commission, to the extent that the market data of an Affiliate SRO is produced separately from where the Exchange market data is produced, the wireless connection to that Affiliate SRO’s market data would be captured by that Affiliate SRO’s rule. 46/47 The definition of ICE has been added to the text. 6. The Exchange proposes to amend the Statutory Basis section of the Filing after the carryover paragraph on pages 19 and 20 of the Filing (second full paragraph on page 47 of the Exhibit 1): The Exchange proposes to include information in the Filing regarding why VerDate Sep<11>2014 20:25 Aug 06, 2020 Jkt 250001 it believes the proposed new rule is not unfairly discriminatory. The Exchange proposes to amend the Statutory Basis section of the Filing to add new paragraphs and accompanying footnotes (subsequent footnotes would be renumbered in a conforming change) after the carryover paragraph on pages 19 and 20 of the Filing (second full paragraph on page 47 of the Exhibit 1), immediately prior to the last paragraph of the section titled ‘‘The Proposed Change is Not Unfairly Discriminatory,’’ as follows (all text is new): The Exchange believes that the proposed new Rule 3.14 would not be unfairly discriminatory, as pursuant to the rule, the networks for the Wireless Market Data Connections, and future wireless connections that use the Data Center Pole, would ‘‘operat[e] in the same manner as competitors do today without a latency subsidy or other advantage provided by the Exchanges. . . .’’ 47/48 Accordingly, the proposed new rule would ensure that the IDS wireless network does not benefit from physical proximity ‘‘on the segment [of the network] closest to the Exchanges’ data center that no competitor can replicate.’’ 48/49 By ending both of the compared connections at the point inside the Data Center where Exchange market data is produced, the proposed rule would take distances within the Mahwah data center into account. The proposed new rule would not apply differently to distinct types or sizes of market participants. The Exchange would be required to ensure that the length of the connection between (a) the base of the Data Center Pole and (b) the point inside the Data Center where Exchange market data is produced, would be no less than the length of the connection between (x) the base of the closest Commercial Pole and (y) the point inside the Data Center where Exchange market data is produced. The Exchange believes that the proposed definition of ‘‘Commercial Pole’’ would not be unfairly discriminatory because it would encompass any pole on which a third party locates its wireless equipment in order to offer wireless connectivity to customers. The Exchange believes that such third parties are the direct competitors for the Wireless Market Data Connections, as they also offer wireless connections to customers. If a third party used a pole for a proprietary wireless network and that pole does not have one or more third parties’ wireless equipment used to offer wireless connectivity to other third parties, that pole would not fall within the scope of the definition of Commercial Pole. The Exchange believes that the proposed definition of ‘‘Data Center’’ would not be unfairly discriminatory because it would capture any data center to which the Exchange locates its matching engine. The Exchange believes that the proposed definition of ‘‘Data Center Pole’’ would not be unfairly discriminatory because it would encompass not just the current pole, but also any additional or successor pole on the grounds of the Data Center, so long as such pole could not be used by third parties other PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 48047 than third parties with which the Exchange or an ICE Affiliate had an agreement to provide services in the name of the Exchange or an ICE Affiliate, such as Anova. The Exchange believes that the definition of ‘‘ICE Affiliate’’ would not be unfairly discriminatory because the same definition is used in Rule 497 49/50 and so using it would add transparency, clarity and internal consistency to Exchange rules. 47/48 McKay Letter, supra note 32/33, at 7. 48/49 Id., at note 33. 49/50 The definition of ICE has been added to the text. 7. The Exchange proposes to amend the section of the Filing titled ‘‘SelfRegulatory Organization’s Statement on Burden on Competition’’ in the following two ways: The Exchange proposes to include information in the Filing regarding why it believes the proposed new rule would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of Section 6(b)(8) of the Securities Exchange Act of 1934 (the ‘‘Act’’).11 Accordingly, the Exchange proposes to amend the section of the Filing titled ‘‘Self-Regulatory Organization’s Statement on Burden on Competition’’ in the following two ways. First, to set the new text apart from the previous discussion regarding the burden on competition, the Exchange proposes to add the heading ‘‘Wireless Market Data Connectivity’’ immediately before the first full paragraph under the heading on page 20 of the Filing (page 48 of the Exhibit 1). The new heading would apply to the current text of the Filing. Second, after the first full paragraph on page 22 of the Filing (first full paragraph on page 51 of the Exhibit 1), the Exchange proposes to add the heading ‘‘Proposed New Rule’’ and new paragraphs and accompanying footnotes (subsequent footnotes would be renumbered in a conforming change), as follows (all text is new): Proposed New Rule The Exchange does not believe that the proposed new rule would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of Section 6(b)(8) of the Act.52/53 With the exception of Anova, third parties do not have access to the data center pole. Under the proposed rule, the Exchange would always be obligated to ensure that the length of the connection between (a) the base of the Data Center Pole and (b) the point inside the Data Center where Exchange market data is produced, would be no less than the length of the connection between (x) the base of the closest Commercial Pole and (y) the point inside the Data Center where Exchange market data is produced. IDS, not the Exchange, provides the Wireless Market 11 15 E:\FR\FM\07AUN1.SGM U.S.C. 78f(b)(8). 07AUN1 jbell on DSKJLSW7X2PROD with NOTICES 48048 Federal Register / Vol. 85, No. 153 / Friday, August 7, 2020 / Notices Data Connections to market participants, and so it would be IDS that would have to slow its connection down as required by the rule. Accordingly, the Exchange believes that the only burden on competition of the proposed change would be on IDS. Nonetheless, the Exchange believes that the proposed rule change would not impose any burden on competition that is not necessary or appropriate because the proposed change would ensure that the IDS wireless network did not benefit from physical proximity ‘‘on the segment [of the network] closest to the Exchanges’ data center that no competitor can replicate.’’ 53/54 The networks for the Wireless Market Data Connections, and future wireless connections that use the Data Center Pole, would ‘‘operat[e] in the same manner as competitors do today without a latency subsidy or other advantage provided by the Exchanges. . . .’’ 54/55 The proposed rule would not otherwise put a burden on competition. As noted above, access to the data center pole is not required for third parties to establish wireless networks that can compete with the Wireless Market Data Connections to the Carteret and Secaucus Third Party Data Centers, as evidenced by the existing wireless connections offered by third party competitors.55/56 Such competitors can offer wireless connectivity to Selected Market Data or other Exchange market data in the Third Party Data Centers by obtaining the market data at the Mahwah data center and sending it over their wireless network to the Third Party Data Centers.56/57 Indeed, the Exchange believes that its competitors’ wireless connections provide connectivity at the same or similar speed as the Wireless Market Data Connections, and at the same or similar cost. The McKay Letter acknowledges that McKay Brothers has the fastest wireless network.57/58 The Exchange notes that proximity to a data center is not the only determinant of a wireless network’s latency. Rather, the latency of a wireless network depends on several factors. Variables include the wireless equipment utilized; the route of, and number of towers or buildings in, the network; and the fiber equipment used at either end of the connection. Moreover, latency is not the only consideration that a customer may have in selecting a wireless network to connect to for market data. Other considerations may include the amount of network uptime; the equipment that the network uses; the cost of the connection; and the applicable contractual provisions. The proposed change does not affect competition among national securities exchanges or among members of the Exchange, but rather between IDS and its commercial competitors. 52/53 15 U.S.C. 78f(b)(8). 53/54 McKay Letter, supra note 32/33, at note 33. 54/55 Id., at 7. 55/56 Based on the information available to it, the Exchange believes that a market participant in the Carteret or Secaucus Third Party Data Center may purchase a wireless connection to the NYSE and NYSE Arca Integrated Feed data feeds from at least two other providers of VerDate Sep<11>2014 20:25 Aug 06, 2020 Jkt 250001 wireless connectivity. market participant in any of the Third Party Data Centers or the Mahwah data center also may create a proprietary wireless market data connection, connect through another market participant, or utilize fiber connections offered by the Exchange, ICE Affiliates, and other service providers and third party telecommunications providers. 57/58 Id., at 4. 56/57 A 8. The Exchange proposes to add a list under ‘‘Exhibit 5—Text of the Proposed Rule Change’’ on page 22 of the Filing: The Exchange proposes to add a new Exhibit 5B. Accordingly, the Exchange proposes to add a list under ‘‘Exhibit 5—Text of Proposed Rule Change’’ on page 22 of the Filing, as follows (new text italicized): Exhibit 5—Text of the Proposed Rule Change A. Text of the Proposed Schedule of Wireless Connectivity Fees and Charges B. Text of the Proposed Rule 9. The Exchange proposes to add new text to the first full paragraph of Section I on page 23 of the Exhibit 1: The Exchange proposes to add new text to the first full paragraph of Section I on page 23 of the Exhibit 1, as follows (new text italicized): The Exchange proposes to add wireless connectivity services that transport the market data of the Exchange and certain affiliates to the schedule of Wireless Connectivity Fees and Charge (the ‘‘Wireless Fee Schedule’’) and add a new rule to place restrictions on the use of a pole on the grounds of the Mahwah, New Jersey data center that is used for such wireless connectivity services. The proposed rule change is available on the Exchange’s website at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. 10. The Exchange proposes to amend ‘‘Exhibit 5’’ to ‘‘Exhibit 5A’’ on page 54 of the Exhibit 5: To reflect the addition of a new Exhibit 5B, the Exchange proposes to add ‘‘A’’ to ‘‘EXHIBIT 5’’ on page 54 of the Exhibit 5, to make it ‘‘EXHIBIT 5A’’. * * * * * All other representations in the Filing remain as stated therein and no other changes are being made. III. Date of Effectiveness of the Proposed Rule Change As Modified By Partial Amendment No. 1 and Timing for Commission Action Within 180 days after the date of publication of the initial Notice of Filing in the Federal Register or within such longer period up to an additional 60 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will issue an order approving or disapproving such proposed rule change, as amended. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended by Partial Amendment No. 1, 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– NYSE–2020–11 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSE–2020–11. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSE–2020–11, and E:\FR\FM\07AUN1.SGM 07AUN1 Federal Register / Vol. 85, No. 153 / Friday, August 7, 2020 / Notices should be submitted on or before August 28, 2020. proposed rule change is provided below. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 J. Matthew DeLesDernier, Assistant Secretary. (additions are italicized; deletions are [bracketed]) * * * * * [FR Doc. 2020–17248 Filed 8–6–20; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–89449; File No. SR– CboeEDGX–2020–038] Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating To Amend Rule 4.5, Which Is Part of the Exchange’s Compliance Rule (‘‘Compliance Rule’’) Regarding the National Market System Plan Governing the Consolidated Audit Trail (the ‘‘CAT NMS Plan’’ or ‘‘Plan’’) To Be Consistent With an Amendment to the CAT NMS Plan Recently Approved by the Securities and Exchange Commission (the ‘‘Commission’’) August 3, 2020. jbell on DSKJLSW7X2PROD with NOTICES Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on July 30, 2020, Cboe EDGX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGX’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe EDGX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘Cboe EDGX’’) proposes to amend Rule 4.5, which is part of the Exchange’s compliance rule (‘‘Compliance Rule’’) regarding the National Market System Plan Governing the Consolidated Audit Trail (the ‘‘CAT NMS Plan’’ or ‘‘Plan’’) 3 to be consistent with an amendment to the CAT NMS Plan recently approved by the Securities and Exchange Commission (the ‘‘Commission’’). The text of the 12 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 Unless otherwise specified, capitalized terms used in this rule filing are defined as set forth in the Compliance Rule. 1 15 VerDate Sep<11>2014 20:25 Aug 06, 2020 Jkt 250001 48049 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this proposed rule Rules of Cboe EDGX Exchange, Inc. change is to amend Chapter 7, Section B of the Rules, the Compliance Rule * * * * * regarding the CAT NMS Plan, to be Rule 4.5. Consolidated Audit Trail— consistent with an amendment to the Definitions CAT NMS Plan recently approved by the Commission.4 The Commission For purposes of Rules 4.5 through approved an amendment to the CAT 4.16: NMS Plan to amend the requirements * * * * * for Firm Designated IDs in four ways: (1) To prohibit the use of account numbers (r) ‘‘Firm Designated ID’’ means (1) a unique and persistent identifier for each as Firm Designated IDs for trading accounts that are not proprietary trading account designated by Industry Members for purposes of providing data accounts; (2) to require that the Firm Designated ID for a trading account be to the Central Repository, provided, persistent over time for each Industry however, such identifier may not be the Member so that a single account may be account number for such trading tracked across time within a single account if the trading account is not a Industry Member; (3) to permit the use proprietary account; (2) a unique and of relationship identifiers as Firm persistent relationship identifier when Designated IDs in certain circumstances; an Industry Member does not have an and (4) to permit the use of entity account number available to its order handling and/or execution system at the identifiers as Firm Designated IDs in time of order receipt, provided, however, certain circumstances (the ‘‘FDID Amendment’’). As a result, the such identifier must be masked; or (3) a unique and persistent entity identifier Exchange proposes to amend the definition of ‘‘Firm Designated ID’’ in when an employee of an Industry Rule 4.5 to reflect the changes to the Member is exercising discretion over CAT NMS Plan regarding the multiple client accounts and creates an requirements for Firm Designated IDs. aggregated order for which a trading Rule 4.5(r) defines the term ‘‘Firm account number of the Industry Member Designated ID’’ to mean ‘‘a unique is not available at the time of order identifier for each trading account origination, where each such identifier is unique among all identifiers from any designated by Industry Members for purposes of providing data to the given Industry Member[ for each Central Repository, where each such business date]. identifier is unique among all identifiers * * * * * from any given Industry Member for The text of the proposed rule change each business date.’’ is also available on the Exchange’s (1) Prohibit Use of Account Numbers website (https://markets.cboe.com/us/ The Exchange proposes to amend the options/regulation/rule_filings/edgx/), definition of ‘‘Firm Designated ID’’ in at the Exchange’s Office of the Rule 4.5(r) to provide that Industry Secretary, and at the Commission’s Members may not use account numbers Public Reference Room. as the Firm Designated ID for trading II. Self-Regulatory Organization’s accounts that are not proprietary Statement of the Purpose of, and accounts. Specifically, the Exchange Statutory Basis for, the Proposed Rule proposes to add the following to the Change definition of a Firm Designated ID: ‘‘provided, however, such identifier In its filing with the Commission, the may not be the account number for such Exchange included statements trading account if the trading account is concerning the purpose of and basis for not a proprietary account.’’ the proposed rule change and discussed (2) Persistent Firm Designated ID any comments it received on the proposed rule change. The text of these The Exchange also proposes to amend statements may be examined at the the definition of ‘‘Firm Designated ID’’ places specified in Item IV below. The in Rule 4.5(r) to require a Firm Exchange has prepared summaries, set Designated ID assigned by an Industry forth in sections A, B, and C below, of the most significant aspects of such 4 Securities Exchange Act Release No. 89397 (July 24, 2020) (Federal Register pending). statements. PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 E:\FR\FM\07AUN1.SGM 07AUN1

Agencies

[Federal Register Volume 85, Number 153 (Friday, August 7, 2020)]
[Notices]
[Pages 48045-48049]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-17248]



[[Page 48045]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89458; File No. SR-NYSE-2020-11]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Partial Amendment No. 1 To Proposed Rule Change To 
Amend the Schedule of Wireless Connectivity Fees and Charges To Add 
Wireless Connectivity Services

August 3, 2020.

I. Introduction

    On February 11, 2020, New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') 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 (SR-NYSE-2020-11) to amend the 
schedule of Wireless Connectivity Fees and Charges (``Wireless Fee 
Schedule'') to add wireless connectivity services that transport the 
market data of the Exchange and certain affiliates.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

    The Commission published the proposed rule change for public 
comment in the Federal Register on February 25, 2020.\3\ The Commission 
received several comments on the proposed rule change, and a response 
from the Exchange.\4\ On April 1, 2020, pursuant to Section 19(b)(2) of 
the Act,\5\ the Commission designated a longer period within which to 
either approve the proposed rule change, disapprove the proposed rule 
change, or institute proceedings to determine whether to disapprove the 
proposed rule change.\6\ On May 18, 2020, the Commission instituted 
proceedings to determine whether to approve or disapprove the proposed 
rule change.\7\ The Commission received additional comments in response 
to the Order Instituting Proceedings.\8\
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 88237 (February 19, 
2020), 85 FR 10752 (February 25, 2020) (SR-NYSE-2020-11) (``Wireless 
II Notice''). See also Securities Exchange Act Release Nos. 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).
    \4\ Comments received on the Wireless II Notice and the 
Exchange's response are available on the Commission's website at: 
https://www.sec.gov/comments/sr-nyse-2020-11/srnyse202011.htm.
    \5\ 15 U.S.C. 78s(b)(2).
    \6\ 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.
    \7\ See Securities Exchange Act Release No. 88901 (May 18, 
2020), 85 FR 31273 (May 22, 2020) in which the Commission instituted 
proceedings (``Order Instituting Proceedings'' or ``OIP'').
    \8\ Comments received on the Wireless II Notice following the 
OIP also are available on the Commission's website at: https://www.sec.gov/comments/sr-nyse-2020-11/srnyse202011.htm.
---------------------------------------------------------------------------

    On July 27, 2020, the Exchange filed Partial Amendment No. 1 to the 
proposed rule change in response to certain comments on the proposed 
rule change. Partial Amendment No. 1 is described in Item II below, 
which has been substantially prepared by the Exchange.\9\ The 
Commission is publishing this notice to solicit comments on Partial 
Amendment No. 1 from interested persons.\10\
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    \9\ The Commission has reformatted the Exchange's presentation 
of the footnotes.
    \10\ Partial Amendment No. 1 is also available on the 
Commission's website at: https://www.sec.gov/comments/sr-nyse-2020-11/srnyse202011.htm. The Commission also refers interested persons 
to Securities Exchange Act Release No. 88168 (February 11, 2020), 85 
FR 8938 (February 18, 2020) (SR-NYSE-2020-05) (wherein the Exchange 
filed a proposed rule change to establish the Wireless Fee Schedule 
listing available wireless bandwidth connections between the Mahwah, 
New Jersey data center and other data centers (``Wireless I'') and 
concurrently proposes to partially amend Wireless I). Partial 
Amendment No. 1 to Wireless I is available on the Commission's 
website at: https://www.sec.gov/comments/sr-nyse-2020-05/srnyse202005.htm.
---------------------------------------------------------------------------

II. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Amendment

    New York Stock Exchange LLC (``NYSE'' or the ``Exchange'') hereby 
submits this Partial Amendment No. 1 to the above-referenced filing 
(``Filing'') in connection with the proposed rule change to add 
wireless connectivity that transport the market data of the Exchange 
and certain affiliates to the schedule of Wireless Connectivity Fees 
and Charges (the ``Wireless Fee Schedule''). With this Partial 
Amendment No. 1, the Exchange proposes a new rule to place restrictions 
on the use of a pole on the grounds of the Mahwah, New Jersey data 
center that is used for wireless connectivity services that transport 
the market data of the Exchange and certain of its affiliates.
    The Exchange proposes the following amendments to the Filing:
    1. The Exchange proposes to amend the first paragraph in Item 1(a) 
on page 3 of the Filing:
    The Exchange proposes to amend the first paragraph of Item 1(a) on 
page 3 of the Filing to add ``(a)'' before ``wireless connectivity 
services'' and add new text at the end of the paragraph to describe the 
proposed rule change, as follows (new text italicized):

    Pursuant to the provisions of Section 19(b)(1) of the Securities 
Exchange Act of 1934 (the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ 
New York Stock Exchange LLC (``NYSE'' or the ``Exchange'') proposes 
to add (a) wireless connectivity services that transport the market 
data of the Exchange and certain affiliates to the schedule of 
Wireless Connectivity Fees and Charges (the ``Wireless Fee 
Schedule''); and (b) a new rule to place restrictions on the use of 
a pole on the grounds of the Mahwah, New Jersey data center that is 
used for such wireless connectivity services.

    2. The Exchange proposes to amend the carryover paragraph on pages 
3 and 4 of the Filing (second full paragraph on page 24 of the Exhibit 
1):
    The Exchange proposes to add amend the carryover paragraph on pages 
3 and 4 of the Filing (second full paragraph on page 24 of the Exhibit 
1) to add ``(a)'' before ``wireless connectivity services'' and add new 
text to describe the proposed rule change, as follows (new text 
italicized, deletion in [brackets]):

    The Exchange proposes to add (a) wireless connectivity services 
that transport market data of the Exchange and its affiliates NYSE 
Arca, Inc. (``NYSE Arca'') and NYSE National, Inc. (``NYSE 
National'') to the Wireless Fee Schedule[.],3/4 and (b) a 
new rule to place restrictions on the use of a pole on the grounds 
of the Mahwah, New Jersey data center that is used for such wireless 
connectivity services.

    3. The Exchange proposes to add a new section titled ``Proposed New 
Rule'' and accompanying footnotes after the first full paragraph on 
page 14 of the Filing (first full paragraph on page 39 of the Exhibit 
1):
    The Exchange proposes a new rule to place restrictions on the use 
of a pole on the grounds of the Mahwah, New Jersey data center that is 
used for wireless connectivity services. Accordingly, the Exchange 
proposes to add a new section titled ``Proposed New Rule'' and 
accompanying footnotes (subsequent footnotes would be renumbered in a 
conforming change) after the first full paragraph on page 14 of the 
Filing (first full paragraph on page 39 of the Exhibit 1), after the 
end of the section titled ``The Proposed Service and Fees,'' as follows 
(all text is new):

Proposed New Rule

    Since 2016, IDS has had the use of a pole on the grounds of the 
Mahwah data center.27/28 The data center pole is part of 
the network utilized for the Wireless Market Data Connections to the 
Carteret and Secaucus Third Party Data Centers.28/29 At 
the data center pole, the wireless connection to the Third Party 
Data Centers converts to a fiber connection, and the fiber 
connection travels

[[Page 48046]]

from the data center pole into the Mahwah data 
center.29/30 The equipment on the data center pole 
belongs to IDS and Anova Technologies, LLC (``Anova''), the non-ICE 
entity that owns the wireless network used for the Wireless Market 
Data Connections to Secaucus and Carteret.30/31
    Other third parties that offer wireless services utilize 
commercial poles located outside the grounds of the Mahwah, New 
Jersey data center for their wireless networks. A third party's 
wireless connections to the Third Party Data Center convert to fiber 
connections at the commercial pole, and the fiber connects the 
commercial pole to the Mahwah data center.
    Several such third parties have objected to the use of the data 
center pole for the Wireless Market Data Connections. They argue 
that IDS has an advantage over its competitors because third parties 
are not allowed access to the data center pole,31/32 and 
the data center pole is closer to the Mahwah data center than any 
commercial pole.32/33 At least one third party has raised 
the additional concern that the Wireless Market Data Connections may 
benefit from ``less obvious and more discreet types of latency 
advantages'' due to infrastructure inside the Mahwah data center, 
noting that ``some connections may have a longer fiber route than 
others within a data center or may have to go through various 
equipment or meet me rooms that an affiliate or preferred provider 
of an exchange do not.'' 33/34
    The Exchange is proposing a new Rule 3.14 (Data Center Pole 
Latency Restrictions--Connectivity to Production of Exchange Market 
Data) that would require that the length of the connection from the 
data center pole to the point inside the Mahwah data center where 
Exchange market data is produced be no less than the length of the 
connection from the closest commercial pole to the same point. By 
requiring that the compared connections both extend to where 
Exchange market data is produced, the proposed rule would take 
distances within the Mahwah data center into account.
    The proposed rule would include the following definitions:
     ``Commercial Pole'' would mean a pole (a) on which one 
or more third parties locate wireless equipment used to offer 
wireless connectivity to other third parties, and (b) from which a 
fiber connection extends from third party equipment on the pole to 
the Data Center.
     ``Data Center'' would mean the Mahwah, New Jersey data 
center where the Exchange's matching engine is located, or its 
successor.
     ``Data Center Pole'' would mean a pole that (a) holds 
wireless equipment, (b) is located within the grounds of the Data 
Center, and (c) cannot be used by third parties other than third 
parties with which the Exchange or an ICE Affiliate has an agreement 
to provide services in the name of the Exchange or an ICE Affiliate.
     ``ICE Affiliate'' would mean Intercontinental Exchange, 
Inc. (``ICE'') and any entity that directly or indirectly, through 
one or more intermediaries, controls, is controlled by, or is under 
common control with ICE, where ``control'' means that one entity 
possesses, directly or indirectly, voting control of the other 
entity either through ownership of capital stock or other equity 
securities or through majority representation on the board of 
directors or other management body of such entity.

    The proposed rule would require that:

the length of the connection between (a) the base of the Data Center 
Pole and (b) the point inside the Data Center where Exchange market 
data is produced shall be no less than the length of the connection 
between (x) the base of the closest Commercial Pole and (y) the 
point inside the Data Center where Exchange market data is produced.

27/28 See Securities Exchange Act Release No. 76748 
(December 23, 3015), 80 FR 81609 (December 30, 2015) (SR-NYSE-2015-
52) (order approving proposed rule change to the co-location 
services offered by the NYSE (the offering of a wireless connection 
to allow users to receive market data feeds from third party 
markets) and to reflect changes to the NYSE's price list related to 
these services).
28/29 The Wireless Market Data Connections with Markham, 
Canada do not use equipment on the data center pole.
29/30 The wireless network similarly converts to a fiber 
connection for its connection into the Third Party Data Centers.
30/31 Equipment for services Anova offers under its own 
name is not allowed on the data center pole.
31/32 IDS does not sell rights to third parties to 
operate wireless equipment on the data center pole due to space 
limitations, security concerns, and the interference that would 
arise between equipment placed too closely together.
32/33 See letter from Gregory Babyak, Global Head of 
Regulatory Affairs, Bloomberg L.P., to Ms. Vanessa Countryman, 
Secretary, Securities and Exchange Commission (``Commission''), 
dated June 12, 2020; letter from Stephen John Berger, Managing 
Director, Global Head of Government and Regulatory Policy, Citadel 
Securities, to Ms. Vanessa Countryman, Secretary, Commission, dated 
June 12, 2020; letter from Jim Considine, Chief Financial Officer, 
McKay Brothers LLC (``McKay Brothers''), to Ms. Vanessa Countryman, 
Secretary, Commission, dated June 12, 2020 (``McKay Letter''); and 
letter from Thomas M. Merritt, Deputy General Counsel, Virtu 
Financial, Inc. to Ms. Vanessa Countryman, Secretary, Commission, 
dated March 10, 2020.
33/34 McKay Letter, supra note 32/33, at 9.

    4. The Exchange proposes to add new text after the first full 
paragraph on page 16 of the Filing (first full paragraph on page 41 of 
the Exhibit 1):
    The Exchange proposes to amend the Filing to include additional 
analysis on the competitive environment for wireless connections. 
Accordingly, the Exchange proposes to add a paragraph and accompanying 
footnotes (subsequent footnotes would be renumbered in a conforming 
change) after the first full paragraph on page 16 of the Filing (first 
full paragraph on page 41 of the Exhibit 1), as follows (all text is 
new):

    Such competitors can offer wireless connectivity to Selected 
Market Data or other Exchange market data in the Third Party Data 
Centers by obtaining the market data at the Mahwah data center and 
sending it over their wireless network to the Third Party Data 
Centers.37/38 The Exchange believes that its competitors' 
wireless connections provide connectivity at the same or similar 
speed as the Wireless Market Data Connections, and at the same or 
similar cost. Indeed, the McKay Letter acknowledges that McKay 
Brothers has the fastest wireless network.38/39

37/38 A market participant in any of the Third Party Data 
Centers or the Mahwah data center also may create a proprietary 
wireless market data connection, connect through another market 
participant, or utilize fiber connections offered by the Exchange, 
ICE Affiliates, and other service providers and third party 
telecommunications providers.
38/39 McKay Letter, supra note 32/33, at 4.

    5. The Exchange proposes to amend the Statutory Basis section of 
the Filing after the third full paragraph on page 18 of the Filing 
(second full paragraph on page 45 of the Exhibit 1):
    The Exchange proposes to include information in the Filing 
regarding why it believes the proposed new rule is reasonable. The 
Exchange proposes to amend the Statutory Basis section of the Filing to 
add new paragraphs and accompanying footnotes (subsequent footnotes 
would be renumbered in a conforming change) after the third full 
paragraph on page 18 of the Filing (second full paragraph on page 45 of 
the Exhibit 1), at the end of the section titled ``The Proposed Change 
is Reasonable,'' as follows (all text is new):

    The Exchange believes that the proposed new Rule 3.14 would be 
reasonable as, pursuant to the rule, the networks for the Wireless 
Market Data Connections, and future wireless connections that use a 
Data Center Pole, would ``operat[e] in the same manner as 
competitors do today without a latency subsidy or other advantage 
provided by the Exchanges. . . .'' 43/44 Accordingly, the 
proposed new rule would promote just and equitable principles of 
trade and, in general, protect investors and the public interest by 
ensuring that the subscribers to services using the IDS wireless 
network do not benefit from any physical proximity ``on the segment 
[of the network] closest to the Exchanges' data center that no 
competitor can replicate.'' 44/45 By ending both of the 
compared connections at the point inside the Data Center where 
Exchange market data is produced, the proposed rule would take 
distances within the Mahwah data center into 
account.45/46
    The proposed new rule would not apply differently to distinct 
types or sizes of market participants. The Exchange would be

[[Page 48047]]

required to ensure that the length of the connection between (a) the 
base of the Data Center Pole and (b) the point inside the Data 
Center where Exchange market data is produced, would be no less than 
the length of the connection between (x) the base of the closest 
Commercial Pole and (y) the point inside the Data Center where 
Exchange market data is produced.
    The Exchange believes that the proposed definition of 
``Commercial Pole'' is reasonable and would promote just and 
equitable principles of trade because it would encompass any pole on 
which a third party locates its wireless equipment in order to offer 
wireless connectivity to customers. The Exchange believes that such 
third parties are the direct competitors for the Wireless Market 
Data Connections, as they also offer wireless connections to 
customers. If a third party used a pole for a proprietary wireless 
network and that pole does not have one or more third parties' 
wireless equipment used to offer wireless connectivity to other 
third parties, that pole would not fall within the scope of the 
definition of Commercial Pole.
    The Exchange believes that the proposed definition of ``Data 
Center'' is reasonable and would promote just and equitable 
principles of trade because it would capture any data center to 
which the Exchange locates its matching engine.
    The Exchange believes that the proposed definition of ``Data 
Center Pole'' is reasonable and would promote just and equitable 
principles of trade because it would encompass not just the current 
pole, but also any additional or successor pole on the grounds of 
the Data Center, so long as such pole could not be used by third 
parties other than third parties with which the Exchange or an ICE 
Affiliate had an agreement to provide services in the name of the 
Exchange or an ICE Affiliate, such as Anova.
    The Exchange believes that the definition of ``ICE Affiliate'' 
is reasonable and would promote just and equitable principles of 
trade because the same definition is used in NYSE Rule 497 
(Additional Requirements for Listed Securities Issued by 
Intercontinental Exchange, Inc. or its Affiliates),46/47 
and so using it would add transparency, clarity and internal 
consistency to Exchange rules.

43/44 McKay Letter, supra note 32/33, at 7.
44/45 Id, at note 33.
45/46 Each of the Affiliate SROs is filing for a rule 
change that is substantially similar to the proposed Exchange rule. 
Assuming such filings are approved by the Commission, to the extent 
that the market data of an Affiliate SRO is produced separately from 
where the Exchange market data is produced, the wireless connection 
to that Affiliate SRO's market data would be captured by that 
Affiliate SRO's rule.
46/47 The definition of ICE has been added to the text.

    6. The Exchange proposes to amend the Statutory Basis section of 
the Filing after the carryover paragraph on pages 19 and 20 of the 
Filing (second full paragraph on page 47 of the Exhibit 1):
    The Exchange proposes to include information in the Filing 
regarding why it believes the proposed new rule is not unfairly 
discriminatory. The Exchange proposes to amend the Statutory Basis 
section of the Filing to add new paragraphs and accompanying footnotes 
(subsequent footnotes would be renumbered in a conforming change) after 
the carryover paragraph on pages 19 and 20 of the Filing (second full 
paragraph on page 47 of the Exhibit 1), immediately prior to the last 
paragraph of the section titled ``The Proposed Change is Not Unfairly 
Discriminatory,'' as follows (all text is new):

    The Exchange believes that the proposed new Rule 3.14 would not 
be unfairly discriminatory, as pursuant to the rule, the networks 
for the Wireless Market Data Connections, and future wireless 
connections that use the Data Center Pole, would ``operat[e] in the 
same manner as competitors do today without a latency subsidy or 
other advantage provided by the Exchanges. . . .'' 47/48 
Accordingly, the proposed new rule would ensure that the IDS 
wireless network does not benefit from physical proximity ``on the 
segment [of the network] closest to the Exchanges' data center that 
no competitor can replicate.'' 48/49 By ending both of 
the compared connections at the point inside the Data Center where 
Exchange market data is produced, the proposed rule would take 
distances within the Mahwah data center into account.
    The proposed new rule would not apply differently to distinct 
types or sizes of market participants. The Exchange would be 
required to ensure that the length of the connection between (a) the 
base of the Data Center Pole and (b) the point inside the Data 
Center where Exchange market data is produced, would be no less than 
the length of the connection between (x) the base of the closest 
Commercial Pole and (y) the point inside the Data Center where 
Exchange market data is produced.
    The Exchange believes that the proposed definition of 
``Commercial Pole'' would not be unfairly discriminatory because it 
would encompass any pole on which a third party locates its wireless 
equipment in order to offer wireless connectivity to customers. The 
Exchange believes that such third parties are the direct competitors 
for the Wireless Market Data Connections, as they also offer 
wireless connections to customers. If a third party used a pole for 
a proprietary wireless network and that pole does not have one or 
more third parties' wireless equipment used to offer wireless 
connectivity to other third parties, that pole would not fall within 
the scope of the definition of Commercial Pole. The Exchange 
believes that the proposed definition of ``Data Center'' would not 
be unfairly discriminatory because it would capture any data center 
to which the Exchange locates its matching engine.
    The Exchange believes that the proposed definition of ``Data 
Center Pole'' would not be unfairly discriminatory because it would 
encompass not just the current pole, but also any additional or 
successor pole on the grounds of the Data Center, so long as such 
pole could not be used by third parties other than third parties 
with which the Exchange or an ICE Affiliate had an agreement to 
provide services in the name of the Exchange or an ICE Affiliate, 
such as Anova.
    The Exchange believes that the definition of ``ICE Affiliate'' 
would not be unfairly discriminatory because the same definition is 
used in Rule 497 49/50 and so using it would add 
transparency, clarity and internal consistency to Exchange rules.

47/48 McKay Letter, supra note 32/33, at 7.
48/49 Id., at note 33.
49/50 The definition of ICE has been added to the text.

    7. The Exchange proposes to amend the section of the Filing titled 
``Self-Regulatory Organization's Statement on Burden on Competition'' 
in the following two ways:
    The Exchange proposes to include information in the Filing 
regarding why it believes the proposed new rule would impose any burden 
on competition that is not necessary or appropriate in furtherance of 
the purposes of Section 6(b)(8) of the Securities Exchange Act of 1934 
(the ``Act'').\11\ Accordingly, the Exchange proposes to amend the 
section of the Filing titled ``Self-Regulatory Organization's Statement 
on Burden on Competition'' in the following two ways. First, to set the 
new text apart from the previous discussion regarding the burden on 
competition, the Exchange proposes to add the heading ``Wireless Market 
Data Connectivity'' immediately before the first full paragraph under 
the heading on page 20 of the Filing (page 48 of the Exhibit 1). The 
new heading would apply to the current text of the Filing.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

    Second, after the first full paragraph on page 22 of the Filing 
(first full paragraph on page 51 of the Exhibit 1), the Exchange 
proposes to add the heading ``Proposed New Rule'' and new paragraphs 
and accompanying footnotes (subsequent footnotes would be renumbered in 
a conforming change), as follows (all text is new):

Proposed New Rule

    The Exchange does not believe that the proposed new rule would 
impose any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of Section 6(b)(8) of the 
Act.52/53
    With the exception of Anova, third parties do not have access to 
the data center pole. Under the proposed rule, the Exchange would 
always be obligated to ensure that the length of the connection 
between (a) the base of the Data Center Pole and (b) the point 
inside the Data Center where Exchange market data is produced, would 
be no less than the length of the connection between (x) the base of 
the closest Commercial Pole and (y) the point inside the Data Center 
where Exchange market data is produced. IDS, not the Exchange, 
provides the Wireless Market

[[Page 48048]]

Data Connections to market participants, and so it would be IDS that 
would have to slow its connection down as required by the rule. 
Accordingly, the Exchange believes that the only burden on 
competition of the proposed change would be on IDS.
    Nonetheless, the Exchange believes that the proposed rule change 
would not impose any burden on competition that is not necessary or 
appropriate because the proposed change would ensure that the IDS 
wireless network did not benefit from physical proximity ``on the 
segment [of the network] closest to the Exchanges' data center that 
no competitor can replicate.'' 53/54 The networks for the 
Wireless Market Data Connections, and future wireless connections 
that use the Data Center Pole, would ``operat[e] in the same manner 
as competitors do today without a latency subsidy or other advantage 
provided by the Exchanges. . . .'' 54/55
    The proposed rule would not otherwise put a burden on 
competition. As noted above, access to the data center pole is not 
required for third parties to establish wireless networks that can 
compete with the Wireless Market Data Connections to the Carteret 
and Secaucus Third Party Data Centers, as evidenced by the existing 
wireless connections offered by third party 
competitors.55/56 Such competitors can offer wireless 
connectivity to Selected Market Data or other Exchange market data 
in the Third Party Data Centers by obtaining the market data at the 
Mahwah data center and sending it over their wireless network to the 
Third Party Data Centers.56/57 Indeed, the Exchange 
believes that its competitors' wireless connections provide 
connectivity at the same or similar speed as the Wireless Market 
Data Connections, and at the same or similar cost. The McKay Letter 
acknowledges that McKay Brothers has the fastest wireless 
network.57/58
    The Exchange notes that proximity to a data center is not the 
only determinant of a wireless network's latency. Rather, the 
latency of a wireless network depends on several factors. Variables 
include the wireless equipment utilized; the route of, and number of 
towers or buildings in, the network; and the fiber equipment used at 
either end of the connection. Moreover, latency is not the only 
consideration that a customer may have in selecting a wireless 
network to connect to for market data. Other considerations may 
include the amount of network uptime; the equipment that the network 
uses; the cost of the connection; and the applicable contractual 
provisions.
    The proposed change does not affect competition among national 
securities exchanges or among members of the Exchange, but rather 
between IDS and its commercial competitors.

52/53 15 U.S.C. 78f(b)(8).
53/54 McKay Letter, supra note 32/33, at note 33.
54/55 Id., at 7.
55/56 Based on the information available to it, the 
Exchange believes that a market participant in the Carteret or 
Secaucus Third Party Data Center may purchase a wireless connection 
to the NYSE and NYSE Arca Integrated Feed data feeds from at least 
two other providers of wireless connectivity.
56/57 A market participant in any of the Third Party Data 
Centers or the Mahwah data center also may create a proprietary 
wireless market data connection, connect through another market 
participant, or utilize fiber connections offered by the Exchange, 
ICE Affiliates, and other service providers and third party 
telecommunications providers.
57/58 Id., at 4.

    8. The Exchange proposes to add a list under ``Exhibit 5--Text of 
the Proposed Rule Change'' on page 22 of the Filing:
    The Exchange proposes to add a new Exhibit 5B. Accordingly, the 
Exchange proposes to add a list under ``Exhibit 5--Text of Proposed 
Rule Change'' on page 22 of the Filing, as follows (new text 
italicized):

Exhibit 5--Text of the Proposed Rule Change

A. Text of the Proposed Schedule of Wireless Connectivity Fees and 
Charges
B. Text of the Proposed Rule

    9. The Exchange proposes to add new text to the first full 
paragraph of Section I on page 23 of the Exhibit 1:
    The Exchange proposes to add new text to the first full paragraph 
of Section I on page 23 of the Exhibit 1, as follows (new text 
italicized):

    The Exchange proposes to add wireless connectivity services that 
transport the market data of the Exchange and certain affiliates to 
the schedule of Wireless Connectivity Fees and Charge (the 
``Wireless Fee Schedule'') and add a new rule to place restrictions 
on the use of a pole on the grounds of the Mahwah, New Jersey data 
center that is used for such wireless connectivity services. The 
proposed rule change is available on the Exchange's website at 
www.nyse.com, at the principal office of the Exchange, and at the 
Commission's Public Reference Room.

    10. The Exchange proposes to amend ``Exhibit 5'' to ``Exhibit 5A'' 
on page 54 of the Exhibit 5:
    To reflect the addition of a new Exhibit 5B, the Exchange proposes 
to add ``A'' to ``EXHIBIT 5'' on page 54 of the Exhibit 5, to make it 
``EXHIBIT 5A''.
* * * * *
    All other representations in the Filing remain as stated therein 
and no other changes are being made.

III. Date of Effectiveness of the Proposed Rule Change As Modified By 
Partial Amendment No. 1 and Timing for Commission Action

    Within 180 days after the date of publication of the initial Notice 
of Filing in the Federal Register or within such longer period up to an 
additional 60 days (i) as the Commission may designate if it finds such 
longer period to be appropriate and publishes its reasons for so 
finding or (ii) as to which the self-regulatory organization consents, 
the Commission will issue an order approving or disapproving such 
proposed rule change, as amended.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended by Partial Amendment No. 1, is consistent with the 
Act. Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSE-2020-11 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2020-11. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSE-2020-11, and

[[Page 48049]]

should be submitted on or before August 28, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-17248 Filed 8-6-20; 8:45 am]
BILLING CODE 8011-01-P
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