Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Temporary Waiver of the Co-Location Hot Hands Fee, 53885-53888 [2020-19046]
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Federal Register / Vol. 85, No. 169 / Monday, August 31, 2020 / Notices
proposed rule change will apply to all
market participants in the same manner.
All market participants will be able to
effect off-floor position transfers
pursuant to Rule 7160(a)(2) on a
recurring or routine basis without
providing the Exchange with notice of
such transfers. The Exchange does not
believe the proposed rule change will
impose any burden on intermarket
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act because it relates
solely to the notice required for off-floor
transfers that may occur today, and the
frequency with which those transfers
may occur. These transfers will
continue to not result in a change in
ownership or netting, and thus will
have no impact on outstanding options
positions.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has neither solicited
nor received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 12 and Rule 19b4(f)(6) thereunder.13
A proposed rule change filed under
Rule 19b-4(f)(6) 14 normally does not
become operative for 30 days after the
date of the filing. However, pursuant to
Rule 19b-4(f)(6)(iii),15 the Commission
may 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 to so
that it may adopt the proposed position
transfer rules as soon as possible which,
according to the Exchange, would
benefit investors and the general public
12 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
14 17 CFR 240.19b–4(f)(6).
15 17 CFR 240.19b–4(f)(6)(iii).
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13 17
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53885
because it will provide Participants with
the ability to request a transfer, for
limited, non-recurring types of transfers,
without the need for exposing those
orders on the Exchange. The proposed
rule change does not present any unique
or novel regulatory issues and is
substantively identical to provisions in
Cboe Rule 6.7. Accordingly, the
Commission hereby waives the
operative delay and designates the
proposal operative upon filing.16
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 will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
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–BOX–2020–35 and should
be submitted on or before September 21,
2020.
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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Jill M. Peterson,
Assistant Secretary.
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 SRBOX–2020–35 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–BOX–2020–35. 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
16 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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[FR Doc. 2020–19052 Filed 8–28–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89652; File No. SR–
NYSEArca-2020–74]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Extend the Temporary
Waiver of the Co-Location Hot Hands
Fee
August 25, 2020.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on August
11, 2020, NYSE Arca, Inc. (‘‘NYSE
Arca’’ or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
17 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
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Federal Register / Vol. 85, No. 169 / Monday, August 31, 2020 / Notices
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to extend the
temporary waiver of the co-location
‘‘Hot Hands’’ fee. The proposed rule
change is available on the Exchange’s
website at www.nyse.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to extend of
the temporary waiver of the colocation 4 ‘‘Hot Hands’’ fee through the
reopening of the Mahwah, New Jersey
data center (‘‘Data Center’’). The waiver
of the Hot Hands fee is scheduled to
expire on August 31, 2020.5
The Exchange is an indirect
subsidiary of Intercontinental Exchange,
Inc. (‘‘ICE’’). Through its ICE Data
Services (‘‘IDS’’) business, ICE operates
the Data Center, from which the
Exchange provides co-location services
to Users.6 Among those services is a
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4 The
Exchange initially filed rule changes
relating to its co-location services with the
Securities and Exchange Commission
(‘‘Commission’’) in 2010. See Securities Exchange
Act Release No. 63275 (November 8, 2010), 75 FR
70048 (November 16, 2010) (SR–NYSEArca–2010–
100).
5 See Securities Exchange Act Release No. 89174
(June 29, 2020), 85 FR 40349 (July 6, 2020) (SR–
NYSEArca–2020–58).
6 For purposes of the Exchange’s co-location
services, a ‘‘User’’ means any market participant
that requests to receive co-location services directly
from the Exchange. See Securities Exchange Act
Release No. 76010 (September 29, 2015), 80 FR
60197 (October 5, 2015) (SR–NYSEArca–2015–82).
As specified in the NYSE Arca Options Fees and
Charges and the NYSE Arca Equities Fees and
Charges (together, the ‘‘Fee Schedules’’), a User that
incurs co-location fees for a particular co-location
service pursuant thereto would not be subject to colocation fees for the same co-location service
charged by the Exchange’s affiliates the New York
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‘‘Hot Hands’’ service, which allows
Users to use on-site Data Center
personnel to maintain User equipment,
support network troubleshooting, rack
and stack a server in a User’s cabinet;
power recycling; and install and
document the fitting of cable in a User’s
cabinet(s).7 The Hot Hands fee is $100
per half hour.
ICE previously announced to Users
that the Data Center would be closed to
third parties starting on March 16, 2020,
to help avoid the spread of COVID–19,
which could negatively impact Data
Center functions. Prior to the closure of
the Data Center, the Chief Executive
Officer of the Exchange took the actions
required under NYSE Arca Rules 7.1–E
and 7.1–O to close the co-location
facility of the Exchange to third parties.
The closure period was extended three
times, through August 31, 2020 (the
‘‘Initial Closure’’).8
ICE has announced to Users that,
because the concerns that led to the
Initial Closure still apply, the closure of
the Data Center will be extended, with
the date of the reopening announced
through a customer notice.
If a User’s equipment requires work
while a Rules 7.1–E and 7.1–O closure
is in effect, the User has to use the Hot
Hands service and, absent a waiver,
incurs Hot Hands fees for the work.
Given that, the Exchange waived all Hot
Hands fees for the duration of the Initial
Closure.9 Because the period has been
extended, the Exchange proposes to
extend the waiver of the Hot Hands Fee
for the length of the period. To that end,
the Exchange proposes to revise the
footnote to the Hot Hands Fee in the Fee
Schedules as follows (deletions
bracketed, additions underlined):
† Fees for Hot Hands Services will be
waived beginning on March 16, 2020 through
[the earlier of August 31, 2020 and] the
reopening of the Mahwah, New Jersey data
center. The date of the reopening will be
announced through a customer notice.
The Exchange believes that there will
be sufficient Data Center staff on-site to
Stock Exchange LLC, NYSE American LLC, NYSE
Chicago, Inc., and NYSE National, Inc. (together,
the ‘‘Affiliate SROs’’). See Securities Exchange Act
Release No. 70173 (August 13, 2013), 78 FR 50459
(August 19, 2013) (SR–NYSEArca-2013–80). Each
Affiliate SRO has submitted substantially the same
proposed rule change to propose the changes
described herein. See SR–NYSE–2020–69, SR–
NYSEAmer–2020–63, SR–NYSECHX–2020–25, and
SR–NYSENAT–2020–26.
7 See Securities Exchange Act Release No. 72720
(July 30, 2014), 79 FR 45577 (August 5, 2014) (SR–
NYSEArca–2014–81).
8 See Securities Exchange Act Release Nos. 88398
(March 17, 2020), 85 FR 16398 (March 23, 2020)
(SR–NYSEArca–2020–22); 88520 (March 31, 2020),
85 FR 19208 (April 6, 2020) (SR–NYSEArca–2020–
26); and 88961 (May 27, 2020), 85 FR 33755 (June
2, 2020) (SR–NYSEArca–2020–47).
9 See 85 FR 40349, supra note 5.
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comply with User requests for Hot
Hands service.
The proposed extension of the waiver
would apply equally to all Users. The
proposed extension of the fee waiver
would not apply differently to distinct
types or sizes of market participants.
Rather, it would continue to apply
uniformly to all Users.
The proposed change is not otherwise
intended to address any other issues
relating to co-location services and/or
related fees, and the Exchange is not
aware of any problems that Users would
have in complying with the proposed
change.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,10 in general, and
furthers the objectives of Sections
6(b)(4) and (5) of the Act,11 in particular,
because it provides for the equitable
allocation of reasonable dues, fees, and
other charges among its members,
issuers and other persons using its
facilities and does not unfairly
discriminate between customers,
issuers, brokers or dealers. In addition,
it is designed to foster cooperation and
coordination with persons engaged in
regulating, clearing, settling, processing
information with respect to, and
facilitating transactions in securities, to
remove impediments to, and perfect the
mechanisms of, a free and open market
and a national market system and, in
general, to protect investors and the
public interest and because it is not
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
The Proposed Rule Change Is
Reasonable
The Exchange believes that the
proposed rule change is reasonable for
the following reasons.
Given that the closure of the Data
Center has been extended, the Exchange
believes that it is reasonable to grant the
proposed corresponding extension of
the waiver of the Hot Hands Fee. While
a Rules 7.1–E and 7.1–O closure is in
effect, User representatives are not
allowed access to the Data Center. If a
User’s equipment requires work during
such period, the User has to use the Hot
Hands service. Absent a waiver, the
User would incur Hot Hands fees for the
work.
The proposed extension of the waiver
would allow a User to have work carried
out on its equipment notwithstanding
10 15
11 15
E:\FR\FM\31AUN1.SGM
U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
31AUN1
Federal Register / Vol. 85, No. 169 / Monday, August 31, 2020 / Notices
the closure of the Data Center without
incurring Hot Hands fees.
The Exchange does not know when
the Mahwah data center will be
reopened, and so believes it is
reasonable to leave the date open ended.
Adding a revised potential reopening
date to the footnote may create an
expectation that the closure has a stated
end point. The Exchange believes that it
is more reasonable to state that the
waiver will continue until the data
center is reopened, and to inform Users
how they will receive notice of the
reopening. The change would also be
consistent with the announcement that
ICE has made to Users.
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The Proposed Rule Change Is Equitable
The Exchange believes the proposed
rule change is an equitable allocation of
its fees and credits for the following
reasons.
The proposed extension of the waiver
would apply equally to all Users. The
proposed extension would not apply
differently to distinct types or sizes of
market participants. Rather, it would
apply uniformly to all Users.
The Exchange believes that the
proposal is equitable because the
extension of the waiver would mean
that for the duration of the closure of the
Data Center all similarly-situated Users
would not be charged a fee to use the
Hot Hands service.
The Proposed Change Is Not Unfairly
Discriminatory and Would Protect
Investors and the Public Interest
The Exchange believes that the
proposed change is not unfairly
discriminatory for the following
reasons.
The proposed extension of the waiver
would not apply differently to distinct
types or sizes of market participants.
Rather, all Users whose equipment
requires work during the extension of
the Data Center closure would have the
resulting fees waived, and the extension
of the waiver would apply uniformly to
all Users during the period. For the
reasons above, the proposed changes do
not unfairly discriminate between or
among market participants.
In addition, the Exchange believes
that the proposed rule change would
perfect the mechanisms of a free and
open market and a national market
system and, in general, protect investors
and the public interest because it would
allow a User to have work carried out
on its equipment notwithstanding a
Rules 7.1–E and 7.1–O closure without
incurring Hot Hands fees. Accordingly,
the Exchange believes that the requested
extension of the waiver is designed to
perfect the mechanisms of a free and
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open market and a national market
system and, in general, protect investors
and the public interest by facilitating
the uninterrupted availability of Users’
equipment.
For all of the above reasons, the
Exchange believes that the proposal is
consistent with the Act.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
In accordance with Section 6(b)(8) of
the Act,12 the Exchange believes that the
proposed rule change will not impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
Intramarket Competition
The Exchange does not believe that
the proposed change would place any
burden on intramarket competition that
is not necessary or appropriate.
The proposed extension of the waiver
is not designed to affect competition,
but rather to provide relief to Users that,
while a Rules 7.1–E and 7.1–O closure
is in effect, have no option but to use
the Hot Hands service.
The proposed extension of the waiver
would not apply differently to distinct
types or sizes of market participants.
Rather, all Users whose equipment
requires work during the extension of
the Data Center closure would have the
resulting fees waived, and the extension
of the waiver would apply uniformly to
all Users during the period.
Intermarket Competition
The Exchange does not believe that
the proposed change would impose any
burden on intermarket competition that
is not necessary or appropriate.
The Exchange believes that the
proposed change would not affect the
competitive landscape among the
national securities exchanges, as the Hot
Hands service is solely charged within
co-location to existing Users, and would
be temporary.
For the reasons described above, the
Exchange believes that the proposed
rule change reflects this competitive
environment.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective
upon filing pursuant to Section
19(b)(3)(A) 13 of the Act and
subparagraph (f)(2) of Rule 19b–4 14
thereunder, because it establishes a due,
fee, or other charge imposed by the
Exchange.
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
under Section 19(b)(2)(B) 15 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
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–
NYSEArca-2020–74 on the subject line.
Paper Comments
• Send paper comments in triplicate
to: Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSEArca-2020–74. 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
13 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
15 15 U.S.C. 78s(b)(2)(B).
14 17
12 15
PO 00000
U.S.C. 78f(b)(8).
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Federal Register / Vol. 85, No. 169 / Monday, August 31, 2020 / Notices
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NYSEArca–2020–74 and
should be submitted on or before
September 21, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2020–19046 Filed 8–28–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89659; File No. TP 20–02]
Order Granting Exemptions From
Certain Rules Related to the Sale and
Delivery of Physical Securities Under
Regulation SHO Related to COVID–19
August 25, 2020.
I. Introduction
The Depository Trust & Clearing
Corporation (‘‘DTCC’’) has
intermittently suspended physical
securities processing services provided
by the Depository Trust Company
(‘‘DTC’’), its subsidiary, due to ongoing
concerns related to the effects of
COVID–19.1 While DTCC has resumed
limited services for new physical
securities transactions,2 there are likely
16 17
CFR 200.30–3(a)(12).
‘‘Temporary Suspension of DTC Physical
Securities Processing as of Close of
Business on April 8, 2020,’’ Important Notice B#
13276–20 (Apr. 8, 2020) available at https://
www.dtcc.com/-/media/Files/pdf/2020/4/8/1327620.pdf; ‘‘Update on Temporary Suspension of DTC
Physical Securities Processing,’’ Important Notice
B#13352-20 (Apr. 30, 2020) available at https://
www.dtcc.com/-/media/Files/pdf/2020/4/30/1335320.pdf.
2 ‘‘Coronavirus Client FAQ,’’ DTCC (Aug. 4, 2020)
available at https://www.dtcc.com/∼/media/Files/
PDFs/Email-Files/Client-FAQCoronavirus.pdf?mkt_tok=eyJpIjoiTURFellqVXhPR0
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1 E.g.,
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to be delays in settlement for the sales
of equity securities that the seller is
‘‘deemed to own’’ pursuant to Rule
200(b) of Regulation SHO,3 and for
which settlement is dependent on the
delivery of physical certificates (‘‘owned
physical securities’’), which may result
in extended failures to deliver 4 and
have resulting implications for
compliance with Regulation SHO under
the Securities Exchange Act of 1934 (the
‘‘Exchange Act’’).5 The Securities
Industry and Financial Markets
Association (‘‘SIFMA’’) has requested
on behalf of its member firms exemptive
relief from certain provisions of
Regulation SHO 6 in connection with
the intermittent suspension of physical
securities processing at DTC due to
ongoing concerns related to COVID–19.7
The Commission is providing certain
exemptive relief from the ‘‘locate’’ and
V5TVRSaiIsInQiOiJPSzFvVE1qM0ZWTWdXR1Zz
ZlB3c1pNYWJmOWZUUjh1Qyt0b29sYmV4cn
IwWWRXYXdWTjQrSXNaOHpyYWQ1RlNIWV
FQeGhoYTN3cDJaRFwvb1JPRGdzR2c9PSJ9. DTC
has requested that participants only submit urgent
time-sensitive transactions. ‘‘Partial Resumption of
DTC Physical Securities Processing,’’ Important
Notice B# 13402–20 (May 14, 2020) available at
https://www.dtcc.com/-/media/Files/pdf/2020/5/
14/13402-20.pdf.
3 17 CFR 242.200(b).
4 Specifically, failures to deliver securities may
occur at the Continuous Net Settlement system, or
‘‘CNS,’’ which is operated by the National
Securities Clearing Corporation (‘‘NSCC’’), a
subsidiary of DTCC. Rule 204 of Regulation SHO
applies specifically to failures to deliver in equity
securities occurring at CNS. 17 CFR
242.204.
5 17 CFR 242.200 et seq.
6 Letter from Robert Toomey, Managing Director
& Associate General Counsel, SIFMA, dated May
21, 2020. SIFMA stated in its request that the
Commission granted similar exemptive relief in
2012 in the aftermath of Hurricane Sandy. See
Order Granting Exemptions From Certain Rules of
Regulation SHO Related to Hurricane Sandy,
Release No. 34–68419 (Dec. 12, 2012) (the ‘‘2012
Hurricane Sandy Order’’), available at https://
www.sec.gov/rules/exorders/2012/34-68419.pdf.
The 2012 Hurricane Sandy Order granted
exemptions from certain provisions of Regulation
SHO related to the inaccessibility of physical
certificates that resulted from water damage
incurred at DTCC’s vault used as part of its Custody
Service for safekeeping of physical certificates.
7 DTCC suspended but recently resumed
processing of physical securities. ‘‘Partial
Resumption of DTC Physical Securities
Processing,’’ Important Notice B# 13402–20 (May
14, 2020) available at https://www.dtcc.com/-/
media/Files/pdf/2020/5/14/13402-20.pdf. However,
based on conversations with SIFMA, we understand
that regular processing may be intermittent during
the current crisis, and that there may be delays in
processing certain physical securities after DTCC
resumes processing after a suspension. See, e.g.,
letter from Robert Toomey, supra note 6 (‘‘While
DTCC has resumed limited services in connection
with processing physical securities . . . we believe
the requested relief continues to be appropriate and
should also provide, given the ongoing
uncertainties in connection with the COVID–19
crisis, mechanisms that would allow market
participants to rely on the relief should there be
further intermittent suspensions of physical
securities processing during this crisis period.’’).
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Sfmt 4703
close-out requirements of Regulation
SHO, as described in more detail below,
for sales of owned physical securities.
II. Regulation SHO
A. Rule 200 Marking Requirement and
Rule 203 ‘‘Locate’’ Requirement
Rule 200(g) of Regulation SHO 8
provides that broker-dealers must mark
all sell orders of any equity security as
‘‘long,’’ ‘‘short,’’ or ‘‘short exempt.’’
Under Rule 200(g)(1), a broker-dealer
may mark an order to sell ‘‘long’’ only
if the seller is ‘‘deemed to own’’ the
security being sold pursuant to
paragraphs (a) through (f) of Rule 200
and either: (1) the security to be
delivered is in the physical possession
or control of the broker-dealer; or (2) it
is reasonably expected that the security
will be in the physical possession or
control of the broker-dealer no later than
the settlement of the transaction.
Due to the intermittent inaccessibility
of physical certificates at DTC as a result
of ongoing concerns related to the
effects of COVID–19, sell orders for
owned physical securities may not
qualify for ‘‘long’’ order marking under
Rule 200(g)(1).9 Specifically, a brokerdealer may not have a reasonable
expectation that such securities will be
in the physical possession or control of
the broker-dealer by the settlement
date.10 Therefore, the broker-dealer
would be required to mark such sale
orders as ‘‘short’’ or, if eligible for Rule
201(c) or (d), ‘‘short exempt.’’ 11
Pursuant to Rule 203(b) of Regulation
SHO, a broker-dealer may not accept a
short sale order in an equity security
from another person, or effect a short
sale in an equity security for its own
account, unless the broker-dealer has:
(1) Borrowed the security, or entered
into a bona fide arrangement to borrow
the security; or (2) reasonable grounds
to believe that the security can be
borrowed so that it can be delivered on
the date delivery is due.12 This
requirement is known as the ‘‘locate’’
requirement, and must be met and
8 17
CFR 242.200(g).
Exchange Act Release No. 50103 (July 28,
2004), 69 FR 48008, 48012, 48015 (Aug. 6, 2004)
(‘‘Regulation SHO Adopting Release’’). As noted
below, sales marked ‘‘short’’ and ‘‘short exempt’’
are generally subject to the Rule 203(b) locate
requirement absent an exception.
10 17 CFR 242.200(g)(1)(ii).
11 Certain sales of owned physical securities may
also qualify under Rule 201(d)(1) to be marked
‘‘short exempt’’ provided that the broker-dealer
executing the transaction makes the required
determination regarding the seller’s ownership of
the security, and that the seller intends to deliver
the security as soon as the current restrictions on
delivery have been removed. 17 CFR 242.201(d)(1).
12 17 CFR 242.203(b).
9 See
E:\FR\FM\31AUN1.SGM
31AUN1
]]>Agencies
[Federal Register Volume 85, Number 169 (Monday, August 31, 2020)]
[Notices]
[Pages 53885-53888]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-19046]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89652; File No. SR-NYSEArca-2020-74]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Extend the
Temporary Waiver of the Co-Location Hot Hands Fee
August 25, 2020.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on August 11, 2020, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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[[Page 53886]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to extend the temporary waiver of the co-
location ``Hot Hands'' fee. The proposed rule change is available on
the Exchange's website at www.nyse.com, at the principal office of the
Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to extend of the temporary waiver of the co-
location \4\ ``Hot Hands'' fee through the reopening of the Mahwah, New
Jersey data center (``Data Center''). The waiver of the Hot Hands fee
is scheduled to expire on August 31, 2020.\5\
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\4\ The Exchange initially filed rule changes relating to its
co-location services with the Securities and Exchange Commission
(``Commission'') in 2010. See Securities Exchange Act Release No.
63275 (November 8, 2010), 75 FR 70048 (November 16, 2010) (SR-
NYSEArca-2010-100).
\5\ See Securities Exchange Act Release No. 89174 (June 29,
2020), 85 FR 40349 (July 6, 2020) (SR-NYSEArca-2020-58).
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The Exchange is an indirect subsidiary of Intercontinental
Exchange, Inc. (``ICE''). Through its ICE Data Services (``IDS'')
business, ICE operates the Data Center, from which the Exchange
provides co-location services to Users.\6\ Among those services is a
``Hot Hands'' service, which allows Users to use on-site Data Center
personnel to maintain User equipment, support network troubleshooting,
rack and stack a server in a User's cabinet; power recycling; and
install and document the fitting of cable in a User's cabinet(s).\7\
The Hot Hands fee is $100 per half hour.
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\6\ For purposes of the Exchange's co-location services, a
``User'' means any market participant that requests to receive co-
location services directly from the Exchange. See Securities
Exchange Act Release No. 76010 (September 29, 2015), 80 FR 60197
(October 5, 2015) (SR-NYSEArca-2015-82). As specified in the NYSE
Arca Options Fees and Charges and the NYSE Arca Equities Fees and
Charges (together, the ``Fee Schedules''), a User that incurs co-
location fees for a particular co-location service pursuant thereto
would not be subject to co-location fees for the same co-location
service charged by the Exchange's affiliates the New York Stock
Exchange LLC, NYSE American LLC, NYSE Chicago, Inc., and NYSE
National, Inc. (together, the ``Affiliate SROs''). See Securities
Exchange Act Release No. 70173 (August 13, 2013), 78 FR 50459
(August 19, 2013) (SR-NYSEArca-2013-80). Each Affiliate SRO has
submitted substantially the same proposed rule change to propose the
changes described herein. See SR-NYSE-2020-69, SR-NYSEAmer-2020-63,
SR-NYSECHX-2020-25, and SR-NYSENAT-2020-26.
\7\ See Securities Exchange Act Release No. 72720 (July 30,
2014), 79 FR 45577 (August 5, 2014) (SR-NYSEArca-2014-81).
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ICE previously announced to Users that the Data Center would be
closed to third parties starting on March 16, 2020, to help avoid the
spread of COVID-19, which could negatively impact Data Center
functions. Prior to the closure of the Data Center, the Chief Executive
Officer of the Exchange took the actions required under NYSE Arca Rules
7.1-E and 7.1-O to close the co-location facility of the Exchange to
third parties. The closure period was extended three times, through
August 31, 2020 (the ``Initial Closure'').\8\
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\8\ See Securities Exchange Act Release Nos. 88398 (March 17,
2020), 85 FR 16398 (March 23, 2020) (SR-NYSEArca-2020-22); 88520
(March 31, 2020), 85 FR 19208 (April 6, 2020) (SR-NYSEArca-2020-26);
and 88961 (May 27, 2020), 85 FR 33755 (June 2, 2020) (SR-NYSEArca-
2020-47).
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ICE has announced to Users that, because the concerns that led to
the Initial Closure still apply, the closure of the Data Center will be
extended, with the date of the reopening announced through a customer
notice.
If a User's equipment requires work while a Rules 7.1-E and 7.1-O
closure is in effect, the User has to use the Hot Hands service and,
absent a waiver, incurs Hot Hands fees for the work. Given that, the
Exchange waived all Hot Hands fees for the duration of the Initial
Closure.\9\ Because the period has been extended, the Exchange proposes
to extend the waiver of the Hot Hands Fee for the length of the period.
To that end, the Exchange proposes to revise the footnote to the Hot
Hands Fee in the Fee Schedules as follows (deletions bracketed,
additions underlined):
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\9\ See 85 FR 40349, supra note 5.
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[dagger] Fees for Hot Hands Services will be waived beginning on
March 16, 2020 through [the earlier of August 31, 2020 and] the
reopening of the Mahwah, New Jersey data center. The date of the
reopening will be announced through a customer notice.
The Exchange believes that there will be sufficient Data Center
staff on-site to comply with User requests for Hot Hands service.
The proposed extension of the waiver would apply equally to all
Users. The proposed extension of the fee waiver would not apply
differently to distinct types or sizes of market participants. Rather,
it would continue to apply uniformly to all Users.
The proposed change is not otherwise intended to address any other
issues relating to co-location services and/or related fees, and the
Exchange is not aware of any problems that Users would have in
complying with the proposed change.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\10\ in general, and furthers the
objectives of Sections 6(b)(4) and (5) of the Act,\11\ in particular,
because it provides for the equitable allocation of reasonable dues,
fees, and other charges among its members, issuers and other persons
using its facilities and does not unfairly discriminate between
customers, issuers, brokers or dealers. In addition, it is designed to
foster cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to, and
perfect the mechanisms of, a free and open market and a national market
system and, in general, to protect investors and the public interest
and because it is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(4) and (5).
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The Proposed Rule Change Is Reasonable
The Exchange believes that the proposed rule change is reasonable
for the following reasons.
Given that the closure of the Data Center has been extended, the
Exchange believes that it is reasonable to grant the proposed
corresponding extension of the waiver of the Hot Hands Fee. While a
Rules 7.1-E and 7.1-O closure is in effect, User representatives are
not allowed access to the Data Center. If a User's equipment requires
work during such period, the User has to use the Hot Hands service.
Absent a waiver, the User would incur Hot Hands fees for the work.
The proposed extension of the waiver would allow a User to have
work carried out on its equipment notwithstanding
[[Page 53887]]
the closure of the Data Center without incurring Hot Hands fees.
The Exchange does not know when the Mahwah data center will be
reopened, and so believes it is reasonable to leave the date open
ended. Adding a revised potential reopening date to the footnote may
create an expectation that the closure has a stated end point. The
Exchange believes that it is more reasonable to state that the waiver
will continue until the data center is reopened, and to inform Users
how they will receive notice of the reopening. The change would also be
consistent with the announcement that ICE has made to Users.
The Proposed Rule Change Is Equitable
The Exchange believes the proposed rule change is an equitable
allocation of its fees and credits for the following reasons.
The proposed extension of the waiver would apply equally to all
Users. The proposed extension would not apply differently to distinct
types or sizes of market participants. Rather, it would apply uniformly
to all Users.
The Exchange believes that the proposal is equitable because the
extension of the waiver would mean that for the duration of the closure
of the Data Center all similarly-situated Users would not be charged a
fee to use the Hot Hands service.
The Proposed Change Is Not Unfairly Discriminatory and Would Protect
Investors and the Public Interest
The Exchange believes that the proposed change is not unfairly
discriminatory for the following reasons.
The proposed extension of the waiver would not apply differently to
distinct types or sizes of market participants. Rather, all Users whose
equipment requires work during the extension of the Data Center closure
would have the resulting fees waived, and the extension of the waiver
would apply uniformly to all Users during the period. For the reasons
above, the proposed changes do not unfairly discriminate between or
among market participants.
In addition, the Exchange believes that the proposed rule change
would perfect the mechanisms of a free and open market and a national
market system and, in general, protect investors and the public
interest because it would allow a User to have work carried out on its
equipment notwithstanding a Rules 7.1-E and 7.1-O closure without
incurring Hot Hands fees. Accordingly, the Exchange believes that the
requested extension of the waiver is designed to perfect the mechanisms
of a free and open market and a national market system and, in general,
protect investors and the public interest by facilitating the
uninterrupted availability of Users' equipment.
For all of the above reasons, the Exchange believes that the
proposal is consistent with the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\12\ the Exchange
believes that the proposed rule change will not impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act.
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\12\ 15 U.S.C. 78f(b)(8).
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Intramarket Competition
The Exchange does not believe that the proposed change would place
any burden on intramarket competition that is not necessary or
appropriate.
The proposed extension of the waiver is not designed to affect
competition, but rather to provide relief to Users that, while a Rules
7.1-E and 7.1-O closure is in effect, have no option but to use the Hot
Hands service.
The proposed extension of the waiver would not apply differently to
distinct types or sizes of market participants. Rather, all Users whose
equipment requires work during the extension of the Data Center closure
would have the resulting fees waived, and the extension of the waiver
would apply uniformly to all Users during the period.
Intermarket Competition
The Exchange does not believe that the proposed change would impose
any burden on intermarket competition that is not necessary or
appropriate.
The Exchange believes that the proposed change would not affect the
competitive landscape among the national securities exchanges, as the
Hot Hands service is solely charged within co-location to existing
Users, and would be temporary.
For the reasons described above, the Exchange believes that the
proposed rule change reflects this competitive environment.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A) \13\ of the Act and subparagraph (f)(2) of Rule
19b-4 \14\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(2).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \15\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\15\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSEArca-2020-74 on the subject line.
Paper Comments
Send paper comments in triplicate to: Secretary,
Securities and Exchange Commission, 100 F Street NE, Washington, DC
20549-1090.
All submissions should refer to File Number SR-NYSEArca-2020-74.
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
[[Page 53888]]
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for website viewing and printing in the Commission's Public
Reference Room, 100 F Street NE, Washington, DC 20549 on official
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of
the filing also will be available for inspection and copying at the
principal office of the Exchange. All comments received will be posted
without change. Persons submitting comments are cautioned that we do
not redact or edit personal identifying information from comment
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number SR-
NYSEArca-2020-74 and should be submitted on or before September 21,
2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2020-19046 Filed 8-28-20; 8:45 am]
BILLING CODE 8011-01-P
