Self-Regulatory Organizations; NYSE National, Inc.; Notice of Filing of Proposed Rule Change To Amend its Schedule of Fees and Rebates Related to Co-Location Services, 8424-8428 [2021-02409]
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Federal Register / Vol. 86, No. 23 / Friday, February 5, 2021 / Notices
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requires, among other things, that the
Exchange’s rules be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest.
The Exchange proposes to adopt new
NYSE Rule 5.2(j)(8) to establish generic
listing standards pursuant to Rule 19b–
4(e) under the Act 21 that would permit
the Exchange to list and trade ExchangeTraded Fund Shares in a manner
consistent with Rule 6c–11 under the
1940 Act. The Exchange represents that
proposed NYSE Rule 5.2(j)(8) is based
on recently adopted NYSE Arca Rule
5.2–E(j)(8).22 The Commission believes
that NYSE’s proposed Rule 5.2(j)(8) is
substantively identical to proposals that
the Commission has previously
approved relating to the listing and
trading of Exchange-Traded Fund
Shares that are permitted to operate in
reliance on Rule 6c–11 under the 1940
Act.23 Accordingly, for the reasons
discussed in the Prior Rule 6c–11
Generic Listing Orders, the Commission
finds that this proposed rule change is
consistent with Section 6(b)(5) of the
Act 24 and the rules and regulations
thereunder applicable to a national
securities exchange.25
21 Rule 19b–4(e)(1) under the Act states that ‘‘[t]he
listing and trading of a new derivative securities
product by a self-regulatory organization shall not
be deemed a proposed rule change, pursuant to
paragraph (c)(1) of this section, if the Commission
has approved, pursuant to section 19(b) of the Act
(15 U.S.C. 78s(b)), the self-regulatory organization’s
trading rules, procedures and listing standards for
the product class that would include the new
derivative securities product and the self-regulatory
organization has a surveillance program for the
product class.’’ 17 CFR 240.19b–4(e)(1). ‘‘New
derivative securities product’’ is defined as ‘‘any
type of option, warrant, hybrid securities product
or any other security, other than a single equity
option or a security futures product, whose value
is based, in whole or in part, upon the performance
of, or interest in, an underlying instrument.’’ 17
CFR 240.19b–4(e).
22 See supra note 9 and accompanying text.
23 See Securities Exchange Act Release Nos.
88625 (April 13, 2020), 85 FR 21479 (April 17,
2020) (SR–NYSEArca–2019–81); 88566 (April 6,
2020), 85 FR 20312 (April 10, 2020) (SR–CboeBZX–
2019–097); and 88561 (April 3, 2020), 85 FR 19984
(April 9, 2020) (SR–NASDAQ–2019–090). These
releases are referred to collectively as the ‘‘Prior
Rule 6c–11 Generic Listing Orders.’’
24 15 U.S.C. 78f(b)(5).
25 When relying on Rule 19b–4(e) under the Act
to list and trade a new derivative securities product,
the Commission notes that NYSE must submit Form
19b–4(e) (17 CFR 249.820) to the Commission
within five business days after commencement of
trading the new derivative securities product. See
17 CFR 240.19b–4(e)(2)(ii). See also 17 CFR
240.19b–4(e)(2)(i) (setting forth NYSE’s
recordkeeping requirements relating to all relevant
records and information pertaining to each new
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In addition, as stated above, the
Exchange represents that proposed
NYSE Rule 7.18(d)(2) governing trading
halts for NYSE-listed ETPs (which
would include Exchange-Traded Fund
Shares), is based on NYSE Arca Rule
7.18–E(d)(2). The Commission believes
that NYSE’s proposed Rule 7.18(d)(2) is
substantively identical to NYSE Arca
Rule 7.18–E(d)(2) and concludes that
this proposed rule does not present any
novel or unique regulatory issues. The
Commission therefore finds that this
proposed rule change relating to trading
halts is consistent with Section 6(b)(5)
of the Act 26 and the rules and
regulations thereunder applicable to a
national securities exchange.
This approval order is based on all of
the Exchange’s representations,
including those set forth above and in
the Notice, including the Exchange’s
representations relating to its
surveillance procedures. Specifically,
the Exchange represents, among other
things, that its surveillance procedures
are adequate to properly monitor the
trading of the Exchange-Traded Fund
Shares in all trading sessions and to
deter and detect violations of Exchange
rules, and that the Exchange will
implement and maintain written
surveillance procedures to monitor
trading in Exchange-Traded Fund
Shares on the NYSE.27
For the foregoing reasons, the
Commission finds that the proposed
rule change is consistent with Section
6(b)(5) of the Act 28 and the rules and
regulations thereunder applicable to a
national securities exchange.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,29 that the
proposed rule change (SR–NYSE–2020–
86) be, and it hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.30
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–02397 Filed 2–4–21; 8:45 am]
BILLING CODE 8011–01–P
derivative securities product traded pursuant to
Rule 19b–4(e)).
26 15 U.S.C. 78f(b)(5).
27 See supra note 17 and accompanying text. See
also supra note 21 (citing to Rule 19b–4(e)(1) under
the Act requiring the self-regulatory organization to
have a surveillance program for the product class
of a new derivative securities product).
28 15 U.S.C. 78f(b)(5).
29 15 U.S.C. 78f(b)(2).
30 17 CFR 200.30–3(a)(12).
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–91037; File No. SR–
NYSENAT–2021–01]
Self-Regulatory Organizations; NYSE
National, Inc.; Notice of Filing of
Proposed Rule Change To Amend its
Schedule of Fees and Rebates Related
to Co-Location Services
February 1, 2021.
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 January
19, 2021, NYSE National, Inc. (‘‘NYSE
National’’ 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 selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
Schedule of Fees and Rebates (‘‘Fee
Schedule’’) related to co-location
services to add two Partial Cabinet
Solution bundles. 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.
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
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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 amend its
Fee Schedule related to co-location 4
services to add two Partial Cabinet
Solution (‘‘PCS’’) bundles that would be
offered to Users.5
Proposed Addition of Option E and
Option F PCS Bundles
The Fee Schedule currently lists four
PCS bundles, Options A through D. As
originally formulated, each PCS bundle
option included a partial cabinet
powered to a maximum of 2 kilowatts
(‘‘kW’’); access to the liquidity center
network (‘‘LCN’’) and internet protocol
(‘‘IP’’) networks, the local area networks
available in the data center; two fiber
cross connections; and connectivity to
one of two time feeds.6 The PCS
bundles are designed to attract smaller
Users, including those with minimal
power or cabinet space demands or
those for which the costs attendant with
having a dedicated cabinet are too
burdensome.7 Users are only eligible to
purchase PCS bundles if they meet
specified requirements, set forth in
General Note 2 of the Fee Schedule.8
In May 2020, the Exchange amended
PCS bundle Options C and D to each
include two 10 Gb connections to the
NMS Network, an alternate dedicated
network connection that Users could
use to access the NMS feeds for which
the Securities Industry Automation
Corporation (‘‘SIAC’’) is engaged as the
securities information processor
(‘‘SIP’’).9 These two 10 Gb NMS
Network connections were added to the
Option C and D bundles at no additional
cost.
In response to customer interest, the
Exchange now proposes to add two new
PCS bundles to the Fee Schedule.
Proposed Options E and F would be
substantially similar to Options C and
D, respectively, with the difference that
each connection included in the
proposed bundles would be upgraded to
40 Gb from 10 Gb: That is, proposed
Options E and F would include a 1 kw
(Option E) or 2 kw (Option F) partial
cabinet, one 40 Gb LCN connection, one
40 Gb IP network connection, two 40 Gb
NMS Network connections, and either
the Network Time Protocol Feed or the
Precision Timing Protocol. Users
selecting an Option E or F bundle would
be charged the same initial charge of
$10,000 that currently applies to
Options C and D. In addition, Users
would be charged monthly recurring
charges (‘‘MRC’’) of $18,000 for an
Option E bundle and $19,000 for an
Option F bundle. The Exchange
proposes that Users that purchase
Option E or F bundles on or before
December 31, 2021 would receive a 50%
reduction in the MRC for the first 12
months.
The amended portion of the Fee
Schedule would read as follows
(proposed additions italicized):
Type of service
Description
Amount of charge
Partial Cabinet Solution bundles Note: A User
and its Affiliates are limited to one Partial
Cabinet Solution bundle at a time. A User
and its Affiliates must have an Aggregate
Cabinet Footprint of 2 kW or less to qualify
for a Partial Cabinet Solution bundle. See
Note 2 under ‘‘General Notes.’’.
Option E: 1 kW partial cabinet, 1 LCN connection (40 Gb), 1 IP network connection
(40 Gb), 2 NMS Network connections (40
Gb each), 2 fiber cross connections and either the Network Time Protocol Feed or
Precision Timing Protocol.
$10,000 initial charge per bundle plus monthly
charge per bundle as follows:
• For Users that order on or before December 31, 2021: $9,000 monthly for first 12
months of service, and $18,000 monthly
thereafter.
• For Users that order after December 31,
2021: $18,000 monthly.
$10,000 initial charge per bundle plus monthly
charge per bundle as follows:
• For Users that order on or before December 31, 2021: $9,500 monthly for first 12
months of service, and $19,000 monthly
thereafter
• For Users that order after December 31,
2021: $19,000 monthly
Option F: 2 kW partial cabinet, 1 LCN connection (40 Gb), 1 IP network connection
(40 Gb), 2 NMS Network connections (40
Gb each), 2 fiber cross connections and either the Network Time Protocol Feed or
Precision Timing Protocol.
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8425
The Exchange proposes that General
Note 2 of the Fee Schedule—which
currently applies to PCS bundle Options
A through D—would also apply to
proposed Option E and F bundles,
without alteration. Specifically, a User
and its Affiliates would be limited to
one PCS bundle at a time, and a User
and its Affiliates must have an
Aggregate Cabinet Footprint of 2 kW or
less to qualify for a PCS bundle.
The Exchange is not proposing any
changes to PCS bundle Options A
through D.
4 The Exchange initially filed rule changes
relating to its co-location services with the
Securities and Exchange Commission
(‘‘Commission’’) in 2018. See Securities Exchange
Act Release No. 83351 (May 31, 2018), 83 FR 26314
(June 6, 2018) (SR–NYSENAT–2018–07) (‘‘NYSE
National Co-location Notice’’).
5 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 id., supra note 4, at 26314
n.9. As specified in the Fee Schedule, 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 New York
Stock Exchange LLC (‘‘NYSE’’), NYSE American
LLC, NYSE Arca, Inc., and NYSE Chicago, Inc.
(together, the ‘‘Affiliate SROs’’). See id. at 26314
n.11. Each Affiliate SRO has submitted
substantially the same proposed rule change to
propose the changes described herein. See SR–
NYSE–2021–05, SR–NYSEAMER–2021–04, SR–
NYSEArca–2021–07, and SR–NYSECHX–2021–01.
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Application and Impact of the Proposed
Changes
The proposed changes would not
apply differently to distinct types or
sizes of market participants. Rather,
they would apply to all Users equally.
Users that require other sizes or
combinations of cabinets, network
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connections, and cross connects could
still request them. As is currently the
case, the purchase of any co-location
service, including PCS bundles, is
completely voluntary and the Fee
Schedule is applied uniformly to all
Users.
Competitive Environment
A User may host another entity in its
space within the data center. Such Users
6 See
id. at 26315.
id.
8 See id. The definitions of ‘‘Affiliate’’ and
‘‘Aggregate Cabinet Footprint’’ were added to the
Fee Schedule at the same time.
9 See Securities Exchange Act Release Nos. 88837
(May 7, 2020), 85 FR 28671 (May 13, 2020) (SR–
NYSE–2019–46, SR–NYSEAMER–2019–34, SR–
NYSEArca–2019–61, SR–NYSENAT–2019–19)
(‘‘NMS Network Approval Order’’) and 88972 (May
29, 2020), 85 FR 34472 (June 4, 2020) (‘‘NYSE
Chicago NMS Network Approval Order’’).
7 See
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Federal Register / Vol. 86, No. 23 / Friday, February 5, 2021 / Notices
are called ‘‘Hosting Users,’’ and their
customers are ‘‘Hosted Customers.’’ 10
Based on conversations with Users
and potential customers, the Exchange
believes that Hosting Users offer
bundles (‘‘Hosting User Bundles’’) that
include cabinet space and space on
shared LCN, IP, and NMS network
connections, and that the Hosting User
Bundles provide their end users with a
service similar to that of the PCS
bundles.11
The Exchange operates in a highly
competitive market in which exchanges
and other vendors (e.g., Hosting Users)
offer co-location services as a means to
facilitate the trading and other market
activities of those market participants
who believe that co-location enhances
the efficiency of their operations. The
Commission has repeatedly expressed
its preference for competition over
regulatory intervention in determining
prices, products, and services in the
securities markets. Specifically, in
Regulation NMS, the Commission
highlighted the importance of market
forces in determining prices and SRO
revenues and, also, recognized that
current regulation of the market system
‘‘has been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 12
The proposed changes are 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.
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2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,13 in general, and
furthers the objectives of Section 6(b)(5)
of the Act,14 in particular, because it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
10 A Hosting User is required to be a User, but
because only Users can be Hosting Users, a Hosted
Customer is not able to provide hosting services to
any other entities in the space in which it is hosted.
The Exchange allows Users to act as Hosting Users
for a monthly fee. See NYSE National Co-location
Notice, supra note 4, at 26318.
11 Because Hosting Users’ services are not
regulated, they may offer differentiated pricing and
are not required to make their pricing public or
disclose it to the Exchange. The Exchange therefore
does not have direct visibility into the specific
range of options, or cost thereof, offered by Hosting
Users, and relies on third parties for information.
12 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
13 15 U.S.C. 78f(b).
14 15 U.S.C. 78f(b)(5).
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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
mechanism 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
Exchange further believes that the
proposed rule change is consistent with
Section 6(b)(4) of the Act,15 because it
provides for the equitable allocation of
reasonable dues, fees, and other charges
among its members and issuers and
other persons using its facilities and
does not unfairly discriminate between
customers, issuers, brokers, or dealers.
The Proposed Change Is Reasonable
The Exchange believes that the
proposed rule change is reasonable and
would perfect the mechanisms of a free
and open market and a national market
system and, in general, protect investors
and the public interest, for the following
reasons.
The Exchange believes that it is
reasonable to expand its PCS bundle
options by offering the proposed Option
E and F bundles. Currently, the
Exchange offers Users the ability to
purchase connectivity to the LCN/NMS
and IP/NMS networks in 10 Gb and 40
Gb bandwidths, but within the
Exchange’s existing PCS bundle options,
40 Gb connections are not available.
This means that at present, Users
interested in the PCS bundled
services—either because they have
minimal power and cabinet space
demands or because the costs attendant
with having a dedicated cabinet are too
burdensome—cannot access 40 Gb
connections and are limited to the 10 Gb
connections offered as part of the
Option C and D bundles. Users and
potential customers have requested that
the Exchange provide them the
opportunity to purchase PCS bundles
that include 40 Gb connections, which
would enable them to connect to more
of the Included Data Products and Third
Party Data Feeds or have the same size
connection in co-location that they have
everywhere. The Exchange believes that
it is reasonable to offer the proposed
Option E and F bundles to satisfy this
customer demand, while continuing to
offer the existing bundle offerings, in
order to provide potential Users of the
PCS bundled services an additional 40
Gb option for their network connection
requirements.
15 15
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U.S.C. 78f(b)(4).
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Additionally, the Exchange believes
that the proposed change may make PCS
bundles more competitive with the
services that Hosting Users offer.
Without this proposed rule change,
potential Users choosing between a PCS
bundle and a Hosting User Bundle
would have fewer options.
The Exchange believes that the
proposed charges for the Option E and
F bundles are reasonable. The Exchange
proposes that Users choosing the Option
E or F bundles would pay the same
$10,000 initial charge that Users
currently pay when choosing the Option
C or D bundles, which reflects the fact
that setting up each of these four cabinet
options involves a similar amount of
work for the Exchange. It is also
reasonable for the Exchange to set MRC
charges of $18,000 for an Option E
bundle (a $4,000 increase over Option
C) and $19,000 for an Option F bundle
(a $4,000 increase over Option D) which
reflects the fact that the Exchange will
have to supply multiple 40 Gb
connections in the Option E and F
bundles, as opposed to the 10 Gb
connections included in the Option C
and D bundles.
The Exchange believes that it is
reasonable to provide a period of
eligibility for a 50% MRC reduction as
an incentive to Users to utilize the
Option E and F bundles. Similar 50%
MRC reductions were proposed and
approved for Options A through D when
those product offerings were added to
the Fee Schedule.
The Proposed Change Is Not Unfairly
Discriminatory
The Exchange believes its proposal is
not unfairly discriminatory. The
proposed change would not apply
differently to distinct types or sizes of
market participants. Rather, it would
apply to all Users equally. The
Exchange would continue to offer the
four existing PCS bundles (Options A
through D) with different cabinet
footprints and network connection
options, in addition to the proposed
Option E and F bundles. Users that
require other sizes or combinations of
cabinets, network connections, and
cross connects could still request them.
As is currently the case, the purchase of
any co-location service, including PCS
bundles, would be completely
voluntary.
The Exchange believes that the
proposed charges for Option E and F
bundles are not unfairly discriminatory.
The proposed initial charges and MRCs
for Options E and F would apply
equally to all Users that purchase an
Option E or F bundle, and the proposed
50% reduction of MRC for the first 12
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appropriate in furtherance of the
purposes of Section 6(b)(8) of the Act.16
months would apply to any User that
orders an Option E or F bundle on or
before December 31, 2021.
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The Proposed Change Is an Equitable
Allocation of Fees and Credits
The Exchange believes that its
proposal equitably allocates its fees
among its market participants.
The proposed change would not
apply differently to distinct types or
sizes of market participants. Rather, it
would apply to all Users equally.
Specifically, the proposed initial
charges and MRCs for Options E and F
would apply equally to all Users that
purchase an Option E or F bundle, and
the proposed 50% reduction of MRC for
the first 12 months would apply to any
User that orders an Option E or F
bundle on or before December 31, 2021.
The Exchange would continue to offer
the four existing PCS bundles (Options
A through D) with different cabinet
footprints and network connection
options, in addition to the proposed
Option E and F bundles. Users that
require other sizes or combinations of
cabinets, network connections, and
cross connects could still request them.
As is currently the case, the purchase of
any co-location service, including PCS
bundles, would be completely
voluntary.
Without this proposed rule change,
potential Users choosing between a PCS
bundle and a Hosting User Bundle
would have fewer options. Potential
Users could benefit from having an
additional 40 Gb option for their
network connection requirements,
which would allow them to connect to
more of the Included Data Products and
Third Party Data Feeds or have the same
size connection in co-location that they
have elsewhere.
Finally, the Exchange believes that it
is subject to significant competitive
forces, as described below in the
Exchange’s statement regarding the
burden on competition.
For the reasons above, the proposed
changes do not unfairly discriminate
between or among market participants
that are otherwise capable of satisfying
any applicable co-location fees,
requirements, terms, and conditions
established from time to time by the
Exchange.
For these reasons, the Exchange
believes that the proposal is consistent
with the Act.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange believes that the
proposal will not impose any burden on
competition that is not necessary or
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Intramarket Competition
The Exchange believes that the
proposed changes would not place any
burden on intramarket competition that
is not necessary or appropriate.
The Exchange’s offering of the
proposed Option E and F bundles
would provide potential Users of PCS
bundles a wider range of choices, which
would be especially beneficial for
potential Users with minimal power and
cabinet space demands, but which
could nevertheless benefit from an
additional 40 Gb option for their
network connection requirements. The
Exchange believes that the proposed
change may make PCS bundles more
attractive to potential Users who might
otherwise opt to become Hosted
Customers, and thus would enhance the
competitive environment for potential
Users, who would then have more
options from which to select. At the
same time, however, no potential User
would be obligated to purchase a PCS
bundle, and it would still have the
options offered by Hosting Users.
Intermarket Competition
The Exchange believes that the
proposed changes will not impose any
burden on intermarket competition that
is not necessary or appropriate. The
proposed change is not meant to affect
competition among national securities
exchanges. Rather, the Exchange
believes that the proposed change is a
reasonable attempt to maintain a more
level playing field between the
Exchange and the Hosting Users, who
compete for Hosted Customer business.
Because Hosting Users’ services are not
regulated, they may offer differentiated
pricing and are not required to make
their pricing public. The Exchange
believes that the proposed change may
make PCS bundles more attractive to
potential users who might otherwise opt
to become Hosted Customers.
The Exchange operates in a highly
competitive market in which exchanges
and other vendors (i.e., Hosting Users)
offer co-location services as a means to
facilitate the trading and other market
activities of those market participants
who believe that co-location enhances
the efficiency of their operations.
Accordingly, fees charged for colocation services are constrained by the
active competition for the order flow of,
and other business from, such market
participants. If a particular exchange
charges excessive fees for co-location
services, affected market participants
16 15
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will opt to terminate their co-location
arrangements with that exchange, and
adopt a possible range of alternative
strategies, including placing their
servers in a physically proximate
location outside the exchange’s data
center (which could be a competing
exchange), or pursuing strategies less
dependent upon the lower exchange-toparticipant latency associated with colocation. Accordingly, an exchange
charging excessive fees would stand to
lose not only co-location revenues but
also the liquidity of the formerly colocated trading firms, which could have
additional follow-on effects on the
market share and revenue of the affected
exchange. In such an environment, the
Exchange must continually review, and
consider adjusting, its services and
related fees and credits to remain
competitive with other exchanges.
The Commission has repeatedly
expressed its preference for competition
over regulatory intervention in
determining price, products, and
services in the securities markets.
Specifically, in Regulation NMS, the
Commission highlighted the importance
of market forces in determining prices
and SRO revenues and, also,
recognizing that current regulation of
the market system ‘‘has been remarkably
successful in promoting market
competition in its broader forms that are
most important to investors and listed
companies.’’ 17
For these reasons, the Exchange
believes that the proposed rule change
reflects this competitive environment
and does not impose any undue burden
on intermarket competition.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or up to 90 days (i) as the
Commission may designate if it finds
such longer period to be appropriate
and publishes its reasons for so finding
or (ii) as to which the self-regulatory
organization consents, the Commission
will:
(A) By order approve or disapprove
the proposed rule change, or
17 See Regulation NMS Adopting Release, supra
note 12, at 37499.
U.S.C. 78f(b)(8).
Frm 00091
8427
Sfmt 4703
E:\FR\FM\05FEN1.SGM
05FEN1
8428
Federal Register / Vol. 86, No. 23 / Friday, February 5, 2021 / Notices
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
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–
NYSENAT–2021–01 on the subject line.
Paper Comments
jbell on DSKJLSW7X2PROD with NOTICES
• Send paper comments in triplicate
to: Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSENAT–2021–01. 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–NYSENAT–2021–01 and
should be submitted on or before
February 26, 2021.
VerDate Sep<11>2014
18:53 Feb 04, 2021
Jkt 253001
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–02409 Filed 2–4–21; 8:45 am]
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–91032; File No. SR–
EMERALD–2021–02]
Self-Regulatory Organizations; MIAX
Emerald, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Its Fee
Schedule To Adopt Port Fees and
Increase Certain Network Connectivity
Fees
February 1, 2021.
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 January
22, 2021, MIAX Emerald, LLC (‘‘MIAX
Emerald’’ or ‘‘Exchange’’), filed with the
Securities and Exchange Commission
(‘‘Commission’’) a proposed rule change
as described in Items I, II, and III below,
which Items have been prepared by the
Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is filing a proposal to
amend the MIAX Emerald Fee Schedule
(the ‘‘Fee Schedule’’).
The text of the proposed rule change
is available on the Exchange’s website at
https://www.miaxoptions.com/rulefilings/emerald, at MIAX’s principal
office, and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
18 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00092
Fmt 4703
Sfmt 4703
1. Purpose
The Exchange proposes to amend the
Fee Schedule to: (1) Adopt Port fees;
and (2) increase the Exchange’s network
connectivity fees for its 10 gigabit
(‘‘Gb’’) ultra-low latency (‘‘ULL’’) fiber
connection for Members 3 and nonMembers (collectively, the ‘‘Proposed
Access Fees’’). On September 15, 2020,
the Exchange issued a Regulatory
Circular which announced, among other
things, that the Exchange would adopt
Port fees, thereby terminating the
Waiver Period 4 for such fees, and
increase the fees for its 10Gb ULL
connection for Members and nonMembers, beginning October 1, 2020.5
The Exchange initially filed this
proposal on October 1, 2020.6 The First
Proposed Rule Change was published
for comment in the Federal Register on
October 20, 2020.7 The Exchange notes
that the First Proposed Rule Change did
not receive any comment letters.
Nonetheless, the Exchange withdrew
the First Proposed Rule Change on
November 25, 2020 8 and resubmitted a
replacement proposal.9 The Second
Proposed Rule Change was published
for comment in the Federal Register on
December 14, 2020.10 The Exchange
notes that the Second Proposed Rule
3 The term ‘‘Member’’ means an individual or
organization approved to exercise the trading rights
associated with a Trading Permit. Members are
deemed ‘‘members’’ under the Exchange Act. See
Exchange Rule 100.
4 ‘‘Waiver Period’’ means, for each applicable fee,
the period of time from the initial effective date of
the MIAX Emerald Fee Schedule until such time
that the Exchange has an effective fee filing
establishing the applicable fee. The Exchange will
issue a Regulatory Circular announcing the
establishment of an applicable fee that was subject
to a Waiver Period at least fifteen (15) days prior
to the termination of the Waiver Period and
effective date of any such applicable fee. See the
Definitions Section of the Fee Schedule.
5 See MIAX Emerald Regulatory Circular 2020–41
available at https://www.miaxoptions.com/sites/
default/files/circular-files/MIAX_Emerald_RC_
2020_41.pdf.
6 See Securities Exchange Act Release No. 90184
(October 14, 2020), 85 FR 66636 (October 20, 2020)
(SR–EMERALD–2020–12) (the ‘‘First Proposed Rule
Change’’).
7 See id.
8 See Comment Letter from Joseph Ferraro, SVP,
Deputy General Counsel, the Exchange, dated
November 20, 2020, notifying the Commission that
the Exchange would withdraw the First Proposed
Rule Change.
9 See Securities Exchange Act Release No. 90600
(December 8, 2020), 85 FR 80831 (December 14,
2020) (SR–EMERALD–2020–17) (the ‘‘Second
Proposed Rule Change’’).
10 See id.
E:\FR\FM\05FEN1.SGM
05FEN1
]]>Agencies
[Federal Register Volume 86, Number 23 (Friday, February 5, 2021)]
[Notices]
[Pages 8424-8428]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-02409]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-91037; File No. SR-NYSENAT-2021-01]
Self-Regulatory Organizations; NYSE National, Inc.; Notice of
Filing of Proposed Rule Change To Amend its Schedule of Fees and
Rebates Related to Co-Location Services
February 1, 2021.
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 January 19, 2021, NYSE National, Inc. (``NYSE National''
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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its Schedule of Fees and Rebates
(``Fee Schedule'') related to co-location services to add two Partial
Cabinet Solution bundles. 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.
[[Page 8425]]
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 amend its Fee Schedule related to co-
location \4\ services to add two Partial Cabinet Solution (``PCS'')
bundles that would be offered to Users.\5\
---------------------------------------------------------------------------
\4\ The Exchange initially filed rule changes relating to its
co-location services with the Securities and Exchange Commission
(``Commission'') in 2018. See Securities Exchange Act Release No.
83351 (May 31, 2018), 83 FR 26314 (June 6, 2018) (SR-NYSENAT-2018-
07) (``NYSE National Co-location Notice'').
\5\ 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 id., supra note 4,
at 26314 n.9. As specified in the Fee Schedule, 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 New York Stock
Exchange LLC (``NYSE''), NYSE American LLC, NYSE Arca, Inc., and
NYSE Chicago, Inc. (together, the ``Affiliate SROs''). See id. at
26314 n.11. Each Affiliate SRO has submitted substantially the same
proposed rule change to propose the changes described herein. See
SR-NYSE-2021-05, SR-NYSEAMER-2021-04, SR-NYSEArca-2021-07, and SR-
NYSECHX-2021-01.
---------------------------------------------------------------------------
Proposed Addition of Option E and Option F PCS Bundles
The Fee Schedule currently lists four PCS bundles, Options A
through D. As originally formulated, each PCS bundle option included a
partial cabinet powered to a maximum of 2 kilowatts (``kW''); access to
the liquidity center network (``LCN'') and internet protocol (``IP'')
networks, the local area networks available in the data center; two
fiber cross connections; and connectivity to one of two time feeds.\6\
The PCS bundles are designed to attract smaller Users, including those
with minimal power or cabinet space demands or those for which the
costs attendant with having a dedicated cabinet are too burdensome.\7\
Users are only eligible to purchase PCS bundles if they meet specified
requirements, set forth in General Note 2 of the Fee Schedule.\8\
---------------------------------------------------------------------------
\6\ See id. at 26315.
\7\ See id.
\8\ See id. The definitions of ``Affiliate'' and ``Aggregate
Cabinet Footprint'' were added to the Fee Schedule at the same time.
---------------------------------------------------------------------------
In May 2020, the Exchange amended PCS bundle Options C and D to
each include two 10 Gb connections to the NMS Network, an alternate
dedicated network connection that Users could use to access the NMS
feeds for which the Securities Industry Automation Corporation
(``SIAC'') is engaged as the securities information processor
(``SIP'').\9\ These two 10 Gb NMS Network connections were added to the
Option C and D bundles at no additional cost.
---------------------------------------------------------------------------
\9\ See Securities Exchange Act Release Nos. 88837 (May 7,
2020), 85 FR 28671 (May 13, 2020) (SR-NYSE-2019-46, SR-NYSEAMER-
2019-34, SR-NYSEArca-2019-61, SR-NYSENAT-2019-19) (``NMS Network
Approval Order'') and 88972 (May 29, 2020), 85 FR 34472 (June 4,
2020) (``NYSE Chicago NMS Network Approval Order'').
---------------------------------------------------------------------------
In response to customer interest, the Exchange now proposes to add
two new PCS bundles to the Fee Schedule. Proposed Options E and F would
be substantially similar to Options C and D, respectively, with the
difference that each connection included in the proposed bundles would
be upgraded to 40 Gb from 10 Gb: That is, proposed Options E and F
would include a 1 kw (Option E) or 2 kw (Option F) partial cabinet, one
40 Gb LCN connection, one 40 Gb IP network connection, two 40 Gb NMS
Network connections, and either the Network Time Protocol Feed or the
Precision Timing Protocol. Users selecting an Option E or F bundle
would be charged the same initial charge of $10,000 that currently
applies to Options C and D. In addition, Users would be charged monthly
recurring charges (``MRC'') of $18,000 for an Option E bundle and
$19,000 for an Option F bundle. The Exchange proposes that Users that
purchase Option E or F bundles on or before December 31, 2021 would
receive a 50% reduction in the MRC for the first 12 months.
The amended portion of the Fee Schedule would read as follows
(proposed additions italicized):
------------------------------------------------------------------------
Type of service Description Amount of charge
------------------------------------------------------------------------
Partial Cabinet Solution Option E: 1 kW $10,000 initial
bundles Note: A User and partial cabinet, 1 charge per bundle
its Affiliates are limited LCN connection (40 plus monthly charge
to one Partial Cabinet Gb), 1 IP network per bundle as
Solution bundle at a time. connection (40 Gb), follows:
A User and its Affiliates 2 NMS Network For Users
must have an Aggregate connections (40 Gb that order on or
Cabinet Footprint of 2 kW each), 2 fiber before December 31,
or less to qualify for a cross connections 2021: $9,000
Partial Cabinet Solution and either the monthly for first
bundle. See Note 2 under Network Time 12 months of
``General Notes.''. Protocol Feed or service, and
Precision Timing $18,000 monthly
Protocol. thereafter.
For Users
that order after
December 31, 2021:
$18,000 monthly.
Option F: 2 kW $10,000 initial
partial cabinet, 1 charge per bundle
LCN connection (40 plus monthly charge
Gb), 1 IP network per bundle as
connection (40 Gb), follows:
2 NMS Network For Users
connections (40 Gb that order on or
each), 2 fiber before December 31,
cross connections 2021: $9,500
and either the monthly for first
Network Time 12 months of
Protocol Feed or service, and
Precision Timing $19,000 monthly
Protocol. thereafter
For Users
that order after
December 31, 2021:
$19,000 monthly
------------------------------------------------------------------------
The Exchange proposes that General Note 2 of the Fee Schedule--
which currently applies to PCS bundle Options A through D--would also
apply to proposed Option E and F bundles, without alteration.
Specifically, a User and its Affiliates would be limited to one PCS
bundle at a time, and a User and its Affiliates must have an Aggregate
Cabinet Footprint of 2 kW or less to qualify for a PCS bundle.
The Exchange is not proposing any changes to PCS bundle Options A
through D.
Application and Impact of the Proposed Changes
The proposed changes would not apply differently to distinct types
or sizes of market participants. Rather, they would apply to all Users
equally.
Users that require other sizes or combinations of cabinets, network
connections, and cross connects could still request them. As is
currently the case, the purchase of any co-location service, including
PCS bundles, is completely voluntary and the Fee Schedule is applied
uniformly to all Users.
Competitive Environment
A User may host another entity in its space within the data center.
Such Users
[[Page 8426]]
are called ``Hosting Users,'' and their customers are ``Hosted
Customers.'' \10\
---------------------------------------------------------------------------
\10\ A Hosting User is required to be a User, but because only
Users can be Hosting Users, a Hosted Customer is not able to provide
hosting services to any other entities in the space in which it is
hosted. The Exchange allows Users to act as Hosting Users for a
monthly fee. See NYSE National Co-location Notice, supra note 4, at
26318.
---------------------------------------------------------------------------
Based on conversations with Users and potential customers, the
Exchange believes that Hosting Users offer bundles (``Hosting User
Bundles'') that include cabinet space and space on shared LCN, IP, and
NMS network connections, and that the Hosting User Bundles provide
their end users with a service similar to that of the PCS bundles.\11\
---------------------------------------------------------------------------
\11\ Because Hosting Users' services are not regulated, they may
offer differentiated pricing and are not required to make their
pricing public or disclose it to the Exchange. The Exchange
therefore does not have direct visibility into the specific range of
options, or cost thereof, offered by Hosting Users, and relies on
third parties for information.
---------------------------------------------------------------------------
The Exchange operates in a highly competitive market in which
exchanges and other vendors (e.g., Hosting Users) offer co-location
services as a means to facilitate the trading and other market
activities of those market participants who believe that co-location
enhances the efficiency of their operations. The Commission has
repeatedly expressed its preference for competition over regulatory
intervention in determining prices, products, and services in the
securities markets. Specifically, in Regulation NMS, the Commission
highlighted the importance of market forces in determining prices and
SRO revenues and, also, recognized that current regulation of the
market system ``has been remarkably successful in promoting market
competition in its broader forms that are most important to investors
and listed companies.'' \12\
---------------------------------------------------------------------------
\12\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
---------------------------------------------------------------------------
The proposed changes are 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,\13\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\14\ in particular, because it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism 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 Exchange further believes
that the proposed rule change is consistent with Section 6(b)(4) of the
Act,\15\ because it provides for the equitable allocation of reasonable
dues, fees, and other charges among its members and issuers and other
persons using its facilities and does not unfairly discriminate between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
\15\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
The Proposed Change Is Reasonable
The Exchange believes that the proposed rule change is reasonable
and would perfect the mechanisms of a free and open market and a
national market system and, in general, protect investors and the
public interest, for the following reasons.
The Exchange believes that it is reasonable to expand its PCS
bundle options by offering the proposed Option E and F bundles.
Currently, the Exchange offers Users the ability to purchase
connectivity to the LCN/NMS and IP/NMS networks in 10 Gb and 40 Gb
bandwidths, but within the Exchange's existing PCS bundle options, 40
Gb connections are not available. This means that at present, Users
interested in the PCS bundled services--either because they have
minimal power and cabinet space demands or because the costs attendant
with having a dedicated cabinet are too burdensome--cannot access 40 Gb
connections and are limited to the 10 Gb connections offered as part of
the Option C and D bundles. Users and potential customers have
requested that the Exchange provide them the opportunity to purchase
PCS bundles that include 40 Gb connections, which would enable them to
connect to more of the Included Data Products and Third Party Data
Feeds or have the same size connection in co-location that they have
everywhere. The Exchange believes that it is reasonable to offer the
proposed Option E and F bundles to satisfy this customer demand, while
continuing to offer the existing bundle offerings, in order to provide
potential Users of the PCS bundled services an additional 40 Gb option
for their network connection requirements.
Additionally, the Exchange believes that the proposed change may
make PCS bundles more competitive with the services that Hosting Users
offer. Without this proposed rule change, potential Users choosing
between a PCS bundle and a Hosting User Bundle would have fewer
options.
The Exchange believes that the proposed charges for the Option E
and F bundles are reasonable. The Exchange proposes that Users choosing
the Option E or F bundles would pay the same $10,000 initial charge
that Users currently pay when choosing the Option C or D bundles, which
reflects the fact that setting up each of these four cabinet options
involves a similar amount of work for the Exchange. It is also
reasonable for the Exchange to set MRC charges of $18,000 for an Option
E bundle (a $4,000 increase over Option C) and $19,000 for an Option F
bundle (a $4,000 increase over Option D) which reflects the fact that
the Exchange will have to supply multiple 40 Gb connections in the
Option E and F bundles, as opposed to the 10 Gb connections included in
the Option C and D bundles.
The Exchange believes that it is reasonable to provide a period of
eligibility for a 50% MRC reduction as an incentive to Users to utilize
the Option E and F bundles. Similar 50% MRC reductions were proposed
and approved for Options A through D when those product offerings were
added to the Fee Schedule.
The Proposed Change Is Not Unfairly Discriminatory
The Exchange believes its proposal is not unfairly discriminatory.
The proposed change would not apply differently to distinct types or
sizes of market participants. Rather, it would apply to all Users
equally. The Exchange would continue to offer the four existing PCS
bundles (Options A through D) with different cabinet footprints and
network connection options, in addition to the proposed Option E and F
bundles. Users that require other sizes or combinations of cabinets,
network connections, and cross connects could still request them. As is
currently the case, the purchase of any co-location service, including
PCS bundles, would be completely voluntary.
The Exchange believes that the proposed charges for Option E and F
bundles are not unfairly discriminatory. The proposed initial charges
and MRCs for Options E and F would apply equally to all Users that
purchase an Option E or F bundle, and the proposed 50% reduction of MRC
for the first 12
[[Page 8427]]
months would apply to any User that orders an Option E or F bundle on
or before December 31, 2021.
The Proposed Change Is an Equitable Allocation of Fees and Credits
The Exchange believes that its proposal equitably allocates its
fees among its market participants.
The proposed change would not apply differently to distinct types
or sizes of market participants. Rather, it would apply to all Users
equally. Specifically, the proposed initial charges and MRCs for
Options E and F would apply equally to all Users that purchase an
Option E or F bundle, and the proposed 50% reduction of MRC for the
first 12 months would apply to any User that orders an Option E or F
bundle on or before December 31, 2021. The Exchange would continue to
offer the four existing PCS bundles (Options A through D) with
different cabinet footprints and network connection options, in
addition to the proposed Option E and F bundles. Users that require
other sizes or combinations of cabinets, network connections, and cross
connects could still request them. As is currently the case, the
purchase of any co-location service, including PCS bundles, would be
completely voluntary.
Without this proposed rule change, potential Users choosing between
a PCS bundle and a Hosting User Bundle would have fewer options.
Potential Users could benefit from having an additional 40 Gb option
for their network connection requirements, which would allow them to
connect to more of the Included Data Products and Third Party Data
Feeds or have the same size connection in co-location that they have
elsewhere.
Finally, the Exchange believes that it is subject to significant
competitive forces, as described below in the Exchange's statement
regarding the burden on competition.
For the reasons above, the proposed changes do not unfairly
discriminate between or among market participants that are otherwise
capable of satisfying any applicable co-location fees, requirements,
terms, and conditions established from time to time by the Exchange.
For these reasons, the Exchange believes that the proposal is
consistent with the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that the proposal will not impose any burden
on competition that is not necessary or appropriate in furtherance of
the purposes of Section 6(b)(8) of the Act.\16\
---------------------------------------------------------------------------
\16\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------
Intramarket Competition
The Exchange believes that the proposed changes would not place any
burden on intramarket competition that is not necessary or appropriate.
The Exchange's offering of the proposed Option E and F bundles
would provide potential Users of PCS bundles a wider range of choices,
which would be especially beneficial for potential Users with minimal
power and cabinet space demands, but which could nevertheless benefit
from an additional 40 Gb option for their network connection
requirements. The Exchange believes that the proposed change may make
PCS bundles more attractive to potential Users who might otherwise opt
to become Hosted Customers, and thus would enhance the competitive
environment for potential Users, who would then have more options from
which to select. At the same time, however, no potential User would be
obligated to purchase a PCS bundle, and it would still have the options
offered by Hosting Users.
Intermarket Competition
The Exchange believes that the proposed changes will not impose any
burden on intermarket competition that is not necessary or appropriate.
The proposed change is not meant to affect competition among national
securities exchanges. Rather, the Exchange believes that the proposed
change is a reasonable attempt to maintain a more level playing field
between the Exchange and the Hosting Users, who compete for Hosted
Customer business. Because Hosting Users' services are not regulated,
they may offer differentiated pricing and are not required to make
their pricing public. The Exchange believes that the proposed change
may make PCS bundles more attractive to potential users who might
otherwise opt to become Hosted Customers.
The Exchange operates in a highly competitive market in which
exchanges and other vendors (i.e., Hosting Users) offer co-location
services as a means to facilitate the trading and other market
activities of those market participants who believe that co-location
enhances the efficiency of their operations. Accordingly, fees charged
for co-location services are constrained by the active competition for
the order flow of, and other business from, such market participants.
If a particular exchange charges excessive fees for co-location
services, affected market participants will opt to terminate their co-
location arrangements with that exchange, and adopt a possible range of
alternative strategies, including placing their servers in a physically
proximate location outside the exchange's data center (which could be a
competing exchange), or pursuing strategies less dependent upon the
lower exchange-to-participant latency associated with co-location.
Accordingly, an exchange charging excessive fees would stand to lose
not only co-location revenues but also the liquidity of the formerly
co-located trading firms, which could have additional follow-on effects
on the market share and revenue of the affected exchange. In such an
environment, the Exchange must continually review, and consider
adjusting, its services and related fees and credits to remain
competitive with other exchanges.
The Commission has repeatedly expressed its preference for
competition over regulatory intervention in determining price,
products, and services in the securities markets. Specifically, in
Regulation NMS, the Commission highlighted the importance of market
forces in determining prices and SRO revenues and, also, recognizing
that current regulation of the market system ``has been remarkably
successful in promoting market competition in its broader forms that
are most important to investors and listed companies.'' \17\
---------------------------------------------------------------------------
\17\ See Regulation NMS Adopting Release, supra note 12, at
37499.
---------------------------------------------------------------------------
For these reasons, the Exchange believes that the proposed rule
change reflects this competitive environment and does not impose any
undue burden on intermarket competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or up to 90 days (i) as the Commission may designate
if it finds such longer period to be appropriate and publishes its
reasons for so finding or (ii) as to which the self-regulatory
organization consents, the Commission will:
(A) By order approve or disapprove the proposed rule change, or
[[Page 8428]]
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSENAT-2021-01 on the subject line.
Paper Comments
Send paper comments in triplicate to: Securities and
Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSENAT-2021-01. 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-NYSENAT-2021-01 and should be submitted
on or before February 26, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-02409 Filed 2-4-21; 8:45 am]
BILLING CODE 8011-01-P
