Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of Proposed Change To Amend the Connectivity Fee Schedule, 88155-88158 [2023-27920]
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Federal Register / Vol. 88, No. 243 / Wednesday, December 20, 2023 / Notices
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 18 and Rule
19b–4(f)(6) thereunder.19 Because the
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
prior to 30 days from the date on which
it was filed, or such shorter time as the
Commission may designate, if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act and Rule 19b–4(f)(6)(iii)
thereunder.
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) 20 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
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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 rule-comments@
sec.gov. Please include file number SR–
NYSENAT–2023–29 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
20 15 U.S.C. 78s(b)(2)(B).
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–NYSENAT–2023–29. 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
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–NYSENAT–2023–29 and should be
submitted on or before January 10, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–27911 Filed 12–19–23; 8:45 am]
BILLING CODE 8011–01–P
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99179; File No. SR–
NYSEAMER–2023–65]
Self-Regulatory Organizations; NYSE
American LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Change To Amend the Connectivity
Fee Schedule
December 14, 2023.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
21 17
1 15
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(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on
November 30, 2023, NYSE American
LLC (‘‘NYSE American’’ or the
‘‘Exchange’’) filed with the Securities
and Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I and II
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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
Connectivity Fee Schedule (the ‘‘Fee
Schedule’’) to add circuits provided by
Fixed Income and Data Services
(‘‘FIDS’’) for connectivity into and out of
the data center in Mahwah, New Jersey
(the ‘‘MDC’’). 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
18 15
19 17
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CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
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The Exchange proposes to amend the
Connectivity Fee Schedule (the ‘‘Fee
Schedule’’) to add circuits provided by
Fixed Income and Data Services
(‘‘FIDS’’) 4 for connectivity into and out
2 15
U.S.C. 78a.
CFR 240.19b–4.
4 Through its FIDS business (previously ICE Data
Services), Intercontinental Exchange, Inc. (‘‘ICE’’)
operates the MDC. The Exchange is an indirect
subsidiary of ICE and is an affiliate of the New York
Stock Exchange LLC, NYSE Arca, Inc., NYSE
Chicago, Inc., and NYSE National, Inc. (together,
the ‘‘Affiliate SROs’’). Each Affiliate SRO has
submitted substantially the same proposed rule
change. See SR–NYSE–2023–48, SR–NYSEARCA–
2023–83, SR–NYSECHX–2023–24, and SR–
NYSENAT–2023–29.
3 17
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Federal Register / Vol. 88, No. 243 / Wednesday, December 20, 2023 / Notices
of the data center in Mahwah, New
Jersey (the ‘‘MDC’’).
As background, market participants
that request to receive colocation
services directly from the Exchange
(‘‘Users’’) require wired circuits 5 to
connect into and out of the MDC. A
User’s equipment in the MDC’s
colocation hall connects to a circuit
leading out of the MDC, which connects
to the User’s equipment in their back
office or another data center.
Before 2013, all such circuits were
provided by ICE’s predecessor, NYSE
Euronext. In response to customer
demand for more connectivity options,
in 2013, the MDC opened two ‘‘meetme-rooms’’ to telecommunications
service providers (‘‘Telecoms’’),6 to
enable Telecoms to offer circuits into
the MDC in competition with NYSE
Euronext. Currently, 16 Telecoms
operate in the meet-me-rooms and
provide circuit options to Users
requiring connectivity into and out of
the MDC. As of June 1, 2023, more than
95% of the circuits for which Users
contracted were supplied by Telecoms,
and all but two of the Users that used
FIDS circuits as of that date also
connected to Telecom circuits in the
MMRs.
The Exchange proposes to add several
circuits provided by FIDS to the Fee
Schedule. Specifically, the Exchange
proposes to amend the Fee Schedule to
add two different types of FIDS circuits,
each available in three different sizes.
Because FIDS is not a
telecommunications provider, FIDS
would purchase circuits from
telecommunications providers, with
portions allocated and sold to Users.
First, the Exchange proposes to
amend the Fee Schedule to add ‘‘Optic
Access’’ circuits supplied by FIDS.
Users can use an Optic Access circuit to
connect between the MDC and the FIDS
access centers at the following five
third-party owned data centers: (1) 111
Eighth Avenue, New York, NY; (2) 32
Avenue of the Americas, New York, NY;
(3) 165 Halsey, Newark, NJ; (4)
Secaucus, NJ (the ‘‘Secaucus Access
Center’’); and (5) Carteret, NJ (the
‘‘Carteret Access Center’’). Optic Access
circuits are available in 1 Gb, 10 Gb, and
40 Gb sizes.
Second, the Exchange proposes to
amend the Fee Schedule to add lowerlatency ‘‘Optic Low Latency’’ circuits
supplied by FIDS that Users can use to
connect between the MDC and FIDS’s
Secaucus Access Center or Carteret
Access Center. Optic Low Latency
circuits are available in 1 Gb, 10 Gb, and
40 Gb sizes.
The Exchange proposes to add the
following chart to the Fee Schedule,
under the new heading ‘‘E. FIDS
Circuits’’:
Type of service
Optic
Optic
Optic
Optic
Optic
Optic
Fees
Access Circuit—1 Gb ......................................................................
Access Circuit—10 Gb ....................................................................
Access Circuit—40 Gb ....................................................................
Low Latency Circuit—1 Gb .............................................................
Low Latency Circuit—10 Gb ...........................................................
Low Latency Circuit—40 Gb ...........................................................
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Application and Impact of the Proposed
Changes
$1,500
$5,000
$5,000
$1,500
$5,000
$5,000
initial
initial
initial
initial
initial
initial
charge
charge
charge
charge
charge
charge
plus
plus
plus
plus
plus
plus
Exchange is not aware of any problems
that market participants would have in
complying with the proposed change.
$650 monthly charge.
$1,900 monthly charge.
$4,000 monthly charge.
$2,750 monthly charge.
$3,950 monthly charge.
$8,250 monthly charge.
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,9 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 not targeted
at, or expected to be limited in
applicability to, a specific segment of
market participant. The FIDS circuits
would be available for purchase for any
potential User requiring a circuit
between the MDC and the FIDS access
centers at the third-party owned data
centers listed above. The proposed
changes do not apply differently to
distinct types or sizes of customers.
Rather, they apply to all customers
equally.
Use of the services proposed in this
filing are completely voluntary and
available to all market participants on a
non-discriminatory basis.
The proposed changes are not
otherwise intended to address any other
issues relating to services related to the
MDC and/or related fees, and the
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,7 in general, and
furthers the objectives of Section 6(b)(5)
of the Act,8 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
The Proposed Change Is Reasonable
The Exchange believes that the
proposed rule change is reasonable. In
considering the reasonableness of
proposed services and fees, the
Commission’s market-based test
considers ‘‘whether the exchange was
subject to significant competitive forces
in setting the terms of its proposal
. . . , including the level of any
fees.’’ 10 If the Exchange meets that
burden, ‘‘the Commission will find that
5 In addition to wired fiber optic connections,
Users may use FIDS or third-party wireless
connections to the MDC. In such a case, the portion
of the connection closest to the MDC is wired.
Other than Telecoms, Users are the only FIDS
customers with equipment physically located in the
MDC.
6 In this filing, telecommunication service
providers that choose to provide circuits at the
MDC are referred to as ‘‘Telecoms.’’ Telecoms are
licensed by the Federal Communications
Commission (‘‘FCC’’) and are not required to be, or
be affiliated with, a member of the Exchange or an
Affiliate SRO.
7 15 U.S.C. 78f(b).
8 15 U.S.C. 78f(b)(5).
9 15 U.S.C. 78f(b)(4).
10 Securities Exchange Act Release No. 90209
(October 15, 2020), 85 FR 67044, 67049 (October 21,
2020) (Order Granting Accelerated Approval to
Establish a Wireless Fee Schedule Setting Forth
Available Wireless Bandwidth Connections and
Wireless Market Data Connections) (SR–NYSE–
2020–05, SR–NYSEAMER–2020–05, SR–
NYSEArca–2020–08, SR–NYSECHX–2020–02, SR–
NYSENAT–2020–03, SR–NYSE–2020–11, SR–
NYSEAMER–2020–10, SR–NYSEArca–2020–15,
SR–NYSECHX–2020–05, SR–NYSENAT–2020–08)
(‘‘Wireless Approval Order’’), citing Securities
Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74781 (December 9, 2008)
(‘‘2008 ArcaBook Approval Order’’). See
NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
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Federal Register / Vol. 88, No. 243 / Wednesday, December 20, 2023 / Notices
its proposal is consistent with the Act
unless ‘there is a substantial
countervailing basis to find that the
terms’ of the proposal violate the Act or
the rules thereunder.’’ 11 Here, the
Exchange is subject to significant
competitive forces in setting the terms
on which it offers its proposal, in
particular because substantially similar
substitutes are available, and the thirdparty vendors are not at a competitive
disadvantage created by the Exchange.
The proposed FIDS circuits would
compete with circuits currently offered
by the 16 Telecoms operating in the
meet-me-rooms at the MDC. The
Telecom circuits are reasonable
substitutes for the FIDS circuits. The
Commission has recognized that
products do not need to be identical or
equivalent to be considered
substitutable; it is sufficient that they be
substantially similar.12 The circuits
provided by FIDS and by the Telecoms
all perform the same function:
connecting into and out of the MDC.
The providers of these circuits design
them to perform with particular
combinations of latency, bandwidth,
price, termination point, and other
factors that they believe will attract
Users, and Users choose from among
these competing services on the basis of
their business needs.
The proposed FIDS circuits are
sufficiently similar substitutes to the
circuits offered by the 16 Telecoms even
though the proposed FIDS circuits
would all terminate in one of the five
data centers mentioned above, while
circuits from the 16 Telecoms could
terminate in those locations or
additional locations. While neither the
Exchange nor FIDS knows the end point
of any particular Telecom circuit, the
Exchange understands that the
Telecoms can offer circuits terminating
in any location, including the five data
center locations where the FIDS circuits
would terminate. In addition, Users can
choose to configure their pathway
leading out of colocation in the way that
best suits their business needs, which
may include connecting to the User’s
equipment at one of the five data center
locations that serve as termination
points for the proposed FIDS circuits, or
connecting first to one of those five data
centers with a FIDS- or Telecomsupplied circuit and then further
connecting to another remote location
using a telecommunication providersupplied circuit.
11 Wireless Approval Order, supra note 10, at
67049, citing 2008 ArcaBook Approval Order, supra
note 10, at 74781.
12 See 2008 ArcaBook Approval Order, supra note
10, at 74789 and note 295 (recognizing that
products need not be identical to be substitutable).
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The proposed FIDS circuits do not
have a distance or latency advantage
over the Telecoms’ circuits within the
MDC. FIDS has normalized (a) the
distance between the meet-me-rooms
and the colocation halls and (b) the
distance between the rooms where the
FIDS circuits are located and the
colocation halls. As a result, a User
choosing whether to use the proposed
FIDS circuits or Telecom circuits does
not face any difference in the distances
or latency within the MDC.
The Exchange also believes that the
proposed FIDS circuits do not have any
latency or bandwidth advantage over
the Telecoms’ circuits as a whole
outside of the MDC. FIDS would
purchase the proposed FIDS circuits
from third-party telecommunications
providers and would allocate and resell
portions of them to Users. The Exchange
believes that the Telecoms operating in
the meet-me-rooms offer circuits with a
variety of latency and bandwidth
specifications, some of which may
exceed the specifications of the
proposed FIDS circuits.13 The Exchange
believes that Users consider these
latency and bandwidth factors—as well
as other factors, such as price and
termination point—in determining
which circuit offerings will best serve
their business needs.14
In sum, the Exchange does not believe
that there is anything about the
proposed FIDS circuits that would make
the Telecoms’ circuits inadequate
substitutes.
Nor does the Exchange have a
meaningful competitive advantage over
the Telecoms by virtue of the fact that
it owns and operates the MDC’s meetme-rooms. The Exchange understands
that Telecoms choose to pay fees to the
Exchange for the opportunity to install
equipment in the MDC’s meet-me-rooms
because of the financial benefits those
Telecoms can accrue by selling circuits
to Users. It is therefore in the
Exchange’s best interest to set fees at the
MDC—including both the meet-meroom fees that Telecoms pay and the
FIDS circuit fees that Users would pay—
13 The specifications of FIDS’s competitors’
circuits are not publicly known. The Exchange
understands that FIDS has gleaned any information
it has about its competitors through anecdotal
communications, by observing customers’
purchasing choices in the competitive market, and
from its own experience as a purchaser of circuits
from telecommunications providers to build FIDS’s
own networks.
14 The fact that the FIDS circuits do not have an
advantage is reflected by the fact that Users choose
to use Telecom circuits for the vast majority of their
circuit needs. Whereas before 2013, NYSE Euronext
provided 100% of such circuits, today more than
95% of the circuits that Users have contracted for
are supplied by third-party Telecoms, with FIDS
supplying less than 5%.
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88157
at a level that encourages market
participants, including Telecoms, to
maximize their use of the MDC.15
Setting the FIDS circuit fees at a
reasonable level makes it more likely
that Users will connect into and out of
the MDC. Competitive rates for circuits,
whether FIDS circuits or Telecom
circuits, help draw more Users and
Hosted Customers 16 into the MDC,
which directly benefits the Exchange by
increasing the customer base to whom
the Exchange can sell its colocation
services (including cabinets, power,
ports, and connectivity to many thirdparty data feeds) and encouraging
greater participation on the Exchange. In
other words, by setting the fees for FIDS
circuits at a level attractive to Users, the
Exchange spurs demand for all of the
services it sells at the MDC.
If the Exchange were to set the price
of the FIDS circuits too high, Users
would likely respond by choosing one
of the many alternative options offered
by the 16 Telecoms. Conversely, if the
Exchange were to offer the FIDS circuits
at prices aimed at undercutting
comparable Telecom circuits, the
Telecoms might reassess whether it
makes financial sense for them to
continue to participate in the MDC’s
meet-me-rooms. Their departure might
negatively impact User participation in
colocation and on the Exchange. As a
result, the Exchange is not motivated to
undercut the prices of Telecom circuits.
For these reasons, the proposed
change is reasonable.
The Proposed Change Is an Equitable
Allocation of Fees and Credits
The Exchange believes that its
proposal equitably allocates its fees
among market participants. The
Exchange believes that the proposed
change is equitable because it would not
apply differently to distinct types or
sizes of market participants. Rather, it
would apply to all market participants
equally.
In addition, the Exchange believes
that the proposal is equitable because
only market participants that
voluntarily select to receive the
proposed FIDS circuits would be
charged for them. The proposed FIDS
circuits are available to all market
participants on an equal basis, and all
15 See Securities Exchange Act Release No. 97999
(July 26, 2023), 88 FR 50190 (August 1, 2023) (SR–
NYSEAMER–2023–36) (‘‘MMR Notice’’).
16 ‘‘Hosting’’ is a service offered by a User to
another entity in the User’s space within the MDC.
The Exchange allows Users to act as Hosting Users
for a monthly fee. See Securities Exchange Act
Release No. 76009 (September 29, 2015), 80 FR
60213 (October 5, 2015) (SR–NYSEMKT–2015–67).
Hosting Users’ customers are referred to as ‘‘Hosted
Customers.’’
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market participants that voluntarily
choose to purchase a FIDS circuit are
charged the same amount for that circuit
as all other market participants
purchasing that type of FIDS circuit.
Moreover, any telecommunications
service provider licensed by the FCC is
eligible to be a Telecom operating in the
MRR, irrespective of size and type. The
Exchange’s MMR services are available
to all Telecoms on an equal basis at
standardized pricing.
The Proposed Change Is Not Unfairly
Discriminatory
The Exchange believes its proposal is
not unfairly discriminatory. The
proposed change does not apply
differently to distinct types or sizes of
market participants. Rather, it applies to
all market participants equally. The
purchase of any proposed service is
completely voluntary and the Fee
Schedule will be applied uniformly to
all market participants.
In addition, the Exchange believes
that the proposal is not unfairly
discriminatory because only market
participants that voluntarily select to
receive the proposed FIDS circuits
would be charged for them. The
proposed FIDS circuits are available to
all market participants on an equal
basis, and all market participants that
voluntarily choose to purchase a FIDS
circuit are charged the same amount for
that circuit as all other market
participants purchasing that type of
FIDS circuit.
For these reasons, the Exchange
believes that the proposal is consistent
with the Act.
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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.17
The proposed change would not
impose a burden on competition among
national securities exchanges or among
members of the Exchange. The proposed
change would enhance competition in
the market for circuits transmitting data
into and out of colocation at the MDC
by adding FIDS as the 17th provider of
such circuits, in addition to the 16
Telecoms that also sell such circuits to
Users. The proposed FIDS circuits do
not have any latency, bandwidth, or
other advantage over the Telecoms’
circuits. The proposal would not burden
competition in the sale of such circuits,
but rather, enhance it by providing
Users with an additional choice for their
circuit needs.
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 Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 18 and Rule
19b–4(f)(6) thereunder.19 Because the
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
prior to 30 days from the date on which
it was filed, or such shorter time as the
Commission may designate, if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act and Rule 19b–4(f)(6)(iii)
thereunder.
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) 20 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–NYSEAMER–2023–65. 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
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–NYSEAMER–2023–65 and should
be submitted on or before January 10,
2024.
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.21
Sherry R. Haywood,
Assistant Secretary.
Electronic Comments
BILLING CODE 8011–01–P
[FR Doc. 2023–27920 Filed 12–19–23; 8:45 am]
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number
SR–NYSEAMER–2023–65 on the
subject line.
18 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
20 15 U.S.C. 78s(b)(2)(B).
19 17
17 15
U.S.C. 78f(b)(8).
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[Federal Register Volume 88, Number 243 (Wednesday, December 20, 2023)]
[Notices]
[Pages 88155-88158]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-27920]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99179; File No. SR-NYSEAMER-2023-65]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of Proposed Change To Amend the
Connectivity Fee Schedule
December 14, 2023.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on November 30, 2023, NYSE American LLC (``NYSE American'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
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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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the Connectivity Fee Schedule (the
``Fee Schedule'') to add circuits provided by Fixed Income and Data
Services (``FIDS'') for connectivity into and out of the data center in
Mahwah, New Jersey (the ``MDC''). 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 amend the Connectivity Fee Schedule (the
``Fee Schedule'') to add circuits provided by Fixed Income and Data
Services (``FIDS'') \4\ for connectivity into and out
[[Page 88156]]
of the data center in Mahwah, New Jersey (the ``MDC'').
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\4\ Through its FIDS business (previously ICE Data Services),
Intercontinental Exchange, Inc. (``ICE'') operates the MDC. The
Exchange is an indirect subsidiary of ICE and is an affiliate of the
New York Stock Exchange LLC, NYSE Arca, Inc., NYSE Chicago, Inc.,
and NYSE National, Inc. (together, the ``Affiliate SROs''). Each
Affiliate SRO has submitted substantially the same proposed rule
change. See SR-NYSE-2023-48, SR-NYSEARCA-2023-83, SR-NYSECHX-2023-
24, and SR-NYSENAT-2023-29.
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As background, market participants that request to receive
colocation services directly from the Exchange (``Users'') require
wired circuits \5\ to connect into and out of the MDC. A User's
equipment in the MDC's colocation hall connects to a circuit leading
out of the MDC, which connects to the User's equipment in their back
office or another data center.
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\5\ In addition to wired fiber optic connections, Users may use
FIDS or third-party wireless connections to the MDC. In such a case,
the portion of the connection closest to the MDC is wired. Other
than Telecoms, Users are the only FIDS customers with equipment
physically located in the MDC.
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Before 2013, all such circuits were provided by ICE's predecessor,
NYSE Euronext. In response to customer demand for more connectivity
options, in 2013, the MDC opened two ``meet-me-rooms'' to
telecommunications service providers (``Telecoms''),\6\ to enable
Telecoms to offer circuits into the MDC in competition with NYSE
Euronext. Currently, 16 Telecoms operate in the meet-me-rooms and
provide circuit options to Users requiring connectivity into and out of
the MDC. As of June 1, 2023, more than 95% of the circuits for which
Users contracted were supplied by Telecoms, and all but two of the
Users that used FIDS circuits as of that date also connected to Telecom
circuits in the MMRs.
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\6\ In this filing, telecommunication service providers that
choose to provide circuits at the MDC are referred to as
``Telecoms.'' Telecoms are licensed by the Federal Communications
Commission (``FCC'') and are not required to be, or be affiliated
with, a member of the Exchange or an Affiliate SRO.
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The Exchange proposes to add several circuits provided by FIDS to
the Fee Schedule. Specifically, the Exchange proposes to amend the Fee
Schedule to add two different types of FIDS circuits, each available in
three different sizes. Because FIDS is not a telecommunications
provider, FIDS would purchase circuits from telecommunications
providers, with portions allocated and sold to Users.
First, the Exchange proposes to amend the Fee Schedule to add
``Optic Access'' circuits supplied by FIDS. Users can use an Optic
Access circuit to connect between the MDC and the FIDS access centers
at the following five third-party owned data centers: (1) 111 Eighth
Avenue, New York, NY; (2) 32 Avenue of the Americas, New York, NY; (3)
165 Halsey, Newark, NJ; (4) Secaucus, NJ (the ``Secaucus Access
Center''); and (5) Carteret, NJ (the ``Carteret Access Center''). Optic
Access circuits are available in 1 Gb, 10 Gb, and 40 Gb sizes.
Second, the Exchange proposes to amend the Fee Schedule to add
lower-latency ``Optic Low Latency'' circuits supplied by FIDS that
Users can use to connect between the MDC and FIDS's Secaucus Access
Center or Carteret Access Center. Optic Low Latency circuits are
available in 1 Gb, 10 Gb, and 40 Gb sizes.
The Exchange proposes to add the following chart to the Fee
Schedule, under the new heading ``E. FIDS Circuits'':
------------------------------------------------------------------------
Type of service Fees
------------------------------------------------------------------------
Optic Access Circuit--1 Gb............. $1,500 initial charge plus $650
monthly charge.
Optic Access Circuit--10 Gb............ $5,000 initial charge plus
$1,900 monthly charge.
Optic Access Circuit--40 Gb............ $5,000 initial charge plus
$4,000 monthly charge.
Optic Low Latency Circuit--1 Gb........ $1,500 initial charge plus
$2,750 monthly charge.
Optic Low Latency Circuit--10 Gb....... $5,000 initial charge plus
$3,950 monthly charge.
Optic Low Latency Circuit--40 Gb....... $5,000 initial charge plus
$8,250 monthly charge.
------------------------------------------------------------------------
Application and Impact of the Proposed Changes
The proposed change is not targeted at, or expected to be limited
in applicability to, a specific segment of market participant. The FIDS
circuits would be available for purchase for any potential User
requiring a circuit between the MDC and the FIDS access centers at the
third-party owned data centers listed above. The proposed changes do
not apply differently to distinct types or sizes of customers. Rather,
they apply to all customers equally.
Use of the services proposed in this filing are completely
voluntary and available to all market participants on a non-
discriminatory basis.
The proposed changes are not otherwise intended to address any
other issues relating to services related to the MDC and/or related
fees, and the Exchange is not aware of any problems that market
participants 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,\7\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\8\ 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,\9\ 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.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
\9\ 15 U.S.C. 78f(b)(4).
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The Proposed Change Is Reasonable
The Exchange believes that the proposed rule change is reasonable.
In considering the reasonableness of proposed services and fees, the
Commission's market-based test considers ``whether the exchange was
subject to significant competitive forces in setting the terms of its
proposal . . . , including the level of any fees.'' \10\ If the
Exchange meets that burden, ``the Commission will find that
[[Page 88157]]
its proposal is consistent with the Act unless `there is a substantial
countervailing basis to find that the terms' of the proposal violate
the Act or the rules thereunder.'' \11\ Here, the Exchange is subject
to significant competitive forces in setting the terms on which it
offers its proposal, in particular because substantially similar
substitutes are available, and the third-party vendors are not at a
competitive disadvantage created by the Exchange.
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\10\ Securities Exchange Act Release No. 90209 (October 15,
2020), 85 FR 67044, 67049 (October 21, 2020) (Order Granting
Accelerated Approval to Establish a Wireless Fee Schedule Setting
Forth Available Wireless Bandwidth Connections and Wireless Market
Data Connections) (SR-NYSE-2020-05, SR-NYSEAMER-2020-05, SR-
NYSEArca-2020-08, SR-NYSECHX-2020-02, SR-NYSENAT-2020-03, SR-NYSE-
2020-11, SR-NYSEAMER-2020-10, SR-NYSEArca-2020-15, SR-NYSECHX-2020-
05, SR-NYSENAT-2020-08) (``Wireless Approval Order''), citing
Securities Exchange Act Release No. 59039 (December 2, 2008), 73 FR
74770, 74781 (December 9, 2008) (``2008 ArcaBook Approval Order'').
See NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
\11\ Wireless Approval Order, supra note 10, at 67049, citing
2008 ArcaBook Approval Order, supra note 10, at 74781.
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The proposed FIDS circuits would compete with circuits currently
offered by the 16 Telecoms operating in the meet-me-rooms at the MDC.
The Telecom circuits are reasonable substitutes for the FIDS circuits.
The Commission has recognized that products do not need to be identical
or equivalent to be considered substitutable; it is sufficient that
they be substantially similar.\12\ The circuits provided by FIDS and by
the Telecoms all perform the same function: connecting into and out of
the MDC. The providers of these circuits design them to perform with
particular combinations of latency, bandwidth, price, termination
point, and other factors that they believe will attract Users, and
Users choose from among these competing services on the basis of their
business needs.
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\12\ See 2008 ArcaBook Approval Order, supra note 10, at 74789
and note 295 (recognizing that products need not be identical to be
substitutable).
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The proposed FIDS circuits are sufficiently similar substitutes to
the circuits offered by the 16 Telecoms even though the proposed FIDS
circuits would all terminate in one of the five data centers mentioned
above, while circuits from the 16 Telecoms could terminate in those
locations or additional locations. While neither the Exchange nor FIDS
knows the end point of any particular Telecom circuit, the Exchange
understands that the Telecoms can offer circuits terminating in any
location, including the five data center locations where the FIDS
circuits would terminate. In addition, Users can choose to configure
their pathway leading out of colocation in the way that best suits
their business needs, which may include connecting to the User's
equipment at one of the five data center locations that serve as
termination points for the proposed FIDS circuits, or connecting first
to one of those five data centers with a FIDS- or Telecom-supplied
circuit and then further connecting to another remote location using a
telecommunication provider-supplied circuit.
The proposed FIDS circuits do not have a distance or latency
advantage over the Telecoms' circuits within the MDC. FIDS has
normalized (a) the distance between the meet-me-rooms and the
colocation halls and (b) the distance between the rooms where the FIDS
circuits are located and the colocation halls. As a result, a User
choosing whether to use the proposed FIDS circuits or Telecom circuits
does not face any difference in the distances or latency within the
MDC.
The Exchange also believes that the proposed FIDS circuits do not
have any latency or bandwidth advantage over the Telecoms' circuits as
a whole outside of the MDC. FIDS would purchase the proposed FIDS
circuits from third-party telecommunications providers and would
allocate and resell portions of them to Users. The Exchange believes
that the Telecoms operating in the meet-me-rooms offer circuits with a
variety of latency and bandwidth specifications, some of which may
exceed the specifications of the proposed FIDS circuits.\13\ The
Exchange believes that Users consider these latency and bandwidth
factors--as well as other factors, such as price and termination
point--in determining which circuit offerings will best serve their
business needs.\14\
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\13\ The specifications of FIDS's competitors' circuits are not
publicly known. The Exchange understands that FIDS has gleaned any
information it has about its competitors through anecdotal
communications, by observing customers' purchasing choices in the
competitive market, and from its own experience as a purchaser of
circuits from telecommunications providers to build FIDS's own
networks.
\14\ The fact that the FIDS circuits do not have an advantage is
reflected by the fact that Users choose to use Telecom circuits for
the vast majority of their circuit needs. Whereas before 2013, NYSE
Euronext provided 100% of such circuits, today more than 95% of the
circuits that Users have contracted for are supplied by third-party
Telecoms, with FIDS supplying less than 5%.
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In sum, the Exchange does not believe that there is anything about
the proposed FIDS circuits that would make the Telecoms' circuits
inadequate substitutes.
Nor does the Exchange have a meaningful competitive advantage over
the Telecoms by virtue of the fact that it owns and operates the MDC's
meet-me-rooms. The Exchange understands that Telecoms choose to pay
fees to the Exchange for the opportunity to install equipment in the
MDC's meet-me-rooms because of the financial benefits those Telecoms
can accrue by selling circuits to Users. It is therefore in the
Exchange's best interest to set fees at the MDC--including both the
meet-me-room fees that Telecoms pay and the FIDS circuit fees that
Users would pay--at a level that encourages market participants,
including Telecoms, to maximize their use of the MDC.\15\
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\15\ See Securities Exchange Act Release No. 97999 (July 26,
2023), 88 FR 50190 (August 1, 2023) (SR-NYSEAMER-2023-36) (``MMR
Notice'').
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Setting the FIDS circuit fees at a reasonable level makes it more
likely that Users will connect into and out of the MDC. Competitive
rates for circuits, whether FIDS circuits or Telecom circuits, help
draw more Users and Hosted Customers \16\ into the MDC, which directly
benefits the Exchange by increasing the customer base to whom the
Exchange can sell its colocation services (including cabinets, power,
ports, and connectivity to many third-party data feeds) and encouraging
greater participation on the Exchange. In other words, by setting the
fees for FIDS circuits at a level attractive to Users, the Exchange
spurs demand for all of the services it sells at the MDC.
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\16\ ``Hosting'' is a service offered by a User to another
entity in the User's space within the MDC. The Exchange allows Users
to act as Hosting Users for a monthly fee. See Securities Exchange
Act Release No. 76009 (September 29, 2015), 80 FR 60213 (October 5,
2015) (SR-NYSEMKT-2015-67). Hosting Users' customers are referred to
as ``Hosted Customers.''
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If the Exchange were to set the price of the FIDS circuits too
high, Users would likely respond by choosing one of the many
alternative options offered by the 16 Telecoms. Conversely, if the
Exchange were to offer the FIDS circuits at prices aimed at
undercutting comparable Telecom circuits, the Telecoms might reassess
whether it makes financial sense for them to continue to participate in
the MDC's meet-me-rooms. Their departure might negatively impact User
participation in colocation and on the Exchange. As a result, the
Exchange is not motivated to undercut the prices of Telecom circuits.
For these reasons, the proposed change is reasonable.
The Proposed Change Is an Equitable Allocation of Fees and Credits
The Exchange believes that its proposal equitably allocates its
fees among market participants. The Exchange believes that the proposed
change is equitable because it would not apply differently to distinct
types or sizes of market participants. Rather, it would apply to all
market participants equally.
In addition, the Exchange believes that the proposal is equitable
because only market participants that voluntarily select to receive the
proposed FIDS circuits would be charged for them. The proposed FIDS
circuits are available to all market participants on an equal basis,
and all
[[Page 88158]]
market participants that voluntarily choose to purchase a FIDS circuit
are charged the same amount for that circuit as all other market
participants purchasing that type of FIDS circuit.
Moreover, any telecommunications service provider licensed by the
FCC is eligible to be a Telecom operating in the MRR, irrespective of
size and type. The Exchange's MMR services are available to all
Telecoms on an equal basis at standardized pricing.
The Proposed Change Is Not Unfairly Discriminatory
The Exchange believes its proposal is not unfairly discriminatory.
The proposed change does not apply differently to distinct types or
sizes of market participants. Rather, it applies to all market
participants equally. The purchase of any proposed service is
completely voluntary and the Fee Schedule will be applied uniformly to
all market participants.
In addition, the Exchange believes that the proposal is not
unfairly discriminatory because only market participants that
voluntarily select to receive the proposed FIDS circuits would be
charged for them. The proposed FIDS circuits are available to all
market participants on an equal basis, and all market participants that
voluntarily choose to purchase a FIDS circuit are charged the same
amount for that circuit as all other market participants purchasing
that type of FIDS circuit.
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.\17\
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\17\ 15 U.S.C. 78f(b)(8).
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The proposed change would not impose a burden on competition among
national securities exchanges or among members of the Exchange. The
proposed change would enhance competition in the market for circuits
transmitting data into and out of colocation at the MDC by adding FIDS
as the 17th provider of such circuits, in addition to the 16 Telecoms
that also sell such circuits to Users. The proposed FIDS circuits do
not have any latency, bandwidth, or other advantage over the Telecoms'
circuits. The proposal would not burden competition in the sale of such
circuits, but rather, enhance it by providing Users with an additional
choice for their circuit needs.
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 Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \18\ and Rule 19b-4(f)(6) thereunder.\19\
Because the 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 prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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\18\ 15 U.S.C. 78s(b)(3)(A)(iii).
\19\ 17 CFR 240.19b-4(f)(6).
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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) \20\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\20\ 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-NYSEAMER-2023-65 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-NYSEAMER-2023-65. 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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-NYSEAMER-2023-65 and should
be submitted on or before January 10, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-27920 Filed 12-19-23; 8:45 am]
BILLING CODE 8011-01-P
