Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Cabinet Proximity Option Fee To Establish a Reservation Fee for Cabinets With Power Densities Greater Than 10kW, 21088-21091 [2024-06331]
Download as PDF
<![CDATA[
21088
Federal Register / Vol. 89, No. 59 / Tuesday, March 26, 2024 / Notices
comment letter on the Second Proposal,
both from the same commenter.38 These
comment letters were submitted not
only on these proposals, but also the
proposals by the Exchange and its
affiliates to amend fees for 10Gb ULL
connectivity and certain other ports.
The Exchange received one other
comment letter on the Second Proposal
and another on the Third Proposal from
a separate commenter.39 Overall, the
Exchange believes that the issues raised
by the first commenter are not germane
to this proposal because they apply
primarily to the other fee filings. Also,
both commenters raised concerns with
the current environment surrounding
exchange non-transaction fee proposals
that should be addressed by the
Commission through rule making, or
Congress, more holistically and not
through an individual exchange fee
filings. However, the commenters do
raise one issue that concerns this
proposal whereby it asserts that the
Exchange’s comparison to fees charged
by other exchanges for similar ports is
irrelevant and unpersuasive. The core of
the issue raised is regarding the cost to
connect to one exchange compared to
the cost to connect to others. A thorough
response to this comment would require
the Exchange to obtain competitively
sensitive information about other
exchanges’ architecture and how their
members connect. The Exchange is not
privy to this information. Further, the
commenters compare the Exchange’s
proposed rate to other exchanges that
offer purge port functionality across all
matching engines for a single fee, but
fails to provide the same comparison to
other exchanges that charge for purge
functionality as proposed herein. The
Exchange does not have insight into the
technical architecture of other
exchanges so it is difficult to ascertain
the number of purge ports a firm would
need to connect to another exchange’s
entire market. Therefore, the Exchange
is limited to comparing its proposed fee
to other exchanges’ purge port fees as
listed in their fee schedules.
ddrumheller on DSK120RN23PROD with NOTICES1
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act,40 and Rule
38 See letters from Thomas M. Merritt, Deputy
General Counsel, Virtu Financial, Inc. (‘‘Virtu’’), to
Vanessa Countryman, Secretary, Commission, dated
November 8, 2023 and January 2, 2024.
39 See letters from John C. Pickford, Counsel,
Susquehanna International Group, LLP (‘‘SIG’’), to
Vanessa Countryman, Secretary, Commission, dated
January 4, 2024 and March 1, 2024.
40 15 U.S.C. 78s(b)(3)(A)(ii).
VerDate Sep<11>2014
18:10 Mar 25, 2024
Jkt 262001
19b–4(f)(2) 41 thereunder. At any time
within 60 days of the filing of the
proposed rule change, the Commission
summarily may temporarily suspend
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act. If the Commission
takes such action, the Commission shall
institute proceedings to determine
whether the proposed rule should be
approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
EMERALD–2024–11 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–EMERALD–2024–11. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of 10
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–EMERALD–2024–11 and should be
submitted on or before April 16, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.42
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–06347 Filed 3–25–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99796; File No. SR–
NASDAQ–2024–013]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend the
Cabinet Proximity Option Fee To
Establish a Reservation Fee for
Cabinets With Power Densities Greater
Than 10kW
March 20, 2024.
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 March 13,
2024, The Nasdaq Stock Market LLC
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the 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 proposes to amend the
Exchange’s Cabinet Proximity Option
Fee at General 8, Section 1, as described
further below.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/nasdaq/rules, at the principal
office of the Exchange, and at the
Commission’s Public Reference Room.
42 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
41 17
PO 00000
CFR 240.19b–4(f)(2).
Frm 00149
Fmt 4703
Sfmt 4703
E:\FR\FM\26MRN1.SGM
26MRN1
Federal Register / Vol. 89, No. 59 / Tuesday, March 26, 2024 / Notices
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
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
ddrumheller on DSK120RN23PROD with NOTICES1
1. Purpose
The purpose of the proposed rule
change 3 is to amend the Exchange’s
Cabinet Proximity Option Fee at General
8, Section 1(d) by establishing a
reservation fee for cabinets with power
densities greater than 10 kilowatts
(‘‘kW’’).4
The Exchange currently offers a
Cabinet Proximity Option program
where, for a monthly fee, customers can
obtain an option for future use on
available, unused cabinet space in
proximity to their existing equipment.
Cabinets reserved under the Cabinet
Proximity Option program are unused
cabinets that customers reserve for
future use and can be converted to a
powered cabinet at the customer’s
request. Under the program, customers
can reserve up to maximum of 20
cabinets that the Exchange endeavors to
provide as close as reasonably possible
to the customer’s existing cabinet space,
taking into consideration power
availability within segments of the data
center and the overall efficiency of use
of data center resources as determined
by the Exchange. Should reserved data
center space be needed for use, the
reserving customer will have three
business days to formally contract with
the Exchange for full payment for the
reserved cabinet space or it will be
reassigned. In making determinations to
require exercise or relinquishment of
reserved space as among numerous
3 The Exchange initially filed the proposed
pricing change on March 1, 2024 (SR–NASDAQ–
2024–009). The instant filing replaces SR–
NASDAQ–2024–009, which was withdrawn on
March 13, 2024.
4 On February 16, 2024, the Exchange filed a
proposal to offer the Exchange’s Cabinet Proximity
Option program for cabinets with power densities
greater than 10 kW. See Securities Exchange Act
Release No. 34–99633 (February 29, 2024), 89 FR
16073 (March 6, 2024) (SR–NASDAQ–2024–007).
VerDate Sep<11>2014
18:10 Mar 25, 2024
Jkt 262001
customers, the Exchange will take into
consideration several factors, including:
proximity between available reserved
cabinet space and the existing space of
a customer seeking additional space for
actual cabinet usage; a customer’s ratio
of cabinets in use to those reserved; the
length of time that a particular
reservation(s) has been in place; and any
other factor that the Exchange deems
relevant to ensure overall efficiency in
use of the data center space.5
The applicable monthly fees for the
Cabinet Proximity Option program are
in General 8, Section 1(d). The Cabinet
Proximity Option fee is $1,055/month 6
per medium or low density cabinets and
$1,583/month 7 per medium/high or
high density cabinets.8 The Exchange
proposes to establish a Cabinet
Proximity Option fee of $3,000 for
cabinets with power densities greater
than 10 kW.9 As such, the Exchange
proposes to amend its fee schedule at
General 8, Section 1(d) to reflect the
addition to the existing Cabinet
Proximity Option fees.
The proposed Cabinet Proximity
Option fee of $3,000 would only be
charged to those customers that
voluntarily choose to reserve cabinets
with power densities greater than 10
kW. Such option is available to all
customers. Similar to other fees related
to cabinet and power usage, the Cabinet
Proximity Option fee is incremental,
with higher fees being imposed based
on higher levels of cabinet and power
allocation. The proposed Cabinet
Proximity Option fee of $3,000 for
cabinets with power densities greater
than 10 kW is comparable to pricing for
‘‘PNU cabinets’’ 10 available to
5 See Securities Exchange Act Release No. 34–
62397 (June 28, 2010), 75 FR 38860 (July 6, 2010)
(SR–NASDAQ–2010–019).
6 On March 1, 2024, the Exchange increased the
fee from $1,000 to $1,055. See SR–NASDAQ–2024–
008 (not yet published).
7 On March 1, 2024, the Exchange increased the
fee from $1,500 to $1,583. See SR–NASDAQ–2024–
008 (not yet published).
8 Low density cabinets are cabinets with power
densities less than or equal to 2.88 kW. Medium
density cabinets are cabinets with power densities
greater than 2.88 kW and less than or equal to 5 kW.
Medium/High density cabinets are cabinets with
power densities greater than 5 kW and less than or
equal to 7 kW. High density cabinets are cabinets
with power densities greater than 7 kW and less
than 10 kW. See General 8, Section 1(a).
9 Currently, the Exchange offers Super High
Density Cabinets with power densities greater than
10 kW and less than or equal to 17.3 kW. See
General 8, Section 1(a). In addition, the Exchange
intends to offer cabinets with new power densities
in the future, including power densities greater than
17.3 kW.
10 Similar to the Exchange’s Cabinet Proximity
Option program, the New York Stock Exchange
offers ‘‘PNU cabinets,’’ which are reserved cabinets
that are not active and can be converted to powered,
dedicated cabinets when the user requests. Due to
PO 00000
Frm 00150
Fmt 4703
Sfmt 4703
21089
customers of co-location facilities of the
New York Stock Exchange LLC
(‘‘NYSE’’), which charges a monthly fee
of $360 per kW for PNU cabinets.11
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,12 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,13 in particular, in that it
provides for the equitable allocation of
reasonable dues, fees and other charges
among members and issuers and other
persons using any facility, and is not
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
First, the proposal is reasonable
because the proposed fee is comparable
to NYSE’s monthly fee of $360 per kW
for PNU cabinets.14 As noted above,
NYSE offers ‘‘PNU cabinets,’’ which are
reserved cabinets that are not active and
can be converted to powered, dedicated
cabinets when the user requests.15 The
Exchange’s proposal would establish a
flat $3,000 Cabinet Proximity Option fee
for cabinets with power densities greater
than 10 kW. Under NYSE’s fee
schedule, a reservation for a cabinet
with power density equal to 10 kW
would be $3,600 (e.g., 10 kW × $360).
Because NYSE’s PNU cabinet fees are
charged on a per kW basis, PNU cabinet
fees for cabinets with power densities
greater than 10 kW would be more than
$3,600 and increase as the power
density of the cabinet increases.
Therefore, Nasdaq’s proposal reflects a
discounted price to reserve such
cabinets as compared to NYSE’s fees for
comparable PNU cabinets.
Furthermore, the Exchange offers the
Cabinet Proximity Option program as a
convenience to customers, providing an
option to reserve unused cabinet space
in proximity to their existing
equipment. No firms are required to
reserve cabinets via the Cabinet
heightened demand for power and cabinets, NYSE
established certain procedures related to PNU
cabinet conversion and restrictions on new PNU
cabinet offerings. NYSE adopted a policy that, if
unallocated cabinet inventory is at or below 40
cabinets, new PNU cabinets are not offered.
However, when the unallocated cabinet inventory
is more than 40 cabinets, NYSE may continue to
offer PNU cabinets. See Securities Exchange Act
Release No. 34–90732 (December 18, 2020), 85 FR
84443 (December 28, 2020). See also Securities
Exchange Act Release No. 34–91515 (April 8, 2021),
86 FR 19674 (April 14, 2021).
11 See NYSE Connectivity Fee Schedule, available
at https://www.nyse.com/publicdocs/Wireless_
Connectivity_Fees_and_Charges.pdf.
12 15 U.S.C. 78f(b).
13 15 U.S.C. 78f(b)(4) and (5).
14 See NYSE Connectivity Fee Schedule, available
at https://www.nyse.com/publicdocs/Wireless_
Connectivity_Fees_and_Charges.pdf.
15 Supra note 10.
E:\FR\FM\26MRN1.SGM
26MRN1
21090
Federal Register / Vol. 89, No. 59 / Tuesday, March 26, 2024 / Notices
Proximity Option program. Clients may
simply order cabinets without utilizing
reservations. The proposed Cabinet
Proximity Option fee of $3,000 would
only be charged to those customers that
voluntarily choose to reserve cabinets
with power densities greater than 10 kW
and such option is available to all
customers.
The Exchange believes substitutable
products and services are available to
market participants, including, among
other things, other equities and options
exchanges that a market participant may
connect to in lieu of the Exchange,16
connectivity to the Exchange via a thirdparty reseller of connectivity, and/or
trading of equities or options products
within markets which do not require
connectivity to the Exchange, such as
the Over-the-Counter (OTC) markets.
Market participants that wish to connect
to the Exchange will continue to choose
the method of connectivity based on
their specific needs. Market participants
that wish to connect to the Exchange but
want to avoid or mitigate the effect of
this proposed fee can choose to connect
to the Exchange through a vendor (or
order cabinets without reservations, as
noted above).
In offering the Cabinet Proximity
Option the Exchange incurs certain
costs, including costs related to the data
center, including maintaining an
adequate level of power so that reserved
cabinets can be available and powered
on promptly at the request of customers.
If the Exchange is incorrect in its
determination that the proposed fee
reflects the value of the Cabinet
Proximity Option for cabinets with
power densities greater than 10 kW,
customers will not reserve such
cabinets.
In summary, the proposal represents
an equitable allocation of reasonable
dues, fees and other charges because the
proposed fee is less than NYSE’s fee for
a comparable service, customers have
ddrumheller on DSK120RN23PROD with NOTICES1
16 There
are currently 16 registered equities
exchanges that trade equities and 17 exchanges
offering options trading services. No single equities
exchange has more than 15% of the market share.
See Cboe Global Markets, U.S. Equities Market
Volume Summary, Month-to-Date (Last updated
January 11, 2024), available at https://
www.cboe.com/us/equities/market_statistics/. No
single options exchange trades more than 14% of
the options market by volume and only one of the
17 options exchanges has a market share over 10
percent. See Nasdaq, Options Market Statistics (Last
updated January 11, 2024), available at https://
www.nasdaqtrader.com/
Trader.aspx?id=OptionsVolumeSummary. This
broad dispersion of market share demonstrates that
market participants can and do exercise choice in
trading venues. Further, low barriers to entry mean
that new exchanges may rapidly enter the market
and offer additional substitute platforms to further
compete with the Exchange and the products it
offers.
VerDate Sep<11>2014
19:31 Mar 25, 2024
Jkt 262001
choices in how they connect to the
Exchange, and reservations under the
Cabinet Proximity Option program are
optional and provided as a convenience
to customers.
The Exchange believes that the
proposed fee change is not unfairly
discriminatory because the Cabinet
Proximity Option fee is assessed
uniformly across all market participants
that voluntarily select the option, which
is available to all customers. All
customers have the choice of whether
and how to connect to the Exchange and
may order cabinets without utilizing
reservations.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act.
Nothing in the proposal burdens
inter-market competition because
approval of the proposal does not
impose any burden on the ability of
other exchanges to compete. The
Exchange operates in a highly
competitive market in which market
participants can determine whether or
not to connect to the Exchange based on
the value received compared to the cost
of doing so. Indeed, market participants
have numerous alternative exchanges
that they may participate on and direct
their order flow, as well as off-exchange
venues, where competitive products are
available for trading.
Nothing in the proposal burdens
intra-market competition because the
Cabinet Proximity Option program is
available to any customer under the
same fees as any other customer, and
any customer that wishes to reserve a
cabinet pursuant to the Cabinet
Proximity Option program can do so on
a non-discriminatory basis.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act.17
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
17 15
PO 00000
U.S.C. 78s(b)(3)(A)(ii).
Frm 00151
Fmt 4703
Sfmt 4703
it appears to the Commission that such
action is: (i) necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) otherwise in
furtherance of the purposes of the Act.
If the Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
NASDAQ–2024–013 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–NASDAQ–2024–013. 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
E:\FR\FM\26MRN1.SGM
26MRN1
Federal Register / Vol. 89, No. 59 / Tuesday, March 26, 2024 / Notices
subject to copyright protection. All
submissions should refer to file number
SR–NASDAQ–2024–013 and should be
submitted on or before April 16, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–06331 Filed 3–25–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99803; File No. SR–NSCC–
2024–003]
Self-Regulatory Organizations;
National Securities Clearing
Corporation; Notice of Filing of
Proposed Rule Change To Amend the
Clearing Agency Risk Management
Framework
March 20, 2024.
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 March 11,
2024, National Securities Clearing
Corporation (‘‘NSCC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II and III
below, which Items have been prepared
by the clearing agency. The Commission
is publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
(a) The proposed rule change consists
of amendments to the Clearing Agency
Risk Management Framework (‘‘Risk
Management Framework’’, or
‘‘Framework’’) of NSCC and its
affiliates, The Depository Trust
Company (‘‘DTC’’) and Fixed Income
Clearing Corporation (‘‘FICC,’’ and
together with NSCC and DTC, the
‘‘Clearing Agencies’’).3
18 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release Nos. 81635
(Sep. 15, 2017), 82 FR 44224 (Sep. 21, 2017) (SR–
DTC–2017–013; SR–FICC–2017–016; SR–NSCC–
2017–012) (‘‘Initial Filing’’), Securities Exchange
Act Release No. 89271 (July 9, 2020), 85 FR 42933
(July 15, 2020) (SR–NSCC–2020–012); Securities
Exchange Act Release No. 89269 (July 9, 2020), 85–
42954 (July 15, 2020) (SR–DTC–2020–009);
Securities Exchange Act Release No. 89270 (July 9,
2020), 85–42927 (July 15, 2020) (SR–FICC–2020–
007); Securities Exchange Act Release No. 96799
(Feb. 03, 2023), 88 FR 8506 (Feb. 9, 2023) (SR–
DTC–2023–001); Securities Exchange Act Release
ddrumheller on DSK120RN23PROD with NOTICES1
1 15
VerDate Sep<11>2014
18:10 Mar 25, 2024
Jkt 262001
The proposed rule change would
amend the Framework to (1) describe
how the Clearing Agencies may solicit
the views of their participants and other
industry stakeholders, for example, in
developing new services or risk
management practices, and in
evaluating existing products or risk
management practices; (2) provide for
the annual assessment and subsequent
review of FICC’s Government Securities
Division (‘‘GSD’’) access models by
FICC’s Board of Directors (‘‘FICC
Board’’), in compliance with the
requirements of Rule 17Ad–
22(e)(18)(iv)(C) under the Act; and (3)
make other conforming and clean up
changes to the Framework, as described
below.4
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission, the
clearing agency 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
clearing agency has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
(A) Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
1. Purpose
The Clearing Agency Risk
Management Framework provides an
outline for, among other things, how
each of the Clearing Agencies
comprehensively manages the risks,
including the legal, credit, liquidity,
operational, general business,
investment, custody, and other risks,
that arise in or are borne by it and, in
this way, supports the Clearing
Agencies’ compliance with certain
requirements of Rule 17Ad–22(e) under
No. 96800 (Feb. 3, 2023), 88–8491 (Feb. 9, 2023)
(SR–FICC–2023–001); Securities Exchange Act
Release No. 96801 (Feb. 3, 2023), 88–8502 (Feb. 9,
2023) (SR–NSCC–2023–001); Securities Exchange
Act Release No. 99097 (Dec. 6, 2023), 88–86186
(Dec. 12, 2023) (SR–FICC–2023–016); Securities
Exchange Act Release No. 99098 (Dec. 6, 2023), 88–
86183 (Dec. 12, 2023) (SR–NSCC–2023–012); and
Securities Exchange Act Release No. 99108 (Dec.
07, 2023), 88 FR 86430 (Dec. 13, 2023) (SR–DTC–
2023–012) (together with the Initial Filing,
‘‘Framework Filings’’).
4 17 CFR 240.17Ad–22(e)(18)(iv)(C). See
Securities Exchange Act Release No. 99149 (Dec.
13, 2023), 89 FR 2714 (Jan. 16, 2024) (‘‘Adopting
Release,’’ and the rules adopted therein referred to
herein as ‘‘Treasury Clearing Rules’’). FICC must
implement the new requirements of Rule 17Ad–
22(e)(18)(iv)(C) by March 31, 2025.
PO 00000
Frm 00152
Fmt 4703
Sfmt 4703
21091
the Act, as described in the Framework
Filings.5
The Clearing Agencies routinely
solicit their participants’ and other
industry stakeholders’ views when
developing new products, services or
risk management practices, and when
evaluating existing products, services or
risk management practices in order to
continue to meet the industry’s needs,
consistent with their responsibility to
provide sound risk management and
comply with other applicable provisions
of the Exchange Act. Solicitation of
industry views may be undertaken in a
number of ways, including targeted
outreach to firms expected to be
impacted by a proposal to broader
engagement with a stakeholder council
that is assembled to consider issues
relevant to a proposal.
Furthermore, the Commission
recently adopted amendments to Rule
17Ad–22(e)(18)(iv)(C) under the Act that
are applicable to FICC as a covered
clearing agency that provides, through
GSD, central counterparty services for
transactions in U.S. Treasury securities.
Rule 17Ad–22(e)(18)(iv)(C) requires that
the FICC Board annually review the
policies and procedures that are
reasonably designed to ensure that FICC
has appropriate means to facilitate
access to clearance and settlement
services of all eligible secondary market
transactions in U.S. Treasury securities,
including those of indirect
participants.6 In connection with this
requirement, FICC would conduct an
annual assessment of its access models,
which would include the solicitation of
participant and other stakeholder views,
prior to the FICC Board’s review of
those models. The proposed rule
changes to the Framework would
describe the scope of this annual
assessment of GSD’s access models and
the FICC Board’s subsequent review.
These proposed changes would
facilitate FICC’s compliance with the
requirements of Rule 17Ad–
22(e)(18)(iv)(C).7
Therefore, the proposed changes
would amend the Framework to (i)
describe the Clearing Agencies’
solicitation of participant and
stakeholder views in connection with
their development and evaluation of
products, services and risk management
5 See supra note 3. As described in the
Framework Filings, the Framework describes how
the Clearing Agencies address their respective
compliance with the requirements of Rules 17Ad–
22(e)(1), (3), (20), (21), (22) and (23). 17 CFR
240.17Ad–22(e)(1), (3), (20), (21), (22) and (23).
6 Supra note 4.
7 Id. Contemporaneous with this filing, FICC will
file separate proposed rule changes to address other
requirements applicable to it and adopted as part
of the Treasury Clearing Rules.
E:\FR\FM\26MRN1.SGM
26MRN1
]]>Agencies
[Federal Register Volume 89, Number 59 (Tuesday, March 26, 2024)]
[Notices]
[Pages 21088-21091]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-06331]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99796; File No. SR-NASDAQ-2024-013]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend the Cabinet Proximity Option Fee To Establish a Reservation Fee
for Cabinets With Power Densities Greater Than 10kW
March 20, 2024.
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 March 13, 2024, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 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 the Exchange's Cabinet Proximity
Option Fee at General 8, Section 1, as described further below.
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, at
the principal office of the Exchange, and at the Commission's Public
Reference Room.
[[Page 21089]]
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 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
1. Purpose
The purpose of the proposed rule change \3\ is to amend the
Exchange's Cabinet Proximity Option Fee at General 8, Section 1(d) by
establishing a reservation fee for cabinets with power densities
greater than 10 kilowatts (``kW'').\4\
---------------------------------------------------------------------------
\3\ The Exchange initially filed the proposed pricing change on
March 1, 2024 (SR-NASDAQ-2024-009). The instant filing replaces SR-
NASDAQ-2024-009, which was withdrawn on March 13, 2024.
\4\ On February 16, 2024, the Exchange filed a proposal to offer
the Exchange's Cabinet Proximity Option program for cabinets with
power densities greater than 10 kW. See Securities Exchange Act
Release No. 34-99633 (February 29, 2024), 89 FR 16073 (March 6,
2024) (SR-NASDAQ-2024-007).
---------------------------------------------------------------------------
The Exchange currently offers a Cabinet Proximity Option program
where, for a monthly fee, customers can obtain an option for future use
on available, unused cabinet space in proximity to their existing
equipment. Cabinets reserved under the Cabinet Proximity Option program
are unused cabinets that customers reserve for future use and can be
converted to a powered cabinet at the customer's request. Under the
program, customers can reserve up to maximum of 20 cabinets that the
Exchange endeavors to provide as close as reasonably possible to the
customer's existing cabinet space, taking into consideration power
availability within segments of the data center and the overall
efficiency of use of data center resources as determined by the
Exchange. Should reserved data center space be needed for use, the
reserving customer will have three business days to formally contract
with the Exchange for full payment for the reserved cabinet space or it
will be reassigned. In making determinations to require exercise or
relinquishment of reserved space as among numerous customers, the
Exchange will take into consideration several factors, including:
proximity between available reserved cabinet space and the existing
space of a customer seeking additional space for actual cabinet usage;
a customer's ratio of cabinets in use to those reserved; the length of
time that a particular reservation(s) has been in place; and any other
factor that the Exchange deems relevant to ensure overall efficiency in
use of the data center space.\5\
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 34-62397 (June 28,
2010), 75 FR 38860 (July 6, 2010) (SR-NASDAQ-2010-019).
---------------------------------------------------------------------------
The applicable monthly fees for the Cabinet Proximity Option
program are in General 8, Section 1(d). The Cabinet Proximity Option
fee is $1,055/month \6\ per medium or low density cabinets and $1,583/
month \7\ per medium/high or high density cabinets.\8\ The Exchange
proposes to establish a Cabinet Proximity Option fee of $3,000 for
cabinets with power densities greater than 10 kW.\9\ As such, the
Exchange proposes to amend its fee schedule at General 8, Section 1(d)
to reflect the addition to the existing Cabinet Proximity Option fees.
---------------------------------------------------------------------------
\6\ On March 1, 2024, the Exchange increased the fee from $1,000
to $1,055. See SR-NASDAQ-2024-008 (not yet published).
\7\ On March 1, 2024, the Exchange increased the fee from $1,500
to $1,583. See SR-NASDAQ-2024-008 (not yet published).
\8\ Low density cabinets are cabinets with power densities less
than or equal to 2.88 kW. Medium density cabinets are cabinets with
power densities greater than 2.88 kW and less than or equal to 5 kW.
Medium/High density cabinets are cabinets with power densities
greater than 5 kW and less than or equal to 7 kW. High density
cabinets are cabinets with power densities greater than 7 kW and
less than 10 kW. See General 8, Section 1(a).
\9\ Currently, the Exchange offers Super High Density Cabinets
with power densities greater than 10 kW and less than or equal to
17.3 kW. See General 8, Section 1(a). In addition, the Exchange
intends to offer cabinets with new power densities in the future,
including power densities greater than 17.3 kW.
---------------------------------------------------------------------------
The proposed Cabinet Proximity Option fee of $3,000 would only be
charged to those customers that voluntarily choose to reserve cabinets
with power densities greater than 10 kW. Such option is available to
all customers. Similar to other fees related to cabinet and power
usage, the Cabinet Proximity Option fee is incremental, with higher
fees being imposed based on higher levels of cabinet and power
allocation. The proposed Cabinet Proximity Option fee of $3,000 for
cabinets with power densities greater than 10 kW is comparable to
pricing for ``PNU cabinets'' \10\ available to customers of co-location
facilities of the New York Stock Exchange LLC (``NYSE''), which charges
a monthly fee of $360 per kW for PNU cabinets.\11\
---------------------------------------------------------------------------
\10\ Similar to the Exchange's Cabinet Proximity Option program,
the New York Stock Exchange offers ``PNU cabinets,'' which are
reserved cabinets that are not active and can be converted to
powered, dedicated cabinets when the user requests. Due to
heightened demand for power and cabinets, NYSE established certain
procedures related to PNU cabinet conversion and restrictions on new
PNU cabinet offerings. NYSE adopted a policy that, if unallocated
cabinet inventory is at or below 40 cabinets, new PNU cabinets are
not offered. However, when the unallocated cabinet inventory is more
than 40 cabinets, NYSE may continue to offer PNU cabinets. See
Securities Exchange Act Release No. 34-90732 (December 18, 2020), 85
FR 84443 (December 28, 2020). See also Securities Exchange Act
Release No. 34-91515 (April 8, 2021), 86 FR 19674 (April 14, 2021).
\11\ See NYSE Connectivity Fee Schedule, available at https://www.nyse.com/publicdocs/Wireless_Connectivity_Fees_and_Charges.pdf.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\12\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\13\ in particular, in that it
provides for the equitable allocation of reasonable dues, fees and
other charges among members and issuers and other persons using any
facility, and is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
First, the proposal is reasonable because the proposed fee is
comparable to NYSE's monthly fee of $360 per kW for PNU cabinets.\14\
As noted above, NYSE offers ``PNU cabinets,'' which are reserved
cabinets that are not active and can be converted to powered, dedicated
cabinets when the user requests.\15\ The Exchange's proposal would
establish a flat $3,000 Cabinet Proximity Option fee for cabinets with
power densities greater than 10 kW. Under NYSE's fee schedule, a
reservation for a cabinet with power density equal to 10 kW would be
$3,600 (e.g., 10 kW x $360). Because NYSE's PNU cabinet fees are
charged on a per kW basis, PNU cabinet fees for cabinets with power
densities greater than 10 kW would be more than $3,600 and increase as
the power density of the cabinet increases. Therefore, Nasdaq's
proposal reflects a discounted price to reserve such cabinets as
compared to NYSE's fees for comparable PNU cabinets.
---------------------------------------------------------------------------
\14\ See NYSE Connectivity Fee Schedule, available at https://www.nyse.com/publicdocs/Wireless_Connectivity_Fees_and_Charges.pdf.
\15\ Supra note 10.
---------------------------------------------------------------------------
Furthermore, the Exchange offers the Cabinet Proximity Option
program as a convenience to customers, providing an option to reserve
unused cabinet space in proximity to their existing equipment. No firms
are required to reserve cabinets via the Cabinet
[[Page 21090]]
Proximity Option program. Clients may simply order cabinets without
utilizing reservations. The proposed Cabinet Proximity Option fee of
$3,000 would only be charged to those customers that voluntarily choose
to reserve cabinets with power densities greater than 10 kW and such
option is available to all customers.
The Exchange believes substitutable products and services are
available to market participants, including, among other things, other
equities and options exchanges that a market participant may connect to
in lieu of the Exchange,\16\ connectivity to the Exchange via a third-
party reseller of connectivity, and/or trading of equities or options
products within markets which do not require connectivity to the
Exchange, such as the Over-the-Counter (OTC) markets. Market
participants that wish to connect to the Exchange will continue to
choose the method of connectivity based on their specific needs. Market
participants that wish to connect to the Exchange but want to avoid or
mitigate the effect of this proposed fee can choose to connect to the
Exchange through a vendor (or order cabinets without reservations, as
noted above).
---------------------------------------------------------------------------
\16\ There are currently 16 registered equities exchanges that
trade equities and 17 exchanges offering options trading services.
No single equities exchange has more than 15% of the market share.
See Cboe Global Markets, U.S. Equities Market Volume Summary, Month-
to-Date (Last updated January 11, 2024), available at https://www.cboe.com/us/equities/market_statistics/. No single options
exchange trades more than 14% of the options market by volume and
only one of the 17 options exchanges has a market share over 10
percent. See Nasdaq, Options Market Statistics (Last updated January
11, 2024), available at https://www.nasdaqtrader.com/Trader.aspx?id=OptionsVolumeSummary. This broad dispersion of market
share demonstrates that market participants can and do exercise
choice in trading venues. Further, low barriers to entry mean that
new exchanges may rapidly enter the market and offer additional
substitute platforms to further compete with the Exchange and the
products it offers.
---------------------------------------------------------------------------
In offering the Cabinet Proximity Option the Exchange incurs
certain costs, including costs related to the data center, including
maintaining an adequate level of power so that reserved cabinets can be
available and powered on promptly at the request of customers.
If the Exchange is incorrect in its determination that the proposed
fee reflects the value of the Cabinet Proximity Option for cabinets
with power densities greater than 10 kW, customers will not reserve
such cabinets.
In summary, the proposal represents an equitable allocation of
reasonable dues, fees and other charges because the proposed fee is
less than NYSE's fee for a comparable service, customers have choices
in how they connect to the Exchange, and reservations under the Cabinet
Proximity Option program are optional and provided as a convenience to
customers.
The Exchange believes that the proposed fee change is not unfairly
discriminatory because the Cabinet Proximity Option fee is assessed
uniformly across all market participants that voluntarily select the
option, which is available to all customers. All customers have the
choice of whether and how to connect to the Exchange and may order
cabinets without utilizing reservations.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
Nothing in the proposal burdens inter-market competition because
approval of the proposal does not impose any burden on the ability of
other exchanges to compete. The Exchange operates in a highly
competitive market in which market participants can determine whether
or not to connect to the Exchange based on the value received compared
to the cost of doing so. Indeed, market participants have numerous
alternative exchanges that they may participate on and direct their
order flow, as well as off-exchange venues, where competitive products
are available for trading.
Nothing in the proposal burdens intra-market competition because
the Cabinet Proximity Option program is available to any customer under
the same fees as any other customer, and any customer that wishes to
reserve a cabinet pursuant to the Cabinet Proximity Option program can
do so on a non-discriminatory basis.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\17\
---------------------------------------------------------------------------
\17\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------
At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-NASDAQ-2024-013 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-NASDAQ-2024-013. 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
[[Page 21091]]
subject to copyright protection. All submissions should refer to file
number SR-NASDAQ-2024-013 and should be submitted on or before April
16, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
---------------------------------------------------------------------------
\18\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-06331 Filed 3-25-24; 8:45 am]
BILLING CODE 8011-01-P
