Self-Regulatory Organizations; NYSE National, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Connectivity Fee Schedule, 21050-21055 [2024-06345]
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Federal Register / Vol. 89, No. 59 / Tuesday, March 26, 2024 / Notices
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.26
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:
ddrumheller on DSK120RN23PROD with NOTICES1
Electronic Comments
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–NASDAQ–2024–012 and should be
submitted on or before April 16, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.27
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–06320 Filed 3–25–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99810; File No. SR–
NYSENAT–2024–09]
• 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–2024–012 on the subject line.
Self-Regulatory Organizations; NYSE
National, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the
Connectivity Fee Schedule
Paper Comments
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 March 8,
2024, NYSE National, Inc. (‘‘NYSE
National’’ or the ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
• 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–2024–012. 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,
26 15
U.S.C. 78s(b)(3)(A)(ii).
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March 20, 2024.
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 (‘‘Fee
Schedule’’) regarding colocation
services and fees to provide Users with
wireless connectivity to MEMX market
data. The proposed rule change is
available on the Exchange’s website at
www.nyse.com, at the principal office of
27 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
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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 (‘‘Fee
Schedule’’) regarding colocation
services and fees to provide Users 4 with
wireless connectivity to MEMX LLC
(‘‘MEMX’’) market data.
The Exchange currently provides
Users with wireless connections to nine
market data feeds or combinations of
feeds from third-party markets (the
‘‘Existing Third Party Data’’),5 and
wired connections to more than 45
market data feeds or combinations of
feeds.6 The Exchange proposes to add to
the Fee Schedule wireless connections
to the MEMX Memoir Depth market
data feed 7 (‘‘MEMX Data’’ and, together
with the Existing Third Party Data, the
‘‘Third Party Data’’). Users would be
offered the proposed wireless
connection to the MEMX Data through
connections into the colocation center
4 For purposes of the Exchange’s colocation
services, a ‘‘User’’ means any market participant
that requests to receive colocation services directly
from the Exchange. See Securities Exchange Act
Release No. 83351 (May 31, 2018), 83 FR 26314 at
n.9 (June 6, 2018) (SR–NYSENAT–2018–07). As
specified in the Fee Schedule, a User that incurs
colocation fees for a particular colocation service
pursuant thereto would not be subject to colocation
fees for the same colocation service charged by the
Exchange’s affiliates the New York Stock Exchange
LLC, NYSE American LLC, NYSE Arca, Inc., and
NYSE Chicago, Inc. (together, the ‘‘Affiliate SROs’’).
Each Affiliate SRO has submitted substantially the
same proposed rule change to propose the changes
described herein. See SR–NYSE–2024–15, SR–
NYSEAMER–2024–18, SR–NYSEARCA–2024–26,
and SR–NYSECHX–2024–11.
5 See 83 FR 26314, supra note 4, at 26319–20.
6 See id. at 26322–23.
7 MEMX Data would also include the test feed for
MEMX Memoir market data.
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in the Mahwah, New Jersey data center
(‘‘MDC’’).8
The Exchange expects that the
proposed rule change would become
operative in the second quarter of 2024.
The Exchange will announce the date
that the wireless connection to the
MEMX Data will be available through a
customer notice.
As requested by Users, the Exchange’s
proposed wireless connectivity to
MEMX Data would be to the MEMX
Memoir Depth market data feed. As
described by MEMX, ‘‘[t]he MEMOIR
Depth feed is a MEMX-only market data
feed that contains all displayed orders
for securities trading on the Exchange
(i.e., top and depth-of-book order data),
order executions (i.e., last sale data),
order cancellations, order modifications,
order identification numbers, and
administrative messages.’’ 9
To receive MEMX Data, the User
would enter into an agreement with a
third party for permission to receive the
data, if required. The User would pay
this third party any fees for the data
content.
The Exchange proposes to revise the
Fee Schedule to reflect fees related to
the wireless connection to MEMX Data.
For each wireless connection to MEMX
Data, a User would be charged a $5,000
non-recurring initial charge and a
monthly recurring charge of $6,000. If a
User were to purchase more than one
wireless connection to MEMX Data, it
would pay more than one non-recurring
initial charge.
Each proposed wireless connection to
MEMX Data would include the use of
one wireless connection port, and a
User would not pay a separate fee for
the use of such port, provided that if a
User already had a port for Existing
Third Party Data other than Toronto
Stock Exchange data or CME Group data
(‘‘Single Port Third Party Data’’), it
would not receive an additional port for
the MEMX Data, as one would not be
needed.10 Rather, the User would be
8 Through its Fixed Income and Data Services
(‘‘FIDS’’) (previously ICE Data Services) business,
Intercontinental Exchange, Inc. (‘‘ICE’’) operates the
MDC. The Exchange and the Affiliate SROs are
indirect subsidiaries of ICE. The proposed service
would be provided by FIDS pursuant to an
agreement with a non-ICE entity. FIDS does not
own the wireless network that would be used to
provide the service.
9 Securities Exchange Act Release No. 97130
(March 13, 2023), 88 FR 16491, 16492 (March 17,
2023) (SR–MEMX–2023–04).
10 Similarly, if a User connected to MEMX Data
on a port for which it did not pay a separate fee
for its use, it would not receive a new port if it
subsequently connected to Single Port Third Party
Data. Connection to Toronto Stock Exchange data
and CME Group data are excepted because they
each require their own port. See Securities
Exchange Act Release Nos. 80215 (February 28,
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able to connect to MEMX Data using the
same port that it already had, as a User
would only require one port to connect
to MEMX Data and Single Port Third
Party Data, irrespective of how many of
the wireless connections it orders.
Application and Impact of the Proposed
Changes
The proposed changes would not
apply differently to distinct types or
sizes of market participants. Rather,
they would apply to all Users equally.
As is currently the case, the purchase
of any colocation service, including
connectivity to Third Party Data, is
completely voluntary and the Fee
Schedule is applied uniformly to all
Users.
Competitive Environment
The Exchange operates in a highly
competitive market in which other
vendors offer colocation services as a
means to facilitate the trading and other
market activities of those market
participants who believe that colocation
enhances the efficiency of their
operations. The Commission has
repeatedly expressed its preference for
competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. Specifically, in Regulation
NMS, the Commission highlighted the
importance of market forces in
determining prices and SRO revenues
and, also, recognized that current
regulation of the market system ‘‘has
been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 11
The Exchange understands that the
third party Quincy Data LLC
(‘‘Quincy’’) 12 already provides wireless
connectivity to MEMX market data in
the MDC. As explained below in this
filing, the Exchange’s proposed wireless
connection to MEMX Data would
compete with the wireless connection to
MEMX market data provided by Quincy.
Third-party vendors such as Quincy are
not at any competitive disadvantage
created by the Exchange.
The proposed change is not otherwise
intended to address any other issues
relating to colocation services or related
fees, and the Exchange is not aware of
any problems that Users would have in
complying with the proposed change.
2017), 82 FR 12658 (March 6, 2017) (SR–NYSE–
2017–05); and 98966 (November 16, 2023), 88 FR
81476 (November 22, 2023) (SR–NYSENAT–2023–
26).
11 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
12 The Exchange understands that Quincy is an
affiliate of McKay Brothers LLC.
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2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,13 in general, and
furthers the objectives of Section 6(b)(5)
of the Act,14 in particular, because it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
regulating, clearing, settling, processing
information with respect to, and
facilitating transactions in securities, to
remove impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest and because it is not
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers. The
Exchange further believes that the
proposed rule change is consistent with
Section 6(b)(4) of the Act,15 because it
provides for the equitable allocation of
reasonable dues, fees, and other charges
among its members and issuers and
other persons using its facilities and
does not unfairly discriminate between
customers, issuers, brokers, or dealers.
The Proposed Change Is Reasonable
The Exchange believes that the
proposed rule change is reasonable. 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.’’ 16 If the Exchange meets that
burden, ‘‘the Commission will find that
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.’’ 17 Here, the
13 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
15 15 U.S.C. 78f(b)(4).
16 See 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).
17 See Wireless Approval Order, supra note 16, at
67049, citing 2008 ArcaBook Approval Order, supra
note 16, at 74781.
14 15
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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
Exchange has not placed the third party
vendors at a competitive disadvantage
created by the Exchange.
Substantially Similar Substitutes Are
Available
The Exchange’s proposed wireless
connection to MEMX Data would
compete with other methods by which
both the Exchange and various third
parties already provide connectivity to
MEMX market data to Users.
Quincy already provides wireless
connectivity to MEMX market data in
the MDC. The Exchange believes that
the Quincy wireless connection to
MEMX market data is to the same
MEMX data feed, and at a same or
similar speed as the Exchange’s
proposed connection.18 Accordingly,
the Quincy wireless connection to
MEMX market data would compete with
the Exchange’s proposed wireless
connection and would exert significant
competitive forces on the Exchange in
setting the terms of its proposal,
including the level of the Exchange’s
proposed fees.19 If the Exchange were to
set its proposed fees too high, Users
could respond by instead selecting
Quincy’s substantially similar wireless
connectivity to MEMX market data.20
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Third Party Competitors Are Not at a
Competitive Disadvantage Created by
the Exchange
The Exchange does not believe that
FIDS would have any competitive
advantage over either the existing thirdparty provider or any future providers of
wireless connectivity to MEMX market
data. The Exchange’s proposed service
for connectivity to MEMX Data does not
have any special access to or advantage
within the MDC. More specifically, the
Exchange’s proposed wireless
connection would lead to the data
center pole, from which a fiber
connection would lead into the MDC.
The data center pole is on the grounds
of the MDC, but pursuant to Exchange
rule the distance from such pole to the
patch panel where fiber connections for
18 Because Quincy is not a regulated entity, it is
not obligated to make its fees publicly available or
make latency or fees the same for all entities. The
Exchange believes that Quincy may offer
connectivity to MEMX data in the MDC, Carteret
data center, and Secaucus data center as a bundle.
19 See 2008 ArcaBook Approval Order, supra note
16, at 74789 and n.295 (recognizing that products
need not be identical to be substitutable).
20 The Exchange believes that at least three thirdparty market participants offer fiber connections to
MEMX market data in colocation.
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wireless services connect to the network
row in the space used for co-location in
the MDC (the ‘‘Patch Panel Point’’) is
normalized 21 Exchange rules also
require that the distance from the Patch
Panel Point to each User cabinet in
colocation be the same.22 Further, all
distances in the MDC are normalized.
Every provider of wireless connectivity
to Users, including FIDS, is connected
to the Patch Panel Point, and the length
of the fiber path from the Patch Panel
Point to each User cabinet in colocation
is the same.
Nor does the Exchange have a
competitive advantage over the thirdparty competitors offering wireless
connectivity to MEMX market data by
virtue of the fact that it owns and
operates the MDC’s meet-me-rooms.
Users purchasing wireless connectivity
to MEMX market data—like Users of
any other colocation service—would
require a circuit connecting out of the
MDC, and in most cases, such circuits
are provided by third-party
telecommunications service providers
that have installed their equipment in
the MDC’s two meet-me-rooms
(‘‘Telecoms’’).23 Currently, 16 Telecoms
operate in the meet-me-rooms and
provide a variety of circuit choices. It is
in the Exchange’s best interest to set the
fees that Telecoms pay to operate in the
meet-me-rooms at a reasonable level 24
so that market participants, including
Telecoms, will maximize their use of
the MDC. By setting the meet-me-room
fees at a reasonable level, the Exchange
encourages Telecoms to participate in
the meet-me-rooms and to sell circuits
to Users for connecting into and out of
the MDC. These Telecoms then compete
with each other by pricing such circuits
at competitive rates. These competitive
rates for circuits help draw in more
Users and Hosted Customers to the
MDC, which directly benefits the
Exchange by increasing the customer
base to whom the Exchange can sell its
colocation services, which include
cabinets, power, ports, and connectivity
to many third-party data feeds, and
21 See
NYSE Rule 3.13, NYSE American Rule
3.13E, NYSE Arca Rule 3.13, NYSE Chicago Rule
3.13, and NYSE National Rule 3.13 (Data Center
Pole Restrictions—Connectivity to Co-Location
Space) (placing restrictions on use of the data center
pole designed to address any advantage that the
wireless connections have by virtue of a data center
pole).
22 Id.
23 Note that in the case of wireless connectivity,
a User in colocation still requires a fiber circuit to
transport data. If a Telecom is used, the data is
transmitted wirelessly to the relevant pole, and then
from the pole to the meet-me-room using a fiber
circuit.
24 See Securities Exchange Act Release No. 98002
(July 26, 2023), 88 FR 50232 (August 1, 2023) (SR–
NYSENAT–2023–12) (‘‘MMR Notice’’).
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because having more Users and Hosted
Customers leads, in many cases, to
greater participation on the Exchange. In
this way, by setting the meet-me-room
fees at a level attractive to
telecommunications firms, the Exchange
spurs demand for all of the services it
sells at the MDC, while setting the meetme-room fees too high would negatively
affect the Exchange’s ability to sell its
services at the MDC.25 Accordingly,
there are real constraints on the meetme-room fees the Exchange charges,
such that the Exchange does not have an
advantage in terms of costs when
compared to third parties that enter the
MDC through the meet-me-rooms to
provide services to compete with the
Exchange’s services.
If anything, the Exchange is subject to
a competitive disadvantage vis-a`-vis
third-party competitors offering wireless
connectivity to MEMX market data.
Third-party competitors are not subject
to the Commission’s filing requirements,
and therefore can freely change their
services and pricing in response to
competitive forces. In contrast, the
Exchange’s service and pricing would
be standardized as set out in this filing,
and the Exchange would be unable to
respond to pricing pressure from its
competitors without seeking a formal
fee change in a filing before the
Commission.
In sum, because the Exchange is
subject to significant competitive forces
in setting the terms on which it offers
its proposal, in particular because a
substantially similar substitute is
available, and the Exchange has not
placed third-party vendors at a
competitive disadvantage created by the
Exchange, the proposed fees for the
Exchange’s wireless connectivity to
MEMX Data are reasonable.26 If the
Exchange were to set its prices for
wireless connectivity to MEMX Data at
a level that Users found to be too high,
Users could easily choose to connect to
MEMX market data in colocation at the
MDC through the competing Quincy
wireless connection, as detailed above.
Additional Considerations
The Exchange believes it is reasonable
that if a User already had a wireless
connection port for Single Port Third
Party Data, it would not receive an
additional port for the MEMX Data. In
such a case, no additional port would be
needed, as the User would be able to
connect to MEMX Data using the port it
already had. Similarly, the Exchange
25 See id. at 50235. Importantly, the Exchange is
prevented from making any alteration to its meetme-room services or fees without filing a proposal
for such changes with the Commission.
26 See Wireless Approval Order, supra note 16.
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believes it is reasonable that if a User
connected to MEMX Data on a port for
which it did not pay a separate fee for
its use, it would not receive a new port
if it subsequently connected to Single
Port Third Party Data. This is because a
User would only require one port to
connect to MEMX and Single Port Third
Party Data, irrespective of how many of
the wireless connections it orders.
The Exchange believes it is reasonable
for the MEMX Data to include the
MEMX Memoir Depth feed and its
related test feed, as that is responsive to
User requests. The Exchange believes
that it is the same feed that the
competing Quincy wireless connection
offers.
The Proposed Change Is an Equitable
Allocation of Fees and Credits
The Exchange believes that its
proposal equitably allocates its fees
among Users. Without this proposed
rule change, Users would have fewer
options for connectivity to MEMX
market data. The proposed change
would provide Users with an additional
choice with respect to the form and
optimal latency of the connectivity they
use to receive MEMX market data,
allowing a User to select the
connectivity that better suits its needs,
helping it tailor its colocation
operations to the requirements of its
business operations. Users that do not
opt to utilize the Exchange’s proposed
wireless connection would still be able
to obtain MEMX market data wirelessly
using Quincy’s wireless connection.
The Exchange believes that the
proposed change is equitable because it
will result in fees being charged only to
Users that voluntarily select to receive
the corresponding services and because
those services will be available to all
Users. Furthermore, the Exchange
believes that the services and fees
proposed herein are equitably allocated
because, in addition to the services
being completely voluntary, they are
available to all Users on an equal basis
(i.e., the same products and services are
available to all Users). All Users that
voluntarily select the Exchange’s
proposed wireless connections to
MEMX Data would be charged the same
amount for the same services.
The Exchange believes that it is
equitable that if a User already had a
port for Single Port Third Party Data, it
would not receive an additional port for
the MEMX Data. Similarly, the
Exchange believes it is equitable that if
a User connected to MEMX Data on a
port for which it did not pay a separate
fee for its use, it would not receive a
new port if it subsequently connected to
Single Port Third Party Data. This is
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because a User would only require one
port to connect to MEMX and Single
Port Third Party Data, irrespective of
how many of the wireless connections
it orders.
The Proposed Change Is Not Unfairly
Discriminatory
The Exchange believes that the
proposed rule change is not unfairly
discriminatory, for the following
reasons. Without this proposed rule
change, Users would have fewer options
for connectivity to MEMX Data. The
proposed change would provide Users
with an additional choice with respect
to the form and optimal latency of the
connectivity they use to receive MEMX
market data, allowing a User to select
the connectivity that better suits its
needs, helping it tailor its colocation
operations to the requirements of its
business operations. Users that do not
opt to utilize the Exchange’s proposed
wireless connection would still be able
to obtain MEMX market data wirelessly
using Quincy’s wireless connection.
The Exchange believes that the
proposed change is not unfairly
discriminatory because it will result in
fees being charged only to Users that
voluntarily select to receive the
corresponding services and because
those services will be available to all
Users. Furthermore, the Exchange
believes that the services and fees
proposed herein are not unfairly
discriminatory because, in addition to
the services being completely voluntary,
they are available to all Users on an
equal basis (i.e., the same products and
services are available to all Users). All
Users that voluntarily select wireless
connections to MEMX Data would be
charged the same amount for the same
services. Users that opt to use wireless
connections to MEMX Data would
receive the MEMX Data that is available
to all Users, as all market participants
that contract with MEMX or its affiliate
for MEMX Data, as required, may
receive it.
The Exchange believes that it is not
unfairly discriminatory that if a User
already had a port for Single Port Third
Party Data, it would not receive an
additional port for the MEMX Data.
Similarly, the Exchange believes it is
not unfairly discriminatory that if a User
connected to MEMX Data on a port for
which it did not pay a separate fee for
its use, it would not receive a new port
if it subsequently connected to Single
Port Third Party Data. This is because a
User would only require one port to
connect to MEMX and Single Port Third
Party Data, irrespective of how many of
the wireless connections it orders.
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For the reasons above, the proposed
changes do not unfairly discriminate
between or among market participants
that are otherwise capable of satisfying
any applicable colocation fees,
requirements, terms, and conditions
established from time to time by the
Exchange.
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.27
The proposed change would not affect
competition among national securities
exchanges or among members of the
Exchange, but rather between FIDS and
its commercial competitors. The
proposed wireless connection would
provide Users with an alternative means
of connectivity to MEMX Data. The
proposed change would provide Users
with an additional choice with respect
to the form and optimal latency of the
connectivity they use to receive MEMX
market data, allowing a User to select
the connectivity that better suits its
needs, helping it tailor its colocation
operations to the requirements of its
business operations.
Users that do not opt to utilize the
Exchange’s proposed wireless
connection would still be able to obtain
MEMX market data wirelessly using
Quincy’s wireless connection. The
Exchange’s proposed wireless
connection and the existing Quincy
wireless connection to MEMX market
data are sufficiently similar substitutes
and thus provide market participants
with choices to meet their wireless
connectivity needs.
In addition, the Exchange does not
believe that FIDS would have any
competitive advantage over either the
existing third-party provider or any
future providers of wireless connectivity
to MEMX market data. The Exchange’s
proposed service for connectivity to
MEMX Data does not have any special
access to or advantage within the MDC.
More specifically, the Exchange’s
proposed wireless connection would
lead to the data center pole, from which
a fiber connection would lead into the
MDC. The data center pole is on the
grounds of the MDC, but pursuant to
Exchange rule, the distance from such
pole to the Patch Panel Point is
normalized.28 Exchange rules also
require that the distance from the Patch
Panel Point to each User cabinet in
27 15
U.S.C. 78f(b)(8).
supra note 21.
28 See
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Federal Register / Vol. 89, No. 59 / Tuesday, March 26, 2024 / Notices
colocation be the same.29 Further, all
distances in the MDC are normalized.
Every provider of wireless connectivity
to Users, including FIDS, is connected
to the Patch Panel Point, and the length
of the fiber path from the Patch Panel
Point to each User cabinet in colocation
is the same.
Nor does the Exchange have a
competitive advantage over the thirdparty competitors offering wireless
connectivity to MEMX market data by
virtue of the fact that it owns and
operates the MDC’s meet-me-rooms.
Users purchasing wireless connectivity
to MEMX market data—like Users of
any other colocation service—would
require a circuit connecting out of the
MDC, and in most cases, such circuits
are provided by third-party Telecoms
that have installed their equipment in
the MDC’s two meet-me-rooms.30
Currently, 16 Telecoms operate in the
meet-me-rooms and provide a variety of
circuit choices. It is in the Exchange’s
best interest to set the fees that
Telecoms pay to operate in the meet-merooms at a reasonable level 31 so that
market participants, including
Telecoms, will maximize their use of
the MDC. By setting the meet-me-room
fees at a reasonable level, the Exchange
encourages Telecoms to participate in
the meet-me-rooms and to sell circuits
to Users for connecting into and out of
the MDC. These Telecoms then compete
with each other by pricing such circuits
at competitive rates. These competitive
rates for circuits help draw in more
Users and Hosted Customers to the
MDC, which directly benefits the
Exchange by increasing the customer
base to whom the Exchange can sell its
colocation services, which include
cabinets, power, ports, and connectivity
to many third-party data feeds, and
because having more Users and Hosted
Customers leads, in many cases, to
greater participation on the Exchange. In
this way, by setting the meet-me-room
fees at a level attractive to
telecommunications firms, the Exchange
spurs demand for all of the services it
sells at the MDC, while setting the meetme-room fees too high would negatively
affect the Exchange’s ability to sell its
services at the MDC.32 Accordingly,
there are real constraints on the meetme-room fees the Exchange charges,
such that the Exchange does not have an
advantage in terms of costs when
compared to third parties that enter the
MDC through the meet-me-rooms to
id.
supra note 23.
31 See MMR Notice, supra note 24.
32 See supra note 25.
provide services to compete with the
Exchange’s services.
If anything, the Exchange is subject to
a competitive disadvantage vis-a`-vis
third party competitors offering wireless
connectivity to MEMX market data.
Third-party competitors are not subject
to the Commission’s filing requirements,
and therefore can freely change their
services and pricing in response to
competitive forces. In contrast, the
Exchange’s service and pricing would
be standardized as set out in this filing,
and the Exchange would be unable to
respond to pricing pressure from its
competitors without seeking a formal
fee change in a filing before the
Commission.
IV. Solicitation of Comments
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Paper Comments
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 33 and Rule
19b–4(f)(6) thereunder.34 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) 35 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
29 See
30 See
VerDate Sep<11>2014
18:10 Mar 25, 2024
33 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
35 15 U.S.C. 78s(b)(2)(B).
34 17
Jkt 262001
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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–2024–09 on the subject line.
• 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–NYSENAT–2024–09. 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–2024–09 and should be
submitted on or before April 16, 2024.
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.36
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–06345 Filed 3–25–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–99806; File No. SR–NYSE–
2024–15]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend the
Connectivity Fee Schedule
March 20, 2024.
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 March 8,
2024, New York Stock Exchange LLC
(‘‘NYSE’’ or the ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
Connectivity Fee Schedule (‘‘Fee
Schedule’’) regarding colocation
services and fees to provide Users with
wireless connectivity to MEMX market
data. 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.
ddrumheller on DSK120RN23PROD with NOTICES1
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,
36 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
VerDate Sep<11>2014
18:10 Mar 25, 2024
Jkt 262001
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 (‘‘Fee
Schedule’’) regarding colocation
services and fees to provide Users 4 with
wireless connectivity to MEMX LLC
(‘‘MEMX’’) market data.
The Exchange currently provides
Users with wireless connections to nine
market data feeds or combinations of
feeds from third-party markets (the
‘‘Existing Third Party Data’’),5 and
wired connections to more than 45
market data feeds or combinations of
feeds.6 The Exchange proposes to add to
the Fee Schedule wireless connections
to the MEMX Memoir Depth market
data feed 7 (‘‘MEMX Data’’ and, together
with the Existing Third Party Data, the
‘‘Third Party Data’’). Users would be
offered the proposed wireless
connection to the MEMX Data through
connections into the colocation center
in the Mahwah, New Jersey data center
(‘‘MDC’’).8
The Exchange expects that the
proposed rule change would become
operative in the second quarter of 2024.
4 For purposes of the Exchange’s colocation
services, a ‘‘User’’ means any market participant
that requests to receive colocation services directly
from the Exchange. See Securities Exchange Act
Release No. 76008 (September 29, 2015), 80 FR
60190 (October 5, 2015) (SR–NYSE–2015–40). As
specified in the Fee Schedule, a User that incurs
colocation fees for a particular colocation service
pursuant thereto would not be subject to colocation
fees for the same colocation service charged by the
Exchange’s affiliates NYSE American 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 to propose the changes described
herein. See SR–NYSEAMER–2024–18, SR–
NYSEARCA–2024–26, SR–NYSECHX–2024–11,
and SR–NYSENAT–2024–09.
5 See Securities Exchange Act Release Nos. 76748
(December 23, 2015), 80 FR 81609 (December 30,
2015) (SR–NYSE–2015–52); 78378 (July 21, 2016),
81 FR 49315 (July 27, 2016) (SR–NYSE–2016–49);
and 80215 (February 28, 2017), 82 FR 12658 (March
6, 2017) (SR–NYSE–2017–05).
6 See Securities Exchange Act Release No. 80311
(March 24, 2017), 82 FR 15741 (March 30, 2017)
(SR–NYSE–2016–45).
7 MEMX Data would also include the test feed for
MEMX Memoir market data.
8 Through its Fixed Income and Data Services
(‘‘FIDS’’) (previously ICE Data Services) business,
Intercontinental Exchange, Inc. (‘‘ICE’’) operates the
MDC. The Exchange and the Affiliate SROs are
indirect subsidiaries of ICE. The proposed service
would be provided by FIDS pursuant to an
agreement with a non-ICE entity. FIDS does not
own the wireless network that would be used to
provide the service.
PO 00000
Frm 00116
Fmt 4703
Sfmt 4703
21055
The Exchange will announce the date
that the wireless connection to the
MEMX Data will be available through a
customer notice.
As requested by Users, the Exchange’s
proposed wireless connectivity to
MEMX Data would be to the MEMX
Memoir Depth market data feed. As
described by MEMX, ‘‘[t]he MEMOIR
Depth feed is a MEMX-only market data
feed that contains all displayed orders
for securities trading on the Exchange
(i.e., top and depth-of-book order data),
order executions (i.e., last sale data),
order cancellations, order modifications,
order identification numbers, and
administrative messages.’’ 9
To receive MEMX Data, the User
would enter into an agreement with a
third party for permission to receive the
data, if required. The User would pay
this third party any fees for the data
content.
The Exchange proposes to revise the
Fee Schedule to reflect fees related to
the wireless connection to MEMX Data.
For each wireless connection to MEMX
Data, a User would be charged a $5,000
non-recurring initial charge and a
monthly recurring charge of $6,000. If a
User were to purchase more than one
wireless connection to MEMX Data, it
would pay more than one non-recurring
initial charge.
Each proposed wireless connection to
MEMX Data would include the use of
one wireless connection port, and a
User would not pay a separate fee for
the use of such port, provided that if a
User already had a port for Existing
Third Party Data other than Toronto
Stock Exchange data or CME Group data
(‘‘Single Port Third Party Data’’), it
would not receive an additional port for
the MEMX Data, as one would not be
needed.10 Rather, the User would be
able to connect to MEMX Data using the
same port that it already had, as a User
would only require one port to connect
to MEMX Data and Single Port Third
Party Data, irrespective of how many of
the wireless connections it orders.
Application and Impact of the Proposed
Changes
The proposed changes would not
apply differently to distinct types or
9 Securities Exchange Act Release No. 97130
(March 13, 2023), 88 FR 16491, 16492 (March 17,
2023) (SR–MEMX–2023–04).
10 Similarly, if a User connected to MEMX Data
on a port for which it did not pay a separate fee
for its use, it would not receive a new port if it
subsequently connected to Single Port Third Party
Data. Connection to Toronto Stock Exchange data
and CME Group data are excepted because they
each require their own port. See 82 FR 12658, supra
note 5, at note 8, and Securities Exchange Act
Release No. 98962 (November 16, 2023), 88 FR
81485 (November 22, 2023) (SR–NYSE–2023–44).
E:\FR\FM\26MRN1.SGM
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]]>Agencies
[Federal Register Volume 89, Number 59 (Tuesday, March 26, 2024)]
[Notices]
[Pages 21050-21055]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-06345]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99810; File No. SR-NYSENAT-2024-09]
Self-Regulatory Organizations; NYSE National, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend the
Connectivity Fee Schedule
March 20, 2024.
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 March 8, 2024, NYSE National, Inc. (``NYSE National'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the Connectivity Fee Schedule (``Fee
Schedule'') regarding colocation services and fees to provide Users
with wireless connectivity to MEMX market data. 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 (``Fee
Schedule'') regarding colocation services and fees to provide Users \4\
with wireless connectivity to MEMX LLC (``MEMX'') market data.
---------------------------------------------------------------------------
\4\ For purposes of the Exchange's colocation services, a
``User'' means any market participant that requests to receive
colocation services directly from the Exchange. See Securities
Exchange Act Release No. 83351 (May 31, 2018), 83 FR 26314 at n.9
(June 6, 2018) (SR-NYSENAT-2018-07). As specified in the Fee
Schedule, a User that incurs colocation fees for a particular
colocation service pursuant thereto would not be subject to
colocation fees for the same colocation service charged by the
Exchange's affiliates the New York Stock Exchange LLC, NYSE American
LLC, NYSE Arca, Inc., and NYSE Chicago, Inc. (together, the
``Affiliate SROs''). Each Affiliate SRO has submitted substantially
the same proposed rule change to propose the changes described
herein. See SR-NYSE-2024-15, SR-NYSEAMER-2024-18, SR-NYSEARCA-2024-
26, and SR-NYSECHX-2024-11.
---------------------------------------------------------------------------
The Exchange currently provides Users with wireless connections to
nine market data feeds or combinations of feeds from third-party
markets (the ``Existing Third Party Data''),\5\ and wired connections
to more than 45 market data feeds or combinations of feeds.\6\ The
Exchange proposes to add to the Fee Schedule wireless connections to
the MEMX Memoir Depth market data feed \7\ (``MEMX Data'' and, together
with the Existing Third Party Data, the ``Third Party Data''). Users
would be offered the proposed wireless connection to the MEMX Data
through connections into the colocation center
[[Page 21051]]
in the Mahwah, New Jersey data center (``MDC'').\8\
---------------------------------------------------------------------------
\5\ See 83 FR 26314, supra note 4, at 26319-20.
\6\ See id. at 26322-23.
\7\ MEMX Data would also include the test feed for MEMX Memoir
market data.
\8\ Through its Fixed Income and Data Services (``FIDS'')
(previously ICE Data Services) business, Intercontinental Exchange,
Inc. (``ICE'') operates the MDC. The Exchange and the Affiliate SROs
are indirect subsidiaries of ICE. The proposed service would be
provided by FIDS pursuant to an agreement with a non-ICE entity.
FIDS does not own the wireless network that would be used to provide
the service.
---------------------------------------------------------------------------
The Exchange expects that the proposed rule change would become
operative in the second quarter of 2024. The Exchange will announce the
date that the wireless connection to the MEMX Data will be available
through a customer notice.
As requested by Users, the Exchange's proposed wireless
connectivity to MEMX Data would be to the MEMX Memoir Depth market data
feed. As described by MEMX, ``[t]he MEMOIR Depth feed is a MEMX-only
market data feed that contains all displayed orders for securities
trading on the Exchange (i.e., top and depth-of-book order data), order
executions (i.e., last sale data), order cancellations, order
modifications, order identification numbers, and administrative
messages.'' \9\
---------------------------------------------------------------------------
\9\ Securities Exchange Act Release No. 97130 (March 13, 2023),
88 FR 16491, 16492 (March 17, 2023) (SR-MEMX-2023-04).
---------------------------------------------------------------------------
To receive MEMX Data, the User would enter into an agreement with a
third party for permission to receive the data, if required. The User
would pay this third party any fees for the data content.
The Exchange proposes to revise the Fee Schedule to reflect fees
related to the wireless connection to MEMX Data. For each wireless
connection to MEMX Data, a User would be charged a $5,000 non-recurring
initial charge and a monthly recurring charge of $6,000. If a User were
to purchase more than one wireless connection to MEMX Data, it would
pay more than one non-recurring initial charge.
Each proposed wireless connection to MEMX Data would include the
use of one wireless connection port, and a User would not pay a
separate fee for the use of such port, provided that if a User already
had a port for Existing Third Party Data other than Toronto Stock
Exchange data or CME Group data (``Single Port Third Party Data''), it
would not receive an additional port for the MEMX Data, as one would
not be needed.\10\ Rather, the User would be able to connect to MEMX
Data using the same port that it already had, as a User would only
require one port to connect to MEMX Data and Single Port Third Party
Data, irrespective of how many of the wireless connections it orders.
---------------------------------------------------------------------------
\10\ Similarly, if a User connected to MEMX Data on a port for
which it did not pay a separate fee for its use, it would not
receive a new port if it subsequently connected to Single Port Third
Party Data. Connection to Toronto Stock Exchange data and CME Group
data are excepted because they each require their own port. See
Securities Exchange Act Release Nos. 80215 (February 28, 2017), 82
FR 12658 (March 6, 2017) (SR-NYSE-2017-05); and 98966 (November 16,
2023), 88 FR 81476 (November 22, 2023) (SR-NYSENAT-2023-26).
---------------------------------------------------------------------------
Application and Impact of the Proposed Changes
The proposed changes would not apply differently to distinct types
or sizes of market participants. Rather, they would apply to all Users
equally.
As is currently the case, the purchase of any colocation service,
including connectivity to Third Party Data, is completely voluntary and
the Fee Schedule is applied uniformly to all Users.
Competitive Environment
The Exchange operates in a highly competitive market in which other
vendors offer colocation services as a means to facilitate the trading
and other market activities of those market participants who believe
that colocation enhances the efficiency of their operations. The
Commission has repeatedly expressed its preference for competition over
regulatory intervention in determining prices, products, and services
in the securities markets. Specifically, in Regulation NMS, the
Commission highlighted the importance of market forces in determining
prices and SRO revenues and, also, recognized that current regulation
of the market system ``has been remarkably successful in promoting
market competition in its broader forms that are most important to
investors and listed companies.'' \11\
---------------------------------------------------------------------------
\11\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
---------------------------------------------------------------------------
The Exchange understands that the third party Quincy Data LLC
(``Quincy'') \12\ already provides wireless connectivity to MEMX market
data in the MDC. As explained below in this filing, the Exchange's
proposed wireless connection to MEMX Data would compete with the
wireless connection to MEMX market data provided by Quincy. Third-party
vendors such as Quincy are not at any competitive disadvantage created
by the Exchange.
---------------------------------------------------------------------------
\12\ The Exchange understands that Quincy is an affiliate of
McKay Brothers LLC.
---------------------------------------------------------------------------
The proposed change is not otherwise intended to address any other
issues relating to colocation services or related fees, and the
Exchange is not aware of any problems that Users would have in
complying with the proposed change.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\13\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\14\ in particular, because it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest
and because it is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers. The Exchange further believes
that the proposed rule change is consistent with Section 6(b)(4) of the
Act,\15\ because it provides for the equitable allocation of reasonable
dues, fees, and other charges among its members and issuers and other
persons using its facilities and does not unfairly discriminate between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
\15\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
The Proposed Change Is Reasonable
The Exchange believes that the proposed rule change is reasonable.
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.'' \16\ If the
Exchange meets that burden, ``the Commission will find that 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.'' \17\ Here, the
[[Page 21052]]
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 Exchange has
not placed the third party vendors at a competitive disadvantage
created by the Exchange.
---------------------------------------------------------------------------
\16\ See 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).
\17\ See Wireless Approval Order, supra note 16, at 67049,
citing 2008 ArcaBook Approval Order, supra note 16, at 74781.
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Substantially Similar Substitutes Are Available
The Exchange's proposed wireless connection to MEMX Data would
compete with other methods by which both the Exchange and various third
parties already provide connectivity to MEMX market data to Users.
Quincy already provides wireless connectivity to MEMX market data
in the MDC. The Exchange believes that the Quincy wireless connection
to MEMX market data is to the same MEMX data feed, and at a same or
similar speed as the Exchange's proposed connection.\18\ Accordingly,
the Quincy wireless connection to MEMX market data would compete with
the Exchange's proposed wireless connection and would exert significant
competitive forces on the Exchange in setting the terms of its
proposal, including the level of the Exchange's proposed fees.\19\ If
the Exchange were to set its proposed fees too high, Users could
respond by instead selecting Quincy's substantially similar wireless
connectivity to MEMX market data.\20\
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\18\ Because Quincy is not a regulated entity, it is not
obligated to make its fees publicly available or make latency or
fees the same for all entities. The Exchange believes that Quincy
may offer connectivity to MEMX data in the MDC, Carteret data
center, and Secaucus data center as a bundle.
\19\ See 2008 ArcaBook Approval Order, supra note 16, at 74789
and n.295 (recognizing that products need not be identical to be
substitutable).
\20\ The Exchange believes that at least three third-party
market participants offer fiber connections to MEMX market data in
colocation.
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Third Party Competitors Are Not at a Competitive Disadvantage Created
by the Exchange
The Exchange does not believe that FIDS would have any competitive
advantage over either the existing third-party provider or any future
providers of wireless connectivity to MEMX market data. The Exchange's
proposed service for connectivity to MEMX Data does not have any
special access to or advantage within the MDC. More specifically, the
Exchange's proposed wireless connection would lead to the data center
pole, from which a fiber connection would lead into the MDC. The data
center pole is on the grounds of the MDC, but pursuant to Exchange rule
the distance from such pole to the patch panel where fiber connections
for wireless services connect to the network row in the space used for
co-location in the MDC (the ``Patch Panel Point'') is normalized \21\
Exchange rules also require that the distance from the Patch Panel
Point to each User cabinet in colocation be the same.\22\ Further, all
distances in the MDC are normalized. Every provider of wireless
connectivity to Users, including FIDS, is connected to the Patch Panel
Point, and the length of the fiber path from the Patch Panel Point to
each User cabinet in colocation is the same.
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\21\ See NYSE Rule 3.13, NYSE American Rule 3.13E, NYSE Arca
Rule 3.13, NYSE Chicago Rule 3.13, and NYSE National Rule 3.13 (Data
Center Pole Restrictions--Connectivity to Co-Location Space)
(placing restrictions on use of the data center pole designed to
address any advantage that the wireless connections have by virtue
of a data center pole).
\22\ Id.
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Nor does the Exchange have a competitive advantage over the third-
party competitors offering wireless connectivity to MEMX market data by
virtue of the fact that it owns and operates the MDC's meet-me-rooms.
Users purchasing wireless connectivity to MEMX market data--like Users
of any other colocation service--would require a circuit connecting out
of the MDC, and in most cases, such circuits are provided by third-
party telecommunications service providers that have installed their
equipment in the MDC's two meet-me-rooms (``Telecoms'').\23\ Currently,
16 Telecoms operate in the meet-me-rooms and provide a variety of
circuit choices. It is in the Exchange's best interest to set the fees
that Telecoms pay to operate in the meet-me-rooms at a reasonable level
\24\ so that market participants, including Telecoms, will maximize
their use of the MDC. By setting the meet-me-room fees at a reasonable
level, the Exchange encourages Telecoms to participate in the meet-me-
rooms and to sell circuits to Users for connecting into and out of the
MDC. These Telecoms then compete with each other by pricing such
circuits at competitive rates. These competitive rates for circuits
help draw in more Users and Hosted Customers to the MDC, which directly
benefits the Exchange by increasing the customer base to whom the
Exchange can sell its colocation services, which include cabinets,
power, ports, and connectivity to many third-party data feeds, and
because having more Users and Hosted Customers leads, in many cases, to
greater participation on the Exchange. In this way, by setting the
meet-me-room fees at a level attractive to telecommunications firms,
the Exchange spurs demand for all of the services it sells at the MDC,
while setting the meet-me-room fees too high would negatively affect
the Exchange's ability to sell its services at the MDC.\25\
Accordingly, there are real constraints on the meet-me-room fees the
Exchange charges, such that the Exchange does not have an advantage in
terms of costs when compared to third parties that enter the MDC
through the meet-me-rooms to provide services to compete with the
Exchange's services.
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\23\ Note that in the case of wireless connectivity, a User in
colocation still requires a fiber circuit to transport data. If a
Telecom is used, the data is transmitted wirelessly to the relevant
pole, and then from the pole to the meet-me-room using a fiber
circuit.
\24\ See Securities Exchange Act Release No. 98002 (July 26,
2023), 88 FR 50232 (August 1, 2023) (SR-NYSENAT-2023-12) (``MMR
Notice'').
\25\ See id. at 50235. Importantly, the Exchange is prevented
from making any alteration to its meet-me-room services or fees
without filing a proposal for such changes with the Commission.
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If anything, the Exchange is subject to a competitive disadvantage
vis-[agrave]-vis third-party competitors offering wireless connectivity
to MEMX market data. Third-party competitors are not subject to the
Commission's filing requirements, and therefore can freely change their
services and pricing in response to competitive forces. In contrast,
the Exchange's service and pricing would be standardized as set out in
this filing, and the Exchange would be unable to respond to pricing
pressure from its competitors without seeking a formal fee change in a
filing before the Commission.
In sum, because the Exchange is subject to significant competitive
forces in setting the terms on which it offers its proposal, in
particular because a substantially similar substitute is available, and
the Exchange has not placed third-party vendors at a competitive
disadvantage created by the Exchange, the proposed fees for the
Exchange's wireless connectivity to MEMX Data are reasonable.\26\ If
the Exchange were to set its prices for wireless connectivity to MEMX
Data at a level that Users found to be too high, Users could easily
choose to connect to MEMX market data in colocation at the MDC through
the competing Quincy wireless connection, as detailed above.
---------------------------------------------------------------------------
\26\ See Wireless Approval Order, supra note 16.
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Additional Considerations
The Exchange believes it is reasonable that if a User already had a
wireless connection port for Single Port Third Party Data, it would not
receive an additional port for the MEMX Data. In such a case, no
additional port would be needed, as the User would be able to connect
to MEMX Data using the port it already had. Similarly, the Exchange
[[Page 21053]]
believes it is reasonable that if a User connected to MEMX Data on a
port for which it did not pay a separate fee for its use, it would not
receive a new port if it subsequently connected to Single Port Third
Party Data. This is because a User would only require one port to
connect to MEMX and Single Port Third Party Data, irrespective of how
many of the wireless connections it orders.
The Exchange believes it is reasonable for the MEMX Data to include
the MEMX Memoir Depth feed and its related test feed, as that is
responsive to User requests. The Exchange believes that it is the same
feed that the competing Quincy wireless connection offers.
The Proposed Change Is an Equitable Allocation of Fees and Credits
The Exchange believes that its proposal equitably allocates its
fees among Users. Without this proposed rule change, Users would have
fewer options for connectivity to MEMX market data. The proposed change
would provide Users with an additional choice with respect to the form
and optimal latency of the connectivity they use to receive MEMX market
data, allowing a User to select the connectivity that better suits its
needs, helping it tailor its colocation operations to the requirements
of its business operations. Users that do not opt to utilize the
Exchange's proposed wireless connection would still be able to obtain
MEMX market data wirelessly using Quincy's wireless connection.
The Exchange believes that the proposed change is equitable because
it will result in fees being charged only to Users that voluntarily
select to receive the corresponding services and because those services
will be available to all Users. Furthermore, the Exchange believes that
the services and fees proposed herein are equitably allocated because,
in addition to the services being completely voluntary, they are
available to all Users on an equal basis (i.e., the same products and
services are available to all Users). All Users that voluntarily select
the Exchange's proposed wireless connections to MEMX Data would be
charged the same amount for the same services.
The Exchange believes that it is equitable that if a User already
had a port for Single Port Third Party Data, it would not receive an
additional port for the MEMX Data. Similarly, the Exchange believes it
is equitable that if a User connected to MEMX Data on a port for which
it did not pay a separate fee for its use, it would not receive a new
port if it subsequently connected to Single Port Third Party Data. This
is because a User would only require one port to connect to MEMX and
Single Port Third Party Data, irrespective of how many of the wireless
connections it orders.
The Proposed Change Is Not Unfairly Discriminatory
The Exchange believes that the proposed rule change is not unfairly
discriminatory, for the following reasons. Without this proposed rule
change, Users would have fewer options for connectivity to MEMX Data.
The proposed change would provide Users with an additional choice with
respect to the form and optimal latency of the connectivity they use to
receive MEMX market data, allowing a User to select the connectivity
that better suits its needs, helping it tailor its colocation
operations to the requirements of its business operations. Users that
do not opt to utilize the Exchange's proposed wireless connection would
still be able to obtain MEMX market data wirelessly using Quincy's
wireless connection.
The Exchange believes that the proposed change is not unfairly
discriminatory because it will result in fees being charged only to
Users that voluntarily select to receive the corresponding services and
because those services will be available to all Users. Furthermore, the
Exchange believes that the services and fees proposed herein are not
unfairly discriminatory because, in addition to the services being
completely voluntary, they are available to all Users on an equal basis
(i.e., the same products and services are available to all Users). All
Users that voluntarily select wireless connections to MEMX Data would
be charged the same amount for the same services. Users that opt to use
wireless connections to MEMX Data would receive the MEMX Data that is
available to all Users, as all market participants that contract with
MEMX or its affiliate for MEMX Data, as required, may receive it.
The Exchange believes that it is not unfairly discriminatory that
if a User already had a port for Single Port Third Party Data, it would
not receive an additional port for the MEMX Data. Similarly, the
Exchange believes it is not unfairly discriminatory that if a User
connected to MEMX Data on a port for which it did not pay a separate
fee for its use, it would not receive a new port if it subsequently
connected to Single Port Third Party Data. This is because a User would
only require one port to connect to MEMX and Single Port Third Party
Data, irrespective of how many of the wireless connections it orders.
For the reasons above, the proposed changes do not unfairly
discriminate between or among market participants that are otherwise
capable of satisfying any applicable colocation fees, requirements,
terms, and conditions established from time to time by the Exchange.
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.\27\
---------------------------------------------------------------------------
\27\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------
The proposed change would not affect competition among national
securities exchanges or among members of the Exchange, but rather
between FIDS and its commercial competitors. The proposed wireless
connection would provide Users with an alternative means of
connectivity to MEMX Data. The proposed change would provide Users with
an additional choice with respect to the form and optimal latency of
the connectivity they use to receive MEMX market data, allowing a User
to select the connectivity that better suits its needs, helping it
tailor its colocation operations to the requirements of its business
operations.
Users that do not opt to utilize the Exchange's proposed wireless
connection would still be able to obtain MEMX market data wirelessly
using Quincy's wireless connection. The Exchange's proposed wireless
connection and the existing Quincy wireless connection to MEMX market
data are sufficiently similar substitutes and thus provide market
participants with choices to meet their wireless connectivity needs.
In addition, the Exchange does not believe that FIDS would have any
competitive advantage over either the existing third-party provider or
any future providers of wireless connectivity to MEMX market data. The
Exchange's proposed service for connectivity to MEMX Data does not have
any special access to or advantage within the MDC. More specifically,
the Exchange's proposed wireless connection would lead to the data
center pole, from which a fiber connection would lead into the MDC. The
data center pole is on the grounds of the MDC, but pursuant to Exchange
rule, the distance from such pole to the Patch Panel Point is
normalized.\28\ Exchange rules also require that the distance from the
Patch Panel Point to each User cabinet in
[[Page 21054]]
colocation be the same.\29\ Further, all distances in the MDC are
normalized. Every provider of wireless connectivity to Users, including
FIDS, is connected to the Patch Panel Point, and the length of the
fiber path from the Patch Panel Point to each User cabinet in
colocation is the same.
---------------------------------------------------------------------------
\28\ See supra note 21.
\29\ See id.
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Nor does the Exchange have a competitive advantage over the third-
party competitors offering wireless connectivity to MEMX market data by
virtue of the fact that it owns and operates the MDC's meet-me-rooms.
Users purchasing wireless connectivity to MEMX market data--like Users
of any other colocation service--would require a circuit connecting out
of the MDC, and in most cases, such circuits are provided by third-
party Telecoms that have installed their equipment in the MDC's two
meet-me-rooms.\30\ Currently, 16 Telecoms operate in the meet-me-rooms
and provide a variety of circuit choices. It is in the Exchange's best
interest to set the fees that Telecoms pay to operate in the meet-me-
rooms at a reasonable level \31\ so that market participants, including
Telecoms, will maximize their use of the MDC. By setting the meet-me-
room fees at a reasonable level, the Exchange encourages Telecoms to
participate in the meet-me-rooms and to sell circuits to Users for
connecting into and out of the MDC. These Telecoms then compete with
each other by pricing such circuits at competitive rates. These
competitive rates for circuits help draw in more Users and Hosted
Customers to the MDC, which directly benefits the Exchange by
increasing the customer base to whom the Exchange can sell its
colocation services, which include cabinets, power, ports, and
connectivity to many third-party data feeds, and because having more
Users and Hosted Customers leads, in many cases, to greater
participation on the Exchange. In this way, by setting the meet-me-room
fees at a level attractive to telecommunications firms, the Exchange
spurs demand for all of the services it sells at the MDC, while setting
the meet-me-room fees too high would negatively affect the Exchange's
ability to sell its services at the MDC.\32\ Accordingly, there are
real constraints on the meet-me-room fees the Exchange charges, such
that the Exchange does not have an advantage in terms of costs when
compared to third parties that enter the MDC through the meet-me-rooms
to provide services to compete with the Exchange's services.
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\30\ See supra note 23.
\31\ See MMR Notice, supra note 24.
\32\ See supra note 25.
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If anything, the Exchange is subject to a competitive disadvantage
vis-[agrave]-vis third party competitors offering wireless connectivity
to MEMX market data. Third-party competitors are not subject to the
Commission's filing requirements, and therefore can freely change their
services and pricing in response to competitive forces. In contrast,
the Exchange's service and pricing would be standardized as set out in
this filing, and the Exchange would be unable to respond to pricing
pressure from its competitors without seeking a formal fee change in a
filing before the Commission.
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 \33\ and Rule 19b-4(f)(6) thereunder.\34\
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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\33\ 15 U.S.C. 78s(b)(3)(A)(iii).
\34\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
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) \35\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\35\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-NYSENAT-2024-09 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-NYSENAT-2024-09. 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-2024-09 and should
be submitted on or before April 16, 2024.
[[Page 21055]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\36\
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\36\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-06345 Filed 3-25-24; 8:45 am]
BILLING CODE 8011-01-P
