Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Connectivity Fee Schedule, 43898-43903 [2024-10960]
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Federal Register / Vol. 89, No. 98 / Monday, May 20, 2024 / Notices
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–NYSE–2024–26 and should be
submitted on or before June 10, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.28
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–10958 Filed 5–17–24; 8:45 am]
BILLING CODE 8011–01–P
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on May 1,
2024, NYSE Arca, Inc. (‘‘NYSE Arca’’ or
the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
Connectivity Fee Schedule to add
wireless connectivity services that
transport market data to Toronto,
Canada. 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
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100144; File No. SR–
NYSEARCA–2024–36]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the
Connectivity Fee Schedule
May 14, 2024.
Pursuant to section 19(b)(1) 1 of the
Securities Exchange Act of 1934
1. Purpose
The Exchange proposes to amend the
Connectivity Fee Schedule to add
wireless connectivity services that
transport market data to Toronto,
Canada.
The Exchange expects that the
proposed rule change would become
operative no later than June 30, 2024. It
will announce the proposed change to
Type of service
Amount of charge
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NYSE Integrated Feed: Wireless Connection in
TR2 access center.
28 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.
19:14 May 17, 2024
$5,000 per connection initial charge plus monthly charge per connection of $6,500.
4 See Securities Exchange Act Release No. 99970
(April 16, 2024), 89 FR 29413 (April 22, 2024) (SR–
NYSEARCA–2024–32).
5 See id. When a market participant requested a
TR2 Market Data Connection, it would receive
connectivity to the Proposed Market Data. The
1 15
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all Fixed Income and Data Services
(‘‘FIDS’’) customers in the TR2 third
party data center in Toronto, Canada
(‘‘TR2’’).
The Exchange proposes to add market
data connections to a selection of
symbols of the NYSE Integrated Feed
(‘‘NYSE IF’’) and to a selection of
symbols of the NYSE Arca Integrated
Feed (‘‘NYSE Arca IF’’ and together
with the NYSE IF, the ‘‘Integrated
Feeds’’) in TR2 (‘‘TR2 Market Data
Connections’’). As is true for the
existing market data connections to the
Markham, Canada third party access
center (such access center, ‘‘Markham’’,
and such connections, ‘‘Markham
Market Data Connections’’),4 the TR2
Market Data Connections would not
include the Integrated Feeds
themselves, just the connections to
them.
As there would be limited bandwidth
available on the wireless network to
TR2, the Exchange proposes that, as
with the Markham Market Data
Connection, the TR2 Market Data
Connection would not transport
information for all the symbols included
in the NYSE IF and NYSE Arca IF.
Rather, FIDS would provide
connectivity to the same selection of
symbols from the Integrated Feeds that
it includes in the Markham Market Data
Connections, which include those
symbols for which there is demand (the
‘‘Proposed Market Data’’).5
The charges for a TR2 Market Data
Connection would be the same as for the
Markham Market Data Connection: a
non-recurring initial charge of $5,000
and a $6,500 monthly fee for the service
of transporting the Proposed Market
Data. The proposal would waive the
first month’s MRC, to allow customers
to test a new TR2 Market Data
Connection for a month before incurring
any MRC.
In order to implement the proposed
change, the Exchange proposes to add
the following items to the Connectivity
Fee Schedule under ‘‘C. Wireless
Connectivity to Market Data’’:
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customer would then determine the symbols for
which it would receive data. The Exchange would
not have visibility into which portions of the
Proposed Market Data a given customer chooses to
receive.
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Federal Register / Vol. 89, No. 98 / Monday, May 20, 2024 / Notices
Type of service
Amount of charge
NYSE Arca Integrated Feed: Wireless Connection in TR2 access center.
As with the Markham Market Data
Connections, the proposed TR2 Market
Data Connections would not utilize the
pole on the grounds of the MDC.
The Proposed Market Data
The Integrated Feeds are generated at
the MDC in the trading and execution
systems of the NYSE and NYSE Arca at
the Mahwah data center. In each case,
the NYSE or NYSE Arca, as applicable,
files with the Commission for the
Integrated Feed it generates, and the
related fees.6 The filed market data fees
apply to all customers of the Integrated
Feeds, no matter what form of
connectivity or connectivity provider
they use.
When a market participant wants to
connect to an Integrated Feed, it
requests a connection from the provider
of its choice. All providers, including
FIDS, may only provide the market
participant with connectivity once the
provider has received confirmation from
the NYSE or NYSE Arca, as applicable,
that the market participant is authorized
to receive the requested data feed.
Application and Impact of the Proposed
Change
The proposed change would apply to
all customers equally. The proposed
change would not apply differently to
distinct types or sizes of market
participants. As is currently the case,
the purchase of any connectivity service
is completely voluntary and the
Connectivity Fee Schedule is applied
uniformly to all customers.
FIDS expects few new customers in
TR2.
Competitive Environment
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The Exchange operates in a highly
competitive market in which other
vendors offer connectivity services as a
6 See Securities Exchange Act Release Nos. 74128
(January 23, 2015), 80 FR 4951 (January 29, 2015)
(SR–NYSE–2015–03) (notice of filing and
immediate effectiveness of proposed rule change
establishing the NYSE Integrated Feed data feed);
76485 (November 20, 2015), 80 FR 74158
(November 27, 2015) (SR–NYSE–2015–57) (notice
of filing and immediate effectiveness of a proposed
rule change establishing fees for the NYSE
Integrated Feed); 65669 (November 2, 2011), 76 FR
69311 (November 8, 2011) (SR–NYSEArca–2011–
78) (notice of filing and immediate effectiveness of
proposed rule change offering the NYSE Arca
Integrated Feed); and 66128 (January 10, 2012), 77
FR 2331 (January 17, 2012) (SR–NYSEArca–2011–
96) (notice of filing and immediate effectiveness of
a proposed rule change establishing fees for NYSE
Arca Integrated Feed).
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$5,000 per connection initial charge plus monthly charge per connection of $6,500.
means to facilitate the trading and other
market activities of those market
participants who believe that it
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.’’ 7
A third party has announced that it
plans to create a wireless connection
between Markham and the MDC. The
Exchange believes it intends to expand
its offering to connect to the TR2. Such
a wireless connection would compete
with the Exchange’s TR2 Market Data
Connection, as customers could use the
third-party wireless connection to
transport the Proposed Market Data.
Third-party vendors 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 market participants
would have in complying with the
proposed change.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
section 6(b) of the Act,8 in general, and
furthers the objectives of section 6(b)(5)
of the Act,9 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
mechanisms of, a free and open market
and a national market system and, in
general, to protect investors and the
7 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
8 15 U.S.C. 78f(b).
9 15 U.S.C. 78f(b)(5).
PO 00000
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public interest and does not unfairly
discriminate 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,10 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.’’ 11 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.’’ 12 Here, the
Exchange is subject to significant
competitive forces in setting the terms
on which it offers its proposal, in
particular because substantially similar
substitutes are available, and the
Exchange has not placed the third party
vendors at a competitive disadvantage
created by the Exchange.
For the first time, a customer would
be able to connect to the Proposed
Market Data at TR2, increasing the
options available to it. Without this
proposed rule change, any market
participants in TR2 would not have
access to the Proposed Market Data.
10 15
U.S.C. 78f(b)(4).
Securities Exchange Act Release No. 90209
(October 15, 2020), 85 FR 67044, 67049 (October 21,
2020) (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) (Order Granting Accelerated
Approval to Establish a Wireless Fee Schedule
Setting Forth Available Wireless Bandwidth
Connections and Wireless Market Data
Connections) (‘‘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).
12 See Wireless Approval Order, supra note 11, at
67049, citing 2008 ArcaBook Approval Order, supra
note 11, at 74781.
11 See
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The Exchange believes that it is
reasonable to charge the same amount
for the TR2 Market Data Connection as
for the Markham Market Data
Connection, as the same market data
would be transported over both
connections. Given the limitation on
bandwidth, the Exchange believes that it
is reasonable not to transport
information for all the symbols included
in the Integrated Feeds to TR2, but
rather that the Proposed Market Data
include a subset of that data.
The Exchange offers wireless
bandwidth connections, without
connectivity to market data, between the
Mahwah data center and Markham and
TR2. It does not charge separately for
the Markham and TR2 connections, as
‘‘the Exchange believes that it is
reasonable to view the . . . service as
one service, and not two.’’ 13 This is
because northbound, the same data, put
on the connection by the customer, is
delivered to both Markham and TR2,
while southbound, the customer may
choose the Mb of data it sends from
each Canadian data center, but the
combined total must equal no more than
the total Mb of the wireless circuit.14
By contrast, in the present case, the
Exchange believes that it is reasonable
to charge for the TR2 Market Data
Connection separately from the
Markham Market Data Connection.
First, the customers would be located in
Canada and need not have a presence in
the Mahwah data center, and charging
for the TR2 Market Data Connection
separately from the Markham Market
Data Connection reflects that usage of
the Integrated Feed serves a different
purpose at each location, and is
consistent with the NYSE Wireless
Order regarding wireless market data
connections. Second, the nature of the
services is different: the present
connectivity would not be to a wireless
bandwidth on which the customer can
put data, irrespective of whether the
data is northbound or southbound.
Rather, the TR2 Market Data Connection
would be limited to connectivity to the
Integrated Feeds. Accordingly, the
Exchange believes that the Markham
and TR2 services are two services.15
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13 Securities
Act Release No. 99523 (February 12,
2024), 89 FR 12390 (February 16, 2024) (SR–
NYSEARCA–2024–11), at 12392.
14 See Connectivity Fee Schedule—B. Wireless
Connectivity—Wireless Connectivity Note.
15 The Exchange believes that this would be
consistent with its existing approach to wireless
connectivity. See Wireless Approval Order, supra
note 11, Connectivity Fee Schedule—B. Wireless
Connectivity, and Connectivity Fee Schedule—C.
Wireless Connectivity to Market Data.
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The Exchange Would Not Preclude
Other Connections to Proposed Market
Data in TR2
The Exchange is not aware of any
other public, commercially available
wireless or fiber connections to the
Proposed Market Data between the MDC
and TR2.
Additional third party competitors
could offer fiber or wireless connectivity
to the Proposed Market Data in TR2 by
obtaining the market data at the MDC
and sending it over a fiber or wireless
network to Canada. A market
participant in TR2 also may create a
proprietary market data connection,
whether fiber or wireless; connect
through another market participant;
utilize fiber connections offered by third
parties; or utilize fiber connections
offered by FIDS. The Exchange could
not impose any impediments to a third
party seeking to offer a similar service,
including by placing them at a latency
or other competitive disadvantage with
respect to the Exchange. Indeed, as
noted above, the Exchange believes that
in the future a third party may offer a
wireless connection to TR2, which
would compete with the TR2 Market
Data Connection, as customers could
use the third-party wireless connection
to transport the Proposed Market Data.
Wireless connections and fiber
connections to the Proposed Market
Data in Markham would compete with
each other. Given the various
advantages and disadvantages of both
wireless and fiber connections, a market
participant interested in purchasing a
connection to the Proposed Market Data
in Markham is likely to consider a
variety of factors in deciding whether to
use a wireless versus fiber connection,
including latency; the amount of
network uptime; the equipment the
network uses; the cost of the
connection; and the applicable
contractual provisions. Indeed, fiber
network connections may be more
attractive to some market participants as
they are more reliable and less
susceptible to weather conditions.
Third Party Competitors Would Not Be
at a Competitive Disadvantage Created
by the Exchange
The Exchange does not believe that
FIDS would have any competitive
advantage over any future providers of
connectivity to the Proposed Market
Data in TR2. The Exchange’s proposed
service for connectivity to Proposed
Market Data in TR2 does not have any
special access to or advantage within
the MDC. The Integrated Feeds are
generated at the MDC in the trading and
execution systems of the NYSE and
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NYSE Arca. FIDS would collect the
Proposed Market Data, then send it over
the TR2 Market Data Connection by
connecting to equipment in a MDC
meet-me-room and from there to a pole.
The pole is owned by a third party and
is not on the grounds of the MDC, and
the path into the MDC through a meetme-room is available to any
telecommunications provider. Further,
all distances in the MDC are
normalized.
Nor would the Exchange have a
competitive advantage over third-party
competitors offering wireless
connectivity to the Proposed Market
Data in TR2 by virtue of the fact that it
owns and operates the MDC’s meet-merooms. Third parties purchasing
wireless connectivity to the Proposed
Market Data 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-merooms (‘‘Telecoms’’). 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 16 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 17 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 18 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 thirdparty 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
16 See Securities Exchange Act Release No. 98000
(July 26, 2023), 88 FR 50244 (August 1, 2023) (SR–
NYSEArca–2023–47) (‘‘MMR Notice’’).
17 ‘‘User’’ means any market participant that
requests to receive co-location services directly
from the Exchange.
18 A User may host another entity in its space
within the MDC. Such Users are called ‘‘Hosting
Users’’ and their customers are referred to as
‘‘Hosted Customers.’’ See Securities Exchange Act
Release No. 76010 (September 29, 2015), 80 FR
60197 (October 5, 2015) (SR–NYSEArca–2015–82).
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spurs demand for all of the services it
sells at the MDC.19
If anything, the Exchange would be
subject to a competitive disadvantage
vis-à-vis third party competitors offering
wireless or fiber connectivity to the
Proposed Market Data in TR2. Thirdparty competitors would not be subject
to the Commission’s filing requirements,
and therefore could 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 could
not impose any impediments to a third
party seeking to offer a similar service,
including by placing them at a latency
or other competitive disadvantage with
respect to the Exchange the proposed
fees for the TR2 Market Data Connection
are reasonable.20
The Exchange believes that the
proposed rule change is reasonable
because a market participant in the
Canadian data center that opted for a
TR2 Market Data Connection would be
able to select the specific Proposed
Market Data feed that it wanted to
receive in accordance with its needs,
thereby helping it tailor its operations to
the requirements of its business
operations.
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The Proposed Change Is an Equitable
Allocation of Fees and Credits
The Exchange believes that its
proposal equitably allocates its fees
among market participants.
The Exchange believes that it is
equitable to make wireless connectivity
to the Proposed Market Data available at
TR2. For the first time, a customer
would be able to connect to the
Proposed Market Data at TR2, increasing
the options available to it. Without this
proposed rule change, any market
participants in TR2 would not have
access to the Proposed Market Data.
The Exchange believes that it is
equitable to charge the same amount for
the TR2 Market Data Connection as for
the Markham Market Data Connection,
as the same market data would be
transported over both connections.
Given the limitation on bandwidth, the
Exchange believes that it is equitable
not to transport information for all the
symbols included in the Integrated
Feeds to TR2, but rather that the
19 See
20 See
MMR Notice, supra note 16.
Wireless Approval Order, supra note 11.
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Proposed Market Data include a subset
of that data.
Additional third party competitors
could offer fiber or wireless connectivity
to the Proposed Market Data in TR2 by
obtaining the market data at the MDC
and sending it over a fiber or wireless
network to Canada. A market
participant in TR2 also may create a
proprietary market data connection,
whether fiber or wireless; connect
through another market participant;
utilize fiber connections offered by third
parties; or utilize fiber connections
offered by FIDS. The Exchange could
not impose any impediments to a third
party seeking to offer a similar service,
including by placing them at a latency
or other competitive disadvantage with
respect to the Exchange. Indeed, as
noted above, the Exchange believes that
in the future a third party may offer a
wireless connection to TR2, which
would compete with the TR2 Market
Data Connection, as customers could
use the third-party wireless connection
to transport the Proposed Market Data.
The Exchange believes that the
proposed change is equitable because it
will result in fees being charged only to
market participants that voluntarily
select to receive the corresponding
services and because those services will
be available to all market participants.
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 market participants on an equal
basis (i.e., the same products and
services are available to all market
participants). All market participants
that voluntarily select a TR2 Market
Data Connection would be charged the
same amount for the same services.
The Proposed Change Is Not Unfairly
Discriminatory
The Exchange believes that the
proposed rule change is not unfairly
discriminatory, for the following
reasons.
The Exchange believes that it is not
unfairly discriminatory to make wireless
connectivity to the Proposed Market
Data available at TR2. For the first time,
a customer would be able to connect to
the Proposed Market Data at TR2,
increasing the options available to it.
Without this proposed rule change, any
market participants in TR2 would not
have access to the Proposed Market
Data.
The Exchange believes that it is not
unfairly discriminatory to charge the
same amount for the TR2 Market Data
Connection as for the Markham Market
Data Connection, as the same market
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43901
data would be transported over both
connections. Given the limitation on
bandwidth, the Exchange believes that it
is not unfairly discriminatory not to
transport information for all the symbols
included in the Integrated Feeds to TR2,
but rather that the Proposed Market Data
include a subset of that data.
The Exchange believes that the
proposed change is not unfairly
discriminatory because it will result in
fees being charged only to market
participants that voluntarily select to
receive the corresponding services and
because those services will be available
to all market participants. 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 market participants on an equal
basis (i.e., the same products and
services are available to all market
participants). All market participants
that voluntarily select a TR2 Market
Data Connection would be charged the
same amount for the same services.
For these reasons, the Exchange
believes that the proposal is consistent
with the Act.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The proposed rule changes 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.21
The Exchange believes that it would
not impose a burden on competition
that is not necessary or appropriate to
expand the connectivity options to
make wireless connectivity to the
Proposed Market Data available at TR2.
For the first time, a customer would be
able to connect to the Proposed Market
Data at TR2, increasing the options
available to it. Without this proposed
rule change, any market participants in
TR2 would not have access to the
Proposed Market Data.
The Exchange believes that it would
not impose a burden on competition
that is not necessary or appropriate to
charge the same amount for the TR2
Market Data Connection as for the
Markham Market Data Connection, as
the same market data would be
transported over both connections.
Given the limitation on bandwidth, the
Exchange believes that it is reasonable
not to transport information for all the
symbols included in the Integrated
Feeds to TR2, but rather that the
Proposed Market Data include a subset
of that data.
21 15
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U.S.C. 78f(b)(8).
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Additional third party competitors
could offer fiber or wireless connectivity
to the Proposed Market Data in TR2 by
obtaining the market data at the MDC
and sending it over a fiber or wireless
network to Canada. A market
participant in Markham or TR2 also may
create a proprietary market data
connection, whether fiber or wireless;
connect through another market
participant; utilize fiber connections
offered by third parties; or utilize fiber
connections offered by FIDS. The
Exchange could not impose any
impediments to a third party seeking to
offer a similar service, including by
placing them at a latency or other
competitive disadvantage with respect
to the Exchange.
The Exchange does not believe that
FIDS would have any competitive
advantage over any future providers of
connectivity to the Proposed Market
Data in TR2. The Exchange’s proposed
service for connectivity to Proposed
Market Data in TR2 does not have any
special access to or advantage within
the MDC. The Integrated Feeds are
generated at the MDC in the trading and
execution systems of the NYSE and
NYSE Arca. FIDS would collect the
Proposed Market Data, then send it over
the TR2 Market Data Connection by
connecting to equipment in a MDC
meet-me-room and from there to a pole.
The pole is owned by a third party and
is not on the grounds of the MDC, and
the path into the MDC through a meetme-room is available to any
telecommunications provider. Further,
all distances in the MDC are
normalized.
Because the Exchange could not
impose any impediments to a third
party seeking to offer a similar service,
including by placing them at a latency
or other competitive disadvantage with
respect to the Exchange, the Exchange
believes that it would not impose a
burden on competition that is not
necessary or appropriate to expand the
connectivity options to make wireless
connectivity to the Proposed Market
Data available at TR2.
Nor does the Exchange have a
competitive advantage over any future
third-party competitors offering wireless
or fiber connectivity to the Proposed
Market Data in TR2 by virtue of the fact
that it owns and operates the MDC’s
meet-me-rooms. Third parties
purchasing wireless connectivity to the
Proposed Market Data would require a
circuit connecting out of the MDC, and
in most cases, such circuits are provided
by third-party Telecoms. 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
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the fees that Telecoms pay to operate in
the meet-me-rooms at a reasonable
level 22 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.23
For the reasons described above, the
Exchange believes that the proposed
rule changes reflect this competitive
environment.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed
rule change pursuant to section
19(b)(3)(A)(iii) of the Act 24 and Rule
19b–4(f)(6) thereunder.25 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.26
MMR Notice, supra note 16.
id.
24 15 U.S.C. 78s(b)(3)(A)(iii).
25 17 CFR 240.19b–4(f)(6).
26 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule
19b–4(f)(6) requires a self-regulatory organization to
give the Commission written notice of its intent to
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) 27 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
NYSEARCA–2024–36 on the subject
line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–NYSEARCA–2024–36. 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,
22 See
23 See
PO 00000
Frm 00103
Fmt 4703
Sfmt 4703
file the proposed rule change at least five business
days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
27 15 U.S.C. 78s(b)(2)(B).
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Federal Register / Vol. 89, No. 98 / Monday, May 20, 2024 / Notices
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–SR–NYSEARCA–2024–36 and
should be submitted on or before June
10, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.28
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–10960 Filed 5–17–24; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100139; File No. SR–
GEMX–2024–10]
Self-Regulatory Organizations; Nasdaq
GEMX, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Options 7,
Section 6
May 14, 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 May 1,
2024, Nasdaq GEMX, LLC (‘‘GEMX’’ or
‘‘Exchange’’) 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 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 its
Rules at Options 7, Section 6.3
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 The Exchange initially filed the proposed
pricing changes on November 28, 2023 (SR–GEMX–
2023–16) to be effective on December 1, 2023. On
December 5, 2023, the Exchange withdrew SR–
GEMX–2023–16 and replaced it with SR–GEMX–
2023–19. On January 16, 2023, the Exchange
withdrew SR–GEMX–2023–19 and submitted SR–
GEMX–2024–03. On March 7, 2024, the Exchange
lotter on DSK11XQN23PROD with NOTICES1
1 15
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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
BILLING CODE 8011–01–P
28 17
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/gemx/rules, at the principal
office of the Exchange, and at the
Commission’s Public Reference Room.
1. Purpose
The Exchange proposes to amend
Options 7, Section 6, C, Ports and Other
Services. Specifically, the Exchange
proposes to amend the monthly caps for
SQF Ports 4 and SQF Purge Ports.5
withdrew SR–GEMX–2024–03 and submitted SR–
GEMX–2024–07. On May 1, 2024, the Exchange
withdrew SR–GEMX–2024–07 and submitted this
filing.
4 ‘‘Specialized Quote Feed’’ or ‘‘SQF’’ is an
interface that allows Market Makers to connect,
send, and receive messages related to quotes,
Immediate-or-Cancel Orders, and auction responses
to the Exchange. Features include the following: (1)
options symbol directory messages (e.g., underlying
instruments); (2) System event messages (e.g., start
of trading hours messages and start of opening); (3)
trading action messages (e.g., halts and resumes); (4)
execution messages; (5) quote messages; (6)
Immediate-or-Cancel Order messages; (7) risk
protection triggers and purge notifications; (8)
opening imbalance messages; (9) auction
notifications; and (10) auction responses. The SQF
Purge Interface only receives and notifies of purge
requests from the Market Maker. Market Makers
may only enter interest into SQF in their assigned
options series. Immediate-or-Cancel Orders entered
into SQF are not subject to the Order Price
Protection, Market Order Spread Protection, and
Size Limitation Protection in Options 3, Section
15(a)(1)(A), (1)(B), and (2)(B) respectively. See
Supplementary Material .03(c) to Options 3, Section
7.
5 SQF Purge is a specific port for the SQF
interface that only receives and notifies of purge
requests from the Market Maker. Dedicated SQF
Purge Ports enable Market Makers to seamlessly
manage their ability to remove their quotes in a
swift manner. The SQF Purge Port is designed to
assist Market Makers in the management of, and
risk control over, their quotes. Market Makers may
utilize a purge port to reduce uncertainty and to
manage risk by purging all quotes in their assigned
options series. Of note, Market Makers may only
enter interest into SQF in their assigned options
series. Additionally, the SQF Purge Port may be
PO 00000
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Sfmt 4703
43903
Today, GEMX assesses $1,250 per
port, per month for an SQF Port as well
as an SQF Purge Port.6 Also, today, SQF
Ports and SQF Purge Ports are subject to
a monthly cap of $17,500, which cap is
applicable to Market Makers.
At this time, the Exchange proposes to
establish an increased SQF Fee and SQF
Purge Port Cap to Primary Market
Makers and Market Makers that do not
provide a minimum amount of liquidity
on GEMX. This proposed increased SQF
Fee and SQF Purge Port Cap is intended
to incentivize Primary Market Makers
and Market Makers to add liquidity on
GEMX for the benefit of other market
participants in order to lower their fees.
GEMX proposes to increase the SQF
Port and SQF Purge Port Cap to $27,500
a month if a Primary Market Maker or
Market Maker does not transact 0.50%
of Total Customer Volume in electronic
simple orders that adds liquidity in a
month.7 Today, GEMX caps an SQF Port
and SQF Purge Port at $17,500 a
month.8 With this proposal, the
Exchange would not assess Primary
Market Makers and Market Makers an
SQF Port and SQF Purge Port Cap
beyond the monthly cap of $27,500,
instead of $17,500, once the Member
has exceeded the proposed port cap for
the respective month. Primary Market
Makers and Market Makers who transact
0.50% of Total Customer Volume in
electronic simple orders that adds
liquidity in a month will continue to be
subject to the $17,500 SQF Port and
SQF Purge Port Cap.
Pursuant to Supplementary Material
.03(c) to Options 3, Section 7, Market
Makers may only enter interest into SQF
in their assigned options series.
Pursuant to Supplementary Material
.03(c) to Options 3, Section 7, the SQF
interface allows Market Makers to
connect, send, and receive messages
related to quotes, Immediate-or-Cancel
Orders, and auction responses to the
Exchange. An SQF Purge is a specific
port for the SQF interface that only
receives and notifies of purge requests
from the Market Maker. A GEMX Market
Maker requires only one SQF Port to
utilized by a Market Maker in the event that the
Member has a system issue and determines to purge
its quotes from the order book.
6 The Exchange proposes to add a comma
between ‘‘per port’’ and ‘‘per month’’ in the Options
7, Section 6, C, SQF Port and SQF Purge Port Fee
rule text. The Exchange also proposes to remove an
extraneous period in Options 7, Section 6, C, in the
second paragraph.
7 For purposes of this cap, ‘‘Total Customer
Volume’’ shall be defined as a percentage of all
cleared customer volume at The Options Clearing
Corporation in Multiply Listed Equity Options and
Exchange-Traded Products (‘‘TCV’’).
8 The Exchange also proposes a technical
amendment to remove an extra period in Options
7, Section 6, C.
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]]>Agencies
[Federal Register Volume 89, Number 98 (Monday, May 20, 2024)]
[Notices]
[Pages 43898-43903]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-10960]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100144; File No. SR-NYSEARCA-2024-36]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the
Connectivity Fee Schedule
May 14, 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 May 1, 2024, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\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 to add
wireless connectivity services that transport market data to Toronto,
Canada. 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 to add
wireless connectivity services that transport market data to Toronto,
Canada.
The Exchange expects that the proposed rule change would become
operative no later than June 30, 2024. It will announce the proposed
change to all Fixed Income and Data Services (``FIDS'') customers in
the TR2 third party data center in Toronto, Canada (``TR2'').
The Exchange proposes to add market data connections to a selection
of symbols of the NYSE Integrated Feed (``NYSE IF'') and to a selection
of symbols of the NYSE Arca Integrated Feed (``NYSE Arca IF'' and
together with the NYSE IF, the ``Integrated Feeds'') in TR2 (``TR2
Market Data Connections''). As is true for the existing market data
connections to the Markham, Canada third party access center (such
access center, ``Markham'', and such connections, ``Markham Market Data
Connections''),\4\ the TR2 Market Data Connections would not include
the Integrated Feeds themselves, just the connections to them.
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\4\ See Securities Exchange Act Release No. 99970 (April 16,
2024), 89 FR 29413 (April 22, 2024) (SR-NYSEARCA-2024-32).
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As there would be limited bandwidth available on the wireless
network to TR2, the Exchange proposes that, as with the Markham Market
Data Connection, the TR2 Market Data Connection would not transport
information for all the symbols included in the NYSE IF and NYSE Arca
IF. Rather, FIDS would provide connectivity to the same selection of
symbols from the Integrated Feeds that it includes in the Markham
Market Data Connections, which include those symbols for which there is
demand (the ``Proposed Market Data'').\5\
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\5\ See id. When a market participant requested a TR2 Market
Data Connection, it would receive connectivity to the Proposed
Market Data. The customer would then determine the symbols for which
it would receive data. The Exchange would not have visibility into
which portions of the Proposed Market Data a given customer chooses
to receive.
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The charges for a TR2 Market Data Connection would be the same as
for the Markham Market Data Connection: a non-recurring initial charge
of $5,000 and a $6,500 monthly fee for the service of transporting the
Proposed Market Data. The proposal would waive the first month's MRC,
to allow customers to test a new TR2 Market Data Connection for a month
before incurring any MRC.
In order to implement the proposed change, the Exchange proposes to
add the following items to the Connectivity Fee Schedule under ``C.
Wireless Connectivity to Market Data'':
------------------------------------------------------------------------
Type of service Amount of charge
------------------------------------------------------------------------
NYSE Integrated Feed: $5,000 per connection initial charge plus
Wireless Connection in TR2 monthly charge per connection of $6,500.
access center.
[[Page 43899]]
NYSE Arca Integrated Feed: $5,000 per connection initial charge plus
Wireless Connection in TR2 monthly charge per connection of $6,500.
access center.
------------------------------------------------------------------------
As with the Markham Market Data Connections, the proposed TR2
Market Data Connections would not utilize the pole on the grounds of
the MDC.
The Proposed Market Data
The Integrated Feeds are generated at the MDC in the trading and
execution systems of the NYSE and NYSE Arca at the Mahwah data center.
In each case, the NYSE or NYSE Arca, as applicable, files with the
Commission for the Integrated Feed it generates, and the related
fees.\6\ The filed market data fees apply to all customers of the
Integrated Feeds, no matter what form of connectivity or connectivity
provider they use.
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\6\ See Securities Exchange Act Release Nos. 74128 (January 23,
2015), 80 FR 4951 (January 29, 2015) (SR-NYSE-2015-03) (notice of
filing and immediate effectiveness of proposed rule change
establishing the NYSE Integrated Feed data feed); 76485 (November
20, 2015), 80 FR 74158 (November 27, 2015) (SR-NYSE-2015-57) (notice
of filing and immediate effectiveness of a proposed rule change
establishing fees for the NYSE Integrated Feed); 65669 (November 2,
2011), 76 FR 69311 (November 8, 2011) (SR-NYSEArca-2011-78) (notice
of filing and immediate effectiveness of proposed rule change
offering the NYSE Arca Integrated Feed); and 66128 (January 10,
2012), 77 FR 2331 (January 17, 2012) (SR-NYSEArca-2011-96) (notice
of filing and immediate effectiveness of a proposed rule change
establishing fees for NYSE Arca Integrated Feed).
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When a market participant wants to connect to an Integrated Feed,
it requests a connection from the provider of its choice. All
providers, including FIDS, may only provide the market participant with
connectivity once the provider has received confirmation from the NYSE
or NYSE Arca, as applicable, that the market participant is authorized
to receive the requested data feed.
Application and Impact of the Proposed Change
The proposed change would apply to all customers equally. The
proposed change would not apply differently to distinct types or sizes
of market participants. As is currently the case, the purchase of any
connectivity service is completely voluntary and the Connectivity Fee
Schedule is applied uniformly to all customers.
FIDS expects few new customers in TR2.
Competitive Environment
The Exchange operates in a highly competitive market in which other
vendors offer connectivity services as a means to facilitate the
trading and other market activities of those market participants who
believe that it 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.'' \7\
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\7\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
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A third party has announced that it plans to create a wireless
connection between Markham and the MDC. The Exchange believes it
intends to expand its offering to connect to the TR2. Such a wireless
connection would compete with the Exchange's TR2 Market Data
Connection, as customers could use the third-party wireless connection
to transport the Proposed Market Data. Third-party vendors 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 market participants would
have in complying with the proposed change.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with section 6(b) of the Act,\8\ in general, and furthers the
objectives of section 6(b)(5) of the Act,\9\ 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 mechanisms of, a free and open market and a national market
system and, in general, to protect investors and the public interest
and does not unfairly discriminate 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,\10\ 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.
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
\10\ 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.'' \11\ 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.'' \12\ Here, the Exchange is subject
to significant competitive forces in setting the terms on which it
offers its proposal, in particular because substantially similar
substitutes are available, and the Exchange has not placed the third
party vendors at a competitive disadvantage created by the Exchange.
---------------------------------------------------------------------------
\11\ See Securities Exchange Act Release No. 90209 (October 15,
2020), 85 FR 67044, 67049 (October 21, 2020) (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) (Order Granting
Accelerated Approval to Establish a Wireless Fee Schedule Setting
Forth Available Wireless Bandwidth Connections and Wireless Market
Data Connections) (``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).
\12\ See Wireless Approval Order, supra note 11, at 67049,
citing 2008 ArcaBook Approval Order, supra note 11, at 74781.
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For the first time, a customer would be able to connect to the
Proposed Market Data at TR2, increasing the options available to it.
Without this proposed rule change, any market participants in TR2 would
not have access to the Proposed Market Data.
[[Page 43900]]
The Exchange believes that it is reasonable to charge the same
amount for the TR2 Market Data Connection as for the Markham Market
Data Connection, as the same market data would be transported over both
connections. Given the limitation on bandwidth, the Exchange believes
that it is reasonable not to transport information for all the symbols
included in the Integrated Feeds to TR2, but rather that the Proposed
Market Data include a subset of that data.
The Exchange offers wireless bandwidth connections, without
connectivity to market data, between the Mahwah data center and Markham
and TR2. It does not charge separately for the Markham and TR2
connections, as ``the Exchange believes that it is reasonable to view
the . . . service as one service, and not two.'' \13\ This is because
northbound, the same data, put on the connection by the customer, is
delivered to both Markham and TR2, while southbound, the customer may
choose the Mb of data it sends from each Canadian data center, but the
combined total must equal no more than the total Mb of the wireless
circuit.\14\
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\13\ Securities Act Release No. 99523 (February 12, 2024), 89 FR
12390 (February 16, 2024) (SR-NYSEARCA-2024-11), at 12392.
\14\ See Connectivity Fee Schedule--B. Wireless Connectivity--
Wireless Connectivity Note.
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By contrast, in the present case, the Exchange believes that it is
reasonable to charge for the TR2 Market Data Connection separately from
the Markham Market Data Connection. First, the customers would be
located in Canada and need not have a presence in the Mahwah data
center, and charging for the TR2 Market Data Connection separately from
the Markham Market Data Connection reflects that usage of the
Integrated Feed serves a different purpose at each location, and is
consistent with the NYSE Wireless Order regarding wireless market data
connections. Second, the nature of the services is different: the
present connectivity would not be to a wireless bandwidth on which the
customer can put data, irrespective of whether the data is northbound
or southbound. Rather, the TR2 Market Data Connection would be limited
to connectivity to the Integrated Feeds. Accordingly, the Exchange
believes that the Markham and TR2 services are two services.\15\
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\15\ The Exchange believes that this would be consistent with
its existing approach to wireless connectivity. See Wireless
Approval Order, supra note 11, Connectivity Fee Schedule--B.
Wireless Connectivity, and Connectivity Fee Schedule--C. Wireless
Connectivity to Market Data.
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The Exchange Would Not Preclude Other Connections to Proposed Market
Data in TR2
The Exchange is not aware of any other public, commercially
available wireless or fiber connections to the Proposed Market Data
between the MDC and TR2.
Additional third party competitors could offer fiber or wireless
connectivity to the Proposed Market Data in TR2 by obtaining the market
data at the MDC and sending it over a fiber or wireless network to
Canada. A market participant in TR2 also may create a proprietary
market data connection, whether fiber or wireless; connect through
another market participant; utilize fiber connections offered by third
parties; or utilize fiber connections offered by FIDS. The Exchange
could not impose any impediments to a third party seeking to offer a
similar service, including by placing them at a latency or other
competitive disadvantage with respect to the Exchange. Indeed, as noted
above, the Exchange believes that in the future a third party may offer
a wireless connection to TR2, which would compete with the TR2 Market
Data Connection, as customers could use the third-party wireless
connection to transport the Proposed Market Data.
Wireless connections and fiber connections to the Proposed Market
Data in Markham would compete with each other. Given the various
advantages and disadvantages of both wireless and fiber connections, a
market participant interested in purchasing a connection to the
Proposed Market Data in Markham is likely to consider a variety of
factors in deciding whether to use a wireless versus fiber connection,
including latency; the amount of network uptime; the equipment the
network uses; the cost of the connection; and the applicable
contractual provisions. Indeed, fiber network connections may be more
attractive to some market participants as they are more reliable and
less susceptible to weather conditions.
Third Party Competitors Would Not Be at a Competitive Disadvantage
Created by the Exchange
The Exchange does not believe that FIDS would have any competitive
advantage over any future providers of connectivity to the Proposed
Market Data in TR2. The Exchange's proposed service for connectivity to
Proposed Market Data in TR2 does not have any special access to or
advantage within the MDC. The Integrated Feeds are generated at the MDC
in the trading and execution systems of the NYSE and NYSE Arca. FIDS
would collect the Proposed Market Data, then send it over the TR2
Market Data Connection by connecting to equipment in a MDC meet-me-room
and from there to a pole. The pole is owned by a third party and is not
on the grounds of the MDC, and the path into the MDC through a meet-me-
room is available to any telecommunications provider. Further, all
distances in the MDC are normalized.
Nor would the Exchange have a competitive advantage over third-
party competitors offering wireless connectivity to the Proposed Market
Data in TR2 by virtue of the fact that it owns and operates the MDC's
meet-me-rooms. Third parties purchasing wireless connectivity to the
Proposed Market Data 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''). 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 \16\
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 \17\ 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 \18\ 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
[[Page 43901]]
spurs demand for all of the services it sells at the MDC.\19\
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\16\ See Securities Exchange Act Release No. 98000 (July 26,
2023), 88 FR 50244 (August 1, 2023) (SR-NYSEArca-2023-47) (``MMR
Notice'').
\17\ ``User'' means any market participant that requests to
receive co-location services directly from the Exchange.
\18\ A User may host another entity in its space within the MDC.
Such Users are called ``Hosting Users'' and their customers are
referred to as ``Hosted Customers.'' See Securities Exchange Act
Release No. 76010 (September 29, 2015), 80 FR 60197 (October 5,
2015) (SR-NYSEArca-2015-82).
\19\ See MMR Notice, supra note 16.
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If anything, the Exchange would be subject to a competitive
disadvantage vis-[agrave]-vis third party competitors offering wireless
or fiber connectivity to the Proposed Market Data in TR2. Third-party
competitors would not be subject to the Commission's filing
requirements, and therefore could 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 could not impose any impediments to a
third party seeking to offer a similar service, including by placing
them at a latency or other competitive disadvantage with respect to the
Exchange the proposed fees for the TR2 Market Data Connection are
reasonable.\20\
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\20\ See Wireless Approval Order, supra note 11.
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The Exchange believes that the proposed rule change is reasonable
because a market participant in the Canadian data center that opted for
a TR2 Market Data Connection would be able to select the specific
Proposed Market Data feed that it wanted to receive in accordance with
its needs, thereby helping it tailor its operations to the requirements
of its business operations.
The Proposed Change Is an Equitable Allocation of Fees and Credits
The Exchange believes that its proposal equitably allocates its
fees among market participants.
The Exchange believes that it is equitable to make wireless
connectivity to the Proposed Market Data available at TR2. For the
first time, a customer would be able to connect to the Proposed Market
Data at TR2, increasing the options available to it. Without this
proposed rule change, any market participants in TR2 would not have
access to the Proposed Market Data.
The Exchange believes that it is equitable to charge the same
amount for the TR2 Market Data Connection as for the Markham Market
Data Connection, as the same market data would be transported over both
connections. Given the limitation on bandwidth, the Exchange believes
that it is equitable not to transport information for all the symbols
included in the Integrated Feeds to TR2, but rather that the Proposed
Market Data include a subset of that data.
Additional third party competitors could offer fiber or wireless
connectivity to the Proposed Market Data in TR2 by obtaining the market
data at the MDC and sending it over a fiber or wireless network to
Canada. A market participant in TR2 also may create a proprietary
market data connection, whether fiber or wireless; connect through
another market participant; utilize fiber connections offered by third
parties; or utilize fiber connections offered by FIDS. The Exchange
could not impose any impediments to a third party seeking to offer a
similar service, including by placing them at a latency or other
competitive disadvantage with respect to the Exchange. Indeed, as noted
above, the Exchange believes that in the future a third party may offer
a wireless connection to TR2, which would compete with the TR2 Market
Data Connection, as customers could use the third-party wireless
connection to transport the Proposed Market Data.
The Exchange believes that the proposed change is equitable because
it will result in fees being charged only to market participants that
voluntarily select to receive the corresponding services and because
those services will be available to all market participants.
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 market
participants on an equal basis (i.e., the same products and services
are available to all market participants). All market participants that
voluntarily select a TR2 Market Data Connection would be charged the
same amount for the same services.
The Proposed Change Is Not Unfairly Discriminatory
The Exchange believes that the proposed rule change is not unfairly
discriminatory, for the following reasons.
The Exchange believes that it is not unfairly discriminatory to
make wireless connectivity to the Proposed Market Data available at
TR2. For the first time, a customer would be able to connect to the
Proposed Market Data at TR2, increasing the options available to it.
Without this proposed rule change, any market participants in TR2 would
not have access to the Proposed Market Data.
The Exchange believes that it is not unfairly discriminatory to
charge the same amount for the TR2 Market Data Connection as for the
Markham Market Data Connection, as the same market data would be
transported over both connections. Given the limitation on bandwidth,
the Exchange believes that it is not unfairly discriminatory not to
transport information for all the symbols included in the Integrated
Feeds to TR2, but rather that the Proposed Market Data include a subset
of that data.
The Exchange believes that the proposed change is not unfairly
discriminatory because it will result in fees being charged only to
market participants that voluntarily select to receive the
corresponding services and because those services will be available to
all market participants. 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 market participants on an equal basis (i.e., the
same products and services are available to all market participants).
All market participants that voluntarily select a TR2 Market Data
Connection would be charged the same amount for the same services.
For these reasons, the Exchange believes that the proposal is
consistent with the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
The proposed rule changes 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.\21\
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\21\ 15 U.S.C. 78f(b)(8).
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The Exchange believes that it would not impose a burden on
competition that is not necessary or appropriate to expand the
connectivity options to make wireless connectivity to the Proposed
Market Data available at TR2. For the first time, a customer would be
able to connect to the Proposed Market Data at TR2, increasing the
options available to it. Without this proposed rule change, any market
participants in TR2 would not have access to the Proposed Market Data.
The Exchange believes that it would not impose a burden on
competition that is not necessary or appropriate to charge the same
amount for the TR2 Market Data Connection as for the Markham Market
Data Connection, as the same market data would be transported over both
connections. Given the limitation on bandwidth, the Exchange believes
that it is reasonable not to transport information for all the symbols
included in the Integrated Feeds to TR2, but rather that the Proposed
Market Data include a subset of that data.
[[Page 43902]]
Additional third party competitors could offer fiber or wireless
connectivity to the Proposed Market Data in TR2 by obtaining the market
data at the MDC and sending it over a fiber or wireless network to
Canada. A market participant in Markham or TR2 also may create a
proprietary market data connection, whether fiber or wireless; connect
through another market participant; utilize fiber connections offered
by third parties; or utilize fiber connections offered by FIDS. The
Exchange could not impose any impediments to a third party seeking to
offer a similar service, including by placing them at a latency or
other competitive disadvantage with respect to the Exchange.
The Exchange does not believe that FIDS would have any competitive
advantage over any future providers of connectivity to the Proposed
Market Data in TR2. The Exchange's proposed service for connectivity to
Proposed Market Data in TR2 does not have any special access to or
advantage within the MDC. The Integrated Feeds are generated at the MDC
in the trading and execution systems of the NYSE and NYSE Arca. FIDS
would collect the Proposed Market Data, then send it over the TR2
Market Data Connection by connecting to equipment in a MDC meet-me-room
and from there to a pole. The pole is owned by a third party and is not
on the grounds of the MDC, and the path into the MDC through a meet-me-
room is available to any telecommunications provider. Further, all
distances in the MDC are normalized.
Because the Exchange could not impose any impediments to a third
party seeking to offer a similar service, including by placing them at
a latency or other competitive disadvantage with respect to the
Exchange, the Exchange believes that it would not impose a burden on
competition that is not necessary or appropriate to expand the
connectivity options to make wireless connectivity to the Proposed
Market Data available at TR2.
Nor does the Exchange have a competitive advantage over any future
third-party competitors offering wireless or fiber connectivity to the
Proposed Market Data in TR2 by virtue of the fact that it owns and
operates the MDC's meet-me-rooms. Third parties purchasing wireless
connectivity to the Proposed Market Data would require a circuit
connecting out of the MDC, and in most cases, such circuits are
provided by third-party Telecoms. 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 \22\ 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.\23\
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\22\ See MMR Notice, supra note 16.
\23\ See id.
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For the reasons described above, the Exchange believes that the
proposed rule changes reflect this competitive environment.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to section
19(b)(3)(A)(iii) of the Act \24\ and Rule 19b-4(f)(6) thereunder.\25\
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.\26\
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\24\ 15 U.S.C. 78s(b)(3)(A)(iii).
\25\ 17 CFR 240.19b-4(f)(6).
\26\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
section 19(b)(2)(B) \27\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\27\ 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-NYSEARCA-2024-36 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-NYSEARCA-2024-36. 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,
[[Page 43903]]
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-SR-NYSEARCA-2024-36 and
should be submitted on or before June 10, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
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\28\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-10960 Filed 5-17-24; 8:45 am]
BILLING CODE 8011-01-P
