Self-Regulatory Organizations; NYSE National, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending the Connectivity Fee Schedule, 52177-52182 [2024-13550]
Download as PDF
<![CDATA[
Federal Register / Vol. 89, No. 120 / Friday, June 21, 2024 / Notices
• Send an email to rule-comments@
sec.gov. Please include file number SR–
NYSEARCA–2024–49 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–2024–49. 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–SR–NYSEARCA–2024–49 and
should be submitted on or before July
12, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.32
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–13548 Filed 6–20–24; 8:45 am]
ddrumheller on DSK120RN23PROD with NOTICES1
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
of the most significant parts of such
statements.
[Release No. 34–100348; File No. SR–
NYSENAT–2024–18]
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
Self-Regulatory Organizations; NYSE
National, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Amending the
Connectivity Fee Schedule
June 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 June 3,
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 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 (‘‘Fee
Schedule’’) regarding colocation
services and fees to provide Users with
wireless connectivity to an additional
market data feed. 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,
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
32 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
17:46 Jun 20, 2024
Jkt 262001
52177
PO 00000
Frm 00168
Fmt 4703
Sfmt 4703
1. Purpose
The Exchange proposes to amend the
Fee Schedule regarding colocation
services and fees to provide Users 4 with
wireless connectivity to an additional
market data feed.
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’’), and wired
connections to more than 45 market
data feeds or combinations of feeds.5
The Exchange proposes to add to the
Fee Schedule wireless connections
(‘‘Connectivity’’) to the Nasdaq CXC and
Nasdaq CX2 market data feeds.6 As
there would be limited bandwidth
available on the wireless network from
the TR2 data center in Toronto, Canada,
where the two feeds are generated, the
Exchange would not transport
information for all the symbols included
in the Nasdaq CXC and Nasdaq CX2
market data feeds. Rather, FIDS would
provide connectivity to a selection of
symbols from the two market data feeds,
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–2024–33, SR–
NYSEAMER–2024–38, SR–NYSEARCA–2024–49,
and SR–NYSECHX–2024–21.
5 See Securities Exchange Act Release No. 99810
(March 20, 2024), 89 FR 21050 (March 26, 2024)
(SR–NYSENAT–2024–09).
6 According to the Nasdaq Canada website, ‘‘CXC
is a lit book providing clients with a reliable
platform for trading Canadian equities, offering the
benefits of anonymous or attributed trading and
price/broker/time priority’’ and ‘‘[t]he CX2 trading
book is designed to provide additional cost savings
and trading efficiencies. Through a unique pricing
model and broker preferencing functionality, this lit
book helps to improve investment performance and
to drive positive market structure change.’’ https://
www.nasdaq.com/solutions/nasdaq-canada
E:\FR\FM\21JNN1.SGM
21JNN1
52178
Federal Register / Vol. 89, No. 120 / Friday, June 21, 2024 / Notices
which would include those symbols for
which there is demand (the ‘‘Proposed
Third Party Data’’).7
As with most other Existing Third
Party Data,8 the monthly charge for the
Connectivity to Proposed Third Party
Data would be subject to a 30-day
testing period, during which the
monthly charge per connection would
be waived. Consistent with that fact, the
Exchange proposes to amend the Fee
Schedule to clarify that this provision is
center in the Mahwah, New Jersey data
center (‘‘MDC’’).9 To receive either
market data feed in the Proposed Third
Party 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.
In order to implement the proposed
change, the Exchange proposes to add
the following item to the Connectivity
Fee Schedule under ‘‘A. Co-Location
Fees’’:
Type of service
Description
Amount of charge
Wireless Connection for Third Party
Data.
Wireless connection of Nasdaq
CXC and Nasdaq CX2 data.
$5,000 per connection initial charge plus monthly charge per connection of $5,000
Fees are subject to a 30-day testing period, during which the monthly
charge per connection is waived.
If a User were to purchase more than
one wireless connection to Proposed
Third Party Data, it would pay more
than one non-recurring initial charge.
Unless the User already had a port for
Toronto Stock Exchange data, a
proposed wireless connection would
include the use of one port for
Connectivity to Proposed Third Party
Data, and a User would not pay a
separate fee for the use of such port.10
If a User already had a port for
Toronto Stock Exchange data, it would
not need an additional port for the
Proposed Third Party Data. Rather, the
User would be able to connect to the
Proposed Third Party Data using the
same port that it already had.
The proposed Connectivity would not
utilize the pole on the grounds of the
MDC.
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 is completely
voluntary and the Fee Schedule is
applied uniformly to all Users.
The Exchange believes that it would
not obtain new Users due to the
proposed change.
ddrumheller on DSK120RN23PROD with NOTICES1
applicable to wireless connections to
the Proposed Third Party Data.
The Exchange expects that the
proposed Connectivity to Proposed
Third Party Data would become
operative by the end of 2024. The
Exchange will announce the date or
dates that Connectivity to Proposed
Third Party Data will be available
through a customer notice.
Users would be offered Connectivity
to the Proposed Third Party Data
through connections into the colocation
7 When a User requested a wireless connection to
Nasdaq CXC or Nasdaq CX2 market data feeds, it
would receive connectivity to the Proposed Market
Data. The User 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.
8 See 83 FR 26314, supra note 4, at 26319–20.
VerDate Sep<11>2014
17:46 Jun 20, 2024
Jkt 262001
Competitive Environment
fees, and the Exchange is not aware of
any problems that Users would have in
complying with the proposed change.
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
A third party has created a wireless
connection between the Markham,
Canada data center and the MDC. The
Exchange believes it intends to expand
its offering to connect to the TR2. If so,
Users 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
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,12 in general, and
furthers the objectives of Section 6(b)(5)
of the Act,13 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,14 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.
9 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 services
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 services.
10 Toronto Stock Exchange data and CME Group
Data each require their own port. The remaining
Existing Third Party Data requires one port.
Accordingly, a User would not be able to connect
to the Proposed Third Party Data using the same
port that it uses for connectivity to CME Group
Data.
11 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
12 15 U.S.C. 78f(b).
13 15 U.S.C. 78f(b)(5).
14 15 U.S.C. 78f(b)(4).
PO 00000
Frm 00169
Fmt 4703
Sfmt 4703
2. Statutory Basis
E:\FR\FM\21JNN1.SGM
21JNN1
Federal Register / Vol. 89, No. 120 / Friday, June 21, 2024 / Notices
ddrumheller on DSK120RN23PROD with NOTICES1
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.’’ 15 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.’’ 16 Here, the
Exchange is subject to significant
competitive forces in setting the terms
on which it offers its proposal, in
particular because the Exchange has not
placed third party vendors at a
competitive disadvantage created by the
Exchange.
The Exchange’s proposed
Connectivity to Proposed Third Party
Data would compete with other
methods by which both the Exchange
and various third parties already
provide, or could provide, Users with
connectivity to the Proposed Third
Party Data.
Under the proposed rule, for the first
time, a User also would be able to
connect to the Proposed Market Data
wirelessly, increasing the options
available to it. Without this proposed
rule change, Users would not have
wireless access to the Proposed Third
Party Data.
Moreover, a third party created a
wireless connection between the
Markham, Canada data center and the
MDC. The Exchange believes it intends
to expand its offering to connect to the
TR2. If so, Users could use the thirdparty wireless connection to transport
the Proposed Market Data.
Accordingly, the wireless connections
would compete with the Exchange’s
proposed Connectivity and would exert
significant competitive forces on the
15 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).
16 See Wireless Approval Order, supra note 15, at
67049, citing 2008 ArcaBook Approval Order, supra
note 15, at 74781.
VerDate Sep<11>2014
17:46 Jun 20, 2024
Jkt 262001
Exchange in setting the terms of its
proposal, including the level of the
Exchange’s proposed fees.17 If the
Exchange were to set its proposed fees
too high, Users could respond by
instead selecting the telecoms’
substantially similar wireless
connectivity.
In addition, the Exchange believes
that at least three third-party market
participants offer fiber connections to
Nasdaq CXC and Nasdaq CX2 market
data, including the Proposed Third
Party Data, in colocation.18 FIDS offers
connectivity to the Proposed Third
Party Data as part of its connectivity to
Nasdaq Canada data feeds.19
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 connections to the Proposed
Third Party Data in colocation.
Additional third party competitors
could offer fiber or wireless connectivity
to the Proposed Third Party Data in
colocation by obtaining the market data
and sending it over a fiber or wireless
network to the MDC. A User also may
create a proprietary market data
connection, whether fiber or wireless;
connect through another market
participant; utilize the existing or
potential fiber connections offered by
third parties; or utilize the existing 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 may compete
with Connectivity, as customers could
use the third-party wireless connection
to transport the Proposed Third Party
Data.
Wireless connections and fiber
connections to the Proposed Third Party
Data in the MDC would compete with
each other. Given the various
advantages and disadvantages of both
wireless and fiber connections, a User
interested in purchasing a connection to
the Proposed Third Party Data is likely
17 See 2008 ArcaBook Approval Order, supra note
15, at 74789 and n.295 (recognizing that products
need not be identical to be substitutable).
18 Because the providers of such connectivity are
not regulated entities, they are not obligated to
make the availability of connections, latency figures
or fees publicly available or the same for all entities.
19 See Securities Exchange Act Release No. 83709
(July 25, 2018), 83 FR 37028 (July 31, 2018) (SR–
NYSENAT–2018–15).
PO 00000
Frm 00170
Fmt 4703
Sfmt 4703
52179
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 Third
Party Data in the MDC. The Exchange’s
proposed service for Connectivity to
Proposed Third Party Data does not
have any special access to or advantage
within the MDC. FIDS would collect the
Proposed Third Party Data, then send it
over a wireless connection from the TR2
data center to the MDC via a pole,
connecting to equipment in a MDC
meet-me-room. 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 does the Exchange have a
competitive advantage over any thirdparty competitors offering wireless
connectivity to the Proposed Third
Party Data by virtue of the fact that it
owns and operates the MDC’s meet-merooms. Users purchasing wireless
connectivity to the Proposed Third
Party 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 meetme-rooms (‘‘Telecoms’’).20 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 21 so that market participants,
including Telecoms, will maximize
their use of the MDC. By setting the
20 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.
21 See Securities Exchange Act Release No. 98002
(July 26, 2023), 88 FR 50232 (August 1, 2023) (SR–
NYSENat—2023–12) (‘‘MMR Notice’’).
E:\FR\FM\21JNN1.SGM
21JNN1
ddrumheller on DSK120RN23PROD with NOTICES1
52180
Federal Register / Vol. 89, No. 120 / Friday, June 21, 2024 / Notices
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.22 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 would be
subject to a competitive disadvantage
vis-à-vis third-party competitors offering
wireless connectivity to the Proposed
Third Party 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 Connectivity to Proposed
Third Party Data are reasonable.23 If the
Exchange were to set its prices for
22 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.
23 See Wireless Approval Order, supra note 15.
VerDate Sep<11>2014
17:46 Jun 20, 2024
Jkt 262001
Connectivity to Proposed Third Party
Data at a level that Users found to be too
high, Users could easily choose to
connect to Proposed Third Party Data in
colocation at the MDC through the
competing wireless connections, as
detailed above.
Additional Considerations
The Exchange believes that it is
reasonable to add text to the Fee
Schedule indicating that the monthly
charge for Connectivity to the Proposed
Third Party Data is subject to a 30-day
testing period, during which the
monthly charge per connection would
be waived. The change would clarify
that the terms on which the
Connectivity to Proposed Third Party
Data is offered are the same as those of
most connections to Existing Third
Party Data.
The Exchange believes that, unless a
User connects to Toronto Stock
Exchange data, it is reasonable that each
proposed service would include the use
of a wireless connection port, and a
User would not pay a separate fee for
the use of such port. If a User already
had a port for Toronto Stock Exchange
data, it would not need an additional
port for the Proposed Third Party Data,
because the User would be able to
connect to the Proposed Third Party
Data using the same port that it already
had.
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 Proposed Third Party
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 Proposed Third Party 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 Connectivity would still be
able to connect to Proposed Third Party
Data over fiber connections.
Additional third party competitors
could offer fiber or wireless connectivity
to the Proposed Third Party Data in
colocation by obtaining the market data
and sending it over a fiber or wireless
network to the MDC. A User also may
create a proprietary market data
connection, whether fiber or wireless;
connect through another market
participant; utilize the existing or
PO 00000
Frm 00171
Fmt 4703
Sfmt 4703
potential fiber connections offered by
third parties; or utilize the existing 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 may compete
with Connectivity, as customers could
use the third-party wireless connection
to transport the Proposed Third Party
Data.
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 Connectivity to Proposed
Third Party Data 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 Third
Party Data available to Users. The
proposed rule change would provide
Users with an additional choice with
respect to the form and optimal latency
of the connectivity they use to receive
Proposed Third Party 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
Connectivity would still be able to
connect to Proposed Third Party Data
over third party fiber 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 Nasdaq CXC and Nasdaq CX2
market data feeds, but rather that the
Proposed Market Data include a subset
of that data.
The Exchange believes that the
proposed change is not unfairly
E:\FR\FM\21JNN1.SGM
21JNN1
Federal Register / Vol. 89, No. 120 / Friday, June 21, 2024 / Notices
ddrumheller on DSK120RN23PROD with NOTICES1
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 the
Exchange’s proposed Connectivity to
Proposed Third Party Data would be
charged the same amount for the same
services.
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.24
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 Connectivity
would provide Users with an alternative
means of connectivity to Proposed
Third Party Data. For the first time, a
User would be able to connect
wirelessly to the Proposed Third Party
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 Proposed Third Party 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
Connectivity would still be able to
connect to Proposed Third Party Data
wirelessly using third party fiber
connections.
Additional third party competitors
could offer fiber or wireless connectivity
to the Proposed Third Party Data in
colocation by obtaining the market data
and sending it over a fiber or wireless
network to the MDC. A User also may
create a proprietary market data
connection, whether fiber or wireless;
connect through another market
participant; utilize the existing or
potential fiber connections offered by
third parties; or utilize the existing 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 may compete
with Connectivity, as customers could
use the third-party wireless connection
to transport the Proposed Third Party
Data.
Adding text to the Fee Schedule
indicating that the monthly charge for
Connectivity to the Proposed Third
Party Data to is subject to a 30-day
testing period, during which the
monthly charge per connection would
be waived, is not designed to address
any competitive issues, but rather to
enhance the clarity and transparency of
the Fee Schedule and alleviate possible
customer confusion that may arise.
The Exchange does not believe that
FIDS would have any competitive
advantage over any future providers of
connectivity to the Proposed Third
Party Data in the MDC. The Exchange’s
proposed service for Connectivity to
Proposed Third Party Data does not
have any special access to or advantage
within the MDC. FIDS would collect the
Proposed Third Party Data, then send it
over a wireless connection from the TR2
data center to the MDC via a pole,
connecting to equipment in a MDC
meet-me-room. 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 does the Exchange have a
competitive advantage over any thirdparty competitors offering wireless
connectivity to the Proposed Third
Party Data by virtue of the fact that it
owns and operates the MDC’s meet-merooms. Users purchasing wireless
connectivity to the Proposed Third
Party 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.25 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 26 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
25 See
24 15
U.S.C. 78f(b)(8).
VerDate Sep<11>2014
17:46 Jun 20, 2024
26 See
Jkt 262001
PO 00000
supra note 20.
MMR Notice, supra note 21.
Frm 00172
Fmt 4703
Sfmt 4703
52181
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.27 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 would be
subject to a competitive disadvantage
vis-à-vis third-party competitors offering
wireless connectivity to the Proposed
Third Party 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.
Given the limitation on bandwidth,
the Exchange believes that it will not
impose any burden on competition that
is not necessary or appropriate to not
transport information for all the symbols
included in the Nasdaq CXC and
Nasdaq CX2 market data feeds, but
rather that the Proposed Market Data
include a subset of that data.
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.
27 See
E:\FR\FM\21JNN1.SGM
id. at 50235.
21JNN1
52182
Federal Register / Vol. 89, No. 120 / Friday, June 21, 2024 / Notices
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 28 and Rule
19b–4(f)(6) thereunder.29 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.30
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) 31 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–
NYSENAT–2024–18 on the subject line.
ddrumheller on DSK120RN23PROD with NOTICES1
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
28 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
30 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.
31 15 U.S.C. 78s(b)(2)(B).
29 17
VerDate Sep<11>2014
17:46 Jun 20, 2024
Jkt 262001
All submissions should refer to file
number SR–NYSENAT–2024–18. 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–2024–18 and should be
submitted on or before July 12, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.32
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–13550 Filed 6–20–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100332; File No. SR–
NYSEAMER–2024–41]
Self-Regulatory Organizations; NYSE
American LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend the NYSE
American Options Fee Schedule
June 14, 2024.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
32 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
PO 00000
Frm 00173
Fmt 4703
Sfmt 4703
notice is hereby given that, on June 12,
2024, NYSE American LLC (‘‘NYSE
American’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
NYSE American Options Fee Schedule
(‘‘Fee Schedule’’) to replace the
Excessive Bandwidth Utilization Fees
with a single fee. The Exchange
proposes to implement the fee changes
effective June 12, 2024.4 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 purpose of this filing is to amend
the Fee Schedule to replace the Order to
Trade Ratio Fee and Messages to
Contracts Traded Ratio Fee with an
Excessive Bandwidth Utilization Fee to
reflect the Exchange’s migration to
NYSE Pillar (‘‘Pillar’’). The Exchange
proposes to implement the fee changes
effective May 30, 2024 [sic].
4 On May 1, 2024, the Exchange originally filed
to amend the Fee Schedule (NYSEAMER–2024–30)
and, on May 16, 2024, the Exchange withdrew that
filing and submitted NYSEAMER–2024–32. On May
30, 2024, the Exchange withdrew NYSEAMER–
2024–32 and submitted NYSEAMER–2024–37,
which latter filing the Exchange withdrew on June
12, 2024.
E:\FR\FM\21JNN1.SGM
21JNN1
]]>Agencies
[Federal Register Volume 89, Number 120 (Friday, June 21, 2024)]
[Notices]
[Pages 52177-52182]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-13550]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100348; File No. SR-NYSENAT-2024-18]
Self-Regulatory Organizations; NYSE National, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Amending the
Connectivity Fee Schedule
June 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 June 3, 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 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 (``Fee
Schedule'') regarding colocation services and fees to provide Users
with wireless connectivity to an additional market data feed. 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 Fee Schedule regarding
colocation services and fees to provide Users \4\ with wireless
connectivity to an additional market data feed.
---------------------------------------------------------------------------
\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-2024-33, SR-NYSEAMER-2024-38, SR-NYSEARCA-2024-
49, and SR-NYSECHX-2024-21.
---------------------------------------------------------------------------
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''), and wired connections to
more than 45 market data feeds or combinations of feeds.\5\
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 99810 (March 20,
2024), 89 FR 21050 (March 26, 2024) (SR-NYSENAT-2024-09).
---------------------------------------------------------------------------
The Exchange proposes to add to the Fee Schedule wireless
connections (``Connectivity'') to the Nasdaq CXC and Nasdaq CX2 market
data feeds.\6\ As there would be limited bandwidth available on the
wireless network from the TR2 data center in Toronto, Canada, where the
two feeds are generated, the Exchange would not transport information
for all the symbols included in the Nasdaq CXC and Nasdaq CX2 market
data feeds. Rather, FIDS would provide connectivity to a selection of
symbols from the two market data feeds,
---------------------------------------------------------------------------
\6\ According to the Nasdaq Canada website, ``CXC is a lit book
providing clients with a reliable platform for trading Canadian
equities, offering the benefits of anonymous or attributed trading
and price/broker/time priority'' and ``[t]he CX2 trading book is
designed to provide additional cost savings and trading
efficiencies. Through a unique pricing model and broker preferencing
functionality, this lit book helps to improve investment performance
and to drive positive market structure change.'' https://www.nasdaq.com/solutions/nasdaq-canada
---------------------------------------------------------------------------
[[Page 52178]]
which would include those symbols for which there is demand (the
``Proposed Third Party Data'').\7\
---------------------------------------------------------------------------
\7\ When a User requested a wireless connection to Nasdaq CXC or
Nasdaq CX2 market data feeds, it would receive connectivity to the
Proposed Market Data. The User 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.
---------------------------------------------------------------------------
As with most other Existing Third Party Data,\8\ the monthly charge
for the Connectivity to Proposed Third Party Data would be subject to a
30-day testing period, during which the monthly charge per connection
would be waived. Consistent with that fact, the Exchange proposes to
amend the Fee Schedule to clarify that this provision is applicable to
wireless connections to the Proposed Third Party Data.
---------------------------------------------------------------------------
\8\ See 83 FR 26314, supra note 4, at 26319-20.
---------------------------------------------------------------------------
The Exchange expects that the proposed Connectivity to Proposed
Third Party Data would become operative by the end of 2024. The
Exchange will announce the date or dates that Connectivity to Proposed
Third Party Data will be available through a customer notice.
Users would be offered Connectivity to the Proposed Third Party
Data through connections into the colocation center in the Mahwah, New
Jersey data center (``MDC'').\9\ To receive either market data feed in
the Proposed Third Party 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.
---------------------------------------------------------------------------
\9\ 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 services 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 services.
---------------------------------------------------------------------------
In order to implement the proposed change, the Exchange proposes to
add the following item to the Connectivity Fee Schedule under ``A. Co-
Location Fees'':
------------------------------------------------------------------------
Type of service Description Amount of charge
------------------------------------------------------------------------
Wireless Connection for Third Wireless $5,000 per connection
Party Data. connection of initial charge plus
Nasdaq CXC and monthly charge per
Nasdaq CX2 data. connection of $5,000
Fees are subject to a
30-day testing
period, during which
the monthly charge
per connection is
waived.
------------------------------------------------------------------------
If a User were to purchase more than one wireless connection to
Proposed Third Party Data, it would pay more than one non-recurring
initial charge. Unless the User already had a port for Toronto Stock
Exchange data, a proposed wireless connection would include the use of
one port for Connectivity to Proposed Third Party Data, and a User
would not pay a separate fee for the use of such port.\10\
---------------------------------------------------------------------------
\10\ Toronto Stock Exchange data and CME Group Data each require
their own port. The remaining Existing Third Party Data requires one
port. Accordingly, a User would not be able to connect to the
Proposed Third Party Data using the same port that it uses for
connectivity to CME Group Data.
---------------------------------------------------------------------------
If a User already had a port for Toronto Stock Exchange data, it
would not need an additional port for the Proposed Third Party Data.
Rather, the User would be able to connect to the Proposed Third Party
Data using the same port that it already had.
The proposed Connectivity would not utilize the pole on the grounds
of the MDC.
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 is completely voluntary and the Fee Schedule is applied
uniformly to all Users.
The Exchange believes that it would not obtain new Users due to the
proposed change.
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).
---------------------------------------------------------------------------
A third party has created a wireless connection between the
Markham, Canada data center and the MDC. The Exchange believes it
intends to expand its offering to connect to the TR2. If so, Users
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 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,\12\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\13\ 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,\14\ 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.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
\14\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
[[Page 52179]]
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.'' \15\ 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.'' \16\ Here, the Exchange is subject
to significant competitive forces in setting the terms on which it
offers its proposal, in particular because the Exchange has not placed
third party vendors at a competitive disadvantage created by the
Exchange.
---------------------------------------------------------------------------
\15\ 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).
\16\ See Wireless Approval Order, supra note 15, at 67049,
citing 2008 ArcaBook Approval Order, supra note 15, at 74781.
---------------------------------------------------------------------------
The Exchange's proposed Connectivity to Proposed Third Party Data
would compete with other methods by which both the Exchange and various
third parties already provide, or could provide, Users with
connectivity to the Proposed Third Party Data.
Under the proposed rule, for the first time, a User also would be
able to connect to the Proposed Market Data wirelessly, increasing the
options available to it. Without this proposed rule change, Users would
not have wireless access to the Proposed Third Party Data.
Moreover, a third party created a wireless connection between the
Markham, Canada data center and the MDC. The Exchange believes it
intends to expand its offering to connect to the TR2. If so, Users
could use the third-party wireless connection to transport the Proposed
Market Data.
Accordingly, the wireless connections would compete with the
Exchange's proposed Connectivity 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.\17\ If
the Exchange were to set its proposed fees too high, Users could
respond by instead selecting the telecoms' substantially similar
wireless connectivity.
---------------------------------------------------------------------------
\17\ See 2008 ArcaBook Approval Order, supra note 15, at 74789
and n.295 (recognizing that products need not be identical to be
substitutable).
---------------------------------------------------------------------------
In addition, the Exchange believes that at least three third-party
market participants offer fiber connections to Nasdaq CXC and Nasdaq
CX2 market data, including the Proposed Third Party Data, in
colocation.\18\ FIDS offers connectivity to the Proposed Third Party
Data as part of its connectivity to Nasdaq Canada data feeds.\19\
---------------------------------------------------------------------------
\18\ Because the providers of such connectivity are not
regulated entities, they are not obligated to make the availability
of connections, latency figures or fees publicly available or the
same for all entities.
\19\ See Securities Exchange Act Release No. 83709 (July 25,
2018), 83 FR 37028 (July 31, 2018) (SR-NYSENAT-2018-15).
---------------------------------------------------------------------------
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 connections to the Proposed Third Party Data in
colocation.
Additional third party competitors could offer fiber or wireless
connectivity to the Proposed Third Party Data in colocation by
obtaining the market data and sending it over a fiber or wireless
network to the MDC. A User also may create a proprietary market data
connection, whether fiber or wireless; connect through another market
participant; utilize the existing or potential fiber connections
offered by third parties; or utilize the existing 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 may
compete with Connectivity, as customers could use the third-party
wireless connection to transport the Proposed Third Party Data.
Wireless connections and fiber connections to the Proposed Third
Party Data in the MDC would compete with each other. Given the various
advantages and disadvantages of both wireless and fiber connections, a
User interested in purchasing a connection to the Proposed Third Party
Data 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
Third Party Data in the MDC. The Exchange's proposed service for
Connectivity to Proposed Third Party Data does not have any special
access to or advantage within the MDC. FIDS would collect the Proposed
Third Party Data, then send it over a wireless connection from the TR2
data center to the MDC via a pole, connecting to equipment in a MDC
meet-me-room. 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 does the Exchange have a competitive advantage over any third-
party competitors offering wireless connectivity to the Proposed Third
Party Data by virtue of the fact that it owns and operates the MDC's
meet-me-rooms. Users purchasing wireless connectivity to the Proposed
Third Party 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'').\20\ 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 \21\ so that market
participants, including Telecoms, will maximize their use of the MDC.
By setting the
[[Page 52180]]
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.\22\ 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.
---------------------------------------------------------------------------
\20\ 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.
\21\ See Securities Exchange Act Release No. 98002 (July 26,
2023), 88 FR 50232 (August 1, 2023) (SR-NYSENat--2023-12) (``MMR
Notice'').
\22\ 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.
---------------------------------------------------------------------------
If anything, the Exchange would be subject to a competitive
disadvantage vis-[agrave]-vis third-party competitors offering wireless
connectivity to the Proposed Third Party 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 Connectivity to Proposed Third Party Data are
reasonable.\23\ If the Exchange were to set its prices for Connectivity
to Proposed Third Party Data at a level that Users found to be too
high, Users could easily choose to connect to Proposed Third Party Data
in colocation at the MDC through the competing wireless connections, as
detailed above.
---------------------------------------------------------------------------
\23\ See Wireless Approval Order, supra note 15.
---------------------------------------------------------------------------
Additional Considerations
The Exchange believes that it is reasonable to add text to the Fee
Schedule indicating that the monthly charge for Connectivity to the
Proposed Third Party Data is subject to a 30-day testing period, during
which the monthly charge per connection would be waived. The change
would clarify that the terms on which the Connectivity to Proposed
Third Party Data is offered are the same as those of most connections
to Existing Third Party Data.
The Exchange believes that, unless a User connects to Toronto Stock
Exchange data, it is reasonable that each proposed service would
include the use of a wireless connection port, and a User would not pay
a separate fee for the use of such port. If a User already had a port
for Toronto Stock Exchange data, it would not need an additional port
for the Proposed Third Party Data, because the User would be able to
connect to the Proposed Third Party Data using the same port that it
already had.
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 Proposed Third Party 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 Proposed
Third Party 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 Connectivity would still be
able to connect to Proposed Third Party Data over fiber connections.
Additional third party competitors could offer fiber or wireless
connectivity to the Proposed Third Party Data in colocation by
obtaining the market data and sending it over a fiber or wireless
network to the MDC. A User also may create a proprietary market data
connection, whether fiber or wireless; connect through another market
participant; utilize the existing or potential fiber connections
offered by third parties; or utilize the existing 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 may
compete with Connectivity, as customers could use the third-party
wireless connection to transport the Proposed Third Party Data.
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 Connectivity to Proposed Third Party Data 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 Third Party Data available
to Users. The proposed rule change would provide Users with an
additional choice with respect to the form and optimal latency of the
connectivity they use to receive Proposed Third Party 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 Connectivity would still be able to connect to Proposed Third
Party Data over third party fiber 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 Nasdaq CXC and Nasdaq CX2 market data feeds,
but rather that the Proposed Market Data include a subset of that data.
The Exchange believes that the proposed change is not unfairly
[[Page 52181]]
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 the Exchange's proposed Connectivity to
Proposed Third Party Data would be charged the same amount for the same
services.
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.\24\
---------------------------------------------------------------------------
\24\ 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 Connectivity would provide Users with an
alternative means of connectivity to Proposed Third Party Data. For the
first time, a User would be able to connect wirelessly to the Proposed
Third Party 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 Proposed Third Party 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
Connectivity would still be able to connect to Proposed Third Party
Data wirelessly using third party fiber connections.
Additional third party competitors could offer fiber or wireless
connectivity to the Proposed Third Party Data in colocation by
obtaining the market data and sending it over a fiber or wireless
network to the MDC. A User also may create a proprietary market data
connection, whether fiber or wireless; connect through another market
participant; utilize the existing or potential fiber connections
offered by third parties; or utilize the existing 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 may
compete with Connectivity, as customers could use the third-party
wireless connection to transport the Proposed Third Party Data.
Adding text to the Fee Schedule indicating that the monthly charge
for Connectivity to the Proposed Third Party Data to is subject to a
30-day testing period, during which the monthly charge per connection
would be waived, is not designed to address any competitive issues, but
rather to enhance the clarity and transparency of the Fee Schedule and
alleviate possible customer confusion that may arise.
The Exchange does not believe that FIDS would have any competitive
advantage over any future providers of connectivity to the Proposed
Third Party Data in the MDC. The Exchange's proposed service for
Connectivity to Proposed Third Party Data does not have any special
access to or advantage within the MDC. FIDS would collect the Proposed
Third Party Data, then send it over a wireless connection from the TR2
data center to the MDC via a pole, connecting to equipment in a MDC
meet-me-room. 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 does the Exchange have a competitive advantage over any third-
party competitors offering wireless connectivity to the Proposed Third
Party Data by virtue of the fact that it owns and operates the MDC's
meet-me-rooms. Users purchasing wireless connectivity to the Proposed
Third Party 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.\25\ 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 \26\
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.\27\ 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.
---------------------------------------------------------------------------
\25\ See supra note 20.
\26\ See MMR Notice, supra note 21.
\27\ See id. at 50235.
---------------------------------------------------------------------------
If anything, the Exchange would be subject to a competitive
disadvantage vis-[agrave]-vis third-party competitors offering wireless
connectivity to the Proposed Third Party 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.
Given the limitation on bandwidth, the Exchange believes that it
will not impose any burden on competition that is not necessary or
appropriate to not transport information for all the symbols included
in the Nasdaq CXC and Nasdaq CX2 market data feeds, but rather that the
Proposed Market Data include a subset of that data.
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.
[[Page 52182]]
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 \28\ and Rule 19b-4(f)(6) thereunder.\29\
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.\30\
---------------------------------------------------------------------------
\28\ 15 U.S.C. 78s(b)(3)(A)(iii).
\29\ 17 CFR 240.19b-4(f)(6).
\30\ 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.
---------------------------------------------------------------------------
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) \31\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------
\31\ 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-2024-18 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-2024-18. 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-2024-18 and should
be submitted on or before July 12, 2024.
---------------------------------------------------------------------------
\32\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\32\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-13550 Filed 6-20-24; 8:45 am]
BILLING CODE 8011-01-P
