80_FR_60405 80 FR 60213 - Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Adding Definitions Applicable to Certain Co-location Services and Modifying the Fee for Users That Host Their Customers at the Exchange's Data Center

80 FR 60213 - Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Adding Definitions Applicable to Certain Co-location Services and Modifying the Fee for Users That Host Their Customers at the Exchange's Data Center

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 192 (October 5, 2015)

Page Range60213-60216
FR Document2015-25175

Federal Register, Volume 80 Issue 192 (Monday, October 5, 2015) 
[Federal Register Volume 80, Number 192 (Monday, October 5, 2015)]
[Notices]
[Pages 60213-60216]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-25175]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76009; File No. SR-NYSEMKT-2015-67]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Adding Definitions 
Applicable to Certain Co-location Services and Modifying the Fee for 
Users That Host Their Customers at the Exchange's Data Center

September 29, 2015.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on September 18, 2015, NYSE MKT LLC (the ``Exchange'' or 
``NYSE MKT'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to add definitions applicable to certain co-
location services to the NYSE MKT Equities Price List (``Price List'') 
and the NYSE Amex Options Fee Schedule (``Fee Schedule'') and modify 
the fee for users that host their customers at the Exchange's Data 
Center. The text of the proposed rule change is available on the 
Exchange's Web site 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 operates a data center in Mahwah, New Jersey, from 
which it provides co-location services to Users.\4\ The Exchange's co-
location services allow Users to rent space in the data center so they 
may locate their electronic servers in close physical proximity to the 
Exchange's trading and execution system.\5\ The Exchange proposes to 
amend the Price List and the Fee Schedule as they apply to co-location 
services to add the definitions of User, Hosting User and Hosted 
Customer. The Exchange also proposes to modify the fee for users that 
host their customers at the Exchange's Data Center, effective January 
1, 2016.\6\
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    \4\ The Exchange initially filed rule changes relating to its 
co-location services with the Securities and Exchange Commission 
(``Commission'') in 2010. See Securities Exchange Act Release No. 
62961 (September 21, 2010), 75 FR 59299 (September 27, 2010) (SR-
NYSEAmex-2010-80).
    \5\ See id. at 59299.
    \6\ As specified in the Price List and the Fee Schedule, a User 
that incurs co-location fees for a particular co-location service 
pursuant thereto would not be subject to co-location fees for the 
same co-location service charged by the Exchange's affiliates New 
York Stock Exchange LLC and NYSE Arca, Inc. See Securities Exchange 
Act Release No. 70176 (August 13, 2013), 78 FR 50471 (August 19, 
2013) (SR-NYSEMKT-2013-67).
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Definitions of User, Hosting User and Hosted Customer
    In 2011, the Exchange changed the definition of the term ``User,'' 
for the purposes of co-location services, to include any market 
participant that requests to receive co-location services directly from 
the Exchange.\7\ As described in the 2011 Releases, Users could include 
member organizations, as that term is defined in the definitions 
section of the General and Floor Rules of the NYSE MKT Equities Rules 
(``Members''), and ATP Holders, as that term is defined in NYSE Amex 
Options Rule 900.2NY(5) (``ATP Holders'') (Members and ATP Holders 
together referred to herein as ``Member Organizations''); Sponsored 
Participants, as that term is defined in NYSE MKT Rule 
123B.30(a)(ii)(B)--Equities and NYSE Amex Options Rule 900.2NY(77) 
(``Sponsored Participants''); and non-Member Organization broker-
dealers and vendors that request to receive co-location services 
directly from the Exchange. At the time, the Exchange contemplated that 
such definition would encompass Users that would provide, for example, 
hosting, service bureau, technical support, risk management, order 
routing and market data delivery services to their customers while such 
Users are co-located in the Exchange's data center.
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    \7\ See Securities Exchange Act Release Nos. 65974 (December 15, 
2011), 76 FR 79249 (December 21, 2011) (SR-NYSEAmex-2011-81) and 
65975 (December 15, 2011), 76 FR 79233 (December 21, 2011) (SR-
NYSEAmex-2011-82) (the ``2011 Releases'').
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    The Exchange proposes to add the current definition of User to the 
Price List and the Fee Schedule, without changes from the 2011 
Releases, as follows:
    A ``User'' means any market participant that requests to receive 
co-location services directly from the Exchange.
    The proposed definition would, consistent with the 2011 Releases, 
encompass Member Organizations, Sponsored Participants and non-member 
broker-dealers, as well as vendors that provide hosting, service bureau 
and technical support, risk management services, order routing services 
and market data delivery services to their customers while such Users 
are co-located in the Exchange's data center. Any entity that could be 
a

[[Page 60214]]

User based on the term as described in the 2011 Releases would be 
considered a User under the proposed definition.
    The Exchange also proposes to make a non-substantive change to the 
description in the Price List and the Fee Schedule of the Exchange's 
billing practice for co-location services received by Users that 
connect to the Exchange and one or more of its affiliates, by replacing 
the term, ``user,'' with the defined term, ``User.''
    In the 2011 Releases, the Exchange also amended the Price List and 
the Fee Schedule to establish a fee applicable to Users that provide 
hosting services to their customers at the Exchange's data center. As 
described in the 2011 Releases, ``hosting'' is a service offered by a 
User to another entity in the User's space within the data center and 
can include, for example, a User supporting such other entity's 
technology, whether hardware or software, through the User's co-
location space. The 2011 Releases used the term ``Hosted User'' to 
describe a customer to which a User provides hosting services.
    The Exchange now proposes to include definitions relating to 
hosting services in the Price List and the Fee Schedule, as follows:
    A ``Hosting User'' means a User that hosts a Hosted Customer in the 
User's co-location space.
    A ``Hosted Customer'' means a customer of a Hosting User that is 
hosted in a Hosting User's co-location space.
    The proposed definition of ``Hosting User'' incorporates the 
description of a User that hosts customers in its co-location space as 
set forth in the 2011 Releases. For the avoidance of doubt, a Hosting 
User must be a User pursuant to the proposed definition of User. Any 
User that could be a Hosting User based on the description of a User 
that hosts customers in the 2011 Releases would be considered a Hosting 
User under the proposed definition.
    The proposed definition of ``Hosted Customer'' would be a customer 
of a Hosting User that is hosted in a Hosting User's co-location space, 
and would be consistent with the description of the term, ``Hosted 
User'' used in the 2011 Releases.\8\ The Exchange proposes to change 
the name of the term from ``Hosted User'' to ``Hosted Customer'' to 
make it clear that the entities that are hosted are customers of the 
Hosting Users that do not, in contrast to Users, have a direct 
contractual relationship with the Exchange vis-[agrave]-vis co-location 
services. For consistency with this proposed change, the Exchange also 
proposes to change the term ``Hosted User'' as used in the ``Hosting 
Fee'' set forth in the Price List and the Fee Schedule, to ``Hosted 
Customer.'' Since, as noted above, only Users can be Hosting Users, a 
Hosted Customer may not provide hosting services to any other entities 
in the space in which it is hosted. Other than the change to the name 
of the definition, no other changes to the definition are intended and 
all current customers of a Hosting User would be ``Hosted Customers'' 
under the proposed definition.
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    \8\ A ``customer of a Hosting User,'' as used in the definition 
of a ``Hosted Customer'' would be any person that has a contractual 
relationship with a Hosting User to use that Hosting User's co-
location space. There is no limitation on the types of persons who 
could be Hosted Customers.
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Hosting Fee
    In the 2011 Releases, the Exchange amended its Price List and the 
Fee Schedule to establish a fee charged to Users of $500.00 per month 
with respect to each Hosted Customer (defined as ``Hosted User'' in the 
2011 Releases) that a User hosts in the Exchange's data center (the 
``Hosting Fee'').
    Effective January 1, 2016, the Exchange proposes to modify the 
Hosting Fee to provide that the Hosting Fee would be assessed to a 
Hosting User on a per Hosted Customer basis and for each cabinet in 
which the Hosting User hosts the Hosted Customer. This approach to 
hosting fees is comparable to the structure used by the NASDAQ Stock 
Market, Inc. (``NASDAQ'') in its Multi-Firm Cabinets Fee, and would 
similarly mean that a Hosting User would be assessed the Hosting Fee 
for each Hosted Customer that occupies space in a cabinet.\9\ Thus, for 
example, if a Hosting User hosts a Hosted Customer in two of the 
Hosting User's cabinets, the Hosting User would be charged two Hosting 
Fees, one for each cabinet in which the Hosted Customer is hosted. The 
Exchange also proposes to increase the monthly Hosting Fee from $500 
per Hosted Customer to $1,000 per Hosted Customer for each cabinet in 
which the Hosted Customer is hosted, effective January 1, 2016.
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    \9\ See Nasdaq Rule 7034(a) and Securities Exchange Act Release 
No. 71200 (Dec. 30, 2013), 79 FR 677 (Jan. 6, 2014) (SR-NASDAQ-2013-
57). [sic]
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    As is the case currently, Users may independently set fees for 
their Hosted Customers and the Exchange would not receive a share of 
any such fees.
General
    As is the case with all Exchange co-location arrangements (i) 
neither a User nor any of the User's customers would be permitted to 
submit orders directly to the Exchange unless such User or customer is 
a Member Organization, a Sponsored Participant or an agent thereof 
(e.g., a service bureau providing order entry services) and (ii) use of 
the co-location services proposed herein would be completely voluntary 
and available to all Users on a non-discriminatory basis.\10\ In 
addition, a User would only incur one charge for the particular co-
location service described herein, regardless of whether the User 
connects only to the Exchange or to the Exchange and one or both of its 
affiliates.\11\
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    \10\ As is currently the case, Users that receive co-location 
services from the Exchange will not receive any means of access to 
the Exchange's trading and execution systems that is separate from, 
or superior to, that of others with access to the Exchange's trading 
and execution systems. In this regard, all orders sent to the 
Exchange enter the Exchange's trading and execution systems through 
the same order gateway, regardless of whether the sender is co-
located in the data center or not. In addition, co-located Users do 
not receive any market data or data service product that is not 
available to users that have access to the Exchange's trading and 
execution systems, although Users that receive co-location services 
normally would expect reduced latencies in sending orders to, and 
receiving market data from, the Exchange.
    \11\ See SR-NYSEMKT-2013-67, supra note 6 at 50471. The 
Exchange's affiliates have also submitted substantially the same 
proposed rule change to propose the changes described herein. See 
SR-NYSE-2015-40 and SR-NYSEArca-2015-82.
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    The proposed change is not otherwise intended to address any other 
issues relating to co-location services and/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 Sections 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 mechanisms 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.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposal is not designed to permit 
unfair discrimination between

[[Page 60215]]

customers, issuers, broker, or dealers. First, the proposed addition of 
the definitions for User, Hosting User and Hosted Customer to the Price 
List and the Fee Schedule, would, by their addition to the Price List 
and the Fee Schedule, make the application of such definitions more 
accessible and transparent. There is no change to the definition of 
User. There is no change to the definition of ``Hosted User'' as 
described in the 2011 Releases other than to change the name to 
``Hosted Customer'' to add clarity to the use and the application of 
the definition. The proposed new term, ``Hosting User'' reflects the 
description of a User that hosts customers in its co-location space as 
set forth in the 2011 Releases. Finally, an entity that could be a 
User, a User that hosts customers and a Hosted User based on the 2011 
Releases, would be considered a User, Hosting User or Hosted Customer, 
respectively under the proposed definitions. The proposed definitions 
would be applied uniformly for comparable services provided by the 
Exchange.
    The Exchange believes that the proposal would remove impediments 
to, and perfect the mechanisms of, a free and open market and a 
national market system and, in general, protect investors and the 
public interest because by including definitions in the Price List and 
the Fee Schedule, the proposed change would provide Users with clarity 
as to the availability and application of co-location hosting services 
and fees.
    The proposed change to the Hosting Fee would be applied uniformly 
for comparable services provided by the Exchange to comparable Hosting 
Users and their customers and would not unfairly discriminate between 
similarly situated Hosting Users. The Exchange notes that assessing a 
fee per Hosted Customer per cabinet is comparable to the approach that 
NASDAQ takes to the same type of services in its Multi-Firm Cabinets 
Fee.\14\ The Exchange also notes that the Hosting Fee has not been 
changed since it was established in 2011. The Exchange believes the 
proposed Hosting Fee is reasonable in that the fee is designed to 
reflect the expenses and resources expended by the Exchange in 
connection with hosting services. In addition, while Hosting Users may 
independently set fees for their Hosted Customers, and the Exchange 
would not receive a share of any such fees, the Hosting Fee on a per 
Hosted Customer per cabinet basis continues to be lower than the fees a 
Hosted Customer would pay for co-location space purchased directly from 
the Exchange.
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    \14\ See supra note 9.
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    The Exchange also believes that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\15\ in particular, because 
it provides for the equitable allocation of reasonable dues, fees, and 
other charges among its Member Organizations, issuers and other persons 
using its facilities and does not unfairly discriminate between 
customers, issuers, brokers or dealers. Overall, the Exchange believes 
that the proposed change is consistent with the Act because the 
Exchange offers the co-location services described herein as a 
convenience to Users, but in so doing incurs certain costs, including 
costs related to the data center facility, hardware and equipment and 
costs related to personnel required for initial installation and 
ongoing monitoring, support and maintenance of such services.
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    \15\ 15 U.S.C. 78f(b)(4).
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    For the reasons above, the proposed change would not unfairly 
discriminate between or among market participants that are otherwise 
capable of satisfying any applicable co-location fees, requirements, 
terms and conditions established from time to time by the Exchange.
    Finally, the Exchange believes that it is subject to significant 
competitive forces, as described below in the Exchange's statement 
regarding the burden on competition.
    For these reasons, the Exchange believes that the proposal is 
consistent with the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\16\ the Exchange 
believes that the proposed rule change would not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act because any market participants that are otherwise 
capable of satisfying any applicable co-location fees, requirements, 
terms and conditions established from time to time by the Exchange 
could have access to the co-location services provided in the data 
center. This is also true because, in addition to the services being 
completely voluntary, they are available to all Users on an equal basis 
(i.e., the same range of products and services are available to all 
Users).
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    \16\ 15 U.S.C. 78f(b)(8).
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    The Exchange believes that incorporating the definitions of User, 
Hosting User and Hosted Customer into the Price List and the Fee 
Schedule, the change to the Hosting Fee and the change to the 
application of the Hosting Fee will not impose any burden on 
competition that is not necessary or appropriate in further of the 
purposes of the Act because the definitions have been previously filed 
with the Commission \17\ and their inclusion in the Price List and the 
Fee Schedule will provide further clarity in the application of the 
fees. The Exchange believes that the changes to the Hosting Fee will 
not impose any burden on competition that is not necessary or 
appropriate in further of the purposes of the Act because they are 
designed to reflect the expenses and resources expended by the Exchange 
in connection with hosting services and because NASDAQ takes the same 
approach to the same type of services in its Multi-Firm Cabinets 
Fee.\18\
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    \17\ See 2011 Releases, supra note 7.
    \18\ See supra note 9.
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    Finally, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues if, for example, they deem fee levels at a particular 
venue to be excessive or if they determine that another venue's 
products and services are more competitive than on the Exchange. In 
such an environment, the Exchange must continually review, and consider 
adjusting, the services it offers as well as any corresponding fees and 
credits to remain competitive with other exchanges. For the reasons 
described above, the Exchange believes that the proposed rule change 
reflects 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

    Because the foregoing 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 for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \19\ and Rule 19b-
4(f)(6) thereunder.\20\
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    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 17 CFR 240.19b-4(f)(6). Rule 19b-4(f)(6)(iii) requires a 
self-regulatory organization to provide the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and text of 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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[[Page 60216]]

    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSEMKT-2015-67 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-NYSEMKT-2015-67. 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 Web site (http://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 Web site 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 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSEMKT-2015-67 and should 
be submitted on or before October 26, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-25175 Filed 10-2-15; 8:45 am]
 BILLING CODE 8011-01-P

Federal Register / Vol. 80, No. 192 / Monday, October 5, 2015 / Notices 60213 Commission, and all written comments on the proposed rule change Definitions of User, Hosting User and communications relating to the from interested persons. Hosted Customer proposed rule change between the In 2011, the Exchange changed the I. Self-Regulatory Organization’s Commission and any person, other than definition of the term ‘‘User,’’ for the Statement of the Terms of Substance of those that may be withheld from the purposes of co-location services, to the Proposed Rule Change public in accordance with the include any market participant that provisions of 5 U.S.C. 552, will be The Exchange proposes to add requests to receive co-location services available for Web site viewing and definitions applicable to certain co- directly from the Exchange.7 As printing in the Commission’s Public location services to the NYSE MKT described in the 2011 Releases, Users Reference Room, 100 F Street NE., Equities Price List (‘‘Price List’’) and the could include member organizations, as Washington, DC 20549 on official NYSE Amex Options Fee Schedule that term is defined in the definitions business days between the hours of (‘‘Fee Schedule’’) and modify the fee for section of the General and Floor Rules 10:00 a.m. and 3:00 p.m. Copies of such users that host their customers at the of the NYSE MKT Equities Rules filing also will be available for Exchange’s Data Center. The text of the (‘‘Members’’), and ATP Holders, as that inspection and copying at the principal proposed rule change is available on the term is defined in NYSE Amex Options office of the Exchange. All comments Exchange’s Web site at www.nyse.com, Rule 900.2NY(5) (‘‘ATP Holders’’) received will be posted without change; at the principal office of the Exchange, (Members and ATP Holders together the Commission does not edit personal and at the Commission’s Public referred to herein as ‘‘Member identifying information from Reference Room. Organizations’’); Sponsored submissions. You should submit only II. Self-Regulatory Organization’s Participants, as that term is defined in information that you wish to make Statement of the Purpose of, and NYSE MKT Rule 123B.30(a)(ii)(B)— available publicly. All submissions Statutory Basis for, the Proposed Rule Equities and NYSE Amex Options Rule should refer to File Number SR–BATS– Change 900.2NY(77) (‘‘Sponsored 2015–76, and should be submitted on or Participants’’); and non-Member before October 26, 2015. In its filing with the Commission, the Organization broker-dealers and self-regulatory organization included For the Commission, by the Division of vendors that request to receive co- statements concerning the purpose of, Trading and Markets, pursuant to delegated location services directly from the and basis for, the proposed rule change authority.17 Exchange. At the time, the Exchange and discussed any comments it received Robert W. Errett, contemplated that such definition on the proposed rule change. The text would encompass Users that would Deputy Secretary. of those statements may be examined at provide, for example, hosting, service [FR Doc. 2015–25177 Filed 10–2–15; 8:45 am] the places specified in Item IV below. bureau, technical support, risk BILLING CODE 8011–01–P The Exchange has prepared summaries, management, order routing and market set forth in sections A, B, and C below, data delivery services to their customers of the most significant parts of such while such Users are co-located in the SECURITIES AND EXCHANGE statements. COMMISSION Exchange’s data center. A. Self-Regulatory Organization’s The Exchange proposes to add the Statement of the Purpose of, and the current definition of User to the Price [Release No. 34–76009; File No. SR– List and the Fee Schedule, without Statutory Basis for, the Proposed Rule NYSEMKT–2015–67] changes from the 2011 Releases, as Change follows: Self-Regulatory Organizations; NYSE 1. Purpose A ‘‘User’’ means any market MKT LLC; Notice of Filing and participant that requests to receive co- The Exchange operates a data center Immediate Effectiveness of Proposed location services directly from the in Mahwah, New Jersey, from which it Rule Change Adding Definitions Exchange. provides co-location services to Users.4 Applicable to Certain Co-location The proposed definition would, The Exchange’s co-location services Services and Modifying the Fee for consistent with the 2011 Releases, allow Users to rent space in the data Users That Host Their Customers at encompass Member Organizations, center so they may locate their the Exchange’s Data Center Sponsored Participants and non- electronic servers in close physical September 29, 2015. proximity to the Exchange’s trading and member broker-dealers, as well as execution system.5 The Exchange vendors that provide hosting, service Pursuant to Section 19(b)(1) 1 of the bureau and technical support, risk proposes to amend the Price List and Securities Exchange Act of 1934 (the management services, order routing the Fee Schedule as they apply to co- ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 services and market data delivery location services to add the definitions notice is hereby given that on services to their customers while such of User, Hosting User and Hosted September 18, 2015, NYSE MKT LLC Users are co-located in the Exchange’s Customer. The Exchange also proposes (the ‘‘Exchange’’ or ‘‘NYSE MKT’’) filed data center. Any entity that could be a to modify the fee for users that host with the Securities and Exchange their customers at the Exchange’s Data Commission (the ‘‘Commission’’) the particular co-location service pursuant thereto Center, effective January 1, 2016.6 proposed rule change as described in would not be subject to co-location fees for the Items I and II below, which Items have same co-location service charged by the Exchange’s 4 The Exchange initially filed rule changes affiliates New York Stock Exchange LLC and NYSE mstockstill on DSK4VPTVN1PROD with NOTICES been prepared by the self-regulatory relating to its co-location services with the Arca, Inc. See Securities Exchange Act Release No. organization. The Commission is Securities and Exchange Commission 70176 (August 13, 2013), 78 FR 50471 (August 19, publishing this notice to solicit (‘‘Commission’’) in 2010. See Securities Exchange 2013) (SR–NYSEMKT–2013–67). Act Release No. 62961 (September 21, 2010), 75 FR 7 See Securities Exchange Act Release Nos. 65974 59299 (September 27, 2010) (SR–NYSEAmex–2010– (December 15, 2011), 76 FR 79249 (December 21, 17 17 CFR 200.30–3(a)(12). 80). 2011) (SR–NYSEAmex–2011–81) and 65975 1 15 U.S.C. 78s(b)(1). 5 See id. at 59299. (December 15, 2011), 76 FR 79233 (December 21, 2 15 U.S.C. 78a. 6 As specified in the Price List and the Fee 2011) (SR–NYSEAmex–2011–82) (the ‘‘2011 3 17 CFR 240.19b–4. Schedule, a User that incurs co-location fees for a Releases’’). VerDate Sep<11>2014 18:34 Oct 02, 2015 Jkt 238001 PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 E:\FR\FM\05OCN1.SGM 05OCN1

60214 Federal Register / Vol. 80, No. 192 / Monday, October 5, 2015 / Notices User based on the term as described in have a direct contractual relationship customer is a Member Organization, a the 2011 Releases would be considered with the Exchange vis-à-vis co-location Sponsored Participant or an agent a User under the proposed definition. services. For consistency with this thereof (e.g., a service bureau providing The Exchange also proposes to make proposed change, the Exchange also order entry services) and (ii) use of the a non-substantive change to the proposes to change the term ‘‘Hosted co-location services proposed herein description in the Price List and the Fee User’’ as used in the ‘‘Hosting Fee’’ set would be completely voluntary and Schedule of the Exchange’s billing forth in the Price List and the Fee available to all Users on a non- practice for co-location services Schedule, to ‘‘Hosted Customer.’’ Since, discriminatory basis.10 In addition, a received by Users that connect to the as noted above, only Users can be User would only incur one charge for Exchange and one or more of its Hosting Users, a Hosted Customer may the particular co-location service affiliates, by replacing the term, ‘‘user,’’ not provide hosting services to any described herein, regardless of whether with the defined term, ‘‘User.’’ other entities in the space in which it is the User connects only to the Exchange In the 2011 Releases, the Exchange hosted. Other than the change to the or to the Exchange and one or both of also amended the Price List and the Fee name of the definition, no other changes its affiliates.11 Schedule to establish a fee applicable to to the definition are intended and all The proposed change is not otherwise Users that provide hosting services to current customers of a Hosting User intended to address any other issues their customers at the Exchange’s data would be ‘‘Hosted Customers’’ under relating to co-location services and/or center. As described in the 2011 the proposed definition. related fees, and the Exchange is not Releases, ‘‘hosting’’ is a service offered aware of any problems that Users would by a User to another entity in the User’s Hosting Fee have in complying with the proposed space within the data center and can In the 2011 Releases, the Exchange change. include, for example, a User supporting amended its Price List and the Fee such other entity’s technology, whether Schedule to establish a fee charged to 2. Statutory Basis hardware or software, through the Users of $500.00 per month with respect The Exchange believes that the User’s co-location space. The 2011 to each Hosted Customer (defined as proposed rule change is consistent with Releases used the term ‘‘Hosted User’’ to ‘‘Hosted User’’ in the 2011 Releases) Section 6(b) of the Act,12 in general, and describe a customer to which a User that a User hosts in the Exchange’s data furthers the objectives of Sections provides hosting services. center (the ‘‘Hosting Fee’’). 6(b)(5) of the Act,13 in particular, The Exchange now proposes to Effective January 1, 2016, the because it is designed to prevent include definitions relating to hosting Exchange proposes to modify the fraudulent and manipulative acts and services in the Price List and the Fee Hosting Fee to provide that the Hosting practices, to promote just and equitable Schedule, as follows: Fee would be assessed to a Hosting User principles of trade, to foster cooperation A ‘‘Hosting User’’ means a User that on a per Hosted Customer basis and for and coordination with persons engaged hosts a Hosted Customer in the User’s each cabinet in which the Hosting User in regulating, clearing, settling, co-location space. hosts the Hosted Customer. This processing information with respect to, A ‘‘Hosted Customer’’ means a approach to hosting fees is comparable and facilitating transactions in customer of a Hosting User that is to the structure used by the NASDAQ securities, to remove impediments to, hosted in a Hosting User’s co-location Stock Market, Inc. (‘‘NASDAQ’’) in its and perfect the mechanisms of, a free space. Multi-Firm Cabinets Fee, and would and open market and a national market The proposed definition of ‘‘Hosting similarly mean that a Hosting User system and, in general, to protect User’’ incorporates the description of a would be assessed the Hosting Fee for investors and the public interest and User that hosts customers in its co- each Hosted Customer that occupies because it is not designed to permit location space as set forth in the 2011 space in a cabinet.9 Thus, for example, unfair discrimination between Releases. For the avoidance of doubt, a if a Hosting User hosts a Hosted customers, issuers, brokers, or dealers. Hosting User must be a User pursuant The Exchange believes that the Customer in two of the Hosting User’s to the proposed definition of User. Any proposal is not designed to permit cabinets, the Hosting User would be User that could be a Hosting User based unfair discrimination between charged two Hosting Fees, one for each on the description of a User that hosts cabinet in which the Hosted Customer customers in the 2011 Releases would is hosted. The Exchange also proposes 10 As is currently the case, Users that receive co- be considered a Hosting User under the location services from the Exchange will not receive to increase the monthly Hosting Fee proposed definition. any means of access to the Exchange’s trading and The proposed definition of ‘‘Hosted from $500 per Hosted Customer to execution systems that is separate from, or superior Customer’’ would be a customer of a $1,000 per Hosted Customer for each to, that of others with access to the Exchange’s Hosting User that is hosted in a Hosting cabinet in which the Hosted Customer trading and execution systems. In this regard, all is hosted, effective January 1, 2016. orders sent to the Exchange enter the Exchange’s User’s co-location space, and would be trading and execution systems through the same As is the case currently, Users may order gateway, regardless of whether the sender is consistent with the description of the independently set fees for their Hosted co-located in the data center or not. In addition, co- term, ‘‘Hosted User’’ used in the 2011 Customers and the Exchange would not located Users do not receive any market data or data Releases.8 The Exchange proposes to service product that is not available to users that receive a share of any such fees. change the name of the term from have access to the Exchange’s trading and execution ‘‘Hosted User’’ to ‘‘Hosted Customer’’ to General systems, although Users that receive co-location services normally would expect reduced latencies make it clear that the entities that are As is the case with all Exchange co- in sending orders to, and receiving market data mstockstill on DSK4VPTVN1PROD with NOTICES hosted are customers of the Hosting location arrangements (i) neither a User from, the Exchange. Users that do not, in contrast to Users, nor any of the User’s customers would 11 See SR–NYSEMKT–2013–67, supra note 6 at 50471. The Exchange’s affiliates have also 8 A ‘‘customer of a Hosting User,’’ as used in the be permitted to submit orders directly to submitted substantially the same proposed rule definition of a ‘‘Hosted Customer’’ would be any the Exchange unless such User or change to propose the changes described herein. person that has a contractual relationship with a See SR–NYSE–2015–40 and SR–NYSEArca–2015– Hosting User to use that Hosting User’s co-location 9 See Nasdaq Rule 7034(a) and Securities 82. 12 15 U.S.C. 78f(b). space. There is no limitation on the types of persons Exchange Act Release No. 71200 (Dec. 30, 2013), 79 who could be Hosted Customers. FR 677 (Jan. 6, 2014) (SR–NASDAQ–2013–57). [sic] 13 15 U.S.C. 78f(b)(5). VerDate Sep<11>2014 18:34 Oct 02, 2015 Jkt 238001 PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 E:\FR\FM\05OCN1.SGM 05OCN1

Federal Register / Vol. 80, No. 192 / Monday, October 5, 2015 / Notices 60215 customers, issuers, broker, or dealers. location space purchased directly from change to the application of the Hosting First, the proposed addition of the the Exchange. Fee will not impose any burden on definitions for User, Hosting User and The Exchange also believes that the competition that is not necessary or Hosted Customer to the Price List and proposed rule change is consistent with appropriate in further of the purposes of the Fee Schedule, would, by their Section 6(b)(4) of the Act,15 in the Act because the definitions have addition to the Price List and the Fee particular, because it provides for the been previously filed with the Schedule, make the application of such equitable allocation of reasonable dues, Commission 17 and their inclusion in definitions more accessible and fees, and other charges among its the Price List and the Fee Schedule will transparent. There is no change to the Member Organizations, issuers and provide further clarity in the application definition of User. There is no change to other persons using its facilities and of the fees. The Exchange believes that the definition of ‘‘Hosted User’’ as does not unfairly discriminate between the changes to the Hosting Fee will not described in the 2011 Releases other customers, issuers, brokers or dealers. impose any burden on competition that than to change the name to ‘‘Hosted Overall, the Exchange believes that the is not necessary or appropriate in Customer’’ to add clarity to the use and proposed change is consistent with the further of the purposes of the Act the application of the definition. The Act because the Exchange offers the co- because they are designed to reflect the proposed new term, ‘‘Hosting User’’ location services described herein as a expenses and resources expended by the reflects the description of a User that convenience to Users, but in so doing Exchange in connection with hosting hosts customers in its co-location space incurs certain costs, including costs services and because NASDAQ takes the as set forth in the 2011 Releases. related to the data center facility, same approach to the same type of Finally, an entity that could be a User, hardware and equipment and costs services in its Multi-Firm Cabinets a User that hosts customers and a related to personnel required for initial Fee.18 Hosted User based on the 2011 Releases, installation and ongoing monitoring, Finally, the Exchange notes that it would be considered a User, Hosting support and maintenance of such operates in a highly competitive market User or Hosted Customer, respectively services. in which market participants can under the proposed definitions. The For the reasons above, the proposed readily favor competing venues if, for proposed definitions would be applied change would not unfairly discriminate example, they deem fee levels at a uniformly for comparable services between or among market participants particular venue to be excessive or if provided by the Exchange. that are otherwise capable of satisfying they determine that another venue’s The Exchange believes that the any applicable co-location fees, products and services are more proposal would remove impediments to, requirements, terms and conditions competitive than on the Exchange. In and perfect the mechanisms of, a free established from time to time by the such an environment, the Exchange and open market and a national market Exchange. must continually review, and consider system and, in general, protect investors Finally, the Exchange believes that it adjusting, the services it offers as well and the public interest because by is subject to significant competitive as any corresponding fees and credits to including definitions in the Price List forces, as described below in the remain competitive with other and the Fee Schedule, the proposed Exchange’s statement regarding the exchanges. For the reasons described change would provide Users with burden on competition. above, the Exchange believes that the clarity as to the availability and For these reasons, the Exchange proposed rule change reflects this application of co-location hosting believes that the proposal is consistent competitive environment. services and fees. with the Act. The proposed change to the Hosting C. Self-Regulatory Organization’s Fee would be applied uniformly for B. Self-Regulatory Organization’s Statement on Comments on the comparable services provided by the Statement on Burden on Competition Proposed Rule Change Received From Exchange to comparable Hosting Users In accordance with Section 6(b)(8) of Members, Participants or Others and their customers and would not the Act,16 the Exchange believes that the No written comments were solicited unfairly discriminate between similarly proposed rule change would not impose or received with respect to the proposed situated Hosting Users. The Exchange any burden on competition that is not rule change. notes that assessing a fee per Hosted necessary or appropriate in furtherance III. Date of Effectiveness of the Customer per cabinet is comparable to of the purposes of the Act because any Proposed Rule Change and Timing for the approach that NASDAQ takes to the market participants that are otherwise Commission Action same type of services in its Multi-Firm capable of satisfying any applicable co- Cabinets Fee.14 The Exchange also notes location fees, requirements, terms and Because the foregoing proposed rule that the Hosting Fee has not been conditions established from time to time change does not: (i) Significantly affect changed since it was established in by the Exchange could have access to the protection of investors or the public 2011. The Exchange believes the the co-location services provided in the interest; (ii) impose any significant proposed Hosting Fee is reasonable in data center. This is also true because, in burden on competition; and (iii) become that the fee is designed to reflect the addition to the services being operative for 30 days from the date on expenses and resources expended by the completely voluntary, they are available which it was filed, or such shorter time Exchange in connection with hosting to all Users on an equal basis (i.e., the as the Commission may designate, it has services. In addition, while Hosting same range of products and services are become effective pursuant to Section Users may independently set fees for available to all Users). 19(b)(3)(A) of the Act 19 and Rule 19b– mstockstill on DSK4VPTVN1PROD with NOTICES their Hosted Customers, and the The Exchange believes that 4(f)(6) thereunder.20 Exchange would not receive a share of incorporating the definitions of User, 17 See 2011 Releases, supra note 7. any such fees, the Hosting Fee on a per Hosting User and Hosted Customer into 18 See supra note 9. Hosted Customer per cabinet basis the Price List and the Fee Schedule, the 19 15 U.S.C. 78s(b)(3)(A). continues to be lower than the fees a change to the Hosting Fee and the 20 17 CFR 240.19b–4(f)(6). Rule 19b–4(f)(6)(iii) Hosted Customer would pay for co- requires a self-regulatory organization to provide 15 15 U.S.C. 78f(b)(4). the Commission with written notice of its intent to 14 See supra note 9. 16 15 U.S.C. 78f(b)(8). Continued VerDate Sep<11>2014 18:34 Oct 02, 2015 Jkt 238001 PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 E:\FR\FM\05OCN1.SGM 05OCN1

60216 Federal Register / Vol. 80, No. 192 / Monday, October 5, 2015 / Notices At any time within 60 days of the business days between the hours of the Commission’s Public Reference filing of the proposed rule change, the 10:00 a.m. and 3:00 p.m. Copies of the Room. Commission summarily may filing also will be available for II. Self-Regulatory Organization’s temporarily suspend such rule change if inspection and copying at the principal Statement of the Purpose of, and it appears to the Commission that such office of the Exchange. All comments Statutory Basis for, the Proposed Rule action is necessary or appropriate in the received will be posted without change; Change public interest, for the protection of the Commission does not edit personal investors, or otherwise in furtherance of identifying information from In its filing with the Commission, the the purposes of the Act. If the submissions. You should submit only Exchange included statements Commission takes such action, the information that you wish to make concerning the purpose of and basis for Commission shall institute proceedings available publicly. All submissions the proposed rule change and discussed to determine whether the proposed rule should refer to File Number SR– any comments it received on the change should be approved or NYSEMKT–2015–67 andshould be proposed rule change. The text of these disapproved. submitted on or before October 26, statements may be examined at the 2015. places specified in Item IV below. The IV. Solicitation of Comments Exchange has prepared summaries, set For the Commission, by the Division of Interested persons are invited to Trading and Markets, pursuant to delegated forth in Sections A, B, and C below, of submit written data, views, and authority.21 the most significant parts of such arguments concerning the foregoing, Robert W. Errett, statements. including whether the proposed rule Deputy Secretary. A. Self-Regulatory Organization’s change is consistent with the Act. [FR Doc. 2015–25175 Filed 10–2–15; 8:45 am] Statement of the Purpose of, and Comments may be submitted by any of BILLING CODE 8011–01–P Statutory Basis for, the Proposed Rule the following methods: Change Electronic Comments: 1. Purpose • Use the Commission’s Internet SECURITIES AND EXCHANGE COMMISSION In early 2014, the Exchange and its comment form (http://www.sec.gov/ affiliate, EDGA Exchange, Inc. rules/sro.shtml); or [Release No. 34–76018; File No. SR–EDGX– (‘‘EDGA’’) received approval to effect a • Send an email to rule-comments@ 2015–42] merger (the ‘‘Merger’’) of the Exchange’s sec.gov. Please include File Number Self-Regulatory Organizations; EDGX parent company, Direct Edge Holdings SR–NYSEMKT–2015–67 on the subject Exchange, Inc.; Notice of Filing and LLC, with BATS Global Markets, Inc., line. Immediate Effectiveness of a Proposed the parent of BZX and the BATS Y- Paper Comments: Rule Change To Amend Rule 11.15, Exchange, Inc. (‘‘BYX’’, together with • Send paper comments in triplicate Clearly Erroneous Executions BZX, EDGA and EDGX, the ‘‘BGM to Secretary, Securities and Exchange Affiliated Exchanges’’).4 In the context Commission, 100 F Street NE., September 29, 2015. of the Merger, the BGM Affiliated Washington, DC 20549–1090. Pursuant to Section 19(b)(1) of the Exchanges are working to align their Securities Exchange Act of 1934 (the rules, retaining only intended All submissions should refer to File ‘‘Act’’),1 and Rule 19b–4 thereunder,2 differences between the BGM Affiliated Number SR–NYSEMKT–2015–67. This notice is hereby given that on Exchanges. Thus, the Exchange file number should be included on the September 21, 2015, EDGX Exchange, proposes to restructure and amend Rule subject line if email is used. To help the Inc. (the ‘‘Exchange’’ or ‘‘EDGX’’) filed 11.15, Clearly Erroneous Executions, in Commission process and review your with the Securities and Exchange order to conform to the corresponding comments more efficiently, please use Commission (‘‘Commission’’) the rules of BYX and BZX and provide a only one method. The Commission will proposed rule change as described in consistent rule set across each of the post all comments on the Commission’s Items I, II, and III below, which items BGM Affiliated Exchanges.5 Internet Web site (http://www.sec.gov/ rules/sro.shtml). Copies of the have been prepared by the Exchange. Background submission, all subsequent The Commission is publishing this notice to solicit comments on the On September 10, 2010, the amendments, all written statements Commission approved, on a pilot basis, with respect to the proposed rule proposed rule change from interested persons. changes to Exchange Rule 11.15 to change that are filed with the provide for uniform treatment: (1) Of Commission, and all written I. Self-Regulatory Organization’s clearly erroneous 6 execution reviews in communications relating to the Statement of the Terms of Substance of multi-stock events involving twenty or proposed rule change between the the Proposed Rule Change Commission and any person, other than The Exchange filed a proposal to 4 See Securities Exchange Act Release No. 71449 those that may be withheld from the amend Rule 11.15, Clearly Erroneous (January 30, 2014), 79 FR 6961 (February 5, 2014) public in accordance with the (SR–EDGX–2013–43; SR–EDGA–2013–34). Executions, in order to conform to the 5 The Exchange notes that EDGA intends to file provisions of 5 U.S.C. 552, will be rules of BATS Exchange, Inc. (‘‘BZX’’) an identical proposal with the Commission to available for Web site viewing and and BATS Y-Exchange, Inc. (‘‘BYX’’).3 restructure and amend its Rule 11.15, Clearly printing in the Commission’s Public The text of the proposed rule change Erroneous Executions, to conform to BYX and BZX Rules 11.17. mstockstill on DSK4VPTVN1PROD with NOTICES Reference Room, 100 F Street NE., is available at the Exchange’s Web site 6 The terms of a transaction executed on the Washington, DC 20549, on official at www.batstrading.com, at the Exchange are ‘‘clearly erroneous’’ when there is an principal office of the Exchange, and at obvious error in any term, such as price, number file the proposed rule change, along with a brief of shares or other unit of trading, or identification description and text of the proposed rule change, 21 17 of the security. A transaction made in clearly at least five business days prior to the date of filing CFR 200.30–3(a)(12). erroneous error and cancelled by both parties or 1 15 U.S.C. 78s(b)(1). of the proposed rule change, or such shorter time determined by the Exchange to be clearly erroneous 2 17 CFR 240.19b–4. as designated by the Commission. The Exchange will be removed from the Consolidated Tape. See has satisfied this requirement. 3 See BYX and BZX Rule 11.17. Exchange Rule 11.15(a). VerDate Sep<11>2014 18:34 Oct 02, 2015 Jkt 238001 PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 E:\FR\FM\05OCN1.SGM 05OCN1


Document Created: 2015-12-15 08:53:17
Document Modified: 2015-12-15 08:53:17
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation80 FR 60213 
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