81_FR_24994 81 FR 24913 - Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a Proposed Rule Change, as Modified by Amendment No. 1, To Establish Procedures for the Allocation of Cages to Co-Located Users, Including the Waiver of Certain Fees, and To Amend the Visitor Security Escort Fee

81 FR 24913 - Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a Proposed Rule Change, as Modified by Amendment No. 1, To Establish Procedures for the Allocation of Cages to Co-Located Users, Including the Waiver of Certain Fees, and To Amend the Visitor Security Escort Fee

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 81 (April 27, 2016)

Page Range24913-24915
FR Document2016-09725

Federal Register, Volume 81 Issue 81 (Wednesday, April 27, 2016)
[Federal Register Volume 81, Number 81 (Wednesday, April 27, 2016)]
[Notices]
[Pages 24913-24915]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-09725]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77682; File No. SR-NYSEARCA-2016-21]


Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a 
Proposed Rule Change, as Modified by Amendment No. 1, To Establish 
Procedures for the Allocation of Cages to Co-Located Users, Including 
the Waiver of Certain Fees, and To Amend the Visitor Security Escort 
Fee

April 21, 2016.

I. Introduction

    On February 23, 2016 NYSE Arca, Inc. (``the Exchange'') filed with 
the Securities and Exchange Commission (``Commission''), pursuant to 
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ 
and Rule 19b-4 thereunder,\2\ a proposed rule change to establish 
procedures for the allocation of cages to co-located Users, including 
the waiver of certain fees, and to amend the visitor security escort 
fee. On March 1, 2016, the Exchange filed Amendment No. 1 to the 
proposed rule change. The proposed rule change, as modified by 
Amendment No. 1, was published for comment in the Federal Register on 
March 11, 2016.\3\ There were no comments on the proposed rule 
change.\4\ This order approves the proposed rule change, as modified by 
Amendment No. 1.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 34-77303 (March 7, 
2016), 81 FR 13003 (``Notice''). Amendment No.1 was included in the 
Notice and provided certain clarifications, including that the 
proposed waiver of fees for two bundles of 24 cross connects, 
applicable while a User is on the waitlist, would only apply to 
cross-connects used to connect an individual User's non-contiguous 
cabinets.
    \4\ The Commission notes that it received one letter referencing 
this filing that addresses issues outside the scope of this 
proposal.
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II. Background and Description of the Proposal, as Modified by 
Amendment No. 1

    The Exchange proposes to establish procedures for the allocation of 
cages to its co-located Users,\5\ including the waiver of certain fees 
subject to specified conditions, and to amend the visitor security 
escort fee.\6\ The Exchange proposes to amend the NYSE Arca Equities 
Schedule of Fees and Charges for Exchange Services (``Schedule of 
Fees'') and the NYSE Arca Options Fee Schedule (``Fee Schedule'') to 
reflect the changes.\7\
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    \5\ For purposes of the Exchange's co-location services, a 
``User'' means any market participant that requests to receive co-
location services directly from the Exchange. The Exchange provides 
co-location services to Users from its data center (``Data Center'') 
in Mahwah, New Jersey.
    \6\ See Notice, 81 FR at 13003.
    \7\ See id.
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    As more fully set forth in the Notice, the Exchange offers Users 
the ability to rent cages to house their cabinets in the Data 
Center,\8\ and historically has offered these cages on a first come/
first serve basis.\9\ The Exchange states that a cage typically is 
purchased by a User that has several cabinets within
    Data Center and wishes to arrange its cabinets contiguously while 
also enhancing privacy around its cabinets.\10\ The Exchange offers 
three cage sizes, corresponding to the number of cabinets housed 
therein, and charges fees for the cages based on the size.\11\ The 
physical footprint of each cage is greater than that of the cabinets 
that it houses, as each cage is constructed so as to include aisles 
around the purchasing User's cabinets, for accessibility and to comply 
with safety regulations.\12\ In order to offer the cages, the Exchange 
must have sufficient contiguous open space available for the cage.\13\
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    \8\ See id. A User must have at least two cabinets in the Data 
Center to purchase a cage. See id.
    \9\ See id.
    \10\ See id.
    \11\ See id.
    \12\ See id.
    \13\ See Notice, 81 FR at 13003-13004.
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    In 2015, the Exchange determined that to continue to be able to 
meet its obligation to accommodate demand, and in particular to make 
available more contiguous, larger spaces for new and existing Users, it 
would exercise its right to move some Users' equipment within the
    Data Center (the ``Migration'').\14\ The Exchange established 
procedures to manage the Migration process, and

[[Page 24914]]

continues to implement them.\15\ The Exchange states that, 
notwithstanding the Migration, contiguous open space will still be 
limited, and may become more limited over time.\16\
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    \14\ See Notice, 81 FR at 13004; see also Securities Exchange 
Act Release No. 76269 (October 26, 2015), 80 FR 66947 (October 30, 
2015) (SR-NYSE-2015-42); Securities Exchange Act Release No. 76268 
(October 26, 2015), 80 FR 66944 (October 30, 2015) (SR-NYSEMKT-2015-
70); Securities Exchange Act Release No. 76270 (October 26, 2015), 
80 FR 66944 (October 30, 2015) (SR-NYSEArca-2015-85) (collectively 
``Migration Filing'').
    \15\ See Notice, 81 FR at 13004; see also Migration Filing supra 
note 14.
    \16\ See Notice, 81 FR at 13004.
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Proposed Cage Allocation Procedure

    The Exchange has proposed to establish procedures governing the 
allocation of cages should the currently available open contiguous 
space in the Data Center be insufficient to house a new cage or if the 
open contiguous space available is sufficiently limited such that the 
Exchange cannot both provide new cages and satisfy all User demand for 
other co-location services.\17\ Specifically, the Exchange proposes 
that it will place Users seeking new cages on a waitlist: (1) The order 
of Users on the list will be based on the date the Exchange receives 
signed orders for the cages from each User; (2) once the list is 
established, Users, on a rolling basis, will be allocated a cage each 
time one becomes available; (3) if a cage becomes available and the 
User that is at the top of the waitlist turns it down because it 
requested a different size, that User will remain on the waitlist and 
the cage will be offered to the next User on the list, in order, until 
a User accepts it; (4) a User that turns down a cage that is the size 
that it requested will be removed from the waitlist; and (5) if a User 
requests two cages, that User will be moved to the bottom of the 
waitlist upon the receipt of its first cage.\18\
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    \17\ See id.
    \18\ See id.
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    In connection with the proposed waitlist procedures, the Exchange 
further proposes to add General Note 3 to the Schedule of Fees and Fee 
Schedule,\19\ to provide that the Exchange would, subject to specified 
conditions, waive the initial and monthly fee for two bundles of 24 
cross connects between a User's non-contiguous cabinets while it is on 
the waitlist.\20\ Specifically, the initial and monthly charge for two 
bundles of 24 cross connects will be waived for a User that is 
waitlisted for a cage for the duration of the waitlist period, provided 
that the cross connects may only be used to connect the User's non-
contiguous cabinets.\21\ The charge will no longer be waived once a 
User is removed from the waitlist.\22\ In addition, a User that is 
removed from the waitlist but subsequently requests a cage will be 
added back to the bottom of the waitlist, provided that, if the User 
was removed from the waitlist because it turned down a cage that is the 
size that it requested, it will not receive a second waiver of the 
charge.\23\
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    \19\ See id.
    \20\ See id.
    \21\ See id.
    \22\ As noted above, a User that turns down a cage because it is 
not the correct size will remain on the waitlist. A User that 
requests to be removed or that turns down a cage that is the size 
that it requested will be removed from the waitlist. See supra note 
18 and accompanying text.
    \23\ See Notice, 81 FR at 13004.
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Visitor Security Escorts

    The Exchange also proposes to amend its visitor security escort 
fee. Currently, a User visiting its cabinet(s) in the Data Center is 
required to pay a $75/hour fee for a security escort.\24\ The Exchange 
proposes to eliminate this fee for Users visiting their own cage in the 
Data Center,\25\ and change the fee for those not visiting their own 
cage from $75/hour to $75/visit.\26\ The Exchange states that a 
security escort is not needed when a User visits its own cage because 
that User would have access only to its own cabinets locked within its 
own cage,\27\ and that User will not have access to the cabinets of 
other Users or Exchange equipment, which are locked as well.\28\
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    \24\ See Notice, 81 FR at 13005.
    \25\ See id. The Exchange is also making a technical change to 
the visitor fee on the Schedule of Fees and Fee Schedule to add 
clarity. See id.
    \26\ See id. The Exchange stated that many of the escorted 
visits lasted an hour or less. See id.
    \27\ See Notice, 81 FR at 13004.
    \28\ See id.
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III. Discussion and Commission Findings

    After careful review and consideration of the Exchange's proposal, 
the Commission finds that the proposed rule change, as modified by 
Amendment No. 1, is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
exchange.\29\ In particular, the Commission finds that the proposed 
rule change, as modified by Amendment No. 1, is consistent with Section 
6(b)(4) of the Act,\30\ which requires that the rules of a national 
securities exchange provide for the equitable allocation of reasonable 
dues, fees and other charges among its members and issuers and other 
persons using its facilities, and with Section 6(b)(5) of the Act,\31\ 
which requires, among other things, that the rules of a national 
securities exchange be designed to promote just and equitable 
principles of trade, 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 not be designed to 
permit unfair discrimination between customers, issuers, brokers, or 
dealers.
---------------------------------------------------------------------------

    \29\ In approving this proposed rule change, as modified by 
Amendment No. 1, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. See 15 
U.S.C. 78c(f).
    \30\ 15 U.S.C. 78f(b)(4).
    \31\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission believes that the proposed procedures for the 
allocation of cages to its co-located Users and associated waiver of 
fees subject to specified conditions are consistent with Sections 
6(b)(4) and 6(b)(5) of the Act. In particular, the Commission believes 
that the proposed cage allocation and waitlist procedures are 
reasonably designed to assist the Exchange in offering cages to current 
and future Users in the Data Center on terms that are equitable and not 
unfairly discriminatory in the event that available open contiguous 
space in the Data Center is not sufficient to house a newly requested 
cage or sufficiently limited that the Exchange cannot both provide new 
cages and satisfy all User demand for other co-location services. The 
Commission further believes that the proposal to waive the initial and 
monthly fee for two bundles of 24 cross connects between a User's non-
contiguous cabinets while a User is on the waitlist is consistent with 
the Act. Users can qualify for the fee waiver by requesting a cage and 
being placed on the waitlist until a cage becomes available to them. 
Once the Exchange offers the requested size cage to a User through the 
allocation procedure or when a User is removed from the waitlist, the 
fee would no longer be waived. In addition, if a User was removed from 
the waitlist because it turned down a cage that was the size that it 
requested, it would not receive a second waiver of the charge. The 
Commission believes that the proposed fee waiver and associated 
conditions are reasonably designed to alleviate the inconvenience for 
waitlisted Users of having cabinets in non-contiguous spaces by 
removing the cost that those Users would otherwise avoid if a cage were 
available.
    The Commission also finds the proposed amendments to the visitor 
security escort fee consistent with Sections 6(b)(4) and 6(b)(5) of the 
Act. The Exchange represents that a security escort is not needed when 
a User visits its own cage because that User would have access only to 
its own cabinets locked within its own cage,\32\ and will not have 
access to the cabinets of other Users or Exchange equipment, which

[[Page 24915]]

are locked as well.\33\ In addition, the proposed rate of $75/visit for 
the visitor security escort would be a fee reduction for any visit that 
lasted more than an hour, and so it would reduce the burden placed on 
Users that remain subject to the fee. Therefore, the Commission finds 
the proposed amendments to the visitor security escort fee to be 
reasonable, equitable, and not unfairly discriminatory.
---------------------------------------------------------------------------

    \32\ See supra notes 27-28 and accompanying text.
    \33\ See id.
---------------------------------------------------------------------------

    For the foregoing reasons, the Commission finds that the proposed 
rule change, as modified by Amendment No. 1, is consistent with the 
Act.

VII. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\34\ that the proposed rule change, as modified by Amendment No.1, 
(File No. SR-NYSEARCA-2016-21) be, and hereby is, approved.
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    \34\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\35\
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    \35\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-09725 Filed 4-26-16; 8:45 am]
 BILLING CODE 8011-01-P



                                                                                 Federal Register / Vol. 81, No. 81 / Wednesday, April 27, 2016 / Notices                                                       24913

                                                    action is: (i) Necessary or appropriate in                All submissions should refer to File                  its co-located Users,5 including the
                                                    the public interest; (ii) for the protection            Number SR–Phlx–2016–51 and should                       waiver of certain fees subject to
                                                    of investors; or (iii) otherwise in                     be submitted on or before May 18, 2016.                 specified conditions, and to amend the
                                                    furtherance of the purposes of the Act.                   For the Commission, by the Division of                visitor security escort fee.6 The
                                                    If the Commission takes such action, the                Trading and Markets, pursuant to delegated              Exchange proposes to amend the NYSE
                                                    Commission shall institute proceedings                  authority.39                                            Arca Equities Schedule of Fees and
                                                    to determine whether the proposed rule                  Brent J. Fields,                                        Charges for Exchange Services
                                                    should be approved or disapproved.                      Secretary.                                              (‘‘Schedule of Fees’’) and the NYSE
                                                    IV. Solicitation of Comments                            [FR Doc. 2016–09716 Filed 4–26–16; 8:45 am]             Arca Options Fee Schedule (‘‘Fee
                                                                                                            BILLING CODE 8011–01–P                                  Schedule’’) to reflect the changes.7
                                                      Interested persons are invited to                                                                                As more fully set forth in the Notice,
                                                    submit written data, views, and                                                                                 the Exchange offers Users the ability to
                                                    arguments concerning the foregoing,                     SECURITIES AND EXCHANGE                                 rent cages to house their cabinets in the
                                                    including whether the proposed rule                     COMMISSION                                              Data Center,8 and historically has
                                                    change is consistent with the Act.
                                                                                                            [Release No. 34–77682; File No. SR–                     offered these cages on a first come/first
                                                    Comments may be submitted by any of                     NYSEARCA–2016–21]                                       serve basis.9 The Exchange states that a
                                                    the following methods:
                                                                                                                                                                    cage typically is purchased by a User
                                                    Electronic Comments                                     Self-Regulatory Organizations; NYSE                     that has several cabinets within
                                                                                                            Arca, Inc.; Order Approving a
                                                      • Use the Commission’s Internet                       Proposed Rule Change, as Modified by                       Data Center and wishes to arrange its
                                                    comment form (http://www.sec.gov/                       Amendment No. 1, To Establish                           cabinets contiguously while also
                                                    rules/sro.shtml); or                                    Procedures for the Allocation of Cages                  enhancing privacy around its cabinets.10
                                                                                                                                                                    The Exchange offers three cage sizes,
                                                      • Send an email to rule-comments@                     to Co-Located Users, Including the
                                                                                                            Waiver of Certain Fees, and To Amend                    corresponding to the number of cabinets
                                                    sec.gov. Please include File Number SR–
                                                                                                            the Visitor Security Escort Fee                         housed therein, and charges fees for the
                                                    Phlx–2016–51 on the subject line.
                                                                                                                                                                    cages based on the size.11 The physical
                                                    Paper Comments                                          April 21, 2016.                                         footprint of each cage is greater than
                                                                                                            I. Introduction                                         that of the cabinets that it houses, as
                                                      • Send paper comments in triplicate                                                                           each cage is constructed so as to include
                                                    to Secretary, Securities and Exchange                      On February 23, 2016 NYSE Arca, Inc.                 aisles around the purchasing User’s
                                                    Commission, 100 F Street NE.,                           (‘‘the Exchange’’) filed with the                       cabinets, for accessibility and to comply
                                                    Washington, DC 20549–1090.                              Securities and Exchange Commission                      with safety regulations.12 In order to
                                                    All submissions should refer to File                    (‘‘Commission’’), pursuant to Section                   offer the cages, the Exchange must have
                                                    Number SR–Phlx–2016–51. This file                       19(b)(1) of the Securities Exchange Act                 sufficient contiguous open space
                                                    number should be included on the                        of 1934 (‘‘Act’’) 1 and Rule 19b–4                      available for the cage.13
                                                    subject line if email is used. To help the              thereunder,2 a proposed rule change to
                                                                                                            establish procedures for the allocation                    In 2015, the Exchange determined
                                                    Commission process and review your                                                                              that to continue to be able to meet its
                                                    comments more efficiently, please use                   of cages to co-located Users, including
                                                                                                            the waiver of certain fees, and to amend                obligation to accommodate demand, and
                                                    only one method. The Commission will                                                                            in particular to make available more
                                                    post all comments on the Commission’s                   the visitor security escort fee. On March
                                                                                                            1, 2016, the Exchange filed Amendment                   contiguous, larger spaces for new and
                                                    Internet Web site (http://www.sec.gov/
                                                                                                            No. 1 to the proposed rule change. The                  existing Users, it would exercise its
                                                    rules/sro.shtml).
                                                                                                            proposed rule change, as modified by                    right to move some Users’ equipment
                                                       Copies of the submission, all                                                                                within the
                                                                                                            Amendment No. 1, was published for
                                                    subsequent amendments, all written
                                                                                                            comment in the Federal Register on                         Data Center (the ‘‘Migration’’).14 The
                                                    statements with respect to the proposed
                                                                                                            March 11, 2016.3 There were no                          Exchange established procedures to
                                                    rule change that are filed with the
                                                                                                            comments on the proposed rule                           manage the Migration process, and
                                                    Commission, and all written
                                                                                                            change.4 This order approves the
                                                    communications relating to the
                                                                                                            proposed rule change, as modified by                       5 For purposes of the Exchange’s co-location
                                                    proposed rule change between the                                                                                services, a ‘‘User’’ means any market participant
                                                                                                            Amendment No. 1.
                                                    Commission and any person, other than                                                                           that requests to receive co-location services directly
                                                    those that may be withheld from the                     II. Background and Description of the                   from the Exchange. The Exchange provides co-
                                                    public in accordance with the                           Proposal, as Modified by Amendment                      location services to Users from its data center
                                                                                                                                                                    (‘‘Data Center’’) in Mahwah, New Jersey.
                                                    provisions of 5 U.S.C. 552, will be                     No. 1                                                      6 See Notice, 81 FR at 13003.
                                                    available for Web site viewing and                         The Exchange proposes to establish                      7 See id.
                                                    printing in the Commission’s Public                     procedures for the allocation of cages to                  8 See id. A User must have at least two cabinets

                                                    Reference Room, 100 F Street NE.,                                                                               in the Data Center to purchase a cage. See id.
                                                    Washington, DC 20549, on official                         39 17 CFR 200.30–3(a)(12).
                                                                                                                                                                       9 See id.

                                                    business days between the hours of                        1 15 U.S.C. 78s(b)(1).
                                                                                                                                                                       10 See id.

                                                                                                                                                                       11 See id.
                                                    10:00 a.m. and 3:00 p.m. Copies of the                    2 17 CFR 240.19b–4.
                                                                                                                                                                       12 See id.
                                                    filing also will be available for                         3 See Securities Exchange Act Release No. 34–
asabaliauskas on DSK3SPTVN1PROD with NOTICES




                                                                                                                                                                       13 See Notice, 81 FR at 13003–13004.
                                                    inspection and copying at the principal                 77303 (March 7, 2016), 81 FR 13003 (‘‘Notice’’).
                                                                                                            Amendment No.1 was included in the Notice and              14 See Notice, 81 FR at 13004; see also Securities
                                                    office of the Exchange. All comments                    provided certain clarifications, including that the     Exchange Act Release No. 76269 (October 26, 2015),
                                                    received will be posted without change;                 proposed waiver of fees for two bundles of 24 cross     80 FR 66947 (October 30, 2015) (SR–NYSE–2015–
                                                    the Commission does not edit personal                   connects, applicable while a User is on the waitlist,   42); Securities Exchange Act Release No. 76268
                                                    identifying information from                            would only apply to cross-connects used to connect      (October 26, 2015), 80 FR 66944 (October 30, 2015)
                                                                                                            an individual User’s non-contiguous cabinets.           (SR–NYSEMKT–2015–70); Securities Exchange Act
                                                    submissions. You should submit only                       4 The Commission notes that it received one letter    Release No. 76270 (October 26, 2015), 80 FR 66944
                                                    information that you wish to make                       referencing this filing that addresses issues outside   (October 30, 2015) (SR–NYSEArca–2015–85)
                                                    available publicly.                                     the scope of this proposal.                             (collectively ‘‘Migration Filing’’).



                                               VerDate Sep<11>2014   17:29 Apr 26, 2016   Jkt 238001   PO 00000   Frm 00131   Fmt 4703   Sfmt 4703   E:\FR\FM\27APN1.SGM    27APN1


                                                    24914                         Federal Register / Vol. 81, No. 81 / Wednesday, April 27, 2016 / Notices

                                                    continues to implement them.15 The                      a User that is removed from the waitlist                be designed to promote just and
                                                    Exchange states that, notwithstanding                   but subsequently requests a cage will be                equitable principles of trade, to remove
                                                    the Migration, contiguous open space                    added back to the bottom of the waitlist,               impediments to and perfect the
                                                    will still be limited, and may become                   provided that, if the User was removed                  mechanism of a free and open market
                                                    more limited over time.16                               from the waitlist because it turned down                and a national market system and, in
                                                                                                            a cage that is the size that it requested,              general, to protect investors and the
                                                    Proposed Cage Allocation Procedure
                                                                                                            it will not receive a second waiver of the              public interest, and not be designed to
                                                       The Exchange has proposed to                         charge.23                                               permit unfair discrimination between
                                                    establish procedures governing the                                                                              customers, issuers, brokers, or dealers.
                                                    allocation of cages should the currently                Visitor Security Escorts                                   The Commission believes that the
                                                    available open contiguous space in the                     The Exchange also proposes to amend                  proposed procedures for the allocation
                                                    Data Center be insufficient to house a                  its visitor security escort fee. Currently,             of cages to its co-located Users and
                                                    new cage or if the open contiguous                      a User visiting its cabinet(s) in the Data              associated waiver of fees subject to
                                                    space available is sufficiently limited                 Center is required to pay a $75/hour fee                specified conditions are consistent with
                                                    such that the Exchange cannot both                      for a security escort.24 The Exchange                   Sections 6(b)(4) and 6(b)(5) of the Act.
                                                    provide new cages and satisfy all User                  proposes to eliminate this fee for Users                In particular, the Commission believes
                                                    demand for other co-location services.17                visiting their own cage in the Data                     that the proposed cage allocation and
                                                    Specifically, the Exchange proposes that                Center,25 and change the fee for those                  waitlist procedures are reasonably
                                                    it will place Users seeking new cages on                not visiting their own cage from $75/                   designed to assist the Exchange in
                                                    a waitlist: (1) The order of Users on the               hour to $75/visit.26 The Exchange states                offering cages to current and future
                                                    list will be based on the date the                      that a security escort is not needed                    Users in the Data Center on terms that
                                                    Exchange receives signed orders for the                 when a User visits its own cage because                 are equitable and not unfairly
                                                    cages from each User; (2) once the list                 that User would have access only to its                 discriminatory in the event that
                                                    is established, Users, on a rolling basis,              own cabinets locked within its own                      available open contiguous space in the
                                                    will be allocated a cage each time one                  cage,27 and that User will not have                     Data Center is not sufficient to house a
                                                    becomes available; (3) if a cage becomes                access to the cabinets of other Users or                newly requested cage or sufficiently
                                                    available and the User that is at the top               Exchange equipment, which are locked                    limited that the Exchange cannot both
                                                    of the waitlist turns it down because it                as well.28                                              provide new cages and satisfy all User
                                                    requested a different size, that User will              III. Discussion and Commission                          demand for other co-location services.
                                                    remain on the waitlist and the cage will                Findings                                                The Commission further believes that
                                                    be offered to the next User on the list,                                                                        the proposal to waive the initial and
                                                    in order, until a User accepts it; (4) a                   After careful review and                             monthly fee for two bundles of 24 cross
                                                    User that turns down a cage that is the                 consideration of the Exchange’s                         connects between a User’s non-
                                                    size that it requested will be removed                  proposal, the Commission finds that the                 contiguous cabinets while a User is on
                                                    from the waitlist; and (5) if a User                    proposed rule change, as modified by                    the waitlist is consistent with the Act.
                                                    requests two cages, that User will be                   Amendment No. 1, is consistent with                     Users can qualify for the fee waiver by
                                                    moved to the bottom of the waitlist                     the requirements of the Act and the                     requesting a cage and being placed on
                                                    upon the receipt of its first cage.18                   rules and regulations thereunder                        the waitlist until a cage becomes
                                                       In connection with the proposed                      applicable to a national securities                     available to them. Once the Exchange
                                                    waitlist procedures, the Exchange                       exchange.29 In particular, the                          offers the requested size cage to a User
                                                    further proposes to add General Note 3                  Commission finds that the proposed                      through the allocation procedure or
                                                    to the Schedule of Fees and Fee                         rule change, as modified by Amendment                   when a User is removed from the
                                                    Schedule,19 to provide that the                         No. 1, is consistent with Section 6(b)(4)               waitlist, the fee would no longer be
                                                    Exchange would, subject to specified                    of the Act,30 which requires that the                   waived. In addition, if a User was
                                                    conditions, waive the initial and                       rules of a national securities exchange                 removed from the waitlist because it
                                                    monthly fee for two bundles of 24 cross                 provide for the equitable allocation of                 turned down a cage that was the size
                                                    connects between a User’s non-                          reasonable dues, fees and other charges                 that it requested, it would not receive a
                                                    contiguous cabinets while it is on the                  among its members and issuers and                       second waiver of the charge. The
                                                    waitlist.20 Specifically, the initial and               other persons using its facilities, and                 Commission believes that the proposed
                                                    monthly charge for two bundles of 24                    with Section 6(b)(5) of the Act,31 which                fee waiver and associated conditions are
                                                    cross connects will be waived for a User                requires, among other things, that the                  reasonably designed to alleviate the
                                                    that is waitlisted for a cage for the                   rules of a national securities exchange                 inconvenience for waitlisted Users of
                                                    duration of the waitlist period, provided                                                                       having cabinets in non-contiguous
                                                                                                            turns down a cage that is the size that it requested    spaces by removing the cost that those
                                                    that the cross connects may only be                     will be removed from the waitlist. See supra note
                                                    used to connect the User’s non-                         18 and accompanying text.                               Users would otherwise avoid if a cage
                                                    contiguous cabinets.21 The charge will                     23 See Notice, 81 FR at 13004.                       were available.
                                                    no longer be waived once a User is                         24 See Notice, 81 FR at 13005.                          The Commission also finds the
                                                    removed from the waitlist.22 In addition,
                                                                                                               25 See id. The Exchange is also making a technical   proposed amendments to the visitor
                                                                                                            change to the visitor fee on the Schedule of Fees       security escort fee consistent with
                                                                                                            and Fee Schedule to add clarity. See id.
                                                      15 See Notice, 81 FR at 13004; see also Migration
                                                                                                               26 See id. The Exchange stated that many of the
                                                                                                                                                                    Sections 6(b)(4) and 6(b)(5) of the Act.
                                                                                                                                                                    The Exchange represents that a security
asabaliauskas on DSK3SPTVN1PROD with NOTICES




                                                    Filing supra note 14.                                   escorted visits lasted an hour or less. See id.
                                                      16 See Notice, 81 FR at 13004.
                                                                                                               27 See Notice, 81 FR at 13004.                       escort is not needed when a User visits
                                                      17 See id.
                                                                                                               28 See id.                                           its own cage because that User would
                                                      18 See id.
                                                                                                               29 In approving this proposed rule change, as        have access only to its own cabinets
                                                      19 See id.
                                                                                                            modified by Amendment No. 1, the Commission             locked within its own cage,32 and will
                                                      20 See id.                                            has considered the proposed rule’s impact on
                                                      21 See id.                                            efficiency, competition, and capital formation. See
                                                                                                                                                                    not have access to the cabinets of other
                                                      22 As noted above, a User that turns down a cage      15 U.S.C. 78c(f).                                       Users or Exchange equipment, which
                                                                                                               30 15 U.S.C. 78f(b)(4).
                                                    because it is not the correct size will remain on the
                                                    waitlist. A User that requests to be removed or that       31 15 U.S.C. 78f(b)(5).                               32 See   supra notes 27–28 and accompanying text.



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                                                                                   Federal Register / Vol. 81, No. 81 / Wednesday, April 27, 2016 / Notices                                                    24915

                                                    are locked as well.33 In addition, the                   change. The proposed rule change, as                     in particular to make available more
                                                    proposed rate of $75/visit for the visitor               modified by Amendment No. 1, was                         contiguous, larger spaces for new and
                                                    security escort would be a fee reduction                 published for comment in the Federal                     existing Users, it would exercise its
                                                    for any visit that lasted more than an                   Register on March 11, 2016.3 There                       right to move some Users’ equipment
                                                    hour, and so it would reduce the burden                  were no comments on the proposed rule                    within the Data Center (the
                                                    placed on Users that remain subject to                   change. This order approves the                          ‘‘Migration’’).13 The Exchange
                                                    the fee. Therefore, the Commission finds                 proposed rule change, as modified by                     established procedures to manage the
                                                    the proposed amendments to the visitor                   Amendment No. 1.                                         Migration process, and continues to
                                                    security escort fee to be reasonable,                                                                             implement them.14 The Exchange states
                                                                                                             II. Background and Description of the                    that, notwithstanding the Migration,
                                                    equitable, and not unfairly
                                                                                                             Proposal, as Modified by Amendment                       contiguous open space will still be
                                                    discriminatory.
                                                      For the foregoing reasons, the                         No. 1                                                    limited, and may become more limited
                                                    Commission finds that the proposed                          The Exchange proposes to establish                    over time.15
                                                    rule change, as modified by Amendment                    procedures for the allocation of cages to
                                                                                                                                                                      Proposed Cage Allocation Procedure
                                                    No. 1, is consistent with the Act.                       its co-located Users,4 including the
                                                                                                             waiver of certain fees subject to                           The Exchange has proposed to
                                                    VII. Conclusion                                          specified conditions, and to amend the                   establish procedures governing the
                                                       It is therefore ordered, pursuant to                  visitor security escort fee.5 The                        allocation of cages should the currently
                                                    Section 19(b)(2) of the Act,34 that the                  Exchange proposes to amend its Price                     available open contiguous space in the
                                                    proposed rule change, as modified by                     List (‘‘Price List’’) to reflect the                     Data Center be insufficient to house a
                                                    Amendment No.1, (File No. SR–                            changes.6                                                new cage or if the open contiguous
                                                    NYSEARCA–2016–21) be, and hereby                            As more fully set forth in the Notice,                space available is sufficiently limited
                                                    is, approved.                                            the Exchange offers Users the ability to                 such that the Exchange cannot both
                                                      For the Commission, by the Division of                 rent cages to house their cabinets in the                provide new cages and satisfy all User
                                                    Trading and Markets, pursuant to delegated               Data Center,7 and historically has                       demand for other co-location services.16
                                                    authority.35                                             offered these cages on a first come/first                Specifically, the Exchange proposes that
                                                    Brent J. Fields,                                         serve basis.8 The Exchange states that a                 it will place Users seeking new cages on
                                                    Secretary.                                               cage typically is purchased by a User                    a waitlist: (1) The order of Users on the
                                                                                                             that has several cabinets within the Data                list will be based on the date the
                                                    [FR Doc. 2016–09725 Filed 4–26–16; 8:45 am]
                                                                                                             Center and wishes to arrange its                         Exchange receives signed orders for the
                                                    BILLING CODE 8011–01–P
                                                                                                             cabinets contiguously while also                         cages from each User; (2) once the list
                                                                                                             enhancing privacy around its cabinets.9                  is established, Users, on a rolling basis,
                                                                                                             The Exchange offers three cage sizes,                    will be allocated a cage each time one
                                                    SECURITIES AND EXCHANGE
                                                                                                             corresponding to the number of cabinets                  becomes available; (3) if a cage becomes
                                                    COMMISSION
                                                                                                             housed therein, and charges fees for the                 available and the User that is at the top
                                                    [Release No. 34–77681; File No. SR–NYSE–                 cages based on the size.10 The physical                  of the waitlist turns it down because it
                                                    2016–13]                                                 footprint of each cage is greater than                   requested a different size, that User will
                                                                                                             that of the cabinets that it houses, as                  remain on the waitlist and the cage will
                                                    Self-Regulatory Organizations; New                                                                                be offered to the next User on the list,
                                                    York Stock Exchange LLC; Order                           each cage is constructed so as to include
                                                                                                             aisles around the purchasing User’s                      in order, until a User accepts it; (4) a
                                                    Approving a Proposed Rule Change,                                                                                 User that turns down a cage that is the
                                                    as Modified by Amendment No. 1, To                       cabinets, for accessibility and to comply
                                                                                                             with safety regulations.11 In order to                   size that it requested will be removed
                                                    Establish Procedures for the                                                                                      from the waitlist; and (5) if a User
                                                    Allocation of Cages to Co-Located                        offer the cages, the Exchange must have
                                                                                                             sufficient contiguous open space                         requests two cages, that User will be
                                                    Users, Including the Waiver of Certain                                                                            moved to the bottom of the waitlist
                                                    Fees, and To Amend the Visitor                           available for the cage.12
                                                                                                                In 2015, the Exchange determined                      upon the receipt of its first cage.17
                                                    Security Escort Fee                                                                                                  In connection with the proposed
                                                                                                             that to continue to be able to meet its
                                                    April 21, 2016.                                          obligation to accommodate demand, and                    waitlist procedures, the Exchange
                                                                                                                                                                      further proposes to add General Note 3
                                                    I. Introduction                                             3 See Securities Exchange Act Release No. 34–         to the Price List,18 to provide that the
                                                       On February 23, 2016 New York Stock                   77302 (March 7, 2016), 81 FR 12998 (‘‘Notice’’).         Exchange would, subject to specified
                                                                                                             Amendment No.1 was included in the Notice and            conditions, waive the initial and
                                                    Exchange LLC (‘‘the Exchange’’) filed                    provided certain clarifications, including that the
                                                    with the Securities and Exchange                         proposed waiver of fees for two bundles of 24 cross      monthly fee for two bundles of 24 cross
                                                    Commission (‘‘Commission’’), pursuant                    connects, applicable while a User is on the waitlist,    connects between a User’s non-
                                                    to Section 19(b)(1) of the Securities                    would only apply to cross-connects used to connect       contiguous cabinets while it is on the
                                                                                                             an individual User’s non-contiguous cabinets.
                                                    Exchange Act of 1934 (‘‘Act’’) 1 and Rule                   4 For purposes of the Exchange’s co-location
                                                                                                                                                                        13 See id.; see also Securities Exchange Act
                                                    19b–4 thereunder,2 a proposed rule                       services, a ‘‘User’’ means any market participant        Release No. 76269 (October 26, 2015), 80 FR 66947
                                                    change to establish procedures for the                   that requests to receive co-location services directly   (October 30, 2015) (SR–NYSE–2015–42); Securities
                                                    allocation of cages to co-located Users,                 from the Exchange. The Exchange provides co-             Exchange Act Release No. 76268 (October 26, 2015),
                                                    including the waiver of certain fees, and                location services to Users from its data center          80 FR 66944 (October 30, 2015) (SR–NYSEMKT–
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                                                                                                             (‘‘Data Center’’) in Mahwah, New Jersey.                 2015–70); Securities Exchange Act Release No.
                                                    to amend the visitor security escort fee.                   5 See Notice, 81 FR at 12999.
                                                                                                                                                                      76270 (October 26, 2015), 80 FR 66944 (October 30,
                                                    On March 1, 2016, the Exchange filed                        6 See id.
                                                                                                                                                                      2015) (SR–NYSEArca–2015–85) (collectively
                                                    Amendment No. 1 to the proposed rule                        7 See id. A User must have at least two cabinets      ‘‘Migration Filing’’).
                                                                                                             in the Data Center to purchase a cage. See id.             14 See Notice, 81 FR at 12999; see also Migration
                                                      33 See id.                                                8 See id.                                             Filing supra note 13.
                                                      34 15 U.S.C. 78s(b)(2).                                   9 See id.                                               15 See Notice, 81 FR at 12999.
                                                      35 17 CFR 200.30–3(a)(12).                                10 See id.                                              16 See id.
                                                      1 15 U.S.C. 78s(b)(1).                                    11 See id.                                              17 See id.
                                                      2 17 CFR 240.19b–4.                                       12 See id.                                              18 See Notice, 81 FR at 13000.




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Document Created: 2018-02-07 13:55:37
Document Modified: 2018-02-07 13:55:37
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 Citation81 FR 24913 

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