81 FR 7394 - Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of Proposed Rule Change, as Modified by Amendment No. 1, To Provide That the Co-Location Services Offered by the Exchange Include Three Time Feeds and Four Partial Cabinet Bundle Options
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 28 (February 11, 2016)
Federal Register Volume 81, Issue 28 (February 11, 2016)
| Page Range | 7394-7398 | |
| FR Document | 2016-02736 |
[Federal Register Volume 81, Number 28 (Thursday, February 11, 2016)] [Notices] [Pages 7394-7398] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-02736] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-77072; File No. SR-NYSE-2015-53] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of Proposed Rule Change, as Modified by Amendment No. 1, To Provide That the Co-Location Services Offered by the Exchange Include Three Time Feeds and Four Partial Cabinet Bundle Options February 5, 2016. I. Introduction On November 27, 2015 the New York Stock Exchange LLC (``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 provide that the co-location services offered by the Exchange include three time feeds and four bundles of co- location services (``Partial Cabinet Solution bundles''). The proposed rule change was published for comment in the Federal Register on December 16, 2015.\3\ The Commission received one comment letter on the proposed rule change.\4\ On January 20, 2016, the Exchange filed a response letter.\5\ On January 28, 2016, the Exchange filed Amendment No. 1 to the proposed rule change.\6\ The Commission is publishing this notice to solicit comments on Amendment No. 1 from interested persons and is approving the proposed rule change, as modified by Amendment No. 1, on an accelerated basis. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ See Securities Exchange Act Release No. 34-76612 (December 10, 2015), 80 FR 78269 (``Notice''). On January 28, 2016, the Exchange consented to extending the time period for the Commission to either approve or disapprove the proposed rule change, or to institute proceedings to determine whether to approve or disapprove the proposed rule change, to February 5, 2016. \4\ See letter from Kermit Kubitz to the Commission, dated January 6, 2016 (``Kubitz Letter''). \5\ See letter from Martha Redding Senior Counsel & Assistant Secretary, NYSE to Brent J. Fields, Secretary of the Commission, dated January 20, 2016 (``Exchange Response Letter''). \6\ Amendment No. 1 (i) updates the proposal to specify that that Partial Cabinet Solution Bundles, originally proposed to be offered on January 1, 2016, instead will be offered on the date that is the later of February 1, 2016 and the date of any Commission approval of the proposal; and (ii) as described further below, adds clarity to the proposal by specifying the differences in precision among the three time feeds. --------------------------------------------------------------------------- II. Description of the Proposal, as Modified by Amendment No. 1 The Exchange proposes to change its rules to provide that the co- location services offered by the Exchange include three time feeds and four Partial Cabinet Solution bundles, and to establish fees for these services. Time Feeds The Exchange proposes to offer Users the option to purchase connectivity to one or more of three time feeds.\7\ Each proposed time feed provides a feed with the current time of day using one of three different time protocols: Global Positioning System (``GPS'') Time Source, the Network Time Protocol (``NTP''), and Precision Timing Protocol [[Page 7395]] (``PTP'').\8\ GPS is a time and location system maintained by the United States government.\9\ The Exchange accesses the GPS Time Source feed through dedicated equipment and subscribing Users connect to the feed over dedicated cables.\10\ For the NTP and PTP time feeds, the Exchange routes the GPS data through dedicated equipment that reformats the GPS data into NTP and PTP.\11\ Subscribing Users connect to PTP over dedicated cables and NTP over the Liquidity Center Network (``LCN''), a local area network available in the data center.\12\ According to the Exchange, the GPS Time Source feed is a sub- microsecond time feed, providing the highest level of accuracy of the three time feeds.\13\ PTP has an accuracy of less than 10 microseconds, while the accuracy of NTP can be greater than 10 milliseconds.\14\ The Exchange states that a User does not require connectivity to a time feed to trade on the Exchange.\15\ The proposed connectivity to time feeds would provide Users a convenient way to access time protocols.\16\ According to the Exchange, Users make use of time feeds to receive time and to synchronize clocks between computer systems or throughout a computer network, and time feeds assist Users in other functions, including record keeping or measuring response times.\17\ --------------------------------------------------------------------------- \7\ 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, a ``Hosting User'' means a User that hosts a Hosted Customer in the User's co-location space, and a ``Hosted Customer'' means a customer of a Hosting User that is hosted in a Hosting User's co-location space. See Securities Exchange Act Release No. 76008 (September 29, 2015), 80 FR 60190 (October 5, 2015) (SR-NYSE-2015-40). As specified in the Price List, 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 NYSE MKT LLC and NYSE Arca, Inc. See Securities Exchange Act Release No. 70206 (August 15, 2013), 78 FR 51765 (August 21, 2013) (SR-NYSE-2013-59). \8\ See Notice, 80 FR at 78269. \9\ See id. at 78270. \10\ See id. \11\ See id. \12\ See id. \13\ See Amendment No. 1, at 4. \14\ See id. \15\ See Notice, 80 FR at 78269, n.6. \16\ See id. at 78270. \17\ See id. at 78269-78270. For example, a User may connect to a time feed for record keeping purposes if it uses that specific time protocol for all its activities, both inside and out of the data center. See id. at 78270, n.7. --------------------------------------------------------------------------- Currently, Users have the option of either renting a dedicated cabinet or a partial cabinet to house their servers and other equipment in the data center.\18\ Under the proposal, only the NTP and PTP time feeds will be available to partial cabinet Users, whereas dedicated cabinet Users will have access to all three time feeds.\19\ According to the Exchange, connectivity to the GPS time feed is not available for partial cabinets because the proximity of the GPS and power connections into a partial cabinet would expose the GPS to interference from the cable power connections, interfering with the delivery of the GPS data.\20\ The Exchange states that if a partial cabinet User is in need of the GPS feed, it could either purchase a dedicated cabinet or become a Hosted Customer of a Hosting User that has the GPS feed.\21\ In addition, the Exchange states that the NTP time feed is offered only over the LCN due to a lack of demand for the NTP over the IP network, and notes that a User that requires connectivity to the NTP could connect to the LCN.\22\ --------------------------------------------------------------------------- \18\ See id. at 78270. \19\ See id. \20\ See id. at n.10. \21\ See id. at 78272. \22\ See id. --------------------------------------------------------------------------- The Exchange proposes to charge a non-recurring fee of $300, $1000, and $3000 for connectivity to the NTP, PTP, and GPS time feeds, respectively.\23\ The Exchange will also charge a monthly recurring fee of $100, $250, and $400 for the NTP, PTP, and GPS time feeds, respectively.\24\ Subscribing Users that order the proposed time feed services will be subject to a 12-month minimum commitment, after which they are subject to a 60-day rolling commitment.\25\ --------------------------------------------------------------------------- \23\ See id. at 78270. \24\ See id. \25\ See id. --------------------------------------------------------------------------- Partial Cabinet Solution Bundles The Exchange also proposes to offer four Partial Cabinet Solution bundles and establish fees therefor.\26\ As more fully described in the Notice, each Partial Cabinet Solution bundle option would include network access, two fiber cross connections, and connectivity to either the NTP or PTP time feed.\27\ Subscribing Users would be assessed a non-recurring fee and monthly charge for each bundle option as set forth below.\28\ --------------------------------------------------------------------------- \26\ See id. \27\ See id. \28\ See id. at 78271. ------------------------------------------------------------------------ Type of service Description Amount of charge ------------------------------------------------------------------------ Partial Cabinet Solution Option A: 1 kW $7,500 initial bundles. partial cabinet, 1 charge per bundle Note: A User and its LCN connection (1 plus monthly charge Affiliates are limited to Gb), 1 IP network per bundle as one Partial Cabinet connection (1 Gb), follows: Solution bundle at a time. 2 fiber crossFor Users A User and its Affiliates connections and that order on or must have an aggregate either the Network before December 31, cabinet footprint of 2 kW Time Protocol Feed 2016: $3,000 or less to qualify for a or Precision Timing monthly for first Partial Cabinet Solution Protocol. 12 months of bundle. service, and $6,000 monthly thereafter. For Users that order after December 31, 2016: $6,000 monthly. Option B: 2 kW $7,500 initial partial cabinet, 1 charge per bundle LCN connection (1 plus monthly charge Gb), 1 IP network per bundle as connection (1 Gb), follows: 2 fiber cross For Users connections and that order on or either the Network before December 31, Time Protocol Feed 2016: $3,500 or Precision Timing monthly for first Protocol. 12 months of service, and $7,000 monthly thereafter. For Users that order after December 31, 2016: $7,000 monthly. Option C: 1 kW $10,000 initial partial cabinet, 1 charge per bundle LCN connection (10 plus monthly charge Gb), 1 IP network per bundle as connection (10 Gb), follows: 2 fiber cross For Users connections and that order on or either the Network before December 31, Time Protocol Feed 2016: $7,000 or Precision Timing monthly for first Protocol. 12 months of service, and $14,000 monthly thereafter. For Users that order after December 31, 2016: $14,000 monthly. [[Page 7396]] Option D: 2 kW $10,000 initial partial cabinet, 1 charge per bundle LCN connection (10 plus monthly charge Gb), 1 IP network per bundle as connection (10 Gb), follows: 2 fiber cross For Users connections and that order on or either the Network before December 31, Time Protocol Feed 2016: $7,500 or Precision Timing monthly for first Protocol. 12 months of service, and $15,000 monthly thereafter. For Users that order after December 31, 2016: $15,000 monthly. ------------------------------------------------------------------------ Additionally, a User purchasing a Partial Cabinet Solution bundle would be subject to a 90-day minimum commitment, after which period it would be subject to the 60-day rolling time period.\29\ --------------------------------------------------------------------------- \29\ See id. at 78272. The Exchange proposes to have a reduced minimum commitment period for the Partial Cabinet Solution bundle to further reduce the cost commitment for such Users. The Exchange acknowledges that the proposal may also attract some entities that are currently Hosted Customers or would have become Hosted Customers. --------------------------------------------------------------------------- As more fully described in the Notice, the Exchange states that the purpose of offering four Partial Cabinet Solution bundles is to attract smaller Users, including those with minimal power or cabinet space demands or those for which the costs attendant with having a dedicated cabinet or greater network connection bandwidth are too burdensome.\30\ The Exchange proposes that the Partial Cabinet Solution bundles would be available to Users provided: (1) The subscribing User purchases only one Partial Cabinet Solution bundle; (2) the subscribing User and its Affiliates must not currently have a Partial Cabinet Solution bundle; and (3) after the purchase of the Partial Cabinet Solution bundle, the subscribing User, together with its Affiliates, has an Aggregate Cabinet Footprint of no more than 2 kW.\31\ The Exchange proposes that for purposes of the Partial Cabinet Solution bundles, an ``Affiliate'' of a User would be any other User or a Hosted Customer that is under 50% or greater common ownership or control of the first User.\32\ Further, the term ``Aggregate Cabinet Footprint'' of a User or Hosted Customer is proposed to be defined as: (a) For a User, the total kW of the User's cabinets, including both partial and dedicated cabinets, and (b), for a Hosted Customer, the total kW of the portion of the Hosting User's cabinet, whether partial or dedicated, allocated to such Hosted Customer.\33\ --------------------------------------------------------------------------- \30\ See id. at 78270. \31\ See id. \32\ See id. at n.15. \33\ See id. at 78270-78271. For example, a User with a 4 kW dedicated cabinet would not be eligible for a Partial Cabinet Solution bundle, as its aggregate cabinet footprint would be either 5 kW or 6 kW once a Partial Cabinet Solution bundle was added. --------------------------------------------------------------------------- A User would be required to inform the Exchange immediately of any event that causes the User or a Hosted Customer to become ineligible for a Partial Cabinet Solution bundle, including an event that causes another User or Hosted Customer to become an Affiliate as this can make the subscribing User ineligible for the bundle.\34\ If a subscribing User ceases to meet the conditions for access to the Partial Cabinet Solution bundle, it would be charged for each of the services individually, at the price for each such service set out in the Price List and Fee Schedule.\35\ Such price change would be effective as of the date that the subscribing User ceased to meet the conditions.\36\ --------------------------------------------------------------------------- \34\ See id. at 78271. The Exchange would review available information regarding the entities and may request additional information to verify the Affiliate status of a User or Hosted Customer. The Exchange would approve a request for a Partial Cabinet Solution bundle unless it determines that the certification is not accurate. \35\ See id. \36\ See id. --------------------------------------------------------------------------- Further, if a subscribing User purchased each of the components of a Partial Cabinet Solution bundle, whether over several purchases or in one order, and met the conditions described above for access to the Partial Cabinet Solution bundle, the Exchange would automatically treat that User's services as a Partial Cabinet Solution bundle and, effective the date of installation of the final component, reduce the User's recurring fee to the recurring fee for the relevant bundle.\37\ In addition, a User that changes its Partial Cabinet Solution bundle from one option to another will not be subject to a second initial charge, but will be required to pay the difference, if any, between the bundles' initial charges.\38\ --------------------------------------------------------------------------- \37\ See id. at 78271-78272. \38\ See id. at 78271, n.19. --------------------------------------------------------------------------- Finally, the Exchange proposes to make non-substantive changes to the Price List and Fee Schedule to add subheadings under ``Co-Location Fees'' for ``Definitions'' and ``General Notes.'' \39\ --------------------------------------------------------------------------- \39\ See id. at 78272. --------------------------------------------------------------------------- III. Summary of Comment Letter and Exchange Response As noted above, the Commission received one comment letter on the proposed rule change,\40\ and a response from the Exchange.\41\ The commenter expressed concern about the potential for ``GPS spoofing'' (intentional interference with GPS feeds from a distance) if GPS data are from an unsecured source.\42\ According to the commenter, a successful GPS spoofing attack could cause time feed data to become corrupted, which could cause Users, such as High Frequency Trading (``HFT'') firms that represent substantial market volume, to withdraw from the market and lead to market disruption.\43\ The commenter asked particularly whether purchasers of Partial Cabinet Solution bundles that have access to the PTP and NTP feeds, but not the dedicated GPS time feed, would have any ``special vulnerability to some sort of feed failure'' as a result of ``GPS spoofing'' or otherwise.\44\ --------------------------------------------------------------------------- \40\ See Kubitz Letter, supra note 4. \41\ See Exchange Response Letter, supra note 5. \42\ See Kubitz Letter, supra note 4. \43\ See id. \44\ See id. The commenter further requested that the Commission more broadly investigate and report on any risks associated with time feeds, and measures to protect these and other data feeds. See id. The Commission notes that this suggestion is beyond the scope of the proposed rule change. --------------------------------------------------------------------------- The Exchange responded that ``[t]o the best of the Exchange's knowledge, Users that connect to the NTP or the PTP, rather than the GPS Time Source, do not have a special vulnerability to feed failure, irrespective of whether they utilize a partial or dedicated cabinet.'' \45\ The Exchange stated that it uses the same GPS time feed equipment for its production environment and to provide time feeds to Users; \46\ and that Users purchasing time feeds from the Exchange (whether GPS, PTP, or NTP) benefit from the same protections that the Exchange has implemented for its [[Page 7397]] own GPS antennas and receivers.\47\ The Exchange also stated that GPS is the source information for all three time feeds and that the Exchange routes the GPS data through dedicated equipment that reformats the GPS data to propagate the NTP and PTP.\48\ The Exchange further stated that any disruption to the GPS time feed would impact the NTP and PTP time feeds in the same way as the GPS feed; and that the Exchange has no knowledge of any other method to ``spoof'' the NTP or PTP feeds if the GPS feed were not compromised.\49\ --------------------------------------------------------------------------- \45\ See Exchange Response Letter, supra note 5, at 3. \46\ See id. at 4. \47\ See id. The Exchange added that that discussion of these protections in a proposed rule change would impair their effectiveness. See id. at 5. \48\ See id. at 3. \49\ See id. Regarding the commenter's concern about the potential for GPS spoofing to lead to market disruption, the Exchange stated that it could not comment on the behavior of HFT Users during a ``spoofing event'' regardless of whether the HFT User received its time feed from the Exchange or a third party vendor. The Exchange noted, however, that the proposal was limited to time feeds provided by the Exchange and that Users purchasing time feeds from the Exchange benefit from the same protections that the Exchange has implemented for its own GPS antennas and receivers. See id. at 5. --------------------------------------------------------------------------- IV. Discussion and Commission Findings After careful review and consideration of the Exchange's proposal, the comment letter and the Exchange's response, 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.\50\ 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,\51\ 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,\52\ 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. --------------------------------------------------------------------------- \50\ 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). \51\ 15 U.S.C. 78f(b)(4). \52\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Commission believes that the proposed rule change is consistent with Section 6(b)(4) of the Act. The Commission notes the Exchange's representation that the proposed fees for the time feed connectivity and Partial Cabinet Solution bundles are reasonable because the Exchange proposes to offer the services as a convenience to Users, but in doing so will incur certain costs, including costs related to the data center facility, hardware and equipment and costs related to personnel required for the initial installation, monitoring, support and maintenance of such services.\53\ The Exchange states that the higher fee in connection with the GPS time feed reflects the greater costs for its equipment, installation and maintenance in comparison with the other time feeds.\54\ In addition, all Users that voluntarily select connectivity to one or more of the proposed time feeds would be charged the same amount for the same services. With respect to the proposed Partial Cabinet Solution bundles in particular, the Commission also notes that all Users are subject to the same conditions and fees for the service selected; all Users are subject to the same limits on the number of Partial Cabinet Solution bundles and aggregate cabinet footprint; all Users that order a bundle on or before December 31, 2016 would have their monthly charges reduced by 50 percent for the first 12 months; and all Users that change their Partial Cabinet Solution bundles would not be charged a second initial charge but instead charged the difference, if any, between the initial charges. --------------------------------------------------------------------------- \53\ See Notice, 80 FR at 78273. \54\ See id. --------------------------------------------------------------------------- The Commission further believes that the Exchange's proposal to offer Users optional connectivity to the GPS, PTP, and NTP time feeds is consistent with the requirements of Section 6(b)(5) of the Act. The proposal to offer connectivity to different time feed options allows a User to select the time protocol that best suits it needs, helping to tailor its data center operations to the requirements of its business operations, and to operate more efficiently. As set forth in the Exchange Response Letter, the Exchange states that whether a User purchases access to the GPS, NTP, or PTP time feed, it benefits from the same precautions as the Exchange's production environment, as the Exchange uses the same GPS time feed equipment, including antennas and receivers, to provide time feeds to Users.\55\ The Commission therefore believes that the proposed time feeds, 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. The Exchange represents that connectivity to the GPS time feed is not available for partial cabinets because the proximity of the GPS and power connections into a partial cabinet would expose the GPS to interference from the cable power connections, interfering with the delivery of the GPS data.\56\ The Exchange also represents that connectivity to the NTP time feed is not proposed to be offered over the IP network due to lack of demand.\57\ For these reasons, the Commission believes that providing connectivity to the GPS Time Source for dedicated cabinets but not partial cabinets, and to the NTP time feed through the LCN but not the IP network, is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \55\ See Exchange Response Letter, supra note 5, at 4. \56\ See supra, notes 20 and 21 and accompanying text. \57\ See supra, note 22 and accompanying text. --------------------------------------------------------------------------- The Commission also finds the Exchange's proposal to offer Partial Cabinet Solution bundles consistent with Section 6(b)(5) of the Act. As noted, all Users seeking to purchase a Partial Cabinet Solution bundle would be subject to the same conditions. The Commission believes that the proposed Partial Cabinet Solution bundles are reasonably designed to make it more cost effective for Users with minimal power or cabinet space demands to take advantage of the option for co-location services, and therefore that they are 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 are not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. For the foregoing reasons, the Commission also finds that, the proposed rule change, as modified by Amendment No. 1, is consistent with the Act. V. Solicitation of Comments on Amendment No. 1 Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether this filing, as modified by Amendment No. 1, is [[Page 7398]] 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 No. SR-NYSE-2015-53 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 No. SR-NYSE-2015-53. 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 such 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 No. SR-NYSE-2015-53, and should be submitted on or before March 3, 2016. VI. Accelerated Approval of Proposed Rule Change, as Modified by Amendment No. 1 The Commission finds good cause, pursuant to Section 19(b)(2) of the Act, to approve the proposed rule change, as modified by Amendment No. 1, prior to the 30th day after the date of publication of Amendment No. 1 in the Federal Register. As discussed above, Amendment No. 1 updates dates in the original proposed rule change and adds clarity on the differences between the three time feeds in terms of their precision.\58\ The Commission believes that these revisions provide clarity on when partial cabinet bundle discounts will apply along with additional information on the differences between the various time feeds. Furthermore, the Commission believes it is appropriate to have these changes incorporated into the rules of the Exchange concurrently with those changes discussed in the original filing. --------------------------------------------------------------------------- \58\ See supra, note 6. --------------------------------------------------------------------------- Accordingly, the Commission finds good cause for approving the proposed rule change, as modified by Amendment No. 1, on an accelerated basis, pursuant to Section 19(b)(2) of the Act.\59\ --------------------------------------------------------------------------- \59\ 15 U.S.C. 78s(b)(2). --------------------------------------------------------------------------- VII. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,\60\ that the proposed rule change, as modified by Amendment No. 1, (File No. SR-NYSE-2015-53) be, and hereby is, approved on an accelerated basis. --------------------------------------------------------------------------- \60\ See id. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\61\ --------------------------------------------------------------------------- \61\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Brent J. Fields, Secretary. [FR Doc. 2016-02736 Filed 2-10-16; 8:45 am] BILLING CODE 8011-01-P
![7394 Federal Register / Vol. 81, No. 28 / Thursday, February 11, 2016 / Notices
must be that of a senior official at the proposed rule change between the December 16, 2015.3 The Commission
company with a rank of Corporate Commission and any person, other than received one comment letter on the
Secretary or above. Based on the those that may be withheld from the proposed rule change.4 On January 20,
foregoing, the Commission believes that public in accordance with the 2016, the Exchange filed a response
waiving the 30-day operative delay is provisions of 5 U.S.C. 552, will be letter.5 On January 28, 2016, the
consistent with the protection of available for Web site viewing and Exchange filed Amendment No. 1 to the
investors and the public interest. For printing in the Commission’s Public proposed rule change.6 The Commission
this reason, the Commission hereby Reference Room, 100 F Street NE., is publishing this notice to solicit
waives the 30-day operative delay and Washington, DC 20549 on official comments on Amendment No. 1 from
designates the proposal operative upon business days between the hours of interested persons and is approving the
filing.12 10:00 a.m. and 3:00 p.m. Copies of the proposed rule change, as modified by
At any time within 60 days of the filing also will be available for Amendment No. 1, on an accelerated
filing of the proposed rule change, the inspection and copying at the principal basis.
Commission summarily may office of the Exchange. All comments
received will be posted without change; II. Description of the Proposal, as
temporarily suspend such rule change if
the Commission does not edit personal Modified by Amendment No. 1
it appears to the Commission that such
action is necessary or appropriate in the identifying information from The Exchange proposes to change its
public interest, for the protection of submissions. You should submit only rules to provide that the co-location
investors, or otherwise in furtherance of information that you wish to make services offered by the Exchange
the purposes of the Act. If the available publicly. All submissions include three time feeds and four Partial
Commission takes such action, the should refer to File Number SR– Cabinet Solution bundles, and to
Commission shall institute proceedings NYSEMKT–2016–14, and should be establish fees for these services.
to determine whether the proposed rule submitted on or before March 3, 2016.
Time Feeds
change should be approved or For the Commission, by the Division of
disapproved. Trading and Markets, pursuant to delegated The Exchange proposes to offer Users
authority.13 the option to purchase connectivity to
IV. Solicitation of Comments Brent J. Fields, one or more of three time feeds.7 Each
Interested persons are invited to Secretary. proposed time feed provides a feed with
submit written data, views, and [FR Doc. 2016–02729 Filed 2–10–16; 8:45 am] the current time of day using one of
arguments concerning the foregoing, BILLING CODE 8011–01–P three different time protocols: Global
including whether the proposed rule Positioning System (‘‘GPS’’) Time
change is consistent with the Act. Source, the Network Time Protocol
Comments may be submitted by any of SECURITIES AND EXCHANGE (‘‘NTP’’), and Precision Timing Protocol
the following methods: COMMISSION
3 See Securities Exchange Act Release No. 34–
Electronic Comments [Release No. 34–77072; File No. SR–NYSE– 76612 (December 10, 2015), 80 FR 78269
2015–53]
• Use the Commission’s Internet (‘‘Notice’’). On January 28, 2016, the Exchange
consented to extending the time period for the
comment form (http://www.sec.gov/ Self-Regulatory Organizations; New Commission to either approve or disapprove the
rules/sro.shtml); or York Stock Exchange LLC; Notice of proposed rule change, or to institute proceedings to
• Send an email to rule-comments@ Filing of Amendment No. 1 and Order determine whether to approve or disapprove the
sec.gov. Please include File Number SR– proposed rule change, to February 5, 2016.
Granting Accelerated Approval of 4 See letter from Kermit Kubitz to the
NYSEMKT–2016–14 on the subject line. Proposed Rule Change, as Modified by Commission, dated January 6, 2016 (‘‘Kubitz
Paper Comments Amendment No. 1, To Provide That the Letter’’).
Co-Location Services Offered by the 5 See letter from Martha Redding Senior Counsel
• Send paper comments in triplicate Exchange Include Three Time Feeds & Assistant Secretary, NYSE to Brent J. Fields,
to Secretary, Securities and Exchange and Four Partial Cabinet Bundle
Secretary of the Commission, dated January 20,
Commission, 100 F Street NE., 2016 (‘‘Exchange Response Letter’’).
Options 6 Amendment No. 1 (i) updates the proposal to
Washington, DC 20549–1090. specify that that Partial Cabinet Solution Bundles,
All submissions should refer to File February 5, 2016. originally proposed to be offered on January 1,
Number SR–NYSEMKT–2016–14. This 2016, instead will be offered on the date that is the
I. Introduction later of February 1, 2016 and the date of any
file number should be included on the Commission approval of the proposal; and (ii) as
subject line if email is used. To help the On November 27, 2015 the New York
described further below, adds clarity to the
Commission process and review your Stock Exchange LLC (‘‘the Exchange’’) proposal by specifying the differences in precision
comments more efficiently, please use filed with the Securities and Exchange among the three time feeds.
only one method. The Commission will Commission (‘‘Commission’’), pursuant 7 For purposes of the Exchange’s co-location
post all comments on the Commission’s to Section 19(b)(1) of the Securities services, a ‘‘User’’ means any market participant
Exchange Act of 1934 (‘‘Act’’) 1 and Rule that requests to receive co-location services directly
Internet Web site (http://www.sec.gov/ from the Exchange, a ‘‘Hosting User’’ means a User
rules/sro.shtml). Copies of the 19b–4 thereunder,2 a proposed rule that hosts a Hosted Customer in the User’s co-
submission, all subsequent change to provide that the co-location location space, and a ‘‘Hosted Customer’’ means a
amendments, all written statements services offered by the Exchange customer of a Hosting User that is hosted in a
include three time feeds and four Hosting User’s co-location space. See Securities
with respect to the proposed rule Exchange Act Release No. 76008 (September 29,
mstockstill on DSK4VPTVN1PROD with NOTICES
change that are filed with the bundles of co-location services (‘‘Partial 2015), 80 FR 60190 (October 5, 2015) (SR–NYSE–
Commission, and all written Cabinet Solution bundles’’). The 2015–40). As specified in the Price List, a User that
communications relating to the proposed rule change was published for incurs co-location fees for a particular co-location
comment in the Federal Register on service pursuant thereto would not be subject to co-
location fees for the same co-location service
12 For purposes only of waiving the 30-day charged by the Exchange’s affiliates NYSE MKT
13 17 CFR 200.30–3(a)(12), (59).
operative delay, the Commission has considered the LLC and NYSE Arca, Inc. See Securities Exchange
1 15 U.S.C. 78s(b)(1).
proposed rule’s impact on efficiency, competition, Act Release No. 70206 (August 15, 2013), 78 FR
and capital formation. See 15 U.S.C. 78c(f). 2 17 CFR 240.19b–4. 51765 (August 21, 2013) (SR–NYSE–2013–59).
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![7396 Federal Register / Vol. 81, No. 28 / Thursday, February 11, 2016 / Notices
Type of service Description Amount of charge
Option D: 2 kW partial cabinet, 1 LCN con- $10,000 initial charge per bundle plus monthly
nection (10 Gb), 1 IP network connection charge per bundle as follows:
(10 Gb), 2 fiber cross connections and ei- • For Users that order on or before De-
ther the Network Time Protocol Feed or cember 31, 2016: $7,500 monthly for
Precision Timing Protocol. first 12 months of service, and $15,000
monthly thereafter.
• For Users that order after December
31, 2016: $15,000 monthly.
Additionally, a User purchasing a A User would be required to inform for ‘‘Definitions’’ and ‘‘General
Partial Cabinet Solution bundle would the Exchange immediately of any event Notes.’’ 39
be subject to a 90-day minimum that causes the User or a Hosted III. Summary of Comment Letter and
commitment, after which period it Customer to become ineligible for a Exchange Response
would be subject to the 60-day rolling Partial Cabinet Solution bundle,
time period.29 including an event that causes another As noted above, the Commission
As more fully described in the Notice, User or Hosted Customer to become an received one comment letter on the
the Exchange states that the purpose of proposed rule change,40 and a response
Affiliate as this can make the
offering four Partial Cabinet Solution from the Exchange.41 The commenter
subscribing User ineligible for the
bundles is to attract smaller Users, expressed concern about the potential
bundle.34 If a subscribing User ceases to
including those with minimal power or for ‘‘GPS spoofing’’ (intentional
meet the conditions for access to the interference with GPS feeds from a
cabinet space demands or those for Partial Cabinet Solution bundle, it
which the costs attendant with having a distance) if GPS data are from an
would be charged for each of the unsecured source.42 According to the
dedicated cabinet or greater network services individually, at the price for
connection bandwidth are too commenter, a successful GPS spoofing
each such service set out in the Price attack could cause time feed data to
burdensome.30 The Exchange proposes
List and Fee Schedule.35 Such price become corrupted, which could cause
that the Partial Cabinet Solution
change would be effective as of the date Users, such as High Frequency Trading
bundles would be available to Users
that the subscribing User ceased to meet (‘‘HFT’’) firms that represent substantial
provided: (1) The subscribing User
purchases only one Partial Cabinet the conditions.36 market volume, to withdraw from the
Solution bundle; (2) the subscribing Further, if a subscribing User market and lead to market disruption.43
User and its Affiliates must not purchased each of the components of a The commenter asked particularly
currently have a Partial Cabinet Partial Cabinet Solution bundle, whether purchasers of Partial Cabinet
Solution bundle; and (3) after the whether over several purchases or in Solution bundles that have access to the
purchase of the Partial Cabinet Solution one order, and met the conditions PTP and NTP feeds, but not the
bundle, the subscribing User, together described above for access to the Partial dedicated GPS time feed, would have
with its Affiliates, has an Aggregate Cabinet Solution bundle, the Exchange any ‘‘special vulnerability to some sort
Cabinet Footprint of no more than 2 would automatically treat that User’s of feed failure’’ as a result of ‘‘GPS
kW.31 The Exchange proposes that for services as a Partial Cabinet Solution spoofing’’ or otherwise.44
purposes of the Partial Cabinet Solution The Exchange responded that ‘‘[t]o
bundle and, effective the date of
bundles, an ‘‘Affiliate’’ of a User would the best of the Exchange’s knowledge,
installation of the final component,
be any other User or a Hosted Customer Users that connect to the NTP or the
reduce the User’s recurring fee to the
that is under 50% or greater common PTP, rather than the GPS Time Source,
recurring fee for the relevant bundle.37
ownership or control of the first User.32 do not have a special vulnerability to
In addition, a User that changes its feed failure, irrespective of whether they
Further, the term ‘‘Aggregate Cabinet Partial Cabinet Solution bundle from
Footprint’’ of a User or Hosted Customer utilize a partial or dedicated cabinet.’’ 45
one option to another will not be subject The Exchange stated that it uses the
is proposed to be defined as: (a) For a to a second initial charge, but will be
User, the total kW of the User’s cabinets, same GPS time feed equipment for its
required to pay the difference, if any, production environment and to provide
including both partial and dedicated between the bundles’ initial charges.38
cabinets, and (b), for a Hosted Customer, time feeds to Users; 46 and that Users
the total kW of the portion of the Finally, the Exchange proposes to purchasing time feeds from the
Hosting User’s cabinet, whether partial make non-substantive changes to the Exchange (whether GPS, PTP, or NTP)
or dedicated, allocated to such Hosted Price List and Fee Schedule to add benefit from the same protections that
Customer.33 subheadings under ‘‘Co-Location Fees’’ the Exchange has implemented for its
39 See id. at 78272.
29 See id. at 78272. The Exchange proposes to aggregate cabinet footprint would be either 5 kW or
40 See Kubitz Letter, supra note 4.
have a reduced minimum commitment period for 6 kW once a Partial Cabinet Solution bundle was
the Partial Cabinet Solution bundle to further added. 41 See Exchange Response Letter, supra note 5.
reduce the cost commitment for such Users. The 34 See id. at 78271. The Exchange would review 42 See Kubitz Letter, supra note 4.
Exchange acknowledges that the proposal may also available information regarding the entities and 43 See id.
mstockstill on DSK4VPTVN1PROD with NOTICES
attract some entities that are currently Hosted may request additional information to verify the 44 See id. The commenter further requested that
Customers or would have become Hosted Affiliate status of a User or Hosted Customer. The the Commission more broadly investigate and
Customers. Exchange would approve a request for a Partial report on any risks associated with time feeds, and
30 See id. at 78270. Cabinet Solution bundle unless it determines that measures to protect these and other data feeds. See
31 See id. the certification is not accurate. id. The Commission notes that this suggestion is
35 See id.
32 See id. at n.15. beyond the scope of the proposed rule change.
33 See id. at 78270–78271. For example, a User 36 See id. 45 See Exchange Response Letter, supra note 5, at
37 See id. at 78271–78272. 3.
with a 4 kW dedicated cabinet would not be eligible
for a Partial Cabinet Solution bundle, as its 38 See id. at 78271, n.19. 46 See id. at 4.
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![7398 Federal Register / Vol. 81, No. 28 / Thursday, February 11, 2016 / Notices
consistent with the Act. Comments may clarity on the differences between the I. Self-Regulatory Organization’s
be submitted by any of the following three time feeds in terms of their Statement of the Terms of the Substance
methods: precision.58 The Commission believes of the Proposed Rule Change
that these revisions provide clarity on Nasdaq is proposing to amend Rule
Electronic Comments
when partial cabinet bundle discounts 4120 and the Nasdaq process for
• Use the Commission’s Internet will apply along with additional commencing trading of a security that is
comment form (http://www.sec.gov/ information on the differences between
rules/sro.shtml); or the subject of Nasdaq and non-Nasdaq-
the various time feeds. Furthermore, the listed initial public offerings (‘‘IPOs’’)
• Send an email to rule-comments@ Commission believes it is appropriate to
sec.gov. Please include File No. SR– and trading halts.
have these changes incorporated into The text of the proposed rule change
NYSE–2015–53 on the subject line. the rules of the Exchange concurrently is available at http://
Paper Comments with those changes discussed in the nasdaq.cchwallstreet.com/, at the
original filing.
• Send paper comments in triplicate Exchange’s principal office, and at the
to Secretary, Securities and Exchange Accordingly, the Commission finds Commission’s Public Reference Room.
Commission, 100 F Street NE., good cause for approving the proposed
II. Self-Regulatory Organization’s
Washington, DC 20549–1090. rule change, as modified by Amendment
Statement of the Purpose of, and
All submissions should refer to File No. No. 1, on an accelerated basis, pursuant
Statutory Basis for, the Proposed Rule
SR–NYSE–2015–53. This file number to Section 19(b)(2) of the Act.59
Change
should be included on the subject line VII. Conclusion In its filing with the Commission, the
if email is used. To help the
It is therefore ordered, pursuant to Exchange included statements
Commission process and review your
Section 19(b)(2) of the Act,60 that the concerning the purpose of and basis for
comments more efficiently, please use
only one method. The Commission will proposed rule change, as modified by the proposed rule change and discussed
post all comments on the Commission’s Amendment No. 1, (File No. SR–NYSE– any comments it received on the
Internet Web site (http://www.sec.gov/ 2015–53) be, and hereby is, approved on proposed rule change. The text of these
rules/sro.shtml). Copies of the an accelerated basis. statements may be examined at the
submission, all subsequent places specified in Item IV below. The
For the Commission, by the Division of Exchange has prepared summaries, set
amendments, all written statements Trading and Markets, pursuant to delegated
with respect to the proposed rule authority.61
forth in Sections A, B, and C below, of
change that are filed with the the most significant aspects of such
Brent J. Fields,
Commission, and all written statements.
Secretary.
communications relating to the [FR Doc. 2016–02736 Filed 2–10–16; 8:45 am] A. Self-Regulatory Organization’s
proposed rule change between the Statement of the Purpose of, and
BILLING CODE 8011–01–P
Commission and any person, other than Statutory Basis for, the Proposed Rule
those that may be withheld from the Change
public in accordance with the SECURITIES AND EXCHANGE
provisions of 5 U.S.C. 552, will be 1. Purpose
COMMISSION
available for Web site viewing and Nasdaq is proposing to make a minor
printing in the Commission’s Public modification to the Nasdaq process for
[Release No. 34–77066; File No. SR– commencing trading of a security that is
Reference Room, 100 F Street NE.,
NASDAQ–2016–008]
Washington, DC 20549 on official the subject of Nasdaq and non-Nasdaq-
business days between the hours of Self-Regulatory Organizations; The listed IPOs or trading halts. Specifically,
10:00 a.m. and 3:00 p.m. Copies of such NASDAQ Stock Market LLC; Notice of the Exchange is proposing to modify the
filing also will be available for Filing of Proposed Rule Change To way in which orders are accepted prior
inspection and copying at the principal Amend Rule 4120 to the commencement of trading for
office of the Exchange. All comments securities subject to trading halt or IPO.
received will be posted without change; February 5, 2016. This small change will simplify the
the Commission does not edit personal Pursuant to Section 19(b)(1) of the order submission operations for market
identifying information from Securities Exchange Act of 1934 (the participants during trading halts and
submissions. You should submit only ‘‘Act’’),1 and Rule 19b–4 thereunder,2 IPOs.
information that you wish to make notice is hereby given that on January Currently, Nasdaq Rule 4120(c)(4)(B)
available publicly. All submissions 29, 2016, The NASDAQ Stock Market provides that during any trading halt or
should refer to File No. SR–NYSE– LLC (‘‘Nasdaq’’ or the ‘‘Exchange’’) filed pause for which a halt cross under Rule
2015–53, and should be submitted on or with the Securities and Exchange 4753 will not occur, market participants
before March 3, 2016. Commission (the ‘‘Commission’’) the may enter orders during the trading halt
proposed rule change as described in or pause and designate such orders to be
VI. Accelerated Approval of Proposed held until the termination of the trading
Rule Change, as Modified by Items I and II below, which Items have
been prepared by the Exchange. The halt or pause. Under this rule, such
Amendment No. 1 orders will be held in a suspended state
Commission is publishing this notice to
The Commission finds good cause, solicit comments on the proposed rule until the termination of the halt or
mstockstill on DSK4VPTVN1PROD with NOTICES
pursuant to Section 19(b)(2) of the Act, change from interested persons. pause, at which time they will be
to approve the proposed rule change, as entered into the system.
modified by Amendment No. 1, prior to 58 See
Nasdaq Rules 4120(a)(1), (4), (5), (6),
supra, note 6.
the 30th day after the date of 59 15 U.S.C. 78s(b)(2).
(9), (10), (11), and (12)(F) provide
publication of Amendment No. 1 in the 60 See id. specific instances when the Exchange
Federal Register. As discussed above, 61 17 CFR 200.30–3(a)(12). may halt trading of a security listed on
Amendment No. 1 updates dates in the 1 15 U.S.C. 78s(b)(1). Nasdaq. Nasdaq Rule 4120(c)(7)(A)
original proposed rule change and adds 2 17 CFR 240.19b–4. establishes the process for lifting the
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Document Created: 2016-02-11 00:03:03
Document Modified: 2016-02-11 00:03:03
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 81 FR 7394 |
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