81 FR 7401 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Amendment No. 2 and Order Granting Accelerated Approval of Proposed Rule Change, as Modified by Amendment No. 2, 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 | 7401-7404 | |
| FR Document | 2016-02734 |
[Federal Register Volume 81, Number 28 (Thursday, February 11, 2016)] [Notices] [Pages 7401-7404] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-02734] [[Page 7401]] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-77070; File No. SR-NYSEArca-2015-102] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Amendment No. 2 and Order Granting Accelerated Approval of Proposed Rule Change, as Modified by Amendment No. 2, 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 NYSE Arca, Inc. (the ``Exchange'') (``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 28, 2016, the Exchange filed a response letter.\5\ On January 28, 2016, the Exchange filed Amendment No. 2 to the proposed rule change.\6\ The Commission is publishing this notice to solicit comments on Amendment No. 2 from interested persons and is approving the proposed rule change, as modified by Amendment No. 2, 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. 34-76616 (December 10, 2015), 80 FR 78275 (``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 28, 2016 (``Exchange Response Letter''). \6\ On January 28, 2016, the Exchange filed Amendment No. 1 but withdrew it on the same day, replacing it with Amendment No. 2. Amendment No. 2 (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 further explained 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. 2 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 (``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. 76010 (September 29, 2015), 80 FR 60197 (October 5, 2015) (SR-NYSEArca-2015-82). As specified in the Fee Schedules, a User that incurs co-location fees for a particular co- location service pursuant thereto would not be subject to co- location fees for the same co-location service charged by the Exchange's affiliates New York Stock Exchange LLC and NYSE MKT LLC. See Securities Exchange Act Release No. 70173 (August 13, 2013), 78 FR 50459 (August 19, 2013) (SR-NYSEArca-2013-80). \8\ See Notice, 80 FR at 78276. \9\ See id. \10\ See id. \11\ See id. \12\ See id. \13\ See Amendment No. 2, at 4. \14\ See id. \15\ See Notice, 80 FR at 78276, n.6. \16\ See id. at 78276. \17\ See id. 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 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 78276. \19\ See id. \20\ See id. at n.10. \21\ See id. at 78279. \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 78276. \24\ See id. \25\ See id. --------------------------------------------------------------------------- Partial Cabinet Solution Bundles The Exchange also proposes to offer four Partial Cabinet Solution bundles [[Page 7402]] 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. 78276-78277. \28\ See id. at 78278. ------------------------------------------------------------------------ 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. 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. 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. \31\ See id. at 78277. \32\ See id. at n.15. \33\ See id. at 78277. 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. 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. --------------------------------------------------------------------------- [[Page 7403]] 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 78278. \38\ See id. at 78277, 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 78278. --------------------------------------------------------------------------- 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 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. 2, 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. 2, 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. 2, 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 78279. \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, [[Page 7404]] 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. 2, is consistent with the Act. V. Solicitation of Comments on Amendment No. 2 Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether this filing, as modified by Amendment No. 2, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File No. SR-NYSEArca-2015-102 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-NYSEArca-2015-102. 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-NYSEArca-2015-102, and should be submitted on or before March 3, 2016. VI. Accelerated Approval of Proposed Rule Change, as Modified by Amendment No. 2 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. 2, prior to the 30th day after the date of publication of Amendment No. 2 in the Federal Register. As discussed above, Amendment No. 2 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. 2, 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. 2, (SR-NYSEArca-2015-102) 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. 2016-02734 Filed 2-10-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 28 / Thursday, February 11, 2016 / Notices 7401
SECURITIES AND EXCHANGE modified by Amendment No. 2, on an The proposed connectivity to time feeds
COMMISSION accelerated basis. would provide Users a convenient way
to access time protocols.16 According to
[Release No. 34–77070; File No. SR– II. Description of the Proposal, as
the Exchange, Users make use of time
NYSEArca–2015–102] Modified by Amendment No. 2
feeds to receive time and to synchronize
Self-Regulatory Organizations; NYSE The Exchange proposes to change its clocks between computer systems or
Arca, Inc.; Notice of Filing of rules to provide that the co-location throughout a computer network, and
Amendment No. 2 and Order Granting services offered by the Exchange time feeds assist Users in other
Accelerated Approval of Proposed include three time feeds and four Partial functions, including record keeping or
Rule Change, as Modified by Cabinet Solution bundles, and to measuring response times.17
Amendment No. 2, To Provide That the establish fees for these services.
Currently, Users have the option of
Co-Location Services Offered by the Time Feeds either renting a dedicated cabinet or a
Exchange Include Three Time Feeds The Exchange proposes to offer Users partial cabinet to house their servers
and Four Partial Cabinet Bundle the option to purchase connectivity to and other equipment in the data
Options one or more of three time feeds.7 Each center.18 Under the proposal, only the
February 5, 2016. proposed time feed provides a feed with NTP and PTP time feeds will be
the current time of day using one of available to partial cabinet Users,
I. Introduction three different time protocols: Global whereas dedicated cabinet Users will
On November 27, 2015 the NYSE Positioning System (‘‘GPS’’) Time have access to all three time feeds.19
Arca, Inc. (the ‘‘Exchange’’) (‘‘the Source, the Network Time Protocol According to the Exchange, connectivity
Exchange’’) filed with the Securities and (‘‘NTP’’), and Precision Timing Protocol to the GPS time feed is not available for
Exchange Commission (‘‘Commission’’), (‘‘PTP’’).8 GPS is a time and location partial cabinets because the proximity of
pursuant to Section 19(b)(1) of the system maintained by the United States the GPS and power connections into a
Securities Exchange Act of 1934 government.9 The Exchange accesses partial cabinet would expose the GPS to
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a the GPS Time Source feed through interference from the cable power
proposed rule change to provide that the dedicated equipment and subscribing connections, interfering with the
co-location services offered by the Users connect to the feed over dedicated delivery of the GPS data.20 The
Exchange include three time feeds and cables.10 For the NTP and PTP time Exchange states that if a partial cabinet
four bundles of co-location services feeds, the Exchange routes the GPS data User is in need of the GPS feed, it could
(‘‘Partial Cabinet Solution bundles’’). through dedicated equipment that either purchase a dedicated cabinet or
The proposed rule change was reformats the GPS data into NTP and become a Hosted Customer of a Hosting
published for comment in the Federal PTP.11 Subscribing Users connect to User that has the GPS feed.21 In
Register on December 16, 2015.3 The PTP over dedicated cables and NTP over addition, the Exchange states that the
Commission received one comment the Liquidity Center Network (‘‘LCN’’), NTP time feed is offered only over the
letter on the proposed rule change.4 On a local area network available in the LCN due to a lack of demand for the
January 28, 2016, the Exchange filed a data center.12 According to the NTP over the IP network, and notes that
response letter.5 On January 28, 2016, Exchange, the GPS Time Source feed is a User that requires connectivity to the
the Exchange filed Amendment No. 2 to a sub-microsecond time feed, providing NTP could connect to the LCN.22
the proposed rule change.6 The the highest level of accuracy of the three The Exchange proposes to charge a
Commission is publishing this notice to time feeds.13 PTP has an accuracy of non-recurring fee of $300, $1000, and
solicit comments on Amendment No. 2 less than 10 microseconds, while the $3000 for connectivity to the NTP, PTP,
from interested persons and is accuracy of NTP can be greater than 10 and GPS time feeds, respectively.23 The
approving the proposed rule change, as milliseconds.14 The Exchange states that Exchange will also charge a monthly
a User does not require connectivity to recurring fee of $100, $250, and $400 for
1 15 U.S.C. 78s(b)(1). a time feed to trade on the Exchange.15 the NTP, PTP, and GPS time feeds,
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 34–
respectively.24 Subscribing Users that
7 For purposes of the Exchange’s co-location
76616 (December 10, 2015), 80 FR 78275 services, a ‘‘User’’ means any market participant
order the proposed time feed services
(‘‘Notice’’). On January 28, 2016, the Exchange that requests to receive co-location services directly will be subject to a 12-month minimum
consented to extending the time period for the from the Exchange, a ‘‘Hosting User’’ means a User commitment, after which they are
Commission to either approve or disapprove the that hosts a Hosted Customer in the User’s co- subject to a 60-day rolling
proposed rule change, or to institute proceedings to location space, and a ‘‘Hosted Customer’’ means a
determine whether to approve or disapprove the customer of a Hosting User that is hosted in a commitment.25
proposed rule change, to February 5, 2016. Hosting User’s co-location space. See Securities
4 See letter from Kermit Kubitz to the Exchange Act Release No. 76010 (September 29,
Partial Cabinet Solution Bundles
Commission, dated January 6, 2016 (‘‘Kubitz 2015), 80 FR 60197 (October 5, 2015) (SR–
NYSEArca–2015–82). As specified in the Fee The Exchange also proposes to offer
Letter’’).
5 See letter from Martha Redding Senior Counsel Schedules, a User that incurs co-location fees for a four Partial Cabinet Solution bundles
particular co-location service pursuant thereto
& Assistant Secretary, NYSE to Brent J. Fields,
would not be subject to co-location fees for the
Secretary of the Commission, dated January 28, same co-location service charged by the Exchange’s
16 See id. at 78276.
2016 (‘‘Exchange Response Letter’’). affiliates New York Stock Exchange LLC and NYSE
17 See id. For example, a User may connect to a
6 On January 28, 2016, the Exchange filed time feed for record keeping purposes if it uses that
MKT LLC. See Securities Exchange Act Release No.
Amendment No. 1 but withdrew it on the same day, 70173 (August 13, 2013), 78 FR 50459 (August 19, specific time protocol for all its activities, both
replacing it with Amendment No. 2. Amendment inside and out of the data center. See id. at n.7.
mstockstill on DSK4VPTVN1PROD with NOTICES
2013) (SR–NYSEArca-2013–80).
No. 2 (i) updates the proposal to specify that that 8 See Notice, 80 FR at 78276. 18 See id. at 78276.
Partial Cabinet Solution Bundles, originally 9 See id. 19 See id.
proposed to be offered on January 1, 2016, instead 10 See id. 20 See id. at n.10.
will be offered on the date that is the later of 11 See id. 21 See id. at 78279.
February 1, 2016 and the date of any Commission 22 See id.
12 See id.
approval of the proposal; and (ii) as further
13 See Amendment No. 2, at 4. 23 See id. at 78276.
explained below, adds clarity to the proposal by
14 See id. 24 See id.
specifying the differences in precision among the
three time feeds. 15 See Notice, 80 FR at 78276, n.6. 25 See id.
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![Federal Register / Vol. 81, No. 28 / Thursday, February 11, 2016 / Notices 7403
Further, if a subscribing User feed failure, irrespective of whether they other persons using its facilities, and
purchased each of the components of a utilize a partial or dedicated cabinet.’’ 45 with Section 6(b)(5) of the Act,52 which
Partial Cabinet Solution bundle, The Exchange stated that it uses the requires, among other things, that the
whether over several purchases or in same GPS time feed equipment for its rules of a national securities exchange
one order, and met the conditions production environment and to provide be designed to promote just and
described above for access to the Partial time feeds to Users; 46 and that Users equitable principles of trade, to remove
Cabinet Solution bundle, the Exchange purchasing time feeds from the impediments to and perfect the
would automatically treat that User’s Exchange (whether GPS, PTP, or NTP) mechanism of a free and open market
services as a Partial Cabinet Solution benefit from the same protections that and a national market system and, in
bundle and, effective the date of the Exchange has implemented for its general, to protect investors and the
installation of the final component, own GPS antennas and receivers.47 The public interest, and not be designed to
reduce the User’s recurring fee to the Exchange also stated that GPS is the permit unfair discrimination between
recurring fee for the relevant bundle.37 source information for all three time customers, issuers, brokers, or dealers.
In addition, a User that changes its feeds and that the Exchange routes the The Commission believes that the
Partial Cabinet Solution bundle from GPS data through dedicated equipment proposed rule change is consistent with
one option to another will not be subject that reformats the GPS data to propagate Section 6(b)(4) of the Act. The
to a second initial charge, but will be the NTP and PTP.48 The Exchange Commission notes the Exchange’s
required to pay the difference, if any, further stated that any disruption to the representation that the proposed fees for
between the bundles’ initial charges.38 GPS time feed would impact the NTP the time feed connectivity and Partial
Finally, the Exchange proposes to and PTP time feeds in the same way as Cabinet Solution bundles are reasonable
make non-substantive changes to the the GPS feed; and that the Exchange has because the Exchange proposes to offer
Price List and Fee Schedule to add no knowledge of any other method to the services as a convenience to Users,
subheadings under ‘‘Co-Location Fees’’ ‘‘spoof’’ the NTP or PTP feeds if the GPS but in doing so will incur certain costs,
for ‘‘Definitions’’ and ‘‘General feed were not compromised.49 including costs related to the data center
Notes.’’ 39 facility, hardware and equipment and
IV. Discussion and Commission costs related to personnel required for
III. Summary of Comment Letter and Findings the initial installation, monitoring,
Exchange Response
After careful review and support and maintenance of such
As noted above, the Commission consideration of the Exchange’s services.53 The Exchange states that the
received one comment letter on the proposal, the comment letter and the higher fee in connection with the GPS
proposed rule change,40 and a response Exchange’s response, the Commission time feed reflects the greater costs for its
from the Exchange.41 The commenter equipment, installation and
finds that the proposed rule change, as
expressed concern about the potential maintenance in comparison with the
modified by Amendment No. 2, is
for ‘‘GPS spoofing’’ (intentional other time feeds.54 In addition, all Users
consistent with the requirements of the
interference with GPS feeds from a that voluntarily select connectivity to
Act and the rules and regulations
distance) if GPS data are from an one or more of the proposed time feeds
thereunder applicable to a national
unsecured source.42 According to the would be charged the same amount for
securities exchange.50 In particular, the
commenter, a successful GPS spoofing the same services. With respect to the
Commission finds that the proposed
attack could cause time feed data to proposed Partial Cabinet Solution
rule change, as modified by Amendment
become corrupted, which could cause bundles in particular, the Commission
No. 2, is consistent with Section 6(b)(4)
Users, such as High Frequency Trading also notes that all Users are subject to
of the Act,51 which requires that the
(‘‘HFT’’) firms that represent substantial the same conditions and fees for the
market volume, to withdraw from the rules of a national securities exchange
provide for the equitable allocation of service selected; all Users are subject to
market and lead to market disruption.43 the same limits on the number of Partial
The commenter asked particularly reasonable dues, fees and other charges
among its members and issuers and Cabinet Solution bundles and aggregate
whether purchasers of Partial Cabinet cabinet footprint; all Users that order a
Solution bundles that have access to the 45 See bundle on or before December 31, 2016
Exchange Response Letter, supra note 5, at
PTP and NTP feeds, but not the 3. would have their monthly charges
dedicated GPS time feed, would have 46 See
id. at 4. reduced by 50 percent for the first 12
any ‘‘special vulnerability to some sort 47 See
id. The Exchange added that that months; and all Users that change their
of feed failure’’ as a result of ‘‘GPS discussion of these protections in a proposed rule Partial Cabinet Solution bundles would
spoofing’’ or otherwise.44 change would impair their effectiveness. See id. at
5. not be charged a second initial charge
The Exchange responded that ‘‘[t]o 48 See id. at 3. but instead charged the difference, if
the best of the Exchange’s knowledge, 49 See id. Regarding the commenter’s concern any, between the initial charges.
Users that connect to the NTP or the about the potential for GPS spoofing to lead to The Commission further believes that
PTP, rather than the GPS Time Source, market disruption, the Exchange stated that it could the Exchange’s proposal to offer Users
do not have a special vulnerability to not comment on the behavior of HFT Users during
optional connectivity to the GPS, PTP,
a ‘‘spoofing event’’ regardless of whether the HFT
37 See
User received its time feed from the Exchange or a and NTP time feeds is consistent with
id. at 78278.
38 See
third party vendor. The Exchange noted, however, the requirements of Section 6(b)(5) of
id. at 78277, n.19. that the proposal was limited to time feeds
39 See id. at 78278. the Act. The proposal to offer
provided by the Exchange and that Users
40 See Kubitz Letter, supra note 4.
purchasing time feeds from the Exchange benefit connectivity to different time feed
mstockstill on DSK4VPTVN1PROD with NOTICES
41 See Exchange Response Letter, supra note 5. from the same protections that the Exchange has options allows a User to select the time
42 See Kubitz Letter, supra note 4. implemented for its own GPS antennas and protocol that best suits it needs, helping
43 See id. receivers. See id. at 5. to tailor its data center operations to the
44 See id. The commenter further requested that 50 In approving this proposed rule change, as
modified by Amendment No. 2, the Commission
requirements of its business operations,
the Commission more broadly investigate and
report on any risks associated with time feeds, and has considered the proposed rule’s impact on
52 15 U.S.C. 78f(b)(5).
measures to protect these and other data feeds. See efficiency, competition, and capital formation. See
id. The Commission notes that this suggestion is 15 U.S.C. 78c(f). 53 See Notice, 80 FR at 78279.
beyond the scope of the proposed rule change. 51 15 U.S.C. 78f(b)(4). 54 See id.
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![7404 Federal Register / Vol. 81, No. 28 / Thursday, February 11, 2016 / Notices
and to operate more efficiently. As set Amendment No. 2, is consistent with VI. Accelerated Approval of Proposed
forth in the Exchange Response Letter, the Act. Rule Change, as Modified by
the Exchange states that whether a User Amendment No. 2
V. Solicitation of Comments on
purchases access to the GPS, NTP, or The Commission finds good cause,
Amendment No. 2
PTP time feed, it benefits from the same pursuant to Section 19(b)(2) of the Act,
precautions as the Exchange’s Interested persons are invited to to approve the proposed rule change, as
production environment, as the submit written data, views, and modified by Amendment No. 2, prior to
Exchange uses the same GPS time feed arguments concerning the foregoing, the 30th day after the date of
equipment, including antennas and including whether this filing, as publication of Amendment No. 2 in the
receivers, to provide time feeds to modified by Amendment No. 2, is Federal Register. As discussed above,
Users.55 The Commission therefore consistent with the Act. Comments may Amendment No. 2 updates dates in the
believes that the proposed time feeds, be submitted by any of the following original proposed rule change and adds
would remove impediments to, and methods: clarity on the differences between the
perfect the mechanisms of, a free and three time feeds in terms of their
open market and a national market Electronic Comments
precision.58 The Commission believes
system and, in general, protect investors • Use the Commission’s Internet that these revisions provide clarity on
and the public interest. The Exchange comment form (http://www.sec.gov/ when partial cabinet bundle discounts
represents that connectivity to the GPS rules/sro.shtml); or will apply along with additional
time feed is not available for partial
cabinets because the proximity of the • Send an email to rule-comments@ information on the differences between
sec.gov. Please include File No. SR– the various time feeds. Furthermore, the
GPS and power connections into a Commission believes it is appropriate to
partial cabinet would expose the GPS to NYSEArca–2015–102 on the subject
line. have these changes incorporated into
interference from the cable power the rules of the Exchange concurrently
connections, interfering with the Paper Comments with those changes discussed in the
delivery of the GPS data.56 The original filing.
Exchange also represents that • Send paper comments in triplicate
to Secretary, Securities and Exchange Accordingly, the Commission finds
connectivity to the NTP time feed is not good cause for approving the proposed
proposed to be offered over the IP Commission, 100 F Street NE.,
Washington, DC 20549–1090. rule change, as modified by Amendment
network due to lack of demand.57 For No. 2, on an accelerated basis, pursuant
these reasons, the Commission believes All submissions should refer to File No. to Section 19(b)(2) of the Act.59
that providing connectivity to the GPS SR–NYSEArca–2015–102. This file
Time Source for dedicated cabinets but number should be included on the VII. Conclusion
not partial cabinets, and to the NTP time subject line if email is used. To help the It is therefore ordered, pursuant to
feed through the LCN but not the IP Commission process and review your Section 19(b)(2) of the Act,60 that the
network, is not designed to permit comments more efficiently, please use proposed rule change, as modified by
unfair discrimination between only one method. The Commission will Amendment No. 2, (SR–NYSEArca–
customers, issuers, brokers, or dealers. post all comments on the Commission’s 2015–102) be, and hereby is, approved
The Commission also finds the Internet Web site (http://www.sec.gov/ on an accelerated basis.
Exchange’s proposal to offer Partial rules/sro.shtml). Copies of the
Cabinet Solution bundles consistent For the Commission, by the Division of
submission, all subsequent Trading and Markets, pursuant to delegated
with Section 6(b)(5) of the Act. As amendments, all written statements authority.61
noted, all Users seeking to purchase a with respect to the proposed rule Brent J. Fields,
Partial Cabinet Solution bundle would change that are filed with the
be subject to the same conditions. The Secretary.
Commission, and all written [FR Doc. 2016–02734 Filed 2–10–16; 8:45 am]
Commission believes that the proposed communications relating to the
Partial Cabinet Solution bundles are proposed rule change between the
BILLING CODE 8011–01–P
reasonably designed to make it more Commission and any person, other than
cost effective for Users with minimal those that may be withheld from the
power or cabinet space demands to take public in accordance with the DEPARTMENT OF STATE
advantage of the option for co-location provisions of 5 U.S.C. 552, will be [Public Notice: 9442]
services, and therefore that they are available for Web site viewing and
designed to promote just and equitable printing in the Commission’s Public Biodiversity Beyond National
principles of trade, to remove Reference Room, 100 F Street NE., Jurisdiction; Notice of Public Meeting
impediments to and perfect the Washington, DC 20549 on official
mechanism of a free and open market business days between the hours of ACTION: Notice of Public Meeting.
and a national market system and, in 10:00 a.m. and 3:00 p.m. Copies of such
general, to protect investors and the Title: Biodiversity Beyond National
filing also will be available for Jurisdiction; Notice of Public Meeting.
public interest, and are not designed to inspection and copying at the principal
permit unfair discrimination between SUMMARY: The Department of State will
office of the Exchange. All comments hold an information session regarding
customers, issuers, brokers, or dealers. received will be posted without change;
For the foregoing reasons, the issues related to upcoming United
mstockstill on DSK4VPTVN1PROD with NOTICES
the Commission does not edit personal Nations meetings concerning marine
Commission also finds that, the identifying information from
proposed rule change, as modified by biodiversity in areas beyond national
submissions. You should submit only jurisdiction.
55 See
information that you wish to make
Exchange Response Letter, supra note 5, at
4.
available publicly. All submissions 58 See supra, note 6.
56 See supra, notes 20 and 21 and accompanying should refer to File No. SR–NYSEArca– 59 15 U.S.C. 78s(b)(2).
text. 2015–102, and should be submitted on 60 See id.
57 See supra, note 22 and accompanying text. or before March 3, 2016. 61 17 CFR 200.30–3(a)(12).
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Document Created: 2016-02-11 00:03:38
Document Modified: 2016-02-11 00:03:38
| 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 7401 |
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