82 FR 49453 - Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Schedule of Fees
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 205 (October 25, 2017)
Federal Register Volume 82, Issue 205 (October 25, 2017)
| Page Range | 49453-49456 | |
| FR Document | 2017-23117 |
[Federal Register Volume 82, Number 205 (Wednesday, October 25, 2017)] [Notices] [Pages 49453-49456] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-23117] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-81902; File No. SR-GEMX-2017-48] Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Schedule of Fees October 19, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on October 16, 2017, Nasdaq GEMX, LLC (``GEMX'' or ``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to: (i) Delete fees and descriptions thereof for connectivity no longer used by the Exchange; and (ii) add new fees for co-location services, direct circuit connections to the Exchange, connections to third party services, point of presence (``POP'') connectivity, and connectivity to the Exchange's Test Facility (the ``Test Facility''). The text of the proposed rule change is available on the Exchange's Web site at www.ise.com, at the principal office of the Exchange, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its Fee Schedule to eliminate certain fees associated with legacy options for connecting to GEMX and to replace them with fees associated with new options for connecting to the Exchange that are similar to those that GEMX's sister exchanges presently offer. GEMX is engaged in an initiative to migrate the Exchange's trading system to the Nasdaq INET architecture. As part of that initiative, GEMX proposes to retire certain obsolete connectivity associated with the Exchange's legacy trading system and the fees associated with such connectivity. Specifically, the Exchange proposes to discontinue offering Ethernet connectivity to the Exchange and also eliminate the fees it charges for such connectivity in Section IV.C of its Fee Schedule, entitled ``Network Fees.'' \3\ The Exchange currently offers four Ethernet connection options: A 1 Gb connection at a cost of $1,000 per month, a 10 Gb connection at a cost of $4,500 per month, a 10 Gb low latency connection at a cost of $8,000 per month, and a 40 Gb low latency connection at a cost of $15,000 per month. --------------------------------------------------------------------------- \3\ The Exchange proposes to change the title of Section IV from ``Access Services'' to ``Connectivity Fees.'' --------------------------------------------------------------------------- Additionally, the Exchange proposes to stop offering customers the ability to connect to the Exchange via an Application Programming Interface (``API'') session or a Financial Information eXchange (``FIX'') session, as these connection options are becoming obsolete with respect to the new trading system. The Exchange correspondingly proposes to eliminate paragraphs 1 and 2 of Section IV.E of its Fee Schedule, entitled ``Port Fees.'' The Exchange presently charges Electronic Access Members (``EAMs'') monthly per session API fees and FIX session fees. In lieu of the above, the Exchange proposes to offer customers various new options to connect to the Exchange and to assess fees for such connectivity. The connectivity options that the Exchange proposes to offer--colocation, direct circuit connectivity, connectivity to third party services, POP connectivity, and connectivity to the Exchange's Test Facility--and the fees that the Exchange proposes to assess for such connectivity are similar to those that ISE's affiliated Nasdaq, Inc. markets--including The NASDAQ Stock Market, LLC (``Nasdaq''), Nasdaq BX, Inc. (``BX''), and Nasdaq Phlx LLC (``Phlx'')--presently offer and assess to their customers under their respective rules. They are also the same as the connectivity options and fees that Nasdaq ISE, LLC (``ISE'') and Nasdaq MRX, LLC (``MRX'') propose to offer and assess under their respective rules in tandem with this filing. This proposal, in other words, seeks to harmonize the Exchange's connectivity offerings and fees with those of its sister exchanges. The first new connectivity option that the Exchange proposes to offer its customers is co-location. Co-location is a suite of hardware, power, telecommunication, and other ancillary products and services that allow market participants and vendors to place their trading and communications equipment [[Page 49454]] in close physical proximity to the quoting and execution facilities of the Exchange and other Nasdaq, Inc. markets. The Exchange provides co- location services and imposes fees through Nasdaq Technology Services LLC and pursuant to agreements with the owner/operator of its data center where both the Exchange's quoting and trading facilities and co- located customer equipment are housed. Users of colocation services include private extranet providers, data vendors, as well as Exchange members and non-members. The use of co-location services is entirely voluntary. Like its sister exchanges, and as detailed in the proposed co- location fee schedule, the Exchange proposes to impose a uniform, non- discriminatory set of fees for various co-location services, including: fees for co-located connections to the Exchange and to third party services (described below) in various bandwidths; fees for cabinet space usage, or options for future space usage; installation and related power provision for hosted equipment; connectivity among multiple cabinets being used by the same customer as well as customer connectivity to the Exchange and telecommunications providers; and related maintenance and consulting services. Fees related to cabinet and power usage are incremental, with additional charges being imposed based on higher levels of cabinet and/or power usage, the use of non- standard cabinet sizes or special cabinet cooling equipment, or the re- selling of cabinet space. In addition to co-location services, the Exchange proposes to offer several other connectivity options for customers that are located outside of the Exchange's primary data center in Carteret, New Jersey. First, the Exchange proposes to offer a ``Direct Circuit Connectivity'' service, whereby subscribers may connect their facilities directly to the Exchange's primary data center using a circuit they obtain from an external telecommunications provider. For this form of connectivity, the Exchange's proposal offers customers the choice of 1 GB, 1 GB Ultra, and 10 GB connections. The installation fee for all such connections will be $1,500 and the monthly fee will be $7,500 for 10 GB connections and $2,500 for both 1 GB and 1 GB Ultra connections. The Exchange also proposes to charge a fee to customers that choose to install a cable router in its data center and a monthly fee for customers that choose to install equipment in the Exchange's data center to support the connectivity. Specifically, the Exchange proposes an installation fee of $925 per router, switch or modem, and a monthly fee of $150 to rent cabinet space based on a unit height of approximately 1.75 inches (commonly called a ``U'' space) and a maximum power of 125 Watts per U space. Next, the Exchange proposes to offer a ``POP Connectivity'' service, whereby subscribers may use external telecommunication circuits to connect directly to one or more of the Exchange's satellite data centers (each, a ``POP'') that are located in places other than Carteret. Each POP, in turn, has a fully redundant connection to the Exchange's primary data center, such that subscribers may connect to the primary data center through its connection to a POP. For POP Connectivity to the Exchange, the Exchange proposes to offer 1 GB Ultra and 10 GB connections. The installation fee for all such connections will be $1,500 and the monthly fee will be $7,500 for 10 GB connections and $2,500 for 1 GB Ultra connections.\4\ --------------------------------------------------------------------------- \4\ Clients will not be permitted to install routers in or rent cabinet space directly from the Exchange at the POPs. Accordingly, the fee schedule for POP connectivity will not include fees for these services. --------------------------------------------------------------------------- Additionally, the Exchange proposes to offer connectivity to third party services. The Exchange is proposing to offer this service to both non-co-location customers (via a direct circuit connection) and co- location customers alike. This connectivity will enable customers to receive third party market data feeds, including Securities Information Processors (``SIPs'') \5\ data, and other non-exchange services.\6\ The Exchange will offer this service to customers in both 10 GB Ultra and 1 GB Ultra bandwidths. The installation fee for both 10 GB Ultra and 1 GB Ultra direct connections will be $1,500. Meanwhile, the monthly fee will be $5,000 for 10 GB Ultra connections and $2,000 for 1 GB Ultra hand-offs. For 1 GB Ultra or 10 GB Ultra connections for UTP only, the installation fee and monthly fee will be waived for the first two connections and thereafter the installation fee will be $100 and the monthly fee also will be $100. As with Direct Circuit Connectivity, the Exchange proposes to charge a $925 fee to customers that choose to install a cable router in its data center for purposes of receiving the third party services as well as a monthly fee of $150 for customers that choose to install equipment in the Exchange's data center to support that connectivity. --------------------------------------------------------------------------- \5\ The SIPs link the U.S. markets by processing and consolidating all protected bid/ask quotes and trades from every registered exchange trading venue and FINRA into a single data feed, and they disseminate and calculate critical regulatory information, including the National Best Bid and Offer, Limit Up Limit Down price bands, short sale restrictions and regulatory halts. \6\ Third Party Services includes not only SIP data feeds, but also data feeds from other exchanges and markets. For example, Third Party Connectivity will support connectivity to the FINRA/Nasdaq Trade Reporting Facility, BATS Depth Feeds, and NYSE Feeds. A customer must separately subscribe to the third party services to which it connects with a Third Party Connectivity subscription. The Exchange notes that customers that do not wish to subscribe to Direct Circuit Connectivity to Third Party Services may alternatively connect through an extranet provider or a market data redistributor. --------------------------------------------------------------------------- Furthermore, the Exchange proposes to offer connectivity to its Test Facility. The Test Facility provides subscribers with a virtual system test environment that closely approximates the production environment and on which they may test their automated systems that integrate with the Exchange. For example, subscribers may test upcoming Exchange releases and product enhancements, as well as test software prior to implementation. The Exchange proposes to assess certain fees for use of the Test Facility. Specifically, the Exchange proposes that subscribers to the Test Facility located in Carteret, New Jersey shall pay a fee of $1,000 per hand-off, per month for connection to the Test Facility. The hand-off fee will includes [sic] either a 1 GB or 10 GB switch port and a cross connect to the Test Facility. Subscribers will also pay a one-time installation fee of $1,000 per handoff. Finally, for each of the connectivity options discussed above, the Exchange proposes to include language in the fee schedule which states that connectivity to the Exchange also applies to connectivity to all of the other Nasdaq, Inc. markets, including Nasdaq, BX, Phlx, MRX, and ISE. This purpose of this proposal is to specify that a client can use the connections it establishes and maintains to connect, not only to the Exchange, but also to any or all of its sister exchanges, and in doing so, it will be billed only once. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,\7\ in general, and furthers the objectives of Section 6(b)(5) of the Act,\8\ in particular, in that it is 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. --------------------------------------------------------------------------- \7\ 15 U.S.C. 78f(b). \8\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange believes that it is reasonable to eliminate its existing [[Page 49455]] Ethernet, FIX, and API connectivity offerings and their associated fees as the Exchange is migrating to a new platform that will offer new connectivity options. The Exchange notes that its customers have had ample prior notice of this transition. The Exchange believes that proposed new connectivity fees are reasonable as a means of covering its costs associated with providing new connectivity options. Moreover, these new fees are reasonable because they are similar to or the same as the connectivity fees that the Exchange's sister exchanges, including Nasdaq, BX, and Phlx, charge under their respective rules.\9\ They are also the same as those connectivity fees that ISE and MRX are proposing to assess in filings being submitted to the Commission concurrently with this one. The Exchange also believes that it is reasonable and in the interest of the public and investors to harmonize all of the Exchange's connectivity options and connectivity fees now that all of the Nasdaq, Inc. exchanges are on a common platform. --------------------------------------------------------------------------- \9\ See Nasdaq Rule 7030, BX Rule 7030, and Nasdaq Phlx LLC Pricing Schedule Section VII.E (Test Facility); Nasdaq Rule 7034(b), BX Rule 7034(b), and Nasdaq Phlx LLC Pricing Schedule Section X (co- location); Nasdaq Rule 7051, BX Rule 7051, and Nasdaq Phlx LLC Pricing Schedule Section XI (direct connectivity). --------------------------------------------------------------------------- The Exchange believes that the proposed new fees are an equitable allocation and are not unfairly discriminatory because the Exchange will apply the same fees to all subscribers to the same connectivity options. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. In terms of inter-market competition, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive, or rebate opportunities available at other venues to be more favorable. In such an environment, the Exchange must continually adjust its fees to remain competitive with other exchanges and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. Because competitors are free to modify their own fees in response, and because market participants may connect to third parties instead of directly connecting to the Exchange, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. In this instance, the proposed changes to the charges assessed for connectivity to the Exchange are consistent with the fees assessed by other exchanges for the same or similar connectivity. Moreover, the Exchange must assess fees to cover the costs incurred in providing connectivity and members had been assessed fees for Exchange connectivity prior to the sunset of the old Exchange architecture. As a consequence, competition will not be burdened by the proposed fees. In sum, if the changes proposed herein are unattractive to market participants, it is likely that the Exchange will lose market share as a result. Accordingly, the Exchange does not believe that the proposed changes will impair the ability of members or competing order execution venues to maintain their competitive standing in the financial markets. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act \10\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\11\ --------------------------------------------------------------------------- \10\ 15 U.S.C. 78s(b)(3)(A)(iii). \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. --------------------------------------------------------------------------- A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally does not become operative prior to 30 days after the date of the filing. However, Rule 19b-4(f)(6)(iii) \13\ permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Exchange states that the proposed rule change does not significantly affect the protection of investors or the public interest because it will eliminate obsolete connectivity services and replace them with services that customers will need to connect to the Exchange via its new trading platform. The Exchange further states that such connectivity services will be similar, or the same, as those that are currently offered by other Nasdaq, Inc. exchanges. Moreover, the Exchange states that the fees for such connectivity that are similar to, or the same, as fees charged by the other Nasdaq, Inc. exchanges. --------------------------------------------------------------------------- \12\ 17 CFR 240.19b-4(f)(6). \13\ 17 CFR 240.19b-4(f)(6)(iii). --------------------------------------------------------------------------- The Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest. The Commission notes that the proposal harmonizes the Exchange's co- location offerings and fees with those of the other Nasdaq, Inc. exchanges. Furthermore, waiver of the 30-day operative delay will eliminate the confusion that could occur if different co-location offerings were available on each of Nasdaq. Inc.'s affiliated exchanges. Accordingly, the Commission hereby waives the 30-day operative delay and designates the proposed rule change as operative upon filing.\14\ --------------------------------------------------------------------------- \14\ For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or [[Page 49456]] Send an email to [email protected]. Please include File Number SR-GEMX-2017-48 on the subject line. Paper Comments Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-GEMX-2017-48. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-GEMX-2017-48 and should be submitted on or before November 15, 2017. --------------------------------------------------------------------------- \15\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\15\ Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-23117 Filed 10-24-17; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 82, No. 205 / Wednesday, October 25, 2017 / Notices 49453
All submissions should refer to File notice is hereby given that on October Specifically, the Exchange proposes to
Number SR–ISE–2017–91. This file 16, 2017, Nasdaq GEMX, LLC (‘‘GEMX’’ discontinue offering Ethernet
number should be included on the or ‘‘Exchange’’) filed with the Securities connectivity to the Exchange and also
subject line if email is used. To help the and Exchange Commission (‘‘SEC’’ or eliminate the fees it charges for such
Commission process and review your ‘‘Commission’’) the proposed rule connectivity in Section IV.C of its Fee
comments more efficiently, please use change as described in Items I and II Schedule, entitled ‘‘Network Fees.’’ 3
only one method. The Commission will below, which Items have been prepared The Exchange currently offers four
post all comments on the Commission’s by the Exchange. The Commission is Ethernet connection options: A 1 Gb
Internet Web site (http://www.sec.gov/ publishing this notice to solicit connection at a cost of $1,000 per
rules/sro.shtml). Copies of the comments on the proposed rule change month, a 10 Gb connection at a cost of
submission, all subsequent from interested persons. $4,500 per month, a 10 Gb low latency
amendments, all written statements connection at a cost of $8,000 per
I. Self-Regulatory Organization’s
with respect to the proposed rule month, and a 40 Gb low latency
Statement of the Terms of Substance of
change that are filed with the connection at a cost of $15,000 per
the Proposed Rule Change
Commission, and all written month.
communications relating to the The Exchange proposes to: (i) Delete Additionally, the Exchange proposes
proposed rule change between the fees and descriptions thereof for to stop offering customers the ability to
Commission and any person, other than connectivity no longer used by the connect to the Exchange via an
those that may be withheld from the Exchange; and (ii) add new fees for co- Application Programming Interface
public in accordance with the location services, direct circuit (‘‘API’’) session or a Financial
provisions of 5 U.S.C. 552, will be connections to the Exchange, Information eXchange (‘‘FIX’’) session,
available for Web site viewing and connections to third party services, as these connection options are
printing in the Commission’s Public point of presence (‘‘POP’’) connectivity, becoming obsolete with respect to the
Reference Room, 100 F Street NE., and connectivity to the Exchange’s Test new trading system. The Exchange
Washington, DC 20549, on official Facility (the ‘‘Test Facility’’). correspondingly proposes to eliminate
business days between the hours of The text of the proposed rule change paragraphs 1 and 2 of Section IV.E of its
10:00 a.m. and 3:00 p.m. Copies of the is available on the Exchange’s Web site Fee Schedule, entitled ‘‘Port Fees.’’ The
filing also will be available for at www.ise.com, at the principal office Exchange presently charges Electronic
inspection and copying at the principal of the Exchange, and at the Access Members (‘‘EAMs’’) monthly per
office of the Exchange. All comments Commission’s Public Reference Room. session API fees and FIX session fees.
received will be posted without change. II. Self-Regulatory Organization’s In lieu of the above, the Exchange
Persons submitting comments are Statement of the Purpose of, and proposes to offer customers various new
cautioned that we do not redact or edit Statutory Basis for, the Proposed Rule options to connect to the Exchange and
personal identifying information from Change to assess fees for such connectivity. The
comment submissions. You should connectivity options that the Exchange
submit only information that you wish In its filing with the Commission, the
proposes to offer—colocation, direct
to make available publicly. All Exchange included statements
circuit connectivity, connectivity to
submissions should refer to File concerning the purpose of and basis for
third party services, POP connectivity,
Number SR–ISE–2017–91 and should be the proposed rule change and discussed
and connectivity to the Exchange’s Test
submitted on or before November 15, any comments it received on the
Facility—and the fees that the Exchange
2017. proposed rule change. The text of these
proposes to assess for such connectivity
statements may be examined at the
For the Commission, by the Division of places specified in Item IV below. The are similar to those that ISE’s affiliated
Trading and Markets, pursuant to delegated Exchange has prepared summaries, set Nasdaq, Inc. markets—including The
authority.14 NASDAQ Stock Market, LLC
forth in sections A, B, and C below, of
Eduardo A. Aleman,
the most significant aspects of such (‘‘Nasdaq’’), Nasdaq BX, Inc. (‘‘BX’’),
Assistant Secretary. statements. and Nasdaq Phlx LLC (‘‘Phlx’’)—
[FR Doc. 2017–23118 Filed 10–24–17; 8:45 am] presently offer and assess to their
BILLING CODE 8011–01–P
A. Self-Regulatory Organization’s customers under their respective rules.
Statement of the Purpose of, and They are also the same as the
Statutory Basis for, the Proposed Rule connectivity options and fees that
SECURITIES AND EXCHANGE Change Nasdaq ISE, LLC (‘‘ISE’’) and Nasdaq
COMMISSION 1. Purpose MRX, LLC (‘‘MRX’’) propose to offer and
assess under their respective rules in
[Release No. 34–81902; File No. SR–GEMX– The Exchange proposes to amend its
2017–48] tandem with this filing. This proposal,
Fee Schedule to eliminate certain fees in other words, seeks to harmonize the
associated with legacy options for Exchange’s connectivity offerings and
Self-Regulatory Organizations; Nasdaq
connecting to GEMX and to replace fees with those of its sister exchanges.
GEMX, LLC; Notice of Filing and
them with fees associated with new The first new connectivity option that
Immediate Effectiveness of Proposed
options for connecting to the Exchange the Exchange proposes to offer its
Rule Change To Amend the
that are similar to those that GEMX’s customers is co-location. Co-location is
Exchange’s Schedule of Fees
sister exchanges presently offer. a suite of hardware, power,
sradovich on DSK3GMQ082PROD with NOTICES
October 19, 2017. GEMX is engaged in an initiative to telecommunication, and other ancillary
Pursuant to Section 19(b)(1) of the migrate the Exchange’s trading system products and services that allow market
Securities Exchange Act of 1934 to the Nasdaq INET architecture. As part participants and vendors to place their
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 of that initiative, GEMX proposes to trading and communications equipment
retire certain obsolete connectivity
14 17 CFR 200.30–3(a)(12). associated with the Exchange’s legacy 3 The Exchange proposes to change the title of
1 15 U.S.C. 78s(b)(1). trading system and the fees associated Section IV from ‘‘Access Services’’ to ‘‘Connectivity
2 17 CFR 240.19b–4. with such connectivity. Fees.’’
VerDate Sep<11>2014 22:06 Oct 24, 2017 Jkt 244001 PO 00000 Frm 00143 Fmt 4703 Sfmt 4703 E:\FR\FM\25OCN1.SGM 25OCN1](https://thefederalregister.org/doc/82_FR_49658/page/1.svg)
![49454 Federal Register / Vol. 82, No. 205 / Wednesday, October 25, 2017 / Notices
in close physical proximity to the installation fee of $925 per router, monthly fee will be waived for the first
quoting and execution facilities of the switch or modem, and a monthly fee of two connections and thereafter the
Exchange and other Nasdaq, Inc. $150 to rent cabinet space based on a installation fee will be $100 and the
markets. The Exchange provides co- unit height of approximately 1.75 inches monthly fee also will be $100. As with
location services and imposes fees (commonly called a ‘‘U’’ space) and a Direct Circuit Connectivity, the
through Nasdaq Technology Services maximum power of 125 Watts per U Exchange proposes to charge a $925 fee
LLC and pursuant to agreements with space. to customers that choose to install a
the owner/operator of its data center Next, the Exchange proposes to offer cable router in its data center for
where both the Exchange’s quoting and a ‘‘POP Connectivity’’ service, whereby purposes of receiving the third party
trading facilities and co-located subscribers may use external services as well as a monthly fee of $150
customer equipment are housed. Users telecommunication circuits to connect for customers that choose to install
of colocation services include private directly to one or more of the equipment in the Exchange’s data center
extranet providers, data vendors, as well Exchange’s satellite data centers (each, a to support that connectivity.
as Exchange members and non- ‘‘POP’’) that are located in places other Furthermore, the Exchange proposes
members. The use of co-location than Carteret. Each POP, in turn, has a to offer connectivity to its Test Facility.
services is entirely voluntary. fully redundant connection to the The Test Facility provides subscribers
Like its sister exchanges, and as Exchange’s primary data center, such with a virtual system test environment
detailed in the proposed co-location fee that subscribers may connect to the that closely approximates the
schedule, the Exchange proposes to primary data center through its production environment and on which
impose a uniform, non-discriminatory connection to a POP. For POP they may test their automated systems
set of fees for various co-location Connectivity to the Exchange, the that integrate with the Exchange. For
services, including: fees for co-located Exchange proposes to offer 1 GB Ultra example, subscribers may test upcoming
connections to the Exchange and to and 10 GB connections. The installation Exchange releases and product
third party services (described below) in fee for all such connections will be enhancements, as well as test software
various bandwidths; fees for cabinet $1,500 and the monthly fee will be prior to implementation. The Exchange
space usage, or options for future space $7,500 for 10 GB connections and proposes to assess certain fees for use of
usage; installation and related power $2,500 for 1 GB Ultra connections.4 the Test Facility. Specifically, the
provision for hosted equipment; Additionally, the Exchange proposes Exchange proposes that subscribers to
connectivity among multiple cabinets to offer connectivity to third party the Test Facility located in Carteret,
being used by the same customer as well services. The Exchange is proposing to New Jersey shall pay a fee of $1,000 per
as customer connectivity to the offer this service to both non-co-location hand-off, per month for connection to
Exchange and telecommunications customers (via a direct circuit the Test Facility. The hand-off fee will
providers; and related maintenance and connection) and co-location customers includes [sic] either a 1 GB or 10 GB
consulting services. Fees related to alike. This connectivity will enable switch port and a cross connect to the
cabinet and power usage are customers to receive third party market Test Facility. Subscribers will also pay
incremental, with additional charges data feeds, including Securities a one-time installation fee of $1,000 per
being imposed based on higher levels of Information Processors (‘‘SIPs’’) 5 data, handoff.
cabinet and/or power usage, the use of and other non-exchange services.6 The Finally, for each of the connectivity
non-standard cabinet sizes or special Exchange will offer this service to options discussed above, the Exchange
cabinet cooling equipment, or the re- customers in both 10 GB Ultra and 1 GB proposes to include language in the fee
selling of cabinet space. Ultra bandwidths. The installation fee schedule which states that connectivity
In addition to co-location services, the for both 10 GB Ultra and 1 GB Ultra to the Exchange also applies to
Exchange proposes to offer several other direct connections will be $1,500. connectivity to all of the other Nasdaq,
connectivity options for customers that Meanwhile, the monthly fee will be Inc. markets, including Nasdaq, BX,
are located outside of the Exchange’s $5,000 for 10 GB Ultra connections and Phlx, MRX, and ISE. This purpose of
primary data center in Carteret, New $2,000 for 1 GB Ultra hand-offs. For 1 this proposal is to specify that a client
Jersey. GB Ultra or 10 GB Ultra connections for can use the connections it establishes
First, the Exchange proposes to offer UTP only, the installation fee and and maintains to connect, not only to
a ‘‘Direct Circuit Connectivity’’ service, the Exchange, but also to any or all of
whereby subscribers may connect their 4 Clients will not be permitted to install routers its sister exchanges, and in doing so, it
facilities directly to the Exchange’s in or rent cabinet space directly from the Exchange will be billed only once.
primary data center using a circuit they at the POPs. Accordingly, the fee schedule for POP
obtain from an external connectivity will not include fees for these services. 2. Statutory Basis
5 The SIPs link the U.S. markets by processing
telecommunications provider. For this and consolidating all protected bid/ask quotes and The Exchange believes that its
form of connectivity, the Exchange’s trades from every registered exchange trading venue proposal is consistent with Section 6(b)
proposal offers customers the choice of and FINRA into a single data feed, and they of the Act,7 in general, and furthers the
1 GB, 1 GB Ultra, and 10 GB disseminate and calculate critical regulatory objectives of Section 6(b)(5) of the Act,8
connections. The installation fee for all information, including the National Best Bid and
Offer, Limit Up Limit Down price bands, short sale in particular, in that it is designed to
such connections will be $1,500 and the restrictions and regulatory halts. promote just and equitable principles of
monthly fee will be $7,500 for 10 GB 6 Third Party Services includes not only SIP data trade, to remove impediments to and
connections and $2,500 for both 1 GB feeds, but also data feeds from other exchanges and perfect the mechanism of a free and
and 1 GB Ultra connections. The markets. For example, Third Party Connectivity will
sradovich on DSK3GMQ082PROD with NOTICES
support connectivity to the FINRA/Nasdaq Trade
open market and a national market
Exchange also proposes to charge a fee Reporting Facility, BATS Depth Feeds, and NYSE system, and, in general to protect
to customers that choose to install a Feeds. A customer must separately subscribe to the investors and the public interest.
cable router in its data center and a third party services to which it connects with a The Exchange believes that it is
monthly fee for customers that choose to Third Party Connectivity subscription. The
Exchange notes that customers that do not wish to
reasonable to eliminate its existing
install equipment in the Exchange’s data subscribe to Direct Circuit Connectivity to Third
center to support the connectivity. Party Services may alternatively connect through an 7 15 U.S.C. 78f(b).
Specifically, the Exchange proposes an extranet provider or a market data redistributor. 8 15 U.S.C. 78f(b)(5).
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![49456 Federal Register / Vol. 82, No. 205 / Wednesday, October 25, 2017 / Notices
• Send an email to rule-comments@ SECURITIES AND EXCHANGE (A) Clearing Agency’s Statement of the
sec.gov. Please include File Number SR– COMMISSION Purpose of, and Statutory Basis for, the
GEMX–2017–48 on the subject line. Proposed Rule Change
[Release No. 34–81909; File No. SR–OCC–
Paper Comments 2017–005] (1) Purpose
Background
• Send paper comments in triplicate Self-Regulatory Organizations; The
to Brent J. Fields, Secretary, Securities Options Clearing Corporation; Notice On September 28, 2016, the
and Exchange Commission, 100 F Street of Filing of Proposed Rule Change Commission adopted amendments to
NE., Washington, DC 20549–1090. Related to a Comprehensive Risk Rule 17Ad–22 4 and added new Rule
Management Framework 17Ab2–2 5 pursuant to Section 17A of
All submissions should refer to File the Securities Exchange Act of 1934
Number SR–GEMX–2017–48. This file October 19, 2017. (‘‘Exchange Act’’) 6 and the Payment,
number should be included on the Pursuant to Section 19(b)(1) of the Clearing and Settlement Supervision
subject line if email is used. To help the Securities Exchange Act of 1934 Act of 2010 (‘‘Clearing Supervision
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 Act’’) 7 to establish enhanced standards
Commission process and review your
notice is hereby given that on October for the operation and governance of
comments more efficiently, please use
10, 2017, The Options Clearing those clearing agencies registered with
only one method. The Commission will Corporation (‘‘OCC’’) filed with the
post all comments on the Commission’s the Commission that meet the definition
Securities and Exchange Commission of a ‘‘covered clearing agency,’’ as
Internet Web site (http://www.sec.gov/ (‘‘Commission’’) the proposed rule
rules/sro.shtml). Copies of the defined by Rule 17Ad–22(a)(5) 8
change as described in Items I, II, and (collectively, the new and amended
submission, all subsequent III below, which Items have been
amendments, all written statements rules are herein referred to as ‘‘CCA’’
prepared by OCC. The Commission is rules). The CCA rules require that
with respect to the proposed rule publishing this notice to solicit covered clearing agencies, among other
change that are filed with the comments on the proposed rule change things:
Commission, and all written from interested persons.
communications relating to the ‘‘[E]stablish, implement, maintain and
I. Clearing Agency’s Statement of the enforce written policies and procedures
proposed rule change between the Terms of Substance of the Proposed reasonably designed to . . . [m]aintain a
Commission and any person, other than Rule Change sound risk management framework for
those that may be withheld from the comprehensively managing legal, credit,
public in accordance with the This purpose of the proposed rule liquidity, operational, general business,
provisions of 5 U.S.C. 552, will be change is to adopt a comprehensive Risk investment, custody, and other risks that
Management Framework Policy, which arise in or are borne by the covered clearing
available for Web site viewing and
would describe OCC’s framework for agency, which . . . [i]ncludes risk
printing in the Commission’s Public comprehensive risk management, management policies, procedures, and
Reference Room, 100 F Street NE., including OCC’s framework to identify, systems designed to identify, measure,
Washington, DC 20549, on official measure, monitor, and manage all risks monitor, and manage the range of risks that
business days between the hours of arise in or are borne by the covered clearing
faced by OCC in the provision of agency, that are subject to review on a
10:00 a.m. and 3:00 p.m. Copies of the clearing, settlement and risk specified periodic basis and approved by the
filing also will be available for management services. The Risk board of directors annually . . .’’ 9
inspection and copying at the principal Management Framework Policy is
office of the Exchange. All comments included in confidential Exhibit 5 of the OCC is defined as a covered clearing
received will be posted without change. filing. The proposed rule change does agency under the CCA rules, and
Persons submitting comments are not require any changes to the text of therefore is subject to the requirements
OCC’s By-Laws or Rules. All terms with of the CCA rules, including Rule 17Ad–
cautioned that we do not redact or edit
initial capitalization that are not 22(e)(3).10 Accordingly, OCC proposes
personal identifying information from
otherwise defined herein have the same to adopt a Risk Management Framework
comment submissions. You should
meaning as set forth in the OCC By- Policy (‘‘RMF’’), as described below, to
submit only information that you wish formalize and update its overall
to make available publicly. All Laws and Rules.3
framework for comprehensively
submissions should refer to File II. Clearing Agency’s Statement of the managing the Key Risks 11 that arise in
Number SR–GEMX–2017–48 and Purpose of, and Statutory Basis for, the or are borne by OCC to promote
should be submitted on or before Proposed Rule Change compliance with Rule 17Ad–22(e)(3).12
November 15, 2017. In its filing with the Commission, Proposed Policy
For the Commission, by the Division of OCC included statements concerning
Trading and Markets, pursuant to delegated the purpose of and basis for the OCC proposes to adopt a new RMF
authority.15 proposed rule change and discussed any document. The purpose of the RMF is
comments it received on the proposed to describe OCC’s framework for
Eduardo A. Aleman,
Assistant Secretary. rule change. The text of these statements
4 17 CFR 240.17Ad–22.
may be examined at the places specified
[FR Doc. 2017–23117 Filed 10–24–17; 8:45 am] 5 17 CFR 240.17Ab2–2.
in Item IV below. OCC has prepared 6 15 U.S.C. 78q–1.
BILLING CODE 8011–01–P
summaries, set forth in sections (A), (B),
sradovich on DSK3GMQ082PROD with NOTICES
7 12 U.S.C. 5461 et seq.
and (C) below, of the most significant 8 17 CFR 240.17Ad–22(a)(5).
aspects of these statements. 9 17 CFR 240.17Ad–22(e)(3).
10 Id.
1 15U.S.C. 78s(b)(1). 11 Under the proposed RMF, ‘‘Key Risks’’ would
2 17CFR 240.19b–4. be defined as risks that are related to the
3 OCC’s By-Laws and Rules can be found on foundational aspects of CCP clearing, settlement
OCC’s public Web site: http://optionsclearing.com/ and risk management services.
15 17 CFR 200.30–3(a)(12). about/publications/bylaws.jsp. 12 17 CFR 240.17Ad–22(e)(3).
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Document Created: 2017-10-25 01:17:21
Document Modified: 2017-10-25 01:17:21
| 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 | 82 FR 49453 |
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