82 FR 60082 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE Arca Options Fees and Charges Schedule and the NYSE Arca Equities Fees and Charges Schedule Relating to Co-location Services To Implement a Fee Change for Fiber Cross Connects

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 241 (December 18, 2017)

Page Range		60082-60085
FR Document		2017-27145
Federal Register, Volume 82 Issue 241 (Monday, December 18, 2017)
[Federal Register Volume 82, Number 241 (Monday, December 18, 2017)]
[Notices]
[Pages 60082-60085]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-27145]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82298; File No. SR-NYSEARCA-2017-135]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE 
Arca Options Fees and Charges Schedule and the NYSE Arca Equities Fees 
and Charges Schedule Relating to Co-location Services To Implement a 
Fee Change for Fiber Cross Connects

December 12, 2017.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on November 29, 2017, NYSE Arca, Inc. (``Exchange'' or ``NYSE 
Arca'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the NYSE Arca Options Fees and 
Charges schedule and the NYSE Arca Equities Fees and Charges schedule 
(together, the ``Fee Schedules'') relating to co-location services to 
implement a fee change for fiber cross connects. The Exchange proposes 
to implement the proposed change on January 1, 2018. The proposed rule 
change is available on the Exchange's website at www.nyse.com, at the 
principal office of the Exchange, and at the Commission's Public 
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below,

[[Page 60083]]

of the most significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Fee Schedules relating to co-
location \4\ services that the Exchange offers Users \5\ to implement a 
fee change for fiber cross connects. The Exchange proposes to implement 
the proposed change on January 1, 2018.
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    \4\ The Exchange initially filed rule changes relating to its 
co-location services with the Commission in 2010. See Securities 
Exchange Act Release No. 63275 (November 8, 2010), 75 FR 70048 
(November 16, 2010) (SR-NYSEArca-2010-100). The Exchange operates a 
data center in Mahwah, New Jersey (the ``data center'') from which 
it provides co-location services to Users.
    \5\ For purposes of the Exchange's co-location services, a 
``User'' means any market participant that requests to receive co-
location services directly from the Exchange. 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 (``NYSE LLC'') and 
NYSE American LLC (``NYSE American'' and, together with NYSE LLC, 
the ``Affiliate SROs''). See Securities Exchange Act Release No. 
70173 (August 13, 2013), 78 FR 50459 (August 19, 2013) (SR-NYSEArca-
2013-80).
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    Cross connects are fiber connections used to connect cabinets and 
equipment within the data center. Cross connects may be used between a 
User's own cabinets, between its cabinet(s) and those of another User, 
and between a User's cabinet and a non-User's equipment within the data 
center.\6\ For example, a cross connect may be used to connect cabinets 
of separate Users when a User receives technical support, order routing 
and/or market data delivery services from another User in the data 
center. Similarly, a User may utilize a cross connect with a non-User 
to connect to a carrier's equipment in order to access the carrier's 
network outside the data center.\7\
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    \6\ See Securities Exchange Act Release No. 74219 (February 6, 
2015), 80 FR 7899 (February 12, 2015) (SR-NYSEArca-2015-03).
    \7\ Id. at 7900.
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    A User is able to purchase cross connects individually or in 
bundles (i.e., multiple cross connects within a single sheath) of six, 
12, 18 or 24 cross connects. Since 2010, the initial charge for 
individual cross connects has been $500 and the monthly charge $500.\8\ 
The pricing for bundled cross connects has not changed since their 
introduction in 2012.\9\
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    \8\ See 75 FR 70048, supra note 3, at 70050.
    \9\ See Securities Exchange Act Release No. 67667 (August 15, 
2012), 77 FR 50743 (August 22, 2012) (SR-NYSEArca-2012-63).
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    The Exchange proposes to amend the Fee Schedules to increase the 
monthly recurring charges of the individual and bundled cross connects. 
More specifically, for individual cross connects, the monthly charge 
would be $600; for a bundle of six cross connects, the monthly charge 
would be $1,800; 12 cross connects would be $3,000 per month; 18 cross 
connects would be $3,840 per month; and 24 cross connects would be 
$4,680 per month. The Exchange does not propose to amend the initial 
charges.
    As is the case with all Exchange co-location arrangements, (i) 
neither a User nor any of the User's customers would be permitted to 
submit orders directly to the Exchange unless such User or customer is 
a member organization, a Sponsored Participant or an agent thereof 
(e.g., a service bureau providing order entry services); (ii) use of 
the co-location services proposed herein would be completely voluntary 
and available to all Users on a non-discriminatory basis; \10\ and 
(iii) a User would only incur one charge for the particular co-location 
service described herein, regardless of whether the User connects only 
to the Exchange or to the Exchange and one or both the Affiliate 
SROs.\11\
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    \10\ As is currently the case, Users that receive co-location 
services from the Exchange will not receive any means of access to 
the Exchange's trading and execution systems that is separate from, 
or superior to, that of other Users. In this regard, all orders sent 
to the Exchange enter the Exchange's trading and execution systems 
through the same order gateway, regardless of whether the sender is 
co-located in the data center or not. In addition, co-located Users 
do not receive any market data or data service product that is not 
available to all Users, although Users that receive co-location 
services normally would expect reduced latencies in sending orders 
to, and receiving market data from, the Exchange.
    \11\ See 78 FR 50459, supra note 5, at 50459. The Affiliate SROs 
have also submitted substantially the same proposed rule change to 
propose the changes described herein. See SR-NYSE-2017-63 and SR-
NYSEAmer-2017-36.
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    The proposed change is not otherwise intended to address any other 
issues relating to co-location services and/or related fees, and the 
Exchange is not aware of any problems that Users would have in 
complying with the proposed change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\12\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\13\ in particular, 
because it provides for the equitable allocation of reasonable dues, 
fees, and other charges among its members, issuers and other persons 
using its facilities and does not unfairly discriminate between 
customers, issuers, brokers or dealers.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed fee changes are consistent 
with Section 6(b)(4) of the Act for multiple reasons. The Exchange 
operates in a highly competitive market in which exchanges offer co-
location services as a means to facilitate the trading and other market 
activities of those market participants who believe that co-location 
enhances the efficiency of their operations. Accordingly, fees charged 
for co-location services are constrained by the active competition for 
the order flow of, and other business from, such market participants. 
If a particular exchange charges excessive fees for co-location 
services, affected market participants will opt to terminate their co-
location arrangements with that exchange, and adopt a possible range of 
alternative strategies, including placing their servers in a physically 
proximate location outside the exchange's data center (which could be a 
competing exchange), or pursuing strategies less dependent upon the 
lower exchange-to-participant latency associated with co-location. 
Accordingly, the exchange charging excessive fees would stand to lose 
not only co-location revenues but also the liquidity of the formerly 
co-located trading firms, which could have additional follow-on effects 
on the market share and revenue of the affected exchange.
    The Exchange believes that the proposed increase in the monthly 
recurring charge for cross connects would be reasonable, equitably 
allocated and not unfairly discriminatory because, in addition to the 
use of cross connects being completely voluntary, cross connects would 
continue to be available to all Users on an equal basis (i.e., the same 
products and services would be available to all Users). All Users that 
voluntarily selected to purchase cross connects would be charged the 
same amount for the same services.
    The Exchange believes that the proposed fee change would be 
reasonable, equitably allocated and not unfairly discriminatory because 
the Exchange offers the cross connects as conveniences to Users, but in 
order to do so must provide, maintain and operate the data center 
facility hardware and technology infrastructure. The Exchange must 
handle the installation, administration, monitoring, support and 
maintenance of co-location services,

[[Page 60084]]

including by responding to any production issues. Since the inception 
of co-location, the Exchange has made numerous improvements to the 
network hardware and technology infrastructure and has established 
additional administrative controls. The Exchange has expanded the 
network infrastructure to keep pace with the increased number of 
services available to Users.
    The Exchange believes the proposed increased monthly recurring fee 
for cross connects would be reasonable because it would allow the 
Exchange to defray or cover the costs associated with offering Users 
cross connects, individually and in bundles, while providing each User 
the convenience of receiving cross connects that may be used between 
the User's own cabinets, between its cabinet(s) and those of another 
User, and between a User's cabinet and a non-User's equipment within 
the data center, helping Users tailor their data center operations to 
the requirements of their business operations. The Exchange believes 
that the proposed increase is representative of the value provided to 
Users of cross connects. The Exchange notes that it has not increased 
the fee for individual cross connects since 2010 or for bundled cross 
connects since their introduction in 2012.\14\ The proposed increase 
would provide for an equitable allocation of the reasonable cost among 
Users that choose to use individual cross connects.
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    \14\ See 75 FR 70048, supra note 3, and 77 FR 50743, supra note 
9.
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    For the reasons above, the proposed changes would not unfairly 
discriminate between or among market participants that are otherwise 
capable of satisfying any applicable co-location fees, requirements, 
terms and conditions established from time to time by the Exchange.
    For these reasons, the Exchange believes that the proposal is 
consistent with the Act.

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

    In accordance with Section 6(b)(8) of the Act,\15\ the Exchange 
believes that the proposed rule change will not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act because, in addition to the proposed services being 
completely voluntary, they are available to all Users on an equal basis 
(i.e. the same products and services are available to all Users).
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    \15\ 15 U.S.C. 78f(b)(8).
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    The Exchange believes that the proposed fee change for cross 
connects would not impose any burden on competition that is not 
necessary or appropriate in furtherance of the purposes of the Act 
because in addition to the use of cross connects being completely 
voluntary, cross connects would continue to be available to all Users 
on an equal basis (i.e., the same products and services would be 
available to all Users). All Users that voluntarily selected to 
purchase cross connects would be charged the same amount for the same 
services. Each User would have the convenience of receiving cross 
connects that may be used between the User's own cabinets, between its 
cabinet(s) and those of another User, and between a User's cabinet and 
a non-User's equipment within the data center, helping Users tailor 
their data center operations to the requirements of their business 
operations. The Exchange believes that the proposed increase is 
representative of the value provided to Users of cross connects. The 
Exchange notes that it has not increased the fee for individual cross 
connects since 2010 or for bundled cross connects since their 
introduction in 2012.\16\ The proposed increase would provide for an 
equitable allocation of the reasonable cost among Users that choose to 
use individual cross connects.
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    \16\ See 75 FR 70048, supra note 3, and 77 FR 50743, supra note 
9.
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    The Exchange operates in a highly competitive market in which 
exchanges offer co-location services as a means to facilitate the 
trading and other market activities of those market participants who 
believe that co-location enhances the efficiency of their operations. 
Accordingly, fees charged for co-location services are constrained by 
the active competition for the order flow of, and other business from, 
such market participants. If a particular exchange charges excessive 
fees for co-location services, affected market participants will opt to 
terminate their co-location arrangements with that exchange, and adopt 
a possible range of alternative strategies, including placing their 
servers in a physically proximate location outside the exchange's data 
center (which could be a competing exchange), or pursuing strategies 
less dependent upon the lower exchange-to-participant latency 
associated with co-location. Accordingly, the exchange charging 
excessive fees would stand to lose not only co-location revenues but 
also the liquidity of the formerly co-located trading firms, which 
could have additional follow-on effects on the market share and revenue 
of the affected exchange. For the reasons described above, the Exchange 
believes that the proposed rule change reflects this competitive 
environment.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) \17\ of the Act and subparagraph (f)(2) of Rule 19b-4 \18\ 
thereunder. At any time within 60 days of the filing of such proposed 
rule change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \19\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b-4(f)(2).
    \19\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSEARCA-2017-135 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEARCA-2017-135. 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

[[Page 60085]]

will post all comments on the Commission's internet website (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 website 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-
NYSEARCA-2017-135 and should be submitted on or before January 8, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-27145 Filed 12-15-17; 8:45 am]
 BILLING CODE 8011-01-P
60082 Federal Register / Vol. 82, No. 241 / Monday, December 18, 2017 / Notices

is not unreasonably discriminatory Electronic Comments SECURITIES AND EXCHANGE
because the process for assigning add COMMISSION
and remove values is equally applied to • Use the Commission’s internet
all Members. comment form (http://www.sec.gov/ [Release No. 34–82298; File No. SR–
rules/sro.shtml); or NYSEARCA–2017–135]
B. Self-Regulatory Organization’s
Statement on Burden on Competition • Send an email to rule-comments@
sec.gov. Please include File Number SR– Self-Regulatory Organizations; NYSE
The Exchange believes the proposed CboeEDGX–2017–004 on the subject Arca, Inc.; Notice of Filing and
amendment to its fee schedule would line. Immediate Effectiveness of Proposed
not impose any burden on competition Rule Change To Amend the NYSE Arca
that is not necessary or appropriate in Paper Comments Options Fees and Charges Schedule
furtherance of the purposes of the Act. and the NYSE Arca Equities Fees and
• Send paper comments in triplicate Charges Schedule Relating to Co-
The Exchange does not believe that the
to Secretary, Securities and Exchange location Services To Implement a Fee
proposed change to add language to the
Commission, 100 F Street NE, Change for Fiber Cross Connects
Exchange’s fee schedule burdens
Washington, DC 20549–1090.
competition, but instead, improves the December 12, 2017.
transparency and clarity of the All submissions should refer to File
Number SR-CboeEDGX–2017–004. This Pursuant to Section 19(b)(1) 1 of the
Exchange’s fee schedule. Further, the
Securities Exchange Act of 1934
Exchange does not believe that the file number should be included on the
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
assignment of status as adder or remover subject line if email is used. To help the
notice is hereby given that, on
burdens competition as between Commission process and review your
November 29, 2017, NYSE Arca, Inc.
Members that submit orders to the comments more efficiently, please use (‘‘Exchange’’ or ‘‘NYSE Arca’’) filed
Exchange that post to the Exchange’s only one method. The Commission will with the Securities and Exchange
order book and Members that submit post all comments on the Commission’s Commission (‘‘Commission’’) the
orders that initiate COAs because the internet website (http://www.sec.gov/ proposed rule change as described in
process of assigning adder and remover rules/sro.shtml). Copies of the Items I and II below, which Items have
status is clearly delineated in the fee submission, all subsequent been prepared by the self-regulatory
schedule and is reasonable for the amendments, all written statements organization. The Commission is
reasons described above. with respect to the proposed rule publishing this notice to solicit
C. Self-Regulatory Organization’s change that are filed with the comments on the proposed rule change
Statement on Comments on the Commission, and all written from interested persons.
Proposed Rule Change Received From communications relating to the
proposed rule change between the I. Self-Regulatory Organization’s
Members, Participants, or Others
Commission and any person, other than Statement of the Terms of Substance of
The Exchange has not solicited, and the Proposed Rule Change
those that may be withheld from the
does not intend to solicit, comments on public in accordance with the The Exchange proposes to amend the
this proposed rule change. The provisions of 5 U.S.C. 552, will be NYSE Arca Options Fees and Charges
Exchange has not received any written available for website viewing and schedule and the NYSE Arca Equities
comments from members or other Fees and Charges schedule (together, the
printing in the Commission’s Public
interested parties. ‘‘Fee Schedules’’) relating to co-location
Reference Room, 100 F Street NE,
III. Date of Effectiveness of the Washington, DC 20549 on official services to implement a fee change for
Proposed Rule Change and Timing for business days between the hours of fiber cross connects. The Exchange
Commission Action 10:00 a.m. and 3:00 p.m. Copies of such proposes to implement the proposed
filing also will be available for change on January 1, 2018. The
The foregoing rule change has become proposed rule change is available on the
effective pursuant to Section 19(b)(3)(A) inspection and copying at the principal
office of the Exchange. All comments Exchange’s website at www.nyse.com, at
of the Act 12 and paragraph (f) of Rule the principal office of the Exchange, and
19b–4 thereunder.13 At any time within received will be posted without change.
Persons submitting comments are at the Commission’s Public Reference
60 days of the filing of the proposed rule Room.
change, the Commission summarily may cautioned that we do not redact or edit
temporarily suspend such rule change if personal identifying information from II. Self-Regulatory Organization’s
it appears to the Commission that such comment submissions. You should Statement of the Purpose of, and
action is necessary or appropriate in the submit only information that you wish Statutory Basis for, the Proposed Rule
public interest, for the protection of to make available publicly. All Change
investors, or otherwise in furtherance of submissions should refer to File In its filing with the Commission, the
the purposes of the Act. Number SR–CboeEDGX–2017–004, and self-regulatory organization included
should be submitted on or before statements concerning the purpose of,
IV. Solicitation of Comments
January 8, 2018. and basis for, the proposed rule change
Interested persons are invited to For the Commission, by the Division of and discussed any comments it received
submit written data, views, and Trading and Markets, pursuant to delegated on the proposed rule change. The text
arguments concerning the foregoing, authority.14 of those statements may be examined at
daltland on DSKBBV9HB2PROD with NOTICES

including whether the proposed rule Robert W. Errett, the places specified in Item IV below.
change is consistent with the Act. The Exchange has prepared summaries,
Comments may be submitted by any of Deputy Secretary.
set forth in sections A, B, and C below,
the following methods: [FR Doc. 2017–27147 Filed 12–15–17; 8:45 am]
BILLING CODE 8011–01–P 1 15 U.S.C. 78s(b)(1).
12 15 U.S.C. 78s(b)(3)(A). 2 15 U.S.C. 78a.
13 17 CFR 240.19b–4(f). 14 17 CFR 200.30–3(a)(12). 3 17 CFR 240.19b–4.

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Document Created: 2017-12-15 23:54:42
Document Modified: 2017-12-15 23:54:42
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 60082