Self-Regulatory Organizations; NYSE National, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Schedule of Fees and Rebates Related to Co-Location
| Published date | 29 March 2021 |
| Record Number | 2021-06346 |
| Section | Notices |
| Court | Securities And Exchange Commission |
Federal Register, Volume 86 Issue 58 (Monday, March 29, 2021)
[Federal Register Volume 86, Number 58 (Monday, March 29, 2021)]
[Notices]
[Pages 16403-16410]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-06346]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-91389; File No. SR-NYSENAT-2021-05]
Self-Regulatory Organizations; NYSE National, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its
Schedule of Fees and Rebates Related to Co-Location
March 23, 2021.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19 b-4 thereunder,\3\ notice is hereby
given that on March 10, 2021, NYSE National, Inc. (``NYSE National'' or
``Exchange'') 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 240.19 b-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 its Schedule of Fees and Rebates
(``Fee Schedule'') related to co-location to (i) provide Users with
access to the systems, and connectivity to the data feeds, of various
additional third parties; and (ii) remove obsolete text. 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, 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 Schedule related to co-
location to (i) provide Users with access to the systems, and
connectivity to the data feeds, of various additional third parties;
and (ii) remove obsolete text.
Proposal To Add Additional Third Party Systems and Third Party Data
Feeds
The Exchange proposes to amend the co-location \4\ services offered
by the Exchange to provide Users \5\ with access to the systems, and
connectivity to the data feeds, of various additional third parties.
The Exchange proposes to make the corresponding amendments to the
Exchange's Fee Schedule related to these co-location services to
reflect these proposed changes.
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\4\ The Exchange initially filed rule changes relating to its
co-location services with the Securities and Exchange Commission
(``Commission'') in 2018. See Securities Exchange Act Release No.
83351 (May 31, 2018), 83 FR 26314 (June 6, 2018) (SR-NYSENAT-2018-
07) (``NYSE National Co-location Notice''). The Exchange is an
indirect subsidiary of Intercontinental Exchange, Inc. (``ICE'').
\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 id., supra note 4,
at 26314 n.9. As specified in the Fee Schedule, 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 American LLC, NYSE Arca, Inc., and NYSE Chicago,
Inc. (together, the ``Affiliate SROs''). See id. at 26314 n.11. Each
Affiliate SRO has submitted substantially the same proposed rule
change to propose the changes described herein. See SR-NYSE-2021-15,
SR-NYSEAMER-2021-13, SR-NYSEArca-2021-15, and SR-NYSECHX-2021-05.
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As set forth in the Fee Schedule, the Exchange charges fees for
connectivity to the execution systems of third party markets and other
content service providers (``Third Party Systems''), and data feeds
from third party markets and other content service providers (``Third
Party Data Feeds'').\6\ The lists of Third Party Systems and Third
Party Data Feeds are set forth in the Fee Schedule.
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\6\ See NYSE National Co-Location Notice, supra note 4, at
26322.
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The Exchange proposes to provide access to the following additional
Third Party Systems: Long Term Stock Exchange, Members Exchange, MIAX
[[Page 16404]]
Emerald, MIAX PEARL Equities, Morgan Stanley, and TD Ameritrade (the
``Proposed Third Party Systems''). The Exchange also proposes to amend
the Fee Schedule to change the name of the ``Miami International
Securities Exchange'' Third Party System to ``MIAX Options,'' to change
the name of the ``MIAX PEARL'' Third Party System to ``MIAX PEARL
Options,'' and to combine MIAX Options, MIAX PEARL Options, MIAX PEARL
Equities, and MIAX Emerald as a single Third Party System on the Fee
Schedule. The list of available Third Party Systems in the Fee Schedule
would be amended as follows:
------------------------------------------------------------------------
Third party systems
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* * * * *
ITG TriAct Matchnow
Long Term Stock Exchange (LTSE)
Members Exchange (MEMX)
[Miami International Securities Exchange]
MIAX Options, MIAX PEARL Options, MIAX PEARL Equities, and MIAX Emerald
Morgan Stanley
Nasdaq
* * * * *
OTC Markets Group
TD Ameritrade
TMX Group
------------------------------------------------------------------------
In addition, the Exchange proposes to provide connectivity to data
feeds from Members Exchange (the ``Proposed MEMX Third Party Data
Feed''), MIAX Emerald (the ``Proposed MIAX Emerald Third Party Data
Feed''), MIAX PEARL Equities (the ``Proposed MIAX PEARL Equities Third
Party Data Feed''), and ICE Data Services--ICE TMC \7\ (the ``Proposed
ICE TMC Third Party Data Feed'') (collectively, the ``Proposed Third
Party Data Feeds''). The Exchange also proposes to change the name of
the current ``Miami International Securities Exchange/MIAX PEARL''
Third Party Data Feed to ``MIAX Options/MIAX PEARL Options'' on the Fee
Schedule. Further, the Exchange proposes to delete the ``NASDAQ OMDF''
data feed from the list, as it is no longer offered by the content
service provider. Finally, the Exchange proposes to change the name of
the current ``SR Labs--SuperFeed'' data feeds to ``Vela--SuperFeed,''
to reflect the content provider's recent change to the name of these
products.
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\7\ The Proposed ICE TMC Third Party Data Feed is generated by
ICE Bonds, an indirect subsidiary of ICE, and includes market data
for the ICE TMC alternative trading system. It does not include
market data of the Exchange or Affiliate SROs.
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The list of available Third Party Data Feeds in the Fee Schedule
would be amended as follows:
------------------------------------------------------------------------
Monthly
recurring
connectivity
Third party data feed fee per third
party data
feed
------------------------------------------------------------------------
* * * * * * *
Global OTC.............................................. $100
[ICE Data Global Index*]................................ [100]
ICE Data Services Consolidated Feed 1 Gb... 1,000
ICE Data Services--ICE TMC.............................. 200
ICE Data Services PRD................................... 200
* * * * * * *
ITG TriAct Matchnow..................................... 1,000
Members Exchange (MEMX)................................. 3,000
MIAX Emerald............................................ 3,500
[Miami International Securities Exchange]MIAX Options/ 2,000
MIAX PEARL Options.....................................
MIAX PEARL Equities..................................... 2,500
Montr[eacute]al Exchange (MX)........................... 1,000
* * * * * * *
NASDAQ OMX Global Index Data Service.................... 100
[NASDAQ OMDF]........................................... [100]
NASDAQ UQDF & UTDF...................................... 500
* * * * * * *
OTC Markets Group....................................... 1,000
Vela[SR Labs]--SuperFeed 500 Mb to 1.25 Gb....................... 1,000
TMX Group............................................... 2,500
* * * * * * *
------------------------------------------------------------------------
The Exchange would provide access to the Proposed Third Party
Systems (``Access'') and connectivity to the Proposed Third Party Data
Feeds (``Connectivity'') as conveniences to Users. Use of Access or
Connectivity would be completely voluntary.
The Exchange does not have visibility into whether third parties
currently offer, or intend to offer, Users access to the Proposed Third
Party Systems and connectivity to the Proposed Third Party Data Feeds,
as such third parties are not required to make that information public.
However, the
[[Page 16405]]
market for access to Third Party Systems and connectivity to Third
Party Data Feeds is competitive. The Exchange competes with other
providers--including other colocation providers and market data
vendors--that offer access to Third Party Systems and connectivity to
Third Party Data Feeds. The Exchange is not aware of any impediment to
such third parties offering access to the Proposed Third Party Systems
or connectivity to the Proposed Third Party Data Feeds.
If one or more third parties presently offer, or in the future opt
to offer, such Access and Connectivity to Users, a User may utilize the
ICE Data Services (``IDS'') network, a third party telecommunication
network, a cross connect, or a combination thereof to access such
services and products through a connection to an access center outside
the data center (which could be an IDS access center, a third-party
access center, or both), another User, or a third party vendor.
Access to the Proposed Third Party Systems
The Exchange proposes to revise the Fee Schedule to provide that
Users may obtain connectivity to the Proposed Third Party Systems for a
fee. As with the current Third Party Systems, Users would connect to
the Proposed Third Party Systems over the internet protocol (``IP'')
network, a local area network available in the data center.\8\
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\8\ See NYSE National Co-Location Notice, supra note 4, at
226322.
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As with the current Third Party Systems, in order to obtain access
to a Proposed Third Party System, the User would enter into an
agreement with the relevant Proposed Third Party, pursuant to which the
third party content service provider would charge the User for access
to the Proposed Third Party System. The Exchange would then establish a
unicast connection between the User and the Proposed Third Party System
over the IP network.\9\ The Exchange would charge the User for the
connectivity to the Proposed Third Party System. A User would only
receive, and would only be charged for, access to the Proposed Third
Party System for which it enters into agreements with the third party
content service provider.
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\9\ Information flows over existing network connections in two
formats: ``unicast'' format, which is a format that allows one-to-
one communication, similar to a phone line, in which information is
sent to and from the Exchange; and ``multicast'' format, which is a
format in which information is sent one-way from the Exchange to
multiple recipients at once, like a radio broadcast.
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The Exchange has no affiliation with the providers of any of the
Proposed Third Party Systems. Establishing a User's access to a
Proposed Third Party System would not give the Exchange any right to
use the Proposed Third Party System. Connectivity to a Proposed Third
Party System would not provide access or order entry to the Exchange's
execution system, and a User's connection to a Proposed Third Party
System would not be through the Exchange's execution system.
Connectivity to the Proposed Third Party Data Feeds
The Exchange proposes to revise the Fee Schedule to provide that
Users may obtain connectivity to the Proposed Third Party Data Feeds
for a fee. As with the existing connections to Third Party Data Feeds,
the Exchange would receive a Proposed Third Party Data Feed from the
content service provider at the data center. The Exchange would then
provide connectivity to that data to Users for a fee. Users would
connect to the Proposed Third Party Data Feeds over the IP network.\10\
The Proposed Third Party Data Feeds would include trading information
concerning the securities that are traded on the relevant Proposed
Third Party Systems.
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\10\ See NYSE National Co-Location Notice, supra note 4, at
226322.
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As with the existing connections to Third Party Data Feeds, in
order to connect to a Proposed Third Party Data Feed, a User would
enter into a contract with the content service provider, pursuant to
which the content service provider may charge the User for the data
feed. The Exchange would receive the Proposed Third Party Data Feed
over its fiber optic network and, after the content service provider
and User entered into an agreement and the Exchange received
authorization from the content service provider, the Exchange would
retransmit the data to the User over the User's port. The Exchange
would charge the User for connectivity to the Proposed Third Party Data
Feed. A User would only receive, and would only be charged the fee for,
connectivity to a Proposed Third Party Data Feed for which it entered
into a contract.
The Exchange has no affiliation with the sellers of the Proposed
MEMX Third Party Data Feed, the Proposed MIAX Emerald Third Party Data
Feed, or the Proposed MIAX PEARL Equities Third Party Data Feed, and
would have no right to use those feeds other than as a redistributor of
the data. Similarly, although the Exchange and ICE Bonds--the generator
of the Proposed ICE TMC Third Party Data Feed--are both indirect
subsidiaries of ICE, the Exchange would have no right to use the
Proposed ICE TMC Third Party Data Feed other than as a redistributor of
the data. None of the Proposed Third Party Data Feeds would provide
access or order entry to the Exchange's execution system. The Proposed
Third Party Data Feeds would not provide access or order entry to the
execution systems of the third parties generating the feeds. The
Exchange would receive the Proposed Third Party Data Feeds via arms-
length agreements and would have no inherent advantage over any other
distributor of such data.
Proposal To Remove Obsolete Text
Proposal To Remove References to ICE Data Global Index
The Exchange proposes to remove obsolete references to the ICE Data
Global Index (the ``GIF'') from the list of Third Party Data Feeds
available for connectivity and related text.
In May 2020, ICE, which publishes the GIF, announced to its
customers that before the end of 2020, it would cease offering the GIF
as a stand-alone product. The Exchange accordingly amended its Fee
Schedule to inform customers that it would cease offering connectivity
to the GIF once it is no longer available.\11\
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\11\ See Securities Exchange Act Release No. 88981 (June 1,
2020), 85 FR 34690 (June 5, 2020) (SR-NYSENAT-2020-19).
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ICE has now informed the Exchange that it ceased offering the GIF
as a stand-alone product, making the references to the GIF obsolete.
The operative date was announced through a customer notice.
Accordingly, the Exchange proposes to remove ``ICE Data Global Index*''
and the corresponding asterisked note from the Fee Schedule.
In order to implement the proposed change, the Exchange proposes to
make the following changes to the section of the Fee Schedule entitled
``Connectivity to Third Party Data Feeds'':
In the first paragraph and in the table of Third Party
Data Feeds, delete ``ICE Data Global Index*''.
Following the table of Third Party Data Feeds, delete the
following text:
* ICE will cease to offer the GIF as a stand-alone product, which
the Exchange has been informed by ICE is currently expected to occur
before the end of 2020. The Exchange will announce the operative date
through a customer notice. Any change fees that a User would otherwise
incur as a result of the proposed change will be waived.
[[Page 16406]]
Proposal To Remove the Temporary Waiver of Hot Hands Fees
The Exchange proposes to remove the obsolete reference to the
waiver of Hot Hands fees in light of the reopening of the Mahwah, New
Jersey data center.
In March 2020, ICE announced to each User that, starting on March
16, 2020, the Mahwah, New Jersey data center would be closed to third
parties in response to COVID-19. The Exchange temporarily waived all
Hot Hands fees from the date of the closing through the date of the
reopening of the data center, and added a note to the fees for the Hot
Hands service stating as much.\12\
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\12\ The Exchange first waived the Hot Hands Fee in a March 17,
2020 filing, and subsequently extended the waiver four times. See
Securities Exchange Act Release Nos. 88399 (March 17, 2020), 85 FR
16428 (March 23, 2020) (SR-NYSENAT-2020-10); 88521 (March 31, 2020),
85 FR 19194 (April 6, 2020) (SR-NYSENAT-2020-14); 88958 (May 27,
2020), 85 FR 33764 (June 2, 2020) (SR-NYSENAT-2020-18); 89175 (June
29, 2020), 85 FR 40354 (July 6, 2020) (SR-NYSENAT-2020-20); and
89653 (August 25, 2020), 85 FR 53874 (SR-NYSENAT-2020-26).
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The Mahwah, New Jersey data center reopened on October 1, 2020. The
date of the reopening was announced through a customer notice. As a
result of the reopening, the waiver of Hot Hands fees ceased, and the
note became obsolete. The Exchange now proposes to remove the obsolete
text.
In order to implement this proposed change, the Exchange proposes
to make the following changes to the Fee Schedule:
In the Types of Service table, remove the ``[dagger]''
symbol after ``Hot Hands Service***''.
Following the Types of Service table, remove the following
text:
[dagger] Fees for Hot Hands Services will be waived beginning on
March 16, 2020 through the reopening of the Mahwah, New Jersey data
center. The date of the reopening will be announced through a customer
notice.
Application and Impact of the Proposed Changes
The proposed changes would not apply differently to distinct types
or sizes of market participants. Rather, they would apply to all Users
equally. As is currently the case, the purchase of any colocation
service is completely voluntary and the Fee Schedule is applied
uniformly to all Users.
As with the existing connections to Third Party Systems, the
Exchange proposes to charge a monthly recurring fee for connectivity to
the Proposed Third Party Systems. Specifically, when a User requests
access to a Proposed Third Party System, it would identify the
applicable content service provider and what bandwidth connection is
required. The Exchange proposes to modify its Fee Schedule to add the
Proposed Third Party Systems to its existing list of Third Party
Systems. The Exchange does not propose to change the monthly recurring
fee the Exchange charges Users for unicast connectivity to each Third
Party System, including the Proposed Third Party Systems.
As it does with the existing Third Party Data Feeds, the Exchange
proposes to charge a monthly recurring fee for connectivity to the
Proposed Third Party Data Feeds. Depending on its needs and bandwidth,
a User may opt to receive all or some of the feeds or services included
in the Proposed Third Party Data Feeds. The Exchange proposes to add
the following fees for connectivity to the Proposed Third Party Data
Feeds to its existing list in the Fee Schedule: (i) $200 per month for
ICE Data Services--ICE TMC; (ii) $3,000 per month for Members Exchange;
(iii) $3,500 per month for MIAX Emerald, and (iv) $2,500 per month for
MIAX PEARL Equities.
Under this proposal, obsolete references to connectivity to the GIF
data feed and the temporary waiver of Hot Hands fees would be removed
for all Users.
Competitive Environment
The Exchange operates in a highly competitive market in which
exchanges and other vendors (e.g., Hosting Users) 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. The Commission has
repeatedly expressed its preference for competition over regulatory
intervention in determining prices, products, and services in the
securities markets. Specifically, in Regulation NMS, the Commission
highlighted the importance of market forces in determining prices and
SRO revenues and, also, recognized that current regulation of the
market system ``has been remarkably successful in promoting market
competition in its broader forms that are most important to investors
and listed companies.'' \13\
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\13\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005).
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The proposed changes are 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,\14\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\15\ in particular, because it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, 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 because it is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers. The Exchange further believes
that the proposed rule change is consistent with Section 6(b)(4) of the
Act,\16\ because it provides for the equitable allocation of reasonable
dues, fees, and other charges among its members and issuers and other
persons using its facilities.
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\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(5).
\16\ 15 U.S.C. 78f(b)(4).
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The Proposed Rule Change Is Reasonable
The Exchange believes that the proposed rule change is reasonable
and would perfect the mechanisms of a free and open market and a
national market system and, in general, protect investors and the
public interest, for the following reasons.
The Exchange believes that the proposed change to Access and
Connectivity is reasonable and 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 because by
offering additional services, the Exchange would give each User
additional options for addressing its access and connectivity needs,
responding to User demand for access and connectivity options.
Providing additional services would help each User tailor its data
center operations to the requirements of its business operations by
allowing it to select the form and latency of access and connectivity
that best suits its needs. In addition, the Exchange believes that the
proposed change is reasonable because by offering Access and
Connectivity to Users when available, the Exchange would give Users
additional options for connectivity and access to new services as soon
as they are available, responding
[[Page 16407]]
to User demand for access and connectivity options.
The Exchange would provide Access and Connectivity as conveniences
to Users. Use of Access or Connectivity would be completely voluntary.
The Exchange is not aware of any impediment to third parties offering
Access or Connectivity. The Exchange does not have visibility into
whether third parties currently offer, or intend to offer, Users access
to the Proposed Third Party Systems and connectivity to the Proposed
Third Party Data Feeds. However, if one or more third parties presently
offer, or in the future opt to offer, such access and connectivity to
Users, a User may utilize the IDS network, a third party
telecommunication network, a cross connect, or a combination thereof to
access such services and products through a connection to an access
center outside the data center (which could be an IDS access center, a
third-party access center, or both), another User, or a third party
vendor.
The Exchange also believes that the proposed rule change to Access
and Connectivity is reasonable because 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. For
these reasons, an 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 also believes that the proposed rule change to Access
and Connectivity is reasonable because the market for access to Third
Party Systems and connectivity to Third Party Data Feeds is
competitive. The Exchange competes with other providers--including
other colocation providers and market data vendors--that offer access
to Third Party Systems and connectivity to Third Party Data Feeds.
Although the Exchange does not have complete visibility into whether
third parties currently offer, or intend to offer, Users access to the
Proposed Third Party Systems and connectivity to the Proposed Third
Party Data Feeds (as such third parties are not required to make that
information public), the Exchange understands that at least one other
vendor is currently offering the Proposed MIAX Third Party Data Feeds.
As such, the Exchange is not aware of any impediment to such third
parties offering substitutes to such Access and Connectivity. If the
Exchange were to propose to charge supra-competitive fees for access to
any of the Proposed Third Party Systems or connectivity to any of the
Proposed Third Party Data Feeds, the Exchange's competitors would
respond by offering such access and connectivity at lower rates, and
market participants would respond by substituting the Exchange's
offerings with more competitively-priced access and connectivity
options available from other providers. As such, competition and the
availability of substitutes is a check on the Exchange's ability to
charge unreasonable fees for Access and Connectivity.
The Exchange further believes that the proposed change to Access
and Connectivity is reasonable because in order to offer the Access and
Connectivity as conveniences to Users, the Exchange 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 such services,
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, including resilient and redundant feeds.
In addition, in order to provide Access and Connectivity, the
Exchange would establish and maintain multiple connections to each
Proposed Third Party System and Proposed Third Party Data Feed,
allowing the Exchange to provide resilient and redundant connections;
adapt to any changes made by the relevant third party; and cover any
applicable fees charged by the relevant third party, such as port fees.
For example, the Exchange already offers several Third Party Data Feeds
supplied by ICE Data Services, such that the Exchange could add the
Proposed ICE TMC Third Party Data Feed over this established connection
with less effort. In contrast, in order to offer connectivity to the
Proposed MEMX Third Party Data Feed, the Proposed MIAX Emerald Third
Party Data Feed, and the Proposed MIAX PEARL Equities Data Feed, the
Exchange must establish and maintain connections to those exchanges,
which requires significantly more effort. As such, it is reasonable for
the Exchange to offer connectivity to the Proposed ICE TMC Third Party
Data Feed at a lower fee than it proposes to charge for connectivity to
the Proposed MEMX Third Party Data Feed, the Proposed MIAX Emerald
Third Party Data Feed, and the Proposed MIAX PEARL Equities Third Party
Data Feed. Further, the different fees that the Exchange proposes for
the Proposed MIAX Emerald Third Party Data Feed and the Proposed MIAX
PEARL Equities Third Party Data Feed are reflective of the fact that
MIAX charges separate fees to the Exchange to become a distributor of
each of its data feed products, and that these distribution fees that
the Exchange must pay to MIAX are higher for the Proposed MIAX Emerald
Third Party Data Feed than for the Proposed MIAX PEARL Equities Third
Party Data Feed.
As such, the Exchange believes the proposed fees for Access and
Connectivity are reasonable because they would allow the Exchange to
defray or cover the costs associated with offering Users Access and
Connectivity while providing Users the convenience of receiving such
Access and Connectivity within co-location, helping them to tailor
their data center operations to the requirements of their business
operations.
The Exchange believes that removing obsolete text from the Fee
Schedule would perfect the mechanisms of a free and open market and a
national market system and, in general, protect investors and the
public interest. Because the GIF is no longer available as a stand-
alone data feed, the references to the GIF and its associated fee in
the Fee Schedule are obsolete. Similarly, because the Mahwah, New
Jersey data center has reopened, the note to the Hot Hands service has
become obsolete. In both cases, removing the obsolete text would
enhance the clarity and transparency of the Fee Schedule and reduce
potential customer confusion.
The Proposed Rule Change Is Equitable
The Exchange believes that the proposed rule change provides for
the
[[Page 16408]]
equitable allocation of reasonable dues, fees, and other charges among
its members, issuers, and other persons using its facilities, for the
following reasons.
First, the proposed fees for Access and Connectivity would not
apply differently to different types or sizes of market participants.
Rather, the proposed fees would apply equally to any User that opts to
access the Proposed Third Party Systems or connect to the Proposed
Third Party Data Feeds, irrespective of that User's size or the type of
market participant it is.
Second, under the proposed rule change, only Users that choose to
connect to the Proposed Third Party Systems and Proposed Third Party
Data Feeds would be charged the proposed fees for Access and
Connectivity. Users who opt not to use the Access or Connectivity would
not be charged. In this way, the proposed rule change equitably
allocates the proposed fees only to Users who choose to use the
Proposed Third Party Systems and Proposed Third Party Data Feeds.
In addition, as noted above, the Exchange would provide Access and
Connectivity as conveniences to Users. Use of Access or Connectivity
would be completely voluntary. By offering additional services, the
Exchange would give each User additional options for addressing its
access and connectivity needs, responding to User demand for access and
connectivity options. Providing additional services would help each
User tailor its data center operations to the requirements of its
business operations by allowing it to select the form and latency of
access and connectivity that best suits its needs. A User that does not
wish to use the Access or Connectivity offered by the Exchange is not
required to do so.
The Exchange is not aware of any impediment to third parties
offering Access or Connectivity. The Exchange does not have visibility
into whether third parties currently offer, or intend to offer, Users
access to the Proposed Third Party Systems and connectivity to the
Proposed Third Party Data Feeds, as third parties are not required to
make that information public. However, if one or more third parties
presently offer, or in the future opt to offer, such access and
connectivity to Users, a User may utilize the IDS network, a third
party telecommunication network, a cross connect, or a combination
thereof to access such services and products through a connection to an
access center outside the data center (which could be an IDS access
center, a third-party access center, or both), another User, or a third
party vendor.
The Exchange believes that removing obsolete text from the Fee
Schedule would perfect the mechanisms of a free and open market and a
national market system and, in general, protect investors and the
public interest. Because the GIF is no longer available as a stand-
alone data feed, the references to the GIF and its associated fee in
the Fee Schedule are obsolete. Similarly, because the Mahwah data
center has reopened, the note to the Hot Hands service has become
obsolete. The changes would have no impact on pricing. Rather, they
would remove obsolete text, thereby clarifying the Exchange rules and
alleviating possible market participant confusion.
The Proposed Change Is Not Unfairly Discriminatory
The Exchange believes that the proposed rule change does not permit
unfair discrimination between customers, issuers, brokers, or dealers,
for the following reasons.
First, the proposed Access and Connectivity are available on equal
terms to all Users. Users that opt to use the proposed Access or
Connectivity would not receive access or connectivity that is not
available to all Users, as all market participants that contract with
the content provider may receive access or connectivity.
Second, the proposed fees for Access and Connectivity would not
apply differently to different types or sizes of market participants.
Rather, the proposed fees would apply equally to any User that opts to
access the Proposed Third Party Systems or connect to the Proposed
Third Party Data Feeds, and would not unfairly discriminate against any
User based on the User's size or the type of market participant it is.
Third, the proposed rule change does not permit unfair
discrimination between market participants because only Users that
choose to connect to the Proposed Third Party Systems and Proposed
Third Party Data Feeds would be charged the proposed fees for access
and connectivity. Users who opt not to use the Access or Connectivity
will not be charged.
In addition, as noted above, the Exchange would provide Access and
Connectivity as conveniences to Users. Use of Access or Connectivity
would be completely voluntary. By offering additional services, the
Exchange would give each User additional options for addressing its
access and connectivity needs, responding to User demand for access and
connectivity options. Providing additional services would help each
User tailor its data center operations to the requirements of its
business operations by allowing it to select the form and latency of
access and connectivity that best suits its needs. A User that does not
wish to use the Access or Connectivity offered by the Exchange is not
required to do so.
The Exchange is not aware of any impediment to third parties
offering Access or Connectivity. The Exchange does not have visibility
into whether third parties currently offer, or intend to offer, Users
access to the Proposed Third Party Systems and connectivity to the
Proposed Third Party Data Feeds, as third parties are not required to
make that information public. However, if one or more third parties
presently offer, or in the future opt to offer, such access and
connectivity to Users, a User may utilize the IDS network, a third
party telecommunication network, a cross connect, or a combination
thereof to access such services and products through a connection to an
access center outside the data center (which could be an IDS access
center, a third-party access center, or both), another User, or a third
party vendor.
The Exchange believes that removing obsolete text from the Fee
Schedule would not permit unfair discrimination between customers,
issuers, brokers, or dealers. Because the GIF is no longer available as
a stand-alone data feed, the references to the GIF and its associated
fee in the Fee Schedule are obsolete. Similarly, because the Mahwah
data center has reopened, the note to the Hot Hands service has become
obsolete. The changes would have no impact on pricing. Rather, they
would remove obsolete text, thereby clarifying the Exchange rules and
alleviating possible market participant confusion.
For the reasons above, the proposed changes do 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 all 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,\17\ the Exchange
believes that the proposed rule change will not impose any burden on
competition that is not
[[Page 16409]]
necessary or appropriate in furtherance of the purposes of the Act.
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\17\ 15 U.S.C. 78f(b)(8).
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Intramarket Competition
The Exchange believes that the proposed changes would not place any
burden on intramarket competition that is not necessary or appropriate
in furtherance of the purposes of the Act, for the following reasons.
The proposed change to Access and Connectivity would give each User
additional options for addressing its access and connectivity needs,
responding to User demand for access and connectivity options.
Providing additional services would help each User tailor its data
center operations to the requirements of its business operations by
allowing it to select the form and latency of access and connectivity
that best suits its needs. The Exchange believes that providing Users
with these additional options for access and connectivity to new
services would not impose any burden on intramarket competition that is
not necessary or appropriate in furtherance of the purposes of the Act,
and would in fact enhance intramarket competition, by giving Users
additional access and connectivity options through which they may
differentiate their business operations from each other.
The Exchange does not have visibility into whether third parties
currently offer, or intend to offer, Users access to the Proposed Third
Party Systems and connectivity to the Proposed Third Party Data Feeds,
as third parties are not required to make that information public.
However, if one or more third parties presently offer, or in the future
opt to offer, such access and connectivity to Users, a User may utilize
the IDS network, a third party telecommunication network, a cross
connect, or a combination thereof to access such services and products
through a connection to an access center outside the data center (which
could be an IDS access center, a third-party access center, or both),
another User, or a third party vendor.
In this way, the proposed changes would enhance intramarket
competition by helping Users tailor their Access and Connectivity to
the needs of their business operations by allowing them to select the
form and latency of access and connectivity that best suits their
needs.
The Exchange further believes that removing the GIF and its
associated fee from the list of Third Party Data Feeds available for
connectivity in the Fee Schedule and removing the note regarding the
temporary waiver of the Hot Hands fee would not permit unfair
discrimination between customers, issuers, brokers, or dealers would
not place any burden on intramarket competition that is not necessary
or appropriate in furtherance of the purposes of the Act. The proposed
changes are not designed to address any competitive issue, but rather
to remove obsolete text, thereby clarifying Exchange rules and
alleviating any possible market participant confusion. The removal of
the obsolete text would not put any market participants at a relative
disadvantage compared to other market participants, or penalize one or
more categories of market participants in a manner that would impose an
undue burden on competition.
Intermarket Competition
The Exchange believes that the proposed changes will not impose any
burden on intermarket competition that is not necessary or appropriate
in furtherance of the purposes of the Act, for the following reasons.
The Exchange operates in a highly competitive market in which
exchanges and other vendors (i.e., Hosting Users) 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, an 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 these reasons, the Exchange believes that the proposed rule
change reflects this competitive environment and does not impose any
undue burden on intermarket competition.
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 Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \18\ and Rule 19b-4(f)(6) thereunder.\19\
Because the 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 prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\20\
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\18\ 15 U.S.C. 78s(b)(3)(A)(iii).
\19\ 17 CFR 240.19b-4(f)(6).
\20\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires the Exchange to give the Commission written notice of its
intent to file the proposed rule change, along with a brief
description and text of 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.
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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) \21\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\21\ 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
[[Page 16410]]
Send an email to [email protected]. Please include
File Number SR-NYSENAT-2021-05 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-NYSENAT-2021-05. 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 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-NYSENAT-2021-05 and should be submitted
on or before April 19, 2021.
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\22\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-06346 Filed 3-26-21; 8:45 am]
BILLING CODE 8011-01-P
