[Federal Register Volume 75, Number 27 (Wednesday, February 10, 2010)]
[Notices]
[Pages 6746-6748]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-2864]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61487; File No. SR-BX-2010-012]


Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing of Proposed Rule Change To Codify Prices for Co-Location 
Services

February 3, 2010.
    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 January 29, 2010, NASDAQ OMX BX, Inc. (``BX'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been substantially prepared by the Exchange. 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\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    NASDAQ OMX BX is filing with the Securities and Exchange Commission 
(``Commission'') a proposed rule change to codify pricing for co-
location services. The text of the proposed rule change is available at 
http://nasdaqomxbx.cchwallstreet.com, on the Commission's Web site at 
http://www.sec.gov, at the Exchange's principal office, and at the 
Commission's Public Reference Room. BX will implement the proposed rule 
change on the first day of the month

[[Page 6747]]

immediately following Commission approval (or on the date of approval, 
if on the first business day of a month).

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 is proposing to codify fees for its existing co-
location services. Co-location services are 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 in close physical proximity to the quoting and 
execution facilities of the Exchange. BX 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.\3\ Users of co-location services include private 
extranet providers, data vendors, as well as the Exchange members and 
non-members. The use of co-location services is entirely voluntary.
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    \3\ Currently, NASDAQ OMX BX provides its current co-location 
services through data centers located in the New York City and Mid-
Atlantic areas.
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    As detailed in the proposed co-location fee schedule, the Exchange 
imposes a uniform, non-discriminatory set of fees for various co-
location services, including: Fees for cabinet space usage, or options 
for future space usage;\4\ 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; \5\ 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.
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    \4\ NASDAQ OMX BX is implementing a Cabinet Proximity Option 
program where, for a monthly fee, customers can obtain an option for 
future use on available currently unused cabinet floor space in 
proximity to their existing equipment. Under the program, customers 
can reserve up to maximum of 20 cabinets which the Exchange will 
endeavor to provide as close as reasonably possible to the 
customer's existing cabinet space, taking into consideration power 
availability within segments of the datacenter and the overall 
efficiency of use of datacenter resources as determined by the 
Exchange. Should reserved datacenter space be needed for use, the 
reserving customer will have three business days to formally 
contract with the Exchange for full payment for the reserved cabinet 
space in contention or it will be reassigned. In making 
determinations to require exercise or relinquishment of reserved 
space as among numerous customers, the Exchange will take into 
consideration several factors, including: Proximity between 
available reserved cabinet space and the existing space of a 
customer seeking additional space for actual cabinet usage; a 
customer's ratio of cabinets in use to those reserved; the length of 
time that a particular reservation(s) has been in place; and any 
other factor that the Exchange deems relevant to ensure overall 
efficiency in use of the datacenter space.
    \5\ These fees are for telecommunications connectivity only. 
Market Data fees are charged independently by NASDAQ OMX BX and 
other exchanges.
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    Co-location customers are not provided any separate or superior 
means of direct access to the Exchange quoting and trading facilities. 
Nor does the Exchange offer any separate or superior means of access to 
the Exchange quoting and trading facilities as among co-location 
customers themselves within in [sic] the datacenter. Likewise, BX does 
not make available to co-located customers any market data or data feed 
product or service for data going into, or out of, the Exchange systems 
that is not likewise available to all the Exchange members.\6\ Finally, 
all orders sent to the Exchange market enter the marketplace through 
[sic] same central system quote and order gateway regardless of whether 
the sender is co-located in the Exchange data center or not. In short, 
the Exchange has created no special market technology or programming 
that is available only to co-located customers and the Exchange has 
organized its systems to minimize, to the greatest extent possible, any 
advantage for one customer versus another.
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    \6\ Currently, the Exchange makes available to co-located 
customers a 10Gb fiber connection. The Exchange will likewise make 
available a 10Gb fiber connection to other customers in the first 
quarter of 2010. The Exchange has not received any requests for 10Gb 
fiber connections from firms that are not co-located.
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    Co-location services are generally available to all qualified 
market participants who desire them. With the exception of customers 
participating in the Cabinet Proximity Option program, the Exchange 
allocates cabinets and power on a first-come/first-serve basis. Should 
available cabinet inventory shrink to 40 cabinets or less, the Exchange 
will limit new cabinet orders to a maximum of 4 cabinets each, and all 
new cabinets will be limited to a maximum power level of 5kW. Should 
available cabinet inventory shrink to zero, the Exchange will place 
firms seeking services on a waiting list based on that date the 
Exchange receives signed orders for the services from the firm. In 
order to be placed on the waiting list, a firm must have utilized all 
existing cabinets they already have in the datacenter. Once on the 
list, the firms, on a rolling basis, will allocated a single 5kW 
cabinet each time one becomes available. After receiving a cabinet, the 
firm will move to the bottom of the waiting list.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\7\ in general, and with 
Sections 6(b)(5) of the Act,\8\ in particular, in that the proposal 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. In 
particular, the filing codifies and makes transparent the uniform fees 
imposed by the Exchange's technology subsidiary for co-location 
services.
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    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended.

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

    Written comments were neither solicited nor received.

[[Page 6748]]

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    A. By order approve such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule 
change should be 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, as amended, 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 e-mail to [email protected]. Please include 
File Number SR-BX-2010-012 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-BX-2010-012. This file 
number should be included on the subject line if e-mail 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 
a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-BX-2010-012 and should be 
submitted on or before March 3, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 C.F.R. 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-2864 Filed 2-9-10; 8:45 am]
BILLING CODE 8011-01-P