[Federal Register Volume 76, Number 245 (Wednesday, December 21, 2011)]
[Notices]
[Pages 79242-79243]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-32664]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65970; File No. SR-NYSEArca-2011-74]


Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving a 
Proposed Rule Change Expanding the Scope of Potential ``Users'' of Its 
Co-Location Services To Include Any Market Participant that Requests to 
Receive Co-Location Services Directly From the Exchange and Amending 
Its Fee Schedule To Establish a Fee for Users That Host Their Customers 
at the Exchange's Data Center

 December 15, 2011.

I. Introduction

    On October 14, 2011, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to expand the scope of potential ``Users'' of its 
co-location services, and to amend its Fee Schedule. The proposed rule 
change was published for comment in the Federal Register on November 1, 
2011.\3\ The Commission received no comments on the proposal. This 
order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 65625 (October 26, 
2011), 76 FR 67522 (``Notice'').
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II. Description of the Proposed Rule Change

    The Exchange operates a data center in Mahwah, New Jersey from 
which it provides co-location services to Users.\4\ For purposes of its 
co-location services, the term ``User'' currently includes any ETP 
Holder or Sponsored Participant who is authorized to obtain access to 
the NYSE Arca Marketplace pursuant to NYSE Arca Equities Rule 7.29 (see 
NYSE Arca Equities Rule 1.1(yy)). The Exchange proposed to expand the 
scope of potential Users of its co-location services to include any 
market participant that requests to receive co-location services 
directly from the Exchange.\5\ Under the proposed rule change, Users 
could therefore include ETP Holders, Sponsored Participants, non-ETP 
Holder broker-dealers and vendors.\6\
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    \4\ See Securities Exchange Act Release No. 63275 (November 8, 
2010), 75 FR 70048.
    \5\ As stated by the Exchange, Users must agree to, and be 
capable of satisfying, any applicable co-location fees, 
requirements, terms and conditions established from time to time by 
the Exchange. See Notice, 76 FR at 67522.
    \6\ Id. The Exchange anticipated that the potential additional 
Users would provide, for example, hosting, service bureau, technical 
support, risk management, order routing and market data delivery 
services to their customers while the User is co-located in the 
Exchange's data center.
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    The Exchange also proposed to amend its Price List to establish a 
fee applicable to Users that provide hosting services to their 
customers (``Hosted Users'') at the Exchange's data center.\7\ 
``Hosting'' would be a service offered by a User to a Hosted User and 
could include, for example, a User supporting its Hosted User's 
technology, whether hardware or software, through the User's co-
location space. Specifically, the Exchange proposed to charge each User 
a fee of $500.00 per month for each Hosted User that the User hosts in 
the Exchange's data center. Users would independently set fees for 
their Hosted Users and the Exchange would not receive a share of any 
such fees.
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    \7\ Id.
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III. Discussion and Commission's Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\8\ 
In particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\9\ which requires that the 
rules of a national securities exchange provide for the equitable 
allocation of reasonable dues, fees and other charges among its members 
and issuers and other persons using its facilities, and with Section 
6(b)(5) of the Act,\10\ which requires, among other things, that the 
rules of a national securities exchange be designed to promote just and 
equitable principles of trade, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system and, 
in general, to protect investors and the public interest, and not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \8\ In approving this proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \9\ 15 U.S.C. 78f(b)(4).
    \10\ 15 U.S.C. 78f(b)(5).
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    The Exchange noted that the expansion of the scope of potential 
Users of the Exchange's co-location services increases access to the 
Exchange's co-location facilities and that the co-location services 
would be offered to these additional Users in a

[[Page 79243]]

manner that is not unfairly discriminatory.\11\ The Commission believes 
that this expansion of the scope of potential Users is consistent with 
the Exchange Act and should increase access to the Exchange co-location 
facilities by allowing additional categories of market participants to 
access the Exchange's co-location services.
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    \11\ See Notice, 76 FR at 67523.
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    Regarding the proposed hosting fee, the Exchange represented that 
it will be applied uniformly and will not unfairly discriminate between 
Users of co-location services, as the hosting fee will be applicable to 
all interested Users that provide hosting services.\12\ The Exchange 
also represented that the hosting fee is reasonable because it is 
designed to defray expenses incurred or resources expended by the 
Exchange.\13\ In light of the Exchange's representations, the 
Commission believes that the hosting fee is consistent with Section 
6(b)(4) of the Exchange Act.
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    \12\ Id.
    \13\ Id.
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\14\ that the proposed rule change (SR-NYSEArca-2011-74) be, and it 
hereby is, approved.
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    \14\ 15 U.S.C. 78s(b)(2).
    \15\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-32664 Filed 12-20-11; 8:45 am]
BILLING CODE 8011-01-P