[Federal Register Volume 76, Number 248 (Tuesday, December 27, 2011)]
[Notices]
[Pages 80993-80995]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-33144]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66010; File No. SR-NASDAQ-2011-160]


 Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify Fees for Co-Location Services

December 20, 2011.
    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 December 9, 2011, The NASDAQ Stock Market LLC (``NASDAQ'' 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 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

    The Exchange proposes to modify pricing for co-location services. 
The text of the proposed rule change is available at http://nasdaq.cchwallstreet.com/, at the Exchange's principal office, on the 
Commission's Web site at http://www.sec.gov, and at the Commission's 
Public Reference Room.

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

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant aspects of such 
statements.

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

1. Purpose
    The Exchange is modifying its co-location fee schedule, Exchange 
Rule 7034(a), to include a fee for an optional cabinet choice. 
Currently co-location customers have the option of obtaining several 
cabinet sizes and power densities. The co-located customer may obtain a 
half cabinet, a low density cabinet, a medium density cabinet, a 
medium-high density cabinet and a high density cabinet.\3\ Each cabinet 
may vary in size and maximum power capacity. The fees related to the 
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. The 
co-location customer may obtain more power by choosing a combination of 
lower power density cabinets. However, the Exchange is providing a 
choice of a larger cabinet (30''W x 48'' D x 96'' H) with higher power 
instead of combining several units for more power (>10kW<=17.3kW)

[[Page 80994]]

with an installation fee of $7,000; and an ongoing monthly fee of 
$15,000. The co-location customer also has the option of a smaller 
cabinet (24'' W x 42'' D x 84'' H) with the same power structure which 
would reduce the installation fee to $3,500 with the same ongoing 
monthly fee of $15,000 per month.
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    \3\ See Exchange Rule 7034(a).
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    Additionally, the Exchange is proposing to include a fee for a 
super high density cabinet kit in Exchange Rule 7034(d). The optional 
super high density cabinet requires additional customized equipment to 
adequately cool the cabinet. The Exchange is proposing an installation 
fee of $7,000 for the required customized equipment kit. All fees are 
charged to recoup costs associated with the optional cabinets while 
providing increased efficiency; and to the extent the costs are 
covered, provide a profit to the Exchange.
    The Exchange is making the super high density cabinets available as 
a convenience to customers, and notes that use of Exchange cabinets is 
completely voluntary.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\4\ in general, and with 
Section 6(b)(4) of the Act,\5\ in particular, in that it provides for 
the equitable allocation of reasonable dues, fees and other charges 
among members and issuers and other persons using any facility or 
system which the Exchange operates or controls.
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    \4\ 15 U.S.C. 78f.
    \5\ 15 U.S.C. 78f(b)(4).
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    The Exchange will incur costs for the super high-density cabinets 
due to the additional costs incurred for the change in design of the 
cabinets to meet the need of the client, and the costs incurred for 
infrastructure to accommodate the proposed units as the cabinet design 
is not of the same dimension as the current cabinets to accommodate new 
server sizes. The Exchange will also incur additional costs for 
personnel needed to monitor and support the new cabinets. The Exchange 
looks to recoup the additional costs from all market participants that 
opt to utilize the proposed cabinets. Thus, the price charged for the 
proposed cabinets is equitable and just in that the proposed fees that 
will be charged only to those that opt for the proposed super high-
density cabinets and will be based on the costs to develop and maintain 
the system, as well as allowing the Exchange to earn a return on its 
investment. Furthermore, because the proposed super high- density 
cabinet option is entirely voluntary and available to all members, the 
Exchange's fees for the purposed cabinet are not only equitably 
allocated, but also non-discriminatory.
    Additionally, the Exchange is providing the additional cabinet 
option to its co-located customers to provide greater efficiency for 
their trading operations. In order to receive similar service under the 
current structure, the co-located customer would need to combine 
several currently provided cabinets. While the price may appear 
initially similar, the co-located customer would incur additional 
monthly interconnectivity costs for cabling to connect all the 
cabinets. Additionally, having one super high-density cabinet to meet 
the space and power requirements to operate the newly designed servers 
reduces the additional latency that would be experienced by combining 
several cabinets to achieve a similar result. The new design of the 
super high-density cabinet allows the fit of more equipment in one unit 
before reaching power capacity. For all the above reasons, the proposed 
super high-density cabinets results in a more efficient operation 
overall for the co-located customer.

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.

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)(ii) of the Act.\6\ At any time within 60 days of the filing 
of the proposed rule change, the Commission summarily may temporarily 
suspend such rule change if it appears to the Commission that such 
action is 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 to determine whether the proposed rule should be 
approved or disapproved.
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    \6\ 15 U.S.C. 78s(b)(3)(a)(ii).
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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, 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 email to [email protected]. Please include 
File Number SR-NASDAQ-2011-160 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2011-160. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
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-NASDAQ-2011-160, and should 
be submitted on or before January 17, 2012.


[[Page 80995]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
Kevin M. O'Neill,
Deputy Secretary.
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    \7\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2011-33144 Filed 12-23-11; 8:45 am]
BILLING CODE 8011-01-P