[Federal Register Volume 80, Number 218 (Thursday, November 12, 2015)]
[Notices]
[Pages 70047-70051]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-28686]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76366; File No. SR-NYSEMKT-2015-85]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of 
Proposed Rule Change to the Co-Location Services Offered by the 
Exchange (the Offering of a Wireless Connection To Allow Users To 
Receive Market Data Feeds From Third Party Markets) and To Reflect 
Changes to the NYSE MKT Equities Price List and the NYSE Amex Options 
Fee Schedule Related to These Services

November 5, 2015.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on October 23, 2015, NYSE MKT LLC (the ``Exchange'' or 
``NYSE MKT'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III 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 change the co-location services offered by 
the Exchange to include a means for co-located Users to receive market 
data feeds from third party markets through a wireless connection. In 
addition, the proposed rule change reflects changes to the NYSE MKT 
Equities Price List (``Price List'') and the NYSE Amex Options Fee 
Schedule (``Fee Schedule'') related to these services. The text of the 
proposed rule change is available on the Exchange's Web site 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

[[Page 70048]]

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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to change the co-location \4\ services 
offered by the Exchange to include a means for Users to receive market 
data feeds from third party markets (the ``Third Party Data'') through 
a wireless connection.\5\ In addition, this proposed rule change 
reflects changes to the Price List and the Fee Schedule related to 
these co-location services.
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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 2010. See Securities Exchange Act Release No. 
62961 (September 21, 2010), 75 FR 59299 (September 27, 2010) (SR-
NYSEAmex-2010-80). 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. 76009 (September 29, 2015), 80 FR 60213 
(October 5, 2015) (SR-NYSEMKT-2015-67). As specified in the Price 
List and 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 and NYSE Arca, 
Inc. See Securities Exchange Act Release No. 70176 (August 13, 
2013), 78 FR 50471 (August 19, 2013) (SR-NYSEMKT-2013-67).
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    The Exchange proposes to offer the wireless connection to provide 
Users with an alternative means of connectivity for Third Party Data. 
Wireless connections involve beaming signals through the air between 
antennas that are within sight of one another. Because the signals 
travel a straight, unimpeded line, and because light waves travel 
faster through air than through glass (fiber optics), wireless messages 
have lower latency than messages travelling through fiber optics.
    Under the proposed rule change, the Exchange would utilize a 
network vendor to provide a wireless connection to the Third Party Data 
through wireless connections from the Exchange access centers in 
Secaucus and Carteret, New Jersey, to its data center in Mahwah, New 
Jersey, through a series of towers equipped with wireless equipment.\6\ 
The wireless connectivity would be an optional offering, offering an 
alternative method for connectivity to the Third Party Data.
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    \6\ The NASDAQ Stock Market LLC (``NASDAQ'') offers a similar 
wireless service. See Securities Exchange Act Release No. 68735 
(January 25, 2013), 78 FR 6842 (January 31, 2013) (SR-NASDAQ-2012-
119) (approving a proposed rule change to establish a new optional 
wireless connectivity for collocated clients).
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    A User that chooses this optional service would be able to receive 
data feeds from NASDAQ and BATS Exchange, Inc. over a wireless 
connection. To receive Third Party Data, the User would enter into a 
contract with the relevant third party market, which would charge the 
User the applicable market data fees for the Third Party Data. The 
Exchange would charge the User fees for the wireless connection for the 
Third Party Data.\7\
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    \7\ A User would only receive the Third Party Data for which it 
had entered into a contract. For example, a User that contracted 
with NASDAQ for the NASDAQ Totalview-ITCH data feed but did not 
contract to receive any other Third Party Data would receive only 
the NASDAQ Totalview-ITCH data feed through its wireless connection.
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    A User would be charged a $5,000 non-recurring initial charge for 
each wireless connection and a monthly recurring charge (``MRC'') that 
would vary depending upon the feed that the User opts to receive. If a 
User purchased two wireless connections, it would pay two non-recurring 
initial charges. The Exchange proposes to waive the first month's MRC, 
to allow Users to test the receipt of the feed(s) for a month before 
incurring any MRCs.
    The Exchange proposes that the wireless connections would include 
the use of one port for connectivity to the Third Party Data. A User 
will only require one port to connect to the Third Party Data, 
irrespective of how many of the five wireless connections it orders. If 
a User that has more than one wireless connection wishes to use more 
than one port to connect to the Third Party Data,\8\ the Exchange 
proposes to make such additional ports available for a monthly fee per 
port of $3,000.
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    \8\ For example, a User with two wireless connections for Third 
Party Data may opt to purchase an additional port in order to route 
the options and equity data it receives to different cabinets.
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    The Exchange proposes to revise its Price List and the Fee Schedule 
to reflect fees related to these connections and ports, as follows:

------------------------------------------------------------------------
              Description                        Amount of charge
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Wireless connection of BATS Pitch BZX    $5,000 per connection initial
 Gig shaped data.                         charge plus monthly charge per
                                          connection of $6,000.
                                         Fees are subject to a 30-day
                                          testing period, during which
                                          the monthly charge per
                                          connection is waived.
Wireless connection of DirectEdge EDGX   $5,000 per connection initial
 Gig shaped data.                         charge plus monthly charge per
                                          connection of $6,000.
                                         Fees are subject to a 30-day
                                          testing period, during which
                                          the monthly charge per
                                          connection is waived.
Wireless connection of NASDAQ Totalview- $5,000 per connection initial
 ITCH data.                               charge plus monthly charge per
                                          connection of $8,500.
                                         Fees are subject to a 30-day
                                          testing period, during which
                                          the monthly charge per
                                          connection is waived.
Wireless connection of NASDAQ BX         $5,000 per connection initial
 Totalview-ITCH data.                     charge plus monthly charge per
                                          connection of $6,000.
                                         Fees are subject to a 30-day
                                          testing period, during which
                                          the monthly charge per
                                          connection is waived.
Wireless connection of NASDAQ Totalview- $5,000 per connection initial
 ITCH and BX Totalview-ITCH data.         charge plus monthly charge per
                                          connection of $12,000.
                                         Fees are subject to a 30-day
                                          testing period, during which
                                          the monthly charge per
                                          connection is waived.
Port for wireless connection...........  $3,000 monthly charge per port,
                                          excluding first port.
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[[Page 70049]]

    There is limited bandwidth available on the wireless connection for 
data feeds from third parties, and so the Exchange has opted to offer 
only the Third Party Data, which are data feeds that are in high demand 
from Users. The wireless network offered by the Exchange, although 
constrained by bandwidth with respect to the number of feeds it can 
carry, can be made available to an unlimited number of Users.
    The Exchange proposes to offer the wireless connection to provide 
Users with an alternative means of connectivity for Third Party Data. 
Currently, Users can receive Third Party Data from wireless networks 
offered by third party vendors.\9\ Users can also receive Third Party 
Data through other methods, including, for example, from another User, 
through a telecommunications provider, or over the internet protocol 
(``IP'') network.\10\
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    \9\ Currently, at least four third party vendors offer Users 
wireless network connections using wireless equipment installed on 
towers and buildings near the data center.
    \10\ The IP network is a local area network available in the 
data center. See Securities Exchange Act Release No. 74220 (February 
6, 2015), 80 FR 7894 (February 12, 2015) (SR-NYSEMKT-2015-08) 
(notice of filing and immediate effectiveness of proposed rule 
change to include IP network connections).
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    The wireless connection to the Third Party Data is expected to be 
available no later than March 1, 2016. The Exchange will announce the 
date that the wireless connection to the Third Party Data will be 
available through a customer notice.
    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; \11\ 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 of its 
affiliates.\12\
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    \11\ 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.
    \12\ See SR-NYSEMKT-2013-67, supra note 5 at 50471. The 
Exchange's affiliates have also submitted substantially the same 
proposed rule change to propose the changes described herein. See 
SR-NYSE-2015-52 and SR-NYSEArca-2015-99.
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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,\13\ in general, and furthers the 
objectives of Sections 6(b)(5) of the Act,\14\ 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 mechanisms 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.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed services are not designed 
to permit unfair discrimination between customers, issuers, brokers, or 
dealers because the wireless connection for Third Party Data would 
provide Users with an alternative means of connectivity for Third Party 
Data. Users that do not opt to utilize the Exchange's proposed wireless 
connections would still be able to obtain Third Party Data through 
other methods, including, for example, from wireless networks offered 
by third party vendors, another User, through a telecommunications 
provider, or over the IP network. Users that opt to use wireless 
connections for Third Party Data would not receive Third Party Data 
that is not available to all Users, as all market participants that 
contract with the relevant third party market for the Third Party Data 
may receive it.
    The Exchange believes that this removes impediments to, and 
perfects the mechanisms of, a free and open market and a national 
market system and, in general, protects investors and the public 
interest because it would provide Users with choices with respect to 
the form and optimal latency of the connectivity they use to receive 
Third Party Data, allowing a User that opts to receive Third Party Data 
to select the connectivity and number of ports that better suit its 
needs, helping it tailor its data center operations to the requirements 
of its business operations.
    The Exchange also believes that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\15\ in particular, because 
it provides for the equitable allocation of reasonable dues, fees, and 
other charges among its member organizations, issuers and other persons 
using its facilities and does not unfairly discriminate between 
customers, issuers, brokers or dealers.
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    \15\ 15 U.S.C. 78f(b)(4).
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    Overall, the Exchange believes that the proposed change is 
reasonable because the Exchange proposes to offer wireless connection 
for Third Party Data described herein as a convenience to Users, but in 
doing so would incur certain costs, including costs related to the data 
center facility, hardware and equipment and costs related to personnel 
required for initial installation and monitoring, support and 
maintenance of such services. The costs associated with the wireless 
connections are incrementally higher than fiber optics-based solutions 
due to the expense of the wireless equipment, cost of installation and 
testing and ongoing maintenance of the network.
    The Exchange believes that the proposed pricing for the wireless 
connection for Third Party Data is reasonable because it allows Users 
to select the Third Party Data connectivity option and number of ports 
that better suit their needs. The fees also reflect the benefit 
received by Users in terms of lower latency over the fiber optics 
option. The Exchange believes that the proposed waiver of the first 
month's MRC is reasonable as it would allow Users to test the receipt 
of the feed(s) for a month before incurring any monthly recurring fees 
and may act as an incentive to Users to utilize the new service.
    The Exchange believes that the proposed change is equitable and not 
unfairly discriminatory because it will result in fees being charged 
only to Users that voluntarily select to receive the corresponding 
services and because those services will be available to all Users. 
Furthermore, the Exchange believes that the services and fees proposed 
herein are not unfairly discriminatory and are equitably allocated 
because, in addition to the services being completely voluntary,

[[Page 70050]]

they are available to all Users on an equal basis (i.e., the same 
products and services are available to all Users). All Users that 
voluntarily select wireless connections and ports would be charged the 
same amount for the same services and would have their first month MRC 
for wireless connections waived.
    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.
    Finally, the Exchange believes that it is subject to significant 
competitive forces, as described below in the Exchange's statement 
regarding the burden on competition.
    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,\16\ 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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    \16\ 15 U.S.C. 78f(b)(8).
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    The Exchange believes that allowing Users to receive Third Party 
Data through a wireless connection will not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act because such access will satisfy User demand for 
additional options for connectivity for Third Party Data. Currently, 
Users can receive Third Party Data from wireless networks offered by 
third party vendors. Based on the information available to it, the 
Exchange believes that its proposed wireless connection would provide 
data at the same or similar speed and at the same or similar cost as 
the existing wireless networks. Accordingly, the proposed wireless 
connection for Third Party Data would provide Users with an additional 
wireless connectivity option, thereby enhancing competition.
    The Exchange notes that the proposed wireless connection would 
compete not just with other wireless connections, but also with fiber 
optic networks, which may be more attractive to some Users as they are 
more reliable and less susceptible to weather conditions. Users that do 
not opt to utilize wireless connections would be able to obtain Third 
Party Data through other methods, including, for example, from another 
User, through a telecommunications provider, or over the IP network. In 
this way, the proposed changes would enhance competition by helping 
Users tailor their connectivity for Third Party Data to the needs of 
their business operations by allowing them to select the form and 
optimal latency of the connectivity they use to receive Third Party 
Data that best suits their needs, helping them tailor their data center 
operations to the requirements of their business operations.
    The proposed wireless connection to the Third Party Data would 
traverse wireless connections through a series of towers equipped with 
wireless equipment, including a pole on the grounds of the data center. 
The proposed wireless network would have exclusive rights to operate 
wireless equipment on the data center pole. The Exchange will not sell 
rights to third parties to operate wireless equipment on the pole, due 
to space limitations, security concerns, and the interference that 
would arise between equipment placed too closely together. In addition 
to space issues, there are contractual restrictions on the use of the 
roof that the Exchange has determined would not be met if it offered 
space on the roof for third party wireless equipment. Moreover, access 
to the pole or roof is not required for third parties to establish 
wireless networks that can compete with the Exchange's proposed 
service, as witnessed by the existing wireless networks currently 
serving Users. Based on the information available to it, the Exchange 
believes that its proposed wireless connection would provide data at 
the same or similar speed, and at the same or similar cost, as its 
proposed wireless connection, thereby enhancing competition.\17\
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    \17\ The Exchange notes that the distance of a wireless network 
provider's wireless equipment from the User is only one factor in 
determining overall latency. Other factors include the number of 
repeaters in the route, the number of switches the data has to 
travel through, and the millimeter wave and switch technology used.
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    Finally, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues if they deem fee levels at a particular venue to be 
excessive. In such an environment, the Exchange must continually 
review, and consider adjusting, its services and related fees and 
credits to remain competitive with other exchanges. 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

    Within 45 days of the date of publication of this notice in the 
Federal Register or up to 90 days (i) as the Commission may designate 
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 or disapprove the 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 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-NYSEMKT-2015-85 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEMKT-2015-85. 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

[[Page 70051]]

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 10:00 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; 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-NYSEMKT-2015-85 and should be submitted on or before 
December 3, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-28686 Filed 11-10-15; 8:45 am]
 BILLING CODE 8011-01-P