[Federal Register Volume 80, Number 250 (Wednesday, December 30, 2015)]
[Notices]
[Pages 81640-81642]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-32818]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76749; File No. SR-NYSEArca-2015-99]


Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving 
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 Arca Options Fee Schedule and the NYSE Arca 
Equities Schedule of Fees and Charges Related to These Services

December 23, 2015.

I. Introduction

    On October 23, 2015, NYSE Arca, Inc. (the ``Exchange'' or ``NYSE 
Arca'') filed with the Securities and Exchange Commission (the 
``Commission'') pursuant to Section 19(b)(1) \1\ of the Securities 
Exchange Act of 1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ a 
proposed rule change to amend 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. The 
proposed rule change was published in the Federal Register on November 
12, 2015.\4\ No comment letters were received in response to the 
Notice. This order approves the proposed rule change.
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    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ See Securities Exchange Act Release No. 76364 (November 5, 
2015), 80 FR 70051 (November 12, 2015) (``Notice'').
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II. Description of the Proposed Rule Change

    The Exchange proposes to change the co-location 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, the proposed rule change reflects changes 
to the Exchange's Fee Schedules related to these co-location services.
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    \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. 76010 (September 29, 2015), 80 FR 60197 
(October 5, 2015) (SR-NYSEArca-2015-82). As specified in the Fee 
Schedules, 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 MKT LLC. 
See Securities Exchange Act Release No. 70173 (August 13, 2013), 78 
FR 50459 (August 19, 2013) (SR-NYSEArca-2013-80).
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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. 
As the Exchange notes, wireless connections involve beaming signals 
through the air between antennas that are within sight of one 
another.\6\ 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.\7\
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    \6\ See Notice, supra note 4 at 70051.
    \7\ See id.
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    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.\8\ 
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.\9\
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    \8\ 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 co-located clients).
    \9\ 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 MRC for a wireless connection to each

[[Page 81641]]

of BATS Pitch BZX Gig shaped data, DirectEdge EDGX Gig shaped data, and 
NASDAQ BX Totalview-ITCH data will be $6,000; the MRC for a wireless 
connection of NASDAQ Totalview-ITCH data will be $8,500; and the MRC 
for a wireless connection of NASDAQ Totalview-ITCH and BX Totalview-
ITCH data will be $12,000. 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 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,\10\ the Exchange proposes to make such additional 
ports available for a monthly fee per port of $3,000.
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    \10\ 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 represents that there is limited bandwidth available 
on the wireless connection for data feeds from third parties. As a 
result, the Exchange has decided to offer as Third Party Data only the 
data feeds that are in high demand from Users. Although constrained by 
bandwidth with respect to the number of feeds it can carry, the 
Exchange represents that the wireless network offered by the Exchange 
can be made available to an unlimited number of Users.
    The wireless connection would provide Users with an alternative 
means of connectivity for Third Party Data. Currently, Users can 
receive Third Party Data through other methods, including, for example, 
from another User, through a telecommunications provider, or over the 
internet protocol (``IP'') network.\11\ In addition, Users can receive 
Third Party Data from wireless networks offered by third party vendors. 
The Exchange represents that there are currently at least four third 
party vendors that offer Users wireless network connections using 
wireless equipment installed on towers and buildings near the data 
center. The Exchange states that its proposed wireless connection would 
traverse wireless connections through a series of towers equipped with 
wireless equipment, including a pole on the grounds of the data 
center.\12\ The Exchange states that access to such pole or the roof is 
not required for third parties to establish wireless networks that can 
compete with Exchange's proposed service and, in particular, represents 
that based on the information available to it, the proposed wireless 
connection would provide data at the same or similar speed, and at the 
same or similar cost, as existing wireless networks, thereby enhancing 
competition.\13\
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    \11\ The IP network is a local area network available in the 
data center. See Securities Exchange Act Release No. 74219 (February 
6, 2015), 80 FR 7899 (February 12, 2015) (SR-NYSEArca-2015-03) 
(notice of filing and immediate effectiveness of proposed rule 
change to include IP network connections).
    \12\ See Notice, supra note 4 at 70053.
    \13\ See Notice, supra note 4 at 70052-54.
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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.

III. Discussion and Commission 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.\14\ In particular, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(4) of the Act,\15\ 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,\16\ 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. In addition, the Commission 
finds that the proposed rule change is consistent with Section 6(b)(8) 
of the Act,\17\ which requires that the rules of the exchange not 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.
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    \14\ 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).
    \15\ 15 U.S.C. 78f(b)(4).
    \16\ 15 U.S.C. 78f(b)(5).
    \17\ 15 U.S.C. 78f(b)(8).
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    The Commission believes that the Exchange's proposal to provide 
this additional connectivity option is consistent with the requirement 
of Section 6(b)(5) of the Act. The Commission believes that the 
proposal is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers because the Exchange makes 
wireless connectivity available to all Users on an equal basis. All 
Users that voluntarily select this service option will be charged the 
same amount for the same services, and there would be no 
differentiation among Users with regard to the fees charged for the 
service. Further, the Exchange represents that Users of the new 
wireless connection would not receive Third Party Data that is not 
available to all Users. In addition, the Exchange represents that Users 
that do not opt to utilize the Exchange's wireless connections would 
still be able to obtain Third Party Data through other methods, such as 
from wireless networks offered by third party vendors, other Users, 
through telecommunications providers, or over the IP network.
    The Commission also believes that the proposed rule change is 
consistent with Section 6(b)(4) of the Act.\18\ All Users that 
voluntarily select this service option will be charged the same amount 
for the same services, and there would be no differentiation among 
Users with regard to the fees charged for the service. The Commission 
notes the Exchange's representation that the fees associated with 
providing the wireless connections are reasonable because the Exchange 
will 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 Exchange states that 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, and that the fees also reflect the benefit received by 
Users in terms of lower latency over the fiber optics option. In 
addition, 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.
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    \18\ 15 U.S.C. 78f(b)(4).
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    The Commission also finds that consistent with Section 6(b)(8) of 
the

[[Page 81642]]

Act the proposed rule change does not impose a burden on competition 
not necessary or appropriate in furtherance of the purposes of the Act. 
The Exchange states that Users currently can receive Third Party Data 
from competing wireless networks offered by third party vendors, 
including at least four third party vendors that offer Users wireless 
network connections using wireless equipment installed on towers and 
buildings near the data center. The Exchange represents, based on the 
information available to it, that the proposed wireless connection 
would provide data at the same or similar speed, and at the same or 
similar cost, as existing wireless networks, thereby enhancing 
competition.\19\ The Exchange also 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. For these reasons, the Commission does not believe that the 
proposed rule change imposes a burden on competition not necessary or 
appropriate in furtherance of the purposes of the Act.
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    \19\ See supra notes 12 and 13 and accompanying text.
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\20\ that the proposed rule change (SR-NYSEArca-2015-99) be, and it 
hereby is, approved.
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    \20\ 15 U.S.C. 78s(b)(2).
    \21\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
Brent J. Fields,
Secretary.
[FR Doc. 2015-32818 Filed 12-29-15; 8:45 am]
 BILLING CODE 8011-01-P