[Federal Register Volume 81, Number 32 (Thursday, February 18, 2016)]
[Notices]
[Pages 8316-8319]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-03264]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77120; File No. SR-NYSEMKT-2016-02]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change to the Co-location 
Services Offered by the Exchange To Include a Means for Co-located 
Users To Receive the NASDAQ TotalView Ultra Market Data Feed Through a 
Wireless Connection and Reflect Changes to the NYSE MKT Equities Price 
List and the NYSE Amex Options Fee Schedule

February 11, 2016.
    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 February 2, 2016, 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 the 
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 the 
NASDAQ TotalView Ultra (FGPA) market data feed 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 the proposed 
service. 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 
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 \5\ to have access 
to the NASDAQ TotalView Ultra (FGPA) market data

[[Page 8317]]

feed through a wireless connection. In addition, the proposed rule 
change reflects changes to the Price List and Fee Schedule related to 
the proposed service.
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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 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 Commission has approved the Exchange's proposed rule change to 
provide a wireless connection to five market data feeds from third 
party markets.\6\ The Exchange now proposes to add to its Price List 
and Fee Schedule a sixth market data feed, NASDAQ TotalView Ultra 
(FGPA) (``TotalView Ultra'' and, together with the previously filed 
five market data feeds, the ``Third Party Data'').
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    \6\ See Securities Exchange Act Release No. 76750 (December 23, 
2015), 80 FR 81648 (December 30, 2015) (SR-NYSEMKT-2015-85) 
(``Wireless Approval Release'').
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    As with the previously approved connectivity to Third Party Data 
through the wireless connection, the Exchange would utilize a network 
vendor to provide a wireless connection to TotalView Ultra through 
wireless connections from an Exchange access center to its data center 
in Mahwah, New Jersey, through a series of towers equipped with 
wireless equipment. To receive TotalView Ultra, the User would enter 
into a contract with NASDAQ, which would charge the User the applicable 
market data fees for TotalView Ultra. The Exchange would charge the 
User fees for the wireless connection to TotalView Ultra.\7\
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    \7\ A User would only receive TotalView Ultra if it had entered 
into a contract with NASDAQ.
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    For each wireless connection to TotalView Ultra, a User would be 
charged a $5,000 non-recurring initial charge and a monthly recurring 
charge (``MRC'') of $11,000. The Exchange proposes to revise its Price 
List and Fee Schedule to reflect fees related to the connection to 
TotalView Ultra.
    As with the previously approved wireless connections to Third Party 
Data, if a User purchased two wireless connections, it would pay two 
non-recurring initial charges, and the wireless connection would 
include the use of one port for connectivity to Third Party Data.\8\ 
Also as with the previously approved wireless connections to Third 
Party Data, the Exchange proposes to waive the first month's MRC, to 
allow Users to test the receipt of TotalView Ultra for a month before 
incurring any MRCs.
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    \8\ A User only requires one port to connect to the Third Party 
Data, irrespective of how many of the wireless connections it 
orders. It may, however, purchase additional ports. See Wireless 
Approval Release, at 81649.
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    The Exchange proposes to offer the wireless connection to provide 
Users with an alternative means of connectivity to TotalView Ultra. 
Currently, Users can receive TotalView Ultra from wireless networks 
offered by third party vendors.\9\ Users may also receive connections 
to TotalView Ultra 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 in January 2016, and 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-2015-01 and SR-NYSEArca-2015-04.
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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)(4) and 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)(4), (5).
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    The Exchange believes that the proposed service is not designed to 
permit unfair discrimination between customers, issuers, brokers, or 
dealers because the wireless connection to TotalView Ultra would 
provide Users with an alternative means of connectivity to TotalView 
Ultra. Users that do not opt to utilize the Exchange's proposed 
wireless connections would still be able to obtain TotalView Ultra 
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 to TotalView Ultra would receive the TotalView 
Ultra that is available to all Users, as all market participants that 
contract with NASDAQ for TotalView Ultra 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 
TotalView Ultra, allowing a User that opts to receive TotalView Ultra 
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

[[Page 8318]]

members, 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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    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, 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 to TotalView Ultra would be charged the 
same amount for the same services and would have their first month MRC 
for wireless connections waived.
    Overall, the Exchange believes that the proposed change is 
reasonable because the Exchange proposes to offer the wireless 
connection to TotalView Ultra 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 it is reasonable that a User that has already 
purchased wireless connections to other Third Party Data would be 
charged a non-recurring charge when it purchases a wireless connection 
to TotalView Ultra, because the Exchange would incur certain costs in 
installing the wireless connection to TotalView Ultra irrespective of 
whether the User had existing wireless connections to Third Party Data. 
Such costs related to initial installation include, in particular, 
costs related to personnel required for initial installation and 
testing. The costs associated with installing wireless connections are 
incrementally higher than those associated with installing fiber 
optics-based solutions.
    The Exchange believes that the proposed pricing for the wireless 
connection to TotalView Ultra is reasonable because it allows Users to 
select the TotalView Ultra connectivity option that better suits 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 for a month before 
incurring any monthly recurring fees and may act as an incentive to 
Users to connect to TotalView Ultra.
    Moreover, the fees are equity [sic] allocated and not unfairly 
discriminatory because the wireless connection to TotalView Ultra would 
provide Users with an alternative means of connectivity to TotalView 
Ultra. Users that do not opt to utilize the Exchange's proposed 
wireless connections would still be able to obtain TotalView Ultra 
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 to TotalView Ultra would receive the TotalView 
Ultra that is available to all Users, as all market participants that 
contract with NASDAQ for TotalView Ultra may receive it.
    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 proposed fees are 
reasonable, equitable, and not unfairly discriminatory.

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 TotalView 
Ultra 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 to TotalView Ultra. Currently, 
Users can receive TotalView Ultra 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 other wireless networks. Accordingly, the proposed wireless 
connection to TotalView Ultra would provide Users with an additional 
wireless connectivity option, thereby enhancing competition.
    The Exchange notes that the proposed wireless connection to 
TotalView Ultra would compete not just with other wireless connections 
to TotalView Ultra, but also with fiber optic network connections to 
TotalView Ultra, 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 
TotalView Ultra 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 to TotalView Ultra to the needs 
of their business operations by allowing them to select the form and 
optimal latency of the connectivity they use to receive TotalView Ultra 
that best suits their needs, helping them tailor their data center 
operations to the requirements of their business operations.
    The proposed wireless connection to TotalView Ultra 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

[[Page 8319]]

that its proposed wireless connection to TotalView Ultra would provide 
data at the same or similar speed, and at the same or similar cost, as 
its proposed wireless connection [sic], 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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \18\ and Rule 19b-4(f)(6) thereunder.\19\ 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \18\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \19\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \20\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\21\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
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    \20\ 17 CFR 240.19b-4(f)(6).
    \21\ 17 CFR 240.19b-4(f)(6)(iii).
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    At any time within 60 days of the filing of such 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 under 
Section 19(b)(2)(B) \22\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \22\ 15 U.S.C. 78s(b)(2)(B).
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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 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 No. SR-NYSEMKT-2016-02 on the subject line.

Paper Comments

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

All submissions should refer to File No. SR-NYSEMKT-2016-02. 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 
10:00 a.m. and 3:00 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 No. SR-NYSEMKT-2016-02, and should be 
submitted on or before March 10, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-03264 Filed 2-17-16; 8:45 am]
 BILLING CODE 8011-01-P