[Federal Register Volume 81, Number 110 (Wednesday, June 8, 2016)]
[Notices]
[Pages 36981-36984]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-13472]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77974; File No. SR-NYSEArca-2016-77]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending the NYSE 
Arca Options Fee Schedule and the NYSE Arca Equities Schedule of Fees 
and Charges for Exchange Services To Eliminate Certain Services That 
Are No Longer Utilized by Users and To Remove Obsolete Text

June 2, 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 May 23, 2016, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') 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 amend the NYSE Arca Options Fee Schedule (the 
``Options Fee Schedule'') and, through its wholly owned subsidiary NYSE 
Arca Equities, Inc. (``NYSE Arca Equities''), the NYSE Arca Equities 
Schedule of

[[Page 36982]]

Fees and Charges for Exchange Services (the ``Equities Fee Schedule'' 
and, together with the Options Fee Schedule, the ``Fee Schedules'') to 
eliminate certain services that are no longer utilized by Users and to 
remove obsolete text. 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 Fee Schedules for the co-
location \4\ services offered by the Exchange to eliminate certain 
services that are no longer utilized by Users \5\ and to remove 
obsolete text.
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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. 
63275 (November 8, 2010), 75 FR 70048 (November 16, 2010) (SR-
NYSEArca-2010-100). 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. 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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LCN CSP Access
    The ``Liquidity Center Network'' (``LCN'') is a local area network 
available in the data center. A User is currently able to act as a 
content service provider (a ``CSP'' User) and deliver services to 
another User in the data center (a ``Subscribing'' User).\6\ These 
services could include, for example, order routing/brokerage services 
and/or data delivery services.
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    \6\ See Securities Exchange Act Release No. 67667 (August 15, 
2012), 77 FR 50743 (August 22, 2012) (SR-NYSEArca-2012-63).
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    Currently, the Exchange offers CSP Users specific, dedicated 10 
gigabyte (``Gb'') LCN connections (``LCN CSP'') that would allow CSP 
Users to send data to, and communicate with, all their properly 
authorized Subscribing Users at once. In such a case, a Subscribing 
User would receive the services via its standard LCN connection and 
would be charged an initial and monthly fee (``CSP Subscriber fee'') 
reflecting the benefit of receiving services from the CSP User in this 
manner.\7\
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    \7\ Id. Previously, the Exchange also offered a one Gb LCN CSP 
connection, but it was discontinued as it was no longer utilized by 
Users. See Securities Exchange Act Release No. 72720 (July 30, 
2014), 79 FR 45577 (August 5, 2014) (SR-NYSEArca-2014-81).
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    However, Users no longer utilize the LCN CSP connection offering. 
Accordingly, the Exchange proposes to discontinue LCN CSP connections, 
and to remove references to LCN CSP access and CSP Subscriber fees from 
the Fee Schedules. A CSP User would remain able to deliver services to 
a Subscribing User via direct cross connect, as is currently the case 
and as was the case prior to the introduction of the LCN CSP connection 
offering.
Bundled Network Access
    A User is currently able to select from two ``bundled'' 
connectivity options when connecting to the data center: ``Bundled 
Network Access Option 1'' and ``Bundled Network Access Option 2''.\8\ 
The Exchange proposes to discontinue Bundled Network Access Option 2, 
as Users no longer utilize it, and to remove references to related 
pricing from the Fee Schedules. In addition, the Exchange proposes to 
rename ``Bundled Network Access Option 1'' as ``Bundled Network 
Access,'' as it would be the sole remaining option.
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    \8\ Previously, the Exchange offered other ``bundled'' 
connectivity options, but they were discontinued as they were no 
longer utilized by Users. See id., at 45578.
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IP Network Access
    The internet protocol (``IP'') network is a local area network 
available in the data center.\9\ IP network access is offered in 1, 10 
and 40 Gb capacities. The Exchange proposes to delete statements in the 
Fee Schedules that the 40 Gb circuit of the IP network is expected to 
be available no later than April 15, 2016,\10\ as such statements are 
obsolete. This proposed change would have no impact on pricing.
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    \9\ 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 and fiber cross connects between a 
User's cabinet and a non-User's equipment).
    \10\ See Securities Exchange Act Release No. 76372 (November 5, 
2015), 80 FR 70039 (November 12, 2015) (SR-NYSEArca-2015-105) 
(notice of filing and immediate effectiveness of proposed rule 
change to include IP 40 Gb network connections).
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General
    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-NYSEArca-2013-80, supra note 5, at 50459. The 
Exchange's affiliates have also submitted substantially the same 
proposed rule change to propose the changes described herein. See 
SR-NYSE-2016-39 and SR-NYSEMKT-2016-57.
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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 section 6(b)(4) of 
the Act,\14\ in particular, because it provides for the equitable 
allocation of reasonable dues, fees, and other charges among its 
members, issuers and other persons using its facilities and does not 
unfairly discriminate between customers,

[[Page 36983]]

issuers, brokers or dealers. The Exchange also believes that the 
proposed rule change furthers the objectives of section 6(b)(5) of the 
Act,\15\ 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).
    \15\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed change is reasonable, 
equitable and not unfairly discriminatory because discontinuing the LCN 
CSP and Bundled Network Access Option 2 in the data center would permit 
the Exchange to streamline the offerings available to Users in the data 
center by eliminating services that Users no longer utilize and, by 
removing references to related pricing from the Fee Schedules, make the 
Fee Schedules easier to read, understand and administer. The Exchange 
believes that, because no Users utilize such services, it would be 
equitable and not unfairly discriminatory to discontinue the services.
    The Exchange believes that it is reasonable to discontinue the 
services in the data center that are no longer utilized by Users and to 
remove references to related pricing from the Fee Schedules because the 
Exchange offers the services described herein as a convenience to 
Users, but in doing so incurs certain costs, including costs related to 
the data center facility, hardware and equipment and costs related to 
personnel required for initial installation and ongoing monitoring, 
support and maintenance of such services. Removing services that Users 
do not utilize from the co-location offerings would contribute to a 
more efficient process for managing the various services offered to 
Users, which would improve the utilization of the data center 
resources, both with respect to personnel and infrastructure, including 
hardware and software.
    The Exchange believes that eliminating references in the Fee 
Schedules that state that the 40 Gb circuit of the IP network is 
expected to be available no later than April 15, 2016, is reasonable, 
equitable and not unfairly discriminatory because these references are 
obsolete and no longer have an impact on pricing. The proposed change 
would result in the removal of obsolete text from the Fee Schedules and 
therefore add greater clarity to the Fee Schedules regarding the 
services offered and the applicable fees.
    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 discontinuing the LCN CSP and Bundled 
Network Access Option 2 in the data center and removing references to 
related pricing and obsolete text from the Fee Schedules would not 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act because no Users utilize the 
services proposed to be discontinued. A CSP User would remain able to 
deliver services to a Subscribing User via direct cross connect, as is 
currently the case and as was the case prior to the introduction of the 
LCN CSP connection offering. The proposed rule change is not intended 
to address competitive issues.
    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 foregoing rule change is effective upon filing pursuant to 
section 19(b)(3)(A) \17\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \18\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b-4(f)(2).
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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) \19\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \19\ 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-NYSEArca-2016-77 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-NYSEArca-2016-77. This file 
number should be included on the

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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-NYSEArca-2016-77, and should be submitted on or before June 
29, 2016.
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    \20\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
Brent J. Fields,
Secretary.
[FR Doc. 2016-13472 Filed 6-7-16; 8:45 am]
 BILLING CODE 8011-01-P