[Federal Register Volume 83, Number 116 (Friday, June 15, 2018)]
[Notices]
[Pages 28053-28057]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-12852]



[[Page 28053]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83403; File No. SR-NYSEARCA-2018-36]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE 
Arca Options Fees and Charges and the NYSE Arca Equities Fees and 
Charges Related to Co-Location Services in Connection With the Re-
Launch of Trading on NYSE National, Inc. and Proposed NYSE National Co-
Location Services

June 11, 2018.
    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 30, 2018, 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 and II 
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 amend the NYSE Arca Options Fees and 
Charges (the ``Options Fee Schedule'') and the NYSE Arca Equities Fees 
and Charges (the ``Equities Fee Schedule'' and, together with the 
Options Fee Schedule, the ``Fee Schedules'') related to co-location 
services in connection with the re-launch of trading on NYSE National, 
Inc. (``NYSE National'') and proposed NYSE National co-location 
services. The Exchange also proposes to make a non-substantive change 
to remove obsolete text from the Fee Schedules. The proposed rule 
change is available on the Exchange's website 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedules related to co-
location \4\ services in connection with the re-launch of trading on 
NYSE National and proposed NYSE National co-location services. 
Specifically, the Exchange proposes to make changes to General Note 1 
and General Note 4 of the Fee Schedules to add references to NYSE 
National. The Exchange also proposes to make a non-substantive change 
to remove obsolete text from the Fee Schedules, with respect to the 
wireless connection to third party data provided by the Toronto Stock 
Exchange (``TSX'').
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    \4\ The Exchange initially filed rule changes relating to its 
co-location services with the 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.
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    On January 31, 2017, Intercontinental Exchange, Inc. (``ICE''), the 
indirect parent of the Exchange, acquired all of the outstanding 
capital stock of NYSE National through its wholly-owned subsidiary NYSE 
Group.\5\ As a result, NYSE National is an affiliate of the Exchange. 
On February 1, 2017, NYSE National ceased trading operations.\6\
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    \5\ See Securities Exchange Act Release No. 79902 (January 30, 
2017), 82 FR 9258 (February 3, 2017) (SR-NSX-2016-16). Prior to its 
acquisition, NYSE National was named ``National Stock Exchange, 
Inc.''
    \6\ See Securities Exchange Act Release No. 80018 (February 10, 
2017), 82 FR 10947 (February 16, 2017) (SR-NSX-2017-04).
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    NYSE National filed proposed rule changes to re-launch trading 
operations.\7\ NYSE National has stated that it anticipates re-
launching trading operations in the second quarter of 2018. In 
connection with the anticipated re-launch of NYSE National's trading 
operations, NYSE National has filed a proposed rule change to offer the 
same co-location services and fees offered by the Exchange, the New 
York Stock Exchange LLC (``NYSE LLC''), and NYSE American LLC (``NYSE 
American'' and, together with the NYSE LLC, the ``Affiliate SROs''), 
which are its affiliates.\8\
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    \7\ See Securities Exchange Act Release No. 83289 (May 17, 2018) 
(notice of filing of Amendment No. 1 and order granting accelerated 
approval of a proposed rule change, as amended by Amendment No. 1, 
to support the re-launch of NYSE National, Inc. on the Pillar 
Trading Platform) (``NYSE National Trading Rules Approval''). See 
also Securities Exchange Act Release No. 82819 (March 7, 2018), 83 
FR 11098 (March 13, 2018) (SR-NYSENat-2018-02).
    \8\ See SR-NYSENat-2018-07 (May 18, 2018).
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    The Exchange requests that the proposed rule change become both 
effective and operative immediately upon filing.\9\
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    \9\ See NYSE National Trading Rules Approval, supra note 7.
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General Note 1
    General Note 1 of the Fee Schedules provides that a User \10\ that 
incurs co-location fees for a particular co-location service shall not 
be subject to co-location fees for the same co-location service charged 
by the other Affiliate SROs.\11\ The Exchange proposes to add NYSE 
National to General Note 1 to the Options Fee Schedule, as follows 
(additions underlined, deletions in brackets):
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    \10\ 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).
    \11\ See Securities Exchange Act Release No. 70173 (August 13, 
2013), 78 FR 50459 (August 19, 2013) (SR-NYSEArca-2013-80). Some 
Users do not connect to the Exchange or the Affiliate SROs, but 
rather provide services to other Users co-located at the data 
center. Id.

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[[Page 28054]]

[GRAPHIC] [TIFF OMITTED] TN15JN18.014

    The Exchange proposes to add NYSE National to General Note 1 to the 
Equities Fee Schedule, as follows (additions underlined, deletions in 
brackets):
[GRAPHIC] [TIFF OMITTED] TN15JN18.015

    By including the proposed reference to NYSE National, General Note 
1 would provide that the fees a User pays for co-location services 
would not depend on whether the User connects to none, one, some, or 
all of the Exchange, the Affiliate SROs, and NYSE National.
General Note 4
    General Note 4 of the Fee Schedules provides that, when a User 
purchases access to the Liquidity Center Network (``LCN'') or the 
internet protocol (``IP'') network, the two local area networks 
available in the data center,\12\ a User receives (a) the ability to 
access the trading and execution systems of the Exchange and Affiliate 
SROs, and (b) connectivity to any of the listed data products 
(``Included Data Products'') that it selects.
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    \12\ See Securities Exchange Act Release No. 79729 (January 4, 
2017), 82 FR 3061 (January 10, 2017) (SR-NYSEArca-2016-172).
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    The Exchange proposes to add NYSE National to the list of trading 
and execution system providers in the first sentence of the first 
paragraph, thereby expanding the definition of ``Exchange Systems'' 
which Users may access to include NYSE National. It also proposes to 
add NYSE National to the lists of affiliated entities in the first, 
third and fourth sentences. The proposed changes are as follows 
(additions underlined, deletions in brackets):

[[Page 28055]]

[GRAPHIC] [TIFF OMITTED] TN15JN18.016

    In addition, the Exchange proposes to add NYSE National to the 
table of Included Data Products set forth in General Note 4.
Toronto Stock Exchange
    The Exchange offers Users the option to receive certain market data 
feeds from third party markets through a wireless connection. The 
description of the charge for the TSX wireless connection in the Fee 
Schedules states that ``[c]ustomers with an existing wireless 
connection to TSX at the time the Exchange makes the service available 
will not be subject to an initial charge or receive 30-day testing 
period.'' Because the wireless connection to the TSX has become 
effective, the statement is obsolete. Accordingly, the Exchange 
proposes to delete the statement from the Fee Schedules.
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; \13\ 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, one or both of its Affiliate SROs, 
or NYSE National.\14\
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    \13\ 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.
    \14\ See 78 FR 50459, supra note 11, at 50459. The Affiliate 
SROs have also submitted substantially the same proposed rule change 
to propose the changes described herein. See SR-NYSE-2018-23 and SR-
NYSEAMER-2018-23.
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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 proposal is consistent with Section 
6(b) of the Act,\15\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\16\ 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

[[Page 28056]]

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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    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed change would remove 
impediments to, and perfect the mechanisms of, a free and open market 
and a national market system and, in general, protect investors and the 
public interest because the amendments would update General Note 1 to 
reflect NYSE National's provision of co-location services. By including 
the proposed reference to NYSE National, General Note 1 would provide 
that the fees a User pays for co-location services would not depend on 
whether the User connects to none, one, some, or all of the Exchange, 
the Affiliate SROs, and NYSE National. For example, to charge one User 
three times for a cage because that User connects to the Exchange, NYSE 
National, and an Affiliate SRO, when another User that buys the same 
size cage and only connects to the Exchange only pays once, would not 
promote just and equitable principles of trade. The Exchange also 
believes that the proposed amendments to General Note 1 are not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers because charging a User for co-location services 
based on how many markets to which a User connects could result in the 
Exchange, NYSE National and the Affiliate SROs receiving the proceeds 
from multiple fees despite only providing a service once.
    The Exchange believes that the proposed amendments would remove 
impediments to, and perfect the mechanisms of, a free and open market 
and a national market system and, in general, protect investors and the 
public interest because the amendments would update General Note 4 to 
reflect NYSE National's provision of co-location services. By expanding 
the definition of ``Exchange Systems'' to include the NYSE National 
trading and execution system, incorporating references to NYSE 
National, and adding NYSE National to the list of Included Data 
Products, the Exchange would provide market participants with clarity 
as to what access and connectivity a User receives when it purchases 
access to the LCN or IP network, thereby making the description more 
accessible and transparent.
    Further, the Exchange believes that revising General Note 4 to 
provide a more detailed description of the access and connectivity to 
NYSE National that Users would receive with their purchase of access to 
the LCN or IP network would promote just and equitable principles of 
trade and remove impediments to, and perfect the mechanisms of, a free 
and open market and a national market system as it would make clear 
that all Users that voluntarily select to access the LCN or IP network 
would receive the same access to the NYSE National trading and 
execution systems and connectivity to NYSE National data and would not 
be subject to a charge above and beyond the fee paid for the relevant 
LCN or IP network access. In addition, a User would not be required to 
use any of its bandwidth to access the NYSE National trading and 
execution system or connect to NYSE National data unless it wishes to 
do so. A User only receives the access to Exchange Systems and 
connectivity to Included Data Products that it selects, and a User can 
change such access or connectivity it receives at any time, subject to 
authorization from the data provider or relevant Exchange or Affiliate 
SRO.
    The Exchange believes that the non-substantive change to remove 
obsolete text with respect to the wireless connection to TSX data would 
remove impediments to, and perfect the mechanisms of, a free and open 
market and a national market system and, in general, protect investors 
and the public interest because the amendment would clarify Exchange 
rules and alleviate any possible market participant confusion caused by 
the obsolete reference.
    The Exchange also believes that the proposed fee change is 
consistent with Section 6(b)(4) of the Act,\17\ 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, 
issuers, brokers or dealers.
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    \17\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed change 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, issuers, brokers or 
dealers, because the change would result in the Exchange offering co-
location services related to access and connectivity to NYSE National, 
an affiliate of the Exchange, on the same terms and in the same manner 
as it offers access and connectivity to the Exchange and the Affiliate 
SROs. By adding NYSE National to General Notes 1 and 4, the proposed 
change would ensure that the fees a User pays for co-location services 
would not depend on whether the User connects to none, one or more of 
the Exchange, the SRO Affiliates and NYSE National. For example, a User 
that connects to the Exchange, NYSE National, and an Affiliate SRO, and 
another User that only connects to the Exchange, would both receive the 
same services for the same fee, including the same access and 
connectivity with their purchase of access to the LCN or IP network.
    The Exchange believes that the proposed non-substantive change to 
remove obsolete text with respect to the wireless connection to TSX 
data would be reasonable because the change would have no impact on 
pricing. Rather, the change would remove obsolete information from the 
description of the pricing for the service, alleviating possible market 
participant confusion.
    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,\18\ 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 use of co-location 
services being completely voluntary, they are available to all Users on 
an equal basis (i.e., the same range of products and services are 
available to all Users).
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    \18\ 15 U.S.C. 78f(b)(8).
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    The Exchange believes that the proposed change would not impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act because the change would result 
in the Exchange offering co-location services related to access and 
connectivity to NYSE National, an affiliate of the Exchange, on the 
same terms and in the same manner as it offers access and connectivity 
to the Exchange and the Affiliate SROs. By adding NYSE National to 
General Notes 1 and 4, the proposed change would ensure that the fees a 
User pays for co-location services would not depend on whether the User 
connects only to none, one or more of the Exchange, the SRO Affiliates 
and NYSE National. Further, the Exchange believes that revising General 
Note 4 to provide a more detailed description of the access and 
connectivity to NYSE National that Users would receive with their 
purchase of access to the LCN or IP network would make clear that all 
Users that voluntarily select to access the LCN or IP network would 
receive the same access to the NYSE National trading and

[[Page 28057]]

execution systems and connectivity to NYSE National data and would not 
be subject to a charge above and beyond the fee paid for the relevant 
LCN or IP network access.
    In addition, a User would not be required to use any of its 
bandwidth to access the NYSE National trading and execution system or 
connect to NYSE National data unless it wishes to do so.
    The Exchange believes that the non-substantive change to remove 
obsolete text with respect to the wireless connection to TSX data would 
not impose any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because it would 
have no impact on pricing or existing services. Rather, the change 
would remove obsolete information from the description of the pricing 
for the service, alleviating possible market participant confusion.

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 \19\ and Rule 19b-4(f)(6) thereunder.\20\ 
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.\21\
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    \19\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \20\ 17 CFR 240.19b-4(f)(6).
    \21\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires the Exchange to give the Commission written notice of its 
intent to file the proposed rule change, along with a brief 
description and text of the proposed rule change, at least five 
business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \22\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\23\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange requests 
that the Commission waive the 30-day operative delay so that the 
proposed rule changes may become operative immediately upon filing. The 
Exchange believes that waiver of the operative delay is consistent with 
the protection of investors and the public interest because it would 
allow the Exchange to offer co-location services related to access and 
connectivity to NYSE National to coincide with the relaunch of the NYSE 
National and its proposed co-location services. The Exchange also notes 
that waiver would alleviate the possibility of confusion that could be 
caused by inconsistencies between the Exchange's Price List and NYSE 
National co-location services that are to be included in NYSE 
National's price list. The Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest as it would allow the Exchange to offer co-locations 
services in the form of access and connectivity to NYSE National 
without undue delay. Accordingly, the Commission waives the 30-day 
operative delay and designates the proposed rule change operative upon 
filing.\24\
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    \22\ 17 CFR 240.19b-4(f)(6).
    \23\ 17 CFR 240.19b-4(f)(6)(iii).
    \24\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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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) \25\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \25\ 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 Number SR-NYSEARCA-2018-36 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-NYSEARCA-2018-36. 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 website (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 website 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSEARCA-2018-36 and should be submitted 
on or before July 6, 2018.
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    \26\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\26\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-12852 Filed 6-14-18; 8:45 am]
 BILLING CODE 8011-01-P