[Federal Register Volume 85, Number 36 (Monday, February 24, 2020)]
[Notices]
[Pages 10495-10499]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-03530]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88230; File No. SR-NYSEARCA-2020-13]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE 
Arca Equities Fees and Charges and the NYSE Arca Options Fees and 
Charges Related to Co-Location Services

February 18, 2020.
    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 4, 2020, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') 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 Equities Fees and 
Charges (the ``Equities Fee Schedule'') and the NYSE Arca Options Fees 
and Charges (the ``Options Fee Schedule'' and, together with the 
Equities Fee Schedule, the ``Fee Schedules'') related to co-location 
services to (a) update the text of General Note 1 to correct a 
typographical error, make a non-substantive change, and to include 
reference to NYSE Chicago, Inc. (``NYSE Chicago'') and (b) make non-
substantive changes to the text of General Note 4. 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
Overview
    The Exchange proposes to amend its Fee Schedules related to co-
location \4\

[[Page 10496]]

services to (a) update the text of General Note 1 to include reference 
to NYSE Chicago, and (b) make non-substantive changes to the text of 
General Note 4. General Note 1 and General Note 4 appear in both the 
Equities Fee Schedule and the Options Fee Schedule, and the Exchange 
proposes to amend them in both locations, as follows.
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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.
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Proposed Change to General Note 1
    General Note 1 currently provides that a User \5\ that incurs co-
location fees for a particular co-location service would not be subject 
to co-location fees for the same co-location service charged by the New 
York Stock Exchange LLC (``NYSE''), NYSE American LLC (``NYSE 
American''), and NYSE National, Inc. (``NYSE National'' and together, 
the ``Affiliate SROs'').\6\ General Note 1 currently does not include 
NYSE Chicago among the Affiliate SROs.
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    \5\ For purposes of the Exchange's co-location services, a 
``User'' shall mean 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).
    \6\ 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 make three changes to the version of 
General Note 1 that currently appears in the Equities Fee Schedule. 
First, the current version of General Note 1 in the Equities Fee 
Schedule contains a typographical error, in that it refers to the 
Equities Fee Schedule instead of the Options Fee Schedule. The Exchange 
proposes to correct that error by substituting the word ``Options'' for 
``Equities.'' This is not a substantive change, and will have no effect 
on the Exchange's actual billing practices for co-location services; it 
simply clarifies that the Exchange will not charge a User co-location 
fees for any co-location service already being charged to the User 
under the NYSE Arca Options Fee Schedule.
    Second, the current General Note 1 lists the Exchange's affiliate, 
NYSE, in the middle of the list of exchanges, instead of at the start 
of the list, as is the Exchange's general practice. The Exchange 
proposes to reorder the list of affiliate exchanges to put NYSE at the 
start of the list.
    Third, in late 2019, NYSE Chicago filed rule changes with the 
Commission establishing its co-location services.\7\ The Exchange now 
proposes to add NYSE Chicago to General Note 1 of the Equities Fee 
Schedule. All three changes are indicated below (deletions bracketed, 
additions underlined):
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    \7\ See Securities Exchange Act Release No. 87408 (October 28, 
2019), 84 FR 58778 (November 1, 2019) (SR-NYSECHX-2019-12).
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[GRAPHIC] [TIFF OMITTED] TN24FE20.000

    The Exchange also proposes to reorder the list of exchanges and to 
add NYSE Chicago to General Note 1 in the Options Fee Schedule, as 
follows (deletions bracketed, additions underlined):
[GRAPHIC] [TIFF OMITTED] TN24FE20.001


[[Page 10497]]


    By including the proposed reference to NYSE Chicago, 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 Chicago.
    The proposed change to add NYSE Chicago to General Note 1 would be 
consistent with General Note 1 under ``Co-location'' in the Fee 
Schedule of NYSE Chicago (the ``NYSE Chicago Fee Schedule''), which 
similarly provides that a User that incurs fees for co-location 
services under that fee schedule is not subject to fees for the same 
co-location services charged by the Exchange, NYSE, NYSE American, or 
NYSE National.
Proposed Changes to General Note 4
    General Note 4 currently 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,\8\ a User would receive (a) the ability to access the 
trading and execution systems of the Exchange and Affiliate SROs 
(``Exchange Systems'') as well as of Global OTC (the ``Global OTC 
System'') and (b) connectivity to any of the listed data products 
(``Included Data Products'') that it selects.
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    \8\ 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 now proposes to make three non-substantive changes to 
the text of the first sentence of General Note 4. First, the Exchange 
proposes to delete the full name of ``NYSE Chicago, Inc.'' from General 
Note 4, since that term would be defined earlier in proposed General 
Note 1 as ``NYSE Chicago.'' Second, the Exchange proposes to delete the 
quotation marks around the term ``Global OTC System,'' because the 
other General Notes generally do not include quotation marks around 
defined terms. Third, the Exchange proposes to add a serial comma after 
the term ``NYSE National'' near the end of the first sentence of 
General Note 4, as follows (additions underlined, deletions in 
brackets):
[GRAPHIC] [TIFF OMITTED] TN24FE20.002

BILLING CODE 8011-01-C
    These changes are typographical in nature and are not intended to 
change the substance or meaning of the text of the Fee Schedules.
    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.\9\
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    \9\ Each Affiliate SRO has submitted substantially the same 
proposed rule change to propose the changes described herein. See 
SR-NYSE-2020-09, SR-NYSEAmer-2020-08, and SR-NYSENAT-2020-06.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\10\ in general, and furthers the 
objectives of Sections 6(b)(5) of the Act,\11\ 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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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed change to add NYSE Chicago 
to General Note 1 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 Chicago's 
provision of co-location services. By including the proposed reference 
to NYSE Chicago, General Note 1 would clarify that NYSE Chicago is 
included among the affiliates of the Exchange referenced in the 
statement that a User paying for co-location services will not be 
subject to co-location fees for the same co-location services charged 
by any of the Exchange's affiliates. The proposed change would make the 
Fee Schedules consistent with General Note 1 under ``Co-location'' in 
the Fee Schedule of NYSE Chicago, alleviating any possible market 
participant confusion.
    The Exchange believes that the other changes to General Note 1 and 
the non-substantive changes to General Note 4 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 clarify Exchange rules, 
making the Fee Schedules easier to read and understand and alleviating 
any possible market participant confusion caused by the current text of 
the note.
    The Exchange also believes that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\12\ in particular, because 
it provides for the

[[Page 10498]]

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. This is true because the proposed amendments to General Note 1 
would simply clarify that a User that incurs co-location fees for a 
particular co-location service pursuant to the Fee Schedules will not 
be subject to co-location fees for the same co-location services 
charged by any of the Exchange's affiliates, including NYSE Chicago. 
The Exchange also believes that the proposed amendments to General Note 
1 provide 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 they clarify that the Exchange, 
NYSE Chicago, and the other Affiliate SROs do not receive the proceeds 
from multiple fees despite providing a service only once.
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    \12\ 15 U.S.C. 78f(b)(4).
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    For these reasons, the Exchange believes that the proposal is 
consistent with the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
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).
    The Exchange believes that the proposed rule change would not 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act because the proposed rule 
change would not change the services and fees to which market 
participants already have access. Rather, it seeks simply to clarify 
that a User that incurs co-location fees for a particular co-location 
service pursuant to the Fee Schedules will not be subject to co-
location fees for the same co-location services charged by any of the 
Exchange's affiliates, including NYSE Chicago.
    In addition, the Exchange believes that the proposed non-
substantive changes to General Note 4 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 changes would clarify Exchange rules, 
making the Fee Schedules easier to understand and alleviating any 
possible market participant confusion caused by the current text of the 
note.

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 \13\ and Rule 19b-4(f)(6) thereunder.\14\ 
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.\15\
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    \13\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 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) \16\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\17\ 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 
proposal 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 NYSE Chicago 
offers co-location services, and the waiver of the operative delay 
would alleviate the possibility of confusion among members, the public, 
and the Commission that could be caused by inconsistencies between the 
Exchange's Fee Schedules and the NYSE Chicago Fee Schedule. The 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Accordingly, the Commission waives the 30-day operative delay and 
designates the proposed rule change operative upon filing.\18\
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    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 17 CFR 240.19b-4(f)(6)(iii).
    \18\ 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) \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 Number SR-NYSEARCA-2020-13 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 Number SR-NYSEARCA-2020-13. 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

[[Page 10499]]

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-2020-13 and should 
be submitted on or before March 16, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2020-03530 Filed 2-21-20; 8:45 am]
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