[Federal Register Volume 86, Number 100 (Wednesday, May 26, 2021)]
[Notices]
[Pages 28427-28430]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-10384]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-91862; File No. SR-NYSECHX-2021-10]
Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Continue
Offering Certain Connectivity Services That Have Been Suspended by the
Securities and Exchange Commission
May 12, 2021.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on May 7, 2021, NYSE Chicago, Inc. (``NYSE Chicago'' 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\ 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 continue offering certain connectivity
services that have been suspended by the Securities and Exchange
Commission (``Commission'') at no charge, for a period of 14 days, in
order to provide affected Users time to acquire substitute services
before their connectivity is terminated. 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.
[[Page 28428]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to continue offering certain connectivity
services that have been suspended by the Commission at no charge, for a
period of 14 days, in order to provide affected Users \3\ time to
acquire substitute services before their connectivity is terminated.
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\3\ For purposes of the Exchange's colocation services, a
``User'' means any market participant that requests to receive
colocation services directly from the Exchange. See Securities
Exchange Act Release No. 87408 (October 28, 2019), 84 FR 58778
(November 1, 2019) (SR-NYSECHX-2019-12). As specified in the NYSE
Chicago Fee Schedule (``Fee Schedule''), a User that incurs
colocation fees for a particular colocation service pursuant thereto
would not be subject to colocation fees for the same colocation
service charged by the Exchange's affiliates New York Stock Exchange
LLC (``NYSE''), NYSE American LLC, NYSE Arca, Inc., and NYSE
National, Inc. (together, the ``Affiliate SROs''). See id. at 58779.
Each Affiliate SRO has submitted substantially the same proposed
rule change to propose the changes described herein. See SR-NYSE-
2021-31, SR-NYSEAMER-2021-26, SR-NYSEArca-2021-38, and SR-NYSENAT-
2021-13.
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As background, on March 10, 2021, the Exchange filed with the
Commission a proposed rule change for immediate effectiveness (the
``Filing'') that amended the colocation services offered by the
Exchange to provide Users the option to access to the systems and data
feeds of various additional third parties.\4\ The proposed rule change
became operative on April 9, 2021. Since then, five Users have
contracted to receive the services that were added in the Filing.
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\4\ See Securities Exchange Act Release No. 91390 (March 23,
2021), 86 FR 16424 (March 29, 2021) (SR-NYSECHX-2021-04).
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On May 7, 2021, the Commission suspended the Filing and instituted
proceedings to determine whether the proposed rule change should be
approved or disapproved.\5\ Such action suspended the Exchange's
ability to offer access to Third Party Systems from Long Term Stock
Exchange, Members Exchange, MIAX Emerald, MIAX PEARL Equities, Morgan
Stanley, and TD Ameritrade, and to offer connectivity to Third Party
Data Feeds from ICE Data Services--ICE TMC, Members Exchange, MIAX
Emerald, and MIAX PEARL Equities (together, the ``Suspended
Services'').
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\5\ See Securities Exchange Act Release No. 91790 (May 7, 2021)
(SR-NYSE-2021-15, SR-NYSEAMER-2021-13, SR-NYSEArca-2021-15, SR-
NYSECHX-2021-04, SR-NYSENAT-2021-05).
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The Commission's suspension of such services is likely to cause
disruption to the current Users of such services, who must now acquire
substitutes for the Suspended Services. As an accommodation to such
current Users, the Exchange now proposes to provide the Suspended
Services to all Users, at no charge, for a period of 14 days from the
date of filing (``Transition Period''), to enable current Users to
maintain their connectivity while establishing alternate connectivity.
Specifically, the Exchange proposes to amend its Fee Schedule
relating to colocation to provide:
Connectivity to Suspended Third Party Systems and Suspended Third Party
Data Feeds
Connectivity to the Third Party Systems and Third Party Data Feeds
listed below (``Suspended Services'') is available until May 24, 2021
(``Transition Period''). During the Transition Period, the Exchange
will not charge any fees for the Suspended Services. At the conclusion
of the Transition Period, any remaining customers of Suspended Services
will have their Suspended Services terminated.
Suspended Third Party Systems
Long Term Stock Exchange (LTSE)
Members Exchange (MEMX)
MIAX Emerald
MIAX PEARL Equities
Morgan Stanley
TD Ameritrade
Suspended Third Party Data Feeds
ICE Data Services--ICE TMC
Members Exchange (MEMX)
MIAX Emerald
MIAX PEARL Equities
Application and Impact of the Proposed Changes
The proposed rule change would apply to all Users, each of which
would be eligible to receive the Suspended Services, at no charge, for
a period of up to 14 days.
Competitive Environment
The proposed changes are not intended to address any other issues
relating to colocation 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,\6\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\7\ 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 mechanism 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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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed rule change would remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and would further the protection of investors
and the public interest. Without the proposed rule change, the
Suspended Services would be terminated immediately, leaving the current
Users without access and connectivity to the Suspended Services. As a
result, the Commission's suspension of the services at issue is likely
to cause disruption to the current Users of the Suspended Services, who
must now acquire substitute services. The Exchange's proposal to
provide the Suspended Services, at no charge, to all Users during the
Transition Period would give such current Users an opportunity to
transition to substitute services without a gap in their service, which
would mitigate the disruption and lessen the burden on such current
Users.
Further, the Exchange believes that providing a 14-day Transition
Period would remove impediments to and perfect the mechanism of a free
and open market and a national market system and would protect
investors and the public interest. Current Users that wish to replace
the Suspended Services will have to investigate their other options,
negotiate new terms, and establish and test their new connections. The
proposed Transition Period gives current Users time to complete all the
steps required to make the transition without having a gap in their
connectivity to the Suspended Services.
The Exchange believes that its proposed rule change would perfect
the mechanism of a free and open market and a national market system
and, in general, protect investors and the public interest because it
would highlight that the Suspended Services are only available during
the Transition Period, that no fee will be charged for the Suspended
Services during the Transition Period. At the end of the
[[Page 28429]]
Transition Period, all Users will have their Suspended Services
terminated. It would thereby reduce any potential ambiguity and provide
current Users and other market participants with clarity concerning the
terms and period of availability of the Suspended Services.
In addition, the Exchange believes that the proposed rule change
would promote just and equitable principles of trade. In light of the
Commission's suspension, the current Users of the affected services are
faced with an unexpected, immediate disruption of their connectivity,
while market participants that opted to obtain similar connectivity
from alternate providers are is not. The Exchange's proposal to allow
all Users to receive the Suspended Services at no charge during the
Transition Period would help equalize the treatment of these two groups
of market participants by providing the same 14 day prospective period
to both groups and giving current Users time to make the transition
without having a gap in their connectivity to the third party systems
and data feeds at issue.
Finally, the proposed rule change is not designed to permit unfair
discrimination between market participants. The proposed rule change
would apply equally to all Users. All Users would be entitled to
receive the Suspended Services at no charge during the Transition
Period. At the conclusion of the Transition Period, any remaining
customers of Suspended Services would have their Suspended Services
terminated.
For all 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,\8\ 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.
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\8\ 15 U.S.C. 78f(b)(8).
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The Exchange believes that the proposed rule change would not place
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. The proposed rule change is not
designed to address any competitive issues but rather is designed to
give current Users time to make a fair and orderly transition to
substitute services without the disruptions to their operations and,
potentially, to the markets that would be caused by an immediate
termination of the Suspended Services.
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 \9\ and Rule 19b-4(f)(6) thereunder.\10\
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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\9\ 15 U.S.C. 78s(b)(3)(A)(iii).
\10\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\12\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing.
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\11\ 17 CFR 240.19b-4(f)(6).
\12\ 17 CFR 240.19b-4(f)(6)(iii).
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The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest, as
it will allow the 14 day period to take effect immediately. For this
reason, the Commission designates the proposed rule change to be
operative upon filing.\13\
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\13\ For purposes only of waiving the operative delay for this
proposal, 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) \14\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\14\ 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-NYSECHX-2021-10 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-NYSECHX-2021-10. 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
[[Page 28430]]
Number SR-NYSECHX-2021-10, and should be submitted on or before June
16, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-10384 Filed 5-25-21; 8:45 am]
BILLING CODE 8011-01-P