[Federal Register Volume 87, Number 142 (Tuesday, July 26, 2022)]
[Notices]
[Pages 44452-44455]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-15932]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95340; File No. SR-NYSECHX-2022-15]


Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its 
Fee Schedule Related To Colocation

July 20, 2022.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on July 6, 2022, the 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\ 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 its Fee Schedule related to 
colocation to specify that the NMS feeds that are included in the 
Included Data Products are no longer available over the Liquidity 
Center Network (``LCN''). 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 its Fee Schedule related to 
colocation to specify that the NMS feeds that are included in the 
Included Data Products are no longer available over the Liquidity 
Center Network (``LCN'').\4\
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    \4\ The Exchange is an indirect subsidiary of Intercontinental 
Exchange, Inc. (``ICE''). Each of the Exchange's affiliates New York 
Stock Exchange LLC, NYSE American LLC, NYSE Arca, Inc., and NYSE 
National, Inc. (together, the ``Affiliate SROs'') has submitted 
substantially the same proposed rule change to propose the changes 
described herein. See SR-NYSE-2022-27, SR-NYSEAMER-2022-28, SR-
NYSEArca-2022-39, and SR-NYSENAT-2022-10.
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Background
    The LCN and the IP network are the two local area networks in the 
Mahwah Data Center that are available to Users.\5\ General Note 5 of 
the Fee Schedule explains that when a User purchases a service that 
includes access to the LCN or IP network, it receives connectivity to 
any of the ``Included Data Products'' that it selects, subject to any 
technical provisioning requirements and authorization from the provider 
of the data feed. The Included Data Products include, among others, the 
``NMS feeds,'' which are the Consolidated Tape

[[Page 44453]]

System and Consolidated Quote System (``CTA'' and ``CQ,'' respectively) 
data feeds and the Options Price Reporting Authority (``OPRA'') data 
feed.\6\
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    \5\ 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 at 
n.6 (November 1, 2019) (SR-NYSECHX-2019-12). As specified in the 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 
Affiliate SROs.
    \6\ See id.
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    Before May 2020, connectivity to the NMS feeds was available on 
only the LCN and IP networks. In May 2020, the Commission approved the 
Exchange's proposal to offer Users access to the new ``NMS network,'' 
an alternate, dedicated network that connects to the NMS feeds faster 
than the LCN or IP networks.\7\ Pursuant to that filing, the Exchange 
amended the notes regarding the services available in colocation to 
provide that if a User purchases a service that includes a 10 Gb or 40 
Gb LCN or IP network connection, that service would also include a 
connection to the NMS network of the same size, at no additional 
charge.
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    \7\ See Securities Exchange Act Release No. 88837 (May 7, 2020), 
85 FR 28671 (May 13, 2020) (SR-NYSE-2019-46, SR-NYSEAMER-2019-34, 
SR- NYSEArca-2019-61, SR-NYSENAT-2019-19). See also Securities 
Exchange Act Release No. 88972 (May 29, 2020), 85 FR 34472 (June 4, 
2020) (SR-NYSECHX-2020-18).
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    Currently, the NMS feeds are available to Users on all three of the 
NMS network, IP network, and LCN, but at varying speeds. The NMS feeds 
are published first to the NMS network, which then republishes them to 
the IP network, which then republishes them to the LCN. This means that 
connectivity to the NMS feeds is fastest over the NMS network and 
slowest over the LCN. This also means that receiving the NMS feeds from 
more than one of these networks does not provide redundancy protection 
to Users; if connectivity to the NMS feeds over the NMS network were to 
be interrupted, so would connectivity to those feeds over the IP 
network and LCN, since the three networks publish the NMS feeds to each 
other in sequence.
    Despite the Exchange's introduction of the NMS network in May 2020, 
some Users have failed to avail themselves of the option to receive the 
NMS feeds over that faster network at no additional cost. Other Users 
have opted to receive the NMS feeds over the NMS network, but have not 
yet formally asked the Exchange to stop also sending them the NMS feeds 
over the other networks (i.e., IP network or LCN) for which those Users 
have ports.
    At the same time, traffic over the LCN has been increasing. 
Increases in options trading volume in recent years on the NYSE 
American Options and NYSE Arca Options exchanges have increased the 
size of the market data feeds from those markets, thereby increasing 
the network bandwidth requirements overall for the market data feeds of 
the Exchange and the Affiliate SROs that are included in the Included 
Data Products (the ``NYSE Group Market Data'' feeds) over the LCN. As a 
result, the LCN connections over which some Users continue to receive 
the NMS feeds are increasingly burdened as the NYSE Group Market Data 
Feeds continue to grow in size.
    To address these issues, the Exchange proposes to remove the NMS 
feeds from the Included Data Products available on the LCN. Doing so 
would permit Users to receive connectivity to the NYSE Group Market 
Data feeds over their LCN connections, while the NMS feeds would remain 
available to Users at no additional charge over the NMS network, at 
faster speeds than they were available over the LCN.
    To accomplish this change, the Exchange proposes to amend General 
Note 5 of the Fee Schedule as follows (proposed addition italicized):
    5. When a User purchases a service that includes access to the LCN 
or IP network it receives connectivity to any of the Included Data 
Products that it selects, subject to any technical provisioning 
requirements and authorization from the provider of the data feed. 
Connectivity to the NMS feeds is not available over the LCN, but is 
available over the IP network and the NMS network described below in 
General Note 6. Market data fees for the Included Data Products are 
charged by the provider of the data feed. A User can change the 
Included Data Products to which it receives connectivity at any time, 
subject to authorization from the provider of the data feed. The 
Exchange is not the exclusive method to connect to the Included Data 
Products.
Application and Impact of the Proposed Changes
    Currently, 34 Users receive the NMS feeds over the LCN, but 23 of 
those 34 Users have access to the NMS network already enabled, such 
that they also receive the NMS feeds over the NMS network. To implement 
this proposal with respect to those 23 Users, the Exchange has notified 
the Users that their connections to the NMS feeds over LCN will be 
discontinued but that they will continue to receive the NMS feeds over 
the NMS network.
    The other 11 Users that receive the NMS feeds over the LCN do not 
currently have NMS network access enabled, but are entitled to such 
access at no additional charge, since their existing LCN service 
includes a connection of the same size to the NMS network. The Exchange 
has notified these 11 Users that their connections to the NMS feeds 
over LCN will be discontinued, and all 11 of them have submitted orders 
to begin receiving the NMS feeds over an NMS network connection at no 
additional charge. The Exchange is currently in the process of 
installing NMS network connections for those 11 Users.\8\
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    \8\ Seven of these 11 Users also currently have access to the IP 
network and could have chosen to receive the NMS feeds over their IP 
network connections at no additional charge, but instead all 11 have 
opted to receive the NMS feeds over the faster NMS network.
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    Users would experience no interruption in their ability to connect 
to the NMS feeds as a result of the proposed change, and would receive 
the NMS feeds faster as a result of the proposed change. No User would 
be required to purchase any additional products or services from the 
Exchange to transition their NMS feed connectivity to the NMS network, 
or to an IP network connection they have already purchased.
    The proposed changes would not apply differently to distinct types 
or sizes of market participants. Rather, they would apply to all Users 
equally. The purchase of any colocation service is completely voluntary 
and the Fee Schedule is applied uniformly to all Users.
    No fees are affected by this proposal.
Implementation Date
    The Exchange is in the process of transitioning all remaining Users 
that receive the NMS feeds over the LCN to begin receiving the feeds 
over NMS network connections at no additional charge. The Exchange 
expects this transition process to be completed before October 2022. 
Once that transition is complete, the Exchange proposes to implement 
this rule change by Customer Notice, at which point the option of 
receiving the NMS feeds over the LCN would be removed from the Fee 
Schedule.
Competitive Environment
    The proposed changes are not otherwise 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,\9\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\10\ in particular, because it 
is

[[Page 44454]]

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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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that discontinuing the availability of the 
NMS feeds on the LCN would perfect the mechanisms of a free and open 
market and a national market system and, in general, protect investors 
and the public interest. Users that currently receive the NMS feeds on 
the LCN would receive the same data at a faster speed via the NMS or IP 
network, with no interruption of their ability to connect to the NMS 
feeds. Connectivity to the NMS feeds over the NMS network would be 
available at no additional charge to affected Users, since their 
existing LCN service includes a connection of the same size to the NMS 
network. In addition, connectivity to the NMS feeds over the IP network 
would be at no additional charge to Users that have already purchased 
access to the IP network. The Exchange believes that providing 
connectivity to the same feeds at a faster speed at no additional 
charge would perfect the mechanisms of a free and open market and a 
national market system.
    The Exchange believes that the proposed rule change does not 
significantly affect the protection of investors or the public 
interest. The proposed rule change would simply give Users that 
currently receive the NMS feeds on the LCN the opportunity to receive 
the same data at a faster speed via the NMS network or the IP network, 
at no additional charge (if they choose to receive the NMS feeds over 
the NMS network or an already-established IP network connection), with 
no interruption of their ability to connect to the NMS feeds.
    The Exchange believes that discontinuing the availability of the 
NMS feeds on the LCN would not permit unfair discrimination between 
customers, issuers, brokers, or dealers, because the proposed change 
would apply equally to all Users that currently receive the NMS feeds 
over the LCN. Nor does the proposed change advantage Users of the LCN 
over Users of the IP network, since, as indicated in the Fee Schedule, 
services that include a 10 Gb or 40 Gb LCN or IP connection also 
include a connection to the NMS network of the same size, at no 
additional charge.
    The Exchange believes that the proposed change would facilitate 
transactions in securities, remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, protect investors and the public interest because removing 
the NMS feeds from the LCN would permit Users to receive connectivity 
to the NYSE Group Market Data feeds over their LCN connections, while 
the NMS feeds would remain available to Users at no additional charge 
over the NMS network, at faster speeds than they were available over 
the LCN. As noted above, increases in options trading volume in recent 
years on the NYSE American Options and NYSE Arca Options exchanges have 
increased the size of the market data feeds from those markets, thereby 
increasing the network bandwidth requirements for the NYSE Group Market 
Data feeds over the LCN.
    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,\11\ 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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    \11\ 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 would provide 
Users that currently receive the NMS feeds on the LCN the same data at 
a faster speed via the NMS or IP network, at no additional charge (if 
they choose to receive the NMS feeds over the NMS network or an 
already-established IP network connection), with no interruption of 
their ability to connect to the NMS feeds.

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 \12\ and Rule 19b-4(f)(6) thereunder.\13\ 
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.\14\
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    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 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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    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) \15\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \15\ 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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSECHX-2022-15 on the subject line.

Paper Comments

     Send paper comments in triplicate to: Secretary, 
Securities and Exchange

[[Page 44455]]

Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSECHX-2022-15. 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 (https://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-NYSECHX-2022-15 and should 
be submitted on or before August 16, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-15932 Filed 7-25-22; 8:45 am]
BILLING CODE 8011-01-P