[Federal Register Volume 89, Number 128 (Wednesday, July 3, 2024)]
[Notices]
[Pages 55294-55296]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-14594]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100440; File No. SR-NASDAQ-2024-026]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Expand Its Co-Location Services

June 27, 2024.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on June 14, 2024, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III, below, which Items have been prepared by the 
Exchange. 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 expand its co-location services. The text 
of the proposed rule change is available on the Exchange's website at 
https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, 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 Exchange 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 these 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 aspects 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 expand its co-location services by 
offering new cabinet, power, and power distribution unit options in the 
Exchange's expanded data center.
    The Exchange's current data center (``NY11'') in Carteret, NJ is 
undergoing an expansion (``NY11-4'') in response to demand for power 
and cabinets. NY11-4 is not a new or distinct co-location facility. 
Instead, NY11-4 is simply an expansion of the existing Nasdaq NY11 data 
center,\3\ and Nasdaq intends to operate it generally in the same 
manner as existing aspects of NY11.\4\ Client connections to the 
matching engine will be equal across the board, within and among NY11 
and NY11-4. In 2010, the Exchange undertook a similar expansion to its 
data center, where connectivity to the Exchange remained equalized, as 
is the case with the NY11-4 expansion.
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    \3\ NY11-4 is not a standalone facility. Equinix considers the 
site as NY11 with three expansions: NY11-2, NY11-3, and NY11-4.
    \4\ One aspect of the data center that will be treated 
differently in NY11-4 as compared to NY11 at its outset is 
telecommunications access and inter-client connectivity. In NY11-4, 
connections between colocated client cabinets and the carrier cage 
will be of equal length. Inter-client connectivity will also be 
equalized in NY11-4. The Exchange believes that equalizing 
telecommunications access and inter-client connectivity in NY11-4 
will provide a fair solution and avoid market disruption by avoiding 
both a race for real estate adjacent to NY11-4 and for particular 
space in NY11-4. The Exchange believes that these actions would 
facilitate a fair and orderly market and protect investors and the 
public interest, consistent with its obligations under the Act.
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    The Exchange submits this filing to propose offering new services 
in NY11-4, as described below, and to the extent the Exchange offers 
additional new services, whether in the existing NY11 data halls or in 
the new NY11-4 data hall, the Exchange will submit additional filings 
with the Commission.
NY11-4 Expanded Cabinet Optionality: Ultra High Density Cabinet
    Currently, co-location customers have the option of obtaining 
cabinets of various sizes and power densities. Co-location customers 
may obtain a Half Cabinet,\5\ a Low Density Cabinet with power density 
less than or equal to 2.88 kilowatts (``kW''), a Medium Density Cabinet 
with power density greater than 2.88 kW and less than or equal to 5 kW, 
a Medium-High Density Cabinet with power density greater than 5 kW and 
less than or equal to 7 kW, a High Density Cabinet with power density 
greater than 7 kW and less than 10 kW, and a Super High Density Cabinet 
with power density greater than 10 kW and less than or equal to 17.3 
kW.
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    \5\ Half cabinets are not available to new subscribers. See 
General 8, Section 1(a).
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    The Exchange proposes to introduce a new cabinet choice in NY11-4, 
an ``Ultra High Density Cabinet,'' with power density greater than 10 
kW and less than or equal to 15 kW. Based on demand, the Exchange 
wishes to

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introduce the Ultra High Density Cabinet as an option for customers 
between the High Density Cabinet and the Super High Density Cabinet. 
The Ultra High Density Cabinet option would only be offered in NY11-4 
because of the power configuration necessary for such cabinets, which 
is not possible or available in other portions of the data center due 
to different power distribution. Because of the addition of the Ultra 
High Density Cabinet option in NY11-4, the Super High Density Cabinet 
in NY11-4 would have power density greater than 15 kW and less than or 
equal to 17.3 kW.
    In addition to the Ultra High Density Cabinet, the Exchange would 
offer the other, existing cabinet options in NY11-4, with the exception 
of the Low Density Cabinet and Half Cabinet due to a lack of demand for 
such cabinets. The cabinets in NY11-4 will include certain features, 
including but not limited to: uniform, wider cabinets \6\ (32'' W x 
48'' D x 91'' H), cable management, and a rear split door and combo 
lock.
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    \6\ In the existing data halls, clients may bring their own 
cabinets or use Exchange-provided cabinets. Because of the cooling 
system in NY11-4 (hot aisle containment), all cabinets must be 
uniform and therefore, the Exchange will provide all cabinets. The 
existing data halls utilize cold aisle containment to manage 
temperatures. Hot aisle containment is a more effective way to 
manage heat in the data center.
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NY-11 4 Cabinet Power and Power Distribution Units
    The Exchange currently provides various cabinet power options, 
including: 2x20 amp 110 volt, 2x30 amp 110 volt, 2x20 amp 208 volt, 
2x30 amp 208 volt, Phase 3 2x20 amp 208 volt, Phase 3 2x30 amp 208 
volt, 2x60 amp 208 volt, Phase 3 2x40 amp 208 volt, Phase 3 2x50 amp 
208 volt, Phase 3 2x60 amp 208 volt, and 2x30 amp 48 volt DC. For NY11-
4, the data center operator is bringing in higher voltage power 
options, which are more consistent with power options used in other 
data centers across the globe. The Exchange proposes to amend General 
8, Section 1(c) to add the cabinet power options for NY11-4, which 
include: Phase 1 20 amp 240 volt, Phase 1 32 amp 240 volt, Phase 1 40 
amp 240 volt, Phase 3 20 amp 415 volt, and Phase 3 32 amp 415 volt. The 
Exchange also proposes to specify in its Rules that these cabinet power 
options are specific to NY11-4 and that one of these options must be 
selected for cabinets in NY11-4. Although different cabinet power 
options will be offered in NY11 and NY11-4 due to differing power 
configurations, the new cabinet power options are not inherently 
preferable to the existing cabinet power options and the Exchange does 
not anticipate material differences in equipment performance based on 
the power distribution. Due to higher voltage options being offered in 
NY11-4, the data center operator is likely to experience increased 
power distribution efficiencies across the data center. As between the 
various cabinet power options, customers choose power based on their 
preference and capacity needs.
    The Exchange also proposes to offer power distribution units 
(``PDUs'') \7\ in NY11-4 as a convenience to customers. Rather than 
sourcing PDUs on a customer-by-customer basis, as the Exchange does for 
customers in NY11, the Exchange wishes to simplify and standardize its 
PDU offering in NY11-4 by offering Phase 1 and Phase 3 \8\ power 
distribution units. This service is optional and customers may choose 
to provide their own PDUs appropriate for their power installation 
choices. The Exchange also proposes to offer a switch monitored PDU add 
on in NY11-4, which would allow customers to connect remotely to their 
PDU and control the power sockets. With the switch monitored PDU 
option, customers would be able to power cycle or shut off power 
remotely. This option is optional as well and customers may choose to 
provide their own switch monitored PDU, if desired.
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    \7\ PDUs are devices fitted with multiple outputs designed to 
distribute electric power. The standardized PDUs would only be 
offered for NY11-4.
    \8\ Phase 1 PDUs would be compatible with the following power 
options: Phase 1 20 amp 240 volt, Phase 1 32 amp 240 volt, and Phase 
1 40 amp 240 volt. Phase 3 PDUs would be compatible with the 
following power options: Phase 3 20 amp 415 volt and Phase 3 32 amp 
415 volt. Phase 1 and Phase 3 are available in NY11 and NY11-4. 
Phase 3 PDUs provide greater power density than Phase 1 PDUs by 
delivering power over three wires as opposed to one wire.
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Implementation
    Although the timing is subject to change,\9\ the Exchange 
anticipates opening NY11-4 Exchange access on October 21, 2024 and 
providing customers access to the space on August 1, 2024. In concert 
with this filing, the Exchange will allow customers to place orders for 
NY11-4, which would not be fee liable until customers are provided 
access to the space.\10\ The Exchange will submit a fee filing to 
establish fees for the services described herein. Allowing customers to 
place orders in advance of opening its doors will allow the Exchange to 
plan ahead for capacity and demand for services, as well as procure 
necessary equipment.
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    \9\ The Exchange will announce modifications to the proposed 
timing via the Nasdaq Customer Portal, which is the web portal used 
for order and inventory management of colocation services, and email 
communication to all colocation customers.
    \10\ Charging customers once access is provided is consistent 
with current practice and allows customers to set up equipment and 
begin using power.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\11\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\12\ in particular, in that it is designed to 
promote just and equitable principles of trade, 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. Today, the Exchange offers various cabinet choices and power 
options in the data center for colocation customers. The proposal would 
expand the cabinet and power options available, by introducing an 
additional cabinet option, the Ultra High Density Cabinet, and new 
power choices. The proposal would benefit the public interest by 
providing customers more cabinet and power options to choose from, 
thereby enhancing their ability to tailor their colocation operations 
to the requirements of their business operations. In general, the 
proposal is consistent with the Act because the Exchange's expansion of 
the data center and expansion of available power and cabinets will 
enable the Exchange to meet customer needs and address demand for both 
cabinets and power. In lieu of collocating directly with the Exchange, 
market participants may choose not to collocate at all or to collocate 
indirectly through a vendor.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
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    The Exchange also believes that the proposal will not be unfairly 
discriminatory, consistent with the objectives of Section 6(b)(5) of 
the Act \13\ because the expanded cabinet and power options in the data 
center would be offered equally to all customers. Although certain 
optionality is only offered in NY11-4 because of different power 
configurations in NY11-4 as compared to NY11, NY11-4 is merely an 
expansion of the data center, and any customer may order cabinets and 
power in NY11-4 (and across the data center broadly) on the same terms 
as any other customer.
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    \13\ Id.
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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 not

[[Page 55296]]

necessary or appropriate in furtherance of the purposes of the Act.
    Nothing in the proposal imposes any burden on the ability of other 
exchanges to compete. The Exchange operates in a highly competitive 
market in which exchanges and other vendors offer colocation services 
as a means to facilitate the trading and other market activities of 
those market participants who believe that colocation enhances the 
efficiency of their operations. As part of its colocation offering, the 
Exchange currently offers similar cabinets and power, as do other 
exchanges.
    Nothing in the Proposal burdens intra-market competition because 
the Exchange's colocation services, including those proposed herein, 
are available to any customer and customers that wish to order cabinets 
and power can do so on a non-discriminatory basis. Use of any 
colocation service is completely voluntary, and each market participant 
is able to determine whether to use colocation services based on the 
requirements of its business operations.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing 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 for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \14\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\15\
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    \14\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \15\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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 the 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 to 
determine whether the proposed rule should be approved or disapproved.

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-NASDAQ-2024-026 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-NASDAQ-2024-026. 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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-NASDAQ-2024-026 and should 
be submitted on or before July 24, 2024.

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. 2024-14594 Filed 7-2-24; 8:45 am]
BILLING CODE 8011-01-P