[Federal Register Volume 89, Number 177 (Thursday, September 12, 2024)]
[Notices]
[Pages 74310-74313]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-20641]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100967; File No. SR-NYSENAT-2024-24]


Self-Regulatory Organizations; NYSE National, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Amending the 
Existing Note in the Connectivity Fee Schedule

September 6, 2024.
    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 August 27, 2024, NYSE National, Inc. (``NYSE National'' 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 existing note in the 
Connectivity Fee Schedule (``Fee Schedule'') regarding cabinet and 
combined waitlists. 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 existing note in the Fee 
Schedule regarding cabinet and combined waitlists.
Background
    Shortly after the onset of the Covid-19 pandemic, the Exchange 
began experiencing unprecedented User \4\ demand for cabinets and power 
at the Mahwah, New Jersey data center (``MDC'').\5\ In order to manage 
its inventory, in late 2020, the Exchange filed to create purchasing 
limits and a waitlist for cabinet orders (``Cabinet Waitlist'').\6\ In 
early 2021, the Exchange filed to create additional purchasing limits 
and a waitlist for orders for additional power in the MDC.\7\
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    \4\ 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. 83351 (May 31, 2018), 83 FR 26314 at n.9 
(June 6, 2018) (SR-NYSENAT-2018-07). 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 New 
York Stock Exchange LLC (``NYSE''), NYSE American LLC, NYSE Arca, 
Inc., and NYSE Chicago, Inc. (together, the ``Affiliate SROs''). 
Each Affiliate SRO has submitted substantially the same proposed 
rule change to propose the changes described herein. See SR-NYSE-
2024-49, SR-NYSEAMER-2024-52, SR-NYSEARCA-2024-71, and SR-NYSECHX-
2024-27.
    \5\ Through its Fixed Income and Data Services (``FIDS'') 
(previously ICE Data Services) business, Intercontinental Exchange, 
Inc. (``ICE'') operates the MDC. The Exchange and the Affiliate SROs 
are indirect subsidiaries of ICE.
    \6\ See Securities Exchange Act Release No. 90732 (December 18, 
2020), 85 FR 84443 (December 28, 2020) (SR-NYSE-2020-73, SR-
NYSEAMER-2020-66, SR-NYSEArca-2020-82, SR-NYSECHX-2020-26, and SR-
NYSENAT-2020-28) (establishing the procedures in current Colocation 
Note 6(a) and 7(a)).
    \7\ See Securities Exchange Act Release No. 91515 (April 8, 
2021), 86 FR 19674 (April 14, 2021) (SR-NYSE-2021-12, SR-NYSEAMER-
2021-08, SR-NYSEArca-2021-11, SR-NYSECHX-2021-02, and SR-NYSENAT-
2021-03) (establishing the procedures in current Colocation Note 
6(b) and 7(b)).
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    In 2021 and 2022, the Exchange expanded the amount of space and 
power available in the MDC by opening a new colocation hall (i.e., Hall 
4). ICE is currently expanding the amount of colocation space and power 
available at the MDC through a new colocation hall (i.e., Hall 5).
    The Exchange subsequently amended the Fee Schedule to provide an 
alternative procedure by which the Exchange can allocate power in the 
Mahwah Data Center via deposit-guaranteed orders from Users made within 
a 90-day ``Ordering Window.'' \8\ The Ordering Window procedure was 
designed with the goal of addressing both (a) whether customer demand 
would support additional expansion projects to provide further power, 
and (b) the fact that previous procedures in the Fee Schedule were not 
well-tailored to allocating large amounts of power that become 
available all at once, such as when a new colocation hall opens.\9\ 
Orders received during an Ordering Window are not considered finalized 
until the Exchange has received the User's signed order form and a 
deposit equal to two months' worth of the monthly recurring costs of 
the amount of new power ordered.
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    \8\ See Securities Exchange Act Release No. 98937 (November 14, 
2023), 88 FR 80795 (November 20, 2023) (SR-NYSE-2023-29, SR-
NYSEAMER-2023-39, SR-NYSEArca-2023-53, SR-NYSECHX-2023-16, and SR-
NYSENAT-2023-18) (``Ordering Window Approval Order'').
    \9\ Id., at 80794.
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    The Exchange had a power and cabinet waitlist (``Combined 
Waitlist'') in place before the Ordering Window.

[[Page 74311]]

The Exchange found that when the Combined Waitlist was in effect, 
approximately \2/3\ of its offers of power were rejected. Users further 
down the Combined Waitlist received power only after those higher up 
the Combined Waitlist were offered the power and rejected it. As a 
result, the Users that actually wanted power received it only after a 
delay that lasted weeks or even months.
Proposed Changes
    In response, the Exchange proposes to amend Fee Schedule Colocation 
Note 7 (Cabinet and Combined Waitlists) (``Note 7'') to require that 
Users wanting to be placed on a waitlist must guarantee their order 
with a deposit.\10\ Requiring Users to submit deposits with their 
orders in order to be placed on the waitlist would help avoid delays 
for Users further down the list, by encouraging Users to carefully 
assess their true power and cabinet needs and protecting against Users 
ordering more power or cabinets than they actually intend to purchase. 
Requiring Users to submit deposits along with their orders was approved 
by the Commission in the Exchange's Ordering Window filing,\11\ and so 
the deposit requirement here would not be novel.
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    \10\ The proposed change would not apply to Users that are 
already on a waitlist at the time the proposed change becomes 
operative.
    \11\ See Ordering Window Approval Order, supra note 8.
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    To implement the change, Note 7(a), which sets forth the practices 
the Exchange follows for a Cabinet Waitlist, would be revised to 
provide that a User would be placed on the Cabinet Waitlist based on 
the date its finalized order is received, and that a User's order would 
be finalized when the Exchange receives (a) User's signed order form 
and (b) a deposit equal to two months' worth of the monthly recurring 
costs of the power requested for the cabinets ordered.\12\
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    \12\ Because monthly charges are calculated based on power, not 
on cabinets, the Exchange proposes to calculate the deposit based on 
the power requested for the cabinets ordered. In such a case, the 
deposit would be calculated as (a) the number of kilowatts allocated 
to the cabinets the User is ordering, multiplied by (b) the 
appropriate ``Per kW Monthly Fee'' as indicated in the Connectivity 
Fee Schedule. The Per kW Monthly Fee is a factor of the total number 
of kilowatts allocated to all of a User's dedicated cabinets and 
varies based on the total kilowatts allocated to a User.
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    Note 7(b), which sets forth the practices the Exchange follows for 
a Combined Waitlist, similarly would be revised to provide that a User 
would be placed on the Combined Waitlist based on the date its 
finalized order for cabinets and/or additional power is received, and 
that a User's order would be finalized when the Exchange receives (a) 
User's signed order form and (b) a deposit equal to two months' worth 
of the monthly recurring costs of (i) the power requested for the 
cabinets ordered and/or (ii) the additional power ordered.\13\
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    \13\ The deposit would be calculated as (a) the number of 
kilowatts allocated to the cabinets the User is ordering, if any, 
plus the number of kilowatts of additional power, multiplied by (b) 
the appropriate ``Per kW Monthly Fee'' as indicated in the 
Connectivity Fee Schedule. The Per kW Monthly Fee is a factor of the 
total number of kilowatts allocated to all of a User's dedicated 
cabinets and varies based on the total kilowatts allocated to a 
User.
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    Note 7(a) and (b) would be revised to provide that:
     If a User changes the size of its order while it is on the 
Cabinet or Combined Waitlist, as the case may be, and any additional 
deposit is received by the Exchange, it will maintain its place, 
provided that the User may not increase the size of its order such that 
it would exceed the Cabinet Limits or Combined Limits, as applicable.
     If a User wishes to reduce the size of its order while it 
is on the Cabinet or Combined Waitlist, its deposit would not be 
reduced or returned, but rather would be applied against the User's 
first and subsequent months' invoices after cabinets are, and/or the 
power is, delivered until the deposit is depleted.
     If the User removes its order from the Cabinet Waitlist or 
Combined Waitlist, its deposit will be returned.
     A User that is removed from the Cabinet or Combined 
Waitlist but subsequently submits a new finalized order for cabinets 
and/or additional power will be added back to the bottom of the 
waitlist.
     The deposit will be applied to the User's first and 
subsequent months' invoices after the cabinets are and/or additional 
power is delivered until the deposit is completely depleted.
General
    The proposed changes would not apply differently to distinct types 
or sizes of market participants. Rather, they would apply to all Users 
equally. As is currently the case, the Fee Schedule would be applied 
uniformly to all Users. FIDS does not expect that the proposed rule 
change will result in new Users.
    The proposed changes are 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 customers 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,\14\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\15\ 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. The Exchange further believes 
that the proposed rule change is consistent with Section 6(b)(4) of the 
Act,\16\ because it provides for the equitable allocation of reasonable 
dues, fees, and other charges among its members and issuers and other 
persons using its facilities and does not unfairly discriminate between 
customers, issuers, brokers, or dealers.
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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
    \16\ 15 U.S.C. 78f(b)(4).
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The Proposed Change Is Reasonable
    The Exchange believes that the proposed change is reasonable 
because requiring Users to submit deposits with their orders in order 
to be placed on the waitlist would help avoid delays for Users further 
down the list, by encouraging Users to carefully assess their true 
power and cabinet needs and protecting against Users ordering more 
power or cabinets than they actually intend to purchase. Without firm, 
guaranteed commitments from waitlisted Users to purchase cabinets or 
power if made available, the Exchange runs the risk of overestimating 
waitlisted Users' true demand, creating delays for Users further down 
the list. The proposed deposit requirement would address this by 
discouraging waitlisted Users from submitting orders for more cabinets 
or power than they actually intend to purchase.
    The proposed deposit requirement is reasonable because, on the one 
hand, it is not so onerous as to dissuade Users from submitting orders, 
and, on the other hand, it is not so trivial that it would fail to 
deter Users from submitting exaggerated orders. It is substantially 
similar to the deposit provision already required under the Ordering 
Window, and as such, the

[[Page 74312]]

deposit requirement here would not be novel.\17\
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    \17\ See Ordering Window Approval Order, supra note 8. The NYSE 
requires market participants to submit deposits in other contexts as 
well. For example, since 2012, the NYSE has required prospective 
issuers to pay a $25,000 initial application fee as part of the 
process for listing a new security on the exchange. This fee 
functions as a deposit that is credited toward the issuer's listing 
fees after it is listed on the exchange. The deposit functions as 
``a disincentive for impractical applications by issuers.'' The 
deposit is forfeited if the issuer does not ultimately list on the 
exchange. See Securities Exchange Act Release No. 68470 (December 
19, 20212), 77 FR 76116 at 76117 (December 26, 2012) (SR-NYSE-2012-
68).
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    In addition, the Exchange believes that the proposed change is 
reasonable because the deposit is proportional to the size of the 
order, and not a fixed amount. As a result, smaller Users would not be 
disproportionately affected by the deposit requirement.
    Under the proposed procedure, if a User wishes to reduce an order 
while on a waitlist, its deposit would not be reduced or returned, but 
rather would be applied against the User's first and subsequent months' 
invoices after the cabinets are, or the power is, delivered until the 
deposit is completely depleted. The Exchange believes that this would 
remove impediments and perfect the mechanism of a free and open market 
and a national market system because a waitlisted User would be 
reimbursed for all of its deposit even if it reduces its order. This 
would remove any incentive a User otherwise might have to understate 
its needs for cabinets and/or power out of a concern that it would not 
be reimbursed for the full amount of its deposit.
The Proposed Change Is Equitable and Not Unfairly Discriminatory
    The Exchange believes that the proposed change provides for the 
equitable allocation of reasonable dues, fees, and other charges among 
its members and issuers and other persons using its facilities and does 
not unfairly discriminate between customers, issuers, brokers, or 
dealers because it is not designed to permit unfair discrimination 
between customers, issuers, brokers, or dealers. The proposed changes 
would apply equally to all types and sizes of market participants. All 
Users would receive equal notice of the deposit requirement through the 
proposed changes to Note 7, and the deposit requirement would be the 
same for all Users. Smaller Users with more modest power needs would 
not be disadvantaged by the proposed changes, as the deposit is 
proportional to the size of the order and not a fixed amount.
    The proposed deposit requirement is equitable because, on the one 
hand, it is not so onerous as to dissuade Users from submitting orders, 
and, on the other hand, it is not so trivial that it would fail to 
deter Users from submitting exaggerated orders. It is substantially 
similar to the deposit provision already required under the Ordering 
Window, and as such, the deposit requirement here would not be 
novel.\18\
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    \18\ See Ordering Window Approval Order, supra note 8.
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    Under the proposed procedure, if a User wishes to reduce an order 
while on a waitlist, its deposit would not be reduced or returned, but 
rather would be applied against the User's first and subsequent months' 
invoices after the cabinets are, or the power is, delivered until the 
deposit is completely depleted. The Exchange believes that this is 
equitable because a waitlisted User would be reimbursed for all of its 
deposit even if it reduces its order. This would remove any incentive a 
User otherwise might have to understate its needs for cabinets and/or 
power out of a concern that it would not be reimbursed for the full 
amount of its deposit.
    For the reasons above, the proposed changes do not unfairly 
discriminate between or among market participants that are otherwise 
capable of satisfying any applicable co-location fees, requirements, 
terms, and conditions established from time to time by the Exchange.
    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 believes that the proposal will not impose any burden 
on competition that is not necessary or appropriate in furtherance of 
the purposes of Section 6(b)(8) of the Act.\19\
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    \19\ 15 U.S.C. 78f(b)(8).
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    The Exchange believes that the proposed rule change does not impose 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed rule change is 
designed to help avoid delays for waitlisted Users, by encouraging 
Users to carefully assess their true power and cabinet needs and 
protecting against Users ordering more power or cabinets than they 
actually intend to purchase. Without firm, guaranteed commitments from 
waitlisted Users to purchase cabinets or power if made available, the 
Exchange runs the risk of overestimating waitlisted Users' true demand, 
creating delays for Users further down the list. The proposed deposit 
requirement would address this by discouraging waitlisted Users from 
submitting orders for more cabinets or power than they actually intend 
to purchase, thereby facilitating a more equitable distribution of 
cabinets and power. Moreover, the Ordering Window already requires a 
deposit, and as such, the deposit requirement here would not be 
novel.\20\
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    \20\ See Ordering Window Approval Order, supra note 8.
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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 \21\ and Rule 19b-4(f)(6) thereunder.\22\ 
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.\23\
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    \21\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \22\ 17 CFR 240.19b-4(f)(6).
    \23\ 17 CFR 240.19b-4(f)(6)(iii). 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 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) \24\ of the Act to determine whether the proposed 
rule

[[Page 74313]]

change should be approved or disapproved.
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    \24\ 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-NYSENAT-2024-24 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-NYSENAT-2024-24. 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-NYSENAT-2024-24 and should 
be submitted on or before October 3, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
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    \25\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-20641 Filed 9-11-24; 8:45 am]
BILLING CODE 8011-01-P