[Federal Register Volume 76, Number 94 (Monday, May 16, 2011)]
[Notices]
[Pages 28251-28252]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-11859]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64441; File No. SR-Phlx-2011-60]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change by NASDAQ
OMX PHLX LLC To Modify Fees for Non Co-Location Services
May 9, 2011.
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 April 28, 2011, NASDAQ OMX PHLX LLC (``Phlx'' 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to modify fees for non co-location services.
While changes to the Fee Schedule pursuant to this proposal are
effective upon filing, the Exchange has designated these changes to be
operative on May 1, 2011.
The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaqomxphlx.cchwallstreet.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 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 is amending the Phlx Fee Schedule, Section VI entitled
``Direct Connectivity to Phlx'' to establish pricing for customers who
are not co-located in the Exchange's data center, but require shared
cabinet space and power for optional routers, switches, or modems to
support their direct circuit connections. The Exchange proposes to
assess customers who are not co-located in the Exchange's data center
monthly fees for space based on a height unit of approximately two
inches high, commonly call a ``U'' space and a maximum power of 125
Watts per U space.
Currently, non co-located customers are assessed fees for direct
circuit connection to the Exchange, as well as installation of an
optional on-site cable router.\3\ However, there is no charge to non
co-located customers for the space and utility cost to maintain the
optional router. As more and more non co-located customers seek to
utilize the optional router, the Exchange must utilize more space and
utilities to accommodate the influx. It has become a necessity for the
Exchange to offset the space and utility cost to maintain the optional
router in the same manner as has been established for co-located
customers. Additionally, the optional router may include other networks
devices (e.g., switches or modems) to operate the customer's business.
---------------------------------------------------------------------------
\3\ See NASDAQ OMX PHLX LLC Fee Schedule, Section VI, Access
Service, Cancellation, Membership, Regulatory and Other Fees, Direct
Connectivity to Nasdaq, Release No. 62639 (August 4, 2010), 75 FR
48391 (August 10, 2010) (SR-PHLX-2010-89).
---------------------------------------------------------------------------
While co-located customers are assessed the same per U fee, the co-
located customers are assessed in increments of a 4U Block at $600 per
month. The Exchange seeks to establish and make transparent the fees
imposed for space and utility costs to non co-located customers.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\4\ in general, and with
Section 6(b)(4) of
[[Page 28252]]
the Act,\5\ in particular, in that it provides for the equitable
allocation of reasonable dues, fees and other charges among members and
issuers and other persons using any facility or system which the
Exchange operates or controls. The Exchange believes the proposed fees
are reasonable and equitable for the reasons below.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78f.
\5\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
The Exchange operates in a highly competitive market in which
exchanges offer non co-location services as a means to facilitate the
trading activities of those customers who believe that the non co-
location services enhance the efficiency of their trading. Accordingly,
fees charged for non co-location services are constrained by the fees
charged to co-located customers, as well as fees charged by other
exchanges, taking into consideration the different costs associated
with the two service types. It should be noted, however, that the costs
associated with a co-located customer are primarily fixed costs that
include the costs of renting or owning data center space and retaining
a staff of technical personnel. Accordingly, the Exchange establishes a
range of non co-location fees with the goal of covering these same
fixed costs and covering less significant marginal costs, such as the
cost of electricity.
The Exchange proposes the same fee for non co-located customers and
co-located customers because the space and utility cost are comparable.
If a particular exchange charges excessive fees for non co-location
services that are comparable to co-location services, affected members
will opt to terminate their non co-location arrangements with that
exchange, and pursue range of alternative trading strategies not
dependent upon the Exchange's non co-location service. Accordingly, the
exchange charging excessive fees would stand to lose not only non co-
location revenues and any other revenues associated with the non co-
located customer's operations. Moreover, all of the Exchange's fees for
space and utility costs services are equitably allocated and non-
discriminatory in that all non co-location customers are offered the
same space and utility service as the co-located customers, and, there
is no differentiation among customers with regard to the fees charged
for such costs.
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 necessary or appropriate in
furtherance of the purposes of the Act.
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
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\6\ 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.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------
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 e-mail to [email protected]. Please include
File Number SR-Phlx-2011-60 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-Phlx-2011-60. This file
number should be included on the subject line if e-mail 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 Web site (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 Web site
viewing and printing in the Commission's Public Reference Room on
official business days between the hours of 10 a.m. and 3 p.m. Copies
of such filing also will be available for inspection and copying at the
principal offices of the Exchange. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-Phlx-2011-60, and should be submitted on or before June
6, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\7\
---------------------------------------------------------------------------
\7\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-11859 Filed 5-13-11; 8:45 am]
BILLING CODE 8011-01-P