[Federal Register Volume 81, Number 110 (Wednesday, June 8, 2016)]
[Notices]
[Pages 36981-36984]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-13472]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-77974; File No. SR-NYSEArca-2016-77]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Amending the NYSE
Arca Options Fee Schedule and the NYSE Arca Equities Schedule of Fees
and Charges for Exchange Services To Eliminate Certain Services That
Are No Longer Utilized by Users and To Remove Obsolete Text
June 2, 2016.
Pursuant to section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on May 23, 2016, NYSE Arca, Inc. (the ``Exchange'' or
``NYSE Arca'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III 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 the
Substance of the Proposed Rule Change
The Exchange proposes amend the NYSE Arca Options Fee Schedule (the
``Options Fee Schedule'') and, through its wholly owned subsidiary NYSE
Arca Equities, Inc. (``NYSE Arca Equities''), the NYSE Arca Equities
Schedule of
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Fees and Charges for Exchange Services (the ``Equities Fee Schedule''
and, together with the Options Fee Schedule, the ``Fee Schedules'') to
eliminate certain services that are no longer utilized by Users and to
remove obsolete text. The proposed rule change is available on the
Exchange's Web site 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
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to change the Fee Schedules for the co-
location \4\ services offered by the Exchange to eliminate certain
services that are no longer utilized by Users \5\ and to remove
obsolete text.
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\4\ The Exchange initially filed rule changes relating to its
co-location services with the Securities and Exchange Commission
(``Commission'') in 2010. See Securities Exchange Act Release No.
63275 (November 8, 2010), 75 FR 70048 (November 16, 2010) (SR-
NYSEArca-2010-100). The Exchange operates a data center in Mahwah,
New Jersey (the ``data center'') from which it provides co-location
services to Users.
\5\ For purposes of the Exchange's co-location services, a
``User'' means any market participant that requests to receive co-
location services directly from the Exchange. See Securities
Exchange Act Release No. 76010 (September 29, 2015), 80 FR 60197
(October 5, 2015) (SR-NYSEArca-2015-82). As specified in the Fee
Schedules, a User that incurs co-location fees for a particular co-
location service pursuant thereto would not be subject to co-
location fees for the same co-location service charged by the
Exchange's affiliates New York Stock Exchange LLC and NYSE MKT LLC.
See Securities Exchange Act Release No. 70173 (August 13, 2013), 78
FR 50459 (August 19, 2013) (SR-NYSEArca-2013-80).
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LCN CSP Access
The ``Liquidity Center Network'' (``LCN'') is a local area network
available in the data center. A User is currently able to act as a
content service provider (a ``CSP'' User) and deliver services to
another User in the data center (a ``Subscribing'' User).\6\ These
services could include, for example, order routing/brokerage services
and/or data delivery services.
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\6\ See Securities Exchange Act Release No. 67667 (August 15,
2012), 77 FR 50743 (August 22, 2012) (SR-NYSEArca-2012-63).
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Currently, the Exchange offers CSP Users specific, dedicated 10
gigabyte (``Gb'') LCN connections (``LCN CSP'') that would allow CSP
Users to send data to, and communicate with, all their properly
authorized Subscribing Users at once. In such a case, a Subscribing
User would receive the services via its standard LCN connection and
would be charged an initial and monthly fee (``CSP Subscriber fee'')
reflecting the benefit of receiving services from the CSP User in this
manner.\7\
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\7\ Id. Previously, the Exchange also offered a one Gb LCN CSP
connection, but it was discontinued as it was no longer utilized by
Users. See Securities Exchange Act Release No. 72720 (July 30,
2014), 79 FR 45577 (August 5, 2014) (SR-NYSEArca-2014-81).
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However, Users no longer utilize the LCN CSP connection offering.
Accordingly, the Exchange proposes to discontinue LCN CSP connections,
and to remove references to LCN CSP access and CSP Subscriber fees from
the Fee Schedules. A CSP User would remain able to deliver services to
a Subscribing User via direct cross connect, as is currently the case
and as was the case prior to the introduction of the LCN CSP connection
offering.
Bundled Network Access
A User is currently able to select from two ``bundled''
connectivity options when connecting to the data center: ``Bundled
Network Access Option 1'' and ``Bundled Network Access Option 2''.\8\
The Exchange proposes to discontinue Bundled Network Access Option 2,
as Users no longer utilize it, and to remove references to related
pricing from the Fee Schedules. In addition, the Exchange proposes to
rename ``Bundled Network Access Option 1'' as ``Bundled Network
Access,'' as it would be the sole remaining option.
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\8\ Previously, the Exchange offered other ``bundled''
connectivity options, but they were discontinued as they were no
longer utilized by Users. See id., at 45578.
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IP Network Access
The internet protocol (``IP'') network is a local area network
available in the data center.\9\ IP network access is offered in 1, 10
and 40 Gb capacities. The Exchange proposes to delete statements in the
Fee Schedules that the 40 Gb circuit of the IP network is expected to
be available no later than April 15, 2016,\10\ as such statements are
obsolete. This proposed change would have no impact on pricing.
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\9\ See Securities Exchange Act Release No. 74219 (February 6,
2015), 80 FR 7899 (February 12, 2015) (SR-NYSEArca-2015-03) (notice
of filing and immediate effectiveness of proposed rule change to
include IP network connections and fiber cross connects between a
User's cabinet and a non-User's equipment).
\10\ See Securities Exchange Act Release No. 76372 (November 5,
2015), 80 FR 70039 (November 12, 2015) (SR-NYSEArca-2015-105)
(notice of filing and immediate effectiveness of proposed rule
change to include IP 40 Gb network connections).
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General
As is the case with all Exchange co-location arrangements, (i)
neither a User nor any of the User's customers would be permitted to
submit orders directly to the Exchange unless such User or customer is
a member organization, a Sponsored Participant or an agent thereof
(e.g., a service bureau providing order entry services); (ii) use of
the co-location services proposed herein would be completely voluntary
and available to all Users on a non-discriminatory basis; \11\ and
(iii) a User would only incur one charge for the particular co-location
service described herein, regardless of whether the User connects only
to the Exchange or to the Exchange and one or both of its
affiliates.\12\
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\11\ As is currently the case, Users that receive co-location
services from the Exchange will not receive any means of access to
the Exchange's trading and execution systems that is separate from,
or superior to, that of other Users. In this regard, all orders sent
to the Exchange enter the Exchange's trading and execution systems
through the same order gateway, regardless of whether the sender is
co-located in the data center or not. In addition, co-located Users
do not receive any market data or data service product that is not
available to all Users, although Users that receive co-location
services normally would expect reduced latencies in sending orders
to, and receiving market data from, the Exchange.
\12\ See SR-NYSEArca-2013-80, supra note 5, at 50459. The
Exchange's affiliates have also submitted substantially the same
proposed rule change to propose the changes described herein. See
SR-NYSE-2016-39 and SR-NYSEMKT-2016-57.
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The proposed change is 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 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,\13\ in general, and section 6(b)(4) of
the Act,\14\ in particular, because it provides for the equitable
allocation of reasonable dues, fees, and other charges among its
members, issuers and other persons using its facilities and does not
unfairly discriminate between customers,
[[Page 36983]]
issuers, brokers or dealers. The Exchange also believes that the
proposed rule change 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 mechanisms 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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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(4).
\15\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed change is reasonable,
equitable and not unfairly discriminatory because discontinuing the LCN
CSP and Bundled Network Access Option 2 in the data center would permit
the Exchange to streamline the offerings available to Users in the data
center by eliminating services that Users no longer utilize and, by
removing references to related pricing from the Fee Schedules, make the
Fee Schedules easier to read, understand and administer. The Exchange
believes that, because no Users utilize such services, it would be
equitable and not unfairly discriminatory to discontinue the services.
The Exchange believes that it is reasonable to discontinue the
services in the data center that are no longer utilized by Users and to
remove references to related pricing from the Fee Schedules because the
Exchange offers the services described herein as a convenience to
Users, but in doing so incurs certain costs, including costs related to
the data center facility, hardware and equipment and costs related to
personnel required for initial installation and ongoing monitoring,
support and maintenance of such services. Removing services that Users
do not utilize from the co-location offerings would contribute to a
more efficient process for managing the various services offered to
Users, which would improve the utilization of the data center
resources, both with respect to personnel and infrastructure, including
hardware and software.
The Exchange believes that eliminating references in the Fee
Schedules that state that the 40 Gb circuit of the IP network is
expected to be available no later than April 15, 2016, is reasonable,
equitable and not unfairly discriminatory because these references are
obsolete and no longer have an impact on pricing. The proposed change
would result in the removal of obsolete text from the Fee Schedules and
therefore add greater clarity to the Fee Schedules regarding the
services offered and the applicable fees.
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.
Finally, the Exchange believes that it is subject to significant
competitive forces, as described below in the Exchange's statement
regarding the burden on competition.
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,\16\ 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 because, in addition to the proposed services being
completely voluntary, they are available to all Users on an equal basis
(i.e., the same products and services are available to all Users).
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\16\ 15 U.S.C. 78f(b)(8).
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The Exchange believes that discontinuing the LCN CSP and Bundled
Network Access Option 2 in the data center and removing references to
related pricing and obsolete text from the Fee Schedules would not
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act because no Users utilize the
services proposed to be discontinued. A CSP User would remain able to
deliver services to a Subscribing User via direct cross connect, as is
currently the case and as was the case prior to the introduction of the
LCN CSP connection offering. The proposed rule change is not intended
to address competitive issues.
Finally, the Exchange notes that it operates in a highly
competitive market in which market participants can readily favor
competing venues if they deem fee levels at a particular venue to be
excessive. In such an environment, the Exchange must continually
review, and consider adjusting, its services and related fees and
credits to remain competitive with other exchanges. For the reasons
described above, the Exchange believes that the proposed rule change
reflects this competitive environment.
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 foregoing rule change is effective upon filing pursuant to
section 19(b)(3)(A) \17\ of the Act and subparagraph (f)(2) of Rule
19b-4 \18\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\17\ 15 U.S.C. 78s(b)(3)(A).
\18\ 17 CFR 240.19b-4(f)(2).
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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) \19\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\19\ 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 No. SR-NYSEArca-2016-77 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 No. SR-NYSEArca-2016-77. This file
number should be included on the
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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 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, 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
such filing also will be available for inspection and copying at the
principal office 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 No. SR-NYSEArca-2016-77, and should be submitted on or before June
29, 2016.
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\20\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
Brent J. Fields,
Secretary.
[FR Doc. 2016-13472 Filed 6-7-16; 8:45 am]
BILLING CODE 8011-01-P