[Federal Register Volume 75, Number 87 (Thursday, May 6, 2010)]
[Notices]
[Pages 25007-25009]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-10595]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61999; File No. SR-NYSEArea-2010-15]
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving
a Proposed Rule Change Amending Its Schedule of Fees and Charges for
Exchange Services
April 29, 2010.
I. Introduction
On March 5, 2010, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change relating to co-location services and related fees.
The proposed rule change was published for comment in the Federal
Register on March 26, 2010.\3\ The Commission received no comment
letters on the proposal. This order approves the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 61748 (March 19,
2010), 75 FR 14644 (``Notice'').
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[[Page 25008]]
II. Description
In its proposal, NYSE Arca described certain co-location services
offered by the Exchange, and proposed to amend its Schedules of Fees
and Charges for Exchange Services for both its equities and options
platforms (the ``Schedules'') in order to identify fees pertaining to
such co-location services.
Co-Location Services
The Exchange offers its Users \4\ the opportunity to rent space on
premises controlled by the Exchange so that they may locate their
electronic servers in close physical proximity to the Exchange's
trading and execution systems. These co-location services are currently
provided at a data center operated by a private third-party vendor
located in New Jersey, and Users may rent space ranging from half
cabinets up to two full cabinets, with different power usage
capabilities ranging from 2 kilowatts up to 8 kilowatts. The services
provided include equipment installation, cross connections, and
miscellaneous post-installation services (including cable installation,
equipment racking and ``remote-hands'' maintenance). In the proposal,
the Exchange represents that the fees assessed for the services and
space generally reflect the amount of space used and power required.
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\4\ The term ``User'' means any ETP Holder or Sponsored
Participant who is authorized to obtain access to the NYSE Arca
Marketplace pursuant to Rule 7.29, and any OTP Holder, OTP Firm or
Sponsored Participant that is authorized to obtain access to OX
pursuant to Rule 6.2A. See NYSE Arca Equities Rule 1.1(yy) and NYSE
Arca Options Rule 6.1A(a)(19).
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NYSE Arca further represents that Users that receive co-location
services from NYSE Arca do not receive any means of access to the
Exchange's trading and execution systems that is separate from or
superior to that of Users that do not receive co-location services.
NYSE Arca further represents that 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
Exchange's data center or not. In addition, the Exchange represents
that co-located Users do not receive any market data or data service
product that is not available to all Users. Finally, NYSE Arca notes
that although Users that receive co-location services normally would
expect reduced latencies when sending orders to the Exchange and
receiving market data from the Exchange, NYSE Arca believes that other
than these reduced latencies, there are no material differences in
terms of access to the Exchange between Users that choose to co-locate
and those that do not.
In the proposal, the Exchange explained that it offers co-location
space based on availability, and believes that it has sufficient space
to accommodate current demand on an equitable basis. In addition,
according to the Exchange, any difference among the positions of the
cabinets within the data center does not create any material difference
among co-location Users in terms of access to the Exchange.
Co-Location Fees
The Exchange's proposed co-location fees, which, in part, reflect
power usage priced at $1000 per kilowatt (``kW'') per month, are
reflected below.
Half cabinet (up to 2 kW).................... $2,000 per month.
$2,500 one time
installation fee.
Full cabinet (up to 2.5 kW).................. $2,500 per month.
$5,000 one time
installation fee.
Full cabinet (up to 4 kW).................... $4,000 per month.
$5,000 one time
installation fee.
Full cabinet (up to 8 kW).................... $8,000 per month.
$5,000 one time
installation fee.
Miscellaneous services post installation $200 per hour.
(including cable installation services,
equipment racking services, and on going
remote-hands maintenance).
Fiber cross connections (local and $600 per month.
interfloor).
$950 one time
installation fee.
Less than half cabinet \5\................... $150 per Rack Unit.
III. Discussion and Commission's Findings
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange.\6\
In particular, the Commission finds that the proposed rule change is
consistent with Section 6(b)(4) of the Act,\7\ which requires that the
rules of a national securities exchange provide for the equitable
allocation of reasonable dues, fees and other charges among its members
and issuers and other persons using its facilities, and with Section
6(b)(5) of the Act,\8\ which requires, among other things, that the
rules of a national securities exchange be 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, and not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\5\ The Exchange represents that it supports existing
arrangements to provide Users with less than a half cabinet, but it
does not offer that option to new co-location Users.
\6\ In approving this proposal, the commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
\7\ 15 U.S.C. 78f(b)(4).
\8\ 15 U.S.C. 78f(b)(5).
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The Commission believes that the proposed co-location fees are
equitably allocated insofar as they are applied on the same terms to
similarly-situated market participants. In addition, the Commission
believes that the co-location services described in the proposed rule
change are not unfairly discriminatory because: (1) Co-location
services are offered to all Users who request them and pay the
appropriate fees; (2) the Exchange has represented that Users receiving
co-location services do not receive any means of access to the
Exchange's trading and execution systems that is separate from or
superior to that of Users that do not receive co-location services; (3)
the Exchange has represented that there are no material differences in
terms of access to the Exchange between Users that choose to co-locate
and those that do not, other than co-located Users' reduced latencies
due to proximity; and (4) the Exchange has stated that it has
sufficient space to accommodate current demand for co-location services
on an equitable basis.
[[Page 25009]]
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\9\ that the proposed rule change (SR-NYSEArca-2010-15) be, and
hereby is, approved.
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\9\ 15 U.S.C. 78s(b)(2).
\10\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-10595 Filed 5-5-10; 8:45 am]
BILLING CODE 8011-01-P