[Federal Register Volume 75, Number 186 (Monday, September 27, 2010)]
[Notices]
[Pages 59310-59311]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-24061]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62960; File No. SR-NYSE-2010-56]
Self-Regulatory Organizations; New York Stock Exchange LLC; Order
Approving a Proposed Rule Change Amending Its Price List To Reflect
Fees Charged for Co-Location Services
September 21, 2010.
On August 3, 2010, New York Stock Exchange LLC (``NYSE'' 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 to amend its Price List to reflect fees charged
for co-location services. The proposed rule change was published for
comment in the Federal Register on August 20, 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 CFR240.19b-4.
\3\ See Securities Exchange Act Release No. 62732 (Aug 16,
2010), 75 FR 51512 (``Notice'').
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In its proposal, NYSE proposed to amend its Price List to identify
fees pertaining to co-location services, which allow Users \4\ of the
Exchange 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. NYSE represented that it
planned to begin operating a data center in Mahwah, New Jersey, from
which it will offer co-location services. The Exchange represented that
it will offer space at the data center in cabinets with power usage
capability of either four or eight kilowatts (kW).\5\ In
[[Page 59311]]
addition, the Exchange stated that it will offer Users services related
to co-location, including cross connections, equipment and cable
installation, and remote ``hot-hands'' services, which allow Users to
use on-site data center personnel to maintain User equipment. The
Exchange proposed tiered co-location fees based on the level of service
(1Gb circuit, 10Gb circuit and various bundled options), and additional
fees for related services.
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\4\ For the purposes of this filing, the term ``Users'' includes
any ``member organization,'' as that term is defined in NYSE Rule
2(b) and any ``Sponsored Participant,'' as that term is defined in
NYSE Rule 123B.30(a)(ii)(B).
\5\ The Exchange represented that it also allows Users, for a
monthly fee (i.e., 40% of the applicable monthly per kW fee), to
obtain an option for future use on available, unused cabinet space
in proximity to their existing cabinet space. Specifically, Users
may reserve cabinet space of up to 30% of the cabinet space under
contract, which the Exchange will endeavor to provide as close as
reasonably possible to the User's existing cabinet space, taking
into consideration power availability within segments of the data
center and the overall efficiency of use of data center resources as
determined by the Exchange.
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NYSE represented that 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 Users that do not receive co-location services. The Exchange noted
that all orders sent to NYSE 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. Furthermore, NYSE
noted that co-located Users do not receive any market data or data
service product that is not available to all Users. Users that receive
co-location services normally would expect reduced latencies in sending
orders to the Exchange and receiving market data from the Exchange.
In addition, the Exchange represented that co-located Users have
the option of obtaining access to the Exchange's Liquidity Center
Network (``LCN''), a local area network available in the data
center.\6\ Co-located Users have the option of using either the LCN or
the Exchange's Secure Financial Transaction Infrastructure (``SFTI'')
network, to which all Users have access. Because it operates as a local
area network within the data center, the LCN provides reduced latencies
in comparison with SFTI. Other than the reduced latencies, the Exchange
believes 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. According to NYSE, SFTI and LCN both provide Users with access to
the Exchange's trading and execution systems and to the Exchange's
proprietary market data products. User access to non-proprietary market
data products is available through SFTI and not through LCN.
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\6\ NYSE represented that pricing for LCN access is provided on
a stand-alone basis and on a bundled basis in combination with SFTI
connections and optic connections to outside access centers and
within the data center. The SFTI and optic connections are not
related to the co-location services.
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NYSE represented that it offers co-location space based on
availability and the Exchange believes that it has sufficient space in
the Mahwah data center to accommodate current demand on an equitable
basis for the foreseeable future. In addition, the Exchange believes
that any difference among the positions of the cabinets within the data
center does not create any material difference to co-location Users in
terms of access to the Exchange.
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.\7\
In particular, the Commission finds that the proposed rule change is
consistent with Section 6(b)(4) of the Act,\8\ 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,\9\ 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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\7\ 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).
\8\ 15 U.S.C. 78f(b)(4).
\9\ 15 U.S.C. 78f(b)(5).
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The Commission believes that the proposed tiered fees for co-
location and related services are reasonable and equitably allocated
insofar as they are applied on the same terms to similarly-situated
market participants. In addition, the Commission believes that the
connectivity options described in the proposed rule change are not
unfairly discriminatory because NYSE makes the co-location services
uniformly available to all Users who voluntarily request them and pay
the fees as detailed in the proposal. As represented by NYSE, these
fees are uniform for all such customers and may vary from User to User
due to each User's choice of service package. Finally, the Commission
believes that the proposal will further the protection of investors and
the public interest because it will provide greater transparency
regarding the connectivity options available to market participants.
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\10\ that the proposed rule change (SR-NYSE-2010-56) be, and hereby
is, approved.
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\10\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-24061 Filed 9-24-10; 8:45 am]
BILLING CODE 8010-01-P