[Federal Register Volume 81, Number 229 (Tuesday, November 29, 2016)]
[Notices]
[Pages 86050-86055]
[FR Doc No: 2016-28637]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79378; File No. SR-NYSEMKT-2016-63]

Self-Regulatory Organizations; NYSE MKT LLC; Order Instituting
Proceedings To Determine Whether To Approve or Disapprove a Proposed
Change, as Modified by Amendment No. 1, Amending the Co-location
Services Offered by the Exchange To Add Certain Access and Connectivity
Fees

November 22, 2016.

I. Introduction

    On August 16, 2016, NYSE MKT LLC (the ``Exchange'' or ``NYSE MKT'')
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 (1)
to provide additional information regarding access to various trading
and execution services; connectivity to market data feeds and testing
and certification feeds; connectivity to Third Party Systems; and
connectivity to DTCC provided to Users using data center local area
networks; and (2) to establish fees relating to a User's access to
various trading and execution services; connectivity to market data
feeds and testing and certification feeds; connectivity to DTCC; and
other services. The proposed rule change was published for comment in
the Federal Register on August 26, 2016.\3\ The Commission received no
comments in response to the proposed rule change.\4\ On October 4,
2016, the Commission extended the time period within which to approve
the proposed rule change, disapprove the proposed rule change, or
institute proceedings to determine whether to approve or disapprove the
proposed rule change to November 24, 2016.\5\
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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. 34-78629 (August 22,
2016), 81 FR 58992 (``Notice'').
    \4\ The Commission notes that it did receive one comment letter
on a related filing, NYSE-2016-45, which is equally relevant to this
filing. See letter to Brent J. Fields, Secretary, Commission, from
John Ramsay, Chief Market Policy Officer, Investors Exchange LLC
(IEX), dated September 9, 2016 (``IEX Letter'').
     On September 23, 2016, the NYSE submitted a response
(``Response Letter'').
    \5\ See Securities Exchange Act Release No. 34-78968 (September
28, 2016), 81 FR 68493.
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    On November 2, 2016, the Exchange filed Amendment No. 1 to the
proposed rule change.\6\ The Commission is publishing this order to
solicit comments on Amendment No. 1 from interested persons and to
institute proceedings pursuant to Exchange Act Section 19(b)(2)(B) to
determine whether to approve or disapprove the proposed rule change, as
modified by Amendment No. 1.\7\ Institution of proceedings does not
indicate that the Commission has reached any conclusions with respect
to the proposed rule change, nor does it mean that the Commission will
ultimately disapprove the proposed rule change. Rather, as discussed
below, the Commission seeks additional input on the proposed rule
change, as modified by Amendment No. 1, and on the issues presented by
the proposal.
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    \6\ Amendment No. 1 is discussed further infra. Amendment No. 1
is available on the Commission's Web site at https://www.sec.gov/comments/sr-nysemkt-2016-63/nysemkt201663-1.pdf.
    \7\ 15 U.S.C. 78s(b)(2)(B).
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II. Description of the Proposed Rule Change, as Modified by Amendment
No. 1

    The proposed rule change seeks to amend the co-location services
offered by the Exchange to (1) provide additional information regarding
the access to trading and execution services and connectivity to data
provided to Users with local area networks available in the data
center; and (2) establish fees relating to a User's \8\ access to
trading and execution services; connectivity to data feeds and to
testing and certification feeds; connectivity to clearing; and other
services.\9\
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    \8\ 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. 76008 (September 29, 2015), 80 FR 60190
(October 5, 2015) (SR-NYSE-2015-40). 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 NYSE MKT LLC (``NYSE MKT'') and NYSE Arca,
Inc. (``NYSE Arca'' and, together with NYSE MKT, the ``Affiliate
SROs''). See Securities Exchange Act Release No. 70206 (August 15,
2013), 78 FR 51765 (August 21, 2013) (SR-NYSE-2013-59).
    \9\ See Notice, supra note 3, 81 FR at 58993.
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Background and Access to Exchange Systems

    As discussed more fully in the Notice, a User can purchase access
to the Liquidity Center Network (``LCN'') and/or internet protocol
(``IP'') network in the data center through the purchase of a 1, 10, or
40 Gb LCN circuit, a 10 Gb LX Circuit, bundled network access, Partial
Cabinet Solution bundle, or 1, 10 or 40 Gb IP network access.\10\ The
purchase of any of the LCN or IP network circuit options gives a User
access \11\ to the Exchange's trading and execution systems,
connectivity to the Exchange's certification and testing feeds,\12\ and
the ability to connect to any NYSE Data Product.\13\ More specifically,
access to the Exchange's trading and execution system provides a User
with access to the Exchange's ``customer gateways that provide for
order entry, order receipt (i.e. confirmation that an order has been
received), receipt of drop copies and trade reporting (i.e. whether a
trade is executed or cancelled), as well as for sending information to
shared data services for clearing and settlement.'' \14\ The Exchange
seeks to add clarifying language in its proposed rule to reflect the
services included with purchase of Exchange system access.\15\
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    \10\ See id.
    \11\ The purchase of access is subject to receiving
authorization from the NYSE, NYSE MKT or NYSE Arca for the Included
Data Products, as applicable. See id. at 58993 n.10.
    \12\ Certification feeds are used to certify that a User
conforms to any relevant technical requirements for receipt of data
or access to Exchange systems. Testing feeds, which do not carry
live production data, provide Users with an environment to conduct
tests with the non-live data, including testing for upcoming
Exchange releases and product enhancements or the User's own
software development. See id. at 58993. These feeds are only
available over the IP network, however a User without an IP network
connection may obtain an IP network circuit for purposes of testing
and certification for free for three months. See id. at 58993 n.12.
    \13\ See id. at 58993.
    \14\ See id. The Exchange represents that connectivity to the
Exchange systems can be obtained without the purchase of access to
the LCN or IP network. See id.
    \15\ See id.
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Connectivity to Included Data Products

    As discussed more fully below, the Exchange offers connectivity to
three types of data products: Included Data Products, Premium NYSE Data
Products, and Third Party Data Feeds.\16\

As discussed more fully in the Notice, the Included Data Products
include Consolidated Tape Association (``CTA'') disseminated data feeds
and NMS data feeds.\17\ The CTA disseminates consolidated real-time
trade and quote information in NYSE listed securities (Network A) and
NYSE MKT, NYSE Arca and other regional exchanges' listed securities
(Network B) pursuant to a national market system plan.\18\ The NMS data
feeds include Consolidated Tape System and Consolidated Quote System
data streams, as well as Options Price Reporting Authority feeds.\19\
To obtain connectivity to the Included Data Products, a User must enter
into a contract with the data provider and pay any applicable fees.\20\
Once the Exchange receives an authorization from the data feed
provider, the Exchange will provide connectivity to the Included Data
Product(s) through a User's LCN or IP network port.\21\ The Exchange
does not charge any additional fees for this connectivity ``because
such access and connectivity is directly related to the purpose of co-
location.'' \22\ The Exchange proposes to add language to the NYSE MKT
Equities Price List and the NYSE Amex Options Fee Schedule
(collectively ``Fee Schedules'') to specify that there are no
additional fees for connectivity to Included Data Products.\23\
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    \16\ See id. at 58993-58994. Neither the NYSE Data Products or
Third Party Data Feeds provide access or order entry to the
Exchange's execution system. See id. at 58994 n. 15. Connectivity to
the NYSE Data Products is available in three forms: A resilient
feed, ``Feed A'', or ``Feed B.'' A resilient feed includes two
copies of the same feed for redundancy purposes and Feed A and Feed
B are identical feeds. A User that wants redundancy would connect to
both Feed A and Feed B or two resilient feeds, using two different
ports. See id. at 58993; see also id. at 58993 n. 13.
    \17\ See Notice, supra note 3, 81 FR at 58994.
    \18\ See id.
    \19\ See id.
    \20\ See id.
    \21\ See id.
    \22\ See id.; see also Amendment No. 1, supra note 6.
    \23\ See Notice, supra note 3, 81 FR at 58994.
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Connectivity to Premium NYSE Data Products

    As part of its data product offerings, the Exchange now proposes to
provide connectivity to Premium NYSE Data Products from the Exchange
and its Affiliate SROs to Users over either the LCN and/or IP network
``because such access and connectivity is directly related to the
purpose of co-location.'' \24\ The proposed rule change seeks to amend
the Fee Schedules to specify the connectivity fees for Premium NYSE
Data Products.\25\
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    \24\ See id.; see also Amendment No. 1, supra note 6.
    \25\ See Notice, supra note 3, 81 FR at 58995.
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    As discussed more fully in the Notice, the Premium NYSE Data
Products are ``equity market data products that are variants of the
equity Included Data Products. Each Premium NYSE Data Product
integrates, or includes data elements from, several Included Data
Products.'' \26\ These Integrated Feeds include ``depth of book order
data (with add, modify and delete orders), trades (with corrections and
cancel/errors), opening and closing imbalance data, security status
updates (e.g., trade corrections and trading halts) and stock summary
messages. The stock summary messages display a market's opening price,
high price, low price, closing price, and cumulative volume for a
security. Only the Integrated Feeds offer all these components in
sequence in one feed.'' \27\ Additionally, the NYSE BQT data feed
includes, among other things, certain data elements from six of the
equity Included Data Products of the Exchange and Affiliated SROs in
one data feed: NYSE Trades, NYSE BBO, NYSE Arca Trades, NYSE Arca BBO,
NYSE MKT Trades, and NYSE MKT BBO.\28\
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    \26\ See id. at 58994. Examples include: (1) The NYSE Integrated
Feed that includes, among other items, data from three of the equity
Included Data Products: NYSE OpenBook, NYSE Trades, and NYSE Order
Imbalances; and (2) the NYSE BQT data feed that includes, among
other items, specific data elements from six of the equity Included
Data Products: NYSE Trades, NYSE BBO, NYSE Arca Trades, NYSE Arca
BBO, NYSE MKT Trades, and NYSE MKT BBO. See id. Additionally, with
respect to the NYSE Amex and NYSE Arca options data, neither NYSE
Amex nor NYSE Arca offer Premium Data Products because there are
``no options data products that integrate, or include data elements
from, other option data products in the same manner that the NYSE,
NYSE MKT and NYSE Arca Integrated Feeds integrate, or include data
elements from, equity Included Data Products.'' See id.
    \27\ See Amendment No. 1, supra note 6.
    \28\ See id. None of the Included Data Products provide Users
with data from the Exchange and Affiliate SROs in one feed. See id.
Also, according to the Exchange, the Premium Data Products contain
more data overall in comparison to the Included Data Products and
potentially can be subject to greater technical specifications in
order to receive the feed(s). See Notice, supra note 3, 81 FR at
58995. ``For example, a User connecting to the NYSE Arca Integrated
Feed, NYSE Integrated Feed or NYSE MKT Integrated Feed would need at
least a 1 Gb IP network connection in order to connect to either
Feed A or Feed B. To connect to a resilient feed, the User would
require an LCN or IP network connection of at least 10 Gb.'' See id.
at 58993 n. 13.
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    As is the case with Included Data Products, a User of Premium NYSE
Data Products must enter into a contract with the data provider for
each feed and the provider would then authorize the Exchange to provide
connectivity of the particular feed to that User's LCN or IP Network
port.\29\ The Exchange proposes to charge a User a monthly recurring
fee per each Premium NYSE Data Product feed for the connectivity
provided by the Exchange.\30\
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    \29\ See Notice, supra note 3, 81 FR at 58994.
    \30\ See id. at 58995.
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Connectivity to Third Party Data Feeds

    The Exchange's proposal further seeks to offer Third Party Data
Feeds to Users and to charge a connectivity fee per feed as reflected
on its Fee Schedules.\31\ In the data center, the Exchange receives
Third Party Data Feeds from multiple national securities exchanges and
other content service providers which it then provides to requesting
Users for a fee.\32\ With the exceptions of Global OTC and NYSE Global
Index, Users connect to Third Party Data Feeds over the IP network.\33\
In charging for this service, the Exchange notes that its practice is
consistent with the monthly fee Nasdaq charges its co-location
customers for connectivity to third party data.\34\
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    \31\ See id. at 58996.
    \32\ See id.
    \33\ See id.
    \34\ See id. The Exchange notes that Nasdaq charges monthly fees
of $1,500 and $4,000 for connectivity to BATS Y and BATS,
respectively, and of $2,500 for connectivity to EDGA or EDGX. See
id.
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    In order to connect to a Third Party Data Feed, a User must enter
into a contract with the relevant third party market or content service
provider, under which the third party market or content service
provider charges the User for the data feed.\35\ The Exchange receives
these Third Party Data Feeds over its fiber optic network and, after
the data provider and User enter into a contract and the Exchange
receives authorization from the data provider, the Exchange re-
transmits the data to the User over a User's port.\36\ Users only
receive, and are only charged for, the feed(s) which they have entered
into contracts for.\37\ Additionally, the Exchange notes that Third
Party Data Feeds do not provide access or order entry to its execution
system or access to the execution system of the third party generating
the feed.\38\ The Exchange proposes to charge a monthly recurring fee
for connectivity to each Third Party Data Feed, however for SuperFeed
and MSCI it proposes to charge different fees which vary based on the
bandwidth requirements for the connection.\39\ A User is free to
receive all or some of the feeds included in the

Fee Schedules.\40\ Moreover, the Exchange notes that Third Party Data
Feed providers may charge redistribution fees, such as Nasdaq's
Extranet Access Fees and OTC Markets Group's Access Fees,\41\ which the
Exchange will pass through to the User in addition to charging the
applicable connectivity fee.\42\ Finally, the Exchange permits third
party markets or content providers that are also Users to connect to
their own Third Party Data Feeds without a charge.\43\ The Exchange
represents that it does not charge Users that are third party markets
or content providers for connectivity to their own feeds because such
parties generally receive their own feeds for purposes of diagnostics
and testing.\44\
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    \35\ See id.
    \36\ See id.
    \37\ See id.
    \38\ See id. There is one exception to this for the ICE feeds
which include both market data and trading and clearing services. In
order to receive the ICE feeds, a User must receive authorization
from ICE to receive both market data and trading and clearing
services. See id.
    \39\ See id.
    \40\ See id.
    \41\ See id.
    \42\ See id.
    \43\ See id. at 58996.
    \44\ See id. at 58997.
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Connectivity to Other Services

    As part of its data center offerings, the Exchange also seeks to
provide access and connectivity to Third Party Systems/content service
providers, the DTCC \45\ (collectively ``Service Providers''), third
party certification and testing feeds,\46\ and Virtual Control Circuits
\47\ (``VCCs'').\48\ The proposed rule change seeks to amend the Fee
Schedules to add new fees for connectivity to these Service Providers
and third party certification and testing feeds and to specify that
connectivity is dependent on a User meeting the necessary technical
requirements, paying the applicable fees, and the Exchange receiving
authorization to establish a connection for a User.\49\ Similarly, the
proposed rule change seeks to amend the Fee Schedules to add a new fee
for connectivity for VCCs which will similarly require permission from
the other User before the Exchange will establish the connection.\50\
Accordingly, the Exchange proposes to amend its Fee Schedules to add
recurring monthly connectivity fees for Service Providers and VCCs
based upon the bandwidth requirements per system and/or VCC connection
between two Users.\51\ For third party certification and testing feeds,
the Exchange proposes to revise its Fee Schedules to include a monthly
recurring $100 fee per feed.\52\
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    \45\ ``Such connectivity to DTCC is distinct from the access to
shared data services for clearing and settlement services that a
User receives when it purchases access to the LCN or IP network. The
shared data services allow Users and other entities with access to
the Trading Systems to post files for settlement and clearing
services to access.'' See id. at 58998 n. 33.
    \46\ Certification feeds certify that a User conforms to any of
the relevant content service providers' requirements for accessing
Third Party Systems or receiving Third Party Data, whereas testing
feeds provide Users an environment in which to conduct system tests
with non-live data. See id. at 58997.
    \47\ A VCC (previously called a ``peer to peer'' connection) is
a two-way connection through which two participants can establish a
connection between two points over dedicated bandwidth using the IP
network to be used for any purpose. See id.
    \48\ See id. at 58995, 58997.
    \49\ See id.
    \50\ See id. at 58997.
    \51\ See id. at 58995, 58997.
    \52\ See id. at 58997.
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    For each service, a User must execute a contract with the
respective Service Provider and/or third party certification and
testing feed provider(s) pursuant to which a User pays each the
associated fee(s) for their services.\53\ Once the Exchange receives
authorization from the Service Provider and/or third party
certification and testing feed provider(s), the Exchange will enable a
User to connect to the Service Provider and/or third party
certification and testing feed(s) over the IP Network.\54\ Similarly,
with respect to VCCs, the Exchange will not establish a VCC connection
over its IP Network until the other User confirms the VCC request.\55\
Finally, the Exchange notes, that its execution system does not provide
access to Service Provider systems, nor do the Service Provider systems
provide access to the Exchange's execution system.\56\
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    \53\ See id. at 58995, 58997.
    \54\ See id. For Third Party Systems, once the Exchange receives
the authorization from the respective third party it establishes a
unicast connection between the User and the relevant third party
over the IP network. See id. at 58995. For the DTCC, ``[t]he
Exchange receives the DTCC feed over its fiber optic network and,
after DTCC and the User enter into the services contract and the
Exchange receives authorization from DTCC, the Exchange provides
connectivity to DTCC to the User over the User's IP network port.''
See id. at 58997.
    \55\ See id. at 58997.
    \56\ See id. at 58995, 58997.
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    As noted above, the Commission received one comment letter on a
related filing which is equally applicable to this filing.\57\ This
commenter (1) requested clarification about the history of the fees and
``the increasing costs of maintaining the data center and providing co-
location compared to any related fee revenue'' and (2) expressed a
concern about whether ``there are any true alternatives that are
practically available to various types of participants who are seeking
to compete with those who are paying exchanges for co-location and data
services.'' \58\ Specifically, the commenter noted that the NYSE states
that the connectivity fees are used to defray the costs associated with
providing co-location to Users, but, the commenter questions whether
the fees to cover the increasing costs of providing co-location are
applied in an equitable manner.\59\ Moreover, with respect to
alternatives, the commenter noted that broker-dealers face best
execution obligations that are ``critically impacted by sub-millisecond
differences in access to exchange systems and market data.'' \60\ As a
result, market participants face the quandary of whether to trade from
outside the data center if other members are trading from inside.\61\
Additionally, some broker-dealers trading for clients ``may be
practically required to buy and consume proprietary market data feeds
directly from exchanges in order to provide competitive products for
those clients.'' \62\ The commenter believes that this environment
``imposes a form of trading tax on all members by offering different
methods of access to different members.'' \63\ The commenter questions
whether true alternatives are available for participants seeking to
compete with firms paying for exchange co-location and data services
and whether the Exchange's ability to set fees is truly constrained by
market forces for a ``comparable product''.\64\
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    \57\ See IEX Letter, supra note 4.
    \58\ See id. at 1-2.
    \59\ See id.
    \60\ See id. at 2.
    \61\ See id.
    \62\ See id.
    \63\ See id.
    \64\ See id.
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    As discussed above, the Exchange submitted a response to the
commenter on the related filing.\65\ The Exchange in its Response
Letter stated that historical information about the development of
these product offerings is ``not required by the Act and is not
relevant to [[hairsp]] the substance of the Proposal-which is, by
definition, forward looking . . . .'' \66\ Additionally, the Response
Letter noted that costs are not the only consideration in setting its
prices, but rather the prices ``include the competitive landscape;
whether Users would be required to utilize a given service; the
alternatives available to Users; and, significantly, the benefits Users
obtain from the services.'' \67\ With respect to the commenter's
concern about members needing additional information to assess the
fixed costs of exchange membership, the Exchange responded that these
are not fixed costs of ``Exchange members'' but instead costs to any
User who voluntarily chooses to purchase such services based upon
``[t]he form and latency of access and connectivity that

bests suits a User's needs . . . .'' \68\ Users do not require the
Exchange's access or connectivity to trade on the Exchange and can
instead use alternative access and connectivity options for trading if
they choose.\69\
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    \65\ See Response Letter, supra note 4.
    \66\ See id. at 2.
    \67\ See id.
    \68\ See id. at 4.
    \69\ See id.
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    In response to the commenter's argument regarding different methods
of access to trading, the Exchange stated that ``it is a vendor of fair
and non-discriminatory access, and like any vendor with multiple
product offerings, different purchasers may make different choices
regarding which products they wish to purchase.'' \70\ The Exchange
further stated in response to the commenter's concern of a lack of true
alternatives for a ``comparable product'', that the filing lists
several alternative options for Users and a User can evaluate the
``relative benefits of those alternatives and choose whichever it deems
most beneficial to it . . . .'' \71\
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    \70\ See id. at 5. The Exchange makes a further argument about
the Exchange being a regulated co-location space whereas other
unregulated co-location options are available. See id.
    \71\ See id. at 6. The Exchange noted that it is not addressing
the commenter's statements about broker-dealers needing to purchase
market data from the Exchange as that is outside the scope of this
proposal. See id. at 5 n.13.
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Amendment No. 1

    In Amendment No. 1, the Exchange offers additional justification
for the proposed rule change.\72\ In Amendment No. 1, the Exchange
addressed (1) the benefits offered by the Premium NYSE Data Products
that are not present in the Included Data Products (2) how Premium NYSE
Data Products are related to the purpose of co-location, (3) the
similarity of charging for connectivity to Third Party Systems and DTCC
and charging for connectivity to Premium NYSE Data Products and (4) the
costs incurred by the Exchange in providing connectivity to Premium
NYSE Data Products to Users in the data center.\73\ In the Amendment,
the Exchange provided further detail on the benefits provided to Users
through the Premium NYSE Data Products including ``depth of book order
data (with add, modify and delete orders), trades (with corrections and
cancel/errors), opening and closing imbalance data, security status
updates (e.g., trade corrections and trading halts) and stock summary
messages.'' \74\ The Exchange also clarified which costs are associated
with providing Users with access and connectivity to the various
services discussed in the filing, including the Premium NYSE Data
Products.
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    \72\ See Amendment No. 1, supra note 6.
    \73\ See id.
    \74\ See id.; see also supra note 27 and accompanying text.
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III. Proceedings To Determine Whether To Disapprove SR-NYSEMKT-2016-63
and Grounds for Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act \75\ to determine whether the proposed rule
change, as modified by Amendment No. 1, should be approved or
disapproved. Institution of such proceedings is appropriate at this
time in view of the legal and policy issues raised by the proposed rule
change, as modified by Amendment No. 1. Institution of proceedings does
not indicate that the Commission has reached any conclusions with
respect to any of the issues involved. Rather, as described below, the
Commission seeks and encourages interested persons to provide comments
on the proposed rule change, as modified by Amendment No. 1.
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    \75\ 15 U.S.C. 78s(b)(2)(B).
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    Pursuant to Section 19(b)(2)(B) of the Act, the Commission is
providing notice of the following grounds for disapproval that are
under consideration:
     Section 6(b)(4) of the Act, 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,'' \76\
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    \76\ 15 U.S.C. 78f(b)(4).
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     Section 6(b)(5) of the Act, which requires, among other
things, that the rules of a national securities exchange be ``designed
to perfect the operation of a free and open market and a national
market system'' and ``protect investors and the public interest,'' and
not be ``designed to permit unfair discrimination between customers,
issuers, brokers, or dealers,'' \77\ and
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    \77\ 15 U.S.C. 78f(b)(5).
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     Section 6(b)(8) of the Act, which requires that the rules
of a national securities exchange ``not impose any burden on
competition not necessary or appropriate in furtherance of the purposes
of [the Act].'' \78\
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    \78\ 15 U.S.C. 78f(b)(8).
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    As discussed above, the Exchange's proposal would, among other
things, establish fees relating to a User's access to trading and
execution services, connectivity to data feeds and to testing and
certification feeds, connectivity to clearing, and other services. The
Exchange believes that the proposed fees are consistent with Sections
6(b)(4), (5), and (8) of the Act because the fees charged for co-
location services are constrained by the active competition for the
order flow and other business from such market participants.\79\ The
Exchange stated that charging excessive fees would make it stand to
lose not only co-location revenues but also the liquidity of the
formerly co-located trading firms.\80\ Additionally, the Exchange
believes that because there are alternatives for a User both in and
outside of the data center if it believes the fees are too excessive,
the fees are consistent with the Act.\81\ Specifically, the Exchange
noted that a User could terminate its co-location arrangement with the
exchange ``and adopt a possible range of alternative strategies,
including placing their servers in a physically proximate location
outside the exchange's data center (which could be a competing
exchange), or pursuing strategies less dependent upon the lower
exchange-to-participant latency associated with co-location.'' \82\
Additionally, ``[a]s alternatives to using the Access and Connectivity
provided by the Exchange, a User may access or connect to such services
and products through another User or through a connection to an
Exchange access center outside the data center, third party access
center, or third party vendor. The User may make such connection
through a third party telecommunication provider, third party wireless
network, the SFTI network, or a combination thereof.'' \83\ However,
the Exchange also stated that the expectation of co-location was that
normally Users would expect reduced latencies in sending orders to the
Exchange and in receiving market data from the Exchange by being co-
located.\84\ Therefore, as the Exchange states in Amendment No. 1, both
Included Data Products and Premium NYSE Data Products are ``directly
related to the purpose of co-location.'' \85\
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    \79\ See Notice, supra note 3, 81 FR at 58999.
    \80\ See id.
    \81\ See id.
    \82\ See id.
    \83\ See id.
    \84\ See id.
    \85\ See Amendment No. 1, supra note 6.
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    The commenter suggests that Users do not in fact have alternatives
to paying the connectivity fee to obtain Premium NYSE Data
Products.\86\ If these products are integral to co-located Users for
trading on the Exchange, the Commission questions whether obtaining the
information contained in these products from another source is, in
fact, a viable alternative given the importance of receiving such
information in a timely manner. The

Commission is concerned that the Exchange has not supported its
argument that there are viable alternatives for Users inside the data
center in lieu of obtaining such information from the Exchange. The
Commission seeks comment on whether Users do have viable alternatives
to paying the Exchange a connectivity fee for the Premium NYSE Data
Products.
---------------------------------------------------------------------------

    \86\ See IEX Letter, supra note 4.
---------------------------------------------------------------------------

    Additionally, the Exchange states that both Included Data Products
and Premium NYSE Data Products are ``directly related to the purpose of
co-location.'' The Commission is concerned that the Exchange has not
made clear why including the cost of connectivity to the Included Data
Products in the purchase of a LCN or IP network connection and charging
an additional fee to obtain the Premium NYSE Data Products is an
equitable allocation of reasonable dues, fees, and other charges among
Users in the data center; does not unfairly discriminate between
customers, issuers, brokers, or dealers; and does not impose a burden
on competition which is not necessary or appropriate in furtherance of
the purposes of the Act. The Commission is concerned that the Exchange
has not identified a distinction between the provision of connectivity
to Included Data Products and the provision of connectivity to Premium
NYSE Data Products, as opposed to a distinction between the utility of
the Included Data Products and Premium NYSE Data Products to Users,
which the Exchange has demonstrated, even though these are all NYSE
proprietary data products. Therefore, the Commission is concerned that
the Exchange has not identified a reasonable basis for charging Users a
separate connectivity fee for the Premium NYSE Data Products while
including connectivity in the purchase price for a LCN/IP network
connection. The Exchange stated in its filing that both are ``directly
related to the purpose of co-location'' but it has not clearly
justified why this permits including the connectivity fee for Included
Data Products as part of the LCN or IP Network connection, even for
those Users that do not use the Included Data Products, but not
including the connectivity fee for the Premium NYSE Data Products as
well. Similarly, the Exchange justifies the costs associated with
providing these feeds by stating ``[i]n order to offer connectivity to
the Premium NYSE Data Products, the Exchange must provide, maintain and
operate the data center facility hardware and technology
infrastructure. The Exchange must handle the installation,
administration, monitoring, support and maintenance of the
connectivity, including by ensuring that the network infrastructure has
the necessary bandwidth for the Premium NYSE Data Products and
responding to any production issues.'' \87\ The Commission does not
believe the Exchange has clearly explained why the same rationale would
not apply to the Included Data Products. The Exchange has sought to
justify this on the basis that the Premium NYSE Data Products are
similar to any other service offered by the Exchange such as
connectivity to Third Party Systems and DTCC.\88\ The Commission
however is concerned that these Premium NYSE Data Products are similar
to the Included Data Products and therefore should not include
different fee structures as they are the same offering by the Exchange
within the contemplated purpose of co-location. The Commission seeks
comment on whether charging fees for connectivity to Included Data
Products and Premium NYSE Data Products in a different manner is
consistent with Section 6(b)(4) of the Act.
---------------------------------------------------------------------------

    \87\ See Amendment No. 1, supra note 6.
    \88\ See id.
---------------------------------------------------------------------------

Procedure: Request for Written Comments

    The Commission requests that interested persons provide written
submissions of their views, data and arguments with respect to the
concerns identified above, as well as any other concerns they may have
with the proposed rule change, as modified by Amendment No. 1. In
particular, the Commission invites the written views of interested
persons concerning whether the proposal, as modified by Amendment No.
1, is consistent with Sections 6(b)(4), (5), or (8) \89\ or any other
provision of the Act, or the rules and regulations thereunder. Although
there does not appear to be any issue relevant to approval or
disapproval which would be facilitated by an oral presentation of
views, data, and arguments, the Commission will consider, pursuant to
Rule 19b-4 under the Act,\90\ any request for an opportunity to make an
oral presentation.\91\
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    \89\ 15 U.S.C. 78f(b)(4), (b)(5) and (b)(8).
    \90\ 17 CFR 240.19b-4.
    \91\ Section 19(b)(2) of the Act, as amended by the Securities
Act Amendments of 1975, Public Law 94-29 (June 4, 1975), grants to
the Commission flexibility to determine what type of proceeding--
either oral or notice and opportunity for written comments--is
appropriate for consideration of a particular proposal by a self-
regulatory organization. See Securities Act Amendments of 1975,
Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No. 75,
94th Cong., 1st Sess. 30 (1975).
---------------------------------------------------------------------------

    Interested persons are invited to submit written data, views, and
arguments regarding whether the proposal, as modified by Amendment No.
1, should be approved or disapproved by December 20, 2016. Any person
who wishes to file a rebuttal to any other person's submission must
file that rebuttal by January 3, 2017. In light of the concerns raised
by the proposed rule change, as discussed above, the Commission invites
additional comment on the proposed rule change, as modified by
Amendment No. 1, as the Commission continues its analysis of the
proposed rule change's consistency with Sections 6(b)(4), (5) and
(8),\92\ or any other provision of the Act, or the rules and
regulations thereunder. The Commission asks that commenters address the
sufficiency and merit of the Exchange's statements in support of the
proposed rule change, as modified by Amendment No. 1, in addition to
any other comments they may wish to submit about the proposed rule
change.
---------------------------------------------------------------------------

    \92\ 15 U.S.C. 78f(b)(4), (b)(5) and (b)(8).
---------------------------------------------------------------------------

    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_ADDRESS>Please include
File No. SR-NYSEMKT-2016-63 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.

All submissions should refer to File No. SR-NYSEMKT-2016-63. 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 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-NYSEMKT-2016-63, and should be submitted by December 20,
2016. Rebuttal comments should be submitted by January 3, 2017.
---------------------------------------------------------------------------

    \93\ 17 CFR 200.30-3(a)(57).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\93\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-28637 Filed 11-28-16; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register: January 2, 2008 (Volume 73, Number 1)]
[Notices]
[Page 222]
[DOCID:fr02ja08-95]

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DEPARTMENT OF TRANSPORTATION

Federal Motor Carrier Safety Administration

[Docket Nos. FMCSA-01-9561, FMCSA-05-22194]

Qualification of Drivers; Exemption Renewals; Vision

AGENCY: Federal Motor Carrier Safety Administration (FMCSA), DOT.

ACTION: Notice of final disposition.

-----------------------------------------------------------------------

SUMMARY: FMCSA previously announced its decision to renew the
exemptions from the vision requirement in the Federal Motor Carrier
Safety Regulations for 25 individuals. FMCSA has statutory authority to
exempt individuals from the vision requirement if the exemptions
granted will not compromise safety. The Agency has reviewed the
comments submitted in response to the previous announcement and
concluded that granting these exemptions will provide a level of safety
that will be equivalent to, or greater than, the level of safety
maintained without the exemptions for these commercial motor vehicle
(CMV) drivers.

FOR FURTHER INFORMATION CONTACT: Dr. Mary D. Gunnels, Director Medical
Programs Division,<PHONE_NUMBER><EMAIL_ADDRESS>FMCSA,
Department of Transportation, 1200 New Jersey Avenue, SE., Room W64-
224, Washington, DC 20590-0001. Office hours are from 8:30 a.m. to 5
p.m., Monday through Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION:

Electronic Access

    You may see all the comments online through the Federal Document
Management System (FDMS) at http://www.regulations.gov.

Background

    Under 49 U.S.C. 31136(e) and 31315, FMCSA may grant an exemption
for a 2-year period if it finds ``such exemption would likely achieve a
level of safety that is equivalent to, or greater than, the level that
would be achieved absent such exemption.'' The statutes also allow the
Agency to renew exemptions at the end of the 2-year period. The Notice
was published on November 7, 2007. The comment period ended on December
7, 2007.

Discussion of Comments

    FMCSA received no comments in this proceeding.

Conclusion

    The Agency has not received any adverse evidence on any of these
drivers that indicates that safety is being compromised. Based upon its
evaluation of the 25 renewal applications, FMCSA renews the Federal
vision exemptions for, Norman E. Braden, Levi A. Brown, Henry L.
Chastain, Thomas R. Crocker, Clinton D. Edwards, Gerald W. Fox, Ronald
K Fultz, Richard L. Gandee, John C. Holmes, John L. Hynes, John G.
Kaye, Richard H. Kind, Bobby G. LaFleur, Robert S. Larrance, John D.
McCormick, Thomas C. Meadows, Timothy S. Miller, David A. Morris, Leigh
E. Moseman, Gary T. Murray, Richard P. Stanley, Paul D. Stoddard,
Robert L. Tankersley, Jr., Scott A. Tetter, and Benny R. Toothman.
    In accordance with 49 U.S.C. 31136(e) and 31315, each renewal
exemption will be valid for 2 years unless revoked earlier by FMCSA.
The exemption will be revoked if: (1) The person fails to comply with
the terms and conditions of the exemption; (2) the exemption has
resulted in a lower level of safety than was maintained before it was
granted; or (3) continuation of the exemption would not be consistent
with the goals and objectives of 49 U.S.C. 31136 and 31315.

    Issued on: December 27, 2007.
Larry W. Minor,
Associate Administrator for Policy and Program Development.
 [FR Doc. E7-25489 Filed 12-31-07; 8:45 am]

BILLING CODE 4910-EX-P


[Federal Register: June 9, 2009 (Volume 74, Number 109)]
[Notices]
[Page 27367-27369]
[DOCID:fr09jn09-151]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60037; File No. SR-NASDAQ-2009-048]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change,
as Modified by Amendment No. 1, Thereto To Establish a New Voluntary
Flash and Cancel Order

June 3, 2009.
    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 May 20, 2009, The NASDAQ Stock Market LLC (``Nasdaq'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by Nasdaq. On May 29, 2009,
Nasdaq filed Amendment No. 1 to the proposed rule change. Nasdaq has
designated the proposed rule change, as amended, as constituting a rule
change under Rule 19b-4(f)(6) under the Act,\3\ which renders the
proposal, as amended, effective upon filing with the Commission. The
Commission is publishing this notice to solicit comments on the
proposed rule change, as amended, from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).

---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    Nasdaq proposes a rule change to establish a new voluntary Flash
and Cancel Order. The text of the proposed rule change is below.
Proposed new language is italicized; proposed deletions are in
brackets.
4751. Definitions
    The following definitions apply to the Rule 4600 and 4750 Series
for the trading of securities listed on Nasdaq or a national securities
exchange other than Nasdaq.
    (a) through (e) No Change.
    (f) The term ``Order Type'' shall mean the unique processing
prescribed for designated orders that are eligible for entry into the
System, and shall include:
    (1)-(10) No Change.
    (11) ``Flash and Cancel Orders'' are market or marketable limit
orders which are to be executed in whole or in part immediately upon
receipt by the System with any unfilled balance being displayed to
Nasdaq market participants (and market data vendors) for potential
execution for a period of time not to exceed one-half of one second. If
any unfilled balance remains after such display, such marketable
unfilled balance shall be cancelled back to the entering party, and
such nonmarketable unfilled balance shall be retained by the System for
potential execution. The System will provide an electronic method to
distinguish the Flash Order during the flash period from the System's
protected quote under Regulation NMS.
    (g) through (i) No Change.
* * * * *

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, Nasdaq 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. Nasdaq 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
    Nasdaq is proposing to establish a new voluntary Flash and Cancel
Order type. A Flash and Cancel Order will provide an optional pre-
cancellation display period for market and marketable limit orders so
designated. Under the proposal, market and marketable limit orders
designated as Flash and Cancel Orders will, after first executing to
the maximum extent possible in Nasdaq's book, have their unexecuted
portions displayed for potential execution at the NBBO such that a
trade-through will not occur, to Nasdaq market participants and market
data vendors for a period of time determined by Nasdaq which will not
exceed one-half of one second. If any unfilled balance remains after
such display, such marketable unfilled balance shall be cancelled back
to the entering party, and such non-marketable unfilled balance shall
be placed on the book for potential execution. As with other Nasdaq
order types, the attributes of the Flash and Cancel Order may be
combined with all Nasdaq non-routable order types. Nasdaq will provide
an electronic method to distinguish the Flash Order during the flash
period from the System's protected quote under Regulation NMS.
    Nasdaq notes that flash and cancel order functionality has already
been approved by the Commission for use by the CBOE Stock Exchange and
that such functionality can be expected to provide Nasdaq system users
with greater control over their trading. Except for the behavior of the
Flash and Cancel Order described here, nothing in the proposal will
modify or alter any existing rule or process related to order priority,
order execution, trade-through protection or locked or crossed markets.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 6 of the Act,\4\ in general, and with
Sections 6(b)(5) of the Act,\5\ in particular, in that the proposal 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. Nasdaq notes
that similar functionality has already been found to be consistent with
the Act by the Commission.\6\
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78f.
    \5\ 15 U.S.C. 78f(b)(5).
    \6\ Securities Exchange Act Release No. 54422 (September 11,
2006), 71 FR 54537 (September 15, 2006) (SR-CBOE-2004-21);
Securities Exchange Act Release No. 59359 (February 4, 2009), 74 FR
6927 (February 11, 2009) (SR-CBOE-2008-123).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq does not believe that the proposed rule change will result
in any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as amended.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Because the foregoing 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 for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \7\ and Rule 19b-
4(f)(6) thereunder.\8\
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6). 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.
Nasdaq has satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \9\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6) \10\ permits the Commission to
designate a shorter time if such action is consistent with the
protection of investors and the public interest. Nasdaq requests that
the Commission waive the 30-day operative delay because the Exchange
expects to have technologies in place to support the proposed rule
change, as amended, on or about June 5, 2009, and believes that the
expected benefits to Nasdaq market participants from the proposed rule
change, as amended, should not be delayed. The Commission believes that
waiving the 30-day operative delay \11\ is consistent with the
protection of

investors and the public interest and designates the proposal operative
on June 5, 2009.
---------------------------------------------------------------------------

    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate 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.\12\
---------------------------------------------------------------------------

    \12\ For purposes of calculating the 60-day period within which
the Commission may summarily abrogate the proposed rule change under
Section 19(b)(3)(C) of the Act, the Commission considers the period
to commence on May 29, 2009, the date on which the Nasdaq submitted
Amendment No. 1. See 15 U.S.C. 78s(b)(3)(C).
---------------------------------------------------------------------------

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_ADDRESS>Please include
File Number SR-NASDAQ-2009-048 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-NASDAQ-2009-048. 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 inspection
and copying 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 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 publicly available. All
submissions should refer to File Number SR-NASDAQ-2009-048 and should
be submitted on or before June 30, 2009.
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-13423 Filed 6-8-09; 8:45 am]

BILLING CODE 8010-01-P