[Federal Register Volume 81, Number 159 (Wednesday, August 17, 2016)]
[Notices]
[Pages 54877-54887]
[FR Doc No: 2016-19586]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78556; File No. SR-NYSE-2016-45]

Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing of Proposed Rule Change Amending the Co-location
Services Offered by the Exchange To Add Certain Access and Connectivity
Fees

August 11, 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 July 29, 2016, New York Stock Exchange LLC (``NYSE'' or
the ``Exchange'') 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 to amend the co-location services offered by
the Exchange as follows: (1) To 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) to establish fees relating to User's access to
trading and execution services; connectivity to data feeds and to
testing and certification feeds; access to clearing; and other
services. In addition, this proposed rule change reflects changes to
the Exchange's Price List related to these co-location services. 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 amend the co-location \4\ services offered
by the Exchange as follows: (1) To provide additional information
regarding the access to trading and execution services and connectivity
to data provided to Users \5\ with local area networks available in the
data center; and (2) to establish fees relating to Users' access to
trading and execution services; connectivity to data feeds and to
testing and certification feeds; access to clearing; and other
services.
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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.
62960 (September 21, 2010), 75 FR 59310 (September 27, 2010) (SR-
NYSE-2010-56) (the ``Original Co-location Filing''). 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. 76008 (September 29, 2015), 80 FR 60190
(October 5, 2015) (SR-NYSE-2015-40). As specified in the Price List,
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).
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    More specifically, the Exchange proposes to revise the Price List
to include:
    a. A more detailed description of the access to the trading and
execution systems of the Exchange and its Affiliate SROs (the
``Exchange Systems'') and connectivity to certain market data products
(the ``Included Data Products'') that Users receive with connections to
the Liquidity Center Network (``LCN'') and internet protocol (``IP'')
network, local area networks available in the data center;
    b. fees for connectivity to:
     Certain other market data products of the Exchange and its
Affiliate SROs (the ``Premium NYSE Data Products'' and, together with
the Included Data Products, the ``NYSE Data Products'');
     access to the execution systems of third party markets and
other content service providers (``Third Party Systems'');
     data feeds from third party markets and other content
service providers (the ``Third Party Data Feeds'');
     third party testing and certification feeds;
     Depository Trust & Clearing Corporation (``DTCC'')
services; and
    c. fees for virtual control circuits (``VCCs'') between two Users.
VCCs are unicast connections between two participants over dedicated
bandwidth.\6\
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    \6\ Information flows over existing network connections in two
formats: ``unicast'' format, which is a format that allows one-to-
one communication, similar to a phone line, in which information is
sent to and from the Exchange; and ``multicast'' format, which is a
format in which information is sent one-way from the Exchange to
multiple recipients at once, like a radio broadcast.
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    The Exchange provides access to the Exchange Systems and Third
Party Systems (together, ``Access'') and connectivity to NYSE Data
Products, Third Party Data Feeds, third party testing and certification
feeds, and DTCC (collectively, ``Connectivity'') as conveniences to
Users. Use of Access or Connectivity is completely voluntary, and
several other access and connectivity options are available to a User.
As 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
Exchange's Secure Financial Transaction Infrastructure (``SFTI'')
network, or a combination thereof.
    Similarly, the Exchange provides VCCs as a convenience to Users.
Use of a VCC is completely voluntary. As an alternative to an Exchange-
provided VCC, a User may connect to another User through a fiber
connection (``cross connect'').\7\
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    \7\ See Original Co-location Filing, supra note 4, at 59311 and
Securities Exchange Act Release No. 74222 (February 6, 2015), 80 FR
7888 (February 12, 2015) (SR-NYSE-2015-05) (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 non-User's equipment as co-location services) (the ``IP
Network Release'').
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Access to Exchange Systems and Connectivity to Included Data Products
    As the Exchange has previously stated, a User's connection to the
LCN or IP network provides it access to the Exchange Systems and
Exchange market data products.\8\ More specifically, when a User
purchases access to the LCN or IP network through 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,\9\ as part of the purchase it receives access to the Exchange
Systems and connectivity to any Included Data Products that it
selects.\10\ The Exchange proposes to revise the Price List to provide
a more detailed description of the access to the Exchange Systems and
connectivity to Included Data Products that comes with connections to
the LCN or IP network.\11\
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    \8\ See Original Co-location Filing, supra note 4, at 59311
(``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.'') and IP Network Release, supra
note 7, at 7889 (``Like the LCN, the IP network provides Users with
access to the Exchange's trading and execution systems and to the
Exchanges' proprietary market data products.''). The IP network was
previously sometimes referred to as SFTI. See id.
    \9\ See Securities Exchange Act Release Nos. 70888 (November 15,
2013), 78 FR 69907 (November 21, 2013) (SR-NYSE-2013-73); 72721
(July 30, 2014), 79 FR 45562 (August 5, 2014) (SR-NYSE-2014-37);
76369 (November 5, 2015), 80 FR 70027 (November 12, 2015) (SR-NYSE-
2015-54); and 77072 (February 5, 2016), 81 FR 7394 (February 11,
2016) (SR-NYSE-2015-53).
    \10\ As discussed below, in order to connect to an Included Data
Product, a User must have entered into a contract with the provider
of the data feed. Similarly, in order to access an Exchange System,
the User must have authorization from the Exchange or the relevant
Affiliate SRO.
    \11\ Because each Included Data Product uses part of a User's
bandwidth, a User may wish to limit the number of Included Data
Products that it receives to those that it requires. The Exchange
notes that connectivity to the LCN and IP network also includes
connectivity to Exchange Systems, as discussed under ``Connectivity
to Exchange Systems,'' below. See also note 8, supra.
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    Access to certification and testing feeds comes with the purchase
of access to the Exchange Systems and connectivity to many of the NYSE
Data Products. Such feeds, which are solely used for certification and
testing and do not carry live production data, are only available over
the IP network.\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. Test feeds provide Users an environment in
which to conduct tests with non-live data, including testing for
upcoming Exchange releases and product enhancements or the User's own
software development.
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    \12\ A User that does not have an IP network connection may
obtain an IP network circuit for purposes of testing and
certification for free for three months. See IP Network Release,
supra note 7, at 7889. A User that opted to obtain connectivity to
NYSE Data Products through another User, a telecommunication
provider, third party wireless network, or the SFTI network would
receive the corresponding testing and certification feeds.
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    The Exchange offers connectivity to NYSE Data Products in three
forms: as

a resilient feed, as ``Feed A'' or as ``Feed B.'' Resilient feeds
include two copies of the same feed, for redundancy purposes. Feed A
and Feed B are identical feeds.\13\
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    \13\ A User that wants redundancy would either choose a
resilient feed or connect to both Feed A and Feed B using two
different ports. A User may opt to connect both Feed A and Feed B to
the same port, the effect of which would be the same as if the User
had connected to a resilient feed.
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Connectivity to Exchange Systems
    As the Exchange has previously stated, Users' connections to the
LCN or IP networks include access to Exchange Systems.\14\ Accordingly,
the Exchange proposes to add language to its Price List stating the
following:
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    \14\ See note 8, supra.

    When a User purchases access to the LCN or IP network, it
receives the ability to connect to the trading and execution systems
of the NYSE, NYSE MKT and NYSE Arca (Exchange Systems), subject, in
each case, to authorization by the NYSE, NYSE MKT or NYSE Arca, as
applicable. Such connectivity includes access to the 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. A User can change the
connections it receives at any time, subject to authorization. A
User does not have to purchase access to the LCN or IP network in
order to obtain connectivity to Exchange Systems.
Connectivity to Included Data Products
    Currently, there are three categories of data feeds for which the
Exchange offers Users connectivity: Included Data Products; Premium
NYSE Data Products; and Third Party Data.\15\
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    \15\ The NYSE Data Products and Third Party Data Feeds do not
provide access or order entry to the Exchange's execution system.
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    The Included Data Products include the data feeds disseminated by
the Consolidated Tape Association (``CTA'') (such data feeds, the ``NMS
feeds''). CTA is responsible for disseminating 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.\16\ The NMS
feeds include the Consolidated Tape System and Consolidated Quote
System data streams, as well as Options Price Reporting Authority
feeds.
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    \16\ The Included Data Products do not include connectivity to
the data feeds disseminated pursuant to the ``Joint Self-Regulatory
Organization Plan Governing the Collection, Consolidation and
Dissemination of Quotation and Transaction Information for Nasdaq-
Listed Securities Traded on Exchanges on an Unlisted Trading
Privilege Basis'' (the ``UTP Plan''). The UTP Plan is responsible
for disseminating consolidated, real-time trade and quote
information in Nasdaq Stock Exchange LLC listed securities (Network
C). Connectivity to data disseminated pursuant to the UTP Plan is
available as a Third Party Data Feed.
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    In order to connect to an Included Data Product, a User enters into
a contract with the provider of such data, pursuant to which the User
is charged for the Included Data Product. After the User and data
provider enter into the contract and the Exchange receives
authorization from the provider of the data feed, the Exchange provides
the User with connectivity to the Included Data Product over the User's
LCN or IP network port. The Exchange does not charge the User
separately for such connectivity to the Included Data Product, as it is
included in the purchase of the access to the LCN or IP network.
    The Included Data Products are available over both the LCN and IP
network.\17\ For a User that purchases access to the LCN and IP
network, the Exchange works with such User to allocate its connectivity
to Included Data Products between its LCN and IP network connections.
Some Included Data Products require a network connection with a minimum
gigabyte (``Gb'') size in order to accommodate the feed. Users may
connect to an Included Data Product as a resilient feed or as
individual Feeds A and B.
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    \17\ As noted above, certification and testing feeds included
with an Included Data Product are only available over the IP
network.
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    The Included Data Products are as follows:

                                NMS Feeds
------------------------------------------------------------------------

-------------------------------------------------------------------------
NYSE:
  NYSE Alerts
  NYSE BBO
  NYSE OpenBook
  NYSE Order Imbalances
  NYSE Trades
NYSE Amex Options
NYSE Arca:
  NYSE ArcaBook
  NYSE Arca BBO
  NYSE Arca Order Imbalances
  NYSE Arca Trades
NYSE Arca Options
NYSE Bonds
NYSE MKT:
  NYSE MKT Alerts
  NYSE MKT BBO
  NYSE MKT OpenBook
  NYSE MKT Order Imbalances
  NYSE MKT Trades
------------------------------------------------------------------------

    In addition to the above list of Included Data Products, the
Exchange proposes to add the following language to the Price List:
    When a User purchases access to the LCN or IP network it receives
connectivity to any of the Included Data Products that it selects,
subject to any technical provisioning requirements and authorization
from the provider of the data feed. Market data fees for the Included
Data Products are charged by the provider of the data feed. A User can
change the Included Data Products to which it receives connectivity at
any time, subject to authorization from the provider of the data feed.
The Exchange is not the exclusive method to connect to the Included
Data Products.
Connectivity
Connectivity to Premium NYSE Data Products
    The Exchange offers Users connectivity to Premium NYSE Data
Products from the Exchange and its Affiliate SROs over Users' LCN and
IP network connections. The Exchange proposes to revise the Price List
to specify the connectivity fees for Premium NYSE Data Products.
    The Premium NYSE Data Products are equity market data products that
are variants of the equity Included Data Products that integrate, or
include data elements from, several Included Data Products.\18\ For
example, the NYSE Integrated Feed includes, among other things,
information available from three of the equity Included Data Products:
NYSE OpenBook, NYSE Trades, and NYSE Order Imbalances.\19\ The NYSE BQT
data feed includes, among other things, certain 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.\20\
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    \18\ The rule changes establishing the NYSE Integrated Feed and
NYSE MKT Integrated Feed were immediately effective in 2015, and the
rule change establishing the NYSE Arca Integrated Data Feed was
immediately effective in 2011. The NYSE Best Quote & Trades (``NYSE
BQT'') data feed was approved in 2014. See Securities Exchange Act
Release Nos. 74128 (Jan. 23, 2015), 80 FR 4951 (Jan. 29, 2015) (SR-
NYSE-2015-03) (establishing the NYSE Integrated Feed); 74127 (Jan.
23, 2015), 80 FR 4956 (Jan. 29, 2015) (SR-NYSEMKT-2015-06)
(establishing the NYSE MKT Integrated Feed); 65669 (Nov. 2, 2011),
76 FR 69311 (Nov. 8, 2011) (SR-NYSEArca-2011-78) (establishing the
NYSE Arca Integrated Feed); and 73553 (Nov. 6, 2014), 79 FR 67491
(Nov. 13, 2014) (SR-NYSE-2014-40) (establishing the NYSE Best Quote
& Trades Data Feed).
    \19\ See SR-NYSE-2015-03, supra note 18, at 4952.
    \20\ See SR-NYSE-2014-40, supra note 18, at 67491.
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    By contrast, while some of the Included Data Products include data
elements from other Included Data Products, no single Included Data
Product includes as much data as a Premium NYSE Data Product. With the
exception of NYSE Arca Order Imbalances, the equity Included Data

Products are older feeds than the Premium Data Products.\21\
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    \21\ See Securities Exchange Act Release Nos. 44138 (December 7,
2001), 66 FR 64895 (December 14, 2001) (SR-NYSE-2001-42)
(establishing fees for NYSE OpenBook); 50844 (December 13, 2004), 69
FR 76806 (December 22, 2004) (SR-NYSE-2004-53) (establishing fee for
NYSE Alerts); 59543 (March 9, 2009), 74 FR 11159 (March 16, 2009)
(establishing fee for NYSE Order Imbalances); 59290 (January 23,
2009) 74 FR 5707 (January 30, 2009) (SR-NYSE- 2009-05) (establishing
pilot program for NYSE Trades); and 62181 (May 26, 2010), 75 FR
31488 (June 3, 2010) (SR-NYSE-2010-30) (establishing NYSE BBO). See
also Securities Exchange Act Release No. 76968 (January 22, 2016),
81 FR 4689 (January 27, 2016) (establishing NYSE Arca Order
Imbalances).
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    In order to connect to a Premium NYSE Data Product, a User enters
into a contract with the provider of such data, pursuant to which it is
charged for the Premium NYSE Data Product. After the data provider and
User enter into the contract and the Exchange receives authorization
from the data provider, the Exchange provides the User with
connectivity to the Premium NYSE Data Product over the User's LCN or IP
network port. The Exchange charges the User for the connectivity to the
Premium NYSE Data Product. A User only receives, and is only charged
for, connectivity to the Premium NYSE Data Product feeds that it
selects.
    The Premium NYSE Data Products are available over both the LCN and
IP network.\22\ For a User that purchases access to the LCN and IP
network, the Exchange works with such User to allocate its connectivity
to Premium NYSE Data Products between its LCN and IP network
connections. Some Premium NYSE Data Products require a network
connection with a minimum Gb size in order to accommodate the feed.\23\
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    \22\ As noted above, certification and testing feeds included
with a Premium NYSE Data Product are only available over the IP
network.
    \23\ For example, a User connecting to the NYSE Arca Integrated
Feed, NYSE Integrated Feed or NYSE MKT Integrated Feed would need a
dedicated connection in order to connect to the A Feed or B Feed
using a 1 Gb IP network connection. In order to connect to the
resilient feeds, the User would require an LCN or IP network
connection of at least 10 Gb.
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    A User can opt to connect to a Premium NYSE Data Product as a
resilient feed or as Feed A or Feed B. Connectivity to the two
identical Feeds A and B is only available on the IP network.
    The Exchange charges a monthly recurring fee for connectivity to
Premium NYSE Data Products. The following table shows the Premium NYSE
Data Products and corresponding monthly recurring connectivity fees.

------------------------------------------------------------------------
                                                              Monthly
                                                             recurring
   Premium NYSE data product               Feed            connectivity
                                                           fee per feed
------------------------------------------------------------------------
NYSE Arca Integrated Feed......  Feed A, IP network only          $1,500
                                 Feed B, IP network only           1,500
                                 Resilient, IP network             3,000
                                  only.
                                 Resilient, LCN only....           1,500
NYSE Best Quote and Trades       Feed A, IP network only             500
 (BQT).
                                 Feed B, IP network only             500
                                 Resilient, IP network             1,000
                                  only.
                                 Resilient, LCN only....             500
NYSE Integrated Feed...........  Feed A, IP network only           1,500
                                 Feed B, IP network only           1,500
                                 Resilient, IP network             3,000
                                  only.
                                 Resilient, LCN only....           1,500
NYSE MKT Integrated Feed.......  Feed A, IP network only             300
                                 Feed B, IP network only             300
                                 Resilient, IP network               600
                                  only.
                                 Resilient, LCN only....             300
------------------------------------------------------------------------

    In addition to the connectivity fees, the Exchange proposes to add
the following language to its Price List:
    Pricing for Premium NYSE Data Products is for connectivity only.
Connectivity to Premium NYSE Data Products is subject to any technical
provisioning requirements and authorization from the provider of the
data feed. Market data fees for the Premium NYSE Data Products are
charged by the provider of the data feed. The Exchange is not the
exclusive method to connect to Premium NYSE Data Products.
Connectivity to Third Party Systems
    The Exchange proposes to revise the Price List to clarify that
Users may obtain connectivity to Third Party Systems of multiple third
party markets and other content service providers for a fee. Users
connect to Third Party Systems over the IP network.\24\ The Exchange
selects what connectivity to Third Party Systems to offer in the data
center based on User demand.
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    \24\ See IP Network Release, supra note 7, at 7889.
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    In order to obtain access to a Third Party System, a User enters
into an agreement with the relevant third party content service
provider, pursuant to which the third party content service provider
charges the User for access to the Third Party System. The Exchange
then establishes a unicast connection between the User and the relevant
third party content service provider over the IP network. The Exchange
charges the User for the connectivity to the Third Party System. A User
only receives, and is only charged for, access to Third Party Systems
for which it enters into agreements with the third party content
service provider.
    With the exception of the ICE feed,\25\ the Exchange has no
ownership interest in the Third Party Systems. Establishing a User's
access to a Third Party System does not give the Exchange any right to
use the Third Party Systems. Connectivity to a Third Party System does
not provide access or order entry to the Exchange's execution system,
and a User's connection to a Third Party System is not through the
Exchange's execution system.\26\
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    \25\ ICE is owned by the Exchange's ultimate parent,
Intercontinental Exchange, Inc., and so the Exchange has an indirect
interest in the ICE feeds. The ICE feeds include both market data
and trading and clearing services, but the Exchange includes it as a
Third Party Data Feed. In order for a User to receive an ICE feed,
ICE must provide authorization for the User to receive both data and
trading and clearing services.
    \26\ The Exchange has a dedicated network connection to each of
the Third Party Systems.

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    The Exchange charges a monthly recurring fee for connectivity to a
Third Party System. Specifically, when a User requests access to a
Third Party System, it identifies the applicable third party market or
other content service provider and what bandwidth connection it
requires.
    The monthly recurring fee the Exchange charges Users for unicast
connectivity to each Third Party System varies by the bandwidth of the
connection, as follows:

------------------------------------------------------------------------
                                                             Monthly
                                                          recurring fee
     Bandwidth of connection to Third Party System       per connection
                                                         to Third Party
                                                             System
------------------------------------------------------------------------
1Mb...................................................              $200
3Mb...................................................               400
5Mb...................................................               500
10Mb..................................................               800
25Mb..................................................             1,200
50Mb..................................................             1,800
100Mb.................................................             2,500
200 Mb................................................             3,000
1 Gb..................................................             3,500
------------------------------------------------------------------------

    The Exchange provides connectivity to the following Third Party
Systems:

Americas Trading Group (ATG)
BATS
Boston Options Exchange (BOX)
Chicago Board Options Exchange (CBOE)
Credit Suisse
International Securities Exchange (ISE)
Nasdaq
National Stock Exchange
NYFIX Marketplace

    In addition to the connectivity fees, the Exchange proposes to add
language to its Price List stating the following:

    Pricing for access to the execution systems of third party
markets and other service providers (Third Party Systems) is for
connectivity only. Connectivity to Third Party Systems is subject to
any technical provisioning requirements and authorization from the
provider of the data feed. Connectivity to Third Party Systems is
over the IP network. Any applicable fees are charged independently
by the relevant third party content service provider. The Exchange
is not the exclusive method to connect to Third Party Systems.
Connectivity to Third Party Data Feeds
    The Exchange proposes to revise the Price List to clarify that
Users may obtain connectivity to Third Party Data Feeds for a fee. The
Exchange receives Third Party Data Feeds from multiple national
securities exchanges and other content service providers at its data
center. It then provides connectivity to that data to Users for a fee.
With the exceptions of Global OTC and NYSE Global Index, Users connect
to Third Party Data Feeds over the IP network.\27\
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    \27\ See IP Network Release, supra note 7, at 7889. Users can
connect to Global OTC and NYSE Global Index over the IP network or
LCN.
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    The Exchange notes that charging Users a monthly fee for
connectivity to Third Party Data Feeds is consistent with the monthly
fee Nasdaq charges its co-location customers for connectivity to third
party data. For instance, Nasdaq charges its co-location customers
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.\28\
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    \28\ See Nasdaq Stock Market Rule 7034.
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    In order to connect to a Third Party Data Feed, a User enters into
a contract with the relevant third party market or other content
service provider, pursuant to which the content service provider
charges the User for the Third Party Data Feed. The Exchange receives
the Third Party Data Feed over its fiber optic network and, after the
data provider and User enter into the contract and the Exchange
receives authorization from the data provider, the Exchange re-
transmits the data to the User over the User's port. The Exchange
charges the User for the connectivity to the Third Party Data Feed. A
User only receives, and is only charged for, connectivity to the Third
Party Data Feeds for which it enters into contracts.
    With the exception of the Intercontinental Exchange (``ICE''),
Global OTC and NYSE Global Index feeds,\29\ the Exchange has no
affiliation with the sellers of the Third Party Data Feeds. It has no
right to use the Third Party Data Feeds other than as a redistributor
of the data. The Third Party Data Feeds do not provide access or order
entry to the Exchange's execution system. With the exception of the ICE
feeds, the Third Party Data Feeds do not provide access or order entry
to the execution systems of the third party generating the feed.\30\
The Exchange receives Third Party Data Feeds via arms-length agreements
and it has no inherent advantage over any other distributor of such
data.
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    \29\ ICE and the Global OTC alternative trading system are both
owned by the Exchange's ultimate parent, Intercontinental Exchange,
Inc., and so the Exchange has an indirect interest in the ICE and
Global OTC feeds. The NYSE Global Index feed includes index and
exchange traded product valuations data, with data drawn from the
Exchange, the Affiliate SROs, and third party exchanges. Because it
includes third party data, the NYSE Global Index feed is considered
a Third Party Data Feed. As with all Third Party Data Feeds, the
Exchange is not the exclusive method to connect to the ICE, Global
OTC or NYSE Global Index feeds.
    \30\ Unlike other Third Party Data Feeds, the ICE feeds 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.
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    The Exchange charges a monthly recurring fee for connectivity to
each Third Party Data Feed. The monthly recurring fee is per Third
Party Data Feed, with the exception that the monthly recurring feed for
SuperFeed and MSCI varies by the bandwidth of the connection. Depending
on its needs and bandwidth, a User may opt to receive all or some of
the feeds or services included in a Third Party Data Feed.
    The following table shows the feeds that connectivity to each Third
Party Data Feed provides, together with the applicable monthly
recurring fee.

------------------------------------------------------------------------
                                                              Monthly
                                                             recurring
                                                           connectivity
                  Third party data feed                    fee per third
                                                            party data
                                                               feed
------------------------------------------------------------------------
Bats BZX Exchange (BZX) and Bats BYX Exchange (BYX).....          $2,000
Bats EDGX Exchange (EDGX) and Bats EDGA Exchange (EDGA).           2,000
Chicago Board Options Exchange (CBOE)...................           2,000
Chicago Stock Exchange (CHX)............................             400
Euronext................................................             600
Financial Industry Regulatory Authority (FINRA).........             500
Global OTC..............................................             100
Intercontinental Exchange (ICE).........................           1,500
Montr[eacute]al Exchange (MX)...........................           1,000
MSCI 5 Mb...............................................             500
MSCI 20 Mb..............................................           2,000
NASDAQ Stock Market.....................................           2,000
NASDAQ OMX Global Index Data Service....................             100
NASDAQ OMDF.............................................             100
NASDAQ UQDF & UTDF......................................             500
NYSE Global Index.......................................             100
OTC Markets Group.......................................           1,000
SR Labs--SuperFeed <= 500 Mb............................             250
SR Labs--SuperFeed >500 Mb to <= 1.25 Gb................             800
SR Labs--SuperFeed >1.25 Gb.............................           1,000
TMX Group...............................................           2,500
------------------------------------------------------------------------

    In addition to the above connectivity fees, the Exchange proposes
to add the following language to its Price List:

    Pricing for data feeds from third party markets and other
content service providers (Third Party Data Feeds) is for
connectivity only. Connectivity to Third Party Data Feeds is subject
to any technical provisioning requirements and authorization from
the provider of the data feed. Connectivity to Third Party Data
Feeds is over the IP network, with the exception that Users can
connect to Global OTC and NYSE Global Index over the IP network or
LCN. Market data fees are charged independently by the relevant
third party market or content service provider. The Exchange is not
the exclusive method to connect to Third Party Data Feeds.

    Third Party Data Feed providers may charge redistribution fees,
such as Nasdaq's Extranet Access Fees and OTC Markets Group's Access
Fees.\31\ When the Exchange receives a redistribution fee, it passes
through the charge to the User, without change to the fee. The fee is
labeled as a pass-through of a redistribution fee on the User's
invoice. The Exchange proposes to add language to the Price List
accordingly.
---------------------------------------------------------------------------

    \31\ See NASDAQ Stock Market LLC Rule 7025, ``Extranet Access
Fee'', and OTC Markets Market Data Distribution Agreement Appendix
B, ``Fees'' at http://www.otcmarkets.com/content/doc/market-data-fees-2016.pdf. See also Securities Exchange Act Release No. 74040
(January 13, 2015), 80 FR 2460 (January 16, 2015) (SR-NASDAQ-2015-
003).
---------------------------------------------------------------------------

    The Exchange provides third party markets or content providers that
are also Users connectivity to their own Third Party Data Feeds. The
Exchange does not charge Users that are third party markets or content
providers for connectivity to their own feeds, as in the Exchange's
experience such parties generally receive their own feeds for purposes
of diagnostics and testing. The Exchange proposes to add language to
the Price List accordingly.
Connectivity to Third Party Testing and Certification Feeds
    The Exchange offers Users connectivity to third party certification
and testing feeds. Certification feeds are used to certify that a User
conforms to any of the relevant content service provider's requirements
for accessing Third Party Systems or receiving Third Party Data, while
testing feeds provide Users an environment in which to conduct tests
with non-live data.\32\ Such feeds, which are solely used for
certification and testing and do not carry live production data, are
available over the IP network.
---------------------------------------------------------------------------

    \32\ For example, a User that trades on a third party exchange
may wish to test the exchange's upcoming releases and product
releases or may wish to test a new algorithm in a testing
environment prior to making it live.
---------------------------------------------------------------------------

    The Exchange proposes to revise the Price List to include
connectivity to third party certification and testing feeds. The
Exchange charges a connectivity fee of $100 per month per feed.
    The Exchange proposes to add the following connectivity fees and
language to its Price List:

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

------------------------------------------------------------------------
Connectivity to third party certification   $100 monthly recurring fee
 and testing feeds.                          per feed
------------------------------------------------------------------------

    The Exchange provides connectivity to third party testing and
certification feeds provided by third party markets and other content
service providers. Pricing for third party testing and certification
feeds is for connectivity only. Connectivity to third party testing and
certification feeds is subject to any technical provisioning
requirements and authorization from the provider of the data feed.
Connectivity to third party testing and certification feeds is over the
IP network. Any applicable fees are charged independently by the
relevant third party market or content service provider. The Exchange
is not the exclusive method to connect to third party testing and
certification feeds.
Connectivity to DTCC
    The Exchange provides Users connectivity to DTCC for clearing, fund
transfer, insurance, and settlement services.\33\ The Exchange proposes
to revise the Price List to include connectivity to DTCC. The Exchange
charges a connectivity fee of $500 per month for connections to DTCC of
5 Mb and $2,500 for connections of 50 Mb. Connectivity to DTCC is
available over the IP network.
---------------------------------------------------------------------------

    \33\ 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.
---------------------------------------------------------------------------

    In order to connect to DTCC, a User enters into a contract with
DTCC, pursuant to which DTCC charges the User for the services
provided. The

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. The Exchange charges
the User for the connectivity to DTCC.
    Connectivity to DTCC does not provide access or order entry to the
Exchange's execution system, and a User's connection to DTCC is not
through the Exchange's execution system.
    The Exchange proposes to add the following connectivity fees and
language to its Price List:

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

------------------------------------------------------------------------
5 Mb connection to DTCC...................  $500 monthly recurring fee
50 Mb connection to DTCC..................  $2,500 monthly recurring fee
------------------------------------------------------------------------

    Pricing for connectivity to DTCC feeds is for connectivity only.
Connectivity to DTCC feeds is subject to any technical provisioning
requirements and authorization from DTCC. Connectivity to DTCC feeds is
over the IP network. Any applicable fees are charged independently by
DTCC. The Exchange is not the exclusive method to connect to DTCC
feeds.
Virtual Control Circuits
    Finally, the Exchange proposes to revise the Price List to offer
VCCs between two Users. VCCs are connections between two points over
dedicated bandwidth using the IP network. A VCC (previously called a
``peer to peer'' connection) is a two-way connection which the two
participants can use for any purpose.
    The Exchange bills the User requesting the VCC, but will not set up
a VCC until the other User confirms that it wishes to have the VCC set
up.
    The Exchange proposes to revise the Price List to include VCCs
between two Users. The fee for VCCs is based on the bandwidth utilized,
as follows:

------------------------------------------------------------------------
        Type of service            Description       Amount of charge
------------------------------------------------------------------------
Virtual Control Circuit between             1Mb  $200 monthly charge.
 two Users.
                                            3Mb  $400 monthly charge.
                                            5Mb  $500 monthly charge.
                                           10Mb  $800 monthly charge.
                                           25Mb  $1,200 monthly charge.
                                           50Mb  $1,800 monthly charge.
                                          100Mb  $2,500 monthly charge.
------------------------------------------------------------------------

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; \34\ 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 Affiliate
SROs.\35\
---------------------------------------------------------------------------

    \34\ 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.
    \35\ See SR-NYSE-2013-59, supra note 5 at 51766. The Affiliate
SROs have also submitted substantially the same proposed rule change
to propose the changes described herein. See SR-NYSEMKT-2016-63 and
SR-NYSEArca-2016-89.
---------------------------------------------------------------------------

    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,\36\ in general, and furthers the
objectives of sections 6(b)(5) of the Act,\37\ 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.
---------------------------------------------------------------------------

    \36\ 15 U.S.C. 78f(b).
    \37\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed changes remove impediments
to, and perfect the mechanisms of, a free and open market and a
national market system and, in general, protect investors and the
public interest because a User is provided choices with respect to its
Access and Connectivity, helping it tailor its data center operations
to the requirements of its business operations by allowing it to select
the form and latency of connectivity that best suits its needs. The
Exchange provides the Access and Connectivity as conveniences to Users.
Use of Access or Connectivity is completely voluntary, and is one of
several connectivity options available to a User. As 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.
    The Exchange believes that revising the Price List to provide a
more detailed description of the access to the Exchange Systems and
connectivity to Included Data Products that Users are provided with
their purchase of access to the LCN or IP network would remove
impediments to, and perfect the mechanisms of, a free and open market
and a national market system and, in general, protect investors and the
public interest because the proposed changes would make the
descriptions of access to the LCN and IP network more accessible and
transparent, thereby providing market participants with clarity as to
what connectivity is

included in the purchase of access to the LCN and IP network.
    The Exchange believes that providing a more detailed description of
the access to Third Party Systems and related fees, as well as the
connectivity and related fees for Premium NYSE Data Products, Third
Party Data Feeds, third party testing and certification feeds and DTCC,
would remove impediments to, and perfect the mechanisms of, a free and
open market and a national market system and, in general, protect
investors and the public interest because the proposed changes would
make the descriptions of market participants' connectivity options more
accessible and transparent, thereby providing market participants with
clarity as to what options for connectivity are available to them and
what the related costs are.
    In addition, the Exchange believes that providing connectivity to
third party testing and certification feeds removes impediments to, and
perfects the mechanisms of, a free and open market and a national
market system and, in general, protects investors and the public
interest because such feeds provide Users an environment in which to
conduct tests with non-live data, including testing for upcoming
releases and product enhancements or the User's own software
development, and allow Users to certify conformance to any applicable
technical requirements. Similarly, the Exchange believes that providing
connectivity to DTCC removes impediments to, and perfects the
mechanisms of, a free and open market and a national market system and,
in general, protects investors and the public interest because it
provides efficient connection to clearing, fund transfer, insurance,
and settlement services.
    The Exchange believes that providing Users with VCCs removes
impediments to, and perfects the mechanisms of, a free and open market
and a national market system because VCCs provide each User with an
additional option for connectivity to another User, helping it tailor
its data center operations to the requirements of its business
operations by allowing it to select the form of connectivity that best
suits its needs. The Exchange provides VCCs as a convenience to Users.
Use of a VCC is completely voluntary. As an alternative to an Exchange-
provided VCC, a User may connect to another User through a cross
connect.
    The Exchange also believes that the proposed rule change is
consistent with section 6(b)(4) of the Act,\38\ 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,
issuers, brokers or dealers.
---------------------------------------------------------------------------

    \38\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes that the proposed fees changes are consistent
with section 6(b)(4) of the Act for multiple reasons. The Exchange
operates in a highly competitive market in which exchanges offer co-
location services as a means to facilitate the trading and other market
activities of those market participants who believe that co-location
enhances the efficiency of their operations. Accordingly, fees charged
for co-location services are constrained by the active competition for
the order flow of, and other business from, such market participants.
If a particular exchange charges excessive fees for co-location
services, affected market participants will opt to terminate their co-
location arrangements with that 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.
Accordingly, the exchange charging excessive fees would stand to lose
not only co-location revenues but also the liquidity of the formerly
co-located trading firms, which could have additional follow-on effects
on the market share and revenue of the affected exchange.
    The Exchange believes that the services and fees proposed herein
are equitably allocated and not unfairly discriminatory because, in
addition to the 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). All Users that voluntarily select to
access the Exchange Systems or connect to Included Data Products would
not be subject to a charge above and beyond the fee paid for the
relevant LCN or IP network access. All Users that voluntarily select to
receive access to Third Party Systems, connectivity to Premium NYSE
Data Products, Third Party Data Feeds, third party testing and
certification feeds and DTCC, or a VCC would be charged the same amount
for the same services.
    The Exchange believes that the services and fees proposed herein
are reasonable, equitably allocated and not unfairly discriminatory
because the Exchange provides Access and Connectivity as conveniences
to Users. Use of Access or Connectivity is completely voluntary, and is
one of several connectivity options available to a User. As
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. Users that opt to use Access or
Connectivity would not receive access or connectivity that is not
available to all Users, as all market participants that contract with
the relevant market or content provider may receive access or
connectivity. Similarly, the Exchange provides VCCs between Users as a
convenience to Users. Use of a VCC is completely voluntary. As an
alternative to an Exchange-provided VCC, a User may connect to another
User through a cross connect.
    Overall, the Exchange believes that the proposed charges are
reasonable, equitably allocated and not unfairly discriminatory because
the Exchange offers Access, Connectivity, and VCCs as conveniences to
Users, and in doing so incurs certain costs. The expenses incurred and
resources expended by the Exchange generally include costs related to
the data center facility hardware and technology infrastructure;
maintenance and operational costs, such as the costs of responding to
any production issues; and the costs related to the personnel required
for initial installation and administration, monitoring, support and
maintenance of such services. Since the inception of co-location, the
Exchange has made numerous improvements to the network hardware and
technology infrastructure and has established additional administrative
controls. The Exchange has expanded the network infrastructure to keep
pace with the increased number of services available to Users,
including the increasing bandwidth required for Access and
Connectivity, including resilient and redundant feeds. For example, the
Exchange must ensure that the network infrastructure has the necessary
bandwidth for the Included Data Products as well as the Premium NYSE
Data Products, which generally require greater bandwidth. In addition,
the Exchange incurs certain costs specific to providing connectivity to
Third Party Data Feeds, Third Party Systems, third party testing and
certification feeds and

DTCC, including the costs of maintaining multiple connections to each
Third Party Data Feed, Third Party System, and DTCC, allowing the
Exchange to provide resilient and redundant connections; adapting to
any changes made by the relevant third party; and covering any
applicable fees (other than redistribution fees) charged by the
relevant third party, such as port fees.
    Co-location was created to permit Users ``to rent space on premises
controlled by the Exchange in order that they may locate their
electronic servers in close physical proximity to the Exchange's
trading and execution systems.'' \39\ The expectation was that normally
Users sending orders to the Exchange would have reduced latencies.\40\
Accordingly, the Exchange believes that including access to the
Exchange Systems with the purchase of access to the LCN or IP network
is reasonable because such access is directly related to the purpose of
co-location.
---------------------------------------------------------------------------

    \39\ Original Co-Location Filing, supra note 4, at 59310.
    \40\ Id., at 59311.
---------------------------------------------------------------------------

    The Exchange believes that including connectivity to the Included
Data products with the purchase of access to the LCN or IP network is
reasonable and not unfairly discriminatory because Users are not
required to use any of their bandwidth to access Exchange Systems or
connect to an Included Data Product unless they wish to do so. Rather,
a User only receives access to the Exchange Systems and connectivity to
the Included Data Products that it selects, and a User can change which
of such access or connections it receives at any time, subject to
authorization from the data provider or relevant Exchange or Affiliate
SRO. Including connectivity to the Included Data products with the
purchase of access to the LCN or IP network is a commercial decision.
As noted above, the Exchange operates in a highly competitive market.
If a particular exchange charges excessive fees for co-location
services--such as excessive fees for access to the local area network
within the exchange's colocation space--affected market participants
will opt to terminate their co-location arrangements with that
exchange, and adopt a possible range of alternative strategies. The
Exchange believes that including connectivity to Included Data Products
with the purchase of access to the LCN or IP network is consistent with
Nasdaq's colocation service, which, apart from an installation fee,
does not charge its co-located customers for connectivity to Nasdaq
data.\41\
---------------------------------------------------------------------------

    \41\ See Nasdaq Stock Market Rule 7034.
---------------------------------------------------------------------------

    The Exchange believes that its fees for connectivity to Premium
NYSE Data Products are reasonable because they allow the Exchange to
defray or cover the costs associated with offering Users connectivity
to Premium NYSE Data Products while providing Users the benefit of
reduced latency when connecting to data feeds that integrate, or
include data elements from, several Included Data Products. Charging
separate connectivity fees for Premium NYSE Data Products is a
commercial decision. As noted above, the Exchange operates in a highly
competitive market. If a particular exchange charges excessive fees for
co-location services--such as excessive fees for connectivity to the
exchange's market data--affected market participants will opt to
terminate their co-location arrangements with that exchange, and adopt
a possible range of alternative strategies. Although Nasdaq does not
include connectivity to any of the Premium NYSE Data Products in its
co-location services, the Exchange believes that the proposed fees are
generally consistent with the fees that a Nasdaq co-location customer
would pay for connectivity to the individual feeds included in a
Premium NYSE Data Product. For example, the NYSE Integrated Feed
includes, among other things, information available from three of the
Included Data Products: NYSE OpenBook, NYSE Trades, and NYSE Order
Imbalances. Nasdaq offers connectivity to two of those feeds, OpenBook
Ultra and NYSE Trades, for which it would charge a co-located customer
a combined monthly fee of $2,600.\42\ The Exchange believes that it is
reasonable to charge less for connectivity to the resilient Premium
NYSE Data Products on the LCN than over the IP network, because Users
do not have the option to connect to the A or B Feed over the LCN.
---------------------------------------------------------------------------

    \42\ Id.
---------------------------------------------------------------------------

    The Exchange believes that charging separate connectivity fees for
Third Party Data Feeds and access to Third Party Systems, third party
testing and certification feeds and connectivity to DTCC is reasonable
and not unfairly discriminatory because, in the Exchange's experience,
not all Users connect to Third Party Data Feeds, Third Party Systems,
third party testing and certification feeds or DTCC. By charging only
those Users that receive such connectivity, only the Users that
directly benefit from it support its cost.
    The Exchange believes the fees for connectivity to Third Party Data
Feeds are reasonable because they allow the Exchange to defray or cover
the costs associated with offering Users connectivity to Third Party
Data Feeds while providing Users the convenience of receiving such
Third Party Data Feeds within co-location, helping them tailor their
data center operations to the requirements of their business operations
by allowing them to select the form and latency of connectivity that
best suits their needs. The Exchange believes that its proposed charges
for connectivity to Third Party Data Feeds are similar to the
connectivity fees Nasdaq imposes on its co-location customers. For
instance, Nasdaq charges its co-location customers 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.\43\
---------------------------------------------------------------------------

    \43\ See Nasdaq Stock Market Rule 7034.
---------------------------------------------------------------------------

    The Exchange believes that its connectivity fees for access to
Third Party Systems are reasonable because they allow the Exchange to
defray or cover the costs associated with offering such access while
providing Users the convenience of being able to access such Third
Party Systems, helping them tailor their data center operations to the
requirements of their business operations by allowing them to select
the form and latency of connectivity that best suits their needs.
Similarly, the Exchange believes that its fees for connectivity to DTCC
are reasonable because they allow the Exchange to defray or cover the
costs associated with offering such access while providing Users the
benefit of an efficient connection to clearing, fund transfer,
insurance, and settlement services. The Exchange further believes the
fees for connectivity to Third Party Systems and DTCC are reasonable
because the monthly recurring fee the Exchange charges Users for
connectivity to each Third Party System and DTCC varies by the
bandwidth of the connection, and so is generally proportional to the
bandwidth required.
    The Exchange also believes that its connectivity fees for access to
third party testing and certification feeds are reasonable because they
allow the Exchange to defray or cover the costs associated with
offering such access while providing Users the benefit of having an
environment in which to conduct tests with non-live data, including
testing for upcoming releases and product enhancements or the User's
own software development, and to certify conformance to any applicable
technical requirements.

    The Exchange believes it is reasonable that redistribution fees
charged by providers of Third Party Data Feeds are passed through to
the User, without change to the fee. If not passed through, the cost of
the re-distribution fees would be factored into the proposed fees for
connectivity to Third Party Data Feeds. The Exchange believes that
passing through the fees makes them more transparent to the User,
allowing the User to better assess the cost of the connectivity to a
Third Party Data Feed by seeing the individual components of the cost,
i.e. the Exchange's fee and the redistribution fee.
    The Exchange believes that it is reasonable that it does not charge
third party markets or content providers for connectivity to their own
Third Party Data Feeds, as in the Exchange's experience such parties
generally receive their own feeds for purposes of diagnostics and
testing. The Exchange believes that it removes impediments to, and
perfects the mechanisms of, a free and open market and a national
market system and, in general, protects investors and the public
interest to facilitate such diagnostics and testing.
    Finally, the Exchange also believes that its fees for VCCs between
two Users are reasonable because they allow the Exchange to defray or
cover the costs associated with offering such VCCs while providing
Users the benefit of an additional option for connectivity to another
User, helping them tailor their data center operations to the
requirements of their business operations by allowing them to select
the form of connectivity that best suits their needs. As an alternative
to an Exchange-provided VCC, a User may connect to another User through
a cross connect.
    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.
    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,\44\ 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).
---------------------------------------------------------------------------

    \44\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

    The Exchange believes that providing Users with access to the
Exchange Systems and Third Party Systems and connectivity to NYSE Data
Products, Third Party Data Feeds, third party testing and certification
feeds, and DTCC does not impose any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Act
because such Access and Connectivity satisfies User demand for access
and connectivity options, and several other access and connectivity
options are available to a User. As 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.
Users that opt to use Access or Connectivity would not receive access
or connectivity that is not available to all Users, as all market
participants that contract with the relevant market or content provider
may receive access or connectivity. In this way, the proposed changes
would enhance competition by helping Users tailor their Access and
Connectivity to the needs of their business operations by allowing them
to select the form and latency of access and connectivity that best
suits their needs.
    Similarly, the Exchange believes that providing VCCs between Users
does not impose any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act because providing
VCCs satisfies User demand for an alternative to cross connects.
    The Exchange believes that revising the Price List to provide a
more detailed description of the Access and Connectivity available to
Users would make such descriptions more accessible and transparent,
thereby providing market participants with clarity as to what Access
and Connectivity is available to them and what the related costs are,
thereby enhancing competition by ensuring that all Users have access to
the same information regarding Access and Connectivity.
    Finally, the Exchange operates in a highly competitive market in
which exchanges offer co-location services as a means to facilitate the
trading and other market activities of those market participants who
believe that co-location enhances the efficiency of their operations.
Accordingly, fees charged for co-location services are constrained by
the active competition for the order flow of, and other business from,
such market participants. If a particular exchange charges excessive
fees for co-location services, affected market participants will opt to
terminate their co-location arrangements with that 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. Accordingly, the exchange charging
excessive fees would stand to lose not only co-location revenues but
also the liquidity of the formerly co-located trading firms, which
could have additional follow-on effects on the market share and revenue
of the affected exchange. 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

    Within 45 days of the date of publication of this notice in the
Federal Register or up to 90 days (i) as the Commission may designate
if it finds such longer period to be appropriate and publishes its
reasons for so finding or (ii) as to which the self-regulatory
organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule
change should be disapproved.

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_ADDRESS>Please include
File No. SR-NYSE-2016-45 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-NYSE-2016-45. 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-NYSE-2016-45, and should be
submitted on or before September 7, 2016.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\45\
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    \45\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-19586 Filed 8-16-16; 8:45 am]
 BILLING CODE 8011-01-P