Notice2022-15933
Self-Regulatory Organizations; NYSE National, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Fee Schedule Related to Colocation
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Published
July 26, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 142 (Tuesday, July 26, 2022)</title>
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[Federal Register Volume 87, Number 142 (Tuesday, July 26, 2022)]
[Notices]
[Pages 44449-44452]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-15933]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-95341; File No. SR-NYSENAT-2022-10]
Self-Regulatory Organizations; NYSE National, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its
Fee Schedule Related to Colocation
July 20, 2022.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that on July 6, 2022, NYSE National, Inc. (``NYSE National'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
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 Substance
of the Proposed Rule Change
The Exchange proposes to amend its Fee Schedule related to
colocation to specify that the NMS feeds that are included in the
Included Data Products are no longer available over the Liquidity
Center Network (``LCN''). The proposed rule change is available on the
Exchange's website at <a href="http://www.nyse.com">www.nyse.com</a>, 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.
[[Page 44450]]
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Fee Schedule related to
colocation to specify that the NMS feeds that are included in the
Included Data Products are no longer available over the Liquidity
Center Network (``LCN'').\4\
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\4\ The Exchange is an indirect subsidiary of Intercontinental
Exchange, Inc. (``ICE''). Each of the Exchange's affiliates New York
Stock Exchange LLC, NYSE American LLC, NYSE Arca, Inc., and NYSE
Chicago, Inc. (together, the ``Affiliate SROs'') has submitted
substantially the same proposed rule change to propose the changes
described herein. See SR-NYSE-2022-27, SR-NYSEAMER-2022-28, SR-
NYSEArca-2022-39, and SR-NYSECHX-2022-15.
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Background
The LCN and the IP network are the two local area networks in the
Mahwah Data Center that are available to Users.\5\ General Note 5 of
the Fee Schedule explains that when a User purchases a service that
includes 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. The Included Data Products include, among others, the
``NMS feeds,'' which are the Consolidated Tape System and Consolidated
Quote System (``CTA'' and ``CQ,'' respectively) data feeds and the
Options Price Reporting Authority (``OPRA'') data feed.\6\
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\5\ For purposes of the Exchange's colocation services, a
``User'' means any market participant that requests to receive
colocation services directly from the Exchange. See Securities
Exchange Act Release No. 83351 (May 31, 2018), 83 FR 26314 at n.9
(June 6, 2018) (SR-NYSENAT-2018-07). As specified in the Fee
Schedule, a User that incurs colocation fees for a particular
colocation service pursuant thereto would not be subject to
colocation fees for the same colocation service charged by the
Affiliate SROs.
\6\ See id.
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Before May 2020, connectivity to the NMS feeds was available on
only the LCN and IP networks. In May 2020, the Commission approved the
Exchange's proposal to offer Users access to the new ``NMS network,''
an alternate, dedicated network that connects to the NMS feeds faster
than the LCN or IP networks.\7\ Pursuant to that filing, the Exchange
amended the notes regarding the services available in colocation to
provide that if a User purchases a service that includes a 10 Gb or 40
Gb LCN or IP network connection, that service would also include a
connection to the NMS network of the same size, at no additional
charge.
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\7\ See Securities Exchange Act Release No. 88837 (May 7, 2020),
85 FR 28671 (May 13, 2020) (SR-NYSE-2019-46, SR-NYSEAMER-2019-34,
SR- NYSEArca-2019-61, SR-NYSENAT-2019-19). See also Securities
Exchange Act Release No. 88972 (May 29, 2020), 85 FR 34472 (June 4,
2020) (SR-NYSECHX-2020-18).
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Currently, the NMS feeds are available to Users on all three of the
NMS network, IP network, and LCN, but at varying speeds. The NMS feeds
are published first to the NMS network, which then republishes them to
the IP network, which then republishes them to the LCN. This means that
connectivity to the NMS feeds is fastest over the NMS network and
slowest over the LCN. This also means that receiving the NMS feeds from
more than one of these networks does not provide redundancy protection
to Users; if connectivity to the NMS feeds over the NMS network were to
be interrupted, so would connectivity to those feeds over the IP
network and LCN, since the three networks publish the NMS feeds to each
other in sequence.
Despite the Exchange's introduction of the NMS network in May 2020,
some Users have failed to avail themselves of the option to receive the
NMS feeds over that faster network at no additional cost. Other Users
have opted to receive the NMS feeds over the NMS network, but have not
yet formally asked the Exchange to stop also sending them the NMS feeds
over the other networks (i.e., IP network or LCN) for which those Users
have ports.
At the same time, traffic over the LCN has been increasing.
Increases in options trading volume in recent years on the NYSE
American Options and NYSE Arca Options exchanges have increased the
size of the market data feeds from those markets, thereby increasing
the network bandwidth requirements overall for the market data feeds of
the Exchange and the Affiliate SROs that are included in the Included
Data Products (the ``NYSE Group Market Data'' feeds) over the LCN. As a
result, the LCN connections over which some Users continue to receive
the NMS feeds are increasingly burdened as the NYSE Group Market Data
Feeds continue to grow in size.
To address these issues, the Exchange proposes to remove the NMS
feeds from the Included Data Products available on the LCN. Doing so
would permit Users to receive connectivity to the NYSE Group Market
Data feeds over their LCN connections, while the NMS feeds would remain
available to Users at no additional charge over the NMS network, at
faster speeds than they were available over the LCN.
To accomplish this change, the Exchange proposes to amend General
Note 5 of the Fee Schedule as follows (proposed addition italicized):
5. When a User purchases a service that includes 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.
Connectivity to the NMS feeds is not available over the LCN, but is
available over the IP network and the NMS network described below in
General Note 6. 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.
Application and Impact of the Proposed Changes
Currently, 34 Users receive the NMS feeds over the LCN, but 23 of
those 34 Users have access to the NMS network already enabled, such
that they also receive the NMS feeds over the NMS network. To implement
this proposal with respect to those 23 Users, the Exchange has notified
the Users that their connections to the NMS feeds over LCN will be
discontinued but that they will continue to receive the NMS feeds over
the NMS network.
The other 11 Users that receive the NMS feeds over the LCN do not
currently have NMS network access enabled, but are entitled to such
access at no additional charge, since their existing LCN service
includes a connection of the same size to the NMS network. The Exchange
has notified these 11 Users that their connections to the NMS feeds
over LCN will be discontinued, and all 11 of them have submitted orders
to begin receiving the NMS feeds over an NMS network connection at no
additional charge. The Exchange is currently in the process of
installing NMS network connections for those 11 Users.\8\
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\8\ Seven of these 11 Users also currently have access to the IP
network and could have chosen to receive the NMS feeds over their IP
network connections at no additional charge, but instead all 11 have
opted to receive the NMS feeds over the faster NMS network.
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Users would experience no interruption in their ability to connect
to the NMS feeds as a result of the proposed change, and would receive
the NMS feeds faster as a result of the proposed change. No User would
be required to purchase any additional products or services from the
Exchange to transition their NMS feed connectivity to the NMS network,
or to an IP network connection they have already purchased.
[[Page 44451]]
The proposed changes would not apply differently to distinct types
or sizes of market participants. Rather, they would apply to all Users
equally. The purchase of any colocation service is completely voluntary
and the Fee Schedule is applied uniformly to all Users.
No fees are affected by this proposal.
Implementation Date
The Exchange is in the process of transitioning all remaining Users
that receive the NMS feeds over the LCN to begin receiving the feeds
over NMS network connections at no additional charge. The Exchange
expects this transition process to be completed before October 2022.
Once that transition is complete, the Exchange proposes to implement
this rule change by Customer Notice, at which point the option of
receiving the NMS feeds over the LCN would be removed from the Fee
Schedule.
Competitive Environment
The proposed changes are not otherwise intended to address any
other issues relating to colocation 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,\9\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\10\ 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 mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest
and because it is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that discontinuing the availability of the
NMS feeds on the LCN would perfect the mechanisms of a free and open
market and a national market system and, in general, protect investors
and the public interest. Users that currently receive the NMS feeds on
the LCN would receive the same data at a faster speed via the NMS or IP
network, with no interruption of their ability to connect to the NMS
feeds. Connectivity to the NMS feeds over the NMS network would be
available at no additional charge to affected Users, since their
existing LCN service includes a connection of the same size to the NMS
network. In addition, connectivity to the NMS feeds over the IP network
would be at no additional charge to Users that have already purchased
access to the IP network. The Exchange believes that providing
connectivity to the same feeds at a faster speed at no additional
charge would perfect the mechanisms of a free and open market and a
national market system.
The Exchange believes that the proposed rule change does not
significantly affect the protection of investors or the public
interest. The proposed rule change would simply give Users that
currently receive the NMS feeds on the LCN the opportunity to receive
the same data at a faster speed via the NMS network or the IP network,
at no additional charge (if they choose to receive the NMS feeds over
the NMS network or an already-established IP network connection), with
no interruption of their ability to connect to the NMS feeds.
The Exchange believes that discontinuing the availability of the
NMS feeds on the LCN would not permit unfair discrimination between
customers, issuers, brokers, or dealers, because the proposed change
would apply equally to all Users that currently receive the NMS feeds
over the LCN. Nor does the proposed change advantage Users of the LCN
over Users of the IP network, since, as indicated in the Fee Schedule,
services that include a 10 Gb or 40 Gb LCN or IP connection also
include a connection to the NMS network of the same size, at no
additional charge.
The Exchange believes that the proposed change would facilitate
transactions in securities, remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, protect investors and the public interest because removing
the NMS feeds from the LCN would permit Users to receive connectivity
to the NYSE Group Market Data feeds over their LCN connections, while
the NMS feeds would remain available to Users at no additional charge
over the NMS network, at faster speeds than they were available over
the LCN. As noted above, increases in options trading volume in recent
years on the NYSE American Options and NYSE Arca Options exchanges have
increased the size of the market data feeds from those markets, thereby
increasing the network bandwidth requirements for the NYSE Group Market
Data feeds over the LCN.
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,\11\ 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.
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\11\ 15 U.S.C. 78f(b)(8).
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The Exchange believes that the proposed rule change would not place
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. The proposed rule change is not
designed to address any competitive issues, but rather would provide
Users that currently receive the NMS feeds on the LCN the same data at
a faster speed via the NMS or IP network, at no additional charge (if
they choose to receive the NMS feeds over the NMS network or an
already-established IP network connection), with no interruption of
their ability to connect to the NMS feeds.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \12\ and Rule 19b-4(f)(6) thereunder.\13\
Because the 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 prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\14\
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\12\ 15 U.S.C. 78s(b)(3)(A)(iii).
\13\ 17 CFR 240.19b-4(f)(6).
\14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires the Exchange to give the Commission written notice of its
intent to file the proposed rule change, along with a brief
description and text of 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. The
Exchange has satisfied this requirement.
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[[Page 44452]]
At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \15\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\15\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#9defe8f1f8b0fef2f0f0f8f3e9eeddeef8feb3faf2eb"><span class="__cf_email__" data-cfemail="5321263f367e303c3e3e363d2720132036307d343c25">[email protected]</span></a>. Please include
File Number SR-NYSENAT-2022-10 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to: Secretary,
Securities and Exchange Commission, 100 F Street NE, Washington, DC
20549-1090.
All submissions should refer to File Number SR-NYSENAT-2022-10. 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 website (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). 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 website 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 the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change. Persons submitting
comments are cautioned that we do not redact or edit personal
identifying information from comment submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSENAT-2022-10 and should
be submitted on or before August 16, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-15933 Filed 7-25-22; 8:45 am]
BILLING CODE 8011-01-P
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