Notice2024-11583
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Cabinet Proximity Option Fee To Establish a Reservation Fee for Cabinets With Power Densities Greater Than 10 kW
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
May 28, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 103 (Tuesday, May 28, 2024)</title>
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[Federal Register Volume 89, Number 103 (Tuesday, May 28, 2024)]
[Notices]
[Pages 46199-46201]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-11583]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100196; File No. SR-NASDAQ-2024-022]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend the Cabinet Proximity Option Fee To Establish a Reservation Fee
for Cabinets With Power Densities Greater Than 10 kW
May 21, 2024.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on May 9, 2024, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III, below, which Items have been prepared by the
Exchange. 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\ 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 the Exchange's Cabinet Proximity
Option Fee at General 8, Section 1, as described further below.
The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/nasdaq/rules">https://listingcenter.nasdaq.com/rulebook/nasdaq/rules</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 Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change \3\ is to amend the
Exchange's Cabinet Proximity Option Fee at General 8, Section 1(d) by
establishing a reservation fee for cabinets with power densities
greater than 10 kilowatts (``kW'').\4\
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\3\ The Exchange initially filed the proposed pricing change on
March 1, 2024 (SR-NASDAQ-2024-009). On March 13, 2024, the Exchange
withdrew that filing and submitted SR-NASDAQ-2024-013. On May 9,
2024, the Exchange withdrew that filing and submitted this filing.
\4\ On February 16, 2024, the Exchange filed a proposal to offer
the Exchange's Cabinet Proximity Option program for cabinets with
power densities greater than 10 kW. See Securities Exchange Act
Release No. 34-99633 (February 29, 2024), 89 FR 16073 (March 6,
2024) (SR-NASDAQ-2024-007).
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[[Page 46200]]
The Exchange currently offers a Cabinet Proximity Option program
where, for a monthly fee, customers can obtain an option for future use
on available, unused cabinet space in proximity to their existing
equipment. Cabinets reserved under the Cabinet Proximity Option program
are unused cabinets that customers reserve for future use and can be
converted to a powered cabinet at the customer's request. Under the
program, customers can reserve up to maximum of 20 cabinets that the
Exchange endeavors to provide as close as reasonably possible to the
customer's existing cabinet space, taking into consideration power
availability within segments of the data center and the overall
efficiency of use of data center resources as determined by the
Exchange. Should reserved data center space be needed for use, the
reserving customer will have three business days to formally contract
with the Exchange for full payment for the reserved cabinet space or it
will be reassigned. In making determinations to require exercise or
relinquishment of reserved space as among numerous customers, the
Exchange will take into consideration several factors, including:
proximity between available reserved cabinet space and the existing
space of a customer seeking additional space for actual cabinet usage;
a customer's ratio of cabinets in use to those reserved; the length of
time that a particular reservation(s) has been in place; and any other
factor that the Exchange deems relevant to ensure overall efficiency in
use of the data center space.\5\
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\5\ See Securities Exchange Act Release No. 34-62397 (June 28,
2010), 75 FR 38860 (July 6, 2010) (SR-NASDAQ-2010-019).
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The applicable monthly fees for the Cabinet Proximity Option
program are in General 8, Section 1(d). The Cabinet Proximity Option
fee is $1,055/month per medium or low density cabinets and $1,583/month
per medium/high or high density cabinets.\6\ The Exchange proposes to
establish a Cabinet Proximity Option fee of $3,000 for cabinets with
power densities greater than 10 kW. As such, the Exchange proposes to
amend its fee schedule at General 8, Section 1(d) to reflect the
addition to the existing Cabinet Proximity Option fees.
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\6\ Low density cabinets are cabinets with power densities less
than or equal to 2.88 kW. Medium density cabinets are cabinets with
power densities greater than 2.88 kW and less than or equal to 5 kW.
Medium/High density cabinets are cabinets with power densities
greater than 5 kW and less than or equal to 7 kW. High density
cabinets are cabinets with power densities greater than 7 kW and
less than 10 kW. See General 8, Section 1(a).
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Currently, the Exchange offers Super High Density Cabinets with
power densities greater than 10 kW and less than or equal to 17.3
kW.\7\ In addition, the Exchange intends to expand its data center and
offer cabinets with increased power densities in the future, including
power densities greater than 17.3 kW.\8\ Customers will not be liable
to pay fees under the Cabinet Proximity Option program until such time
as cabinets can be converted to powered cabinets. To be clear, the
Cabinet Proximity Option fee of $3,000 for cabinets with power
densities greater than 10 kW would apply to any such reservations in
the existing data center. Although the Exchange has an expansion of the
data center underway, the fees for the Cabinet Proximity Option program
would not apply to the expanded data center until the expansion is
operational and cabinets are available and able to be converted to
powered cabinets.\9\
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\7\ See General 8, Section 1(a).
\8\ The Exchange will submit proposed rule change(s) to the
Commission regarding any proposal to expand its services, including
a proposal to offer cabinets with new power densities.
\9\ Although the timing is subject to change, the Exchange
anticipates that the data center expansion will be complete by
September 2024.
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The proposed Cabinet Proximity Option fee of $3,000 would only be
charged to those customers that voluntarily choose to reserve cabinets
with power densities greater than 10 kW. Such option is available to
all customers. Similar to other fees related to cabinet and power
usage, the Cabinet Proximity Option fee is incremental, with higher
fees being imposed based on higher levels of cabinet and power
allocation. The proposed Cabinet Proximity Option fee of $3,000 for
cabinets with power densities greater than 10 kW is comparable to
pricing for ``PNU cabinets'' \10\ available to customers of co-location
facilities of the New York Stock Exchange LLC (``NYSE''), which charges
a monthly fee of $360 per kW for PNU cabinets.\11\
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\10\ Similar to the Exchange's Cabinet Proximity Option program,
the New York Stock Exchange offers ``PNU cabinets,'' which are
reserved cabinets that are not active and can be converted to
powered, dedicated cabinets when the user requests. Due to
heightened demand for power and cabinets, NYSE established certain
procedures related to PNU cabinet conversion and restrictions on new
PNU cabinet offerings. NYSE adopted a policy that, if unallocated
cabinet inventory is at or below 40 cabinets, new PNU cabinets are
not offered. However, when the unallocated cabinet inventory is more
than 40 cabinets, NYSE may continue to offer PNU cabinets. See
Securities Exchange Act Release No. 34-90732 (December 18, 2020), 85
FR 84443 (December 28, 2020). See also Securities Exchange Act
Release No. 34-91515 (April 8, 2021), 86 FR 19674 (April 14, 2021).
\11\ See NYSE Connectivity Fee Schedule, available at <a href="https://www.nyse.com/publicdocs/Wireless_Connectivity_Fees_and_Charges.pdf">https://www.nyse.com/publicdocs/Wireless_Connectivity_Fees_and_Charges.pdf</a>.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\12\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\13\ in particular, in that it
provides for the equitable allocation of reasonable dues, fees and
other charges among members and issuers and other persons using any
facility, and is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(4) and (5).
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First, the proposal is reasonable because the proposed fee is
comparable to NYSE's monthly fee of $360 per kW for PNU cabinets.\14\
As noted above, NYSE offers ``PNU cabinets,'' which are reserved
cabinets that are not active and can be converted to powered, dedicated
cabinets when the user requests.\15\ The Exchange's proposal would
establish a flat $3,000 Cabinet Proximity Option fee for cabinets with
power densities greater than 10 kW. Under NYSE's fee schedule, a
reservation for a cabinet with power density equal to 10 kW would be
$3,600 (e.g., 10 kW x $360). Because NYSE's PNU cabinet fees are
charged on a per kW basis, PNU cabinet fees for cabinets with power
densities greater than 10 kW would be more than $3,600 and increase as
the power density of the cabinet increases. Therefore, Nasdaq's
proposal reflects a discounted price to reserve such cabinets as
compared to NYSE's fees for comparable PNU cabinets.
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\14\ See NYSE Connectivity Fee Schedule, available at <a href="https://www.nyse.com/publicdocs/Wireless_Connectivity_Fees_and_Charges.pdf">https://www.nyse.com/publicdocs/Wireless_Connectivity_Fees_and_Charges.pdf</a>.
\15\ Supra note 10.
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Furthermore, the Exchange offers the Cabinet Proximity Option
program as a convenience to customers, providing an option to reserve
unused cabinet space in proximity to their existing equipment. No firms
are required to reserve cabinets via the Cabinet Proximity Option
program. Clients may simply order cabinets without utilizing
reservations. The proposed Cabinet Proximity Option fee of $3,000 would
only be charged to those customers that voluntarily choose to reserve
cabinets with power densities greater than 10 kW and such option is
available to all customers.
The Exchange believes substitutable products and services are
available to market participants, including, among
[[Page 46201]]
other things, other equities and options exchanges that a market
participant may connect to in lieu of the Exchange,\16\ connectivity to
the Exchange via a third-party reseller of connectivity, and/or trading
of equities or options products within markets which do not require
connectivity to the Exchange, such as the Over-the-Counter (OTC)
markets. Market participants that wish to connect to the Exchange will
continue to choose the method of connectivity based on their specific
needs. Market participants that wish to connect to the Exchange but
want to avoid or mitigate the effect of this proposed fee can choose to
connect to the Exchange through a vendor (or order cabinets without
reservations, as noted above).
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\16\ There are currently 16 registered equities exchanges that
trade equities and 17 exchanges offering options trading services.
No single equities exchange has more than 15% of the market share.
See Cboe Global Markets, U.S. Equities Market Volume Summary, Month-
to-Date (Last updated January 11, 2024), available at <a href="https://www.cboe.com/us/equities/market_statistics/">https://www.cboe.com/us/equities/market_statistics/</a>. No single options
exchange trades more than 14% of the options market by volume and
only one of the 17 options exchanges has a market share over 10
percent. See Nasdaq, Options Market Statistics (Last updated January
11, 2024), available at <a href="https://www.nasdaqtrader.com/Trader.aspx?id=OptionsVolumeSummary">https://www.nasdaqtrader.com/Trader.aspx?id=OptionsVolumeSummary</a>. This broad dispersion of market
share demonstrates that market participants can and do exercise
choice in trading venues. Further, low barriers to entry mean that
new exchanges may rapidly enter the market and offer additional
substitute platforms to further compete with the Exchange and the
products it offers.
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In offering the Cabinet Proximity Option the Exchange incurs
certain costs, including costs related to the data center, including
maintaining an adequate level of power so that reserved cabinets can be
available and powered on promptly at the request of customers.
If the Exchange is incorrect in its determination that the proposed
fee reflects the value of the Cabinet Proximity Option for cabinets
with power densities greater than 10 kW, customers will not reserve
such cabinets.
In summary, the proposal represents an equitable allocation of
reasonable dues, fees and other charges because the proposed fee is
less than NYSE's fee for a comparable service, customers have choices
in how they connect to the Exchange, and reservations under the Cabinet
Proximity Option program are optional and provided as a convenience to
customers.
The Exchange believes that the proposed fee change is not unfairly
discriminatory because the Cabinet Proximity Option fee is assessed
uniformly across all market participants that voluntarily select the
option, which is available to all customers. All customers have the
choice of whether and how to connect to the Exchange and may order
cabinets without utilizing reservations.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
Nothing in the proposal burdens inter-market competition because
approval of the proposal does not impose any burden on the ability of
other exchanges to compete. The Exchange operates in a highly
competitive market in which market participants can determine whether
or not to connect to the Exchange based on the value received compared
to the cost of doing so. Indeed, market participants have numerous
alternative exchanges that they may participate on and direct their
order flow, as well as off-exchange venues, where competitive products
are available for trading.
Nothing in the proposal burdens intra-market competition because
the Cabinet Proximity Option program is available to any customer under
the same fees as any other customer, and any customer that wishes to
reserve a cabinet pursuant to the Cabinet Proximity Option program can
do so on a non-discriminatory basis.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\17\
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\17\ 15 U.S.C. 78s(b)(3)(A)(ii).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or 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
<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#6113140d044c020e0c0c040f1512211204024f060e17"><span class="__cf_email__" data-cfemail="057770696028666a6868606b7176457660662b626a73">[email protected]</span></a>. Please include
file number SR-NASDAQ-2024-022 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-NASDAQ-2024-022. 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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-NASDAQ-2024-022 and should
be submitted on or before June 18, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-11583 Filed 5-24-24; 8:45 am]
BILLING CODE 8011-01-P
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