Notice2025-10368
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Remove the Cabinet Proximity Option Program
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
June 9, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 109 (Monday, June 9, 2025)</title>
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[Federal Register Volume 90, Number 109 (Monday, June 9, 2025)]
[Notices]
[Pages 24305-24308]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-10368]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103174; File No. SR-NASDAQ-2025-041]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To Remove the Cabinet Proximity Option Program
June 3, 2025.
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 21, 2025, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
[[Page 24306]]
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I and II, 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 remove the Cabinet Proximity Option
program and to amend Nasdaq Rule General 8, Section 1(d) accordingly,
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/rulefilings">https://listingcenter.nasdaq.com/rulebook/nasdaq/rulefilings</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
In 2010, Nasdaq established the Cabinet Proximity Option program
(the ``Program'') where, for a monthly fee, customers can obtain an
option for future use on available currently-unused cabinet floor space
in proximity to their existing equipment.\3\ The Exchange offers
reservations for low, medium, medium/high, high density cabinets and
cabinets with power density greater than 10kW under the Program.\4\
Additionally, customers can reserve up to maximum of 20 cabinets which
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. The Program does not guarantee that reserved cabinets will be
located in close proximity to a customer's current cabinets. If the
reserving customer opts to exercise its reserved data center space, the
reserving customer has three business days from the time of the request
to formally contract with the Exchange for full payment for the
reserved cabinet space in contention or the cabinet space will be
reassigned.\5\ While the customer determines when to exercise a
reservation, in limited circumstances, the Exchange could require a
customer to exercise a reservation. In making determinations to require
exercise or relinquishment of reserved space as among numerous
customers, the Exchange takes 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.
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\3\ See Securities Exchange Act Release No. 34-62397 (June 28,
2010), 75 FR 38860 (July 6, 2010) (SR-NASDAQ-2010-019).
\4\ See General 8, Section 1(d). Low density cabinets are
cabinets with power densities less than or equal to 2.88 kilowatts
(``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).
\5\ Since the inception of the Program, the Exchange has
automated this process to enable immediate processing of a
customer's reservation, without the 3-day wait.
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The Exchange offers the Cabinet Proximity Option program as a
convenience to customers. No firms are required to reserve cabinets via
the Program and it is only for those customers that choose to co-locate
directly with the Exchange. Participants can avoid reserving cabinets
under this program (and the related fee) by (1) co-locating but not
reserving space in advance of needing it; (2) ordering cabinet space
immediately and paying cabinet fees (without reserving in advance); (3)
collocating indirectly through a vendor to defray costs; or (4) not
collocating at all.
In response to demand for additional power and cabinets, in
September 2024, the Exchange expanded its co-location services by
expanding its current data center (``NY11'') to offer power and power
distribution unit options in the new wing of the Exchange's expanded
data center (``NY11-4'') in Carteret, NJ. NY11-4 is being constructed
with additional cabinet power options that are more consistent with
power options used in other data centers across the globe. In addition
to equalized connectivity in NY11-4, the Exchange is undergoing an
equalization across its entire data center campus, including its
existing NY11 facility (``Equalization Project'').\6\
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\6\ The Equalization Project is an ambitious project to equalize
telco connectivity across the Exchange's entire data center campus,
including retrofitting equalized cabling and replacing the
infrastructure with equidistant connectivity throughout its existing
NY11 facility and the NY11-4 expansion. The Exchange estimates that
the Project will require 18-24 months to complete, commencing as of
the launch of NY11-4. Securities Exchange Act Release No. 34-101078
(Sept. 18, 2024), 89 FR 77937 (Sept. 24, 2024) (SR-NASDAQ-2024-054)
(Proposal to expand co-location services).
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Historically, customers utilized the Program to ensure they could
obtain additional cabinet floor space in proximity to their existing
equipment. The Program offers customers the option to reserve up to 20
cabinets and exercise the reservation at any time, without the
Exchange's ability to deny or delay the reservation request and
irrespective of the Exchange's capacity to honor the reservation. With
the expansion of NY11-4, and equalization of client connections within
and among NY11 and NY11-4, the Exchange believes that it is more
efficient to remove the reservation system so that it can better
allocate cabinet space for immediate use. Therefore, in an ongoing
effort to optimize power management and cabinet space, the Exchange is
proposing to retire the Cabinet Proximity Option program. Elimination
of the Program will enable the Exchange to only accept immediate orders
and unilaterally determine where to place the customer's cabinet,
allowing the Exchange to more effectively manage its capacity planning
process while undergoing its data center expansion. Similar to the
current Program, the Exchange will not guarantee that cabinets will be
located in close proximity to each other. Customers with current
cabinet reservations will be given the option to cancel the reservation
or convert their reservation to a power order in NY11-4, where the
Exchange currently has more power options. If a customer does not
choose either option before the deadline, the customer will forego the
option to exercise and all open reservations will be cancelled.\7\
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\7\ The Exchange notified its customers and provided May 2 as
their deadline to notify the Exchange of whether they would exercise
or cancel their existing reservation.
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[[Page 24307]]
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\8\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\9\ in particular, in that it is designed to promote
just and equitable principles of trade, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general to protect investors and the public interest.
For many years, customers have been able to reserve additional space in
NY11 through the Cabinet Proximity program. Expanding the data center
has allowed the Exchange to offer additional cabinet and power options.
However, the Exchange does not have an unlimited supply of power and
therefore, must manage its power allocation. As a result, in an effort
to appropriately administer its power allocation, it is reasonable for
the Exchange not to want to provide unlimited reservations with no
expiration date, that can be exercised at any time and to want to
eliminate the Program now that NY11-4 is available and the Equalization
Project is underway, which will ensure that proximity and length of
connections will be the same in NY11 and NY11-4.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
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The proposal would remove impediments and benefit the public
interest by enabling the Exchange to have more control over its
capacity planning and to efficiently manage the space and power in its
data center, thereby ensuring that customers will have sufficient
cabinet space when they need it. Customers who have utilized the
Program pay for their reserved cabinet spaces in arrears on a month-to-
month basis and have not been billed for reservations beyond April 30,
2025. Therefore, customers will have paid for a reservation up to the
time of retirement of the Program and no customer is in danger of not
receiving a reservation space that they have already paid for. As
discussed above, customers with existing cabinet reservations will be
given the option to cancel or convert their reservation.
The Exchange also believes that the proposal will not be unfairly
discriminatory, consistent with the objectives of Section 6(b)(5) of
the Act \10\ because the Exchange is terminating the Program for all
customers and all customers will continue to maintain the right to
request cabinet space for immediate use.
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\10\ 15 U.S.C. 78f(b)(5).
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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 imposes
any burden on the ability of other exchanges to compete. The Exchange
operates in a highly competitive market in which exchanges and other
vendors offer co-location services as a means to facilitate the trading
and other market activities of those market participants who believe
that colocation enhances the efficiency of their operations. By
eliminating cabinet reservations, the Exchange would align itself with
other exchanges that do not offer a similar program.\11\ Additionally,
there is no burden to intra-market competition because the program is
being terminated for all customers and the Exchange has provided all
customers the option to cancel the reservation or convert their
reservation to a power order in NY11-4 on a non-discriminatory basis.
Use of any co-location service is completely voluntary, and each market
participant can determine whether to use co-location services based on
the requirements of its business operations
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\11\ See e.g., Connectivity Fee Schedule for New York Stock
Exchange LLC, NYSE American LLC, NYSE Arca, Inc., NYSE National,
Inc. and NYSE Texas, Inc., available at <a href="https://www.nyse.com/publicdocs/nyse/Wireless_Connectivity_Fees_and_Charges.pdf">https://www.nyse.com/publicdocs/nyse/Wireless_Connectivity_Fees_and_Charges.pdf</a>. These
exchanges do not offer a cabinet reservation program.
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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 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 for 30
days from the date on which it was filed, or such shorter time as the
Commission may designate, it has become effective pursuant to Section
19(b)(3)(A)(iii) of the Act \14\ and Rule 19b-4(f)(6) \15\ thereunder.
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\12\ 15 U.S.C. 78s(b)(3)(A)(iii).
\13\ 17 CFR 240.19b-4(f)(6).
\14\ 15 U.S.C. 78s(b)(3)(A)(iii).
\15\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) under the Act
\16\ normally does not become operative prior to 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii),\17\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has requested that the Commission waive the 30-day operative delay. The
Exchange states that waiver of the operative delay will allow the
Exchange to end the Cabinet Proximity Option program on the date of
this filing without affecting any customers because the Exchange has
already provided its customers with notice of the program's termination
and an opportunity to exercise their existing reservation(s) by May 2,
2025, and no customers have been billed for reservations beyond April
30, 2025. Additionally, the Exchange states that termination of this
program does not preclude customers from ordering cabinet space
immediately and paying cabinet fees. Because the program ended on May
2, 2025, the Exchange provided its customers with notice of the
program's termination and an opportunity to exercise their reservations
before the termination date, and no customers were billed for
reservations beyond the termination date, the Commission believes the
waiver of the operative delay is consistent with the protection of
investors and the public interest because it removes from the rulebook
a program that is no longer in effect, reducing the potential for
confusion that could otherwise be present. Accordingly, the Commission
hereby waives the 30-day operative delay and designates the proposed
rule change operative upon filing.\18\
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\16\ 17 CFR 240.19b-4(f)(6).
\17\ 17 CFR 240.19b-4(f)(6)(iii).
\18\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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 necessary or
appropriate in the
[[Page 24308]]
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 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#82f0f7eee7afe1edefefe7ecf6f1c2f1e7e1ace5edf4"><span class="__cf_email__" data-cfemail="c3b1b6afa6eea0acaeaea6adb7b083b0a6a0eda4acb5">[email protected]</span></a>. Please include
file number SR-NASDAQ-2025-041 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-2025-041. 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-2025-041 and should
be submitted on or before June 30, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12), (59).
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Stephanie J. Fouse,
Assistant Secretary.
[FR Doc. 2025-10368 Filed 6-6-25; 8:45 am]
BILLING CODE 8011-01-P
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