13686 Federal Register / Vol. 76, No. 49 / Monday, March 14, 2011 / Notices 

7 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3The P, C, and number designations reflect 

differences in the shape of a cord’s plug as well a 

cord’s power throughput capability. 

4 15 U.S.C. 78f. 

5 15 U.S.C. 78f(b)(4). 

Reference Room on official business 

days between the hours of 10 a.m. and 

3 p.m. Copies of such filing also will be 

available for inspection and copying at 

the principal offices 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 

Number SR–Phlx–2011–30, and should 

be submitted on or before April 4, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.7

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–5764 Filed 3–11–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64060; File No. SR– 

NASDAQ–2011–035] 

Self-Regulatory Organizations; the 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Modify Fees 

for Co-Location Services 

March 8, 2011. 

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 March 1, 

2011, The NASDAQ Stock Market LLC 

(‘‘NASDAQ’’ or ‘‘Exchange’’) filed with 

the Securities and Exchange 

Commission (‘‘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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of the Substance 

of the Proposed Rule Change 

The Exchange proposes to modify 

pricing for co-location services. The 

Exchange will implement the proposed 

change on March 1, 2011. The text of 

the proposed rule change is available at 

http://nasdaq.cchwallstreet.com/, at the 

Exchange’s principal office, 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 Exchange is amending its colocation fee schedule to: (1) Institute a 

monthly fee of $300 for 

telecommunications and inter-cabinet 

cross connections; and (2) fees for 

additional patch and power cords. 

Under the proposal, co-location 

customers having telecommunications 

cross-connections to approved 

telecommunication carriers in the 

datacenter will be assessed a monthly 

fee of $300 per connection. For the 

convenience of its customers, the 

Exchange allows telecommunications 

carriers to maintain a presence in the 

data center free of charge. In addition, 

inter-cabinet connections to other 

customers in the datacenter will be 

likewise assessed a $300 per-month, 

per-connection fee. These fees will only 

be assessed on the customer that 

requested the initiation of the 

connection, and cross-connections 

between cabinets being used by the 

same customer will not be assessed the 

fee. 

The Exchange is also proposing to 

introduce fees for patch and power 

cords. Under the proposal, the Exchange 

will maintain an inventory of patch 

cords (ethernet and fiber optic cables) 

and power cords at the datacenter and 

make them available to customers 

should they desire to purchase them. 

The proposed fees for patch cords vary 

with their capabilities and length, with 

copper patch cord being charged at 

$4.50 + $.50 per foot; multi-mode fiber 

patch cord being priced at $20 + $1.50 

per-meter, and single-mode fiber patch 

cord priced at $24 + $.75 per-meter. For 

power cords, the Exchange proposes to 

charge $5 for 5–15P—C13 cords of two 

to four feet in length, and $10 for C14— 

C19 cords also of two to four feet in 

length.3 The Exchange is making the 

cords available as a convenience to 

customers, and notes that use of 

Exchange-provided patch and power 

cords is completely voluntary, and that 

such cords may be freely obtained by 

[sic] other vendors for use by customers 

in the datacenter. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the provisions of Section 6 of the Act,4

in general, and with Section 6(b)(4) of 

the Act,5 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 or system 

which the Exchange operates or 

controls. 

The Exchange operates in a highly 

competitive market, in which exchanges 

offer co-location services as a means to 

facilitate the trading activities of those 

members who believe that co-location 

enhances the efficiency of their trading. 

Accordingly, fees charged for colocation services are constrained by the 

active competitive [sic] for the order 

flow of such members. If a particular 

exchange charges excessive fees for colocation services, affected members will 

opt to terminate their co-location 

arrangements with that exchange, and 

adopt a possible range of alternative 

strategies, including co-locating with a 

different exchange, placing their servers 

in a physically proximate location 

outside the exchange’s data center, or 

pursuing trading strategies not 

dependent upon co-location. 

Accordingly, the exchange charging 

excessive fees would stand to lose not 

only co-location revenues but also 

revenues associated with the execution 

of orders routed to it by affected 

members. The Exchange believes that 

this competitive dynamic imposes 

powerful restraints on the ability of any 

exchange to charge unreasonable fees 

for co-location services. Moreover, all of 

the Exchange’s fees for co-location 

services are equitably allocated and 

non-discriminatory, in that all colocation customers are offered the same 

range of products and services and there 

is no differentiation among customers 

with regard to the fees charged for a 

particular product, service, or piece of 

equipment. 

It should be noted, however, that the 

costs associated with operating a comstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 76, No. 49 / Monday, March 14, 2011 / Notices 13687 

6 15 U.S.C. 78s(b)(3)(a)(ii). [sic] 

location facility, like the costs of 

operating the electronic trading facility 

with which the co-location facility is 

associated, are primarily fixed costs, 

and in the case of co-location are 

primarily the costs of renting or owning 

data center space and retaining a staff of 

technical personnel. Accordingly, the 

Exchange establishes a range of colocation fees with the goal of covering 

these fixed costs, covering less 

significant marginal costs, such as the 

cost of electricity, and earning a return 

on its investment. Because fixed costs 

must be allocated among all customers, 

the Exchange’s fee schedule reflects an 

effort to assess a range of relatively low 

fees for specific aspects of co-location 

services, which, in the aggregate, will 

allow the Exchange to cover its costs 

and earn a return on investment. 

In the case of inter-cabinet connection 

fees, the proposed fee of $300 per month 

covers the marginal costs of establishing 

and maintaining such connections, and 

also allows customers maintaining such 

connections to contribute to the fixed 

costs of data center operation. Notably, 

because telecommunications providers 

are provided with free data center space 

as a convenience to co-located 

customers, the Exchange believes that it 

is reasonable to impose charges on 

persons connecting to such providers as 

a means of defraying the fixed rental 

cost incurred in making such space 

available to the telecommunications 

providers. The Exchange further 

believes that the number of data center 

cross connections correlates to the 

extent and complexity of a customer’s 

operations within the data center. 

Accordingly, the Exchange believes that 

it is reasonable to use fees assessed on 

this basis as a means to recoup a share 

of fixed costs and earn a return on 

investment. 

The Exchange also notes that the New 

York Stock Exchange (‘‘NYSE’’) imposes 

charges for connections within the data 

center that include a $500 per month 

charge for connections between cabinets 

of the same customer, and charges for 

connectivity bundles that include a 

limited number of connections to 

telecommunications providers and 

connections within the data center for 

monthly fees ranging from $13,000 to 

$61,000 per month, depending on the 

number of connections and the 

bandwidth. NYSEArca charges $600 per 

month for all connections within its 

data center. See http://www.nyse.com/ 

pdfs/nyse_equities_pricelist.pdf at page 

14 and. http://www.nyse.com/pdfs/ 

nysearcaMarketplaceFees112011– 

Clean.pdf at p. 10. Accordingly, the 

Exchange believes that its proposed fee 

of $300 per month is reasonable in 

comparison with fees already charged 

for comparable services of other 

exchanges offering co-location. 

With respect to the Exchange’s 

proposed fees for power cords, the 

Exchange believes that its fees are a 

reasonable reflection of its costs to 

obtain and resell such cords as a 

convenience to its customers. Notably, 

the fees charged by the Exchange are 

generally comparable to prices charged 

by unregulated vendors for similar 

products. See http:// 

www.comegacity.com/cables-computer/ 

power-cables/tripp-lite-p047-002-2ft-acpower-cord-c19-c14-10; and http:// 

www.cables.com/Products/NEMA-5- 

15P-TO-IEC320-C13-13a-4-Feet_PCRD4-13A.aspx. The same is true for the 

proposed patch cord pricing. See http:// 

www.cablestogo.com/ 

product_list.asp?cat_id=3525; and 

http://www.cablestogo.com/ 

product.asp?cat_id=2323&sku=33027. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will result in 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act, as amended. 

As discussed above, the Exchange 

believes that fees for co-location 

services are constrained by the robust 

competition for order flow among 

exchanges and non-exchange markets, 

because co-location exists to advance 

that competition, and excessive fees for 

co-location services would serve to 

impair an exchange’s ability to compete 

for order flow rather than burdening 

competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act.6 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 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, as amended, is consistent with 

the Act. Comments may be submitted by 

any of the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–NASDAQ–2011–035 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–NASDAQ–2011–035. This 

file number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet website (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 on official business 

days between the hours of 10 a.m. and 

3 p.m. Copies of such filing also will be 

available for inspection and copying at 

the principal offices 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 

Number SR–NASDAQ–2011–035, and 

should be submitted on or before April 

4, 2011. 

mstockstill on DSKH9S0YB1PROD with NOTICES

13688 Federal Register / Vol. 76, No. 49 / Monday, March 14, 2011 / Notices 

7 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A)(iii). 

4 17 CFR 240.19b–4(f)(6). 

5The Exchange is also proposing to change the 

title of Rule 6.10 to ‘‘Order Types Defined.’’ 

6The allocation algorithms include base 

execution algorithms (price-time, pro-rata, and 

price-time with primary public customer priority 

and secondary trade participation right priority) 

and an optional market turner priority overlay. See 

Rule 6.12, Order Execution and Priority. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.7

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–5763 Filed 3–11–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64058; File No. SR–C2– 

2011–006] 

Self-Regulatory Organizations; C2 

Options Exchange, Incorporated; 

Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change Related to the Opening 

System 

March 8, 2011. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on March 1, 

2011, the C2 Options Exchange, 

Incorporated (‘‘Exchange’’ or ‘‘C2’’) 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 Exchange. The 

Exchange has designated the proposal as 

a ‘‘non-controversial’’ proposed rule 

change pursuant to Section 

19(b)(3)(A)(iii) of the Act 3 and Rule 

19b–4(f)(6) thereunder.4 The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to modify 

Rule 6.11, Openings (and sometimes 

Closings). The text of the proposed rule 

change is available on the Exchange’s 

Web site (http://www.c2exchange.com/ 

Legal/RuleFilings.aspx), at the 

Exchange’s Office of the Secretary and 

at the Commission. 

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 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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Rule 6.11 describes the Exchange’s 

procedures for conducting trading 

rotations. The Exchange is proposing to 

amend Rule 6.11 in various respects. 

First, to have more flexibility in a 

manner that is consistent with other C2 

rules with order eligibility provisions, 

the Exchange is proposing to amend 

Rule 6.11 to include an order eligibility 

provision. In particular, Rule 6.11 will 

be amended to provide that the 

Exchange shall designate the eligible 

order size, eligible order type, eligible 

order origin code (i.e., public customer 

orders, non-Market Maker broker-dealer 

orders, and Market Maker broker-dealer 

orders) that the System will accept for 

rotations on a class-by-class basis. The 

proposal would not, however, permit 

the Exchange to discriminate among 

individual market participants of the 

same type (e.g., permit certain marketmaker orders but not others to be 

eligible). The Rule will also be amended 

to delete a reference to spread orders 

and contingency orders not being 

eligible to participate in opening trades 

or in the determination of the opening 

price, expected opening price or 

expected opening size. (As revised, the 

Exchange would determine whether to 

designate these orders types as eligible 

on a class-by-class basis, just as it would 

for any other order type.) Any changes 

to the order eligibility parameters 

determined by the Exchange would be 

announced to C2 Participants via 

Regulatory Circular. 

This proposed change to include 

order eligibility requirements within 

Rule 6.11 is consistent with the order 

eligibility requirements contained in 

other rules, such as the order eligibility 

requirements for Rule 6.14, SAL (SAL is 

a feature that auctions marketable orders 

for price improvement over the national 

best bid and offer). The proposed rule 

change is also consistent with the 

provisions of Rule 6.10, Orders Types 

Defined,5 which provides that the 

classes and/or systems for which the 

orders types described in Rule 6.10 shall 

be available will be as provided in the 

Exchange Rules, as the context may 

indicate, or as otherwise specified via 

Regulatory Circular. 

Second, the Exchange is proposing to 

adopt new Interpretation and Policy .01 

to Rule 6.11 to provide that the 

Exchange may determine on a class-byclass basis which electronic allocation 

algorithm 6 would apply for rotations. 

Currently Rule 6.11(g) provides that, in 

determining priority of orders and 

quotes to be traded at a single clearing 

price, the System gives priority to 

public customer market orders first 

(with multiple orders ranked based on 

time priority), then to non-public 

customer market orders second (with 

multiple orders being ranked based on 

time priority), then to multiple quotes 

and orders whose price is better than 

the opening price (with multiple quotes 

and orders being ranked in accordance 

with the allocation algorithm in effect 

for the option class), then to limit orders 

and quotes at the opening price (with 

multiple orders and quotes ranked in 

accordance with the allocation 

algorithm in effect for the class). Any 

remaining marketable order(s) are then 

exposed and allocated in accordance 

with the matching algorithms in effect 

for the class. The Exchange is proposing 

to remove these specific allocation 

algorithm descriptions. Instead, the 

provision will be amended to provide 

that, in determining the priority of 

orders and quotes to be traded at a 

single clearing price, the System will 

give priority to market orders first, then 

to limit orders and quotes whose price 

is better than the opening price, and 

then to resting orders and quotes at the 

opening price. In addition, as indicated 

above, the Exchange is proposing to 

adopt new Interpretation and Policy .01 

to Rule 6.11. Proposed Interpretation 

and Policy .01 to Rule 6.11 will provide 

that the Exchange may determine on a 

class-by-class basis which electronic 

allocation algorithm would apply for 

rotations. This change will also provide 

the Exchange with additional flexibility 

to permit the allocation algorithm in 

effect for a rotation to be different from 

the allocation algorithm in effect for the 

option class. All pronouncements 

regarding allocation algorithm 

determinations by the Exchange will be 

announced to C2 Participants via 

Regulatory Circular. 

In conjunction with this change, the 

Exchange is also proposing to modify 

Rule 6.11 to codify and describe the 

mstockstill on DSKH9S0YB1PROD with NOTICES