[Federal Register Volume 88, Number 224 (Wednesday, November 22, 2023)]
[Notices]
[Pages 81449-81454]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-25771]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98964; File No. SR-NYSEARCA-2023-79]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the 
Connectivity Fee Schedule

November 16, 2023.
    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 November 9, 2023, NYSE Arca, Inc. (``NYSE Arca'' 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 Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Connectivity Fee Schedule 
regarding colocation services and fees to provide Users with wireless 
connectivity to CME Group market data. The proposed rule change is 
available on the Exchange's website 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Connectivity Fee Schedule (``Fee 
Schedule'') regarding colocation services and fees to provide Users \4\ 
with wireless connectivity to CME Group market data.\5\
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    \4\ 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. 76010 (September 29, 2015), 80 FR 60197 
(October 5, 2015) (SR-NYSEArca-2015-82). 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 
Exchange's affiliates the New York Stock Exchange LLC, NYSE American 
LLC, NYSE Chicago, Inc., and NYSE National, Inc. (together, the 
``Affiliate SROs''). Each Affiliate SRO has submitted substantially 
the same proposed rule change to propose the changes described 
herein. See SR-NYSE-2023-44, SR-NYSEAMER-2023-59, SR-NYSECHX-2023-
22, and SR-NYSENAT-2023-26.
    \5\ The Exchange filed a similar proposal in 2021, which it 
subsequently withdrew. See Securities Exchange Act Release No. 93810 
(December 17, 2021), 86 FR 73026 (December 23, 2021) (SR-NYSE-2021-
67, SR-NYSEAMER-2021-43, SR-NYSEARCA-2021-97, SR-NYSECHX-2021-17, 
SR-NYSENAT-2021-23).
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    The Exchange currently provides Users with wireless connections to 
eight market data feeds or combinations of feeds from third-party 
markets (the ``Existing Third Party Data''),\6\ and wired connections 
to more than 45 market data feeds or combinations of feeds.\7\ The 
Exchange proposes to add to the Fee Schedule wireless connections to 
CME Group, Inc. (``CME Group'') market data (``CME Group Data'' and, 
together with the Existing Third Party Data, the ``Third Party Data''). 
Users would be offered the proposed wireless connection to the CME 
Group Data through connections into the colocation center in the 
Mahwah, New Jersey data center (``MDC'').\8\
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    \6\ See Securities Exchange Act Release Nos. 76749 (December 23, 
2015), 80 FR 81640 (December 30, 2015) (SR-NYSEArca-2015-99); 78377 
(July 21, 2016), 81 FR 49327 (July 27, 2016) (SR-NYSEARCA-2016-99); 
and 80116 (February 28, 2017), 82 FR 12663 (March 6, 2017) (SR-
NYSEArca-2017-18).
    \7\ See Securities Exchange Act Release No. 80310 (March 24, 
2017), 82 FR 15763 (March 30, 2017) (SR-NYSEArca-2016-89).
    \8\ Through its Fixed Income and Data Services (``FIDS'') 
(previously ICE Data Services) business, Intercontinental Exchange, 
Inc. (``ICE'') operates the MDC. The Exchange and the Affiliate SROs 
are indirect subsidiaries of ICE. The proposed service would be 
provided by FIDS pursuant to an agreement with a non-ICE entity. 
FIDS does not own the wireless network that would be used to provide 
the service.
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    The Exchange expects that the proposed rule change would become

[[Page 81450]]

operative in the fourth quarter of 2023, and in any event, no later 
than December 31, 2023. The Exchange will announce the date that the 
wireless connection to the CME Group Data will be available through a 
customer notice.
    To receive CME Group Data, the User would enter into an agreement 
with a third party for permission to receive the data, if required. The 
User would pay this third party any fees for the data content.
    The Exchange proposes to revise the Fee Schedule to reflect fees 
related to the wireless connection to CME Group Data. For each wireless 
connection to CME Group Data, a User would be charged a $5,000 non-
recurring initial charge and a monthly recurring charge of $6,000. If a 
User were to purchase more than one wireless connection to CME Group 
Data, it would pay more than one non-recurring initial charge. Each 
proposed wireless connection would include the use of one port for 
connectivity to CME Group Data, and a User would not pay a separate fee 
for the use of such port.\9\
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    \9\ If a User also connects to Existing Third Party Data, it 
would not be able to connect to such Existing Third Party Data using 
the same port that it uses for connectivity to CME Group Data.
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    The Exchange's proposed wireless connectivity to CME Group market 
data would not include the entire CME Group market data feed, which 
includes market data for approximately 1,200 futures symbols. Wireless 
bandwidth capacity is a small fraction of the capacity required to 
transport the full CME Group feed. Accordingly, FIDS has consulted with 
customers about which of the CME Group symbols they would like to be 
available wirelessly and plans to offer connectivity to a subgroup of 
symbols based on this customer feedback. The Exchange understands that 
Quincy Data LLC (``Quincy''),\10\ a third party that already provides 
wireless connectivity to CME Group market data in the MDC, similarly 
provides wireless connectivity to a subset of CME Group market data 
based on customer demand for particular symbols.\11\
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    \10\ The Exchange understands that Quincy is an affiliate of 
McKay Brothers LLC.
    \11\ The Exchange understands that the third parties that 
provide wireless connectivity to CME Group market data to the MDC 
and other data centers in New Jersey (as discussed later in this 
filing) follow a substantially similar model, offering wireless 
connectivity to a selection of market data rather than to entire 
feeds.
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Application and Impact of the Proposed Changes
    The proposed changes would not apply differently to distinct types 
or sizes of market participants. Rather, they would apply to all Users 
equally.
    As is currently the case, the purchase of any colocation service, 
including connectivity to Third Party Data, is completely voluntary and 
the Fee Schedule is applied uniformly to all Users.
Competitive Environment
    The Exchange operates in a highly competitive market in which other 
vendors offer colocation 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. The 
Commission has repeatedly expressed its preference for competition over 
regulatory intervention in determining prices, products, and services 
in the securities markets. Specifically, in Regulation NMS, the 
Commission highlighted the importance of market forces in determining 
prices and SRO revenues and, also, recognized that current regulation 
of the market system ``has been remarkably successful in promoting 
market competition in its broader forms that are most important to 
investors and listed companies.'' \12\
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    \12\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005).
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    As explained below in this filing, the Exchange's proposed wireless 
connection to CME Group Data would compete with the wireless connection 
to CME Group market data provided by Quincy. Third-party vendors such 
as Quincy are not at any competitive disadvantage created by the 
Exchange.
    The proposed change is not otherwise intended to address any other 
issues relating to colocation services 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,\13\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\14\ 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. The Exchange further believes 
that the proposed rule change is consistent with Section 6(b)(4) of the 
Act,\15\ because it provides for the equitable allocation of reasonable 
dues, fees, and other charges among its members and issuers and other 
persons using its facilities and does not unfairly discriminate between 
customers, issuers, brokers, or dealers.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
    \15\ 15 U.S.C. 78f(b)(4).
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The Proposed Change Is Reasonable
    The Exchange believes that the proposed rule change is reasonable. 
In considering the reasonableness of proposed services and fees, the 
Commission's market-based test considers ``whether the exchange was 
subject to significant competitive forces in setting the terms of its 
proposal . . . , including the level of any fees.'' \16\ If the 
Exchange meets that burden, ``the Commission will find that its 
proposal is consistent with the Act unless `there is a substantial 
countervailing basis to find that the terms' of the proposal violate 
the Act or the rules thereunder.'' \17\ Here, the Exchange is subject 
to significant competitive forces in setting the terms on which it 
offers its proposal, in particular because substantially similar 
substitutes are available, and the Exchange has not placed the third 
party vendors at a competitive disadvantage created by the Exchange.
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    \16\ See Securities Exchange Act Release No. 90209 (October 15, 
2020), 85 FR 67044, 67049 (October 21, 2020) (Order Granting 
Accelerated Approval to Establish a Wireless Fee Schedule Setting 
Forth Available Wireless Bandwidth Connections and Wireless Market 
Data Connections) (SR-NYSE-2020-05, SR-NYSEAMER-2020-05, SR-
NYSEArca-2020-08, SR-NYSECHX-2020-02, SR-NYSENAT-2020-03, SR-NYSE-
2020-11, SR-NYSEAMER-2020-10, SR-NYSEArca-2020-15, SR-NYSECHX-2020-
05, SR-NYSENAT-2020-08) (``Wireless Approval Order''), citing 
Securities Exchange Act Release No. 59039 (December 2, 2008), 73 FR 
74770, 74781 (December 9, 2008) (``2008 ArcaBook Approval Order''). 
See NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
    \17\ See Wireless Approval Order, supra note 16, at 67049, 
citing 2008 ArcaBook Approval Order, supra note 16, at 74781.
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Substantially Similar Substitutes Are Available
    The Exchange's proposed wireless connection to CME Group Data would 
compete with other methods by which both the Exchange and various third 
parties already provide connectivity to CME Group market data to Users.
    Quincy already provides wireless connectivity to CME Group market 
data in the MDC. Like the Exchange's

[[Page 81451]]

proposed wireless connectivity, Quincy's wireless connectivity to CME 
Group market data includes a similarly-sized subset of symbols that 
almost completely overlaps with the symbols for which the Exchange 
proposes to provide wireless connectivity--presumably because customers 
have requested the same symbols of each provider. Specifically, like 
the Quincy wireless connection, the Exchange's proposed wireless 
connection would include the main futures for equity indices, 
government bonds, foreign exchanges, oil, and precious metals.\18\ In 
addition, the Exchange's proposed wireless connection would also 
include several additional symbols that proposed Users have 
specifically requested be included. The Exchange plans to continuously 
monitor Users' preferences and their views of the usefulness of the 
included symbols, and may adjust them accordingly. The Exchange 
believes that the Quincy wireless connection to CME Group market data 
is at a same or similar speed as the Exchange's proposed connection, 
and at a similar price.\19\
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    \18\ Quincy's symbol list for wireless connectivity to CME Group 
data is available at https://www.quincy-data.com/product-page/ 
under the heading ``2023 Quincy Extreme Data Symbol Set/North 
America QED Symbol Set.'' The Exchange understands that the Quincy 
wireless connection to CME Group data currently includes 26 symbols. 
The Exchange's proposed wireless connection to CME Group data would 
contain a similar number of symbols, nearly all of which are 
included in the Quincy wireless connection.
    \19\ Because Quincy is not a regulated entity, it is not 
obligated to make its latency figures or fees publicly available or 
the same for all entities.
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    Accordingly, the Quincy wireless connection to CME Group market 
data would compete with the Exchange's proposed wireless connection, 
and would exert significant competitive forces on the Exchange in 
setting the terms of its proposal, including the level of the 
Exchange's proposed fees.\20\ If the Exchange were to set its proposed 
fees too high, Users could respond by instead selecting Quincy's 
substantially similar wireless connectivity to CME Group data.\21\
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    \20\ See 2008 ArcaBook Approval Order, supra note 16, at 74789 
and n.295 (recognizing that products need not be identical to be 
substitutable).
    \21\ In addition, the Exchange believes that at least two third-
party market participants, in addition to FIDS, offer fiber 
connections to CME Group market data in colocation. See Securities 
Exchange Act Release No. 81013 (June 23, 2017), 82 FR 29604 (June 
29, 2017) (SR-NYSEARCA-2017-62). Unlike the proposed wireless 
connectivity, FIDS' fiber connection to CME Group market data 
includes the entire CME Group data feed, instead of a subset of 
symbols.
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Third Party Competitors Are Not at a Competitive Disadvantage Created 
by the Exchange
    The Exchange does not believe that FIDS would have any competitive 
advantage over either the existing third-party provider or any future 
providers of wireless connectivity to CME Group market data. The 
Exchange's proposed service for connectivity to CME Group Data does not 
have any special access to or advantage within the MDC. The Exchange's 
proposed wireless connection would lead to a pole, from which a fiber 
connection would lead into the MDC. The pole is owned by a third party 
and is not on the grounds of the MDC, and the path into the MDC through 
a meet-me-room is available to any telecommunications provider. Within 
the MDC, the proposed connection would follow the same route as that of 
any User, connecting to equipment in colocation and then to any Users 
that are customers.
    Further, all distances in the MDC are normalized and Exchange rules 
require that the distance from the Patch Panel Point to each User 
cabinet in colocation be the same.\22\ Every provider of wireless 
connectivity to Users, including FIDS, is connected to the Patch Panel 
Point, and the length of the fiber path from the Patch Panel Point to 
each User cabinet in colocation is the same.
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    \22\ See NYSE Rule 3.13(c), NYSE American Rule 3.13E(c), NYSE 
Arca Rule 3.13(c), NYSE Chicago Rule 3.13(c), and NYSE National Rule 
3.13(c) (Data Center Pole Restrictions--Connectivity to Co-Location 
Space). ``Patch Panel Point'' is defined as ``the patch panel where 
fiber connections for wireless services connect to the network row 
in the space used for co-location in the Data Center.'' Id. The 
proposed service would not use the MDC pole, so Rule 3.13(b) would 
not apply.
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    Nor does the Exchange have a competitive advantage over the third-
party competitors offering wireless connectivity to CME Group market 
data by virtue of the fact that it owns and operates the MDC's meet-me-
rooms. Users purchasing wireless connectivity to CME Group market 
data--like Users of any other colocation service--would require a 
circuit connecting out of the MDC, and in most cases, such circuits are 
provided by third-party telecommunications service providers that have 
installed their equipment in the MDC's two meet-me-rooms 
(``Telecoms'').\23\ Currently, 16 Telecoms operate in the meet-me-rooms 
and provide a variety of circuit choices. It is in the Exchange's best 
interest to set the fees that Telecoms pay to operate in the meet-me-
rooms at a reasonable level \24\ so that market participants, including 
Telecoms, will maximize their use of the MDC. By setting the meet-me-
room fees at a reasonable level, the Exchange encourages Telecoms to 
participate in the meet-me-rooms and to sell circuits to Users for 
connecting into and out of the MDC. These Telecoms then compete with 
each other by pricing such circuits at competitive rates. These 
competitive rates for circuits help draw in more Users and Hosted 
Customers to the MDC, which directly benefits the Exchange by 
increasing the customer base to whom the Exchange can sell its 
colocation services, which include cabinets, power, ports, and 
connectivity to many third-party data feeds, and because having more 
Users and Hosted Customers leads, in many cases, to greater 
participation on the Exchange. In this way, by setting the meet-me-room 
fees at a level attractive to telecommunications firms, the Exchange 
spurs demand for all of the services it sells at the MDC, while setting 
the meet-me-room fees too high would negatively affect the Exchange's 
ability to sell its services at the MDC.\25\ Accordingly, there are 
real constraints on the meet-me-room fees the Exchange charges, such 
that the Exchange does not have an advantage in terms of costs when 
compared to third parties that enter the MDC through the meet-me-rooms 
to provide services to compete with the Exchange's services.
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    \23\ Note that in the case of wireless connectivity, a User in 
colocation still requires a fiber circuit to transport data. If a 
Telecom is used, the data is transmitted wirelessly to the relevant 
pole, and then from the pole to the meet-me-room using a fiber 
circuit.
    \24\ See Securities Exchange Act Release No. 98000 (July 26, 
2023), 88 FR 50244 (August 1, 2023) (SR-NYSEARCA-2023-47) (``MMR 
Notice'').
    \25\ See id. at 50247. Importantly, the Exchange is prevented 
from making any alteration to its meet-me-room services or fees 
without filing a proposal for such changes with the Commission.
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    If anything, the Exchange is subject to a competitive disadvantage 
vis-[agrave]-vis third-party competitors offering wireless connectivity 
to CME Group market data. Third-party competitors are not subject to 
the Commission's filing requirements, and therefore can freely change 
their services and pricing in response to competitive forces. In 
contrast, the Exchange's service and pricing would be standardized as 
set out in this filing, and the Exchange would be unable to respond to 
pricing pressure from its competitors without seeking a formal fee 
change in a filing before the Commission.
    In sum, because the Exchange is subject to significant competitive 
forces in setting the terms on which it offers its proposal, in 
particular because a substantially similar substitute is available, and 
the Exchange has not

[[Page 81452]]

placed the third-party vendors at a competitive disadvantage created by 
the Exchange, the proposed fees for the Exchange's wireless 
connectivity to CME Group Data are reasonable.\26\ If the Exchange were 
to set its prices for wireless connectivity to CME Group Data at a 
level that Users found to be too high, Users could easily choose to 
connect to CME Group market data in colocation at the MDC through the 
competing Quincy wireless connection, as detailed above.
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    \26\ See Wireless Approval Order, supra note 16.
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Additional Considerations
    The Exchange believes that it is reasonable for the proposed 
wireless connection to CME Group Data not to transport information for 
all of the symbols included in CME Group data feeds to the MDC, but 
rather to transport a subset of that data. Wireless bandwidth capacity 
is a small fraction of the capacity required to transport the full CME 
Group feed. The Exchange believes it is reasonable for FIDS to select 
the symbols it will make available for wireless connectivity based on 
customer input and demand. The Exchange understands that Quincy 
similarly provides wireless connectivity to a subset of CME Group 
market data based on customer demand for particular symbols.
    The Exchange believes that it is reasonable that a User that 
connects to both CME Group Data and Existing Third Party Data may not 
use the same port for connectivity to both, and so would have at least 
two ports, because the proposed wireless connection would include the 
use of one port for connectivity to CME Group Data, and the 
connectivity to the Existing Third Party Data includes the use of one 
port for connectivity to Existing Third Party Data. A User would not 
pay a separate fee for using such ports.
The Proposed Change Is an Equitable Allocation of Fees and Credits
    The Exchange believes that its proposal equitably allocates its 
fees among Users. Without this proposed rule change, Users would have 
fewer options for connectivity to CME Group market data. The proposed 
change would provide Users with an additional choice with respect to 
the form and optimal latency of the connectivity they use to receive 
CME Group market data, allowing a User to select the connectivity that 
better suits its needs, helping it tailor its colocation operations to 
the requirements of its business operations. Users that do not opt to 
utilize the Exchange's proposed wireless connection would still be able 
to obtain CME Group market data wirelessly using Quincy's wireless 
connection.
    The Exchange believes that the proposed change is equitable because 
it will result in fees being charged only to Users that voluntarily 
select to receive the corresponding services and because those services 
will be available to all Users. Furthermore, the Exchange believes that 
the services and fees proposed herein are equitably allocated 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 
the Exchange's proposed wireless connections to CME Group Data would be 
charged the same amount for the same services.
The Proposed Change Is Not Unfairly Discriminatory
    The Exchange believes that the proposed rule change is not unfairly 
discriminatory, for the following reasons. Without this proposed rule 
change, Users would have fewer options for connectivity to CME Group 
Data. The proposed change would provide Users with an additional choice 
with respect to the form and optimal latency of the connectivity they 
use to receive CME Group market data, allowing a User to select the 
connectivity that better suits its needs, helping it tailor its 
colocation operations to the requirements of its business operations. 
Users that do not opt to utilize the Exchange's proposed wireless 
connection would still be able to obtain CME Group market data 
wirelessly using Quincy's wireless connection.
    The Exchange believes that it is not unfairly discriminatory to not 
transport information for all of the symbols included in CME Group data 
feeds to the MDC, but rather to transport a subset of that data. There 
is limited bandwidth available on the wireless network to colocation, 
and there are a number of CME Group data feeds. Limiting the feeds to 
the selection of CME Group market data regarding securities for which 
FIDS determines there is demand would allow Users to receive the 
relevant CME Group Data over a wireless network.
    The Exchange believes that the proposed change is not unfairly 
discriminatory because it will result in fees being charged only to 
Users that voluntarily select to receive the corresponding services and 
because those services will be available to all Users. Furthermore, the 
Exchange believes that the services and fees proposed herein are 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 wireless connections to CME Group Data 
would be charged the same amount for the same services. Users that opt 
to use wireless connections to CME Group Data would receive the CME 
Group Data that is available to all Users, as all market participants 
that contract with CME Group or its affiliate for CME Group Data, as 
required, may receive it.
    For the reasons above, the proposed changes do not unfairly 
discriminate between or among market participants that are otherwise 
capable of satisfying any applicable colocation fees, requirements, 
terms, and conditions established from time to time by the Exchange.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the proposal will not impose any burden 
on competition that is not necessary or appropriate in furtherance of 
the purposes of Section 6(b)(8) of the Act.\27\
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    \27\ 15 U.S.C. 78f(b)(8).
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    The proposed change would not affect competition among national 
securities exchanges or among members of the Exchange, but rather 
between FIDS and its commercial competitors. The proposed wireless 
connection would provide Users with an alternative means of 
connectivity to CME Group Data. The proposed change would provide Users 
with an additional choice with respect to the form and optimal latency 
of the connectivity they use to receive CME Group market data, allowing 
a User to select the connectivity that better suits its needs, helping 
it tailor its colocation operations to the requirements of its business 
operations.
    Users that do not opt to utilize the Exchange's proposed wireless 
connection would still be able to obtain CME Group market data 
wirelessly using Quincy's wireless connection. The Exchange's proposed 
wireless connection and the existing Quincy wireless connection to CME 
Group market data are sufficiently similar substitutes and thus provide 
market participants with choices to meet their wireless connectivity 
needs.
    In addition, the Exchange does not believe that FIDS would have any 
competitive advantage over either the existing third-party provider or 
any future providers of wireless connectivity to CME Group market data. 
The

[[Page 81453]]

Exchange's proposed service for connectivity to CME Group Data does not 
have any special access to or advantage within the MDC. The Exchange's 
proposed wireless connection would lead to a pole, from which a fiber 
connection would lead into the MDC. The pole is owned by a third party 
and is not on the grounds of the MDC, and the path into the MDC through 
a meet-me-room is the same path followed by any Telecom. Within the 
MDC, the proposed connection would follow the same route as that of any 
User, connecting to equipment in colocation and then to any Users that 
are customers.
    Further, all distances in the MDC are normalized and Exchange rules 
require that the distance from the Patch Panel Point to each User 
cabinet in colocation be the same.\28\ Every provider of wireless 
connectivity to Users, including FIDS, is connected to the Patch Panel 
Point, and the length of the fiber path from the Patch Panel Point to 
each User cabinet in colocation is the same.
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    \28\ See supra note 22.
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    Nor does the Exchange have a competitive advantage over the third-
party competitors offering wireless connectivity to CME Group market 
data by virtue of the fact that it owns and operates the MDC's meet-me-
rooms. Users purchasing wireless connectivity to CME Group market 
data--like Users of any other colocation service--would require a 
circuit connecting out of the MDC, and in most cases, such circuits are 
provided by third-party Telecoms that have installed their equipment in 
the MDC's two meet-me-rooms.\29\ Currently, 16 Telecoms operate in the 
meet-me-rooms and provide a variety of circuit choices. It is in the 
Exchange's best interest to set the fees that Telecoms pay to operate 
in the meet-me-rooms at a reasonable level \30\ so that market 
participants, including Telecoms, will maximize their use of the MDC. 
By setting the meet-me-room fees at a reasonable level, the Exchange 
encourages Telecoms to participate in the meet-me-rooms and to sell 
circuits to Users for connecting into and out of the MDC. These 
Telecoms then compete with each other by pricing such circuits at 
competitive rates. These competitive rates for circuits help draw in 
more Users and Hosted Customers to the MDC, which directly benefits the 
Exchange by increasing the customer base to whom the Exchange can sell 
its colocation services, which include cabinets, power, ports, and 
connectivity to many third-party data feeds, and because having more 
Users and Hosted Customers leads, in many cases, to greater 
participation on the Exchange. In this way, by setting the meet-me-room 
fees at a level attractive to telecommunications firms, the Exchange 
spurs demand for all of the services it sells at the MDC, while setting 
the meet-me-room fees too high would negatively affect the Exchange's 
ability to sell its services at the MDC.\31\ Accordingly, there are 
real constraints on the meet-me-room fees the Exchange charges, such 
that the Exchange does not have an advantage in terms of costs when 
compared to third parties that enter the MDC through the meet-me-rooms 
to provide services to compete with the Exchange's services.
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    \29\ See supra note 23.
    \30\ See MMR Notice, supra note 24.
    \31\ See supra note 25.
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    If anything, the Exchange is subject to a competitive disadvantage 
vis-[agrave]-vis third party competitors offering wireless connectivity 
to CME Group market data. Third-party competitors are not subject to 
the Commission's filing requirements, and therefore can freely change 
their services and pricing in response to competitive forces. In 
contrast, the Exchange's service and pricing would be standardized as 
set out in this filing, and the Exchange would be unable to respond to 
pricing pressure from its competitors without seeking a formal fee 
change in a filing before the Commission.

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 \32\ and Rule 19b-4(f)(6) thereunder.\33\ 
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.
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    \32\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \33\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \34\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\35\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
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    \34\ 17 CFR 240.19b-4(f)(6).
    \35\ 17 CFR 240.19b-4(f)(6)(iii).
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    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) \36\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \36\ 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 (https://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#0173746d642c626e6c6c646f7572417264622f666e77"><span class="__cf_email__" data-cfemail="bac8cfd6df97d9d5d7d7dfd4cec9fac9dfd994ddd5cc">[email protected]</span></a>. Please include 
file number SR-NYSEARCA-2023-79 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-NYSEARCA-2023-79. 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 (https://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

[[Page 81454]]

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-NYSEARCA-2023-79 and should 
be submitted on or before December 13, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\37\
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    \37\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-25771 Filed 11-21-23; 8:45 am]
BILLING CODE 8011-01-P


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