Federal Register / Vol. 89, No. 185 / Tuesday, September 24, 2024 / Notices 77937 

30 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Exchange previous submitted a similar 

proposal earlier this year, see Securities Exchange 

Act Release No. 34–100440 (June 27, 2024), 89 FR 

55294 (July 3, 2024) (SR–NASDAQ–2024–026) (the 

‘‘Prior Proposal’’), but withdrew it on August 13, 

2024 to allow for the Exchange to address 

outstanding comments and concerns raised by the 

Commission Staff and commenters. 

4NY11–4 is not a standalone facility. Equinix 

considers the site as NY11 with three expansions: 

NY11 Phase 1, NY11 Phase 2 and NY11–4. 

5As discussed below in further detail, one aspect 

of the data center that will be different (temporarily) 

in NY11–4 as compared to NY11 is 

telecommunications access and inter-client 

connectivity. In NY11–4 at its launch, connections 

between colocated client cabinets and the carrier 

cage will be equalized as will be inter-client 

connectivity. Presently, such connectivity is not 

equalized in NY11, but the Exchange intends to 

retrofit NY11 to be equalized in the months ahead. 

6Half cabinets are not available to new 

subscribers. See General 8, Section 1(a). 

7 In the existing data halls, clients may bring their 

own cabinets or use Exchange-provided cabinets. 

Because of the cooling system in NY11–4 (hot aisle 

containment), all cabinets must be uniform and 

therefore, the Exchange will provide all cabinets. 

The existing data halls utilize cold aisle 

containment to manage temperatures. Hot aisle 

containment is a more effective way to manage heat 

in the data center. 

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–Phlx–2024–47 and should be 

submitted on or before October 15, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.30

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2024–21751 Filed 9–23–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101078; File No. SR– 

NASDAQ–2024–054] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Expand Its 

Co-Location Services 

September 18, 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 

September 5, 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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to expand its 

co-location services. The text of the 

proposed rule change is available on the 

Exchange’s website at https://

listingcenter.nasdaq.com/rulebook/ 

nasdaq/rules, 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 Exchange proposes to expand its 

co-location services by offering new 

cabinet, power, and power distribution 

unit options in the Exchange’s 

expanded data center.3

The Exchange’s current data center 

(‘‘NY11’’) in Carteret, NJ is undergoing 

an expansion (‘‘NY11–4’’) in response to 

demand for power and cabinets. NY11– 

4 is not a new or distinct co-location 

facility. Instead, NY11–4 is simply an 

expansion of the existing Nasdaq NY11 

data center,4 and Nasdaq intends to 

operate it generally in the same manner 

as existing aspects of NY11.5 Client 

connections to the matching engine will 

be equal across the board, within and 

among NY11 and NY11–4. In 2010, the 

Exchange undertook a similar expansion 

to its data center, where connectivity to 

the Exchange remained equalized, as is 

the case with the NY11–4 expansion. 

The Exchange submits this filing to 

propose offering new services in NY11– 

4, as described below, and to the extent 

the Exchange offers additional new 

services, whether in the existing NY11 

data halls or in the new NY11–4 data 

hall, the Exchange will submit 

additional filings with the Commission. 

New and Upgraded Services in NY11– 

4 

NY11–4 Expanded Cabinet Optionality: 

Ultra High Density Cabinet 

Currently, co-location customers have 

the option of obtaining cabinets of 

various sizes and power densities. Colocation customers may obtain a Half 

Cabinet,6 a Low Density Cabinet with 

power density less than or equal to 2.88 

kilowatts (‘‘kW’’), a Medium Density 

Cabinet with power density greater than 

2.88 kW and less than or equal to 5 kW, 

a Medium-High Density Cabinet with 

power density greater than 5 kW and 

less than or equal to 7 kW, a High 

Density Cabinet with power density 

greater than 7 kW and less than 10 kW, 

and a Super High Density Cabinet with 

power density greater than 10 kW and 

less than or equal to 17.3 kW. 

The Exchange proposes to introduce a 

new cabinet choice in NY11–4, an 

‘‘Ultra High Density Cabinet,’’ with 

power density greater than 10 kW and 

less than or equal to 15 kW. Based on 

demand, the Exchange wishes to 

introduce the Ultra High Density 

Cabinet as an option for customers 

between the High Density Cabinet and 

the Super High Density Cabinet. The 

Ultra High Density Cabinet option 

would only be offered in NY11–4 

because of the power configuration 

necessary for such cabinets, which is 

not possible or available in other 

portions of the data center due to 

different power distribution. Because of 

the addition of the Ultra High Density 

Cabinet option in NY11–4, the Super 

High Density Cabinet in NY11–4 would 

have power density greater than 15 kW 

and less than or equal to 17.3 kW. 

In addition to the Ultra High Density 

Cabinet, the Exchange would offer the 

other, existing cabinet options in NY11– 

4, with the exception of the Low Density 

Cabinet and Half Cabinet due to a lack 

of demand for such cabinets. The 

cabinets in NY11–4 will include certain 

features, including but not limited to: 

uniform, wider cabinets 7 (32′′ W x 48′′ 


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8PDUs are devices fitted with multiple outputs 

designed to distribute electric power. The 

standardized PDUs would only be offered for 

NY11–4. 

9Phase 1 PDUs would be compatible with the 

following power options: Phase 1 20 amp 240 volt, 

Phase 1 32 amp 240 volt, and Phase 1 40 amp 240 

volt. Phase 3 PDUs would be compatible with the 

following power options: Phase 3 20 amp 415 volt 

and Phase 3 32 amp 415 volt. Phase 1 and Phase 

3 are available in NY11 and NY11–4. Phase 3 PDUs 

provide greater power density than Phase 1 PDUs 

by delivering power over three wires as opposed to 

one wire. 

10The Exchange will announce modifications to 

the proposed timing via the Nasdaq Customer 

Portal, which is the web portal used for order and 

inventory management of colocation services, and 

email communication to all colocation customers. 

11Charging customers once access is provided is 

consistent with current practice and allows 

customers to set up equipment and begin using 

power. 

12See Ltr. From J. Considine, McKay Brothers 

LLC, to V. Countryman, SEC, dated July 24, 2024, 

available at https://www.sec.gov/comments/srnasdaq-2024-026/srnasdaq2024026-496995- 

1434326.pdf (the ‘‘McKay Letter’’). Akuna 

Securities LLC also filed a comment letter that 

largely echoed the arguments in the McKay Letter. 

See Ltr. From D. DeSalle-Baron, Akuna Securities 

LLC to V. Countryman, SEC, dated July 24, 2024, 

available at https://www.sec.gov/comments/srnasdaq-2024-026/srnasdaq2024026-497096- 

1434386.pdf. 13The structure of the Secaucus data center is a 

generally known fact within the industry and one 

of which the Exchange is itself aware due, among 

other things, to its own status as a tenant of the 

Secaucus data center. 14The McKay Letter asserts incorrectly and 

without any evidentiary basis that the Exchange is 

capable of equalizing telco connectivity quickly and 

can do so before launching NY11–4 with only a 

minor ensuing delay to the launch. See id. at 4, 

n.15. As we explain herein, equalization of NY11 

will take many months to accomplish, even at an 

aggressive pace, including because of factors 

outside of its control. The Exchange notes, for 

example, that the fiber needed to re-cable NY11 is 

in short supply and orders are subject to substantial 

waiting periods. 

D x 91′′ H), cable management, and a 

rear split door and combo lock. 

NY–11 4 Cabinet Power and Power 

Distribution Units 

The Exchange currently provides 

various cabinet power options, 

including: 2 × 20 amp 110 volt, 2 × 30 

amp 110 volt, 2 × 20 amp 208 volt, 2 × 

30 amp 208 volt, Phase 3 2 × 20 amp 

208 volt, Phase 3 2 × 30 amp 208 volt, 

2 × 60 amp 208 volt, Phase 3 2 × 40 amp 

208 volt, Phase 3 2 × 50 amp 208 volt, 

Phase 3 2 × 60 amp 208 volt, and 2 × 

30 amp 48 volt DC. For NY11–4, the 

data center operator is bringing in 

higher voltage power options, which are 

more consistent with power options 

used in other data centers across the 

globe. The Exchange proposes to amend 

General 8, Section 1(c) to add the 

cabinet power options for NY11–4, 

which include: Phase 1 20 amp 240 volt, 

Phase 1 32 amp 240 volt, Phase 1 40 

amp 240 volt, Phase 3 20 amp 415 volt, 

and Phase 3 32 amp 415 volt. The 

Exchange also proposes to specify in its 

Rules that these cabinet power options 

are specific to NY11–4 and that one of 

these options must be selected for 

cabinets in NY11–4. Although different 

cabinet power options will be offered in 

NY11 and NY11–4 due to differing 

power configurations, the new cabinet 

power options are not inherently 

preferable to the existing cabinet power 

options and the Exchange does not 

anticipate material differences in 

equipment performance based on the 

power distribution. Due to higher 

voltage options being offered in NY11– 

4, the data center operator is likely to 

experience increased power distribution 

efficiencies across the data center. As 

between the various cabinet power 

options, customers choose power based 

on their preference and capacity needs. 

The Exchange also proposes to offer 

power distribution units (‘‘PDUs’’) 8 in 

NY11–4 as a convenience to customers. 

Rather than sourcing PDUs on a 

customer-by-customer basis, as the 

Exchange does for customers in NY11, 

the Exchange wishes to simplify and 

standardize its PDU offering in NY11– 

4 by offering Phase 1 and Phase 3 9

power distribution units. This service is 

optional and customers may choose to 

provide their own PDUs appropriate for 

their power installation choices. The 

Exchange also proposes to offer a switch 

monitored PDU add on in NY11–4, 

which would allow customers to 

connect remotely to their PDU and 

control the power sockets. With the 

switch monitored PDU option, 

customers would be able to power cycle 

or shut off power remotely. This option 

is optional as well and customers may 

choose to provide their own switch 

monitored PDU, if desired. 

Implementation 

Although the timing is subject to 

change,10 the Exchange anticipates 

opening NY11–4 Exchange access on 

November 4, 2024. In concert with this 

filing, the Exchange will allow 

customers to place orders for NY11–4, 

which would not be fee liable until 

customers are provided access to the 

space.11 The Exchange will submit a fee 

filing to establish fees for the services 

described herein. Allowing customers to 

place orders in advance of opening its 

doors will allow the Exchange to plan 

ahead for capacity and demand for 

services, as well as procure necessary 

equipment. 

Equalization of Telecommunications 

Connectivity in NY11–4 and NY11 

Although the Exchange has 

constructed NY11–4 to address capacity 

constraints associated with its existing 

data center footprint, as well as to 

enable the provision of upgraded power 

for customer equipment, an ancillary 

design feature of NY11–4 will be that it 

will include, at launch, equalized 

cabling between customer equipment 

and equipment owned and operated by 

third-party telecommunications 

providers (‘‘telco connectivity’’). This 

design feature is incident, but not 

strictly relevant to the Proposal at hand. 

Nevertheless, we discuss it below 

insofar as it garnered attention in the 

Prior Proposal, by one commenter, in 

particular.12

Presently, the Exchange does not have 

equalized telco connectivity in NY11, 

much like several of its peers, IEX, 

MEMX, and Cboe, all of which operate 

through their Secaucus data center 

without equalized telco connectivity.13

The present architecture of NY11 is a 

product of its history and that of 

technology; the Exchange designed 

NY11 at a time when latency differences 

were measured by customers in terms of 

miles of cable between customer 

facilities and exchange data centers, 

rather than in feet or inches within 

exchange data centers, as is the case 

today. As the technology paradigm 

shifted, and as variances in telco 

connectivity became more meaningful 

to some market participants, the 

Exchange reevaluated its design of its 

data center and determined that telco 

connectivity equalization would be in 

the best interests of the markets going 

forward. Thus, on its own initiative, the 

Exchange has embarked on an ambitious 

project to equalize telco connectivity 

across its entire data center campus, 

including both its existing NY11 facility 

and the NY11–4 expansion (the 

‘‘Equalization Project’’). The launch of 

NY11–4 will constitute phase 1 of the 

Equalization Project. 

The Equalization Project will be 

complex, time consuming, and costly to 

complete, especially as to NY11, where 

the existing facility must be retrofitted 

with equalized cabling. In NY11, 

thousands of existing customer cables 

threaded throughout the facility will 

need to be removed and replaced with 

new infrastructure to support 

equidistant connectivity relative to all 

other customers’ locations in the data 

center. This painstaking project will 

cost millions of dollars in design, 

equipment, and labor costs. Due to its 

complexity, the Equalization Project 

cannot and will not be accomplished 

instantaneously.14 Instead, the 

Exchange estimates that the Project will 

require 18–24 months to complete, 


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15See id. 16See id. at 1–2, 5–6. 

17Ltr. from F. Zucek, Old Mission, to B. Kitt, 

Nasdaq, dated Aug. 21, 2024. 

18See McKay Ltr., supra, at 3–4 (asserting that 

‘‘introduction of NY11–4 before equalizing NY11 

will compel many customers to establish a third 

point of presence—at a cost in incremental fees 

paid to Nasdaq alone of at least $2.5 million on a 

three-year commitment—to eliminate the risk that 

the NY11–4 connection is a superior connection to 

one (or both) of their existing NY11 points of 

presence.’’). 

commencing as of the launch of NY11– 

4. Moreover, it will occur in a 

methodical and phased manner to 

ensure proper design, testing, and 

workmanship, as well as to minimize 

the customer disruptions that, 

unfortunately, will be unavoidable 

during the process. The launch of 

NY11–4 with equalized telco 

connectivity will be the first phase of 

the Equalization Project, with the 

equalization of NY11 constituting the 

remaining phases of the Project. For the 

phased transition of NY11, the 

Exchange expects the migration to occur 

in tranches over the course of several 

weekends at the tail end of the 18–24 

project period. 

Concerns About the Sequencing of the 

Equalization Project Are Unfounded 

In the Prior Proposal, the commenter 

objected to the Exchange’s plan to 

accomplish the Equalization Project by 

first launching equalized telco 

connectivity in NY11–4 before 

launching it in NY11.15 The commenter 

argued that this sequencing of the 

Equalization Project would be unfairly 

discriminatory in that it would 

exacerbate existing inequalities in the 

Exchange’s Data Center while also 

compelling customers to secure 

unneeded space in NY11–4 to ensure 

that they obtain or maintain the closest 

possible geographic proximity to their 

telecommunications providers’ 

equipment.16 These arguments are 

simply wrong. 

The Exchange’s Plan for the Launch of 

NY11–4 To Constitute Phase One of the 

Equalization Project Is Fair and 

Reasonable and in the Best Interests of 

the Markets 

The Exchange’s Plan To Proceed With 

NY11–4 as the First Phase of the 

Equalization Project Is in the Best 

Interests of the Markets 

The fact of the matter is that the 

Exchange needs to launch NY11–4—and 

needs to do so in November 2024—to 

ensure that it remains capable of 

meeting the growing power and capacity 

demands of its customers. Regulation 

SCI requires the Exchange to reasonably 

anticipate its capacity needs. NY11–4, 

which has been three years in the 

making, is a product of the SCI planning 

process. Delaying the launch of NY11– 

4 to accommodate the equalization of 

NY11 would jeopardize the sound and 

orderly operation of the Exchange’s 

markets. Such a danger readily 

outweighs any concerns that some may 

have about the fairness of the 

Exchange’s plan to sequence the 

Equalization Project, even if such 

concerns were well-founded, which 

they are not. 

We note that our customers generally 

support this view. One customer sent 

the Exchange a letter stating the 

following about Nasdaq’s plans: 

As noted in your August 12, 2024, 

comment letter response to the SEC, the 

addition of NY11–4 is needed to meet the 

growing customer demands for space, power, 

and upgraded technological capabilities. 

OMC echoes these concerns as one of those 

customers, with an immediate and significant 

need to expand its colocation space to 

accommodate the growing demands of 

OMC’s business. OMC is a registered member 

of the Nasdaq Stock Market and eight other 

options and equities exchanges operated by 

Nasdaq (the ‘‘Exchanges’’), with more than 

half of those memberships added within 

roughly the last year. As a registered Market 

Maker for hundreds of listed symbols, OMC 

actively provides liquidity across the 

Exchanges. Also, as a Designated Liquidity 

Provider, OMC plays a key role in supporting 

the active and efficient trading of many new 

and existing products listed on the 

Exchanges. To support this significant 

amount of trading activity on the Exchanges, 

OMC urgently needs the additional 

colocation space made available in NY11–4. 

Any halt or delay of the NY11–4 launch 

would prevent OMC’s planned expansion 

and would endanger OMC’s ability to grow 

and meet the liquidity provision demands of 

the Exchanges and their customers.17

The Exchange’s Sequencing Plan Is Also 

Pragmatic and Efficient 

Expanding the existing data center by 

building a new wing (NY11–4) from 

scratch afforded the Exchange an 

opportunity to design the expansion 

efficiently with telco connectivity 

equalization incorporated therein from 

the outset. This approach avoids the 

need to later engage in a wasteful 

process of retrofitting NY11–4 for telco 

connectivity equalization—a process in 

which the Exchange must now engage 

with respect to NY11. 

Launching NY11–4 Before Equalizing 

NY11 Will Not Worsen Inequality 

The latency profile of a customer 

collocating in NY11–4 would be no 

better than that of the lowest latency 

customer and no worse than that of the 

highest latency customer colocating 

presently in NY11. In fact, the launch of 

a full-equalized NY11–4 before 

equalizing NY11 would actually 

diminish the overall average latency 

differential among collocated customers’ 

telecom provider connections because 

NY11–4 introduces connections at a 

single latency value in between the 

slowest and fastest latencies. That is, the 

shortest current telco connection 

possible into NY11 is 160 ft while the 

longest current telco connection 

possible into NY11 is 680 feet; the 

equidistant telco connections into 

NY11–4 will be 590 feet, which falls 

between these two extremes. 

Moreover, although the Exchange 

does not know the precise latency 

profiles of each of its colocation 

customers, it has provided those 

customers with the latency profile for 

NY11–4 and interhall connectivity 

through its distribution of a technical 

specification document via the 

Customer Portal. This technical 

specification document will allow 

customers to determine for themselves 

whether their current location in NY11 

or alternative space in NY11–4 will 

optimize their latency profile. It will 

provide a means for customers to plan 

ahead and avoid undesirable outcomes 

associated with the launch of NY11–4. 

Contrary to assertions made by the 

commenter in connection with the Prior 

Proposal,18 the technical specification 

document alleviates uncertainty that 

might otherwise compel customers to 

waste money to secure unnecessary 

space in NY11–4 as a defensive means 

of assuring themselves the most 

advantageous position available in the 

Exchange’s data center campus. 

Any Advantage Attainable From the 

Launch of NY11–4 First Will Be 

Temporary 

Even if a customer was to gain a 

latency advantage from the launch of 

NY11–4 before equalization of NY11, 

such an advantage would be temporary 

given the fact that equalization of NY11 

will follow soon after the launch of 

NY11–4. The fleeting nature of any such 

advantage should also disincentivize 

colocation customers from engaging in a 

‘‘land grab’’ for what they perceive to be 

the most geographically advantageous 

space in NY11–4. Indeed, the Exchange 

sees no evidence of such a land grab 

actually occurring with respect to 

customers’ expressions of interest in 

NY11–4, notwithstanding warnings to 

that effect from the same commenter. As 

of the date of submission of this filing, 

only roughly 10 percent of existing 

customers, representing a mix of 

business models and latency sensitive 


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19See id. at 2. 

20 15 U.S.C. 78f(b). 

21 15 U.S.C. 78f(b)(5). 

22 Id. 

23See McKay Ltr., supra. 

24See id. at 1–2, 5–6. 

25Ltr. from F. Zucek, Old Mission, to B. Kitt, 

Nasdaq, dated Aug. 21, 2024. 

activities, have requested space in 

NY11–4. Moreover, interest in NY11–4 

thus far involves a mix of customers 

wanting to expand upon their existing 

space in NY11 and others that want to 

move their existing space in NY11 

entirely to NY11–4. 

Equalizing NY11 First Will Not Avoid 

Creating Temporary Customer 

Disparities 

Finally, the commenter’s argument is 

incorrect that equalizing NY11 before 

launching NY11–4 would avoid creating 

disparities among customers with 

respect to their telco connections.19

Equalizing telecommunications 

connectivity in NY11 before launching 

NY11–4 would not avoid the reality that 

full telco connectivity equalization— 

however accomplished—will require 

the introduction of temporary 

disparities in the lengths of the cables 

running between telecommunications 

providers and customers in the data 

center complex. Even if the Exchange 

were to pursue equalization of NY11 

first, doing so would necessarily entail 

certain customers in NY11 experiencing 

changes to their telco cable lengths 

before others during the phased 

transition period. Thus, re-sequencing 

the Equalization Project to start with 

NY11 will do nothing to affect these 

temporary customer disparities, but 

instead will needlessly place the 

markets at risk by delaying the 

availability of expanded data center 

capacity. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,20 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,21

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. Today, 

the Exchange offers various cabinet 

choices and power options in the data 

center for colocation customers. The 

proposal would expand the cabinet and 

power options available, by introducing 

an additional cabinet option, the Ultra 

High Density Cabinet, and new power 

choices. The proposal would benefit the 

public interest by providing customers 

more cabinet and power options to 

choose from, thereby enhancing their 

ability to tailor their colocation 

operations to the requirements of their 

business operations. In general, the 

proposal is consistent with the Act 

because the Exchange’s expansion of the 

data center and expansion of available 

power and cabinets will enable the 

Exchange to meet customer needs and 

address demand for both cabinets and 

power. In lieu of collocating directly 

with the Exchange, market participants 

may choose not to collocate at all or to 

collocate indirectly through a vendor. 

The Exchange also believes that the 

proposal will not be unfairly 

discriminatory, consistent with the 

objectives of Section 6(b)(5) of the Act 22

because the expanded cabinet and 

power options in the data center would 

be offered equally to all customers. 

Although certain optionality is only 

offered in NY11–4 because of different 

power configurations in NY11–4 as 

compared to NY11, NY11–4 is merely 

an expansion of the data center, and any 

customer may order cabinets and power 

in NY11–4 (and across the data center 

broadly) on the same terms as any other 

customer. 

The Equalization Project Is Consistent 

With the Act 

In addition to the above, and although 

not strictly relevant to the proposal at 

hand, the Exchange also believes that 

the Equalization Project, as outlined 

above and which will begin with the 

launch of NY11–4, is consistent with 

the Act. 

Concerns About the Sequencing of the 

Equalization Project Are Unfounded 

In the Prior Proposal, the commenter 

objected to the Exchange’s plan to 

accomplish the Equalization Project by 

first launching equalized telco 

connectivity in NY11–4 before 

launching it in NY11.23 The commenter 

argued that this sequencing of the 

Equalization Project would be unfairly 

discriminatory in that it would 

exacerbate existing inequalities in the 

Exchange’s Data Center while also 

compelling customers to secure 

unneeded space in NY11–4 to ensure 

that they obtain or maintain the closest 

possible geographic proximity to their 

telecommunications providers’ 

equipment.24 These arguments are 

simply wrong. 

The Exchange’s Plan for the Launch of 

NY11–4 To Constitute Phase One of the 

Equalization Project Is Fair and 

Reasonable and in the Best Interests of 

the Markets 

The Exchange’s Plan To Proceed With 

NY11–4 as the First Phase of the 

Equalization Project Is in the Best 

Interests of the Markets 

The fact of the matter is that the 

Exchange needs to launch NY11–4—and 

needs to do so in November 2024—to 

ensure that it remains capable of 

meeting the growing power and capacity 

demands of its customers. Regulation 

SCI requires the Exchange to reasonably 

anticipate its capacity needs. NY11–4, 

which has been three years in the 

making, is a product of the SCI planning 

process. Delaying the launch of NY11– 

4 to accommodate the equalization of 

NY11 would jeopardize the sound and 

orderly operation of the Exchange’s 

markets. Such a danger readily 

outweighs any concerns that some may 

have about the fairness of the 

Exchange’s plan to sequence the 

Equalization Project, even if such 

concerns were well-founded, which 

they are not. 

We note that our customers generally 

support this view. One customer sent 

the Exchange a letter stating the 

following about Nasdaq’s plans: 

As noted in your August 12, 2024, 

comment letter response to the SEC, the 

addition of NY11–4 is needed to meet the 

growing customer demands for space, power, 

and upgraded technological capabilities. 

OMC echoes these concerns as one of those 

customers, with an immediate and significant 

need to expand its colocation space to 

accommodate the growing demands of 

OMC’s business. OMC is a registered member 

of the Nasdaq Stock Market and eight other 

options and equities exchanges operated by 

Nasdaq (the ‘‘Exchanges’’), with more than 

half of those memberships added within 

roughly the last year. As a registered Market 

Maker for hundreds of listed symbols, OMC 

actively provides liquidity across the 

Exchanges. Also, as a Designated Liquidity 

Provider, OMC plays a key role in supporting 

the active and efficient trading of many new 

and existing products listed on the 

Exchanges. To support this significant 

amount of trading activity on the Exchanges, 

OMC urgently needs the additional 

colocation space made available in NY11–4. 

Any halt or delay of the NY11–4 launch 

would prevent OMC’s planned expansion 

and would endanger OMC’s ability to grow 

and meet the liquidity provision demands of 

the Exchanges and their customers.25


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Federal Register / Vol. 89, No. 185 / Tuesday, September 24, 2024 / Notices 77941 

26See McKay Ltr., supra, at 3–4 (asserting that 

‘‘introduction of NY11–4 before equalizing NY11 

will compel many customers to establish a third 

point of presence—at a cost in incremental fees 

paid to Nasdaq alone of at least $2.5 million on a 

three-year commitment—to eliminate the risk that 

the NY11–4 connection is a superior connection to 

one (or both) of their existing NY11 points of 

presence.’’). 27See id. at 2. 

The Exchange’s Sequencing Plan Is Also 

Pragmatic and Efficient 

Expanding the existing data center by 

building a new wing (NY11–4) from 

scratch afforded the Exchange an 

opportunity to design the expansion 

efficiently with telco connectivity 

equalization incorporated therein from 

the outset. This approach avoids the 

need to later engage in a wasteful 

process of retrofitting NY11–4 for telco 

connectivity equalization—a process in 

which the Exchange must now engage 

with respect to NY11. 

Launching NY11–4 Before Equalizing 

NY11 Will Not Worsen Inequality 

The latency profile of a customer 

collocating in NY11–4 would be no 

better than that of the lowest latency 

customer and no worse than that of the 

highest latency customer colocating 

presently in NY11. In fact, the launch of 

a full-equalized NY11–4 before 

equalizing NY11 would actually 

diminish the overall average latency 

differential among collocated customers’ 

telecom provider connections because 

NY11–4 introduces connections at a 

single latency value in between the 

slowest and fastest latencies. That is, the 

shortest current telco connection 

possible into NY11 is 160 ft while the 

longest current telco connection 

possible into NY11 is 680 feet; the 

equidistant telco connections into 

NY11–4 will be 590 feet, which falls 

between these two extremes. 

Moreover, although the Exchange 

does not know the precise latency 

profiles of each of its colocation 

customers, it has provided those 

customers with the latency profile for 

NY11–4 and interhall connectivity 

through its distribution of a technical 

specification document via the 

Customer Portal. This technical 

specification document will allow 

customers to determine for themselves 

whether their current location in NY11 

or alternative space in NY11–4 will 

optimize their latency profile. It will 

provide a means for customers to plan 

ahead and avoid undesirable outcomes 

associated with the launch of NY11–4. 

Contrary to assertions made by the 

commenter in connection with the Prior 

Proposal,26 the technical specification 

document alleviates uncertainty that 

might otherwise compel customers to 

waste money to secure unnecessary 

space in NY11–4 as a defensive means 

of assuring themselves the most 

advantageous position available in the 

Exchange’s data center campus. 

Any Advantage Attainable From the 

Launch of NY11–4 First Will Be 

Temporary 

Even if a customer was to gain a 

latency advantage from the launch of 

NY11–4 before equalization of NY11, 

such an advantage would be temporary 

given the fact that equalization of NY11 

will follow soon after the launch of 

NY11–4. The fleeting nature of any such 

advantage should also disincentivize 

colocation customers from engaging in a 

‘‘land grab’’ for what they perceive to be 

the most geographically advantageous 

space in NY11–4. Indeed, the Exchange 

sees no evidence of such a land grab 

actually occurring with respect to 

customers’ expressions of interest in 

NY11–4, notwithstanding warnings to 

that effect from the same commenter. As 

of the date of submission of this filing, 

only roughly 10 percent of existing 

customers, representing a mix of 

business models and latency sensitive 

activities, have requested space in 

NY11–4. Moreover, interest in NY11–4 

thus far involves a mix of customers 

wanting to expand upon their existing 

space in NY11 and others that want to 

move their existing space in NY11 

entirely to NY11–4. 

Equalizing NY11 First Will Not Avoid 

Creating Temporary Customer 

Disparities 

Finally, the commenter’s argument is 

incorrect that equalizing NY11 before 

launching NY11–4 would avoid creating 

disparities among customers with 

respect to their telco connections.27

Equalizing telecommunications 

connectivity in NY11 before launching 

NY11–4 would not avoid the reality that 

full telco connectivity equalization— 

however accomplished—will require 

the introduction of temporary 

disparities in the lengths of the cables 

running between telecommunications 

providers and customers in the data 

center complex. 

Even if the Exchange were to pursue 

equalization of NY11 first, doing so 

would necessarily entail certain 

customers in NY11 experiencing 

changes to their telco cable lengths 

before others during the phased 

transition period. Thus, re-sequencing 

the Equalization Project to start with 

NY11 will do nothing to affect these 

temporary customer disparities, but 

instead will needlessly place the 

markets at risk by delaying the 

availability of expanded data center 

capacity. 

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 

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. As 

part of its colocation offering, the 

Exchange currently offers similar 

cabinets and power, as do other 

exchanges. 

Nothing in the Proposal burdens 

intra-market competition because the 

Exchange’s colocation services, 

including those proposed herein, are 

available to any customer and customers 

that wish to order cabinets and power 

can do so on a non-discriminatory basis. 

Use of any colocation service is 

completely voluntary, and each market 

participant is able to determine whether 

to use colocation services based on the 

requirements of its business operations. 

Additionally, and although not 

strictly relevant to the Proposal, nothing 

about the Equalization Plan, as 

described above, would impose an 

undue burden on competition. The 

Exchange intends for the Equalization 

Plan to facilitate increased competition 

among its colocation customers by 

eliminating telco connectivity 

disparities that currently provide some 

customers with latency advantages 

relative to others. For the reasons 

discussed above, the Exchange believes 

that it is fair and necessary to sequence 

the Equalization Project by beginning 

with the launch of NY11–4 with an 

equalized design, rather than with 

NY11. Specifically, the timely launch of 

NY11–4 is necessary for the Exchange to 

meet its capacity needs and those of its 

customers, while retrofitting NY11 will 

be a complex process that will require 

many months to complete. Moreover, 

the current sequencing plan will not 

worsen existing inequalities, but instead 

will improve the overall average 

disparity in telco cable lengths in the 

data center. Even though the sequencing 

plan will cause some customers to be 

subject to telco connectivity 

equalization before others, this result is 

unavoidable even if the Exchange were 


lotter on DSK11XQN23PROD with NOTICES1
77942 Federal Register / Vol. 89, No. 185 / Tuesday, September 24, 2024 / Notices 

28 15 U.S.C. 78s(b)(3)(A)(iii). 

29 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. 30 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Notice of Filing infra note 4, at 89 FR 21118. 

4Securities Exchange Act Release No. 99802 

(March 20, 2024), 89 FR 21118 (March 26, 2024) 

(File No. SR–DTC–2024–003) (‘‘Notice of Filing’’). 

5Comments on the Proposed Rule Change were 

received under an affiliated filing and are available 

at https://www.sec.gov/comments/sr-ficc-2024-006/ 

srficc2024006.htm. 

6 15 U.S.C. 78s(b)(2). 

7Securities Exchange Act Release No. 100076 

(May 8, 2024), 89 FR 42006 (May 14, 2024). 

8 15 U.S.C. 78s(b)(2)(B). 

9Securities Exchange Act Release No. 100400 

(June 21, 2024), 89 FR 53674 (June 27, 2024). 

to equalize NY11 first. Any customer 

advantage or disadvantage that might 

arise from the Equalization Project 

would be temporary. Finally, the 

Exchange has been transparent about its 

plans and afforded opportunities to 

customers to make informed choices 

about how to mitigate any adverse 

consequences, competitive or otherwise. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange received a written letter 

of support from Old Mission Capital 

LLC, dated August 21, 2024. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing 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 28 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.29

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 is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

NASDAQ–2024–054 on the subject line. 

Paper Comments 

• 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–2024–054. 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 

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–2024–054 and should be 

submitted on or before October 15, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.30

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2024–21750 Filed 9–23–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101083; File No. SR–DTC– 

2024–003] 

Self-Regulatory Organizations; 

Depository Trust Company; Notice of 

Designation of Longer Period for 

Commission Action on Proposed Rule 

Change To Amend the Clearing 

Agency Risk Management Framework 

September 18, 2024. 

On March 11, 2024, The Depository 

Trust Company (‘‘DTC’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change SR–DTC–2024–003 (‘‘Proposed 

Rule Change’’) pursuant to Section 19(b) 

of the Securities Exchange Act of 1934 

(‘‘Exchange Act’’) 1 and Rule 19b–4 2

thereunder to amend the Clearing 

Agency Risk Management Framework of 

DTC and its affiliates, Fixed Income 

Clearing Corporation (‘‘FICC’’) and 

National Securities Clearing Corporation 

(‘‘NSCC,’’ and together with FICC and 

NSCC, the ‘‘Clearing Agencies’’) to 

describe how the Clearing Agencies may 

solicit views of participants and other 

industry stakeholders, and to provide 

for the annual assessment and 

subsequent review of FICC’s 

Government Securities Division access 

models by FICC’s Board of Directors.3

The Proposed Rule Change was 

published for public comment in the 

Federal Register on March 26, 2024.4

The Commission has received 

comments regarding the substance of 

the changes proposed in the Proposed 

Rule Change.5

On May 8, 2024, pursuant to Section 

19(b)(2) of the Act,6 the Commission 

designated a longer period within which 

to approve, disapprove, or institute 

proceedings to determine whether to 

approve or disapprove the Proposed 

Rule Change.7 On June 21, 2024, 

pursuant to Section 19(b)(2)(B) of the 

Exchange Act,8 the Commission 

instituted proceedings to determine 

whether to approve or disapprove the 

Proposed Rule Change.9


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