61362 Federal Register / Vol. 79, No. 197 / Friday, October 10, 2014 / Notices 

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

2 17 CFR 240.19b–4. 

3NASDAQ OMX acts as re-distributor of these 

third-party market data feeds, capturing the data at 

the originating data centers and transporting the 

data to the Carteret data center. 

4Because direct line of sight between Carteret and 

the data centers of other exchanges is not possible, 

BX’s vendors lease as many towers and associated 

equipment as needed to ensure an unbroken line of 

sight between individual towers, repeating the 

signal until it arrives at its destination. 

5See http://www1.nyse.com/press/

1337855269042.html. 

6Wireless connectivity is an optional alternative 

to higher latency fiber optic network connectivity. 

7The Exchange notes that The NASDAQ Stock 

Market LLC recently increased fees assessed for its 

MITCH Wave Ports that connect to Mahwah. See 

Securities Exchange Act Release No. 73132 

(September 17, 2014), 79 FR 56836 (September 23, 

2014) (SR–NASDAQ–2014–092). 

8Clients opting to pay for the remote MITCH 

Wave Ports will continue to be fee liable for the 

applicable market data fees as described in BX 

Rules 7019, 7023, and 7026. 

9 15 U.S.C. 78f(b). 

10 15 U.S.C. 78f(b)(4) and (5). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73305; File No. SR–BX– 

2014–047] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

of Proposed Rule Change To Amend 

Fees for Optional Wireless 

Connectivity for Co-Located Clients 

October 6, 2014. 

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 30, 2014, NASDAQ OMX 

BX, Inc. (‘‘BX’’ 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 is proposing a rule 

change to amend fees assessed to clients 

for wireless connectivity that enables 

clients to receive data from BX. 

Specifically, the Exchange proposes to 

amend fees assessed for remote multicast ITCH (‘‘MITCH’’) Wave Ports for 

clients co-located at other third-party 

data centers, through which BX 

TotalView ITCH market data will be 

distributed after delivery to those data 

centers via wireless network. The text of 

the proposed rule change is available at 

http://nasdaqomxbx.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 

BX is proposing to amend fees 

assessed under BX Rule 7015 for remote 

MITCH Wave Ports for clients colocated at other third-party data centers, 

through which BX TotalView ITCH 

market data will be distributed after 

delivery to those data centers via 

wireless network. 

BX offers optional wireless 

connectivity to clients who had 

requested such connectivity for other 

markets’ data. BX uses network vendors 

to supply wireless connectivity from the 

Carteret, NJ data center to the data 

centers of other exchanges.3 The vendor 

installs, tests and maintains the 

necessary communication equipment 

for this wireless network between the 

data centers. The wireless connectivity 

is an optional alternative to fiber optic 

network connectivity, providing lower 

latency because the wireless signals 

travel a straight, unimpeded line and 

because light waves travel faster through 

air than through glass (fiber optics). 

Because wireless transmission of such 

data requires an unimpeded line of sight 

between Carteret and the data center of 

the market to which it is connecting, BX 

and its vendors incur costs associated 

with maintaining hardware and leasing 

towers on which its microwave dishes 

and the associated hardware are 

mounted, which generally increase as 

distance between data centers increase.4

BX originally planned to create 

wireless connections to a data center in 

Newark used by NYSE as a SFTI 

Network Point of Presence, which is 

approximately 15 miles from BX’s 

Carteret data center. In 2013, NYSE 

began to allow wireless vendors and 

telco vendors to connect directly to its 

data center in Mahwah, NJ,5 which is 

approximately 40 miles from Carteret. 

Because the wireless data feeds are 

designed to offer high-speed and low 

latency,6 BX determined to direct its 

wireless vendors to connect to the 

Mahwah data center instead of the 

Newark SFTI Point of Presence. As a 

consequence, BX is proposing to 

increase the fees assessed under Rule 

7015 for MITCH Wave Ports relating to 

connectivity to data received wirelessly 

to and from Mahwah, which will help 

offset greater costs incurred in leasing 

towers, and purchasing and maintaining 

wireless equipment to cover the 

increased distance as well as the higher 

costs to house equipment and 

connections within the Mahwah data 

center.7

BX currently assesses an installation 

charge for the remote port, at each of the 

data center locations, of $2,500 for 

installation, and $5,000 as a monthly 

recurring fee.8 Each of the data centers 

that a client may subscribe to is 

approximately the same distance from 

the Carteret data center. As discussed 

above, BX will be providing a direct 

connection to NYSE’s data center in 

Mahwah, which is significantly farther 

from Carteret. The Exchange incurs 

higher costs for housing its equipment 

at Mahwah, including higher fees for 

power, cabinets and connections. 

Moreover and as noted above, the 

Exchange and its vendors incur higher 

costs in leasing towers and equipment 

to connect Carteret to Mahwah. As a 

consequence, BX is proposing to 

increase the one-time installation charge 

to $5,000, and the monthly recurring fee 

to $7,500. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 9 in general, and with 

Sections 6(b)(4) and (b)(5) of the Act,10

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, and 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. 

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 

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Federal Register / Vol. 79, No. 197 / Friday, October 10, 2014 / Notices 61363 

11 15 U.S.C. 78s(b)(3)(A). 

12 17 CFR 240.19b–4(f). 

members who believe that co-location 

enhances the efficiency of their trading. 

Accordingly, fees charged for colocation services are constrained by the 

active competition for the order flow of 

such members. If a particular exchange 

charges excessive fees for co-location 

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. 

Moreover, the Exchange believes the 

proposed increased fees are reasonable 

because they are based on the 

Exchange’s increased costs incurred in 

connecting to Mahwah. As discussed, 

the greater distance between Carteret 

and Mahwah results in greater costs 

incurred by the Exchange and its 

vendors, and the Exchange is assessed 

higher charges for housing its 

equipment at Mahwah as compared to 

other exchanges’ locations. The 

proposed fees allow the Exchange to 

recoup these costs and make a profit, 

while providing clients the ability to 

reduce latency in the transmission of 

data by connecting directly to NYSE’s 

data center wirelessly. 

The Exchange believes the proposed 

increased fees are equitably allocated in 

that all clients that voluntarily select 

connectivity to, and to receive data 

from, BX through this service is [sic] 

charged the same amount for the same 

services. Although the proposed fee is 

higher than the fees charged for 

connectivity to other exchanges’ data 

centers, they are reflective of the 

increased costs associated with 

connecting to the Mahwah data center. 

Accordingly, the increased fees are 

allocated equitably on those that receive 

the benefit of the connectivity. 

The Exchange’s proposal is also 

consistent with the requirement of 

Section 6(b)(5) of the Act that Exchange 

rules be designed to promote just and 

equitable principles of trade [sic] to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade [sic], 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 are not designed to 

permit unfair discrimination between 

clients, issuers, brokers, or dealers. The 

proposal is consistent with these 

requirements because it provides 

optional connectivity that promotes 

low-latency transfer of data to market 

participants. As is true of all co-location 

services, all co-located clients have the 

option to select this voluntary 

connectivity option, and there is no 

differentiation among clients with 

regard to the fees charged for the 

wireless connectivity to, and wirelesslyreceived data from Mahwah. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

BX 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. To the 

contrary, this proposal will promote 

competition for distribution of market 

data by offering an optional direct 

connection to the NYSE data center, 

which will improve the latency of the 

connection to BX data that would be 

available through NYSE’s STFI Point of 

Presence in Newark. As discussed 

above, the Exchange believes that fees 

for co-location services, including those 

proposed for microwave connectivity, 

are constrained by the robust 

competition for order flow among 

exchanges and non-exchange markets, 

because co-location exists to advance 

that competition. Further, excessive fees 

for co-location services, including for 

wireless technology, 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 change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act,11 and paragraph (f) 12 of Rule 

19b–4, thereunder. 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 (http://www.sec.gov/

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

BX–2014–047 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–BX–2014–047. 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 Web site (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, 100 F Street NE., 

Washington, DC 20549 on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

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–BX– 

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61364 Federal Register / Vol. 79, No. 197 / Friday, October 10, 2014 / Notices 

13 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.10C–1. 

4 Id. 

5 15 U.S.C. 78j–3. 

6Public Law 111–203, 124 Stat. 1900 (2010). 

7See Securities Act Release No. 9199, Securities 

Exchange Act Release No. 64149 (March 30, 2011), 

76 FR 18966 (April 6, 2011) (‘‘Rule 10C–1 

Proposing Release’’). 

8See Securities Act Release No. 9330, Securities 

Exchange Act Release No. 67220 (June 20, 2012), 77 

FR 38422 (June 27, 2012) (‘‘Rule 10C–1 Adopting 

Release’’). 

9 17 CFR 240.10C–1. 

10 Id. 

11The ISE Stock Exchange is the Exchange’s 

facility for trading equity securities. 12 17 CFR 240.10A–3. 13 15 U.S.C. 78f(b). 14 15 U.S.C. 78f(b)(5). 

15 15 U.S.C. 78j–3. 

16 15 U.S.C. 78f(b)(8). 

2014–047 and should be submitted on 

or before October 31, 2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–24206 Filed 10–9–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73308; File No. SR–ISE– 

2014–45] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change To Add a Reference to 

Exchange Act Rule 10C–1 in the 

Exchange’s Rules Concerning Unlisted 

Trading Privileges 

October 6, 2014. 

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 

September 22, 2014 the International 

Securities Exchange, LLC (the 

‘‘Exchange’’ or the ‘‘ISE’’) filed with the 

Securities and Exchange Commission 

the proposed rule change, as described 

in Items I, II, and III below, which items 

have been prepared by the selfregulatory organization. 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 ISE proposes to add language to 

Rule 2101(a), entitled ‘‘Unlisted Trading 

Privileges,’’ that will make clear that the 

Exchange will not list equity securities 

without first ensuring that its rules 

comply with Rule 10C–1 under the Act 

(‘‘Rule 10C–1’’).3 The text of the 

proposed rule change is available on the 

Exchange’s Web site (http://

www.ise.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 these statements may be examined at 

the places specified in Item IV below. 

The self-regulatory organization 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 proposing to add 

language to Rule 2101(a), which will 

clarify the fact that the Exchange will 

not list equity securities without first 

ensuring that Exchange Rules comply 

with Rule 10C–1, as described below.4

On March 30, 2011, to implement 

Section 10C of the Act,5 as added by 

Section 952 of the Dodd-Frank Wall 

Street Reform and Consumer Protection 

Act of 2010 (‘‘Dodd-Frank Act’’),6 the 

Commission proposed Rule 10C–1 

under the Act,7 which directs each 

national securities exchange to prohibit 

the listing of any equity security of any 

issuer, with certain exceptions, that 

does not comply with the rule’s 

requirements regarding compensation 

committees of listed issuers and related 

requirements regarding compensation 

advisers. On June 20, 2012, the 

Commission adopted Rule 10C–1.8 Rule 

10C–1 obligates the Exchange to 

establish listing standards that require 

each member of a listed issuer’s 

compensation committee to be a 

member of the issuer’s board and to be 

independent, as well as establish certain 

factors that an issuer must consider 

when evaluating the independence of a 

director.9 Rule 10C–1 also requires the 

Exchange to establish standards for 

evaluating the independence of a 

compensation consultant, legal counsel, 

or other adviser (‘‘Compensation 

Consultant’’) and requires a Company to 

provide funding to a compensation 

committee to retain such Compensation 

Consultant.10

The Exchange does not currently list 

any equity securities as a primary listing 

market. Consistent with this fact, 

Exchange Rule 2101(a) currently states 

that all equity securities traded on the 

ISE Stock Exchange 11 are traded 

pursuant to unlisted trading privileges 

and that the Exchange will not list any 

such securities before first filing and 

obtaining Commission approval of rules 

that incorporate qualitative listing 

criteria and comply with Rule 10A–3 

under the Act.12 To make clear the 

Exchange’s intention to comply with the 

requirements of Rule 10C–1, the 

Exchange proposes to amend Rule 

2101(a) to state that no equity securities 

will be listed on the ISE Stock Exchange 

until Exchange Rules have been 

amended to also comply with Rule 10C– 

1. Because the Exchange does not 

presently list any equity securities, the 

Exchange does not believe it is 

necessary to make any further 

amendments in response Section 952 of 

the Dodd-Frank Act at this time. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with the 

requirements of the Act and the rules 

and regulations thereunder that are 

applicable to a national securities 

exchange, and, in particular, with the 

requirements of Section 6(b) of the 

Act.13 Specifically, the proposal is 

consistent with Section 6(b)(5) of the 

Act,14 which requires exchange rules to 

promote just and equitable principles of 

trade, remove impediments to, and 

perfect the mechanism of, a free and 

open market and a national market 

system, and, in general, protect 

investors and the public interest. The 

Exchange believes the proposed rule 

change fulfills these requirements 

because it will add language to Rule 

2101(a) that clarifies the fact that the 

Exchange will not list equity securities 

without first ensuring that its rules 

comply with Rule 10C–1, which 

implements Section 10C of the Act.15

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange believes the proposal is 

consistent with Section 6(b)(8) of the 

Act 16 in that it does not impose any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange notes that the proposed rule 

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