Document ID: SEC-2010-0672-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2010-05-06T04:00Z

[Federal Register: May 6, 2010 (Volume 75, Number 87)]
[Notices]               
[Page 25007-25009]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06my10-105]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61999; File No. SR-NYSEArea-2010-15]

 
 Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving 
a Proposed Rule Change Amending Its Schedule of Fees and Charges for 
Exchange Services

April 29, 2010.

I. Introduction

    On March 5, 2010, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change relating to co-location services and related fees. 
The proposed rule change was published for comment in the Federal 
Register on March 26, 2010.\3\ The Commission received no comment 
letters on the proposal. This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 61748 (March 19, 
2010), 75 FR 14644 (``Notice'').

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[[Page 25008]]

II. Description

    In its proposal, NYSE Arca described certain co-location services 
offered by the Exchange, and proposed to amend its Schedules of Fees 
and Charges for Exchange Services for both its equities and options 
platforms (the ``Schedules'') in order to identify fees pertaining to 
such co-location services.

Co-Location Services

    The Exchange offers its Users \4\ the opportunity to rent space on 
premises controlled by the Exchange so that they may locate their 
electronic servers in close physical proximity to the Exchange's 
trading and execution systems. These co-location services are currently 
provided at a data center operated by a private third-party vendor 
located in New Jersey, and Users may rent space ranging from half 
cabinets up to two full cabinets, with different power usage 
capabilities ranging from 2 kilowatts up to 8 kilowatts. The services 
provided include equipment installation, cross connections, and 
miscellaneous post-installation services (including cable installation, 
equipment racking and ``remote-hands'' maintenance). In the proposal, 
the Exchange represents that the fees assessed for the services and 
space generally reflect the amount of space used and power required.
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    \4\ The term ``User'' means any ETP Holder or Sponsored 
Participant who is authorized to obtain access to the NYSE Arca 
Marketplace pursuant to Rule 7.29, and any OTP Holder, OTP Firm or 
Sponsored Participant that is authorized to obtain access to OX 
pursuant to Rule 6.2A. See NYSE Arca Equities Rule 1.1(yy) and NYSE 
Arca Options Rule 6.1A(a)(19).
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    NYSE Arca further represents that Users that receive co-location 
services from NYSE Arca do not receive any means of access to the 
Exchange's trading and execution systems that is separate from or 
superior to that of Users that do not receive co-location services. 
NYSE Arca further represents that all orders sent to the Exchange enter 
the Exchange's trading and execution systems through the same order 
gateway, regardless of whether the sender is co-located in the 
Exchange's data center or not. In addition, the Exchange represents 
that co-located Users do not receive any market data or data service 
product that is not available to all Users. Finally, NYSE Arca notes 
that although Users that receive co-location services normally would 
expect reduced latencies when sending orders to the Exchange and 
receiving market data from the Exchange, NYSE Arca believes that other 
than these reduced latencies, there are no material differences in 
terms of access to the Exchange between Users that choose to co-locate 
and those that do not.
    In the proposal, the Exchange explained that it offers co-location 
space based on availability, and believes that it has sufficient space 
to accommodate current demand on an equitable basis. In addition, 
according to the Exchange, any difference among the positions of the 
cabinets within the data center does not create any material difference 
among co-location Users in terms of access to the Exchange.

Co-Location Fees

    The Exchange's proposed co-location fees, which, in part, reflect 
power usage priced at $1000 per kilowatt (``kW'') per month, are 
reflected below.

Half cabinet (up to 2 kW)....................  $2,000 per month.
                                               $2,500 one time
                                                installation fee.
Full cabinet (up to 2.5 kW)..................  $2,500 per month.
                                               $5,000 one time
                                                installation fee.
Full cabinet (up to 4 kW)....................  $4,000 per month.
                                               $5,000 one time
                                                installation fee.
Full cabinet (up to 8 kW)....................  $8,000 per month.
                                               $5,000 one time
                                                installation fee.
Miscellaneous services post installation       $200 per hour.
 (including cable installation services,
 equipment racking services, and on going
 remote-hands maintenance).
Fiber cross connections (local and             $600 per month.
 interfloor).
                                               $950 one time
                                                installation fee.
Less than half cabinet \5\...................  $150 per Rack Unit.

III. Discussion and Commission's Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\6\ 
In particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\7\ which requires that the 
rules of a national securities exchange provide for the equitable 
allocation of reasonable dues, fees and other charges among its members 
and issuers and other persons using its facilities, and with Section 
6(b)(5) of the Act,\8\ which requires, among other things, that the 
rules of a national securities exchange be 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, and not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \5\ The Exchange represents that it supports existing 
arrangements to provide Users with less than a half cabinet, but it 
does not offer that option to new co-location Users.
    \6\ In approving this proposal, the commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78f(b)(4).
    \8\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that the proposed co-location fees are 
equitably allocated insofar as they are applied on the same terms to 
similarly-situated market participants. In addition, the Commission 
believes that the co-location services described in the proposed rule 
change are not unfairly discriminatory because: (1) Co-location 
services are offered to all Users who request them and pay the 
appropriate fees; (2) the Exchange has represented that Users receiving 
co-location services do not receive any means of access to the 
Exchange's trading and execution systems that is separate from or 
superior to that of Users that do not receive co-location services; (3) 
the Exchange has represented that there are no material differences in 
terms of access to the Exchange between Users that choose to co-locate 
and those that do not, other than co-located Users' reduced latencies 
due to proximity; and (4) the Exchange has stated that it has 
sufficient space to accommodate current demand for co-location services 
on an equitable basis.

[[Page 25009]]

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change (SR-NYSEArca-2010-15) be, and 
hereby is, approved.
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    \9\ 15 U.S.C. 78s(b)(2).
    \10\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-10595 Filed 5-5-10; 8:45 am]
BILLING CODE 8011-01-P