Document ID: SEC-2021-0814-0002
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2021-07-15T04:00Z

[Federal Register Volume 86, Number 133 (Thursday, July 15, 2021)]
[Notices]
[Pages 37356-37361]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-15038]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92368; File Nos. SR-NYSE-2021-25, SR-NYSEAMER-2021-21, 
SR-NYSEArca-2021-24, SR-NYSECHX-2021-07, SR-NYSENAT-2021-09]

Self-Regulatory Organizations; New York Stock Exchange LLC, NYSE 
American LLC, NYSE Arca, Inc., NYSE Chicago, Inc., and NYSE National, 
Inc.; Order Instituting Proceedings To Determine Whether To Approve or 
Disapprove Proposed Rule Changes To Amend the Fee Schedule To Add Meet-
Me-Room Connectivity Services Available at the Mahwah Data Center

July 9, 2021.

I. Introduction

    On April 9, 2021, New York Stock Exchange LLC (``NYSE''), NYSE 
American LLC (``NYSE American''), NYSE Arca, Inc. (``NYSE Arca''), NYSE 
Chicago, Inc. (``NYSE Chicago''), and NYSE National, Inc. (``NYSE 
National'') (collectively, the ``Exchanges'') each filed with the 
Securities and Exchange Commission (``Commission''), pursuant to 
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Exchange 
Act'' or ``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule 
change to amend the schedule (``Fee Schedule'') to set forth several 
``Meet-Me-Room'' connectivity services available at the data center in 
Mahwah, New Jersey (``Mahwah Data Center'') for associated fees, and 
establish procedures for the allocation of cabinets and power to such 
customers should availability become limited. The proposed rule changes 
were published for comment in the Federal Register on April 22, 
2021.\3\ On June 2, 2021, pursuant to Section 19(b)(2) of the Act,\4\ 
the Commission designated a longer period within which to either 
approve the proposed rule changes, disapprove the proposed rule 
changes, or institute proceedings to determine whether to disapprove 
the proposed rule changes.\5\ The Commission has received no comment 
letters on the proposed rule changes. This order institutes proceedings 
under Section 19(b)(2)(B) of the Exchange Act \6\ to determine whether 
to approve or disapprove the proposed rule changes.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release Nos. 91598 (April 16, 
2021), 86 FR 21373 (April 22, 2021) (SR-NYSE-2021-25); 91599 (April 
16, 2021), 86 FR 21365 (April 22, 2021) (SR-NYSEAMER-2021-21); 91600 
(April 16, 2021), 86 FR 21384 (April 22, 2021) (SR-NYSEArca-2021-
24); 91601 (April 16, 2021), 86 FR 21410 (April 22, 2021) (SR-
NYSECHX-2021-07); and 91602 (April 16, 2021), 86 FR 21393 (April 22, 
2021) (SR-NYSENAT-2021-09) (collectively, the ``Notices''). For ease 
of reference, citations to the Notice(s) are to the Notice for SR-
NYSE-2021-25.
    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 92089 (June 2, 
2021), 86 FR 30510 (June 8, 2021). The Commission designated July 
21, 2021, as the date by which it should approve, disapprove, or 
institute proceedings to determine whether to disapprove the 
proposed rule changes.
    \6\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

II. Description of the Proposed Rule Changes

    The Exchanges propose to amend the Fee Schedule to set forth 
several ``Meet-Me-Room'' (or ``MMR'') connectivity services available 
at the data center in Mahwah, New Jersey (``Mahwah Data Center''), and 
associated fees, and establish procedures for the allocation of 
cabinets and power to MMR customers should availability become 
limited.\7\
---------------------------------------------------------------------------

    \7\ See Notice, supra note 3, at 21373.
---------------------------------------------------------------------------

    The Exchanges state that Intercontinental Exchange, Inc. (``ICE''), 
through its ICE Data Services (``IDS'') business, operates the Mahwah 
Data Center.\8\ From the Mahwah Data Center, the Exchanges provide co-
location services to any market participant that requests to receive 
co-location services directly from the Exchange (``Users'').\9\ 
Services are also available to customers that are not co-location Users 
(``NCL Customers'') \10\ (Users and NCL Customers, together the 
``Mahwah Customers'').\11\
---------------------------------------------------------------------------

    \8\ See id. The Exchanges themselves are indirect subsidiaries 
of ICE. See id. at 21373 n.6.
    \9\ See id. at 21373.
    \10\ See id. The Exchanges recently filed proposed rule changes 
regarding the IDS circuits and certain other services offered to NCL 
Customers. See, e.g., Securities Exchange Act Release No. 91217 
(February 26, 2021), 86 FR 12715 (March 4, 2021) (SR-NYSE-2021-14).
    \11\ See Notice, supra note 3, at 21373.
---------------------------------------------------------------------------

    The Exchanges state that Mahwah Customers require circuits 
connecting into and out of the Mahwah Data Center in order to connect 
their equipment outside of the Mahwah Data Center to their equipment or 
port within the Mahwah Data Center.\12\ They state that IDS and 
numerous third-party telecommunications service providers 
(``Telecoms'') provide these connections to Mahwah Customers in the 
form of wired circuits into and out of the Mahwah Data Center.\13\ The 
Exchanges explain that a Telecom completes a wired circuit by placing 
equipment in an MMR and installing carrier circuits between the 
Telecom's MMR equipment and one or more points outside the Mahwah Data 
Center.\14\ Mahwah Customers that contract with a Telecom to use its 
circuit connection connect to the Telecom's MMR equipment using a cross 
connect.\15\ Once connected to the Telecom's equipment, the Mahwah 
Customers can then use the Telecom's circuit to transport data into and 
out of the Mahwah Data Center.\16\
---------------------------------------------------------------------------

    \12\ See id.
    \13\ See id. Mahwah Customers may also use a third party 
wireless connection, including a proprietary wireless connection, to 
the Mahwah Data Center, in which case the portion of the connection 
closest to the Mahwah Data Center is wired. See id. at 21373 n.8. 
Regarding services offered by Telecoms, the Exchanges state that 
Telecoms are licensed by the Federal Communications Commission and 
are not required to be, or be affiliated with, a member of the 
Exchanges. See id. at 21373 n.9.
    \14\ See id. at 21373-74. The Exchanges state that a Telecom 
elects which MMR it will use, or if it will use both, and that 
neither IDS nor the Exchange knows the termination point of a 
Telecom's circuit or the content of any data sent on a circuit. See 
id. at 21374 n.10.
    \15\ See id. at 21374.
    \16\ In addition, the Exchanges state that a Telecom may sell 
access to its circuits to a second Telecom, which allows the second 
Telecom to use the first Telecom's circuit to access the Mahwah Data 
Center. The second Telecom thereby gains access to the Mahwah Data 
Center, where it installs its equipment in an MMR, without incurring 
the cost of installing its own proprietary circuits to the Mahwah 
Data Center. According to the Exchanges, IDS does not consent to, 
and need not be informed of, a Telecom's sale of a circuit to 
another Telecom. See id. at 21374.
---------------------------------------------------------------------------

    The Exchanges state that they make the current proposals solely as 
a result of their determination that the Commission's interpretations 
of the Act's definitions of the terms

[[Page 37357]]

``exchange'' \17\ and ``facility'' \18\ apply to connectivity services 
described herein that are offered by entities other than the 
Exchanges.\19\ The Exchanges state that they disagree with the 
Commission's interpretations, deny the services covered herein are 
offerings of an ``exchange'' or a ``facility'' thereof, and have sought 
review of the Commission's interpretations as expressed in the Wireless 
Approval Order in the Court of Appeals for the District of Columbia 
Circuit.\20\
---------------------------------------------------------------------------

    \17\ See 15 U.S.C. 78c(a)(1) (``The term `exchange' means any 
organization, association, or group of persons, whether incorporated 
or unincorporated, which constitutes, maintains, or provides a 
market place or facilities for bringing together purchasers and 
sellers of securities or for otherwise performing with respect to 
securities the functions commonly performed by a stock exchange as 
that term is generally understood, and includes the market place and 
the market facilities maintained by such exchange.'').
    \18\ See 15 U.S.C. 78c(a)(2) (``The term `facility' when used 
with respect to an exchange includes its premises, tangible or 
intangible property whether on the premises or not, any right to the 
use of such premises or property or any service thereof for the 
purpose of effecting or reporting a transaction on an exchange 
(including, among other things, any system of communication to or 
from the exchange, by ticker or otherwise, maintained by or with the 
consent of the exchange), and any right of the exchange to the use 
of any property or service.'').
    \19\ See Notice, supra note 3, at 21373; see also Securities 
Exchange Act Release No. 90209 (October 15, 2020), 85 FR 67044 
(October 21, 2020) (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'').
    \20\ See Notice, supra note 3, at 21373; see also 
Intercontinental Exchange, Inc. v. SEC, No. 20-1470 (D.C. Cir. 
2020).
---------------------------------------------------------------------------

A. Meet-Me-Room (MMR) Services

    The Exchanges propose to change the title of the Fee Schedule to 
``Wireless and Meet-Me-Room Connectivity Fees and Charges,'' and add 
under the heading ``C. Meet-Me-Room (`MMR') Services'' the following 
services available to customers in the two MMRs on the north and south 
sides of the Mahwah Data Center.\21\
---------------------------------------------------------------------------

    \21\ See Notice, supra note 3, at 21374. The Exchanges state 
that they recently filed proposed rule changes regarding the IDS 
circuits and services offered to NCL Customers, and that if such 
proposals are approved by the Commission, then the Exchanges expect 
to file amendments to the present proposals to conform to the 
relevant changes. See id. at 21374 n.11 (citing Securities Exchange 
Act Release No. 91217 (February 26, 2021), 86 FR 12715 (March 4, 
2021) (SR-NYSE-2021-14)).
---------------------------------------------------------------------------

1. Cabinet-Related Services
    The Exchanges propose to add to the Fee Schedule services and fees 
relating to the dedicated cabinets in the MMRs that IDS provides to 
Telecoms to house their equipment (collectively, ``Cabinet-Related 
Services'').\22\ According to the Exchanges, these cabinets are 
available in sizes based on the number of kilowatts (``kW'') allocated, 
subject to a maximum of 8 kW per cabinet.\23\ Telecoms pay an initial 
fee for each cabinet and a monthly fee based on the number of kW 
allocated to all of the Telecom's cabinets.\24\ The Exchanges propose 
an initial fee of $5,000 per dedicated MMR cabinet, and a monthly fee 
for power allocated to all of a Telecom's dedicated cabinets as 
follows: 4-8 kWs ($1,200); 9-20 kWs ($1,050); 21-40 kWs ($950); and 41+ 
kWs ($900) (each fee, per kW).\25\
---------------------------------------------------------------------------

    \22\ The Exchanges state that the Cabinet-Related Services are 
substantially similar to co-location services and related fees that 
the Exchanges offer to Users, as set forth in their price lists and 
fee schedules. See id. at 21374.
    \23\ See id.
    \24\ See id.
    \25\ The Exchanges also propose to add a note to the Fee 
Schedule stating that the monthly fee is based on total kWs 
allocated to all of a Telecom's cabinets. See id.
---------------------------------------------------------------------------

2. Access and Service Fees
    The Exchanges propose to add to the Fee Schedule the following 
services and fees relating to access and services that IDS provides to 
Telecoms (collectively, ``Access and Service Fees'').\26\
---------------------------------------------------------------------------

    \26\ The Exchanges state that most of the Access and Service 
Fees are substantially similar to services and related fees that the 
Exchanges offer to Users, as set forth in their price lists and fee 
schedules. See id.
---------------------------------------------------------------------------

a. Data Center Fiber Cross Connect
    According to the Exchanges, IDS offers fiber cross connects for an 
initial and monthly charge.\27\ Cross connects may run between a 
Telecom's cabinets, between its cabinet and the cabinet of another 
Telecom, or between its cabinet and its customer's cabinet or port.\28\ 
Cross connects may be bundled (i.e., multiple cross connects within a 
single sheath) such that a single sheath can hold either one cross 
connect or six cross connects.\29\ The Exchanges propose to amend the 
Fee Schedule to describe these services and set forth corresponding 
fees as follows: Furnish and install 1 cross connect ($500 initial 
charge plus $600 monthly charge); and furnish and install bundle of 6 
cross connects ($500 initial charge plus $1,800 monthly charge).\30\
---------------------------------------------------------------------------

    \27\ See id.
    \28\ See id. The Exchanges state that a cross connect to MMR 
cabinets may be purchased by the Telecom or the Telecom's customer. 
The same fee applies irrespective of which entity purchases the 
cross connect. See id. at 21374 n.15.
    \29\ See id. at 21374.
    \30\ See id. at 21375.
---------------------------------------------------------------------------

b. Conduit Sleeve Fee
    According to the Exchanges, a Telecom's circuits into and out of 
the Mahwah Data Center run through IDS conduits.\31\ Telecoms are 
assessed an initial charge for the installation of circuits in the IDS 
conduit, which covers up to five hours of work, and a monthly fee per 
conduit sleeve for using the IDS conduit.\32\ The Exchanges propose to 
amend the Fee Schedule to describe these services and set forth 
corresponding fees as follows: Install (5 hrs) and maintain conduit 
sleeve supporting Telecom circuit into data center ($1,000 initial 
charge plus $2,000 monthly charge per conduit sleeve).\33\
---------------------------------------------------------------------------

    \31\ The Exchanges state that there are currently three IDS 
conduit paths leading into the Mahwah Data Center, and a Telecom 
determines which conduit or conduits it will use to carry its 
circuits, which are carried in individual conduit sleeves. See id. 
at 21374. According to the Exchanges, the number of conduit sleeves 
a Telecom uses is dependent on the equipment and technology it uses 
and the size of the circuits it sells to Mahwah Customers, and that 
most Telecoms that use them have one conduit sleeve. See id. at 
21374 n.16.
    \32\ See id. at 21374.
    \33\ See id. at 21375.
---------------------------------------------------------------------------

c. Carrier Connection Fee
    As noted above,\34\ Telecoms contract with their customers for 
circuits into and out of the Mahwah Data Center.\35\ According to the 
Exchanges, Telecoms are charged a monthly fee for providing such 
circuits to Mahwah Customers, on a per connection basis.\36\ The 
Exchanges propose to amend the Fee Schedule to describe this service 
and set forth the corresponding fee as follows: Maintain Telecom's 
connections to its non-Telecom data center customers ($1,150 monthly 
charge per connection).\37\
---------------------------------------------------------------------------

    \34\ See supra notes 12-13 and accompanying text.
    \35\ See Notice, supra note 3, at 21374.
    \36\ See id.
    \37\ See id. at 21375.
---------------------------------------------------------------------------

d. Connection to Time Protocol Feed
    According to the Exchanges, IDS offers Telecoms the option to 
purchase connectivity to the Precision Time Protocol, with monthly and 
initial charges.\38\ Telecoms may make use of time feeds to receive 
time and to synchronize clocks between computer systems or throughout a 
computer network, and time feeds may assist Telecoms in other 
functions, including record keeping or measuring response times.\39\ 
The Exchanges propose to amend the Fee Schedule to describe this 
service and set forth corresponding fees as follows: Precision Time 
Protocol

[[Page 37358]]

($1,000 initial charge plus $250 monthly charge).\40\
---------------------------------------------------------------------------

    \38\ See id. at 21374.
    \39\ See id.
    \40\ See id. at 21375.
---------------------------------------------------------------------------

e. Expedite Fee
    According to the Exchanges, IDS offers Telecoms the option to 
expedite the completion of MMR services purchased or ordered by the 
Telecoms.\41\ The Exchanges propose to amend the Fee Schedule to 
describe this service and set forth the corresponding fee as follows: 
Expedited installation/completion of MMR service ($4,000 per 
request).\42\
---------------------------------------------------------------------------

    \41\ See id. at 21374.
    \42\ See id. at 21375.
---------------------------------------------------------------------------

3. Service-Related Fees
    The Exchanges propose to add to the Fee Schedule the following 
services and fees relating to services IDS provides to Telecoms 
(collectively, ``Service-Related Fees'').\43\
---------------------------------------------------------------------------

    \43\ The Exchange state that the Service-Related Fees are 
substantially similar to services and related fees that the 
Exchanges offer to Users, as set forth in their price lists and fee 
schedules. See id.
---------------------------------------------------------------------------

a. Change Fee
    According to the Exchanges, IDS charges a Telecom a ``Change Fee'' 
if the Telecom requests a change to one or more existing MMR services 
that IDS has already established or completed for the Telecom.\44\ The 
Change Fee is charged per order.\45\ The Exchanges propose to amend the 
Fee Schedule to describe this service and set forth the corresponding 
fee as follows: Change to a service that has already been installed/
completed for a Telecom ($950 per request).\46\
---------------------------------------------------------------------------

    \44\ See id.
    \45\ If a Telecom orders two or more services at one time, the 
Exchanges state that the Telecom is charged a one-time Change Fee, 
which would cover the multiple services. See id.
    \46\ See id.
---------------------------------------------------------------------------

b. Hot Hands Service
    According to the Exchanges, IDS offers Telecoms a ``Hot Hands 
Service,'' which allows Telecoms to use on-site data center personnel 
to maintain Telecom equipment, support network troubleshooting, rack 
and stack a server in a Telecom's cabinet, power recycling, and install 
and document the fitting of cable in a Telecom's cabinet(s).\47\ A Hot 
Hands Service fee is charged per half hour.\48\ The Exchanges propose 
to amend the Fee Schedule to describe this service and set forth the 
corresponding fee as follows: Allows Telecom to use on-site data center 
personnel to maintain Telecom equipment, support network 
troubleshooting, rack and stack, power recycling, and install and 
document cable ($100 per half hour).\49\
---------------------------------------------------------------------------

    \47\ See id.
    \48\ See id.
    \49\ See id.
---------------------------------------------------------------------------

c. Shipping and Receiving
    According to the Exchanges, IDS offers shipping and receiving 
services to Telecoms, with a per shipment fee for the receipt of one 
shipment of goods at the Mahwah Data Center from the Telecom or 
supplier.\50\ The Exchanges propose to amend the Fee Schedule to 
describe this service and set forth the corresponding fee as follows: 
Receipt of one shipment of goods at data center on behalf of Telecom 
(includes coordination of shipping and receiving) ($100 per 
shipment).\51\
---------------------------------------------------------------------------

    \50\ See id.
    \51\ See id.
---------------------------------------------------------------------------

d. Visitor Security Escort
    According to the Exchanges, Telecom representatives are required to 
be accompanied by a visitor security escort during visits to the Mahwah 
Data Center, for which a fee per visit is charged.\52\ The Exchanges 
propose to amend the Fee Schedule to describe this service and set 
forth the corresponding fee as follows: All Telecom representatives are 
required to be accompanied by a visitor security escort during visits 
to the data center ($75 per visit).\53\
---------------------------------------------------------------------------

    \52\ See id.
    \53\ See id.
---------------------------------------------------------------------------

B. Allocation of Cabinets and Power

    The Exchanges propose to establish procedures for the allocation of 
cabinets and power to Telecoms (``Proposed Allocation 
Procedures'').\54\ As noted above,\55\ IDS offers dedicated cabinets in 
the MMRs to Telecoms to house their equipment.\56\ According to the 
Exchanges, the Exchanges allocate cabinets on a first-come/first-serve 
basis.\57\ When a cabinet is first set up or later, a Telecom may 
request power upgrades (``Additional Power'') to a dedicated cabinet in 
addition to the power allocated to such cabinet (the ``Standard Cabinet 
Power''), subject to a maximum of 8 kW per cabinet.\58\ The Exchanges 
maintain that it would be prudent to have procedures in place for the 
allocation of cabinets and power to Telecoms should such allocation be 
necessary.\59\
---------------------------------------------------------------------------

    \54\ See id.
    \55\ See supra note 22 and accompanying text.
    \56\ See Notice, supra note 3, at 21375.
    \57\ See id.
    \58\ See id.
    \59\ See id.
---------------------------------------------------------------------------

    The Exchanges propose to add the Proposed Allocation Procedures to 
the Fee Schedule under the heading ``MMR Notes,'' setting forth the 
procedures under proposed Notes 1 and 2.\60\ Proposed Note 1 would 
provide that, if the amount of power or cabinets available fell below 
specified thresholds, Telecoms would be subject to purchasing 
limits.\61\ Note 1 would also specify when the purchasing limits would 
cease to apply and would provide that if a Telecom requests a number of 
cabinets and/or amount of Additional Power that would cause the 
unallocated capacity to be below the specified power and cabinet 
thresholds, the purchasing limits would apply only to the portion of 
the Telecom's order below the relevant threshold.\62\
---------------------------------------------------------------------------

    \60\ See id.
    \61\ See id. Specifically, the Exchanges propose to provide 
under the heading ``Note 1: Cabinet and Power Purchasing Limits'' 
that if (i) unallocated cabinet inventory is at or below 3 cabinets 
(``Cabinet Threshold''), or (ii) the unallocated power capacity in 
the MMRs is at or below 8 kW (the ``Power Threshold''), then the 
following limits on the purchase of new cabinets (``Purchasing 
Limits'') will apply: If only the Cabinet Threshold is reached, then 
under the following measures (the ``Cabinet Limits''), the Exchanges 
will limit each Telecom's purchase of new cabinets to a maximum of 
one dedicated cabinet. A Telecom will have to wait 30 days from the 
date of its signed order form before purchasing a new cabinet again. 
If only the Power Threshold is reached or both the Cabinet Threshold 
and the Power Threshold are reached, then under the following 
measures (the ``Combined Limits''), a Telecom may purchase either or 
both of a one new cabinet, subject to a maximum standard power 
allocation of 4 kW (``Standard Cabinets''), or additional power for 
new or existing cabinet, so long as the combined power usage of such 
purchases is no more than a maximum of 4 kW. A Telecom will have to 
wait 30 days from the date of its signed order form before 
purchasing a new Standard Cabinet or additional power again. If the 
Cabinet Threshold is reached before the Power Threshold, the Cabinet 
Limits will be in effect until the Power Threshold is reached, after 
which the Combined Limits will apply. See id. at 21376.
    \62\ See id. at 21375. Specifically, the Exchanges propose to 
provide that if a Telecom requests, in writing, a number of cabinets 
that, if provided, would cause the available cabinet inventory to be 
below 3 cabinets, the Cabinet Limits will only apply to the portion 
of the Telecom's order below the Cabinet Threshold. When unallocated 
cabinet inventory for the MMRs is more than 3 cabinets, the 
Exchanges will discontinue the Cabinet Limits. If a Telecom 
requests, in writing, a number of Standard Cabinets and/or an amount 
of additional power that, if provided, would cause the unallocated 
power capacity to be below the Power Threshold or Cabinet Threshold, 
the Combined Limits would apply only to the portion of the Telecom's 
order below the relevant threshold. When unallocated power capacity 
is above the Power Threshold, the Exchanges will discontinue the 
Combined Limits. If at that time the unallocated cabinet inventory 
is 3 or fewer cabinets, the Cabinet Limits would enter into effect. 
See id. at 21376.
---------------------------------------------------------------------------

    Note 2 would provide that, if the amount of power or cabinets 
available fell to zero, Telecoms seeking to purchase power or cabinets 
would be put on a ``Cabinet Waitlist'' \63\ or a

[[Page 37359]]

``Combined Waitlist.'' \64\ In both proposed Notes 1 and 2, the 
Proposed Allocation Procedures would state how the procedures regarding 
cabinets and the procedures regarding power would relate to each other, 
and in each case would state what the threshold amount of power and 
cabinets would be to discontinue the limits.\65\
---------------------------------------------------------------------------

    \63\ Specifically, the Exchanges propose to provide under the 
heading ``Note 2: Cabinet and Combined Waitlists'' that the 
Exchanges will create a cabinet waitlist (``Cabinet Waitlist'') if 
the available cabinet inventory is zero, or a Telecom requests, in 
writing, a number of cabinets that, if provided, would cause the 
available inventory to be zero. The Exchanges will place Telecoms 
seeking cabinets on a Cabinet Waitlist as follows: A Telecom will be 
placed on the Cabinet Waitlist based on the date its signed order is 
received. A Telecom may only have one order for a new cabinet on the 
Cabinet Waitlist at a time, and the order is subject to the Cabinet 
Limits. If a Telecom changes the size of its order while it is on 
the Cabinet Waitlist, it will maintain its place on the Cabinet 
Waitlist, provided that the Telecom may not increase the size of its 
order such that it would exceed the Cabinet Limits. As cabinets 
become available, the Exchanges will offer a cabinet to the Telecom 
at the top of the Cabinet Waitlist. If the Telecom's order is 
completed, it will be removed from the Cabinet Waitlist. A Telecom 
will be removed from the Cabinet Waitlist (a) at the Telecom's 
request or (b) if the Telecom turns down an offer of a cabinet of 
the same size it requested in its order. If the Exchange offer the 
Telecom a cabinet of a different size than the Telecom requested in 
its order, the Telecom may turn down the offer and remain at the top 
of the Cabinet Waitlist until its order is completed. A Telecom that 
is removed from the Cabinet Waitlist but subsequently submits a new 
written order for a cabinet will be added back to the bottom of the 
Cabinet Waitlist. When unallocated cabinet inventory is more than 3 
cabinets, the Exchange will cease use of the Cabinet Waitlist. See 
id.
    \64\ See id. at 21375. Specifically, the Exchanges propose to 
create a power and cabinet waitlist (``Combined Waitlist'') if the 
unallocated power capacity is zero, or if a Telecom requests, in 
writing, an amount of power (whether power allocated to a Standard 
Cabinet or additional power) that, if provided, would cause the 
unallocated power capacity to be below zero. The Exchanges will 
place Telecoms seeking cabinets or power on the Combined Waitlist, 
as follows: If a Cabinet Waitlist exists when the requirements to 
create a Combined Waitlist are met, the Cabinet Waitlist will 
automatically convert to the Combined Waitlist. If a Combined 
Waitlist exists when the requirements to create a Cabinet Waitlist 
are met, no new waitlist will be created, and the Combined Waitlist 
will continue in effect. A Telecom will be placed on the Combined 
Waitlist based on the date its signed order for a cabinet and/or 
additional power is received. A Telecom may only have one order for 
a new cabinet and/or additional power on the Combined Waitlist at a 
time, and the order would be subject to the Combined Limits. If a 
Telecom changes the size of its order while it is on the Combined 
Waitlist, it will maintain its place on the Combined Waitlist, 
provided that the Telecom may not increase the size of its order 
such that it would exceed the Combined Limits. As additional power 
and/or cabinets become available, the Exchanges will offer them to 
the Telecom at the top of the Combined Waitlist. If the Telecom's 
order is completed, the order will be removed from the Combined 
Waitlist. If the Telecom's order is not completed, it will remain at 
the top of the Combined Waitlist. A Telecom will be removed from the 
Combined Waitlist (a) at the Telecom's request; or (b) if the 
Telecom turns down an offer that is the same as its order (e.g., the 
offer includes a cabinet of the same size and/or the amount of 
additional power that the Telecom requested in its order). If the 
Exchanges offer the Telecom an offer that is different than its 
order, the Telecom may turn down the offer and remain at the top of 
the Combined Waitlist until its order is completed. A Telecom that 
is removed from the Combined Waitlist but subsequently submits a new 
written order for a cabinet and/or additional power will be added 
back to the bottom of the waitlist. If the Combined Waitlist is in 
effect, when unallocated power capacity in co-location is at 8 kW or 
more, the Exchanges will cease use of the Combined Waitlist. If at 
that time the unallocated cabinet inventory is 3 or fewer cabinets, 
the Cabinet Waitlist would enter into effect. See id. at 21376-77.
    \65\ See id. at 21375-36.
---------------------------------------------------------------------------

III. Exchanges' Justification

    With respect to the MMR services and fees, the Exchanges generally 
argue that the proposals are reasonable, equitable, not unfairly 
discriminatory, and would not impose a burden on competition that it 
not necessary or appropriate, as required by Sections 6(b)(4), (5) and 
(8) of the Exchange Act, because use of the proposed services is 
completely voluntary and their use enables Telecoms to compete with IDS 
in providing connectivity services to Mahwah Customers.\66\ According 
to the Exchanges, IDS operates in a highly competitive market in which 
exchanges, third party telecommunications providers, Hosting Users,\67\ 
and other third-party vendors offer connectivity services as a means to 
facilitate the trading and other market activities of market 
participants.\68\ By making it possible for Telecoms to offer their 
customers circuits into and out of the Mahwah Data Center, the 
Exchanges state that the proposed MMR services allow Telecoms to 
compete with IDS, and that the continued availability of choices for 
Mahwah Customers is beneficial to both the Telecoms and the Mahwah 
Customers.\69\ The Exchanges state that if these MMR services were not 
available, all Mahwah Customers and third-party telecommunications 
service providers would be required to use IDS circuits to access the 
Mahwah Data Center, thereby reducing competition.\70\ The Exchanges 
also state that the described services and fees are offered to and 
subscribed to by existing Telecoms, and thus expect that the impact of 
the proposals would be minimal.\71\
---------------------------------------------------------------------------

    \66\ See id. at 21377-79.
    \67\ ``Hosting'' is a service offered by a User to another 
entity in the User's space within the Mahwah Data Center. The 
Exchanges allow Users to act as Hosting Users for a monthly fee. See 
id. at 21377 n.21 (citing Securities Exchange Act Release No. 76008 
(September 29, 2015), 80 FR 60190 (October 5, 2015) (SR-NYSE-2015-
40)).
    \68\ In this regard, the Exchanges maintain that most of the 
Telecoms that provide circuits do so at fees lower than those of 
IDS, and that most Mahwah Customers use Telecom circuits into and 
out of the Mahwah Data Center. See id. at 21377.
    \69\ See id.
    \70\ See id.
    \71\ The Exchanges further state that they do not expect that 
IDS would attract any new customers as a result of the proposals. 
See id.
---------------------------------------------------------------------------

    In addition, the Exchanges argue that the proposals are reasonable 
because use of any MMR service is completely voluntary and available to 
purchasers on an equal basis, with each Telecom able to determine 
whether to use MMR services based on the requirements of its business 
operations, and each Telecom being charged only for the services that 
it selects and for the same amount as all other Telecoms purchasing 
such services.\72\ The Exchanges also argue that the fees proposed for 
the MMR fees are reasonable because, to the extent the services IDS 
offers to Telecoms are substantially the same as the services offered 
by the Exchange to Users, the fees are the same.\73\ With respect to 
the two services not offered to Users (the Conduit Sleeve Fee and 
Carrier Connection Fee), the Exchanges state that the fees IDS charges 
Telecoms are reasonable because the services correspond to the 
Telecoms' usage of the IDS conduits and the Telecoms' ability to offer 
their circuits to their customers.\74\ In addition, the Exchanges 
provide some cost-based justifications for why the proposals are 
reasonable, claiming that IDS must provide, maintain, and operate the 
Mahwah Data Center technology infrastructure, expand the network 
infrastructure to keep pace with the services available to Telecoms, 
and handle the installation, administration, monitoring, support, and 
maintenance of the MMR services.\75\
---------------------------------------------------------------------------

    \72\ See id.
    \73\ See id.
    \74\ See id.
    \75\ See id.
---------------------------------------------------------------------------

    The Exchanges contend that the proposals provide for an equitable 
allocation of fees and are not unfairly discriminatory, again arguing 
generally that the proposed services would allow Telecoms to continue 
to compete with IDS, in addition to being voluntary and available to 
all market participants on an equal basis.\76\ The Exchanges claim that 
the proposed rule changes would apply to all market participants and 
would not apply differently to distinct types or sizes of licensed 
telecommunications service providers, but rather would apply to all 
equally.\77\
---------------------------------------------------------------------------

    \76\ See id. at 21378-79.
    \77\ See id. at 21379.
---------------------------------------------------------------------------

    The Exchanges argue that the proposed rule changes do not impose an 
unnecessary or inappropriate burden on competition because the 
proposals would preserve the ability of IDS to offer the services 
described herein,

[[Page 37360]]

allowing the Telecoms to compete with IDS in providing connectivity 
services into and out of the Mahwah Data Center.\78\ According to the 
Exchanges, the proposals do not affect competition among national 
securities exchanges or among members of the Exchanges, but rather the 
Exchanges' filing of the proposals puts IDS at a competitive 
disadvantage relative to its commercial competitors that are not 
subject to filing requirements of Section 19(b) of the Act.\79\
---------------------------------------------------------------------------

    \78\ See id.
    \79\ See id. at 21379-80.
---------------------------------------------------------------------------

    Regarding the Proposed Allocation Procedures, the Exchanges argue 
principally that it would be reasonable to put in place procedures to 
establish the allocation of power and cabinets to Telecoms on an 
equitable basis should the need arise, and that the Proposed Allocation 
Procedures are consistent with those of another exchange and those 
recently approved for allocating cabinets and power in the context of 
the Exchanges' co-location service offerings.\80\
---------------------------------------------------------------------------

    \80\ See id. at 21378, 21378 n.26.
---------------------------------------------------------------------------

IV. Proceedings To Determine Whether To Approve or Disapprove the 
Proposed Rule Changes

    The Commission is instituting proceedings pursuant to Section 
19(b)(2)(B) of the Act to determine whether the Exchanges' proposed 
rule changes should be approved or disapproved.\81\ Institution of 
proceedings does not indicate that the Commission has reached any 
conclusions with respect to any of the issues involved. Rather, the 
Commission seeks and encourages interested persons to provide 
additional comment on the proposed rule changes to inform the 
Commission's analysis of whether to approve or disapprove the proposed 
rule changes.
---------------------------------------------------------------------------

    \81\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

    Pursuant to Section 19(b)(2)(B) of the Act,\82\ the Commission is 
providing notice of the grounds for possible disapproval under 
consideration:
---------------------------------------------------------------------------

    \82\ Id. Section 19(b)(2)(B) of the Act also provides that 
proceedings to determine whether to disapprove a proposed rule 
change must be concluded within 180 days of the date of publication 
of notice of the filing of the proposed rule change. See id. The 
time for conclusion of the proceedings may be extended for up to 60 
days if the Commission finds good cause for such extension and 
publishes its reasons for so finding, or if the exchange consents to 
the longer period. See id.
---------------------------------------------------------------------------

     Whether the Exchanges have demonstrated how the proposals 
are consistent with Section 6(b)(4) of the Act, 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;'' \83\
---------------------------------------------------------------------------

    \83\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

     Whether the Exchanges have demonstrated how the proposals 
are consistent with Section 6(b)(5) of the Act, which requires, among 
other things, that the rules of a national securities exchange be 
``designed to perfect the operation of a free and open market and a 
national market system'' and ``protect investors and the public 
interest,'' and not be ``designed to permit unfair discrimination 
between customers, issuers, brokers, or dealers;'' \84\ and
---------------------------------------------------------------------------

    \84\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

     Whether the Exchanges have demonstrated how the proposals 
are consistent with Section 6(b)(8) of the Act, which requires that the 
rules of a national securities exchange ``not impose any burden on 
competition not necessary or appropriate in furtherance of the purposes 
of [the Act].'' \85\
---------------------------------------------------------------------------

    \85\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

    As discussed in Section III above, the Exchanges make various 
arguments in support of the proposals. The Commission believes that 
there are questions as to whether the Exchanges have provided 
sufficient information to demonstrate that the proposals, including the 
proposed fees for MMR services, are consistent with the Act.
    Under the Commission's Rules of Practice, the ``burden to 
demonstrate that a proposed rule change is consistent with the Exchange 
Act and the rules and regulations issued thereunder . . . is on the 
self-regulatory organization [`SRO'] that proposed the rule change.'' 
\86\ The description of a proposed rule change, its purpose and 
operation, its effect, and a legal analysis of its consistency with 
applicable requirements must all be sufficiently detailed and specific 
to support an affirmative Commission finding.\87\ Any failure of an SRO 
to provide this information may result in the Commission not having a 
sufficient basis to make an affirmative finding that a proposed rule 
change is consistent with the Act and the applicable rules and 
regulations.\88\
---------------------------------------------------------------------------

    \86\ 17 CFR 201.700(b)(3).
    \87\ See id.
    \88\ See id.
---------------------------------------------------------------------------

    The Commission is instituting proceedings to allow for additional 
consideration and comment on the issues raised herein, including as to 
whether the proposals are consistent with the Act, specifically, with 
its requirements that the rules of a national securities exchange 
provide for the equitable allocation of reasonable dues, fees, and 
other charges among its members, issuers, and other persons using its 
facilities; are designed to perfect the operation of a free and open 
market and a national market system, and to protect investors and the 
public interest; are not designed to permit unfair discrimination 
between customers, issuers, brokers, or dealers; and do not impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act; \89\ as well as any other 
provision of the Act, or the rules and regulations thereunder.
---------------------------------------------------------------------------

    \89\ See 15 U.S.C. 78f(b)(4), (5), and (8).
---------------------------------------------------------------------------

V. Commission's Solicitation of Comments

    The Commission requests written views, data, and arguments with 
respect to the concerns identified above as well as any other relevant 
concerns. Such comments should be submitted by August 5, 2021. Rebuttal 
comments should be submitted by August 19, 2021. Although there do not 
appear to be any issues relevant to approval or disapproval that would 
be facilitated by an oral presentation of views, data, and arguments, 
the Commission will consider, pursuant to Rule 19b-4, any request for 
an opportunity to make an oral presentation.\90\
---------------------------------------------------------------------------

    \90\ 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act grants the 
Commission flexibility to determine what type of proceeding--either 
oral or notice and opportunity for written comments--is appropriate 
for consideration of a particular proposal by an SRO. See Securities 
Acts Amendments of 1975, Report of the Senate Committee on Banking, 
Housing and Urban Affairs to Accompany S. 249, S. Rep. No. 75, 94th 
Cong., 1st Sess. 30 (1975).
---------------------------------------------------------------------------

    The Commission asks that commenters address the sufficiency and 
merit of the Exchanges' statements in support of the proposals, in 
addition to any other comments they may wish to submit about the 
proposed rule changes.
    Interested persons are invited to submit written data, views, and 
arguments concerning the proposed rule changes, including whether the 
proposals are 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 Nos. SR-NYSE-2021-25, SR-NYSEAMER-2021-21, SR-NYSEArca-2021-24, 
SR-NYSECHX-2021-07, SR-NYSENAT-2021-09 on the subject line.

[[Page 37361]]

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 Nos. SR-NYSE-2021-25, SR-NYSEAMER-
2021-21, SR-NYSEArca-2021-24, SR-NYSECHX-2021-07, and SR-NYSENAT-2021-
09. The file numbers 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 (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 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 10:00 a.m. and 3:00 p.m. Copies of such filing also will be 
available for inspection and copying at the principal office of the 
Exchanges. All comments received will be posted without change. Persons 
submitting comments are cautioned that we do not redact or edit 
personal identifying information from comment submissions. You should 
submit only information that you wish to make publicly available. All 
submissions should refer to File Nos. SR-NYSE-2021-25, SR-NYSEAMER-
2021-21, SR-NYSEArca-2021-24, SR-NYSECHX-2021-07, and SR-NYSENAT-2021-
09 and should be submitted on or before August 5, 2021. Rebuttal 
comments should be submitted by August 19, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\91\
---------------------------------------------------------------------------

    \91\ 17 CFR 200.30-3(a)(57).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-15038 Filed 7-14-21; 8:45 am]
BILLING CODE 8011-01-P