Document ID: SEC-2010-1751-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2010-11-16T05:00Z

[Federal Register Volume 75, Number 220 (Tuesday, November 16, 2010)]
[Notices]
[Pages 70048-70052]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-28691]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63275; File No. SR-NYSEArca-2010-100]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending the 
Applicable Sections of Its Schedules of Fees and Charges for Exchange 
Services for Both Its Equities and Options Platforms (the 
``Schedules'') To Reflect Fees Charged for Co-location Services

November 8, 2010.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\

[[Page 70049]]

notice is hereby given that, on November 3, 2010, NYSE Arca, Inc. (the 
``Exchange'' or ``NYSE Arca'') filed with the Securities and Exchange 
Commission (the ``Commission'') the proposed rule change as described 
in Items I and II below, which Items have been prepared by the self-
regulatory organization. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the applicable sections of its 
Schedules of Fees and Charges for Exchange Services for both its 
equities and options platforms (the ``Schedules'') to reflect fees 
charged for co-location services as described more fully herein. The 
text of the proposed rule change is available at the Exchange, the 
Commission's Public Reference Room, on the Commission's Web site at 
http://www.sec.gov, and http://www.nyse.com.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Schedules to identify fees 
pertaining to co-location services, which allow Users \4\ of the 
Exchange to rent space on premises controlled by the Exchange in order 
that they may locate their electronic servers in close physical 
proximity to the Exchange's trading and execution systems.\5\ The 
Exchange plans to offer these co-location services beginning in January 
2011 at its data center in Mahwah, New Jersey.\6\ The Exchange will 
offer space at the data center in cabinets with power usage capability 
of either four or eight kilowatts (kW).\7\ In addition, the Exchange 
will offer Users services related to co-location, including cross 
connections, equipment and cable installation, and remote ``hot-hands'' 
services.
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    \4\ For the purposes of this filing, the term ``Users'' includes 
any ETP Holder or Sponsored Participant who is authorized to obtain 
access to the NYSE Arca Marketplace pursuant to NYSE Arca Equities 
Rule 7.29 (see NYSE Arca Equities Rule 1.1(yy)), or any OTP Holder, 
OTP Firm or Sponsored Participant that is authorized to obtain 
access to OX pursuant to NYSE Arca Options Rule 6.2A (see NYSE Arca 
Options Rule 6.1A(a)(19)).
    \5\ The Commission has approved proposed rule filings submitted 
by the Exchange's affiliates, the New York Stock Exchange LLC, and 
NYSE Amex LLC (with respect to its equities business), to offer the 
same co-location services from the Mahwah data center at the same 
prices. See Securities Exchange Act Release No. 62961 (September 21, 
2010), 75 FR 59299 (September 27, 2010) (SR-NYSE-2010-56); 
Securities Exchange Act Release No. 62960 (September 21, 2010) 75 FR 
59310 (September 27, 2010) (SR-NYSEAmex-2010-80).
    \6\ The Exchange will announce the effective date of the fees 
set forth in this proposed rule change through a notice to Users.
    \7\ The Exchange also allows Users, for a monthly fee (i.e., 40% 
of the applicable monthly per kW fee), to obtain an option for 
future use on available, unused cabinet space in proximity to their 
existing cabinet space. Specifically, Users may reserve cabinet 
space of up to 30% of the cabinet space under contract, which the 
Exchange will endeavor to provide as close as reasonably possible to 
the User's existing cabinet space, taking into consideration power 
availability within segments of the data center and the overall 
efficiency of use of data center resources as determined by the 
Exchange. (If the 30% measurement results in a fractional cabinet, 
the cabinet count is adjusted up to the next increment.) If reserved 
cabinet space becomes needed for use, the reserving User will have 
30 business days to formally contract with the Exchange for full 
payment for the reserved cabinet space needed or the space will be 
reassigned.
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    Users that receive co-location services from the Exchange will 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. 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, co-located Users do not receive any market 
data or data service product that is not available to all Users. 
However, Users that receive co-location services normally would expect 
reduced latencies in sending orders to the Exchange and receiving 
market data from the Exchange. In addition, co-located Users have the 
option of obtaining access to the Exchange's Liquidity Center Network 
(``LCN''), a local area network available in the data center.\8\ Co-
located Users have the option of using either the LCN or the Exchange's 
Secure Financial Transaction Infrastructure (``SFTI'') network, to 
which all Users have access. Because it operates as a local area 
network within the data center, the LCN provides reduced latencies in 
comparison with SFTI. Other than the reduced latencies, the Exchange 
believes 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. SFTI and LCN both provide Users with access to the Exchange's 
trading and execution systems and to the Exchange's proprietary market 
data products. User access to non-proprietary market data products is 
available through SFTI and not through LCN.
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    \8\ As set forth below, pricing for LCN access is provided on a 
stand-alone basis and on a bundled basis in combination with SFTI 
connections and optic connections to outside access centers and 
within the data center. The SFTI and optic connections are not 
related to the co-location services.
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    The Exchange offers co-location space based on availability and the 
Exchange believes that it has sufficient space in the Mahwah data 
center to accommodate current demand on an equitable basis for the 
foreseeable future. In addition, the Exchange believes that any 
difference among the positions of the cabinets within the data center 
does not create any material difference to co-location Users in terms 
of access to the Exchange.
    The following charts identify the proposed tiered fees for co-
location and the proposed fees for related services.

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                Initial fee per cabinet                                          $5,000
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                     Number of kWs                                         Per kW fee monthly
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4-8...................................................                                                    $1,200
12-20.................................................                                                    $1,050
24-40.................................................                                                      $950
44 +..................................................                                                      $900
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[[Page 70050]]

------------------------------------------------------------------------
        Type of service              Description       Amount of charge
------------------------------------------------------------------------
LCN Access.....................  1 GB Circuit.......  $6,000 per
                                                       connection
                                                       initial charge
                                                       plus $5,000
                                                       monthly per
                                                       connection.
LCN Access.....................  10 GB Circuit......  $10,000 per
                                                       connection.
Bundled Network Access, Option   1 GB Bundle........  $25,000 initial
 1 (2 LCN connections, 2 SFTI    10 GB Bundle.......   charge plus
 connections, and 2 optic                              $13,000 monthly
 connections to outside access                         charge.
 center).                                             $50,000 initial
                                                       charge plus
                                                       $47,000 monthly
                                                       charge.
Bundled Network Access, Option   1 GB Bundle........  $26,000 initial
 2 (2 LCN connections, 2 SFTI    10 GB Bundle.......   charge plus
 connections, 1 optic                                  $16,000 monthly
 connection to outside access                          charge.
 center, and 1 optic connection                       $50,000 initial
 in data center).                                      charge plus
                                                       $54,250 monthly
                                                       charge.
Bundled Network Access, Option   1 GB Bundle........  $27,500 initial
 3 (2 LCN Connections, 2 SFTI    10 GB Bundle.......   charge plus
 connections, and 2 optic                              $19,000 monthly
 connections in data center).                          charge.
                                                      $50,000 initial
                                                       charge plus
                                                       $61,500 monthly
                                                       charge.
Data Center Fiber Cross Connect  Cross connect        $500 per unit
                                  between a single     initial charge
                                  User's cabinets      plus $500 monthly
                                  within the data      per unit.
                                  center.
Initial Install Services         Includes initial     $800 per cabinet.
 (Required per cabinet).          racking of
                                  equipment in
                                  cabinet and
                                  provision of up to
                                  10 cables (4 hrs).
Hot Hands Service: Normal        Applies on non-NYSE  $200 per hour.
 Business Hours, Scheduled        Arca holidays,
 (Note: Hot Hands Service         Monday to Friday,
 allows Users to use on-site      9am to 5pm if
 data center personnel to         scheduled at least
 maintain User equipment.).       1 day in advance.
Hot Hands Service: Extended      Applies Monday to    $275 per hour.
 Business Hours, Scheduled.       Friday 5pm to 9am,
                                  NYSE Arca
                                  holidays, and
                                  weekends if
                                  scheduled at least
                                  1 day in advance.
Hot Hands Service: Normal        Applies on non-NYSE  $250 per hour.
 Business Hours, Expedited.       Arca holidays,
                                  Monday to Friday,
                                  9am to 5pm if NOT
                                  scheduled at least
                                  1 day in advance.
Hot Hands Service: Extended      Applies Monday to    $325 per hour.
 Business Hours, Expedited.       Friday 5pm to 9am,
                                  NYSE Arca
                                  holidays, and
                                  weekends if NOT
                                  scheduled at least
                                  1 day in advance.
Rack and Stack.................  Installation of one  $200 per server.
                                  server in User's
                                  cabinet. Service
                                  encompasses
                                  handling,
                                  unpacking,
                                  tagging, and
                                  installation of
                                  the server as well
                                  as 1 network
                                  connection within
                                  the User rack.
Power Recycling................  Reboot of power on   $50 per reset.
                                  one server or
                                  switch as well as
                                  observing and
                                  reporting on the
                                  status of the
                                  reboot back to the
                                  User.
Shipping and Receiving.........  Receipt of one       $100 per shipment.
                                  shipment of goods
                                  at data center
                                  from User/
                                  supplier. Includes
                                  coordination of
                                  shipping and
                                  receiving.
Badge Request..................  Request for          $50 per badge.
                                  provision of a
                                  permanent data
                                  center site access
                                  badge for a User
                                  representative.
External Cabinet Cable Tray....  Engineer, furnish    $400 per tray.
                                  and install Rittal
                                  5'H x 12'W cable
                                  tray on cabinet.
Custom External Cabinet Cable    Engineer, furnish    $100 per linear
 Tray.                            and install 4'' H    foot.
                                  x 24'' W custom
                                  basket cable tray
                                  above client's
                                  cabinet rows.
Install and Document Cable.....  Labor charges to     $200 per hour.
                                  install and
                                  document the
                                  fitting of a
                                  cable(s) in a
                                  User's cabinet(s)
                                  in excess of the
                                  10 copper cables
                                  included in the
                                  cabinet
                                  installation fee.
Equipment Maintenance Call       Hardware             $100 per call.
 Escalation.                      maintenance-break
                                  fix services
                                  available through
                                  NYSE Arca
                                  arrangement with
                                  Delta Computer
                                  Group.
Visitor Security Escort........  NYSE Arca employee   $75 per hour.
                                  escort, which is
                                  required during
                                  User visits to the
                                  data center.
                                  (Note: all User
                                  representatives
                                  are required to
                                  have a visitor
                                  security escort
                                  during visits to
                                  the data center,
                                  including User
                                  representatives
                                  who have a
                                  permanent data
                                  center site access
                                  badge.).
Technician Support Service-Non   Network technician   $200 per hour.
 Emergency.                       equipped to
                                  support User
                                  network
                                  troubleshooting
                                  activity and to
                                  provide all
                                  necessary testing
                                  instruments to
                                  support the User
                                  request. Prior day
                                  notice is required.

[[Page 70051]]

 
Technician Support Service-      Network technician   $325 per hour.
 Emergency.                       equipped to
                                  support User
                                  network
                                  troubleshooting
                                  activity and to
                                  provide all
                                  necessary testing
                                  instruments to
                                  support the User
                                  request. Two hour
                                  notice is required.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Securities Exchange Act of 1934 
(the ``Act''),\9\ in general, and Sections 6(b)(4) and 6(b)(5), of the 
Act,\10\ in particular, in that it is designed to (i) provide for the 
equitable allocation of reasonable dues, fees, and other charges among 
its members and other persons using its facilities, and (ii) prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in facilitating transactions in securities, and to 
remove impediments to and perfect the mechanisms of a free and open 
market and a national market system. The Exchange believes that the 
proposed changes to the Schedules are equitable in that they apply fees 
for comparable co-location services uniformly to our Users. Moreover, 
the Exchange believes that, as described herein, access to its market 
is offered on fair and non-discriminatory terms.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4) and 15 U.S.C. 78f(b)(5).
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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 that is not necessary or appropriate 
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received from Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\ 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 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 Commission notes that the Exchange satisfied this five-day pre-
filing requirement.
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    The Exchange has requested that the Commission waive the 30-day 
operative delay. The Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest. The Commission notes that the co-location fees sought 
to be codified here are based on filings by the Exchange's affiliates, 
the New York Stock Exchange LLC and NYSE Amex LLC, which have already 
been approved by the Commission, and that accelerated approval of the 
co-location fees will ensure that the co-location services and fees are 
made available to all interested parties without delay. For this 
reason, the Commission designates the proposed rule change as operative 
upon filing.\13\
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    \13\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    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.

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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2010-100 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.
    All submissions should refer to File Number SR-NYSEArca-2010-100. 
This file number should be included on the subject line if e-mail 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 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 such filing also will be 
available for inspection and copying at the principal office 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-
NYSEArca-2010-100 and should be submitted on or before December 7, 
2010.

[[Page 70052]]

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-28691 Filed 11-15-10; 8:45 am]
BILLING CODE 8011-01-P