Document ID: SEC-2015-2079-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.,
Posted Date: 2015-12-16T05:00Z

[Federal Register Volume 80, Number 241 (Wednesday, December 16, 2015)]
[Notices]
[Pages 78275-78282]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-31578]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76616; File No. SR-NYSEARCA-2015-102]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change to Its Rules To Provide That the Co-location 
Services Offered by the Exchange Include Three Time Feeds and Four 
Bundles of Co-location Services

December 10, 2015.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on November 27, 2015, 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 the 
Substance of the Proposed Rule Change

    The Exchange proposes to change its rules to provide that the co-
location services offered by the Exchange include three time feeds and 
four bundles of co-location services (``Partial Cabinet Solution 
bundles''). The Exchange proposes to amend the NYSE Arca Options Fee 
Schedule (the ``Options Fee Schedule'') and, through its wholly owned 
subsidiary NYSE Arca Equities, Inc. (``NYSE Arca Equities''), the NYSE 
Arca Equities Schedule of

[[Page 78276]]

Fees and Charges for Exchange Services (the ``Equities Fee Schedule'' 
and, together with the Options Fee Schedule, the ``Fee Schedules'') to 
reflect the time feeds and the Partial Cabinet Solution bundles. The 
text of the proposed rule change is available on the Exchange's Web 
site at www.nyse.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 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to change its rules to provide that the co-
location \4\ services offered by the Exchange include three time feeds 
and four new Partial Cabinet Solution bundles. In addition, the 
Exchange proposes to amend the Fee Schedules to reflect the time feeds 
and the Partial Cabinet Solution bundles. The Exchange proposes to 
offer the Partial Cabinet Solution bundles beginning January 1, 2016.
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    \4\ The Exchange initially filed rule changes relating to its 
co-location services with the Securities and Exchange Commission 
(``Commission'') in 2010. See Securities Exchange Act Release No. 
63275 (November 8, 2010), 75 FR 70048 (November 16, 2010) (SR-
NYSEArca-2010-100) (the ``Original Co-location Filing''). The 
Exchange operates a data center in Mahwah, New Jersey (the ``data 
center'') from which it provides co-location services to Users.
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Time Feeds
    The proposed rule change would provide that Users \5\ may purchase 
access to three time feeds, each of which provides a feed with the 
current time of day using one of three different time protocols: GPS 
Time Source, the Network Time Protocol feed (``NTP''), and Precision 
Timing Protocol (``PTP'').\6\
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    \5\ For purposes of the Exchange's co-location services, a 
``User'' means any market participant that requests to receive co-
location services directly from the Exchange, a ``Hosting User'' 
means a User that hosts a Hosted Customer in the User's co-location 
space, and a ``Hosted Customer'' means a customer of a Hosting User 
that is hosted in a Hosting User's co-location space. See Securities 
Exchange Act Release No. 76010 (September 29, 2015), 80 FR 60197 
(October 5, 2015) (SR-NYSEArca-2015-82). As specified in the Fee 
Schedules, a User that incurs co-location fees for a particular co-
location service pursuant thereto would not be subject to co-
location fees for the same co-location service charged by the 
Exchange's affiliates New York Stock Exchange LLC and NYSE MKT LLC. 
See Securities Exchange Act Release No. 70173 (August 13, 2013), 78 
FR 50459 (August 19, 2013) (SR-NYSEArca-2013-80).
    \6\ The time feeds are unrelated to trading on the Exchange or 
the Exchange's data feeds. A User does not require connectivity to a 
time feed to trade on the Exchange, and usage of a time feed has no 
effect on a User's orders going to, or trade data coming from, the 
Exchange.
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    Time feeds are used to receive time and to synchronize clocks 
between computer systems or throughout a computer network. A User may 
opt to connect to a time feed for various reasons, including record 
keeping or measuring response times.\7\ The proposed connectivity to 
time feeds would provide Users a convenient way to access time 
protocols.
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    \7\ For example, a User may connect to a time feed for record 
keeping purposes if it uses that specific time protocol for all its 
activities, both inside and out of the data center.
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    The proposed change includes three time feeds. Global Positioning 
System (``GPS'') is a time and location system maintained by the United 
States government. The Exchange accesses the GPS Time Source feed 
through dedicated equipment and subscribing Users connect to the feed 
over dedicated cables. For the NTP and PTP time feeds, the Exchange 
routes the GPS data through dedicated equipment that reformats the GPS 
data into NTP and PTP.\8\ Subscribing Users connect to PTP over 
dedicated cables and NTP over the Liquidity Center Network (``LCN''), a 
local area network available in the data center.
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    \8\ The reformatting equipment is programmed by the vendor to 
generate NTP and PTP time feeds that comply with industry standards. 
The Exchange does not program or manage the reformatting of the GPS 
data into NTP and PTP.
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    Currently, the Exchange's co-location services allow a User to 
request a physical cabinet to house its servers and other equipment in 
the data center. A User has the option of receiving an entire cabinet 
that is dedicated solely to that User (``dedicated cabinet'') or a 
partial cabinet available in increments of eight-rack units of space 
(``partial cabinet'').\9\ Connectivity to all three time protocols 
would be available for dedicated cabinets. Due to technical 
limitations, connectivity to the NTP and PTP would be available for 
partial cabinets, but connectivity to GPS would not.\10\
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    \9\ See Original Co-location Filing, at 70049 and Securities 
Exchange Act Release No. 71130 (December 18, 2013), 78 FR 77765 
(December 24, 2013) (SR-NYSEArca-2013-143) (notice of filing and 
immediate effectiveness of proposed rule change to offer partial 
cabinets).
    \10\ The Exchange does not propose to make connectivity to GPS 
available for partial cabinets because the proximity of the GPS and 
power connections into a partial cabinet would expose GPS to 
interference from the cable power connections, interfering with the 
delivery of the GPS data.
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    The Exchange proposes to amend the Fee Schedules to reflect fees 
related to these services, as follows:

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Connection to Time Protocol Feed  Network Time        $300 initial
                                   Protocol Feed       charge plus $100
                                   (Note: LCN only).   monthly
                                  Precision Time      $1,000 initial
                                   Protocol.           charge plus $250
                                                       monthly
                                  GPS Time Source     $3,000 initial
                                   (Note: dedicated    charge plus $400
                                   cabinets only).     monthly
------------------------------------------------------------------------

    Users that order the proposed time feed services will be subject to 
a 12-month minimum commitment, after which period they are subject to a 
60-day rolling time period.\11\
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    \11\ The Exchange believes that the 12-month minimum period is 
common practice for colocation offerings. See, e.g., Securities 
Exchange Act Release No. 68735 (January 25, 2013), 78 FR 6842 
(January 31, 2013) (SR-NASDAQ-2012-119) (noting that NASDAQ 
represented that the lock-in feature ``is common practice for 
colocation offerings''). If a User upgrades a service (i.e., goes 
from a 10 Gb to a 40 Gb LCN circuit), it will not be held to the 
minimum period for the first service, but will be subject to a 12-
month minimum period for the upgraded service, starting from the 
date of the upgrade.
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Partial Cabinet Solution Bundles
    The Exchange proposes to offer four Partial Cabinet Solution 
bundles intended to make it more cost effective for smaller Users to 
utilize co-location. These proposed Partial Cabinet Solution bundles 
would provide smaller Users a convenient way to create a colocation 
environment, by including in each

[[Page 78277]]

Partial Cabinet Solution bundle cabinet space, network access, fiber 
connections (``cross connects''), and the choice of either the NTP or 
PTP time feed. The Exchange expects that such Users would include those 
with minimal power or cabinet space demands and Users for which the 
costs attendant with having a dedicated cabinet or greater network 
connection bandwidth are too burdensome. The Exchange expects that the 
majority of Users that purchase a Partial Cabinet Solution bundle will 
not previously have been a User or Hosted Customer, but recognizes that 
it is possible that purchasing Users may include entities that 
otherwise would be Hosted Customers. The Exchange proposes to offer the 
Partial Cabinet Solution bundles beginning January 1, 2016.
    As noted above, currently a User may opt to receive a partial 
cabinet available in increments of eight-rack units of space. Each 
partial cabinet is allocated up to two kilowatts (``kWs'') of power.
    In addition, the Exchange offers Users access to two local area 
networks available in the data center: the LCN and the internet 
protocol (``IP'') network.\12\ The Exchange offers 1 and 10 gigabit 
(``Gb'') IP network access, 1, 10, and 40 Gb LCN network access, and 
LCN 10 Gb LX network access.\13\
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    \12\ See Original Co-location Filing, at 70049 and Securities 
Exchange Act Release Nos. 74219 (February 6, 2015), 80 FR 7899 
(February 12, 2015) (SR-NYSEArca-2015-03) (notice of filing and 
immediate effectiveness of proposed rule change to include IP 
network connections and fiber cross connects between a User's 
cabinet and a non-User's equipment) (``Release No. 74219'') and 
70887 (November 15, 2013), 78 FR 69897 (November 21, 2013) (SR-
NYSEArca-2013-123) (notice of filing and immediate effectiveness of 
proposed rule change to include LCN 10 Gb LX connection).
    \13\ The Exchange also proposes to provide 40 Gb IP network 
access. The 40 Gb IP network connection is expected to be available 
no later than April 15, 2016. The Exchange will announce the date 
that the 40 Gb IP network connection will be available through a 
customer notice. See Securities Exchange Act Release No. 76372 
(November 5, 2015), 80 FR 70039 (November 12, 2015) (SR-NYSEArca-
2015-105) (notice of filing and immediate effectiveness of proposed 
rule change to include IP 40 Gb network connections).
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    Users may use cross connects to connect cabinets within the data 
center, including between a User's cabinet and a non-User's equipment 
within the data center. For example, a User may utilize a cross connect 
with a non-User to connect to a carrier's equipment in order to access 
the carrier's network outside the data center.\14\
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    \14\ See Release No. 74219, supra note 12.
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    The Exchange proposes to offer four Partial Cabinet Solution 
bundles. Because the Partial Cabinet Solution bundles are intended to 
make it more cost effective for smaller Users to utilize co-location, 
the Exchange proposes only to provide access to a Partial Cabinet 
Solution bundle to a User that meets the following conditions: (1) The 
User purchases only one Partial Cabinet Solution bundle; (2) the User 
and its Affiliates \15\ do not currently have a Partial Cabinet 
Solution bundle; and (3) after the purchase of the Partial Cabinet 
Solution bundle, the User, together with its Affiliates, will have an 
aggregate cabinet footprint of no more than 2 kW.\16\ A User's 
aggregate cabinet footprint is the total kW of its cabinets, including 
both partial and dedicated cabinets, and a Hosted Customer's aggregate 
cabinet footprint is the total kW of the portion of the Hosting User's 
cabinet, whether partial or dedicated, allocated to such Hosted 
Customer.\17\
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    \15\ For purposes of the Partial Cabinet Solution bundles, an 
``Affiliate'' of a User would be any other User or a Hosted Customer 
that is under 50% or greater common ownership or control of the 
first User.
    \16\ For example, a User with a 4 kW dedicated cabinet would not 
be eligible for a Partial Cabinet Solution bundle, as its aggregate 
cabinet footprint would be either 5 kW or 6 kW once a Partial 
Cabinet Solution bundle was added.
    \17\ The Exchange's subsidiary NYSE Arca Equities similarly 
aggregates eligible activity of member organization affiliates for 
purposes of charges or credits based on volume. See Securities 
Exchange Act Release No. 74604 (March 30, 2015), 80 FR 18270 (April 
3, 2015) (SR-NYSEArca-2015-20), 80 FR 20043 (April 14, 2015) 
(correction). The threshold percentage used in the definition of 
``affiliate'' for purposes of charges or credits based on volume is 
75%. Id. The Exchange proposes a lower threshold in the present case 
in order to discourage any User from taking deliberate advantage of 
the proposed Partial Cabinet Solution bundle by setting up separate 
corporate entities to act as Users or Hosted Customers.
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    The Exchange proposes to aggregate the aggregate cabinet footprint 
of a User of a Partial Cabinet Solution bundle with the aggregate 
cabinet footprint of its Affiliates for purposes of determining whether 
the User has satisfied the conditions in order to avoid disparate 
treatment of Users that have divided their various business activities 
between separate corporate entities, including between a User and a 
Hosted Customer, as compared to Users that operate those business 
activities within a single corporate entity. Accordingly, the Exchange 
proposes that a User requesting a Partial Cabinet Solution bundle be 
required to represent to the Exchange (a) whether it has any Affiliates 
that are Users or Hosted Customers, and (b) that its aggregate cabinet 
footprint, together with the aggregate cabinet footprint of its 
Affiliates that are also Users or Hosted Customers and the cabinet 
footprint of the Partial Cabinet Solution bundle, will not exceed 2 kW. 
In addition, the User of a Partial Cabinet Solution bundle would be 
required to inform the Exchange immediately of any event that causes 
another User or Hosted Customer to become an Affiliate.\18\ The 
Exchange proposes to revise the Fee Schedules accordingly.
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    \18\ The Exchange would review available information regarding 
the entities and may request additional information to verify the 
Affiliate status of a User or Hosted Customer. The Exchange would 
approve a request for a Partial Cabinet Solution bundle unless it 
determines that the certification is not accurate.
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    If a User of a Partial Cabinet Solution bundle became Affiliated 
with one or more other Users or Hosted Customers and thereby no longer 
met the conditions for access to the Partial Cabinet Solution bundle, 
or if the User otherwise ceased to meet the conditions for access, the 
Exchange would no longer offer access to the Partial Cabinet Solution 
bundle to such User. Once the User ceased to meet the conditions for 
access to the Partial Cabinet Solution bundle, it would be charged for 
each of the services individually, at the price for each such service 
set out in the Fee Schedules. Such price change would be effective as 
of the date that the User ceased to meet the conditions.
    The Exchange proposes that Users that purchase a Partial Cabinet 
Solution bundle would be charged a non-recurring initial charge 
(``NRC'') and a monthly recurring charge (``MRC'').\19\ The Exchange 
proposes that Users that order a Partial Cabinet Solution bundle on or 
before December 31, 2016 would have their MRC reduced by 50% for the 
first 12 months.
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    \19\ A User that changes its Partial Cabinet Solution bundle 
would not be subject to a second NRC. Rather, it would pay the 
difference, if any, between the NRCs. For example, a User that buys 
an Option A Partial Cabinet Solution bundle would pay a $7,500 NRC. 
If it then opted to change to Option C, it would pay $2,500, i.e. 
the difference between the Option A and Option C NRCs of $7,500 and 
$10,000, respectively.
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    The Exchange proposes to amend the Fee Schedules to reflect fees 
related to these new services, as follows:

[[Page 78278]]

------------------------------------------------------------------------
        Type of service              Description       Amount of charge
------------------------------------------------------------------------
Partial Cabinet Solution         Option A:           $7,500 initial
 bundles (effective from         1 kW partial         charge per bundle
 January 1, 2016).                cabinet, 1 LCN      plus monthly
Note: A User and its Affiliates   connection (1       charge per bundle
 are limited to one Partial       Gb), 1 IP network   as follows:
 Cabinet Solution bundle at a     connection (1       For Users
 time. A User and its             Gb), 2 fiber        that order on or
 Affiliates must have an          cross connections   before December
 aggregate cabinet footprint of   and either the      31, 2016: $3,000
 2 kW or less to qualify for a    Network Time        monthly for first
 Partial Cabinet Solution         Protocol Feed or    12 months of
 bundle.                          Precision Timing    service, and
                                  Protocol.           $6,000 monthly
                                                      thereafter.
                                                      For Users
                                                      that order after
                                                      December 31, 2016:
                                                      $6,000 monthly.
                                 Option B:           $7,500 initial
                                 2 kW partial         charge per bundle
                                  cabinet, 1 LCN      plus monthly
                                  connection (1       charge per bundle
                                  Gb), 1 IP network   as follows:
                                  connection (1       For Users
                                  Gb), 2 fiber        that order on or
                                  cross connections   before December
                                  and either the      31, 2016: $3,500
                                  Network Time        monthly for first
                                  Protocol Feed or    12 months of
                                  Precision Timing    service, and
                                  Protocol.           $7,000 monthly
                                                      thereafter.
                                                      For Users
                                                      that order after
                                                      December 31, 2016:
                                                      $7,000 monthly.
                                 Option C:           $10,000 initial
                                 1 kW partial         charge per bundle
                                  cabinet, 1 LCN      plus monthly
                                  connection (10      charge per bundle
                                  Gb), 1 IP network   as follows:
                                  connection (10      For Users
                                  Gb), 2 fiber        that order on or
                                  cross connections   before December
                                  and either the      31, 2016: $7,000
                                  Network Time        monthly for first
                                  Protocol Feed or    12 months of
                                  Precision Timing    service, and
                                  Protocol.           $14,000 monthly
                                                      thereafter.
                                                      For Users
                                                      that order after
                                                      December 31, 2016:
                                                      $14,000 monthly.
                                 Option D:           $10,000 initial
                                 2 kW partial         charge per bundle
                                  cabinet, 1 LCN      plus monthly
                                  connection (10      charge per bundle
                                  Gb), 1 IP network   as follows:
                                  connection (10      For Users
                                  Gb), 2 fiber        that order on or
                                  cross connections   before December
                                  and either the      31, 2016: $7,500
                                  Network Time        monthly for first
                                  Protocol Feed or    12 months of
                                  Precision Timing    service, and
                                  Protocol.           $15,000 monthly
                                                      thereafter.
                                                      For Users
                                                      that order after
                                                      December 31, 2016:
                                                      $15,000 monthly.
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    Each proposed Partial Cabinet Solution bundle is made up of a 
number of different services. If a User purchased each of the 
components of a Partial Cabinet Solution bundle, whether over several 
purchases or in one order, and met the conditions described above for 
access to the Partial Cabinet Solution bundle, the Exchange would 
automatically treat the User's services as a Partial Cabinet Solution 
bundle and, effective the date of installation of the final component, 
reduce the User's MRC to the MRC for the relevant bundle.\20\
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    \20\ The Exchange proposes to implement the proposed Partial 
Cabinet Solution bundle changes effective January 1, 2016. If as of 
that date a User already had each of the components of a Partial 
Cabinet Solution bundle and met the conditions described above for 
access to the Partial Cabinet Solution bundle, the Exchange would 
automatically treat the User's services as a Partial Cabinet 
Solution bundle and reduce the User's MRC to the MRC for the 
relevant bundle, effective January 1, 2016.
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    Finally, the Exchange proposes to make non-substantive changes to 
the Fee Schedules to add subheadings under ``Co-Location Fees'' for 
``Definitions'' and ``General Notes''. Definitions of aggregate cabinet 
footprint and Affiliate would be added under ``Definitions''. The 
existing note stating that a User that incurs co-location fees for a 
particular co-location service would not be subject to co-location fees 
for the same co-location service charged by the Exchange's affiliates 
would become note one under ``General Notes'' and the proposed 
provisions regarding aggregate cabinet footprints and what portion of 
an NRC, if any, a User would be subject to if it changed bundles would 
become note two.\21\
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    \21\ See note 18, supra.
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    Users that purchase a proposed Partial Cabinet Solution bundle 
would not be subject to the 12-month minimum commitment, but rather 
would be subject to a 90-day commitment, after which period they would 
be subject to the 60-day rolling time period. As noted above, the 
Exchange anticipates that Users of the Partial Cabinet Solution bundles 
would include those with minimum power or cabinet space demands and 
Users for which the costs attendant with having a dedicated cabinet or 
greater network connection bandwidth are too burdensome. The Exchange 
proposes to have a reduced minimum commitment period for the Partial 
Cabinet Solution bundle to further reduce the cost commitment for such 
Users.
General
    As is the case with all Exchange co-location arrangements, (i) 
neither a User nor any of the User's customers would be permitted to 
submit orders directly to the Exchange unless such User or customer is 
a member organization, a Sponsored Participant or an agent thereof 
(e.g., a service bureau providing order entry services); (ii) use of 
the co-location services proposed herein would be completely voluntary 
and available to all Users on a non-discriminatory basis; \22\ and 
(iii) a User would only incur one charge for the particular co-location 
service described herein, regardless of whether the User connects only 
to the Exchange or to the Exchange and one or both of its 
affiliates.\23\
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    \22\ As is currently the case, 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 other Users. In this regard, 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 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, although Users that receive co-location 
services normally would expect reduced latencies in sending orders 
to, and receiving market data from, the Exchange.
    \23\ See SR-NYSEArca-2013-80, supra note 5 at 50459. The 
Exchange's affiliates have also submitted the same proposed rule 
change to propose the changes described herein. See SR-NYSE-2015-53 
and SR-NYSEMKT-2015-89.
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    The proposed change is not otherwise intended to address any other 
issues relating to co-location services and/or related fees, and the 
Exchange is not aware of any problems that Users would have in 
complying with the proposed change.

[[Page 78279]]

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\24\ in general, and furthers the 
objectives of Sections 6(b)(5) of the Act,\25\ in particular, because 
it is designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, 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 mechanisms of, a free and open market and a national market 
system and, in general, to protect investors and the public interest 
and because it is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \24\ 15 U.S.C. 78f(b).
    \25\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that providing connectivity to time feeds is 
not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers because the service would offer 
connectivity to different time feed options, allowing a User that opts 
to connect to a time feed to select the time protocol that best suits 
its needs, helping it tailor its data center operations to the 
requirements of its business operations. The time feeds are unrelated 
to trading on the Exchange or the Exchange's data feeds. A User does 
not require connectivity to a time feed to trade on the Exchange, and 
usage of a time feed has no effect on a User's orders going to, or 
trade data coming from, the Exchange.
    The Exchange believes that providing connectivity to GPS for 
dedicated cabinets but not partial cabinets and to NTP through the LCN 
but not the IP network is not designed to permit unfair discrimination 
between customers, issuers, brokers, or dealers because the Exchange 
proposes to offer connectivity to time feeds, including GPS and NTP, as 
a convenience to Users, and usage of a time feed has no effect on a 
User's orders going to, or trade data coming from, the Exchange. 
Regarding GPS, the proximity of GPS and power connections into a 
partial cabinet would expose GPS to interference from the cable power 
connections, interfering with the delivery of the GPS data, and so the 
Exchange is not able to offer connectivity to GPS for partial cabinets. 
A User that requires connectivity to GPS could opt to purchase a 
dedicated cabinet or become a Hosted Customer of a Hosting User with a 
dedicated cabinet. Regarding NTP, the Exchange has opted to offer the 
NTP only over the LCN due to a lack of demand for the NTP over the IP 
network. A User that requires connectivity to NTP could connect to the 
LCN.
    The Exchange believes that the Partial Cabinet Solution bundles are 
not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers because the Partial Cabinet Solution 
bundles would offer four different Partial Cabinet Solution bundles 
with options with respect to cabinet footprint and network connections. 
Users that require other sizes or combinations of cabinets, network 
connections and cross connects could still request them.
    The Exchange believes that its proposal would remove impediments 
to, and perfects the mechanisms of, a free and open market and a 
national market system and, in general, protects investors and the 
public interest because the proposed connectivity to time feeds would 
provide Users a convenient way to access time protocols. Having 
different time feed options would allow a User with a dedicated cabinet 
to select the time protocol that suits its needs, and for a User with a 
partial cabinet to select between the NTP and PTP.
    In addition, the Exchange believes that its proposal would remove 
impediments to, and perfects the mechanisms of, a free and open market 
and a national market system and, in general, protects investors and 
the public interest because the proposed Partial Cabinet Solution 
bundles would make it more cost effective for Users that meet the 
conditions described above for access to the Partial Cabinet Solution 
bundle to utilize co-location by creating a convenient way to create a 
colocation environment, through four Partial Cabinet Solution bundles 
with options with respect to cabinet footprint and network connections. 
The Exchange expects that such Users would include those with minimal 
power or cabinet space demands and Users for which the costs attendant 
with having a dedicated cabinet or greater network connection bandwidth 
are too burdensome. Such Users may choose to pass on such cost savings 
to their customers. The Exchange expects that the majority of Users 
that purchase a Partial Cabinet Solution bundle will not previously 
have been a User or Hosted Customer, but recognizes that it is possible 
that purchasing Users may include entities that otherwise would be 
Hosted Customers.
    The Exchange also believes that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\26\ in particular, because 
it provides for the equitable allocation of reasonable dues, fees, and 
other charges among its member organizations, issuers and other persons 
using its facilities and does not unfairly discriminate between 
customers, issuers, brokers or dealers.
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    \26\ 15 U.S.C. 78f(b)(4).
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    Overall, the Exchange believes that the proposed fees for the time 
feed connectivity and Partial Cabinet Solution bundles are reasonable 
because the Exchange proposes to offer the services as a convenience to 
Users, but in doing so will incur certain costs, including costs 
related to the data center facility, hardware and equipment and costs 
related to personnel required for initial installation and monitoring, 
support and maintenance of such services. The higher fee in connection 
with the GPS reflects the greater costs for its equipment, installation 
and maintenance in comparison with the other time feeds. The Exchange 
believes that submitting Users that order the proposed time feed 
services to a 12-month minimum commitment, after which period they 
would be subject a 60-day rolling time period, is reasonable, as it 
reflects the investment the Exchange incurs in order to provide the 
service. The Exchange believes that the 12-month minimum period is 
common practice for colocation offerings.
    In addition, the Exchange believes that its proposal to limit 
access to Partial Cabinet Solution bundles to a User that meets the 
conditions described above, specifically, that (1) the User purchases 
only one Partial Cabinet Solution bundle, (2) the User and its 
Affiliates do not currently have a Partial Cabinet Solution bundle, 
and, (3) after the purchase of a Partial Cabinet Solution bundle, the 
User, together with its Affiliates, will have an aggregate cabinet 
footprint of no more than 2 kW, is reasonable, because the Partial 
Cabinet Solution bundles are intended to make it more cost effective 
for smaller Users to utilize co-location. All Users would be subject to 
the same limits on the number of Partial Cabinet Solution bundles and 
aggregate cabinet footprint. The Exchange believes that the proposal is 
reasonable because it establishes a manner for the Exchange to treat 
Users for purposes of assessing aggregate cabinet footprint. The 
provision is equitable because all Users seeking to purchase a Partial 
Cabinet Solution bundle would be subject to the same parameters. The 
Exchange further notes that the proposal would serve to reduce any 
potential for confusion on

[[Page 78280]]

how cabinet footprint can be aggregated or what entities would 
constitute Affiliates.
    The Exchange believes that, by aggregating the aggregate cabinet 
footprint of a User with the aggregate cabinet footprint of its 
Affiliates for purposes of determining whether the User has satisfied 
the conditions, the proposed rule change avoids disparate treatment of 
Users that have divided their various business activities between 
separate corporate entities, including between a User and a Hosted 
Customer, as compared to Users that operate those business activities 
within a single corporate entity. The Exchange believes that setting 
the common ownership or control threshold in the definition of 
Affiliates at 50% is reasonable because it will discourage any User 
from taking deliberate advantage of the proposed Partial Cabinet 
Solution bundle by setting up separate corporate entities to act as 
Users or Hosted Customers.
    The Exchange believes that it is reasonable that Users that order a 
Partial Cabinet Solution bundle on or before December 31, 2016 would 
have their MRC reduced by 50% for the first 12 months because the 
Partial Cabinet Solution bundles are a new service, and so it is 
reasonable to offer such reduction as an incentive to Users to utilize 
the new service. Similarly, the Exchange believes that submitting Users 
that purchase the propose Partial Cabinet Solution bundle to a 90-day 
commitment, rather than the 12-month minimum commitment, after which 
period they would be subject to the 60-day rolling time period, is 
reasonable. As noted above, the Exchange anticipates that Users of the 
Partial Cabinet Solution bundles would include those with minimum power 
or cabinet space demands and Users for which the costs attendant with 
having a dedicated cabinet or greater network connection bandwidth are 
too burdensome. The Exchange believes that it is reasonable to have a 
reduced minimum commitment period for the Partial Cabinet Solution 
bundle to further reduce the cost commitment for such Users as an 
incentive to Users to utilize the new service.
    The Exchange believes that it is reasonable not to charge a User 
that changes its Partial Cabinet Solution bundle a second NRC, but 
instead charge the difference, if any, between the NRCs, because the 
cost to the Exchange of modifying the service to move a User to a 
different Partial Cabinet Solution bundle is lower than the cost of the 
initial installation of a Partial Cabinet Solution bundle.
    The Exchange also believes that the services and fees proposed 
herein for Partial Cabinet Solution bundles are reasonable because if a 
User purchased each of the components of a Partial Cabinet Solution 
bundle, whether over several purchases or in one order, and met the 
conditions described above for access to the Partial Cabinet Solution 
bundle, the Exchange would automatically treat the User's services as a 
Partial Cabinet Solution bundle and, effective the date of installation 
of the final component, reduce the User's MRC to the MRC for the 
relevant bundle.
    The Exchange believes that the proposed change to provide Users 
access to time feeds is equitable and not unfairly discriminatory 
because it will result in fees being charged only to Users that 
voluntarily select to receive the corresponding services and because 
those services will be available to all Users. Furthermore, the 
Exchange believes that the services and fees proposed herein are not 
unfairly discriminatory and are equitably allocated because, in 
addition to the connectivity to time feeds being completely voluntary, 
it is available to all Users on an equal basis (i.e., the same 
connectivity to time feed products and services is available to all 
Users, and the same conditions described above for access to the 
Partial Cabinet Solution bundles would apply to all Users). All Users 
that voluntarily select connectivity to one or more of the proposed 
time feeds would be charged the same amount for the same services.
    The Exchange believes that the proposed change to provide Partial 
Cabinet Solution bundles is equitable and not unfairly discriminatory 
because it would be available to all Users that meet the conditions 
described above for access to the Partial Cabinet Solution bundle and 
would result in fees being charged only to such Users that voluntarily 
select to receive the corresponding service.
    The Exchange believes that the proposed change to provide Partial 
Cabinet Solution bundles provides for the equitable allocation of 
reasonable dues, fees, and other charges among its members, issuers and 
other persons using its facilities. As previously stated, the proposal 
would make it more cost effective for Users that meet the conditions 
described above for access to the Partial Cabinet Solution bundle to 
utilize co-location. While the Exchange expects that the majority of 
Users that purchase a Partial Cabinet Solution bundle will not 
previously have been a User or Hosted Customer, it recognizes that it 
is possible that purchasing Users may include entities that otherwise 
would be Hosted Customers. However, it notes that being a Hosted 
Customer and being a User with a Partial Cabinet Solution bundle are 
not fungible. A Hosting User manages the service provided to the Hosted 
Customer, which services may include, for example, supporting the 
Hosted Customer's technology, whether hardware or software. The Hosted 
Customer has no relationship with the Exchange. A User with a Partial 
Cabinet Solution bundle, by contrast, is responsible for supporting its 
own technology and is in a direct contractual relationship with the 
Exchange. Providing entities with the additional option of the Partial 
Cabinet Solution bundle will allow them to select the relationship and 
type of service that better corresponds to their needs and resources.
    Furthermore, the Exchange believes that the Partial Cabinet 
Solution bundle services and fees proposed herein are not unfairly 
discriminatory and are equitably allocated because, in addition to the 
services being completely voluntary, they are available to all Users on 
an equal basis (i.e., the same products and services are available to 
all Users, and the same conditions described above for access to the 
Partial Cabinet Solution bundles would apply to all Users). All Users 
that voluntarily select the proposed Partial Cabinet Solution bundle 
service would be subject to the same limits on the number of Partial 
Cabinet Solution bundles and aggregate cabinet footprint. The Exchange 
believes that, by aggregating the aggregate cabinet footprint of a User 
with the aggregate cabinet footprint of its Affiliates for purposes of 
determining whether the User has satisfied the conditions, the proposed 
limit on aggregate cabinet footprint avoids disparate treatment of 
Users that have divided their various business activities between 
separate corporate entities, including between a User and a Hosted 
Customer, as compared to Users that operate those business activities 
within a single corporate entity. Finally, all Users that order a 
bundle on or before December 31, 2016 would have their MRC reduced by 
50% for the first 12 months.
    The Exchange believes that it is equitable and not unfairly 
discriminatory to not charge a User that changes its Partial Cabinet 
Solution bundle a second NRC, but instead charge the difference, if 
any, between the NRCs, because the cost to the Exchange of modifying 
the service to move a User to a different Partial Cabinet Solution 
bundle is lower than the cost of the initial installation of a Partial 
Cabinet Solution bundle.

[[Page 78281]]

    The Exchange also believes that the services and fees proposed 
herein for Partial Cabinet Solution bundles are not unfairly 
discriminatory and are equitably allocated because if a User purchased 
each of the components of a Partial Cabinet Solution bundle, whether 
over several purchases or in one order, and met the conditions 
described above for access to the Partial Cabinet Solution bundle, the 
Exchange would automatically treat the User's services as a Partial 
Cabinet Solution bundle and, effective the date of installation of the 
final component, reduce the User's MRC to the MRC for the relevant 
bundle.
    For the reasons above, the proposed changes do not unfairly 
discriminate between or among market participants that are otherwise 
capable of satisfying any applicable co-location fees, requirements, 
terms and conditions established from time to time by the Exchange.
    Finally, the Exchange believes that it is subject to significant 
competitive forces, as described below in the Exchange's statement 
regarding the burden on competition.
    For these reasons, the Exchange believes that the proposal is 
consistent with the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\27\ the Exchange 
believes that the proposed rule change will not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act because, in addition to the proposed services being 
completely voluntary, they are available to all Users on an equal basis 
(i.e. the same products and services are available to all Users, and 
the same conditions described above for access to the Partial Cabinet 
Solution bundles would apply to all Users).
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    \27\ 15 U.S.C. 78f(b)(8).
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    The Exchange believes that providing Users with connectivity to 
time feeds will not impose any burden on competition that is not 
necessary or appropriate in furtherance of the purposes of the Act 
because such connectivity satisfies User demand for a convenient way to 
access time protocols Having connectivity to different time feed 
options would allow a User with a dedicated cabinet to select the time 
protocol that best suits its needs, and for a User with a partial 
cabinet to select between the NTP and PTP, helping Users tailor their 
data center operations to the requirements of their business 
operations. In addition, the Exchange believes that providing 
connectivity to GPS for dedicated cabinets but not partial cabinets and 
to NTP through the LCN but not the IP network will not impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act because the Exchange proposes to 
offer connectivity to time feeds, including GPS and NTP, as a 
convenience to Users, and usage of a time feed has no effect on a 
User's orders going to, or trade data coming from, the Exchange.
    The Exchange believes that allowing Users to purchase Partial 
Cabinet Solution bundles will not impose any burden on competition that 
is not necessary or appropriate in furtherance of the purposes of the 
Act because such access will satisfy User demand for cost effective 
options for smaller Users that choose to utilize co-location. All Users 
that meet the conditions described above for access to the Partial 
Cabinet Solution bundle would be subject to the same limits on the 
number of Partial Cabinet Solution bundles and aggregate cabinet 
footprint, all Users that order a bundle on or before December 31, 2016 
would have their MRC reduced by 50% for the first 12 months, and all 
Users that change Partial Cabinet Solution bundles would not be charged 
a second NRC, but instead charged the difference, if any, between the 
NRCs.
    The Exchange believes that allowing Users to purchase Partial 
Cabinet Solution bundles will not impose any burden on competition that 
is not necessary or appropriate in furtherance of the purposes of the 
Act because, as previously stated, the proposal would make it more cost 
effective for Users that meet the conditions described above for access 
to the Partial Cabinet Solution bundle to utilize co-location. While 
the Exchange expects that the majority of Users that purchase a Partial 
Cabinet Solution bundle will not previously have been a User or Hosted 
Customer, it recognizes that it is possible that purchasing Users may 
include entities that otherwise would be Hosted Customers. However, it 
notes that being a Hosted Customer and being a User with a Partial 
Cabinet Solution bundle are not fungible. A Hosting User manages the 
service provided to the Hosted Customer, which services may include, 
for example, supporting the Hosted Customer's technology, whether 
hardware or software. The Hosted Customer has no relationship with the 
Exchange. A User with a Partial Cabinet Solution bundle, by contrast, 
is responsible for supporting its own technology and is in a direct 
contractual relationship with the Exchange. Providing entities with the 
additional option of the Partial Cabinet Solution bundle will allow 
them to select the relationship and type of service that better 
corresponds to their needs and resources.
    The proposed changes will also enhance competition by making it 
more cost effective for Users that meet the conditions described above 
for access to the Partial Cabinet Solution bundle to utilize co-
location by creating a convenient way to create a colocation 
environment, through Partial Cabinet Solution bundles with options with 
respect to cabinet footprint and network connections. Such Users may 
choose to pass on such cost savings to their customers.
    Finally, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues if they deem fee levels at a particular venue to be 
excessive. In such an environment, the Exchange must continually 
review, and consider adjusting, its services and related fees and 
credits to remain competitive with other exchanges. For the reasons 
described above, the Exchange believes that the proposed rule change 
reflects this competitive environment.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission shall: (a) by order approve 
or disapprove such proposed rule change, or (b) institute proceedings 
to determine whether the proposed rule change should be 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:

[[Page 78282]]

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 No. SR-NYSEARCA-2015-102 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 No. SR-NYSEARCA-2015-102. 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 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 No. SR-NYSEARCA-2015-102, and should 
be submitted on or before January 6, 2016.
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    \28\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\28\
Brent J. Fields,
Secretary.
[FR Doc. 2015-31578 Filed 12-15-15; 8:45 am]
BILLING CODE 8011-01-P