Document ID: SEC-2020-0895-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Chicago, Inc.
Posted Date: 2020-06-08T04:00Z

[Federal Register Volume 85, Number 110 (Monday, June 8, 2020)]
[Notices]
[Pages 34778-34782]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-12274]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88990; File No. SR-NYSECHX-2020-17]

Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend the 
Fee Schedule of NYSE Chicago, Inc. Related to Co-Location Services

June 2, 2020.
    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 May 18, 2020, the NYSE Chicago, Inc. (``NYSE Chicago'' 
or the ``Exchange'') 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 Fee Schedule of NYSE Chicago, 
Inc. (``Fee Schedule'') related to co-location services with respect to 
connectivity to

[[Page 34779]]

the ICE Data Global Index and to waive any change fees that a User 
would otherwise incur as a result of the proposed change. The proposed 
rule change is available on the Exchange's website 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedule related to co-
location \4\ services offered by the Exchange with respect to 
connectivity to the ICE Data Global Index (``GIF'') and to waive any 
change fees that a User would otherwise incur as a result of the 
proposed change.
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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 October 2019. See Securities Exchange Act 
Release No. 87408 (October 28, 2019), 84 FR 58778 (November 1, 2019) 
(SR-NYSECHX-2019-27[sic]). The Exchange is an indirect subsidiary of 
Intercontinental Exchange, Inc. (``ICE''). Through its ICE Data 
Services (``IDS'') business, ICE operates a data center in Mahwah, 
New Jersey (the ``data center''), from which the Exchange provides 
co-location services to Users.
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Proposed Change
    The Exchange offers Users \5\ connectivity to data feeds from third 
party markets and other content service providers (``Third Party Data 
Feeds'').\6\ The list of Third Party Data Feeds is set forth in the Fee 
Schedule, and includes connectivity to the GIF for a monthly 
connectivity fee of $100.\7\
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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. See id., at note 6. As 
specified in the Fee Schedule, 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 the New York Stock Exchange LLC, NYSE 
American LLC, NYSE Arca, Inc., and NYSE National, Inc. 
(collectively, the ``Affiliate SROs''). Each Affiliate SRO has 
submitted substantially the same proposed rule change to propose the 
changes described herein. See SR-NYSE-2020-46, SR-NYSEAmer-2020-40, 
SR-NYSEArca-2020-49, and SR-NYSENAT-2020-19.
    \6\ See id., at 58787-58788.
    \7\ The Exchange has an indirect interest in the GIF because ICE 
is the Exchange's ultimate parent. See id., at note 5.
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    ICE, which publishes the GIF, announced to its customers that 
connect to the GIF that it will no longer offer the GIF as a stand-
alone product. Accordingly, the Exchange proposes to cease offering 
connectivity to the GIF once it is no longer available. The Exchange 
has been informed by ICE that cessation is currently expected to occur 
before the end of 2020. The Exchange will announce the operative date 
through a customer notice.
    Users are subject to a change fee if they request a change to one 
or more existing co-location services.\8\ The Exchange proposes to 
waive any change fees that a User would otherwise incur as a result of 
the proposed change.
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    \8\ See id., at 58785.
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    In order to implement the proposed change, the Exchange proposes to 
make the following changes to the section entitled ``Connectivity to 
Third Party Data Feeds'':
     In the first paragraph and in the table of Third Party 
Data Feeds, add an asterisk after ``ICE Data Global Index.''
     Following the table of Third Party Data Feeds, add the 
following text:
    * ICE will cease to offer the GIF as a stand-alone product, which 
the Exchange has been informed by ICE is currently expected to occur 
before the end of 2020. The Exchange will announce the operative date 
through a customer notice. Any change fees that a User would otherwise 
incur as a result of the proposed change will be waived.
    The GIF includes the values of various indices and exchange traded 
product data.\9\ Based on information published by ICE Data Services, 
all the data in the GIF was already available on the ICE Data Services 
Consolidated Feed (``Consolidated Feed'').\10\ The Exchange offers 
connectivity to the Consolidated Feed, and does not propose to change 
the price for such connectivity. In addition, the Exchange's 
connectivity to the GIF and the Consolidated Feed should have 
approximately the same latency.
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    \9\ The Exchange understands that some of the indices may 
include Exchange or Affiliate SRO data as underlying components, but 
the GIF does not include those underlying components or other 
information directly from the Exchange and Affiliate SROs.
    \10\ See ``Consolidated Data Feed Coverage List--Indices and 
Indicators'' at https://www.theice.com/market-data/connectivity-and-feeds/consolidated-feed/coverage-list.
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Application and Impact of the Proposed Change
    The proposed change would not apply differently to distinct types 
or sizes of market participants. Rather, it would apply to all Users 
equally. As is currently the case, the purchase of any colocation 
service is completely voluntary and the Fee Schedule is applied 
uniformly to all Users.
    Currently, there are seven Users that have connectivity to the GIF, 
and so would be affected by the change. If any of them wish to continue 
having connectivity to the information in the GIF, they could connect 
to the Consolidated Feed, which none of them do presently. The monthly 
cost for connectivity to the Consolidated Feed depends on the size of 
the bandwidth utilized. If a User opts to connect to the Consolidated 
Feed to connect to the information in the GIF, the monthly connectivity 
cost charged by the Exchange would be $200.
    ICE has informed the Exchange that currently there are various 
third parties that offer Users connectivity to the Consolidated Feed. 
To use such third party connectivity to the Consolidated Feed, a User 
may utilize the IDS network, a third party telecommunication network, a 
cross connect, or a combination thereof to access the Consolidated Feed 
through a connection to an access center outside the data center (which 
could be an IDS access center, a third-party access center, or both), 
another User, or a third party vendor.
Competitive Environment
    The Exchange operates in a highly competitive market in which 
exchanges and other vendors (e.g., Hosting Users) offer co-location 
services as a means to facilitate the trading and other market 
activities of those market participants who believe that co-location 
enhances the efficiency of their operations. The Commission has 
repeatedly expressed its preference for competition over regulatory 
intervention in determining prices, products, and services in the 
securities markets. Specifically, in Regulation NMS, the Commission 
highlighted the importance of market forces in determining prices and 
SRO revenues and, also, recognized that current regulation of the 
market system ``has been remarkably successful in promoting market 
competition in its

[[Page 34780]]

broader forms that are most important to investors and listed 
companies.'' \11\
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    \11\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005).
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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.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\12\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\13\ in particular, 
because it provides for the equitable allocation of reasonable dues, 
fees, and other charges among its members, issuers and other persons 
using its facilities and does not unfairly discriminate between 
customers, issuers, brokers or dealers. In addition, it is designed 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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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4) and (5).
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The Proposed Rule Change Is Reasonable and Equitable
    The Exchange believes that the proposed rule change is reasonable 
and equitable for the following reasons.
    The Exchange believes that it is reasonable and an equitable 
allocation of its fees and credits to add a note to its Fee Schedule 
stating that ICE will cease to offer the GIF as a stand-alone product, 
as the Exchange will no longer be able to offer the service once that 
occurs.
    If a User wishes connectivity to the information in the GIF, the 
Users could connect to the Consolidated Feed through IDS or from a 
third party provider. A User may utilize the IDS network, a third party 
telecommunication network, a cross connect, or a combination thereof to 
access the Consolidated Feed, through a connection to an access center 
outside the data center (which could be an IDS access center, a third-
party access center, or both), another User, or a third party vendor.
    The Exchange believes that it is reasonable and equitable that it 
waive any change fees that a User would otherwise incur as a result of 
the proposed change, as Users would have no choice but to terminate 
connectivity to the GIF. The fee waiver would help to alleviate any 
burden related to the change.
The Proposed Rule Change Would Protect Investors and the Public 
Interest
    The Exchange believes that the proposed rule change would perfect 
the mechanisms of a free and open market and a national market system 
and, in general, protect investors and the public interest for the 
following reasons.
    It would be against the protection of investors and the public 
interest if the Exchange were to continue to offer something that it 
cannot provide because the relevant feed has been discontinued. Adding 
the proposed note to its Fee Schedule would reduce any potential 
ambiguity and provide clarification concerning the availability and the 
costs of connectivity to Third Party Data Feeds available to Users, 
because it would highlight that the GIF will become obsolete, provide a 
timeline for the change, and state that any change fees that a User 
would otherwise incur as a result of the proposed change would be 
waived.
The Proposed Change Is Not Unfairly Discriminatory
    The Exchange believes that the proposed change is not unfairly 
discriminatory for the following reasons.
    The proposed change would not apply differently to distinct types 
or sizes of market participants. Rather, it would apply to all Users 
equally. As a consequence of ICE's ceasing to offer the GIF as a stand-
alone product, the Exchange will not be able to provide any Users with 
connectivity to the GIF.
    If a User wishes connectivity to the information in the GIF, the 
Users could connect to the Consolidated Feed through the Exchange. If 
any of the seven Users that have connectivity to the GIF opt to connect 
to the Consolidated Feed, the monthly connectivity cost charged by the 
Exchange would be $200.
    ICE has informed the Exchange that currently there are various 
third parties that offer Users connectivity to the Consolidated Feed. 
To use such third party connectivity to the Consolidated Feed, a User 
may utilize the IDS network, a third party telecommunication network, a 
cross connect, or a combination thereof to access the Consolidated 
Feed, through a connection to an access center outside the data center 
(which could be an IDS access center, a third-party access center, or 
both), another User, or a third party vendor.
    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.
    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,\14\ 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.
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    \14\ 15 U.S.C. 78f(b)(8).
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Intramarket Competition
    The Exchange does not believe that the proposed change would place 
any burden on intramarket competition that is not necessary or 
appropriate. The proposed change would not apply differently to 
distinct types or sizes of market participants. Rather, it would apply 
to all Users equally: As a consequence of ICE's ceasing to offer the 
GIF as a stand-alone product, the Exchange will not be able to provide 
any Users with connectivity to the GIF. The Exchange proposes to waive 
any change fees that a User would otherwise incur as a result of the 
proposed change.
    Adding the proposed note to the Fee Schedule would reduce any 
potential ambiguity and provide clarification concerning the 
availability and the costs of connectivity to Third Party Data Feeds 
available to Users, because it would highlight that the GIF will become 
obsolete, provide a timeline for the change, and state that any change 
fees that a User would otherwise incur as a result of the proposed 
change would be waived.
    If a User wishes connectivity to the information in the GIF, the 
Users could connect to the Consolidated Feed through the Exchange. If 
any of the seven Users that have connectivity to the GIF opt to connect 
to the Consolidated Feed, the monthly connectivity cost charged by the 
Exchange would be $200.
    ICE has informed the Exchange that currently there are various 
third parties that offer Users connectivity to the Consolidated Feed. 
To use such third

[[Page 34781]]

party connectivity to the Consolidated Feed, a User may utilize the IDS 
network, a third party telecommunication network, a cross connect, or a 
combination thereof to access the Consolidated Feed, through a 
connection to an access center outside the data center (which could be 
an IDS access center, a third-party access center, or both), another 
User, or a third party vendor.
    Use of any co-location service is completely voluntary, and each 
market participant is able to determine whether to use co-location 
services based on the requirements of its business operations.
Intermarket Competition
    The Exchange does not believe that the proposed fee would impose 
any burden on intermarket competition that is not necessary or 
appropriate.
    The Exchange operates in a highly competitive market in which 
exchanges and other vendors (i.e., Hosting Users) offer co-location 
services as a means to facilitate the trading and other market 
activities of those market participants who believe that co-location 
enhances the efficiency of their operations. Accordingly, fees charged 
for co-location services are constrained by the active competition for 
the order flow of, and other business from, such market participants.
    The Commission has repeatedly expressed its preference for 
competition over regulatory intervention in determining prices, 
products, and services in the securities markets. Specifically, in 
Regulation NMS, the Commission highlighted the importance of market 
forces in determining prices and SRO revenues and, also, recognized 
that current regulation of the market system ``has been remarkably 
successful in promoting market competition in its broader forms that 
are most important to investors and listed companies.'' \15\
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    \15\ See 70 FR 37496, supra note 11.
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    The Exchange believes that the proposed change is necessary and 
appropriate. Adding the proposed note to the Fee Schedule would reduce 
any potential ambiguity and provide clarification concerning the 
availability and the costs of connectivity to Third Party Data Feeds 
available to Users, because it would highlight that the GIF will become 
obsolete and provide a timeline for the change.
    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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \16\ and Rule 19b-4(f)(6) thereunder.\17\ 
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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    \16\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \17\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \18\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\19\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has 
requested that the Commission waive the 30-day operative delay so that 
the proposal may become operative immediately upon filing. The Exchange 
believes that such waiver would be consistent with the protection of 
investors and the public interest because it would allow the Exchange 
to waive the change fee sooner. The Commission believes that waiving 
the 30-day operative delay is consistent with the protection of 
investors and the public interest because it would permit the Exchange, 
without undue delay, to cease offering the GIF when it becomes 
unavailable, provide notice to customers and waive the change fee. 
Accordingly, the Commission waives the 30-day operative delay and 
designates the proposed rule change operative upon filing.\20\
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    \18\ 17 CFR 240.19b-4(f)(6).
    \19\ 17 CFR 240.19b-4(f)(6)(iii).
    \20\ 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 such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \21\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \21\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSECHX-2020-17 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSECHX-2020-17. 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 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 the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change.

[[Page 34782]]

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 available publicly. All 
submissions should refer to File Number SR-NYSECHX-2020-17 and should 
be submitted on or before June 29, 2020.
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    \22\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-12274 Filed 6-5-20; 8:45 am]
 BILLING CODE 8011-01-P