Document ID: SEC-2021-0270-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE National, Inc.
Posted Date: 2021-02-24T05:00Z

[Federal Register Volume 86, Number 35 (Wednesday, February 24, 2021)]
[Notices]
[Pages 11367-11372]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-03718]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91158; File No. SR-NYSENAT-2021-03]

Self-Regulatory Organizations; NYSE National, Inc.; Notice of 
Filing of Proposed Rule Change To Establish Procedures for the 
Allocation of Power to Its Co-Located Users

February 18, 2021.
    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 February 4, 2021, NYSE National, Inc. (``NYSE National'' 
or the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I, 
II, and III 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 establish procedures for the allocation of 
power to its co-located Users. 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 establish procedures for the allocation of 
power to its co-located \4\ Users.\5\
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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 2018. See Securities Exchange Act Release No. 
83351 (May 31, 2018), 83 FR 26314 (June 6, 2018) (SR-NYSENAT-2018-
07). 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.
    \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 9. As 
specified in the Exchange's Price List, 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, NYSE American LLC, NYSE Arca, Inc., and NYSE Chicago, Inc. 
(together, the ``Affiliate SROs''). Each Affiliate SRO has submitted 
substantially the same proposed rule change to propose the changes 
described herein. See SR-NYSE-2021-12, SR-NYSEAMER-2021-08, SR-
NYSEArca-2021-11, and SR-NYSECHX-2021-02.
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    Recently, the Exchange added procedures for the allocation of 
cabinets (``Existing Procedures'') \6\ in colocation should it become 
needed, which procedures are not currently being used. In addition, 
Users have had an unprecedented demand for power, largely driven by the 
demands caused by volatile market conditions related to the COVID-19 
pandemic and higher than usual trading volumes. The Exchange is 
currently working to expand the amount of power and number of cabinets 
available in colocation. To complement the procedures for allocation of 
colocation cabinets, the Exchange believes it would be prudent to have 
procedures in place for the allocation of power, should such allocation 
be necessary. The Exchange accordingly proposes to expand the Existing 
Procedures to incorporate procedures for the allocation of power 
(``Proposed Procedures'').
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    \6\ See Securities Exchange Act Release No. 90732 (December 18, 
2020), 85 FR 84443 (December 28, 2020) (SR-NYSE-2020-73, SR-
NYSEAMER-2020-66, SR-NYSEArca-2020-82, SR-NYSECHX-2020-26, and SR-
NYSENAT-2020-28) (Notice of Filings of Amendment No. 1 and Order 
Granting Approval of Proposed Rule Changes, Each as Modified by 
Amendment No. 1, Amending the Exchanges' Co-Location Services To 
Establish Procedures for the Allocation of Cabinets to Co-Located 
Users if Cabinet Inventory Falls Below Certain Thresholds).
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Background
    Users currently have two options for purchasing power. First, a 
User may purchase a new dedicated or partial cabinet, which comes with 
power. The User pays an initial fee and a monthly fee based on the 
number of kilowatts (``kW'') contracted for the cabinet. The dedicated 
cabinets have a standard power allocation of either 4 kW or 8 kW (the 
``Standard Cabinet Power''). Partial cabinets are available in 
increments of eight-rack units of space, and each eight-rack unit may 
be allocated 1 or 2 kW. The Exchange allocates cabinets on a first-
come/first-serve basis.
    Second, a User may request power upgrades to dedicated cabinets in 
addition to the Standard Cabinet Power.\7\ Users may request that such 
additional power (``Additional Power'') be allocated to a cabinet when 
it is first set up or later. A User with a dedicated cabinet, for 
example, may develop its infrastructure in a manner that allows it to 
expand the hardware within that cabinet by adding Additional Power. 
Because it could add Additional Power to its existing cabinet, the User 
would not need an additional cabinet. Adding Additional Power may 
entail overhauling wiring, circuitry and hardware for the dedicated 
cabinet so that it can handle the increased power.\8\
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    \7\ See 83 FR 26314, supra note 4, at 26316.
    \8\ See id.
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    The Exchange also offers cabinets that do not have power: Cabinets 
for which power is not utilized (``PNU cabinets'').

[[Page 11368]]

PNU cabinets are reserved cabinet space that are not active, and that 
can be converted to a powered, dedicated cabinet when the User requests 
it.\9\ Although PNU cabinets do not use power, when the Exchange 
establishes a PNU cabinet, it allocates unused power capacity to it, 
depending on the User's requirements. The allocated power is kept in 
reserve for the PNU cabinet, and, upon the User's request, the PNU 
cabinet may be powered and used promptly.
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    \9\ See id.
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    If additional power or cabinets are needed, the Exchange may use 
established measures to convert PNU cabinets:

    [i]f 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.\10\
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    \10\ Securities Exchange Act Release No. 62732 (August 16, 
2010), 75 FR 51512 (August 20, 2010) (SR-NYSE-2010-56), at note 5. 
See 83 FR 26314, supra note 4, at 26316. ``Reserved cabinet space'' 
is a PNU cabinet. See Securities Exchange Act Release No. 70913 
(November 21, 2013), 78 FR 70987 (November 27, 2013) (SR-NYSE-2013-
74).

    The Exchange proposes to provide additional detail regarding the 
conversion of PNU cabinets in the Proposed Procedures.
Proposed Procedures
    Like the Existing Procedures, the Proposed Procedures would be set 
forth in General Notes 7 and 8. General Note 7 would be amended to 
provide that, if the amount of power or cabinets available fell below 
specified thresholds, Users would be subject to purchasing limits. 
General Note 7 would also specify when the purchasing limits would 
cease to apply. Consistent with the Existing Procedures, the amended 
General Note 7 would provide that if a User requests a number of 
Standard Cabinets and/or amount of Additional Power that would cause 
the unallocated power capacity to be below the specified power and 
cabinet thresholds, the purchasing limits would apply only to the 
portion of the User's order below the relevant threshold.\11\
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    \11\ For example, if there was 365 kW unallocated power capacity 
in co-location and a User requested to purchase cabinets and 
Additional Power that would, together, total 55 kW, the purchasing 
limits in General Note 7 would not apply to the User's purchase of 
the first 15 kW, whether those kW were in the form of cabinets or 
Additional Power. Once the power threshold was reached, the combined 
limits would be activated, limiting the User's purchase of 
additional cabinets and Additional Power. In all, the User would be 
permitted to purchase a total of 47 kW out of its original order of 
55 kW. The User could choose whether the 47 kW was in the form of 
cabinets, Additional Power, or both.
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    The Exchange proposes that, if either the Cabinet Threshold or the 
Power Threshold, or if both the Cabinet Threshold and Power Threshold 
are reached, all Users with PNU cabinets would be required to either 
convert or relinquish them, consistent with the applicable provisions. 
Doing so would allow all cabinets and power to be available for active 
use. As a result, no User would be subject to limitations on its 
ability to purchase and use cabinets or power at the same time that PNU 
cabinets were dormant.
    General Note 8 would be amended to provide that, if the amount of 
power or cabinets available fell to zero, Users seeking to purchase 
power or cabinets would be put on a waitlist. The waitlist provisions 
for power would be substantially similar to those for cabinets in the 
Existing Procedures.\12\ In both General Notes 7 and 8, the Proposed 
Procedures would also state how the Existing Procedures regarding 
cabinets and the new procedures regarding power would relate to each 
other. In each case, the Proposed Procedures would state what the 
threshold amount of power and cabinets would be to discontinue the 
limits, which would allow the Exchange to return to offering PNU 
cabinets. Finally, in clarifying changes, the existing text of General 
Notes 7 and 8 would be amended to change ``Purchasing Limits'' to 
``Cabinet Limits'' and ``waitlist'' to ``Cabinet Waitlist'' and to 
delete redundant text.
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    \12\ Consistent with the Existing Procedures, the Proposed 
Procedures would provide that, as additional power and cabinets 
became available, the Exchange would offer it to the User at the top 
of the combined waitlist. Power may become available if, for 
example, (a) a User vacates a dedicated or partial cabinet or 
relinquishes Additional Power or (b) IDS builds additional capacity. 
Cabinets may become available if, for example, a User vacates a 
dedicated or partial cabinet.
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Proposed Amendments to General Note 7
    The Exchange proposes to amend General Note 7 as follows (additions 
italicized, deletions in [brackets]):

    7. Cabinet and Power Purchasing Limits. If (i) unallocated 
cabinet inventory is at or below 40 cabinets, whether or not such 
cabinets are configured to be subdivided into partial cabinets 
(``Cabinet Threshold''), or (ii) the unallocated power capacity in 
co-location is at or below 350 kW (the ``Power Threshold''), the 
following limits on the purchase of new cabinets (``Purchasing 
Limits'') will apply:
    a. Cabinet Limits. If only the Cabinet Threshold is reached, the 
following measures (the ``Cabinet Limits'') will apply:
     All Users with PNU cabinets will be required to either 
convert [its]their PNU cabinets into dedicated cabinets or 
relinquish [its]their PNU cabinets [before being permitted to 
purchase new cabinets]. The Exchange will notify each User with a 
PNU cabinet that the User has 30 business days to decide whether to 
contract to convert the PNU cabinet to a dedicated cabinet. If the 
User does not contract to use the PNU cabinet as a dedicated cabinet 
within such time, the PNU cabinet will be relinquished.
     [Once the Cabinet Threshold is reached, t]The Exchange 
will limit each User's purchase of new cabinets (dedicated and 
partial) to a maximum of four dedicated cabinets. The maximum may be 
comprised of a mix of dedicated and partial cabinets, with two 
partial cabinets counting as one dedicated cabinet.
     If a User requests, in writing, a number of cabinets 
that, if provided, would cause the available cabinet inventory to be 
below 40 cabinets, the [Purchasing]Cabinet Limits will only apply to 
the portion of the User's order below the Cabinet Threshold.
     A User will have to wait 30 days from the date of its 
signed order form before purchasing new cabinets again.
     If the Cabinet Threshold is reached, the Exchange will 
cease offering or providing new PNU cabinets to all Users and Users 
will not be permitted to convert a currently used dedicated cabinet 
to a PNU cabinet.
     When unallocated cabinet inventory is more than 40 
cabinets, the Exchange will discontinue the [Purchasing]Cabinet 
Limits.
    b. Combined Limits. If only the Power Threshold is reached or 
both the Cabinet Threshold and the Power Threshold are reached, the 
following measures (the ``Combined Limits'') will apply:
     All Users with PNU cabinets will be required to either 
convert their PNU cabinets into dedicated cabinets or relinquish 
their PNU cabinets. The Exchange will notify each User with a PNU 
cabinet that the User has 30 business days to decide whether to 
contract to convert the PNU cabinet to a dedicated cabinet. If the 
User does not contract to use the PNU cabinet as a dedicated cabinet 
within such time, the PNU cabinet will be relinquished.
     A User may purchase either or both of the following, so 
long as the combined power usage of such purchases is no more than a 
maximum of 32 kW:
    a. New cabinets (dedicated and partial), subject to a maximum of 
four dedicated cabinets with standard power allocations of 4 kW or 8 
kW (``Standard Cabinets''). The purchase may be comprised of a mix 
of dedicated and partial cabinets, with two partial cabinets 
counting as one dedicated cabinet.
    b. Additional power for new or existing cabinets.
     If a User requests, in writing, a number of Standard 
Cabinets and/or an amount of additional power that, if provided, 
would cause the unallocated power capacity to be below the Power 
Threshold or Cabinet Threshold, the Combined Limits would apply only 
to the portion of the User's order below the relevant threshold.
     A User will have to wait 30 days from the date of its 
signed order form before purchasing new Standard Cabinets or 
additional power again.

[[Page 11369]]

     If the Power Threshold or Cabinet Threshold is reached, 
the Exchange will cease offering or providing new PNU cabinets to 
all Users and Users will not be permitted to convert a currently 
used dedicated cabinet to a PNU cabinet.
     When unallocated power capacity is above the Power 
Threshold, the Exchange will discontinue the Combined Limits. If at 
that time the unallocated cabinet inventory is 40 or fewer cabinets, 
the Cabinet Limits would enter into effect.
    c. Applicability. If the Cabinet Threshold is reached before the 
Power Threshold, the Cabinet Limits will be in effect until the 
Power Threshold is reached, after which the Combined Limits will 
apply.
Proposed Amendments to General Note 8
    The Exchange proposes to amend General Note 8 as follows (additions 
italicized, deletions in [brackets]):

    8. Cabinet and Combined Waitlists.
    a. Cabinet Waitlist. Unless a Combined Waitlist is in effect, 
t[T]he Exchange will create a cabinet waitlist (``Cabinet 
Waitlist'') if the available cabinet inventory is zero, or a User 
requests, in writing, a number of cabinets that, if provided, would 
cause the available inventory to be zero. The Exchange will place 
Users seeking cabinets on a Cabinet [w]Waitlist, as follows:
     Users with PNU cabinets will not be required to either 
convert their PNU cabinets into dedicated cabinets or relinquish 
their PNU cabinets in accordance with the measures set forth in 
General Note 7(a), above. [placed on the waitlist if the User could 
meet its new cabinet request by converting its PNU cabinets to 
dedicated cabinets. A User will only be placed on the waitlist for 
the portion of its new cabinet request that exceeds its existing PNU 
cabinets, subject to the Purchasing Limitations.]
     A User will be placed on the Cabinet [w]Waitlist based 
on the date its signed order is received. A User may only have one 
order for new cabinets on the Cabinet [w]Waitlist at a time, and the 
order is subject to the [Purchasing]Cabinet Limits. If a User 
changes the size of its order while it is on the Cabinet Waitlist, 
it will maintain its place on the Cabinet Waitlist, and will remain 
subject to the Cabinet Limits.
     As cabinets become available, the Exchange will offer 
them to the User at the top of the Cabinet [w]Waitlist. If the 
User's order is completed, it will be removed from the Cabinet 
[w]Waitlist. If the User's order is not completed, it will remain at 
the top of the Cabinet [w]Waitlist.
     A User will be removed from the Cabinet [w]Waitlist (a) 
at the User's request or (b) if the User turns down an offer of a 
cabinet of the same size it requested in its order. If the Exchange 
offers the User a cabinet of a different size than the User 
requested in its order, the User may turn down the offer and remain 
at the top of the Cabinet [w]Waitlist until its order is completed.
     A User that is removed from the Cabinet [w]Waitlist but 
subsequently submits a new written order for cabinets will be added 
back to the bottom of the Cabinet [w]Waitlist.
     When unallocated cabinet inventory is more than 10 
cabinets, the Exchange will cease use of the Cabinet [w]Waitlist.
    b. Combined Waitlist. The Exchange would create a power and 
cabinet waitlist (``Combined Waitlist'') if the unallocated power 
capacity is zero, or if a User requests, in writing, an amount of 
power (whether power allocated to a Standard Cabinet or additional 
power) that, if provided, would cause the unallocated power capacity 
to be below zero. The Exchange would place Users seeking cabinets or 
power on the Combined Waitlist, as follows:
     All Users with PNU cabinets will be required to either 
convert their PNU cabinets into dedicated cabinets or relinquish 
their PNU cabinets in accordance with the measures set forth in 
General Note 7(b), above.
     If a Cabinet Waitlist exists when the requirements to 
create a Combined Waitlist are met, the Cabinet Waitlist will 
automatically convert to the Combined Waitlist. If a Combined 
Waitlist exists when the requirements to create a Cabinet Waitlist 
are met, no new waitlist will be created, and the Combined Waitlist 
will continue in effect.
     A User will be placed on the Combined Waitlist based on 
the date its signed order for cabinets and/or additional power is 
received. A User may only have one order for new cabinets and/or 
additional power on the Combined Waitlist at a time, and the order 
would be subject to the Combined Limits. If a User changes the size 
of its order while it is on the Combined Waitlist, it will maintain 
its place on the Combined Waitlist, and will remain subject to the 
Combined Limits.
     As additional power and/or cabinets become available, 
the Exchange will offer them to the User at the top of the Combined 
Waitlist. If the User's order is completed, the order will be 
removed from the Combined Waitlist. If the User's order is not 
completed, it will remain at the top of the Combined Waitlist.
     A User will be removed from the Combined Waitlist (a) 
at the User's request; (b) if the User turns down an offer that is 
the same as its order (e.g., the offer includes cabinets of the same 
size and/or the amount of additional power that the User requested 
in its order). If the Exchange offers the User an offer that is 
different than its order, the User may turn down the offer and 
remain at the top of the Combined Waitlist until its order is 
completed.
     A User that is removed from the Combined Waitlist but 
subsequently submits a new written order for cabinets and/or 
additional power will be added back to the bottom of the waitlist.
     If the Combined Waitlist is in effect, when unallocated 
power capacity in co-location is at 100 kW, the Exchange will cease 
use of the waitlist. If at that time the unallocated cabinet 
inventory is 10 or fewer cabinets, the Cabinet Limits would enter 
into effect.

    The proposed change would apply the same way to all types and sizes 
of market participants. As is currently the case, the purchase of any 
colocation service is completely voluntary and the Price List is 
applied uniformly to all Users. 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,\13\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\14\ 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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    \13\ 15 U.S.C. 78f(b).
    \14\ 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 User demand for power will continue. The 
Exchange is currently working to expand the amount of power and number 
of cabinets available in colocation. Nevertheless, the Exchange 
believes that it would be reasonable for it to put in place the 
Proposed Procedures to establish the allocation of power and cabinets 
on an equitable basis, consistent with the Established Procedures. The 
Proposed Procedures would establish a rational, objective procedure 
that would be applied uniformly by the Exchange to all Users that 
requested new cabinets or Additional Power.
    The Exchange believes that integrating the procedures for the 
allocation of power with the Existing Procedures would be reasonable, 
because cabinets are provided with power. Having both power and 
cabinets covered by the Proposed Procedures would ensure that the 
procedures for all

[[Page 11370]]

relevant services are consistent and coordinated. Having the Proposed 
Procedures state what would occur if the Cabinet Threshold and Power 
Threshold are reached at different times, and how the Cabinet Waitlist 
and Combined Waitlist interrelate, is reasonable for the same reason.
    The Exchange believes that following the Existing Procedures' two-
tier structure of establishing, first, a purchasing limitation on order 
size, and second, a waitlist, would be a reasonable method to respond 
to increasing demand for power and cabinets in the future. The Exchange 
notes that the Existing Procedures are consistent with the Nasdaq 
procedures for allocating cabinets if its cabinet inventory shrinks to 
zero.\15\ The Exchange believes that it is reasonable to amend the 
Existing Procedures to clarify what would occur if a User changes the 
size of its order while it is on the Cabinet Waitlist.
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    \15\ See Securities Exchange Act Release No. 62397 (June 28, 
2010), 75 FR 38860 (July 6, 2010) (SR-NASDAQ-2010-019).
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    The Exchange believes that the proposed Power Threshold is 
reasonable and equitable. Based on experience, the Exchange believes 
that the Power Threshold of 350 kW is reasonable and appropriate 
because it is sufficiently low that it would not be triggered 
repeatedly, yet it offers a reasonable buffer during which the Combined 
Limits would apply before the Combined Waitlist would become effective.
    The Exchange believes that the proposed Combined Limits are 
reasonable and equitable. Based on its experience with co-location and 
purchasing trends over the last few years, the Exchange believes that 
in most cases the amount of power that a User would be allowed to buy 
under the proposed Combined Limits, whether in the form of cabinets or 
Additional Power, would be sufficient for a User's needs while leaving 
a margin for potential growth.
    Further, the Exchange believes that, by establishing a waitlist on 
the basis of the date it receives signed orders, limiting the size and 
number of orders a User may have on the waitlist at any one time, 
stating what happens if a User changes its order while on the waitlist, 
and removing a User from the waitlist if it turns down an offer that is 
the same as what it requested, the Combined Waitlist is largely 
consistent with the Existing Procedures and reasonably designed to 
prevent Users from utilizing the waitlist as a method to obtain a 
greater portion of the power and cabinets available, thereby 
facilitating a more equitable distribution. Similarly, the Exchange 
believes that by requiring a 30-day delay before a User subject to the 
Combined Limits could purchase Standard Cabinets or Additional Power 
again, the Proposed Procedure is reasonably designed to prevent a User 
from obtaining a greater portion of the power and cabinets available.
    The Exchange believes that the proposed change is reasonable and 
equitable because the Exchange would only place limits on Users' 
ability to purchase Standard Cabinets or Additional Power if either or 
both the Power Threshold and Cabinet Threshold are reached. Similarly, 
the Exchange believes that the proposed change is reasonable and 
equitable because the Combined Waitlist would only be created if 
unallocated power capacity in co-location is zero, or if a User 
requests, in writing, an amount of power (whether power allocated to a 
Standard Cabinet or Additional Power) that, if provided, would cause 
the unallocated power capacity to be below zero, and because there 
would be an established threshold for cessation of the Combined 
Waitlist.
    The Exchange believes that it would be reasonable and equitable to 
require Users with PNU cabinets to either convert their PNU cabinets 
into dedicated cabinets or relinquish them if either or both the 
Cabinet Threshold and Power Threshold are reached. Doing so would make 
the power reserved for PNU cabinets and the cabinets themselves 
available to meet User demand for power and cabinets. As a result, no 
User would be subject to limitations on its ability to purchase and use 
power or cabinets at the same time that PNU cabinets were dormant. The 
Exchange believes that the measure is therefore reasonably designed to 
prevent a User from reserving, but not using, power or cabinets at a 
time when other Users are subject to limitations, facilitating a more 
equitable distribution.
    The Proposed Procedures would provide additional specificity to the 
existing PNU cabinet provision permitting conversion of PNU cabinets, 
by stating what the relevant thresholds would be, when the Exchange 
would require Users to decide whether to convert their PNU cabinets, 
and when PNU cabinets would be offered again, thereby increasing 
transparency and adding clarity.
    The Exchange believes that the proposed change would be a 
reasonable method for the Exchange to accommodate demand for power and 
cabinets on an equitable basis, while allowing all Users that currently 
have a PNU cabinet to have a choice between converting their PNU 
cabinet to a dedicated cabinet or relinquishing it. The Exchange notes 
that Nasdaq's co-location customers that have a ``Cabinet Proximity 
Option'' have a similar choice if Nasdaq determines that the reserved 
data center space is needed for use.\16\ Finally, the Exchange believes 
that it would be fair and equitable to require all Users with PNU 
cabinets to be subject to the same measures if the Cabinet Threshold or 
Power Threshold were met.
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    \16\ Co-location customers may either contract with Nasdaq for 
full payment or have the cabinet reassigned. Securities Exchange Act 
Release No. 62354 (June 22, 2010), 75 FR 38860 (July 6, 2010) (SR-
Nasdaq-2010-019).
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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.
    The Exchange believes that User demand for cabinets and power will 
continue. In this context, the proposed rule change would allow the 
Exchange to protect investors and the public interest, first, by 
setting limits on Users' ability to purchase power, and second, by 
using a waitlist to allocate any unallocated cabinets and power on a 
first come-first served rolling basis.
    Based on experience, the Exchange believes that the Power Threshold 
is sufficiently low that it would not be triggered repeatedly, which 
would protect investors and the public interest. Similarly, based on 
its experience with co-location and purchasing trends over the last few 
years, the Exchange believes that in most cases the amount of power 
that a User would be allowed to buy under the proposed Combined Limits, 
whether in the form of cabinets or Additional Power, would be 
sufficient for a User's needs while leaving a margin for potential 
growth, which would protect investors and the public interest.
    In addition, the Proposed Procedures would protect investors and 
the public interest in that they are designed to prevent Users from 
utilizing the Combined Limit and waitlist procedures to obtain a 
greater portion of the power and cabinets available, thereby 
facilitating a more equitable distribution.
    The Exchange believes that it would protect investors and the 
public interest to require Users with PNU cabinets to either convert 
their PNU cabinets into

[[Page 11371]]

dedicated cabinets or relinquish them if either or both the Cabinet 
Threshold and Power Threshold are reached. Doing so would mean that no 
User would be subject to limitations on its ability to purchase and use 
power or cabinets at the same time that PNU cabinets were dormant. The 
Exchange believes that the measure is therefore reasonably designed to 
prevent a User from reserving but not using power or cabinets at a time 
when other Users are subject to limitations.
    The proposed rule change would protect investors and the public 
interest because the proposed revised General Notes would articulate 
rational, objective procedures consistent with the Existing Procedures 
and PNU cabinet provisions, and would serve to reduce any potential for 
confusion on how cabinets and power would be allocated if a shortage in 
one or the other were to arise in the future, and would thereby make 
the Price List more transparent and reduce any potential ambiguity.
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 apply equally to all types and sizes of 
market participants. If the Proposed Procedures were in place, all 
Users would be able to identify the permitted cabinet and power options 
and the procedures that would apply to them in the event that 
unallocated cabinet or power supply runs low in the future. All Users 
with PNU cabinets would be subject to the same measures if the Cabinet 
Threshold or Power Threshold were met. The Proposed Procedures would 
assist the Exchange in accommodating demand for co-location services, 
and power and cabinets in particular, on an equitable basis.
    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,\17\ 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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    \17\ 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.
    The Exchange believes that, if triggered, the imposition of the 
Combined Limits or Combined Waitlist would not impose a burden on a 
User's ability to compete that is not necessary or appropriate. The 
Exchange believes that User demand for power will continue in the 
future, and the Exchange is presently working to expand the amount of 
power and number of cabinets available in colocation. In this context, 
the Exchange believes that it would be reasonable for it to put in 
place the Proposed Procedures to expand on the Existing Procedures and 
establish a method for allocating not just cabinets but also power on 
an equitable basis.
    The Exchange would only follow the Proposed Procedures and place 
limits on Users' ability to purchase new power and cabinets if either 
or both the proposed Power Threshold and existing Cabinet Threshold 
were met, as specified in the proposed General Notes. Similarly, the 
Exchange would only create the Proposed Waitlist if the unallocated 
power capacity is zero, or if a User requests, in writing, an amount of 
power that, if provided, would cause the unallocated power capacity to 
be below zero. Based on its experience with co-location and purchasing 
trends over the last few years, the Exchange believes that in most 
cases the amount of power that a User would be allowed to buy under the 
proposed Combined Limits, whether in the form of cabinets or Additional 
Power, would be sufficient for a User's needs while leaving a margin 
for potential growth.
    The Exchange believes that the proposed revised General Notes would 
articulate rational, objective procedures consistent with the Existing 
Procedures and PNU cabinet provisions, and would serve to reduce any 
potential for confusion on how power and cabinets would be allocated if 
a shortage in one or the other were to arise in the future, and would 
thereby make the Price List more transparent and reduce any potential 
ambiguity.
    The Exchange believes that it would not impose a burden on a User's 
ability to compete that is not necessary or appropriate to require 
Users with PNU cabinets to either convert or relinquish their PNU 
cabinets if either or both the Cabinet Threshold and Power Threshold 
are reached. Doing so would make the power reserved for PNU cabinets 
and the cabinets themselves available to meet User demand for power and 
cabinets. As a result, no User would be subject to limitations on its 
ability to purchase and use power or cabinets at the same time that PNU 
cabinets were dormant. A User does not require a PNU cabinet to trade 
on the Exchange, and whether or not a User has a PNU cabinet has no 
effect on such User's orders going to, or trade data coming from, the 
Exchange, or the User's ability to utilize other co-location services. 
Rather, the proposed change would assist the Exchange in accommodating 
demand for co-location services on an equitable basis.
    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 change 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.'' \18\
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    \18\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005).
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    The proposed rule change would protect investors and the public 
interest because the proposed revised General Notes would articulate 
rational, objective procedures consistent with the

[[Page 11372]]

Existing Procedures and PNU cabinet provisions, and would serve to 
reduce any potential for confusion on how cabinets and power would be 
allocated if a shortage in one or the other were to arise in the 
future, and would thereby make the Price List more transparent and 
reduce any potential ambiguity.
    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 up to 90 days (i) as the Commission may designate 
if it finds such longer period to be appropriate and publishes its 
reasons for so finding or (ii) as to which the self-regulatory 
organization consents, the Commission will:
    (A) By order approve or disapprove the 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:

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-NYSENAT-2021-03 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSENAT-2021-03. 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. 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-NYSENAT-2021-03 and should be submitted 
on or before March 17, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-03718 Filed 2-23-21; 8:45 am]
BILLING CODE 8011-01-P