Document ID: SEC-2020-0820-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC, NYSE American, LLC, NYSE Arca, Inc., NYSE Chicago, Inc., and NYSE National, Inc.
Posted Date: 2020-05-22T04:00Z

[Federal Register Volume 85, Number 100 (Friday, May 22, 2020)]
[Notices]
[Pages 31273-31281]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-11045]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88901; File Nos. SR-NYSE-2020-05, SR-NYSEAMER-2020-05, 
SR-NYSEArca-2020-08, SR-NYSECHX-2020-02, SR-NYSENAT-2020-03, SR-NYSE-
2020-11, SR-NYSEAMER-2020-10, SR-NYSEArca-2020-15, SR-NYSECHX-2020-05, 
SR-NYSENAT-2020-08]

Self-Regulatory Organizations; New York Stock Exchange LLC, NYSE 
American LLC, NYSE Arca, Inc., NYSE Chicago, Inc., and NYSE National, 
Inc.; Order Instituting Proceedings To Determine Whether To Approve or 
Disapprove Proposed Rule Changes To Establish a Wireless Fee Schedule 
Setting Forth Available Wireless Bandwidth Connections and Wireless 
Market Data Connections and Associated Fees

May 18, 2020.

I. Introduction

    On January 30, 2020, New York Stock Exchange LLC (``NYSE''), NYSE 
American LLC (``NYSE American''), NYSE Arca, Inc. (``NYSE Arca''), NYSE 
Chicago, Inc. (``NYSE Chicago''), and NYSE National, Inc. (``NYSE 
National'') (collectively, the ``Exchanges'') each filed with the 
Securities and Exchange Commission (``Commission''), pursuant to 
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Exchange 
Act'' or ``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule 
change to establish a schedule of Wireless Connectivity Fees and 
Charges (``Wireless Fee Schedule'') listing available wireless 
connections between the Mahwah, New Jersey data center (``Mahwah Data 
Center'') and other data centers. The proposed rule changes 
(collectively, ``Wireless I'') were published for comment in the 
Federal Register on February 18, 2020.\3\ On April 1, 2020, pursuant to 
Section 19(b)(2) of the Act,\4\ the Commission designated a longer 
period within which to either approve the Wireless I proposed rule 
changes, disapprove the proposed rule changes, or institute

[[Page 31274]]

proceedings to determine whether to disapprove the proposed rule 
changes.\5\
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release Nos. 88168 (February 11, 
2020), 85 FR 8938 (February 18, 2020) (SR-NYSE-2020-05) (``Wireless 
I Notice''); 88169 (February 11, 2020), 85 FR 8946 (February 18, 
2020) (SR-NYSEAMER-2020-05); 88170 (February 11, 2020), 85 FR 8956 
(February 18, 2020) (SR-NYSEArca-2020-08); 88172 (February 11, 
2020), 85 FR 8923 (February 18, 2020) (SR-NYSECHX-2020-02); and 
88171 (February 11, 2020), 85 FR 8930 (February 18, 2020) (SR-
NYSENAT-2020-03) (collectively, the ``Wireless I Notices''). 
Comments received on the Wireless I Notices are available on the 
Commission's website at: https://www.sec.gov/comments/sr-nyse-2020-05/srnyse202005.htm.
    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 88539 (April 1, 
2020), 85 FR 19553 (April 7, 2020). The Commission designated May 
18, 2020, as the date by which it should approve, disapprove, or 
institute proceedings to determine whether to disapprove the 
proposed rule changes.
---------------------------------------------------------------------------

    On February 11, 2020, NYSE, NYSE Arca, NYSE Chicago, and NYSE 
National each filed with the Commission, pursuant to Section 19(b)(1) 
of the Act \6\ and Rule 19b-4 thereunder,\7\ a proposed rule change to 
amend the Wireless Fee Schedule to add wireless connections for the 
transport of certain market data of the Exchanges. NYSE American filed 
with the Commission a substantively identical filing on February 12, 
2020. The proposed rule changes (collectively, ``Wireless II'') were 
published for comment in the Federal Register on February 25, 2020.\8\ 
On April 1, 2020, pursuant to Section 19(b)(2) of the Act,\9\ the 
Commission designated a longer period within which to either approve 
the Wireless II proposed rule changes, disapprove the proposed rule 
changes, or institute proceedings to determine whether to disapprove 
the proposed rule changes.\10\
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    \6\ 15 U.S.C. 78s(b)(1).
    \7\ 17 CFR 240.19b-4.
    \8\ See Securities Exchange Act Release Nos. 88237 (February 19, 
2020), 85 FR 10752 (February 25, 2020) (SR-NYSE-2020-11) (``Wireless 
II Notice''); 88238 (February 19, 2020), 85 FR 10776 (February 25, 
2020) (SR-NYSEAMER-2020-10); 88239 (February 19, 2020), 85 FR 10786 
(February 25, 2020) (SR-NYSEArca-2020-15); 88240 (February 19, 
2020), 85 FR 10795 (February 25, 2020) (SR-NYSECHX-2020-05); and 
88241 (February 19, 2020), 85 FR 10738 (February 25, 2020) (SR-
NYSENAT-2020-08) (collectively, the ``Wireless II Notices''). 
Comments received on the Wireless II Notices are available on the 
Commission's website at: https://www.sec.gov/comments/sr-nyse-2020-11/srnyse202011.htm.
    \9\ 15 U.S.C. 78s(b)(2).
    \10\ See Securities Exchange Act Release No. 88540 (April 1, 
2020), 85 FR 19562 (April 7, 2020). The Commission designated May 
25, 2020, as the date by which it should approve, disapprove, or 
institute proceedings to determine whether to disapprove the 
proposed rule changes.
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    This order institutes proceedings under Section 19(b)(2)(B) of the 
Exchange Act \11\ to determine whether to approve or disapprove the 
Wireless I and Wireless II proposed rule changes.
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    \11\ 15 U.S.C. 78s(b)(2)(B).
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II. Description of the Proposed Rule Changes

A. Wireless I

    In Wireless I, the Exchanges propose to establish the Wireless Fee 
Schedule, setting forth options for market participants to establish 
wireless connections for specified fees between the Mahwah Data Center 
and three data centers that are owned and operated by third parties 
unaffiliated with the Exchanges: (1) Carteret, New Jersey; (2) 
Secaucus, New Jersey; and (3) Markham, Canada (collectively, the 
``Third Party Data Centers'').\12\ As more fully set forth in the 
Wireless I Notices, the Exchanges state that a market participant 
opting to establish a wireless connection between the Mahwah Data 
Center and a Third Party Data Center may do so by requesting one from 
ICE Data Services (``IDS'').\13\ The Exchanges state that IDS operates 
through several different Intercontinental Exchange, Inc. (``ICE'') 
affiliates, including NYSE Technologies Connectivity, Inc., an indirect 
subsidiary of NYSE.\14\
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    \12\ See Wireless I Notice, supra note 3, at 8938.
    \13\ See id. at 8939.
    \14\ See id. at 8939 n.11. The Exchanges themselves are indirect 
subsidiaries of ICE. See id. at 8939.
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    According to the Exchanges, once requested, IDS establishes the 
wireless connection (herein a ``Wireless Bandwidth Connection'') 
between IDS's equipment in the Third Party Data Center and IDS's 
equipment in the Mahwah Data Center.\15\ IDS uses its own wireless 
network between the Markham Third Party Data Center and the Mahwah Data 
Center.\16\ IDS contracts with a non-ICE entity to provide Wireless 
Bandwidth Connections between the Secaucus and Carteret Third Party 
Data Centers and the Mahwah Data Center through a series of towers 
equipped with wireless equipment.\17\ With respect to connections 
between the Secaucus and Carteret Third Party Data Centers and the 
Mahwah Data Center, these towers include a pole on the grounds of the 
Mahwah Data Center property, to which access is restricted.\18\ At each 
end of the Wireless Bandwidth Connection, the customer uses a cross 
connect or other cable to connect its own equipment to the IDS 
equipment.\19\ Cross connects in the Mahwah Data Center lead to the 
customer's server in co-location.\20\
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    \15\ See id. See also infra note 47 and accompanying text 
(further summarizing how the Exchanges describe the function and 
purpose of these connections).
    \16\ See id. at 8939.
    \17\ See id. at 8939.
    \18\ See id. at 8943.
    \19\ See id.
    \20\ See id. Proposed rule changes regarding such cross connects 
in the Mahwah Data Center are filed with the Commission. See id. at 
8939 n.12 (citing Securities Exchange Act Release No. 67666 (August 
15, 2012), 77 FR 50742 (August 22, 2012) (SR-NYSE-2012-18)).
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    As discussed further below,\21\ the Exchanges take the position 
that the Wireless Bandwidth Connections are not ``facilities of an 
exchange'' within the meaning of Section 3(a)(1) of the Act (defining 
``exchange'') and Section 3(a)(2) of the Act (defining 
``facility'').\22\ The Exchanges thus take the position that the 
proposed Wireless Fee Schedule is not required to be filed with the 
Commission, and not subject to review for determination of consistency 
with Act standards.\23\ The Exchanges seek approval of the Wireless Fee 
Schedule, however, stating that they have filed the current proposals 
``solely because the Staff of the Commission'' has advised that filing 
is required.\24\
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    \21\ See Section II.C.1. infra.
    \22\ See Wireless I Notice, supra note 3, at 8939-41.
    \23\ See id. at 8938-39.
    \24\ See id. at 8939.
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Proposed Wireless Fee Schedule (Wireless I)
    The Exchanges propose that IDS would assess a non-recurring initial 
charge and a monthly recurring charge (``MRC'') for the Wireless 
Bandwidth Connections, with variations depending upon bandwidth size 
and the location of the connection. The proposed schedule set forth by 
the Exchanges is as follows: \25\
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    \25\ See id. at 8941-42.

------------------------------------------------------------------------
        Type of service            Description        Amount of charge
------------------------------------------------------------------------
Wireless Connection between     10 Mb Circuit....  $10,000 per
 Mahwah Data Center and                             connection initial
 Secaucus access center.                            charge plus monthly
                                                    charge per
                                                    connection of
                                                    $9,000.
Wireless Connection between     50 Mb Circuit....  $10,000 per
 Mahwah Data Center and                             connection initial
 Secaucus access center.                            charge plus monthly
                                                    charge per
                                                    connection of
                                                    $13,500.
Wireless Connection between     100 Mb Circuit...  $10,000 per
 Mahwah Data Center and                             connection initial
 Secaucus access center.                            charge plus monthly
                                                    charge per
                                                    connection of
                                                    $23,000.
Wireless Connection between     200 Mb Circuit...  $10,000 per
 Mahwah Data Center and                             connection initial
 Secaucus access center.                            charge plus monthly
                                                    charge per
                                                    connection of
                                                    $44,000.
Wireless Connection between     10 Mb Circuit....  $10,000 per
 Mahwah Data Center and                             connection initial
 Carteret access center.                            charge plus monthly
                                                    charge per
                                                    connection of
                                                    $10,000.

[[Page 31275]]

 
Wireless Connection between     50 Mb Circuit....  $10,000 per
 Mahwah Data Center and                             connection initial
 Carteret access center.                            charge plus monthly
                                                    charge per
                                                    connection of
                                                    $15,000.
Wireless Connection between     100 Mb Circuit...  $10,000 per
 Mahwah Data Center and                             connection initial
 Carteret access center.                            charge plus monthly
                                                    charge per
                                                    connection of
                                                    $25,000.
Wireless Connection between     200 Mb Circuit...  $10,000 per
 Mahwah Data Center and                             connection initial
 Carteret access center.                            charge plus monthly
                                                    charge per
                                                    connection of
                                                    $45,000.
Wireless Connections between    50 Mb Circuits...  $15,000 initial
 (a) Mahwah Data Center and                         charge for both
 Carteret access center and                         connections plus
 (b) Mahwah Data Center and                         monthly charge for
 Secaucus Data Center.                              both connections of
                                                    $22,000.
Wireless Connection between     1 Mb Circuit.....  $10,000 per
 Mahwah Data Center and                             connection initial
 Markham access center.                             charge plus monthly
                                                    charge per
                                                    connection of
                                                    $6,000.
Wireless Connection between     5 Mb Circuit.....  $10,000 per
 Mahwah Data Center and                             connection initial
 Markham access center.                             charge plus monthly
                                                    charge per
                                                    connection of
                                                    $15,500.
Wireless Connection between     10 Mb Circuit....  $10,000 per
 Mahwah Data Center and                             connection initial
 Markham access center.                             charge plus monthly
                                                    charge per
                                                    connection of
                                                    $23,000.
------------------------------------------------------------------------

    As an incentive, the first month's MRC would be waived.\26\ In 
addition, the Exchanges propose to include a General Note on the 
Wireless Fee Schedule, stating that a market participant that obtains a 
Wireless Bandwidth Connection will not be charged more than once for 
that service, irrespective of whether it is a member of one, some or 
none of the Exchanges.\27\
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    \26\ See id. at 8942. If a customer had an existing Wireless 
Bandwidth Connection and opted to upgrade or downgrade to a 
different size circuit connecting to the same Third Party Access 
Center, it would not be subject to the initial charge. See id.
    \27\ The proposed General Note would be consistent with the 
first general note in the co-location section of each Exchange's 
price list and fee schedule. See id. at 8942 (citing Securities 
Exchange Act Release Nos. 70206 (August 15, 2013), 78 FR 51765 
(August 21, 2013) (SR-NYSE-2013-59); 70176 (August 13, 2013), 78 FR 
50471 (August 19, 2013) (SR-NYSEMKT-2013-67); 70173 (August 13, 
2013), 78 FR 50459 (August 19, 2013) (SR-NYSEArca-2013-80); 83351 
(May 31, 2018), 83 FR 26314 (June 6, 2018) (SR-NYSENAT-2018-07; and 
87408 (October 28, 2019), 84 FR 58778 (November 1, 2019) (SR-
NYSECHX-2019-12)). The Exchanges also note that similar language 
appears in the Nasdaq Stock Market rules. See id. (citing The Nasdaq 
Stock Market General Equity and Options Rules, General 8, Section 
1).
---------------------------------------------------------------------------

B. Wireless II

    In Wireless II, the Exchanges propose to include additional 
connectivity options on the Wireless Fee Schedule for specified fees; 
namely, wireless connections for the transport of certain market data 
feeds (``Wireless Market Data Connections'') from the Mahwah Data 
Center to Third Party Data Centers.\28\ The market data feeds available 
via the Wireless Market Data Connections (the ``Selected Market Data'') 
are certain proprietary market data feeds offered by NYSE, NYSE Arca, 
and/or NYSE National.\29\
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    \28\ See Wireless II Notice, supra note 8, at 10753.
    \29\ The Exchanges state that the Selected Market Data is 
generated at the Mahwah Data Center in the trading and execution 
systems of NYSE, NYSE Arca and NYSE National. See id. In each case, 
NYSE, NYSE Arca, or NYSE National, as applicable, files with the 
Commission for the Selected Market Data it generates, and the 
related fees. See id. The filed market data fees apply to all 
Selected Market Data customers no matter what connectivity provider 
they use. See id. at 10754.
---------------------------------------------------------------------------

    As more fully set forth in the Wireless II Notices, the Exchanges 
explain that a market participant seeking connectivity to a Selected 
Market Data feed chooses a connectivity provider.\30\ In the case of 
the proposed Wireless Market Data Connections, market participants 
would be choosing IDS as wireless connectivity provider.\31\ Upon 
selection, IDS would first need to obtain authorization from the 
provider of the relevant Selected Market Data feed.\32\ Then, IDS would 
set up the Wireless Market Data Connection for the market participant 
by collecting the Selected Market Data and sending it over the Wireless 
Market Data Connection to the IDS access center in the Third Party Data 
Center, where the customer would then connect to the Selected Market 
Data at the Third Party Data Center.\33\
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    \30\ See id.
    \31\ See id. at 10754 n.17. See also infra note 48 and 
accompanying text (further summarizing how the Exchanges describe 
the function and purpose of these connections).
    \32\ See id. at 10754. When requesting authorization from the 
NYSE, NYSE Arca, or NYSE National to provide a customer with 
Selected Market Data, the ICE affiliate providing the Wireless 
Market Data Connection uses the same online tool as all data 
vendors. See id. at 10754 n.15.
    \33\ See id. at 10754. A cable connects the IDS and customer 
equipment in the Markham Third Party Data Center. If the customer is 
located in either the Carteret or Secaucus Third Party Data Center, 
the customer buys a cross connect from IDS. See id. at 10754 n.16.
---------------------------------------------------------------------------

    As discussed further below,\34\ the Exchanges maintain that the 
Wireless Market Data Connections are not ``facilities of an exchange'' 
within the meaning of Section 3(a)(1) of the Act (defining 
``exchange'') and Section 3(a)(2) of the Act (defining the term 
``facility'').\35\ They thus take the position that the proposed 
Wireless Fee Schedule itemizing the available Wireless Market Data 
Connections and associated fees are not proposed rules of an exchange, 
are not required to be filed with the Commission, and are not subject 
to review for determination of consistency with Act standards.\36\ The 
Exchanges seek approval of the addition of Wireless Market Data 
Connections to the Wireless Fee Schedule, however, stating that they 
have filed the current proposals ``solely because the Staff of the 
Commission'' has advised that filing is required.\37\
---------------------------------------------------------------------------

    \34\ See Section II.C.1. infra.
    \35\ See Wireless II Notice, supra note 8, at 10754-56.
    \36\ See id. at 10753.
    \37\ See id.
---------------------------------------------------------------------------

Proposed Additions to the Wireless Fee Schedule (Wireless II)
    The Exchanges propose that IDS would assess a non-recurring initial 
charge and MRC for the Wireless Market Data Connections, with the 
variations depending upon the type of fees and location of the 
connection, set forth by the Exchanges as follows: \38\
---------------------------------------------------------------------------

    \38\ See id. at 10756. The Exchanges note that the customer is 
charged by IDS an initial and monthly fee for the Wireless Market 
Data Connection (whereas the applicable Exchange bills market data 
subscribers directly, irrespective of whether the market data 
subscribers receive the Selected Market Data over a Wireless Market 
Data Connection or from another connectivity provider). See id. at 
10754.
    The Exchanges further explain that there is limited bandwidth 
available on the wireless network to the Markham, Canada Third Party 
Data Center. Accordingly, such Wireless Market Data Connections do 
not transport information for all of the symbols included in the 
NYSE BBO and Trades and NYSE Arca BBO and Trades data feeds. Rather, 
IDS provides connectivity to a selection of such data feeds, 
including the data for which IDS believes there is demand. When a 
market participant requests a Wireless Market Data Connection to 
Markham, it receives connectivity to the portions of the NYSE BBO 
and Trades and NYSE Arca BBO and Trades data that IDS transmits 
wirelessly. The customer then determines the symbols for which it 
will receive data. The Exchanges do not have visibility into which 
portion of the data feed a given customer receives. See id. at 
10756.

[[Page 31276]]

------------------------------------------------------------------------
            Type of service                      Amount of charge
------------------------------------------------------------------------
NYSE Integrated Feed: Wireless           $5,000 per connection initial
 Connection in Carteret access center.    charge plus monthly charge per
                                          connection of $10,500.
NYSE Arca Integrated Feed: Wireless      $5,000 per connection initial
 Connection in Carteret access center.    charge plus monthly charge per
                                          connection of $10,500.
NYSE National Integrated Feed: Wireless  $5,000 per connection initial
 Connection in Carteret access center.    charge plus monthly charge per
                                          connection of $5,250.
NYSE Integrated Feed and NYSE Arca       $5,000 per connection initial
 Integrated Feed: Wireless Connection     charge plus monthly charge per
 in Carteret access center.               connection of $18,500.
NYSE Integrated Feed, NYSE Arca          $5,000 per connection initial
 Integrated Feed, and NYSE National       charge plus monthly charge per
 Integrated Feed: Wireless Connection     connection of $21,000.
 in Carteret access center.
NYSE Integrated Feed: Wireless           $5,000 per connection initial
 Connection in Secaucus access center.    charge plus monthly charge per
                                          connection of $10,500.
NYSE Arca Integrated Feed: Wireless      $5,000 per connection initial
 Connection in Secaucus access center.    charge plus monthly charge per
                                          connection of $10,500.
NYSE National Integrated Feed: Wireless  $5,000 per connection initial
 Connection in Secaucus access center.    charge plus monthly charge per
                                          connection of $5,250.
NYSE Integrated Feed and NYSE Arca       $5,000 per connection initial
 Integrated Feed: Wireless Connection     charge plus monthly charge per
 in Secaucus access center.               connection of $18,500.
NYSE Integrated Feed, NYSE Arca          $5,000 per connection initial
 Integrated Feed, and NYSE National       charge plus monthly charge per
 Integrated Feed: Wireless Connection     connection of $21,000.
 in Secaucus access center.
NYSE BBO and Trades: Wireless            $5,000 per connection initial
 Connection in Markham, Canada access     charge plus monthly charge per
 center.                                  connection of $6,500.
NYSE Arca BBO and Trades: Wireless       $5,000 per connection initial
 Connection in Markham, Canada access     charge plus monthly charge per
 center.                                  connection of $6,500.
------------------------------------------------------------------------

C. Exchanges' Justification and Comments Received

1. Facilities of an Exchange
    As noted above, the Exchanges take the position that the Wireless 
Fee Schedule is not a proposed rule change required to be filed with 
the Commission because the Wireless Bandwidth Connections and Wireless 
Market Data Connections (collectively, ``Wireless Connections'') are 
not ``facilities of an exchange.'' \39\ In sum, they urge that the 
Wireless Connections are not facilities of an exchange because they are 
services that are not offered by the Exchanges, nor are they offered by 
a group of persons constituting an exchange (within the definition of 
``exchange'' in Section 3(a)(1) of the Act),\40\ and further, that the 
Wireless Connections are not within the meaning of the definition of 
``facility'' in Section 3(a)(2) of the Act.\41\
---------------------------------------------------------------------------

    \39\ See Wireless I Notice, supra note 3, at 8938-39; Wireless 
II Notice, supra note 8, at 10753.
    \40\ Exchange Act Section 3(a)(1) defines the term ``exchange'' 
as: ``any organization, association, or group of persons, whether 
incorporated or unincorporated, which constitutes, maintains, or 
provides a market place or facilities for bringing together 
purchasers and sellers of securities or for otherwise performing 
with respect to securities the functions commonly performed by a 
stock exchange as that term is generally understood, and includes 
the market place and the market facilities maintained by such 
exchange.'' 15 U.S.C. 78c(a)(1). According to the Exchanges, the ICE 
affiliates are not an exchange, or part of the Exchange(s) because 
they do not provide a marketplace for bringing together purchasers 
and sellers. See Wireless I Notice, supra note 3, at 8940; Wireless 
II Notice, supra note 8, at 10754.
    \41\ Under Exchange Act Section 3(a)(2): ``The term `facility' 
when used with respect to an exchange includes ``its premises, 
tangible or intangible property whether on the premises or not, any 
right to the use of such premises or property or any service thereof 
for the purpose of effecting or reporting a transaction on an 
exchange (including, among other things, any system of communication 
to or from the exchange, by ticker or otherwise, maintained by or 
with the consent of the exchange), and any right of the exchange to 
the use of any property or service.'' 15 U.S.C. 78c(a)(2).
---------------------------------------------------------------------------

    With respect to the definition of facility, the Exchanges state 
that the definition has four ``prongs,'' none of which describes the 
Wireless Connections.\42\ First, the Exchanges take the position that 
the Wireless Connections are not the ``premises'' of the Exchanges, 
reasoning that the network that runs between IDS's equipment in the 
Mahwah Data Center and IDS's equipment in Third Party Data Centers, 
much of which is actually owned, operated, and maintained by a non-ICE 
entity, do not constitute ``premises.'' \43\
---------------------------------------------------------------------------

    \42\ See Wireless I Notice, supra note 3, at 8940 (using 
bracketed numbers placed by the Exchanges); Wireless II Notice, 
supra note 8, at 10754-55 (same).
     For a full recitation of the Exchanges' analysis of why the 
Wireless Bandwidth Connections and Wireless Market Data Connections 
are not, in their view, facilities of an exchange, see Wireless I 
Notice, supra note 3, at 8939-41; Wireless II Notice, supra note 8, 
at 10754-56 (same).
    \43\ See Wireless I Notice, supra note 3, at 8940 (also stating 
with respect to the Wireless Bandwidth Connections that the network 
does not connect to Exchange trading and execution systems); 
Wireless II Notice, supra note 8, at 10755. They add that the 
portion of the Mahwah Data Center where the ``exchange'' functions 
are performed (i.e., the SRO Systems that bring together purchasers 
and sellers of securities and perform with respect to securities the 
functions commonly performed by a stock exchange) could be construed 
as the ``premises'' of the Exchange, but the same is not true for a 
wireless network that is almost completely outside of the Mahwah 
Data Center. See id.
---------------------------------------------------------------------------

    Second, the Exchanges state that the Wireless Connections are not 
the ``property'' of the Exchanges because they are ``services,'' and 
the underlying network is owned by ICE affiliates and a non-ICE 
entity.\44\ Drawing further distinctions between the Exchanges and IDS, 
they also state that the Wireless Connections are a service offered 
strictly by IDS, over which the Exchanges lack control.\45\
---------------------------------------------------------------------------

    \44\ See Wireless I Notice, supra note 3, at 8940; Wireless II 
Notice, supra note 8, at 10755. The Exchanges add that the Act does 
not automatically collapse affiliates into the definition of an 
``exchange,'' and something owned by an ICE affiliate is not owned 
by the Exchanges. Id.
    \45\ See Wireless I Notice, supra note 3 at 8939; Wireless II 
Notice, supra note 8, at 10755. The Exchanges state that although 
all ICE affiliates are ultimately controlled by ICE (as the indirect 
parent company), the Exchanges do not control IDS. See id.
---------------------------------------------------------------------------

    Third, the Exchanges maintain that the Wireless Connections do not 
constitute ``any right to the use of such premises or property or 
service thereof for the purpose of effecting or reporting a transaction 
on an exchange,'' because the Exchanges do not have the right to use 
the Wireless Connections to effect or report a transaction on the 
Exchanges.\46\ In support of this position, the Exchanges note that the 
Wireless Bandwidth Connections do not connect

[[Page 31277]]

directly to the Exchanges' trading and execution systems \47\ and the 
Wireless Market Data Connections are provided without the Exchanges 
involvement.\48\
---------------------------------------------------------------------------

    \46\ See id.
    \47\ See Wireless I Notice, supra note 3, at 8939-41. The 
Exchanges urge that these connections are not provided for ``the 
purpose of effecting or reporting a transaction on'' the Exchanges, 
but rather are provided to facilitate the customer's interaction 
with itself--that these connections are essentially an ``empty 
pipe'' that a customer can use to communicate between its equipment 
in co-location and its equipment in the Third Party Data Center. Id. 
The Exchanges also state that they have no control over these 
connections, and put no content on them. Rather, customers have 
control over the data that flows over these connections, which may 
include the sending of trading orders to their equipment in co-
location; the relay of Exchange market data, third party market 
data, and public quote feeds; as well as risk management, billing, 
compliance, or other market information. Id.
    \48\ See Wireless II Notice, supra note 8, at 10755. The 
Exchanges state that they do not know whether or when a customer has 
entered into an agreement for a Wireless Market Data Connection; 
have no right to approve or disapprove of the provision of a 
Wireless Market Data Connection, any more than it would if the 
provider were a third party; do not put the Selected Market Data 
content onto the Wireless Market Data Connections or send it to 
customers; and do not need to consent when a customer terminates a 
Wireless Market Data Connection. The Exchanges further state that it 
is not possible to use a Wireless Market Data Connection to effect a 
transaction on the Exchange, because they are one-way connections 
away from the Mahwah Data Center; that customers cannot use them to 
send trading orders or information of any sort to the Exchanges; and 
that the Exchanges do not use them to send confirmations of trades, 
and that they solely carry Selected Market Data. See id.
    In addition, the Exchanges state that the statute's 
parenthetical language--``(including, among other things, any system 
of communication to or from the exchange, by ticker or otherwise, 
maintained by or with the consent of the exchange)''--is not an 
independent prong of the facility definition, but explains the 
preceding text. See Wireless I Notice, supra note 3, at 8941; 
Wireless II Notice, supra note 8, at 10755.
---------------------------------------------------------------------------

    Fourth, the Exchanges state that ``any right of the exchange to the 
use of any property or service'' does not describe the Wireless 
Connections because the Exchanges do not have the right to use the 
Wireless Connections.\49\
---------------------------------------------------------------------------

    \49\ See id.
---------------------------------------------------------------------------

    The Commission has received several comment letters expressing 
opposition to the Exchanges' position that the Wireless Bandwidth and/
or Wireless Market Data Connections are not facilities of an 
exchange.\50\ Broadly, commenters express the view that the Wireless 
Connections are designed to provide market participants the fastest 
means of communication into and out of the Exchanges to facilitate more 
competitive trading on the Exchanges, and that the Exchanges' analysis 
is one of form over substance.\51\ More specifically, one commenter 
states that there can be ``no dispute that both the private bandwidth 
and market data wireless connectivity offerings constitute systems of 
communication 100% controlled and maintained by NYSE, for its own 
benefit and the benefit of its customers,'' and are therefore exchange 
facilities.\52\
---------------------------------------------------------------------------

    \50\ See Letter from Tyler Gellasch, Executive Director, Healthy 
Markets to Vanessa Countryman, Secretary, Commission, dated March 9, 
2020 (``Healthy Markets Letter''); Letters from Jim Considine, Chief 
Financial Officer, McKay Brothers, LLC to Vanessa Countryman, 
Secretary, Commission, dated March 10, 2020 (``McKay Letter I''); 
Letter from Thomas M. Merritt, Deputy General Counsel, Virtu 
Financial to Vanessa Countryman, Secretary, Commission, dated March 
10, 2020 (``Virtu Letter''); Letter from Gregory Babyak, Global Head 
of Regulatory Affairs, Bloomberg L.P. to Vanessa Countryman, 
Secretary, Commission, dated March 10, 2020 (``Bloomberg Letter'') 
(the Bloomberg Letter addresses Wireless I specifically); Letter 
from Andrew Stevens, General Counsel, IMC Financial Markets to 
Vanessa Countryman, Secretary, Commission, dated March 12, 2020 
(``IMC Letter''); Letters from Matt Haraburda, President, XR 
Securities LLC to Vanessa Countryman, Secretary, Commission, dated 
March 18, 2020 (``XRS Letter'') (the XRS Letter addresses Wireless I 
specifically); Letters from Jim Considine, Chief Financial Officer, 
McKay Brothers, LLC to Vanessa Countryman, Secretary, Commission, 
dated March 17, 2020 (``McKay Letter II''); Letter from Ellen 
Greene, Managing Director, Securities Industry and Financial Markets 
Association, to Vanessa Countryman, Secretary, Commission, dated 
April 3, 2020 (``SIFMA Letter'') (the SIFMA Letter addresses 
Wireless II more specifically); Letter from Joanna Mallers, 
Secretary, FIA Principal Traders Group, to Vanessa Countryman, 
Secretary, Commission, dated April 27, 2020 (regarding SR-NYSENAT-
2020-03); Letter from Joanna Mallers, Secretary, FIA Principal 
Traders Group, to Vanessa Countryman, Secretary, Commission, dated 
May 8, 2020 (regarding Wireless I and Wireless II) (``FIA Letter'').
    \51\ See e.g., Virtu Letter at 4-6 (stating that the ``only 
purpose'' of the Wireless Connections is to facilitate faster 
connections for more competitive trading, and ``[c]ustomers paying 
for the Wireless Connections are clearly doing so only in order to 
competitively trade on the NYSE exchanges''). See also Healthy 
Markets Letter at 8 (stating that the Exchanges' analysis ignores 
the plain meaning of the Act); McKay Letter I at 4 (characterizing 
the Exchanges' facility analysis as superficial and flawed); IMC 
Letter at 2 (stating that ``the NYSE Pole offers direct access to 
[the NYSE] data center and thus its matching engine for purposes of 
transmitting data or orders)''; XRS Letter at 3 (stating that ``the 
Wireless Connections have the fastest means of access to the 
Exchange[] via the on-premises pole.'').
    \52\ See Virtu Letter at 5. According to this commenter, the 
contention that (i) the Wireless Bandwidth Connections are offered 
without the Exchanges knowing how they are used ``ignores the 
reality of market connectivity,'' and (ii) the Exchanges' do not 
have the right to use the Wireless Market Data Connections, is 
``nonsensical,'' because the Exchanges' have ``control over the data 
transmission.'' See id. at 7.
---------------------------------------------------------------------------

    Other commenters state that the Wireless Connections rely on the 
Exchanges' premises and property to effectuate systems of communication 
to and from the Exchanges,\53\ and that they are designed for the 
purpose of effecting transactions on the Exchanges.\54\ According to 
one of these commenters, the fact that orders and market data have to 
traverse a cross connect at the Mahwah Data Center before reaching the 
Exchanges' trading execution systems is an insufficient basis on which 
to conclude the Wireless Connections are not part of the facilities of 
an exchange.\55\ This commenter expresses concern that the Exchanges 
are attempting to circumvent categorizing a product or service as a 
facility by moving ownership to a parent company or an affiliate of the 
Exchanges.\56\ Another commenter urges that the Exchanges should not be 
able to defeat the operation of Exchange Act filing requirements by 
``interpositioning'' an affiliate to provide connectivity to customers 
instead of providing it directly.\57\
---------------------------------------------------------------------------

    \53\ See e.g., McKay Letter I at 4-7 (stating that the Wireless 
Connections are facilities of the Exchanges because they use the 
pole located on the premises of the Exchanges, and also intangible 
property in the form of technical specifications relating to the 
Wireless Connections, available through NYSE's website and branded 
with NYSE's trademark and logo). See also Bloomberg Letter at 4 
(noting that the Wireless Connections are physically located on the 
property of the Mahwah Data Center); Healthy Markets Letter at 6 
(noting that the Wireless Connections have access to the Exchanges' 
physical facility); IMC Letter at 2 (noting that the pole offers 
direct access to each Exchange's data center for purposes of 
transmitting data or orders).
    \54\ See Bloomberg Letter at 4 (``[I]t is clear that this is a 
system of communication to or from the exchange for `effecting or 
reporting a transaction of the exchange.'''); McKay Letter I, at 6 
(stating that ``The Wireless [Bandwidth] Connections are also 
facilities of the Exchange under the third prong of the definition 
because they may be used to effect transactions on the Exchange (and 
report transactions or other market data disseminated from the 
Exchange) using Exchange Property (e.g., the NYSE Private Pole).''); 
IMC Letter at 2 (citing the McKay Letter I) (``The Wireless 
Connections are facilities of the Exchange, in that they use the 
Exchange's tangible and intangible property and are used for 
effecting or reporting a transaction.''). See also SIFMA Letter at 2 
(opining that the Wireless Market Data Connections are akin to a 
``ticker' system,'' but not conceding that that these connections do 
not meet other parts of the definition of facility).
    \55\ See McKay Letter I at 6.
    \56\ See id. at 5 n.20.
    \57\ See Healthy Markets Letter at 3-8. This commenter in 
particular expresses concern about Wireless Connections originating 
from the roof of Mahwah Data Center, which as noted below, the 
Exchanges state is not what is proposed. See infra note 95 and 
accompanying text.
---------------------------------------------------------------------------

    The Exchanges submitted a response to these comment letters.\58\ As 
an initial matter, the Exchanges urge that treating the Wireless 
Connections as ``facilities of an exchange'' would place an undue 
competitive burden on the ICE affiliates, as they would be required to 
make their services and fees public and subject to a Commission 
determination for consistency with the Act, whereas

[[Page 31278]]

competitors are not subject to such requirements.\59\ The Exchanges 
maintain that IDS acts independently of the Exchanges in offering the 
Wireless Connections, and that it is a vendor selling connectivity, 
just like other vendors.\60\ In addition to reiterating the rationale 
provided in the Wireless I and Wireless II Notices, the Exchanges 
further state that, contrary to commenters' beliefs, they do not have a 
right to use the Wireless Connections to effect or report a transaction 
or otherwise, nor do they own the Mahwah Data Center or the pole on its 
grounds.\61\
---------------------------------------------------------------------------

    \58\ Letter from Elizabeth K. King, Chief Regulatory Officer, 
ICE, General Counsel & Corporate Secretary, NYSE, to Vanessa 
Countryman, Secretary, Commission, dated May 8, 2020, responding to 
comments on Wireless I and Wireless II (``NYSE Response'').
    \59\ See id. at 3.
    \60\ See id. at 8-16.
    \61\ See id. at 8-15. See also id. at 11 (``The definition of 
facility focuses on ownership and the right to use properties and 
services, not corporate relationships.'').
---------------------------------------------------------------------------

2. Proposed Wireless Fee Schedule
    In support of the proposed Wireless Fee Schedule, the Exchanges 
state that the Wireless I and Wireless II proposals are reasonable, 
equitable, and not unfairly discriminatory because use of the Wireless 
Connections is voluntary and alternatives to the Wireless Connections 
are available.\62\ Addressing the competitive environment, the 
Exchanges state that there are at least three other vendors that offer 
market participants wireless network connections between the Mahwah 
Data Center and the Secaucus and Carteret Third Party Access Centers 
using wireless equipment installed on towers and buildings near the 
Mahwah Data Center.\63\ With respect to the Wireless Market Data 
Connections specifically, they state that other providers offer 
connectivity to Selected Market Data in the Third Party Data Centers, 
and believe that a market participant in the Carteret or Secaucus Third 
Party Data Center may purchase a wireless connection to the NYSE and 
NYSE Arca Integrated Feed data feeds from at least two other providers 
of wireless connectivity.\64\ The Exchanges believe that competing 
wireless connections offered by non-ICE entities provide connectivity 
at the ``same or similar speed'' as the Wireless Connections, and at 
the ``same or similar cost.'' \65\ In addition, the Exchanges state 
that some market participants have their own proprietary wireless 
networks, and that market participants may create a new proprietary 
wireless connection, connect through another market participant, or use 
fiber connections offered by the Exchanges, ICE affiliates, other 
service providers, and third party telecommunications providers.\66\
---------------------------------------------------------------------------

    \62\ See Wireless I Notice, supra note 3, at 8943-44; Wireless 
II Notice, supra note 8, at 10757-59.
    \63\ See Wireless I Notice, supra note 3, at 8942; Wireless II 
Notice, supra note 8, at 10757. The Exchanges acknowledge that they 
believe the Wireless Bandwidth Connections between the Mahwah Data 
Center and the Markham Third Party Data Center to be the first 
public, commercially available wireless connections between the two 
points, creating a new connectivity option for customers in Markham. 
See id.
    \64\ See Wireless II Notice, supra note 8, at 10757.
    \65\ See Wireless I Notice, supra note 3, at 8943; Wireless II 
Notice, supra note 8, at 10757.
    \66\ See id.
---------------------------------------------------------------------------

    The Exchanges acknowledge that the Wireless Connections traverse 
wireless connections through a series of towers equipped with wireless 
equipment, including, in the case of the Carteret and Secaucus 
connections, a pole on the grounds of the Mahwah Data Center, and that 
third party access to the pole is restricted.\67\ However, the 
Exchanges state that access to the pole is not required for third 
parties to establish wireless networks that can compete.\68\ The 
Exchanges discount the significance of the location of the pole and the 
restrictions on access, urging that proximity to a data center is not 
the only determinant of a wireless network's speed.\69\ The Exchanges 
also assert that latency is not the only consideration that a market 
participant may have in selecting a wireless network,\70\ and that 
fiber network connections may sometimes be more attractive since they 
are more reliable and less susceptible to weather conditions.\71\
---------------------------------------------------------------------------

    \67\ See Wireless I Notice, supra note 3, at 8943; Wireless II 
Notice, supra note 8, at 10759. The Exchanges state that IDS does 
not sell rights to third parties to operate wireless equipment on 
the pole due to space limitations, security concerns, and the 
interference that would arise between equipment placed too closely 
together. See id.
    \68\ See id.
    \69\ See id. According to the Exchanges, other relevant 
variables include the wireless equipment utilized; the route of, and 
number of towers or buildings in, the network; and the fiber 
equipment used at either end of the connection. See id.
    \70\ See id. According to the Exchanges, other considerations 
may include the bandwidth of the offered connection; amount of 
network uptime; the equipment that the network uses; the cost of the 
connection; and the applicable contractual provisions. See id.
    \71\ See Wireless I Notice, supra note 3, at 8943; Wireless II 
Notice, supra note 8, at 10757.
---------------------------------------------------------------------------

    The Exchanges state that the proposed pricing is reasonable because 
the services are voluntary, market participants may to select the 
connectivity options that best suit their needs, and the fees reflect 
the benefit received by customers in term of lower latency over the 
fiber optics options.\72\ The Exchanges believe that the proposals 
involve an equitable allocation of fees among market participants 
because such fees would apply to all market participants equally and 
would not apply differently to distinct types or sizes of market 
participants.\73\ In addition, the services are ``completely 
voluntary,'' and the various options proposed offer market participants 
additional choices that they can select to best suit their needs.\74\
---------------------------------------------------------------------------

    \72\ See Wireless I Notice, supra note 3, at 8943-44; Wireless 
II Notice, supra note 8, at 10757-58.
    \73\ See Wireless I Notice, supra note 3, at 8944; Wireless II 
Notice, supra note 8, at 10758.
    \74\ See id.
---------------------------------------------------------------------------

    The Exchanges also state that, because numerous substitute 
connectivity providers are available, the proposals do not impose an 
unnecessary or inappropriate burden on competition.\75\ According to 
the Exchanges, the proposals do not affect competition among national 
securities exchanges or between members of Exchanges, but rather that 
the Exchanges' filing of the proposals puts IDS at a competitive 
disadvantage relative to its commercial competitors that are not 
subject to filing requirements of Section 19(b) of the Act.\76\
---------------------------------------------------------------------------

    \75\ See Wireless I Notice, supra note 3, at 8944-45; Wireless 
II Notice, supra note 8, at 10759.
    \76\ See id.
---------------------------------------------------------------------------

    Commenters disagree, arguing that the Exchanges have not met their 
burden of demonstrating that the Wireless Connections are consistent 
with the Act.\77\ Broadly, commenters express concern that the Wireless 
Connections (those to the Secaucus and Carteret Third Party Data 
Centers) begin and end at an antenna on the grounds of the Mahwah Data 
Center, whereas competing services are not allowed on the Mahwah Data 
Center grounds to install wireless equipment and must instead end their 
wireless connections outside the grounds and use a wired connection 
into the Mahwah Data Center.\78\ According to commenters, this 
difference means that the Wireless Connections have an insurmountable 
exclusive geographic latency advantage enabling the fastest possible 
access to the Exchanges that no competing service can offer.\79\
---------------------------------------------------------------------------

    \77\ See e.g., McKay Letter I at 7-11; Bloomberg Letter at 4-5; 
XRS Letter at 2-4; Healthy Markets Letter at 8-10; IMC Letter at 2; 
Virtu Letter at 2-3. One commenter states that the Exchanges provide 
``almost none'' of the information needed to establish that the 
Wireless Connections are consistent with the Act. See Healthy 
Markets Letter at 10.
    \78\ See, e.g., McKay Letter I at 8; Virtu Letter at 3; IMC 
Letter at 2; XRS Letter at 1-2 (all generally questioning the basis 
of the disparity in access in to the Mahwah Data Center pole).
    \79\ See, e.g., McKay Letter I at 8-10; McKay Letter II at 3; 
Bloomberg Letter at 4; IMC Letter at 2; XRS Letter at 1-2; Virtu 
Letter at 8-10; FIA Letter at 3.
---------------------------------------------------------------------------

    One commenter observes that ``conspicuously absent'' from the 
Exchanges' description of the Wireless Connections is that the pole on 
the

[[Page 31279]]

Mahwah Data Center grounds is ``approximately 700 feet closer to the 
NYSE matching engine than the closest public poles available to all 
other wireless connectivity vendors.'' \80\ This commenter underscores 
that ``timely receipt of market data is essential to trading 
competitively in today's markets,'' \81\ and while it may not seem like 
a significant distance, ``the delay of data through 700 feet of fiber 
is meaningful in today's markets.'' \82\ This commenter objects that 
the Exchanges have designed the Wireless Connections with a geographic 
latency advantage, enabling these connectivity offerings to be the 
fastest means of access to the Exchanges, and have not provided factual 
details sufficient to demonstrate why this advantage is not unfairly 
discriminatory and an inappropriate burden on competition.\83\ Another 
commenter agrees that a 700 foot difference is material, and states 
that without details regarding (among other things) the magnitude of 
the latency advantage, its availability, and its impact on participants 
who are unable to avail themselves of the Wireless Connections, the 
Commission and the public will be unable to reasonably determine 
whether the proposed rule changes do not unfairly discriminate against 
market participants or unduly burden competition.\84\ An additional 
commenter states that the contention that there is competition for 
exchange connectivity, and that other providers can offer the same or 
similar access and latency is ``simply false.'' \85\ Some commenters 
express concern that the latency advantage that is unavailable to 
competing providers unfairly discriminates against market participants 
that do not choose to use the Wireless Connections.\86\
---------------------------------------------------------------------------

    \80\ See McKay Letter I at 8-11 (also noting that its distance 
estimate is a good-faith, educated guess, but that additional 
transparency on the matter is needed). This commenter also states 
that distribution of Selected Market Data via the Wireless Market 
Data Connections is discriminatory because it is distributed in a 
different manner than Selected Market Data obtained otherwise than 
via the Wireless Connections. See McKay Letter II at 2-3.
    \81\ Id. at 3.
    \82\ See McKay Letter I at 8.
    \83\ See McKay Letter I at 2, 8-12; McKay Letter II at 2-3.
    \84\ See IMC Letter at 2. This commenter states, ``In a market 
where equidistant cabling is required for connections between a 
participant's co-located customer equipment to the Exchange's 
matching engine, NYSE's suggestion that the 700 foot difference 
between the NYSE Pole and others outside the their premises is 
immaterial is ludicrous.'' Id.
    \85\ See Virtu Letter at 9. This commenter also contrasts 
exclusive access to the private pole with the Exchanges' offering 
third-party firms the option to co-locate on their premises through 
other means. See id. at 2.
    \86\ See FIA Letter at 2; McKay Letter I at 11; XRS Letter at 2-
3.
---------------------------------------------------------------------------

    Commenters also address the proposed fees. One commenter states 
that IDS's exclusive geographic latency advantage establishes a 
monopoly service that enables it to charge ``exorbitant fees.'' \87\ 
Another commenter states that given the exclusivity of the service, it 
would be difficult for the Exchanges to demonstrate how the proposed 
fees are fair and reasonable without providing an in-depth assessment 
of the costs of the service, and ``more difficult'' to justify how the 
fees are not unfairly discriminatory.\88\ One commenter states that 
some market participants would be forced to purchase the fastest 
connectivity services to meet regulatory obligations, without regard to 
the price of such services.\89\
---------------------------------------------------------------------------

    \87\ See Virtu Letter at 2.
    \88\ See Bloomberg Letter at 5 (adding that the ``little to no 
attempt'' is made to discuss the implications of the exclusive 
privilege afforded to IDS to operate the Wireless Connections that 
are on the Mahwah Data Center property).
    \89\ See SIFMA Letter at 2-3 (addressing the Wireless Market 
Data Connections specifically, and stating that broker-dealers with 
best execution obligation may, for regulatory and competitive 
reasons, feel they must purchase the fastest connectivity services 
to remain in business).
---------------------------------------------------------------------------

    In the NYSE Response, the Exchanges maintain that the Wireless 
Connections are subject to competition, and state that the subject 
services are not new and have been provided since 2016.\90\ In their 
view, the fact that competition has continued to proliferate over the 
intervening years demonstrates that use of the pole on the Mahwah Data 
Center grounds is not required for third parties to compete with the 
Wireless Connections.\91\ Moreover, they assert that market 
participants have for years had a choice about what wireless services 
to use, ``and often choose not to use IDS.'' \92\ The Exchanges state 
that disapproval of the proposals would result in less competition by 
reducing the availability of wireless connections between Mahwah and 
Secaucus or Carteret, because service would be available from only the 
two remaining commercial providers or would require customers to 
purchase space on a proprietary data network, if available.\93\ For 
those customers seeking connections to Markham, Canada, the Exchanges 
believe that disapproval would mean that customers would be left with 
no wireless connectivity services.\94\
---------------------------------------------------------------------------

    \90\ See NYSE Response at 6.
    \91\ See id.
    \92\ Id.
    \93\ See id. at 2.
    \94\ See id.
---------------------------------------------------------------------------

    In response to comments that the Wireless Connections are offered 
on terms that are unfairly discriminatory because the Exchanges possess 
an exclusive geographic latency advantage that competitors cannot 
overcome, the Exchanges state that although having the pole 700 feet 
closer to the facility is a ``positive factor for latency,'' it is just 
one in a list of factors that determine the network's latency 
levels.\95\ The Exchanges also defend IDS's choice to limit access to 
the Mahwah Data Center pole, noting that it is smaller than commercial 
poles and that space limitations, security concerns, and interference 
are practical factors that are a ``real concern.'' \96\ They also state 
that IDS does not believe that its wireless network offers the fastest 
commercial option, and that market participants have chosen not to use 
it.\97\
---------------------------------------------------------------------------

    \95\ See id. at 6. The Exchanges note that contrary to the 
suggestion of several commenters, the Wireless Connections do not 
use the Mahwah Data Center roof, nor does IDS expect to put any 
equipment on the roof for any services it offers or allow others to 
do so. See id. at 5.
    \96\ See id. at 7.
    \97\ See id. at 5, 13. The Exchanges represent that there are 11 
current customers with Wireless Bandwidth Connections and 11 current 
customers with Wireless Market Data Connections. See id. at 2.
---------------------------------------------------------------------------

    In response to comments that they should provide additional 
information regarding the geographic latency advantage, the Exchanges 
characterize these requests as ``disingenuous'' because IDS cannot 
describe the magnitude of a geographic latency advantage it does not 
believe it has, and it is not privy to its competitors' latency 
information.\98\
---------------------------------------------------------------------------

    \98\ See id. at 17, 18-19.
---------------------------------------------------------------------------

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

    The Commission is instituting proceedings pursuant to Section 
19(b)(2)(B) of the Act to determine whether the Exchanges' proposed 
rule changes should be approved or disapproved.\99\ Institution of 
proceedings does not indicate that the Commission has reached any 
conclusions with respect to any of the issues involved. Rather, the 
Commission seeks and encourages interested persons to provide 
additional comment on the proposed rule changes (Wireless I and 
Wireless II) to inform the Commission's analysis of whether to approve 
or disapprove the proposed rule changes.
---------------------------------------------------------------------------

    \99\ 15 U.S.C. 78s(b)(2)(B).

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

[[Page 31280]]

    Pursuant to Section 19(b)(2)(B) of the Act,\100\ the Commission is 
providing notice of the grounds for possible disapproval under 
consideration:
---------------------------------------------------------------------------

    \100\ Id. Section 19(b)(2)(B) of the Act also provides that 
proceedings to determine whether to disapprove a proposed rule 
change must be concluded within 180 days of the date of publication 
of notice of the filing of the proposed rule change. See id. The 
time for conclusion of the proceedings may be extended for up to 60 
days if the Commission finds good cause for such extension and 
publishes its reasons for so finding, or if the exchange consents to 
the longer period. See id.
---------------------------------------------------------------------------

     Whether the Exchanges have demonstrated how the proposals 
are consistent with Section 6(b)(4) of the Act, which requires that the 
rules of a national securities exchange ``provide for the equitable 
allocation of reasonable dues, fees, and other charges among its 
members and issuers and other persons using its facilities;'' \101\
---------------------------------------------------------------------------

    \101\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

     Whether the Exchanges have demonstrated how the proposals 
are consistent with Section 6(b)(5) of the Act, which requires, among 
other things, that the rules of a national securities exchange be 
``designed to perfect the operation of a free and open market and a 
national market system'' and ``protect investors and the public 
interest,'' and not be ``designed to permit unfair discrimination 
between customers, issuers, brokers, or dealers;'' \102\ and
---------------------------------------------------------------------------

    \102\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

     Whether the Exchanges have demonstrated how the proposals 
are consistent with Section 6(b)(8) of the Act, which requires that the 
rules of a national securities exchange ``not impose any burden on 
competition not necessary or appropriate in furtherance of the purposes 
of [the Act].'' \103\
---------------------------------------------------------------------------

    \103\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

    As discussed in Section II above, the Exchanges made various 
arguments in support of the Wireless I and Wireless II proposals and 
the Commission received comment letters that expressed concerns 
regarding the proposals, including that the Exchanges did not provide 
sufficient information to establish that the proposals are consistent 
with the Act and the rules thereunder.
    Under the Commission's Rules of Practice, the ``burden to 
demonstrate that a proposed rule change is consistent with the Exchange 
Act and the rules and regulations issued thereunder . . . is on the 
self-regulatory organization [`SRO'] that proposed the rule change.'' 
\104\ The description of a proposed rule change, its purpose and 
operation, its effect, and a legal analysis of its consistency with 
applicable requirements must all be sufficiently detailed and specific 
to support an affirmative Commission finding.\105\ Any failure of an 
SRO to provide this information may result in the Commission not having 
a sufficient basis to make an affirmative finding that a proposed rule 
change is consistent with the Act and the applicable rules and 
regulations.\106\
---------------------------------------------------------------------------

    \104\ 17 CFR 201.700(b)(3).
    \105\ See id.
    \106\ See id.
---------------------------------------------------------------------------

    The Commission is instituting proceedings to allow for additional 
consideration and comment on the issues raised herein, including as to 
whether the proposals are consistent with the Act, specifically, with 
its requirements that the rules of a national securities exchange 
provide for the equitable allocation of reasonable dues, fees, and 
other charges among its members, issuers, and other persons using its 
facilities; are designed to perfect the operation of a free and open 
market and a national market system, and to protect investors and the 
public interest; are not designed to permit unfair discrimination 
between customers, issuers, brokers, or dealers; and do not impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act; \107\ as well as any other 
provision of the Act, or the rules and regulations thereunder.
---------------------------------------------------------------------------

    \107\ See 15 U.S.C. 78f(b)(4), (5), and (8).
---------------------------------------------------------------------------

IV. Commission's Solicitation of Comments

    The Commission requests written views, data, and arguments with 
respect to the concerns identified above as well as any other relevant 
concerns. Such comments should be submitted by June 12, 2020. Rebuttal 
comments should be submitted by June 26, 2020. Although there do not 
appear to be any issues relevant to approval or disapproval that would 
be facilitated by an oral presentation of views, data, and arguments, 
the Commission will consider, pursuant to Rule 19b-4, any request for 
an opportunity to make an oral presentation.\108\
---------------------------------------------------------------------------

    \108\ 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act grants 
the Commission flexibility to determine what type of proceeding--
either oral or notice and opportunity for written comments--is 
appropriate for consideration of a particular proposal by an SRO. 
See Securities Acts Amendments of 1975, Report of the Senate 
Committee on Banking, Housing and Urban Affairs to Accompany S. 249, 
S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975).
---------------------------------------------------------------------------

    The Commission asks that commenters address the sufficiency and 
merit of the Exchanges' statements in support of the proposal, in 
addition to any other comments they may wish to submit about the 
proposed rule change.
    Interested persons are invited to submit written data, views, and 
arguments concerning the proposed rule changes, including whether the 
Wireless I and Wireless II proposals are consistent with the Act. 
Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Nos. SR-NYSE-2020-05, SR-NYSEAMER-2020-05, SR-NYSEArca-2020-08, 
SR-NYSECHX-2020-02, SR-NYSENAT-2020-03, SR-NYSE-2020-11, SR-NYSEAMER-
2020-10, SR-NYSEArca-2020-15, SR-NYSECHX-2020-05, SR-NYSENAT-2020-08 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 Nos. SR-NYSE-2020-05, SR-NYSEAMER-
2020-05, SR-NYSEArca-2020-08, SR-NYSECHX-2020-02, SR-NYSENAT-2020-03, 
SR-NYSE-2020-11, SR-NYSEAMER-2020-10, SR-NYSEArca-2020-15, SR-NYSECHX-
2020-05, and SR-NYSENAT-2020-08. The file numbers should be included on 
the subject line if email is used. To help the Commission process and 
review your comments more efficiently, please use only one method. The 
Commission will post all comments on the Commission's internet website 
(http://www.sec.gov/rules/sro.shtml). Copies of the submission, all 
subsequent amendments, all written statements with respect to the 
proposed rule change that are filed with the Commission, and all 
written communications relating to the proposed rule change between the 
Commission and any person, other than those that may be withheld from 
the public in accordance with the provisions of 5 U.S.C. 552, will be 
available for website viewing and printing in the Commission's Public 
Reference Room, 100 F Street NE, Washington, DC 20549, on official 
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of 
such filing also will be available for inspection and copying at the 
principal office of the Exchanges. All comments received will be posted 
without change. Persons submitting comments are cautioned that we do 
not redact or edit

[[Page 31281]]

personal identifying information from comment submissions. You should 
submit only information that you wish to make publicly available. All 
submissions should refer to File Nos. SR-NYSE-2020-05, SR-NYSEAMER-
2020-05, SR-NYSEArca-2020-08, SR-NYSECHX-2020-02, SR-NYSENAT-2020-03, 
SR-NYSE-2020-11, SR-NYSEAMER-2020-10, SR-NYSEArca-2020-15, SR-NYSECHX-
2020-05, and SR-NYSENAT-2020-08 and should be submitted on or before 
June 12, 2020. Rebuttal comments should be submitted by June 26, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\109\
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    \109\ 17 CFR 200.30-3(a)(57).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-11045 Filed 5-21-20; 8:45 am]
 BILLING CODE 8011-01-P