Document ID: SEC-2016-1602-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2016-09-08T04:00Z

[Federal Register Volume 81, Number 174 (Thursday, September 8, 2016)]
[Notices]
[Pages 62203-62205]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-21495]

[[Page 62203]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78752; File No. SR-NYSEArca-2016-122]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Amending the NYSE 
Arca Options Fee Schedule and, the NYSE Arca Equities Schedule of Fees 
and Charges for Exchange Services To Amend the Date That Two Wireless 
Connections to Third Party Data Feeds Are Expected To Be Available

September 1, 2016.
    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 August 24, 2016, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, 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 the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend the NYSE Arca Options Fee Schedule 
(the ``Options Fee Schedule'') and, through its wholly owned subsidiary 
NYSE Arca Equities, Inc. (``NYSE Arca Equities''), the NYSE Arca 
Equities Schedule of Fees and Charges for Exchange Services (the 
``Equities Fee Schedule'' and, together with the Options Fee Schedule, 
the ``Fee Schedules'') to amend the date that two wireless connections 
to third party data feeds are expected to be available. The proposed 
rule change is available on the Exchange's Web site at www.nyse.com, at 
the principal office of the Exchange, and at the Commission's Public 
Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend the Fee Schedules to amend the date 
that two wireless connections to third party data feeds are expected to 
be available.
    The Exchange's co-location \4\ services include the means for Users 
\5\ to receive market data feeds from third party markets (``Third 
Party Data'') through a wireless connection.\6\ The Exchange recently 
amended the Fee Schedules to:
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    \4\ The Exchange initially filed rule changes relating to its 
co-location services with the Securities and Exchange Commission 
(``Commission'') in 2010. See Securities Exchange Act Release No. 
63275 (November 8, 2010), 75 FR 70048 (November 16, 2010) (SR-
NYSEArca-2010-100). The Exchange operates a data center in Mahwah, 
New Jersey (the ``data center'') from which it 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 Securities 
Exchange Act Release No. 76010 (September 29, 2015), 80 FR 60197 
(October 5, 2015) (SR-NYSEArca-2015-82). As specified in the Fee 
Schedules, a User that incurs co-location fees for a particular co-
location service pursuant thereto would not be subject to co-
location fees for the same co-location service charged by the 
Exchange's affiliates New York Stock Exchange LLC (``NYSE LLC'') and 
NYSE MKT LLC (``NYSE MKT''). See Securities Exchange Act Release No. 
70173 (August 13, 2013), 78 FR 50459 (August 19, 2013) (SR-NYSEArca-
2013-80).
    \6\ See Securities Exchange Act Release No. 76749 (December 23, 
2015), 80 FR 81640 (December 30, 2015) (SR-NYSEArca-2015-99).
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     Expand the existing wireless connection to Bats Pitch BZX 
Gig shaped data (``BZX'') to include Bats Pitch BYX Gig shaped data 
(``BYX''); and
     expand the existing wireless connection to Bats EDGX Gig 
shaped data (``EDGX'') to include Bats EDGA Gig shaped data 
(``EDGA'').\7\
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    \7\ See Securities Exchange Act Release No. 78377 (July 21, 
2016), 81 FR 49327 (July 27, 2016) (SR-NYSEArca-2016-99). The 
Commission designated the proposed rule change as operative upon 
filing with the Commission. Id. at 49331.
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    In its filing with the Securities and Exchange Commission 
(``Commission'') making such amendment, the Exchange stated that the 
proposed connectivity was expected to be available no later than 
September 1, 2016, and amended the Fee Schedules to note that 
connectivity to the BYX and EDGA data feeds was expected to be 
available no later than such date.\8\
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    \8\ Id. at 49329.
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    The Exchange now proposes to amend the Fee Schedules to update the 
expected availability date to December 31, 2016. As previously stated, 
the Exchange will announce the date that such wireless connections will 
be made available through a customer notice.
    No other aspect of the wireless connection to BZX and BYX or EDGX 
and EDGA (together, the ``Additional Third Party Data'') is being 
amended.
    By way of background, as with all wireless connections to Third 
Party Data, the Exchange would utilize a network vendor to provide a 
wireless connection to the Additional Third Party Data through wireless 
connections from an Exchange access center to its data center in 
Mahwah, New Jersey, through a series of towers equipped with wireless 
equipment. A User that wished to receive Additional Third Party Data 
would enter into a contract with the relevant third party provider, 
which would charge the User the applicable market data fees. The 
Exchange would charge the User fees for the wireless connection.\9\
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    \9\ A User only receives the Third Party Data for which it 
enters into a contract with the third party provider.
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    The Exchange proposes to offer the wireless connections to provide 
Users with an alternative means of connectivity to Additional Third 
Party Data. Currently, Users can receive such Third Party Data from 
wireless networks offered by third party vendors.\10\ Users may also 
receive connections to Additional Third Party Data through other 
methods, including, for example, from another User, through a 
telecommunications provider, or over the internet protocol (``IP'') 
network.\11\
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    \10\ Currently, at least six third party vendors offer Users 
wireless network connections using wireless equipment installed on 
towers and buildings near the data center.
    \11\ The IP network is a local area network available in the 
data center. See Securities Exchange Act Release No. 74219 (February 
6, 2015), 80 FR 7899 (February 12, 2015) (SR-NYSEArca-2015-03) 
(notice of filing and immediate effectiveness of proposed rule 
change to include IP network connections).
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    As is the case with all Exchange co-location arrangements, (i) 
neither a User nor any of the User's customers would be permitted to 
submit orders directly to the Exchange unless such User or customer is 
a member organization, a Sponsored Participant or an agent thereof 
(e.g., a service bureau providing order entry services); (ii) use of 
the co-location services proposed herein would be completely voluntary 
and available to all Users on a non-discriminatory basis; \12\ and 
(iii) a User would only

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incur one charge for the particular co-location service described 
herein, regardless of whether the User connects only to the Exchange or 
to the Exchange and one or both of its affiliates.\13\
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    \12\ As is currently the case, Users that receive co-location 
services from the Exchange will not receive any means of access to 
the Exchange's trading and execution systems that is separate from, 
or superior to, that of other Users. In this regard, all orders sent 
to the Exchange enter the Exchange's trading and execution systems 
through the same order gateway, regardless of whether the sender is 
co-located in the data center or not. In addition, co-located Users 
do not receive any market data or data service product that is not 
available to all Users, although Users that receive co-location 
services normally would expect reduced latencies in sending orders 
to, and receiving market data from, the Exchange.
    \13\ See SR-NYSEArca-2013-80, supra note 5, at 50459. The 
Exchange's affiliates have also submitted substantially the same 
proposed rule change to propose the changes described herein. See 
SR-NYSE-2016-61 and SR-NYSEMKT-2016-82.
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    The proposed change is not otherwise intended to address any other 
issues relating to co-location services and/or related fees, and the 
Exchange is not aware of any problems that Users would have in 
complying with the proposed change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act,\14\ in general, and section 6(b)(4) of 
the Act,\15\ 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. 
The Exchange also believes that the proposed rule change furthers the 
objectives of section 6(b)(5) of the Act,\16\ in particular, because it 
is designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to, and 
perfect the mechanisms of, a free and open market and a national market 
system and, in general, to protect investors and the public interest 
and because it is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(4).
    \16\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed change is reasonable, 
equitable and not unfairly discriminatory because amending the Fee 
Schedules to update the expected availability date for connectivity to 
the BYX and EDGA data feeds to December 31, 2016, would add greater 
clarity to the Fee Schedules regarding when such connectivity will be 
available and allow the Exchange more time to establish and test 
connectivity to the BYX and EDGA data feeds.
    The Exchange believes that the proposed change is equitable and not 
unfairly discriminatory because connectivity to the BYX and EDGA data 
feeds would be available to all Users on an equal basis (i.e., the 
connectivity to such feeds will be made available to all Users at the 
same time). Such connectivity is completely voluntary. Users that do 
not opt to utilize the Exchange's proposed wireless connections would 
still be able to obtain the Additional Third Party Data through other 
methods, including, for example, from wireless networks offered by 
third party vendors, another User, through a telecommunications 
provider, or over the IP network.
    For the reasons above, the proposed changes do not unfairly 
discriminate between or among market participants that are otherwise 
capable of satisfying any applicable co-location fees, requirements, 
terms and conditions established from time to time by the Exchange.
    Finally, the Exchange believes that it is subject to significant 
competitive forces, as described below in the Exchange's statement 
regarding the burden on competition.
    For these reasons, the Exchange believes that the proposed fees are 
reasonable, equitable, and not unfairly discriminatory.

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 because, in addition to the proposed services being 
completely voluntary, they are available to all Users on an equal basis 
(i.e. the same products and services are available to all Users).
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    \17\ 15 U.S.C. 78f(b)(8).
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    The Exchange believes that amending the Fee Schedules to update the 
expected availability date for connectivity to the BYX and EDGA data 
feeds to December 31, 2016, will not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act because connectivity to the BYX and EDGA data feeds would be 
available to all Users on an equal basis (i.e., the connectivity to 
such feeds will be made available to all Users at the same time). The 
proposed change would add greater clarity to the Fee Schedules 
regarding when such connectivity will be available and allow the 
Exchange more time to establish and test connectivity to the BYX and 
EDGA data feeds. In addition, Users that do not opt to utilize the 
Exchange's proposed wireless connections would still be able to obtain 
the Additional Third Party Data through other methods, including, for 
example, from wireless networks offered by third party vendors, another 
User, through a telecommunications provider, or over the IP network.
    The Exchange operates in a highly competitive market in which 
exchanges 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. If a particular exchange charges excessive 
fees for co-location services, affected market participants will opt to 
terminate their co-location arrangements with that exchange, and adopt 
a possible range of alternative strategies, including placing their 
servers in a physically proximate location outside the exchange's data 
center (which could be a competing exchange), or pursuing strategies 
less dependent upon the lower exchange-to-participant latency 
associated with co-location. Accordingly, the exchange charging 
excessive fees would stand to lose not only co-location revenues but 
also the liquidity of the formerly co-located trading firms, which 
could have additional follow-on effects on the market share and revenue 
of the affected exchange.

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

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

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

    The foregoing rule change is effective upon filing pursuant to 
section 19(b)(3)(A) \18\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \19\ thereunder, because it establishes a due,

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fee, or other charge imposed by the Exchange.
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    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
section 19(b)(2)(B) \20\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \20\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File No. SR-NYSEArca-2016-122 on the subject line.

Paper Comments

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

All submissions should refer to File No. SR-NYSEArca-2016-122. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File No. SR-NYSEArca-2016-122, and should 
be submitted on or before September 29, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-21495 Filed 9-7-16; 8:45 am]
 BILLING CODE 8011-01-P