
[Federal Register: September 27, 2010 (Volume 75, Number 186)]
[Notices]               
[Page 59310-59311]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27se10-144]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62960; File No. SR-NYSE-2010-56]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; Order 
Approving a Proposed Rule Change Amending Its Price List To Reflect 
Fees Charged for Co-Location Services

September 21, 2010.
    On August 3, 2010, New York Stock Exchange LLC (``NYSE'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder, \2\ a 
proposed rule change to amend its Price List to reflect fees charged 
for co-location services. The proposed rule change was published for 
comment in the Federal Register on August 20, 2010.\3\ The Commission 
received no comment letters on the proposal. This order approves the 
proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR240.19b-4.
    \3\ See Securities Exchange Act Release No. 62732 (Aug 16, 
2010), 75 FR 51512 (``Notice'').
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    In its proposal, NYSE proposed to amend its Price List to identify 
fees pertaining to co-location services, which allow Users \4\ of the 
Exchange to rent space on premises controlled by the Exchange so that 
they may locate their electronic servers in close physical proximity to 
the Exchange's trading and execution systems. NYSE represented that it 
planned to begin operating a data center in Mahwah, New Jersey, from 
which it will offer co-location services. The Exchange represented that 
it will offer space at the data center in cabinets with power usage 
capability of either four or eight kilowatts (kW).\5\ In

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addition, the Exchange stated that it will offer Users services related 
to co-location, including cross connections, equipment and cable 
installation, and remote ``hot-hands'' services, which allow Users to 
use on-site data center personnel to maintain User equipment. The 
Exchange proposed tiered co-location fees based on the level of service 
(1Gb circuit, 10Gb circuit and various bundled options), and additional 
fees for related services.
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    \4\ For the purposes of this filing, the term ``Users'' includes 
any ``member organization,'' as that term is defined in NYSE Rule 
2(b) and any ``Sponsored Participant,'' as that term is defined in 
NYSE Rule 123B.30(a)(ii)(B).
    \5\ The Exchange represented that it also allows Users, for a 
monthly fee (i.e., 40% of the applicable monthly per kW fee), to 
obtain an option for future use on available, unused cabinet space 
in proximity to their existing cabinet space. Specifically, Users 
may reserve cabinet space of up to 30% of the cabinet space under 
contract, which the Exchange will endeavor to provide as close as 
reasonably possible to the User's existing cabinet space, taking 
into consideration power availability within segments of the data 
center and the overall efficiency of use of data center resources as 
determined by the Exchange.
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    NYSE represented that 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 Users that do not receive co-location services. The Exchange noted 
that all orders sent to NYSE enter the Exchange's trading and execution 
systems through the same order gateway regardless of whether the sender 
is co-located in the Exchange's data center or not. Furthermore, NYSE 
noted that co-located Users do not receive any market data or data 
service product that is not available to all Users. Users that receive 
co-location services normally would expect reduced latencies in sending 
orders to the Exchange and receiving market data from the Exchange.
    In addition, the Exchange represented that co-located Users have 
the option of obtaining access to the Exchange's Liquidity Center 
Network (``LCN''), a local area network available in the data 
center.\6\ Co-located Users have the option of using either the LCN or 
the Exchange's Secure Financial Transaction Infrastructure (``SFTI'') 
network, to which all Users have access. Because it operates as a local 
area network within the data center, the LCN provides reduced latencies 
in comparison with SFTI. Other than the reduced latencies, the Exchange 
believes that there are no material differences in terms of access to 
the Exchange between Users that choose to co-locate and those that do 
not. According to NYSE, SFTI and LCN both provide Users with access to 
the Exchange's trading and execution systems and to the Exchange's 
proprietary market data products. User access to non-proprietary market 
data products is available through SFTI and not through LCN.
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    \6\ NYSE represented that pricing for LCN access is provided on 
a stand-alone basis and on a bundled basis in combination with SFTI 
connections and optic connections to outside access centers and 
within the data center. The SFTI and optic connections are not 
related to the co-location services.
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    NYSE represented that it offers co-location space based on 
availability and the Exchange believes that it has sufficient space in 
the Mahwah data center to accommodate current demand on an equitable 
basis for the foreseeable future. In addition, the Exchange believes 
that any difference among the positions of the cabinets within the data 
center does not create any material difference to co-location Users in 
terms of access to the Exchange.
    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\7\ 
In particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\8\ 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, and with Section 
6(b)(5) of the Act,\9\ which requires, among other things, that the 
rules of a national securities exchange be designed to promote just and 
equitable principles of trade, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system and, 
in general, to protect investors and the public interest, and not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \7\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f(b)(4).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that the proposed tiered fees for co-
location and related services are reasonable and equitably allocated 
insofar as they are applied on the same terms to similarly-situated 
market participants. In addition, the Commission believes that the 
connectivity options described in the proposed rule change are not 
unfairly discriminatory because NYSE makes the co-location services 
uniformly available to all Users who voluntarily request them and pay 
the fees as detailed in the proposal. As represented by NYSE, these 
fees are uniform for all such customers and may vary from User to User 
due to each User's choice of service package. Finally, the Commission 
believes that the proposal will further the protection of investors and 
the public interest because it will provide greater transparency 
regarding the connectivity options available to market participants.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\10\ that the proposed rule change (SR-NYSE-2010-56) be, and hereby 
is, approved.
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    \10\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-24061 Filed 9-24-10; 8:45 am]
BILLING CODE 8010-01-P

