[Federal Register Volume 85, Number 129 (Monday, July 6, 2020)]
[Notices]
[Pages 40377-40379]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-14387]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89176; File No. SR-NYSECHX-2020-19]


Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Extend 
the Temporary Waiver of the Co-location Hot Hands Fee

June 29, 2020.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on June 17, 2020 the NYSE Chicago, Inc. (``NYSE Chicago'' 
or the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I, 
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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to extend the temporary waiver of the co-
location ``Hot Hands'' fee. The proposed rule change is available on 
the Exchange's website at www.nyse.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to extend of the temporary waiver of the co-
location \4\ ``Hot Hands'' fee through the earlier of August 31, 2020 
and the reopening of the Mahwah, New Jersey data center (``Data 
Center''). The waiver of the Hot Hands fee is scheduled to expire on 
June 30, 2020.\5\
---------------------------------------------------------------------------

    \4\ The Exchange initially filed rule changes relating to its 
co-location services with the Securities and Exchange Commission 
(``Commission'') in October 2019. See Securities Exchange Act 
Release No. 87408 (October 28, 2019), 84 FR 58778 (November 1, 2019) 
(SR-NYSECHX-2019-27).
    \5\ See Securities Exchange Act Release No. 88957 (May 27, 
2020), 85 FR 33766 (June 2, 2020) (SR-NYSECHX-2020-15).
---------------------------------------------------------------------------

    The Exchange is an indirect subsidiary of Intercontinental 
Exchange, Inc. (``ICE''). Through its ICE Data Services (``IDS'') 
business, ICE operates the Data Center, from which the Exchange 
provides co-location services to Users.\6\ Among those services is a 
``Hot Hands'' service, which allows Users to use on-site Data Center 
personnel to maintain User equipment, support network troubleshooting, 
rack and stack a server in a User's cabinet;

[[Page 40378]]

power recycling; and install and document the fitting of cable in a 
User's cabinet(s).\7\ The Hot Hands fee is $100 per half hour.
---------------------------------------------------------------------------

    \6\ 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 84 FR 58778, supra 
note 4, at note 6. As specified in the Fee Schedule of NYSE Chicago, 
Inc. (``Fee Schedule''), a User that incurs co-location fees for a 
particular co-location service pursuant thereto would not be subject 
to co-location fees for the same co-location service charged by the 
Exchange's affiliates the New York Stock Exchange LLC, NYSE American 
LLC, NYSE Arca, Inc., and NYSE National, Inc. (together, the 
``Affiliate SROs''). See id. at 58779. Each Affiliate SRO has 
submitted substantially the same proposed rule change to propose the 
changes described herein. See SR-NYSE-2020-53, SR-NYSEAmer-2020- 46, 
SR-NYSEArca-2020-58, and SR-NYSENAT-2020-20.
    \7\ See 84 FR 58778, supra note 4.
---------------------------------------------------------------------------

    ICE previously announced to Users that the Data Center would be 
closed to third parties starting on March 16, 2020, to help avoid the 
spread of COVID-19, which could negatively impact Data Center 
functions. Prior to the closure of the Data Center, the Chief Executive 
Officer of the Exchange took the actions required under NYSE Chicago 
Rule 7.1 to close the co-location facility of the Exchange to third 
parties. The closure period was extended twice, through June 30, 2020 
(the ``Initial Closure'').\8\
---------------------------------------------------------------------------

    \8\ See Securities Exchange Act Release Nos. 88400 (March 17, 
2020), 85 FR 16434 (March 23, 2020) (SR-NYSECHX-2020-07), and 88522 
(March 31, 2020), 85 FR 19191 (April 6, 2020) (SR-NYSECHX-2020-10).
---------------------------------------------------------------------------

    ICE has announced to Users that, because the concerns that led to 
the Initial Closure still apply, the closure of the Data Center will be 
extended, with the date of the reopening announced through a customer 
notice.
    If a User's equipment requires work while a Rule 7.1 closure is in 
effect, the User has to use the Hot Hands service and, absent a waiver, 
incurs Hot Hands fees for the work. Given that, the Exchange waived all 
Hot Hands fees for the duration of the Initial Closure.\9\ Because the 
period has been extended, the Exchange proposes to extend the waiver of 
the Hot Hands Fee for the length of the period. To that end, the 
Exchange proposes to revise the footnote to the Hot Hands Fee in the 
Fee Schedule as follows (deletions bracketed, additions italicized):
---------------------------------------------------------------------------

    \9\ See 85 FR 33766, supra note 5.
---------------------------------------------------------------------------

    [dagger] Fees for Hot Hands Services will be waived beginning on 
March 16, 2020 through the earlier of [June 30]August 31, 2020 and the 
reopening of the Mahwah, New Jersey data center.
    The Exchange believes that there will be sufficient Data Center 
staff on-site to comply with User requests for Hot Hands service.
    The proposed extension of the waiver would apply equally to all 
Users. The proposed extension of the fee waiver would not apply 
differently to distinct types or sizes of market participants. Rather, 
it would continue to apply uniformly to all Users.
    The proposed change is not otherwise intended to address any other 
issues relating to co-location services and/or related fees, and the 
Exchange is not aware of any problems that Users would have in 
complying with the proposed change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\10\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\11\ in particular, 
because it provides for the equitable allocation of reasonable dues, 
fees, and other charges among its members, issuers and other persons 
using its facilities and does not unfairly discriminate between 
customers, issuers, brokers or dealers. In addition, it is designed to 
foster cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to, and 
perfect the mechanisms of, a free and open market and a national market 
system and, in general, to protect investors and the public interest 
and because it is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

The Proposed Rule Change is Reasonable
    The Exchange believes that the proposed rule change is reasonable 
for the following reasons.
    Given that the closure of the Data Center has been extended, the 
Exchange believes that it is reasonable to grant the proposed 
corresponding extension of the waiver of the Hot Hands Fee. While a 
Rule 7.1 closure is in effect, User representatives are not allowed 
access to the Data Center. If a User's equipment requires work during 
such period, the User has to use the Hot Hands service. Absent a 
waiver, the User would incur Hot Hands fees for the work.
    The proposed extension of the waiver would allow a User to have 
work carried out on its equipment notwithstanding the closure of the 
Data Center without incurring Hot Hands fees.
The Proposed Rule Change is Equitable
    The Exchange believes the proposed rule change is an equitable 
allocation of its fees and credits for the following reasons.
    The proposed extension of the waiver would apply equally to all 
Users. The proposed extension would not apply differently to distinct 
types or sizes of market participants. Rather, it would apply uniformly 
to all Users.
    The Exchange believes that the proposal is equitable because the 
extension of the waiver would mean that for the duration of the closure 
of the Data Center all similarly-situated Users would not be charged a 
fee to use the Hot Hands service.
The Proposed Change is Not Unfairly Discriminatory and Would Protect 
Investors and the Public Interest
    The Exchange believes that the proposed change is not unfairly 
discriminatory for the following reasons.
    The proposed extension of the waiver would not apply differently to 
distinct types or sizes of market participants. Rather, all Users whose 
equipment requires work during the extension of the Data Center closure 
would have the resulting fees waived, and the extension of the waiver 
would apply uniformly to all Users during the period. For the reasons 
above, the proposed changes do not unfairly discriminate between or 
among market participants.
    In addition, the Exchange believes that the proposed rule change 
would perfect the mechanisms of a free and open market and a national 
market system and, in general, protect investors and the public 
interest because it would allow a User to have work carried out on its 
equipment notwithstanding a Rule 7.1 closure without incurring Hot 
Hands fees. Accordingly, the Exchange believes that the requested 
extension of the waiver is designed to perfect the mechanisms of a free 
and open market and a national market system and, in general, protect 
investors and the public interest by facilitating the uninterrupted 
availability of Users' equipment.
    For all of the above reasons, the Exchange believes that the 
proposal is consistent with the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\12\ 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.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

Intramarket Competition
    The Exchange does not believe that the proposed change would place 
any burden on intramarket competition that is not necessary or 
appropriate.
    The proposed extension of the waiver is not designed to affect 
competition, but rather to provide relief to Users that, while a Rule 
7.1 closure is in effect, have no option but to use the Hot Hands 
service.
    The proposed extension of the waiver would not apply differently to 
distinct types or sizes of market participants. Rather, all Users whose 
equipment

[[Page 40379]]

requires work during the extension of the Data Center closure would 
have the resulting fees waived, and the extension of the waiver would 
apply uniformly to all Users during the period.
Intermarket Competition
    The Exchange does not believe that the proposed change would impose 
any burden on intermarket competition that is not necessary or 
appropriate.
    The Exchange believes that the proposed change would not affect the 
competitive landscape among the national securities exchanges, as the 
Hot Hands service is solely charged within co-location to existing 
Users, and would be temporary.
    For the reasons described above, the Exchange believes that the 
proposed rule change reflects this competitive environment.

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

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

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

    The foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \13\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \14\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    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) \15\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

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

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSECHX-2020-19 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSECHX-2020-19. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street, NE, Washington, 
DC 20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSECHX-2020-19 and should be submitted 
on or before July 27, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-14387 Filed 7-2-20; 8:45 am]
BILLING CODE 8011-01-P


