[Federal Register Volume 86, Number 58 (Monday, March 29, 2021)]
[Notices]
[Pages 16424-16431]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-06348]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91390; File No. SR-NYSECHX-2021-04]


Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its 
Fee Schedule Related to Co-Location

March 23, 2021.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on March 10, 2021, the NYSE Chicago, Inc. (``NYSE Chicago'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its Fee Schedule (the ``Fee 
Schedule'') related to co-location to (i) provide Users with access to 
the systems, and connectivity to the data feeds, of various additional 
third parties; and (ii) remove obsolete text. 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 amend its Fee Schedule related to co-
location to (i) provide Users with access to the systems, and 
connectivity to the data feeds, of various additional third parties; 
and (ii) remove obsolete text.
Proposal To Add Additional Third Party Systems and Third Party Data 
Feeds
    The Exchange proposes to amend the co-location \4\ services offered 
by the Exchange to provide Users \5\ with access to the systems, and 
connectivity to the data feeds, of various additional third parties. 
The Exchange proposes to make the corresponding amendments to the 
Exchange's Fee Schedule related to these co-location services to 
reflect these proposed changes.
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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 2019. See Securities Exchange Act Release No. 
87408 (October 28, 2019), 84 FR 58778 (November 1, 2019) (SR-
NYSECHX-2019-12) (``NYSE Chicago Co-location Notice''). The Exchange 
is an indirect subsidiary of Intercontinental Exchange, Inc. 
(``ICE'').
    \5\ For purposes of the Exchange's co-location services, a 
``User'' means any market participant that requests to receive co-
location services directly from the Exchange. See id., supra note 4, 
at 58778 n.6. As specified in the 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 New York Stock 
Exchange LLC (``NYSE''), 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-2021-15, SR-NYSEAMER-2021-13, SR-NYSEArca-2021-15, and SR-
NYSENAT-2021-05.
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    As set forth in the Fee Schedule, the Exchange charges fees for 
connectivity to the execution systems of third party markets and other 
content service providers (``Third Party Systems''), and data feeds 
from third party markets and other content service providers (``Third 
Party Data Feeds'').\6\ The lists of Third Party Systems and Third 
Party Data Feeds are set forth in the Fee Schedule.
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    \6\ See NYSE Chicago Co-location Notice, supra note 4, at 58786-
87.
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    The Exchange proposes to provide access to the following additional 
Third Party Systems: Long Term Stock Exchange, Members Exchange, MIAX 
Emerald, MIAX PEARL Equities, Morgan Stanley, and TD Ameritrade (the 
``Proposed Third Party Systems''). The Exchange also proposes to amend 
the Fee Schedule to change the name of the ``Miami International 
Securities

[[Page 16425]]

Exchange'' Third Party System to ``MIAX Options,'' to change the name 
of the ``MIAX PEARL'' Third Party System to ``MIAX PEARL Options,'' and 
to combine MIAX Options, MIAX PEARL Options, MIAX PEARL Equities, and 
MIAX Emerald as a single Third Party System on the Fee Schedule. The 
list of available Third Party Systems in the Fee Schedule would be 
amended as follows:

------------------------------------------------------------------------
                           Third party systems
-------------------------------------------------------------------------
 
                                * * * * *
ITG TriAct Matchnow
Long Term Stock Exchange (LTSE)
Members Exchange (MEMX)
[Miami International Securities Exchange]
MIAX Options, MIAX PEARL Options, MIAX PEARL Equities, and MIAX Emerald
Morgan Stanley
Nasdaq
 
                                * * * * *
OTC Markets Group
TD Ameritrade
TMX Group
------------------------------------------------------------------------

    In addition, the Exchange proposes to provide connectivity to data 
feeds from Members Exchange (the ``Proposed MEMX Third Party Data 
Feed''), MIAX Emerald (the ``Proposed MIAX Emerald Third Party Data 
Feed''), MIAX PEARL Equities (the ``Proposed MIAX PEARL Equities Third 
Party Data Feed''), and ICE Data Services--ICE TMC \7\ (the ``Proposed 
ICE TMC Third Party Data Feed'') (collectively, the ``Proposed Third 
Party Data Feeds''). The Exchange also proposes to change the name of 
the current ``Miami International Securities Exchange/MIAX PEARL'' 
Third Party Data Feed to ``MIAX Options/MIAX PEARL Options'' on its Fee 
Schedule. Further, the Exchange proposes to delete the ``NASDAQ OMDF'' 
data feed from the list, as it is no longer offered by the content 
service provider. Finally, the Exchange proposes to change the name of 
the current ``SR Labs--SuperFeed'' data feeds to ``Vela--SuperFeed,'' 
to reflect the content provider's recent change to the name of these 
products.
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    \7\ The Proposed ICE TMC Third Party Data Feed is generated by 
ICE Bonds, an indirect subsidiary of ICE, and includes market data 
for the ICE TMC alternative trading system. It does not include 
market data of the Exchange or Affiliate SROs.
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    The list of available Third Party Data Feeds in the Fee Schedule 
would be amended as follows:

------------------------------------------------------------------------
                                                              Monthly
                                                             recurring
                                                           connectivity
                  Third party data feed                    fee per third
                                                            party data
                                                               feed
------------------------------------------------------------------------
 
                              * * * * * * *
Global OTC..............................................            $100
[ICE Data Global Index *]...............................           [100]
ICE Data Services Consolidated Feed <=100 Mb............             200
 
                              * * * * * * *
ICE Data Services Consolidated Feed Shared Farm >1 Gb...           1,000
ICE Data Services--ICE TMC..............................             200
ICE Data Services PRD...................................             200
 
                              * * * * * * *
ITG TriAct Matchnow.....................................           1,000
Members Exchange (MEMX).................................           3,000
MIAX Emerald............................................           3,500
[Miami International Securities Exchange]MIAX Options/             2,000
 MIAX PEARL Options.....................................
MIAX PEARL Equities.....................................           2,500
Montr[eacute]al Exchange (MX)...........................           1,000
 
                              * * * * * * *
NASDAQ OMX Global Index Data Service....................             100
[NASDAQ OMDF]...........................................           [100]
NASDAQ UQDF & UTDF......................................             500
 
                              * * * * * * *
OTC Markets Group.......................................           1,000
Vela[SR Labs]--SuperFeed <500 Mb........................             250
Vela[SR Labs]--SuperFeed >500 Mb to <1.25 Gb............             800
Vela[SR Labs]--SuperFeed >1.25 Gb.......................           1,000
TMX Group...............................................           2,500
 
                              * * * * * * *
------------------------------------------------------------------------

    The Exchange would provide access to the Proposed Third Party 
Systems (``Access'') and connectivity to the Proposed Third Party Data 
Feeds (``Connectivity'') as conveniences to Users. Use of Access or 
Connectivity would be completely voluntary.
    The Exchange does not have visibility into whether third parties 
currently offer, or intend to offer, Users access to the Proposed Third 
Party Systems and connectivity to the Proposed Third Party Data Feeds, 
as such third parties are not required to make that information public. 
However, the market for access to Third Party Systems and connectivity 
to Third Party Data Feeds is competitive. The Exchange competes with 
other providers--including other colocation providers and market data 
vendors--that offer

[[Page 16426]]

access to Third Party Systems and connectivity to Third Party Data 
Feeds. The Exchange is not aware of any impediment to such third 
parties offering access to the Proposed Third Party Systems or 
connectivity to the Proposed Third Party Data Feeds.
    If one or more third parties presently offer, or in the future opt 
to offer, such Access and Connectivity to Users, a User may utilize the 
ICE Data Services (``IDS'') network, a third party telecommunication 
network, a cross connect, or a combination thereof to access such 
services and products through a connection to an access center outside 
the data center (which could be an IDS access center, a third-party 
access center, or both), another User, or a third party vendor.
Access to the Proposed Third Party Systems
    The Exchange proposes to revise the Fee Schedule to provide that 
Users may obtain connectivity to the Proposed Third Party Systems for a 
fee. As with the current Third Party Systems, Users would connect to 
the Proposed Third Party Systems over the internet protocol (``IP'') 
network, a local area network available in the data center.\8\
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    \8\ See NYSE Chicago Co-location Notice, supra note 4, at 58787.
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    As with the current Third Party Systems, in order to obtain access 
to a Proposed Third Party System, the User would enter into an 
agreement with the relevant Proposed Third Party, pursuant to which the 
third party content service provider would charge the User for access 
to the Proposed Third Party System. The Exchange would then establish a 
unicast connection between the User and the Proposed Third Party System 
over the IP network.\9\ The Exchange would charge the User for the 
connectivity to the Proposed Third Party System. A User would only 
receive, and would only be charged for, access to the Proposed Third 
Party System for which it enters into agreements with the third party 
content service provider.
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    \9\ Information flows over existing network connections in two 
formats: ``unicast'' format, which is a format that allows one-to-
one communication, similar to a phone line, in which information is 
sent to and from the Exchange; and ``multicast'' format, which is a 
format in which information is sent one-way from the Exchange to 
multiple recipients at once, like a radio broadcast.
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    The Exchange has no affiliation with the providers of any of the 
Proposed Third Party Systems. Establishing a User's access to a 
Proposed Third Party System would not give the Exchange any right to 
use the Proposed Third Party System. Connectivity to a Proposed Third 
Party System would not provide access or order entry to the Exchange's 
execution system, and a User's connection to a Proposed Third Party 
System would not be through the Exchange's execution system.
Connectivity to the Proposed Third Party Data Feeds
    The Exchange proposes to revise the Fee Schedule to provide that 
Users may obtain connectivity to the Proposed Third Party Data Feeds 
for a fee. As with the existing connections to Third Party Data Feeds, 
the Exchange would receive a Proposed Third Party Data Feed from the 
content service provider at the data center. The Exchange would then 
provide connectivity to that data to Users for a fee. Users would 
connect to the Proposed Third Party Data Feeds over the IP network.\10\ 
The Proposed Third Party Data Feeds would include trading information 
concerning the securities that are traded on the relevant Proposed 
Third Party Systems.
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    \10\ See NYSE Chicago Co-location Notice, supra note 4, at 
58787.
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    As with the existing connections to Third Party Data Feeds, in 
order to connect to a Proposed Third Party Data Feed, a User would 
enter into a contract with the content service provider, pursuant to 
which the content service provider may charge the User for the data 
feed. The Exchange would receive the Proposed Third Party Data Feed 
over its fiber optic network and, after the content service provider 
and User entered into an agreement and the Exchange received 
authorization from the content service provider, the Exchange would 
retransmit the data to the User over the User's port. The Exchange 
would charge the User for connectivity to the Proposed Third Party Data 
Feed. A User would only receive, and would only be charged the fee for, 
connectivity to a Proposed Third Party Data Feed for which it entered 
into a contract.
    The Exchange has no affiliation with the sellers of the Proposed 
MEMX Third Party Data Feed, the Proposed MIAX Emerald Third Party Data 
Feed, or the Proposed MIAX PEARL Equities Third Party Data Feed, and 
would have no right to use those feeds other than as a redistributor of 
the data. Similarly, although the Exchange and ICE Bonds--the generator 
of the Proposed ICE TMC Third Party Data Feed--are both indirect 
subsidiaries of ICE, the Exchange would have no right to use the 
Proposed ICE TMC Third Party Data Feed other than as a redistributor of 
the data. None of the Proposed Third Party Data Feeds would provide 
access or order entry to the Exchange's execution system. The Proposed 
Third Party Data Feeds would not provide access or order entry to the 
execution systems of the third parties generating the feeds. The 
Exchange would receive the Proposed Third Party Data Feeds via arms-
length agreements and would have no inherent advantage over any other 
distributor of such data.
Proposal To Remove Obsolete Text
Proposal To Remove References to ICE Data Global Index
    The Exchange proposes to remove obsolete references to the ICE Data 
Global Index (the ``GIF'') from the list of Third Party Data Feeds 
available for connectivity and related text.
    In May 2020, ICE, which publishes the GIF, announced to its 
customers that before the end of 2020, it would cease offering the GIF 
as a stand-alone product. The Exchange accordingly amended its Fee 
Schedule to inform customers that it would cease offering connectivity 
to the GIF once it is no longer available.\11\
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    \11\ See Securities Exchange Act Release No. 88990 (June 2, 
2020), 85 FR 34778 (June 8, 2020) (SR-NYSECHX-2020-17).
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    ICE has now informed the Exchange that it ceased offering the GIF 
as a stand-alone product, making the references to the GIF obsolete. 
The operative date was announced through a customer notice. 
Accordingly, the Exchange proposes to remove ``ICE Data Global Index*'' 
and the corresponding asterisked note from the Fee Schedule.
    In order to implement the proposed change, the Exchange proposes to 
make the following changes to the section of the Fee Schedule entitled 
``Connectivity to Third Party Data Feeds'':
     In the first paragraph and in the table of Third Party 
Data Feeds, delete ``ICE Data Global Index*''.
     Following the table of Third Party Data Feeds, delete the 
following text:
    * ICE will cease to offer the GIF as a stand-alone product, which 
the Exchange has been informed by ICE is currently expected to occur 
before the end of 2020. The Exchange will announce the operative date 
through a customer notice. Any change fees that a User would otherwise 
incur as a result of the proposed change will be waived.
Proposal To Remove the Temporary Waiver of Hot Hands Fees
    The Exchange proposes to remove the obsolete reference to the 
waiver of Hot Hands fees in light of the reopening of the Mahwah, New 
Jersey data center.
    In March 2020, ICE announced to each User that, starting on March 
16, 2020, the Mahwah, New Jersey data

[[Page 16427]]

center would be closed to third parties in response to COVID-19. The 
Exchange temporarily waived all Hot Hands fees from the date of the 
closing through the date of the reopening of the data center, and added 
a note to the fees for the Hot Hands service stating as much.\12\
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    \12\ The Exchange first waived the Hot Hands Fee in a March 17, 
2020 filing, and subsequently extended the waiver four times. See 
Securities Exchange Act Release Nos. 88400 (March 17, 2020), 85 FR 
16434 (March 23, 2020) (SR-NYSECHX-2020-07); 88522 (March 31, 2020), 
85 FR 19191 (April 6, 2020) (SR-NYSECHX-2020-10); 88957 (May 27, 
2020), 85 FR 33766 (June 2, 2020) (SR-NYSECHX-2020-15); 89176 (June 
29, 2020), 85 FR 40377 (July 6, 2020) (SR-NYSECHX-2020-19); and 
89654 (August 25, 2020), 85 FR 53879 (August 31, 2020) (SR-NYSECHX-
2020-25).
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    The Mahwah, New Jersey data center reopened on October 1, 2020. The 
date of the reopening was announced through a customer notice. As a 
result of the reopening, the waiver of Hot Hands fees ceased, and the 
note became obsolete. The Exchange now proposes to remove the obsolete 
text.
    In order to implement this proposed change, the Exchange proposes 
to make the following changes to the Fee Schedule:
     In the Types of Service table, remove the `` [dagger] '' 
symbol after ``Hot Hands Service*** ''.
     Following the Types of Service table, remove the following 
text:
    [dagger] Fees for Hot Hands Services will be waived beginning on 
March 16, 2020 through the reopening of the Mahwah, New Jersey data 
center. The date of the reopening will be announced through a customer 
notice.
Application and Impact of the Proposed Changes
    The proposed changes would not apply differently to distinct types 
or sizes of market participants. Rather, they would apply to all Users 
equally. As is currently the case, the purchase of any colocation 
service is completely voluntary and the Fee Schedule is applied 
uniformly to all Users.
    As with the existing connections to Third Party Systems, the 
Exchange proposes to charge a monthly recurring fee for connectivity to 
the Proposed Third Party Systems. Specifically, when a User requests 
access to a Proposed Third Party System, it would identify the 
applicable content service provider and what bandwidth connection is 
required. The Exchange proposes to modify its Fee Schedule to add the 
Proposed Third Party Systems to its existing list of Third Party 
Systems. The Exchange does not propose to change the monthly recurring 
fee the Exchange charges Users for unicast connectivity to each Third 
Party System, including the Proposed Third Party Systems.
    As it does with the existing Third Party Data Feeds, the Exchange 
proposes to charge a monthly recurring fee for connectivity to the 
Proposed Third Party Data Feeds. Depending on its needs and bandwidth, 
a User may opt to receive all or some of the feeds or services included 
in the Proposed Third Party Data Feeds. The Exchange proposes to add 
the following fees for connectivity to the Proposed Third Party Data 
Feeds to its existing list in the Fee Schedule: (i) $200 per month for 
ICE Data Services--ICE TMC; (ii) $3,000 per month for Members Exchange; 
(iii) $3,500 per month for MIAX Emerald, and (iv) $2,500 per month for 
MIAX PEARL Equities.
    Under this proposal, obsolete references to connectivity to the GIF 
data feed and the temporary waiver of Hot Hands fees would be removed 
for all Users.
Competitive Environment
    The Exchange operates in a highly competitive market in which 
exchanges and other vendors (e.g., Hosting Users) offer co-location 
services as a means to facilitate the trading and other market 
activities of those market participants who believe that co-location 
enhances the efficiency of their operations. The Commission has 
repeatedly expressed its preference for competition over regulatory 
intervention in determining prices, products, and services in the 
securities markets. Specifically, in Regulation NMS, the Commission 
highlighted the importance of market forces in determining prices and 
SRO revenues and, also, recognized that current regulation of the 
market system ``has been remarkably successful in promoting market 
competition in its broader forms that are most important to investors 
and listed companies.'' \13\
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    \13\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005).
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    The proposed changes are 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 furthers the 
objectives of Section 6(b)(5) of the Act,\15\ 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 mechanism 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. The Exchange further believes 
that the proposed rule change is consistent with Section 6(b)(4) of the 
Act,\16\ because it provides for the equitable allocation of reasonable 
dues, fees, and other charges among its members and issuers and other 
persons using its facilities.
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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
    \16\ 15 U.S.C. 78f(b)(4).
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The Proposed Rule Change Is Reasonable
    The Exchange believes that the proposed rule change is reasonable 
and would perfect the mechanisms of a free and open market and a 
national market system and, in general, protect investors and the 
public interest, for the following reasons.
    The Exchange believes that the proposed change to Access and 
Connectivity is reasonable and would remove impediments to, and perfect 
the mechanisms of, a free and open market and a national market system 
and, in general, protect investors and the public interest because by 
offering additional services, the Exchange would give each User 
additional options for addressing its access and connectivity needs, 
responding to User demand for access and connectivity options. 
Providing additional services would help each User tailor its data 
center operations to the requirements of its business operations by 
allowing it to select the form and latency of access and connectivity 
that best suits its needs. In addition, the Exchange believes that the 
proposed change is reasonable because by offering Access and 
Connectivity to Users when available, the Exchange would give Users 
additional options for connectivity and access to new services as soon 
as they are available, responding to User demand for access and 
connectivity options.
    The Exchange would provide Access and Connectivity as conveniences 
to Users. Use of Access or Connectivity would be completely voluntary. 
The Exchange is not aware of any impediment to third parties offering 
Access or Connectivity. The Exchange

[[Page 16428]]

does not have visibility into whether third parties currently offer, or 
intend to offer, Users access to the Proposed Third Party Systems and 
connectivity to the Proposed Third Party Data Feeds. However, if one or 
more third parties presently offer, or in the future opt to offer, such 
access and connectivity to Users, a User may utilize the IDS network, a 
third party telecommunication network, a cross connect, or a 
combination thereof to access such services and products through a 
connection to an access center outside the data center (which could be 
an IDS access center, a third-party access center, or both), another 
User, or a third party vendor.
    The Exchange also believes that the proposed rule change to Access 
and Connectivity is reasonable because 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. For 
these reasons, an 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.
    The Exchange also believes that the proposed rule change to Access 
and Connectivity is reasonable because the market for access to Third 
Party Systems and connectivity to Third Party Data Feeds is 
competitive. The Exchange competes with other providers--including 
other colocation providers and market data vendors--that offer access 
to Third Party Systems and connectivity to Third Party Data Feeds. 
Although the Exchange does not have complete visibility into whether 
third parties currently offer, or intend to offer, Users access to the 
Proposed Third Party Systems and connectivity to the Proposed Third 
Party Data Feeds (as such third parties are not required to make that 
information public), the Exchange understands that at least one other 
vendor is currently offering the Proposed MIAX Third Party Data Feeds. 
As such, the Exchange is not aware of any impediment to such third 
parties offering substitutes to such Access and Connectivity. If the 
Exchange were to propose to charge supra-competitive fees for access to 
any of the Proposed Third Party Systems or connectivity to any of the 
Proposed Third Party Data Feeds, the Exchange's competitors would 
respond by offering such access and connectivity at lower rates, and 
market participants would respond by substituting the Exchange's 
offerings with more competitively-priced access and connectivity 
options available from other providers. As such, competition and the 
availability of substitutes is a check on the Exchange's ability to 
charge unreasonable fees for Access and Connectivity.
    The Exchange further believes that the proposed change to Access 
and Connectivity is reasonable because in order to offer the Access and 
Connectivity as conveniences to Users, the Exchange must provide, 
maintain, and operate the data center facility hardware and technology 
infrastructure. The Exchange must handle the installation, 
administration, monitoring, support, and maintenance of such services, 
including by responding to any production issues. Since the inception 
of co-location, the Exchange has made numerous improvements to the 
network hardware and technology infrastructure and has established 
additional administrative controls. The Exchange has expanded the 
network infrastructure to keep pace with the increased number of 
services available to Users, including resilient and redundant feeds.
    In addition, in order to provide Access and Connectivity, the 
Exchange would establish and maintain multiple connections to each 
Proposed Third Party System and Proposed Third Party Data Feed, 
allowing the Exchange to provide resilient and redundant connections; 
adapt to any changes made by the relevant third party; and cover any 
applicable fees charged by the relevant third party, such as port fees. 
For example, the Exchange already offers several Third Party Data Feeds 
supplied by ICE Data Services, such that the Exchange could add the 
Proposed ICE TMC Third Party Data Feed over this established connection 
with less effort. In contrast, in order to offer connectivity to the 
Proposed MEMX Third Party Data Feed, the Proposed MIAX Emerald Third 
Party Data Feed, and the Proposed MIAX PEARL Equities Data Feed, the 
Exchange must establish and maintain connections to those exchanges, 
which requires significantly more effort. As such, it is reasonable for 
the Exchange to offer connectivity to the Proposed ICE TMC Third Party 
Data Feed at a lower fee than it proposes to charge for connectivity to 
the Proposed MEMX Third Party Data Feed, the Proposed MIAX Emerald 
Third Party Data Feed, and the Proposed MIAX PEARL Equities Third Party 
Data Feed. Further, the different fees that the Exchange proposes for 
the Proposed MIAX Emerald Third Party Data Feed and the Proposed MIAX 
PEARL Equities Third Party Data Feed are reflective of the fact that 
MIAX charges separate fees to the Exchange to become a distributor of 
each of its data feed products, and that these distribution fees that 
the Exchange must pay to MIAX are higher for the Proposed MIAX Emerald 
Third Party Data Feed than for the Proposed MIAX PEARL Equities Third 
Party Data Feed.
    As such, the Exchange believes the proposed fees for Access and 
Connectivity are reasonable because they would allow the Exchange to 
defray or cover the costs associated with offering Users Access and 
Connectivity while providing Users the convenience of receiving such 
Access and Connectivity within co-location, helping them to tailor 
their data center operations to the requirements of their business 
operations.
    The Exchange believes that removing obsolete text from the Fee 
Schedule 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 the GIF is no longer available as a stand-
alone data feed, the references to the GIF and its associated fee in 
the Fee Schedule are obsolete. Similarly, because the Mahwah, New 
Jersey data center has reopened, the note to the Hot Hands service has 
become obsolete. In both cases, removing the obsolete text would 
enhance the clarity and transparency of the Fee Schedule and reduce 
potential customer confusion.
The Proposed Rule Change Is Equitable
    The Exchange believes that the proposed rule change provides for 
the equitable allocation of reasonable dues, fees, and other charges 
among its members, issuers, and other persons using its facilities, for 
the following reasons.
    First, the proposed fees for Access and Connectivity would not 
apply differently to different types or sizes of market participants. 
Rather, the

[[Page 16429]]

proposed fees would apply equally to any User that opts to access the 
Proposed Third Party Systems or connect to the Proposed Third Party 
Data Feeds, irrespective of that User's size or the type of market 
participant it is.
    Second, under the proposed rule change, only Users that choose to 
connect to the Proposed Third Party Systems and Proposed Third Party 
Data Feeds would be charged the proposed fees for Access and 
Connectivity. Users who opt not to use the Access or Connectivity would 
not be charged. In this way, the proposed rule change equitably 
allocates the proposed fees only to Users who choose to use the 
Proposed Third Party Systems and Proposed Third Party Data Feeds.
    In addition, as noted above, the Exchange would provide Access and 
Connectivity as conveniences to Users. Use of Access or Connectivity 
would be completely voluntary. By offering additional services, the 
Exchange would give each User additional options for addressing its 
access and connectivity needs, responding to User demand for access and 
connectivity options. Providing additional services would help each 
User tailor its data center operations to the requirements of its 
business operations by allowing it to select the form and latency of 
access and connectivity that best suits its needs. A User that does not 
wish to use the Access or Connectivity offered by the Exchange is not 
required to do so.
    The Exchange is not aware of any impediment to third parties 
offering Access or Connectivity. The Exchange does not have visibility 
into whether third parties currently offer, or intend to offer, Users 
access to the Proposed Third Party Systems and connectivity to the 
Proposed Third Party Data Feeds, as third parties are not required to 
make that information public. However, if one or more third parties 
presently offer, or in the future opt to offer, such access and 
connectivity to Users, a User may utilize the IDS network, a third 
party telecommunication network, a cross connect, or a combination 
thereof to access such services and products through a connection to an 
access center outside the data center (which could be an IDS access 
center, a third-party access center, or both), another User, or a third 
party vendor.
    The Exchange believes that removing obsolete text from the Fee 
Schedule 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 the GIF is no longer available as a stand-
alone data feed, the references to the GIF and its associated fee in 
the Fee Schedule are obsolete. Similarly, because the Mahwah data 
center has reopened, the note to the Hot Hands service has become 
obsolete. The changes would have no impact on pricing. Rather, they 
would remove obsolete text, thereby clarifying the Exchange rules and 
alleviating possible market participant confusion.
The Proposed Change Is Not Unfairly Discriminatory
    The Exchange believes that the proposed rule change does not permit 
unfair discrimination between customers, issuers, brokers, or dealers, 
for the following reasons.
    First, the proposed Access and Connectivity are available on equal 
terms to all Users. Users that opt to use the proposed Access or 
Connectivity would not receive access or connectivity that is not 
available to all Users, as all market participants that contract with 
the content provider may receive access or connectivity.
    Second, the proposed fees for Access and Connectivity would not 
apply differently to different types or sizes of market participants. 
Rather, the proposed fees would apply equally to any User that opts to 
access the Proposed Third Party Systems or connect to the Proposed 
Third Party Data Feeds, and would not unfairly discriminate against any 
User based on the User's size or the type of market participant it is.
    Third, the proposed rule change does not permit unfair 
discrimination between market participants because only Users that 
choose to connect to the Proposed Third Party Systems and Proposed 
Third Party Data Feeds would be charged the proposed fees for access 
and connectivity. Users who opt not to use the Access or Connectivity 
will not be charged.
    In addition, as noted above, the Exchange would provide Access and 
Connectivity as conveniences to Users. Use of Access or Connectivity 
would be completely voluntary. By offering additional services, the 
Exchange would give each User additional options for addressing its 
access and connectivity needs, responding to User demand for access and 
connectivity options. Providing additional services would help each 
User tailor its data center operations to the requirements of its 
business operations by allowing it to select the form and latency of 
access and connectivity that best suits its needs. A User that does not 
wish to use the Access or Connectivity offered by the Exchange is not 
required to do so.
    The Exchange is not aware of any impediment to third parties 
offering Access or Connectivity. The Exchange does not have visibility 
into whether third parties currently offer, or intend to offer, Users 
access to the Proposed Third Party Systems and connectivity to the 
Proposed Third Party Data Feeds, as third parties are not required to 
make that information public. However, if one or more third parties 
presently offer, or in the future opt to offer, such access and 
connectivity to Users, a User may utilize the IDS network, a third 
party telecommunication network, a cross connect, or a combination 
thereof to access such services and products through a connection to an 
access center outside the data center (which could be an IDS access 
center, a third-party access center, or both), another User, or a third 
party vendor.
    The Exchange believes that removing obsolete text from the Fee 
Schedule would not permit unfair discrimination between customers, 
issuers, brokers, or dealers. Because the GIF is no longer available as 
a stand-alone data feed, the references to the GIF and its associated 
fee in the Fee Schedule are obsolete. Similarly, because the Mahwah 
data center has reopened, the note to the Hot Hands service has become 
obsolete. The changes would have no impact on pricing. Rather, they 
would remove obsolete text, thereby clarifying the Exchange rules and 
alleviating possible market participant confusion.
    For the reasons above, the proposed changes do not unfairly 
discriminate between or among market participants that are otherwise 
capable of satisfying any applicable co-location fees, requirements, 
terms and conditions established from time to time by the Exchange.
* * * * *
    For all these reasons, the Exchange believes that the proposal is 
consistent with the Act.

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

    In accordance with Section 6(b)(8) of the Act,\17\ the Exchange 
believes that the proposed rule change will not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act.
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    \17\ 15 U.S.C. 78f(b)(8).
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Intramarket Competition
    The Exchange believes that the proposed changes would not place any 
burden on intramarket competition that is not necessary or appropriate 
in furtherance of the purposes of the Act, for the following reasons.

[[Page 16430]]

    The proposed change to Access and Connectivity would give each User 
additional options for addressing its access and connectivity needs, 
responding to User demand for access and connectivity options. 
Providing additional services would help each User tailor its data 
center operations to the requirements of its business operations by 
allowing it to select the form and latency of access and connectivity 
that best suits its needs. The Exchange believes that providing Users 
with these additional options for access and connectivity to new 
services would not impose any burden on intramarket competition that is 
not necessary or appropriate in furtherance of the purposes of the Act, 
and would in fact enhance intramarket competition, by giving Users 
additional access and connectivity options through which they may 
differentiate their business operations from each other.
    The Exchange does not have visibility into whether third parties 
currently offer, or intend to offer, Users access to the Proposed Third 
Party Systems and connectivity to the Proposed Third Party Data Feeds, 
as third parties are not required to make that information public. 
However, if one or more third parties presently offer, or in the future 
opt to offer, such access and connectivity to Users, a User may utilize 
the IDS network, a third party telecommunication network, a cross 
connect, or a combination thereof to access such services and products 
through a connection to an access center outside the data center (which 
could be an IDS access center, a third-party access center, or both), 
another User, or a third party vendor.
    In this way, the proposed changes would enhance intramarket 
competition by helping Users tailor their Access and Connectivity to 
the needs of their business operations by allowing them to select the 
form and latency of access and connectivity that best suits their 
needs.
    The Exchange further believes that removing the GIF and its 
associated fee from the list of Third Party Data Feeds available for 
connectivity in the Fee Schedule and removing the note regarding the 
temporary waiver of the Hot Hands fee would not permit unfair 
discrimination between customers, issuers, brokers, or dealers would 
not place any burden on intramarket competition that is not necessary 
or appropriate in furtherance of the purposes of the Act. The proposed 
changes are not designed to address any competitive issue, but rather 
to remove obsolete text, thereby clarifying Exchange rules and 
alleviating any possible market participant confusion. The removal of 
the obsolete text would not put any market participants at a relative 
disadvantage compared to other market participants, or penalize one or 
more categories of market participants in a manner that would impose an 
undue burden on competition.
Intermarket Competition
    The Exchange believes that the proposed changes will not impose any 
burden on intermarket competition that is not necessary or appropriate 
in furtherance of the purposes of the Act, for the following reasons.
    The Exchange operates in a highly competitive market in which 
exchanges and other vendors (i.e., Hosting Users) offer co-location 
services as a means to facilitate the trading and other market 
activities of those market participants who believe that co-location 
enhances the efficiency of their operations. Accordingly, fees charged 
for co-location services are constrained by the active competition for 
the order flow of, and other business from, such market participants. 
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, an 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.
    For these reasons, the Exchange believes that the proposed rule 
change reflects this competitive environment and does not impose any 
undue burden on intermarket competition.

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 Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \18\ and Rule 19b-4(f)(6) thereunder.\19\ 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\20\
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    \18\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \19\ 17 CFR 240.19b-4(f)(6).
    \20\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires the Exchange to give the Commission written notice of its 
intent to file the proposed rule change, along with a brief 
description and text of the proposed rule change, at least five 
business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Exchange has satisfied this requirement.
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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) \21\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \21\ 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-2021-04 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-2021-04. This 
file number should be included on the subject line if email is used. To 
help the

[[Page 16431]]

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-2021-04 and should be submitted 
on or before April 19, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-06348 Filed 3-26-21; 8:45 am]
BILLING CODE 8011-01-P


