[Federal Register Volume 85, Number 100 (Friday, May 22, 2020)]
[Notices]
[Pages 31273-31281]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-11045]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88901; File Nos. SR-NYSE-2020-05, SR-NYSEAMER-2020-05,
SR-NYSEArca-2020-08, SR-NYSECHX-2020-02, SR-NYSENAT-2020-03, SR-NYSE-
2020-11, SR-NYSEAMER-2020-10, SR-NYSEArca-2020-15, SR-NYSECHX-2020-05,
SR-NYSENAT-2020-08]
Self-Regulatory Organizations; New York Stock Exchange LLC, NYSE
American LLC, NYSE Arca, Inc., NYSE Chicago, Inc., and NYSE National,
Inc.; Order Instituting Proceedings To Determine Whether To Approve or
Disapprove Proposed Rule Changes To Establish a Wireless Fee Schedule
Setting Forth Available Wireless Bandwidth Connections and Wireless
Market Data Connections and Associated Fees
May 18, 2020.
I. Introduction
On January 30, 2020, New York Stock Exchange LLC (``NYSE''), NYSE
American LLC (``NYSE American''), NYSE Arca, Inc. (``NYSE Arca''), NYSE
Chicago, Inc. (``NYSE Chicago''), and NYSE National, Inc. (``NYSE
National'') (collectively, the ``Exchanges'') each filed with the
Securities and Exchange Commission (``Commission''), pursuant to
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Exchange
Act'' or ``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule
change to establish a schedule of Wireless Connectivity Fees and
Charges (``Wireless Fee Schedule'') listing available wireless
connections between the Mahwah, New Jersey data center (``Mahwah Data
Center'') and other data centers. The proposed rule changes
(collectively, ``Wireless I'') were published for comment in the
Federal Register on February 18, 2020.\3\ On April 1, 2020, pursuant to
Section 19(b)(2) of the Act,\4\ the Commission designated a longer
period within which to either approve the Wireless I proposed rule
changes, disapprove the proposed rule changes, or institute
[[Page 31274]]
proceedings to determine whether to disapprove the proposed rule
changes.\5\
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release Nos. 88168 (February 11,
2020), 85 FR 8938 (February 18, 2020) (SR-NYSE-2020-05) (``Wireless
I Notice''); 88169 (February 11, 2020), 85 FR 8946 (February 18,
2020) (SR-NYSEAMER-2020-05); 88170 (February 11, 2020), 85 FR 8956
(February 18, 2020) (SR-NYSEArca-2020-08); 88172 (February 11,
2020), 85 FR 8923 (February 18, 2020) (SR-NYSECHX-2020-02); and
88171 (February 11, 2020), 85 FR 8930 (February 18, 2020) (SR-
NYSENAT-2020-03) (collectively, the ``Wireless I Notices'').
Comments received on the Wireless I Notices are available on the
Commission's website at: https://www.sec.gov/comments/sr-nyse-2020-05/srnyse202005.htm.
\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 88539 (April 1,
2020), 85 FR 19553 (April 7, 2020). The Commission designated May
18, 2020, as the date by which it should approve, disapprove, or
institute proceedings to determine whether to disapprove the
proposed rule changes.
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On February 11, 2020, NYSE, NYSE Arca, NYSE Chicago, and NYSE
National each filed with the Commission, pursuant to Section 19(b)(1)
of the Act \6\ and Rule 19b-4 thereunder,\7\ a proposed rule change to
amend the Wireless Fee Schedule to add wireless connections for the
transport of certain market data of the Exchanges. NYSE American filed
with the Commission a substantively identical filing on February 12,
2020. The proposed rule changes (collectively, ``Wireless II'') were
published for comment in the Federal Register on February 25, 2020.\8\
On April 1, 2020, pursuant to Section 19(b)(2) of the Act,\9\ the
Commission designated a longer period within which to either approve
the Wireless II proposed rule changes, disapprove the proposed rule
changes, or institute proceedings to determine whether to disapprove
the proposed rule changes.\10\
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\6\ 15 U.S.C. 78s(b)(1).
\7\ 17 CFR 240.19b-4.
\8\ See Securities Exchange Act Release Nos. 88237 (February 19,
2020), 85 FR 10752 (February 25, 2020) (SR-NYSE-2020-11) (``Wireless
II Notice''); 88238 (February 19, 2020), 85 FR 10776 (February 25,
2020) (SR-NYSEAMER-2020-10); 88239 (February 19, 2020), 85 FR 10786
(February 25, 2020) (SR-NYSEArca-2020-15); 88240 (February 19,
2020), 85 FR 10795 (February 25, 2020) (SR-NYSECHX-2020-05); and
88241 (February 19, 2020), 85 FR 10738 (February 25, 2020) (SR-
NYSENAT-2020-08) (collectively, the ``Wireless II Notices'').
Comments received on the Wireless II Notices are available on the
Commission's website at: https://www.sec.gov/comments/sr-nyse-2020-11/srnyse202011.htm.
\9\ 15 U.S.C. 78s(b)(2).
\10\ See Securities Exchange Act Release No. 88540 (April 1,
2020), 85 FR 19562 (April 7, 2020). The Commission designated May
25, 2020, as the date by which it should approve, disapprove, or
institute proceedings to determine whether to disapprove the
proposed rule changes.
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This order institutes proceedings under Section 19(b)(2)(B) of the
Exchange Act \11\ to determine whether to approve or disapprove the
Wireless I and Wireless II proposed rule changes.
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\11\ 15 U.S.C. 78s(b)(2)(B).
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II. Description of the Proposed Rule Changes
A. Wireless I
In Wireless I, the Exchanges propose to establish the Wireless Fee
Schedule, setting forth options for market participants to establish
wireless connections for specified fees between the Mahwah Data Center
and three data centers that are owned and operated by third parties
unaffiliated with the Exchanges: (1) Carteret, New Jersey; (2)
Secaucus, New Jersey; and (3) Markham, Canada (collectively, the
``Third Party Data Centers'').\12\ As more fully set forth in the
Wireless I Notices, the Exchanges state that a market participant
opting to establish a wireless connection between the Mahwah Data
Center and a Third Party Data Center may do so by requesting one from
ICE Data Services (``IDS'').\13\ The Exchanges state that IDS operates
through several different Intercontinental Exchange, Inc. (``ICE'')
affiliates, including NYSE Technologies Connectivity, Inc., an indirect
subsidiary of NYSE.\14\
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\12\ See Wireless I Notice, supra note 3, at 8938.
\13\ See id. at 8939.
\14\ See id. at 8939 n.11. The Exchanges themselves are indirect
subsidiaries of ICE. See id. at 8939.
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According to the Exchanges, once requested, IDS establishes the
wireless connection (herein a ``Wireless Bandwidth Connection'')
between IDS's equipment in the Third Party Data Center and IDS's
equipment in the Mahwah Data Center.\15\ IDS uses its own wireless
network between the Markham Third Party Data Center and the Mahwah Data
Center.\16\ IDS contracts with a non-ICE entity to provide Wireless
Bandwidth Connections between the Secaucus and Carteret Third Party
Data Centers and the Mahwah Data Center through a series of towers
equipped with wireless equipment.\17\ With respect to connections
between the Secaucus and Carteret Third Party Data Centers and the
Mahwah Data Center, these towers include a pole on the grounds of the
Mahwah Data Center property, to which access is restricted.\18\ At each
end of the Wireless Bandwidth Connection, the customer uses a cross
connect or other cable to connect its own equipment to the IDS
equipment.\19\ Cross connects in the Mahwah Data Center lead to the
customer's server in co-location.\20\
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\15\ See id. See also infra note 47 and accompanying text
(further summarizing how the Exchanges describe the function and
purpose of these connections).
\16\ See id. at 8939.
\17\ See id. at 8939.
\18\ See id. at 8943.
\19\ See id.
\20\ See id. Proposed rule changes regarding such cross connects
in the Mahwah Data Center are filed with the Commission. See id. at
8939 n.12 (citing Securities Exchange Act Release No. 67666 (August
15, 2012), 77 FR 50742 (August 22, 2012) (SR-NYSE-2012-18)).
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As discussed further below,\21\ the Exchanges take the position
that the Wireless Bandwidth Connections are not ``facilities of an
exchange'' within the meaning of Section 3(a)(1) of the Act (defining
``exchange'') and Section 3(a)(2) of the Act (defining
``facility'').\22\ The Exchanges thus take the position that the
proposed Wireless Fee Schedule is not required to be filed with the
Commission, and not subject to review for determination of consistency
with Act standards.\23\ The Exchanges seek approval of the Wireless Fee
Schedule, however, stating that they have filed the current proposals
``solely because the Staff of the Commission'' has advised that filing
is required.\24\
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\21\ See Section II.C.1. infra.
\22\ See Wireless I Notice, supra note 3, at 8939-41.
\23\ See id. at 8938-39.
\24\ See id. at 8939.
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Proposed Wireless Fee Schedule (Wireless I)
The Exchanges propose that IDS would assess a non-recurring initial
charge and a monthly recurring charge (``MRC'') for the Wireless
Bandwidth Connections, with variations depending upon bandwidth size
and the location of the connection. The proposed schedule set forth by
the Exchanges is as follows: \25\
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\25\ See id. at 8941-42.
------------------------------------------------------------------------
Type of service Description Amount of charge
------------------------------------------------------------------------
Wireless Connection between 10 Mb Circuit.... $10,000 per
Mahwah Data Center and connection initial
Secaucus access center. charge plus monthly
charge per
connection of
$9,000.
Wireless Connection between 50 Mb Circuit.... $10,000 per
Mahwah Data Center and connection initial
Secaucus access center. charge plus monthly
charge per
connection of
$13,500.
Wireless Connection between 100 Mb Circuit... $10,000 per
Mahwah Data Center and connection initial
Secaucus access center. charge plus monthly
charge per
connection of
$23,000.
Wireless Connection between 200 Mb Circuit... $10,000 per
Mahwah Data Center and connection initial
Secaucus access center. charge plus monthly
charge per
connection of
$44,000.
Wireless Connection between 10 Mb Circuit.... $10,000 per
Mahwah Data Center and connection initial
Carteret access center. charge plus monthly
charge per
connection of
$10,000.
[[Page 31275]]
Wireless Connection between 50 Mb Circuit.... $10,000 per
Mahwah Data Center and connection initial
Carteret access center. charge plus monthly
charge per
connection of
$15,000.
Wireless Connection between 100 Mb Circuit... $10,000 per
Mahwah Data Center and connection initial
Carteret access center. charge plus monthly
charge per
connection of
$25,000.
Wireless Connection between 200 Mb Circuit... $10,000 per
Mahwah Data Center and connection initial
Carteret access center. charge plus monthly
charge per
connection of
$45,000.
Wireless Connections between 50 Mb Circuits... $15,000 initial
(a) Mahwah Data Center and charge for both
Carteret access center and connections plus
(b) Mahwah Data Center and monthly charge for
Secaucus Data Center. both connections of
$22,000.
Wireless Connection between 1 Mb Circuit..... $10,000 per
Mahwah Data Center and connection initial
Markham access center. charge plus monthly
charge per
connection of
$6,000.
Wireless Connection between 5 Mb Circuit..... $10,000 per
Mahwah Data Center and connection initial
Markham access center. charge plus monthly
charge per
connection of
$15,500.
Wireless Connection between 10 Mb Circuit.... $10,000 per
Mahwah Data Center and connection initial
Markham access center. charge plus monthly
charge per
connection of
$23,000.
------------------------------------------------------------------------
As an incentive, the first month's MRC would be waived.\26\ In
addition, the Exchanges propose to include a General Note on the
Wireless Fee Schedule, stating that a market participant that obtains a
Wireless Bandwidth Connection will not be charged more than once for
that service, irrespective of whether it is a member of one, some or
none of the Exchanges.\27\
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\26\ See id. at 8942. If a customer had an existing Wireless
Bandwidth Connection and opted to upgrade or downgrade to a
different size circuit connecting to the same Third Party Access
Center, it would not be subject to the initial charge. See id.
\27\ The proposed General Note would be consistent with the
first general note in the co-location section of each Exchange's
price list and fee schedule. See id. at 8942 (citing Securities
Exchange Act Release Nos. 70206 (August 15, 2013), 78 FR 51765
(August 21, 2013) (SR-NYSE-2013-59); 70176 (August 13, 2013), 78 FR
50471 (August 19, 2013) (SR-NYSEMKT-2013-67); 70173 (August 13,
2013), 78 FR 50459 (August 19, 2013) (SR-NYSEArca-2013-80); 83351
(May 31, 2018), 83 FR 26314 (June 6, 2018) (SR-NYSENAT-2018-07; and
87408 (October 28, 2019), 84 FR 58778 (November 1, 2019) (SR-
NYSECHX-2019-12)). The Exchanges also note that similar language
appears in the Nasdaq Stock Market rules. See id. (citing The Nasdaq
Stock Market General Equity and Options Rules, General 8, Section
1).
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B. Wireless II
In Wireless II, the Exchanges propose to include additional
connectivity options on the Wireless Fee Schedule for specified fees;
namely, wireless connections for the transport of certain market data
feeds (``Wireless Market Data Connections'') from the Mahwah Data
Center to Third Party Data Centers.\28\ The market data feeds available
via the Wireless Market Data Connections (the ``Selected Market Data'')
are certain proprietary market data feeds offered by NYSE, NYSE Arca,
and/or NYSE National.\29\
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\28\ See Wireless II Notice, supra note 8, at 10753.
\29\ The Exchanges state that the Selected Market Data is
generated at the Mahwah Data Center in the trading and execution
systems of NYSE, NYSE Arca and NYSE National. See id. In each case,
NYSE, NYSE Arca, or NYSE National, as applicable, files with the
Commission for the Selected Market Data it generates, and the
related fees. See id. The filed market data fees apply to all
Selected Market Data customers no matter what connectivity provider
they use. See id. at 10754.
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As more fully set forth in the Wireless II Notices, the Exchanges
explain that a market participant seeking connectivity to a Selected
Market Data feed chooses a connectivity provider.\30\ In the case of
the proposed Wireless Market Data Connections, market participants
would be choosing IDS as wireless connectivity provider.\31\ Upon
selection, IDS would first need to obtain authorization from the
provider of the relevant Selected Market Data feed.\32\ Then, IDS would
set up the Wireless Market Data Connection for the market participant
by collecting the Selected Market Data and sending it over the Wireless
Market Data Connection to the IDS access center in the Third Party Data
Center, where the customer would then connect to the Selected Market
Data at the Third Party Data Center.\33\
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\30\ See id.
\31\ See id. at 10754 n.17. See also infra note 48 and
accompanying text (further summarizing how the Exchanges describe
the function and purpose of these connections).
\32\ See id. at 10754. When requesting authorization from the
NYSE, NYSE Arca, or NYSE National to provide a customer with
Selected Market Data, the ICE affiliate providing the Wireless
Market Data Connection uses the same online tool as all data
vendors. See id. at 10754 n.15.
\33\ See id. at 10754. A cable connects the IDS and customer
equipment in the Markham Third Party Data Center. If the customer is
located in either the Carteret or Secaucus Third Party Data Center,
the customer buys a cross connect from IDS. See id. at 10754 n.16.
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As discussed further below,\34\ the Exchanges maintain that the
Wireless Market Data Connections are not ``facilities of an exchange''
within the meaning of Section 3(a)(1) of the Act (defining
``exchange'') and Section 3(a)(2) of the Act (defining the term
``facility'').\35\ They thus take the position that the proposed
Wireless Fee Schedule itemizing the available Wireless Market Data
Connections and associated fees are not proposed rules of an exchange,
are not required to be filed with the Commission, and are not subject
to review for determination of consistency with Act standards.\36\ The
Exchanges seek approval of the addition of Wireless Market Data
Connections to the Wireless Fee Schedule, however, stating that they
have filed the current proposals ``solely because the Staff of the
Commission'' has advised that filing is required.\37\
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\34\ See Section II.C.1. infra.
\35\ See Wireless II Notice, supra note 8, at 10754-56.
\36\ See id. at 10753.
\37\ See id.
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Proposed Additions to the Wireless Fee Schedule (Wireless II)
The Exchanges propose that IDS would assess a non-recurring initial
charge and MRC for the Wireless Market Data Connections, with the
variations depending upon the type of fees and location of the
connection, set forth by the Exchanges as follows: \38\
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\38\ See id. at 10756. The Exchanges note that the customer is
charged by IDS an initial and monthly fee for the Wireless Market
Data Connection (whereas the applicable Exchange bills market data
subscribers directly, irrespective of whether the market data
subscribers receive the Selected Market Data over a Wireless Market
Data Connection or from another connectivity provider). See id. at
10754.
The Exchanges further explain that there is limited bandwidth
available on the wireless network to the Markham, Canada Third Party
Data Center. Accordingly, such Wireless Market Data Connections do
not transport information for all of the symbols included in the
NYSE BBO and Trades and NYSE Arca BBO and Trades data feeds. Rather,
IDS provides connectivity to a selection of such data feeds,
including the data for which IDS believes there is demand. When a
market participant requests a Wireless Market Data Connection to
Markham, it receives connectivity to the portions of the NYSE BBO
and Trades and NYSE Arca BBO and Trades data that IDS transmits
wirelessly. The customer then determines the symbols for which it
will receive data. The Exchanges do not have visibility into which
portion of the data feed a given customer receives. See id. at
10756.
[[Page 31276]]
------------------------------------------------------------------------
Type of service Amount of charge
------------------------------------------------------------------------
NYSE Integrated Feed: Wireless $5,000 per connection initial
Connection in Carteret access center. charge plus monthly charge per
connection of $10,500.
NYSE Arca Integrated Feed: Wireless $5,000 per connection initial
Connection in Carteret access center. charge plus monthly charge per
connection of $10,500.
NYSE National Integrated Feed: Wireless $5,000 per connection initial
Connection in Carteret access center. charge plus monthly charge per
connection of $5,250.
NYSE Integrated Feed and NYSE Arca $5,000 per connection initial
Integrated Feed: Wireless Connection charge plus monthly charge per
in Carteret access center. connection of $18,500.
NYSE Integrated Feed, NYSE Arca $5,000 per connection initial
Integrated Feed, and NYSE National charge plus monthly charge per
Integrated Feed: Wireless Connection connection of $21,000.
in Carteret access center.
NYSE Integrated Feed: Wireless $5,000 per connection initial
Connection in Secaucus access center. charge plus monthly charge per
connection of $10,500.
NYSE Arca Integrated Feed: Wireless $5,000 per connection initial
Connection in Secaucus access center. charge plus monthly charge per
connection of $10,500.
NYSE National Integrated Feed: Wireless $5,000 per connection initial
Connection in Secaucus access center. charge plus monthly charge per
connection of $5,250.
NYSE Integrated Feed and NYSE Arca $5,000 per connection initial
Integrated Feed: Wireless Connection charge plus monthly charge per
in Secaucus access center. connection of $18,500.
NYSE Integrated Feed, NYSE Arca $5,000 per connection initial
Integrated Feed, and NYSE National charge plus monthly charge per
Integrated Feed: Wireless Connection connection of $21,000.
in Secaucus access center.
NYSE BBO and Trades: Wireless $5,000 per connection initial
Connection in Markham, Canada access charge plus monthly charge per
center. connection of $6,500.
NYSE Arca BBO and Trades: Wireless $5,000 per connection initial
Connection in Markham, Canada access charge plus monthly charge per
center. connection of $6,500.
------------------------------------------------------------------------
C. Exchanges' Justification and Comments Received
1. Facilities of an Exchange
As noted above, the Exchanges take the position that the Wireless
Fee Schedule is not a proposed rule change required to be filed with
the Commission because the Wireless Bandwidth Connections and Wireless
Market Data Connections (collectively, ``Wireless Connections'') are
not ``facilities of an exchange.'' \39\ In sum, they urge that the
Wireless Connections are not facilities of an exchange because they are
services that are not offered by the Exchanges, nor are they offered by
a group of persons constituting an exchange (within the definition of
``exchange'' in Section 3(a)(1) of the Act),\40\ and further, that the
Wireless Connections are not within the meaning of the definition of
``facility'' in Section 3(a)(2) of the Act.\41\
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\39\ See Wireless I Notice, supra note 3, at 8938-39; Wireless
II Notice, supra note 8, at 10753.
\40\ Exchange Act Section 3(a)(1) defines the term ``exchange''
as: ``any organization, association, or group of persons, whether
incorporated or unincorporated, which constitutes, maintains, or
provides a market place or facilities for bringing together
purchasers and sellers of securities or for otherwise performing
with respect to securities the functions commonly performed by a
stock exchange as that term is generally understood, and includes
the market place and the market facilities maintained by such
exchange.'' 15 U.S.C. 78c(a)(1). According to the Exchanges, the ICE
affiliates are not an exchange, or part of the Exchange(s) because
they do not provide a marketplace for bringing together purchasers
and sellers. See Wireless I Notice, supra note 3, at 8940; Wireless
II Notice, supra note 8, at 10754.
\41\ Under Exchange Act Section 3(a)(2): ``The term `facility'
when used with respect to an exchange includes ``its premises,
tangible or intangible property whether on the premises or not, any
right to the use of such premises or property or any service thereof
for the purpose of effecting or reporting a transaction on an
exchange (including, among other things, any system of communication
to or from the exchange, by ticker or otherwise, maintained by or
with the consent of the exchange), and any right of the exchange to
the use of any property or service.'' 15 U.S.C. 78c(a)(2).
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With respect to the definition of facility, the Exchanges state
that the definition has four ``prongs,'' none of which describes the
Wireless Connections.\42\ First, the Exchanges take the position that
the Wireless Connections are not the ``premises'' of the Exchanges,
reasoning that the network that runs between IDS's equipment in the
Mahwah Data Center and IDS's equipment in Third Party Data Centers,
much of which is actually owned, operated, and maintained by a non-ICE
entity, do not constitute ``premises.'' \43\
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\42\ See Wireless I Notice, supra note 3, at 8940 (using
bracketed numbers placed by the Exchanges); Wireless II Notice,
supra note 8, at 10754-55 (same).
For a full recitation of the Exchanges' analysis of why the
Wireless Bandwidth Connections and Wireless Market Data Connections
are not, in their view, facilities of an exchange, see Wireless I
Notice, supra note 3, at 8939-41; Wireless II Notice, supra note 8,
at 10754-56 (same).
\43\ See Wireless I Notice, supra note 3, at 8940 (also stating
with respect to the Wireless Bandwidth Connections that the network
does not connect to Exchange trading and execution systems);
Wireless II Notice, supra note 8, at 10755. They add that the
portion of the Mahwah Data Center where the ``exchange'' functions
are performed (i.e., the SRO Systems that bring together purchasers
and sellers of securities and perform with respect to securities the
functions commonly performed by a stock exchange) could be construed
as the ``premises'' of the Exchange, but the same is not true for a
wireless network that is almost completely outside of the Mahwah
Data Center. See id.
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Second, the Exchanges state that the Wireless Connections are not
the ``property'' of the Exchanges because they are ``services,'' and
the underlying network is owned by ICE affiliates and a non-ICE
entity.\44\ Drawing further distinctions between the Exchanges and IDS,
they also state that the Wireless Connections are a service offered
strictly by IDS, over which the Exchanges lack control.\45\
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\44\ See Wireless I Notice, supra note 3, at 8940; Wireless II
Notice, supra note 8, at 10755. The Exchanges add that the Act does
not automatically collapse affiliates into the definition of an
``exchange,'' and something owned by an ICE affiliate is not owned
by the Exchanges. Id.
\45\ See Wireless I Notice, supra note 3 at 8939; Wireless II
Notice, supra note 8, at 10755. The Exchanges state that although
all ICE affiliates are ultimately controlled by ICE (as the indirect
parent company), the Exchanges do not control IDS. See id.
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Third, the Exchanges maintain that the Wireless Connections do not
constitute ``any right to the use of such premises or property or
service thereof for the purpose of effecting or reporting a transaction
on an exchange,'' because the Exchanges do not have the right to use
the Wireless Connections to effect or report a transaction on the
Exchanges.\46\ In support of this position, the Exchanges note that the
Wireless Bandwidth Connections do not connect
[[Page 31277]]
directly to the Exchanges' trading and execution systems \47\ and the
Wireless Market Data Connections are provided without the Exchanges
involvement.\48\
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\46\ See id.
\47\ See Wireless I Notice, supra note 3, at 8939-41. The
Exchanges urge that these connections are not provided for ``the
purpose of effecting or reporting a transaction on'' the Exchanges,
but rather are provided to facilitate the customer's interaction
with itself--that these connections are essentially an ``empty
pipe'' that a customer can use to communicate between its equipment
in co-location and its equipment in the Third Party Data Center. Id.
The Exchanges also state that they have no control over these
connections, and put no content on them. Rather, customers have
control over the data that flows over these connections, which may
include the sending of trading orders to their equipment in co-
location; the relay of Exchange market data, third party market
data, and public quote feeds; as well as risk management, billing,
compliance, or other market information. Id.
\48\ See Wireless II Notice, supra note 8, at 10755. The
Exchanges state that they do not know whether or when a customer has
entered into an agreement for a Wireless Market Data Connection;
have no right to approve or disapprove of the provision of a
Wireless Market Data Connection, any more than it would if the
provider were a third party; do not put the Selected Market Data
content onto the Wireless Market Data Connections or send it to
customers; and do not need to consent when a customer terminates a
Wireless Market Data Connection. The Exchanges further state that it
is not possible to use a Wireless Market Data Connection to effect a
transaction on the Exchange, because they are one-way connections
away from the Mahwah Data Center; that customers cannot use them to
send trading orders or information of any sort to the Exchanges; and
that the Exchanges do not use them to send confirmations of trades,
and that they solely carry Selected Market Data. See id.
In addition, the Exchanges state that the statute's
parenthetical language--``(including, among other things, any system
of communication to or from the exchange, by ticker or otherwise,
maintained by or with the consent of the exchange)''--is not an
independent prong of the facility definition, but explains the
preceding text. See Wireless I Notice, supra note 3, at 8941;
Wireless II Notice, supra note 8, at 10755.
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Fourth, the Exchanges state that ``any right of the exchange to the
use of any property or service'' does not describe the Wireless
Connections because the Exchanges do not have the right to use the
Wireless Connections.\49\
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\49\ See id.
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The Commission has received several comment letters expressing
opposition to the Exchanges' position that the Wireless Bandwidth and/
or Wireless Market Data Connections are not facilities of an
exchange.\50\ Broadly, commenters express the view that the Wireless
Connections are designed to provide market participants the fastest
means of communication into and out of the Exchanges to facilitate more
competitive trading on the Exchanges, and that the Exchanges' analysis
is one of form over substance.\51\ More specifically, one commenter
states that there can be ``no dispute that both the private bandwidth
and market data wireless connectivity offerings constitute systems of
communication 100% controlled and maintained by NYSE, for its own
benefit and the benefit of its customers,'' and are therefore exchange
facilities.\52\
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\50\ See Letter from Tyler Gellasch, Executive Director, Healthy
Markets to Vanessa Countryman, Secretary, Commission, dated March 9,
2020 (``Healthy Markets Letter''); Letters from Jim Considine, Chief
Financial Officer, McKay Brothers, LLC to Vanessa Countryman,
Secretary, Commission, dated March 10, 2020 (``McKay Letter I'');
Letter from Thomas M. Merritt, Deputy General Counsel, Virtu
Financial to Vanessa Countryman, Secretary, Commission, dated March
10, 2020 (``Virtu Letter''); Letter from Gregory Babyak, Global Head
of Regulatory Affairs, Bloomberg L.P. to Vanessa Countryman,
Secretary, Commission, dated March 10, 2020 (``Bloomberg Letter'')
(the Bloomberg Letter addresses Wireless I specifically); Letter
from Andrew Stevens, General Counsel, IMC Financial Markets to
Vanessa Countryman, Secretary, Commission, dated March 12, 2020
(``IMC Letter''); Letters from Matt Haraburda, President, XR
Securities LLC to Vanessa Countryman, Secretary, Commission, dated
March 18, 2020 (``XRS Letter'') (the XRS Letter addresses Wireless I
specifically); Letters from Jim Considine, Chief Financial Officer,
McKay Brothers, LLC to Vanessa Countryman, Secretary, Commission,
dated March 17, 2020 (``McKay Letter II''); Letter from Ellen
Greene, Managing Director, Securities Industry and Financial Markets
Association, to Vanessa Countryman, Secretary, Commission, dated
April 3, 2020 (``SIFMA Letter'') (the SIFMA Letter addresses
Wireless II more specifically); Letter from Joanna Mallers,
Secretary, FIA Principal Traders Group, to Vanessa Countryman,
Secretary, Commission, dated April 27, 2020 (regarding SR-NYSENAT-
2020-03); Letter from Joanna Mallers, Secretary, FIA Principal
Traders Group, to Vanessa Countryman, Secretary, Commission, dated
May 8, 2020 (regarding Wireless I and Wireless II) (``FIA Letter'').
\51\ See e.g., Virtu Letter at 4-6 (stating that the ``only
purpose'' of the Wireless Connections is to facilitate faster
connections for more competitive trading, and ``[c]ustomers paying
for the Wireless Connections are clearly doing so only in order to
competitively trade on the NYSE exchanges''). See also Healthy
Markets Letter at 8 (stating that the Exchanges' analysis ignores
the plain meaning of the Act); McKay Letter I at 4 (characterizing
the Exchanges' facility analysis as superficial and flawed); IMC
Letter at 2 (stating that ``the NYSE Pole offers direct access to
[the NYSE] data center and thus its matching engine for purposes of
transmitting data or orders)''; XRS Letter at 3 (stating that ``the
Wireless Connections have the fastest means of access to the
Exchange[] via the on-premises pole.'').
\52\ See Virtu Letter at 5. According to this commenter, the
contention that (i) the Wireless Bandwidth Connections are offered
without the Exchanges knowing how they are used ``ignores the
reality of market connectivity,'' and (ii) the Exchanges' do not
have the right to use the Wireless Market Data Connections, is
``nonsensical,'' because the Exchanges' have ``control over the data
transmission.'' See id. at 7.
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Other commenters state that the Wireless Connections rely on the
Exchanges' premises and property to effectuate systems of communication
to and from the Exchanges,\53\ and that they are designed for the
purpose of effecting transactions on the Exchanges.\54\ According to
one of these commenters, the fact that orders and market data have to
traverse a cross connect at the Mahwah Data Center before reaching the
Exchanges' trading execution systems is an insufficient basis on which
to conclude the Wireless Connections are not part of the facilities of
an exchange.\55\ This commenter expresses concern that the Exchanges
are attempting to circumvent categorizing a product or service as a
facility by moving ownership to a parent company or an affiliate of the
Exchanges.\56\ Another commenter urges that the Exchanges should not be
able to defeat the operation of Exchange Act filing requirements by
``interpositioning'' an affiliate to provide connectivity to customers
instead of providing it directly.\57\
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\53\ See e.g., McKay Letter I at 4-7 (stating that the Wireless
Connections are facilities of the Exchanges because they use the
pole located on the premises of the Exchanges, and also intangible
property in the form of technical specifications relating to the
Wireless Connections, available through NYSE's website and branded
with NYSE's trademark and logo). See also Bloomberg Letter at 4
(noting that the Wireless Connections are physically located on the
property of the Mahwah Data Center); Healthy Markets Letter at 6
(noting that the Wireless Connections have access to the Exchanges'
physical facility); IMC Letter at 2 (noting that the pole offers
direct access to each Exchange's data center for purposes of
transmitting data or orders).
\54\ See Bloomberg Letter at 4 (``[I]t is clear that this is a
system of communication to or from the exchange for `effecting or
reporting a transaction of the exchange.'''); McKay Letter I, at 6
(stating that ``The Wireless [Bandwidth] Connections are also
facilities of the Exchange under the third prong of the definition
because they may be used to effect transactions on the Exchange (and
report transactions or other market data disseminated from the
Exchange) using Exchange Property (e.g., the NYSE Private Pole).'');
IMC Letter at 2 (citing the McKay Letter I) (``The Wireless
Connections are facilities of the Exchange, in that they use the
Exchange's tangible and intangible property and are used for
effecting or reporting a transaction.''). See also SIFMA Letter at 2
(opining that the Wireless Market Data Connections are akin to a
``ticker' system,'' but not conceding that that these connections do
not meet other parts of the definition of facility).
\55\ See McKay Letter I at 6.
\56\ See id. at 5 n.20.
\57\ See Healthy Markets Letter at 3-8. This commenter in
particular expresses concern about Wireless Connections originating
from the roof of Mahwah Data Center, which as noted below, the
Exchanges state is not what is proposed. See infra note 95 and
accompanying text.
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The Exchanges submitted a response to these comment letters.\58\ As
an initial matter, the Exchanges urge that treating the Wireless
Connections as ``facilities of an exchange'' would place an undue
competitive burden on the ICE affiliates, as they would be required to
make their services and fees public and subject to a Commission
determination for consistency with the Act, whereas
[[Page 31278]]
competitors are not subject to such requirements.\59\ The Exchanges
maintain that IDS acts independently of the Exchanges in offering the
Wireless Connections, and that it is a vendor selling connectivity,
just like other vendors.\60\ In addition to reiterating the rationale
provided in the Wireless I and Wireless II Notices, the Exchanges
further state that, contrary to commenters' beliefs, they do not have a
right to use the Wireless Connections to effect or report a transaction
or otherwise, nor do they own the Mahwah Data Center or the pole on its
grounds.\61\
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\58\ Letter from Elizabeth K. King, Chief Regulatory Officer,
ICE, General Counsel & Corporate Secretary, NYSE, to Vanessa
Countryman, Secretary, Commission, dated May 8, 2020, responding to
comments on Wireless I and Wireless II (``NYSE Response'').
\59\ See id. at 3.
\60\ See id. at 8-16.
\61\ See id. at 8-15. See also id. at 11 (``The definition of
facility focuses on ownership and the right to use properties and
services, not corporate relationships.'').
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2. Proposed Wireless Fee Schedule
In support of the proposed Wireless Fee Schedule, the Exchanges
state that the Wireless I and Wireless II proposals are reasonable,
equitable, and not unfairly discriminatory because use of the Wireless
Connections is voluntary and alternatives to the Wireless Connections
are available.\62\ Addressing the competitive environment, the
Exchanges state that there are at least three other vendors that offer
market participants wireless network connections between the Mahwah
Data Center and the Secaucus and Carteret Third Party Access Centers
using wireless equipment installed on towers and buildings near the
Mahwah Data Center.\63\ With respect to the Wireless Market Data
Connections specifically, they state that other providers offer
connectivity to Selected Market Data in the Third Party Data Centers,
and believe that a market participant in the Carteret or Secaucus Third
Party Data Center may purchase a wireless connection to the NYSE and
NYSE Arca Integrated Feed data feeds from at least two other providers
of wireless connectivity.\64\ The Exchanges believe that competing
wireless connections offered by non-ICE entities provide connectivity
at the ``same or similar speed'' as the Wireless Connections, and at
the ``same or similar cost.'' \65\ In addition, the Exchanges state
that some market participants have their own proprietary wireless
networks, and that market participants may create a new proprietary
wireless connection, connect through another market participant, or use
fiber connections offered by the Exchanges, ICE affiliates, other
service providers, and third party telecommunications providers.\66\
---------------------------------------------------------------------------
\62\ See Wireless I Notice, supra note 3, at 8943-44; Wireless
II Notice, supra note 8, at 10757-59.
\63\ See Wireless I Notice, supra note 3, at 8942; Wireless II
Notice, supra note 8, at 10757. The Exchanges acknowledge that they
believe the Wireless Bandwidth Connections between the Mahwah Data
Center and the Markham Third Party Data Center to be the first
public, commercially available wireless connections between the two
points, creating a new connectivity option for customers in Markham.
See id.
\64\ See Wireless II Notice, supra note 8, at 10757.
\65\ See Wireless I Notice, supra note 3, at 8943; Wireless II
Notice, supra note 8, at 10757.
\66\ See id.
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The Exchanges acknowledge that the Wireless Connections traverse
wireless connections through a series of towers equipped with wireless
equipment, including, in the case of the Carteret and Secaucus
connections, a pole on the grounds of the Mahwah Data Center, and that
third party access to the pole is restricted.\67\ However, the
Exchanges state that access to the pole is not required for third
parties to establish wireless networks that can compete.\68\ The
Exchanges discount the significance of the location of the pole and the
restrictions on access, urging that proximity to a data center is not
the only determinant of a wireless network's speed.\69\ The Exchanges
also assert that latency is not the only consideration that a market
participant may have in selecting a wireless network,\70\ and that
fiber network connections may sometimes be more attractive since they
are more reliable and less susceptible to weather conditions.\71\
---------------------------------------------------------------------------
\67\ See Wireless I Notice, supra note 3, at 8943; Wireless II
Notice, supra note 8, at 10759. The Exchanges state that IDS does
not sell rights to third parties to operate wireless equipment on
the pole due to space limitations, security concerns, and the
interference that would arise between equipment placed too closely
together. See id.
\68\ See id.
\69\ See id. According to the Exchanges, other relevant
variables include the wireless equipment utilized; the route of, and
number of towers or buildings in, the network; and the fiber
equipment used at either end of the connection. See id.
\70\ See id. According to the Exchanges, other considerations
may include the bandwidth of the offered connection; amount of
network uptime; the equipment that the network uses; the cost of the
connection; and the applicable contractual provisions. See id.
\71\ See Wireless I Notice, supra note 3, at 8943; Wireless II
Notice, supra note 8, at 10757.
---------------------------------------------------------------------------
The Exchanges state that the proposed pricing is reasonable because
the services are voluntary, market participants may to select the
connectivity options that best suit their needs, and the fees reflect
the benefit received by customers in term of lower latency over the
fiber optics options.\72\ The Exchanges believe that the proposals
involve an equitable allocation of fees among market participants
because such fees would apply to all market participants equally and
would not apply differently to distinct types or sizes of market
participants.\73\ In addition, the services are ``completely
voluntary,'' and the various options proposed offer market participants
additional choices that they can select to best suit their needs.\74\
---------------------------------------------------------------------------
\72\ See Wireless I Notice, supra note 3, at 8943-44; Wireless
II Notice, supra note 8, at 10757-58.
\73\ See Wireless I Notice, supra note 3, at 8944; Wireless II
Notice, supra note 8, at 10758.
\74\ See id.
---------------------------------------------------------------------------
The Exchanges also state that, because numerous substitute
connectivity providers are available, the proposals do not impose an
unnecessary or inappropriate burden on competition.\75\ According to
the Exchanges, the proposals do not affect competition among national
securities exchanges or between members of Exchanges, but rather that
the Exchanges' filing of the proposals puts IDS at a competitive
disadvantage relative to its commercial competitors that are not
subject to filing requirements of Section 19(b) of the Act.\76\
---------------------------------------------------------------------------
\75\ See Wireless I Notice, supra note 3, at 8944-45; Wireless
II Notice, supra note 8, at 10759.
\76\ See id.
---------------------------------------------------------------------------
Commenters disagree, arguing that the Exchanges have not met their
burden of demonstrating that the Wireless Connections are consistent
with the Act.\77\ Broadly, commenters express concern that the Wireless
Connections (those to the Secaucus and Carteret Third Party Data
Centers) begin and end at an antenna on the grounds of the Mahwah Data
Center, whereas competing services are not allowed on the Mahwah Data
Center grounds to install wireless equipment and must instead end their
wireless connections outside the grounds and use a wired connection
into the Mahwah Data Center.\78\ According to commenters, this
difference means that the Wireless Connections have an insurmountable
exclusive geographic latency advantage enabling the fastest possible
access to the Exchanges that no competing service can offer.\79\
---------------------------------------------------------------------------
\77\ See e.g., McKay Letter I at 7-11; Bloomberg Letter at 4-5;
XRS Letter at 2-4; Healthy Markets Letter at 8-10; IMC Letter at 2;
Virtu Letter at 2-3. One commenter states that the Exchanges provide
``almost none'' of the information needed to establish that the
Wireless Connections are consistent with the Act. See Healthy
Markets Letter at 10.
\78\ See, e.g., McKay Letter I at 8; Virtu Letter at 3; IMC
Letter at 2; XRS Letter at 1-2 (all generally questioning the basis
of the disparity in access in to the Mahwah Data Center pole).
\79\ See, e.g., McKay Letter I at 8-10; McKay Letter II at 3;
Bloomberg Letter at 4; IMC Letter at 2; XRS Letter at 1-2; Virtu
Letter at 8-10; FIA Letter at 3.
---------------------------------------------------------------------------
One commenter observes that ``conspicuously absent'' from the
Exchanges' description of the Wireless Connections is that the pole on
the
[[Page 31279]]
Mahwah Data Center grounds is ``approximately 700 feet closer to the
NYSE matching engine than the closest public poles available to all
other wireless connectivity vendors.'' \80\ This commenter underscores
that ``timely receipt of market data is essential to trading
competitively in today's markets,'' \81\ and while it may not seem like
a significant distance, ``the delay of data through 700 feet of fiber
is meaningful in today's markets.'' \82\ This commenter objects that
the Exchanges have designed the Wireless Connections with a geographic
latency advantage, enabling these connectivity offerings to be the
fastest means of access to the Exchanges, and have not provided factual
details sufficient to demonstrate why this advantage is not unfairly
discriminatory and an inappropriate burden on competition.\83\ Another
commenter agrees that a 700 foot difference is material, and states
that without details regarding (among other things) the magnitude of
the latency advantage, its availability, and its impact on participants
who are unable to avail themselves of the Wireless Connections, the
Commission and the public will be unable to reasonably determine
whether the proposed rule changes do not unfairly discriminate against
market participants or unduly burden competition.\84\ An additional
commenter states that the contention that there is competition for
exchange connectivity, and that other providers can offer the same or
similar access and latency is ``simply false.'' \85\ Some commenters
express concern that the latency advantage that is unavailable to
competing providers unfairly discriminates against market participants
that do not choose to use the Wireless Connections.\86\
---------------------------------------------------------------------------
\80\ See McKay Letter I at 8-11 (also noting that its distance
estimate is a good-faith, educated guess, but that additional
transparency on the matter is needed). This commenter also states
that distribution of Selected Market Data via the Wireless Market
Data Connections is discriminatory because it is distributed in a
different manner than Selected Market Data obtained otherwise than
via the Wireless Connections. See McKay Letter II at 2-3.
\81\ Id. at 3.
\82\ See McKay Letter I at 8.
\83\ See McKay Letter I at 2, 8-12; McKay Letter II at 2-3.
\84\ See IMC Letter at 2. This commenter states, ``In a market
where equidistant cabling is required for connections between a
participant's co-located customer equipment to the Exchange's
matching engine, NYSE's suggestion that the 700 foot difference
between the NYSE Pole and others outside the their premises is
immaterial is ludicrous.'' Id.
\85\ See Virtu Letter at 9. This commenter also contrasts
exclusive access to the private pole with the Exchanges' offering
third-party firms the option to co-locate on their premises through
other means. See id. at 2.
\86\ See FIA Letter at 2; McKay Letter I at 11; XRS Letter at 2-
3.
---------------------------------------------------------------------------
Commenters also address the proposed fees. One commenter states
that IDS's exclusive geographic latency advantage establishes a
monopoly service that enables it to charge ``exorbitant fees.'' \87\
Another commenter states that given the exclusivity of the service, it
would be difficult for the Exchanges to demonstrate how the proposed
fees are fair and reasonable without providing an in-depth assessment
of the costs of the service, and ``more difficult'' to justify how the
fees are not unfairly discriminatory.\88\ One commenter states that
some market participants would be forced to purchase the fastest
connectivity services to meet regulatory obligations, without regard to
the price of such services.\89\
---------------------------------------------------------------------------
\87\ See Virtu Letter at 2.
\88\ See Bloomberg Letter at 5 (adding that the ``little to no
attempt'' is made to discuss the implications of the exclusive
privilege afforded to IDS to operate the Wireless Connections that
are on the Mahwah Data Center property).
\89\ See SIFMA Letter at 2-3 (addressing the Wireless Market
Data Connections specifically, and stating that broker-dealers with
best execution obligation may, for regulatory and competitive
reasons, feel they must purchase the fastest connectivity services
to remain in business).
---------------------------------------------------------------------------
In the NYSE Response, the Exchanges maintain that the Wireless
Connections are subject to competition, and state that the subject
services are not new and have been provided since 2016.\90\ In their
view, the fact that competition has continued to proliferate over the
intervening years demonstrates that use of the pole on the Mahwah Data
Center grounds is not required for third parties to compete with the
Wireless Connections.\91\ Moreover, they assert that market
participants have for years had a choice about what wireless services
to use, ``and often choose not to use IDS.'' \92\ The Exchanges state
that disapproval of the proposals would result in less competition by
reducing the availability of wireless connections between Mahwah and
Secaucus or Carteret, because service would be available from only the
two remaining commercial providers or would require customers to
purchase space on a proprietary data network, if available.\93\ For
those customers seeking connections to Markham, Canada, the Exchanges
believe that disapproval would mean that customers would be left with
no wireless connectivity services.\94\
---------------------------------------------------------------------------
\90\ See NYSE Response at 6.
\91\ See id.
\92\ Id.
\93\ See id. at 2.
\94\ See id.
---------------------------------------------------------------------------
In response to comments that the Wireless Connections are offered
on terms that are unfairly discriminatory because the Exchanges possess
an exclusive geographic latency advantage that competitors cannot
overcome, the Exchanges state that although having the pole 700 feet
closer to the facility is a ``positive factor for latency,'' it is just
one in a list of factors that determine the network's latency
levels.\95\ The Exchanges also defend IDS's choice to limit access to
the Mahwah Data Center pole, noting that it is smaller than commercial
poles and that space limitations, security concerns, and interference
are practical factors that are a ``real concern.'' \96\ They also state
that IDS does not believe that its wireless network offers the fastest
commercial option, and that market participants have chosen not to use
it.\97\
---------------------------------------------------------------------------
\95\ See id. at 6. The Exchanges note that contrary to the
suggestion of several commenters, the Wireless Connections do not
use the Mahwah Data Center roof, nor does IDS expect to put any
equipment on the roof for any services it offers or allow others to
do so. See id. at 5.
\96\ See id. at 7.
\97\ See id. at 5, 13. The Exchanges represent that there are 11
current customers with Wireless Bandwidth Connections and 11 current
customers with Wireless Market Data Connections. See id. at 2.
---------------------------------------------------------------------------
In response to comments that they should provide additional
information regarding the geographic latency advantage, the Exchanges
characterize these requests as ``disingenuous'' because IDS cannot
describe the magnitude of a geographic latency advantage it does not
believe it has, and it is not privy to its competitors' latency
information.\98\
---------------------------------------------------------------------------
\98\ See id. at 17, 18-19.
---------------------------------------------------------------------------
III. Proceedings To Determine Whether To Approve or Disapprove the
Proposed Rule Changes
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act to determine whether the Exchanges' proposed
rule changes should be approved or disapproved.\99\ Institution of
proceedings does not indicate that the Commission has reached any
conclusions with respect to any of the issues involved. Rather, the
Commission seeks and encourages interested persons to provide
additional comment on the proposed rule changes (Wireless I and
Wireless II) to inform the Commission's analysis of whether to approve
or disapprove the proposed rule changes.
---------------------------------------------------------------------------
\99\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
[[Page 31280]]
Pursuant to Section 19(b)(2)(B) of the Act,\100\ the Commission is
providing notice of the grounds for possible disapproval under
consideration:
---------------------------------------------------------------------------
\100\ Id. Section 19(b)(2)(B) of the Act also provides that
proceedings to determine whether to disapprove a proposed rule
change must be concluded within 180 days of the date of publication
of notice of the filing of the proposed rule change. See id. The
time for conclusion of the proceedings may be extended for up to 60
days if the Commission finds good cause for such extension and
publishes its reasons for so finding, or if the exchange consents to
the longer period. See id.
---------------------------------------------------------------------------
Whether the Exchanges have demonstrated how the proposals
are consistent with Section 6(b)(4) of the Act, which requires that the
rules of a national securities exchange ``provide for the equitable
allocation of reasonable dues, fees, and other charges among its
members and issuers and other persons using its facilities;'' \101\
---------------------------------------------------------------------------
\101\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
Whether the Exchanges have demonstrated how the proposals
are consistent with Section 6(b)(5) of the Act, which requires, among
other things, that the rules of a national securities exchange be
``designed to perfect the operation of a free and open market and a
national market system'' and ``protect investors and the public
interest,'' and not be ``designed to permit unfair discrimination
between customers, issuers, brokers, or dealers;'' \102\ and
---------------------------------------------------------------------------
\102\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Whether the Exchanges have demonstrated how the proposals
are consistent with Section 6(b)(8) of the Act, which requires that the
rules of a national securities exchange ``not impose any burden on
competition not necessary or appropriate in furtherance of the purposes
of [the Act].'' \103\
---------------------------------------------------------------------------
\103\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------
As discussed in Section II above, the Exchanges made various
arguments in support of the Wireless I and Wireless II proposals and
the Commission received comment letters that expressed concerns
regarding the proposals, including that the Exchanges did not provide
sufficient information to establish that the proposals are consistent
with the Act and the rules thereunder.
Under the Commission's Rules of Practice, the ``burden to
demonstrate that a proposed rule change is consistent with the Exchange
Act and the rules and regulations issued thereunder . . . is on the
self-regulatory organization [`SRO'] that proposed the rule change.''
\104\ The description of a proposed rule change, its purpose and
operation, its effect, and a legal analysis of its consistency with
applicable requirements must all be sufficiently detailed and specific
to support an affirmative Commission finding.\105\ Any failure of an
SRO to provide this information may result in the Commission not having
a sufficient basis to make an affirmative finding that a proposed rule
change is consistent with the Act and the applicable rules and
regulations.\106\
---------------------------------------------------------------------------
\104\ 17 CFR 201.700(b)(3).
\105\ See id.
\106\ See id.
---------------------------------------------------------------------------
The Commission is instituting proceedings to allow for additional
consideration and comment on the issues raised herein, including as to
whether the proposals are consistent with the Act, specifically, with
its requirements that the rules of a national securities exchange
provide for the equitable allocation of reasonable dues, fees, and
other charges among its members, issuers, and other persons using its
facilities; are designed to perfect the operation of a free and open
market and a national market system, and to protect investors and the
public interest; are not designed to permit unfair discrimination
between customers, issuers, brokers, or dealers; and do not impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act; \107\ as well as any other
provision of the Act, or the rules and regulations thereunder.
---------------------------------------------------------------------------
\107\ See 15 U.S.C. 78f(b)(4), (5), and (8).
---------------------------------------------------------------------------
IV. Commission's Solicitation of Comments
The Commission requests written views, data, and arguments with
respect to the concerns identified above as well as any other relevant
concerns. Such comments should be submitted by June 12, 2020. Rebuttal
comments should be submitted by June 26, 2020. Although there do not
appear to be any issues relevant to approval or disapproval that would
be facilitated by an oral presentation of views, data, and arguments,
the Commission will consider, pursuant to Rule 19b-4, any request for
an opportunity to make an oral presentation.\108\
---------------------------------------------------------------------------
\108\ 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act grants
the Commission flexibility to determine what type of proceeding--
either oral or notice and opportunity for written comments--is
appropriate for consideration of a particular proposal by an SRO.
See Securities Acts Amendments of 1975, Report of the Senate
Committee on Banking, Housing and Urban Affairs to Accompany S. 249,
S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975).
---------------------------------------------------------------------------
The Commission asks that commenters address the sufficiency and
merit of the Exchanges' statements in support of the proposal, in
addition to any other comments they may wish to submit about the
proposed rule change.
Interested persons are invited to submit written data, views, and
arguments concerning the proposed rule changes, including whether the
Wireless I and Wireless II proposals are consistent with the Act.
Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Nos. SR-NYSE-2020-05, SR-NYSEAMER-2020-05, SR-NYSEArca-2020-08,
SR-NYSECHX-2020-02, SR-NYSENAT-2020-03, SR-NYSE-2020-11, SR-NYSEAMER-
2020-10, SR-NYSEArca-2020-15, SR-NYSECHX-2020-05, SR-NYSENAT-2020-08 on
the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Nos. SR-NYSE-2020-05, SR-NYSEAMER-
2020-05, SR-NYSEArca-2020-08, SR-NYSECHX-2020-02, SR-NYSENAT-2020-03,
SR-NYSE-2020-11, SR-NYSEAMER-2020-10, SR-NYSEArca-2020-15, SR-NYSECHX-
2020-05, and SR-NYSENAT-2020-08. The file numbers should be included on
the subject line if email is used. To help the Commission process and
review your comments more efficiently, please use only one method. The
Commission will post all comments on the Commission's internet website
(http://www.sec.gov/rules/sro.shtml). Copies of the submission, all
subsequent amendments, all written statements with respect to the
proposed rule change that are filed with the Commission, and all
written communications relating to the proposed rule change between the
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for website viewing and printing in the Commission's Public
Reference Room, 100 F Street NE, Washington, DC 20549, on official
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of
such filing also will be available for inspection and copying at the
principal office of the Exchanges. All comments received will be posted
without change. Persons submitting comments are cautioned that we do
not redact or edit
[[Page 31281]]
personal identifying information from comment submissions. You should
submit only information that you wish to make publicly available. All
submissions should refer to File Nos. SR-NYSE-2020-05, SR-NYSEAMER-
2020-05, SR-NYSEArca-2020-08, SR-NYSECHX-2020-02, SR-NYSENAT-2020-03,
SR-NYSE-2020-11, SR-NYSEAMER-2020-10, SR-NYSEArca-2020-15, SR-NYSECHX-
2020-05, and SR-NYSENAT-2020-08 and should be submitted on or before
June 12, 2020. Rebuttal comments should be submitted by June 26, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\109\
---------------------------------------------------------------------------
\109\ 17 CFR 200.30-3(a)(57).
---------------------------------------------------------------------------
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-11045 Filed 5-21-20; 8:45 am]
BILLING CODE 8011-01-P