Overview
Title
Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of Filing of Proposed Rule Change To Amend the Connectivity Fee Schedule
Agencies
ELI5 AI
The SEC is looking at a new idea from the NYSE Chicago to change how much it costs to connect to their trading floors. NYSE Chicago wants to offer new ways for people to connect and use their systems, hoping to make things fairer and give people more choices.
Summary AI
The NYSE Chicago, Inc. has proposed a rule change to its Connectivity Fee Schedule, aiming to enhance competition by adding new connectivity options to several trading floors, including the New York Stock Exchange. This change introduces new types of connections called TF Connections, which offer users dedicated bandwidth between their data center in Mahwah, New Jersey, and the trading floors. The NYSE Chicago argues that these new options will provide more choices without any unfair advantage or discrimination against telecom companies that also provide similar services. The rule change is open for public comments before a final decision is made by the Securities and Exchange Commission.
Keywords AI
Sources
AnalysisAI
The recent notice published by NYSE Chicago, Inc. in the Federal Register pertains to a proposed amendment to their Connectivity Fee Schedule. This notice outlines a new rule change designed to add connectivity options to trading floors such as the New York Stock Exchange LLC, NYSE American LLC, and NYSE Arca, Inc. At the core of this proposal are what are known as TF Connections, which provide dedicated bandwidth for users connecting to these trading floors from the data center located in Mahwah, New Jersey.
General Overview
The primary aim of this proposal is to broaden connectivity options available to users, facilitating greater flexibility and choice when connecting to trading floors. TF Connections will allow users to either establish connectivity for their own use or extend this connection to third parties. These connections will be offered at a monthly fee, where cost varies depending on the type and size of bandwidth required.
Key Issues and Concerns
Several issues arise from the proposal. The document indicates that TF Connections are expected to be competitive with similar options offered by telecom companies. However, the proposal lacks a detailed breakdown of costs, making it difficult to assess the reasonableness of the fees from a financial perspective. Additionally, the language and reasoning around competitive forces are somewhat complex, potentially limiting transparency for stakeholders who are not well-versed in technical or financial jargon.
Concerns are also raised regarding the claims of competitiveness and reasonable substitutes for TF Connections, which seem to be based on indirect observations or anecdotal evidence. This could affect the robustness of the exchange's assertions about the proposal's advantages and fairness. Furthermore, there is no detailed description of the technical specifications of the TF Connections compared to telecom circuit offerings, which might be crucial for users to make an informed decision.
Public Impact
For the general public, this notice signifies a potential change in how trading data is transmitted between exchanges and data centers. By broadening connectivity options, there could be a beneficial impact on the broader trading environment, with potential improvements in speed, efficiency, and cost for users. However, understanding and navigating the new fee structures and connectivity options may present a challenge for those less familiar with trading technology intricacies.
Stakeholder Impact
For stakeholders such as market participants who regularly use these connections, the proposed rule change could offer enhanced flexibility and efficiency in executing trades, thanks to improved connectivity options. Users might find cost-effective alternatives depending on their bandwidth needs and the specific type of connection chosen. However, for telecom companies providing similar services, this could represent increased competition. While the exchange states that TF Connections will not have an inherent advantage over telecom alternatives, this remains to be fully demonstrated through comparative data and user experiences.
In summary, while the proposal presents the possibility of positive advancements in trading connectivity, it also raises several questions that warrant thorough examination. A clearer understanding of costs, technological specifications, and market impacts will be vital as stakeholders consider submitting comments about the proposed changes. The absence of comments received thus far highlights a potential gap in public engagement, underscoring the importance of increased transparency and participation in the decision-making process.
Issues
• The notice does not provide a detailed breakdown of costs related to the implementation of the TF Connections, which could help in assessing whether the fees are reasonable.
• The language around 'substantial countervailing basis' is somewhat complex and may be difficult for non-experts to understand, potentially limiting transparency for the average stakeholder.
• The document makes various claims about competitive forces and reasonable substitutes without providing detailed evidence or data to support these claims, which could lead to questions about the robustness of these assertions.
• Information about the specific specifications and performance capabilities of the TF Connections compared to Telecom circuits is anecdotal or based on indirect sources, potentially weakening the case for the proposal's reasonableness.
• The explanation of the Fee Schedule and how fees are determined based on bandwidth could be more detailed to improve clarity for potential Users who are not familiar with technical specifics.
• The document does not provide concrete examples or scenarios demonstrating how the proposed TF VCC and TF VRF options function relative to user needs, which could aid understanding.
• While asserting that the proposal is not unfairly discriminatory, the document lacks specific criteria or benchmarks used to ensure fairness and non-discrimination, thus potentially raising questions about oversight.
• The document indicates that no comments were solicited or received, which might suggest a lack of engagement or public awareness of the proposed rule change.