Exhibit 3 Sent As Paper Document Exhibit 2 Sent As Paper Document
has duly caused this filing to be signed on its behalf by the undersigned thereunto duly authorized officer. 19b-4(f)(6) 19b-4(f)(5)
Provide a brief description of the proposed rule change (limit 250 characters, required when Initial is checked *).
(Name *)
NOTE: Clicking the button at right will digitally sign and lock this form. A digital signature is as legally binding as a physical signature, and once signed, this form cannot be changed.
Executive Vice President and General Counsel
(Title *)
01/28/2011 Date
Provide the name, telephone number and e-mail address of the person on the staff of the self-regulatory organization prepared to respond to questions and comments on the proposed rule change.
Assistant Vice President and Associate General Counsel Title *
Contact Information
19b-4(f)(4) 19b-4(f)(2)
19b-4(f)(3) Extension of Time Period
for Commission Action *
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
Form 19b-4
Withdrawal
Fax (301) 978-8472
Thomas Last Name *
Proposed Rule Change by
Pilot
NASDAQ OMX BX, Inc.
005 - * 2011
Amendment No. (req. for Amendments *)
File No.* SR -
Moran
[email protected] (301) 978-8483
Telephone * E-mail * First Name *
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934,
Section 19(b)(3)(A) * Section 19(b)(3)(B) * Initial * Amendment *
Pursuant to Rule 19b-4 under the Securities Exchange Act of 1934
Description
A proposed rule change to modify pricing for colocation services.
Edward S Knight, Edward S. Knight
By
Section 19(b)(2) *
19b-4(f)(1) Required fields are shown with yellow backgrounds and asterisks.
Page 1 of * 16
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Rule
If the self-regulatory organization is amending only part of the text of a lengthy proposed rule change, it may, with the Commission's permission, file only those portions of the text of the proposed rule change in which changes are being made if the filing (i.e. partial amendment) is clearly understandable on its face. Such partial amendment shall be clearly identified and marked to show deletions and additions. Partial Amendment
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The self-regulatory organization may choose to attach as Exhibit 5 proposed changes to rule text in place of providing it in Item I and which may otherwise be more easily readable if provided separately from Form 19b-4. Exhibit 5 shall be considered part of the proposed rule change.
Exhibit 5 - Proposed Rule Text
Copies of any form, report, or questionnaire that the self-regulatory organization proposes to use to help implement or operate the proposed rule change, or that is referred to by the proposed rule change.
Exhibit Sent As Paper Document
Exhibit 4 - Marked Copies
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Exhibit 3 - Form, Report, or Questionnaire
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Exhibit 2 - Notices, Written Comments, Transcripts, Other Communications
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Exhibit 1 - Notice of Proposed Rule Change (required)
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Form 19b-4 Information (required)
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The full text shall be marked, in any convenient manner, to indicate additions to and deletions from the immediately preceding filing. The purpose of Exhibit 4 is to permit the staff to identify immediately the changes made from the text of the rule with which it has been working.
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The self-regulatory organization must provide all required information, presented in a clear and comprehensible manner, to enable the public to provide meaningful comment on the proposal and for the Commission to determine whether the proposal is consistent with the Act and applicable rules and regulations under the Act.
View
Exhibit Sent As Paper Document
The Notice section of this Form 19b-4 must comply with the guidelines for publication in the Federal Register as well as any requirements for electronic filing as published by the Commission (if applicable). The Office of the Federal Register (OFR) offers guidance on Federal Register publication requirements in the Federal Register Document Drafting Handbook, October 1998 Revision. For example, all references to the federal securities laws must include the corresponding cite to the United States Code in a footnote. All references to SEC rules must include the corresponding cite to the Code of Federal Regulations in a footnote. All references to Securities Exchange Act Releases must include the release number, release date, Federal Register cite, Federal Register date, and corresponding file number (e.g., SR-[SRO]-xx-xx). A material failure to comply with these guidelines will result in the proposed rule change being deemed not properly filed. See also Rule 0-3 under the Act (17 CFR 240.0-3)
Copies of notices, written comments, transcripts, other communications. If such documents cannot be filed electronically in accordance with Instruction F, they shall be filed in accordance with Instruction G.
1. Text of Proposed Rule Change
(a) Pursuant to the provisions of Section 19(b)(1) under the Securities Exchange
Act of 1934 (“Act”)1 and Rule 19b-4 thereunder,2
(b) Not applicable.
NASDAQ OMX BX, Inc. (“BX” or ”Exchange”) is filing with the Securities and Exchange Commission (“Commission”) a proposed rule change to modify pricing for co-location services. The text of the proposed rule change is attached as Exhibit 5.
(c) Not applicable.
2. Procedures of the Self-Regulatory Organization
The proposed rule change was approved by senior management of BX pursuant to authority delegated by the Board of Directors of the Exchange on December 9, 2008. BX staff will advise the Board of Directors of the Exchange of any action taken pursuant to delegated authority. No other action by BX is necessary for the filing of the rule change.
The Exchange will implement the proposed change on February 1, 2011. Questions regarding this rule filing may be directed to Thomas P. Moran, Associate General Counsel, at (301) 978-8483.
3. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change
a. Purpose
The Exchange is amending its co-location fee schedule to: 1) institute a monthly fee of $300 for telecommunications and inter-cabinet cross connections; and 2) fees for additional patch and power cords.
1
15 U.S.C. 78s(b)(1).
2
Under the proposal, co-location customers having telecommunications cross-connections to approved telecommunication carriers in the datacenter will be assessed a monthly fee of $300 per connection. In addition, inter-cabinet connections to other customers in the datacenter will be likewise assessed a $300 per-month, per-connection fee. These fees will only be assessed on the customer that requested the initiation of the connection, and cross-connections between cabinets being used by the same customer will not be assessed the fee. Finally, the Exchange will allow customers a one-time grace period, until February 15, 2011, to cancel or modify their current inter-customer
connections so as to reduce, or eliminate, the imposition of these fees before they are billed at the end of that month. The Exchange believes that these fees appropriately reflect that value of cross-connectivity in the datacenter and the increased complexity such connections create.
The Exchange is also proposing to introduce fees for patch and power cords. Under the proposal, the Exchange will maintain an inventory of patch cords (ethernet and fiber optic cables) and power cords at the datacenter and make them available to
customers should they desire to purchase them. The proposed fees for patch cords vary with their capabilities and length, with copper patch cord being charged at $4.50 + $.50 per foot; multi-mode fiber patch cord being priced at $20 + $1.50 per-meter, and single-mode fiber patch cord priced at $24 + $.75 per-meter. For power cords, the Exchange proposes to charge $5 for 5-15P – C13 cords of two to four feet in length, and $10 for
C14 – C19 cords also of two to four feet in length.3
3
The P , C, and number designations reflect differences in the shape of a cord’s
plug as well a cord’s power throughput capability.
The Exchange is making the cords available as a convenience to customers, and notes that use of Exchange-provided patch
and power cords is completely voluntary, and that such cords may be freely obtained by other vendors for use by customers in the datacenter.
b. Statutory Basis
The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,4 in general, and with Section 6(b)(4) of the Act,5
First, the Exchange notes that it operates in a highly competitive market and participants can readily elect to use, or not to use, the Exchange’s co-location services. Accordingly, if particular market participants object to the proposed fees, they can avoid paying them by either not using co-location services, or declining to use the particular product or service that has pricing they object to. Second, among co-location customers, there is no differentiation as to individual products, services, or equipment made
available to them. All co-location customers are offered same range of products and services as any other co-location customer.
in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility or system which the Exchange operates or controls.
In addition, the prices proposed for power cords bear a rational relationship to prices charged by other vendors for similar products. See
4
15 U.S.C. 78f.
5
patch cord pricing. S
Finally, the monthly inter-cabinet connection fees proposed here are less than those already imposed by NYSE for cabinet connectivity among the same customer, with connectivity fees to other parties being bundled together with other network access
offerings. S
4. Self-Regulatory Organization’s Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended.
5. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule
Change Received from Members, Participants, or Others Written comments were neither solicited nor received.
6. Extension of Time Period for Commission Action
Not applicable.
7. Basis for Summary Effectiveness Pursuant to Section 19(b)(3) or for Accelerated
Effectiveness Pursuant to Section 19(b)(2)
Pursuant to Section 19(b)(3)(A)(ii) of the Act6
8. Proposed Rule Change Based on Rules of Another Self-Regulatory Organization
or of the Commission
, the Exchange has designated this proposal as establishing or changing a due, fee, or other charge imposed by the regulatory organization on any person, whether or not the person is a member of the self-regulatory organization, which renders the proposed rule change effective upon filing.
Not applicable. 6
9. Exhibits
1. Completed notice of proposed rule change for publication in the Federal Register.
EXHIBIT 1
SECURITIES AND EXCHANGE COMMISSION (Release No. 34- ; File No. SR-BX-2011-005) February __, 2011
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change to Modify Fees for Members Using the NASDAQ Market Center
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),1 and
Rule 19b-4 thereunder,2
I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the
Proposed Rule Change
notice is hereby given that on January 28, 2011, NASDAQ OMX BX, Inc. (“BX” or “Exchange”) filed with the Securities and Exchange
Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
The Exchange proposes to modify pricing for co-location services. The Exchange will implement the proposed change on February 1, 2011. The text of the proposed rule
change is available at
office, 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 Exchange 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 the proposed rule change is available
1
15 U.S.C. 78s(b)(1).
2
at
Commission’s Public Reference Room. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory
Basis for, the Proposed Rule Change
1. Purpose
The Exchange is amending its co-location fee schedule to: 1) institute a monthly fee of $300 for telecommunications and inter-cabinet cross connections; and 2) fees for additional patch and power cords.
Under the proposal, co-location customers having telecommunications cross-connections to approved telecommunication carriers in the datacenter will be assessed a monthly fee of $300 per connection. In addition, inter-cabinet connections to other customers in the datacenter will be likewise assessed a $300 per-month, per-connection fee. These fees will only be assessed on the customer that requested the initiation of the connection, and cross-connections between cabinets being used by the same customer will not be assessed the fee. Finally, the Exchange will allow customers a one-time grace period, until February 15, 2011, to cancel or modify their current inter-customer
connections so as to reduce, or eliminate, the imposition of these fees before they are billed at the end of that month. The Exchange believes that these fees appropriately reflect that value of cross-connectivity in the datacenter and the increased complexity such connections create.
The Exchange is also proposing to introduce fees for patch and power cords. Under the proposal, the Exchange will maintain an inventory of patch cords (ethernet and fiber optic cables) and power cords at the datacenter and make them available to
customers should they desire to purchase them. The proposed fees for patch cords vary with their capabilities and length, with copper patch cord being charged at $4.50 + $.50 per foot; multi-mode fiber patch cord being priced at $20 + $1.50 per-meter, and single-mode fiber patch cord priced at $24 + $.75 per-meter. For power cords, the Exchange proposes to charge $5 for 5-15P – C13 cords of two to four feet in length, and $10 for
C14 – C19 cords also of two to four feet in length.3
2. Statutory Basis
The Exchange is making the cords available as a convenience to customers, and notes that use of Exchange-provided patch and power cords is completely voluntary, and that such cords may be freely obtained by other vendors for use by customers in the datacenter.
The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,4 in general, and with Section 6(b)(4) of the Act,5
First, the Exchange notes that it operates in a highly competitive market and participants can readily elect to use, or not to use, the Exchange’s co-location services. Accordingly, if particular market participants object to the proposed fees, they can avoid paying them by either not using co-location services, or declining to use the particular product or service that has pricing they object to. Second, among co-location customers,
in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility or system which the Exchange operates or controls.
3
The P, C, and number designations reflect differences in the shape of a cord’s
plug as well a cord’s power throughput capability. 4
15 U.S.C. 78f.
5
there is no differentiation as to individual products, services, or equipment made available to them. All co-location customers are offered same range of products and services as any other co-location customer.
In addition, the prices proposed for power cords bear a rational relationship to prices charged by other vendors for similar products. See
patch cord pricing. S
Finally, the monthly inter-cabinet connection fees proposed here are less than those already imposed by NYSE for cabinet connectivity among the same customer, with connectivity fees to other parties being bundled together with other network access
offerings. S
B. Self-Regulatory Organization’s Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended.
C. Self-Regulatory Organization’s Statement on Comments on the Proposed
Rule Change Received from Members, Participants, or Others Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act.6
IV. Solicitation of Comments
At any time within 60 days of the filing of the 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 to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Comments may be submitted by any of the following methods:
Electronic comments:
• Use the Commission's Internet comment form
• Send an e-mail to
SR-BX-2011-005 on the subject line. Paper comments:
• Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities
and Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090. All submissions should refer to File Number SR-BX-2011-005. This file number should be included on the subject line if e-mail is used.
6
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 Web site (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 inspection and copying in the Commission’s Public Reference Room 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 offices of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly.
All submissions should refer to File Number SR-BX-2011-005, and should be submitted on or before [insert date 21 days from publication in the Federal Register].
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.7
Florence E. Harmon Deputy Secretary
7
EXHIBIT 5
The text of the proposed rule change is below. Proposed new language is underlined; proposed deletions are in brackets.
7034. Co-Location Services
The following charges are assessed by NASDAQ OMX BX, Inc., for co-location services:1
(a) No Change.
(b) Connectivity
External Telco /Inter-Cabinet Connectivity
Description Installation Fee Ongoing Monthly
Fee
Category 6 Cable patch $300 $[0] 300**
DS-3 Connection $500 $[0] 300**
Fiber $500 $[0] 300**
POTS Line $0 $0
One-Time Telco Connectivity Expedite Fee
$1,400 $0
Inter-Cabinet Telco connection outside Nasdaq space
$1,000
Connectivity to Nasdaq
Description Installation Fee Ongoing Monthly
Fee
Additional Fiber Connection to Nasdaq (10Gb)
$1,000 $5000
Additional Fiber Connection to Nasdaq (1Gb)
$1,000 $500
Additional 1Gb Copper Connection to Nasdaq
$100 $250
Additional 100Mb Connection to Nasdaq*
$50 $100
* One 100Mb connection to NASDAQ OMX BX is provided as a part of the standard service at no charge.
** Requesting party only. Not applicable to inter-cabinet connections among the same customer.
1
Market Data Connectivity*
Description Installation Fee Ongoing Monthly
Fee
Nasdaq $1,000 $0
SIAC $1,000
CTS/CQS $1,412
OpenBook Realtime $2,500
OpenBook Ultra $2,500
NYSE Alerts $200
NYSE Trades $100
Arca Trades $100
ArcaBook Multicast $1,500
Arca BBO $125
AMEX- Ultra/Trades/Alerts/LRP $100
OPRA $6,000
CME $1,000 $3,500
Access Fee per location device/user $65
BATS Multicast PITCH $1,000
BATS $4,000
BATS Y $1,500
Direct Edge $1,000
EDGA $2,500
EDGX $2,500
*Pricing is for telco connectivity only and is similar to connectivity fees imposed by other vendors. The fees are generally based on the amount of bandwidth needed
to accommodate a particular feed and NASDAQ OMX BX is not the exclusive method to get market data connectivity. Market data fees are charged independently by the
NASDAQ OMX BX and other exchanges.
(c) No Change.
(d) Additional Charges/Services
Additional Items
Description Installation Fee Ongoing Monthly
Fee
Cooling (Door) Fans $1,500 $0
Perforated Floor Tiles $250 $0
Cabinet Extension $500 $0
Single Master Key Locks $175 $0
Cabinet Caging Installation
Specific
$3,000
Custom Installation Installation
Specific
$0
Cabinet Equipment Storage $0 $500
Cable Downspouts $750 $0
Copper Patch Cords $4.50 +$.50 per
foot
$0
Fiber Patch Cords – Multi-mode $20 +$1.50 per
meter
$0
Fiber Patch Cords – Single-mode $24 +$.75 per
meter
$0
Power Cords - 5-15P to C13 – 2 to 4 feet $5 $0
Power Cords - C14 to C19 – 2 to 4 feet $10 $0
Equipment Storage $0 $100
Internet Bandwidth – 1Mb $0 $300
Internet Bandwidth – 2Mb $0 $500
Internet Bandwidth – 3Mb $0 $700
Internet Bandwidth – 4Mb $0 $900
Internet Bandwidth – 5Mb $0 $1,100
GPS Antenna Installation
Specific
$200
Cabinet Proximity Option Fee $0 $1000 per medium
or low density cabinet, or $1500 per
medium/high or high density cabinet
Services
Description Rate
Power Consulting Service (billed in hourly increments)
$250/hr plus materials if necessary
Remote Hands Service $150/hr
