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Federal Register / Vol. 86, No. 35 / Wednesday, February 24, 2021 / Notices
khammond on DSKJM1Z7X2PROD with NOTICES

issuers, brokers or dealers. In addition, it is designed to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to, and perfect the mechanisms of, a free and open market and a national market system and, in general, to protect investors and the public interest and because it is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers.
The Proposed Rule Change Is Reasonable and Equitable The Exchange believes that the proposed rule change is reasonable and equitable for the following reasons.
The Exchange believes that User demand for power will continue. The Exchange is currently working to expand the amount of power and number of cabinets available in colocation. Nevertheless, the Exchange believes that it would be reasonable for it to put in place the Proposed Procedures to establish the allocation of power and cabinets on an equitable basis, consistent with the Established Procedures. The Proposed Procedures would establish a rational, objective procedure that would be applied uniformly by the Exchange to all Users that requested new cabinets or Additional Power.
The Exchange believes that integrating the procedures for the allocation of power with the Existing Procedures would be reasonable, because cabinets are provided with power. Having both power and cabinets covered by the Proposed Procedures would ensure that the procedures for all relevant services are consistent and coordinated. Having the Proposed Procedures state what would occur if the Cabinet Threshold and Power Threshold are reached at different times, and how the Cabinet Waitlist and Combined Waitlist interrelate, is reasonable for the same reason.
The Exchange believes that following the Existing Procedures two-tier structure of establishing, first, a purchasing limitation on order size, and second, a waitlist, would be a reasonable method to respond to increasing demand for power and cabinets in the future. The Exchange notes that the Existing Procedures are consistent with the Nasdaq procedures for allocating cabinets if its cabinet inventory shrinks to zero.15 The 15 See Securities Exchange Act Release No. 62397
June 28, 2010, 75 FR 38860 July 6, 2010 SR
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Exchange believes that it is reasonable to amend the Existing Procedures to clarify what would occur if a User changes the size of its order while it is on the Cabinet Waitlist.
The Exchange believes that the proposed Power Threshold is reasonable and equitable. Based on experience, the Exchange believes that the Power Threshold of 350 kW is reasonable and appropriate because it is sufficiently low that it would not be triggered repeatedly, yet it offers a reasonable buffer during which the Combined Limits would apply before the Combined Waitlist would become effective.
The Exchange believes that the proposed Combined Limits are reasonable and equitable. Based on its experience with co-location and purchasing trends over the last few years, the Exchange believes that in most cases the amount of power that a User would be allowed to buy under the proposed Combined Limits, whether in the form of cabinets or Additional Power, would be sufficient for a Users needs while leaving a margin for potential growth.
Further, the Exchange believes that, by establishing a waitlist on the basis of the date it receives signed orders, limiting the size and number of orders a User may have on the waitlist at any one time, stating what happens if a User changes its order while on the waitlist, and removing a User from the waitlist if it turns down an offer that is the same as what it requested, the Combined Waitlist is largely consistent with the Existing Procedures and reasonably designed to prevent Users from utilizing the waitlist as a method to obtain a greater portion of the power and cabinets available, thereby facilitating a more equitable distribution. Similarly, the Exchange believes that by requiring a 30-day delay before a User subject to the Combined Limits could purchase Standard Cabinets or Additional Power again, the Proposed Procedure is reasonably designed to prevent a User from obtaining a greater portion of the power and cabinets available.
The Exchange believes that the proposed change is reasonable and equitable because the Exchange would only place limits on Users ability to purchase Standard Cabinets or Additional Power if either or both the Power Threshold and Cabinet Threshold are reached. Similarly, the Exchange believes that the proposed change is reasonable and equitable because the Combined Waitlist would only be created if unallocated power capacity in co-location is zero, or if a User requests, in writing, an amount of power
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whether power allocated to a Standard Cabinet or Additional Power that, if provided, would cause the unallocated power capacity to be below zero, and because there would be an established threshold for cessation of the Combined Waitlist.
The Exchange believes that it would be reasonable and equitable to require Users with PNU cabinets to either convert their PNU cabinets into dedicated cabinets or relinquish them if either or both the Cabinet Threshold and Power Threshold are reached.
Doing so would make the power reserved for PNU cabinets and the cabinets themselves available to meet User demand for power and cabinets. As a result, no User would be subject to limitations on its ability to purchase and use power or cabinets at the same time that PNU cabinets were dormant. The Exchange believes that the measure is therefore reasonably designed to prevent a User from reserving, but not using, power or cabinets at a time when other Users are subject to limitations, facilitating a more equitable distribution.
The Proposed Procedures would provide additional specificity to the existing PNU cabinet provision permitting conversion of PNU cabinets, by stating what the relevant thresholds would be, when the Exchange would require Users to decide whether to convert their PNU cabinets, and when PNU cabinets would be offered again, thereby increasing transparency and adding clarity.
The Exchange believes that the proposed change would be a reasonable method for the Exchange to accommodate demand for power and cabinets on an equitable basis, while allowing all Users that currently have a PNU cabinet to have a choice between converting their PNU cabinet to a dedicated cabinet or relinquishing it.
The Exchange notes that Nasdaqs colocation customers that have a Cabinet Proximity Option have a similar choice if Nasdaq determines that the reserved data center space is needed for use.16
Finally, the Exchange believes that it would be fair and equitable to require all Users with PNU cabinets to be subject to the same measures if the Cabinet Threshold or Power Threshold were met.
16 Co-location customers may either contract with Nasdaq for full payment or have the cabinet reassigned. Securities Exchange Act Release No.
62354 June 22, 2010, 75 FR 38860 July 6, 2010
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