Introduction
NYSE National, Inc., a self-regulatory organization under the Securities Exchange Act of 1934, filed a proposed rule change with the Securities and Exchange Commission on February 26, 2026. Published in the Federal Register on March 12, 2026, the filing seeks to amend the exchange's Connectivity Fee Schedule by incorporating new third-party systems and data feeds. This development, effective immediately upon filing, allows users in the Mahwah, New Jersey data center to connect to emerging platforms like 24X, Bruce ATS, and the Texas Stock Exchange. It highlights the evolving landscape of securities trading infrastructure, where colocation services enable market participants to access diverse execution venues and data streams efficiently. By expanding these options, NYSE National responds to user demand while maintaining uniform fees, potentially influencing market competition and operational choices for brokers, traders, and investors.
Background on Colocation and Connectivity Services
Colocation services at NYSE National's Mahwah data center, operated by Intercontinental Exchange through its Fixed Income and Data Services business, provide market participants with proximity to trading engines. This setup reduces latency, a critical factor in high-frequency trading. Users, defined as any market participant requesting direct colocation services, can connect to third-party systems—execution platforms from other markets—and third-party data feeds, which deliver trading information from those venues.
The proposal builds on prior filings, such as the 2018 rule change that defined users and clarified affiliate relationships (Securities Exchange Act Release No. 83351). It also references a 2025 update expanding connectivity options (Securities Exchange Act Release No. 103413). Key players include NYSE National and its affiliates like NYSE Arca, all indirect subsidiaries of Intercontinental Exchange. Emerging entities like 24X, which filed its Form 1 application in August 2024, Bruce ATS with its ATS-N form, and the Texas Stock Exchange, which submitted its application in April 2025, represent new entrants aiming to challenge established exchanges. These additions align with broader trends in market fragmentation, where alternative trading systems and new exchanges seek to capture volume amid regulatory scrutiny from the SEC.
Key Changes to the Fee Schedule
The filing proposes adding 24X, Bruce ATS, and the Texas Stock Exchange to the list of third-party systems available for connectivity. Users can access these via the data center's internet protocol network, entering agreements directly with the providers. No changes are made to the monthly recurring fees for bandwidth connections, which remain based on connection size rather than the specific system. This approach ensures users pay only for selected services, promoting flexibility.
For third-party data feeds, the proposal introduces specific monthly fees: $4,000 for 24X, $1,250 for Bruce ATS, and $1,300 for the Texas Stock Exchange. These feeds deliver trading and securities information from the respective platforms. As with existing feeds, NYSE National receives data from remote sources, transports it to the data center, and redistributes it to authorized users over their ports. The exchange emphasizes that it acts solely as a redistributor, with no affiliation to the providers and no inherent advantage over other distributors.
The changes apply uniformly to all users, who voluntarily select services. NYSE National notes that most requests for these additions came from users, estimating minimal new customer growth but enhanced options for existing ones.
Statutory Basis and Regulatory Justification
NYSE National justifies the proposal under Section 6(b) of the Securities Exchange Act, arguing it promotes just and equitable trade principles, removes market impediments, and protects investors. It cites consistency with equitable fee allocation, as charges apply only to opting users and remain uniform.
The exchange addresses competition by referencing Regulation NMS, which favors market forces over intervention (Securities Exchange Act Release No. 51808). It argues the proposal faces competitive pressures, as users can access the new systems and feeds independently through third-party telecommunications providers in the data center's meet-me-rooms. With 17 such providers operating as of December 2025, alternatives exist, and over 98 percent of user circuits are supplied by them. NYSE National contends it has no competitive edge, as distances in the data center are normalized and it charges only for connectivity, not the underlying data or systems.
Perspectives vary: proponents see this as fostering innovation by integrating new platforms, while critics might argue it entrenches established exchanges' infrastructure advantages. However, the filing stresses that fees are reasonable, with 24X's higher charge reflecting market rates, and comparable to existing feeds like those from the Boston Options Exchange ($1,300).
Competitive Environment and Market Implications
The proposal operates in a competitive market where vendors offer similar colocation and connectivity. NYSE National highlights that users can bypass its services by contracting directly with telecommunications firms, creating substitutes that constrain its pricing. This echoes SEC approvals in cases like the 2020 wireless connectivity order (Securities Exchange Act Release No. 90209), where competition justified fee structures.
Short-term implications include expanded choices for users, potentially increasing trading efficiency and volume on new platforms. Long-term, it could accelerate market fragmentation, as seen in the rise of alternative trading systems. Different viewpoints emerge: new exchanges like 24X and Texas Stock Exchange may benefit from easier integration, boosting their viability, while established players maintain dominance through infrastructure. Regulators might monitor for anti-competitive effects, but the filing asserts no undue burden, as services are voluntary and non-discriminatory.
Forward-Looking Conclusion
This rule change by NYSE National expands connectivity options, integrating emerging trading platforms into its colocation ecosystem without altering core fee structures. It underscores the dynamic nature of securities markets, driven by technological advancements and user needs. Potential next steps include SEC review of comments, which could lead to suspension if public interest concerns arise. Ongoing debates may focus on balancing innovation with fair competition, while challenges like latency demands and regulatory oversight persist. Market participants will likely continue adapting to these options, shaping the trajectory of trading infrastructure.
