Notice2024-18472
Self-Regulatory Organizations; Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Fee Schedule Concerning Transaction Pricing
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
August 19, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 160 (Monday, August 19, 2024)</title>
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[Federal Register Volume 89, Number 160 (Monday, August 19, 2024)]
[Notices]
[Pages 67133-67138]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-18472]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100718; File No. SR-IEX-2024-13]
Self-Regulatory Organizations; Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend the
Exchange's Fee Schedule Concerning Transaction Pricing
August 13, 2024.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the
[[Page 67134]]
``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given that,
on July 31, 2024, the Investors Exchange LLC (``IEX'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II
and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Pursuant to the provisions of Section 19(b)(1) under the Act,\4\
and Rule 19b-4 thereunder,\5\ the Exchange is filing with the
Commission a proposed rule change to amend the Exchange's fee schedule
applicable to Members \6\ (the ``Fee Schedule'' \7\) pursuant to IEX
Rule 15.110(a) and (c). Changes to the Fee Schedule pursuant to this
proposal are effective upon filing,\8\ and will be operative on August
1, 2024.
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\4\ 15 U.S.C. 78s(b)(1).
\5\ 17 CFR 240.19b-4.
\6\ See IEX Rule 1.160(s).
\7\ See Investors Exchange Fee Schedule, available at <a href="https://www.iexexchange.io/resources/trading/fee-schedule">https://www.iexexchange.io/resources/trading/fee-schedule</a>.
\8\ 15 U.S.C. 78s(b)(3)(A)(ii).
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The text of the proposed rule change is available at the Exchange's
website at <a href="http://www.iextrading.com">www.iextrading.com</a>, at the principal office of the Exchange,
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 self-regulatory organization
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 these statements may be examined at
the places specified in Item IV below. The self-regulatory organization
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 proposes to modify its Fee Schedule, pursuant to IEX
Rule 15.110(a) and (c), to introduce two different tier-based volume-
based pricing structures designed to improve market quality on the
Exchange by incentivizing Members to send more displayed liquidity
adding orders to the Exchange. The first tier-based structure will
provide for an enhanced rebate for executions of displayed liquidity
adding orders priced at or above $1.00 per share applicable to Members
that meet certain liquidity adding requirements specified below. The
second tier-based structure will provide for a higher fee for displayed
liquidity removing orders priced at or above $1.00 per share applicable
to Members that do not trade a minimum amount of displayed liquidity
adding volume as specified below.
Displayed Liquidity Adding Rebate Tiers
The Exchange proposes to introduce a tiered pricing structure
applicable to the rebates provided for executions of displayed
liquidity adding orders \9\ priced at or above $1.00 per share (``Added
Displayed Liquidity'').\10\ Specifically, the Exchange proposes to
revise its Fee Schedule to set forth two volume-based rebate tiers:
Tier 1 and Tier 2 (referred to in the Fee Schedule as the ``Displayed
Liquidity Adding Rebate Tiers'').
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\9\ This higher rebate would apply to any orders assigned Fee
Code Combinations ML, MLB, MLY, and MLYB.
\10\ Nothing in this rule filing affects trades below $1.00 per
share (``sub-dollar trades''). Sub-dollar trades would not impact
the rebate tier calculations and remain ineligible for rebates.
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As proposed, Tier 1 will provide the Exchange's current base rebate
of $0.0014 per share to all Added Displayed Liquidity for Members that
add less than 10,000,000 ADV \11\ of Added Displayed Liquidity. And
Tier 2 will provide a rebate of $0.0020 per share to all Added
Displayed Liquidity for Members that add at least 10,000,000 ADV of
Added Displayed Liquidity (a rebate of $0.0006 more per share than the
rebate provided currently and pursuant to Tier 1). IEX notes that this
model of offering volume-based rebates is consistent with the rebates
offered by competitor exchanges.\12\ The Exchange also notes that the
new proposed rebate for Tier 2 (as well as the current rebate that will
be applicable to Tier 1) is lower than the highest rebates offered by
competing exchanges.\13\
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\11\ As proposed, IEX will introduce the following definition of
ADV: ``ADV'' means average daily volume calculated as the number of
shares added or removed that execute at or above $1.00 per share,
combined, per day. ADV is calculated on a monthly basis.
\12\ See, e.g., MEMX Equities Fee Schedule (Effective July 16,
2024), available at <a href="https://info.memxtrading.com/equities-trading-resources/us-equities-fee-schedule/">https://info.memxtrading.com/equities-trading-resources/us-equities-fee-schedule/</a>. However, IEX's proposed Tier 2
would be based on each Member's ADV, without a requirement to meet a
total consolidated volume threshold.
\13\ See, e.g., MEMX Equities Fee Schedule, supra note 12
(maximum rebate of $0.0037); Nasdaq Equity VII, Section 114 (maximum
rebate of $0.0036); New York Stock Exchange Price List 2024 (as of
June 3, 2024), <a href="https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf">https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf</a> (maximum rebate of $0.0035).
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Accordingly, IEX proposes to update its Fee Schedule to make
several revisions to reflect the proposed rebate tiers. First, the
Exchange proposes to amend the Base Rates table to update the
description and fees associated with Base Fee Code ML (``Add displayed
liquidity''). As amended, the Base Rates table will list two base rates
for Fee Code ML--the $0.0014 rebate applied if ``Member adds less than
10,000,000 ADV of displayed liquidity'' and the higher $0.0020 rebate
applied if ``Member adds at least 10,000,000 ADV of displayed
liquidity.''
IEX also proposes to add Footnote 4 to the Transaction Fees
section, which will be applicable to fee code ML in the Base Rates
table, and to Fee Code Combinations ML, MLB, MLY, and MLYB in the Fee
Code Combination and Associated Fees table. As proposed, Footnote 4 is
titled ``Displayed Liquidity Adding Rebate Tiers (Applicable to
Executions at or above $1)'' and followed by a table describing Tier 1
and Tier 2, including the required criteria for each rebate tier and
the applicable rebate, as described above.
The new rebate tiers are based on each Member's ADV, which is not
currently defined in IEX's Fee Schedule. Therefore, IEX also proposes
to update the list of ``Definitions'' in the Transaction Fees section
of the Fee Schedule by renaming it ``Definitions and Information'', and
adding a definition of ADV and relevant information thereof to the
list:
<bullet> ``ADV'' means average daily volume calculated as the
number of shares added or removed (as applicable) that execute at or
above $1.00 per share, combined, per day. ADV is calculated on a
monthly basis.
[cir] The Exchange excludes from its calculations of ADV any
trading day that the Exchange's system experiences a disruption that
lasts for more than 60 minutes during regular trading hours and any day
with a scheduled early market close.
[cir] Routed shares executed away from IEX are not included in ADV
calculation.
[cir] Auction and Opening Process executed shares are not included
in ADV calculation.
[cir] With prior notice to the Exchange, a Member may aggregate ADV
with
[[Page 67135]]
other Members with which the Member is affiliated pursuant to Rule 12b-
2 under the Act.
In calculating a Member's ADV, the numerator will be the share
volume of applicable transactions (i.e., adding, removing, displayed,
non-displayed, as applicable) during the month and the denominator will
be the total number of eligible trading days in the month.
As noted above, when calculating ADV, the Exchange will exclude
days with system disruptions that last for more than 60 minutes and
days with scheduled early closes when determining the numerator and the
denominator. An Exchange system disruption may occur, for example,
where a certain group of securities traded on the Exchange is
unavailable for trading due to an Exchange system issue. Similarly, the
Exchange may be able to perform certain functions with respect to
accepting and processing orders, but may have a failure to another
significant process, such as routing to other market centers, that
would lead Members that rely on such process to avoid utilizing the
Exchange until the Exchange's entire system was operational. The
Exchange believes that these types of Exchange system disruptions could
preclude Members from participating on the Exchange to the extent that
they might have otherwise participated on such days, and thus, the
Exchange believes it is appropriate to exclude such days when
determining a Member's ADV to avoid penalizing Members that might
otherwise have met the ADV requirements for the higher rebate provided
for in Tier 2. For similar reasons, the Exchange believes it is
appropriate to exclude trading days with scheduled early closes,
because the shorter trading days are likely to result in a lower
monthly average daily trading volume for each Member. The Exchange
notes that excluding system disruption days and trading days with
scheduled early closes is consistent with the methodologies used by
other exchanges when calculating each member's ADV.\14\
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\14\ See, e.g., MEMX Equities Fee Schedule, supra note 12.
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The Exchange will exclude routed shares that executed away from the
Exchange from its ADV calculations because, by definition, these are
not trades that added displayed liquidity to the Exchange.\15\ The
Exchange notes that excluding routed shares from the calculation of ADV
is also consistent with the practice of other exchanges when
calculating ADV.\16\ And the Exchange will exclude executions in the
opening process for non-listed securities from its ADV calculations,
because they are not eligible for any rebates and the adding and
removing liquidity concepts are not applicable to the opening
process.\17\
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\15\ IEX also notes that it only charges Members a nominal fee
of $0.0001 on top of the away market's transaction fee for each
routable share that executes away from the Exchange.
\16\ See, e.g., MEMX Equities Fee Schedule, supra note 12.
\17\ Similarly, in the event that the Exchange were to have
auctions, such transactions would also be excluded.
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The Exchange will allow Members to aggregate their ADV with other
Members with which they are affiliated,\18\ if Members provide prior
notice to the Exchange. As proposed, to the extent that two or more
affiliated companies maintain separate memberships with the Exchange
and can demonstrate their affiliation by showing they control, are
controlled by, or are under common control with each other, the
Exchange would permit such Members to aggregate their ADV. Members will
be responsible for having proper internal documentation in their books
and records substantiating that the two or more Members seeking to
aggregate their ADV are affiliates of one another. IEX notes that this
grouping of Member affiliates is consistent with how IEX allows Member
affiliates to apply IEX's optional anti-internalization functionality
across affiliates,\19\ and is already a common practice for exchanges
that offer tiered rebates, in order to not penalize two affiliated
members when calculating rebate tiers.\20\
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\18\ As defined in Rule 12b-2 under the Act, 17 CFR 240.12b-2.
\19\ See IEX Rule 11.190(e)(1)(B).
\20\ See, e.g., the Nasdaq Stock Market LLC Equity 7, Section
127 (``Aggregation of Activity of Affiliated Members'').
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As noted above, the Exchange is not proposing to change the fees
applicable to executions of and with orders with an execution price
below $1.00 per share, which would remain free for such orders that
provide displayed liquidity and subject to a fee of 0.09% of the total
dollar volume of the execution for orders that take displayed
liquidity. IEX is also not proposing to make any changes to the fees
applicable to the execution of Retail \21\ orders that remove displayed
liquidity, which will continue to execute for free.
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\21\ See IEX Rule 11.190(b)(15).
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The Exchange believes the proposed Displayed Liquidity Adding
Rebate Tier structure would provide an incremental incentive for
Members to send more orders to the Exchange in an effort to qualify for
the proposed enhanced rebate offered by Tier 2 for executions of Added
Displayed Volume. As such, the proposed Displayed Liquidity Adding
Rebate Tiers are designed to encourage Members that provide liquidity
on the Exchange to maintain or increase their order flow, thereby
contributing to a deeper and more liquid market to the benefit of all
market participants and enhancing the attractiveness of the Exchange as
a trading venue.
Displayed Liquidity Removing Fee Tiers
The Exchange also proposes to introduce a tiered pricing structure
applicable to the fees charged for executions of displayed liquidity
removing orders priced at or above $1.00 per share. Specifically, the
Exchange proposes to revise its Fee Schedule to set forth two volume-
based fee tiers: Tier 1 and Tier 2 (referred to in the Fee Schedule as
the ``Displayed Liquidity Removing Fee Tiers'').
As proposed, Tier 1 will apply a new $0.0030 per share fee to all
displayed liquidity removing orders for Members that add less than
25,000 ADV of Added Displayed Liquidity. And Tier 2 will apply the
Exchange's current base displayed liquidity removing fee of $0.0020 per
share to all displayed liquidity removing orders for Members that add
at least 25,000 ADV of Added Displayed Liquidity.\22\
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\22\ For purposes of determining a Member's Displayed Liquidity
Removing Fee Tier, the Exchange will conduct the same ADV
calculation described above.
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Accordingly, IEX proposes to update its Fee Schedule to amend the
Base Rates table to update the description and fees associated with
Base Fee Code TL (``Remove displayed liquidity''). As amended, the Base
Rates table will list two base rates for Fee Code TL--the current
$0.0020 fee applied if a ``Member adds at least 25,000 ADV of displayed
liquidity'', and the new $0.0030 fee applied if a ``Member adds less
than 25,000 ADV of displayed liquidity.''
IEX also proposes to add Footnote 5 to the Transaction Fees
section, which will be applicable to fee code TL in the Base Rates
table, and to fee code combinations TL, TLB, TLY, TLYB, TLW, and TLWB
in the Fee Code Combination and Associated Fees table. As proposed,
Footnote 5 is titled ``Displayed Liquidity Removing Fee Tiers
(Applicable to Executions at or above $1)'' and followed by a table
describing Tier 1 and Tier 2, including the required criteria for each
tier and the applicable fee, as described above.
The Exchange believes it is reasonable to charge its members an
increased fee
[[Page 67136]]
for removing displayed liquidity from the Exchange if they do not trade
a minimum amount of Added Displayed Liquidity volume on the Exchange.
The proposed higher displayed liquidity removing fee in Tier 1 is
designed to incentivize Members to maintain a minimum level of
displayed adding activity on the Exchange. The Exchange notes this fee
is consistent with other ``maker-taker'' exchanges that charge higher
fees of members to remove liquidity if the members do not qualify for
any volume tiers.\23\ Similarly, some ``taker-maker'' exchanges charge
liquidity removal fees of Members that do not maintain a meaningful
level of liquidity adding activity. For example, Nasdaq BX charges
$0.0007 per share for all liquidity removing orders if the member does
not add at least 50,000 ADV (by contrast, members that add at least
50,000 ADV qualify for at least a $0.0005 per share rebate).\24\ The
Exchange periodically assesses its fee structure and based upon a
recent assessment, the Exchange believes that these proposed pricing
changes would further incentivize Members to submit displayed orders in
securities priced at or above $1.00 per share. The proposed fee changes
are designed to incentivize posting displayed liquidity on IEX in
securities priced at or above $1.00 per share in order to address
competitive factors (as discussed more thoroughly in the Statutory
Basis section) and facilitate price discovery and price formation,
which the Exchange believes benefits all Members and market
participants.
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\23\ See, e.g., New York Stock Exchange Price List 2024 (as of
June 3, 2024), supra note 13 (charging $0.0030 per share for
liquidity removing orders, but charging between $0.00285 and
$0.00295 for the same orders if the member adds between 0.05% and
1.05% ADV of the Consolidated Average Daily Volume); see also MEMX
Equities Fee Schedule, supra note 12 (charging $0.0030 per share for
liquidity removing orders, but charging $0.00295 for the same orders
if the member's ADV qualifies it for MEMX's Liquidity Removal Tier
by having an ADV greater than or equal to 0.70% of the Total
Consolidated Volume, including at least .35% of the Total
Consolidated Volume remove ADV).
\24\ See Nasdaq BX Equity VII, Section 118.
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2. Statutory Basis
IEX believes that the proposed rule change is consistent with the
provisions of Section 6(b) \25\ of the Act in general, and furthers the
objectives of Sections 6(b)(4) \26\ of the Act, in particular, in that
it is designed to provide for the equitable allocation of reasonable
dues, fees and other charges among its Members and other persons using
its facilities. The Exchange believes that the proposed fee change is
reasonable, fair and equitable, and non-discriminatory.
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\25\ 15 U.S.C. 78f.
\26\ 15 U.S.C. 78f(b)(4).
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The Exchange operates in a highly competitive market in which
market participants can readily direct order flow to competing venues
if they deem fee levels at a particular venue to be excessive. IEX has
concluded that, in the context of current regulatory requirements
governing access fees and rebates, it will be able to more effectively
compete with other exchanges for order flow by offering higher rebate
incentives. Based upon informal discussions with market participants,
IEX believes that Members and other market participants may be more
willing to send displayed orders to IEX if the proposed fee structure
was adopted.
Accordingly, IEX has designed the proposed access fee and rebate
tiers to attract and incentivize displayed orders as well as order flow
seeking to trade with such displayed orders. Moreover, increases in
displayed liquidity would contribute to the public price discovery
process which would benefit all market participants and protect
investors and the public interest.
As it has stated repeatedly, IEX believes that the existing access
fee level of $0.0030 per share set by Rule 610 of Regulation NMS \27\
heavily affects the way that exchanges compete for order flow and has
led to various market distortions and inefficiencies. It has also
created a collective action problem that substantially hinders the
ability of exchanges to compete by offering better execution quality
and without relying on high access fees and correspondingly high
rebates. The Commission can resolve this problem and help to promote
more displayed liquidity by substantially reducing the access fee cap
for all NMS stocks, a step that is consistent with other market-based
trading cost measures and one favored by a broad spectrum of market
participants and virtually all institutional investors that have
commented on this issue.\28\ IEX hopes to be able to further adjust its
transaction prices in the near future to reflect a market-wide adoption
of lower access fees as a result of this critically-needed reform.
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\27\ 17 CFR 242.610.
\28\ See IEX comment letters on S7-30-22, Regulation NMS:
Minimum Pricing Increments, Access Fees, and Transparency of Better-
Priced Orders: <a href="https://www.sec.gov/comments/s7-30-22/s73022-20160364-328968.pdf">https://www.sec.gov/comments/s7-30-22/s73022-20160364-328968.pdf</a>; <a href="https://www.sec.gov/comments/s7-30-22/s73022-276579-672162.pdf">https://www.sec.gov/comments/s7-30-22/s73022-276579-672162.pdf</a>; <a href="https://www.sec.gov/comments/s7-30-22/s73022-434239-1076742.pdf">https://www.sec.gov/comments/s7-30-22/s73022-434239-1076742.pdf</a>.
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Thus, as discussed in the Purpose section, the Exchange believes
that the proposed adoption of a volume-based rebate tier that provides
higher rebates for Members that provide a relatively higher ADV of
displayed liquidity is reasonable and consistent with the Act because
it is designed to incentivize Members to add additional displayed
orders on IEX. Specifically, the Exchange believes that the volume-
based rebate tiers are reasonably designed to incentivize Members to
add a meaningful volume of displayed liquidity by providing a $0.0006
higher rebate for Members that qualify for Tier 2 than it provides to
Members that qualify for Tier 1. As noted in the Purpose section, other
exchanges offer rebate tiers, and thus the Exchange does not believe
that this aspect of the proposal raises any new or novel issues not
already considered by the Commission.
The Exchange also believes that adding to the Fee Schedule the
notes defining ``ADV'' and additional notes describing the ADV
calculation methodologies and criteria for determining whether a Member
satisfies the requirements to qualify for any of the rebate or fee
tiers is reasonable, equitable, and non-discriminatory because these
notes and definitions are designed to ensure that the Fee Schedule is
as clear and easily understandable as possible with respect to the
requirements of the proposed rebate or fee tiers.
Additionally, the Exchange believes that excluding system
disruption days and days with a scheduled early close when calculating
ADV is reasonable, equitable, and non-discriminatory because, as
explained above, the Exchange believes doing so would avoid penalizing
Members that might otherwise have met the requirements to qualify for
the proposed Displayed Liquidity Adding Rebate Tier 2 (or to avoid
being subject to Displayed Liquidity Removing Fee Tier 1) but for the
system disruption or scheduled early close. As discussed in the Purpose
section, the exclusion of certain trading days from the ADV calculation
is consistent with the methodologies used by other exchanges when
calculating certain member trading and other volume metrics for
purposes of determining whether members qualify for certain pricing
incentives, including calculations of ADV for rebate tiers
specifically. And as noted in the Purpose section, these exclusions are
consistent with how other exchanges calculate ADV for rebate/fee tier
purposes, and thus the Exchange does not believe that this aspect of
the proposal raises any new or novel issues
[[Page 67137]]
not already considered by the Commission.
Further, the Exchange believes that excluding routed shares that
execute away from the Exchange, is reasonable, equitable, and non-
discriminatory because, as explained above, these orders do not execute
on IEX. And, as noted above, excluding routed executions on other
exchanges from the ADV calculation is consistent with the practice of
other exchanges, and thus the Exchange does not believe that this
aspect of the proposal raises any new or novel issues not already
considered by the Commission.
Similarly, the Exchange believes that excluding shares that execute
in an auction or the opening process from the ADV calculation is
reasonable, equitable, and non-discriminatory because, as explained
above, these executions are not eligible for rebates and the adding and
removing liquidity concepts are not applicable to the auction or
opening processes.
As described above, the proposed additional language in the Fee
Schedule permitting aggregation of trades among affiliated Members for
purposes of the ADV calculation is intended to avoid disparate
treatment of firms that have divided their various business activities
between separate corporate entities as compared to firms that operate
those business activities within a single corporate entity.
Accordingly, the Exchange believes that its proposed policy is fair and
equitable, and not unreasonably discriminatory. In addition to ensuring
fair and equal treatment of its Members, the Exchange does not want to
create incentives for its Members to restructure their business
operations or compliance functions simply due to the Exchange's pricing
structure. Moreover, as noted above, this proposed policy is consistent
with the practice of the Exchange and other exchanges with respect to
the aggregation of affiliated Members' volumes for purposes of
determining ADV with respect to pricing tiers, and therefore, it does
not raise any new or novel issues that have not previously been
considered by the Commission.
As discussed above, the Exchange operates in a highly competitive
market in which market participants can readily direct order flow to
competing venues if they deem fee levels at a particular venue to be
excessive. Within that context, the proposed Displayed Liquidity Adding
Rebate Tier structure is designed to keep IEX's displayed trading
prices competitive with those of other exchanges. The proposed rebate
for the new Displayed Liquidity Adding Rebate Tier 2 (as well as the
current rebate that will be applicable to Tier 1) are within the range
offered by competing exchanges, and thus IEX does not believe that the
proposal raises any new or novel issues not already considered by the
Commission in the context of other exchanges' fees.
The Exchange further believes that the proposed rebate tiers are
consistent with the Act's requirement that the Exchange provide for an
equitable allocation of fees that is also not unfairly discriminatory,
because the proposed rebate tiers will apply based on a Member's
average daily volume (with no regard to the percentage of total market
volume reflected by their trades) in an equal and nondiscriminatory
manner to all Members, and all Members are eligible to qualify for any
of the proposed rebate tiers.
Furthermore, as discussed in the Purpose section, the Exchange
believes it is reasonable to adopt the proposed Displayed Liquidity
Removing Fee Tiers, including the proposed higher displayed liquidity
removing fee associated with Fee Tier 1 applied to Members that do not
trade a minimum amount of Added Displayed Liquidity volume on the
Exchange. In particular, the proposed fee tiers are designed to
incentivize IEX Members to enter increased displayed liquidity adding
orders on the Exchange in order to avoid the proposed higher fee tier.
The Exchange believes that the proposed fee tiers are equitable and not
unfairly discriminatory because they would apply to all similarly
situated Members and because any Member may avoid imposition of the
higher fees applied in Fee Tier 1 by adding the requisite level of
displayed liquidity to the Exchange during a month. As noted above, the
proposed Displayed Liquidity Removing Fee Tiers are within the range
charged by competing exchanges, and thus IEX believes they do not raise
any new or novel issues not already considered by the Commission in the
context of other exchanges' fees. Additionally, the Exchange believes
that the proposed fee tiers are reasonable because they are designed to
incentivize Members to maintain a meaningful level of liquidity-adding
activity on the Exchange.
The Exchange also believes that it is reasonable and consistent
with the Act not to modify its displayed fees for sub-dollar executions
to synchronize those fees with the proposed fees for executions at or
above $1.00 per share. The Exchange believes that the existing fee
structure for such executions continues to be reasonably designed to
incentivize displayed order flow (and orders seeking to trade with
displayed order flow) in such securities.
Further, IEX believes that it is reasonable and consistent with the
Act not to change the fees applicable to the execution of Retail orders
that remove liquidity, which will continue to execute for free. In this
regard, the Exchange believes that the existing fee structure continues
to be reasonably designed to incentivize the entry of Retail orders,
and notes that the Commission, in approving IEX's Retail Price
Improvement Program, acknowledged the value of exchanges' offering
incentives to attract both retail investor orders and orders
specifically designated to execute only with retail orders.\29\
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\29\ See Securities Exchange Act Release No. 86619 (August 9,
2019), 84 FR 41769, 41771 (August 15, 2019) (SR-IEX-2019-05).
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Finally, to the extent this proposed fee change is successful in
incentivizing the entry and execution of displayed orders on IEX, such
greater liquidity will benefit all market participants by increasing
price discovery and price formation as well as market quality and
execution opportunities. And, as discussed above, IEX does not believe
that any aspect of this proposal raises new or novel issues not already
considered by the Commission.
B. Self-Regulatory Organization's Statement on Burden on Competition
IEX 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. The Exchange does not believe
that the proposed rule change will impose any burden on intermarket
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. The Exchange operates in a highly competitive
market in which market participants can readily favor competing venues
if fee schedules at other venues are viewed as more favorable.
Consequently, the Exchange believes that the degree to which IEX fees
could impose any burden on competition is extremely limited, and does
not believe that such fees would burden competition between Members or
competing venues. Moreover, as noted in the Statutory Basis section,
the Exchange does not believe that the proposed changes raise any new
or novel issues not already considered by the Commission.
The Exchange does not believe that the proposed rule change will
impose any burden on intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act because, while
different rebates and fees
[[Page 67138]]
are assessed on Members, these rebate and fee tiers are not based on
the type of Member entering the orders that match, but rather on the
Member's own trading activity. Further, the proposed fee changes
continue to be intended to encourage market participants to bring
increased order flow to the Exchange, which benefits all market
participants.
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) \30\ of the Act.
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\30\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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 under
Section 19(b)(2)(B) \31\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\31\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#8af8ffe6efa7e9e5e7e7efe4fef9caf9efe9a4ede5fc"><span class="__cf_email__" data-cfemail="d5a7a0b9b0f8b6bab8b8b0bba1a695a6b0b6fbb2baa3">[email protected]</span></a>. Please include
file number SR-IEX-2024-13 on the subject line.
Paper Comments
<bullet> 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 number SR-IEX-2024-13. This file
number 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 (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). 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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-IEX-2024-13 and should be
submitted on or before September 9, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\32\
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\32\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-18472 Filed 8-16-24; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on August 19, 2024.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.