Notice2024-22415
Self-Regulatory Organizations; Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify a Representation in a Recent Rule Filing Regarding the Planned Migration of its System
Primary source
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Published
October 1, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 190 (Tuesday, October 1, 2024)</title>
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[Federal Register Volume 89, Number 190 (Tuesday, October 1, 2024)]
[Notices]
[Pages 79988-79990]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-22415]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101192; File No. SR-IEX-2024-18]
Self-Regulatory Organizations; Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Modify a
Representation in a Recent Rule Filing Regarding the Planned Migration
of its System
September 25, 2024.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on September 18, 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
and II 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 proposal to modify a representation in a recent rule
filing regarding the amount of advance notice IEX will give before
implementing that rule filing. The Exchange has designated this
proposal as non-controversial and is requesting a waiver of the notice
required by Rule 19b-4(f)(6)(iii) under the Act.\6\
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\4\ 15 U.S.C. 78s(b)(1).
\5\ 17 CFR 240.19b-4.
\6\ 17 CFR 240.19b-4(f)(6)(iii).
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There is no rule text for this proposed rule change.
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
On September 4, 2024, in connection with IEX's planned migration of
its System \7\ from a data center located in Weehawken, New Jersey to a
data center located in Secaucus, New Jersey, IEX filed with the
Commission an immediately effective proposed rule change.\8\ The Data
Center Migration Filing amended IEX Rules 11.190 and 11.510 to remove
references to the latency applicable to outbound communications from
IEX's System (``outbound latency'') to its Users \9\ (defined as
Members \10\ and Sponsored Participants \11\), Data Recipients \12\,
and Service Bureaus \13\ (collectively, ``Participants'' \14\); the
filing also added Temporary Supplementary Material .01 to IEX Rule
11.510(a) to describe the minor temporary change in inbound latency
\15\ during the data center migration. The Data Center Migration Filing
included a representation that IEX would issue a Trading Alert at least
30 days in advance of the migration ``describing the transition,
schedule, and impact.'' \16\ For the reasons set forth below, IEX is
making this filing to modify the advance notice period in the Data
Center Migration Filing from 30 to 28 days.
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\7\ See IEX Rule 1.160(nn).
\8\ See Securities Exchange Act Release No. 101018 (September
12, 2024), 89 FR 76526 (September 18, 2024) (SR-IEX-2024-17) (``Data
Center Migration Filing'').
\9\ See IEX Rule 1.160(qq).
\10\ See IEX Rule 1.160(s).
\11\ See IEX Rule 1.160(ll).
\12\ See IEX Rule 11.130(c).
\13\ See IEX Rule 11.130(d).
\14\ See IEX Rule 11.130(a).
\15\ See IEX Rule 11.510(b)(1).
\16\ See supra note 5.
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IEX has issued three Trading Alerts informing market participants
about the
[[Page 79989]]
planned data center migration. The first Trading Alert, issued on
August 29, 2024 (``August 29 Alert''), informed Participants of the
data center migration planned for the fourth quarter of 2024, described
how the migration would reduce the outbound latency from 37
microseconds to a negligible latency, explained that Participants would
not need to make any configuration changes to accommodate the data
center migration, and provided three Saturday testing dates in
September 2024.\17\ The second Trading Alert, issued on September 9,
2024 (``September 9 Alert''), provided additional detail about the data
center migration planned for the fourth quarter of 2024.\18\ In
particular, the September 9 Alert detailed the temporary change to
IEX's inbound latency during the migration: from 350 to 387
microseconds for inbound messages and from 350 to 424 microseconds for
routable orders.\19\ The September 9 Alert also provided an overview of
the migration schedule that would entail migrating client gateways,
market data feeds, and matching engines on a symbol-by-symbol
basis.\20\
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\17\ See IEX Trading Alert #2024-024, <a href="https://iextrading.com/alerts/#/263">https://iextrading.com/alerts/#/263</a>. IEX understands that Members that use arrival-time
routing strategies may choose to update their routing logic during
the migration period.
\18\ See IEX Trading Alert #2024-027, <a href="https://iextrading.com/alerts/#/256">https://iextrading.com/alerts/#/256</a>.
\19\ Id.
\20\ Id.
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On Monday, September 16, 2024, IEX issued a third Trading Alert
(``September 16 Alert''), which announced the October 14, 2024
scheduled commencement of the data center migration and detailed which
aspects of the System would be migrated until the October 31, 2024
completion.\21\
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\21\ See IEX Trading Alert #2024-028, <a href="https://iextrading.com/alerts/#/266">https://iextrading.com/alerts/#/266</a>.
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IEX waited until September 16 to announce the October 14 migration
start date to allow for testing of our fallback mechanisms for the
migration, as well as confirmatory testing of connectivity to the CTA
SIP conducted over the prior weekend (September 14 and 15).
Additionally, IEX wanted to offer Participants an opportunity to
connect to and test the new data center, which it did on September 14.
While September 16 is 28 days before the migration start date, as noted
above, IEX already provided more than 30 days' notice to market
participants of the planned migration before it issued the September 14
Alert. Furthermore, IEX believes 28 days' advance notice provides
sufficient advance notice of the migration schedule to inform
Participants who may need to prepare for the migration.
IEX selected Monday, October 14, 2024, as the migration start date
for two primary reasons. First, the migration must start on a Monday to
allow IEX's technology team to use the preceding weekend to physically
relocate equipment from the Weehawken data center to the Secaucus data
center and to test that the equipment is properly installed in the
Secaucus data center. Second, IEX determined it would be optimal to
start the migration on October 14, for several logistical reasons,
including that commencing the migration on October 14 will allow IEX
sufficient time to fully decommission or relocate IEX's equipment
currently housed in the Weehawken data center, without causing any
undue hardship to the Exchange.
Thus, for the reasons set forth above, IEX is filing this proposal
to modify the 30 days' advance notice requirement to 28 days' advance
notice. With this filing, the September 16 Alert will be deemed to
provide timely notice of the migration. If, for an unforeseen reason,
IEX must delay the October 14, 2024 data center migration start date,
IEX will issue an additional Trading Alert providing at least 10 days'
notice of the new start date for the migration.
2. Statutory Basis
IEX believes that its proposal is consistent with the provisions of
Section 6(b) of the Act \22\ in general, and with Section 6(b)(5) of
the Act,\23\ in particular, in that it is designed to promote just and
equitable principles of trade, to remove impediments to and perfect the
mechanism of a free and open market and a national market system and,
in general, to protect investors and the public interest. Specifically,
the proposal is consistent with the Act because the three Trading
Alerts described in the Purpose section provided appropriate
transparency and clarity to market participants and the Commission
regarding the data center migration and the related rule changes.
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\22\ 15 U.S.C. 78f(b).
\23\ 15 U.S.C. 78f(b)(5).
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As noted in the Purpose section, Participants will not need to make
any configuration changes to accommodate the reduction in IEX's
outbound latency set forth in the Data Center Migration Filing.
Participants also will not need to make any configuration changes to
accommodate the temporary increases to IEX's inbound latency set forth
in the Data Center Migration Filing. Nevertheless, IEX understands that
Members that use arrival-time routing strategies may choose to update
their routing logic during the migration period. Thus, IEX believes it
is consistent with the Act to provide at least 28 days' notice of the
start date of the data center migration, and that the advance notice
IEX provided of its data center migration is more than sufficient
notice to remove impediments to and perfect the mechanism of a free and
open market and to protect investors and the public interest.
Additionally, as described in the Purpose section, reducing from 30
to 28 days the amount of advance notice IEX must give to Participants
of the data center migration schedule allowed IEX sufficient time to
fully test the data center migration before announcing the start date
(including allowing Participants a testing date on September 14), and
allows enough time for IEX to conduct an orderly migration and to
properly decommission its Weehawken data center. Thus, this slightly
reduced notice period is designed to allow IEX to maintain a
functioning market without interruption during the migration, which is
consistent with the requirements of the Act that a rule change should
remove impediments to and perfect the mechanism of a free and open
market and protect investors.
B. Self-Regulatory Organization's Statement on Burden on Competition
IEX does not believe that the proposal will result in any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. As explained above, the purpose of this proposal
is to modify from 30 to 28 days the amount of advance notice IEX must
give to Participants of the data migration schedule. This modest
reduction in the amount of advance notice IEX must give of the
migration start date will impact all market participants equally. The
Exchange does not expect the slightly shorter notice period to place
any burden on competition. Rather, the change to the notice period will
allow the Exchange to implement the data center migration in a thorough
and risk averse manner and is not designed for any competitive purpose.
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.
[[Page 79990]]
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)(iii) \24\ of the Act and Rule 19b-4(f)(6) thereunder \25\
in that it effects a change that: (i) does not significantly affect the
protection of investors or the public interest; (ii) does not impose
any significant burden on competition; and (iii) by its terms, does not
become operative for 30 days after the date of the filing, or such
shorter time as the Commission may designate if consistent with the
protection of investors and the public interest.
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\24\ 15 U.S.C. 78s(b)(3)(A)(iii).
\25\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of the filing of the
proposed rule change, or such shorter time as designated by the
Commission. The Exchange requested waiver of the five-day prefiling
requirement for this proposal for the reasons stated in its filing,
which the Commission hereby grants.
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A proposed rule change filed under Rule 19b-4(f)(6) \26\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\27\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay contained in Rule
19b-4(f)(6)(iii).\28\ The Exchange stated that waiver of the 30-day
delay would permit the Exchange to promptly notify market participants
of the data center migration schedule without any confusion as to
whether IEX has provided sufficient advance notice of the migration,
thereby allowing market participants sufficient time to test the new
data center configuration and update any routing logic to account for
the temporary changes to IEX's inbound latency during the migration. In
the filing, IEX confirmed that it issued a Trading Alert on September
16 with details on the migration from the Weehawken data center to the
Secaucus data center at least 28 days prior to starting the migration,
which is currently planned for October 14. IEX further represented that
it provided Participants one round of testing before issuing the
September 16 Trading Alert. The proposed modification of the duration
of the notice by IEX to its members of the data center migration from
30 days to 28 days to account for an intervening weekend during which
IEX allowed participants to connect to and test the new data center
does not raise any novel issues and provides sufficient clarification
of IEX's previously-announced intentions regarding the timing of the
migration, especially in light of the two prior Trading Alerts that IEX
issued on August 29 and September 9, and therefore waiver of the 30-day
operative delay is consistent with the protection of investors and the
public interest. Accordingly, the Commission hereby waives the 30-day
operative delay and designates the proposal operative upon filing.\29\
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\26\ 17 CFR 240.19b-4(f)(6).
\27\ 17 CFR 240.19b-4(f)(6)(iii).
\28\ 17 CFR 240.19b-4(f)(6)(iii).
\29\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule change's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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) \30\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\30\ 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#443631282169272b2929212a3037043721276a232b32"><span class="__cf_email__" data-cfemail="0270776e672f616d6f6f676c7671427167612c656d74">[email protected]</span></a>. Please include
file number SR-IEX-2024-18 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-2024-18. 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-2024-18 and should be
submitted on or before October 22, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\31\
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\31\ 17 CFR 200.30-3(a)(12) and (59).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-22415 Filed 9-30-24; 8:45 am]
BILLING CODE 8011-01-P
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