Notice2025-22468
Self-Regulatory Organizations; Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend IEX's Fee Schedule Concerning the Supplemental Market Quality Program
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Published
December 11, 2025
Issuing agencies
Securities and Exchange Commission
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<title>Federal Register, Volume 90 Issue 236 (Thursday, December 11, 2025)</title>
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[Federal Register Volume 90, Number 236 (Thursday, December 11, 2025)]
[Notices]
[Pages 57502-57505]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-22468]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104343; File No. SR-IEX-2025-32]
Self-Regulatory Organizations; Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
IEX's Fee Schedule Concerning the Supplemental Market Quality Program
December 8, 2025.
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 November 26, 2025, 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) to lower the barriers to qualification for the
Supplemental Market Quality Program incentive payments. Changes to the
Fee Schedule pursuant to this proposal are effective upon filing,\8\
and will be operative beginning on December 1, 2025.
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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="https://www.iexexchange.io/resources/regulation/rule-filings">https://www.iexexchange.io/resources/regulation/rule-filings</a>
and at the principal office of the Exchange.
II. Self-Regulatory Organization's Statement of the Purpose of, and the
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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Fee Schedule to modify the
Supplemental Market Quality Program (``SMQ'' or the ``Program'') \9\ to
lower the barriers to qualify for the incentive payments by counting
qualifying activity in any eligible security when determining if a
Member satisfied the Program's requirements for that month. The
Exchange also proposes to make conforming changes to the Fee Schedule
to reflect the changes to the SMQ. As described below, this proposed
rule change is designed to make it easier for Members to qualify for
the SMQ.
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\9\ The Exchange filed the proposed rule change establishing the
SMQ on May 16, 2025. See Securities Exchange Act Release No. 103131
(May 27, 2025), 90 FR 23397 (June 2, 2025) (SR-IEX-2025-07) (``SMQ
Product Filing'').
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Background
The Program is intended to increase displayed liquidity and promote
order flow to the Exchange by offering a financial incentive (the ``SMQ
Incentive Payment'') for Members to enter displayed orders or quotes
(i.e., displayed trading interest) priced at the NBBO \10\ on the
Exchange for a significant portion of the day in certain securities
designated by the Exchange as either SMQ Level 1 Securities or SMQ
Level 2 Securities (collectively ``SMQ Securities'').\11\
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\10\ See IEX Rule 1.160(u).
\11\ Information about the objective criteria applied by the
Exchange in determining which securities to designate as SMQ Level 1
or SMQ Level 2 Securities can be found in the rule filing that
established the two SMQ tiers. See Securities Exchange Act Release
No. 104221 (November 19, 2025), 90 FR 53037 (November 24, 2025) (SR-
IEX-2025-27).
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[[Page 57503]]
To qualify for the SMQ Incentive Payment, a Member must enter
displayed trading interest of at least one round lot at either the NBB,
the NBO, or the NBBO, for at least 40% of the time during regular
market hours in at least 100 of the SMQ Level 1 Securities or at least
20 of the SMQ Level 2 Securities (based on an average daily number)
during the month. IEX defines these quoting requirements as ``Percent
Time at NBB'' \12\ and ``Percent Time at NBO'',\13\ which added
together are called ``NBBO Time.'' \14\ Members that qualify for the
SMQ based upon their quoting activity in SMQ Level 1 Securities receive
an ``SMQ Incentive Payment'' of $125 per qualified security, and
Members that qualify for the SMQ based upon their quoting activity in
SMQ Level 2 Securities receive an ``SMQ Incentive Payment'' of $400 per
qualified security. As set forth in the Fee Schedule, a Member that
satisfies the Program's requirements receives an ``SMQ Payout'', which
is a lump sum payment determined by multiplying the applicable SMQ
Incentive Payment times the number of qualified securities in which the
Member had ``SMQ Qualifying Activity.'' \15\ The following examples
demonstrate how a Member can earn SMQ Payouts based upon its quoting
activity in either SMQ Level 1 Securities, SMQ Level 2 Securities, or
both:
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\12\ As set forth in the Fee Schedule, ``Percent Time at NBB''
means the aggregate of the percentage of time during Regular Market
Hours where a Member has a displayed order of at least one round lot
at the national best bid (``NBB'').
\13\ As set forth in the Fee Schedule, ``Percent Time at NBO''
means the aggregate of the percentage of time during Regular Market
Hours where a Member has a displayed order of at least one round lot
at the national best offer (``NBO'').
\14\ IEX notes that if a Member enters displayed trading
interest of at least one round lot at both the NBB and the NBO, each
of those quotes will be counted towards the Member's NBBO Time.
\15\ As set forth in the Fee Schedule, ``SMQ Qualifying
Activity'' is calculated at the end of the month by taking the
average (rounded to the nearest whole number) of the number of SMQ
Level 1 and/or Level 2 Securities for which the Member's NBBO Time
was at least the threshold value set forth in the SMQ Calculation
Tables below.
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Example 1
<bullet> Member has NBBO Time of at least 40% in 110 SMQ Level 1
Securities and NBBO Time of at least 40% in 10 SMQ Level 2 Securities.
<bullet> Member qualifies for an SMQ Payout of $13,750 for its
quoting activity in SMQ Level 1 Securities ($125 SMQ Incentive Payment
per qualified security times 110 SMQ Level 1 Securities).
<bullet> Member does not qualify for an SMQ Payout for its quoting
activity in SMQ Level 2 Securities (because it did not have SMQ
Qualifying Activity for at least 20 SMQ Level 2 Securities).
<bullet> Member's monthly SMQ Payout is $13,750.
Example 2
<bullet> Member has NBBO Time of at least 40% in in 90 SMQ Level 1
Securities and NBBO Time of at least 40% in 22 SMQ Level 2 Securities.
<bullet> Member qualifies for an SMQ Payout of $8,800 for its
quoting activity in SMQ Level 2 Securities ($400 SMQ Incentive Payment
per qualified security times 22 SMQ Level 2 Securities).
<bullet> Member does not qualify for an SMQ Payout for its quoting
activity in SMQ Level 1 Securities (because it did not have SMQ
Qualifying Activity for at least 100 SMQ Level 1 Securities).
<bullet> Member's monthly SMQ Payout is $8,800.
Example 3
<bullet> Member has NBBO Time of at least 40% in 110 SMQ Level 1
Securities and NBBO Time of at least 40% in 22 SMQ Level 2 Securities.
<bullet> Member qualifies for an SMQ Payout of $13,750 for its
quoting activity in SMQ Level 1 Securities ($125 SMQ Incentive Payment
per qualified security times 110 SMQ Level 1 Securities).
<bullet> Member qualifies for an SMQ Payout of $8,800 for its
quoting activity in SMQ Level 2 Securities ($400 SMQ Incentive Payment
per qualified security times 22 SMQ Level 2 Securities).
<bullet> Member's monthly SMQ Payout is $22,550.
However, if a Member does not meet the quoting threshold for either
SMQ Level 1 or Level 2 Securities, the Member will not receive an SMQ
Payout for that month, as demonstrated in the following example:
Example 4
<bullet> Member has NBBO Time of at least 40% in 90 SMQ Level 1
Securities and in 15 SMQ Level 2 Securities.
<bullet> Member does not qualify for an SMQ Payout for its quoting
activity in SMQ Level 1 Securities (because it did not have SMQ
Qualifying Activity for at least 100 SMQ Level 1 Securities)
<bullet> Member does not qualify for an SMQ Payout for its quoting
activity in SMQ Level 2 Securities (because it did not have SMQ
Qualifying Activity for at least 20 SMQ Level 2 Securities).
<bullet> Member does not receive an SMQ Payout for that month.
Proposal
IEX proposes to lower the barriers for qualifying for the SMQ by
counting a Member's quoting activity in either SMQ Level 1 or SMQ Level
2 Securities towards that Member's SMQ Qualifying Activity for the
month. As proposed, a Member could qualify for the SMQ Payout by
entering displayed trading interest of at least one round lot at either
the NBB, the NBO, or the NBBO, for at least 40% of the time during
regular market hours in 100 or more SMQ Level 1 or Level 2 Securities.
Thus, the Member described in Example 4 would now qualify for an SMQ
Payout as follows:
Example 4-A
<bullet> Member has NBBO Time of at least 40% in 90 SMQ Level 1
Securities and in 15 SMQ Level 2 Securities.
<bullet> Member satisfies the Program's requirements, because it
had SMQ Qualifying Activity in 105 SMQ Securities (counting Level 1 and
Level 2 together), which exceeds the Program requirement to have SMQ
Qualifying Activity in at least 100 SMQ Securities.
<bullet> Member qualifies for an SMQ Payout of $11,250 for its
quoting activity in SMQ Level 1 Securities ($125 SMQ Incentive Payment
per qualified security times 90 SMQ Level 1 Securities).
<bullet> Member qualifies for an SMQ Payout of $6,000 for its
quoting activity in SMQ Level 2 Securities ($400 SMQ Incentive Payment
per qualified security times 15 SMQ Level 2 Securities).
<bullet> Member's monthly SMQ Payout is $17,250.
IEX makes this proposal to further incentivize Members to enter
displayed interest in SMQ Level 2 Securities, which, by design, are
more difficult securities in which to meet the quoting requirements for
the Program.\16\ As a result, IEX expects there will typically be many
more securities on the SMQ Level 1 list than on the SMQ Level 2 list,
which means Members have more opportunities to qualify for the SMQ
based upon quoting activity in SMQ Level 1 Securities.\17\ Thus, a
Member that enters qualified displayed trading interest in at least 100
of the 650 SMQ Level 1 Securities will both receive SMQ Incentive
Payments for that quoting activity and for any qualifying quoting
activity in SMQ Level 2 Securities.
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\16\ See supra note 11.
\17\ For example, since October 1, 2025, IEX has designated 650
securities as SMQ Level 1 Securities and 100 securities as SMQ Level
2 securities. See SMQ Security List, <a href="https://www.iexexchange.io/resources/trading/supplemental-market-quality-program">https://www.iexexchange.io/resources/trading/supplemental-market-quality-program</a>.
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[[Page 57504]]
To make this change, IEX proposes to remove the SMQ Level 2
Calculation Table from the Fee Schedule and to revise the SMQ Level 1
Calculation Table so that it applies to all SMQ Qualifying Activity. As
proposed, the table will now read as follows:
SMQ Calculation Table
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SMQ Qualifying Activity: average daily
number of SMQ Securities with an NBBO SMQ incentive payment
time of at least 40%
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0-99................................... $0 per qualified security per
month.
100 or more SMQ Securities *........... $125 per qualified SMQ Level 1
Security per month.
$400 per qualified SMQ Level 2
Security per month.
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* SMQ Payouts will be made for all qualified securities if Member had
SMQ Qualifying Activity in at least 100 SMQ Securities during the
month.
IEX also proposes to make the following conforming changes to the
SMQ section of the Fee Schedule:
<bullet> In the bullet describing ``SMQ Qualifying Activity'',
remove the references to ``Level 1 and/or Level 2'' and revise
``Calculation Tables'' to read ``SMQ Calculation Table''.
<bullet> In the bullet describing ``SMQ Payout'' remove the ``s''
from ``Calculation Tables'' to reflect that there is now only one
Calculation Table and revise the final sentence by adding ``for the
qualified securities in which the Member had SMQ Qualifying Activity''
to the end.
Finally, as noted in the SMQ Product Filing, the SMQ Program is
similar to quote incentive programs at other national securities
exchanges.\18\
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\18\ See SMQ Product Filing, supra note 9, 90 FR at 23400
(comparing the SMQ to the Enhanced Market Quality Program offered by
Nasdaq BX, the Market Quality program offered by MIAX PEARL, and
Cboe EDGA's NBBO Setter Program); see also LTSE's Liquidity
Incentive Program, available at <a href="https://ltse.com/trading/fee-schedules">https://ltse.com/trading/fee-schedules</a>.
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2. Statutory Basis
IEX believes that the proposed rule change is consistent with the
provisions of Section 6(b) \19\ of the Act in general, and furthers the
objectives of Sections 6(b)(4) \20\ 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 is not designed to permit unfair
discrimination.
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\19\ 15 U.S.C. 78f.
\20\ 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
believes that it will be able to more effectively compete with other
exchanges for order flow by lowering the barriers to qualify for the
SMQ. IEX believes that Members and other market participants may be
more willing to send displayed trading interest to IEX if the proposed
rule change is adopted.
IEX believes that an increase in displayed liquidity and order flow
to the Exchange will, in turn, improve the quality of the IEX market
and increase its attractiveness to existing and prospective
participants. In addition, the proposal is equitable and not designed
to permit unfair discrimination as the proposal would equitably
allocate SMQ Payouts among Members by paying Members based on their
total quoting activity in SMQ Level 1 Securities and SMQ Level 2
Securities in any given month.
As noted in the Purpose section, the Exchange believes the proposed
incentive payments in the SMQ will incentivize Members to direct
additional displayed liquidity-providing orders to the Exchange in SMQ
Securities, thereby promoting price discovery and market quality in the
SMQ Securities and more generally on the Exchange, and, further, that
the resulting increased displayed liquidity and narrower spreads will
benefit all investors by deepening the Exchange's liquidity pool,
supporting the quality of price discovery, enhancing quoting
competition across all exchanges, and promoting market transparency.
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. The SMQ is comparable to quote incentive programs at other
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.\21\ To the extent this proposed fee
change is successful in incentivizing the entry and execution of
displayed trading interest 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.
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\21\ See supra note 18.
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Finally, the Exchange believes that the proposed conforming changes
to the Fee Schedule are consistent with the requirements above. These
proposed changes are designed to reduce any potential confusion for
market participants using IEX's Fee Schedule and to provide clarity,
accuracy, and consistency between the Fee Schedule and the Rule Book.
Further, IEX believes these changes would contribute to reasonably
ensuring that the requirements of the SMQ Program, and any other
activity-based incentive or rebate described in the Fee Schedule, are
clear, accurate, and consistent with the Rule Book.
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
[[Page 57505]]
because, while different Members may qualify for different amounts of
SMQ Payouts, these payments are not based on the type of Member
entering the displayed trading interest, but rather on the amount of
displayed trading interest in a wide range of eligible securities that
each Member submits to the Exchange. Further, the proposed fee changes
are intended to incentivize 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) \22\ of the Act.
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\22\ 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) \23\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\23\ 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#e391968f86ce808c8e8e868d9790a3908680cd848c95"><span class="__cf_email__" data-cfemail="552720393078363a3838303b2126152630367b323a23">[email protected]</span></a>. Please include
File Number SR-IEX-2025-32 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-2025-32. 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 filing 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-2025-32 and should be submitted on
or before January 2, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
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\24\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-22468 Filed 12-10-25; 8:45 am]
BILLING CODE 8011-01-P
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