Notice2026-04502
Self-Regulatory Organizations; Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Harmonize Rules 9.261, 9.341, 9.524, and 9.830 With Rule Changes Made by the Financial Industry Regulatory Authority, Inc. That Allow for Video Conference Hearings Under Specified Conditions
Primary source
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Published
March 9, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 45 (Monday, March 9, 2026)</title>
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[Federal Register Volume 91, Number 45 (Monday, March 9, 2026)]
[Notices]
[Pages 11353-11356]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-04502]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104925; File No. SR-IEX-2026-06]
Self-Regulatory Organizations; Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Harmonize
Rules 9.261, 9.341, 9.524, and 9.830 With Rule Changes Made by the
Financial Industry Regulatory Authority, Inc. That Allow for Video
Conference Hearings Under Specified Conditions
March 4, 2026.
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 February 23, 2026, 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) of the Act,\4\ IEX
is filing with the Commission a proposed rule change to harmonize Rules
9.261, 9.341, 9.524, and 9.830 with rule changes made by the Financial
Industry Regulatory Authority, Inc. (``FINRA'') that allow for video
conference hearings under specified conditions.
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\4\ 15 U.S.C. 78s(b)(1).
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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
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 harmonize IEX Rules 9.261, 9.341, 9.524,
and 9.830 with rule changes made by FINRA that allow for video
conference hearings under specified conditions.\5\
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\5\ See Securities Exchange Act Release No. 98029 (August 4,
2023), 88 FR 51879 (August 4, 2023) (SR-FINRA-2023-008) (``FINRA
Approval Order'').
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Background
Chapter 9 of the IEX Rulebook, which is titled ``Code of
Procedure'', sets forth rules for conducting investigations and
enforcement actions regarding Members and persons associated with
Members.\6\ IEX's Code of Procedure is modeled on FINRA Rule Series
9000, which sets forth FINRA's ``Code of Procedure'' for conducting
investigations and enforcement actions.
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\6\ See IEX Rule 1.160(s).
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In adopting disciplinary rules modeled on FINRA's rules, IEX
adopted the hearing and evidentiary processes, as well as the appeals
process, set forth in FINRA Rules 9261, 9341, 9524, and 9830, which are
reproduced in IEX Rules 9.261, 9.341, 9.524, and 9.830.\7\
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\7\ There is one difference between FINRA Rule 9524 and IEX Rule
9.524. FINRA Rule 9524 governs the process by which a statutorily
disqualified member firm or associated person can appeal a
recommendation by the FINRA Department of Member Regulation to deny
a firm or sponsoring firm's application to the NAC. IEX Rule 9.524
provides that if the Chief Regulatory Officer rejects its
application, a Member or applicant may request a review by the
Appeals Committee of the Exchange Board of Directors. This differs
from FINRA's process, which provides for a hearing before the
National Adjudicatory Council (``NAC'') and further consideration by
the FINRA Board of Directors.
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In 2020, given the spread of COVID-19 and its effect on FINRA's
adjudicatory functions nationwide, FINRA filed a temporary rule change
to grant FINRA's Office of Hearing Officers (``OHO'') and the NAC the
authority to conduct certain hearings by video conference if warranted
by the COVID-19-related public health risks posed by in-person
hearings. Among the rules FINRA temporarily amended were FINRA Rules
9261, 9524, and 9830.\8\
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\8\ See Securities Exchange Act Release Nos. 83289 (September 2,
2020), 85 FR 55712 (September 9, 2020) (SR-FINRA-2020-027)
(``Temporary Amendments Filing'').
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In its Temporary Amendments Filing, FINRA represented that its
protocol for conducting hearings by video conference would ensure that
such hearings maintain a fair process for the parties by, among other
things, FINRA's use of a high quality, secure and user-friendly video
conferencing service and provision of thorough instructions, training
and technical support to all hearing participants.\9\ According to
FINRA, the changes were a reasonable interim solution to allow FINRA's
critical adjudicatory processes to continue to function while
protecting the health and safety of hearing participants.\10\
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\9\ See id., at 55713.
\10\ Id.
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In 2023, FINRA filed a proposed rule change to make the temporary
amendments regarding video conference hearings permanent, with some
modifications to permit the use of video conferences for reasons beyond
the COVID-19 pandemic.\11\ The SEC approved FINRA's proposal.\12\ Among
other changes, FINRA amended Rules 9261 (Evidence and Procedure in
Hearing), 9341 (Oral Argument), 9524 (National Adjudicatory Council
Consideration), and 9830 (Hearing) to grant hearing officers the
authority to
[[Page 11354]]
order hearings by video conference in situations in which proceeding in
person could endanger the health or safety of the participant or
alternatively would be impracticable (e.g., an uncommon situation or
extraordinary circumstances such as a natural disaster or terrorist
attack that caused travel to be canceled for an extended period of
time).\13\ Under the amended rules, OHO has discretion to determine
whether the circumstances for a video hearing have been met and can act
quickly if a future unexpected event impairs their ability to conduct
in-person hearings safely.\14\ In addition, the amended rules gave OHO
the authority to order hearings to occur by video conference based on a
motion,\15\ and gave the NAC the authority and discretion to conduct
oral argument by video conference for ``other reasons'' unless any
party demonstrates that conducting oral argument via video conference
would materiality disadvantage the party.\16\
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\11\ See Securities Exchange Act Release No. 97403 (April 28,
2023), 88 FR 28645 (May 4, 2023) (SR-FINRA-2023-008).
\12\ See FINRA Approval Order, supra note 4.
\13\ See id., supra note 4 at 51880.
\14\ Id.
\15\ See FINRA Rules 9261 and 9830.
\16\ See FINRA Approval Order, supra note 4 at 51880.
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As the FINRA Approval Order noted, FINRA represented that it will
utilize the same protocols for conducting video conference hearings as
those employed under the temporary COVID-related amendments, including
using a high quality, secure, user-friendly video conferencing service
and providing thorough instructions, training, and technical support to
all hearing participants.\17\ In addition, the FINRA Approval Order
noted that, according to FINRA, the parties could file a joint motion
requesting the hearing to occur, in whole or in part, by video
conference based on a showing of good cause. In-person hearings,
however, would remain the default method for conducting hearings.\18\
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\17\ Id.
\18\ Id.
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Further, as noted in the FINRA Approval Order, given the nature of
evidentiary hearings,\19\ which often occur over multiple days and
generally include numerous documents in evidence and witness testimony,
motions for a hearing by video conference would need to be joined by
all parties, and even joint motions could be denied if the adjudicator
determines that good cause has not been shown.\20\ According to FINRA,
OHO would have reasonable discretion based on a joint motion of the
parties to exercise its authority to determine whether a hearing should
occur by video conference under the proposed rule change.\21\ Moreover,
in deciding whether to schedule a hearing by video conference, OHO
could consider and balance a variety of factors including, for example
and without limitation, a hearing participant's individual health
concerns and access to the connectivity and technology necessary to
participate in a video conference hearing. Additionally, as noted
above, OHO may consider whether a situation is uncommon or there are
extraordinary circumstances.\22\
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\19\ As used herein, ``evidentiary hearings'' refers to hearings
conducted before OHO under FINRA Rules 9261 and 9830. See FINRA
Approval Order, supra note 4 at 51880 n. 25.
\20\ See FINRA Approval Order, supra note 4 at 51881.
\21\ Id.
\22\ See text accompanying note 12, supra.
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Finally, the FINRA Approval Order noted that for approximately two
and a half years, while the temporary amendments were in effect, OHO
successfully conducted numerous hearings by video conference using
Zoom, a system which was vetted by FINRA's information technology
staff.\23\ FINRA stated that this use of video conference technology
has been an effective and efficient alternative to in-person
hearings.\24\
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\23\ See FINRA Approval Order, supra note 4 at 51880.
\24\ Id.
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Proposed Rule Change
Given that FINRA and OHO administer disciplinary hearings on the
Exchange's behalf pursuant to a regulatory services agreement
(``RSA''), and that the public health concerns addressed by FINRA's
video conference provisions in the above described rules apply equally
to the Exchange's disciplinary hearings, IEX proposes to amend IEX
Rules 9.261, 9.341, 9.524, and 9.830 to incorporate the equivalent
mechanism for conducting a hearing, oral argument, or appeal via video
conference in the same specific circumstances set forth in the amended
FINRA rules. As noted, FINRA has adopted a detailed and thorough
protocol to ensure that hearings conducted by video conference will
maintain a fair process for the parties.\25\ Moreover, the proposed
rule change would modernize existing procedures and allow parties who
jointly prefer video conference to potentially save travel costs and
time. As proposed, the use of video conferences would be limited and
controlled, and in-person hearings would continue to be the default
method for conducting hearings.\26\ Furthermore, the proposed rule
changes include procedural safeguards to ensure fairness, such as the
requirement that for evidentiary hearings that any motions be joined by
all parties and show good cause.\27\ The Exchange believes that these
are reasonable procedures to follow in hearings, arguments, and appeals
conducted pursuant to IEX Rules 9.261, 9.341, 9.524, and 9.830.
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\25\ See text accompanying note 8, supra.
\26\ See FINRA Approval Order, supra note 4 at 51882.
\27\ Id.
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To effectuate these changes, IEX proposes to amend these four rules
as follows:
<bullet> Add a new sentence to the end of IEX Rule 9.261(b)
(Evidence and Procedure in Hearing: Party's Right to Be Heard) that
reads as follows:
[cir] ``Upon a determination that proceeding in person may
endanger the health or safety of the participants or would be
impracticable, or upon consideration of a joint motion of the
Parties for good cause shown, the Chief Hearing Officer or Deputy
Chief Hearing Officer may, in the exercise of reasonable discretion,
order the hearing to be conducted, in whole or in part, by video
conference.''
<bullet> Amend IEX Rule 9.341(d) (Oral Argument: Attendance
Required) as follows:
[cir] Change the subparagraph name from ``Attendance Required''
to ``Mode of Oral Argument''
[cir] In the second sentence, replace ``be present for'' with
``participate in'' so that the rule states that ``all members of the
IEX Appeals Committee shall participate in the oral argument.''
[cir] Add a new third sentence that reads in full:
[ssquf] ``The IEX Appeals Committee may, in the exercise of
reasonable discretion, order oral argument by video conference, in
whole or in part, (i) upon a determination that proceeding in person
may endanger the health or safety of the participants or would be
impracticable; or (ii) upon a determination, on its own or on motion
of a Party, that oral argument should occur by video conference for
other reasons, unless any Party demonstrates that conducting oral
argument by video conference would materially disadvantage that
Party.''
<bullet> Add a new sentence to the end of IEX Rule 9.524(a)(4)
(IEX Appeals Committee Consideration: Rights of Disqualified Member,
Sponsoring Member, Disqualified Person, and Department of Member
Regulation) that reads as follows:
[cir] ``Upon a determination that proceeding in person may
endanger the health or safety of the participants or would be
impracticable, or upon consideration of a joint motion of the
Parties for good cause shown, the Hearing Panel may, in the exercise
of reasonable discretion, order the hearing to be conducted, in
whole or in part, by video conference.''
<bullet> Add a new sentence to the end of IEX Rule 9.830(a)
(Hearing: When Held) that reads as follows:
[cir] ``Upon a determination that proceeding in person may
endanger the health or safety
[[Page 11355]]
of the participants or would be impracticable, or upon consideration
of a joint motion of the Parties for good cause shown, the Chief
Hearing Officer or Deputy Chief Hearing Officer may, in the exercise
of reasonable discretion, order the hearing to be conducted, in
whole or in part, by video conference.''
IEX believes these proposed changes will modernize its rules and
make oral arguments, hearings, and appeals more efficient and effective
because it will update these four IEX rules with identical language
adopted by FINRA.
2. Statutory Basis
IEX believes that the proposed rule change is consistent with the
provisions of Section 6(b) of the Act,\28\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\29\ in particular, because it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, and, in general, to
protect investors and the public interest. Additionally, the Exchange
believes the proposed rule change is designed to provide a fair
procedure for the disciplining of Members \30\ and persons associated
with Members, consistent with Sections 6(b)(7) and 6(d) of the Act.\31\
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\28\ 15 U.S.C. 78f(b).
\29\ 15 U.S.C. 78f(b)(5).
\30\ See IEX Rule 1.160(s).
\31\ 15 U.S.C. 78f(b)(7) and 78f(d).
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The Exchange believes that the proposed rule changes support the
objectives of the Act by harmonizing Exchange rules modeled on FINRA's
rules with those same rules, resulting in less burdensome and more
efficient regulatory compliance. As previously noted, the additional
text proposed for IEX Rules 9261, 9.341, 9.524, 9830 is identical to
the text in the counterpart FINRA rules. As such, the proposed rule
change would facilitate rule harmonization among self-regulatory
organizations with respect to the conduct of video conference hearings,
thereby fostering cooperation and coordination with persons engaged in
facilitating transactions in securities and will remove impediments to
and perfect the mechanism of a free and open market and a national
market system.
IEX believes that the proposed rule change is designed to protect
investors and the public interest by requiring use of broadly available
technology to allow hearings to proceed by video conference under
certain circumstances. The Exchange's disciplinary proceedings serve a
critical role in providing investor protection and maintaining fair and
orderly markets by, for example, sanctioning misconduct and preventing
further customer harm by Members and associated persons. The proposed
rule change would encourage the prompt resolution of these cases while
preserving fair process. The Exchange believes that this is especially
important in matters where temporary and permanent cease and desist
orders are sought because the proposed rule change would enable those
hearings to proceed without delay, thereby enabling the Exchange to
take immediate action to stop significant, ongoing harm, to the benefit
of the investing public.
The proposed rule change is also designed to promote efficiency by
permitting hearings to occur by video conference in situations where
the hearings would otherwise be postponed for an uncertain period of
time. Moreover, as noted, FINRA (on IEX's behalf) will utilize the same
protocols for conducting video conference hearings as those employed
under the temporary amendments, including using a high quality, secure,
user-friendly video conferencing service and providing thorough
instructions, training, and technical support to all hearing
participants.\32\ In addition, the Chief or Deputy Chief Hearing
Officer may take into consideration, among other things, a hearing
participant's individual health concerns and access to the connectivity
and technology necessary to participate in a video conference
hearing.\33\
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\32\ See FINRA Approval Order, supra note 4 at 51880.
\33\ See FINRA Approval Order, supra note 4 at 51881.
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For the same reasons, the Exchange believes that the proposed
changes are designed to provide a fair procedure for the disciplining
of Members and persons associated with Members, consistent with
Sections 6(b)(7) and 6(d) of the Act.\34\ The Exchange believes that
the proposed rule change provides a fair procedure by allowing hearings
to proceed by video conference not only due to public health or safety
reasons but also at a party or the parties' request for reasons
particular to them. The Chief or Deputy Chief Hearing Officer could
allow a hearing to proceed by video conference in the exercise of
reasonable discretion and subject to procedural safeguards that ensure
fairness, including the requirement that any motions be joined by all
parties and show good cause. Overall, the proposed rule change
represents a significant step toward modernizing disciplinary process
procedures in a manner that preserves in-person hearings but allows for
the use of video conference technology under certain circumstances.
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\34\ 15 U.S.C. 78f(b)(7) and 78f(d).
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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. To the contrary, IEX believes
that the proposed rule change reduces the burden on competition because
it eliminates inconsistencies between IEX's Code of Procedure (Chapter
9 of the IEX Rule Book) and FINRA's rules governing the adjudication of
disputes and disciplinary proceedings. Additionally, IEX notes that the
proposed rule change is not intended to address competitive issues but
is intended solely to create permanent rules that would allow video
conference hearings if OHO determines that proceeding in person may
endanger the health or safety of the participants or would be
impracticable, or where both parties prefer doing so and show good
cause, thereby providing greater harmonization with approved FINRA
rules.
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 Exchange has designated this rule filing as non-controversial
under Section 19(b)(3)(A) \35\ of the Act and Rule 19b-4(f)(6) \36\
thereunder. Because the proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6) thereunder.
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\35\ 15 U.S.C. 78s(b)(3)(A).
\36\ 17 CFR 240.19b-4(f)(6).
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The Exchange believes that this filing is non-controversial and
eligible to become effective immediately because the proposal is
designed to promote uniformity in disciplinary rules across self-
regulatory organizations and thereby enable FINRA to conduct IEX
disciplinary hearings by video conference where OHO determines that
proceeding in person may endanger the
[[Page 11356]]
health or safety of the participants or would be impracticable, or
where both parties prefer doing so and show good cause. Further, as
described in the Purpose and Statutory Basis sections and below, the
proposed rule change is designed to protect investors and the public
interest by providing a fair process to conduct disciplinary hearings
by video conference when appropriate.
Furthermore, the Exchange believes that the proposed rule change
would not significantly affect the protection of investors or the
public interest or impose any significant burden on competition because
the changes are based on approved FINRA rules of similar purpose and
would align IEX's rules with those FINRA rules, which the Exchange
proposes to amend in the same form that they were amended by FINRA. The
Exchange further believes that the proposed rule change would not
impose any significant burden on competition because the changes are
based on approved rules of FINRA. Moreover, the proposed rule change is
not intended to address competitive issues but rather is concerned
solely with creating rules that would allow video conference hearings
under certain specified circumstances, thereby providing greater
harmonization with approved FINRA rules of similar purpose. For the
foregoing reasons, this rule filing qualifies for immediate
effectiveness as a ``non-controversial'' rule change under paragraph
(f)(6) of Rule 19b-4.
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) \37\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\37\ 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#4230372e276f212d2f2f272c3631023127216c252d34"><span class="__cf_email__" data-cfemail="d3a1a6bfb6feb0bcbebeb6bda7a093a0b6b0fdb4bca5">[email protected]</span></a>. Please include
file number SR-IEX-2026-06 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-2026-06. 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-2026-06 and should be submitted on
or before March 30, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\38\
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\38\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-04502 Filed 3-6-26; 8:45 am]
BILLING CODE 8011-01-P
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