Self-Regulatory Organizations; Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend IEX Rule 21.150 To Eliminate the Minimum Roster Requirement on the Obvious Error Panel

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<title>Federal Register, Volume 91 Issue 189 (Thursday, October 1, 2026)</title>
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[Federal Register Volume 91, Number 189 (Thursday, October 1, 2026)]
[Notices]
[Pages 62566-62569]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-20072]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-106507; File No. SR-IEX-2026-33]


Self-Regulatory Organizations; Investors Exchange LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend IEX 
Rule 21.150 To Eliminate the Minimum Roster Requirement on the Obvious 
Error Panel

September 28, 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 September 18, 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 
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 rule change proposal to amend Rule 21.150 (Nullification 
and Adjustment of Options Transactions including Obvious Errors) to 
eliminate the requirement regarding the maintenance of a minimum roster 
of representatives eligible to serve on the Exchange's Obvious Error 
Panel. The Exchange has designated this rule change as ``non-
controversial'' under Section 19(b)(3)(A) of the Act \6\ and provided 
the Commission with the notice required by Rule 19b-4(f)(6) 
thereunder.\7\
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    \4\ 15 U.S.C. 78s(b)(1).
    \5\ 17 CFR 240.19b-4.
    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f)(6).
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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

[[Page 62567]]

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 amend Rule 21.150 (Nullification and 
Adjustment of Options Transactions including Obvious Errors) to 
simplify the representative requirement for the Obvious Error Panel. 
Specifically, as described below, the Exchange proposes to eliminate 
the requirement regarding the maintenance of a minimum roster of 
representatives eligible to serve on the Exchange's Obvious Error Panel 
to avoid an unnecessary administrative burden on the Exchange and its 
Options Members.\8\ This proposed rule change is substantially similar 
to proposals by MEMX and MX2.\9\
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    \8\ The term ``Options Member'' means a firm or organization 
that is registered with the Exchange pursuant to Chapter 18 of the 
Exchange's Rules for purposes of participating in options trading on 
IEX Options as an Options Order Entry Firm, Options Market Maker, or 
Clearing Member. See Rule 17.100.
    \9\ See Securities Exchange Act Release No. 106157 (August 18, 
2026), 91 FR 54422 (August 21, 2026) (SR-MEMX-2026-27); Securities 
Exchange Act Release No. 106197 (August 26, 2026), 91 FR 55918 
(August 31, 2026) (SR-MX2-2026-04).
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    Under Rule 21.150(l), an Options Member affected by a determination 
made under Rule 21.150(l) may request review by an Obvious Error Panel. 
Under Rule 21.150(l)(1), each Obvious Error Panel must be comprised of 
the Exchange's Chief Regulatory Officer (``CRO''), or a designee of the 
CRO; two representatives of an Options Member engaged in market making 
(any such representative, a ``MM Representative''); and two 
representatives of Options Members that satisfy specified criteria 
designed to ensure that such representatives are not principally in 
options market making (any such representative, a ``Non-MM 
Representative'').
    Under current Rule 21.150(l)(2), the Exchange must designate at 
least ten MM Representatives and at least ten non-MM Representatives to 
be called upon to serve on the Obvious Error Panel as needed. That rule 
further provides that an Obvious Error Panel may not include a person 
affiliated with a party to the trade in question and that, to the 
extent reasonably possible, the Exchange must call upon designated 
representatives to participate on panels on an equally frequent basis.
    The Exchange believes that the requirement to designate at least 
ten MM Representatives and at least ten non-MM Representatives to be 
called upon to serve on the Obvious Error Panel is unnecessarily 
burdensome to both the Exchange and the representatives. The Exchange 
believes that a mandatory roster of twenty or more designated 
representatives is larger than necessary to administer the appeals 
process effectively and imposes avoidable administrative burdens on 
both the Exchange and its Options Members. Maintaining such a roster 
requires the Exchange to identify, solicit, qualify, designate, track, 
and periodically refresh a substantial number of representatives, even 
though only four industry representatives serve on a particular panel, 
and appeals occur only periodically and infrequently.
    The Exchange believes that Rule 21.150, as amended, will facilitate 
a more efficient administration of the appeal process while retaining 
the requirement of having both MM Representatives and non-MM 
Representatives on the panel. The proposed amendment will streamline 
the appeal process by removing the unnecessary burden of maintaining an 
active list of at least twenty representatives to serve on an Obvious 
Error Panel. The Exchange does not believe it is necessary to designate 
such a large number of representatives because the composition of each 
Obvious Error Panel will remain unchanged, as each panel will continue 
to include two MM Representatives and two non-MM Representatives, in 
addition to the CRO or the CRO's designee. The Exchange believes this 
composition provides a proper balance of competing interests and helps 
ensure regulatory fairness when resolving trade disputes.
    The proposal will not alter the eligibility criteria for non-MM 
Representatives. In addition, Rule 21.150(l)(2) will retain the 
requirements that an Obvious Error Panel may not include a person 
affiliated with a party to the trade in question and that, to the 
extent reasonably possible, the Exchange must call upon the designated 
representatives to participate on panels on an equally frequent basis. 
These provisions will continue to promote impartiality and equitable 
participation in the appeal process.
    The Exchange expects to continue designating a sufficient number of 
qualified MM Representatives and non-MM Representatives to convene 
panels promptly, taking into account representative availability, 
potential conflicts, and the applicable review timeframes. Eliminating 
the fixed minimum roster size will provide the Exchange flexibility to 
maintain a roster appropriately sized to its operational needs without 
affecting the composition, independence, or substantive authority of 
the Obvious Error Panel.
    The Exchange notes that the proposed approach is consistent with 
the rules of other national securities exchanges.\10\
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    \10\ See, e.g., Nasdaq Options 3, Section 20(l)(1), which 
provides that a Nasdaq Review Council panel will be comprised 
minimally of one representative of a member engaged in market making 
and two industry representatives not engaged in market making, and 
that no more than 50% of the panel may be engaged in market making. 
The rule does not require Nasdaq to designate or maintain a minimum 
roster of potential panel representatives. Nasdaq ISE and Nasdaq MRX 
maintain materially similar panel-composition provisions in their 
respective rulebooks, likewise without imposing a minimum roster 
requirement. See Nasdaq ISE Options 3, Section 20(k)(1); Nasdaq MRX 
Options 3, Section 20(k)(1).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of Section 6(b) of the 
Act.\11\ Specifically, the Exchange believes the proposed rule change 
is consistent with the Section 6(b)(5) \12\ requirements that the rules 
of an exchange be designed to prevent fraudulent and manipulative acts 
and practices, to promote just and equitable principles of trade, to 
foster cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in, securities, 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. 
Additionally, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \13\ requirement that the rules of 
an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers. The Exchange also believes 
that the proposed rule change is consistent with Section 6(b)(1) of the 
Act,\14\ which

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provides that the Exchange be organized and have the capacity to be 
able to carry out the purposes of the Act and to enforce compliance by 
the Exchange's Options Members and persons associated with its Options 
Members with the Act, the rules and regulations thereunder, and the 
rules of the Exchange.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
    \13\ Id.
    \14\ 15 U.S.C. 78f(b)(1).
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    In particular, the Exchange believes the proposed amendment to 
eliminate the requirement regarding the maintenance of a minimum roster 
of representatives eligible to serve on the Exchange's Obvious Error 
Panel will make the administration of the appeal process more efficient 
by reducing an unnecessary numerical condition while preserving the 
provisions governing panel composition, representative qualifications, 
conflicts of interest, review timing, and decisional authority. The 
required panel composition, the eligibility criteria for non-MM 
Representatives, and the prohibition on participation by a person 
affiliated with a party to the trade will remain unchanged. The 
Exchange believes these retained safeguards provide a proper balance of 
competing interests and protect investors and the public interest.
    The Exchange does not believe that requiring a roster of at least 
twenty designated representatives is necessary to ensure fair review. 
Rather, fairness is achieved through the composition of the panel that 
hears the appeal, the qualifications, and independence of its 
representatives, and the substantive and procedural protections in Rule 
21.150. The proposed change also will serve to avoid wasting Options 
Member and Exchange resources on maintaining an excessive list of 
Options Member representatives.
    The Exchange further believes that the proposal's consistency with 
the rules of Nasdaq and its affiliated options exchanges supports the 
conclusion that the fixed roster requirement is not necessary to 
protect investors or ensure fair review. Those exchanges rely on panel-
composition safeguards similar to those that will remain in Rule 
21.150, but do not require the maintenance of a roster of at least ten 
market-maker and ten non-market maker representatives.
    Finally, the proposal is not designed to permit unfair 
discrimination. Rather, the proposal relates only to the Exchange's 
administrative requirements for maintaining a roster of eligible 
representatives and will apply uniformly to all Options Members and all 
appeals under Rule 21.150. The Exchange will continue to maintain a 
roster of qualified representatives appropriately sized to its 
operational needs and will continue to select representatives in 
accordance with the rule's objective criteria and, to the extent 
reasonably possible, call upon designated representatives on an equally 
frequent basis.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. This proposal does not 
create an unnecessary or inappropriate intramarket burden on 
competition because the proposed change will apply uniformly to all 
Options Members and will not affect any Options Member's ability to 
request or obtain review of an obvious error determination. Further, 
the proposal will not impact the fairness or impartiality of the appeal 
process. The Exchange will continue to appoint qualified individuals to 
serve on the Obvious Error Panel and to administer the appeals process 
in a fair and consistent manner, and all similarly situated parties 
will continue to have access to the same appeal procedures and 
protections under Rule 21.150.
    The Exchange also does not believe the proposed rule change will 
impose any burden on intermarket competition because the proposal 
relates solely to the Exchange's internal administration of the Obvious 
Error Panel and does not affect the standards for determining whether a 
transaction is erroneous, the relief available for market participants, 
the rights or obligations of any Options Member, the Exchange's trading 
functionality or the ability of Options Members to compete on the 
Exchange or across markets.

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 filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \15\ and Rule 19b-4(f)(6) thereunder.\16\ 
Because the foregoing 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)(iii) of the Act \17\ and subparagraph (f)(6) of 
Rule 19b-4 thereunder.\18\
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    \15\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \18\ 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 filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \19\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\20\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has 
requested that the Commission waive the 30-day operative delay so that 
the proposal may become operative immediately upon filing. The Exchange 
states that waiver of the operative delay would permit the proposed 
rule change to become operative on October 2, 2026, which is the date 
when IEX Options is scheduled to commence trading operations. For this 
reason, and because the proposed rule change raises no new or novel 
legal or regulatory issues, the Commission finds that waiver of the 
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 proposed rule change to be operative 
upon filing.\21\
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    \19\ 17 CFR 240.19b-4(f)(6).
    \20\ 17 CFR 240.19b-4(f)(6)(iii).
    \21\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule'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 will institute proceedings under 
Section 19(b)(2)(B) \22\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \22\ 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#483a3d242d652b2725252d263c3b083b2d2b662f273e"><span class="__cf_email__" data-cfemail="1062657c753d737f7d7d757e6463506375733e777f66">[email&#160;protected]</span></a>. Please include 
file number SR-IEX-2026-33 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-2026-33. 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-2026-33 and should be submitted on 
or before October 22, 2026.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-20072 Filed 9-30-26; 8:45 am]
BILLING CODE 8011-01-P


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