8238 Federal Register / Vol. 86, No. 22 / Thursday, February 4, 2021 / Notices 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 90645 

(December 11, 2020), 85 FR 81982 (December 17, 

2020) (‘‘Notice’’). 

4See proposed Rule 11.510; Notice, supra note 3, 

at 81982. The Exchange did not propose any 

changes to the coil delay that applies to inbound 

order messages, including order cancellations and 

modifications, from users at the POP to the IEX 

system and from the system routing logic to the 

order book. See proposed Rule 11.510; Notice, 

supra note 3, at 81984. The Exchange does not 

apply a coil delay to its communications with the 

Securities Information Processors (‘‘SIP(s)’’) or away 

trading centers, and those aspects of the Exchange 

likewise are not changing under the proposal. See 

Notice, supra note 3, at 81983. 

5See Notice, supra note 3, at 81983. 

6 Id. 

7 Id. 

8 Id. If a user sends a routable order to the 

Exchange, after traversing the inbound latency 

(including the coil) from the POP to the IEX system, 

the order is directed to the system routing logic. Id. 

The current 350 microsecond latency on order 

messages between the IEX routing logic and order 

book is implicated when the routing logic has 

determined to route to the IEX order book all or part 

of the routable order submitted by the user, and is 

in addition to the 350 microsecond latency between 

the POP and the IEX system. Id. As a result, 

currently, users connected at the POP experience a 

cumulative, one-way latency of 700 microseconds 

on routable order messages to and from the IEX 

system. Id. at 81983–84; see also Rule 11.230(b), 

11.510(c)(1), and proposed Supplementary Material 

(‘‘Supp.’’) .03 to Rule 11.510. 

9See Notice, supra note 3, at 81983. 

10See proposed Rule 11.510(a); see also Notice, 

supra note 3, at 81984. Specifically, the Exchange 

proposed to amend Rule 11.510(a) to state that 

outbound communications from the IEX system to 

the POP will not traverse the physical distance 

provided by coiled optical fiber and instead will be 

subject to an equivalent 37 microseconds of latency 

due to traversing the geographic distribution and 

network connectivity between the system at the 

primary data center and the network access point 

of the POP. See proposed Rule 11.510(a). Relatedly, 

the Exchange proposed to amend Rule 11.510(b)(2) 

to state that, for outbound communications 

(including, without limitation, execution report 

messages found in the Exchange’s FIX 

Specification, quote and trade update messages 

found in the Exchange’s TOPS and DEEP 

specifications, and DROP messages), the Exchange’s 

connectivity infrastructure is designed to provide 

an equivalent 37 microseconds of latency from the 

system at the primary data center to the Exchangeprovided network interface at the POP. See 

proposed Rule 11.510(b)(2). 

11See Notice; supra note 3, at 81986. Specifically, 

the Exchange proposed to amend Rule 11.510(c)(1) 

to state that all outbound communications 

(including, without limitation, execution report 

messages found in the Exchange’s FIX specification) 

from the order book to the system routing logic are 

subject to 37 microseconds of latency, which is in 

addition to the 37 microsecond latency on 

outbound communications from the IEX system to 

the POP described in proposed Rule 11.510(b)(2). 

See proposed Rule 11.510(c)(1); see also proposed 

Supp. .03 (stating that all responses from the IEX 

order book to the system routing logic are subject 

to 37 microseconds of latency and all messages 

from the system routing logic to users are subject 

to an additional 37 microseconds of outbound 

latency). Users connected to IEX at the POP 

therefore would experience a cumulative delay of 

74 microseconds on outbound messages from the 

IEX system regarding their routable orders. See 

proposed Rule 11.510(c)(1); see also proposed 

Supp. .03. Users would continue to experience a 

cumulative latency of 700 microseconds on 

inbound routable order messages. See proposed 

Rule 11.510(c)(1); proposed Supp. .03; Notice, 

supra note 3, at 81984. In addition, the Exchange 

proposed to amend Rule 11.510(c)(2)(A) to specify 

that the IEX routing logic may only receive 

Exchange data products subject to 37 microseconds 

of latency, equivalent to the outbound latency 

applicable to all other data product recipients that 

is described in proposed Rule 11.510(b)(2). See 

proposed Rule 11.510(c)(2)(A). 

12See proposed Rule 11.510(a). 

There were no Schedule C appointing 

authorities revoked during October 

2020. 

Authority: 5 U.S.C. 3301 and 3302; E.O. 

10577, 3 CFR, 1954–1958 Comp., p. 218. 

Office of Personnel Management. 

Alexys Stanley, 

Regulatory Affairs Analyst. 

[FR Doc. 2021–02253 Filed 2–3–21; 8:45 am] 

BILLING CODE 6325–39–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–91016; File No. SR–IEX– 

2020–18] 

Self-Regulatory Organizations; 

Investors Exchange, LLC; Order 

Granting Approval of Proposed Rule 

Change To Amend IEX Rule 11.510 To 

Reduce the Outbound Latency That 

Presently Applies to All Messages Sent 

From IEX Back to Users of the 

Exchange 

January 29, 2021. 

I. Introduction 

On December 9, 2020, the Investors 

Exchange LLC (‘‘Exchange’’) filed with 

the Securities and Exchange 

Commission (‘‘SEC’’ or ‘‘Commission’’), 

pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a 

proposed rule change to amend IEX 

Rule (‘‘Rule’’) 11.510 to reduce the 

outbound latency that presently applies 

to all messages sent from IEX to users 

of the Exchange, as well as to make 

conforming changes to the outbound 

latency that applies to all trading 

messages sent from the IEX order book 

to the system routing logic with respect 

to routable orders. The proposed rule 

change was published for comment in 

the Federal Register on December 17, 

2020.3 The Commission received no 

comment letters on the proposed rule 

change. This order approves the 

proposed rule change. 

II. Description of the Proposal 

The Exchange proposed to amend 

Rule 11.510 to eliminate the ‘‘coil’’ 

delay that is currently applied to 

outbound order execution messages and 

IEX proprietary market data sent to IEX 

users and the IEX system routing logic 

used by IEX’s affiliated routing brokerdealer, IEX Services LLC (‘‘IEXS’’).4

Currently, users access IEX through the 

Exchange-provided network interface at 

the IEX Point-of-Presence, or ‘‘POP,’’ 

located in Secaucus, New Jersey.5

Electronic messages that users send 

inbound to the IEX system, and order 

execution messages and IEX proprietary 

market data sent outbound to users, 

traverse the IEX coil, which is a box 

containing approximately 38 miles of 

compactly coiled optical fiber cable, and 

travel an additional geographic and 

physical distance between the POP and 

the IEX system located at the Exchange’s 

primary data center in Weehawken, 

New Jersey.6 The time required for such 

communications to traverse the coil 

combined with the geographic and 

physical distance (and related 

networking) currently equates to an 

equivalent 350 microseconds of 

latency.7 IEXS is a member of the 

Exchange and its associated routing 

logic currently is subject to the same 

350 microseconds of latency as other 

members when sending order messages 

to the IEX order book and when 

receiving order execution messages and 

IEX proprietary market data.8 As a 

result, IEXS has no speed or 

informational advantage compared to 

other Exchange members and data 

recipients.9

IEX’s proposed elimination of the coil 

delay on outbound order execution 

messages and proprietary market data 

will reduce the latency on outbound 

communications to 37 microseconds, 

which latency will be due to geographic 

and physical distance and network 

connectivity.10 The proposed 

elimination of the coil delay on 

outbound order execution messages and 

proprietary market data will affect IEXS 

in the same manner that it effects other 

Exchange users, thus ensuring that the 

Exchange’s affiliated routing brokerdealer is similarly situated and not 

competitively advantaged vis-a`-vis any 

non-affiliated routing broker-dealer.11

The Exchange also proposed to make 

several non-substantive clarifying 

changes to add further detail to Rule 

11.510 to: (i) Define the term ‘‘POP’’; 12

(ii) reference the 350 microsecond 

latency on inbound communications 

from the POP to the IEX system and 

from the system routing logic to the 

order book separately from the proposed 

37 microsecond latency on outbound 

communications from the system to the 


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Federal Register / Vol. 86, No. 22 / Thursday, February 4, 2021 / Notices 8239 

13See proposed Rule 11.510(a) and 11.510(c)(1). 

14See proposed Rule 11.510(c)(1). 

15See proposed Rule 11.510. 

16See proposed Rule 11.510(b), 11.510(c)(3)(A), 

and Supp. .02. 

17See proposed Rule 11.510. 

18 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. See 15 U.S.C. 78c(f). 

19 15 U.S.C. 78f(b)(5). 

20 15 U.S.C. 78f(b)(8). 

21See Notice, supra note 3, at 81983–84. By 

contrast, the inbound coil delay, which is not 

affected by this proposal, is designed to enable IEX 

to more effectively manage and price orders resting 

on its book when the market moves. Id. at 81983. 

22 Id. at 81983–86; see also Securities Exchange 

Act Release No. 89686 (August 26, 2020), 85 FR 

54438, 54441 (September 1, 2020). 

23See Notice, supra note 3, at 81984 and n.25 

(noting that, at the time of IEX’s exchange launch 

in September 2016 the average latencies for quote 

messages was 470 microseconds for the CQ Plan 

and 762 microseconds for the UTP Plan, and for 

trade messages was 320 microseconds for the CTA 

Plan and 619.7 microseconds for the UTP Plan); see 

also www.utpplan.com (stating that current median 

latency is approximately 13.0–14.2 microseconds); 

www.ctaplan.com (stating that current median 

latency is under 17 microseconds for quotes and 

under 18 microseconds for trades); and compare 

current Rule 11.150(b)(2) (stating that the POP is 

currently designed to provide 350 microseconds of 

latency on IEX proprietary market data). 

24See Notice, supra note 3, at 81984–86. 

25 Id. at 81986. 

26 IEX will sequence the necessary systems 

changes to implement this proposed rule change in 

two steps, the first occurring for IEX users and the 

second for IEXS, thus ensuring that IEX’s system 

routing logic is not preferenced over other users 

during implementation. Id. at 81985. After step one 

and before step two, while all outbound 

communications from the order book to the routing 

logic would continue to be subject to an equivalent 

350 microseconds of latency, outgoing messages 

(i.e., responses) from the routing logic to users (with 

respect to routable orders sent to IEX) would be 

subject to the proposed reduced outbound latency 

of 37 microseconds. Id. at 81985 n.29. During this 

intervening period IEXS also would be able to 

receive IEX proprietary market data subject to the 

same 37 microseconds of latency as other members 

and data recipients. Id. 

27 Id. at 81986. 

POP and from the order book to the 

system routing logic; 13 (iii) further 

describe, without alteration, how the 

Exchange handles incoming routable 

orders, and specify that the 350 

microseconds of latency on inbound 

communications from the routing logic 

to the order book is in addition to the 

inbound latency on communications 

from the POP to the system; 14 (iv) refine 

references to ‘‘POP’’ throughout the rule 

such that they refer to connectivity at 

the POP or the connectivity 

infrastructure between the system and 

the POP, as appropriate; 15 (v) add 

explanatory cross references to 

provisions within the rule; 16 and (vi) 

make non-substantive grammatical 

revisions.17

III. Discussion and Commission 

Findings 

After careful review, the Commission 

finds that the proposed rule change is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange.18 In particular, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,19 which requires, 

among other things, that the rules of a 

national securities exchange be 

designed to prevent fraudulent and 

manipulative acts and practices, 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, and 

not be designed to permit unfair 

discrimination between customers, 

issuers, brokers or dealers; and with 

Section 6(b)(8) of the Act,20 which 

requires that the rules of a national 

securities exchange not impose any 

burden on competition that is not 

necessary or appropriate. 

IEX’s coil delay on outbound order 

execution messages and proprietary 

market data, which has been in place 

since IEX became a registered national 

securities exchange in 2016, was 

designed to help IEX members avoid 

potential information leakage in 

connection with an execution on IEX 

that could reduce their ability to access 

liquidity on other markets after trading 

on IEX.21 Since 2016, however, various 

technological developments, including 

the widespread availability of improved 

smart order routing techniques that take 

into account transmission latency in 

coordinating simultaneous order arrival 

and execution times across multiple 

trading venues, have greatly reduced the 

potential for information leakage when 

sweeping the market, thus mitigating 

the utility of IEX’s outbound coil delay 

to IEX users.22 In addition, SIP latencies 

have decreased materially since 2016, 

effectively nullifying the purpose of the 

coil delay on IEX proprietary data since 

market participants currently can 

receive SIP data faster than IEX 

proprietary data.23

Against this backdrop, the Exchange 

asserts that the considerations that 

existed in 2016 for imposing the coil 

delay on its outbound order execution 

messages and proprietary data have 

been superseded by developments in 

the market and are now outweighed by 

the benefits that would be provided by 

the proposal—in particular, 

enhancement of members’ ability to 

manage risk and market exposure 

through receipt of execution messages 

and IEX market data closer in time to 

when executions or quote changes 

occur.24 The Exchange also states that 

the proposal would enable other 

exchanges to update their pegged orders 

faster, and enable other exchanges’ 

affiliated routing brokers to more 

quickly incorporate executions on IEX 

into their routing decisions.25

Importantly, IEXS (the Exchange’s 

affiliated routing broker) and all other 

IEX members will remain on equal 

footing in that they will experience the 

same 37 microseconds of latency on 

their receipt of IEX order execution 

messages and proprietary market data. 

As a result, IEXS will have no 

informational or time advantage—or 

resulting competitive advantage—over 

any other IEX member.26 Also, due to 

the equivalent reduction in the latency 

attendant to both outbound execution 

messages and IEX proprietary market 

data, parties to an execution on IEX will 

not receive information regarding the 

execution prior to other market 

participants, and thus will have no 

informational or time advantage—or 

resulting competitive advantage—over 

members who receive IEX proprietary 

data but are not parties to the execution. 

For these reasons, the Commission 

believes that the proposal is not 

designed to permit unfair 

discrimination, consistent with Section 

6(b)(5) of the Act, and would not impose 

any inappropriate or unnecessary 

burden on competition, consistent with 

Section 6(b)(8) of the Act. 

In addition, permitting the Exchange 

to modernize its infrastructure in a way 

that will better enable its members to 

manage risk and market exposure 

without inhibiting their ability to 

capture liquidity when routing orders to 

multiple market venues is consistent 

with the Section 6(b)(5) goals of 

promoting just and equitable principles 

of trade, removing impediments to and 

perfecting the mechanism of a free and 

open market and a national market 

system, and protecting investors and the 

public interest. These goals also will be 

furthered by the proposal to the extent 

that other exchanges are better able to 

manage their own resting orders and 

routing processes through faster receipt 

of order messages and proprietary data 

from IEX. This potential effect on other 

exchanges, coupled with the fact that no 

other exchange currently imposes an 

artificial delay on outbound order 

execution messages or proprietary 

market data,27 also support the 

conclusion that the proposal will not 

impose any inappropriate or 

unnecessary burden on competition, 


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8240 Federal Register / Vol. 86, No. 22 / Thursday, February 4, 2021 / Notices 

28 15 U.S.C. 78s(b)(2). 

29 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See Securities Exchange Act Release No. 89403 

(July 31, 2020 [sic]), 85 FR 46198 (July 31, 2008 

[sic]) (SR–NASDAQ–2020–038). 

5Section 102.06 of the Manual provides that an 

Acquisition Company could pay operating and 

other expenses, subject to a limitation that 90% of 

the gross proceeds of the company’s offering must 

be retained in the trust account. However, the 

Exchange understands that marketplace demands 

typically dictate that 100% of the gross proceeds 

from the IPO be kept in the trust account and that 

only interest earned on that account be used to pay 

taxes and a limited amount of operating expenses. 

consistent with Section 6(b)(8) of the 

Act. 

Finally, the Commission believes that 

the Exchange’s proposed clarifying 

changes to Rule 11.510 add helpful 

detail that will further enhance 

investors’ understanding of how IEX 

operates in a manner consistent with the 

Act, thereby helping to protect investors 

and the public interest consistent with 

Section 6(b)(5) of the Act. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,28 that the 

proposed rule change (SR–IEX–2020– 

18) be and hereby is approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.29

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–02266 Filed 2–3–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–91012; File No. SR–NYSE– 

2021–06] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Amending 

Sections 902.02 and 902.11 of the 

NYSE Listed Company Manual To 

Defer the Billing of Initial Listing Fees 

Payable by Acquisition Companies 

January 29, 2021. 

Pursuant to Section 19(b)(1) 1 of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on January 

21, 2021, the New York Stock Exchange 

LLC (‘‘NYSE’’ or ‘‘Exchange’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the selfregulatory organization. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Sections 902.02 and 902.11 of the NYSE 

Listed Company Manual (the ‘‘Manual’’) 

to defer the billing of initial listing fees 

payable by Acquisition Companies. The 

text of the. The proposed rule change is 

available on the Exchange’s website at 

www.nyse.com, at the principal office of 

the Exchange, and at the Commission’s 

Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Section 102.06 sets forth listing 

requirements applicable to any 

company with a business plan is to 

complete an initial public offering and 

engage in a merger or acquisition with 

one or more unidentified companies 

within a specific period (‘‘Acquisition 

Company’’). Section 902.11 provides 

that an Acquisition Company is subject 

to a flat initial listing fee of $85,000 at 

the time of initial listing. Based on 

experience listing these companies, the 

Exchange proposes to defer the billing 

and payment of initial listing fees until 

one year from the date of an Acquisition 

Company’s initial listing on the 

Exchange. For the avoidance of doubt, 

such fee is owed to the Exchange at the 

time of initial listing based on the fee 

schedule in effect on the date of listing 

but will be billed by the Exchange and 

become payable on the first anniversary 

of the date of listing. The Exchange 

notes that the Nasdaq Stock Market 

(‘‘Nasdaq’’) is the Exchange’s primary 

competitor in the market for the listing 

of Acquisition Companies and that 

Nasdaq has a deferral provision 

comparable to the deferral the Exchange 

proposes.4

Acquisition Companies are formed to 

raise capital in an initial public offering 

(‘‘IPO’’) with the purpose of using the 

proceeds to acquire one or more 

unspecified businesses or assets to be 

identified after the IPO. However, 

unlike other types of listed companies 

that have pre-existing operations or that 

fund their operations by proceeds raised 

from the IPO, following the IPO, an 

Acquisition Company funds a trust 

account with an amount typically equal 

to 100% of the gross proceeds of the 

IPO.5 As such, operating expenses are 

typically borne by the Acquisition 

Company’s sponsor, particularly during 

the initial post-IPO period. The 

Acquisition Company’s sponsor is the 

entity or management team that forms 

the Acquisition Company and, typically, 

runs the operations of the Acquisition 

Company until an appropriate target 

company is identified and the business 

combination is consummated. The 

funds in the trust account are typically 

invested in short-term U.S. government 

securities or held as cash, earning 

interest over time. Thus, the unique 

structure of an Acquisition Company 

results in the sponsor’s extreme fee 

sensitivity, particularly during the 

initial post-IPO period before any 

substantial amount of interest is earned 

from the trust account. The Exchange 

believes that the market practice of 

depositing 100% of the gross proceeds 

of the IPO in a trust account (rather than 

the minimum of 90% required by 

Section 102.06) benefits shareholders 

and is consistent with investor 

protection because it assures that 

shareholders choosing to exercise their 

right to redeem shares for a pro rata 

share of the trust account will receive 

the full IPO price paid, rather than a 

lesser amount guaranteed by Exchange 

rules. Accordingly, to encourage this 

market practice the Exchange believes it 

is appropriate to defer the payment of 

the initial listing fee owed by an 

Acquisition Company listed on the 

Exchange until the first anniversary of 

the date of listing. The initial listing fee 

paid at that time would be based on the 

fee schedule in effect at the time of 

initial listing. 

The Exchange believes that the 

proposed fee deferral would provide an 

incentive to sponsors to list Acquisition 

Companies on the Exchange. The 

Exchange also believes it is reasonable 

to balance its need to remain 

competitive with other listing venues, 

while at the same time ensuring 


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