[Federal Register Volume 89, Number 28 (Friday, February 9, 2024)]
[Notices]
[Pages 9192-9194]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-02643]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99471; File No. SR-IEX-2024-04]


Self-Regulatory Organizations; Investors Exchange LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Pursuant to 
IEX Rule 15.110 To Amend IEX's Fee Schedule

February 5, 2024.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on January 24, 2024, the Investors Exchange LLC (``IEX'' or 
the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I, 
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 its Fee Schedule, \6\ 
pursuant to IEX Rule 15.110(a) and (c) (the ``Fee Schedule''), to 
revise the Fee Codes \7\ applicable to transactions that involve a Post 
Only order that executes on entry. Changes to the Fee Schedule pursuant 
to this proposal are effective upon filing,\8\ and the Exchange plans 
to implement the changes on February 15, 2024.
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    \4\ 15 U.S.C. 78s(b)(1).
    \5\ 17 CFR 240.19b-4.
    \6\ See Fee Schedule at https://www.iexexchange.io/resources/trading/fee-schedule for the complete list of fee code combinations 
and their corresponding fees.
    \7\ Fee Codes are identified on each execution report message 
from the Exchange in the Trade Liquidity Indicator (FIX tag 9730) 
field. See ``Transaction Fees/Definitions'' on the Fee Schedule.
    \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 www.iextrading.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 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, pursuant to IEX 
Rule 15.110(a) and (c), to revise the Fee Codes applicable to 
transactions that involve a Post Only order that executes on entry. IEX 
recently filed a rule change to introduce a Post Only order parameter 
instruction and a Trade Now instruction.\9\ The Post Only Filing was 
effective on filing but will not be implemented until February 15, 
2024.\10\
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    \9\ See Securities Exchange Act Release No. 98988 (November 20, 
2023), 88 FR 82926 (November 27, 2023) (SR-IEX-2023-13) (``Post Only 
Filing'').
    \10\ See IEX Trading Alert 2024-003, available at https://iextrading.com/alerts/#/239.
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    As described in the Post Only Filing, Members \11\ may attach a 
Post Only parameter instruction to any displayable, non-routable order 
priced at or above $1.00 per share (i.e., a Post Only order).\12\ A 
Post Only order will not remove contra-side liquidity from the IEX 
Order Book \13\ on entry (and will rest on the Order Book as a 
displayed liquidity adding order), except in two specific 
circumstances: (i) if the value of such execution when removing 
liquidity equals or exceeds the value of such execution if the order 
instead posted to the IEX Order Book and subsequently provided 
liquidity, including the applicable fees charged or rebates provided 
(the ``Sum of Fees''), or (ii) if the contra-side resting order with 
which the incoming order could match is a non-displayed order with a 
``Trade Now'' instruction.\14\ When an incoming Post Only order matches 
a resting order with a Trade Now instruction, the resting order 
converts into an executable order that removes liquidity against the 
incoming Post Only order, and the incoming Post Only order becomes the 
liquidity adding order.
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    \11\ See IEX Rule 1.160(s).
    \12\ If a Member submits a Post Only order that is priced below 
$1.00 per share, the Exchange will disregard the Post Only 
instruction. See IEX Rule 11.190(b)(20)(A).
    \13\ See IEX Rule 1.160(p).
    \14\ See IEX Rule 11.190(b)(21).
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Fee Schedule Changes
    IEX proposes to introduce two new Fee Codes, to specify (1) when a 
Post Only order executed on entry, and (2) when a resting non-displayed 
order with a Trade Now instruction removed liquidity from a Post Only 
order that executed on entry. Specifically, as proposed, Fee Code Y 
will be included on any execution report for a Post Only order that 
executes on entry, and Fee Code W will be included on any execution 
report for a resting order with a Trade Now instruction that removes 
liquidity against an incoming liquidity-adding Post Only order. IEX 
proposes to add these Fee Codes to the Fee Code Modifiers table on the 
IEX Fee Schedule as follows:

------------------------------------------------------------------------
  Additional Fee Codes         Description                  Fee
------------------------------------------------------------------------
Y......................  Post Only order          See Relevant Fee Code
                          executes on entry.       Combinations Below.
W......................  Resting order removes    See Relevant Fee Code
                          against Post Only        Combinations Below.
                          order.
------------------------------------------------------------------------


[[Page 9193]]

    Additionally, IEX proposes to add four new Fee Code Combinations to 
the Additional Fee Code Combinations and Associated Fees table that 
reflect the fees IEX will assess for an execution involving a Post Only 
order that executes on entry:
    <bullet> Fee Code Combination TIY, would apply to a Post Only order 
priced at $1.00 or more that removes non-displayed liquidity on entry. 
The fees associated with Fee Code Combination TIY are the same as the 
fees associated with Fee Code Combination TI, the fee code for an order 
that removes non-displayed liquidity on entry (currently $0.0010 per 
share). IEX would include Fee Code Combination TIY on execution reports 
to specify that a Post Only order executed on entry because the Sum of 
Fees was less than the value of the execution if the order had added 
displayed liquidity on the Exchange. Because the Exchange will 
disregard the Post Only instruction on orders priced less than $1.00 
per share (``sub-dollar''),\15\ IEX proposes to have the ``Executions 
below $1.00'' column of the Additional Fee Code Combinations and 
Associated Fees table read ``N/A''.\16\
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    \15\ See supra note 9.
    \16\ An incoming sub-dollar order with a disregarded Post Only 
instruction that executes on entry with a resting non-displayed 
order will result in a Fee Code Combination of TI (``Removes non-
displayed liquidity'') on the execution report and be charged the 
normal sub-dollar dark taking fee of 0.10% of the Total Dollar Value 
(``TDV'').
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    <bullet> Fee Code Combination TLY, would apply to a Post Only order 
priced at $1.00 or more per share that removes displayed liquidity on 
entry. The fees associated with Fee Code Combination TLY are the same 
as the fees associated with Fee Code Combination TL, the fee code for 
an order that removes displayed liquidity on entry (currently $0.0010 
per share). IEX would include Fee Code Combination TLY on execution 
reports to specify that a Post Only order executed on entry because the 
Sum of Fees was less than the value of the execution if the order had 
added displayed liquidity on the Exchange. Because the Exchange will 
disregard the Post Only instruction on sub-dollar orders,\17\ IEX 
proposes to have the ``Executions below $1.00'' column of the 
Additional Fee Code Combinations and Associated Fees table read ``N/
A''.\18\
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    \17\ See supra note 9.
    \18\ An incoming sub-dollar order with a disregarded Post Only 
instruction that executes on entry with a resting displayed order 
will result in a Fee Code Combination of TL (``Removes displayed 
liquidity'') on the execution report and be charged the normal sub-
dollar lit taking fee of 0.09% of the TDV.
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    <bullet> Fee Code Combination MLY, would apply to a Post Only order 
priced at $1.00 or more per share that executes on entry with a contra-
side order with the Trade Now instruction. The fees associated with Fee 
Code Combination MLY are the same as the fees associated with Fee Code 
Combination ML, the fee code for an order that adds displayed liquidity 
(currently a rebate of $0.0004 per share). IEX would include Fee Code 
Combination MLY on execution reports to specify that although the order 
executed on entry, it executed as the adder of displayed liquidity 
because of the contra-side order's Trade Now instruction. Because the 
Exchange will disregard the Post Only instruction on sub-dollar 
orders,\19\ IEX proposes to have the ``Executions below $1.00'' column 
of the Additional Fee Code Combinations and Associated Fees table 
column read ``N/A''.\20\
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    \19\ See supra note 9.
    \20\ An incoming sub-dollar order with a disregarded Post Only 
instruction will not trigger a resting order with the ``Trade Now'' 
instruction to become the taking order and will not be treated as 
the making order. Thus, Fee Code Combination MLY would never apply. 
If the incoming order matched with a resting non-displayed or 
displayed order, it will result in a Fee Code Combination of TL or 
TI, with fees of 0.09% or 0.10% of TDV, respectively.
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    <bullet> Fee Code Combination TLW, would apply to a resting non-
displayed order with the Trade Now instruction that executes against an 
incoming Post Only order priced at $1.00 or more per share. The fees 
associated with Fee Code Combination TLW are the same as the fees 
associated with Fee Code Combination MI, the fee code for an execution 
that adds non-displayed liquidity (currently $0.0010 per share for 
executions at or above $1.00). IEX would include Fee Code Combination 
TLW on execution reports that the order executed as the taker of 
displayed liquidity. Because the Exchange will disregard the Post Only 
instruction on an incoming sub-dollar Post Only order,\21\ that order 
will not trigger a resting order with the ``Trade Now'' instruction to 
become the taking order. Therefore, Fee Code Combination TLW would 
never apply to a resting non-displayed order that matches with an 
incoming sub-dollar order with a Post Only instruction, and IEX 
proposes to have the ``Executions below $1.00'' column of the 
Additional Fee Code Combinations and Associated Fees table column read 
``N/A''.
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    \21\ See supra note 9.
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    IEX proposes to add these Fee Codes to the Additional Fee Code 
Combinations and Associated Fees table on the IEX Fee Schedule as 
follows:

----------------------------------------------------------------------------------------------------------------
                                                                                   Executions at    Executions
               Fee Codes                               Description                or above $1.00    below $1.00
----------------------------------------------------------------------------------------------------------------
MLY....................................  Post Only order adds liquidity against        ($0.0004)             N/A
                                          resting non-displayed order.
TIY....................................  Post Only order removes non-displayed            0.0010             N/A
                                          liquidity.
TLY....................................  Post Only order removes displayed                0.0010             N/A
                                          liquidity.
TLW....................................  Resting non-displayed order removes              0.0010             N/A
                                          liquidity against incoming Post Only
                                          order.
----------------------------------------------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\22\ in general, and furthers the 
objectives of Section 6(b)(4) \23\ of the Act, in particular, in that 
it is designed to provide for the equitable allocation of reasonable 
fees among IEX Members and persons using its facilities. As described 
in the Purpose section, these proposed Fee Code changes will not change 
the fees the Exchange charges for impacted orders but will simply 
provide additional information with respect to such fees. Therefore, 
the Exchange does not believe that adding this additional information 
raises any new or novel issues not already considered by the 
Commission. IEX also believes that the proposed rule change is 
nondiscriminatory since all Members are eligible to enter orders with 
Post Only and/or Trade Now instructions.
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    \22\ 15 U.S.C. 78f(b).
    \23\ 15 U.S.C. 78f(b)(4).
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    Additionally, IEX believes that the proposed changes to the Fee 
Schedule are consistent with the investor protection objectives of 
Section 6(b)(5) \24\ of the Act, in particular, in that they are 
designed to prevent fraudulent and manipulative acts and practices; to 
promote just and equitable principles of trade; to foster cooperation 
and

[[Page 9194]]

coordination with persons engaged in 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; and are not designed to 
permit unfair discrimination between customers, brokers, or dealers. 
IEX believes that providing additional specificity to Members on 
execution reports about the circumstances under which a Post Only order 
executed on entry, as well as when an order with a Trade Now 
instruction executed as a liquidity remover, will assist Members with 
their order routing strategies, thereby facilitating transactions in 
securities. Further, IEX believes that specifying that these new Fee 
Code Combinations do not apply to sub-dollar executions because IEX 
disregards the Post Only instruction on orders priced below $1.00 per 
share will also assist Members with their order routing strategies, 
thereby facilitating transactions in securities.
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    \24\ 15 U.S.C. 78f(b)(5).
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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. The Exchange does not 
believe that the proposed Fee Code changes will impose any burden on 
intermarket competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. As described in the Purpose and 
Statutory Basis sections, the Exchange is not proposing to change any 
fees but merely to provide additional information to Members regarding 
certain executions.
    The Exchange also 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. The proposed 
fees will apply to all Members in the same manner, as discussed in the 
Statutory Basis section. Accordingly, the Exchange does not believe 
that these changes will have any impact on competition that is not 
necessary or appropriate in furtherance of the purposes of the Act.

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) \25\ of the Act.
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    \25\ 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) \26\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \26\ 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
    (https://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#5321263f367e303c3e3e363d2720132036307d343c25"><span class="__cf_email__" data-cfemail="93e1e6fff6bef0fcfefef6fde7e0d3e0f6f0bdf4fce5">[email protected]</span></a>. Please include 
file number SR-IEX-2024-04 on the subject line.

Paper Comments

    <bullet> Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-IEX-2024-04. 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 (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for website viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE, 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-IEX-2024-04 and should be 
submitted on or before March 1, 2024.
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    \27\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\27\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-02643 Filed 2-8-24; 8:45 am]
BILLING CODE 8011-01-P


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