[Federal Register Volume 89, Number 195 (Tuesday, October 8, 2024)]
[Notices]
[Pages 81608-81612]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-23166]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101231; File No. SR-IEX-2024-20]


Self-Regulatory Organizations; Investors Exchange LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
Rule 11.330 To Adopt a New Market Data Product To Be Known as DEEP+

October 2, 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 September 19, 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 
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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[[Page 81609]]

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 with the Commission a 
proposed rule change to amend Rule 11.330 to adopt a new market data 
product to be known as DEEP+, which is an uncompressed data feed that 
provides order-by-order depth of book quotations for all displayed 
orders for securities traded on IEX, and execution information (i.e., 
last sale information) for executions on the Exchange. The Exchange has 
designated this proposal as non-controversial and provided the 
Commission with the notice required by Rule 19b-4(f)(6)(iii) under the 
Act.\6\ IEX also proposes to update its Fee Schedule to reflect that 
DEEP+ will be offered free of charge for an initial incentive period.
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    \4\ 15 U.S.C. 78s(b)(1).
    \5\ 17 CFR 240.19b-4.
    \6\ 17 CFR 240.19b-4(f)(6)(iii).
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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 IEX Rule 11.330(a) to add a new 
subparagraph (3) that describes a new market data product to be known 
as DEEP+, and to renumber the current subparagraphs (3) and (4) to be 
subparagraphs (4) and (5). The Exchange also proposes to make a 
conforming edit to IEX Rule 11.232(f), and to update its Fee Schedule 
\7\ to reflect that IEX will be offering DEEP+ free of charge for an 
initial incentive period.
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    \7\ See IEX Fee Schedule, available at https://www.iexexchange.io/resources/trading/fee-schedule.
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    Currently, the Exchange offers two Real-Time \8\ market data 
products: TOPS \9\, an uncompressed data feed that provides aggregated 
top of book quotations for all displayed orders resting on the Order 
Book and execution information (i.e., last sale information) for 
executions on the Exchange; and DEEP,\10\ an uncompressed data feed 
that provides aggregated depth of book quotations for all displayed 
orders resting on the Order Book at each price level, and execution 
information (i.e., last sale information) for executions on the 
Exchange.\11\ The TOPS and DEEP feeds also include IEX's ``Retail 
Liquidity Identifier'' \12\, which is disseminated by IEX to TOPS, 
DEEP, and the appropriate securities information processor (``SIP''), 
when IEX's Order Book has at least one round lot of aggregated Retail 
Liquidity Provider \13\ order interest (``RLP Interest'') \14\ for a 
particular security, provided that the RLP Interest is resting at the 
Midpoint Price \15\ and priced at least $0.001 better than the NBB \16\ 
or NBO \17\. The Retail Liquidity Identifier \18\ provides the symbol 
and side of the RLP Interest, but does not include its price or 
size.\19\
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    \8\ ``Real-Time'' means IEX market data that is accessed, used, 
or distributed less than fifteen (15) milliseconds after it was made 
available by the Exchange. IEX provides only Real-Time IEX market 
data to Data Subscribers.
    \9\ See IEX Rule 11.330(a)(1).
    \10\ See IEX Rule 11.330(a)(2).
    \11\ TOPS and DEEP would also provide IEX Auction Information 
for any IEX-listed securities. Currently, IEX is not a listing 
exchange, and such information is only provided with respect to 
auction test symbols.
    \12\ See IEX Rule 11.232(f).
    \13\ See IEX Rule 11.190(b)(14).
    \14\ See IEX Rule 11.232(f).
    \15\ See IEX Rule 1.160(t).
    \16\ See IEX Rule 1.160(u).
    \17\ See IEX Rule 1.160(u).
    \18\ See IEX Rule 11.232(f).
    \19\ Id.
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    Based on informal discussion with market participants, the Exchange 
has determined that there is demand for an order-by-order depth of book 
feed offering for displayed orders, in addition to the aggregated depth 
of book data offered by DEEP. Accordingly, the Exchange proposes to 
amend Rule 11.330(a)(3) to offer the new DEEP+ market data product.
    As proposed, DEEP+ will disseminate, on a Real-Time basis, order-
by-order information for all displayed orders resting on the Order Book 
for securities traded on IEX and execution information (i.e., last sale 
information) for executions on the Exchange. DEEP+ will provide details 
on each displayed order resting on the Order Book including OrderID, 
symbol, side, timestamp associated with the message, price, and size, 
and will update each order's data when there are amendments, cancels, 
and executions.\20\
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    \20\ IEX notes that Data Subscribers will be able to use DEEP+ 
to derive IEX's top of book quotations for internal use from the 
order-by-order data, as set forth in IEX's Market Data Policies 
(available at https://www.iexexchange.io/resources/trading/market-data).
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    Like TOPS and DEEP, DEEP+ will also disseminate a Retail Liquidity 
Identifier for each security for which IEX has the requisite RLP 
Interest. Therefore, IEX proposes to amend IEX Rule 11.232(f) to 
reflect that the Retail Liquidity Indicator will be disseminated to 
DEEP+, in addition to being disseminated to TOPS, DEEP, and the SIPs. 
IEX notes that this order-specific information, including the 
disseminated Retail Liquidity Identifier,\21\ is functionally 
equivalent to the order-specific information provided by other 
exchanges' order-by-order feeds.\22\
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    \21\ See, e.g., Cboe BYX Rule 11.22(k) (referencing the 
inclusion of Cboe BYX's retail liquidity identifier in the BYX 
Summary Depth data feed).
    \22\ For example, Cboe BYX provides an order-by-order depth of 
book with the equivalent data. See Cboe US Equities/Options 
Multicast Depth of Book (PITCH) Specification, available at https://cdn.cboe.com/resources/membership/Cboe_US_Equities_FIX_Specification.pdf.
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    For an initial incentive period, DEEP+ will be provided free of 
charge, and Data Subscribers \23\ may redistribute DEEP+ data, whether 
on a Real-Time or Delayed \24\ basis, free of charge (for an initial 
incentive period), subject to the terms of the IEX Data Subscriber 
Agreement and IEX's Market Data Policies.\25\
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    \23\ ``Data Subscriber'' means any natural person or entity that 
receives Real-Time IEX market data either directly from the Exchange 
or from another non-affiliate Data Subscriber. A Data Subscriber 
must enter into a Data Subscriber Agreement with IEX in order to 
receive Real-Time IEX market data. A natural person or entity that 
receives Real-Time IEX market data from an affiliated Data 
Subscriber is subject to the Data Subscriber Agreement of such 
affiliated Data Subscriber. See IEX Fee Schedule.
    \24\ ``Delayed'' means IEX market data that is accessed, used, 
or distributed at least fifteen (15) milliseconds after it was made 
available by the Exchange. A Data Subscriber may redistribute Real-
Time IEX market data that it receives from the Exchange on a Delayed 
basis to a natural person or entity. In addition, a recipient of 
Delayed IEX market data may further redistribute such Delayed IEX 
market data to a natural person or entity. See IEX Fee Schedule.
    \25\ Available at https://www.iexexchange.io/resources/trading/market-data.
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    Additionally, IEX proposes to amend the Fee Schedule to insert two 
new rows in the table of Market Data Fees reflecting that DEEP+ 
initially will be offered for free (on a Real-Time or

[[Page 81610]]

Delayed basis).\26\ IEX also proposes to delete the two references to 
footnote 3 in the Market Data Fees table (in the rows for Real-Time 
DEEP and TOPS), and to amend the footnote's language so that it is 
applicable to DEEP+. Footnote 3 currently reads ``These fees will be 
operative beginning July 1, 2022,'' which was the date IEX began 
charging to distribute TOPS and DEEP in Real-Time. Because that date 
applied to the initiation of fees for TOPS and DEEP in Real-Time (and 
has passed), IEX proposes to amend the footnote to apply to DEEP+ and 
read: ``These fees will be operative when the product is launched. IEX 
will announce the launch date by Trader Alert at least 10 business days 
in advance of the product launch'' and to apply footnote 3 to the two 
new rows describing the free distribution of DEEP+ on both a Real-Time 
and Delayed basis.\27\
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    \26\ Should IEX in the future decide to charge for DEEP+, it 
will make a fee filing pursuant to the SEC rule filing process.
    \27\ While not specified in the Fee Schedule, as noted 
throughout this filing, IEX will be offering DEEP+ free of charge 
during an initial incentive period.
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    The Exchange notes that other exchanges offer both aggregated and 
order-by-order depth of book market data products. For example, Cboe 
BYX offers both Multicast Depth \28\ (also known as BYX Depth), an 
order-by-order depth of book market data feed, and BYX Summary 
Depth,\29\ a depth of book data feed that offers aggregated quotations 
for all displayed orders for up to five price levels. Cboe BYX's order-
by-order depth of book market data feed contains the same order-
specific information that will be contained in IEX's proposed DEEP+ 
market data feed.\30\ Thus, the Exchange does not believe that this 
aspect of the proposal raises any new or novel issues not already 
considered by the Commission.\31\ The Exchange plans to implement the 
proposed changes during the fourth quarter of 2024, pending completion 
of necessary technology changes and subject to effectiveness of this 
proposed rule change. The Exchange will announce the implementation 
date of the proposed changes by Trader Alert at least 10 business days 
in advance of such implementation date and within 120 days of 
effectiveness of this proposed rule change.
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    \28\ See Cboe BYX Rule 11.22(c).
    \29\ See Cboe BYX Rule 11.22(k).
    \30\ See supra note 22.
    \31\ DEEP+ Data Subscribers will also have access to the DEEP+ 
SNAP service, which allows Data Subscribers to download point-in-
time snapshots of DEEP+ in order to enable them to accelerate late 
start recovery. As with its current DEEP SNAP and TOPS SNAP 
services, DEEP+ SNAP will be offered for no additional charge to 
DEEP+ Data Subscribers; thus, DEEP+ SNAP will also be offered free 
of charge during the initial incentive period.
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2. Statutory Basis
    IEX believes that the proposed rule change is consistent with the 
provisions of Section 6 of the Act \32\ in general, and with Section 
6(b)(5) of the Act,\33\ in particular. DEEP+ will be provided 
consistent with the purposes of Section 6(b)(5) of the Act.\34\ 
Specifically, the Exchange believes that the proposed introduction of 
an order-by-order depth of book market data feed, which will provide 
Data Subscribers with full depth-of-market information, will serve to 
more closely align the information provided by IEX with that of 
competitor exchanges, while providing additional data to the 
marketplace. Thus, this proposal should help remove impediments to a 
free and open market, in furtherance of the protection of investors and 
the public interest.
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    \32\ 15 U.S.C. 78f(b).
    \33\ 15 U.S.C. 78f(b)(5).
    \34\ 15 U.S.C. 78f(b)(5).
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    Additionally, the benefit of providing additional data to the 
marketplace may be useful to certain market participants with trading 
strategies that take into account order-by-order depth of book feeds 
such as DEEP+. Thus, these Members may choose to deploy additional 
trading strategies on IEX that align with how they function on other 
exchanges. IEX believes that this potential deployment of additional 
trading strategies on IEX by certain market participants could attract 
additional volume to IEX (both displayed and non-displayed), which 
would benefit all market participants. Thus, this proposal should help 
remove impediments to a free and open market, in furtherance of the 
protection of investors and the public interest.
    Moreover, DEEP+ will be available to all Data Subscribers on an 
equal basis including being offered free of charge to all Data 
Subscribers on an initial basis. By expanding all market participants' 
access to Real-Time market data disseminated from IEX's displayed Order 
Book, the proposal is not designed to permit unfair discrimination 
among customers, issuers, and brokers; and is designed to promote just 
and equitable principles of trade, to foster cooperation and 
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.
    The proposed rule change is designed to promote just and equitable 
principles of trade and remove impediments to and perfect the mechanism 
of a free and open market and a national market system by providing 
more detailed quotation and transaction information to market 
participants. The Exchange also believes this proposal is consistent 
with Section 6(b)(5) of the Act because it is designed to protect 
investors and the public interest and promote just and equitable 
principles of trade by providing additional transparency regarding 
displayed orders on the IEX Order Book, and also provides market 
participants with a disaggregated feed that allows them to construct 
the IEX BBO information otherwise than under the CTA and Nasdaq/UTP 
Plans. Further, the proposal would not permit unfair discrimination 
because the information will be available to all market participants 
and market data vendors on an equivalent basis. In addition, any market 
participant that wishes to receive IEX BBO and last sale information 
via the CTA and Nasdaq/UTP Plans will still be able to do so if they 
subscribe or access through a Data Subscriber.
    The Exchange also believes that not charging a fee for DEEP+ for an 
initial incentive period (whether accessed on a Real-Time or Delayed 
basis) is appropriate, reasonable, and consistent with the Act because 
it is designed to incentivize market participants to subscribe to 
DEEP+, which may in turn encourage those same market participants to 
direct more order flow to the Exchange as discussed above, and such 
orders will have the benefit of exchange transparency, regulation, and 
oversight. IEX operates in a highly competitive environment, and not 
charging fees for DEEP+ is designed to enable it to compete effectively 
and to encourage market participants to connect to the Exchange.
    The Exchange also believes that the proposed rule change is 
consistent with Section 11(A) of the Act \35\ in that it supports (1) 
fair competition among brokers and dealers, among exchange markets, and 
between exchange markets and markets other than exchange markets and 
(2) the availability to brokers, dealers, and investors of information 
with respect to quotations for and transactions in securities. As noted 
above, the Exchange will provide DEEP+ to Members and other recipients 
of Exchange data on terms that are fair and reasonable and not 
unreasonably discriminatory in that DEEP+ will be

[[Page 81611]]

provided free of charge for an initial incentive period.
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    \35\ 15 U.S.C. 78k-1.
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    Additionally, IEX believes that the proposed rule change is 
consistent with the provisions with Section 6(b)(5) of the Act because 
DEEP+ would be accessed and subscribed to on a voluntary basis, in that 
neither the Exchange nor market data distributors are required by any 
rule or regulation to make this data available. Accordingly, 
distributors and subscribers can discontinue their use at any time and 
for any reason. Thus, the proposal should help remove impediments to a 
free and open market, in furtherance of the protection of investors and 
the public interest.
    Further, IEX believes that the proposed edits to the Fee Schedule 
are consistent with the Act. Specifically, the proposal to update the 
Fee Schedule to state that DEEP+ will be offered for free,\36\ and to 
revise footnote 3 to make clear that the fee's (and product's) 
implementation date will be on a date to be announced by Trading Alert 
at least ten (10) business days in advance of the product launch are 
consistent with the Act because they will provide clarity to, and 
reduce confusion of, market participants about the cost and 
availability of this new market data product, which should help remove 
impediments to a free and open market, in furtherance of the protection 
of investors and the public interest.
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    \36\ While not specified in the Fee Schedule, as noted 
throughout this filing, IEX will be offering DEEP+ free of charge 
during an initial incentive period.
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    Finally, as noted in the Purpose section, offering both an order-
by-order and aggregated depth of book market data product is consistent 
with the offerings of other exchanges. Specifically, as discussed in 
the Purpose section, Cboe BYX's order-by-order market data feed 
contains the same order-specific information that IEX will provide in 
DEEP+.\37\ And Cboe BYX's order-by-order also contains the same non-
order-specific information such as the Retail Liquidity Identifier, 
which DEEP+ will also contain.\38\ Thus IEX believes it does not raise 
any new or novel issues not already considered by the Commission in the 
context of other exchanges' market data product filings.
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    \37\ See supra note 21.
    \38\ See supra note 22.
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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. The Exchange is not proposing 
to charge a fee for DEEP+ during an initial incentive period and will 
make it available to market participants on a fair and impartial basis, 
and on terms that are not unfairly discriminatory. In addition, the 
Exchange believes that providing order-by-order depth of book 
quotations as described above is designed to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system by providing investors with a new exchange-specific source of 
market data, as well as to compete with other exchanges that offer 
similar market data products.
    With regard to intra-market competition, the proposed order-by-
order depth of book market data feed will be made equally available to 
all Members and Data Subscribers on a fair, impartial and 
nondiscriminatory basis without imposing any new burdens on the Members 
and Data Subscribers, including the fact that it will be offered free 
of charge during an initial incentive period. As discussed in the 
Purpose and Statutory Basis sections, the proposed rule change is 
designed to provide all market participants more transparency into the 
order-by-order composition of IEX's Order Book.
    With regard to inter-market competition, other exchanges are free 
to adopt similar market data product offerings, and, as discussed in 
the Purpose section, other exchanges like Cboe BYX already provide 
market participants the option of subscribing to an aggregated or 
order-by-order depth of book feed (or both). IEX's proposed DEEP+ feed 
will foster, not burden, competition by providing a new exchange-
specific source of market data, which is similar to products offered by 
other exchanges. Thus, it will provide investors with a new option for 
receiving market data. Thus, the Exchange believes the proposed rule 
change is consistent with the Exchange Act because it will further 
encourage competition between IEX and other exchanges.

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

    Because the foregoing proposed rule 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.\39\
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    \39\ CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 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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    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) \40\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \40\ 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#0f7d7a636a226c6062626a617b7c4f7c6a6c21686079"><span class="__cf_email__" data-cfemail="d2a0a7beb7ffb1bdbfbfb7bca6a192a1b7b1fcb5bda4">[email protected]</span></a>. Please include 
file number SR-IEX-2024-20 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-2024-20. 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

[[Page 81612]]

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-2024-20 and should be submitted on 
or before October 29, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\41\
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    \41\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-23166 Filed 10-7-24; 8:45 am]
BILLING CODE 8011-01-P


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