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[Federal Register Volume 89, Number 220 (Thursday, November 14, 2024)]
[Notices]
[Pages 90098-90101]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-26421]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101562; File No. SR-IEX-2024-24]

Self-Regulatory Organizations; Investors Exchange LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend the 
Exchange's Fee Schedule Concerning Transaction Pricing

November 7, 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 October 28, 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 the Exchange's fee schedule 
applicable to Members \6\ (the ``Fee Schedule'' \7\) pursuant to IEX 
Rule 15.110(a) and (c). Changes to the Fee Schedule pursuant to this 
proposal are effective upon filing,\8\ and will be operative on 
November 1, 2024.
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    \4\ 15 U.S.C. 78s(b)(1).
    \5\ 17 CFR 240.19b-4.
    \6\ See IEX Rule 1.160(s).
    \7\ See Investors Exchange Fee Schedule, available at https://www.iexexchange.io/resources/trading/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 modify its Fee Schedule, pursuant to IEX 
Rule 15.110(a) and (c), to introduce four new Displayed Liquidity 
Adding Rebate Tiers (and to modify the two current tiers) for 
executions priced at or above $1.00. The Exchange proposes to implement 
these changes effective November 1, 2024.
Displayed Liquidity Adding Rebate Tiers
    As reflected in the Transaction Fees section of the Fee Schedule, 
IEX currently offers two Displayed Liquidity Adding Rebate tiers. 
Specifically, Displayed Liquidity Adding Rebate Tier 1 provides the 
Exchange's base rebate of $0.0014 per share to all executions of 
displayed liquidity adding orders priced at or above $1.00 per share 
(``Added Displayed Liquidity'').\9\ And Displayed Liquidity Adding 
Rebate Tier 2 provides a rebate of $0.0020 per share to all Added 
Displayed Liquidity for Members that add at least 10,000,000 ADV \10\ 
of Added Displayed Liquidity.
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    \9\ Nothing in this rule filing affects trades below $1.00 per 
share (``sub-dollar trades''). Sub-dollar trades would not impact 
the rebate tier calculations and remain ineligible for rebates.
    \10\ The Fee Schedule defines ``ADV'' as the number of shares 
added or removed that execute at or above $1.00 per share, combined, 
per day, calculated on a monthly basis.
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    To further incentivize the posting of displayed liquidity on the 
Exchange, IEX proposes to modify the two current Displayed Liquidity 
Adding Rebate tiers and introduce four new tiers. Under this proposal, 
the fees/rebates the Exchange charges for adding displayed liquidity to 
the Exchange will be:
     Members that add less than 3,000,000 ADV of displayed 
liquidity will be charged a fee of FREE for their displayed liquidity 
adding executions (Tier 1).
     Members that trade at least 5,000,000 non-displayed ADV 
and less than 10,000,000 non-displayed ADV will receive a rebate of 10 
mils per share for their displayed liquidity adding executions (Tier 
2).\11\
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    \11\ IEX designed Tier 2, which provides a 10 mil rebate to 
Members that trade at least 5,000,000 non-displayed ADV, to provide 
Members additional ways to qualify for a tiered rebate incentive.

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[[Page 90099]]

     Members that: (1) add at least 3,000,000 ADV of displayed 
liquidity and less than 10,000,000 ADV of displayed liquidity; or (2) 
trade at least 10,000,000 non-displayed ADV, will receive a rebate of 
14 mils per share for their displayed liquidity adding executions (Tier 
3).\12\
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    \12\ IEX designed Tier 3, which provides a 14 mil rebate to 
Members that trade at least 10,000,000 non-displayed ADV (or add 
between 3,000,000 and 10,000,000 displayed ADV), to provide Members 
additional ways to qualify for a tiered rebate incentive.
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     Members that add at least 10,000,000 ADV of displayed 
liquidity and less than 15,000,000 ADV of displayed liquidity will 
receive a rebate of 16 mils per share for their displayed liquidity 
adding executions (Tier 4).
     Members that add at least 15,000,000 ADV of displayed 
liquidity and less than 20,000,000 ADV of displayed liquidity will 
receive a rebate of 18 mils per share for their displayed liquidity 
adding executions (Tier 5).
     Members that add at least 20,000,000 ADV of displayed 
liquidity will receive a rebate of 20 mils per share for their 
displayed liquidity adding executions (Tier 6).
    Proposed Displayed Liquidity Adding Rebate Tiers 2 and 3 are based 
on a Member's trading (both adding and removing) of non-displayed ADV 
on the Exchange.\13\ Therefore, IEX proposes to update the definition 
of ``ADV'' in the Definitions and Information portion of the 
Transaction Fees section of the IEX Fee Schedule to explain which fee 
code combinations count as ``non-displayed ADV.'' Specifically, IEX 
proposes to add a bullet under the ADV definition that states:
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    \13\ Tier 3 is also available to a Member that adds at least 
3,000,000 displayed ADV and less than 10,000,000 displayed ADV, 
irrespective of the Member's non-displayed ADV.
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     ``non-displayed ADV'' refers to executions with the 
following Fee Code Combinations: MI, MIB, TI, TIB, TIY, TIYB, TIR, TLW, 
TLWB, and MIA.
    IEX notes that this model of offering volume-based rebates is 
consistent with the rebates offered by competitor exchanges.\14\ The 
Exchange also notes that the highest rebate in this proposal, the 
$0.0020 rebate for Tier 5, is well within the range of rebates offered 
by competing exchanges.\15\
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    \14\ See, e.g., MEMX Equities Fee Schedule (Effective July 16, 
2024), available at https://info.memxtrading.com/equities-trading-resources/us-equities-fee-schedule/. However, IEX's proposed rebate 
tiers will continue to be based on each Member's ADV, without a 
requirement to meet a total consolidated volume threshold.
    \15\ See, e.g., MEMX Equities Fee Schedule, supra note 14 
(maximum rebate of $0.0037); Nasdaq Equity VII, Section 114 (maximum 
rebate of $0.0036); New York Stock Exchange Price List 2024 (as of 
June 3, 2024), https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf (maximum rebate of $0.0035).
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    Accordingly, IEX proposes to update its Fee Schedule to make 
several revisions to reflect the proposed amended rebate tiers. First, 
the Exchange proposes to amend the Fee Schedule's Base Rates table to 
update the description and fees associated with Base Fee Code ML (``Add 
displayed liquidity''). As amended, the Base Rates table will list six 
base rates for Fee Code ML--the FREE execution applied if ``Member adds 
less than 3,000,000 ADV of displayed liquidity''; the $0.0010 rebate 
applied if ``Member trades at least 5,000,000 non-displayed ADV and 
less than 10,000,000 non-displayed ADV''; the $0.0014 rebate applied if 
``Member: (1) adds at least 3,000,000 ADV and less than 10,000,000 ADV 
of displayed liquidity; or (2) trades at least 10,000,000 non-displayed 
ADV''; the $0.0016 rebate applied if ``Member adds at least 10,000,000 
ADV and less than 15,000,000 ADV of displayed liquidity''; the $0.0018 
rebate applied if ``Member adds at least 15,000,000 and less than 
20,000,000 ADV of displayed liquidity''; and the $0.0020 rebate applied 
if ``Member adds at least 20,000,000 ADV of displayed liquidity.''
    IEX also proposes to amend Footnote 4 to the Transaction Fees 
section, which is applicable to fee code ML in the Base Rates table, 
and to Fee Code Combinations ML, MLB, MLY, and MLYB in the Fee Code 
Combination and Associated Fees table. As proposed, Footnote 4 will be 
amended to reflect the six tiers proposed in this filing, including the 
required criteria for each rebate tier and the applicable rebate, as 
described above.
    The Exchange believes the proposed amendments to the Displayed 
Liquidity Adding Rebate Tiers would provide an incremental incentive 
for Members to send more orders to the Exchange in an effort to qualify 
for the proposed enhanced rebates offered by Tiers 2-5 for executions 
of Added Displayed Volume. As such, the proposed Displayed Liquidity 
Adding Rebate Tiers are designed to encourage Members that provide 
liquidity on the Exchange to maintain or increase their order flow, 
thereby contributing to a deeper and more liquid market to the benefit 
of all market participants and enhancing the attractiveness of the 
Exchange as a trading venue.
    As noted above, the Exchange is not proposing to change the fees 
applicable to executions of and with orders with an execution price 
below $1.00 per share, which would remain free for such orders that 
provide displayed liquidity and subject to a fee of 0.09% of the total 
dollar volume of the execution for orders that take displayed 
liquidity. IEX is also not proposing to make any changes to the fees 
applicable to the execution of Retail \16\ orders that remove displayed 
liquidity, which will continue to execute for free.
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    \16\ See IEX Rule 11.190(b)(15).
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2. Statutory Basis
    IEX believes that the proposed rule change is consistent with the 
provisions of Section 6(b) \17\ of the Act in general and furthers the 
objectives of Sections 6(b)(4) \18\ of the Act, in particular, in that 
it is designed to provide for the equitable allocation of reasonable 
dues, fees and other charges among its Members and other persons using 
its facilities. The Exchange believes that the proposed fee change is 
reasonable, fair and equitable, and non-discriminatory.
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    \17\ 15 U.S.C. 78f.
    \18\ 15 U.S.C. 78f(b)(4).
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    The Exchange operates in a highly competitive market in which 
market participants can readily direct order flow to competing venues 
if they deem fee levels at a particular venue to be excessive. IEX has 
concluded that, in the context of current regulatory requirements 
governing access fees and rebates, it will be able to more effectively 
compete with other exchanges for order flow by offering more targeted 
rebate incentives. Based upon informal discussions with market 
participants, IEX believes that Members and other market participants 
may be more willing to send displayed orders to IEX if the proposed fee 
structure was adopted.
    Accordingly, IEX has designed the proposed rebate tiers to attract 
and incentivize displayed orders as well as order flow seeking to trade 
with such displayed orders. Moreover, increases in displayed liquidity 
would contribute to the public price discovery process which would 
benefit all market participants and protect investors and the public 
interest. Additionally, as discussed in the Purpose section, IEX has 
designed Tiers 2 and 3, which provide a 10 mil rebate to Members that 
trade at least 5,000,000 non-displayed ADV (but less than 10,000,000 
non-displayed ADV) and a 14 mil rebate to Members that trade at least 
10,000,000 non-displayed ADV to allow Members additional ways to 
qualify for an incentive rebate tier.
    The Exchange also believes that adding language to the ADV 
definition in the Fee Schedule to explain which

[[Page 90100]]

fee codes count towards ``non-displayed ADV'' is reasonable, equitable, 
and non-discriminatory because this language is designed to ensure that 
the Fee Schedule is as clear and easily understandable as possible with 
respect to the criteria applied by the Exchange for two of the new 
proposed rebate tiers.
    Thus, as discussed in the Purpose section, the Exchange believes 
that the proposed addition of new volume-based rebate tiers that pay 
progressively higher rebates to Members who add progressively more 
displayed liquidity (on a monthly average basis) is reasonable and 
consistent with the Act because it is designed to incentivize Members 
to send additional displayed orders to IEX. Specifically, the Exchange 
believes that the volume-based rebate tiers are reasonably designed to 
incentivize Members to add a meaningful volume of displayed liquidity 
by providing increasingly higher rebates for Members that qualify for 
increasingly higher average minimum volume thresholds. As noted in the 
Purpose section, other exchanges offer rebate tiers, and thus the 
Exchange does not believe that this aspect of the proposal raises any 
new or novel issues not already considered by the Commission. The 
Exchange also believes that setting tier thresholds based on each 
Member's own volume on the Exchange rather than based on consolidated 
market-wide volume will facilitate the ability of Members to control 
and predict the net fees that will apply to their transactions on the 
Exchange each month.
    As discussed above, the Exchange operates in a highly competitive 
market in which market participants can readily direct order flow to 
competing venues if they deem fee levels at a particular venue to be 
excessive. Within that context, the proposed Displayed Liquidity Adding 
Rebate Tier structure is designed to keep IEX's displayed trading 
prices competitive with those of other exchanges. The proposed rebates 
for the six Displayed Liquidity Adding Rebate tiers are within the 
range offered by competing exchanges, and thus IEX does not believe 
that the proposal raises any new or novel issues not already considered 
by the Commission in the context of other exchanges' fees.
    The Exchange also believes that it is reasonable and consistent 
with the Act not to modify its displayed fees for sub-dollar executions 
to synchronize those fees with the proposed fees for executions at or 
above $1.00 per share. The Exchange believes that the existing fee 
structure for such executions continues to be reasonably designed to 
incentivize displayed order flow (and orders seeking to trade with 
displayed order flow) in such securities.
    Further, IEX believes that it is reasonable and consistent with the 
Act not to change the fees applicable to the execution of Retail orders 
that remove liquidity, which will continue to execute for free. In this 
regard, the Exchange believes that the existing fee structure continues 
to be reasonably designed to incentivize the entry of Retail orders, 
and notes that the Commission, in approving IEX's Retail Price 
Improvement Program, acknowledged the value of exchanges' offering 
incentives to attract both retail investor orders and orders 
specifically designated to execute only with retail orders.\19\
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    \19\ See Securities Exchange Act Release No. 86619 (August 9, 
2019), 84 FR 41769, 41771 (August 15, 2019) (SR-IEX-2019-05).
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    Finally, to the extent this proposed fee change is successful in 
incentivizing the entry and execution of displayed orders on IEX, such 
greater liquidity will benefit all market participants by increasing 
price discovery and price formation as well as market quality and 
execution opportunities. And, as discussed above, IEX does not believe 
that any aspect of this proposal raises new or novel issues not already 
considered by the Commission.

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 does not believe 
that the proposed rule change will impose any burden on intermarket 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. The Exchange operates in a highly competitive 
market in which market participants can readily direct order flow to 
competing venues if fee schedules at other venues are viewed as more 
favorable. Consequently, the Exchange believes that the degree to which 
IEX fees could impose any burden on competition is extremely limited 
and does not believe that such fees would burden competition between 
Members or competing venues. Moreover, as noted in the Statutory Basis 
section, the Exchange does not believe that the proposed changes raise 
any new or novel issues not already considered by the Commission.
    The Exchange 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 because, while 
different rebates and fees are assessed on Members, these rebate and 
fee tiers are not based on the type of Member entering the orders that 
match, but rather on the Member's own trading activity. Further, the 
proposed fee changes continue to be intended to encourage market 
participants to bring increased order flow to the Exchange, which 
benefits all market participants.

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) \20\ of the Act.
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    \20\ 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) \21\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \21\ 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

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-IEX-2024-24 on the subject line.

Paper Comments

     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-2024-24. This file 
number should be included on the

[[Page 90101]]

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-2024-24 and should be submitted on or before December 5, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-26421 Filed 11-13-24; 8:45 am]
BILLING CODE 8011-01-P
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