Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Notices 523 

29 15 U.S.C. 78s(b)(3)(A)(ii). 

30 17 CFR 240.19b–4(f)(2). 31 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 93557 

(November 10, 2021), 86 FR 64268 (November 17, 

2021). 

4 15 U.S.C. 78s(b)(3)(C). 

5TOPS is an uncompressed data feed that offers 

aggregated top of book quotations for all displayed 

orders resting on the IEX Order Book and last sale 

information for executions on the Exchange. See 

Notice, supra note 3, at 64269. According to the 

Exchange, the data available through TOPS is also 

available through the securities information 

processor feed. See id. 

6 DEEP is an uncompressed data feed that 

provides aggregated depth of book quotations for all 

displayed orders resting on the IEX Order Book at 

each price level and last sale information for 

executions on the Exchange. See Notice, supra note 

3, at 64269. 

7See Notice, supra note 3, at 64269. 

8See id. 

9The Exchange proposes to define the term ‘‘Data 

Subscriber’’ as ‘‘any natural person or entity that 

receives Real-Time IEX market data either directly 

from the Exchange or from another Data 

Subscriber.’’ See Notice, supra note 3, at 64274. IEX 

will require Data Subscribers to enter into a Data 

Subscriber Agreement with IEX in order to receive 

Real-Time IEX Data. See id. at 64270, n.23. 

10See Notice, supra note 3, at 64269. 

11See Notice, supra note 3, at 64270, n.22. 

any burden on inter-market competition 

that is not necessary or appropriate in 

furtherance of the purposes of the Act 

because the proposed extension of the 

fee waivers and the extension of the 

Incentive Program apply only to the 

Exchange’s Proprietary Products 

(including options on SPIKES), which 

are traded exclusively on the Exchange. 

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) of the Act,29 and Rule 

19b–4(f)(2) 30 thereunder. 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 to determine 

whether the proposed rule should be 

approved or disapproved. 

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 rule-comments@

sec.gov. Please include File Number SR– 

MIAX–2021–63 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–MIAX–2021–63. 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 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–MIAX–2021–63, and 

should be submitted on or before 

January 26, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.31

Eduardo A. Aleman, 

Deputy Secretary. 

[FR Doc. 2021–28576 Filed 1–4–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–93883; File No. SR–IEX– 

2021–14] 

Self-Regulatory Organizations; 

Investors Exchange LLC; Suspension 

of and Order Instituting Proceedings 

To Determine Whether To Approve or 

Disapprove a Proposed Rule Change 

To Amend Its Fee Schedule for Market 

Data Fees 

December 30, 2021. 

I. Introduction 

On November 1, 2021, Investors 

Exchange LLC (‘‘IEX’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

Exchange Act of 1934 (‘‘Act’’ or 

‘‘Exchange Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

modify its Fee Schedule to establish 

fees, as of January 3, 2022, for the 

receipt and distribution of proprietary 

market data feeds. The proposed rule 

change was published for comment in 

the Federal Register on November 17, 

2021.3 Pursuant to Section 19(b)(3)(C) of 

the Act,4 the Commission is hereby 

temporarily suspending File No. SR– 

IEX–2021–14 and instituting 

proceedings to determine whether to 

approve or disapprove File No. SR–IEX– 

2021–14. 

II. Description of the Proposed Rule 

Change 

IEX offers two real-time proprietary 

market data feeds, ‘‘TOPS’’ 5 and 

‘‘DEEP’’ 6 (collectively, ‘‘IEX Data’’ or 

the ‘‘market data feeds’’).7 DEEP 

includes all resting displayed liquidity 

on the Exchange aggregated by price 

level and it therefore includes the top of 

book quotes contained in TOPS, as well 

as less aggressively priced displayed 

quotes. IEX has not previously imposed 

fees to access or redistribute its market 

data feeds.8

The Exchange proposes to modify its 

Fee Schedule to assess fees on Data 

Subscribers 9 that access IEX Data in 

real-time.10 As discussed below, IEX 

would not itself provide or impose a fee 

for time-delayed IEX Data.11 The 

Exchange proposes to implement these 

fees on January 3, 2022. 

Specifically, IEX proposes to assess 

Data Subscribers $2,500 per month for 

its ‘‘Real-Time’’ DEEP feed and $500 per 


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12See Notice, supra note 3, at 64274. IEX will 

consider ‘‘market data that is accessed, used, or 

distributed at least fifteen (15) milliseconds after it 

was made available by the Exchange’’ as ‘‘Delayed’’ 

IEX Data. See id. IEX only provides Real-Time IEX 

Data and will not itself delay the dissemination of 

IEX Data to Data Subscribers. See Notice, supra note 

3, at 64269, n.22. 

13See Notice, supra note 3, at 64269. 

14See Notice, supra note 3, at 64270. The 

Exchange notes that a recipient of Delayed IEX Data 

may be subject to fees imposed by the redistributor 

of the Delayed IEX Data pursuant to the contract 

between the recipient of the Delayed IEX Data and 

the third-party provider of such market data. See id. 

at 64270, n.24. 

15 15 U.S.C. 78s(b)(3)(C). 

16 15 U.S.C. 78s(b)(1). 

17See Notice, supra note 3, at 64274. 

18See Notice, supra note 3, at 64274. 

19See Notice, supra note 3, at 64271. 

20See Notice, supra note 3, at 64274–75. 

21See Notice, supra note 3, at 64275. 

22See Notice, supra note 3, at 64273. 

23See Notice, supra note 3, at 64275. 

24See 17 CFR 240.19b–4 (General Instructions for 

Form 19b–4—Information to be Included in the 

Complete Form—Item 3 entitled ‘‘Self-Regulatory 

Organization’s Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule Change’’). 

25See id. 

26 15 U.S.C. 78f(b)(4). 27 15 U.S.C. 78f(b)(5). 28 15 U.S.C. 78f(b)(8). 29See 15 U.S.C. 78f(b)(4), (5), and (8), 

respectively. 30For purposes of temporarily suspending the 

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). 

31 15 U.S.C. 78s(b)(3)(C). Once the Commission 

temporarily suspends a proposed rule change, 

month for its ‘‘Real-Time’’ TOPS feed. 

The Exchange proposes to define ‘‘RealTime’’ as ‘‘IEX market data that is 

accessed, used, or distributed less than 

fifteen (15) milliseconds after it was 

made available by the Exchange.’’ 12

Further, the Exchange proposes to 

assess a $500 per month ‘‘Distribution 

Fee’’ to each Data Subscriber that 

redistributes IEX Data in Real-Time to 

an external, non-affiliated third-party.13

For Data Subscribers that redistribute 

IEX Data to others, IEX would not 

charge them a Distribution Fee if: (1) 

They only redistribute the IEX Data in 

Real-Time to internal, affiliated parties; 

or (2) they delay distribution of the data 

by at least fifteen milliseconds before 

redistributing it. 

For recipients of IEX Data, IEX would 

not consider them a ‘‘Data Subscriber’’ 

and would not charge them the TOPS or 

DEEP fees if they only (1) receive IEX 

Data subject to a delay of at least a 

fifteen milliseconds 14 or (2) receive 

Real-Time IEX Data internally from an 

affiliate. 

III. Suspension of the Proposed Rule 

Change 

Pursuant to Section 19(b)(3)(C) of the 

Act,15 at any time within 60 days of the 

date of filing of an immediately effective 

proposed rule change pursuant to 

Section 19(b)(1) of the Act,16 the 

Commission summarily may 

temporarily suspend the change in the 

rules of a self-regulatory organization 

(‘‘SRO’’) 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. As described below, the 

Commission believes a temporary 

suspension of the proposed rule change 

is necessary and appropriate to allow for 

additional analysis of the proposed rule 

change’s consistency with the Act and 

the rules thereunder. 

In support of its proposed market data 

fees, the Exchange states ‘‘its belief that 

the fees each equities exchange charges 

for its proprietary market data are not 

subject to competitive forces’’ 17 and 

therefore has proposed fees that it 

believes are ‘‘fair and reasonable as a 

form of cost recovery plus the 

possibility of a reasonable return for 

IEX’s aggregate costs of offering IEX 

Data to its Data Subscribers.’’ 18 With 

respect to its proposed cost-based fees, 

IEX provides a summary of its annual 

market data infrastructure costs 

($2,483,644 for 2021), with a breakdown 

of selected line-item costs including 

direct costs, enhancement initiative 

costs, and personnel costs.19 IEX states 

that its proposed fees are reasonable 

under the Act because they are ‘‘based 

both on the relative costs to IEX to 

generate TOPS and DEEP, as well as 

IEX’s objective to make TOPS broadly 

available to a range of market 

participants including long-term 

investors.’’ 20 IEX further asserts that its 

proposed fees ‘‘are reasonable because 

they are designed to generate annual 

revenue of approximately $3.1 million 

(reflecting a 25% markup over 

costs),’’ 21 though IEX acknowledges a 

potential markup from ‘‘break even’’ or 

even below aggregate costs to an 

aggregate markup of 95%, depending on 

the number of paying subscribers it 

ultimately will have.22 IEX further states 

that it ‘‘is only charging Data 

Subscribers who use IEX Data in real 

time’’ and argues that its proposed fees 

‘‘are significantly less than the fees 

charged by competing equities 

exchanges’’ and that its fee proposal 

‘‘will not impose onerous audit 

requirements on Data Subscribers.’’ 23

When an Exchange files a proposed 

rule change with the Commission, 

including fee filings, it is required to 

provide a statement supporting the 

proposal’s basis under the Act and the 

rules and regulations thereunder 

applicable to the exchange.24 The 

instructions to Form 19b–4, on which 

exchanges file their proposed rule 

changes, specify that such statement 

‘‘should be sufficiently detailed and 

specific to support a finding that the 

proposed rule change is consistent with 

[those] requirements.’’ 25

Section 6 of the Act, including 

Sections 6(b)(4), (5), and (8), requires, 

among other things, that the rules of an 

exchange: (1) Provide for the equitable 

allocation of reasonable fees among 

members, issuers, and other persons 

using the exchange’s facilities; 26 (2) be 

designed to perfect the mechanism of a 

free and open market and a national 

market system and to protect investors 

and the public interest, and not be 

designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers; 27 and (3) 

not impose any burden on competition 

not necessary or appropriate in 

furtherance of the purposes of the Act.28

In temporarily suspending the 

Exchange’s proposed rule change, the 

Commission intends to further consider 

whether the proposed fees are 

consistent with the statutory 

requirements applicable to a national 

securities exchange under the Act. In 

particular, the Commission will 

consider whether the proposed rule 

change satisfies the standards under the 

Act and the rules thereunder requiring, 

among other things, that an exchange’s 

rules provide for the equitable 

allocation of reasonable fees among 

members, issuers, and other persons 

using its facilities; are designed to 

perfect the mechanism of a free and 

open market and a national market 

system and to protect investors and the 

public interest, and are not designed to 

permit unfair discrimination between 

customers, issuers, brokers, or dealers; 

and do not impose any burden on 

competition not necessary or 

appropriate in furtherance of the 

purposes of the Act.29

Therefore, the Commission finds that 

it is appropriate in the public interest, 

for the protection of investors, and 

otherwise in furtherance of the purposes 

of the Act, to temporarily suspend the 

proposed rule change.30

IV. Proceedings To Determine Whether 

To Approve or Disapprove SR–IEX– 

2021–14 and Grounds for Disapproval 

Under Consideration 

In addition to temporarily suspending 

the proposal, the Commission also 

hereby institutes proceedings pursuant 

to Sections 19(b)(3)(C) 31 and 


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Section 19(b)(3)(C) of the Act requires that the 

Commission institute proceedings under Section 

19(b)(2)(B) to determine whether a proposed rule 

change should be approved or disapproved. 

32 15 U.S.C. 78s(b)(2)(B). 

33 15 U.S.C. 78s(b)(2)(B). Section 19(b)(2)(B) of the 

Act also provides that proceedings to determine 

whether to disapprove a proposed rule change must 

be concluded within 180 days of the date of 

publication of notice of the filing of the proposed 

rule change. See id. The time for conclusion of the 

proceedings may be extended for up to 60 days if 

the Commission finds good cause for such 

extension and publishes its reasons for so finding, 

or if the exchange consents to the longer period. See 

id. 

34 15 U.S.C. 78f(b)(4). 

35 15 U.S.C. 78f(b)(5). 

36 15 U.S.C. 78f(b)(8). 

37Notice, supra note 3 at 64272. 

38Notice, supra note 3 at 64269. 

39Notice, supra note 3 at 64269. 

40Notice, supra note 3 at 64269–70. 

41Notice, supra note 3 at 64270. 

42Notice, supra note 3 at 64274–75. 

43Notice, supra note 3 at 64270–71. 

44Notice, supra note 3 at 64271. 

45Notice, supra note 3 at 64271. 

46Notice, supra note 3 at 64270, n.31. 

47Notice, supra note 3 at 64271. 

48Notice, supra note 3 at 64271, n.33. 

49Notice, supra note 3 at 64271, n.33. 

50See, e.g., Cost Study at 3. 

19(b)(2)(B) 32 of the Act to determine 

whether the proposed rule change 

should be approved or disapproved. 

Institution of such proceedings is 

appropriate at this time in view of the 

legal and policy issues raised by the 

proposed rule change. Institution of 

proceedings does not indicate that the 

Commission has reached any 

conclusions with respect to any of the 

issues involved. Rather, as described 

below, the Commission seeks and 

encourages interested persons to 

provide comments on the proposed rule 

change to inform the Commission’s 

analysis of whether to approve or 

disapprove the proposed rule change. 

Pursuant to Section 19(b)(2)(B) of the 

Act,33 the Commission is providing 

notice of the grounds for possible 

disapproval under consideration. The 

Commission is instituting proceedings 

to allow for additional analysis of 

whether the Exchange has sufficiently 

demonstrated how the proposed rule 

change is consistent with Sections 

6(b)(4),34 6(b)(5),35 and 6(b)(8) 36 of the 

Act. Section 6(b)(4) of the Act requires 

that the rules of a national securities 

exchange provide for the equitable 

allocation of reasonable dues, fees, and 

other charges among its members and 

issuers and other persons using its 

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

requires that the rules of a national 

securities exchange be designed, among 

other things, 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. 

Section 6(b)(8) of the Act requires that 

the rules of a national securities 

exchange not impose any burden on 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act. 

The Commission asks that 

commenters address the sufficiency of 

the Exchange’s statements in support of 

the proposal, which are set forth in the 

Notice, in addition to any other 

comments they may wish to submit 

about the proposed rule change. In 

particular, the Commission seeks 

comment on the following aspects of the 

proposal and asks commenters to 

submit data where appropriate to 

support their views: 

1. Cost Allocation. IEX states it ‘‘does 

not believe that exchange market data 

fees are constrained by competitive 

market forces,’’ 37 and that ‘‘each 

exchange has a natural monopoly over 

its own market data.’’ 38 Consequently, 

for market data fee filings, IEX believes 

that exchanges ‘‘should meet very high 

standards of transparency to 

demonstrate why each new fee or fee 

increase meets the Exchange Act 

requirements’’ and that ‘‘each exchange 

should demonstrate that these fees bear 

a reasonable relationship to its costs and 

reasonable business needs and that it is 

not taking unfair advantage of its unique 

position as the sole provider of its own 

proprietary market data.’’ 39 In 

proposing its fees, IEX says it used a 

‘‘cost-plus model’’ and ‘‘sought to 

determine such fees in a transparent 

way in relation to its own aggregate 

costs of providing the related 

service. . . .’’ 40 IEX says it used a 

‘‘conservative methodology (i.e., that 

strictly considers only those costs that 

are most clearly directly related to the 

production and distribution of IEX Data) 

to estimate such costs, as well as the 

relative costs of compiling the TOPS 

and DEEP feeds . . .’’ 41 and also 

considered its ‘‘objective to make TOPS 

broadly available to a range of market 

participants including long-term 

investors.’’ 42 IEX summarizes its cost 

components according to (1) direct costs 

(servers, infrastructure, monitoring), (2) 

enhancement initiative costs (new 

functionality and capacity), and (3) 

personnel.43 IEX asserts that direct costs 

are those that are specifically dedicated 

to IEX Data and that physical assets and 

software are valued at cost and 

depreciated over three years.44 For 

direct costs, IEX notes that ‘‘servers 

included were limited to those 

specifically dedicated to IEX Data’’ and 

that ‘‘[a]ll physical assets and software, 

which also includes assets used for 

testing and monitoring of market data 

infrastructure, were valued at cost, and 

depreciated over three years.’’ 45 Do 

commenters believe IEX has provided 

sufficient detail about the specific direct 

costs it has assigned to market data to 

justify its proposal? For enhancement 

initiative costs, IEX asserts that, though 

they are one-time costs, it expects to 

incur ‘‘annual enhancement costs on an 

ongoing basis’’ that ‘‘will be similar’’ to 

what it incurred in 2021.46 Do 

commenters believe enhancement costs 

are sufficiently clear and defined? 

Further, do commenters expect costs 

(enhancement costs as well as all other 

costs) incurred in 2021 to be generally 

representative of an exchange’s 

expected costs going forward (to the 

extent commenters consider 2021 to be 

an atypical year), or should an exchange 

present an estimated range of costs with 

an explanation of how profit margins 

could vary along with estimates costs? 

For personnel costs, IEX ‘‘calculated an 

allocation of employee time for 

employees whose functions include 

providing and maintaining IEX Data 

and/or the proprietary market data feeds 

used to transmit IEX Data, and used a 

blended rate of compensation reflecting 

salary, stock and bonus compensation, 

bonuses, benefits, payroll taxes, and 

401(k) matching contributions.’’ 47 IEX 

estimates 6.15 FTEs who ‘‘work in 

support of compiling and disseminating 

IEX Data,’’ 48 but does not identify the 

department and job title of all 

employees it counted as ‘‘work[ing] in 

support of compiling and disseminating 

IEX Data’’ nor does it explain the 

methodology it used to determine how 

much of an employee’s time is devoted 

to that specific activity (e.g., are finance, 

legal, HR, administrative personnel 

included in this estimate and what 

portion of their time did IEX count 

towards market data costs and why?). 

Further, IEX uses a ‘‘blended 

compensation rate . . . to determine the 

personnel costs associated with 

compiling and disseminating IEX 

Data,’’ 49 which includes salary, stock 

compensation, annual cash bonus, 

benefits, payroll taxes, and 401(k) 

matching contributions.50 Do 

commenters believe those are 

appropriate criteria? In particular, 

would it be appropriate to include stock 

compensation and annual cash bonuses 

in a blended compensation rate for 


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51Notice, supra note 3 at 64270. 

52Notice, supra note 3 at 64269. 

53Notice, supra note 3 at 64270. 

54Notice, supra note 3 at 64275. 

55See Notice, supra note 3 at 64273 (discussing 

IEX’s projections regarding how fees are likely to 

impact IEX market data subscriptions). 

56Notice, supra note 3 at 64273. 

57See id. 

58Notice, supra note 3 at 64271. 

59Notice, supra note 3 at 64273. 

60Notice, supra note 3 at 64273. 

61Notice, supra note 3 at 64271. 

62Notice, supra note 3 at 64272. 

63Notice, supra note 3 at 64275. 

purposes of assessing market data costs 

if those items are based on an 

exchange’s overall profitability or 

performance and not the individual 

employee’s performance (and thus not 

directly attributable to market data)? 

Across all of these costs, what are 

commenters’ views on whether the 

Exchange has provided sufficient detail 

on the elements that go into its market 

data costs, including how it allocated 

and attributed shared costs to market 

data expenses, to permit an independent 

review of its costs and meaningfully 

assess the reasonableness of purported 

cost-based fees and the corresponding 

profit margin thereon? 

2. TOPS versus DEEP. IEX states that 

its proposed market data fee structure is 

‘‘designed to make real time access to 

IEX’s top of book widely available to a 

broad base of market participants’’ and, 

to accomplish that goal, IEX ‘‘proposes 

to allocate its cost plus structure so that 

TOPS is materially more affordable than 

DEEP.’’ IEX notes that ‘‘because it 

contains multiple price levels, DEEP 

requires more processing (and related 

costs) for IEX to generate than TOPS.’’ 51

As proposed, DEEP ($2,500) is five 

times more expensive than TOPS 

($500). However, IEX does not assert in 

its filing that DEEP is five times more 

costly for it to produce than TOPS, nor 

does IEX present its separate costs to 

produce DEEP and TOPS individually. 

Rather, IEX appears to be subsidizing 

TOPS, though it has not presented a 

cost-based explanation for how it is 

doing so or explained the extent to 

which it is subsidizing TOPS through 

the proposed fees for DEEP or some 

other source of revenue. Do commenters 

believe that the price difference between 

TOPS and DEEP is consistent with IEX’s 

assertions that it set the level of its 

proposed fees ‘‘in relation to its own 

aggregate costs of providing the related 

service. . .’’ 52 and according to the 

‘‘relative costs of compiling the TOPS 

and DEEP feeds?’’ 53 Do commenters 

believe that IEX should provide more 

detail about the types of market 

participants that subscribe to TOPS and 

DEEP in order to assess, among other 

things, IEX’s statement that ‘‘fees also 

do not depend on any distinctions 

between Members, customers, brokerdealers, or any other entity, because 

they are solely determined by the 

individual Data Subscriber’s business 

needs?’’ 54

3. Subscribers. IEX acknowledges that 

imposing a fee on the proprietary 

market data it previously offered for free 

may cause some of its current market 

data subscribers to terminate or modify 

their current subscriptions.55

Specifically, IEX says it ‘‘currently has 

70 Data Subscribers who it believes are 

individuals and expects that most, if not 

all, of the individual Data Subscribers 

will terminate their subscriptions for 

IEX Data’’ once IEX charges for RealTime data (though ‘‘if they choose to 

continue to receive IEX Data, [they] can 

opt to receive Delayed IEX Data from a 

third-party vendor or through HIST’’).56

IEX says (without providing supporting 

numbers) that the ‘‘remaining, nonindividual, Data Subscribers are made 

up of approximately one-third IEX 

Members, one-third professional market 

participants that are not IEX Members 

(e.g., hedge funds and broker-dealers), 

and one-third data vendors’’ and 

‘‘[b]ased on IEX’s general understanding 

of many of its current Data Subscribers’ 

business models, IEX projects at least 

half of the data vendors will retain all 

of their existing subscriptions for IEX 

Data while the others may cancel their 

real-time data subscriptions, and also 

anticipates that several Members and 

non-Members will cancel their real-time 

data subscriptions for either TOPS, 

DEEP, or both.’’ 57 IEX did not offer any 

further explanation of its basis for these 

projections. For example, how many 

non-individual Data Subscribers does 

IEX have that subscribe to each of 

TOPS, DEEP, or TOPS and DEEP, and 

on what basis does IEX estimate they 

will alter their current subscriptions? 

Has IEX received any verbal or written 

indication of such subscribers’ likely 

intent? Do commenters believe IEX has 

provided sufficient information 

regarding its current market data 

subscriber base as well as sufficient 

information to support its projections 

regarding what types of current 

subscribers (i.e., individuals, vendors, 

members, and non-members) may 

terminate or modify their current 

subscriptions and why? Do commenters 

believe that additional detail on 

estimated subscribers to TOPS, DEEP, or 

TOPS and DEEP is necessary and useful 

to assess the Exchange’s estimated profit 

margin on market data? 

4. Profit Margin Range. IEX states that 

its proposed fee structure is ‘‘designed 

to recoup its costs and limit any revenue 

in excess of cost to an amount that 

represents no more than what IEX 

believes is a reasonable rate of return 

over such costs.’’ 58 Depending on how 

many paying subscribers IEX will have 

once the fees take effect, IEX projects 

that the proposed market data fees will 

generate revenue of up to 95% above 

cost, though it has targeted and projects 

a 25% return over costs based on its 

estimate of subscribers.59 IEX attributes 

the wide range to its inability to know 

beforehand who will subscribe to TOPS 

or DEEP (or both or neither). If IEX is 

incorrect and all people that currently 

obtain IEX Data (for free) keep that data 

and pay the fee, IEX estimates it could 

generate revenue of 95% above cost. On 

the other hand, IEX also acknowledges 

that ‘‘revenues could range from ‘break 

even’ (or even below aggregate costs)’’ if 

its projections are incorrect.60 However, 

IEX does not specify the circumstances 

under which it would receive zero or 

negative profit margins or the likelihood 

of that occurring. Further, IEX does not 

specifically explain why it believes that 

profit margins of up to 95% are 

appropriate nor does it provide an 

argument to support a finding that fees 

within that range would be reasonable 

under the Act. Do commenters find 

IEX’s projected range to be 

appropriately narrow for a cost-based 

fee filing, or should IEX provide a more 

detailed and precise estimate in order to 

facilitate consideration of whether the 

proposed fees are reasonable and 

equitably allocated? Do commenters 

believe that the top-end of the range 

(95%) would constitute a reasonable 

rate of return over cost for proprietary 

market data? 

5. Reasonable Rate of Return. IEX 

believes that a 95% return ‘‘is unlikely’’ 

and ‘‘is targeting a return of 25% over 

its costs’’ 61 because ‘‘market 

participants that do not need real-time 

data will have the option to receive 

Delayed IEX Data (at a minimal delay of 

only 15 milliseconds) in lieu of realtime data, without paying a fee to 

IEX.’’ 62 IEX states that its proposed fees 

are reasonable because, among other 

things, ‘‘IEX is only charging Data 

Subscribers who use IEX Data in real 

time’’ and the fees ‘‘are significantly less 

than the fees charged by competing 

equities exchanges. . . .’’ 63 If IEX’s 

subscriber estimates are correct, do 

commenters agree with IEX that its 

targeted 25% profit margin would 

constitute a reasonable rate of return 

over cost for proprietary market data? If 

not, what would commenters consider 


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64Notice, supra note 3 at 64271, n.44. 

65Notice, supra note 3 at 64273. 

66Notice, supra note 3 at 64270. 

67Notice, supra note 3 at 64273. 

68Notice, supra note 3 at 64275. 

69Notice, supra note 3 at 64270. 

70Notice, supra note 3 at 64270. 

71Notice, supra note 3 at 64275. 

72Notice, supra note 3 at 64276, n.75. 

73Notice, supra note 3 at 64272. 

74Notice, supra note 3 at 64274. 

75See id. 

76Rule 700(b)(3), Commission Rules of Practice, 

17 CFR 201.700(b)(3). 

77See id. 

to be a reasonable rate of return for 

proprietary market data fees? The rate of 

return is dependent on the accuracy of 

the cost allocations which, if inflated 

(intentionally or unintentionally), may 

render the projected profit margin 

meaningless. What are commenters’ 

views regarding what factors should be 

considered in determining what 

constitutes a reasonable rate of return 

for proprietary market data fees? 

6. Periodic Reevaluation. IEX 

represented that ‘‘[i]f the revenue IEX 

receives from the proposed fees 

materially deviates from IEX’s 

projections described herein, IEX will 

assess whether it is appropriate to make 

a rule filing pursuant to Section 19(b) of 

the Act to increase or decrease the fees 

accordingly.’’ 64 In light of the impact 

that the number of subscribers has on 

market data profit margins (because 

market data costs do not necessarily 

linearly change as the number of 

subscribers increase or decrease), what 

are commenters’ views on the need for 

exchanges to commit to reevaluate, on 

an ongoing and periodic basis, their 

cost-based proprietary market data fees 

to ensure that they stay in line with 

their stated profitability target and do 

not become unreasonable over time, for 

example, by failing to adjust for 

efficiency gains, cost increases or 

decreases, and changes in subscribers? 

How formal should that process be, how 

often should that reevaluation occur, 

and what metrics and thresholds should 

be considered? How soon after a new 

market data fee change is implemented 

should an exchange assess whether its 

subscriber estimates were accurate and 

at what threshold should an exchange 

commit to file a fee change if its 

estimates were inaccurate? Should an 

initial review take place within the first 

30 days after a proprietary market data 

fee becomes operative? 

7. Real-Time. IEX is only proposing to 

assess fees for market data that is made 

available in ‘‘Real-Time.’’ The Exchange 

is proposing to define ‘‘Real-Time’’ 

market data as IEX market data that is 

accessed, used, or distributed less than 

fifteen milliseconds after it was made 

available by the Exchange. IEX states 

that it ‘‘sought informal feedback from 

Members and other Data Subscribers’’ 

and, ‘‘[b]ased upon that informal 

feedback, IEX believes that most, if not 

all, non-electronic trading desks would 

be able to continue to use IEX Data if it 

was received subject to at least a fifteenmillisecond delay.’’ 65 What are 

commenters’ views on this threshold 

and whether this definition accurately 

reflects and correlates to IEX’s assertion 

that ‘‘it is the very demand for real-time, 

low latency data that drives much of the 

costs associated with creating and 

distributing’’ such data? 66 Do 

commenters agree with IEX’s statement 

that ‘‘most, if not all, non-electronic 

trading desks would be able to continue 

to use IEX Data if it was received subject 

to at least a fifteen-millisecond delay,’’ 

and that (conversely) electronic trading 

desks that need IEX Data for trading 

purposes require the data to have less 

than a 15 millisecond delay? 67

Similarly, do commenters agree with 

IEX’s statement that a fifteenmillisecond delay is ‘‘a time frame that 

is usable for most trading purposes’’ 

(i.e., does usefulness to ‘‘non-electronic 

trading desks’’ cover ‘‘most trading 

purposes’’), while the fifteen-minute 

delay offered by other exchanges 

‘‘makes the data stale for any 

subscribers using the data to make 

trading decisions’’? 68

8. Distribution Fee. IEX proposes a 

$500 redistribution fee because 

‘‘[e]nabling redistribution in real time 

adds to IEX’s administrative expenses 

related to the need to identify and track 

the recipients of IEX Data.’’ 69 IEX does 

not, however, provide any estimate of 

such administrative expenses, nor does 

it mention its targeted profit margin on 

the proposed Distribution Fee. IEX also 

justifies the proposed Distribution Fee 

by noting that ‘‘if it allowed Data 

Subscribers to redistribute IEX Data in 

real time without any additional fees, it 

could enable Data Subscribers to 

circumvent IEX’s fees for providing IEX 

Data, which would conflict with IEX’s 

objective to recover its costs of 

producing IEX Data.’’ 70 IEX does not 

explain how the proposed Distribution 

Fee would discourage Data Subscribers 

from circumventing the TOPS and/or 

DEEP fees. What are commenters’ views 

on the adequacy of the information IEX 

provides regarding its proposed 

Distribution Fee? 

9. Delayed IEX Data. IEX does not 

propose to itself directly offer Delayed 

IEX Data, nor does it propose to charge 

persons that access, receive, or 

distribute Delayed IEX Data from third 

parties. IEX states that its proposal will 

continue ‘‘to allow market participants 

to access IEX Data free of charge if they 

can wait at least fifteen milliseconds to 

receive it’’ 71 but acknowledges that 

‘‘[d]istributors of Delayed IEX Data may 

charge a fee for the data, but that fee is 

not payable to IEX.’’ 72 What do 

commenters think will be the end costs 

to consumers of Delayed IEX Data? 

While IEX itself will not charge for 

Delayed IEX Data, do commenters think 

there is sufficient competition among 

data vendors such that market 

participants will have access to Delayed 

IEX Data for a reasonable fee? 

10. Sharing with Affiliates. In an 

example discussing the other exchanges 

that charge for proprietary market data, 

IEX explains that ‘‘the aggregate 

monthly cost for those 11 equity 

exchanges [to obtain IEX Data] would be 

$3,000 per exchange family.’’ 73 That 

statement, however, appears to be 

inconsistent with the rule text and the 

proposed definition of Data Subscriber. 

Specifically, IEX’s proposed rule text 

defines ‘‘Data Subscriber’’ as ‘‘any 

natural person or entity that receives 

Real-Time IEX market data either 

directly from the Exchange or from 

another Data Subscriber.’’ 74 Further, it 

states that each Data Subscriber ‘‘must 

enter into a Data Subscriber Agreement 

with IEX in order to receive Real-Time 

IEX market data’’ 75 as well as pay the 

applicable fee. Yet, IEX’s example of 

affiliated exchanges states that an 

exchange family would only be assessed 

$3,000 in fees (i.e., $2,500 for DEEP and 

$500 for TOPS), despite the fact that 

each exchange within a family would 

independently meet the proposed 

definition of Data Subscriber. IEX’s 

filing appears incomplete with respect 

to how the proposed fees would apply 

in the case of internal sharing of TOPS 

and/or DEEP with an affiliate. 

Under the Commission’s Rules of 

Practice, the ‘‘burden to demonstrate 

that a proposed rule change is 

consistent with the [Act] and the rules 

and regulations issued thereunder . . . 

is on the [SRO] that proposed the rule 

change.’’ 76 The description of a 

proposed rule change, its purpose and 

operation, its effect, and a legal analysis 

of its consistency with applicable 

requirements must all be sufficiently 

detailed and specific to support an 

affirmative Commission finding,77 and 

any failure of an SRO to provide this 

information may result in the 

Commission not having a sufficient 

basis to make an affirmative finding that 

a proposed rule change is consistent 

with the Act and the applicable rules 


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528 Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Notices 

78See id. 

79See Susquehanna Int’l Group, LLP v. Securities 

and Exchange Commission, 866 F.3d 442, 446–47 

(D.C. Cir. 2017) (rejecting the Commission’s reliance 

on an SRO’s own determinations without sufficient 

evidence of the basis for such determinations). 

80Section 19(b)(2) of the Exchange Act, as 

amended by the Securities Act Amendments of 

1975, Public Law 94–29 (June 4, 1975), grants the 

Commission flexibility to determine what type of 

proceeding—either oral or notice and opportunity 

for written comments—is appropriate for 

consideration of a particular proposal by a selfregulatory organization. See Securities Act 

Amendments of 1975, Senate Comm. on Banking, 

Housing & Urban Affairs, S. Rep. No. 75, 94th 

Cong., 1st Sess. 30 (1975). 81 15 U.S.C. 78s(b)(3)(C). 

82 17 CFR 200.30–3(a)(57) and (58). 

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

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A). 

4 17 CFR 240.19b–4(f)(2) and (f)(4). 

5Each term not otherwise defined herein has its 

respective meaning as set forth in the Rules, ByLaws and Organization Certificate of DTC (the 

‘‘Rules’’), the Guide to the DTC Fee Schedule (‘‘Fee 

Guide’’), and the Reorganizations Service Guide 

(‘‘Reorganizations Guide’’), available at http://

www.dtcc.com/legal/rules-and-procedures.aspx. 

6Each of the CCF Entitlements and Allocations 

Files falls into one of two categories (each, a ‘‘File 

Category’’): (i) Pre-allocation (‘‘Pre-Allocation CCF 

Files’’), which includes files containing a 

Participant’s allocation projections and 

entitlements, or (ii) allocation/post-allocation 

(‘‘Allocation/Post-Allocation CCF Files’’), which 

and regulations.78 Moreover, 

‘‘unquestioning reliance’’ on an SRO’s 

representations in a proposed rule 

change would not be sufficient to justify 

Commission approval of a proposed rule 

change.79

The Commission believes it is 

appropriate to institute proceedings to 

allow for additional consideration and 

comment on the issues raised herein, 

including as to whether the proposed 

fees are consistent with the Act, any 

potential comments or supplemental 

information provided by the Exchange, 

and any additional independent 

analysis by the Commission. 

V. Request for Written Comments 

The Commission requests that 

interested persons provide written 

submissions of their views, data, and 

arguments with respect to the concerns 

and issues identified above, as well as 

any other relevant concerns. In 

particular, the Commission invites the 

written views of interested persons 

concerning whether the proposal is 

consistent with Sections 6(b)(4), 6(b)(5), 

and 6(b)(8), or any other provision of the 

Act, or the rules and regulations 

thereunder. The Commission asks that 

commenters address the sufficiency and 

merit of the Exchange’s statements in 

support of the proposal, in addition to 

any other comments they may wish to 

submit about the proposed rule change. 

Although there do not appear to be any 

issues relevant to approval or 

disapproval that would be facilitated by 

an oral presentation of views, data, and 

arguments, the Commission will 

consider, pursuant to Rule 19b–4, any 

request for an opportunity to make an 

oral presentation.80

Interested persons are invited to 

submit written data, views, and 

arguments regarding whether the 

proposal should be approved or 

disapproved by January 26, 2022. Any 

person who wishes to file a rebuttal to 

any other person’s submission must file 

that rebuttal by February 9, 2022. 

Comments may be submitted by any 

of the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

IEX–2021–14 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–2021–14. 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 (http://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 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number IEX–2021–14 and should be 

submitted on or before January 26, 2022. 

Rebuttal comments should be submitted 

by February 9, 2022. 

VI. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(3)(C) of the Act,81 that File 

No. SR–IEX–2021–14 be, and hereby is, 

temporarily suspended. In addition, the 

Commission is instituting proceedings 

to determine whether the proposed rule 

change should be approved or 

disapproved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.82

Eduardo A. Aleman, 

Deputy Secretary. 

[FR Doc. 2021–28577 Filed 1–4–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–93885; File No. SR–DTC– 

2021–018] 

Self-Regulatory Organizations; The 

Depository Trust Company; Notice of 

Filing and Immediate Effectiveness of 

a Proposed Rule Change To Amend 

the Reorganizations Guide and the Fee 

Guide 

December 30, 2021. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on December 

29, 2021, The Depository Trust 

Company (‘‘DTC’’) 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 clearing agency. DTC filed the 

proposed rule change pursuant to 

Section 19(b)(3)(A) of the Act 3 and 

Rules 19b–4(f)(2) and (f)(4) thereunder.4

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

The proposed rule change 5 consists of 

amendments to the Reorganizations 

Guide and the Fee Guide to (i) postpone 

the retirement of DTC’s legacy computer 

to computer facility (‘‘CCF’’) files for 

corporate actions entitlements and 

allocations (‘‘CCF Entitlements and 

Allocations Files’’) 6 to January 1, 2023, 


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