63616 Federal Register / Vol. 85, No. 196 / Thursday, October 8, 2020 / Notices 

22See supra note 4 for a description of 

Amendment No. 1. 

23 15 U.S.C. 78s(b)(2). 

24 Id. 

25 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(1). 

4 17 CFR 240.19b–4. 

5 15 U.S.C. 78s(b)(3)(A)(ii). 

6See IEX Trading Alert #2020–024 (Discretionary 

Limit (D-Limit) Order Type Launch) issued on 

August 28, 2020, available at https://

iextrading.com/alerts/#/121. All D-Limit, D-Peg, 

and M-Peg executions that occur prior to October 

1, 2020 will be subject to the fee schedule in effect 

prior to October 1, 2020. 

7See supra note 6. 

8See Securities Exchange Act Release No. 89686 

(August 26, 2020), 85 FR 54438 (September 1, 2020) 

(SR–IEX–2019–15) (‘‘D-Limit Approval Order’’). 

9See Securities Exchange Act Release No. 87814 

(December 20, 2019), 84 FR 71997, 71998 

(December 30, 2019) (SR–IEX–2019–15) (‘‘D-Limit 

Proposal’’). 

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–CBOE–2020–071 and 

should be submitted on or before 

October 29, 2020. 

V. Accelerated Approval of Proposed 

Rule Change, as Modified by 

Amendment No. 1 

The Commission finds good cause for 

approving the proposed rule change, as 

amended by Amendment No. 1, prior to 

the 30th day after the date of 

publication of notice in the Federal 

Register. Amendment No. 1 provided 

additional detail and clarity on a few 

points without materially changing the 

proposal or the proposed rule text.22

The Commission notes that Amendment 

No. 1 does not change the substance of 

the proposed rule change as it was 

initially filed, but merely adds detail to 

a few select items of the proposal 

regarding their intended scope. These 

points of clarification add helpful detail 

to support the proposal without 

materially altering it. Accordingly, the 

Commission finds good cause for 

approving the proposed rule change, as 

amended, on an accelerated basis, 

pursuant to Section 19(b)(2) of the 

Act.23

VI. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,24 that the 

proposed rule change, as modified by 

Amendment No. 1 (SR–CBOE–2020– 

071), be, and hereby is, approved on an 

accelerated basis. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.25

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–22251 Filed 10–7–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–89967; File No. SR–IEX– 

2020–14] 

Self-Regulatory Organizations: 

Investors Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Related to 

Transaction Fees Pursuant to IEX Rule 

15.110 Concerning D-Limit Orders 

September 23, 2020. 

Editorial Note: Notice document 2020– 

21403, which published Tuesday, September 

29, 2020, was incorrect. We are republishing 

it here in its entirety. 

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 

September 11, 2020, the Investors 

Exchange LLC (‘‘IEX’’ or the 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Pursuant to the provisions of Section 

19(b)(1) under the Act,3 and Rule 19b– 

4 thereunder,4 IEX is filing with the 

Commission a proposed rule change to 

modify its Fee Schedule, pursuant to 

IEX Rule 15.110(a) and (c), to establish 

fees for the execution of Discretionary 

Limit (‘‘D-Limit’’) orders, including 

pricing incentives for certain D-Limit, 

Discretionary Peg (‘‘D-Peg’’), and 

Midpoint Peg (‘‘M-Peg’’) order 

executions. Changes to the Fee Schedule 

pursuant to this proposal are effective 

upon filing,5 and will be implemented 

in conjunction with the full launch of DLimit trading on October 1, 2020.6

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 

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 

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 establish fees for 

the execution of Discretionary Limit 

(‘‘D-Limit’’) orders, including pricing 

incentives for certain D-Limit, 

Discretionary Peg (‘‘D-Peg’’) and 

Midpoint Peg (‘‘M-Peg’’) order 

executions. Changes to the Fee 

Schedule, as proposed, will be 

implemented in conjunction with the 

full launch of D-Limit trading on 

October 1, 2020.7

D-Limit Overview 

The D-Limit order type was approved 

by the Commission on August 26, 

2020,8 and is designed to protect 

liquidity providers from potential 

adverse selection by latency arbitrage 

trading strategies in a fair and 

nondiscriminatory manner.9 A D-Limit 

order may be a displayed or nondisplayed limit order that upon entry 


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Federal Register / Vol. 85, No. 196 / Thursday, October 8, 2020 / Notices 63617 

10See IEX Rule 1.160(p). 

11See IEX Rules 11.190(b)(7) and 11.190(g). 

12See IEX Rule 11.190(b)(7). 

13 Generally, IEX currently charges $.0003 per 

share for any displayed orders that execute 

(whether they add or remove liquidity) and $.0009 

per share for any non-displayed orders that execute 

(whether they add or remove liquidity). If the shares 

execute for less than $1.00 per share, the Exchange 

charges 0.30% of the total dollar value of the 

transaction. See IEX Fee Schedule, https://

iextrading.com/trading/fees/. 

14See IEX Rule 1.160(s). 

15See IEX Fee Schedule, https://iextrading.com/ 

trading/fees/. 

16For example, the Exchange would review a 

Member’s Form BD in FINRA’s Central Registration 

Depository (‘‘CRD’’) to verify that the Member(s) for 

which it seeks aggregation pursuant to the proposed 

rule is under 75% common ownership or control 

of the requesting Member. 

17 If two or more Members become affiliated on 

or prior to the sixteenth day of a month and submit 

the required request for aggregation on or prior to 

the twenty-second day of the month, an approval 

of the request by the Exchange shall be deemed to 

be effective as of the first day of that month. If two 

or more Members become affiliated after the 

sixteenth day of a month or submit a request for 

aggregation after the twenty-second day of the 

month, an approval of the request by the Exchange 

shall be deemed to be effective as of the first day 

of the next calendar month. For purposes of 

applying the fees and discounts proposed herein, 

references to Member shall include the Member and 

any of its affiliates that have been approved for 

aggregation, and the term ‘‘affiliate’’ shall mean any 

Member under 75% common ownership or control 

of that Member. 

18See D-Limit Approval Order, supra note 8, 

54443. 

19Notably, several exchanges pay rebates to 

Members for liquidity adding orders, which means 

the exchanges actually pay Members to add 

liquidity. See, e.g., New York Stock Exchange Price 

List as of August 20, 2020 (offering free execution 

for liquidity adding orders, with rebates ranging 

from $0.0000 to $0.0030 per share executed), 

Continued 

and when posting to the Order Book 10

is priced to be equal to and ranked at 

the order’s limit price, but will be 

adjusted to a less-aggressive price 

during periods of quote instability, as 

defined in IEX Rule 11.190(g).11

Otherwise, a D-Limit order operates in 

the same manner as either a displayed 

or non-displayed limit order, as 

applicable.12

Proposed D-Limit Fees 

As proposed, liquidity taking D-Limit 

orders will be subject to the same 

transaction fees as other displayed or 

non-displayed orders.13 However, in 

order to incentivize the entry of 

liquidity providing D-Limit orders, IEX 

proposes to establish pricing incentives, 

including free executions of certain 

liquidity providing D-Limit orders and 

discounted execution fees for certain 

liquidity providing D-Peg and M-Peg 

orders. 

Specifically, as proposed, any 

Member 14 that enters a D-Limit order 

that provides liquidity, with the 

exception of executions of such orders 

at a price below $1.00 per share, will be 

entitled to free executions and certain 

reduced transaction fees (in lieu of the 

fees otherwise specified and unless a 

lower fee applies) 15 as described below: 

• A D-Limit order that provides liquidity 

and is executed at a price at or above $1.00 

per share results in a free execution. 

• D-Peg and M-Peg orders that provide 

liquidity and execute at a price at or above 

$1.00 per share will be subject to a discount 

of $0.0002 per share from the fee that would 

otherwise be charged for the number of 

shares of such orders executed up to the 

number of shares of D-Limit orders that 

provided liquidity and executed at a price at 

or above $1.00 per share during such time 

period by the same Member, measured on a 

monthly basis. 

• IEX will aggregate all of a Member’s 

MPIDs to calculate each Member’s D-Peg, MPeg, and D-Limit liquidity providing orders 

on a monthly basis. In addition, a Member 

may request that the Exchange aggregate its 

activity with activity of such Member’s 

affiliated Members. A Member requesting 

aggregation of affiliate activity is required to 

certify to the Exchange the affiliate status of 

Members whose activity it seeks to aggregate 

prior to receiving approval for aggregation 

and inform the Exchange immediately of any 

event that causes an entity to cease being an 

affiliate. The Exchange shall review available 

information regarding the entities and 

reserves the right to request additional 

information to verify the affiliate status of an 

entity.16 The Exchange shall approve a 

request unless it determines that the 

certification is not accurate.17

The proposed fees are designed to 

provide a narrowly tailored incentive 

for Members to utilize a new and 

innovative order type. IEX understands 

that Members seeking to utilize the new 

D-Limit order type may need to modify 

and test their trading strategies and 

order entry systems in order to do so, 

and the proposed fees are designed to 

provide a meaningful economic 

incentive for such efforts. 

IEX believes that offering free 

executions for specified D-Limit orders, 

as well as a discount for qualifying DPeg and M-Peg orders, will provide a 

meaningful incentive to Members to 

adopt the use of D-Limit orders. IEX 

operates in a highly competitive 

environment in which a large number of 

national securities exchanges and other 

venues offer markets for the execution 

of equities transactions, and in which 

market participants can readily direct 

order flow to other venues. Accordingly, 

IEX believes that it is important to 

provide meaningful incentives for the 

adoption of D-Limit orders to 

demonstrate the value of the order type 

in protecting against certain types of 

latency arbitrage and thereby result in 

increasing use of the order type. 

D-Peg and M-Peg order types are 

widely used and have achieved 

significant adoption by a diverse group 

of IEX Members. Consequently, IEX 

believes that combining free executions 

for certain liquidity providing D-Limit 

orders with discounted executions for 

certain liquidity providing D-Peg and 

M-Peg orders, as described above, will 

effectively augment the incentive value 

provision of free D-Limit liquidity 

providing executions for orders 

executed at or above $1.00. 

IEX believes that providing pricing 

incentives to liquidity providing orders 

will best incentivize the adoption of DLimit orders. While a D-Limit order can 

take liquidity upon entry, IEX believes 

that its commercial success will be 

based on Members having favorable 

experiences as liquidity adders, 

particularly for displayed liquidity 

providing D-Limit orders. As the 

Commission noted in the D-Limit 

Approval Order: 

[E]xchange functionality that protects 

resting displayed orders against adverse 

selection resulting from latency arbitrage will 

improve the execution quality experienced 

by market participants that post displayed 

liquidity and are affected by such adverse 

selection. This improved execution quality 

could encourage more displayed liquidity, 

which in turn, would contribute to fair and 

orderly markets and support the public price 

discovery process. Specifically, if sufficiently 

protected against being ‘‘picked off’’ when 

the conditions for latency arbitrage are 

present, long term investors will no longer 

experience those relatively poor executions 

and thus will have less incentive to avoid 

posting displayed orders on exchanges.18

IEX believes that targeting fee 

incentives to liquidity adders will 

enable Members to see for themselves 

the benefits of using the innovative DLimit order type, while adding to the 

pool of displayed (as well as nondisplayed) liquidity from which all 

market participants will benefit. 

Specifically, IEX believes that the 

proposed fees are a narrowly tailored 

approach that is designed to increase 

liquidity on IEX, which would benefit 

investors in securities traded on IEX. 

Specifically, to the extent Members post 

more displayed D-Limit orders on IEX, 

price discovery would be enhanced 

drawing more natural trading interest to 

the public markets, which would 

deepen liquidity and dampen the 

impact of shocks from liquidity 

demand. The Exchange notes that other 

exchanges offer a diverse range of feebased incentives to their members for 

trading activity that they believe 

incentivizes liquidity adding orders, 

and thereby improves market quality.19


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https://www.nyse.com/publicdocs/nyse/markets/ 

nyse/NYSE_Price_List.pdf; and Nasdaq Equity 7 

Pricing Schedule (offering free execution for 

liquidity adding orders, with rebates ranging from 

$0.00005 to $0.0033 per share executed). See 

https://listingcenter.nasdaq.com/rulebook/nasdaq/ 

rules/nasdaq-equity-7. 

20See NYSE’s Price List, available at: https://

www.nyse.com/publicdocs/nyse/markets/nyse/ 

NYSE_Price_List.pdf; see also Nasdaq Equities 7 

Pricing Schedule, Section 127. 

21 15 U.S.C. 78f(b). 

22 15 U.S.C. 78f(b)(4). 

23 15 U.S.C. 78f(b)(5). 

24See D-Limit Approval Order, supra note 8, 

54450 (‘‘Because IEX will reprice all D-Limit orders 

without further action from the user, all users will 

benefit equally regardless of their technological 

capabilities and ability to take action within a 

prescribed period.’’) 

25See IEX Rule 1.160(t). 26See IEX Rule 1.160(u). 27See Securities Exchange Act Release No. 88487 

(March 26, 2020), 85 FR 18290 (April 1, 2020) (SR– 

CboeBZX–2020–027). 28See e.g., ‘‘Nasdaq Growth Program,’’ Nasdaq 

Equity 7 Section 114 (paying a $0.0025 per share 

rebate to a member that adds a daily average of 

750,000 or more shares and also increases its 

volume of shares traded on Nasdaq in prior months 

by 20%; and paying a larger $0.0027 per share 

rebate if that member increases its share of liquidity 

adding volume by at least 50% versus its August 

2016 share of liquidity adding volume); see also 

NYSE Arca Equities Fee Schedule, Retail Order 

Step-Up Tiers 1–3 (paying rebates ranging from 

$0.0035 to $0.0037 per share for retail orders that 

provide displayed liquidity with the rebates 

increasing as the member submits more retail orders 

(both adding and taking) in any given month when 

compared to a prior period). 

Importantly, the Exchange is not 

proposing to offer a rebate, in that the 

proposed fee reduction will not be 

greater than the fee charged for 

executions on the Exchange. The 

Exchange will offer a discount to the 

fees charged for qualifying orders, but 

such discounts will not result in any net 

payments to Members for the execution 

of such orders. The proposed fees are 

designed to provide an alternative feebased incentive to Members to utilize a 

new order type on IEX. 

Finally, IEX notes that the affiliate 

aggregation for purposes of applying DLimit fees and discounts is similar to 

pricing structures in place at other 

exchanges. For example, the New York 

Stock Exchange, Inc. (‘‘NYSE’’) pricing 

rules provide that ‘‘[f]or purposes of 

applying any provision of the Price List 

where the charge assessed, or credit 

provided, by the Exchange depends 

upon the volume of a member 

organization’s activity, a member 

organization may request that the 

Exchange aggregate its eligible activity 

with the eligible activity of its 

affiliates.’’ The NYSE Price List also 

includes provisions regarding 

aggregation requests, and the timing 

thereof, that are substantially similar to 

those proposed in this rule change. 

Nasdaq Stock Market (‘‘Nasdaq’’) 

pricing rules contain virtually identical 

provisions.20

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,21 in general, and 

furthers the objectives of Section 

6(b)(4) 22 of the Act, in particular, in that 

it is designed to provide for the 

equitable allocation of reasonable fees 

among IEX members and persons using 

its facilities. Additionally, IEX believes 

that the proposed fees are consistent 

with the investor protection objectives 

of Section 6(b)(5) 23 of the Act, in 

particular, in that they are designed to 

prevent fraudulent and manipulative 

acts and practices; to promote just and 

equitable principles of trade; to foster 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities; to remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest; and are not designed to 

permit unfair discrimination between 

customers, brokers, or dealers. 

The Exchange believes that the 

proposed fees are consistent with the 

Act because they would be available to 

all Members on a fair, equal and 

nondiscriminatory basis. All Members, 

regardless of their technological 

sophistication, can enter D-Limit 

liquidity providing orders priced to 

execute at or above $1.00.24 Similarly, 

all Members, regardless of their 

technological sophistication, can enter 

liquidity providing D-Peg and M-Peg 

orders priced to execute at or above 

$1.00. Thus, all Members are able to 

benefit from the proposed fees on a fair, 

equal and nondiscriminatory basis. 

The proposed fees take a narrowly 

tailored approach, designed to 

maximize participation for the launch of 

D-Limit by incentivizing the entry of 

certain displayed and non-displayed 

liquidity adding D-Limit orders. As 

noted in the Purpose section, IEX 

understands that Members seeking to 

utilize the D-Limit order type may need 

to modify and test their trading 

strategies and order entry systems in 

order to do so, and the proposed fees are 

designed to provide a meaningful 

economic incentive for such efforts. 

As discussed in the Purpose section, 

IEX believes that the proposed fees are 

narrowly tailored to incentivize 

Members to enter liquidity providing DLimit, D-Peg and M-Peg orders on IEX 

that execute at or above $1.00, which 

would have several benefits to investors 

in securities traded on IEX. First, to the 

extent Members post more displayed DLimit orders on IEX, price discovery 

would be enhanced potentially drawing 

more natural trading interest to the 

public markets, which would deepen 

liquidity and dampen the impact of 

shocks from liquidity demand. Second, 

incentivizing the entry of both 

displayed and non-displayed liquidity 

adding orders should deepen the 

Exchange’s liquidity pool and 

contribute to public price discovery, 

consistent with the goal of enhancing 

market quality. Third, to the extent that 

the proposed fees incentivize additional 

liquidity providing D-Peg and M-Peg 

orders that execute at the Midpoint 

Price 25 and at or above $1.00, such 

orders will result in benefits to 

counterparties, offering price 

improvement over the prevailing 

national best bid and offer prices.26

Finally, to the extent price discovery is 

enhanced and more orders are drawn to 

the public markets, orders executed on 

IEX will have the benefit of exchange 

transparency, regulation, and oversight. 

These benefits would generally apply to 

all Members, even if a Member elects to 

not use the D-Limit order type. 

Additionally, IEX notes that it 

operates in an increasingly competitive 

and fragmented marketplace consisting 

of a large number of national securities 

exchanges and non-exchange venues 

that trade equity securities. As a 

relatively small market, IEX believes 

that meaningful pricing incentives are 

necessary to encourage market 

participants to utilize the new D-Limit 

order type and address the significant 

competitive challenges of attracting 

liquidity to the Exchange. While the 

Exchange believes that adding liquidity 

with a D-Limit order with less risk of 

adverse selection should provide an 

incentive for Members to use D-Limit, 

the Exchange also believes that offering 

Members the proposed fees will 

enhance such incentive. 

The Exchange notes that other 

exchanges offer a diverse range of 

pricing incentives to their members for 

providing certain order flow. For 

example, Cboe BZX Exchange, Inc. 

offers free executions for orders that 

participate in its new Cboe Market 

Close, which it describes as a 

‘‘competitive pricing structure designed 

to incentivize market participants to 

direct their [Market-On-Close] orders to 

the Cboe Market Close, which the 

Exchange believes would facilitate the 

execution of those orders . . . .’’ 27 And 

several exchanges offer rebate tiers for 

liquidity adding orders, which increase 

in value as the member increases its 

volume of liquidity adding orders.28


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29See, e.g., NYSE Arca Equities Fee Schedule, 

Cross-Asset Tiers 1–2 (paying rebates of $0.0031 per 

share and $0.0030 per share, respectively, for 

adding more than 0.30% of consolidated average 

daily volume concurrent with an affiliate meeting 

certain volume thresholds on the NYSE Arca 

Options exchange). See https://www.nyse.com/ 

publicdocs/nyse/markets/nyse-arca/NYSE_Arca_

Marketplace_Fees.pdf. See also, Cboe BZX 

Exchange, Inc. Cross-Asset Tape B Tier (paying a 

rebate of $0.0031 per share for adding volume since 

February 2015 equal to or greater than 0.06% of 

total consolidated volume if the member also has 

an options market maker that added options 

customer volume equal to or greater than 1.00%), 

available at http://markets.cboe.com/us/equities/ 

membership/fee_schedule/bzx/. 

30See Nasdaq Equities 7 Pricing Schedule, 

Section 118 (providing lower fees or higher rebates/ 

credits for specified levels of volume, either 

generally or through the use of a particular order 

type if coupled with specified volume in other 

specified order types, including several examples of 

rebates tied to adding displayed liquidity and nondisplayed liquidity at specified levels of volume). 

For example, Nasdaq pays a rebate of $0.00295 per 

share for adding more than 0.70% of total 

consolidated volume (‘‘TCV’’), provided that at least 

0.20% of the added TCV was done with midpoint 

and midpoint extended life orders, and the member 

also removed at least 1.10% of TCV). Similarly, 

Nasdaq pays a rebate of $0.0027 per share for 

displayed quotes/orders that provide liquidity if the 

member also takes and provides specified levels of 

consolidated volume and provides a daily average 

of at least 800,000 shares of non-displayed liquidity 

during the month in question; see also NYSE Arca 

Equities Fee Schedule, Limit Non-Displayed Order 

Step Up Tier (paying rebates ranging from $0.0004 

to $0.0020 per share for meeting certain thresholds 

of adding limit non-displayed liquidity and adding 

midpoint (non-displayed) liquidity). Similarly, 

NYSE Arca pays rebates ranging from $0.0029 to 

$0.0031 per share for orders that meet certain 

thresholds for adding displayed liquidity, removing 

liquidity, and participating in the exchange’s 

closing auctions, including additional rebates of 

between $0.0010 to $0.0020 per share for adding 

liquidity with non-displayed midpoint orders. 31See Nasdaq Equities 7 Pricing Schedule, 

Section 118 (providing rebates of between $0.0005 

to $0.0075 per share for adding non-displayed 

liquidity at specified levels of volume, provided 

that some of the added non-displayed liquidity was 

done with various combinations of midpoint and 

midpoint extended life orders). 

32See supra note 19. 

33Cboe EDGA pays a $0.018 per share rebate for 

liquidity taking orders, see https://

markets.cboe.com/us/equities/membership/fee_

schedule/edga/; Cboe BYX pays a $0.005 per share 

rebate for liquidity taking orders, see https://

markets.cboe.com/us/equities/membership/fee_

schedule/byx/; and Nasdaq BX pays between 

$0.0000 and $0.0030 per share for liquidity taking 

orders, see Nasdaq BX Equity 7, https://

listingcenter.nasdaq.com/rulebook/bx/rules/bxequity-7. 

34See supra note 20. 

35 Id. 

Furthermore, several exchanges use 

‘‘cross-asset’’ incentives, which offer 

pricing incentives to members that 

submit different order types to the 

exchange.29 Similarly, other exchanges 

have fee structures that use trading in 

one order type to incentivize trading 

either in another order type or more 

generally, as well as coupling 

requirements of displayed and nondisplayed volume to qualify for 

preferential pricing, that are analogous 

to IEX’s proposal to provide discounts 

to certain D-Peg and M-Peg executions 

to incentive the use of D-Limit orders.30

Additionally, other exchanges have fee 

structures that incentivize the posting of 

non-displayed liquidity adding orders, 

which is analogous to how the proposed 

fees incentivize non-displayed liquidity 

adding M-Peg and D-Peg orders, in 

addition to incentivizing liquidity 

adding D-Limit orders.31 Finally, makertaker exchanges pay rebates to members 

that add liquidity,32 while taker-maker 

exchanges pay rebates to members that 

take liquidity, in each case to 

incentivize such order flow.33

The proposed fees are designed to 

provide a simple, non-rebate incentive 

to market participants to enter certain 

liquidity providing D-Limit orders on 

IEX, through free executions and 

discounts on certain D-Peg and M-Peg 

orders. 

The Exchange further believes that the 

proposed fees are consistent with the 

Act’s requirement that the Exchange 

provide for an equitable allocation of 

fees because all Members are eligible for 

incentive pricing on the same terms and 

conditions, and there are no restrictions 

on the use of impacted order types. 

Additionally, IEX believes that it is 

reasonable to incentivize Members to 

use certain D-Limit liquidity providing 

orders in view of the potential burdens 

on those Members that choose to adopt 

this new order type and the highly 

competitive market in which IEX 

operates, which provides myriad 

alternatives to Members. Furthermore, 

the Exchange believes that the proposed 

fees are an equitable allocation of fees 

because to the extent the incentive 

pricing results in increased liquidity on 

IEX, all market participants will benefit, 

irrespective of if the market participant 

is an IEX Member that submits certain 

liquidity adding D-Limit, D-Peg, and MPeg orders. Accordingly, IEX believes 

that the proposed fees constitute an 

equitable allocation of fees. 

Moreover, the Exchange believes that 

the proposal to cap the $0.0002 discount 

on certain D-Peg and M-Peg orders 

executed by a Member (including any 

aggregated affiliates) at the number of DLimit liquidity adding shares executed 

by that Member in the same month is 

reasonable, because the cap is designed 

to further incentivize Members to 

submit certain liquidity-adding D-Limit 

orders. Further, all Members will benefit 

from the discount in the same manner 

based on the number of qualifying DLimit liquidity adding shares they 

execute. 

Finally, the Exchange believes that 

the proposed aggregation provision is 

consistent with the protection of 

investors and the public interest 

because it establishes a clear policy with 

respect to affiliate aggregation for fee 

purposes that is common among other 

exchanges, thereby promoting Members’ 

understanding of the parameters of the 

D-Limit fee and discount structure and 

the efficiency of its administration. The 

proposed rule is equitable because all 

similarly situated members are subject 

to the proposed rules equally, and 

access to the Exchange is offered on fair 

and nondiscriminatory terms. 

All Members seeking to aggregate 

their activity are subject to the same 

reasonable parameters, in accordance 

with a standard that recognizes an 

affiliation as of the month’s beginning, 

or close in time to when the affiliation 

occurs, provided the Member submits a 

timely request. Moreover, the proposed 

billing aggregation language is 

reasonable because it establishes a 

standard for implementation of 

aggregation requests that is easy to 

administer and that reflects the need for 

the Exchange to review and approve 

aggregation requests while avoiding the 

complexities associated with proration 

of the bills of Members that become 

affiliated during the course of a month. 

The Exchange believes that this 

approach will thus simplify the process 

of billing for the Exchange and its 

Members and is substantially similar to 

aggregation standards adopted by other 

exchanges.34

The Exchange also believes that the 

proposed rule change avoids disparate 

treatment of Members that have divided 

their various business activities between 

separate legal entities as compared to 

Members that operate those business 

activities within a single legal entity. 

The Exchange further notes that the 

aggregation provisions are reasonable 

and designed to remove impediments to 

and perfect the mechanism of a free and 

open market by harmonizing with the 

rules across exchanges that govern the 

aggregation of certain activity for 

purposes of billing. In particular, as 

noted above, both Nasdaq and NYSE 

have substantially similar rules 

governing aggregation of activity for fee 

purposes.35 Thus, the Exchange believes 

the proposed change does not present 

any unique or novel issues under the 

Act that have not already been 

considered by the Commission. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 


khammond on DSKJM1Z7X2PROD with NOTICES
63620 Federal Register / Vol. 85, No. 196 / Thursday, October 8, 2020 / Notices 

36See supra note 19. 

37 15 U.S.C. 78s(b)(3)(A)(ii). 

38 15 U.S.C. 78s(b)(2)(B). 

39 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Exchange Rule 1.5(p). 

necessary or appropriate in furtherance 

of the purposes of the Act. To the 

contrary, IEX believes that the proposed 

fees would enhance competition and 

execution quality by increasing the 

Exchange’s pool of both displayed and 

non-displayed liquidity, and to the 

extent that displayed liquidity 

increases, would contribute to the 

public price discovery process. 

The Exchange does not believe that 

the proposed fees will impose any 

burden on intermarket competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act 

since competing venues use various 

pricing structures to incentivize market 

participants to add liquidity to their 

markets, including but not limited to 

paying rebates to liquidity providers.36

The proposed fees are a means of 

providing such incentives without the 

use of rebates, as described in the 

Purpose and Statutory Basis sections. 

And, as noted in the Statutory Basis 

section, other exchanges have adopted 

similar pricing incentives for their 

current offerings. Moreover, subject to 

the SEC rule filing process, other 

exchanges could adopt a similar order 

type and fee incentive. Further, the 

Exchange operates in a highly 

competitive market in which market 

participants can easily direct their 

orders to competing venues, including 

off-exchange venues, if its fees are 

viewed as non-competitive. 

The Exchange also does not believe 

that the proposed rule change will 

impose any burden on intramarket 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act. While Members 

that add liquidity using certain D-Limit 

orders (as well as certain D-Peg and MPeg orders) will be subject to different 

fees based on this usage, those 

differences are not based on the type of 

Member entering orders but on whether 

the Member chose to submit certain 

liquidity providing D-Limit orders. As 

noted above, not only can any Member 

submit certain liquidity adding D-Limit 

orders, but every Member would benefit 

from the availability of more liquidity 

on the Exchange that the proposed fees 

are designed to incentivize 

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) 37 of the Act. 

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) 38 of the Act to 

determine whether the proposed rule 

change 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 (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

IEX–2020–14 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–2020–14. 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 

offices 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–IEX–2020–14, and should 

be submitted on or before October 20, 

2020. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.39

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. R1–2020–21403 Filed 10–7–20; 8:45 am] 

BILLING CODE 1301–00–D 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90076; File No. SR–MEMX– 

2020–10] 

Self-Regulatory Organizations; MEMX 

LLC; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Adopt the Initial Fee 

Schedule and Other Fees for MEMX 

LLC 

October 2, 2020. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on 

September 21, 2020, MEMX LLC 

(‘‘MEMX’’ 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 Exchange. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing with the 

Commission a proposed rule change to 

adopt (i) the initial fees and rebates 

applicable to Members 3 of the Exchange 


khammond on DSKJM1Z7X2PROD with NOTICES