Federal Register / Vol. 87, No. 71 / Wednesday, April 13, 2022 / Notices 21945 

26 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. 

5See Securities Exchange Act Release No. 93557 

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

2021) (SR–IEX–2021–14). 

6See supra note 3. 

7See Securities Exchange Act Release No. 93883 

(December 30, 2021), 87 FR 523 (January 5, 2022) 

(SR–IEX–2021–14) (‘‘Suspension Order’’). 

8See January 27, 2022 letter from Erika Moore 

(Nasdaq Vice President and Corporate Secretary), 

January 26, 2022 letter from Tyler Gellasch 

(Executive Director, Healthy Markets Association), 

January 26, 2022 letter from Douglas Cifu (CEO, 

Virtu Financial, Inc.), and February 28, 2022 letter 

from Hope M. Jarkowski (General Counsel, New 

York Stock Exchange Group, Inc.). The comment 

letters are accessible at: https://www.sec.gov/ 

comments/sr-iex-2021-14/sriex202114.htm. 

9 IEX determined not to propose a redistribution 

fee in this Second Fee Filing (referred to as 

distribution fees in the fee schedule proposed in the 

First Fee Filing) because of challenges allocating 

costs directly to redistribution by a Data Subscriber. 

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–NYSEAMER–2022– 

18 and should be submitted on or before 

May 4, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.26

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–07847 Filed 4–12–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94630; File No. SR–IEX– 

2022–02] 

Self-Regulatory Organizations; 

Investors Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend Its 

Fee Schedule To Adopt Market Data 

Fees 

April 7, 2022. 

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 April 1, 

2022, 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 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 the Exchange is filing 

with the Commission a proposed rule 

change to modify its Fee Schedule, 

pursuant to IEX Rules 15.110(a) and (c), 

to assess fees for receipt of its 

proprietary market data feeds. IEX 

intends to implement the proposed fees 

beginning on July 1, 2022, to provide an 

opportunity for subscribers to update 

their data subscriptions to suit their 

particular market data needs. 

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 

IEX is proposing to modify its Fee 

Schedule, pursuant to IEX Rules 

15.110(a) and (c), to assess fees for 

receipt of its proprietary market data 

feeds. 

Background 

IEX previously filed a proposal to 

charge market data fees on November 1, 

2021, with the proposed fee changes 

effective on filing but not operative until 

January 3, 2022 (‘‘First Fee Filing’’).5

The First Fee Filing was published for 

comment in the Federal Register on 

November 17, 2021.6 The Commission 

received no comments on the First Fee 

Filing before December 30, 2021. On 

that date, the Commission suspended 

the First Fee Filing and requested public 

comment and additional information on 

various aspects of the First Fee Filing.7

To date, the Commission has received 

four comment letters in response to its 

Suspension Order, none of which stated 

that the First Fee Filing should not be 

approved by the Commission.8

Generally, the letters either commended 

IEX for the level of transparency raised 

in its rule filing and offered support for 

approval, or raised issues which are 

irrelevant to the consideration of IEX 

fees. As described more fully below, this 

filing provides additional transparency 

in support of IEX’s proposed approach 

to charging for proprietary market data, 

as well as providing additional data and 

information included in the 

Commission’s requests for comments in 

the Suspension Order. 

The Exchange withdrew the First Fee 

Filing on April 1, 2022 and now submits 

this proposal for immediate 

effectiveness (‘‘Second Fee Filing’’), 

with a scheduled implementation date 

of July 1, 2022. This Second Fee Filing 

revises the fees proposed in the First 

Fee Filing to remove the proposed 

redistribution fees 9 and provide 

additional clarity regarding how the fees 

apply to affiliated market data 

subscribers. Further, as discussed 

below, in connection with the First Fee 

Filing, IEX obtained feedback from some 

current market data subscribers with 

respect to their anticipated plans with 

respect to IEX’s fee liable market data 

products (i.e., products for which IEX 

would charge a fee) which was not 

available at the time of filing of the First 

Fee Filing. This feedback enables IEX to 

supplement this Second Fee Filing with 

additional details relevant to its revenue 

projections. Additionally, this filing 

responds to various questions and 

requests for information contained in 

the Suspension Order. 

As explained in the First Fee Filing, 

IEX’s proposed market data fees were 

derived based on IEX’s costs to produce 

the market data products to which the 

fees apply and applying a reasonable 

markup over those costs (i.e., a ‘‘costplus model’’). Further, as discussed 

more fully below, the proposed 

allocation of these fees to the two 

market data products is informed by the 

extent to which demand for each 

product drives IEX’s overall market data 

costs and the different uses of the 

products by different types of 

participants. 


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10See IEX Rule 11.330(a)(1). 

11See IEX Rule 11.330(a)(2). 

12As discussed below, both TOPS and DEEP also 

include last sale information. 

13 ‘‘Data Subscriber’’ refers to any natural person 

or entity that receives real-time market data either 

directly from IEX or from another non-affiliated 

Data Subscriber. IEX notes that the current 

recipients of IEX Data include many Members of the 

Exchange, see IEX Rule 1.160(s), but also include 

several non-Members, including vendors who 

redistribute IEX Data to third-party recipients. 

14 15 U.S.C. 78s(b)(1). 

15 17 CFR 240.19b–4. 

16 15 U.S.C. 78f(b). 

17 15 U.S.C. 78f(b)(4). 

18 15 U.S.C. 78f(b)(5). 

19 15 U.S.C. 78f(b)(8). 

20 In May 2019, the Commission staff published 

guidance suggesting the types of information that 

SROs may use to demonstrate that their fee filings 

comply with the standards of the Exchange Act 

(‘‘Guidance’’). While IEX understands that the 

Guidance does not create new legal obligations on 

SROs, the Guidance is consistent with IEX’s view 

about the type and level of transparency that 

exchanges should meet to demonstrate compliance 

with their existing obligations when they seek to 

charge new fees. See Staff Guidance on SRO Rule 

Filings Relating to Fees (May 21, 2019) available at 

https://www.sec.gov/tm/staff-guidance-sro-rulefilings-fees. 

21See IEX Rule 1.160(p). 

22See IEX Rule 11.330(a)(1). 

23See IEX Rule 11.330(a)(2). 

24See IEX Rule 1.160(s). 25See IEX Rule 1.160(nn). 

IEX has not previously imposed any 

fees to access its real-time top of book 

(‘‘TOPS’’ 10) and depth of book 

(‘‘DEEP’’ 11) proprietary market data 

feeds (‘‘IEX Data’’),12 either by direct 

recipients or through redistribution. In 

general, IEX believes that exchanges, in 

setting fees of all types, should meet 

very high standards of transparency to 

demonstrate why each new fee or fee 

increase meets the Exchange Act 

requirements. IEX believes this high 

standard is especially important when 

an exchange imposes fees for its own 

depth of book market data because each 

exchange is the exclusive source of its 

own depth of book market data. IEX 

further believes that, as a general matter, 

market data fees cannot be sufficiently 

justified based on unproven 

assumptions about competition for 

market data. Rather, IEX believes that 

market data fees can be best justified by 

an exchange demonstrating that its fees 

bear a reasonable relationship to its 

related costs and business needs (i.e., to 

obtain a reasonable return on its costs) 

and that it is not taking unfair advantage 

of its unique position as the source of 

its own proprietary market data. IEX 

believes that it does not need to address 

questions about market competition in 

the context of this filing because the 

proposed fees are so clearly consistent 

with the Act based on a cost analysis. 

In proposing to charge fees for access 

to IEX Data, IEX has sought to determine 

such fees in a transparent way in 

relation to its own aggregate costs of 

providing the related service, that also 

carefully and transparently assesses the 

impact on Data Subscribers 13—both 

generally and in relation to other Data 

Subscribers, i.e., to assure the fee will 

not create an unfair financial burden on 

any participant and will not have an 

undue impact in particular on smaller 

Data Subscribers and competition 

among Data Subscribers in general. 

IEX believes that this level of 

diligence and transparency is called for 

by the requirements of Section 19(b)(1) 

under the Act,14 and Rule 19b–4 

thereunder,15 with respect to the types 

of information self-regulatory 

organizations (‘‘SROs’’) should provide 

in seeking approval of any fee changes, 

and Section 6(b) of the Act,16 which 

requires, among other things, that 

exchange fees be reasonable and 

equitably allocated,17 not designed to 

permit unfair discrimination,18 and that 

they not impose a burden on 

competition not necessary or 

appropriate in furtherance of the 

purposes of the Act.19 This rule change 

proposal addresses those requirements, 

and the analysis and data in each of the 

sections that follow are designed to 

clearly and comprehensively show how 

they are met.20

As noted above, IEX offers two realtime proprietary market data feeds: 

TOPS and DEEP. TOPS is an 

uncompressed data feed that offers 

aggregated top of book quotations for all 

displayed orders resting on the Order 

Book 21 and last sale information for 

executions on the Exchange.22 The data 

available in TOPS is also available 

through the securities information 

processor (‘‘SIP’’) feeds. DEEP is an 

uncompressed data feed that provides 

aggregated depth of book quotations for 

all displayed orders resting on the Order 

Book at each price level and last sale 

information for executions on the 

Exchange.23 DEEP includes all resting 

displayed liquidity on the Exchange, 

aggregated by price level, meaning it 

includes the top of book quotes 

contained in TOPS, and also contains 

any less aggressively priced displayed 

quotes. The content of both TOPS and 

DEEP is derived exclusively from orders 

that are sent by the Exchange’s 

Members,24 which the Exchange formats 

and rebroadcasts to market participants 

and to data vendors. 

IEX currently does not charge fees for 

access to IEX Data, irrespective of 

whether the Data Subscriber is a 

Member or not, the manner in which the 

data is received or used, the number of 

users, how quickly the recipient is able 

to receive the data after it is made 

available by the System,25 or whether 

the data is subject to any delay through 

the redistribution process. The objective 

of this approach was to eliminate any 

fee-based barriers to access IEX Data 

when IEX launched as a national 

securities exchange in 2016, and it was 

successful in achieving this objective in 

that a large number of both Members 

and non-Members currently receive 

either TOPS, DEEP, or both. As 

discussed more fully below, IEX 

recently calculated its annual aggregate 

costs for providing IEX Data to its Data 

Subscribers at approximately $2.5 

million. Because IEX has to date offered 

IEX Data free of charge, IEX has borne 

100% of all costs for the compilation 

and dissemination of IEX Data to IEX’s 

Data Subscribers. 

Proposal 

In order to establish fees that are 

designed to recover the aggregate costs 

of providing IEX Data to its Data 

Subscribers and limit the amount of 

potential return in excess of those costs 

to no more than a reasonable markup, 

the Exchange is proposing to modify its 

Fee Schedule, pursuant to IEX Rules 

15.110(a) and (c), to charge all Data 

Subscribers fees to access IEX Data in 

real time. 

As proposed, the following 

definitions and concepts will be 

applicable to market data fees: 

• ‘‘Real-Time’’ means IEX market data 

that is accessed, used, or distributed less 

than fifteen (15) milliseconds after it 

was made available by the Exchange. 

IEX provides only Real-Time IEX market 

data to Data Subscribers. 

• ‘‘Data Subscriber’’ means any 

natural person or entity that receives 

Real-Time IEX market data either 

directly from the Exchange or from 

another non-affiliate Data Subscriber. A 

Data Subscriber must enter into a Data 

Subscriber Agreement with IEX in order 

to receive Real-Time IEX market data. A 

natural person or entity that receives 

Real-Time IEX market data from an 

affiliated Data Subscriber is subject to 

the Data Subscriber Agreement of such 

affiliated Data Subscriber. 

• A Data Subscriber may redistribute 

Real-Time IEX market data that it 

receives from the Exchange on a RealTime basis to a natural person or entity. 

Receipt of IEX market data on a RealTime basis by an affiliate of a Data 

Subscriber is not subject to additional 

Fees beyond those paid by such 

affiliated Data Subscriber. 

• ‘‘Delayed’’ means IEX market data 

that is accessed, used, or distributed at 


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26As specified in the IEX Fee Schedule, as 

proposed, the terms ‘‘affiliate’’ and ‘‘affiliated’’ have 

the meaning specified in Rule 12b–2 of the 

Exchange Act which provides that such terms as ‘‘a 

person that directly, or indirectly through one or 

more intermediaries, controls, or is controlled by, 

or is under common control with, the person 

specified’’. The Data Subscriber Agreement 

provides additional context and defines affiliate as 

‘‘any individual, corporation, company, 

partnership, limited partnership, limited liability 

company, trust, association or other entity that, 

directly or indirectly through one or more 

intermediaries, controls, is controlled by or is under 

common control with such party.’’ A non-affiliated 

third-party is any individual, corporation, 

company, partnership, limited partnership, limited 

liability company, trust, association or other entity 

that is not an affiliate of the Data Subscriber 

pursuant to such definition. 

27See IEX Market Data Policies, available at 

https://storage.googleapis.com/assets-bucket/ 

exchange/assets/Market_Data_Agreements/IEX_

Market_Data_Policies_Jan_2022.pdf. 

28The Delayed IEX Data recipient may be subject 

to any fees charged by the redistributor of the 

Delayed IEX Data, based upon the contractual 

arrangement between the Delayed IEX Data 

recipient and the provider of Delayed IEX Data. 

Such fees would not be paid to the Exchange. 

least fifteen (15) milliseconds after it 

was made available by the Exchange. A 

Data Subscriber may redistribute RealTime IEX market data that it receives 

from the Exchange on a Delayed basis to 

a natural person or entity. In addition, 

a recipient of Delayed IEX market data 

may further redistribute such Delayed 

IEX market data to a natural person or 

entity. 

IEX proposes to charge the following 

flat fees to each Data Subscriber: $500 

per month for Real-Time access to the 

TOPS feed and $2,500 per month for 

Real-Time access to the DEEP feed, 

whether received directly from IEX or 

from another Data Subscriber, except for 

an affiliated Data Subscriber 26 as 

described more fully below. As 

proposed, IEX will only provide RealTime IEX Data, and every recipient of 

such data (whether directly or 

indirectly) is required to become a Data 

Subscriber and enter into a Data 

Subscriber Agreement with IEX.27 A 

Data Subscriber may redistribute IEX 

Data on either a Real-Time basis or 

subject to a delay. IEX is not proposing 

to charge a fee for redistribution of IEX 

Data. However, a recipient of Real-Time 

IEX Data would be required to become 

a Data Subscriber, and would be subject 

to the applicable fees, except for an 

affiliated recipient of the Data 

Subscriber. Further, a recipient of IEX 

Data that is subject to at least a 15- 

millisecond delay (whether from an IEX 

Data Subscriber or other recipient) is not 

required to become a Data Subscriber or 

pay any fees to IEX.28 IEX is not 

proposing to charge any additional fees 

to a Data Subscriber based on the way 

it uses the data, e.g., display v. nondisplay use, and is not proposing to 

impose any individual per user fees. 

The Suspension Order sought 

clarification on how affiliated entities 

are treated for purposes of the Data 

Subscriber definition, noting an 

apparent inconsistency between that 

language and IEX’s calculation of the 

amount that exchange companies would 

be required to pay for IEX Data. To 

address that question, this Second Fee 

Filing clarifies that the definition of 

Data Subscriber includes any affiliates 

of the Data Subscriber. Thus, for 

example, a broker-dealer subscriber and 

an investment adviser under common 

control could both use the data from a 

particular feed for a single fee. RealTime distribution of IEX Data to an 

affiliate of the Data Subscriber would 

not subject the affiliated recipient to any 

additional fees beyond those paid by the 

IEX Data Subscriber. Further, an affiliate 

that receives Real-Time IEX Data from 

an affiliated Data Subscriber is subject 

to the Data Subscriber Agreement of 

such Data Subscriber. 

IEX Framework 

The Suspension Order seeks 

additional information and comments 

on various aspects of the First Fee 

Filing. In many respects, the 

Commission’s questions about the First 

Fee Filing raise broader questions 

around the factors the SEC should 

consider and the type of data and 

analysis an exchange should provide in 

considering whether market data or 

connectivity fees are fair and reasonable 

under a cost-based methodology. 

In this Second Fee Filing, IEX offers 

a conceptual framework for further 

considering the Commission’s questions 

that draws on IEX’s experience over 

several years in analyzing its own costs. 

The elements of that framework are as 

follows: 

First, we allocate costs to market data 

products as part of a comprehensive and 

coherent methodology for allocating 

costs to different types of exchange 

products. That methodology does not 

allow ‘‘double-counting’’ of the same 

costs for different classes of exchange 

products—for example market data, 

physical connectivity, or ‘‘logical’’ port 

connections. Our general methodology 

was detailed in our 2019 Study of 

exchange costs, described below. This 

methodology reflects our belief that in 

conducting a cost analysis, it is both 

realistic and appropriate to segregate the 

costs of producing market data, for 

example, from the costs of other general 

aspects of an exchange’s operation, 

including the receiving and matching of 

orders for execution. 

Second, we have sought to carefully 

and narrowly allocate specific costs to 

the market data products to which the 

fees apply. In this filing, we provide 

more detail about how that allocation 

was determined, including by providing 

information about tangential cost items 

that were not included. In general, we 

believe that the more an exchange can 

demonstrate its cost accounting is 

carefully circumscribed, the stronger it 

can make the case that its fees are fair 

and reasonable. 

Third, in accounting for costs, we 

have included certain costs we have 

incurred in the last year to enhance our 

technology related to market data. We 

believe such expenses are appropriately 

included if they are identified and can 

be shown to bear a reasonable 

relationship to projected future 

expenses of this type. 

Fourth, our framework recognizes that 

the cost elements related to market data 

are largely common across different 

types of market data products. 

Accordingly, we have set fees for each 

of our two market data products based 

on factors other than differences 

between the two in cost to produce. 

These other factors include differences 

in the use and need for depth of book 

compared to top of book data among 

different types of participants, and the 

impact of the need for more detailed 

real-time data in driving many 

operational costs of the Exchange. 

Fifth, we have sought to maximize the 

availability of data that is not needed on 

a very time-sensitive basis to investors 

and other market participants. For that 

reason, we are not proposing to charge 

for any data that a user receives with a 

delay of 15 milliseconds or more. IEX 

believes that promoting the wide 

availability of market data to market 

participants other than latency-sensitive 

traders is consistent with the goal of fair 

and efficient markets. 

Sixth, IEX has created a flat, simple 

fee structure that imposes a single 

monthly fee for each Data Subscriber 

and its affiliates, without added fees 

based on the way the data is used or 

individual per user fees. IEX believes 

this relatively simple, flat structure is 

transparent and easy for users to apply, 

and this difference also helps to show 

that it meets the objectives of the Act. 

Finally, because it is difficult to 

predict how much revenue IEX will 

receive from market data fees with 

precision, IEX is committing to conduct 

a one-year review after implementation 

of these fees, and to publish the results 

of that review. IEX expects that it may 

propose to adjust fees at that time, to 

increase fees in the event that revenues 

fail to cover costs and a reasonable 


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29 IEX first published a comprehensive study of 

its aggregate costs to produce market data and 

connectivity in January 2019. See ‘‘The Cost of 

Exchange Services—Disclosing the Cost of Offering 

Market Data and Connectivity as a National 

Securities Exchange’’ available at https://

iextrading.com/docs/ 

The%20Cost%20of%20Exchange%20Services.pdf. 

(‘‘IEX Study’’). 

30Notwithstanding that IEX does not currently 

charge for its market data products, it does not 

believe that a review is warranted sooner than one 

year after implementation because of the feedback 

it received from current market data subscribers 

regarding their plans with respect to IEX’s fee liable 

market data products, as discussed supra. This 

feedback provides a reasonable basis for IEX to 

project anticipated revenue and support that the 

proposed fees are consistent with the Act. 

31For example, IEX only included the costs 

associated with physical assets that are directly 

responsible for producing and transmitting IEX Data 

and excluded from its market data cost calculations 

any physical connectivity assets that are used to 

provide both order entry and market data. See IEX 

Study at 16. Thus, IEX notes that this methodology 

underestimates the total costs of providing market 

data. 

32See supra note 27. 

33See IEX Study at 15–18 for details on how IEX 

estimated the costs of its market data infrastructure; 

see also supra note 29. 

34Table 2 also shows the breakdown of the 2019 

estimated market data infrastructure costs. 

35As described more fully below, these 

enhancement initiative costs are a routine part of 

offering proprietary market data. Some of the 

enhancement costs in Table 2, such as the 

introduction of the snapshot functionality for TOPS 

and DEEP, are one-time costs, but each year IEX 

mark-up of such costs. Similarly, IEX 

would propose to decrease fees in the 

event that revenue materially exceeds 

our current projections. In addition, IEX 

will periodically conduct a review to 

inform its decision making on whether 

a fee change is appropriate (e.g., to 

monitor for costs increasing/decreasing 

or subscribers increasing/decreasing, 

etc. in ways that suggest the thencurrent fees are becoming dislocated 

from the prior cost-based analysis) and 

would propose to increase fees in the 

event that revenues fail to cover market 

data costs and a reasonable mark-up, or 

decrease fees in the event that revenue 

or the mark-up materially exceeds our 

current projections. In the event that 

IEX determines to propose a fee change, 

the results of a timely review, including 

an updated cost estimate, will be 

included in a rule filing proposing the 

fee change. More generally, we believe 

that, in applying a cost-plus model, it is 

appropriate for an exchange to refresh 

and update information about its 

relevant costs and revenues in seeking 

any future changes to fees, and IEX 

commits to do so. 

IEX believes that applying this 

framework to the proposed fees shows 

that they are consistent with the 

requirements of the Act, leaving aside 

the stark contrast in the amount of the 

proposed fees in comparison to market 

data fees commonly charged by other 

exchanges. 

IEX Market Data Costs 

The proposed fees are based on a 

comprehensive and transparent ‘‘costplus’’ methodology, wherein the 

proposed fees bear a reasonable 

relationship to the cost of producing 

market data products using a rigorous 

and narrow allocation of costs.29

Moreover, IEX believes that any 

potential profit over IEX’s costs of 

offering market data is reasonably based 

on realistic revenue assumptions, as 

described below. Further, as described 

above, IEX will conduct a review of 

these fees one year after implementation 

(as well as subsequent periodic 

reviews), including public disclosure of 

its revenues based on actual experience, 

and may propose to adjust such fees if 

warranted based on that review. In 

addition, IEX intends to provide 

updated information about its market 

data costs and revenue in any future 

filing to change its fees.30

In determining the appropriate fees to 

charge, IEX considered its costs of 

providing market data, using what it 

believes to be a conservative 

methodology (i.e., that strictly considers 

only those costs that are most clearly 

directly and exclusively related to the 

production and distribution of IEX Data) 

to estimate such costs,31 and set fees 

that are designed to cover its costs with 

a limited potential return in excess of 

such costs. However, as discussed more 

fully below, such fees may also result in 

IEX recouping less than all of its costs 

of providing market data because of the 

uncertainty of forecasting Data 

Subscriber decision-making with 

respect to their IEX market data 

subscriptions. 

Prior to the Commission’s suspension 

of its First Fee Filing, IEX advised its 

current Data Subscribers of the 

proposed market data fees and received 

feedback from a significant number of 

such Data Subscribers as to whether 

they planned to continue to receive realtime IEX Data following implementation 

of such fees. Based on that feedback, 

which is described below, IEX believes 

it is likely that the proposed fees will 

not fully cover its costs and that a ‘‘best 

case’’ scenario is a return of 

approximately six percent in excess of 

such costs. The following describes 

IEX’s cost allocation methodology, and 

how such methodology supports that 

the proposed fees are clearly consistent 

with the Act. 

IEX was the first exchange to conduct 

a comprehensive review of its costs to 

produce market data, physical 

connectivity (the physical connections 

required to access IEX in its data 

center), and logical connectivity 

products (the cost to offer and maintain 

order entry ports) and published the 

results of that review in the January 

2019 IEX Study.32 The IEX Study 

explained how hardware, software, and 

personnel costs were allocated for 

market data and connectivity and 

identified an annual dollar cost for each 

line item in each category. The IEX 

Study also explained graphically and 

textually the relationship of the 

different parts of the operation of an 

electronic exchange, to allow readers to 

understand the interrelationship among 

the various components. The IEX Study 

estimated IEX’s aggregate annual cost to 

offer IEX Data to its Data Subscribers to 

be approximately $1.8 million per year, 

for the year 2019, as reflected in Table 

1.33

TABLE 1—ANNUAL IEX MARKET DATA

INFRASTRUCTURE

[2019] 

($1,791,403) 

Top of Book Servers (TOPS) 

(5) ...................................... ($12,833) 

Depth of Book Servers 

(DEEP) (5) ........................ (12,833) 

Market Data Feeds Switches 

(2 × 24 port) ...................... (13,333) 

ITF Market Data ................... (7,333) 

Data Center Space, Power, 

Security ............................. (10,605) 

Administrative Access .......... (33,333) 

Monitoring ............................. (596,135) 

Personnel .............................. (1,104,998) 

Total Annual Costs ........ (1,791,403) 

In 2021, in preparation for the First 

Fee Filing, IEX updated and refreshed 

the cost estimates contained in the IEX 

Study. As further detailed below, this 

update reflects somewhat lower annual 

hardware costs related to market data 

than contained in the 2019 IEX Study, 

and somewhat higher personnel costs. 

Considering all factors together, the 

updated estimates reflect an increase in 

total annual costs to produce market 

data from $1,791,403 to $2,483,644. 

Table 2, below, details the individual 

annual line-item costs considered by 

IEX to be directly related to offering IEX 

Data to Data Subscribers.34 The chart 

shows three cost components: (1) Direct 

costs, such as servers, infrastructure, 

and monitoring; (2) enhancement 

initiative costs (e.g., new functionality 

for IEX Data and increased capacity for 

the proprietary market data feeds, as 

described below); 35 and (3) personnel 


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expects to incur new enhancement costs such as the 

costs associated with increasing the capacity of its 

market data feeds and costs associated with 

upgrading its market data infrastructure, as well as 

any new functionality. Thus, IEX believes that its 

annual enhancement costs on an ongoing basis will 

be similar and that the enhancement costs included 

in the 2021 update are not extraordinary. 

36See IEX Rule 11.330(a)(4). HIST data is 

available for download at https://iextrading.com/ 

trading/market-data/#hist-download. 

37 IEX also notes that the SIPs are operated 

separately from IEX’s provision of proprietary 

market data, with correspondingly separate costs 

and revenue streams. 

38These assets may be used infrequently for 

incidental purposes to assess the status of Exchange 

systems. 

39Notably, IEX did not include any costs 

associated with operating the Exchange itself in 

calculating the costs of offering IEX Data. 

40Applying the methodology of the IEX Study, 

IEX determined cost allocation for employees who 

perform work in support of compiling and 

disseminating IEX Data to arrive at a full time 

equivalent (‘‘FTE’’) of 6.15 FTEs across all the 

identified personnel (the FTE at the time of the IEX 

Study was 4.05). IEX then multiplied the FTE times 

a blended compensation rate for all relevant IEX 

personnel to determine the personnel costs 

associated with compiling and disseminating IEX 

Data. 

41See Trading Alert No. 2021–003, available at 

https://iextrading.com/alerts/#/135. 

42See Trading Alert No. 2021–006, available at 

https://iextrading.com/alerts/#/138. 

43See Securities Exchange Act Release No. 91016, 

January 29, 2021, 86 FR 8238 (February 4, 2021) 

(SR–IEX–2020–18). 

44See Trading Alert 2021–010, available at 

https://iextrading.com/alerts/#/142; see also, See 

Securities Exchange Act Release No. 90933, January 

15, 2021, 86 FR 6687 (January 22, 2021) (SR–IEX– 

2021–01). 

costs. The costs allocated to IEX Data do 

not include the de minimis costs for 

creation of ‘‘HIST’’ 36 files available for 

download from IEX’s website, or 

separate costs associated with 

transmitting IEX market data to the 

SIPs.37

The servers and related hardware 

included were limited to those 

specifically dedicated to IEX Data, 

subject to the depreciation schedule 

described below. Network Infrastructure 

and Administrative Access costs consist 

of 100% of the network equipment 

(switches and cabling) to enable data 

transmission and maintenance. Data 

Center costs consist of the fees charged 

by the third-party data centers used by 

IEX and represent less than 10% the 

Exchange’s total data center costs based 

on space utilized. Monitoring costs 

include 100% of the hardware and 

vendor licenses needed to enable the 

IEX technology team to monitor these 

servers and the health of the market data 

products provided by such assets, 

which are primarily used for market 

data monitoring.38 The monitoring 

consists of real-time monitoring of 

system performance, integrity, and 

latency of market data products. 

All physical assets were valued at cost 

for financial accounting purposes and 

depreciated over three years. All 

software used for market data purposes 

was developed internally, and the 

applicable costs are captured in the 

personnel category. For purposes of the 

allocation of these costs to market data, 

IEX allocates the annual depreciation 

expense (i.e., one-third of the initial 

asset value) of in-scope physical assets 

in each year. 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,39 and 

used a blended rate of compensation 

reflecting salary, stock and bonus 

compensation, benefits, payroll taxes, 

and 401(k) matching contributions.40

Enhancement costs are allocated 

similarly (i.e., hardware is subject to a 

three year depreciation schedule) and 

consist primarily of personnel costs 

(over 80%), with the balance comprised 

of hardware utilized for development 

and operation of each enhancement. 

TABLE 2—ANNUAL IEX MARKET DATA INFRASTRUCTURE

2019 

($1,791,403) 

2021 

($2,483,644) 

Direct Costs: 

Servers ............................................................................................................................................................. ($32,999) ($26,696) 

Network Infrastructure & Admin Access .......................................................................................................... (46,666) (152,783) 

Monitoring ......................................................................................................................................................... (596,135) (213,109) 

Data Center (Space, Power, Security) ............................................................................................................. (10,605) (79,142) 

Enhancement Initiatives Costs: 

DEEP Snapshot ................................................................................................................................................ N/A (95,974) 

TOPS Snapshot ................................................................................................................................................ N/A (95,974) 

Capacity Planning ............................................................................................................................................. N/A (232,856) 

Monitoring Tools ............................................................................................................................................... N/A (49,609) 

Ongoing Personnel Costs ........................................................................................................................................ (1,104,998) (1,537,500) 

Total Annual Costs ........................................................................................................................................... (1,791,403) (2,483,644) 

As noted in Table 2, IEX continues to 

introduce enhancement initiatives to 

IEX Data. First, effective February 3, 

2021, IEX launched ‘‘DEEP Snapshot’’, 

which allows Data Subscribers to 

download point-in-time snapshots of 

DEEP in order to enable Data 

Subscribers to accelerate late start 

recovery.41 Second, effective September 

27, 2021, IEX launched ‘‘TOPS 

Snapshot’’, which allows Data 

Subscribers to download point-in-time 

snapshots of TOPS in order to enable 

them to accelerate late-start recovery. 

Third, IEX is in the process of 

expanding the capacity and monitoring 

tools that support the efficient 

transmission of IEX Data to the IEX’s 

proprietary market data feeds. 

IEX also notes that it has made recent 

changes to its system functionality and 

architecture which improve the content 

and speed of IEX’s proprietary market 

data feeds, but that have no impact on 

IEX’s estimated costs of providing IEX 

Data. For example, effective February 

16, 2021, IEX removed its outbound 350 

microsecond latency ‘‘speedbump’’ 

while retaining its inbound 350 

microsecond latency ‘‘speedbump.’’ 42

Prior to that date, IEX disseminated its 

top of book data and last sale data to the 

SIPs free of any artificial delays, but all 

other outbound messages, including IEX 

Data transmitted through IEX’s 

proprietary market data feeds, were 

subjected to a 350-microsecond 

latency.43 Additionally, on April 1, 

2021, IEX began to display odd lot sized 

orders, which are aggregated by price on 

DEEP, and can aggregate to form the top 

of book quote on TOPS.44 And on 

October 13, 2021, IEX began 

disseminating a ‘‘Retail Liquidity 

Indicator’’ on both TOPS and DEEP, 

which tells market participants when 


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45See IEX Rule 11.190(b)(14). 

46The term ‘‘Midpoint Price’’ means the midpoint 

of the NBBO. See IEX Rule 1.160(t). The term 

‘‘NBBO’’ means the national best bid or offer, as set 

forth in Rule 600(b) of Regulation NMS under the 

Act, determined as set forth in IEX Rule 11.410(b). 

47See IEX Rule 1.160(u). 

48 Id. 

49See Trading Alert 2021–036, available at 

https://iextrading.com/alerts/#/169; see also, 

Securities Exchange Act Release No. 92398 (July 13, 

2021), 86 FR 38166 (July 19, 2021) (SR–IEX–2021– 

06). 

50See Securities Exchange Act Release No. 86626 

(August 9, 2019), 84 FR 41793 (August 15, 2019) 

(SR–IEX–2019–07). 

51 In some cases, these assets and services also 

entail fees from outside service providers, such as 

software licenses and data center costs. Additional 

detail is available in the IEX Study. 

52Administrative Access consists of the 

dedicated networking infrastructure to enable the 

technology team to manage and troubleshoot the 

production and distribution of market data. 

53See IEX Study at 15. See also discussion supra 

describing monitoring functions. 

54See IEX Study at 16. 

IEX has at least one round of Retail 

Liquidity Provider order 45 interest 

available for a particular security, which 

is resting at the Midpoint Price 46 and 

priced at least $0.001 better than the 

NBB47 or NBO.48 The Retail Liquidity 

Indicator reflects the symbol and side of 

the resting interest, but does not include 

the price or size.49

As discussed above, IEX’s cost 

methodology allocates costs for 

hardware, software, and personnel 

expenses, and identified an annual 

dollar cost for each line item in each 

category. IEX’s cost methodology does 

not provide for ‘‘double-counting’’, that 

is, the same cost items are not counted 

for more than one set of products. This 

was the approach followed in the IEX 

Study, the 2021 update, the First Fee 

Filing, and this Second Fee Filing. This 

segmentation of costs is also consistent 

with IEX’s earlier filing to charge fees 

for order entry logical ‘‘ports’’ members 

use to communicate order messages to 

the Exchange (‘‘Port Fee Filing’’).50 In 

the Port Fee Filing, we detailed the 

servers, other hardware, monitoring, 

administrative, and personnel expenses 

that were directly connected to the 

provision of logical order entry ports. 

Consequently, there is no overlap with 

the costs IEX allocated to the provision 

of logical order entry ports and the 

provision of market data feeds. 

In the First Fee Filing, IEX provided 

detail on how it allocated the costs of 

providing market data feeds. The 

Suspension Order raised questions 

about whether additional detail and 

explanation should be provided, as 

detailed below. As described in the IEX 

Study, IEX considers the following 

physical technology assets and services 

as relevant to the production of market 

data: 51

• Market Data Servers 

• Market Data Feed Switches 

• Software Licenses 

• IEX Testing Facility (ITF) 

Infrastructure Hardware 

• Data Center Space, Power, and 

Security 

• Administrative Access 52

• Monitoring Servers, Switches and 

Licenses 53

Hardware is depreciated on a straightline three-year period, which in IEX’s 

experience, is equal to the typical life 

expectancy of those assets. As noted 

above, one-third of the cost of each 

hardware asset is included in the annual 

costs allocated to market data. IEX only 

included hardware specifically 

dedicated to the market data feeds in 

calculating the costs of providing 

market data. This means that physical 

assets used for both order entry and 

market data were excluded from the 

calculation.54

The Suspension Order asked if IEX 

should provide more detail about the 

methodology IEX used to determine 

how much of an employee’s time is 

devoted to specific market data related 

activities. In considering the cost of 

personnel, IEX generally considered the 

time spent on various market data 

projects and initiatives through project 

management tracking tools, in the 

following areas: 

Technology Teams: 

• Technical Operations 

• Software Engineering 

• Quality Assurance 

• Infrastructure 

Non-Technology Teams: 

• Market Operations 

• Project Management 

• Product Management 

• Business Development/Corporate 

Communications 

• Regulatory 

• Legal 

• Accounting/Finance 

Based on this analysis, IEX allocated 

6.15 ‘‘full time equivalent’’ employees 

(or ‘‘FTEs’’) to direct market data costs. 

Generally, for the technology teams, we 

attributed approximately 8% of their 

aggregate time to market data. For the 

non-technology teams we attributed 

approximately 12% of their time to 

market data. Consistent with IEX’s 

methodology, these allocations do not 

provide for any ‘‘double counting’’. 

Additionally, the Suspension Order 

asked if it is appropriate to include 

incentive compensation in the blended 

personnel compensation rate if the 

incentive compensation is not directly 

attributable to market data. IEX believes 

that inclusion is appropriate on the 

same basis as other personnel costs for 

in-scope employees because incentive 

compensation is a part of the total 

personnel costs associated with IEX’s 

provision of market data. Moreover, IEX 

notes that it has taken a conservative 

approach in determining which 

employees to include in its cost 

analysis, in terms of function and 

percent allocation, so that the included 

personnel costs are directly and closely 

tied to the costs of providing market 

data. The FTE allocation represents just 

7.1% of the Exchange’s overall 

personnel costs. In addition, IEX 

allocated 1.58 FTEs to market data 

enhancements, which represents 1.8% 

of the Exchange’s overall personal costs, 

totaling 7.73 FTEs and 8.9% when 

combined with personnel allocated to 

direct market data costs. Consistent with 

IEX’s conservative methodology to limit 

costs allocated to market data, this 

approach includes only a de minimis 

personnel cost allocation for senior level 

executives and no allocation for 

members of IEX’s board of directors. 

Accordingly, IEX believes that the 

allocated personnel expenses included 

are appropriately attributable to market 

data. 

Another way to evaluate whether 

costs are narrowly allocated is to 

consider other expenses that may bear 

an indirect relationship to the 

production of market data, but which 

were not included. Various expense 

items may be viewed as necessary to 

exchange functioning and therefore 

having some relationship to market 

data, but IEX chose not to allocate any 

portion of the cost of those items, 

because we believe limiting allocated 

costs to those with a more proximate 

relationship to market data is more 

justifiable and avoids the difficulties 

and potential arbitrariness of 

determining how to allocate a portion of 

general operational expenses to specific 

data products. IEX’s excluded costs 

relate to: 

• General and Administrative Expenses 

Æ Travel, Sales, and Marketing 

Æ Office and Miscellaneous/ 

Occupancy and Overhead 

Æ Professional Fees (including Audit 

Fees) 

• Operating Expenses 

Æ Costs Paid to Exchanges 

Æ Other Technology and 

Infrastructure 

• Other (Income)/Expense 

• Income Tax (Benefit)/Expense 

The expenses associated with the 

above, excluded, items amount to many 

multiples of the approximately $2.5 

million in annual costs that IEX 


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55 DEEP is an aggregated feed that must perform 

additional logic on each order-related message 

received from the System to calculate the total 

number of displayed shares available at each price 

level. TOPS requires less processing than DEEP 

because it only aggregates displayed liquidity at a 

single price level, the top of book. 

56Broadly speaking, the self-regulatory 

organizations (‘‘SROs’’) administer the SIPs and set 

pricing. Each SIP charges its own fees, which are 

determined by the operating committees of each SIP 

subject to the SEC rule filing process. While IEX is 

a member of the operating committee of each SIP, 

it has only one vote and does not exercise control 

over SIP pricing. IEX also notes that the SIPs charge 

pursuant to a different pricing structure than the 

pricing structure proposed by IEX in this filing. 

allocated to market data. Inclusion of 

just a small portion of these more 

tangential items would have more than 

doubled the estimated cost basis for IEX 

to provide market data feeds. 

Exchanges typically incur episodic 

expenses to upgrade market data or 

connectivity products, for example, to 

expand capacity, increase security or 

reliability, reduce latency, or to achieve 

other objectives. These expenses would 

not otherwise be captured in a 

methodology that looks exclusively at 

more static annualized expenses, such 

as servers, switches, and routine testing 

and monitoring functions. In the First 

Fee Filing, IEX detailed episodic 

expenses directly related to offering 

market data totaling $474,000, 

amounting to approximately 19% of the 

total of the approximately $2.5 million 

estimate for total market data 

infrastructure costs in 2021. These costs 

were approximately $282,000 for 

capacity planning and monitoring and 

approximately $192,000 for the addition 

of ‘‘snapshot’’ functionality, which 

facilitates the ability of users to 

construct an integrated stream of market 

data when there is a temporary 

interruption. IEX believes that this level 

of episodic expenses will likely recur, 

and that it is therefore appropriate to 

include such expenses as part of the 

cost allocation. In any event, variations 

in episodic expenses will be reflected in 

IEX’s annual review of its market data 

fees and any proposed adjustments. 

Characteristics and Pricing of Different 

Products 

IEX believes the process of allocating 

costs to individual exchange products 

necessarily involves some degree of 

subjectivity, but that an exchange’s 

allocation of costs to identified products 

and services should be part of a 

coherent and transparent methodology 

for allocating costs across various 

products and services, so that the 

Commission and commenters can 

evaluate whether its decisions are 

reasonable and well-grounded. 

Exchanges incur many operational costs 

as preconditions to being able to offer 

various products and services, but 

individual cost elements differ in how 

closely they are related to the offering of 

specific products, as distinct from 

general operational costs. 

If an exchange is proposing different 

fees for products of the same class, e.g., 

different connectivity options or 

different market data feeds, it may seek 

to allocate fees separately by product 

even if there are not material differences 

in terms of the cost of each product. It 

is IEX’s experience, as explained in the 

IEX Study, that most of the expenses to 

offer a class of products and services, 

e.g., physical connectivity, logical 

connectivity, and market data feeds, are 

common to the category and not unique 

to individual products. Accordingly, 

IEX believes that an exchange may base 

price differences among products in a 

given category based on factors other 

than cost where there are other reasons 

to differentiate. 

Consistent with the practice at all 

other exchanges, IEX is proposing to 

charge different fees for its top of book 

(‘‘TOB’’) and depth of book (‘‘DOB’’) 

market data feeds, i.e., TOPS and DEEP 

respectively. The costs allocated to 

IEX’s production of market data are in 

large part costs that are common to the 

offering of both market data feeds. Thus, 

IEX based its proposed pricing for RealTime access to TOPS and DEEP, as well 

as minimally delayed access to TOPS 

and DEEP, on other factors as well. 

While there are some cost differences to 

compile and disseminate TOPS versus 

DEEP,55 IEX is basing its proposed 

pricing differential on other factors. 

First, IEX believes that the fee 

differential is justified based on the 

need for real-time DEEP data by 

electronic trading firms, the relative 

volume of and benefit to those firms in 

terms of their trading on the Exchange, 

and the need to compile and distribute 

real-time DOB data as a factor driving 

Exchange costs. Based on data from the 

fourth quarter of 2021, the top ten 

members of IEX by volume on the 

Exchange collectively represented over 

60% of total Exchange volume. More 

tellingly, the same firms represented 

approximately 70% of message traffic 

on the Exchange. Over 90% of displayed 

orders are submitted by market 

participants that subscribe to DEEP. IEX 

believes that it is clear and wellestablished that trading that occurs on a 

millisecond and sub-millisecond time 

scale drives the majority of trading on 

U.S. exchanges. Further, IEX systems 

costs are heavily impacted by the need 

to support this activity, including the 

need to provide real-time depth data 

that is required by electronic trading 

firms. IEX believes that in order to 

provide market data that supports these 

types of trading strategies, IEX’s market 

data needs to be published quickly 

enough (i.e., microsecond timescales) 

following order and trade events to be 

useful. Further, such publication 

timescales must be consistent and 

deterministic regardless of market 

volume and volatility. 

In contrast, IEX believes that the 

relative value of real-time TOPS is 

diminished by the availability of 

alternative sources of IEX’s TOB market 

data. Specifically, IEX believes that 

several factors operate to restrain 

demand for real-time TOPS, including 

that real-time IEX TOB market data can 

be readily obtained from the SIPs 56 and 

that fifteen-millisecond delayed TOPS 

data (which would not be subject to any 

IEX fees pursuant to this proposal) is 

adequate for many firms that are not 

electronic trading firms. In discussions 

with current market data subscribers 

regarding the fees proposed in the First 

Fee Filing, a number of such firms 

advised IEX that they would drop RealTime access to TOPS to avoid the $500 

monthly fee, and instead rely on the 

SIPs or delayed access for IEX’s TOB 

market data. Thus, IEX believes that 

there are constraints that operate to 

limit its ability to base Real-Time TOPS 

pricing based on some type of pro rata 

cost allocation. In view of these factors, 

IEX believes that it is fair and 

reasonable to price Real-Time access to 

DEEP at five times the price of TOPS. 

Further, IEX is charging only for data 

that is made available in Real-Time, 

because it is the very demand for RealTime, low latency data that drives much 

of the costs associated with creating and 

distributing IEX Data. For example, IEX 

must invest more in the resiliency, 

capacity, and redundancy of its 

proprietary market data feeds to provide 

Real-Time, low latency access to IEX 

Data. Moreover, IEX’s decision to not 

charge fees for Delayed IEX Data is also 

consistent with IEX’s goal to make its 

data broadly available to a wide range 

of market participants including longterm investors. 

Specifically, IEX believes that 

minimally delayed market data may be 

useful to a much broader range of 

market participants. For example, such 

data may be useful in a variety of 

display use cases, for example, in 

streams of market data prices that are 

available in a graphical user interface, 

for episodic trading strategies that are 

less latency sensitive, for retail and 

individual investors that have no need 

for Real-Time data, for use by ‘‘middle 

office’’ or risk personnel at brokerVerDate Sep<11>2014 18:05 Apr 12, 2022 Jkt 256001 PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 E:\FR\FM\13APN1.SGM 13APN1

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57 IEX’s belief in this regard is based on an 

assessment that the Data Subscriber has a natural 

person name (i.e., fist name—last name), rather than 

an entity name. 

58For examples of other exchange’s market data 

fees, see https://www.nyse.com/publicdocs/nyse/ 

data/NYSE_Market_Data_Fee_Schedule.pdf; 

https://nasdaqtrader.com/ 

Trader.aspx?id=DPUSdata; and https://

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

schedule/bzx/. 

59Public Law 94–29, 89 Stat. 97 (1975). 

60See, e.g., NYSE Comprehensive Market Data 

Policies, Section 7 (Delayed Data Policy), available 

at https://www.nyse.com/publicdocs/data/PolicyComprehensivPackage_PDP.pdf; Cboe Global 

Markets North American Data Policies, Section 5 

(Delayed Data), available at https://

cdn.batstrading.com/resources/membership/ 

Market_Data_Policies.pdf; Nasdaq Delayed Data 

Policy, available at http://www.nasdaqtrader.com/ 

content/administrationsupport/policy/ 

delayeddatapolicy.pdf. 

61See, e.g., Interactive Brokers Delayed and 

Streaming Market Data, available at https://

www.interactivebrokers.com/en/software/ 

webtrader/webtrader/marketdata/ 

delayedandstreamingmarketdata.htm (‘‘Delayed 

market data is available for instruments for which 

you do not currently hold market data 

subscriptions.’’). 

62See, e.g., MarketWatch Market Data Terms of 

Use, available at https://www.marketwatch.com/ 

site/investing-terms-of-use (‘‘comprehensive quotes 

and volume reflect trading in all markets and are 

delayed at least 15 minutes.’’). 

63 IEX notes that it is not only being transparent 

about its costs associated with producing IEX Data, 

but is also being transparent about its anticipated 

markup over costs. 

dealers, and for academics, among 

others. 

The Suspension Order asks if IEX 

should provide more detail about the 

types of market participants that choose 

to subscribe to TOPS, DEEP, or both, in 

that such information may be relevant to 

an assessment of its pricing of different 

market data products. IEX has 70 Data 

Subscribers who it believes are 

individuals,57 and 170 other subscribers 

who are comprised 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. Of the 170 non-individuals, 15 

currently subscribe to only DEEP (4 IEX 

Members, 4 professional market 

participants, 7 vendors), 64 to only 

TOPS (14 IEX Members, 23 professional 

market participants, 27 vendors) and 91 

to both (41 Members, 26 professional 

market participants, 24 vendors). All of 

the individuals currently subscribe only 

to TOPS, and no individual subscriber 

has indicated that it will continue to 

receive TOPS in Real-Time once IEX 

begins charging the fee set forth in this 

proposal. 

As proposed, IEX is structuring its 

fees so that fee levels are aligned with 

access to Real-Time DOB market data of 

the type that is needed by the relatively 

small number of firms that drive much 

of the Exchange’s market data costs. 

Because of this dynamic, the proposed 

fee structure means that the absolute 

amount of fees charged for DOB market 

data will be far less than those charged 

by other exchanges for the equivalent 

products 58 and result in fees that are 

fair and reasonable from the standpoint 

of all users, including electronic trading 

firms. This structure serves the goal of 

promoting the wide availability of 

minimally delayed data to a broad range 

of market participants, including 

investors. IEX believes that these 

distinctions are not only allowed by the 

Act but fully align with the principles 

of fair and efficient markets more than 

many other fee structures now in place. 

IEX’s proposed cost structure serves to 

provide wide availability of market data 

on a cost-effective (and in some cases, 

free) basis, which is itself a fundamental 

purpose of the Securities Acts 

Amendments of 1975.59

IEX proposes to provide Delayed IEX 

Data free of charge in order to minimize 

barriers to access IEX Data and thereby 

potentially increase trading on IEX. 

IEX’s business model seeks to primarily 

generate revenue from trading rather 

than from data and connectivity fees, so 

an essential objective of the proposed 

fee structure is to enable broad access to 

IEX Data while it is still timely and 

useful to most IEX Data consumers 

without incurring any IEX fees. 

IEX notes that other equities 

exchanges also offer delayed market 

data free of charge, but they define 

‘‘delayed data’’ as data that is 

disseminated at least fifteen minutes 

after the same data is disseminated in 

Real Time.60 These delayed data feeds 

are often used by brokerage firms 61 or 

online distributors of market data 62 to 

provide stock quote information free of 

charge, even if it is 15 minutes old. 

In determining the appropriate delay 

interval, IEX sought to strike a balance 

between offering IEX Data at a 

reasonable and transparent price to 

market participants who require realtime data, while also offering market 

participants a commercially viable 

option for the receipt of free IEX Data 

within a time period in which the data 

will remain useful to market 

participants who do not require near 

instantaneous real-time market data for 

trading purposes. Knowing there is no 

‘‘exact science’’ to the determination of 

how long to delay data before allowing 

it to be retransmitted free of charge, IEX 

sought informal feedback from Members 

and other Data Subscribers. Based 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 fifteen-millisecond delay. Also 

based on that informal feedback, IEX 

believes that there will be some current 

Data Subscribers—e.g., algorithmic 

traders, data vendors, and any electronic 

trading platform that we believe 

typically use real-time data to calculate 

the NBBO—that will continue to pay for 

Real-Time IEX Data. 

In addition, IEX is not proposing to 

charge fees for HIST and did not include 

the de minimis incremental costs to 

create daily HIST files in its market data 

costs. IEX believes that HIST is not used 

for trading decisions since it is available 

only on a T+1 basis, other than possibly 

for back testing and research. 

Accordingly, all the factors that apply to 

IEX’s decision not to charge for Delayed 

Data are even more applicable to HIST 

(which is significantly more delayed 

than 15 milliseconds), including the 

objective to provide broad access to IEX 

Data. 

The proposed fees will not apply 

differently based upon the size or type 

of the market participant, but rather 

based upon the speed with which the 

Data Subscriber wishes to obtain IEX 

Data, based upon factors deemed 

relevant by each Data Subscriber, such 

as the cost to access and process IEX 

Data as well as business models. 

Finally, IEX notes that this simple, 

transparent market data fee proposal 

will simplify IEX audits for compliance 

with applicable market data policies. 

Any Data Subscriber receiving RealTime IEX Data will enter into a Data 

Subscriber Agreement with IEX, even if 

the Data Subscriber obtains its data 

through a third-party vendor (as noted 

above, if the Real-Time data is received 

by an affiliate of the Data Subscriber, 

there will be no additional fees 

charged). Further, any Delayed IEX Data 

recipient does not need to enter into a 

Data Subscriber Agreement with IEX. 

Therefore, to assess compliance with 

applicable market data policies, IEX 

would simply audit whether any 

redistribution of IEX Data to any 

external, non-affiliate third party Data 

Subscribers is occurring, and if so, 

whether such redistribution is in Real 

Time or subject to at least a fifteenmillisecond delay. 

IEX’s proposed fee structure is 

designed to recoup its costs and limit 

any revenue in excess of costs to an 

amount that represents no more than 

what IEX believes is a reasonable rate of 

return over such costs.63 IEX conducted 

an updated analysis of potential 


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64See supra note 56. 

65Currently, IEX pays for market data from four 

NYSE exchanges (New York Stock Exchange LLC, 

NYSE American LLC, and NYSE Arca, Inc.), three 

Nasdaq exchanges (Nasdaq Stock Market LLC, 

Nasdaq BX, Inc., and Nasdaq PHLX LLC) and four 

Cboe exchanges (Cboe BYX Exchange, Inc., Cboe 

BZX Exchange, Inc., Cboe EDGA Exchange, Inc., 

and Cboe EDGX Exchange, Inc.). 

66Long-Term Stock Exchange Inc.; MEMX LLC; 

MIAX PEARL, LLC; and NYSE Chicago, Inc. 

currently do not charge for their market data. 

However, MEMX LLC has announced a plan to 

begin charging for market data on April 1, 2022, 

which would increase IEX’s fees. 

67See IEX Study at 18. 

68 Internal distribution is receiving market data 

from an exchange and distributing it within the 

same entity that received the data. 

69External distribution is receiving market data 

from an exchange and distributing it to a third party 

outside of the entity that received the data. 

70Non-display usage means any method of 

accessing a market data product that involves 

access or use by a machine or automated device 

without access or use of a display by a natural 

person. 

71Non-professional users are natural persons who 

use data for personal, not commercial, purposes, 

and are not a registered financial services 

professional. 

72Anyone who is not a non-professional user is 

considered a professional user. 

73See supra note 56. 

74 IEX notes that the proposed fee filing 

introduces a new subscription model, and IEX will 

notify all current Data Subscribers that before July 

1, 2022, they will need to enter into a new Data 

Subscriber Agreement with IEX if they wish to 

continue receiving IEX Data in real time (either 

directly from IEX or via a third party). Furthermore, 

anyone who elects to receive Delayed IEX Data from 

a third party would no longer need to enter into a 

Continued 

revenue, based on responses from 

current market data subscribers in 

connection with the First Fee Filing. 

Specifically, IEX obtained feedback 

from existing Data Subscribers in 

connection with the First Fee Filing on 

whether they intend to continue to 

subscribe to Real-Time TOPS and/or 

DEEP following the implementation of 

the fees proposed therein. As discussed 

above, this feedback, which was not 

available at the time of filing of the First 

Fee Filing, enables IEX to supplement 

this Second Fee Filing with additional 

details relevant to revenue projection. 

Based upon that feedback, and the 

expertise of IEX employees, IEX expects 

that most, if not all, of the individual 

Data Subscribers will terminate their 

subscriptions for Real-Time IEX Data 

and, if they choose to continue to 

receive IEX Data, can opt to receive 

Delayed IEX Data from a third-party 

vendor or through HIST. Of the nonindividual Data Subscribers IEX projects 

the following: Over one-third overall 

will drop Real-Time IEX Data and use 

Delayed IEX Data, SIP feeds or obtain 

Real-Time IEX Data through an affiliate; 

approximately two-thirds of Members 

that are Data Subscribers will retain 

Real-Time access; over 50% of vendors 

will drop Real-Time IEX Data; and those 

Data Subscribers that currently only 

subscribe to TOPS are more likely to 

drop compared to those that subscribe 

to DEEP. 

Based on the feedback received, IEX 

believes that in the worst case, assuming 

no subscribers that have not yet 

indicated whether they will continue to 

subscribe elect to subscribe, we estimate 

annual revenues of $1.75 million, 

amounting to a loss of 29.5% under our 

estimated costs. In the best case, if all 

such subscribers choose to continue to 

subscribe, we estimate annual revenue 

of $2.63 million, representing a 

potential markup of just 6.1%. IEX 

believes that this revenue and cost 

recovery range is clearly reasonable and 

does not come even close to constituting 

taking an unfair advantage of its unique 

position as the sole source of its own 

proprietary market data. 

IEX does not have visibility into other 

equities exchanges’ costs to provide 

market data, and therefore cannot use 

those exchanges’ market data fees as a 

benchmark to determine a reasonable 

markup over the costs of providing 

market data. Nevertheless, IEX believes 

the other exchanges’ market data fees 

are a useful example of alternative 

approaches to providing and charging 

for market data. To that end, IEX notes 

that its proposed fees are materially 

lower than what competing equities 

exchanges charge IEX for similar market 

data products.64 Specifically, during 

2022, IEX pays an aggregate monthly 

cost of $101,024 to the 11 other equities 

exchanges 65 that charge for their market 

data 66 to obtain TOB, DOB and last sale 

market data. By comparison, to obtain 

the equivalent market data from IEX (as 

proposed) the aggregate monthly cost for 

those 11 equity exchanges would be 

$3,000 per exchange family, compared 

to the approximately $34,000 (on 

average) that IEX pays each exchange 

family to obtain such equivalent market 

data. As proposed, the 11 competing 

exchanges will, in the aggregate, be 

subject to monthly fees of $9,000 or 

approximately one-eleventh of the 

aggregate fees that IEX pays to those 11 

exchanges. Additionally, as noted in the 

IEX Study, the actual costs IEX incurs 

to obtain market data from other 

exchanges often involve aggregating 

several different kinds of fees, making it 

difficult to ascertain the actual costs to 

a market participant of obtaining 

equivalent market data from other 

exchanges.67 For example, several other 

exchanges charge separate fees 

depending on whether exchange data is 

redistributed internally 68 or 

externally,69 is used for non-display or 

other forms of use,70 or is calculated on 

a per user basis, with different fees for 

non-professional 71 and professional 72

users of the data feeds.73 By contrast, 

IEX’s fee proposal is much simpler— 

charging a flat fee for any entity to 

access one or both of the IEX Data feeds 

($500 month for TOPS/$2,500 for 

DEEP), with no fee to redistribute TOPS, 

DEEP, or both TOPS and DEEP in RealTime or on a Delayed basis (regardless 

of the number of recipients that the 

entity redistributes to). This simple fee 

structure means the cost burden for 

subscribing to receive IEX Data would 

be relatively flat regardless of the size of 

the Data Subscriber’s firm. At the same 

time, IEX believes that the fees are set 

at a level that will not represent a 

significant cost to any Data Subscriber. 

For example, because IEX will not be 

charging any variable per user fees, Data 

Subscribers will not need to expend 

resources on monthly reporting of 

market data usage that can be required 

when subscribing to other exchange 

data feeds with pricing that differs 

based on the various factors noted 

above. Furthermore, because IEX will 

not be charging different usage fees 

(such as for ‘‘display’’ vs. ‘‘non-display’’ 

usage) or charging based on 

‘‘controlled’’ and ‘‘uncontrolled’’ 

products, the Data Subscribers will not 

need to expend resources on managing 

different methods of receiving and 

distributing IEX Data or different types 

of application usage. Furthermore, IEX 

understands that the above 

administrative concerns can result in 

contentious audits or even litigation 

between data subscribers and providers 

of proprietary market data, all of which 

can result in substantial costs to the 

subscribers of other exchanges’ market 

data feeds. 

IEX acknowledges that there are tradeoffs between the benefits of a relatively 

simple fee structure and a fee structure 

that is more graduated based on the 

extent and variety of uses of IEX Data. 

IEX believes it has struck an appropriate 

balance of these interests by creating a 

fee model that is simple, easy to 

understand and administer, and set at a 

level that is affordable for all firms that 

need real-time data, while imposing no 

charge on recipients of Delayed IEX 

Data that do not need Real-Time IEX 

Data. 

As discussed above, IEX estimates 

that this fee proposal would result in it 

receiving at most an amount equal to 

approximately 6.1% over its estimated 

costs of providing market data, with a 

significant possibility that IEX will not 

even recoup all of its costs.74 We believe 


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Data Subscriber Agreement with IEX, as required 

under IEX’s current market data policies. 75As noted above, IEX will only provide real-time 

IEX Data and will not itself delay the dissemination 

of IEX Data to Data Subscribers. 76The Delayed IEX Data recipient may be subject 

to any fees charged by the redistributor of the 

Delayed IEX Data, based upon the contractual 

arrangement between the Delayed IEX Data 

recipient and the provider of Delayed IEX Data. 

Such fees would not be paid to the Exchange. 

77The Delayed IEX Data recipient may be subject 

to any fees charged by the redistributor of the 

Delayed IEX Data, based upon the contractual 

arrangement between the Delayed IEX Data 

recipient and the provider of Delayed IEX Data. 

Such fees would not be paid to the Exchange. 

78 IEX will bill all Data Subscribers directly, even 

if the Data Subscriber obtains IEX Data from a 

the fact that some current users have 

indicated to IEX they no longer plan to 

subscribe to Real-Time IEX Data owes in 

part to the fact that they will have the 

option to receive Delayed IEX Data (at 

a minimal delay of only 15 

milliseconds) in lieu of Real-Time IEX 

Data, without paying a fee to IEX. IEX 

believes that Data Subscribers that are 

not engaged in high speed, low latency 

trading may not choose to pay for RealTime IEX Data. As proposed, Data 

Subscribers may provide Delayed IEX 

Data to market participants who do not 

require (or quite possibly even have the 

necessary technology tools to use) near 

instantaneous access to IEX Data.75

These Delayed IEX Data recipients that 

elect to receive Delayed IEX Data from 

a Data Subscriber of IEX Data will not 

incur any IEX fees.76 Conversely, a 

market participant that values near 

instantaneous market data (e.g., 

algorithmic traders or other equities 

venues that use proprietary market data 

feeds to calculate the NBBO for each 

security) will have the option of paying 

$3,000 per month to receive Real-Time 

TOPS and DEEP. IEX also notes that any 

consumers can continue to obtain all the 

data in TOPS and DEEP free of charge 

on a T+1 basis from IEX’s HIST data 

product. And a market participant can 

also choose to obtain IEX TOB market 

data from the SIPs instead of from IEX. 

Annual Review of Fees 

In its Suspension Order, the 

Commission asks whether exchanges 

should periodically reevaluate fees on 

an ongoing and periodic basis in order 

to assure that actual revenue aligns with 

a reasonable cost-plus model. IEX 

intends to conduct a review (as 

described above) one year after 

implementation of the proposed fees 

and will publish the results of that 

review, including the aggregate revenue 

received during the year from 

subscription to each market data 

product. IEX expects that it may 

propose to adjust fees at that time, to 

increase fees in the event that revenues 

fail to cover costs. Similarly, IEX would 

propose to decrease fees in the event 

that revenue materially exceeds our 

current projections and is above a 

reasonable mark-up of market data 

costs. Further, and as discussed above, 

IEX will periodically conduct a review 

to inform its decision making on 

whether a fee change is appropriate 

(e.g., to monitor for costs increasing/ 

decreasing or subscribers increasing/ 

decreasing, etc. in ways that suggest the 

then-current fees are becoming 

dislocated from the prior cost-based 

analysis). In the event that IEX 

determines to propose a fee change, the 

results of a timely review, including an 

updated cost estimate, will be included 

in a rule filing proposing the fee change. 

IEX believes this approach will further 

increase transparency around market 

data costs and help to ensure that 

Exchange fees continue to be reasonably 

related to costs. 

Specific Changes to the Fee Schedule 

In order to effectuate the proposed fee 

changes, IEX is proposing to make the 

following changes to the definitions in 

the ‘‘Market Data Fees’’ part of its Fee 

Schedule: 

• Remove the definitions for ‘‘Internal 

Distribution Fee’’ and ‘‘External 

Distribution Fee’’ because IEX is not 

proposing to charge any distribution 

fees. 

• Define the term ‘‘Real-Time’’ as 

‘‘IEX market data that is accessed, used, 

or distributed less than fifteen (15) 

milliseconds after it was made available 

by the Exchange. IEX provides only 

Real-Time IEX market data to Data 

Subscribers. A Data Subscriber may 

redistribute Real-Time IEX market data 

that it receives from the Exchange on a 

Real-Time basis to a natural person or 

entity. Receipt of IEX market data on a 

Real-Time basis by an affiliate of a Data 

Subscriber is not subject to additional 

Fees beyond those paid by such Data 

Subscriber.1’’ 

• Define the term ‘‘Delayed’’ as ‘‘IEX 

market data that is accessed, used, or 

distributed at least fifteen (15) 

milliseconds after it was made available 

by the Exchange. A Data Subscriber may 

redistribute Real-Time IEX market data 

that it receives from the Exchange on a 

Delayed basis to a natural person or 

entity. In addition, a recipient of 

Delayed IEX market data may further 

redistribute such Delayed IEX market 

data to a natural person or entity.’’ 

• 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 non-affiliate Data 

Subscriber. A Data Subscriber must 

enter into a Data Subscriber Agreement 

with IEX in order to receive Real-Time 

IEX market data. A natural person or 

entity that receives Real-Time IEX 

market data from an affiliated Data 

Subscriber is subject to the Data 

Subscriber Agreement of such affiliated 

Data Subscriber.’’ 

• Remove the definition of ‘‘Usage 

Fee’’ because IEX is not proposing to 

charge any usage fees for its market 

data. 

• Add the following words before the 

‘‘Service/Fee’’ table: ‘‘The following 

fees2 are assessed by IEX on market data 

recipients:’’ 

IEX is also proposing to the make the 

following changes to the ‘‘Service/Fee’’ 

table in the Market Data Fees section of 

the Fee Schedule: 

• Delete the references to the Internal 

Distribution, External Distribution, and 

Usage Fees. 

• Add the following entries to the 

table: 

Service Fee 

DEEP Feed (RealTime).$2,500 per month.3

TOPS Feed (RealTime).$500 per month.3

DEEP Feed (Delayed).FREE. 

TOPS Feed (Delayed).FREE. 

• Define footnote 1 to say: ‘‘The terms 

‘‘affiliate’’ and ‘‘affiliated’’ have the 

meaning specified in Rule 12b–2 of the 

Exchange Act.’’ 

• Define footnote 2 to say: ‘‘The fees 

set forth below include only fees 

charged by IEX. Receipt of Real-Time 

IEX market data from a Data Subscriber 

or Delayed IEX market data from a Data 

Subscriber or other person may also be 

subject to fees agreed to between the 

Data Subscriber and recipient of such 

IEX market data.’’ 

• Define footnote 3 to say: ‘‘These 

fees will be operative beginning July 1, 

2022.’’ 

Implementation Schedule 

As noted above, the proposed rule 

change is effective on filing and the fees 

proposed herein will become operative 

on July 1, 2022. Delayed 

implementation will provide an 

opportunity for current Data Subscribers 

to modify the manner in which they 

receive IEX Data, if they choose to do so, 

allowing them to obtain IEX Data 

without incurring any charge from IEX 

if they receive it subject to at least a 

fifteen-millisecond delay,77 before the 

first month in which IEX will charge for 

access to IEX Data.78


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vendor, rather than indirectly billing the Data 

Subscriber through the vendor and requiring the 

Data Subscriber to reimburse the vendor from 

which it receives IEX Data. 

79 15 U.S.C. 78f(b). 

80 15 U.S.C. 78f(b)(4). 

81 15 U.S.C. 78f(b)(5). 

2. Statutory Basis 

IEX believes that the proposed rule 

change is consistent with the provisions 

of Section 6(b) 79 of the Act in general 

and furthers the objectives of Section 

6(b)(4) 80 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 also believes 

that the proposed fee change promotes 

just and equitable principles of trade 

and will not be unfairly discriminatory, 

consistent with the objectives of Section 

6(b)(5) 81 of the Act. 

Reasonableness 

With regard to reasonableness, the 

Exchange understands that the 

Commission has traditionally taken a 

market-based approach to examine 

whether the SRO making the fee 

proposal was subject to significant 

competitive forces in setting the terms 

of the proposal. IEX understands that in 

general the analysis considers whether 

the SRO has demonstrated in its filing 

that (i) there are reasonable substitutes 

for the product or service; (ii) 

‘‘platform’’ competition constrains the 

ability to set the fee; and/or (iii) revenue 

and cost analysis shows the fee would 

not result in the SRO taking 

supracompetitive profits. If the SRO 

demonstrates that the fee is subject to 

significant competitive forces, IEX 

understands that in general the analysis 

will next consider whether there is any 

substantial countervailing basis to 

suggest the fee’s terms fail to meet one 

or more standards under the Exchange 

Act. IEX further understands that if the 

filing fails to demonstrate that the fee is 

constrained by competitive forces, the 

SRO must provide a substantial basis, 

other than competition, to show that it 

is consistent with the Exchange Act, 

which may include production of 

relevant revenue and cost data 

pertaining to the product or service. 

As discussed in the Purpose section, 

IEX believes that as a general matter, 

because each exchange is the exclusive 

source of its own market data 

(particularly its depth of book data), 

market data fees cannot be sufficiently 

justified based on unproven 

assumptions about competition for 

market data, notwithstanding that a 

newer and/or smaller securities 

exchange, such as IEX, may be less able 

to set prices for its market data free of 

competition pressures than may be the 

case for more established securities 

exchanges. Nevertheless, IEX has not 

determined its proposed overall market 

data fees based on assumptions about 

market competition, instead relying 

upon a cost-plus model to determine a 

reasonable fee structure that is informed 

by the extent to which demand for each 

product drives IEX’s overall market data 

costs and the different uses of the 

products by different types of 

participants. In this context, IEX 

believes the proposed fees overall 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. 

As discussed in the Purpose section, 

IEX believes that charging $500 per 

month for TOPS and $2,500 per month 

for DEEP is reasonable because it is 

based both on the relative costs to IEX 

to generate TOPS and DEEP, the extent 

to which each product drives IEX’s 

overall costs and the relative value of 

each, as well as IEX’s objective to make 

TOPS broadly available to a range of 

market participants including long-term 

investors. Therefore, IEX believes that it 

is reasonable to charge a higher fee for 

DEEP than for TOPS. 

IEX also believes the proposed fees 

are reasonable because they are 

designed to generate annual revenue to 

recoup some or all of IEX’s annual costs 

of providing market data. As discussed 

in the Purpose section, subsequent to 

the First Fee Filing, IEX conducted an 

updated analysis of potential revenue, 

based on responses from current market 

data subscribers. Based on that analysis, 

assuming no subscribers that have not 

yet indicated whether they will 

continue to subscribe elect not to 

subscribe, we estimate annual revenues 

of $1.75 million in market data fees, 

amounting to a loss of 29.5% under our 

estimated costs of providing that data. 

Even if all such subscribers choose to 

continue to subscribe, we estimate this 

fee filing will result in annual revenue 

of $2.63 million, representing a 

potential markup of just 6.1% over the 

cost of providing market data. 

Accordingly, IEX believes that this fee 

methodology is reasonable because it 

both allows IEX to recoup some or all 

of its expenses for providing market 

data (with any additional revenue 

representing no more than what IEX 

believes to be a reasonable rate of 

return), while continuing to allow 

market participants to access IEX Data 

free of charge if they can wait at least 

fifteen milliseconds to receive it. 

Additionally, IEX believes the 

proposed fees are reasonable because 

IEX is only charging Data Subscribers 

who use IEX Data in Real-Time, and as 

described in the Purpose section, these 

Data Subscribers are the very ones 

creating the demand for Real-Time IEX 

Data, thereby causing IEX to incur the 

costs described above to produce RealTime market data feeds. 

IEX also believes that the proposed 

fees are reasonable because they are 

significantly less than the fees charged 

by competing equities exchanges, 

notwithstanding that the competing 

exchanges may have different system 

architectures that may result in different 

cost structures for the provision of 

market data. As described above, the 

three large exchange families charge 

significantly more than IEX’s proposed 

fees for real-time access to their 

proprietary market data. Significantly, 

they charge these fees without offering 

an option to receive delayed market data 

within a time frame that is usable for 

most trading purposes. The delayed data 

offered by other exchanges is also 

offered free of charge, but only fifteen 

minutes after it is first disseminated, 

which IEX believes generally makes the 

data stale for any subscribers using the 

data to make trading decisions. 

Finally, as described in the Purpose 

section above, IEX believes that this fee 

proposal is reasonable because it will 

not impose onerous audit requirements 

on Data Subscribers, because there will 

be no need to substantiate the number 

of users of IEX Data or the manner in 

which it is being used, but rather only 

whether it is being redistributed in real 

time or subject to at least a fifteenmillisecond delay. 

Equitable Allocation and NonDiscrimination 

IEX believes that its proposed fees are 

reasonable, fair, and equitable, and not 

unfairly discriminatory because they are 

designed to align fees with services 

provided, will apply equally to all Data 

Subscribers that require real-time data, 

and will minimize barriers to entry by 

providing IEX Data for free after at least 

fifteen milliseconds, thereby allowing 

all but the most latency sensitive market 

participants access to IEX Data within a 

time frame that is usable for most 

trading purposes. 

The Exchange believes that providing 

Delayed IEX Data without charging any 

fees and charging as much as $3,000 per 

month to Data Subscribers who require 

Real-Time IEX Data is fair and equitable, 

and not unfairly discriminatory because 

it will enable all market participants to 

access Delayed IEX Data without paying 


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82Although IEX will not charge any distribution 

fees to a redistributor of Delayed IEX Data, the 

redistributor may still charge its own fees to its 

customers that receive Delayed IEX Data from such 

redistributor. 

83 Distributors of Delayed IEX Data may charge a 

fee for the data, but that fee is not payable to IEX. 

84 15 U.S.C. 78s(b)(3)(A)(ii). 

85 15 U.S.C. 78s(b)(2)(B). 

any fees to IEX 82 and will charge only 

the users who require the fastest market 

data feeds available (which, as 

discussed in the Purpose section, drives 

much of the costs associated with 

creating and distributing IEX Data 

because it increases the resiliency, 

capacity and redundancy costs 

associated with IEX’s proprietary market 

data feeds) for access to IEX Data. 

Additionally, as noted in the Purpose 

section, anyone can obtain TOPS and 

DEEP data free of charge on a T+1 basis 

through IEX’s HIST data product. IEX 

believes this approach to market data 

fees will equitably distribute the costs of 

IEX Data among market participants 

whose business models require the 

highest speed market data available but 

without unfairly discriminating among 

market participants based on any 

distinctions between or among 

Members, customers, broker-dealers, or 

any other entity, because they are solely 

determined by the individual market 

participant based on its business needs. 

Furthermore, IEX believes that 

charging $500 per month for TOPS and 

$2,500 per month for DEEP is fair and 

equitable because, as discussed in the 

Purpose section, it is based on the 

relative value of DEEP and TOPS, the 

fact that demand for real-time DEEP 

drives a significant portion of IEX’s 

market data costs, and the existence of 

alternatives to real-time TOB market 

data. These factors operate to limit IEX’s 

ability to base real-time TOPS pricing 

strictly on a proportional cost 

allocation; additionally, charging 

significantly less for TOPS supports 

IEX’s objective to make TOPS broadly 

available to a range of market 

participants including long-term 

investors. Therefore, IEX believes that it 

is fair and equitable to charge a higher 

fee for DEEP than for TOPS. 

The Exchange also believes that it is 

fair and reasonable to not charge 

additional fees to affiliates of a Data 

Subscriber because that approach is 

agnostic on corporate structure without 

financially penalizing a firm organized 

into multiple affiliates. Moreover, IEX’s 

costs do not materially differ based on 

how Data Subscribers have legally 

structured their operations. 

The Exchange further believes that the 

proposed fees are reasonable, fair, and 

equitable, and non-discriminatory 

because they will apply to all Data 

Subscribers in the same manner based 

on the type of market data needed. All 

similarly situated market participants 

are subject to the same fees. The fees 

also do not depend on any distinctions 

between or among Members, customers, 

broker-dealers, or any other entity, 

because they are solely determined by 

the individual market participant based 

on its business needs. 

Finally, the Exchange believes that 

the proposed fee is consistent with 

Section 11A of the Exchange Act in that 

it is designed to facilitate the 

economically efficient execution of 

securities transactions, fair competition 

among brokers and dealers, exchange 

markets and markets other than 

exchange markets, and the practicability 

of brokers executing investors’ orders in 

the best market. Specifically, the 

proposed low, cost-based fee, with the 

option of receiving free data from a third 

party on at least a fifteen-millisecond 

delay 83 or for absolutely no cost on a 

T+1 basis using HIST, will enable a 

broad range of market participants to 

continue to receive IEX Data, thereby 

facilitating the economically efficient 

execution of securities transactions on 

IEX, fair competition between and 

among such Members, and the 

practicability of Members that are 

brokers executing investors’ orders on 

IEX when it is the best market. 

For the foregoing reasons, the 

Exchange believes that the proposed fee 

is reasonable, equitably allocated, and 

not unfairly discriminatory. 

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 intramarket or intermarket 

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 proposed fees are based on actual 

costs and are designed to enable the 

Exchange to recoup its applicable costs 

with the possibility of a reasonable 

profit on its investment as described in 

the Purpose and Statutory Basis 

sections. Competing equities exchanges 

are free to adopt comparable fee 

structures subject to the SEC rule filing 

process. 

The Exchange also does not believe 

that the proposed fees will impose any 

burden on intramarket competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act 

because all market participants are 

entitled to receive IEX Data free of 

charge after at least a fifteen-millisecond 

delay. Providing a commercially viable 

free data feed to Data Subscribers is 

designed to avoid creating barriers to 

entry for smaller Members, thereby 

promoting intramarket competition. In 

addition, even Members subject to 

relatively higher fees, because they are 

paying up to $3,000 per month for IEX 

Data, will still be subject to a relatively 

low aggregate fee (and significantly less 

than the fees charged by competing 

exchanges, as described above) and IEX 

thus believes that the proposed fee will 

not operate as a barrier to entry for such 

Members or impose a significant 

business cost burden on such Members 

relative to their levels of business 

activity. Finally, as noted in the Purpose 

and Statutory Basis sections, IEX 

believes that not requiring any onerous 

audits for Data Subscribers will be of 

equal benefit to all Data Subscribers. 

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) 84 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) 85 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: 


jspears on DSK121TN23PROD with NOTICES1
Federal Register / Vol. 87, No. 71 / Wednesday, April 13, 2022 / Notices 21957 

86 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See Securities Exchange Act Release No. 62886 

(Sept. 10, 2010), 75 FR 56613 (Sept. 16, 2010) (SR– 

CHX–2010–13). 

5See Securities Exchange Act Release No. 68802 

(Feb. 1, 2013), 78 FR 9092 (Feb. 7, 2013) (SR–CHX– 

2013–04). 

6See Securities Exchange Act Release No. 72434 

(June 19, 2014), 79 FR 36110 (June 25, 2014) (SR– 

CHX–2014–06). 

7See Securities Exchange Act Release No. 67091 

(May 31, 2012), 77 FR 33498 (June 6, 2012) (the 

‘‘Limit Up-Limit Down Release’’). 

8See Securities Exchange Act Release No. 71782 

(March 24, 2014), 79 FR 17630 (March 28, 2014) 

(SR–CHX–2014–04). 

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 No. SR– 

IEX–2022–02 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 No. 

SR–IEX–2022–02. 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 and on its 

internet website at www.iextrading.com. 

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 No. SR–IEX–2022–02, and 

should be submitted on or before May 

4, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.86

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–07853 Filed 4–12–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94639; File No. SR– 

NYSECHX–2022–05] 

Self-Regulatory Organizations; NYSE 

Chicago, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Extend the Current 

Pilot Program Related to Rule 7.10 

April 7, 2022. 

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 April 5, 

2022, the NYSE Chicago, Inc. (‘‘NYSE 

Chicago’’ or the ‘‘Exchange’’) filed with 

the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the self-regulatory 

organization. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to extend the 

current pilot program related to Rule 

7.10 (Clearly Erroneous Executions) to 

the close of business on July 20, 2022. 

The proposed rule change is available 

on the Exchange’s website at 

www.nyse.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 those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts 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 purpose of the proposed rule 

change is to extend the current pilot 

program related to Rule 7.10 (Clearly 

Erroneous Executions) to the close of 

business on July 20, 2022. The pilot 

program is currently due to expire on 

April 20, 2022. 

On September 10, 2010, the 

Commission approved, on a pilot basis, 

changes to Article 20, Rule 10 that, 

among other things: (i) Provided for 

uniform treatment of clearly 

erroneous execution reviews in multistock events involving twenty or more 

securities; and (ii) reduced the ability of 

the Exchange to deviate from the 

objective standards set forth in the rule.4

In 2013, the Exchange adopted a 

provision designed to address the 

operation of the Plan.5 Finally, in 2014, 

the Exchange adopted two additional 

provisions providing that: (i) A series of 

transactions in a particular security on 

one or more trading days may be viewed 

as one event if all such transactions 

were effected based on the same 

fundamentally incorrect or grossly 

misinterpreted issuance information 

resulting in a severe valuation error for 

all such transactions; and (ii) in the 

event of any disruption or malfunction 

in the operation of the electronic 

communications and trading facilities of 

an Exchange, another SRO, or 

responsible single plan processor in 

connection with the transmittal or 

receipt of a trading halt, an Officer, 

acting on his or her own motion, shall 

nullify any transaction that occurs after 

a trading halt has been declared by the 

primary listing market for a security and 

before such trading halt has officially 

ended according to the primary listing 

market.6

These changes were originally 

scheduled to operate for a pilot period 

to coincide with the pilot period for the 

Plan to Address Extraordinary Market 

Volatility (the ‘‘Limit Up-Limit Down 

Plan’’ or ‘‘LULD Plan’’),7 including any 

extensions to the pilot period for the 

LULD Plan.8 In April 2019, the 

Commission approved an amendment to 

the LULD Plan for it to operate on a 


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