Document ID: SEC-2018-1062-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Investors Exchange, LLC
Posted Date: 2018-07-09T04:00Z

[Federal Register Volume 83, Number 131 (Monday, July 9, 2018)]
[Notices]
[Pages 31828-31833]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-14547]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83582; File No. SR-IEX-2018-11]

Self-Regulatory Organizations; Investors Exchange LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Modify 
the Structure of its Fee Schedule and Make Several Conforming and 
Clarifying Changes, Pursuant to IEX Rule 15.110(A) and (C)

July 2, 2018.
    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 June 29, 2018, the Investors Exchange LLC (``IEX'' or 
the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I, 
II and III below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Pursuant to the provisions of Section 19(b)(1) under the Securities 
Exchange Act of 1934 (``Act''),\4\ and Rule 19b-4 thereunder,\5\ 
Investors Exchange LLC (``IEX'' or ``Exchange'') is filing with the 
Securities and Exchange Commission (``Commission'') a proposed rule 
change to modify the structure of its Fee Schedule and make several 
conforming and clarifying changes, pursuant to IEX Rule 15.110(a) and 
(c), in order to provide more clarity to market participants regarding 
the fees assessed for executions on the Exchange. Changes to the Fee 
Schedule pursuant to this proposal are effective upon filing and will 
be operative on July 1, 2018.
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    \4\ 15 U.S.C. 78s(b)(1).
    \5\ 17 CFR 240.19b-4.
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    The text of the proposed rule change is available at the Exchange's 
website at www.iextrading.com, at the principal office of the Exchange, 
and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
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 statement may be examined at 
the places specified in Item IV below. The self-regulatory organization 
has prepared summaries, set forth in Sections A, B, and C below, of the 
most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to modify the structure of its Fee Schedule 
and make minor conforming changes, pursuant to IEX Rule 15.110(a) and 
(c), in order to provide more clarity to market participants regarding 
the fees assessed for executions on the Exchange. The Exchange's 
existing Fee Schedule requires market participants to determine which 
of the Exchange's Fee Codes are applicable to any given transaction, 
and then calculate the applicable fee that will be assessed depending 
on the applicable Fee Code combination. After informal discussions with 
various market participants, the Exchange is proposing to provide more 
clarity to market participants regarding the fees assessed for 
executions on the Exchange by amending the structure of its Fee 
Schedule to explicitly provide each possible Fee Code combination, 
along with the associated fee applicable to such transaction. The 
Exchange is also proposing to make several minor substantive changes to 
the Fee Schedule and related rules to enhance the consistency and 
clarity of the Exchange's Fee Schedule.
Existing Fee Schedule
    In an effort to incentivize Members \6\ to submit displayed orders 
to the Exchange, the Exchange currently charges a fee of $0.0003 per 
share (or 0.30% of the total dollar value of the transaction for 
securities priced below $1.00) to Members for executions on IEX that 
provide or take resting interest with displayed priority (i.e., an 
order or portion of a reserve order that is booked and ranked with 
display priority on the Order Book).\7\ Furthermore, the Exchange 
currently charges $0.0009 per share (or 0.30% of the total dollar value 
of the transaction for securities priced below $1.00) to Members for 
executions on IEX that provide or take resting interest with non-
displayed priority (i.e., an order or portion of a reserve order that 
is booked and ranked with non-displayed priority on the Order Book).\8\
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    \6\ See Rule 1.160(s).
    \7\ This pricing is referred to by the Exchange as ``Displayed 
Match Fee'' with a Fee Code of `L' provided by the Exchange on 
execution reports. See the Investors Exchange Fee Schedule, 
available on the Exchange public website.
    \8\ This pricing is referred to by the Exchange as the ``Non-
Displayed Match Fee'' with a Fee Code of `I' provided by the 
Exchange on execution reports. See the Investors Exchange Fee 
Schedule, available on the Exchange public website.
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    Moreover, in order to reduce the variability in fees to access 
liquidity on the Exchange and thereby incentivize Members to route more 
orders to the Exchange that are executable at the far side of the 
NBBO,\9\ the Exchange assesses a deterministic Spread-Crossing Remove 
Fee of $0.0003 per share to all executions at or above $1.00 that 
result from removing liquidity with a buy (sell) order that is 
executable at the NBO (NBB).\10\ The Exchange does not charge

[[Page 31829]]

any fee to Members for executions on IEX when the adding and removing 
order originated from the same Exchange Member,\11\ and all executions 
below $1.00 are assessed a fee equal to 0.30% of the total dollar value 
of the transaction.\12\
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    \9\ As defined by Regulation NMS Rule 600(b)(42). 17 CFR 
242.600.
    \10\ This pricing is referred to by the Exchange as the 
``Spread-Crossing Remove Fee'', with a Fee Code of ``N'' provided by 
the Exchange on execution reports. See the Investors Exchange Fee 
Schedule, available on the Exchange public website. The Exchange 
notes that if an order--based on market conditions, User 
instructions, applicable IEX Rules and/or the Act and the rules and 
regulations thereunder--is not executable at the far side of the 
NBBO, such order will not be eligible for the Spread-Crossing Remove 
Fee. See Securities Exchange Act Release No. 83147 (May 1, 2018) 83 
FR 20118 (May 7, 2018) (SR-IEX-2018-09).
    \11\ This pricing is referred to by the Exchange as the 
``Internalization Fee'' with a Fee Code of `S' provided by the 
Exchange on execution reports. Orders from different market 
participant identifiers of the same broker dealer, with the same 
Central Registration Depository registration number, are treated as 
originating from the same Exchange Member. See the Investors 
Exchange Fee Schedule, available on the Exchange public website.
    \12\ See the Investors Exchange Fee Schedule, available on the 
Exchange public website.
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    Furthermore, to incentivize additional resting liquidity on IEX, 
including displayed liquidity, the Exchange charges the maximum fee 
allowable pursuant to Regulation NMS for certain executions that appear 
to be part of a deliberate trading strategy that targets resting 
liquidity during periods of quote instability. Specifically, the 
Exchange charges a Crumbling Quote Remove Fee (``CQRF'') of $0.0030 (or 
0.3% of the total dollar value of the transaction for securities priced 
below $1.00) to orders that remove resting liquidity during periods of 
quote instability, as defined in Rule 11.190(g), if such orders 
constitute at least 5% of the Member's volume executed on IEX and at 
least 1 million shares, on a monthly basis, measured on a per market 
participant identifier (``MPID'') basis.\13\ Orders that exceed the 5% 
and 1 million share thresholds are assessed the CQRF per each 
incremental share executed that exceeds the threshold.\14\
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    \13\ This pricing is referred to by the Exchange as the 
``Crumbling Quote Remove Fee Indicator'' with a Fee Code of `Q' 
provided by the Exchange on execution reports. See the Investors 
Exchange Fee Schedule, available on the Exchange public website. See 
also 17 CFR 242.610(c).
    \14\ See Securities Exchange Act Release No. 81484 (August 25, 
2017), 82 FR 41446 (August 31, 2017) (SR-IEX-2017-27).
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    In addition to the fees assessed for trading on the continuous 
market, the Exchange also assesses fees for orders that execute in an 
IEX Auction for securities listed on the Exchange pursuant to Rule 
11.350, as well as for orders that execute in the Opening Process for 
non-IEX-listed securities pursuant to Rule 11.231.\15\ For orders that 
execute in an IEX Auction for securities listed on the Exchange:
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    \15\ See Securities Exchange Act Release No. 82127 (November 20, 
2017), 82 FR 56089 (November 27, 2017) (SR-IEX-2017-40), and 
Securities Exchange Act Release No. 81502 (August 30, 2017), 82 FR 
42141 (September 6, 2017) (SR-IEX-2017-28), respectively. The 
Exchange does not yet have any IEX-listed securities, but intends on 
launching a listings program for corporate issuers.
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     Executions in the Opening Auction \16\ receive Fee Code 
``O'', and are assessed a fee of $0.0003 per share, unless the order 
was displayed on the Continuous Book during the Pre-Market Session,\17\ 
in which case the execution also receives Fee Code ``L'', and is not 
charged a fee.
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    \16\ See Rule 11.350(c).
    \17\ See Rule 1.160(z).
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     Executions in the Closing Auction \18\ receive Fee Code 
``C'', and are assessed a fee of $0.0003 per share, unless the order 
was displayed on the Continuous Book during the Regular Market 
Session,\19\ in which case the execution also receives Fee Code ``L'', 
and is not charged a fee.
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    \18\ See Rule 11.350(d).
    \19\ See Rule 1.160(gg).
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     Executions in a Halt Auction \20\ or Volatility Auction 
\21\ receive Fee Code ``H'', and are assessed a fee of $0.0003 per 
share; \22\ and
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    \20\ See Rule 11.350(e).
    \21\ See Rule 11.350(f).
    \22\ The Exchange also notes that there is no Continuous Book 
prior to a Halt, Volatility, or IPO auction, and thus no opportunity 
for a Member to have a displayed order on the Continuous Book that 
is executed in such auctions.
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     Executions in an IPO Auction \23\ receive Fee Code ``P'', 
and are assessed a fee of $0.0003 per share.\24\
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    \23\ See Rule 11.350(e).
    \24\ See supra note 13.
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    For orders that execute in the Opening Process for non-IEX-listed 
securities pursuant to Rule 11.231:
     Orders resting on the Cross Book \25\ that execute in the 
Opening Process receive Fee Code ``X'', and are assessed a fee of 
$0.0009 per share;
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    \25\ See Rule 11.231(a).
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     Non-displayed orders resting on the Continuous Book that 
execute in the Opening Process receive Fee Code ``X'', and are assessed 
a fee of $0.0009 per share; and
     Displayed orders resting on the Continuous Book that 
execute in the Opening Process receive Fee Codes ``X'' and ``L'', and 
are assessed a fee of $0.0003 per share.
    In addition to the fees described above, the Exchange also offers a 
Market Quality Incentive Program that offers certain fee-based 
incentives for Members that provide meaningful and consistent support 
to market quality and price discovery by extensive quoting at and/or 
near the NBBO in IEX-listed securities for a significant portion of the 
day.\26\ Specifically, a Member that satisfies the quoting criteria for 
one or more of the following tiers in each security listed on IEX over 
the course of the month that the security is listed on IEX may be 
designated as an ``IEMM'':
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    \26\ See Rule 11.170(a).
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     Inside Tier IEMM: One or more of its MPIDs has a displayed 
order entered in a principal capacity of at least one round lot resting 
on the Exchange at the NBB and/or the NBO for an average of at least 
20% of Regular Market Hours (the ``NBBO Quoting Percentage''); and/or
     Depth Tier IEMM: One or more of its MPIDs has a displayed 
order entered in a principal capacity of at least one round lot resting 
on the Exchange at the greater of 1 minimum price variation (``MPV'') 
or 0.03% (i.e., 3 basis points) away from the NBBO (or more aggressive) 
for an average of at least 75% of Regular Market Hours (the ``Depth 
Quoting Percentage'').
    Members that are designated as an IEMM qualify for the Displayed 
Match Fee Discount as well as the Non-Displayed Match Fee Discount. 
Specifically, for Inside Tier IEMMs, the Displayed Match Fee Discount 
and the Non-Displayed Match Fee Discount results in a $0.0001 discount 
for each execution subject to the Displayed Match Fee and the Non-
Displayed Match Fee, respectively, with no cap on aggregate monthly 
savings. Furthermore, Depth Tier IEMMs will receive a $0.0001 discount 
for each execution subject to the Displayed Match Fee and the Non-
Displayed Match Fee, up to $20,000.00 in aggregate savings per 
month.\27\
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    \27\ See Securities Exchange Act Release No. 82636 (February 6, 
2018), 83 FR 6059 (February 12, 2018) (SR-IEX-2018-02). See also the 
Investors Exchange Fee Schedule, available on the Exchange public 
website.
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Proposed Changes
    After informal discussions with various market participants, the 
Exchange is proposing to provide more clarity to market participants 
regarding the fees assessed for executions on the Exchange by amending 
the structure of its Fee Schedule to provide an overarching framework 
for interpreting the Exchange's Fee Codes, as well as explicitly 
enumerating each possible Fee Code combination, along with the 
associated fee applicable to such transaction. The Exchange is also 
proposing to make several conforming changes to the Fee Schedule and 
related rules to account for the updated structure.
    The Exchange proposes to continue utilizing standard FIX tag 9730 
(Trade Liquidity Indicator) to populate the applicable Fee Codes for 
executions on

[[Page 31830]]

the Exchange.\28\ Furthermore, the Exchange is proposing to divide the 
Exchange's Fee Codes into ``Base Fee Codes'', one of which shall be 
supplied on every execution report, and ``Additional Fee Codes'', one 
or more of which may be provided on an execution report, as applicable. 
The first position in the Last Liquidity Indictor tag would always 
contain a Base Fee Code. The second through fourth positions would 
contain one or more Additional Fee Codes, as applicable, that serve to 
modify the Base Fee Code in the first position.
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    \28\ See the Investors Exchange FIX Specification, available on 
the Exchange's public website.
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    As in the existing Fee Schedule, all proposed fees identify cost 
per share executed unless otherwise specified, and footnotes provide 
further explanatory text or indicate variable rate changes, provided 
the conditions in the footnote are met. The rates listed in the 
proposed Base Rates table apply unless a Member's transaction is 
assigned an Additional Fee Code. If a Member's transaction is assigned 
an Additional Fee Code, the rates listed in the Fee Code Combinations 
and Associated Fees table will apply. Executions below $1.00 are 
assessed a fee of 0.30% of TDV unless the Fee Code Combination results 
in a FREE execution. For executions on routable orders, the Exchange 
passes-through in full any fees charged by/rebates received from away 
venues (``Cost'') to the Member and adds the IEX fee (i.e., a $0.0001 
charge per share).
    The Exchange also proposes to adopt the following definitions that 
are substantially like the Exchange's existing definitions governing 
transaction fees:
     ``Fee Code'' is identified on each execution report 
message from the Exchange in the Trade Liquidity Indicator (FIX tag 
9730) field.
     ``MPID'' means a market participant identifier.
     ``TDV'' means the total dollar value of the execution 
calculated as the execution price multiplied by the number of shares 
executed in the transaction.
     ``Quote instability'' is defined in IEX Rule 
11.190(g).\29\
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    \29\ The Exchange notes the proposed definition of ``Quote 
instability'' is a new definition, and is simply a cross reference 
to Rule 11.190(g). See Rule 11.190(g).
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     ``CQRF Threshold'' means the Crumbling Quote Remove Fee 
Threshold. The threshold is equal to 5% of the sum of a Member's total 
monthly executions on IEX if at least 1,000,000 shares during the 
calendar month, measured on an MPID basis.
     ``Spread-crossing eligible order'' means a buy order that 
is executable at the NBO or a sell order that is executable at the NBB 
after accounting for the order's limit (if any), peg instruction (if 
any), market conditions, and all applicable rules and regulations.\30\
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    \30\ The Exchange notes that the proposed definition of 
``Spread-crossing eligible order'' is a new definition, and is 
intended to provide market participants further clarity regarding 
the conditions associated with the Spread-Crossing Remove Fee. See 
Securities Exchange Act Release No. 83147 (May 1, 2018) 83 FR 20118 
(May 7, 2018) (SR-IEX-2018-09).

The proposed Base Fee Codes and Additional Fee Codes, as well as the 
corresponding fees, are as follows:

----------------------------------------------------------------------------------------------------------------
                                                                     Executions at
           Base fee codes                      Description          or above $1.00     Executions below $1.00
----------------------------------------------------------------------------------------------------------------
I, X................................  Standard Match Fee..........         $0.0009  0.30% of TDV.
L...................................  Reduced Match Fee...........          0.0003  0.30% of TDV.
O, C, H, P..........................  Auction Match Fee...........          0.0003  0.30% of TDV.
                                                                   ---------------------------------------------
Alpha...............................  Routing and removing                         Cost + $0.0001
                                       liquidity (all routing
                                       options).
----------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------
   Additional fee codes             Description                 Fee
------------------------------------------------------------------------
S........................  Internalization Fee: Member              FREE
                            executes against resting
                            liquidity provided by such
                            Member.
Q........................  Crumbling Quote Remove Fee:           $0.0030
                            Removes liquidity during
                            periods of quote instability
                            at or within the NBBO above
                            the CQRF Threshold, measured
                            on an MPID basis.
N........................  Spread-Crossing Eligible              $0.0003
                            Remove Fee: Removes
                            liquidity with a spread-
                            crossing eligible order.
D........................  Discounted Single-Price Cross            FREE
                            Fee: Displayed interest
                            resting on the Continuous
                            Book executes in a cross or
                            auction.
------------------------------------------------------------------------

    Fee Codes ``I'' and ``X'' are currently identified as the Non-
Displayed Match Fee and the Opening Match Fee, respectively, and would 
both be referred to as the Standard Match Fee, as proposed. 
Furthermore, Fee Code ``L'' is currently identified as the Displayed 
Match Fee, and would be referred to as the Reduced Match Fee, as 
proposed. The Exchanges notes these amendments reflect only changes in 
nomenclature, and do not represent substantive changes to the fees 
assessed for execution on the Exchange. Moreover, similar to the 
existing Fee Schedule, the Exchange proposes to append footnote 1 to 
each Fee Code combination that includes Fee Code ``Q''. Footnote 1 
states that executions with Fee Code Q that exceed the CQRF Threshold 
are subject to the Crumbling Quote Remove Fee identified in the Fee 
Code Modifiers table. Executions with Fee Code Q that do not exceed the 
CQRF Threshold are subject to the fees identified in the Fee Code 
Combinations and Associated Fees table.
    The Exchange is proposing to make one minor conforming change to 
the fees assessed for displayed order's resting on the Continuous Book 
that are executed in the Opening Process for non-IEX-listed securities 
pursuant to Rule 11.231 in order to enhance the consistency and clarity 
of the Exchange's Fee Schedule. Specifically, as described above, a 
displayed order resting on the Continuous Book that is executed in the 
Opening Process for non-IEX-listed securities is currently charged the 
Displayed Match Fee (or the Reduced Match Fee, as proposed). In 
contrast, a displayed order resting on the Continuous Book that is 
executed in an Opening or Closing Auction for IEX-listed securities is 
not charged a fee. However, as proposed, the Opening Process utilizes 
the Base Fee Code of ``X'', which would conflict with the Base Fee Code 
of ``L'' for displayed executions. Thus, the Exchange is

[[Page 31831]]

proposing to harmonize the fees charged to displayed orders resting on 
the Continuous Book that are executed in the Opening Process or the 
Opening or Closing Auction, by introducing Additional Fee Code ``D'' 
(Discounted Single-Price Cross Fee), representing displayed interest 
resting on the Continuous Book that executes in a single price cross 
(i.e., in Opening Process, or an IEX Auction), and is not charged a 
fee.\31\
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    \31\ See proposed Additional Fee Code ``D'', Discounted Single-
Price Cross: displayed interest resting on the Continuous Book 
executes in a cross or auction.
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    The Exchange believes that offering such displayed orders resting 
on the Continuous Book free execution in the Opening Process is 
consistent with the protection of investors and the public interest in 
that it may have the effect of incentivizing Members that seek 
execution in the Opening Process to enter displayed interest, thereby 
contributing to the public price discovery process to the benefit of 
all market participants. Furthermore, the proposed change creates 
consistency in the Exchange's fee for similarly situated orders in that 
displayed orders resting on the Continuous Book that are executed as 
part of a single-priced cross will receive the same free execution.
    In addition to the Base Fee Code and Additional Fee Code framework 
described above, the Exchange is also proposing to provide a table of 
all possible Fee Code combinations and their associated fees, which 
explicitly sets forth each of the fees associated with each Fee Code 
combination. This table is designed to provide market participants an 
authoritative source on how to interpret the Fee Code's assigned by the 
Exchange on each execution report. Consistent with the foregoing, the 
proposed Fee Code combinations and associated fees are as follows: \32\
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    \32\ The Exchange has included an asterisk to denote a Fee Code 
combination that will have proposed footnote 1 appended. As 
described above, Footnote 1 states that executions with Fee Code Q 
that exceed the CQRF Threshold are subject to the Crumbling Quote 
Remove Fee of $0.0030, as identified in the Fee Code Modifiers 
table. Executions with Fee Code Q that do not exceed the CQRF 
Threshold are subject to the fees identified in the Fee Code 
Combinations and Associated Fees table.

------------------------------------------------------------------------
        Fee Codes                   Description                 Fee
------------------------------------------------------------------------
I........................  Adds or removes non-displayed         $0.0009
                            liquidity.
L........................  Adds or removes displayed             $0.0003
                            liquidity.
IS.......................  Member executes against                  FREE
                            resting non-displayed
                            liquidity provided by such
                            Member.
IQ *.....................  Removes non-displayed                 $0.0009
                            liquidity during periods of
                            quote instability.
IN.......................  Removes non-displayed                 $0.0003
                            liquidity with a spread-
                            crossing eligible order.
LS.......................  Member executes against                  FREE
                            resting displayed liquidity
                            provided by such Member.
LQ *.....................  Removes displayed liquidity           $0.0003
                            during periods of quote
                            instability.
LN.......................  Removes displayed liquidity           $0.0003
                            with a spread-crossing
                            eligible order.
ISQ *....................  Member removes non-displayed             FREE
                            liquidity provided by such
                            Member during periods of
                            quote instability.
ISN......................  Member removes non-displayed             FREE
                            liquidity provided by such
                            Member with a spread-
                            crossing eligible order.
IQN *....................  Removes non-displayed                 $0.0003
                            liquidity during periods of
                            quote instability with a
                            spread-crossing eligible
                            order.
LSQ *....................  Member removes displayed                 FREE
                            liquidity provided by such
                            Member during periods of
                            quote instability.
LSN......................  Member removes non-displayed             FREE
                            liquidity provided by such
                            Member with a spread-
                            crossing eligible order.
LQN *....................  Removes displayed liquidity           $0.0003
                            during periods of quote
                            instability with a spread-
                            crossing eligible order.
ISQN *...................  Member removes non-displayed             FREE
                            liquidity provided by such
                            Member during periods of
                            quote instability with a
                            spread-crossing eligible
                            order.
LSQN *...................  Member removes non-displayed             FREE
                            liquidity provided by such
                            Member during periods of
                            quote instability with a
                            spread-crossing eligible
                            order.
X........................  Opening Process for Non-              $0.0009
                            Listed Securities (``Opening
                            Process'').
XD.......................  Displayed interest resting on            FREE
                            the Continuous Book executes
                            in the Opening Process.
O........................  Opening Auction, IEX-listed           $0.0003
                            security.
OD.......................  Displayed interest resting on            FREE
                            the Continuous Book executes
                            in the Opening Auction.
C........................  Closing Auction, IEX-listed           $0.0003
                            security.
CD.......................  Displayed interest resting on            FREE
                            the Continuous Book executes
                            in the Closing Auction.
H........................  Halt or Volatility Auction,           $0.0003
                            IEX-listed security.
P........................  IPO Auction, IEX-listed               $0.0003
                            security.
------------------------------------------------------------------------

    Lastly, in order to enhance the consistency and clarity of the 
Exchange's Fee Schedule, IEX proposes to make conforming changes to the 
description of the IEMM Program in both the Fee Schedule and Rule 
11.170(a)(3) to account for the changes described above, as well as to 
clarify the application of the Spread-Crossing Eligible Remove Fee. 
Specifically, the Exchange is changing the name of the Non-Displayed 
Match Fee Discount and the Displayed Match Fee Discount to the Standard 
Match Fee Discount and Reduced Match Fee Discount, respectively, which 
conforms to the nomenclature of the proposed Base Rate's. Furthermore, 
the Exchange is clarifying that Members that qualify as IEMMs will 
receive a $0.0001 discount on executions that receive the Spread-
Crossing Eligible Remove Fee, subject to any applicable Depth Tier 
aggregate monthly savings cap. The Spread-Crossing Eligible Remove Fee 
Code of ``N'' is an additional Fee Code applied to execution that 
remove resting liquidity (either displayed, or non-displayed), and 
thus, such executions would also receive the applicable Base Fee Code, 
but would be subject to the Spread-Crossing Eligible Remove Fee as set 
forth in the proposed table of Fee Code combinations and associated 
fees.
    The Exchange believes the proposed changes do not substantively 
change the IEMM Program, as executions qualifying for the Spread-
Crossing Eligible Remove Fee are a logical subset of executions that 
satisfy the conditions of the Standard Match Fee (when removing non-
displayed liquidity) or the Reduced Match Fee (when removing displayed 
liquidity). Thus, to provide clarity regarding the application of the 
Spread-Crossing Eligible Remove Fee, the Exchange proposes to amend the 
Fee Schedule to explicitly enumerate the Spread-Crossing Eligible 
Remove Fee Discount for Members that qualify as an IEMM. Accordingly, 
as proposed, unless an IEMM otherwise qualifies for a lower rate, IEMMs 
will receive the following rates for executions during continuous 
trading in securities priced at or above $1.00.

[[Page 31832]]

----------------------------------------------------------------------------------------------------------------
                                                                                                      Spread-
                                                                                                     crossing
                            IEMM Tier                             Standard match   Reduced match     eligible
                                                                   fee discount    fee discount     remove fee
                                                                                                     discount
----------------------------------------------------------------------------------------------------------------
Inside Tier.....................................................         $0.0001         $0.0001         $0.0001
Depth Tier......................................................          0.0001          0.0001          0.0001
----------------------------------------------------------------------------------------------------------------

    The Exchange also proposes to clarify in the Fee Schedule that 
IEMMs qualifying for the Depth Tier can receive up to $20,000.00 in 
aggregate savings, per month, before the discounted rates above no 
longer apply, and the IEMM is subject to the Base Rates. Furthermore, 
the Exchange proposed to clarify in both the Fee Schedule and Rule 
11.170(a)(3) that if a Member qualifies under both the Inside Tier and 
the Depth Tier, any earned Standard Match Fee Discount, Reduced Match 
Fee Discount, and Spread-Crossing Eligible Remove Fee Discount will be 
aggregated and applied to such Members' executions that are subject to 
the Standard Match Fee, Reduced Match Fee, or Spread-Crossing Eligible 
Remove Fee in securities priced at or above $1.00, subject to the 
applicable Depth Tier aggregate monthly savings cap of $20,000.00.
    Finally, the Exchange is proposing to make conforming changes to 
Rule 11.170(a)(3) in order to explicitly state that for Members that 
qualify as an IEMM, executions that take liquidity in securities priced 
at or above $1.00 with a buy order that is executable at the NBO or a 
sell order that is executable at the NBB after accounting for the 
order's limit (if any), peg instruction (if any), market conditions, 
and all applicable rules and regulations (i.e., orders that receive the 
Spread-Crossing Eligible Remove Fee) will receive a $0.0001 fee 
reduction, up to $20,000.00 in aggregate savings, per month, inclusive 
of Reduced Standard Match Fee and Reduced Discounted Match Fee savings. 
The Exchange believes that these changes do not represent a substantive 
change to the IEMM Program, but are simply meant to conform to the 
Exchange's proposed Fee Schedule as discussed above.
2. Statutory Basis
    IEX believes that the proposed rule change is consistent with the 
provisions of Section 6(b) \33\ of the Act in general, and furthers the 
objectives of Sections 6(b)(4) \34\ of the Act, in particular, in that 
it is designed to provide for the equitable allocation of reasonable 
dues, fees and other charges among its Members and other persons using 
its facilities. The Exchange believes that the proposed fee change is 
reasonable, fair and equitable, and non-discriminatory.
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    \33\ 15 U.S.C. 78f.
    \34\ 15 U.S.C. 78f(b)(4).
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    The proposed changes are designed to provide more clarity to market 
participants regarding the fees assessed for executions on the Exchange 
by amending the structure of its Fee Schedule to explicitly provide 
each possible Fee Code combination, along with the associated fee 
applicable to such transaction, therefore making the Exchange's Fee 
Schedule more clear and deterministic to the benefit of all market 
participants. The Exchange believes the proposed changes enhance the 
consistency and clarity of the Exchange's Fee Schedule, and do not 
represent a significant departure from pricing currently offered by the 
Exchange. As described in the Purpose section, the Exchange is 
proposing to primarily make formatting changes, and certain conforming 
edits designed to make the Exchange's rules clearer and more precise.
    As described above, as part of the proposed restructuring of the 
Fee Schedule, the Exchange is proposing to not charge any fee for 
displayed order's resting on the Continuous Book that are executed in 
the Opening Process for non-IEX-listed securities pursuant to Rule 
11.231. The Exchange believes that offering displayed orders resting on 
the Continuous Book free execution in the Opening Process is consistent 
with the protection of investors and the public interest in that it may 
have the effect of incentivizing Members that seek execution in the 
Opening Process to enter displayed interest, thereby contributing to 
the public price discovery process to the benefit of all market 
participants. Furthermore, the proposed change creates consistency in 
the Exchange's fees for similarly situated orders in that displayed 
orders resting on the Continuous Book that are executed as part of a 
single-priced cross (i.e., the Opening Process or an IEX Auction) will 
receive the same free execution.
    In addition, as described above, the Exchange is also proposing to 
make conforming changes to the description of the IEMM Program in both 
the Fee Schedule and Rule 11.170(a)(3) to account for the modified Fee 
Schedule, as well as to clarify the application of the Spread-Crossing 
Eligible Remove Fee. The Exchange believes these proposed changes are 
reasonable, fair and equitable, and non-discriminatory because they do 
not substantively change the IEMM Program, as executions qualifying for 
the Spread-Crossing Eligible Remove Fee are a logical subset of 
executions that satisfy the conditions of the Standard Match Fee (when 
removing non-displayed liquidity) or the Reduced Match Fee (when 
removing displayed liquidity). Thus, the proposed changes are primarily 
designed to provide clarity regarding the application of the Spread-
Crossing Eligible Remove Fee in the context of the IEMM program by 
explicitly enumerating the Spread-Crossing Eligible Remove Fee Discount 
for Members that qualify as an IEMM.
    Furthermore, the Exchange notes that the proposed structure of the 
Fee Schedule is substantially like the Fee Schedule of other market 
centers, and therefore does not present any new or novel issues not 
already considered by the Commission.\35\
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    \35\ See, e.g., the Fee Schedule of Cboe BZX Exchange, Inc., 
available at http://markets.cboe.com/us/equities/membership/fee_schedule/bzx/.
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    Finally, the Exchange believes that the proposed fees are 
nondiscriminatory because they will continue to apply uniformly to all 
Members.

B. Self-Regulatory Organization's Statement on Burden on Competition

    IEX does not believe that the proposed rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange does not believe 
that the proposed rule change will impose any burden on intramarket 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act, because, as discussed above, the Exchange is not 
materially altering the fees assessed for executions on the Exchange. 
Moreover, the Exchange operates in a highly competitive market in which 
market participants can readily favor competing venues if fee

[[Page 31833]]

schedules at other venues are viewed as more favorable. Consequently, 
the Exchange believes that the degree to which IEX fees could impose 
any burden on competition is extremely limited and does not believe 
that such fees would burden competition between Members or competing 
venues in a manner that is not necessary or appropriate in furtherance 
of the purposes of the Act. Moreover, as noted in the Statutory Basis 
section, the Exchange does not believe that the proposed changes 
represent a significant departure from its current fee schedule.
    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 because the 
Exchange is not materially altering the fees assessed for executions on 
the Exchange. Furthermore, as noted above, the Exchange notes that the 
proposed structure of the Fee Schedule is substantially similar to the 
Fee Schedule of other market centers, and therefore does not present 
any new intermarket competitive burdens that do not already exist.\36\
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    \36\ See supra note 30.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) \37\ of the Act.
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    \37\ 15 U.S.C. 78s(b)(3)(A)(ii).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \38\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \38\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-IEX-2018-11 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-IEX-2018-11. This file 
number should be included in 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 Section, 100 F Street NE, Washington, 
DC 20549-1090, on official business days between the hours of 10:00 
a.m. and 3:00 p.m. Copies of the filing will also be available for 
inspection and copying at the IEX's principal office 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 Number SR-IEX-2018-11 and should be 
submitted on or before July 30, 2018. For the Commission, by the 
Division of Trading and Markets, pursuant to delegated authority.\39\
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    \39\ 17 CFR 200.30-3(a)(12).

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-14547 Filed 7-6-18; 8:45 am]
 BILLING CODE 8011-01-P