Document ID: SEC-2020-0327-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Investors Exchange, LLC
Posted Date: 2020-03-09T04:00Z

[Federal Register Volume 85, Number 46 (Monday, March 9, 2020)]
[Notices]
[Pages 13684-13686]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-04678]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88313; File No. SR-IEX-2020-03]

Self-Regulatory Organizations; Investors Exchange LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend IEX 
Rules 2.220(a)(7) and 11.410(a) To Include the Long-Term Stock 
Exchange, Inc. (LTSE) in the List of Away Trading Centers to Which the 
Exchange Routes and the Market Data Sources the Exchange Will Use To 
Determine LTSE's Top of Book Quotation

March 3, 2020.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on February 20, 2020, the Investors Exchange LLC (``IEX'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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''),\3\ and Rule 19b-4 thereunder,\4\ the 
Exchange is filing with the Commission a proposed rule change to amend 
IEX Rules 2.220(a)(7) and 11.410(a) to include the Long-Term Stock 
Exchange, Inc. (``LTSE'') in the list of away trading centers to which 
the Exchange routes and the market data sources the Exchange will use 
to determine LTSE's Top of Book \5\ quotation, in anticipation of 
LTSE's planned launch. The Exchange has designated this rule change as 
``non-controversial'' under Section 19(b)(3)(A) of the Act \6\ and 
provided the Commission with the notice required by Rule 19b-4(f)(6) 
thereunder.\7\ 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.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78s(b)(1).
    \4\ 17 CFR 240.19b-4.
    \5\ See IEX Rule 11.410(a)(1).
    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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 [sic] may be examined 
at the places specified in Item IV below. The self-regulatory 
organization has prepared summaries, set forth in Sections A, B, and C 
below, of the most significant aspects of such statements.

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

1. Purpose
    The Exchange proposes to amend IEX Rules 2.220(a)(7) \8\ and 
11.410(a) \9\ to include the Long-Term Stock Exchange, Inc. (``LTSE'') 
in the list of away trading centers to which the Exchange routes and 
the market data sources the Exchange will use to determine LTSE's Top 
of Book \10\ quotation, in anticipation of LTSE's planned launch, which 
LTSE expects ``toward the end of Q1 2020.'' \11\ The Exchange is also 
proposing to re-alphabetize the list of away trading centers in both 
IEX Rules 2.220(a)(7) and 11.410(a).
---------------------------------------------------------------------------

    \8\ IEX Rule 2.220(a)(7) lists the away trading centers that IEX 
Services LLC (``IEX Services'') routes to as outbound router for the 
Exchange.
    \9\ IEX Rule 11.410(a) specifies the market data sources for 
each away trading center that the Exchange uses for necessary price 
reference points.
    \10\ See IEX Rule 11.410(a)(1).
    \11\ See LTSE FAQ for Exchange Launch published on January 3, 
2020, available at: https://ltse.com/static/MA-2020-001-e5bc8cb62425903526027cdeed7b14fd.pdf.
---------------------------------------------------------------------------

    Specifically, the Exchange proposes to amend IEX Rule 2.220(a)(7) 
to add LTSE to the list of away trading centers to which IEX Services 
routes orders. As set forth in IEX Rule 11.230(b)(2), IEX Services 
routes eligible orders to away trading centers with accessible 
Protected Quotations in compliance with Regulation NMS Rule 611.\12\ 
The Exchange must include LTSE in its list of away trading centers to 
which it routes, because LTSE's best-priced, displayed quotation will 
be a Protected Quotation under Regulation NMS Rule 600(b)(62) \13\ for 
purposes of Regulation NMS Rule 611.\14\
---------------------------------------------------------------------------

    \12\ 17 CFR 242.611.
    \13\ 17 CFR 242.600(b)(62).
    \14\ See Securities Exchange Act Release No. 85828 (May 10, 
2019), 84 FR 21841, 21849 (May 15, 2019) (File No. 10-234) (Order 
approving LTSE application for registration as a national securities 
exchange).
---------------------------------------------------------------------------

    The Exchange also proposes to amend and update the table in IEX 
Rule 11.410(a) specifying the primary sources for LTSE market data. As 
specified in IEX Rule 11.410(a)(2), the Exchange uses market data from 
each away trading center that produces a Protected Quotation \15\ to 
determine each away trading center's Top of Book quotation, as well as 
the NBBO \16\ for certain reporting, regulatory and compliance systems 
within IEX. As proposed, the Exchange will use securities information 
processor (``SIP'') data, i.e., CQS SIP data for securities reported 
under the Consolidated Quotation Services and Consolidated Tape 
Association plans and UQDF SIP data for securities reported under the 
Nasdaq Unlisted Trading Privileges plan, to determine LTSE Top of Book 
quotes. No secondary source for LTSE market data will be specified 
because LTSE has announced that it will only distribute market data to 
the SIPs and will not have a proprietary market data feed.\17\
---------------------------------------------------------------------------

    \15\ See IEX Rule 1.160(bb).
    \16\ See IEX Rule 1.160(u).
    \17\ See supra note 11 at 2.
---------------------------------------------------------------------------

    Consistent with the proposed changes to the table in IEX Rule 
11.410(a), the Exchange proposes to make a conforming change to IEX 
Rule 11.410(a)(2) to reflect that, as proposed, the Exchange will use 
SIP data as the primary source from which it will determine Top of Book 
quotations for LTSE and for certain reporting, regulatory and 
compliance systems within IEX.\18\ While the Exchange uses proprietary 
market data feeds to determine the Protected Quotations of all but two 
of the other away markets,\19\ it will utilize the SIP quote feeds to 
determine LTSE's Protected Quotations because LTSE will only distribute 
market data to the SIP and will not have a proprietary market data 
feed.\20\
---------------------------------------------------------------------------

    \18\ See IEX Rule 11.410(a)(2).
    \19\ The Exchange also uses CQS/UQDF SIP data as the exclusive 
source of market data for NYSE Chicago (XCHI) and NYSE National 
(XCIS). See IEX Rule 11.410(a).
    \20\ See supra note 11 at 2.
---------------------------------------------------------------------------

    Furthermore, the Exchange is proposing to make nonsubstantive 
changes to the list of away trading

[[Page 13685]]

centers in IEX Rule 2.220(a)(7) and the table of away trading centers 
in IEX Rule 11.410(a) to list each away trading center in alphabetical 
order.
    The Exchange is not proposing any other changes to IEX Rules 
2.220(a)(7) and 11.410. The proposed changes do not alter the manner in 
which orders are handled or routed by the Exchange.
2. Statutory Basis
    IEX believes that the proposed rule change is consistent with the 
provisions of Section 6(b) \21\ of the Act in general, and furthers the 
objectives of Section 6(b)(5) of the Act \22\ in particular, in that it 
is designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and, in general, to protect investors and the 
public interest.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78f.
    \22\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    For the reasons discussed in the Purpose section, the Exchange 
believes that the proposed rule change removes impediments to and 
perfects the mechanism of a free and open market and protects investors 
and the public interest because including LTSE in the list of away 
trading centers to which IEX routes and in the sources of market data 
the Exchange will use to determine away trading center Top of Book 
quotes will facilitate the Exchange's compliance with the applicable 
requirements of Regulation NMS. Similarly, the Exchange believes it is 
consistent with the Act to specify in Rule 11.410(a)(2) that the 
Exchange will use SIP data to calculate LTSE's Top of Book quotation 
and for certain reporting, regulatory and compliance systems within the 
Exchange, because it will facilitate compliance with the applicable 
requirements of Regulation NMS and provide clarity in this regard to 
market participants.
    Additionally, adding LTSE to the list of away trading centers to 
which IEX routes and in the sources of market data the Exchange will 
use to determine away trading center Top of Book quotes provides 
transparency with respect to the away trading centers to which IEX 
Services may route orders and the sources of market data the Exchange 
will use to determine LTSE Top of Book quotes. In addition, and as 
further noted in the Purpose section, LTSE will only disseminate its 
market data through the SIP, so use of SIP data to determine LTSE's Top 
of Book quotes is the only means to do so.
    Further, the Exchange believes it is consistent with the Act to 
update the referenced rules to list all the away trading centers in 
alphabetical order, to enhance clarity to market participants.
    As noted in the Purpose section, the proposed changes are 
nonsubstantive and do not alter the manner in which orders are handled 
or routed by the Exchange.

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 believes that the 
proposed update does not impact competition in any respect since its 
purpose is to enhance transparency with respect to the operation of the 
Exchange and its use of market data feeds, and to update an away market 
name.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \23\ and Rule 19b-
4(f)(6) thereunder.\24\
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 78s(b)(3)(A).
    \24\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \25\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \26\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has asked the Commission to waive the 30-day operative delay.
---------------------------------------------------------------------------

    \25\ 17 CFR 240.19b-4(f)(6).
    \26\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    The proposed rule change amends IEX rules to reflect the launch of 
LTSE as an away trading center with a Protected Quote and specifies 
that IEX will route orders to LTSE and use the SIP to determine LTSE's 
Top of Book quotation. Additionally, the proposed rule change will make 
a nonsubstantive change to re-alphabetize the list of away trading 
centers in IEX Rule 2.220(a)(7) to enhance clarity to market 
participants.
    The Exchange believes that waiver of the operative delay is 
consistent with the protection of investors and the public interest 
because it will allow the Exchange to implement the proposed rule 
change in anticipation of LTSE's exchange launch, thereby facilitating 
IEX's compliance with the applicable requirements of Regulation NMS and 
providing clarity to market participants with respect to whether IEX 
routes to LTSE and how IEX determines LTSE's Top of Book quotation. The 
Commission believes that waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because the proposed rule change does not raise any new or novel 
issues. Therefore, the Commission hereby waives the operative delay and 
designates the proposal as operative upon filing.\27\
---------------------------------------------------------------------------

    \27\ For purposes only of waiving the 30-day operative delay, 
the Commission also has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    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) \28\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \28\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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:

[[Page 13686]]

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-IEX-2020-03 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-IEX-2020-03. 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 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-2020-03 
and should be submitted on or before March 30, 2020.
---------------------------------------------------------------------------

    \29\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\29\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-04678 Filed 3-6-20; 8:45 am]
 BILLING CODE 8011-01-P