Document ID: SEC-2019-1044-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Investors Exchange, LLC
Posted Date: 2019-07-23T04:00Z

[Federal Register Volume 84, Number 141 (Tuesday, July 23, 2019)]
[Notices]
[Pages 35430-35431]
From the Federal Register Online via the Government Publishing Office [http://www.gpo.gov/]
[FR Doc No: 2019-15635]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86408; File No. SR-IEX-2019-06]

Self-Regulatory Organizations; Investors Exchange LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change to IEX's Fee 
Schedule To Correct Two Fee Code Combinations

July 18, 2019.
    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 July 15, 2019, 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 Act,\4\ 
and Rule 19b-4 thereunder,\5\ IEX is filing with the Commission a 
proposed rule change to modify its Fee Schedule, pursuant to IEX Rule 
15.110(a) and (c), to correct two minor Fee Code combination to conform 
each to the applicable fee. The Exchange proposes to implement the 
change immediately upon filing, pursuant to Section 19(b)(3)(A)(ii) of 
the Act.\6\
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    \4\ 15 U.S.C. 78s(b)(1).
    \5\ 17 CFR 240.19b-4.
    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
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    The text of the proposed rule change is available at the Exchange's 
website at http://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 its Fee Schedule, pursuant to IEX 
Rule 15.110(a) and (c), to correct two minor Fee Code combination 
descriptions to conform each to the applicable fee. Specifically, the 
Exchange proposes to change the words ``non-displayed'' to 
``displayed'' in the descriptions of fee codes LSN and LSQN. As 
discussed below, neither descriptive error had any impact on IEX 
Members because the applicable fees were correctly applied.
    Effective July 1, 2018, IEX modified the structure of its Fee 
Schedule in order to provide more clarity to market participants 
regarding the fees assessed for executions on the Exchange (``Fee 
Schedule Update'').\7\ Among other changes, the Fee Schedule Update 
added a table of all possible Fee Code combinations, a description of 
each combination, and the applicable fee.
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    \7\ See Securities Exchange Act Release No. 83582 (July 2, 2018) 
83 FR 31828 (July 9, 2018) (SR-IEX-2018-11).
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    The Exchange recently identified that the descriptions for the LSN 
and LSQN Fee Code combinations are inaccurate. Each description 
incorrectly states that the execution involves removing non-displayed 
liquidity rather than displayed liquidity.\8\ As described in the Fee 
Schedule Update, IEX uses a Fee Code of ``L'' to designate executions 
that provide or take resting interest with displayed priority, and a 
Fee Code of ``I'' to designate executions that provide or take resting 
interest with non-displayed priority.\9\ Thus, Fee Code ``L'' is 
accurately defined in the Fee Schedule as relating to the adding or 
removing of displayed liquidity, and a Fee Code combination that 
includes ``L'' should reference displayed liquidity. Notwithstanding 
these errors, the table correctly specifies that both Fee Code 
combinations are free of charge.\10\ This is because each includes Fee 
Code ``S'' pursuant to which a Member's order that executes against 
resting liquidity provided by the same Member is free of charge.\11\ 
Thus, although the Fee Code descriptions for LSN and LSQN inaccurately 
state that they apply to removal of non-displayed interest, IEX has 
correctly billed all executions pursuant to each Fee Code 
combination.\12\ In addition, Fee Code combinations ISN and ISQN apply 
to an execution in which a Member removes non-displayed liquidity 
provided with a spread-crossing eligible order or a Member removes non-
displayed liquidity provided by such Member during periods of quote 
instability with a spread-crossing eligible order, respectively.
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    \8\ The IEX Fee Schedule currently describes Fee Code LSN as 
``Member removes non-displayed liquidity provided by such Member 
with a spread-crossing eligible order'' and Fee Code LSQN as 
``Member removes non-displayed liquidity provided by such Member 
during periods of quote instability with a spread-crossing eligible 
order.''
    \9\ See Fee Schedule Update, Note 7, at 5.
    \10\ Under some circumstances, executions that receive the LSQN 
Fee Code combination are not free to the liquidity remover. 
Specifically, executions that include Fee Code ``Q'' are subject to 
footnote 1 of the Fee Schedule which specifies when the Crumbling 
Quote Remove Fee identified in the Fee Code Modifiers table applies.
    \11\ Id.
    \12\ Notably, other lines in the Fee Code Combinations and 
Associated Fees table correctly indicate that Fee Code combinations 
containing Fee Code ``L'' apply to the removal of displayed 
liquidity. See, e.g., Fee Codes LS, LQ, LN, and LSQ.
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    Accordingly, the Exchange proposes to correct the IEX Fee Schedule 
to reflect that Fee Codes LSN and LSQN apply to the removal of 
displayed liquidity, not non-displayed liquidity.
    IEX notes, as suggested by the May 21, 2019 Staff Guidance on SRO 
Rule Filings Relating to Fees (``Guidance''),\13\ that these proposed 
corrections to the descriptions of two Fee Codes do not involve any new 
or changed fees, because IEX will continue to charge Members no fee for 
executions that remove displayed liquidity from the same Member with a 
spread-crossing eligible order. Additionally, IEX is not proposing any 
new product, service, or fee change. While, the Guidance does not 
suggest that IEX provide an analysis of any impact this proposal will 
have on market participants, IEX notes that this proposed rule change 
will have no impact on market participants because it merely corrects 
descriptive text in the Fee Schedule.
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    \13\ See Staff Guidance on SRO Rule Filings Relating to Fees 
(May 21, 2019) available at https://www.sec.gov/tm/staff-guidance-sro-rule-filings-fees.
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2. Statutory Basis
    IEX believes that the proposed rule change is consistent with the 
provisions of Section 6(b) \14\ of the Act in general, and furthers the 
objectives of Section

[[Page 35431]]

6(b)(5) of the Act \15\ [sic] 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 it is consistent with the Act to correct the Fee 
Schedule so that the Fee Schedule is accurate, avoiding any potential 
confusion among Members. The Exchange further believes that the 
correction to the Fee Schedule is reasonable, equitable, and not 
unfairly discriminatory because all Members will be subject to the same 
fee structure.
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    \14\ 15 U.S.C. 78f.
    \15\ 15 U.S.C. 78f(b)(5).
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    As described in the Purpose section above, this proposed rule 
change does not change any fees charged by IEX, but rather corrects 
inaccurate descriptions of two Fee Code combinations. Thus, the 
proposed fee change will provide clarity to market participants 
regarding the meaning of Fee Codes LSN and LSQN, therefore making the 
Exchange's Fee Schedule clearer and more deterministic to the benefit 
of all market participants.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on intermarket or intramarket competition that is not 
necessary or appropriate in furtherance of the purposes of the Act. The 
proposed rule change is designed to correct an inadvertent error rather 
than a competitive issue.

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) \16\ of the Act.
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    \16\ 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) \17\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \17\ 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 No. SR-IEX-2019-06 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-2019-06. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File No. SR-IEX-2019-06, and should be submitted on or 
before August 13, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-15635 Filed 7-22-19; 8:45 am]
 BILLING CODE 8011-01-P