Document ID: SEC-2023-0851-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Investors Exchange, LLC
Posted Date: 2023-08-10T04:00Z

[Federal Register Volume 88, Number 153 (Thursday, August 10, 2023)]
[Notices]
[Pages 54373-54375]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-17109]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98063; File No. SR-IEX-2023-08]

Self-Regulatory Organizations; Investors Exchange LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Pursuant to 
IEX Rule 15.110 To Amend IEX's Fee Schedule

August 4, 2023.
    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 25, 2023, 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 and II 
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.
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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 amend the Exchange's fee schedule applicable to 
Members \6\ (the ``Fee Schedule'') pursuant to IEX Rule 15.110(a) and 
(c), to modify the fees applicable to executions of and with displayed 
orders for securities priced at or above $1.00 per share. Changes to 
the Fee Schedule pursuant to this proposal are effective upon 
filing,\7\ and will be operative on September 1, 2023.
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    \4\ 15 U.S.C. 78s(b)(1).
    \5\ 17 CFR 240.19b-4.
    \6\ See IEX Rule 1.160(s).
    \7\ 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 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 Exchange 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 Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

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

1. Purpose
    The Exchange proposes to modify its Fee Schedule, pursuant to IEX 
Rule 15.110(a) and (c), to modify the fees applicable to executions of 
and with displayed orders with an execution price at or above $1.00 per 
share. The Exchange currently does not charge Members a fee for an 
execution at or above $1.00 per share that provides displayed liquidity 
and charges Members $0.0009 per share for an execution at or above 
$1.00 per share that removes displayed liquidity.\8\
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    \8\ See Investors Exchange Fee Schedule, available at https://www.iexexchange.io/resources/trading/fee-schedule.
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    As proposed, for executions at or above $1.00 per share, Members 
that enter displayed orders that provide liquidity will receive a 
rebate of $0.0004 per share and Members that enter orders that remove 
displayed liquidity will be charged a fee of $0.0010 per share, unless 
a lower fee applies.\9\ The proposed fee change would also apply to 
executions when the adding and removing orders originated from the same 
Member.
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    \9\ As discussed infra, if a Retail order removes displayed 
liquidity, the Retail order would not be charged a fee.
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    The Exchange provides the following Fee Codes on execution reports 
to Members for executions of and with displayed liquidity: ``ML'' for 
orders that provide displayed liquidity, ``MLS'' for orders that 
provide displayed liquidity that executes against an order that 
originated from the same Member, ``TL'' for orders that remove 
displayed liquidity, and ``TLS'' for orders that remove displayed 
liquidity added by the same Member.\10\ These existing Fee Codes will 
continue to apply.
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    \10\ See supra note 8.
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    Specifically, the Exchange is proposing to make the following 
changes to its Fee Schedule:
     Replace the words ``Effective January 2, 2023'' at the top 
of the Fee Schedule with the words ``Effective July 25, 2023'' and on 
the line immediately after, add ``New underlined text and deletions in 
brackets will be operative on September 1, 2023'' (to indicate the date 
the fees in this proposal will be operative).
     Modify the first bullet point under the ``Transaction 
Fees'' header to specify that all fees identify the cost ``or rebate'' 
per share executed. And add a sentence stating that ``Rebates are 
indicated by parentheses ().''
     In the ``Base Rates'' table, change the fee for executions 
at or above $1.00 per share for Fee Code ML from ``FREE'' to 
``($0.0004)''.
     In the ``Base Rates'' table, change the fee for executions 
at or above $1.00 per share for Fee Code TL from ``$0.0009'' to 
``$0.0010''.
     In the ``Fee Code Combinations and Associated Fees'' 
table, change the fee for executions at or above $1.00 per share for 
Fee Code ML from ``FREE'' to ``($0.0004)''.
     In the ``Fee Code Combinations and Associated Fees'' 
table, change the fee for executions at or above $1.00 per share for 
Fee Code TL from ``$0.0009'' to ``$0.0010''.
     In the ``Fee Code Combinations and Associated Fees'' 
table, change the fee for executions at or above $1.00 per share for 
Fee Code MLS from ``FREE'' to ``($0.0004)''.
     In the ``Fee Code Combinations and Associated Fees'' 
table, change the fee for executions at or above $1.00 per share for 
Fee Code TLS from ``$0.0009'' to ``$0.0010''.
    The Exchange is not proposing to change the fees applicable to 
executions of and with displayed orders with an execution price below 
$1.00 per share, which would remain free for such orders that provide 
displayed liquidity and 0.09% of the total dollar volume of the 
execution for orders that take displayed liquidity. IEX is also not 
proposing to make any changes to the fees applicable to the execution 
of

[[Page 54374]]

Retail \11\ orders that remove displayed liquidity, which will continue 
to execute for free.
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    \11\ See IEX Rule 11.190(b)(15).
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    The current fees for orders that provide or take displayed 
liquidity were adopted in 2021 and designed to attract displayed order 
flow to the Exchange by offering a fee-based incentive to provide 
displayed liquidity.\12\ The Exchange periodically assesses its fee 
structure and based upon a recent assessment, the Exchange believes 
that the proposed pricing change would further incentivize Members to 
submit displayed orders in securities priced at or above $1.00 per 
share. The proposed fee change is designed to incentivize posting 
displayed liquidity on IEX in securities priced at or above $1.00 per 
share in order to address competitive factors (as discussed more 
thoroughly in the Statutory Basis section) and facilitate price 
discovery and price formation, which the Exchange believes benefits all 
Members and market participants.
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    \12\ See Securities Exchange Act Release No. 91443 (March 30, 
2021), 86 FR 17654 (April 5, 2021) (SR-IEX-2021-05).
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2. Statutory Basis
    IEX believes that the proposed rule change is consistent with the 
provisions of section 6(b) \13\ of the Act in general, and furthers the 
objectives of sections 6(b)(4) \14\ 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. The Exchange 
operates in a highly competitive market in which market participants 
can readily direct order flow to competing venues if they deem fee 
levels at a particular venue to be excessive. The Exchange believes 
that the proposed fee structure will attract and incentivize displayed 
order flow as well as order flow seeking to trade with displayed order 
flow. Moreover, increases in displayed liquidity would contribute to 
the public price discovery process which would benefit all market 
participants and protect investors and the public interest.
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    \13\ 15 U.S.C. 78f.
    \14\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed fee structure for providing 
and removing displayed liquidity is reasonable and consistent with the 
Act. Specifically, the Exchange believes that for securities that trade 
at or above $1.00 per share, it is reasonable to provide a $0.0004 per 
share rebate for providing displayed liquidity and to modestly increase 
the fee for removing displayed liquidity to $0.0010 per share. As noted 
above, the Exchange operates in a highly competitive market in which 
market participants can readily direct order flow to competing venues 
if they deem fee levels at a particular venue to be excessive. Within 
that context, charging $0.0010 per share for orders that remove 
displayed liquidity (coupled with a $0.0004 per share rebate for orders 
that add displayed liquidity) is designed to keep IEX's displayed 
trading prices competitive with those of other exchanges. In this 
regard, IEX notes that while many competing exchanges pay rebates to 
provide displayed liquidity that are substantially higher than those 
proposed, others charge fees to provide displayed liquidity for 
securities that trade at or above $1.00 per share.\15\ Further, IEX 
notes that for securities that trade at or above $1.00 per share, many 
competing exchanges charge substantially higher fees to remove 
displayed liquidity than those charged by IEX.\16\ Consequently, IEX 
believes that the proposed fee structure for providing and removing 
displayed liquidity is within the range charged by competing exchanges 
and does not raise any new or novel issues not already considered by 
the Commission in the context of other exchanges' fees.
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    \15\ See e.g., Nasdaq BX Equity 7 Section 118(a) (up to $0.0030 
fee per share to add displayed liquidity), available at https://listingcenter.nasdaq.com/rulebook/bx/rules/BX%20Equity%207; Cboe BYX 
Equities Fee Schedule (up to $0.0020 fee per share to add displayed 
liquidity, available at https://www.cboe.com/us/equities/membership/fee_schedule/byx/; Cboe EDGA Equities Fee Schedule (up to $0.0030 
fee per share to add displayed liquidity, available at https://www.cboe.com/us/equities/membership/fee_schedule/edga/.
    \16\ See e.g., Cboe BZX Equities Fee Schedule (up to $0.0030 fee 
per share to remove displayed liquidity), available at https://markets.cboe.com/us/equities/membership/fee_schedule/bzx/; MIAX 
Pearl Equities Exchange Fee Schedule (up to $0.00295 fee per share 
for liquidity removing executions), available at https://www.miaxglobal.com/sites/default/files/page-files/MIAX_Pearl_Equities_Fee_Schedule_07112023.pdf; MEMX Fee Schedule (up 
to $0.0030 fee per share for liquidity removing executions), 
available at https://info.memxtrading.com/fee-schedule/; Nasdaq 
Equity 7 Section 118(a) (up to $0.0030 fee per share for any 
liquidity removing executions), available at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules/nasdaq-equity-7; New 
York Stock Exchange Price List 2023 (up to $0.0030 per share for 
liquidity removing executions), available at https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf.
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    In addition, IEX believes that it is reasonable and consistent with 
the Act to apply the proposed fees to executions when the adding and 
removing order originated from the same Member. IEX believes that the 
same factors that support the proposed fees overall, are also 
applicable to such executions. Specifically, IEX believes that the 
incentives to send displayed orders to IEX (and orders seeking to 
execute against displayed orders) will similarly provide an incentive 
to Members to send orders to IEX that might otherwise be internalized 
off-exchange, which may increase order interaction on IEX. 
Internalization on IEX is not guaranteed, and the additional orders 
that do not internalize are available to trade by all Members.
    The Exchange also believes that it is reasonable and consistent 
with the Act not to modify its displayed fees for sub-dollar executions 
to synchronize those fees with the proposed fees for executions at or 
above $1.00 per share. The Exchange believes that the existing fee 
structure for such executions continues to be reasonably designed to 
incentivize displayed order flow (and orders seeking to trade with 
displayed order flow) in such securities.
    Further, IEX believes that it is reasonable and consistent with the 
Act not to change the fees applicable to the execution of Retail orders 
that remove liquidity, which will continue to execute for free. In this 
regard, the Exchange believes that the existing fee structure continues 
to be reasonably designed to incentivize the entry of Retail orders, 
and notes that the Commission, in approving IEX's Retail Price 
Improvement Program, acknowledged the value of exchanges' offering 
incentives to attract both retail investor orders and orders 
specifically designated to execute only with retail orders.\17\
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    \17\ See Securities Exchange Act Release No. 86619 (August 9, 
2019), 84 FR 41769, 41771 (August 15, 2019) (SR-IEX-2019-05).
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    The Exchange further believes that the proposed fee change is 
consistent with the Act's requirement that the Exchange provide for an 
equitable allocation of fees that is also not unfairly discriminatory.
    First, the fees for adding and removing displayed liquidity will 
apply on a per share basis in an equal and nondiscriminatory manner to 
all Members, without regard to the volume of orders submitted by a 
Member or other factors.
    Second, because the fees would apply on a flat, per share basis--
like IEX's existing fees--they will continue to be fully deterministic, 
in that a Member will be able to determine the Exchange fees for each 
execution. IEX believes this aspect of its fee proposal will assist all 
Members in making decisions about routing of orders without the 
uncertainties associated with volume tiers or other requirements that 
cannot

[[Page 54375]]

be determined at the time of the trade. IEX notes that applying fees in 
this way is consistent with the purpose of the Commission's proposal to 
require that exchange fees be set in a manner such that the amount of a 
fee or rebate related to each trade is determinable at the time of the 
trade.\18\
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    \18\ See Securities Exchange Act Release No. 96494 (December 14, 
2022), 87 FR 80266, 80292-93 (December 29, 2022) (File No. S7-30-
22).
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    Additionally, the Exchange believes that it is reasonable to modify 
the first bullet under ``Transaction Fees'' to include a reference to 
rebates and to specify that rebates are indicated by parentheses. 
Updating this bullet point will avoid any potential confusion as to the 
applicable fees and rebates for each execution.
    Finally, to the extent the proposed change is successful in 
incentivizing the entry and execution of displayed orders on IEX, such 
greater liquidity will benefit all market participants by increasing 
price discovery and price formation as well as market quality and 
execution opportunities.

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 intermarket 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. The Exchange operates in a highly competitive 
market in which market participants can readily favor competing venues 
if fee 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. Moreover, as noted in the Statutory Basis section, 
the Exchange does not believe that the proposed changes raise any new 
or novel issues not already considered by the Commission.
    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, while 
different fees are assessed in some circumstances, these different fees 
are not based on the type of Member entering the orders that match or 
on the volume of orders submitted by a Member but on the type of order 
entered, and all Members can submit any type of order and will be 
subject to the same fee for that type of order. IEX believes that 
applying a flat, per share fee or rebate for each type of order avoids 
imposing a burden on competition by ensuring that individual Members do 
not gain a competitive advantage over other Members based solely on 
their size or volume of orders they are able to submit to the Exchange. 
Further, the proposed fee changes continue to be intended to encourage 
market participants to bring increased order flow to the Exchange, 
which benefits all market participants.

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 is effective upon filing pursuant to 
section 19(b)(3)(A) \19\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \20\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of such 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) \21\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \21\ 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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-IEX-2023-08 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-2023-08. 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 (https://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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-IEX-2023-08 and should be 
submitted on or before August 31, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-17109 Filed 8-9-23; 8:45 am]
BILLING CODE 8011-01-P