Document ID: SEC-2016-1387-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Investors Exchange, LLC
Posted Date: 2016-08-09T04:00Z

[Federal Register Volume 81, Number 153 (Tuesday, August 9, 2016)]
[Notices]
[Pages 52730-52733]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-18795]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78475; File No. SR-IEX-2016-05]

Self-Regulatory Organizations; Investors Exchange LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
Rule 11.330 To Combine the TOPS and LAST Data Products and Make Minor 
Correcting and Conforming Changes to the Description of TOPS Viewer

August 3, 2016.
    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 28, 2016, 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 
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.
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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

[[Page 52731]]

(``IEX'' or ``Exchange'') is filing with the Securities and Exchange 
Commission (``Commission'') a proposed rule change to amend Rule 11.330 
(Data Products) to (i) combine the TOPS and LAST data products to 
eliminate the LAST data product and add execution information to the 
TOPS data product, and (2) make minor correcting and conforming changes 
to the description of TOPS Viewer. The Exchange has designated this 
proposal as non-controversial and provided the Commission with the 
notice required by Rule 19b-4(f)(6)(iii) under the Act.\6\
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    \4\ 15 U.S.C. 78s(b)(1).
    \5\ 17 CFR 240.19b-4.
    \6\ 17 CFR 240.19b-4(f)(6)(iii).
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    The text of the proposed rule change is available at the Exchange's 
Web site 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 [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 Rule 11.330 (Data Products) to 
combine the TOPS and LAST data products, to eliminate the LAST data 
product, and to add execution information to the TOPS data product. 
Currently, Rule 11.330(a)(1) specifies that the TOPS data product is an 
uncompressed data feed that offers aggregated top of book quotations 
for all displayed orders resting on the Order Book, while paragraph 
(a)(3) specifies that the LAST data product is an uncompressed data 
feed that offers only execution information based on equities orders 
entered into the System (i.e. last sale information). IEX has 
determined to add the information contemplated to be provided in LAST 
into TOPS.
    Accordingly, the Exchange proposes to amend Rule 11.330(a)(1) to 
provide that TOPS is an uncompressed data feed that offers aggregated 
top of book quotations for all displayed orders resting on the Order 
Book and execution information for executions on the Exchange (i.e., 
last sale information). As proposed, TOPS will disseminate, on a real-
time basis,\7\ (1) the aggregate best bid and offer (``BBO'') of all 
displayed orders for securities traded on IEX; and (2) the price, size, 
and time of execution for each transaction executed on IEX. For the 
sake of clarity, the Exchange also proposes to make certain non-
substantive changes to the existing description of LAST as it is 
incorporated into the TOPS description. Specifically, rather than 
describe execution information as ``based on equity orders entered into 
the System,'' which technically could include executions on away 
exchanges of orders routed to such exchanges, the proposed text would 
clarify IEX includes execution information for orders executed on the 
Exchange. All information that will be provided in TOPS will also be 
reported under the Consolidated Tape Association (``CTA'') Plan or the 
Nasdaq/UTP Plan. The Exchange will release information to TOPS and TOPS 
Viewer in compliance with Rule 603(a) of Regulation NMS, which requires 
that exchanges distribute market data on terms that are ``fair and 
reasonable'' and ``not unreasonably discriminatory,'' and prohibits an 
exchange from releasing data relating to quotes and trades to its 
customers through proprietary feeds before it sends its quotes and 
trade reports for inclusion in the consolidated feeds.\8\
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    \7\ Rule 11.510(b)(2) describes the application of the POP to 
outbound communications from the Exchange, which impacts TOPS. As 
specified therein, the POP ``is designed to provide all Participants 
with an equivalent 350 microseconds of latency from the System at 
the primary data center to the Exchange-provided network interface 
at the IEX POP.''
    \8\ See Regulation NMS, 70 FR 37,496, 37,567 (June 29, 2005) 
(adopting release); see also Concept Release, 75 FR at 3601 (January 
21, 2010).
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    The Exchange also proposes to make minor correcting and conforming 
changes to Rule 11.330(a)(2), which describes TOPS Viewer. Currently, 
as specified therein, TOPS Viewer is described as a data feed, 
currently available through the Exchange's public Web site, that offers 
two-sided quotations for all displayed orders resting on the Order Book 
as well as the aggregate volume traded execution information based on 
orders entered into the System. TOPS and TOPS Viewer contain the same 
information, delivered in different manners. TOPS provides the 
specified information only through an application programming interface 
(``API'') via the POP (an API is by definition not human readable). 
TOPS Viewer provides the specified information in both a human readable 
format on the Exchange's Web site as well as through an API from the 
Exchange's Web site.
    IEX proposes to make three minor changes to the description of TOPS 
Viewer in subparagraph (a)(2) of Rule 11.330. First, IEX proposes a 
ministerial change to conform the description of the quotation 
information available through TOPS Viewer, in subparagraph (a)(2) of 
the Rule, to the description set forth in the description of TOPS in 
subparagraph (a)(1). Second, IEX proposes a correcting change to delete 
the word ``aggregate'' in the description because information will be 
provided for each execution, rather than on an aggregated basis. Third, 
IEX proposes to include the clarifying language proposed to be added to 
subparagraph (a)(1) of the rule to make clear that the execution 
information provided is for transactions executed on the Exchange 
(i.e., last sale information).
2. Statutory Basis
    IEX believes that the proposed rule change is consistent with the 
provisions of Section 6 of the Act \9\ in general, and with Section 
6(b)(5) of the Act,\10\ in particular. TOPS and TOPS Viewer will be 
provided consistent with the purposes of Section 6(b)(5) of the 
Act.\11\ Moreover, the proposed rule change is not designed to permit 
unfair discrimination among customers, issuers, and brokers; and is 
designed to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities, 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.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4) [sic], (5).
    \11\ 15 U.S.C. 78f(b)(5).
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    The proposed rule change is designed to promote just and equitable 
principles of trade and remove impediments to and perfect the mechanism 
of a free and open market and a national market system by providing 
quotation and transaction information to market participants. The 
Exchange also believes this proposal is consistent with Section 6(b)(5) 
of the Act because it protects investors and the public interest and 
promotes just and equitable principles of trade by providing market 
participants with the option to receive such information otherwise than 
under the CTA and Nasdaq/UTP Plans.

[[Page 52732]]

    Further, the proposal would not permit unfair discrimination 
because the information will be available to all market participants 
and market data vendors on an equivalent basis and without charge. In 
addition, any market participant that wishes to receive such 
information via the CTA and Nasdaq/UTP Plans will be able to do so. As 
noted above, the Exchange is simply proposing to include data elements 
contemplated to be included in LAST data product in TOPS, as well as to 
make minor correcting and conforming changes to the description of TOPS 
Viewer.
    The Exchange also believes that the proposed rule change is 
consistent with Section 11(A) of the Act \12\ in that it supports (1) 
fair competition among brokers and dealers, among exchange markets, and 
between exchange markets and markets other than exchange markets and 
(2) the availability to brokers, dealers, and investors of information 
with respect to quotations for and transactions in securities. 
Furthermore, the proposed rule change is consistent with Rule 603 of 
Regulation NMS,\13\ which provides that any national securities 
exchange which distributes information with respect to quotations for 
or transactions in an NMS stock do so on terms that are fair and 
reasonable and not unreasonably discriminatory. As noted above, the 
Exchange will provide TOPS and TOPS Viewer to Members and other 
recipients of Exchange data on terms that are fair and reasonable and 
not unreasonably discriminatory in that TOPS and TOPS Viewer will be 
provided free of charge and TOPS Viewer is available to the public via 
the Exchange's Web site.
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    \12\ 15 U.S.C. 78k-1.
    \13\ See 17 CFR 242.603.
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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 is not proposing 
to charge a fee for the TOPS feed, and will make the feed available to 
market participants on a fair and impartial basis, and on terms that 
are not unreasonably discriminatory.

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 Exchange has designated this rule filing as non-controversial 
under Section 19(b)(3)(A) \14\ of the Act and Rule 19b-4(f)(6) \15\ 
thereunder. Because the 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 if consistent with 
the protection of investors and the public interest, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6) thereunder.\16\ The Exchange has asked the Commission to waive 
the 30-day operative delay, making this proposal operative upon filing. 
The Exhange argues that the proposed rule filing merely combines the 
data elements from the LAST data product into TOPS and TOPS Viewer, and 
makes minor conforming and correcting changes to Rule 11.330. According 
to the Exchange, waiver of the operative delay is, therefore, 
consistent with the protection of investors and the public interest, 
because it will allow the Exchange to implement the proposed rule 
change to coincide with IEX's launch of exchange operations during a 
security-by-security phase-in period beginning August 19, 2016, and 
thus provide operational simplification to Members and other recipients 
of Exchange data as well as a source of Exchange data free of charge 
otherwise than under the CTA and Nasdaq/UTP Plans, consistent with the 
protection of investors and the public interest. The Exchange further 
adds that waiver of the operative delay period will also enable the 
Exchange to make the minor correcting and clarifying changes described 
herein to coincide with IEX's launch of exchange operations.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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.
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    The Commission believes that waiver of the operative delay is 
consistent with the protection of investors and the public interest. 
The Commission notes that the proposal would merely consolidate 
existing data products and make minor, clarifying changes to the 
descriptions of TOPS and TOPS Viewer. In the absence of a waiver of the 
operative delay, customers would have to subscribe to two data products 
to receive both top-of-book and last sale information when the Exchange 
begins operating on August 19, 2016, until the proposal becomes 
effective shortly thereafter. Waiving the operative delay would provide 
customers with the opportunity to receive a single, streamlined product 
with top-of-book and last sale information and would also provide 
customers with greater clarity about the content of the available 
products from the outset of the Exchange's launch of operations. 
Therefore, the Commission hereby waives the operative delay and 
designates the proposed rule change operative upon filing.\17\
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    \17\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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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)\18\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \18\ 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 rule-comments@sec.gov. Please include 
File Number SR-IEX-2016-05 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-2016-05. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your

[[Page 52733]]

comments more efficiently, please use only one method. The Commission 
will post all comments on the Commission's Internet Web site (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 Web site 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; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-IEX-2016-05 and should be submitted on or before August 
30, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-18795 Filed 8-8-16; 8:45 am]
 BILLING CODE 8011-01-P