Document ID: SEC-2020-0760-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Investors Exchange LLC
Posted Date: 2020-05-12T04:00Z

[Federal Register Volume 85, Number 92 (Tuesday, May 12, 2020)]
[Notices]
[Pages 28059-28061]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-10057]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88819; File No. SR-IEX-2020-06]

Self-Regulatory Organizations; Investors Exchange LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Modify 
the IEX Fee Schedule, Pursuant to IEX Rule 15.110(a) and (c), To 
Clarify the Circumstances in Which IEX Offers Certain Physical Port 
Connections

May 6, 2020.
    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 April 22, 2020, 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 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 clarify the circumstances in which IEX offers certain 
physical port connections. 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\
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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).
    \7\ 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

[[Page 28060]]

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 
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 clarify the circumstances in which IEX 
offers certain physical port connections. Specifically, the Exchange 
proposes to add two footnotes to its Fee Schedule to clarify that 10 
gigabit (``10G'') physical connections are available to connect to both 
its production and test systems, but 1 gigabit (``1G'') physical 
connections are only available to connect to its test system. IEX will 
continue to offer all physical connections to the Exchange free of 
charge.
    IEX is proposing this change to its Fee Schedule in order to more 
clearly denote the various ways market participants can connect to the 
Exchange. IEX, like all securities exchanges, offers its Members \8\ 
physical connections (also called ``physical ports'') through which 
Members may ``plug in'' to the Exchange.\9\ These physical ports come 
in several forms that offer different amounts of bandwidth into the 
Exchange's network. IEX offers two types of physical ports: Either a 1G 
or 10G interface.\10\ 10G physical ports are ten times faster than 1G 
physical ports. IEX offers 10G physical ports only to connect to the 
IEX point-of-presence (``IEX POP'') and Disaster Recovery data centers 
(collectively the ``Production Systems'').\11\ 1G physical ports are 
the default interface to the IEX Test Facility (``ITF''), which is not 
as bandwidth or latency sensitive as the Production Systems, but 10G 
physical ports are also available to connect to the ITF.\12\ IEX offers 
all physical ports free of charge, but the current IEX Fee Schedule 
does not specify which physical ports are used to connect to the 
Production Systems or the ITF.\13\
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    \8\ See IEX Rule 1.160(s).
    \9\ Members physically connect to IEX through physical ports, 
each of which supports multiple ``logical port'' connections. 
Members send and receive data through the logical ports (also known 
as ``sessions'') such as order entry messages and market data feeds.
    \10\ See IEX Connectivity Manual (Version 1.80) at 5, available 
at https://iextrading.com/docs/IEX%20Connectivity%20Manual.pdf.
    \11\ Prior to January 1, 2017, IEX allowed Members to connect to 
the Production Systems through either 1G or 10G physical ports, see 
IEX Trading Alert #2016-060 ``Notice of Upcoming Network & Support 
Changes'' (October 28, 2016) available at https://iextrading.com/trading/alerts/2016/060/, but always recommended to Members that 
they connect via the faster 10G physical ports. See ``Connectivity 
Manual (Version 1.0),'' Addendum F-14 to IEX's Form 1 Filing 
(September 9, 2015).
    \12\ See supra note 10.
    \13\ See IEX Fee Schedule, available at https://iextrading.com/trading/fees/.
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    Therefore, the Exchange proposes to add two clarifying footnotes to 
the ``Connectivity Fees'' section of the IEX Fee Schedule. The first 
footnote, after the words ``10G Physical Port,'' states that ``10G 
physical ports are available to connect to IEX's production systems 
(i.e., the IEX POP and Disaster Recovery Data Centers) and the IEX Test 
Facility (`ITF').'' The second footnote, after the words ``1G Physical 
Port,'' states that ``1G physical ports are the default connection to 
the ITF, but Members may also connect to the ITF through a 10G physical 
port.''
    IEX also proposes to make three conforming changes to the 
Connectivity Fees section of the IEX Fee Schedule. First, IEX proposes 
to renumber current footnote one to footnote three and current footnote 
two to footnote four, to reflect the addition of the new footnotes one 
and two. And IEX proposes to remove the words ``IEX Test Facility'' 
from the newly-renumbered footnote three, because the term is defined 
in the new footnote one.
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 Sections 6(b)(4) \15\ 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 also believes that the proposed rule 
change is consistent with Section 6(b)(5) \16\ of the Act, in 
particular, in that it is designed to prevent fraudulent and 
manipulative acts and practices; to promote just and equitable 
principles of trade; to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities; and 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; and is not designed to permit unfair 
discrimination between customers, brokers, or dealers.
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    \14\ 15 U.S.C. 78f.
    \15\ 15 U.S.C. 78f(b)(4).
    \16\ 15 U.S.C. 78f(b)(5).
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    Specifically, the Exchange believes that the proposed rule change 
is consistent with Section 6(b)(4) of the Act because physical ports 
will continue to be available to all Members on the same basis and free 
of charge. As described in the Purpose section, all Members will 
continue to be able to connect to the IEX Production Systems through 
faster 10G physical ports, and may choose to use either 1G or 10G 
physical ports to connect to the ITF. As described in the Purpose 
section above, this proposed rule change does not change any fees 
charged by IEX, but rather provides clarity to market participants as 
to which physical port connections are available to connect to the 
Production Systems and the ITF.
    The Exchange also believes that the proposed rule change is 
consistent with Section 6(b)(5) of the Act because it is designed to 
provide enhanced clarity to Members that 1G physical ports are only 
available to connect to the ITF, and that physical connections to the 
Exchange's Production Systems are only available through a 10G physical 
port connection. While the availability of 1G and 10G physical port 
connections are clearly described in the IEX Connectivity Manual, as 
discussed in the Purpose section, IEX believes that including 
descriptive language in the IEX Fee Schedule will provide enhanced 
clarity to Members.
    Furthermore, the Exchange believes it is consistent with the Act to 
make conforming changes to the Connectivity Fees section of the Fee 
Schedule, because the renumbering of the footnotes and deletion of the 
duplicative language in the newly-numbered third footnote will provide 
enhanced clarity in the IEX Fee Schedule 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 
Exchange believes that the proposed rule change does not impact 
competition in any respect, since it is merely designed to provide 
enhanced clarity to market participants rather than for any competitive 
purpose.

[[Page 28061]]

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 filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \17\ and Rule 19b-4(f)(6) thereunder.\18\ 
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 prior to 
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, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \19\ and Rule 19b-
4(f)(6)(iii) thereunder.\20\
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    \17\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \18\ 17 CFR 240.19b-4(f)(6).
    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's 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.
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    A proposed rule change filed under Rule 19b-4(f)(6) \21\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\22\ the Commission 
may 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 so that the proposal 
may become operative immediately upon filing because the proposed rule 
change merely clarifies the IEX Fee Schedule's description of physical 
port connections offered by IEX. 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 provide 
clarity to market participants about which physical port connections 
may be used to connect to the Production Systems and the ITF, thereby 
permitting the Exchange to avoid any potential confusion on the part of 
its Members and their associated persons. For this reason, and because 
the proposal does not raise any novel issues or affect fees, the 
Commission believes that waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
According, the Commission hereby waives the 30-day operative delay and 
designates the proposal operative upon filing.\23\
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    \21\ 17 CFR 240.19b-4(f)(6).
    \22\ 17 CFR 240.19b-4(f)(6)(iii).
    \23\ For purposed only of waiving the 30-day operative delay, 
the Commission has 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 this 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 will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

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-2020-06 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 Number SR-IEX-2020-06. 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 Number SR-IEX-2020-06, and should be submitted on 
or before June 2, 2020.
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    \24\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-10057 Filed 5-11-20; 8:45 am]
BILLING CODE 8011-01-P