Document ID: SEC-2017-0534-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Investors Exchange, LLC
Posted Date: 2017-04-04T04:00Z

[Federal Register Volume 82, Number 63 (Tuesday, April 4, 2017)]
[Notices]
[Pages 16456-16458]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-06566]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80331; File No. SR-IEX-2017-08]

Self-Regulatory Organizations: Investors Exchange LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Correct 
Typographical Errors in SR-IEX-2017-06

March 29, 2017.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given that, on 
March 17, 2017, the Investors Exchange LLC 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.
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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 (``IEX'' or ``Exchange'') is filing with the 
Commission a proposed rule change to correct several typographical 
errors in Rule 11.190(g)(1)(A) and in the Purpose Section of SR-IEX-
2017-06 describing the changes to IEX Rule 11.190(g)(1)(A) proposed 
therein. The Exchange has designated this proposal as non-controversial 
and has satisfied the requirements of 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 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 recently filed with the Commission an immediately 
effective proposed rule change to amend Rule 11.190(g) to modify the 
quote instability coefficients and quote instability threshold included 
in the quote instability calculation specified in subparagraph (g)(1) 
of Rule 11.190 for purposes of determining whether a crumbling quote 
exists. The rule filing was published on the Commission Web site on 
March 10, 2017.\7\ Thereafter the Exchange identified that the formula 
contained in Rule 11.190(g)(1)(A) (the ``formula'') contains several 
minor typographical errors. First, the numerical references to the 
Quote Stability Coefficients contained in the formula were each 
represented as regular text rather than as subscript, as they are 
specified in subparagraph (a) of Rule 11.190(g)(1)(A). Second, the 
Quote Stability Variables NC and FC are incorrectly represented as NC-1 
and FC-1 respectively in the formula. Exhibit 5 to this filing corrects 
both of these typographical errors. In addition, Exhibit 5 to SR-IEX-
2017-06 contains inconsistent notations on text marked for deletion and 
retention whereby the same phrase is marked for deletion and also 
marked as retained and relocated in the following subparagraph. 
Specifically, the phrase ``the quote instability factor result from the 
quote stability calculation is greater than the defined quote 
instability threshold'' is not clearly shown as relocated. Exhibit 5 to 
this rule filing corrects this typographical error by showing the text 
of the relocated phrase as new text, notwithstanding that it was 
previously contained in the text of Rule

[[Page 16457]]

1.190(g)(1)(A) [sic] as amended by SR-IEX-2017-06.
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    \7\ See Securities Exchange Act Release No. 34-80202; File No. 
SR-IEX-2017-06.
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    In addition, the Purpose Section of the filing contains two sets of 
typographical errors which the Exchange proposes to correct with this 
filing. First, numbered paragraph 1, beginning on page 8, which 
describes one aspect of the proposed amendments to Rule 11.190(g) 
inadvertently omits the Nasdaq Stock Market in the list of exchanges 
for which protected quotations are included in the Crumbling Quote 
determination described in subparagraph (1) of Rule 11.190(g). This 
paragraph also uses the word ``protection'' rather than ``protected'' 
in the second sentence. The proposed rule text in Exhibit 5 to the rule 
filing is correct in this respect. Accordingly, IEX proposes to restate 
the relevant portion of the Purpose Section to read as follows:

    1. Rule 11.190(g) states that the Exchange utilizes real time 
relative quoting activity of Protected Quotations, not including IEX 
protected quotations, in the quote instability calculation. As 
proposed, the Exchange is proposing to include the protected 
quotations of the following exchanges in the quote instability 
calculation: New York Stock Exchange, NYSE Arca, Nasdaq Stock 
Market, Nasdaq BX, Bats BZX Exchange, Bats BYX Exchange, Bats EDGX 
Exchange, and Bats EDGA Exchange. In connection with our analysis of 
market data, as described above, the Exchange considered several 
different permutations of which exchanges to include in the model. 
The research identified that using the Protected Quotations of these 
specific eight exchanges in the aggregate resulted in the greatest 
predictive power of all permutations of exchanges assessed for 
determining a crumbling quote.

    Second, the description in the Purpose Section of the filing in the 
first and third sentences of numbered paragraph 3 on page 10, which 
reference the quote stability variables to be retired, incorrectly 
format N-1 and F-1 in regular text, when the 
numeral 1 and preceding minus sign in each should be subscript. 
Accordingly, IEX proposes to restate the first three sentences of the 
paragraph to read as follows:

    The Exchange proposes to revise the quote stability variables 
currently specified in subparagraph (1)(D)(i)(b) of Rule 11.190(g) 
by adding seven (7) new variables (NC, FC, Delta, EPos, ENeg, 
EPosPrev, and ENegPrev) and retiring four (4) variables 
(N-1, F-1, E, and D). Specifically, based on 
our analysis of market data, as described above, the Exchange 
identified that considering the maximum change over the course of 
the previous millisecond up to the most recent Protected NBBO change 
was a more accurate indicator of a crumbling quote than simply 
looking at the absolute state of the market one millisecond 
previously. The replacement of N-1, F-1, and D 
with NC, FC, and Delta, respectively, reflects this finding.'' 
(internal footnote omitted)
2. Statutory Basis
    IEX believes that the proposed rule change is consistent with 
Section 6(b) of the Act \8\ in general, and furthers the objectives of 
Section 6(b)(5) of the Act,\9\ 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, 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. Specifically, the correction 
of inadvertent typographical errors in IEX Rule 11.190(g)(1)(A) and in 
SR-IEX-2017-06 describing the changes to IEX Rule 11.190(g)(1)(A) 
proposed therein will serve the goals of the Act by having rule text 
accurately reflect system functionality and avoid the potential for 
market participant confusion.
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    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(5).
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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 believes that the 
proposed correction does not impact competition in any respect since it 
is designed to correct typographical errors.

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 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 \10\ and Rule 19b-4(f)(6) thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), IEX provided the Commission with written notice of its 
intent to file the proposed rule change, along with a brief 
description and the 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.
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    A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\13\ 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, noting that the 
proposal would correct typographical errors in SR-IEX-2017-06, and 
stating that waiver would allow the Exchange to implement these 
corrections upon effectiveness of the proposal and avoid potential 
confusion that otherwise might occur. 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 
would correct a number of typographical errors contained in IEX's 
recent SR-IEX-2017-06 filing, but would not result in any substantive 
changes to that proposal. Waiver of the operative delay will allow IEX 
to correct these errors without delay, which should reduce the 
potential for confusion regarding the operation of IEX's quote 
instability calculation referenced in IEX Rule 11.190. Therefore, the 
Commission hereby waives the operative delay and designates the 
proposed rule change operative upon filing.\14\
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    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
    \14\ 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 to 
determine whether the proposed rule 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.

[[Page 16458]]

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 SR-IEX-2017-08 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-2017-08. 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 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-2017-08 and should be 
submitted on or before April 25, 2017.
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    \15\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-06566 Filed 4-3-17; 8:45 am]
 BILLING CODE 8011-01-P