Document ID: SEC-2018-1093-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Investors Exchange, LLC
Posted Date: 2018-07-13T04:00Z

[Federal Register Volume 83, Number 135 (Friday, July 13, 2018)]
[Notices]
[Pages 32704-32706]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-14962]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83609; File No. SR-IEX-2018-14]

Self-Regulatory Organizations; Investors Exchange LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
Rule 16.160 To Remove Form 19b-4(e) Filing Requirement

July 9, 2018.
    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 
June 26, 2018, the Investors Exchange LLC (``IEX'' or ``Exchange'') 
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\ IEX is 
filing with the Commission a proposed rule change to amend IEX Rule 
16.160 related to derivative securities traded under unlisted trading 
privileges (``UTP'') to remove the requirement in Rule 16.160(a)(1) for 
the Exchange to file with the Commission a Form 19b-4(e) for each ``new 
derivative securities product'' as defined in Rule 19b-4(e) under the 
Act \6\ (a ``Derivative Security'') traded under UTP and renumber the 
remaining provisions of Rule 16.160(a) to maintain an organized rule 
structure. The Exchange has designated this rule change as ``non-
controversial'' under Section 19(b)(3)(A) of the Act \7\ and provided 
the Commission with the notice required by Rule 19b-4(f)(6) 
thereunder.\8\ 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.
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    \4\ 15 U.S.C. 78s(b)(1).
    \5\ 17 CRF [sic] 240.19b-4.
    \6\ 17 CRF [sic] 240.19b-4(e).
    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(e) [sic].
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II. Self-Regulatory Organization's Statement of the Purpose of, and the 
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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to amend Rule 16.160 
related to derivative securities traded under UTP by removing the 
requirement in Rule 16.160(a)(1) for the Exchange to file with the 
Commission a Form 19b-4(e) for each Derivative Security, and 
renumbering the remaining rules of Rule 16.160(a) to maintain an 
organized rule structure, as described below.
    Rule 16.160(a)(1) sets forth the requirement for IEX to file with 
the Commission a Form 19b-4(e) with respect to each Derivative Security 
that is traded under UTP. However, IEX believes that it should not be 
necessary to file a Form 19b-4(e) with the Commission if it begins 
trading a Derivative Security on a UTP basis, because Rule 19b-4(e)(1) 
under the Act refers to the ``listing and trading'' of a ``new 
derivative securities product.'' The Exchange believes that the 
requirements of that rule refers [sic] to when an exchange lists and 
trades a Derivative Security, and not when an exchange seeks only to 
trade such product on a UTP basis pursuant to Rule 12f-2 under the 
Act.\9\ Therefore, IEX proposes to delete the requirement in current 
Rule 16.160(a)(1) for IEX to file a Form 19b-4(e) with the Commission

[[Page 32705]]

with respect to each Derivative Security it begins trading on a UTP 
basis. In addition, as a result of the deletion of current Rule 
16.160(a)(1) IEX proposes to renumber current Rules 16.160(a)(2)-(6), 
as Rules 16.160(a)(1)-(5) respectively.
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    \9\ 17 CFR 240.12f-2.
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2. Statutory Basis
    IEX believes that the proposed rule change is consistent with the 
provisions of Section 6(b) \10\ of the Act in general, and furthers the 
objectives of Section 6(b)(5) of the Act \11\ in particular, in that it 
is designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, 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, eliminating the requirement to file a 
Form 19b-4(e) for each Derivative Security the Exchange begins trading 
on a UTP basis removes an unnecessary regulatory requirement thereby 
providing for a more efficient process for adding Derivative Securities 
to trading on the Exchange on a UTP basis.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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    In addition, the Exchange notes that a substantially identical 
proposed rule change by NYSE National, Inc. (``NYSE National'') was 
recently approved by the Commission.\12\ In particular, the Commission 
noted in the approval order that it ``believes that the filing of a 
Form 19b-4(e) is not required when an Exchange is trading a new 
derivative securities product on a UTP basis only'' \13\ and also found 
that the NYSE National's proposed rule change is ``consistent with the 
requirements of Section 6(b)(5) of the Act.'' \14\
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    \12\ See Securities Exchange Act Release No. 83289 (May 17, 
2018), 83 FR 23968 (May 23, 2018) (Order Approving File No. SR-
NYSENAT-2018-02).
    \13\ See supra note 12 at page 23975.
    \14\ See supra note 12 at page 23976.
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    With respect to the renumbering of current Rules 16.160(a)(2)-(6) 
as Rule 11.160(a)(1)-(5), the Exchange believes that these changes are 
consistent with the Act because they will allow the Exchange to 
maintain a clear and organized rule structure, thus preventing investor 
confusion.

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. To the contrary, removing the 
requirement to file a Form 19b-4(e) will serve to enhance competition 
by providing for the efficient addition of Derivative Securities for 
trading under UTP on IEX. To the extent that a competitor marketplace 
believes that the proposed rule change places it at a competitive 
disadvantage, it may file with the Commission a proposed rule change to 
adopt the same or similar rule.
    In addition, the proposal to renumber the current Rules 
16.160(a)(2)-(6) as Rules 16.160(a)(1)-(5) does not impact competition 
in any respect since it merely maintains a clear and organized rule 
structure.

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) \15\ of the Act and Rule 19b-4(f)(6) \16\ 
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, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6) thereunder.\17\
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ As required under Rule 19b-4(f)(6)(iii), the Exchange 
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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    The Exchange has requested a waiver of the 30-day operative delay 
so that the Exchange can begin trading Derivative Securities on a UTP 
basis without filing a Form 19b-4(e) with the Commission prior to the 
end of the 30-day operative delay. Because the proposed rule change is 
based on a rule change previously approved by the Commission \18\ and 
does not present any novel issues, the Commission believes that waiving 
the 30-day operative delay period is consistent with the protection of 
investors and the public interest. Accordingly, the Commission 
designates the proposed rule change to be operative upon filing.\19\
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    \18\ See supra note 12.
    \19\ 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) \20\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \20\ 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 proposal 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 Number SR-IEX-2018-14 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-2018-14. 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

[[Page 32706]]

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 
such filing will also 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-
2018-14 and should be submitted on or before August 3, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2018-14962 Filed 7-12-18; 8:45 am]
 BILLING CODE P