[Federal Register Volume 86, Number 219 (Wednesday, November 17, 2021)]
[Notices]
[Pages 64268-64276]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-25021]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93557; File No. SR-IEX-2021-14]


Self-Regulatory Organizations; Investors Exchange LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its 
Fee Schedule for Market Data Fees

November 10, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on November 1, 2021, 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, II 
and III 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\ 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,\3\ 
and Rule 19b-4 thereunder,\4\ the Exchange is filing with the 
Commission a proposed rule change to modify its Fee Schedule, pursuant 
to IEX Rules 15.110(a) and (c), to assess fees for receipt and 
distribution of its proprietary market data feeds. IEX will implement 
the proposed fee beginning on January 3, 2022, to provide an 
opportunity for subscribers to update their data subscriptions to suit 
their particular market data needs.
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    \3\ 15 U.S.C. 78s(b)(1).
    \4\ 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 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 self-regulatory organization 
has

[[Page 64269]]

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
    IEX is proposing to modify its Fee Schedule, pursuant to IEX Rules 
15.110(a) and (c), to assess fees for receipt and distribution of its 
proprietary market data feeds.
    IEX has not previously imposed any fees to access its real-time top 
of book (``TOPS'' \5\) and depth of book (``DEEP'' \6\) proprietary 
market data feeds (``IEX Data''),\7\ either by direct recipients or 
through redistribution. In general, IEX believes that exchanges, in 
setting fees of all types, should meet very high standards of 
transparency to demonstrate why each new fee or fee increase meets the 
Exchange Act requirements that fees be reasonable, equitably allocated, 
not unfairly discriminatory, and not create an undue burden on 
competition among members and markets. IEX believes this high standard 
is especially important when an exchange imposes fees for its own 
market data, because it believes each exchange has a natural monopoly 
over its own market data (specifically depth of book and direct access 
to top of book). Therefore, IEX believes that each exchange should 
demonstrate that these fees bear a reasonable relationship to its costs 
and reasonable business needs and that it is not taking unfair 
advantage of its unique position as the sole provider of its own 
proprietary market data.
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    \5\ See IEX Rule 11.330(a)(1).
    \6\ See IEX Rule 11.330(a)(3).
    \7\ As discussed below, both TOPS and DEEP also include last 
sale information.
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    In proposing to charge fees for access to IEX Data, IEX has sought 
to determine such fees in a transparent way in relation to its own 
aggregate costs of providing the related service, and also carefully 
and transparently assess the impact on Data Subscribers \8\--both 
generally and in relation to other Data Subscribers, i.e., to assure 
the fee will not create an undue financial burden on any participant 
and will not have an undue impact in particular on smaller Data 
Subscribers and competition among Data Subscribers in general.
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    \8\ ``Data Subscriber'' refers to any natural person or entity, 
that receives real-time market data either directly from IEX or from 
another Data Subscriber. IEX notes that the current recipients of 
IEX Data include many Members of the Exchange, see IEX Rule 
1.160(s), but also include several non-Members, including vendors 
who redistribute IEX Data to third-party recipients.
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    IEX believes that this level of diligence and transparency is 
called for by the requirements of Section 19(b)(1) under the Act,\9\ 
and Rule 19b-4 thereunder,\10\ with respect to the types of information 
self-regulatory organizations (``SROs'') should provide in seeking 
approval of any fee changes, and Section 6(b) of the Act,\11\ which 
requires, among other things, that exchange fees be reasonable and 
equitably allocated,\12\ not designed to permit unfair 
discrimination,\13\ and that they not impose a burden on competition 
not necessary or appropriate in furtherance of the purposes of the 
Act.\14\ This rule change proposal addresses those requirements, and 
the analysis and data in each of the sections that follow are designed 
to clearly and comprehensively show how they are met.\15\
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    \9\ 15 U.S.C. 78s(b)(1).
    \10\ 17 CFR 240.19b-4.
    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4).
    \13\ 15 U.S.C. 78f(b)(5).
    \14\ 15 U.S.C. 78f(b)(8).
    \15\ In May 2019, the Commission staff published guidance 
suggesting the types of information that SROs may use to demonstrate 
that their fee filings comply with the standards of the Exchange Act 
(``Guidance''). While IEX understands that the Guidance does not 
create new legal obligations on SROs, the Guidance is consistent 
with IEX's view about the type and level of transparency that 
exchanges should meet to demonstrate compliance with their existing 
obligations when they seek to charge new fees. See Staff Guidance on 
SRO Rule Filings Relating to Fees (May 21, 2019) available at 
https://www.sec.gov/tm/staff-guidance-sro-rule-filings-fees.
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    As noted above, IEX offers two real-time proprietary market data 
feeds: TOPS and DEEP. TOPS is an uncompressed data feed that offers 
aggregated top of book quotations for all displayed orders resting on 
the Order Book \16\ and last sale information for executions on the 
Exchange.\17\ The data available in TOPS is also available through the 
securities information processor (``SIP'') feeds. DEEP is an 
uncompressed data feed that provides aggregated depth of book 
quotations for all displayed orders resting on the Order Book at each 
price level and last sale information for executions on the 
Exchange.\18\ DEEP includes all resting displayed liquidity on the 
Exchange, aggregated by price level, meaning it includes the top of 
book quotes contained in TOPS, and also contains any less aggressively 
priced displayed quotes. The content of both TOPS and DEEP is derived 
exclusively from orders that are sent by the Exchange's Members,\19\ 
which the Exchange formats and rebroadcasts to market participants and 
to data vendors.
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    \16\ See IEX Rule 1.160(p).
    \17\ See IEX Rule 11.330(a)(1).
    \18\ See IEX Rule 11.330(a)(3).
    \19\ See IEX Rule 1.160(s).
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    IEX currently does not charge fees for access to IEX Data, 
irrespective of whether the Data Subscriber is a Member or not, the 
manner in which the data is received or used, the number of users, how 
quickly the recipient is able to receive the data after it is made 
available by the System,\20\ or whether the data is subject to any 
delay through the redistribution process. The objective of this 
approach was to eliminate any fee-based barriers to access IEX Data 
when IEX launched as a national securities exchange in 2016, and it was 
successful in achieving this objective in that a large number of both 
Members and non-Members currently receive either TOPS, DEEP, or both. 
As discussed more fully below, IEX recently calculated its annual 
aggregate costs for providing IEX Data to its Data Subscribers at 
approximately $2.5 million. Because IEX has to date offered IEX Data 
free of charge, IEX has borne 100% of all costs for the compilation and 
dissemination of IEX Data to IEX's Data Subscribers.
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    \20\ See IEX Rule 1.160(nn).
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    In order to establish fees that are intended to recover the 
aggregate costs of providing IEX Data to its Data Subscribers and limit 
the amount of potential return in excess of those costs to a reasonable 
markup, the Exchange is proposing to modify its Fee Schedule, pursuant 
to IEX Rules 15.110(a) and (c), to charge all Data Subscribers fees to 
access IEX Data in real time. In addition, Data Subscribers that 
redistribute IEX Data in real time to an external, non-affiliated \21\ 
third party would be subject to redistribution fees. However, Data 
Subscribers that redistribute IEX Data subject to a delay of at least 
fifteen milliseconds (``Delayed IEX Data'') \22\ will not be subject to 
a fee for such redistribution, and the recipients of Delayed IEX Data 
(``Delayed IEX Data Recipient'') will not be considered to be

[[Page 64270]]

Data Subscribers.\23\ Neither approach will differentiate between 
redistribution to Data Subscribers that receive IEX Data in displayed 
versus non-displayed format, whether in real time or delayed.
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    \21\ The Data Subscriber Agreement defines affiliate as ``any 
individual, corporation, company, partnership, limited partnership, 
limited liability company, trust, association or other entity that, 
directly or indirectly through one or more intermediaries, controls, 
is controlled by or is under common control with such party.'' A 
non-affiliated third-party is any individual, corporation, company, 
partnership, limited partnership, limited liability company, trust, 
association or other entity that is not an affiliate of the Data 
Subscriber pursuant to such definition.
    \22\ IEX only provides real-time IEX Data and will not itself 
delay the dissemination of IEX Data to Data Subscribers.
    \23\ Data Subscribers, whether they receive IEX Data directly 
from the Exchange or from another Data Subscriber, will be required 
to enter into a Data Subscriber Agreement with IEX, which will be 
made available on IEX's website. Delayed IEX Data Recipients will 
not be required to enter into a Data Subscriber Agreement with IEX.
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    Specifically, IEX proposes to charge the following flat fees to any 
Data Subscriber: $500 per month for real-time access to the TOPS feed; 
$2,500 per month for real-time access to the DEEP feed; and $500 per 
month to redistribute either the TOPS or DEEP feed (or both TOPS and 
DEEP) in real time. As noted above, IEX is proposing that 
redistribution of TOPS or DEEP after [sic] at least a fifteen-
millisecond delay will be free. Data Subscribers may therefore 
redistribute IEX Data to any Delayed IEX Data Recipient without paying 
any distribution fees to IEX, and without requiring the Delayed IEX 
Data Recipient to become a Data Subscriber.\24\ And IEX is also not 
proposing to charge a distribution fee to a Delayed IEX Data Recipient 
that further redistributes Delayed IEX Data.
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    \24\ The Delayed IEX Data Recipient may be subject to any fees 
charged by the redistributor of the Delayed IEX Data, based upon the 
contractual arrangement between the Delayed IEX Data Recipient and 
the provider of Delayed IEX Data. Such fees would not be paid to the 
Exchange.
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    IEX's proposed market data fees are based on a cost-plus model. In 
determining the appropriate fees to charge, IEX considered its costs of 
providing market data, using what it believes to be a conservative 
methodology (i.e., that strictly considers only those costs that are 
most clearly directly related to the production and distribution of IEX 
Data) to estimate such costs,\25\ as well as the relative costs of 
compiling the TOPS and DEEP feeds,\26\ and set fees that are designed 
to cover its costs with a limited return in excess of such costs. 
However, as discussed more fully below, such fees may also result in 
IEX recouping less than all of its costs of providing market data 
because of the uncertainty of forecasting Data Subscriber decision-
making with respect to their IEX market data subscriptions.
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    \25\ For example, IEX only included the costs associated with 
physical assets that are directly responsible for producing and 
transmitting IEX Data, and excluded from its market data cost 
calculations any physical connectivity assets that are used to 
provide both order entry and market data. See Cost Study at 16. 
Thus, IEX notes that this methodology underestimates the total costs 
of providing market data.
    \26\ DEEP is an aggregated feed that must perform additional 
logic on each order-related message received from the System to 
calculate the total number of displayed shares available at each 
price level. TOPS requires less processing than DEEP because it only 
aggregates displayed liquidity at a single price level, the top of 
book.
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    Applying this pricing model, IEX is proposing to charge $500 per 
month for real-time receipt of TOPS and $2,500 per month for real-time 
receipt of DEEP. IEX believes that it is reasonable and appropriate to 
charge a higher fee for DEEP because it contains significantly more 
market data than TOPS and costs more for IEX to compile.\27\ 
Additionally, IEX's proposed fee structure for TOPS and DEEP is 
designed to make real time access to IEX's top of book widely available 
to a broad base of market participants. In order to accomplish this 
goal, IEX proposes to allocate its cost plus structure so that TOPS is 
materially more affordable than DEEP. IEX also notes, as described in 
footnote 23 [sic], supra, that because it contains multiple price 
levels, DEEP requires more processing (and related costs) for IEX to 
generate than TOPS.
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    \27\ See supra note 26.
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    IEX is also proposing to charge a $500 per month redistribution fee 
to Data Subscribers that choose to redistribute IEX market data in real 
time to an external, non-affiliate third party. Enabling redistribution 
in real time adds to IEX's administrative expenses related to the need 
to identify and track the recipients of IEX Data. In addition, IEX 
notes that if it allowed Data Subscribers to redistribute IEX Data in 
real time without any additional fees, it could enable Data Subscribers 
to circumvent IEX's fees for providing IEX Data, which would conflict 
with IEX's objective to recover its costs of producing IEX Data.
    Finally, IEX is charging only for data that is made available in 
real time, because it is the very demand for real-time, low latency 
data that drives much of the costs associated with creating and 
distributing IEX Data. For example, IEX must invest more in the 
resiliency, capacity, and redundancy of its proprietary market data 
feeds to provide real-time, low latency access to IEX Data. Moreover, 
not charging IEX fees for Delayed IEX Data is also consistent with 
IEX's desire to make its data broadly available to a range of market 
participants including long-term investors.
    As discussed below, this total maximum cost of $3,500 per month for 
a Data Subscriber to receive all IEX Data and be permitted to 
redistribute it in real time, reflects an amount that at most would 
lead to a reasonable markup over IEX's costs of providing IEX Data, and 
may even result in only a partial recoupment of IEX's costs.
    In January 2019, IEX conducted a study of its aggregate costs to 
produce market data and connectivity (the ``Cost Study'').\28\ The Cost 
Study includes a detailed analysis of IEX's aggregate baseline costs, 
including the methodology it used for determining such costs for three 
separate segments--market data, physical connectivity (the physical 
connections required to access IEX in its data center), and logical 
connectivity, which concerns the cost to offer and maintain Order Entry 
Ports. The Cost Study estimated IEX's aggregate annual cost to offer 
IEX Data to its Data Subscribers to be approximately $1.8 million per 
year, as reflected in Table 1.\29\
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    \28\ See ``The Cost of Exchange Services--Disclosing the Cost of 
Offering Market Data and Connectivity as a National Securities 
Exchange'' (January 2019) available at https://iextrading.com/docs/The%20Cost%20of%20Exchange%20Services.pdf.
    \29\ See Cost Study at 15-18 for details on how IEX estimated 
the costs of its market data infrastructure; see also supra note 25.

                                 Table 1
------------------------------------------------------------------------
                                                               (2019)
           Annual IEX Market Data Infrastructure            ($1,791,403)
------------------------------------------------------------------------
Top of Book Servers (TOPS) (5)............................     ($12,833)
Depth of Book Servers (DEEP) (5)..........................      (12,833)
Market Data Feeds Switches................................      (13,333)
(2 x 24 port).............................................
ITF Market Data...........................................       (7,333)
Data Center Space, Power, Security........................      (10,605)
Administrative Access.....................................      (33,333)
Monitoring................................................     (596,135)
Personnel.................................................   (1,104,998)
                                                           -------------
  Total Annual Costs......................................   (1,791,403)
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    IEX recently updated and refreshed the cost estimates contained in 
the Cost Study. As further detailed below, this update reflects 
somewhat lower annual hardware costs related to market data than 
contained in the 2019 Study, and somewhat higher personnel costs. 
Considering all factors together, the updated estimates reflect an 
increase in total annual costs to produce market data from $1,791,403 
to $2,483,644.
    Table 2, below, details the individual annual line-item costs 
considered by IEX to be directly related to offering IEX Data to Data 
Subscribers.\30\ The chart shows three cost components: (1) Direct 
costs, such as servers, infrastructure, and monitoring; (2) enhancement 
initiative costs (e.g., new functionality for IEX Data and increased 
capacity for the proprietary market data feeds, as described below); 
\31\ and (3) personnel

[[Page 64271]]

costs. The servers included were limited to those specifically 
dedicated to IEX Data. ``Monitoring'' includes hardware and software 
licenses used to monitor these servers and the health of the market 
data products provided by such assets. All physical assets and 
software, which also includes assets used for testing and monitoring of 
market data infrastructure, were valued at cost, and depreciated over 
three years. For personnel costs, IEX calculated an allocation of 
employee time for employees whose functions include providing and 
maintaining IEX Data and/or the proprietary market data feeds used to 
transmit IEX Data,\32\ and used a blended rate of compensation 
reflecting salary, stock and bonus compensation, bonuses, benefits, 
payroll taxes, and 401(k) matching contributions.\33\
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    \30\ Table 2 also shows the breakdown of the 2019 estimated 
market data infrastructure costs.
    \31\ These enhancement initiative costs are a routine part of 
offering proprietary market data. Some of the enhancement costs in 
Table 2, such as the introduction of the snapshot functionality for 
TOPS and DEEP, are one-time costs, but each year IEX expects to 
incur new enhancement costs such as the costs associated with 
increasing the capacity of its market data feeds and costs 
associated with upgrading its market data infrastructure, as well as 
any new functionality. Thus IEX believes that its annual enhancement 
costs on an ongoing basis will be similar and that the enhancement 
costs included in the 2021 update are not extraordinary.
    \32\ Notably, IEX did not include any costs associated with 
operating the Exchange itself in calculating the costs of offering 
IEX Data.
    \33\ Applying the methodology of the Cost Study, IEX determined 
cost allocation for employees who perform work in support of 
compiling and disseminating IEX Data to arrive at a full time 
equivalent (``FTE'') of 6.15 FTEs across all the identified 
personnel (the FTE at the time of the Cost Study was 4.05). IEX then 
multiplied the FTE times a blended compensation rate for all 
relevant IEX personnel to determine the personnel costs associated 
with compiling and disseminating IEX Data.

                                 Table 2
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                                               2019            2021
  Annual IEX Market Data Infrastructure    ($1,791,403)    ($2,483,644)
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Direct Costs:
    Servers.............................       ($32,999)       ($26,696)
    Network Infrastructure & Admin              (46,666)       (152,783)
     Access.............................
    Monitoring..........................       (596,135)       (213,109)
    Data Center (Space, Power, Security)        (10,605)        (79,142)
Enhancement Initiatives Costs:
    DEEP Snapshot.......................             N/A        (95,974)
    TOPS Snapshot.......................             N/A        (95,974)
    Capacity Planning...................             N/A       (232,856)
    Monitoring Tools....................             N/A        (49,609)
Ongoing Personnel Costs.................     (1,104,998)     (1,537,500)
                                         -------------------------------
    Total Annual Costs..................     (1,791,403)     (2,483,644)
------------------------------------------------------------------------

    As noted in Table 2, IEX continues to introduce enhancement 
initiatives to IEX Data. First, effective February 3, 2021, IEX 
launched ``DEEP Snapshot'', which allows Data Subscribers to download 
point-in-time snapshots of DEEP in order to enable Data Subscribers to 
accelerate late start recovery.\34\ Second, effective September 27, 
2021, IEX launched ``TOPS Snapshot'', which allows Data Subscribers to 
download point-in-time snapshots of TOPS in order to enable them to 
accelerate late-start recovery. Third, IEX is in the process of 
expanding the capacity and monitoring tools that support the efficient 
transmission of IEX Data to the IEX's proprietary market data feeds.
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    \34\ See Trading Alert No. 2021-003, available at https://iextrading.com/alerts/#/135.
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    IEX also notes that it has made recent changes to its system 
functionality and architecture which improve the content and speed of 
IEX's proprietary market data feeds, but that have no impact on IEX's 
estimated costs of providing IEX Data. For example, effective February 
16, 2021, IEX removed its outbound 350 microsecond latency 
``speedbump'' while retaining its inbound 350 microsecond latency 
``speedbump.'' \35\ Prior to that date, IEX disseminated its top of 
book data and last sale data to the SIPs free of any artificial delays, 
but all other outbound messages, including IEX Data transmitted through 
IEX's proprietary market data feeds, were subjected to a 350-
microsecond latency.\36\ Additionally, on April 1, 2021, IEX began to 
display odd lot sized orders, which are aggregated by price on DEEP, 
and can aggregate to form the top of book quote on TOPS.\37\ And on 
October 13, 2021, IEX began disseminating a ``Retail Liquidity 
Indicator'' on both TOPS and DEEP, which tells market participants when 
IEX has at least one round of Retail Liquidity Provider order \38\ 
interest available for a particular security, which is resting at the 
Midpoint Price \39\ and priced at least $0.001 better than the NBB \40\ 
or NBO.\41\ The Retail Liquidity Indicator reflects the symbol and side 
of the resting interest, but does not include the price or size.\42\
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    \35\ See Trading Alert 2021-006, available at https://iextrading.com/alerts/#/138.
    \36\ See Securities Exchange Act Release No. 91016, January 29, 
2021, 86 FR 8238 (February 4, 2021) (SR-IEX-2020-18).
    \37\ See Trading Alert 2021-010, available at https://iextrading.com/alerts/#/142; see also, See Securities Exchange Act 
Release No. 90933, January 15, 2021, 86 FR 6687 (January 22, 2021) 
(SR-IEX-2021-01).
    \38\ See IEX Rule 11.190(b)(14).
    \39\ The term ``Midpoint Price'' means the midpoint of the NBBO. 
See IEX Rule 1.160(t). The term ``NBBO'' means the national best bid 
or offer, as set forth in Rule 600(b) of Regulation NMS under the 
Act, determined as set forth in IEX Rule 11.410(b).
    \40\ See IEX Rule 1.160(u).
    \41\ Id.
    \42\ See Trading Alert 2021-036, available at https://iextrading.com/alerts/#/169; see also, Securities Exchange Act 
Release No. 92398 (July 13, 2021), 86 FR 38166 (July 19, 2021) (SR-
IEX-2021-06).
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    IEX now proposes a fee structure designed to recoup its costs and 
limit any revenue in excess of cost to an amount that represents no 
more than what IEX believes is a reasonable rate of return over such 
costs.\43\ If all of IEX's current Data Subscribers continue to receive 
and, as applicable, redistribute, real-time IEX Data, IEX estimates it 
would earn at most an approximately 95% markup over its costs (a total 
of $4,878,000 annually). IEX believes that such a scenario is unlikely 
(as discussed more fully below), so that any return in excess of its 
costs is likely to be significantly lower (IEX is targeting a return of 
25% over its costs).\44\ IEX believes that this cost-plus pricing model 
would allow IEX to recoup its annualized costs and continuing

[[Page 64272]]

investments in its market data infrastructure, while introducing a 
straightforward pricing framework that would not be unwieldy or onerous 
for even the heaviest users of IEX Data, which would pay at most $3,500 
per month for access to both TOPS and DEEP and the right to 
redistribute IEX Data in real time.
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    \43\ IEX notes that it is not only being transparent about its 
costs associated with producing IEX Data, but is also being 
transparent about what it thinks the appropriate markup over costs 
should be.
    \44\ If the revenue IEX receives from the proposed fees 
materially deviates from IEX's projections described herein, IEX 
will assess whether it is appropriate to make a rule filing pursuant 
to Section 19(b) of the Act to increase or decrease the fees 
accordingly.
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    As described in the Statutory Basis section, IEX does not believe 
that exchange market data fees are constrained by competitive market 
forces, and therefore does not believe this fee proposal should be 
based on a comparative analysis of IEX's proposed fees for IEX Data and 
the fees charged by IEX's competitors for the equivalent data. 
Furthermore, IEX does not have visibility into other equities 
exchanges' costs to provide market data or their fee markup over those 
costs, and therefore cannot use other exchange's market data fees as a 
benchmark to determine a reasonable markup over the costs of providing 
market data. Nevertheless, IEX believes the other exchange's market 
data fees are a useful example of alternative approaches to providing 
and charging for market data. To that end, IEX notes that its proposed 
fees are materially lower than what competing equities exchanges charge 
IEX for similar market data products.\45\ Specifically, during 2021 to 
date, IEX paid an aggregate of $101,024 to the 11 other equities 
exchanges \46\ that charge for their market data \47\ to obtain top of 
book, depth of book and last sale market data on a monthly basis. By 
comparison, to obtain the equivalent market data from IEX (as proposed) 
the aggregate monthly cost for those 11 equity exchanges would be 
$3,000 per exchange family.\48\ Thus the 11 competing exchanges would 
be subject to aggregate monthly fees of $9,000 or approximately one-
eleventh of the aggregate fees that IEX pays to those 11 exchanges. 
Additionally, as noted in the Cost Study, the actual costs IEX incurs 
to obtain market data from other exchanges often involve aggregating 
several different kinds of fees, making it difficult to ascertain the 
actual costs to a market participant of obtaining equivalent market 
data from other exchanges.\49\ For example, several other exchanges 
charge separate fees depending on whether exchange data is 
redistributed internally \50\ or externally,\51\ is used for non-
display or other forms of use,\52\ or is calculated on a per user 
basis, with different fees for non-professional \53\ and professional 
\54\ users of the data feeds.\55\ By contrast, IEX's fee proposal is 
much simpler--charging a flat fee for any entity to access one or both 
of the IEX Data feeds ($500 month for TOPS/$2,500 for DEEP), and a flat 
fee of $500 for any entity that wishes to redistribute TOPS, DEEP, or 
both TOPS and DEEP in real time (regardless of the number of recipients 
that the entity redistributes to). This simple fee structure means the 
cost burden for subscribing to receive IEX Data would be relatively 
flat regardless of the size of the Data Subscriber's firm. At the same 
time, IEX believes that the fees are set at a level that will not 
represent a significant cost to any Data Subscriber. For example, 
because IEX will not be charging any variable per user fees, Data 
Subscribers will not need to expend resources on monthly reporting of 
market data usage that can be required when subscribing to other 
exchange data feeds with pricing that differs based on the various 
factors noted above. Furthermore, because IEX will not be charging 
different usage fees (such as for ``display'' vs. ``non-display'' 
usage) or charging based on ``controlled'' and ``uncontrolled'' 
products, the Data Subscribers will not need to expend resources on 
managing different methods of receiving and distributing IEX Data or 
different types of application usage. Furthermore, IEX understands that 
the above administrative concerns can result in contentious audits or 
even litigation between data subscribers and providers of proprietary 
market data, all of which can result in substantial costs to the 
subscribers of other exchanges' market data feeds.
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    \45\ For examples of other exchange's market data fees, see 
https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Fee_Schedule.pdf; https://nasdaqtrader.com/Trader.aspx?id=DPUSdata; and https://www.cboe.com/us/equities/membership/fee_schedule/bzx/.
    \46\ Currently, IEX pays for market data from four NYSE 
exchanges (New York Stock Exchange LLC, NYSE American LLC, and NYSE 
Arca, Inc.), three Nasdaq exchanges (Nasdaq Stock Market LLC, Nasdaq 
BX, Inc., and Nasdaq PHLX LLC) and four Cboe exchanges (Cboe BYX 
Exchange, Inc., Cboe BZX Exchange, Inc., Cboe EDGA Exchange, Inc., 
and Cboe EDGX Exchange, Inc.).
    \47\ Long-Term Stock Exchange Inc.; MEMX LLC; MIAX PEARL, LLC; 
and NYSE Chicago, Inc. currently do not charge for their market 
data.
    \48\ As described below, IEX is proposing to only charge the 
$500 Distribution Fee to external, non-affiliate third parties of 
the Data Subscriber.
    \49\ See Cost Study at 18.
    \50\ Internal distribution is receiving market data from an 
exchange and distributing it within the same entity that received 
the data.
    \51\ External distribution is receiving market data from an 
exchange and distributing it to a third party outside of the entity 
that received the data.
    \52\ Non-display usage means any method of accessing a market 
data product that involves access or use by a machine or automated 
device without access or use of a display by a natural person.
    \53\ Non-professional users are natural persons who use data for 
personal, not commercial, purposes, and are not a registered 
financial services professional.
    \54\ Anyone who is not a non-professional user is considered a 
professional user.
    \55\ See supra note 45.
---------------------------------------------------------------------------

    IEX acknowledges that there are trade-offs between the benefits of 
a relatively simple fee structure and a fee structure that is more 
graduated based on the extent and variety of uses of IEX Data. IEX 
believes it has struck an appropriate balance of these interests by 
creating a fee model that is simple, easy to understand and administer, 
and set at a level that is affordable for all firms that need real-time 
data, while imposing no charge on recipients of Delayed IEX Data that 
do not need real-time data.
    IEX proposes to allow Data Subscribers to provide Delayed IEX Data 
free of charge in order to minimize barriers to access IEX Data. IEX's 
business model seeks to generate revenue from trading rather than from 
data and connectivity fees, so an essential part of the proposed fee 
structure is to enable all market participants to be able to obtain IEX 
Data while it is still timely and useful to most of them without 
incurring any IEX fees.
    As noted above, this fee proposal would result in IEX receiving at 
most an amount equal to approximately 95% over its estimated costs of 
providing market data, only if all current Data Subscribers and their 
customers (i.e., recipients of redistributed IEX Data from a Data 
Subscriber) elect to make no changes to their current subscriptions and 
continue to receive IEX market data in real time.\56\ However, IEX 
expects to recoup far less than that amount because market participants 
that do not need real-time data will have the option to receive Delayed 
IEX Data (at a minimal delay of only 15 milliseconds) in lieu of real-
time data, without paying a fee to IEX. For example, and as described 
more fully below, IEX believes that Data Subscribers that are not 
engaged in high speed, low latency trading may not choose to pay for 
real-time IEX Data. As noted above, this aspect of the proposal allows 
Data Subscribers to provide Delayed IEX Data to market participants who 
do not require (or quite possibly even have the

[[Page 64273]]

necessary technology tools to use) near instantaneous access to IEX 
Data.\57\ These Delayed IEX Data Recipient that elect to receive 
Delayed IEX Data from a Data Subscriber of IEX Data will not incur any 
IEX fees.\58\ Conversely, a market participant that values near 
instantaneous market data (e.g., algorithmic traders or other equities 
venues that use proprietary market data feeds to calculate the NBBO for 
each security) will have the option of paying $3,000 per month to 
receive TOPS and DEEP. IEX also notes that any consumers can continue 
to obtain all the data in TOPS and DEEP free of charge on a T+1 basis 
from IEX's ``HIST'' \59\ data product.\60\
---------------------------------------------------------------------------

    \56\ IEX notes that the proposed fee filing introduces a new 
subscription model, and IEX will notify all current Data Subscribers 
that before January 3, 2022, they will need to enter into a new Data 
Subscriber Agreement with IEX if they wish to continue receiving IEX 
Data in real time (either directly from IEX or via a third party). 
Furthermore, anyone who elects to receive Delayed IEX Data from a 
third party would no longer need to enter into a Data Subscriber 
Agreement with IEX, as required under IEX's current market data 
policies.
    \57\ As noted above, IEX will only provide real-time IEX Data 
and will not itself delay the dissemination of IEX Data to Data 
Subscribers.
    \58\ The Delayed IEX Data Recipient may be subject to any fees 
charged by the redistributor of the Delayed IEX Data, based upon the 
contractual arrangement between the Delayed IEX Data Recipient and 
the provider of Delayed IEX Data. Such fees would not be paid to the 
Exchange.
    \59\ See IEX Rule 11.330(a)(5).
    \60\ HIST data is available for download at https://iextrading.com/trading/market-data/#hist-download.
---------------------------------------------------------------------------

    IEX currently has 70 Data Subscribers who it believes are 
individuals \61\ and expects that most, if not all, of the individual 
Data Subscribers will terminate their subscriptions for IEX Data and, 
if they choose to continue to receive IEX Data, can opt to receive 
Delayed IEX Data from a third-party vendor or through HIST. The 
remaining, non-individual, Data Subscribers are made up of 
approximately one-third IEX Members, one-third professional market 
participants that are not IEX Members (e.g., hedge funds and broker-
dealers), and one-third data vendors. Based on IEX's general 
understanding of many of its current Data Subscribers' business models, 
IEX projects at least half of the data vendors will retain all of their 
existing subscriptions for IEX Data while the others may cancel their 
real-time data subscriptions,\62\ and also anticipates that several 
Members and non-Members will cancel their real-time data subscriptions 
for either TOPS, DEEP, or both. Based on this analysis, IEX set its 
proposed fees at a range that it anticipates will, in the most likely 
scenario, result in revenue of approximately 25% above cost. IEX's 
analysis and projections are based on the expertise and industry 
knowledge of relevant IEX personnel with respect to the broker-dealer 
community as well as market participants' sensitivity to market data 
costs. Having never charged for market data, IEX has no experience 
pricing market data. Furthermore, no equities exchange provides free 
redistribution of near real-time market data (that is delayed at least 
15 milliseconds). Acknowledging the number of variables that could 
impact how much IEX recovers of its costs of providing IEX Data, the 
Exchange determined that a target return of 25% over costs is a 
reasonable goal for its market data fee model. If our projections are 
incorrect, revenues could range from ``break even'' (or even below 
aggregate costs) to an aggregate markup of at most approximately 
95%.\63\ However, the actual revenue will be determined by decisions 
made by each Data Subscriber based on the meaningful choices IEX 
proposes to offer for the receipt of market data.
---------------------------------------------------------------------------

    \61\ IEX's belief in this regard is based on an assessment that 
the Data Subscriber has a natural person name (i.e., fist name--last 
name), rather than an entity name.
    \62\ IEX notes that not all Data Subscribers classified as 
vendors by IEX are established professional market data vendors. 
Some appear to redistribute IEX market data on a less sophisticated 
basis (e.g., startups redistributing data to a small number of 
customers).
    \63\ As discussed above, IEX believes it is unrealistic and 
unlikely that all current Data Subscribers will maintain their 
current subscriptions (including the 70 individual current Data 
Subscribers, all of whom IEX estimates will not maintain their 
current subscriptions), and therefore does not expect the markup 
over its costs of providing IEX Data to be anywhere near 95%.
---------------------------------------------------------------------------

    IEX notes that other equities exchanges also offer delayed market 
data free of charge, but they define ``delayed data'' as data that is 
disseminated at least fifteen minutes after the same data is 
disseminated in real time.\64\ These delayed data feeds are often used 
by brokerage firms \65\ or online distributors of market data \66\ to 
provide stock quote information free of charge, even if it is 15 
minutes old.
---------------------------------------------------------------------------

    \64\ See, e.g., NYSE Comprehensive Market Data Policies, Section 
7 (Delayed Data Policy), available at https://www.nyse.com/publicdocs/data/Policy-ComprehensivPackage_PDP.pdf; Cboe Global 
Markets North American Data Policies, Section 5 (Delayed Data), 
available at https://cdn.batstrading.com/resources/membership/Market_Data_Policies.pdf; Nasdaq Delayed Data Policy, available at 
http://www.nasdaqtrader.com/content/administrationsupport/policy/delayeddatapolicy.pdf.
    \65\ See, e.g., Interactive Brokers Delayed and Streaming Market 
Data, available at https://www.interactivebrokers.com/en/software/webtrader/webtrader/marketdata/delayedandstreamingmarketdata.htm 
(``Delayed market data is available for instruments for which you do 
not currently hold market data subscriptions.'').
    \66\ See, e.g., MarketWatch Market Data Terms of Use, available 
at https://www.marketwatch.com/site/investing-terms-of-use 
(``comprehensive quotes and volume reflect trading in all markets 
and are delayed at least 15 minutes.'').
---------------------------------------------------------------------------

    In determining the appropriate delay interval, IEX sought to strike 
a balance between offering IEX Data at a reasonable and transparent 
price to market participants who require real-time data, while also 
offering market participants a commercially viable option for the 
receipt of free IEX Data within a time period in which the data will 
remain useful to market participants who do not require near 
instantaneous real-time market data for trading purposes. Knowing there 
is no ``exact science'' to the determination of how long to delay data 
before allowing it to be retransmitted free of charge, IEX sought 
informal feedback from Members and other Data Subscribers. Based upon 
that informal feedback, IEX believes that most, if not all, non-
electronic trading desks would be able to continue to use IEX Data if 
it was received subject to at least a fifteen-millisecond delay. Also 
based on that informal feedback, IEX believes that there will be some 
current Data Subscribers--e.g., algorithmic traders, data vendors, and 
any electronic trading platform that we believe typically use real-time 
data to calculate the NBBO--that will continue to pay for real-time IEX 
Data.
    The proposed fees will not apply differently based upon the size or 
type of the market participant, but rather based upon the speed with 
which the Data Subscriber wishes to obtain IEX Data, based upon factors 
deemed relevant by each Data Subscriber, such as the cost to access and 
process IEX Data as well as business models.
    Finally, IEX notes that this simple, transparent market data fee 
proposal will simplify IEX audits for compliance with applicable market 
data policies. Any Data Subscriber receiving real-time IEX Data will 
enter into a Data Subscriber Agreement with IEX, even if the Data 
Subscriber obtains their data through a third-party vendor. And any 
Delayed IEX Data Recipient does not need to enter into a Data 
Subscriber Agreement with IEX. Therefore, to assess compliance with 
applicable market data policies, IEX would simply audit whether any 
redistribution of IEX Data to any external, non-affiliate third party 
Data Subscribers is occurring, and if so, whether such redistribution 
is in real time or subject to at least a fifteen-millisecond delay.
    In order to effectuate the proposed fee changes, IEX is proposing 
to make the following changes to the definitions in the ``Market Data 
Fees'' part of its Fee Schedule:
     Remove the definitions for ``Internal Distribution Fee'' 
and ``External Distribution Fee'' because IEX is not proposing to 
charge different fees for internal or external distribution and 
introduce the term ``Distribution Fee'' which IEX proposes to define as 
``the fee charged to any Data Subscriber that receives IEX market data 
directly from

[[Page 64274]]

the Exchange or indirectly through another Data Subscriber and then 
redistributes that data to an external, non-affiliate third party.''
     Define the term ``Real-Time'' as ``IEX market data that is 
accessed, used, or distributed less than fifteen (15) milliseconds 
after it was made available by the Exchange. IEX provides only Real-
Time IEX market data to Data Subscribers. A Data Subscriber may 
redistribute Real-Time IEX market data that it receives from the 
Exchange on a Real-Time basis to a natural person or entity.**''
     Define the term ``Delayed'' as ``IEX market data that is 
accessed, used, or distributed at least fifteen (15) milliseconds after 
it was made available by the Exchange. A Data Subscriber may 
redistribute Real-Time IEX market data that it receives from the 
Exchange on a Delayed basis to a natural person or entity. In addition, 
a recipient of Delayed IEX market data may further redistribute such 
Delayed IEX market data to a natural person or entity.**''
     Define the term ``Data Subscriber'' as ``any natural 
person or entity that receives Real-Time IEX market data either 
directly from the Exchange or from another Data Subscriber. A Data 
Subscriber must enter into a Data Subscriber Agreement with IEX in 
order to receive Real-Time IEX market data.''
     Remove the definition of ``Usage Fee'' because IEX is not 
proposing to charge any usage fees for its market data.
     Add the following words before the ``Service/Fee'' table: 
``The following fees are assessed by IEX on market data recipients:''
    IEX is also proposing to the make the following changes to the 
``Service/Fee'' table in the Market Data Fees section of the Fee 
Schedule:
     Delete the references to the Internal Distribution, 
External Distribution, and Usage Fees.
     Add the following entries to the table:

------------------------------------------------------------------------
                Service                                Fee
------------------------------------------------------------------------
DEEP Feed (Real-Time)..................  $2,500 per month.*
TOPS Feed (Real-Time)..................  $500 per month.*
Distribution Fee (Real-Time)...........  $500 per month.*
DEEP Feed (Delayed)....................  FREE.
TOPS Feed (Delayed)....................  FREE.
Distribution Fee (Delayed).............  FREE.
------------------------------------------------------------------------

     Define the asterisk to say ``These fees will be operative 
beginning January 3, 2022.''
     Define the double asterisk to say ``The fees set forth 
above include only fees charged by IEX. Receipt of Real-Time IEX market 
data from a Data Subscriber or Delayed IEX market data from a Data 
Subscriber or other person may be subject to fees agreed to between the 
Data Subscriber and recipient of such IEX market data.''
    As noted above, the proposed rule change is effective on filing and 
the fees proposed herein will become operative on January 3, 2022.\67\ 
Delayed implementation will provide an opportunity for current Data 
Subscribers to modify the manner in which they receive IEX Data, if 
they choose to do so, allowing them to obtain IEX Data without 
incurring any charge from IEX if they receive it subject to at least a 
fifteen-millisecond delay,\68\ before the first month in which IEX will 
charge for access to IEX Data.
---------------------------------------------------------------------------

    \67\ January 3, 2022 is the first trading day of the new year.
    \68\ The Delayed IEX Data Recipient may be subject to any fees 
charged by the redistributor of the Delayed IEX Data, based upon the 
contractual arrangement between the Delayed IEX Data Recipient and 
the provider of Delayed IEX Data. Such fees would not be paid to the 
Exchange.
---------------------------------------------------------------------------

2. Statutory Basis
    IEX believes that the proposed rule change is consistent with the 
provisions of Section 6(b) \69\ of the Act in general and furthers the 
objectives of Section 6(b)(4) \70\ 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 fee change 
promotes just and equitable principles of trade and will not be 
unfairly discriminatory, consistent with the objectives of Section 
6(b)(5) \71\ of the Act.
---------------------------------------------------------------------------

    \69\ 15 U.S.C. 78f(b).
    \70\ 15 U.S.C. 78f(b)(4).
    \71\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

Reasonableness
    With regard to reasonableness, the Exchange understands that the 
Commission has traditionally taken a market-based approach to examine 
whether the SRO making the fee proposal was subject to significant 
competitive forces in setting the terms of the proposal. IEX 
understands that in general the analysis considers whether the SRO has 
demonstrated in its filing that (i) there are reasonable substitutes 
for the product or service; (ii) ``platform'' competition constrains 
the ability to set the fee; and/or (iii) revenue and cost analysis 
shows the fee would not result in the SRO taking supracompetitive 
profits. If the SRO demonstrates that the fee is subject to significant 
competitive forces, IEX understands that in general the analysis will 
next consider whether there is any substantial countervailing basis to 
suggest the fee's terms fail to meet one or more standards under the 
Exchange Act. IEX further understands that if the filing fails to 
demonstrate that the fee is constrained by competitive forces, the SRO 
must provide a substantial basis, other than competition, to show that 
it is consistent with the Exchange Act, which may include production of 
relevant revenue and cost data pertaining to the product or service.
    As detailed in the Cost Study, IEX's experience as an exchange 
strongly supports its belief that the fees each equities exchange 
charges for its proprietary market data are not subject to competitive 
forces.\72\ As noted in the Purpose section, each exchange has a 
monopoly over its own market data, particularly its depth of book data 
which is not available on the SIPs. IEX believes that this monopoly 
over proprietary market data, coupled with the need of many market 
participants for real-time data in order to compete in a market system 
in which trading outcomes can depend on time differences measured in 
millionths of a second, allows exchanges to set their fees for 
proprietary market data without competitive constraints. As also noted 
in the Cost Study, the extreme differences between IEX's aggregate cost 
to produce market data (as well as physical and logical connectivity 
products) and the prices charged by other exchanges for similar 
products and services clearly suggests that the pricing for market data 
is not constrained by competition.\73\
---------------------------------------------------------------------------

    \72\ See Cost Study at 34.
    \73\ See Cost Study at 18-19, 24-25, and 31-32, respectively.
---------------------------------------------------------------------------

    Further, IEX is not aware of and does not believe that there is any 
evidentiary support for the proposition that competition at the 
``platform level'' constrains market data fees of the type proposed in 
this filing.
    Because IEX believes that market data is not constrained by 
competition, IEX is not relying on an argument that the fees proposed 
in this filing are justified based on market competition. Instead, IEX 
believes the proposed fees are fair and reasonable as a form of cost 
recovery plus the possibility of a reasonable return for IEX's 
aggregate costs of offering IEX Data to its Data Subscribers.
    As discussed in the Purpose section, IEX believes that charging 
$500 per month for TOPS, $2,500 per month for DEEP, and $500 per month 
for real-time redistribution of TOPS, DEEP, or both, is reasonable 
because it is based both on the relative costs to IEX to generate TOPS 
and DEEP, as well as IEX's objective to make TOPS broadly

[[Page 64275]]

available to a range of market participants including long-term 
investors. Specifically, DEEP contains more data than TOPS, and is more 
resource intensive to produce and maintain because it aggregates 
displayed liquidity at multiple price levels. Therefore, IEX believes 
that it is reasonable to charge a higher fee for DEEP than for TOPS. 
Similarly, as discussed in the Purpose section, IEX believes that 
charging $500 per month to any real-time redistributors of IEX Data is 
reasonable both because of the administrative and other costs IEX 
incurs in supporting the redistribution of IEX Data and to prevent the 
possible circumvention of IEX's market data fees by any redistributors 
of IEX Data.
    IEX also believes the proposed fees are reasonable because they are 
designed to generate annual revenue of approximately $3.1 million 
(reflecting a 25% markup over costs). As described in the Purpose 
section, IEX expects many of its current Data Subscribers to terminate 
their subscriptions for real-time data, instead opting to pay IEX no 
fee and to receive Delayed IEX Data through a redistribution agreement 
with a Data Subscriber. Accordingly, IEX believes that this fee 
methodology is reasonable because it both allows IEX to recoup some or 
all of its expenses for providing market data (with any additional 
revenue representing no more than what IEX believes to be a reasonable 
rate of return), while continuing to allow market participants to 
access IEX Data free of charge if they can wait at least fifteen 
milliseconds to receive it.
    Additionally, IEX believes the proposed fees are reasonable because 
IEX is only charging Data Subscribers who use IEX Data in real time, 
and as described in the Purpose section, these Data Subscribers are the 
very ones creating the demand for real-time data, thereby causing IEX 
to incur the costs described above to produce real-time market data 
feeds.
    IEX also believes that the proposed fees are reasonable because 
they are significantly less than the fees charged by competing equities 
exchanges, notwithstanding that the competing exchanges may have 
different system architectures that may result in different cost 
structures for the provision of market data. As described above, the 
three large exchange families charge significantly more than IEX's 
proposed fees for real-time access to their proprietary market data. 
Significantly, they charge these fees without offering an option to 
receive delayed market data within a time frame that is usable for most 
trading purposes. The delayed data offered by other exchanges is also 
offered free of charge, but only fifteen minutes after it is first 
disseminated, which IEX believes generally makes the data stale for any 
subscribers using the data to make trading decisions.
    Finally, as described in the Purpose section above, IEX believes 
that this fee proposal is reasonable because it will not impose onerous 
audit requirements on Data Subscribers, because there will be no need 
to substantiate the number of users of IEX Data or the manner in which 
it is being used, but rather only whether it is being redistributed in 
real time or subject to at least a fifteen-millisecond delay.
Equitable Allocation and Non-Discrimination
    IEX believes that its proposed fees are reasonable, fair, and 
equitable, and not unfairly discriminatory because they are designed to 
align fees with services provided, will apply equally to all Data 
Subscribers that require real-time data, and will minimize barriers to 
entry by providing IEX Data for free after [sic] at least fifteen 
milliseconds, thereby allowing all but the most latency sensitive 
market participants access to IEX Data within a time frame that is 
usable for most trading purposes.
    The Exchange believes that providing Delayed IEX Data without 
charging any fees and charging as much as $3,500 per month to Data 
Subscribers who require real-time data and/or wish to redistribute the 
same data is fair and equitable, and not unfairly discriminatory 
because it will enable all market participants to access Delayed IEX 
Data without paying any fees to IEX \74\ and will charge only the users 
who require the fastest market data feeds available (which, as 
discussed in the Purpose section, drives much of the costs associated 
with creating and distributing IEX Data because it increases the 
resiliency, capacity and redundancy costs associated with IEX's 
proprietary market data feeds) for access to IEX Data. Additionally, as 
noted in the Purpose section, anyone can obtain TOPS and DEEP data free 
of charge on a T+1 basis through IEX's HIST data product. IEX believes 
this approach to market data fees will equitably distribute the costs 
of IEX Data among market participants whose business models require the 
highest speed market data available.
---------------------------------------------------------------------------

    \74\ Although IEX will not charge any distribution fees to a 
redistributor of Delayed IEX Data, the distributor may still charge 
fees to any Delayed IEX Data Recipients.
---------------------------------------------------------------------------

    Furthermore, IEX believes that charging $500 per month for TOPS, 
$2,500 per month for DEEP, and $500 per month for real-time 
redistribution of TOPS, DEEP, or both, is fair and equitable because it 
is based both on the relative costs to IEX to generate TOPS and DEEP, 
as well as IEX's objective to make TOPS broadly available to a range of 
market participants including long-term investors. As described in the 
Purpose section, DEEP contains more data than TOPS, and is more 
resource intensive to produce and maintain because it aggregates 
displayed liquidity at multiple price levels. Therefore, IEX believes 
that it is fair and equitable to charge a higher fee for DEEP than for 
TOPS. Similarly, as discussed in the Purpose section, IEX believes that 
charging $500 per month to any real-time redistributors of IEX Data is 
fair and equitable both because of the administrative and other costs 
IEX incurs in supporting the redistribution of IEX Data and to prevent 
the possible circumvention of IEX's market data fees by any 
redistributors of IEX Data.
    The Exchange further believes that the proposed fees are 
reasonable, fair, and equitable, and non-discriminatory because they 
will apply to all Data Subscribers in the same manner based on the type 
of market data needed. All similarly situated market participants are 
subject to the same fees. The fees also do not depend on any 
distinctions between Members, customers, broker-dealers, or any other 
entity, because they are solely determined by the individual Data 
Subscriber's business needs. For example, as discussed in the Purpose 
section, if the Data Subscriber is a market data vendor that resells 
IEX Data, IEX believes that Data Subscriber is likely to continue to 
subscribe for real-time IEX Data and pay the distribution fee because 
it is commercially beneficial to that Data Subscriber. By contrast, a 
non-Member Data Subscriber is far more likely to not require IEX Data 
in real time, and is therefore more likely to unsubscribe from one or 
both of IEX's real-time IEX Data and instead elect to receive Delayed 
IEX Data from a vendor or via HIST.
    Finally, the Exchange believes that the proposed fee is consistent 
with Section 11A of the Exchange Act in that it is designed to 
facilitate the economically efficient execution of securities 
transactions, fair competition among brokers and dealers, exchange 
markets and markets other than exchange markets, and the practicability 
of brokers executing investors' orders in the best market. 
Specifically, the proposed low, cost-based fee, with the option of 
receiving free data from a third party on at least a fifteen-
millisecond

[[Page 64276]]

delay \75\ or for absolutely no cost on a T+1 basis using HIST, will 
enable a broad range of market participants to continue to receive IEX 
Data, thereby facilitating the economically efficient execution of 
securities transactions on IEX, fair competition between and among such 
Members, and the practicability of Members that are brokers executing 
investors' orders on IEX when it is the best market.
---------------------------------------------------------------------------

    \75\ Distributors of Delayed IEX Data may charge a fee for the 
data, but that fee is not payable to IEX.
---------------------------------------------------------------------------

    For the foregoing reasons, the Exchange believes that the proposed 
fee is reasonable, equitably allocated, and not unfairly 
discriminatory.

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 intramarket or intermarket 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 proposed 
fees are a cost-based fee, that are designed to enable the Exchange to 
recoup its applicable costs with the possibility of a reasonable profit 
on its investment as described in the Purpose and Statutory Basis 
sections. Competing equities exchanges are free to adopt comparable fee 
structures subject to the SEC rule filing process.
    The Exchange also does not believe that the proposed fees will 
impose any burden on intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because all 
market participants are entitled to receive IEX Data free of charge 
after [sic] at least a fifteen-millisecond delay. Providing a 
commercially viable free data feed to Data Subscribers is designed to 
avoid creating barriers to entry for smaller Members, thereby promoting 
intramarket competition. In addition, even Members [sic] subject to 
relatively higher fees, because they are paying up to $3,500 per month 
for IEX Data, will still be subject to a relatively low aggregate fee 
(and significantly less than the fees charged by competing exchanges, 
as described above) and IEX thus believes that the proposed fee will 
not operate as a barrier to entry for such Members [sic] or impose a 
significant business cost burden on such Members [sic] relative to 
their levels of business activity. Finally, as noted in the Purpose and 
Statutory Basis sections, IEX believes that not requiring any onerous 
audits for Data Subscribers will be of equal benefit to all Data 
Subscribers.

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 has become effective pursuant to Section 
19(b)(3)(A)(ii) \76\ of the Act.
---------------------------------------------------------------------------

    \76\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

    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) \77\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \77\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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 [email protected]. Please include 
File No. SR-IEX-2021-14 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-2021-14. 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 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 and on its internet 
website at www.iextrading.com. 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-
2021-14, and should be submitted on or before December 8, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\78\
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    \78\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-25021 Filed 11-16-21; 8:45 am]
BILLING CODE 8011-01-P


