
[Federal Register Volume 88, Number 226 (Monday, November 27, 2023)]
[Notices]
[Pages 82936-82939]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-26004]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98994; File No. SR-IEX-2023-12]


Self-Regulatory Organizations; Investors Exchange LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Pursuant to 
IEX Rule 15.110 To Amend IEX's Fee Schedule

November 20, 2023.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act''),\2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on November 7, 2023, Investors Exchange LLC (``IEX'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the 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\ 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 its Fee 
Schedule,\6\ pursuant to IEX Rule 15.110(a) and (c) (the ``Fee 
Schedule''), to revise the fees applicable to transactions that add or 
remove non-displayed liquidity from the same

[[Page 82937]]

Member,\7\ and to make conforming changes to the ``Fee Code Modifiers'' 
and ``Fee Code Combinations and Associated Fees'' sections of the Fee 
Schedule. Changes to the Fee Schedule pursuant to this proposal are 
effective upon filing,\8\ and the Exchange plans to implement the 
changes on January 1, 2024.
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    \4\ 15 U.S.C. 78s(b)(1).
    \5\ 17 CFR 240.19b-4.
    \6\ See the IEX Fee Schedule at https://www.iexexchange.io/resources/trading/fee-schedule for the complete list of fee code 
combinations and their corresponding fees.
    \7\ See IEX Rule 1.160(s).
    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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 Exchange 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 Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Fee Schedule, pursuant to IEX 
Rule 15.110(a) and (c), to revise the fees applicable to transactions 
that add or remove resting non-displayed liquidity from the same Member 
(the ``internalization fee''). Currently such executions are free. As 
proposed, they would be subject to existing fees applicable to adding 
or removing non-displayed liquidity by different Members. IEX also 
proposes to revise the Fee Schedule to delete Fee Code Modifier ``S'' 
that applies when a Member executes against resting liquidity added by 
such Member and to make conforming changes to the ``Fee Code 
Combinations and Associated Fees'' section of the Fee Schedule. Changes 
to the Fee Schedule pursuant to this proposal are effective upon 
filing,\9\ and the Exchange plans to implement the changes on January 
1, 2024.
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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
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    As proposed, IEX will remove Fee Code Modifier S and the seven (7) 
Fee Code Combinations that contain Fee Code Modifier S from the IEX Fee 
Schedule. As described below, two (2) of the seven (7) Fee Code 
Combinations (MIS and TIS) currently result in a free execution for 
both the adding and removing orders of an execution, and as proposed 
will be replaced with existing Fee Code Combinations that do not 
include Fee Code Modifier S and thereby be subject to the regular fees 
for adding or removing non-displayed liquidity specified in such Fee 
Code Combinations. The remaining five (5) Fee Code Combinations would 
be replaced with existing Fee Code Combinations that do not include Fee 
Code Modifier S but would not result in a fee change.
     Fee Code Combination MIS, which applies when a Member adds 
resting non-displayed liquidity that executes against such Member's 
removing interest and is currently free, would be deleted; such 
executions would be subject to Fee Code Combination MI, which results 
in a fee of $0.0010 per share for executions priced at or above $1.00 
per share or 0.10% of the total dollar value of the transaction for 
executions priced below $1.00 per share.
     Fee Code Combination TIS, which applies when a Member 
removes resting non-displayed liquidity added by such Member and is 
currently free, would be deleted; such executions would be subject to 
Fee Code Combination TI, which results in a fee of $0.0010 per share 
for executions priced at or above $1.00 per share or 0.10% of the total 
dollar amount of the transaction for executions priced below $1.00 per 
share.
     Fee Code Combination MLS, which applies when a Member's 
order adds displayed liquidity that executes against such Member's 
removing interest, would be deleted; such executions would be subject 
to Fee Code Combination ML and would continue to result in a rebate of 
$0.0004 per share for executions priced at or above $1.00 per share or 
no fee (i.e., free) for executions priced below $1.00 per share.
     Fee Code Combination TLS, which applies when a Member 
removes displayed liquidity added by such Member, would be deleted; 
such executions would be subject to Fee Code TL, which would continue 
to result in a fee of $0.0010 per share for executions priced at or 
above $1.00 per share or 0.09% of the total dollar value of the 
transaction for executions priced below $1.00 per share.
     Fee Code Combinations TLSR and TISR, which apply when a 
Retail \10\ order removes displayed or non-displayed liquidity, 
respectively, from orders entered by the same Member, would be deleted; 
such executions would be subject to Fee Code Combinations TLR and TIR, 
respectively, and would continue to result in a free execution, like 
all other executions of Retail orders.
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    \10\ See IEX Rule 11.190(b)(15).
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     Fee Code Combination MISA, which applies when a Retail 
Liquidity Provider \11\ order adds non-displayed liquidity that 
executes against a Retail order entered by the same Member, would be 
deleted; such executions would be subject to Fee Code Combination MIA, 
which would continue to result in a free execution, like all other 
executions of Retail Liquidity Provider orders.
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    \11\ See IEX Rule 11.190(b)(14).

Thus, the only fees that would change under this proposal are for the 
fees currently charged for orders that add or remove non-displayed 
liquidity submitted by the same Member, which would now be charged the 
same $0.0010 fee per share that is charged for all other orders that 
add or remove non-displayed liquidity.\12\
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    \12\ As noted above, for executions priced below $1.00 per 
share, the fee would be 0.10% of the total dollar amount value of 
the transaction. Also, as noted above, executions of Retail orders 
and Retail Liquidity Provider orders will continue to be free of 
charge.
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    The internalization fee was initially adopted when IEX launched as 
a national securities exchange and was designed to incentivize Members 
(and their customers) to send orders to IEX that might otherwise be 
internalized off exchange with the overall goals of, among other 
things, enhancing order interaction on the Exchange with the resultant 
benefit of exchange transparency, regulation, and oversight. While the 
internalization fee initially applied to executions that added or 
removed displayed and non-displayed interest from the same Member, it 
currently only applies to executions that add or remove non-displayed 
interest from the same Member.\13\ The Exchange believes that the 
internalization fee was initially an appropriate means to incentivize 
order entry on IEX, but that in the current market structure 
environment there are myriad factors that impact order routing 
decisions and the internalization fee has not operated as a meaningful 
incentive. Consequently, IEX believes that impacted orders should be 
subject to the

[[Page 82938]]

same fee structure as other IEX executions.
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    \13\ See Securities Exchange Act Release No. 91443 (March 30, 
2021), 86 FR 17654 (April 5, 2021) (SR-IEX-2021-05), which revised 
the application of the internalization fee, so that it only provided 
a free execution when a Member added or removed non-displayed 
interest from the same Member.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\14\ in general, and furthers the 
objectives of Section 6(b)(4) \15\ of the Act, in particular, in that 
it is designed to provide for the equitable allocation of reasonable 
fees among IEX Members and persons using its facilities. Additionally, 
IEX believes that the proposed changes to the Fee Schedule are 
consistent with the investor protection objectives of Section 6(b)(5) 
\16\ of the Act, in particular, in that they are 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; and are not designed to permit 
unfair discrimination between customers, brokers, or dealers.
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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(4).
    \16\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed changes are reasonable, 
fair and equitable, non-discriminatory, and consistent with the Act. 
The Exchange operates in a highly competitive market in which market 
participants can readily direct order flow to competing venues if they 
deem fee levels at a particular venue to be excessive.
    The Exchange further believes that the proposed fee change is 
consistent with the Act's requirement that the Exchange provide for an 
equitable allocation of fees that is also not unfairly discriminatory. 
As proposed, the fees for adding and removing non-displayed liquidity 
will apply in an equal and nondiscriminatory manner to all Members. All 
Members are eligible to enter non-displayed orders and orders that 
remove non-displayed liquidity, and the proposed fee structure will 
apply to all Members in the same manner.
    IEX notes that other exchanges do not offer free executions for the 
execution of orders entered by the same Member. Consequently, IEX does 
not believe that its proposed fee structure for adding and removing 
non-displayed liquidity entered by the same Member raises any new or 
novel issues that the Commission has not already considered in the 
context of other exchanges' fees.
    In addition, the Exchange believes that it is reasonable and 
consistent with the Act to delete Fee Code Modifier S and the Fee Code 
Combinations and Associated Fees that include Fee Code Modifier S, as 
described in the Purpose section, to reflect the proposed fee changes 
and to provide information to Members on the relevant charges.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange does not 
believe that the proposed fees will impose any burden on intermarket 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. The Exchange operates in a highly competitive 
market in which market participants can easily direct their orders to 
competing venues, including off-exchange venues, if its fees are viewed 
as non-competitive. As proposed, IEX fees for executions that add or 
remove non-displayed liquidity will continue to be below fees charged 
by competing exchanges.\17\ Moreover, subject to the SEC rule filing 
process, other exchanges could adopt similar fees.
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    \17\ See e.g., Cboe BZX Equities Fee Schedule (up to $0.0030 fee 
per share to remove non-displayed liquidity), available at https://markets.cboe.com/us/equities/membership/fee_schedule/bzx/; MIAX 
Pearl Equities Exchange Fee Schedule (up to $0.00295 fee per share 
for non-displayed liquidity removing executions), available at 
https://www.miaxglobal.com/sites/default/files/fee_schedule-files/MIAX_Pearl_Equities_Fee_Schedule_11012023.pdf; MEMX Fee Schedule (up 
to $0.0030 fee per share for non-displayed liquidity removing 
executions), available at https://info.memxtrading.com/equities-trading-resources/us-equities-fee-schedule/; Nasdaq Equity 7 Section 
118(a) (up to $0.0030 fee per share for any non-displayed liquidity 
removing executions), available at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules/nasdaq-equity-7; New York Stock Exchange Price 
List 2023 (up to $0.0030 per share for non-displayed liquidity 
removing executions), available at https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf.
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    The Exchange also does not believe that the proposed rule change 
will impose any burden on intramarket competition that is not necessary 
or appropriate in furtherance of the purposes of the Act. The proposed 
fees will apply to all Members in the same manner, as discussed in the 
Statutory Basis section. Accordingly, the Exchange does not believe 
that these changes will have any impact on competition that is not 
necessary or appropriate in furtherance of the purposes of the Act.

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 is effective upon filing pursuant to 
Section 19(b)(3)(A) \18\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \19\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of such 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 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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-IEX-2023-12 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-2023-12. 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 (https://www.sec.gov/rules/sro.shtml). Copies of the

[[Page 82939]]

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 a.m. and 3 
p.m. Copies of the filing also will be available for inspection and 
copying at the principal office of the Exchange. Do not include 
personal identifiable information in submissions; you should submit 
only information that you wish to make available publicly. We may 
redact in part or withhold entirely from publication submitted material 
that is obscene or subject to copyright protection. All submissions 
should refer to file number SR-IEX-2023-12 and should be submitted on 
or before December 18, 2023.

    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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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-26004 Filed 11-24-23; 8:45 am]
BILLING CODE 8011-01-P


