Self-Regulatory Organizations; Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify Its Fee Schedule, Pursuant to IEX Rule 15.110(a) and (c), To Adopt Pricing for Orders That Execute in an IEX Auction for IEX-Listed Securities, 56089-56093 [2017-25471]

Download as PDF Federal Register / Vol. 82, No. 226 / Monday, November 27, 2017 / Notices SECURITIES AND EXCHANGE COMMISSION SECURITIES AND EXCHANGE COMMISSION Sunshine Act Meetings [Release No. 34–82127; File No. SR–IEX– 2017–40] 12:00 p.m. on Friday, December 1, 2017. TIME AND DATE: Closed Commission Hearing Room 10800. PLACE: This meeting will be closed to the public. STATUS: MATTERS TO BE CONSIDERED: Commissioners, Counsel to the Commissioners, the Secretary to the Commission, and recording secretaries will attend the closed meeting. Certain staff members who have an interest in the matters also may be present. The General Counsel of the Commission, or his designee, has certified that, in his opinion, one or more of the exemptions set forth in 5 U.S.C. 552b(c)(3), (5), (7), 9(B) and (10) and 17 CFR 200.402(a)(3), (a)(5), (a)(7), (a)(9)(ii) and (a)(10), permit consideration of the scheduled matters at the closed meeting. Commissioner Stein, as duty officer, voted to consider the items listed for the closed meeting in closed session. The subject matters of the closed meeting will be: Institution and settlement of injunctive actions; Institution and settlement of administrative proceedings; Adjudicatory matter; and Other matters relating to enforcement proceedings. At times, changes in Commission priorities require alterations in the scheduling of meeting items. CONTACT PERSON FOR MORE INFORMATION: For further information and to ascertain what, if any, matters have been added, deleted or postponed; please contact Brent J. Fields from the Office of the Secretary at (202) 551–5400. Dated: November 22, 2017. Brent J. Fields, Secretary. asabaliauskas on DSKBBXCHB2PROD with NOTICES 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 (date), 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 self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 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 modify its Fee Schedule, pursuant to IEX Rule 15.110(a) and (c), to adopt pricing for orders that execute in an IEX Auction 6 for IEX-listed securities pursuant to Rule 11.350. Changes to the Fee Schedule pursuant to this proposal are effective upon filing, and will be operative once the Exchange begins conducting IEX Auctions in IEX-listed securities.7 The text of the proposed rule change is available at the Exchange’s Web site at www.iextrading.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 4 15 U.S.C. 78s(b)(1). 5 17 CRF 240.19b–4. 6 IEX Auctions include the daily Opening and Closing Auctions (Rule 11.350(c) and (d), respectively), as well as IPO Auctions related to an initial public offering of securities (Rule 11.350(e)), Halt Auctions following a regulatory halt (Rule 11.350(e)), and Volatility Auctions following a trading pause pursuant to the Limit Up-Limit Down Plan (Rule 11.350(f)). 7 See IEX Trader Alert #2017–015, available on the Exchange public Web site. 2 15 BILLING CODE 8011–01–P 16:59 Nov 24, 2017 November 20, 2017. 1 15 [FR Doc. 2017–25701 Filed 11–22–17; 4:15 pm] VerDate Sep<11>2014 Self-Regulatory Organizations; Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify Its Fee Schedule, Pursuant to IEX Rule 15.110(a) and (c), To Adopt Pricing for Orders That Execute in an IEX Auction for IEX-Listed Securities Jkt 244001 PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 56089 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 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 On August 10, 2017, the Commission approved a proposed rule change by the Exchange to adopt rules governing auctions, including dissemination of auction-related market data, for securities listed on the Exchange pursuant to Chapter 14 of the IEX Rule Book.8 The Exchange proposes to update its Fee Schedule, pursuant to IEX Rule 15.110(a) and (c), to add new Fee Codes to identify the fees applicable to orders that execute in IEX Auctions. The IEX Auction processes are designed to maximize participation in the auctions in order to provide an efficient price discovery process and greater opportunity for execution at the official auction price. The Exchange believes that fees are an important component of the IEX Auction processes, in that execution fees can influence the trading behavior of Members by creating economic incentives (and disincentives) for Members that participate in IEX Auctions. Thus, the Exchange is proposing fees that are similarly designed to incentivize participation in IEX Auctions in order to further support an efficient price discovery process and greater opportunity for execution at the official auction price. The Exchange proposes to apply the following new Fee Codes: • Executions in the Opening Auction 9 will receive Fee Code ‘‘O’’ • Executions in the Closing Auction 10 will receive Fee Code ‘‘C’’ 8 See Securities and Exchange Act Release No. 81316 (August 4, 2017), 82 FR 37474 (August 10, 2017) (SR–IEX–2017–10). 9 See Rule 11.350(c). 10 See Rule 11.350(d). E:\FR\FM\27NON1.SGM 27NON1 56090 Federal Register / Vol. 82, No. 226 / Monday, November 27, 2017 / Notices • Executions in a Halt Auction 11 or Volatility Auction 12 will receive Fee Code ‘‘H’’ • Executions in an IPO Auction 13 will receive Fee Code ‘‘N’’ As proposed, non-displayed orders on the Continuous Book 14 that are executed in an IEX Auction will receive the applicable auction Fee Code on their execution reports and will be subject to a fee of $0.0003 per share (or 0.30% of total dollar value of the transaction calculated as the execution price multiplied by the number of shares executed in the transaction for shares executed below $1.00) (the ‘‘Auction Match Fee’’). Furthermore, all orders on the Auction Book 15 that are executed in an IEX Auction will receive the applicable auction Fee Code on their execution reports and will also be subject to the Auction Match Fee of $0.0003 per share (or 0.30% of total dollar value of the transaction calculated as the execution price multiplied by the number of shares executed in the transaction for shares executed below $1.00). The Exchange believes that the proposed Auction Match Fee for nondisplayed orders on the Continuous Book and all orders on the Auction Book that are executed in an IEX Auction are designed to incentivize participation in IEX Auctions by providing a cost-effective execution mechanism that offers Members an opportunity to receive executions at the official opening, re-opening, or closing price of an IEX-listed security. The Exchange believes the proposed fees enhance the price discovery process by incentivizing Members to enter interest in IEX-listed securities into IEX Auctions, rather than investing resources into developing and maintaining their own off-exchange 11 See Rule 11.350(e). Rule 11.350(f). 13 See Rule 11.350(e). 14 See Rule 11.350(a)(4). 15 See Rule 11.350(a)(1). asabaliauskas on DSKBBXCHB2PROD with NOTICES 12 See VerDate Sep<11>2014 16:59 Nov 24, 2017 Jkt 244001 internalization mechanisms, or utilizing the internalization mechanisms of competing brokers and alternative trading systems, and entering only the balance to participate in an IEX Auction.16 The Exchange believes incentivizing broader participation will increase overall liquidity in the IEX Auctions, and enhance the price discovery process, particularly in the Opening and Closing Auctions, which provide a critical price discovery mechanism to establish the official opening and closing prices for IEXlisted securities at the start and end of each trading day. Moreover, orders that were displayed on the Continuous Book during the PreMarket Session 17 or Regular Market Session 18 that are executed in the Opening Auction or Closing Auction, respectively, will receive the applicable auction Fee Code, as well as existing Fee Code L (Displayed Match Fee).19 Thus, such orders will not be charged a fee because, pursuant to the IEX Fee Schedule, to the extent a Member receives multiple Fee Codes on an 16 See, e.g., Exhibit F of Instinet LLC’s Form ATS, which describes its MOC Crosses that match buy and sell orders for certain U.S. equity securities marked ‘‘market on close’’. See also, Table 6 in Appendix A of Bats BZX Exchange’s (‘‘Bats’’) response letter from Joanne Moffic-Silver, Executive Vice President, General Counsel, and Corporate Secretary, to Secretary Brent J. Fields, dated August 2, 2017, in support of the proposed Bats Market Close. Table 6 illustrates significant volume in shares of FedEx, Proctor & Gamble, and Cardinal Health that was executed at the official closing price at off exchange venues. See Securities and Exchange Act Release No. 80683 (May 16, 2017), 82 FR 23320 (May 22, 2017) (SR–BatsBZX–2017–34). 17 See Rule 1.160(z). 18 See Rule 1.160(gg). 19 The Exchange currently does not charge any fee to Members for executions on IEX that provide or take resting interest with displayed priority (i.e., an order or portion of a reserve order that is booked and ranked with display priority on the Order Book either as the IEX best bid or best offer (‘‘BBO’’), or at a less aggressive price). This pricing is referred to by the Exchange as ‘‘Displayed Match Fee’’ with a Fee Code of ‘L’ provided by the Exchange on execution reports. See the Investors Exchange Fee Schedule, available on the Exchange public Web site. PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 execution, the lower fee shall apply.20 As with the existing fee structure for execution of transactions including displayed liquidity, this fee structure is designed to incentivize Members to send IEX aggressively priced displayable orders, thereby contributing to price discovery leading into IEX Auctions. The Exchange notes that the Internalization Fee, Displayed Match Fee for non-displayed orders that remove displayed liquidity,21 and the exception to the Non-Displayed Match Fee for displayable orders that remove non-displayed resting interest upon entry,22 are not applicable to IEX Auctions. IEX Auctions are an aggregated match process where only the cumulative volume to buy and sell at various prices is considered, and thus there is no basis to distinguish between liquidity providers and liquidity removers, rendering the Internalization Fee, Displayed Match Fee for nondisplayed orders that remove displayed liquidity, and the exception to the NonDisplayed Match Fee for displayable orders that remove non-displayed resting interest upon entry, inapplicable. The following table is designed to illustrate the various Fee Codes and execution fees that will be applied to orders that may be executed in an IEX Auction: 20 See IEX Fee Schedule, Transaction Fees, bullet three. The Exchange also notes that there is no Continuous Book prior to a Halt, Volatility, or IPO auction, and thus no opportunity for a Member to have a displayed order on the Continuous Book that is executed in such auctions. 21 See supra note 19. 22 The Exchange does not charge any fee to Members (on a per MPID basis) for executions on IEX that remove resting interest with non-displayed priority where (i) the liquidity removing order was displayable (i.e., the order would have booked and displayed if posted to the Order Book), and (ii) on a monthly basis, at least 90% of the liquidity removing MPID’s aggregate executions of displayable orders provided liquidity during such calendar month. In such transactions, the liquidity providing non-displayed interest is subject to the Non-Displayed Match Fee. E:\FR\FM\27NON1.SGM 27NON1 56091 Federal Register / Vol. 82, No. 226 / Monday, November 27, 2017 / Notices Order details Opening auction Closing auction Halt/volatility auction IPO auction Fee for executions >=$1.00 Non-displayed orders resting on the Continuous Book that execute in the Opening or Closing Auction 23. Displayed orders resting on the Continuous Book that execute in the Opening or Closing Auction. All orders on the Auction Book that execute in an IEX Auction. O .................... C .................... Not applicable ........ Not applicable ........ $0.0003 .......... 0.30% of TDVT.24 O, L ................ C, L ................ Not applicable ........ Not applicable ........ FREE ............. FREE. O .................... C .................... H ............................ N ............................ $0.0003 .......... 0.30% of TDVT asabaliauskas on DSKBBXCHB2PROD with NOTICES 2. Statutory Basis IEX believes that the proposed rule change is consistent with the provisions of Section 6(b) 25 of the Act in general, and furthers the objectives of Sections 6(b)(4) 26 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. IEX believes that its proposed pricing for orders executed in an IEX Auction is reasonable and equitable because, as discussed above, the proposed fees are designed to incentivize participation in IEX Auctions by providing a costeffective execution mechanism that offers Members an opportunity to receive executions at the official opening, re-opening, or closing price of an IEX-listed security. The Exchange believes the proposed fees may also incentivize Members to enter more interest into IEX Auctions, rather than investing resources into developing and maintaining their own off-exchange internalization mechanisms, or utilizing the internalization mechanisms of competing brokers and alternative trading systems. The Exchange notes that it 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. However, in the case of auctions, the primary listing market receives the majority of order flow seeking execution 23 The Exchange notes that non-displayed orders resting on the Continuous Book that execute in the auction will no longer receive Fee Code ‘‘I’’, and will instead receive the applicable auction Fee Code. Orders taking or adding non-displayed liquidity prior to or after an IEX Auction, will continue to receive Fee Code I, either alone or in conjunction with other applicable Fee Codes. 24 ‘‘TDVT’’ means the total dollar value of the transaction calculated as the execution price multiplied by the number of shares executed in the transaction. See IEX Fee Schedule, Definitions, bullet five. 25 15 U.S.C. 78f. 26 15 U.S.C. 78f(b)(4). VerDate Sep<11>2014 16:59 Nov 24, 2017 Jkt 244001 at the official opening, re-opening, and closing prices of its listed securities, because such price is generally established by its auction processes. As a result, the Exchange believes that, to date, the Nasdaq Stock Market (‘‘Nasdaq’’) and the New York Stock Exchange (‘‘NYSE’’) charge auction fees that are considerably higher than those charged during continuous trading, when accounting for the fact that fees for executions in the auction processes are assessed on both sides of each transaction, and a large portion of the fees collected for removing liquidity during continuous trading are largely earmarked to pay rebates to liquidity providers.27 Consequently, the Exchange believes there is considerable demand from market participants seeking an alternative to the primary market’s auction processes, as evidenced by the recent proposal from Bats BZX Exchange, Inc. (‘‘Bats’’) to offer a closing process to match orders in non-listed securities at the official closing price published by the primary listing market (the ‘‘Bats Market Close’’).28 Therefore, the Exchange has designed its proposed fees to meet the demands of market participants by 27 For example, the Nasdaq Stock Market charges fees ranging between $0.0008–$0.0016 for orders executed in the Nasdaq Closing Cross, resulting in net fee capture ranging between $0.0016–$0.0032 per share executed. In contrast, during continuous trading, Nasdaq pays rebates ranging between $0.0015–$0.00305 to liquidity providing orders, and charges a fee of $0.0030 to liquidity taking orders, resulting in net fee capture ranging between ¥$0.00005–$0.0015 per share executed. Similarly, NYSE charges fees ranging between $0.0008– $0.0011 for MOC and LOC orders executed in the NYSE Closing Auction, resulting in net fee capture ranging between $0.0016 and $0.0022 per share executed. In contrast, during continuous trading, NYSE pays a rebate ranging between $0.0010– $0.0022 to liquidity providing orders for nonmarket makers and non-Supplemental Liquidity providers, and assuming a member qualifies for the highest removal tier, NYSE charges $0.00275 to liquidity taking orders, resulting in net fee capture ranging between $0.00055–$0.00175 per share executed. 28 See Securities and Exchange Act Release No. 80683 (May 16, 2017), 82 FR 23320 (May 22, 2017) (SR–BatsBZX–2017–34). PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 Fee for executions <$1.00 offering competitive pricing to compete for auction order flow with trading centers such as Bats (if the Bats Market Close is approved), as well as other offexchange facilities.29 As discussed above, IEX also believes that it is appropriate, reasonable, and consistent with the Act not to charge a fee for an order executed in an IEX Auction that was displayed on the Continuous Book prior to the Opening or Closing Auction. As with the existing fee structure for the execution of transactions including displayed liquidity, this fee structure is designed to incentivize Members to send IEX aggressively priced displayable orders, thereby contributing to price discovery, consistent with the overall goal of enhancing market quality. IEX believes that, as with the existing Displayed Match Fee, not charging a fee for the execution of a previously displayed order is equitable and not unfairly discriminatory because it is designed to facilitate the entry of, and enhance execution opportunities for, displayable orders, thereby further incentivizing entry of displayed orders. Furthermore, the Exchange notes that the proposed fees are nondiscriminatory because they will apply uniformly to all Members, and all Members have an equal opportunity to submit any type of Auction Eligible Order,30—including both displayed and non-displayed orders on the Continuous Book, or orders that queue on the Auction Book—for execution in an IEX Auction, using the order types made available to all Members on a fair and equal basis. In addition, the Exchange believes that the proposed fees for IEX Auctions are appropriate, reasonable, and consistent with the Act, because such fees are within the range of transaction fees charged by other exchanges for their 29 See 30 See E:\FR\FM\27NON1.SGM supra note 16. Rule 11.350(a)(2). 27NON1 56092 Federal Register / Vol. 82, No. 226 / Monday, November 27, 2017 / Notices asabaliauskas on DSKBBXCHB2PROD with NOTICES respective Auction processes.31 Furthermore, although orders that execute in IEX Auctions may be subject to different fees than similar orders executed during continuous trading, the Exchange notes that other exchanges also charge differential pricing for orders that execute in their opening process.32 Moreover, as described above, the Exchange believes the proposed fees for orders executed in an IEX Auction are appropriate, reasonable, and consistent with the Act, because such fees are designed to incentivize participation in IEX Auctions, in order to provide an efficient price discovery process and greater opportunity for execution at the official auction price. Additionally, the Exchange believes that its proposed Fee Codes for orders executed in an IEX Auction, which will be provided on execution reports, will provide transparency and predictability to Members as to the applicable transaction fees, because Members can determine which Fee Code is applicable to the execution of a particular order in an IEX Auction. As discussed above, the Exchange does not believe that it is appropriate to provide the Internalization Fee, or the Displayed Match Fee to non-displayed orders that execute in an IEX Auction, because IEX Auctions are an aggregated match process where only the cumulative volume to buy and sell at various prices is considered, and thus there is no basis to distinguish between liquidity providers and liquidity removers. Similarly, the Exchange does not believe that the exception to the Non-Displayed Match Fee for displayable orders that take resting interest upon entry is applicable in the context of an IEX Auction, since such orders are not able to remove resting interest on entry in an IEX Auction, because they are either queued on the Auction Book and not displayed, or resting displayed on the Continuous Book.33 Moreover, as noted above, the IEX Auctions are an aggregated match process where only the cumulative 31 For example, the Nasdaq Stock Market charges fees ranging from $0.00085–$0.0015 for orders executed in the Nasdaq Opening Cross, including capping such fees at $35,000 per month for certain members, which includes crosses for listed and non-listed securities. Similarly, NYSE charges fees ranging from $0 for closing off-set orders and orders on the continuous book that are executed in the auction, to $0.0011 for MOC and LOC orders (for members that don’t qualify for MOC/LC Tier 1 or 2). 32 See id. 33 The Exchange notes that it is of course possible for a displayed order to remove non-displayed liquidity during continuous trading on the Continuous Book; however, such execution would not be part of an IEX Auction, and would be subject to the Exchange’s existing Fee Schedule. VerDate Sep<11>2014 16:59 Nov 24, 2017 Jkt 244001 volume to buy and sell at various prices is considered, and thus there is no basis to distinguish between liquidity providers and liquidity removers, or their respective display status on the Auction Book. In conclusion, the Exchange also submits that its proposed fee structure satisfies the requirements of Sections 6(b)(4) and 6(b)(5) of the Act for the reasons discussed above in that it does not permit unfair discrimination between customers, issuers, brokers, or dealers, and is designed 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. Further, IEX believes that its proposal does not raise any new or novel issues that have not previously been considered by the Commission when approving the existing IEX fees, or the auction fees of other national securities exchanges. B. Self-Regulatory Organization’s Statement on Burden on Competition IEX does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange 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. To the contrary, the Exchange believes that the proposed pricing structure will increase competition and draw additional volume to the Exchange for IEX Auctions. The Exchange operates in a highly competitive market in which market participants can readily favor competing venues if fee schedules at other venues are viewed as more favorable. Consequently, the Exchange believes that the degree to which IEX fees could impose any burden on competition is extremely limited, and does not believe that such fees would burden competition between Members or competing venues in a manner 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 intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because, while different fees are assessed in some circumstances, these different fees are not based on the type of Member entering the orders that execute in an IEX Auction, but based on the type of order entered, and all PO 00000 Frm 00108 Fmt 4703 Sfmt 4703 Members can submit any of IEX’s permissible order types. 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) 34 of the Act. 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) 35 of the Act to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– IEX–2017–40 on the subject line. Paper Comments • Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–IEX–2017–40. This file number should be included in the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements 34 15 35 15 E:\FR\FM\27NON1.SGM U.S.C. 78s(b)(3)(A)(ii). U.S.C. 78s(b)(2)(B). 27NON1 Federal Register / Vol. 82, No. 226 / Monday, November 27, 2017 / Notices with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Section, 100 F Street NE., Washington, DC 20549–1090. Copies of the filing will also be available for inspection and copying at the IEX’s principal office and on its Internet Web site 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 Number SR–IEX–2017–40 and should be submitted on or before December 18, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.36 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–25471 Filed 11–24–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 32900; 812–14799] New Mountain Finance Corporation, et al. November 20, 2017. Securities and Exchange Commission (‘‘Commission’’). ACTION: Notice. asabaliauskas on DSKBBXCHB2PROD with NOTICES AGENCY: Notice of application for an order (‘‘Order’’) to amend a prior order under sections 17(d) and 57(i) of the Investment Company Act of 1940 (the ‘‘Act’’) and rule 17d–1 under the Act permitting certain joint transactions otherwise prohibited by sections 17(d) and 57(a)(4) of the Act and under rule 17d–1 under the Act. SUMMARY OF APPLICATION: Applicants request an order to permit certain business development companies (each, a ‘‘BDC’’) and certain closed-end investment companies to co-invest in portfolio companies with each other and 36 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 16:59 Nov 24, 2017 Jkt 244001 with affiliated investment funds. The Order would supersede the prior order.1 APPLICANTS: New Mountain Finance Corporation (‘‘NMFC’’); NMF Ancora Holdings, Inc., NMF QID NGL Holdings, Inc., and NMF YP Holdings, Inc. (collectively, the ‘‘NMFC Subsidiaries’’); New Mountain Finance SBIC, L.P. (‘‘SBIC LP’’); New Mountain Net Lease Corporation (‘‘NMNLC’’); New Mountain Guardian Partners II, L.P. (‘‘Guardian II’’); New Mountain Guardian II Master Fund-A, L.P. (‘‘Guardian II Master A’’); New Mountain Guardian II Master Fund–B, L.P. (‘‘Guardian II Master B,’’ and together with Guardian II and Guardian II Master A, the ‘‘Guardian II Funds’’); and New Mountain Finance Advisers BDC, L.L.C. (the BDC Adviser’’) on behalf of itself and its successors.2 FILING DATES: The application was filed on July 10, 2017 and amended on October 31, 2017. HEARING OR NOTIFICATION OF HEARING: An order granting the requested relief will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Commission’s Secretary and serving applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on December 15, 2017, and should be accompanied by proof of service on applicants, in the form of an affidavit or, for lawyers, a certificate of service. Pursuant to rule 0–5 under the Act, hearing requests should state the nature of the writer’s interest, any facts bearing upon the desirability of a hearing on the matter, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Commission’s Secretary. ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F St., NE., Washington, DC 20549–1090. Applicants: Robert A. Hamwee, New Mountain Finance Corporation, 787 Seventh Avenue, 48th Floor, New York, NY 10019. FOR FURTHER INFORMATION CONTACT: Barbara T. Heussler, Senior Counsel, at (202) 551–6990 or David J. Marcinkus, Branch Chief, at (202) 551–6821 (Division of Investment Management, Chief Counsel’s Office). SUPPLEMENTARY INFORMATION: The following is a summary of the 1 New Mountain Finance Corporation, et al., Investment Company Act Rel. Nos. 32630 (May 8, 2017) (notice) and 32668 (Jun. 5, 2017). 2 The term ‘‘successor,’’ means an entity that results from a reorganization into another jurisdiction or change in the type of business organization. PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 56093 application. The complete application may be obtained via the Commission’s Web site by searching for the file number, or for an applicant using the Company name box, at http:// www.sec.gov/search/search.htm or by calling (202) 551–8090. Applicants’ Representations 1. NMFC, a Delaware corporation, is an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a BDC under section 54(a) of the Act.3 Applicants state that NMFC’s Objectives and Strategies 4 are to generate both current income and capital appreciation through the sourcing and origination of debt securities at all levels of the capital structure, including first and second lien debt, notes, bonds and mezzanine securities. The board of directors (‘‘Board’’) of NMFC is comprised of seven directors, four of whom are not ‘‘interested directors’’ as defined in section 2(a)(19) of the Act (‘‘NonInterested Directors’’), of NMFC. 2. The NMFC Subsidiaries are Wholly-Owned Investment Subs (as defined below) of NMFC, each structured as a Delaware corporation to hold equity or equity-like investments in portfolio companies organized as limited liability companies or other forms of pass-through entities. The NMFC Subsidiaries are not registered under the Act in reliance on the exclusion from the definition of ‘‘investment company’’ in section 3(a)(7) of the Act. 3. SBIC LP, a Wholly-Owned Investment Sub of NMFC, is structured as a Delaware limited partnership. SBIC LP received a license from the Small Business Administration (‘‘SBA’’) to operate under the Small Business Investment Act of 1958 (‘‘SBA Act’’) as a small business investment company (each such licensed entity, a ‘‘SBIC Subsidiary’’). 4. NMNLC, a Maryland corporation, is a Wholly-Owned Investment Sub of NMFC. NMNLC was formed to acquire real properties that are subject to ‘‘triple net’’ leases and will qualify as a real 3 Section 2(a)(48) of the Act defines a BDC to be any closed-end investment company that operates for the purpose of making investments in securities described in sections 55(a)(1) through 55(a)(3) of the Act and makes available significant managerial assistance with respect to the issuers of such securities. 4 ‘‘Objectives and Strategies’’ means a Regulated Fund’s investment objectives and strategies as described in the Regulated Fund’s registration statement on Form N–2, other filings the Regulated Fund has made with the Commission under the Securities Act of 1933 (the ‘‘Securities Act’’), or the Securities Exchange Act of 1934, and the Regulated Fund’s reports to shareholders. E:\FR\FM\27NON1.SGM 27NON1

Agencies

[Federal Register Volume 82, Number 226 (Monday, November 27, 2017)]
[Notices]
[Pages 56089-56093]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-25471]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82127; File No. SR-IEX-2017-40]


Self-Regulatory Organizations; Investors Exchange LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Modify 
Its Fee Schedule, Pursuant to IEX Rule 15.110(a) and (c), To Adopt 
Pricing for Orders That Execute in an IEX Auction for IEX-Listed 
Securities

November 20, 2017.
    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 (date), 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 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 modify its Fee 
Schedule, pursuant to IEX Rule 15.110(a) and (c), to adopt pricing for 
orders that execute in an IEX Auction \6\ for IEX-listed securities 
pursuant to Rule 11.350. Changes to the Fee Schedule pursuant to this 
proposal are effective upon filing, and will be operative once the 
Exchange begins conducting IEX Auctions in IEX-listed securities.\7\ 
The text of the proposed rule change is available at the Exchange's Web 
site at www.iextrading.com, at the principal office of the Exchange, 
and at the Commission's Public Reference Room.
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    \4\ 15 U.S.C. 78s(b)(1).
    \5\ 17 CRF 240.19b-4.
    \6\ IEX Auctions include the daily Opening and Closing Auctions 
(Rule 11.350(c) and (d), respectively), as well as IPO Auctions 
related to an initial public offering of securities (Rule 
11.350(e)), Halt Auctions following a regulatory halt (Rule 
11.350(e)), and Volatility Auctions following a trading pause 
pursuant to the Limit Up-Limit Down Plan (Rule 11.350(f)).
    \7\ See IEX Trader Alert #2017-015, available on the Exchange 
public Web site.
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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 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
    On August 10, 2017, the Commission approved a proposed rule change 
by the Exchange to adopt rules governing auctions, including 
dissemination of auction-related market data, for securities listed on 
the Exchange pursuant to Chapter 14 of the IEX Rule Book.\8\ The 
Exchange proposes to update its Fee Schedule, pursuant to IEX Rule 
15.110(a) and (c), to add new Fee Codes to identify the fees applicable 
to orders that execute in IEX Auctions. The IEX Auction processes are 
designed to maximize participation in the auctions in order to provide 
an efficient price discovery process and greater opportunity for 
execution at the official auction price. The Exchange believes that 
fees are an important component of the IEX Auction processes, in that 
execution fees can influence the trading behavior of Members by 
creating economic incentives (and disincentives) for Members that 
participate in IEX Auctions. Thus, the Exchange is proposing fees that 
are similarly designed to incentivize participation in IEX Auctions in 
order to further support an efficient price discovery process and 
greater opportunity for execution at the official auction price.
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    \8\ See Securities and Exchange Act Release No. 81316 (August 4, 
2017), 82 FR 37474 (August 10, 2017) (SR-IEX-2017-10).
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    The Exchange proposes to apply the following new Fee Codes:

 Executions in the Opening Auction \9\ will receive Fee Code 
``O''
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    \9\ See Rule 11.350(c).
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 Executions in the Closing Auction \10\ will receive Fee Code 
``C''
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    \10\ See Rule 11.350(d).

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[[Page 56090]]

 Executions in a Halt Auction \11\ or Volatility Auction \12\ 
will receive Fee Code ``H''
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    \11\ See Rule 11.350(e).
    \12\ See Rule 11.350(f).
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 Executions in an IPO Auction \13\ will receive Fee Code ``N''
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    \13\ See Rule 11.350(e).

    As proposed, non-displayed orders on the Continuous Book \14\ that 
are executed in an IEX Auction will receive the applicable auction Fee 
Code on their execution reports and will be subject to a fee of $0.0003 
per share (or 0.30% of total dollar value of the transaction calculated 
as the execution price multiplied by the number of shares executed in 
the transaction for shares executed below $1.00) (the ``Auction Match 
Fee''). Furthermore, all orders on the Auction Book \15\ that are 
executed in an IEX Auction will receive the applicable auction Fee Code 
on their execution reports and will also be subject to the Auction 
Match Fee of $0.0003 per share (or 0.30% of total dollar value of the 
transaction calculated as the execution price multiplied by the number 
of shares executed in the transaction for shares executed below $1.00).
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    \14\ See Rule 11.350(a)(4).
    \15\ See Rule 11.350(a)(1).
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    The Exchange believes that the proposed Auction Match Fee for non-
displayed orders on the Continuous Book and all orders on the Auction 
Book that are executed in an IEX Auction are designed to incentivize 
participation in IEX Auctions by providing a cost-effective execution 
mechanism that offers Members an opportunity to receive executions at 
the official opening, re-opening, or closing price of an IEX-listed 
security. The Exchange believes the proposed fees enhance the price 
discovery process by incentivizing Members to enter interest in IEX-
listed securities into IEX Auctions, rather than investing resources 
into developing and maintaining their own off-exchange internalization 
mechanisms, or utilizing the internalization mechanisms of competing 
brokers and alternative trading systems, and entering only the balance 
to participate in an IEX Auction.\16\ The Exchange believes 
incentivizing broader participation will increase overall liquidity in 
the IEX Auctions, and enhance the price discovery process, particularly 
in the Opening and Closing Auctions, which provide a critical price 
discovery mechanism to establish the official opening and closing 
prices for IEX-listed securities at the start and end of each trading 
day.
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    \16\ See, e.g., Exhibit F of Instinet LLC's Form ATS, which 
describes its MOC Crosses that match buy and sell orders for certain 
U.S. equity securities marked ``market on close''. See also, Table 6 
in Appendix A of Bats BZX Exchange's (``Bats'') response letter from 
Joanne Moffic-Silver, Executive Vice President, General Counsel, and 
Corporate Secretary, to Secretary Brent J. Fields, dated August 2, 
2017, in support of the proposed Bats Market Close. Table 6 
illustrates significant volume in shares of FedEx, Proctor & Gamble, 
and Cardinal Health that was executed at the official closing price 
at off exchange venues. See Securities and Exchange Act Release No. 
80683 (May 16, 2017), 82 FR 23320 (May 22, 2017) (SR-BatsBZX-2017-
34).
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    Moreover, orders that were displayed on the Continuous Book during 
the Pre-Market Session \17\ or Regular Market Session \18\ that are 
executed in the Opening Auction or Closing Auction, respectively, will 
receive the applicable auction Fee Code, as well as existing Fee Code L 
(Displayed Match Fee).\19\ Thus, such orders will not be charged a fee 
because, pursuant to the IEX Fee Schedule, to the extent a Member 
receives multiple Fee Codes on an execution, the lower fee shall 
apply.\20\ As with the existing fee structure for execution of 
transactions including displayed liquidity, this fee structure is 
designed to incentivize Members to send IEX aggressively priced 
displayable orders, thereby contributing to price discovery leading 
into IEX Auctions.
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    \17\ See Rule 1.160(z).
    \18\ See Rule 1.160(gg).
    \19\ The Exchange currently does not charge any fee to Members 
for executions on IEX that provide or take resting interest with 
displayed priority (i.e., an order or portion of a reserve order 
that is booked and ranked with display priority on the Order Book 
either as the IEX best bid or best offer (``BBO''), or at a less 
aggressive price). This pricing is referred to by the Exchange as 
``Displayed Match Fee'' with a Fee Code of `L' provided by the 
Exchange on execution reports. See the Investors Exchange Fee 
Schedule, available on the Exchange public Web site.
    \20\ See IEX Fee Schedule, Transaction Fees, bullet three. The 
Exchange also notes that there is no Continuous Book prior to a 
Halt, Volatility, or IPO auction, and thus no opportunity for a 
Member to have a displayed order on the Continuous Book that is 
executed in such auctions.
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    The Exchange notes that the Internalization Fee, Displayed Match 
Fee for non-displayed orders that remove displayed liquidity,\21\ and 
the exception to the Non-Displayed Match Fee for displayable orders 
that remove non-displayed resting interest upon entry,\22\ are not 
applicable to IEX Auctions. IEX Auctions are an aggregated match 
process where only the cumulative volume to buy and sell at various 
prices is considered, and thus there is no basis to distinguish between 
liquidity providers and liquidity removers, rendering the 
Internalization Fee, Displayed Match Fee for non-displayed orders that 
remove displayed liquidity, and the exception to the Non-Displayed 
Match Fee for displayable orders that remove non-displayed resting 
interest upon entry, inapplicable.
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    \21\ See supra note 19.
    \22\ The Exchange does not charge any fee to Members (on a per 
MPID basis) for executions on IEX that remove resting interest with 
non-displayed priority where (i) the liquidity removing order was 
displayable (i.e., the order would have booked and displayed if 
posted to the Order Book), and (ii) on a monthly basis, at least 90% 
of the liquidity removing MPID's aggregate executions of displayable 
orders provided liquidity during such calendar month. In such 
transactions, the liquidity providing non-displayed interest is 
subject to the Non-Displayed Match Fee.
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    The following table is designed to illustrate the various Fee Codes 
and execution fees that will be applied to orders that may be executed 
in an IEX Auction:

[[Page 56091]]



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                                                                                                                                                    Fee for  executions     Fee for  executions
          Order details                Opening  auction         Closing  auction        Halt/volatility  auction             IPO auction                  >=$1.00                 <$1.00
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Non-displayed orders resting on    O......................  C......................  Not applicable...............  Not applicable..............  $0.0003...............  0.30% of TDVT.\24\
 the Continuous Book that execute
 in the Opening or Closing
 Auction \23\.
Displayed orders resting on the    O, L...................  C, L...................  Not applicable...............  Not applicable..............  FREE..................  FREE.
 Continuous Book that execute in
 the Opening or Closing Auction.
All orders on the Auction Book     O......................  C......................  H............................  N...........................  $0.0003...............  0.30% of TDVT
 that execute in an IEX Auction.
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2. Statutory Basis
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    \23\ The Exchange notes that non-displayed orders resting on the 
Continuous Book that execute in the auction will no longer receive 
Fee Code ``I'', and will instead receive the applicable auction Fee 
Code. Orders taking or adding non-displayed liquidity prior to or 
after an IEX Auction, will continue to receive Fee Code I, either 
alone or in conjunction with other applicable Fee Codes.
    \24\ ``TDVT'' means the total dollar value of the transaction 
calculated as the execution price multiplied by the number of shares 
executed in the transaction. See IEX Fee Schedule, Definitions, 
bullet five.
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    IEX believes that the proposed rule change is consistent with the 
provisions of Section 6(b) \25\ of the Act in general, and furthers the 
objectives of Sections 6(b)(4) \26\ 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.
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    \25\ 15 U.S.C. 78f.
    \26\ 15 U.S.C. 78f(b)(4).
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    IEX believes that its proposed pricing for orders executed in an 
IEX Auction is reasonable and equitable because, as discussed above, 
the proposed fees are designed to incentivize participation in IEX 
Auctions by providing a cost-effective execution mechanism that offers 
Members an opportunity to receive executions at the official opening, 
re-opening, or closing price of an IEX-listed security. The Exchange 
believes the proposed fees may also incentivize Members to enter more 
interest into IEX Auctions, rather than investing resources into 
developing and maintaining their own off-exchange internalization 
mechanisms, or utilizing the internalization mechanisms of competing 
brokers and alternative trading systems. The Exchange notes that it 
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. However, in the case of 
auctions, the primary listing market receives the majority of order 
flow seeking execution at the official opening, re-opening, and closing 
prices of its listed securities, because such price is generally 
established by its auction processes. As a result, the Exchange 
believes that, to date, the Nasdaq Stock Market (``Nasdaq'') and the 
New York Stock Exchange (``NYSE'') charge auction fees that are 
considerably higher than those charged during continuous trading, when 
accounting for the fact that fees for executions in the auction 
processes are assessed on both sides of each transaction, and a large 
portion of the fees collected for removing liquidity during continuous 
trading are largely earmarked to pay rebates to liquidity 
providers.\27\ Consequently, the Exchange believes there is 
considerable demand from market participants seeking an alternative to 
the primary market's auction processes, as evidenced by the recent 
proposal from Bats BZX Exchange, Inc. (``Bats'') to offer a closing 
process to match orders in non-listed securities at the official 
closing price published by the primary listing market (the ``Bats 
Market Close'').\28\ Therefore, the Exchange has designed its proposed 
fees to meet the demands of market participants by offering competitive 
pricing to compete for auction order flow with trading centers such as 
Bats (if the Bats Market Close is approved), as well as other off-
exchange facilities.\29\
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    \27\ For example, the Nasdaq Stock Market charges fees ranging 
between $0.0008-$0.0016 for orders executed in the Nasdaq Closing 
Cross, resulting in net fee capture ranging between $0.0016-$0.0032 
per share executed. In contrast, during continuous trading, Nasdaq 
pays rebates ranging between $0.0015-$0.00305 to liquidity providing 
orders, and charges a fee of $0.0030 to liquidity taking orders, 
resulting in net fee capture ranging between -$0.00005-$0.0015 per 
share executed. Similarly, NYSE charges fees ranging between 
$0.0008-$0.0011 for MOC and LOC orders executed in the NYSE Closing 
Auction, resulting in net fee capture ranging between $0.0016 and 
$0.0022 per share executed. In contrast, during continuous trading, 
NYSE pays a rebate ranging between $0.0010-$0.0022 to liquidity 
providing orders for non-market makers and non-Supplemental 
Liquidity providers, and assuming a member qualifies for the highest 
removal tier, NYSE charges $0.00275 to liquidity taking orders, 
resulting in net fee capture ranging between $0.00055-$0.00175 per 
share executed.
    \28\ See Securities and Exchange Act Release No. 80683 (May 16, 
2017), 82 FR 23320 (May 22, 2017) (SR-BatsBZX-2017-34).
    \29\ See supra note 16.
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    As discussed above, IEX also believes that it is appropriate, 
reasonable, and consistent with the Act not to charge a fee for an 
order executed in an IEX Auction that was displayed on the Continuous 
Book prior to the Opening or Closing Auction. As with the existing fee 
structure for the execution of transactions including displayed 
liquidity, this fee structure is designed to incentivize Members to 
send IEX aggressively priced displayable orders, thereby contributing 
to price discovery, consistent with the overall goal of enhancing 
market quality. IEX believes that, as with the existing Displayed Match 
Fee, not charging a fee for the execution of a previously displayed 
order is equitable and not unfairly discriminatory because it is 
designed to facilitate the entry of, and enhance execution 
opportunities for, displayable orders, thereby further incentivizing 
entry of displayed orders.
    Furthermore, the Exchange notes that the proposed fees are 
nondiscriminatory because they will apply uniformly to all Members, and 
all Members have an equal opportunity to submit any type of Auction 
Eligible Order,\30\--including both displayed and non-displayed orders 
on the Continuous Book, or orders that queue on the Auction Book--for 
execution in an IEX Auction, using the order types made available to 
all Members on a fair and equal basis. In addition, the Exchange 
believes that the proposed fees for IEX Auctions are appropriate, 
reasonable, and consistent with the Act, because such fees are within 
the range of transaction fees charged by other exchanges for their

[[Page 56092]]

respective Auction processes.\31\ Furthermore, although orders that 
execute in IEX Auctions may be subject to different fees than similar 
orders executed during continuous trading, the Exchange notes that 
other exchanges also charge differential pricing for orders that 
execute in their opening process.\32\ Moreover, as described above, the 
Exchange believes the proposed fees for orders executed in an IEX 
Auction are appropriate, reasonable, and consistent with the Act, 
because such fees are designed to incentivize participation in IEX 
Auctions, in order to provide an efficient price discovery process and 
greater opportunity for execution at the official auction price.
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    \30\ See Rule 11.350(a)(2).
    \31\ For example, the Nasdaq Stock Market charges fees ranging 
from $0.00085-$0.0015 for orders executed in the Nasdaq Opening 
Cross, including capping such fees at $35,000 per month for certain 
members, which includes crosses for listed and non-listed 
securities. Similarly, NYSE charges fees ranging from $0 for closing 
off-set orders and orders on the continuous book that are executed 
in the auction, to $0.0011 for MOC and LOC orders (for members that 
don't qualify for MOC/LC Tier 1 or 2).
    \32\ See id.
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    Additionally, the Exchange believes that its proposed Fee Codes for 
orders executed in an IEX Auction, which will be provided on execution 
reports, will provide transparency and predictability to Members as to 
the applicable transaction fees, because Members can determine which 
Fee Code is applicable to the execution of a particular order in an IEX 
Auction.
    As discussed above, the Exchange does not believe that it is 
appropriate to provide the Internalization Fee, or the Displayed Match 
Fee to non-displayed orders that execute in an IEX Auction, because IEX 
Auctions are an aggregated match process where only the cumulative 
volume to buy and sell at various prices is considered, and thus there 
is no basis to distinguish between liquidity providers and liquidity 
removers. Similarly, the Exchange does not believe that the exception 
to the Non-Displayed Match Fee for displayable orders that take resting 
interest upon entry is applicable in the context of an IEX Auction, 
since such orders are not able to remove resting interest on entry in 
an IEX Auction, because they are either queued on the Auction Book and 
not displayed, or resting displayed on the Continuous Book.\33\ 
Moreover, as noted above, the IEX Auctions are an aggregated match 
process where only the cumulative volume to buy and sell at various 
prices is considered, and thus there is no basis to distinguish between 
liquidity providers and liquidity removers, or their respective display 
status on the Auction Book.
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    \33\ The Exchange notes that it is of course possible for a 
displayed order to remove non-displayed liquidity during continuous 
trading on the Continuous Book; however, such execution would not be 
part of an IEX Auction, and would be subject to the Exchange's 
existing Fee Schedule.
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    In conclusion, the Exchange also submits that its proposed fee 
structure satisfies the requirements of Sections 6(b)(4) and 6(b)(5) of 
the Act for the reasons discussed above in that it does not permit 
unfair discrimination between customers, issuers, brokers, or dealers, 
and is designed 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. Further, IEX believes that its proposal does 
not raise any new or novel issues that have not previously been 
considered by the Commission when approving the existing IEX fees, or 
the auction fees of other national securities exchanges.

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

    IEX does not believe that the proposed rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange 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. To the contrary, the Exchange believes that the 
proposed pricing structure will increase competition and draw 
additional volume to the Exchange for IEX Auctions. The Exchange 
operates in a highly competitive market in which market participants 
can readily favor competing venues if fee schedules at other venues are 
viewed as more favorable. Consequently, the Exchange believes that the 
degree to which IEX fees could impose any burden on competition is 
extremely limited, and does not believe that such fees would burden 
competition between Members or competing venues in a manner 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 intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because, while 
different fees are assessed in some circumstances, these different fees 
are not based on the type of Member entering the orders that execute in 
an IEX Auction, but based on the type of order entered, and all Members 
can submit any of IEX's permissible order types.

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) \34\ of the Act.
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    \34\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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) \35\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \35\ 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-IEX-2017-40 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-IEX-2017-40. This file 
number should be included in the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements

[[Page 56093]]

with respect to the proposed rule change that are filed with the 
Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for Web site viewing and printing in 
the Commission's Public Reference Section, 100 F Street NE., 
Washington, DC 20549-1090. Copies of the filing will also be available 
for inspection and copying at the IEX's principal office and on its 
Internet Web site 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 Number SR-IEX-
2017-40 and should be submitted on or before December 18, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\36\
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    \36\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-25471 Filed 11-24-17; 8:45 am]
BILLING CODE 8011-01-P