Self-Regulatory Organizations: Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 11.380 To Expand the Exchange's Optional Aggregate Risk Controls Mechanism To Include a Net Notional Exposure Risk Check in Addition to the Gross Notional Exposure Risk Check, 67302-67304 [2019-26409]
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Federal Register / Vol. 84, No. 236 / Monday, December 9, 2019 / Notices
Date of required notice:
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SUPPLEMENTARY INFORMATION:
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[FR Doc. 2019–26416 Filed 12–6–19; 8:45 am]
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8th Floor Board Conference
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STATUS: The initial part of this meeting
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[FR Doc. 2019–26613 Filed 12–5–19; 4:15 pm]
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[FR Doc. 2019–26388 Filed 12–6–19; 8:45 am]
BILLING CODE 7905–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–87647; File No. SR–IEX–
2019–13]
Portions Open to the Public
VerDate Sep<11>2014
Actuary of the U. S. Railroad Retirement
Board, 844 North Rush Street, Chicago,
Illinois, on the conduct of the 28th
Actuarial Valuation of the Railroad
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meeting will include a discussion of the
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Self-Regulatory Organizations:
Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend Rule
11.380 To Expand the Exchange’s
Optional Aggregate Risk Controls
Mechanism To Include a Net Notional
Exposure Risk Check in Addition to
the Gross Notional Exposure Risk
Check
December 3, 2019.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on
November 27, 2019, the Investors
Exchange LLC (‘‘IEX’’ or the
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
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,4 and Rule 19b–
4 thereunder,5 IEX is filing with the
Commission a proposed rule change to
amend Rule 11.380 to offer an optional
net notional exposure risk check to
Members and their clearing firms as part
of the Exchange’s Aggregate Risk
Controls mechanism. The Exchange has
designated this rule change as noncontroversial under Section 19(b)(3)(A)
of the Act 6 and provided the
Commission with the notice required by
Rule 19b–4(f)(6)(iii) thereunder.7
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 the
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of
and basis for the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of these statement may be examined at
the places specified in Item IV below.
The self-regulatory organization has
prepared summaries, set forth in
Sections A, B, and C below, of the most
significant aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
Rule 11.380 to offer an optional net
notional exposure risk check to
Members and their clearing firms as part
of the Exchange’s Aggregate Risk
Controls (‘‘ARC’’) mechanism. Rule
11.380, entitled Risk Management,
describes the Exchange’s current
optional ARC mechanism that is
designed to assist IEX Members 8 and
their clearing firms in their risk
management efforts. IEX does not charge
a fee for use of the ARC mechanism. As
described in the rule, the ARC
mechanism currently can be configured
to provide trading limits based on the
gross notional exposure for matched and
4 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
6 15 U.S.C. 78s(b)(3)(A).
7 17 CFR 240.19b–4(f)(6)(iii).
8 See Rule 1.160(s).
5 17
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
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Federal Register / Vol. 84, No. 236 / Monday, December 9, 2019 / Notices
routed trades for a Member or clearing
firm’s broker correspondent across
MPIDs, by MPID, by FIX session or in
combination, per clearing firm
relationship or Member, as applicable
(‘‘Gross Notional Exposure’’). Once the
Gross Notional Exposure, as elected and
configured by a Member or its clearing
firm, has exceeded the pre-determined
limit, IEX will automatically reject new
orders and cancel all open orders for the
applicable MPID(s) and/or FIX session
specified. Further, the Gross Notional
Exposure risk control may be increased
or decreased on an intra-day basis by a
Member or the clearing firm of a
Member, as applicable. As specified in
paragraph (a)(2)(A) of Rule 11.380,
Gross Notional Exposure is calculated as
the absolute sum of the notional value
of all buy and sell trades (i.e., equal to
the value of executed buys plus the
absolute value of executed long sells
plus the absolute value of executed
short sells). There is no netting of buys
and sales in the same symbol or across
symbols. And the Gross Notional
Exposure resets for each new trading
day.
IEX proposes to revise the rule to
provide Members or the clearing firms
of Members with an additional option of
configuring an ARC trading limit on the
net notional exposure for matched and
routed trades for a Member or clearing
firm’s broker correspondent across
MPIDs, by MPID, by FIX session or in
combination, per clearing firm
relationship or Member as applicable
(‘‘Net Notional Exposure’’). IEX notes
that other exchanges offer their
members the option of a risk control
based upon the member’s net notional
exposure.9 As proposed, once the Net
Notional Exposure, as elected and
configured by a Member or its clearing
firm, has exceeded the pre-determined
limit, IEX will automatically reject new
orders and cancel all open orders for the
applicable MPID(s) and/or FIX session
specified. However, just as with the
existing Gross Notional Exposure risk
control, the proposed new Net Notional
Exposure risk control may be increased
or decreased on an intra-day basis by a
Member or the clearing firm of a
Member, as applicable. As specified in
the proposed new paragraph (a)(2)(B) of
Rule 11.380, Net Notional Exposure will
be calculated as the absolute net sum of
the notional value of all buy and sell
9 See e.g., Nasdaq Stock Market (‘‘Nasdaq’’) Rule
6130; Cboe BZX Exchange, Inc. (‘‘Cboe’’) Rule 11.13
Interpretations and Policies .01(h); see also New
York Stock Exchange LLC (‘‘NYSE’’) Technology
FAQ and Best Practices: Equities (November 2019)
Section 5.7, available at https://www.nyse.com/
publicdocs/nyse/markets/nyse/NYSE_Group_
Equities_Technology_FAQ.pdf.
VerDate Sep<11>2014
17:22 Dec 06, 2019
Jkt 250001
trades (i.e., equal to the value of
executed buys minus the absolute value
of executed long sells minus the
absolute value of executed short sells).
Netting will be calculated across all
symbols. And, as with Gross Notional
Exposure risk controls, the proposed
Net Notional Exposure risk control
would reset for each new trading day.
Under the proposed rule change,
Members or their clearing firms, if they
choose to avail themselves of IEX’s ARC
mechanism, may elect to configure the
ARC mechanism to accumulate and
specify a limit or limits on either the
Gross Notional Exposure, the newlyoffered Net Notional Exposure, or both
(collectively defined in the proposed
new rule as the ‘‘ARC Limit’’).10
IEX believes that adding a Net
Notional Exposure risk control to its
existing ARC mechanism will enhance
the risk management tools available to
IEX Members. The Exchange notes,
however, that use of an ARC Limit by
a Member or the clearing firm of a
Member does not automatically
constitute compliance with IEX rules or
SEC rules, nor does it replace Membermanaged and clearing firm-managed
risk management solutions. The
Exchange does not propose to require
Members or their clearing firms to use
the ARC mechanism, and Members and
their clearing firms may use any other
appropriate risk-management tool or
service instead of, or in combination
with, IEX’s ARC mechanism. The
Exchange will not provide preferential
treatment to Members or clearing firms
using IEX’s ARC mechanism, nor will
the use of the ARC mechanism impact
a Member’s or clearing firm’s use of IEX
other than when it results in orders
being rejected or cancelled pursuant to
the ARC Limit. In addition, IEX will
continue to provide the ARC
mechanism to Members and clearing
firms without charge.
2. Statutory Basis
IEX believes that the proposed rule
change is consistent with the provisions
of Sections 6(b) 11 of the Act in general,
and furthers the objectives of Section
6(b)(5) 12 of the Act, in particular, in that
it is designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
10 In the case of a Member that is subject to ARC
Limits set by its clearing firm, the Member will be
advised of such limits by IEX. In the event a
Member that is subject to ARC Limits set by its
clearing firm also elects to set ARC Limits for its
own trading, the Exchange will apply both such
limits with the lower of the ARC Limits being
applicable since it will trigger first.
11 15 U.S.C. 78f.
12 15 U.S.C. 78f(b)(5).
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67303
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 by
enhancing the risk management
protections available to Exchange
Members and their clearing firms. The
Exchange believes that the proposed
rule change supports these objectives
because it is designed to enable all IEX
Members an additional option for how
to manage and limit their own trading
exposure (whether on the basis of the
Member’s Gross Notional Exposure, Net
Notional Exposure, or both) on IEX, in
addition to enabling clearing firms an
additional option to monitor their
correspondent Members’ trading
exposure as well as their own trading
exposure (whether on the basis of the
clearing firm’s Gross Notional Exposure,
Net Notional Exposure, or both),
including by intra-day increases or
decreases in the limits.
Further, the Exchange believes that
the proposed rule change is consistent
with the protection of investors and the
public interest because it provides an
additional mechanism to enable IEX
Members and clearing firms of IEX
Members to manage their risk by
preventing trading that exceeds a
Member’s, or clearing firm of a
Member’s, financial resources on a net
notional basis (as well as the currently
available gross notional basis risk
control), and thereby contributes to the
stability of the equities markets. Thus,
the Exchange believes the addition of a
Net Notional Exposure risk control
offers Members and their clearing firms
an important compliance tool that
Members and their clearing firms may
use to help maintain the regulatory
integrity of the markets.
The Exchange notes that other
exchanges’ rules provide for similar
functionality, as discussed in the
Purpose section, and accordingly IEX
does not believe that the proposed rule
change raises any new or novel issues
not already considered by the
Commission.13
In addition, the Exchange believes
that the proposal is consistent with just
and equitable principles of trade and
not unfairly discriminatory because the
ARC mechanism is available to all IEX
Members and their clearing firms
without charge.
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
13 See
E:\FR\FM\09DEN1.SGM
supra note 9.
09DEN1
67304
Federal Register / Vol. 84, No. 236 / Monday, December 9, 2019 / Notices
necessary or appropriate in furtherance
of the purposes of the Act. The proposal
is designed to expand the Exchange’s
existing, optional, ARC mechanism by
adding a new Net Notional Exposure
risk control as described in the Purpose
section. The Exchange is not proposing
to charge any fee for use of any aspect
of its ARC mechanism, which as
proposed, is available to all Members
and clearing firms of Members without
charge. The Exchange does not believe
the proposed rule change will impose
any burden on intermarket competition
because other exchanges offer similar
functionality.14 The Exchange also does
not believe that the proposal will
impose an burden on intramarket
competition because it is available to all
Members, and clearing firms of
Members, and provides a mechanism to
enable IEX Members and clearing firms
to manage their risk by preventing
trading that is erroneous or exceeds a
Member’s or clearing firm’s financial
resources, thereby contributing to the
stability of the equities markets.
Accordingly, the Exchange does not
believe that this proposal will have any
impact on competition.
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.
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III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A)(iii) of the Act 15 and
subparagraph (f)(6) of Rule 19b–4
thereunder.16
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
14 See
supra note 9.
U.S.C. 78s(b)(3)(A)(iii).
16 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
15 15
VerDate Sep<11>2014
17:22 Dec 06, 2019
Jkt 250001
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
be submitted on or before December 30,
2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Jill M. Peterson,
Assistant Secretary.
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:
[FR Doc. 2019–26409 Filed 12–6–19; 8:45 am]
Electronic Comments
[Release No. 34–87650; File No. SR–
NYSECHX–2019–24]
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
IEX–2019–13 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–2019–13. 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
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. 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–2019–13 and should
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BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Self-Regulatory Organizations; NYSE
Chicago, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the Fee
Schedule of NYSE Chicago, Inc.
December 3, 2019.
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 29, 2019 the NYSE Chicago,
Inc. (‘‘NYSE Chicago’’ 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 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
The Exchange proposes to amend its
Fee Schedule to (a) adopt the same
billing dispute practice as the
Exchange’s affiliates and other
exchanges, (b) adopt the same policy
regarding the aggregation of affiliated
Participants’ activity as applied by the
Exchange’s affiliates and other
exchanges, and (c) delete text
referencing fees and services that
became obsolete upon the Exchange’s
transition to the Pillar trading platform.
proposed rule change is available on the
Exchange’s website at www.nyse.com, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
17 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
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]]>Agencies
[Federal Register Volume 84, Number 236 (Monday, December 9, 2019)]
[Notices]
[Pages 67302-67304]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-26409]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-87647; File No. SR-IEX-2019-13]
Self-Regulatory Organizations: Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
Rule 11.380 To Expand the Exchange's Optional Aggregate Risk Controls
Mechanism To Include a Net Notional Exposure Risk Check in Addition to
the Gross Notional Exposure Risk Check
December 3, 2019.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on November 27, 2019, the Investors Exchange LLC (``IEX'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
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,\4\
and Rule 19b-4 thereunder,\5\ IEX is filing with the Commission a
proposed rule change to amend Rule 11.380 to offer an optional net
notional exposure risk check to Members and their clearing firms as
part of the Exchange's Aggregate Risk Controls mechanism. The Exchange
has designated this rule change as non-controversial under Section
19(b)(3)(A) of the Act \6\ and provided the Commission with the notice
required by Rule 19b-4(f)(6)(iii) thereunder.\7\
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78s(b)(1).
\5\ 17 CFR 240.19b-4.
\6\ 15 U.S.C. 78s(b)(3)(A).
\7\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------
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 the
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of and basis for the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of these statement may be examined at
the places specified in Item IV below. The self-regulatory organization
has prepared summaries, set forth in Sections A, B, and C below, of the
most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Rule 11.380 to offer an optional net
notional exposure risk check to Members and their clearing firms as
part of the Exchange's Aggregate Risk Controls (``ARC'') mechanism.
Rule 11.380, entitled Risk Management, describes the Exchange's current
optional ARC mechanism that is designed to assist IEX Members \8\ and
their clearing firms in their risk management efforts. IEX does not
charge a fee for use of the ARC mechanism. As described in the rule,
the ARC mechanism currently can be configured to provide trading limits
based on the gross notional exposure for matched and
[[Page 67303]]
routed trades for a Member or clearing firm's broker correspondent
across MPIDs, by MPID, by FIX session or in combination, per clearing
firm relationship or Member, as applicable (``Gross Notional
Exposure''). Once the Gross Notional Exposure, as elected and
configured by a Member or its clearing firm, has exceeded the pre-
determined limit, IEX will automatically reject new orders and cancel
all open orders for the applicable MPID(s) and/or FIX session
specified. Further, the Gross Notional Exposure risk control may be
increased or decreased on an intra-day basis by a Member or the
clearing firm of a Member, as applicable. As specified in paragraph
(a)(2)(A) of Rule 11.380, Gross Notional Exposure is calculated as the
absolute sum of the notional value of all buy and sell trades (i.e.,
equal to the value of executed buys plus the absolute value of executed
long sells plus the absolute value of executed short sells). There is
no netting of buys and sales in the same symbol or across symbols. And
the Gross Notional Exposure resets for each new trading day.
---------------------------------------------------------------------------
\8\ See Rule 1.160(s).
---------------------------------------------------------------------------
IEX proposes to revise the rule to provide Members or the clearing
firms of Members with an additional option of configuring an ARC
trading limit on the net notional exposure for matched and routed
trades for a Member or clearing firm's broker correspondent across
MPIDs, by MPID, by FIX session or in combination, per clearing firm
relationship or Member as applicable (``Net Notional Exposure''). IEX
notes that other exchanges offer their members the option of a risk
control based upon the member's net notional exposure.\9\ As proposed,
once the Net Notional Exposure, as elected and configured by a Member
or its clearing firm, has exceeded the pre-determined limit, IEX will
automatically reject new orders and cancel all open orders for the
applicable MPID(s) and/or FIX session specified. However, just as with
the existing Gross Notional Exposure risk control, the proposed new Net
Notional Exposure risk control may be increased or decreased on an
intra-day basis by a Member or the clearing firm of a Member, as
applicable. As specified in the proposed new paragraph (a)(2)(B) of
Rule 11.380, Net Notional Exposure will be calculated as the absolute
net sum of the notional value of all buy and sell trades (i.e., equal
to the value of executed buys minus the absolute value of executed long
sells minus the absolute value of executed short sells). Netting will
be calculated across all symbols. And, as with Gross Notional Exposure
risk controls, the proposed Net Notional Exposure risk control would
reset for each new trading day.
---------------------------------------------------------------------------
\9\ See e.g., Nasdaq Stock Market (``Nasdaq'') Rule 6130; Cboe
BZX Exchange, Inc. (``Cboe'') Rule 11.13 Interpretations and
Policies .01(h); see also New York Stock Exchange LLC (``NYSE'')
Technology FAQ and Best Practices: Equities (November 2019) Section
5.7, available at https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Group_Equities_Technology_FAQ.pdf.
---------------------------------------------------------------------------
Under the proposed rule change, Members or their clearing firms, if
they choose to avail themselves of IEX's ARC mechanism, may elect to
configure the ARC mechanism to accumulate and specify a limit or limits
on either the Gross Notional Exposure, the newly-offered Net Notional
Exposure, or both (collectively defined in the proposed new rule as the
``ARC Limit'').\10\
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\10\ In the case of a Member that is subject to ARC Limits set
by its clearing firm, the Member will be advised of such limits by
IEX. In the event a Member that is subject to ARC Limits set by its
clearing firm also elects to set ARC Limits for its own trading, the
Exchange will apply both such limits with the lower of the ARC
Limits being applicable since it will trigger first.
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IEX believes that adding a Net Notional Exposure risk control to
its existing ARC mechanism will enhance the risk management tools
available to IEX Members. The Exchange notes, however, that use of an
ARC Limit by a Member or the clearing firm of a Member does not
automatically constitute compliance with IEX rules or SEC rules, nor
does it replace Member-managed and clearing firm-managed risk
management solutions. The Exchange does not propose to require Members
or their clearing firms to use the ARC mechanism, and Members and their
clearing firms may use any other appropriate risk-management tool or
service instead of, or in combination with, IEX's ARC mechanism. The
Exchange will not provide preferential treatment to Members or clearing
firms using IEX's ARC mechanism, nor will the use of the ARC mechanism
impact a Member's or clearing firm's use of IEX other than when it
results in orders being rejected or cancelled pursuant to the ARC
Limit. In addition, IEX will continue to provide the ARC mechanism to
Members and clearing firms without charge.
2. Statutory Basis
IEX believes that the proposed rule change is consistent with the
provisions of Sections 6(b) \11\ of the Act in general, and furthers
the objectives of Section 6(b)(5) \12\ of the Act, in particular, in
that it is designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general, to protect investors and the
public interest by enhancing the risk management protections available
to Exchange Members and their clearing firms. The Exchange believes
that the proposed rule change supports these objectives because it is
designed to enable all IEX Members an additional option for how to
manage and limit their own trading exposure (whether on the basis of
the Member's Gross Notional Exposure, Net Notional Exposure, or both)
on IEX, in addition to enabling clearing firms an additional option to
monitor their correspondent Members' trading exposure as well as their
own trading exposure (whether on the basis of the clearing firm's Gross
Notional Exposure, Net Notional Exposure, or both), including by intra-
day increases or decreases in the limits.
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\11\ 15 U.S.C. 78f.
\12\ 15 U.S.C. 78f(b)(5).
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Further, the Exchange believes that the proposed rule change is
consistent with the protection of investors and the public interest
because it provides an additional mechanism to enable IEX Members and
clearing firms of IEX Members to manage their risk by preventing
trading that exceeds a Member's, or clearing firm of a Member's,
financial resources on a net notional basis (as well as the currently
available gross notional basis risk control), and thereby contributes
to the stability of the equities markets. Thus, the Exchange believes
the addition of a Net Notional Exposure risk control offers Members and
their clearing firms an important compliance tool that Members and
their clearing firms may use to help maintain the regulatory integrity
of the markets.
The Exchange notes that other exchanges' rules provide for similar
functionality, as discussed in the Purpose section, and accordingly IEX
does not believe that the proposed rule change raises any new or novel
issues not already considered by the Commission.\13\
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\13\ See supra note 9.
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In addition, the Exchange believes that the proposal is consistent
with just and equitable principles of trade and not unfairly
discriminatory because the ARC mechanism is available to all IEX
Members and their clearing firms without charge.
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
[[Page 67304]]
necessary or appropriate in furtherance of the purposes of the Act. The
proposal is designed to expand the Exchange's existing, optional, ARC
mechanism by adding a new Net Notional Exposure risk control as
described in the Purpose section. The Exchange is not proposing to
charge any fee for use of any aspect of its ARC mechanism, which as
proposed, is available to all Members and clearing firms of Members
without charge. The Exchange does not believe the proposed rule change
will impose any burden on intermarket competition because other
exchanges offer similar functionality.\14\ The Exchange also does not
believe that the proposal will impose an burden on intramarket
competition because it is available to all Members, and clearing firms
of Members, and provides a mechanism to enable IEX Members and clearing
firms to manage their risk by preventing trading that is erroneous or
exceeds a Member's or clearing firm's financial resources, thereby
contributing to the stability of the equities markets. Accordingly, the
Exchange does not believe that this proposal will have any impact on
competition.
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\14\ See supra note 9.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \15\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\16\
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\15\ 15 U.S.C. 78s(b)(3)(A)(iii).
\16\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. 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-2019-13 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-2019-13. 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 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. 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-2019-13 and should be submitted on
or before December 30, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-26409 Filed 12-6-19; 8:45 am]
BILLING CODE 8011-01-P
