Self-Regulatory Organizations: Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to Transaction Fees Pursuant to IEX Rule 15.110, 86617-86619 [2020-28811]
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Federal Register / Vol. 85, No. 250 / Wednesday, December 30, 2020 / Notices
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, on business days
between the hours of 10:00 a.m. and
3:00 p.m., located at 100 F Street NE,
Washington, DC 20549. Copies of such
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–NASDAQ–2020–092 and
should be submitted on or before
January 20, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2020–28803 Filed 12–29–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90786; File No. SR–IEX–
2020–19]
Self-Regulatory Organizations:
Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Related to
Transaction Fees Pursuant to IEX Rule
15.110
December 22, 2020.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on December
11, 2020, the Investors Exchange LLC
(‘‘IEX’’ or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II,
and III below, which Items have been
prepared by the Exchange. The
16 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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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,3 and Rule 19b4 thereunder,4 IEX is filing with the
Commission a proposed rule change to
amend its Fee Schedule, pursuant to
IEX Rule 15.110(a) and (c) (the ‘‘Fee
Schedule’’) to modify certain
promotional pricing incentives for the
execution of Discretionary Limit (‘‘DLimit’’) orders. Changes to the Fee
Schedule pursuant to this proposal are
effective upon filing,5 and the Exchange
plans to implement the changes on
January 1, 2021.
The text of the proposed rule change
is available at the Exchange’s website at
www.iextrading.com, at the principal
office of the Exchange, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of
and basis for the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of these statements may be examined at
the places specified in Item IV below.
The self-regulatory organization has
prepared summaries, set forth in
Sections A, B, and C below, of the most
significant aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
Fee Schedule, pursuant to IEX Rule
15.110(a) and (c), to modify certain
pricing incentives currently applicable
to executions of Discretionary Limit
(‘‘D-Limit’’), Discretionary Peg (‘‘DPeg’’), and Midpoint Peg (‘‘M-Peg’’)
order executions that were implemented
with the launch of the D-limit order
type on October 1 2020.6 Specifically,
the Exchange proposes to eliminate the
fee discount of $0.0002 per executed
3 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
5 15 U.S.C. 78s(b)(3)(A)(ii).
6 See Securities Exchange Act Release No. 89967
(September 23, 2020), 85 FR 63616 (October 8,
2020) (SR–IEX–2020–14).
4 17
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86617
share available to IEX Members 7 for
liquidity-providing D-Peg and M-Peg
orders.
The D-Limit order type was approved
by the Commission on August 26,
2020,8 and is designed to protect
liquidity providers from potential
adverse selection by latency arbitrage
trading strategies in a fair and
nondiscriminatory manner. A D-Limit
order may be a displayed or nondisplayed limit order that upon entry
and when posting to the Order Book 9 is
priced to be equal to and ranked at the
order’s limit price, but will be adjusted
to a less-aggressive price during periods
of quote instability, as defined in IEX
Rule 11.190(g).10 Otherwise, a D-Limit
order operates in the same manner as
either a displayed or non-displayed
limit order, as applicable,11 and
accordingly, the Exchange determined
that liquidity-taking D-Limit orders
would be subject to the same transaction
fees as other displayed or non-displayed
orders.12
Currently, a D-Limit order that
provides liquidity and is executed at a
price at or above $1.00 results in a free
execution.13 In addition, D-Peg and MPeg orders that provide liquidity and
execute at a price at or above $1.00 per
share are currently subject to a discount
of $0.0002 per share from the fee that
would otherwise be charged for the
number of shares of such orders
executed up to the number of shares of
D-Limit orders that provided liquidity
and executed at a price at or above $1.00
per share during such time period by
the same Member, measured on a
monthly basis.14
The fee discounts were designed to
provide a narrowly tailored incentive
for Members to utilize D-limit orders, a
new and innovative order type, taking
7 See
IEX Rule 1.160(s).
Securities Exchange Act Release No. 89686
(August 26, 2020), 85 FR 54438 (September 1, 2020)
(SR–IEX–2019–15).
9 See IEX Rule 1.160(p).
10 See IEX Rules 11.190(b)(7) and 11.190(g).
11 See IEX Rule 11.190(b)(7).
12 Generally, IEX currently charges $.0003 per
share for any displayed orders that execute
(whether they add or remove liquidity) and $.0009
per share for any non-displayed orders that execute
(whether they add or remove liquidity). If the shares
execute for less than $1.00 per share, the Exchange
charges 0.30% of the total dollar value of the
transaction. See IEX Fee Schedule, https://
iextrading.com/trading/fees/.
13 See IEX Fee Schedule, https://iextrading.com/
trading/fees/.
14 For purposes of the discount, IEX aggregates all
of a Member’s MPIDs to calculate each Member’s
D-Peg, M-Peg, and D-Limit liquidity providing
orders on a monthly basis. Upon a Member’s
request and subject to IEX’s review and verification
of the affiliate’s relationship to the requesting
Member, IEX will aggregate the Member’s activity
with activity of the Member’s affiliated Member(s).
8 See
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Federal Register / Vol. 85, No. 250 / Wednesday, December 30, 2020 / Notices
into account that Members seeking to
utilize the new D-Limit order type may
have needed to modify and test new
trading strategies and order entry
systems in order to do so. Accordingly,
the pricing incentives implemented by
the Exchange were designed to provide
a meaningful economic incentive for
such efforts and to encourage use of this
new order type.
However, IEX has concluded that,
while free executions for liquidity
providing D-Limit orders priced at or
above $1.00 continues to be an
appropriate incentive, elimination of the
related fee discount of $0.0002 per share
for the execution of liquidity providing
D-Peg and M-Peg orders is appropriate
in order to simplify the fee structure.
Specifically, based on informal
discussions with Members, the
Exchange understands that the fee
discounts for non-D-Limit related order
flow has created complexities in
tracking applicable fees and
corresponding billing for some Members
and therefore do not provide a
meaningful incentive for the use of DLimit orders. As a result, the Exchange
proposes to eliminate the fee discount of
$0.0002 per share for the execution of
liquidity providing D-Peg and M-Peg
orders.
The Fee Schedule will continue to
provide that execution of a D-Limit
order that adds liquidity will result in
a free execution, with the exception of
executions below $1.00, which will
continue to be assessed a fee of 0.30%
of TDV (unless otherwise eligible for a
free execution in accordance with the
IEX Fee Schedule).
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,15 in general, and
furthers the objectives of Section
6(b)(4) 16 of the Act, in particular, in that
it is designed to provide for the
equitable allocation of reasonable fees
among IEX Members and persons using
its facilities. Additionally, IEX believes
that the proposed changes to the Fee
Schedule are consistent with the
investor protection objectives of Section
6(b)(5) 17 of the Act, in particular, in that
they are designed to prevent fraudulent
and manipulative acts and practices; to
promote just and equitable principles of
trade; to foster cooperation and
coordination with persons engaged in
facilitating transactions in securities; to
remove impediments to and perfect the
mechanism of a free and open market
15 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4).
17 15 U.S.C. 78f(b)(5).
16 15
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and a national market system, and, in
general, to protect investors and the
public interest; and are not designed to
permit unfair discrimination between
customers, brokers, or dealers.
The Exchange believes that the
proposed changes are consistent with
the Act because they will be applicable
to all Members on a fair, equal and
nondiscriminatory basis. The
transaction fee discount was part of a
narrowly tailored approach, designed to
maximize participation for the launch of
D-Limit, while free executions for
liquidity providing D-Limit orders
priced at or above $1.00 per share is
designed to provide the primary pricing
incentive. As with any new order type,
the implementation of D-Limit required
a period during which Members needed
to become familiar with its operation
and potentially adjust order entry
systems and trading strategies to
effectively use D-Limit orders. However,
based on informal Member feedback
regarding the complexity such discounts
have created, IEX believes that the
transaction fee discounts are no longer
necessary to incentivize Members to use
D-Limit orders.
The Exchange further believes that the
proposed amendment is consistent with
the Act’s requirement that the Exchange
provide for an equitable allocation of
fees. The Exchange’s proposal involves
the elimination of transaction fee
incentives that were available to all
Members based on executions of
liquidity adding D-Peg and M-Peg
orders. Similarly, eliminating the
transaction fee incentive will apply in
an equal and nondiscriminatory manner
to all Members. All Members will
continue to be subject to the same fees
for the use of D-Limit orders. Moreover,
eliminating the fee discount will operate
to simplify the Exchange’s fee structure
and reduce any corresponding order
tracking and billing complexities on the
part of Members.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange does not believe that the
proposed fees will impose any burden
on intermarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange operates in a highly
competitive market in which market
participants can easily direct their
orders to competing venues, including
off-exchange venues, if its fees are
viewed as non-competitive. Moreover,
PO 00000
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IEX believes that the proposed fees, as
amended, continue to be designed to
enhance competition by increasing the
Exchange’s pool of both displayed and
non-displayed liquidity, and to the
extent that displayed liquidity
increases, would contribute to the
public price discovery process. Further,
subject to the SEC rule filing process,
other exchanges could adopt a similar
order type and fee incentive.
The Exchange also does not believe
that the proposed rule change will
impose any burden on intramarket
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act. While Members
that add liquidity using certain D-Limit
orders will be subject to different fees
based on this usage, those differences
are not based on the type of Member
entering orders but on whether the
Member chose to submit certain
liquidity providing D-Limit orders. As
noted above, not only can any Member
submit certain liquidity adding D-Limit
orders, but every Member would benefit
from the availability of more liquidity
on the Exchange that the proposed fees
are designed to incentivize. The
Exchange is proposing to eliminate
discounted transaction fees for certain
D-Peg and M-peg orders that were part
of a narrowly tailored incentive for
Members to begin using the D-Limit
order type. As discussed in the Purpose
and Statutory Basis sections, the
Exchange has concluded that the fee
transaction discounts are no longer
necessary to incentivize Members to use
D-Limit orders and can operate to
introduce certain complexities in order
tracking and billing. Accordingly, the
Exchange does not believe that
eliminating the transaction fee
discounts will have any impact on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) 18 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
18 15
E:\FR\FM\30DEN1.SGM
U.S.C. 78s(b)(3)(A)(ii).
30DEN1
Federal Register / Vol. 85, No. 250 / Wednesday, December 30, 2020 / Notices
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) 19 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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
IEX–2020–19 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–2020–19. 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
offices 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–2020–19, and should
be submitted on or before January 20,
2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2020–28811 Filed 12–29–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90778; File No. SR–FINRA–
2020–045]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing of a
Proposed Rule Change To Amend
FINRA Rule 8312 (FINRA BrokerCheck
Disclosure)
December 22, 2020.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on December
16, 2020, the Financial Industry
Regulatory Authority, Inc. (‘‘FINRA’’)
filed with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
the proposed rule change as described
in Items I, II, and III below, which Items
have been prepared by FINRA. 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
FINRA is proposing to amend to
amend FINRA Rule 8312 (FINRA
BrokerCheck Disclosure). The proposed
rule change would (1) make information
about formerly registered individuals
subject to a final regulatory action
available through BrokerCheck® on a
permanent basis only for those
individuals who have been registered on
or after August 16, 1999; and (2) exclude
information from BrokerCheck about
deceased individuals. The proposed
rule change also would make nonsubstantive, technical changes to FINRA
Rule 8312.
The text of the proposed rule change
is available on FINRA’s website at
20 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
19 15
U.S.C. 78s(b)(2)(B).
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17:47 Dec 29, 2020
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86619
https://www.finra.org, at the principal
office of FINRA and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
FINRA 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. FINRA 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
BrokerCheck Program
FINRA established the BrokerCheck
program (then known as the Public
Disclosure Program) in 1988 to provide
investors and the general public with
information on the professional
background, business practices, and
conduct of member firms and their
associated persons. Since establishing
BrokerCheck, FINRA has regularly
assessed the scope and utility of the
information it provides to the public
and, as a result, has made numerous
changes to improve the program. These
changes have made BrokerCheck easier
to access by expanding the available
methods of requesting information
through the program. For instance,
initially the public could request
information only via U.S. mail or
facsimile. FINRA subsequently added
the ability to submit requests via a tollfree telephone number in 1991 and then
through email in 1997.3 Now
BrokerCheck reports are available
instantly online at https://
brokercheck.finra.org/.4 FINRA also has
increased the amount of information
available through the program. At first,
3 Congress in 1990 amended Exchange Act
Section 15A to require FINRA to establish and
maintain a toll-free telephone listing to receive
inquiries regarding disciplinary actions involving
its member firms and their associated persons, and
promptly respond to such inquiries in writing. See
Securities Enforcement Remedies and Penny Stock
Reform Act of 1990, Public Law 101–429, 104 Stat.
931 (1990). See also Notice to Members 00–16
(March 2000).
4 In 2006, Congress again amended Exchange Act
Section 15A to, among other things, expand the
methods by which BrokerCheck information is
made available. See Military Personnel Financial
Services Protection Act, Public Law 109–290, 120
Stat. 1317 (2006).
E:\FR\FM\30DEN1.SGM
30DEN1
]]>Agencies
[Federal Register Volume 85, Number 250 (Wednesday, December 30, 2020)]
[Notices]
[Pages 86617-86619]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-28811]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-90786; File No. SR-IEX-2020-19]
Self-Regulatory Organizations: Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Related to
Transaction Fees Pursuant to IEX Rule 15.110
December 22, 2020.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 11, 2020, the Investors Exchange LLC (``IEX'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 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,\3\
and Rule 19b-4 thereunder,\4\ IEX is filing with the Commission a
proposed rule change to amend its Fee Schedule, pursuant to IEX Rule
15.110(a) and (c) (the ``Fee Schedule'') to modify certain promotional
pricing incentives for the execution of Discretionary Limit (``D-
Limit'') orders. Changes to the Fee Schedule pursuant to this proposal
are effective upon filing,\5\ and the Exchange plans to implement the
changes on January 1, 2021.
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\3\ 15 U.S.C. 78s(b)(1).
\4\ 17 CFR 240.19b-4.
\5\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------
The text of the proposed rule change is available at the Exchange's
website at www.iextrading.com, at the principal office of the Exchange,
and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of and basis for the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of these statements may be examined at
the places specified in Item IV below. The self-regulatory organization
has prepared summaries, set forth in Sections A, B, and C below, of the
most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Fee Schedule, pursuant to IEX
Rule 15.110(a) and (c), to modify certain pricing incentives currently
applicable to executions of Discretionary Limit (``D-Limit''),
Discretionary Peg (``D-Peg''), and Midpoint Peg (``M-Peg'') order
executions that were implemented with the launch of the D-limit order
type on October 1 2020.\6\ Specifically, the Exchange proposes to
eliminate the fee discount of $0.0002 per executed share available to
IEX Members \7\ for liquidity-providing D-Peg and M-Peg orders.
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\6\ See Securities Exchange Act Release No. 89967 (September 23,
2020), 85 FR 63616 (October 8, 2020) (SR-IEX-2020-14).
\7\ See IEX Rule 1.160(s).
---------------------------------------------------------------------------
The D-Limit order type was approved by the Commission on August 26,
2020,\8\ and is designed to protect liquidity providers from potential
adverse selection by latency arbitrage trading strategies in a fair and
nondiscriminatory manner. A D-Limit order may be a displayed or non-
displayed limit order that upon entry and when posting to the Order
Book \9\ is priced to be equal to and ranked at the order's limit
price, but will be adjusted to a less-aggressive price during periods
of quote instability, as defined in IEX Rule 11.190(g).\10\ Otherwise,
a D-Limit order operates in the same manner as either a displayed or
non-displayed limit order, as applicable,\11\ and accordingly, the
Exchange determined that liquidity-taking D-Limit orders would be
subject to the same transaction fees as other displayed or non-
displayed orders.\12\
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\8\ See Securities Exchange Act Release No. 89686 (August 26,
2020), 85 FR 54438 (September 1, 2020) (SR-IEX-2019-15).
\9\ See IEX Rule 1.160(p).
\10\ See IEX Rules 11.190(b)(7) and 11.190(g).
\11\ See IEX Rule 11.190(b)(7).
\12\ Generally, IEX currently charges $.0003 per share for any
displayed orders that execute (whether they add or remove liquidity)
and $.0009 per share for any non-displayed orders that execute
(whether they add or remove liquidity). If the shares execute for
less than $1.00 per share, the Exchange charges 0.30% of the total
dollar value of the transaction. See IEX Fee Schedule, https://iextrading.com/trading/fees/.
---------------------------------------------------------------------------
Currently, a D-Limit order that provides liquidity and is executed
at a price at or above $1.00 results in a free execution.\13\ In
addition, D-Peg and M-Peg orders that provide liquidity and execute at
a price at or above $1.00 per share are currently subject to a discount
of $0.0002 per share from the fee that would otherwise be charged for
the number of shares of such orders executed up to the number of shares
of D-Limit orders that provided liquidity and executed at a price at or
above $1.00 per share during such time period by the same Member,
measured on a monthly basis.\14\
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\13\ See IEX Fee Schedule, https://iextrading.com/trading/fees/.
\14\ For purposes of the discount, IEX aggregates all of a
Member's MPIDs to calculate each Member's D-Peg, M-Peg, and D-Limit
liquidity providing orders on a monthly basis. Upon a Member's
request and subject to IEX's review and verification of the
affiliate's relationship to the requesting Member, IEX will
aggregate the Member's activity with activity of the Member's
affiliated Member(s).
---------------------------------------------------------------------------
The fee discounts were designed to provide a narrowly tailored
incentive for Members to utilize D-limit orders, a new and innovative
order type, taking
[[Page 86618]]
into account that Members seeking to utilize the new D-Limit order type
may have needed to modify and test new trading strategies and order
entry systems in order to do so. Accordingly, the pricing incentives
implemented by the Exchange were designed to provide a meaningful
economic incentive for such efforts and to encourage use of this new
order type.
However, IEX has concluded that, while free executions for
liquidity providing D-Limit orders priced at or above $1.00 continues
to be an appropriate incentive, elimination of the related fee discount
of $0.0002 per share for the execution of liquidity providing D-Peg and
M-Peg orders is appropriate in order to simplify the fee structure.
Specifically, based on informal discussions with Members, the Exchange
understands that the fee discounts for non-D-Limit related order flow
has created complexities in tracking applicable fees and corresponding
billing for some Members and therefore do not provide a meaningful
incentive for the use of D-Limit orders. As a result, the Exchange
proposes to eliminate the fee discount of $0.0002 per share for the
execution of liquidity providing D-Peg and M-Peg orders.
The Fee Schedule will continue to provide that execution of a D-
Limit order that adds liquidity will result in a free execution, with
the exception of executions below $1.00, which will continue to be
assessed a fee of 0.30% of TDV (unless otherwise eligible for a free
execution in accordance with the IEX Fee Schedule).
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\15\ in general, and furthers the
objectives of Section 6(b)(4) \16\ of the Act, in particular, in that
it is designed to provide for the equitable allocation of reasonable
fees among IEX Members and persons using its facilities. Additionally,
IEX believes that the proposed changes to the Fee Schedule are
consistent with the investor protection objectives of Section 6(b)(5)
\17\ of the Act, in particular, in that they are designed to prevent
fraudulent and manipulative acts and practices; to promote just and
equitable principles of trade; to foster cooperation and coordination
with persons engaged in facilitating transactions in securities; to
remove impediments to and perfect the mechanism of a free and open
market and a national market system, and, in general, to protect
investors and the public interest; and are not designed to permit
unfair discrimination between customers, brokers, or dealers.
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\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(4).
\17\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed changes are consistent with
the Act because they will be applicable to all Members on a fair, equal
and nondiscriminatory basis. The transaction fee discount was part of a
narrowly tailored approach, designed to maximize participation for the
launch of D-Limit, while free executions for liquidity providing D-
Limit orders priced at or above $1.00 per share is designed to provide
the primary pricing incentive. As with any new order type, the
implementation of D-Limit required a period during which Members needed
to become familiar with its operation and potentially adjust order
entry systems and trading strategies to effectively use D-Limit orders.
However, based on informal Member feedback regarding the complexity
such discounts have created, IEX believes that the transaction fee
discounts are no longer necessary to incentivize Members to use D-Limit
orders.
The Exchange further believes that the proposed amendment is
consistent with the Act's requirement that the Exchange provide for an
equitable allocation of fees. The Exchange's proposal involves the
elimination of transaction fee incentives that were available to all
Members based on executions of liquidity adding D-Peg and M-Peg orders.
Similarly, eliminating the transaction fee incentive will apply in an
equal and nondiscriminatory manner to all Members. All Members will
continue to be subject to the same fees for the use of D-Limit orders.
Moreover, eliminating the fee discount will operate to simplify the
Exchange's fee structure and reduce any corresponding order tracking
and billing complexities on the part of Members.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange does not
believe that the proposed fees will impose any burden on intermarket
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. The Exchange operates in a highly competitive
market in which market participants can easily direct their orders to
competing venues, including off-exchange venues, if its fees are viewed
as non-competitive. Moreover, IEX believes that the proposed fees, as
amended, continue to be designed to enhance competition by increasing
the Exchange's pool of both displayed and non-displayed liquidity, and
to the extent that displayed liquidity increases, would contribute to
the public price discovery process. Further, subject to the SEC rule
filing process, other exchanges could adopt a similar order type and
fee incentive.
The Exchange also does not believe that the proposed rule change
will impose any burden on intramarket competition that is not necessary
or appropriate in furtherance of the purposes of the Act. While Members
that add liquidity using certain D-Limit orders will be subject to
different fees based on this usage, those differences are not based on
the type of Member entering orders but on whether the Member chose to
submit certain liquidity providing D-Limit orders. As noted above, not
only can any Member submit certain liquidity adding D-Limit orders, but
every Member would benefit from the availability of more liquidity on
the Exchange that the proposed fees are designed to incentivize. The
Exchange is proposing to eliminate discounted transaction fees for
certain D-Peg and M-peg orders that were part of a narrowly tailored
incentive for Members to begin using the D-Limit order type. As
discussed in the Purpose and Statutory Basis sections, the Exchange has
concluded that the fee transaction discounts are no longer necessary to
incentivize Members to use D-Limit orders and can operate to introduce
certain complexities in order tracking and billing. Accordingly, the
Exchange does not believe that eliminating the transaction fee
discounts will have any impact on competition that is not necessary or
appropriate in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) \18\ of the Act.
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\18\ 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
[[Page 86619]]
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) \19\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\19\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-IEX-2020-19 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-2020-19. 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 offices 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-2020-19, and should be submitted on
or before January 20, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2020-28811 Filed 12-29-20; 8:45 am]
BILLING CODE 8011-01-P
