Self-Regulatory Organizations; Investors Exchange LLC; Suspension of and Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change To Amend Its Fee Schedule for Market Data Fees, 523-528 [2021-28577]
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Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Notices
any burden on inter-market competition
that is not necessary or appropriate in
furtherance of the purposes of the Act
because the proposed extension of the
fee waivers and the extension of the
Incentive Program apply only to the
Exchange’s Proprietary Products
(including options on SPIKES), which
are traded exclusively on the Exchange.
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) of the Act,29 and Rule
19b–4(f)(2) 30 thereunder. 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:
TKELLEY on DSK125TN23PROD with NOTICE
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–
MIAX–2021–63 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–MIAX–2021–63. 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
29 15
30 17
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
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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–MIAX–2021–63, and
should be submitted on or before
January 26, 2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.31
Eduardo A. Aleman,
Deputy Secretary.
‘‘Exchange Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
modify its Fee Schedule to establish
fees, as of January 3, 2022, for the
receipt and distribution of proprietary
market data feeds. The proposed rule
change was published for comment in
the Federal Register on November 17,
2021.3 Pursuant to Section 19(b)(3)(C) of
the Act,4 the Commission is hereby
temporarily suspending File No. SR–
IEX–2021–14 and instituting
proceedings to determine whether to
approve or disapprove File No. SR–IEX–
2021–14.
II. Description of the Proposed Rule
Change
IEX offers two real-time proprietary
market data feeds, ‘‘TOPS’’ 5 and
‘‘DEEP’’ 6 (collectively, ‘‘IEX Data’’ or
the ‘‘market data feeds’’).7 DEEP
includes all resting displayed liquidity
on the Exchange aggregated by price
level and it therefore includes the top of
book quotes contained in TOPS, as well
as less aggressively priced displayed
quotes. IEX has not previously imposed
fees to access or redistribute its market
data feeds.8
The Exchange proposes to modify its
Fee Schedule to assess fees on Data
Subscribers 9 that access IEX Data in
real-time.10 As discussed below, IEX
would not itself provide or impose a fee
for time-delayed IEX Data.11 The
Exchange proposes to implement these
fees on January 3, 2022.
Specifically, IEX proposes to assess
Data Subscribers $2,500 per month for
its ‘‘Real-Time’’ DEEP feed and $500 per
[FR Doc. 2021–28576 Filed 1–4–22; 8:45 am]
1 15
BILLING CODE 8011–01–P
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 93557
(November 10, 2021), 86 FR 64268 (November 17,
2021).
4 15 U.S.C. 78s(b)(3)(C).
5 TOPS is an uncompressed data feed that offers
aggregated top of book quotations for all displayed
orders resting on the IEX Order Book and last sale
information for executions on the Exchange. See
Notice, supra note 3, at 64269. According to the
Exchange, the data available through TOPS is also
available through the securities information
processor feed. See id.
6 DEEP is an uncompressed data feed that
provides aggregated depth of book quotations for all
displayed orders resting on the IEX Order Book at
each price level and last sale information for
executions on the Exchange. See Notice, supra note
3, at 64269.
7 See Notice, supra note 3, at 64269.
8 See id.
9 The Exchange proposes to define the term ‘‘Data
Subscriber’’ as ‘‘any natural person or entity that
receives Real-Time IEX market data either directly
from the Exchange or from another Data
Subscriber.’’ See Notice, supra note 3, at 64274. IEX
will require Data Subscribers to enter into a Data
Subscriber Agreement with IEX in order to receive
Real-Time IEX Data. See id. at 64270, n.23.
10 See Notice, supra note 3, at 64269.
11 See Notice, supra note 3, at 64270, n.22.
2 17
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93883; File No. SR–IEX–
2021–14]
Self-Regulatory Organizations;
Investors Exchange LLC; Suspension
of and Order Instituting Proceedings
To Determine Whether To Approve or
Disapprove a Proposed Rule Change
To Amend Its Fee Schedule for Market
Data Fees
December 30, 2021.
I. Introduction
On November 1, 2021, Investors
Exchange LLC (‘‘IEX’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’ or
31 17
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Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Notices
month for its ‘‘Real-Time’’ TOPS feed.
The Exchange proposes to define ‘‘RealTime’’ as ‘‘IEX market data that is
accessed, used, or distributed less than
fifteen (15) milliseconds after it was
made available by the Exchange.’’ 12
Further, the Exchange proposes to
assess a $500 per month ‘‘Distribution
Fee’’ to each Data Subscriber that
redistributes IEX Data in Real-Time to
an external, non-affiliated third-party.13
For Data Subscribers that redistribute
IEX Data to others, IEX would not
charge them a Distribution Fee if: (1)
They only redistribute the IEX Data in
Real-Time to internal, affiliated parties;
or (2) they delay distribution of the data
by at least fifteen milliseconds before
redistributing it.
For recipients of IEX Data, IEX would
not consider them a ‘‘Data Subscriber’’
and would not charge them the TOPS or
DEEP fees if they only (1) receive IEX
Data subject to a delay of at least a
fifteen milliseconds 14 or (2) receive
Real-Time IEX Data internally from an
affiliate.
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III. Suspension of the Proposed Rule
Change
Pursuant to Section 19(b)(3)(C) of the
Act,15 at any time within 60 days of the
date of filing of an immediately effective
proposed rule change pursuant to
Section 19(b)(1) of the Act,16 the
Commission summarily may
temporarily suspend the change in the
rules of a self-regulatory organization
(‘‘SRO’’) 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. As described below, the
Commission believes a temporary
suspension of the proposed rule change
is necessary and appropriate to allow for
additional analysis of the proposed rule
change’s consistency with the Act and
the rules thereunder.
In support of its proposed market data
fees, the Exchange states ‘‘its belief that
the fees each equities exchange charges
12 See Notice, supra note 3, at 64274. IEX will
consider ‘‘market data that is accessed, used, or
distributed at least fifteen (15) milliseconds after it
was made available by the Exchange’’ as ‘‘Delayed’’
IEX Data. See id. IEX only provides Real-Time IEX
Data and will not itself delay the dissemination of
IEX Data to Data Subscribers. See Notice, supra note
3, at 64269, n.22.
13 See Notice, supra note 3, at 64269.
14 See Notice, supra note 3, at 64270. The
Exchange notes that a recipient of Delayed IEX Data
may be subject to fees imposed by the redistributor
of the Delayed IEX Data pursuant to the contract
between the recipient of the Delayed IEX Data and
the third-party provider of such market data. See id.
at 64270, n.24.
15 15 U.S.C. 78s(b)(3)(C).
16 15 U.S.C. 78s(b)(1).
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for its proprietary market data are not
subject to competitive forces’’ 17 and
therefore has proposed fees that it
believes are ‘‘fair and reasonable as a
form of cost recovery plus the
possibility of a reasonable return for
IEX’s aggregate costs of offering IEX
Data to its Data Subscribers.’’ 18 With
respect to its proposed cost-based fees,
IEX provides a summary of its annual
market data infrastructure costs
($2,483,644 for 2021), with a breakdown
of selected line-item costs including
direct costs, enhancement initiative
costs, and personnel costs.19 IEX states
that its proposed fees are reasonable
under the Act because they are ‘‘based
both on the relative costs to IEX to
generate TOPS and DEEP, as well as
IEX’s objective to make TOPS broadly
available to a range of market
participants including long-term
investors.’’ 20 IEX further asserts that its
proposed fees ‘‘are reasonable because
they are designed to generate annual
revenue of approximately $3.1 million
(reflecting a 25% markup over
costs),’’ 21 though IEX acknowledges a
potential markup from ‘‘break even’’ or
even below aggregate costs to an
aggregate markup of 95%, depending on
the number of paying subscribers it
ultimately will have.22 IEX further states
that it ‘‘is only charging Data
Subscribers who use IEX Data in real
time’’ and argues that its proposed fees
‘‘are significantly less than the fees
charged by competing equities
exchanges’’ and that its fee proposal
‘‘will not impose onerous audit
requirements on Data Subscribers.’’ 23
When an Exchange files a proposed
rule change with the Commission,
including fee filings, it is required to
provide a statement supporting the
proposal’s basis under the Act and the
rules and regulations thereunder
applicable to the exchange.24 The
instructions to Form 19b–4, on which
exchanges file their proposed rule
changes, specify that such statement
‘‘should be sufficiently detailed and
specific to support a finding that the
proposed rule change is consistent with
[those] requirements.’’ 25
17 See
Notice, supra note 3, at 64274.
Notice, supra note 3, at 64274.
19 See Notice, supra note 3, at 64271.
20 See Notice, supra note 3, at 64274–75.
21 See Notice, supra note 3, at 64275.
22 See Notice, supra note 3, at 64273.
23 See Notice, supra note 3, at 64275.
24 See 17 CFR 240.19b–4 (General Instructions for
Form 19b–4—Information to be Included in the
Complete Form—Item 3 entitled ‘‘Self-Regulatory
Organization’s Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change’’).
25 See id.
18 See
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Section 6 of the Act, including
Sections 6(b)(4), (5), and (8), requires,
among other things, that the rules of an
exchange: (1) Provide for the equitable
allocation of reasonable fees among
members, issuers, and other persons
using the exchange’s facilities; 26 (2) be
designed to perfect the mechanism of a
free and open market and a national
market system and to protect investors
and the public interest, and not be
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers; 27 and (3)
not impose any burden on competition
not necessary or appropriate in
furtherance of the purposes of the Act.28
In temporarily suspending the
Exchange’s proposed rule change, the
Commission intends to further consider
whether the proposed fees are
consistent with the statutory
requirements applicable to a national
securities exchange under the Act. In
particular, the Commission will
consider whether the proposed rule
change satisfies the standards under the
Act and the rules thereunder requiring,
among other things, that an exchange’s
rules provide for the equitable
allocation of reasonable fees among
members, issuers, and other persons
using its facilities; are designed to
perfect the mechanism of a free and
open market and a national market
system and to protect investors and the
public interest, and are not designed to
permit unfair discrimination between
customers, issuers, brokers, or dealers;
and do not impose any burden on
competition not necessary or
appropriate in furtherance of the
purposes of the Act.29
Therefore, the Commission finds that
it is appropriate in the public interest,
for the protection of investors, and
otherwise in furtherance of the purposes
of the Act, to temporarily suspend the
proposed rule change.30
IV. Proceedings To Determine Whether
To Approve or Disapprove SR–IEX–
2021–14 and Grounds for Disapproval
Under Consideration
In addition to temporarily suspending
the proposal, the Commission also
hereby institutes proceedings pursuant
to Sections 19(b)(3)(C) 31 and
26 15
U.S.C. 78f(b)(4).
U.S.C. 78f(b)(5).
28 15 U.S.C. 78f(b)(8).
29 See 15 U.S.C. 78f(b)(4), (5), and (8),
respectively.
30 For purposes of temporarily suspending the
proposed rule change, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
31 15 U.S.C. 78s(b)(3)(C). Once the Commission
temporarily suspends a proposed rule change,
27 15
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19(b)(2)(B) 32 of the Act to determine
whether the proposed rule change
should be approved or disapproved.
Institution of such proceedings is
appropriate at this time in view of the
legal and policy issues raised by the
proposed rule change. Institution of
proceedings does not indicate that the
Commission has reached any
conclusions with respect to any of the
issues involved. Rather, as described
below, the Commission seeks and
encourages interested persons to
provide comments on the proposed rule
change to inform the Commission’s
analysis of whether to approve or
disapprove the proposed rule change.
Pursuant to Section 19(b)(2)(B) of the
Act,33 the Commission is providing
notice of the grounds for possible
disapproval under consideration. The
Commission is instituting proceedings
to allow for additional analysis of
whether the Exchange has sufficiently
demonstrated how the proposed rule
change is consistent with Sections
6(b)(4),34 6(b)(5),35 and 6(b)(8) 36 of the
Act. Section 6(b)(4) of the Act requires
that the rules of a national securities
exchange provide for the equitable
allocation of reasonable dues, fees, and
other charges among its members and
issuers and other persons using its
facilities. Section 6(b)(5) of the Act
requires that the rules of a national
securities exchange be designed, among
other things, 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, and not be designed to
permit unfair discrimination between
customers, issuers, brokers, or dealers.
Section 6(b)(8) of the Act requires that
the rules of a national securities
exchange not impose any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.
Section 19(b)(3)(C) of the Act requires that the
Commission institute proceedings under Section
19(b)(2)(B) to determine whether a proposed rule
change should be approved or disapproved.
32 15 U.S.C. 78s(b)(2)(B).
33 15 U.S.C. 78s(b)(2)(B). Section 19(b)(2)(B) of the
Act also provides that proceedings to determine
whether to disapprove a proposed rule change must
be concluded within 180 days of the date of
publication of notice of the filing of the proposed
rule change. See id. The time for conclusion of the
proceedings may be extended for up to 60 days if
the Commission finds good cause for such
extension and publishes its reasons for so finding,
or if the exchange consents to the longer period. See
id.
34 15 U.S.C. 78f(b)(4).
35 15 U.S.C. 78f(b)(5).
36 15 U.S.C. 78f(b)(8).
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The Commission asks that
commenters address the sufficiency of
the Exchange’s statements in support of
the proposal, which are set forth in the
Notice, in addition to any other
comments they may wish to submit
about the proposed rule change. In
particular, the Commission seeks
comment on the following aspects of the
proposal and asks commenters to
submit data where appropriate to
support their views:
1. Cost Allocation. IEX states it ‘‘does
not believe that exchange market data
fees are constrained by competitive
market forces,’’ 37 and that ‘‘each
exchange has a natural monopoly over
its own market data.’’ 38 Consequently,
for market data fee filings, IEX believes
that exchanges ‘‘should meet very high
standards of transparency to
demonstrate why each new fee or fee
increase meets the Exchange Act
requirements’’ and that ‘‘each exchange
should demonstrate that these fees bear
a reasonable relationship to its costs and
reasonable business needs and that it is
not taking unfair advantage of its unique
position as the sole provider of its own
proprietary market data.’’ 39 In
proposing its fees, IEX says it used a
‘‘cost-plus model’’ and ‘‘sought to
determine such fees in a transparent
way in relation to its own aggregate
costs of providing the related
service. . . .’’ 40 IEX says it used a
‘‘conservative methodology (i.e., that
strictly considers only those costs that
are most clearly directly related to the
production and distribution of IEX Data)
to estimate such costs, as well as the
relative costs of compiling the TOPS
and DEEP feeds . . .’’ 41 and also
considered its ‘‘objective to make TOPS
broadly available to a range of market
participants including long-term
investors.’’ 42 IEX summarizes its cost
components according to (1) direct costs
(servers, infrastructure, monitoring), (2)
enhancement initiative costs (new
functionality and capacity), and (3)
personnel.43 IEX asserts that direct costs
are those that are specifically dedicated
to IEX Data and that physical assets and
software are valued at cost and
depreciated over three years.44 For
direct costs, IEX notes that ‘‘servers
included were limited to those
specifically dedicated to IEX Data’’ and
that ‘‘[a]ll physical assets and software,
37 Notice,
supra note 3 at 64272.
supra note 3 at 64269.
39 Notice, supra note 3 at 64269.
40 Notice, supra note 3 at 64269–70.
41 Notice, supra note 3 at 64270.
42 Notice, supra note 3 at 64274–75.
43 Notice, supra note 3 at 64270–71.
44 Notice, supra note 3 at 64271.
which also includes assets used for
testing and monitoring of market data
infrastructure, were valued at cost, and
depreciated over three years.’’ 45 Do
commenters believe IEX has provided
sufficient detail about the specific direct
costs it has assigned to market data to
justify its proposal? For enhancement
initiative costs, IEX asserts that, though
they are one-time costs, it expects to
incur ‘‘annual enhancement costs on an
ongoing basis’’ that ‘‘will be similar’’ to
what it incurred in 2021.46 Do
commenters believe enhancement costs
are sufficiently clear and defined?
Further, do commenters expect costs
(enhancement costs as well as all other
costs) incurred in 2021 to be generally
representative of an exchange’s
expected costs going forward (to the
extent commenters consider 2021 to be
an atypical year), or should an exchange
present an estimated range of costs with
an explanation of how profit margins
could vary along with estimates costs?
For personnel costs, IEX ‘‘calculated an
allocation of employee time for
employees whose functions include
providing and maintaining IEX Data
and/or the proprietary market data feeds
used to transmit IEX Data, and used a
blended rate of compensation reflecting
salary, stock and bonus compensation,
bonuses, benefits, payroll taxes, and
401(k) matching contributions.’’ 47 IEX
estimates 6.15 FTEs who ‘‘work in
support of compiling and disseminating
IEX Data,’’ 48 but does not identify the
department and job title of all
employees it counted as ‘‘work[ing] in
support of compiling and disseminating
IEX Data’’ nor does it explain the
methodology it used to determine how
much of an employee’s time is devoted
to that specific activity (e.g., are finance,
legal, HR, administrative personnel
included in this estimate and what
portion of their time did IEX count
towards market data costs and why?).
Further, IEX uses a ‘‘blended
compensation rate . . . to determine the
personnel costs associated with
compiling and disseminating IEX
Data,’’ 49 which includes salary, stock
compensation, annual cash bonus,
benefits, payroll taxes, and 401(k)
matching contributions.50 Do
commenters believe those are
appropriate criteria? In particular,
would it be appropriate to include stock
compensation and annual cash bonuses
in a blended compensation rate for
38 Notice,
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45 Notice,
supra note 3 at 64271.
supra note 3 at 64270, n.31.
47 Notice, supra note 3 at 64271.
48 Notice, supra note 3 at 64271, n.33.
49 Notice, supra note 3 at 64271, n.33.
50 See, e.g., Cost Study at 3.
46 Notice,
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purposes of assessing market data costs
if those items are based on an
exchange’s overall profitability or
performance and not the individual
employee’s performance (and thus not
directly attributable to market data)?
Across all of these costs, what are
commenters’ views on whether the
Exchange has provided sufficient detail
on the elements that go into its market
data costs, including how it allocated
and attributed shared costs to market
data expenses, to permit an independent
review of its costs and meaningfully
assess the reasonableness of purported
cost-based fees and the corresponding
profit margin thereon?
2. TOPS versus DEEP. IEX states that
its proposed market data fee structure is
‘‘designed to make real time access to
IEX’s top of book widely available to a
broad base of market participants’’ and,
to accomplish that goal, IEX ‘‘proposes
to allocate its cost plus structure so that
TOPS is materially more affordable than
DEEP.’’ IEX notes that ‘‘because it
contains multiple price levels, DEEP
requires more processing (and related
costs) for IEX to generate than TOPS.’’ 51
As proposed, DEEP ($2,500) is five
times more expensive than TOPS
($500). However, IEX does not assert in
its filing that DEEP is five times more
costly for it to produce than TOPS, nor
does IEX present its separate costs to
produce DEEP and TOPS individually.
Rather, IEX appears to be subsidizing
TOPS, though it has not presented a
cost-based explanation for how it is
doing so or explained the extent to
which it is subsidizing TOPS through
the proposed fees for DEEP or some
other source of revenue. Do commenters
believe that the price difference between
TOPS and DEEP is consistent with IEX’s
assertions that it set the level of its
proposed fees ‘‘in relation to its own
aggregate costs of providing the related
service. . .’’ 52 and according to the
‘‘relative costs of compiling the TOPS
and DEEP feeds?’’ 53 Do commenters
believe that IEX should provide more
detail about the types of market
participants that subscribe to TOPS and
DEEP in order to assess, among other
things, IEX’s statement that ‘‘fees also
do not depend on any distinctions
between Members, customers, brokerdealers, or any other entity, because
they are solely determined by the
individual Data Subscriber’s business
needs?’’ 54
3. Subscribers. IEX acknowledges that
imposing a fee on the proprietary
market data it previously offered for free
may cause some of its current market
data subscribers to terminate or modify
their current subscriptions.55
Specifically, IEX says it ‘‘currently has
70 Data Subscribers who it believes are
individuals and expects that most, if not
all, of the individual Data Subscribers
will terminate their subscriptions for
IEX Data’’ once IEX charges for RealTime data (though ‘‘if they choose to
continue to receive IEX Data, [they] can
opt to receive Delayed IEX Data from a
third-party vendor or through HIST’’).56
IEX says (without providing supporting
numbers) that the ‘‘remaining, nonindividual, Data Subscribers are made
up of approximately one-third IEX
Members, one-third professional market
participants that are not IEX Members
(e.g., hedge funds and broker-dealers),
and one-third data vendors’’ and
‘‘[b]ased on IEX’s general understanding
of many of its current Data Subscribers’
business models, IEX projects at least
half of the data vendors will retain all
of their existing subscriptions for IEX
Data while the others may cancel their
real-time data subscriptions, and also
anticipates that several Members and
non-Members will cancel their real-time
data subscriptions for either TOPS,
DEEP, or both.’’ 57 IEX did not offer any
further explanation of its basis for these
projections. For example, how many
non-individual Data Subscribers does
IEX have that subscribe to each of
TOPS, DEEP, or TOPS and DEEP, and
on what basis does IEX estimate they
will alter their current subscriptions?
Has IEX received any verbal or written
indication of such subscribers’ likely
intent? Do commenters believe IEX has
provided sufficient information
regarding its current market data
subscriber base as well as sufficient
information to support its projections
regarding what types of current
subscribers (i.e., individuals, vendors,
members, and non-members) may
terminate or modify their current
subscriptions and why? Do commenters
believe that additional detail on
estimated subscribers to TOPS, DEEP, or
TOPS and DEEP is necessary and useful
to assess the Exchange’s estimated profit
margin on market data?
4. Profit Margin Range. IEX states that
its proposed fee structure is ‘‘designed
to recoup its costs and limit any revenue
in excess of cost to an amount that
represents no more than what IEX
believes is a reasonable rate of return
58 Notice,
55 See
Notice, supra note 3 at 64273 (discussing
IEX’s projections regarding how fees are likely to
impact IEX market data subscriptions).
56 Notice, supra note 3 at 64273.
57 See id.
51 Notice,
supra note 3 at 64270.
supra note 3 at 64269.
53 Notice, supra note 3 at 64270.
54 Notice, supra note 3 at 64275.
52 Notice,
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18:05 Jan 04, 2022
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over such costs.’’ 58 Depending on how
many paying subscribers IEX will have
once the fees take effect, IEX projects
that the proposed market data fees will
generate revenue of up to 95% above
cost, though it has targeted and projects
a 25% return over costs based on its
estimate of subscribers.59 IEX attributes
the wide range to its inability to know
beforehand who will subscribe to TOPS
or DEEP (or both or neither). If IEX is
incorrect and all people that currently
obtain IEX Data (for free) keep that data
and pay the fee, IEX estimates it could
generate revenue of 95% above cost. On
the other hand, IEX also acknowledges
that ‘‘revenues could range from ‘break
even’ (or even below aggregate costs)’’ if
its projections are incorrect.60 However,
IEX does not specify the circumstances
under which it would receive zero or
negative profit margins or the likelihood
of that occurring. Further, IEX does not
specifically explain why it believes that
profit margins of up to 95% are
appropriate nor does it provide an
argument to support a finding that fees
within that range would be reasonable
under the Act. Do commenters find
IEX’s projected range to be
appropriately narrow for a cost-based
fee filing, or should IEX provide a more
detailed and precise estimate in order to
facilitate consideration of whether the
proposed fees are reasonable and
equitably allocated? Do commenters
believe that the top-end of the range
(95%) would constitute a reasonable
rate of return over cost for proprietary
market data?
5. Reasonable Rate of Return. IEX
believes that a 95% return ‘‘is unlikely’’
and ‘‘is targeting a return of 25% over
its costs’’ 61 because ‘‘market
participants that do not need real-time
data will have the option to receive
Delayed IEX Data (at a minimal delay of
only 15 milliseconds) in lieu of realtime data, without paying a fee to
IEX.’’ 62 IEX states that its proposed fees
are reasonable because, among other
things, ‘‘IEX is only charging Data
Subscribers who use IEX Data in real
time’’ and the fees ‘‘are significantly less
than the fees charged by competing
equities exchanges. . . .’’ 63 If IEX’s
subscriber estimates are correct, do
commenters agree with IEX that its
targeted 25% profit margin would
constitute a reasonable rate of return
over cost for proprietary market data? If
not, what would commenters consider
PO 00000
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Fmt 4703
Sfmt 4703
supra note 3 at 64271.
supra note 3 at 64273.
60 Notice, supra note 3 at 64273.
61 Notice, supra note 3 at 64271.
62 Notice, supra note 3 at 64272.
63 Notice, supra note 3 at 64275.
59 Notice,
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to be a reasonable rate of return for
proprietary market data fees? The rate of
return is dependent on the accuracy of
the cost allocations which, if inflated
(intentionally or unintentionally), may
render the projected profit margin
meaningless. What are commenters’
views regarding what factors should be
considered in determining what
constitutes a reasonable rate of return
for proprietary market data fees?
6. Periodic Reevaluation. IEX
represented that ‘‘[i]f the revenue IEX
receives from the proposed fees
materially deviates from IEX’s
projections described herein, IEX will
assess whether it is appropriate to make
a rule filing pursuant to Section 19(b) of
the Act to increase or decrease the fees
accordingly.’’ 64 In light of the impact
that the number of subscribers has on
market data profit margins (because
market data costs do not necessarily
linearly change as the number of
subscribers increase or decrease), what
are commenters’ views on the need for
exchanges to commit to reevaluate, on
an ongoing and periodic basis, their
cost-based proprietary market data fees
to ensure that they stay in line with
their stated profitability target and do
not become unreasonable over time, for
example, by failing to adjust for
efficiency gains, cost increases or
decreases, and changes in subscribers?
How formal should that process be, how
often should that reevaluation occur,
and what metrics and thresholds should
be considered? How soon after a new
market data fee change is implemented
should an exchange assess whether its
subscriber estimates were accurate and
at what threshold should an exchange
commit to file a fee change if its
estimates were inaccurate? Should an
initial review take place within the first
30 days after a proprietary market data
fee becomes operative?
7. Real-Time. IEX is only proposing to
assess fees for market data that is made
available in ‘‘Real-Time.’’ The Exchange
is proposing to define ‘‘Real-Time’’
market data as IEX market data that is
accessed, used, or distributed less than
fifteen milliseconds after it was made
available by the Exchange. IEX states
that it ‘‘sought informal feedback from
Members and other Data Subscribers’’
and, ‘‘[b]ased upon that informal
feedback, IEX believes that most, if not
all, non-electronic trading desks would
be able to continue to use IEX Data if it
was received subject to at least a fifteenmillisecond delay.’’ 65 What are
commenters’ views on this threshold
and whether this definition accurately
64 Notice,
65 Notice,
supra note 3 at 64271, n.44.
supra note 3 at 64273.
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reflects and correlates to IEX’s assertion
that ‘‘it is the very demand for real-time,
low latency data that drives much of the
costs associated with creating and
distributing’’ such data? 66 Do
commenters agree with IEX’s statement
that ‘‘most, if not all, non-electronic
trading desks would be able to continue
to use IEX Data if it was received subject
to at least a fifteen-millisecond delay,’’
and that (conversely) electronic trading
desks that need IEX Data for trading
purposes require the data to have less
than a 15 millisecond delay? 67
Similarly, do commenters agree with
IEX’s statement that a fifteenmillisecond delay is ‘‘a time frame that
is usable for most trading purposes’’
(i.e., does usefulness to ‘‘non-electronic
trading desks’’ cover ‘‘most trading
purposes’’), while the fifteen-minute
delay offered by other exchanges
‘‘makes the data stale for any
subscribers using the data to make
trading decisions’’? 68
8. Distribution Fee. IEX proposes a
$500 redistribution fee because
‘‘[e]nabling redistribution in real time
adds to IEX’s administrative expenses
related to the need to identify and track
the recipients of IEX Data.’’ 69 IEX does
not, however, provide any estimate of
such administrative expenses, nor does
it mention its targeted profit margin on
the proposed Distribution Fee. IEX also
justifies the proposed Distribution Fee
by noting that ‘‘if it allowed Data
Subscribers to redistribute IEX Data in
real time without any additional fees, it
could enable Data Subscribers to
circumvent IEX’s fees for providing IEX
Data, which would conflict with IEX’s
objective to recover its costs of
producing IEX Data.’’ 70 IEX does not
explain how the proposed Distribution
Fee would discourage Data Subscribers
from circumventing the TOPS and/or
DEEP fees. What are commenters’ views
on the adequacy of the information IEX
provides regarding its proposed
Distribution Fee?
9. Delayed IEX Data. IEX does not
propose to itself directly offer Delayed
IEX Data, nor does it propose to charge
persons that access, receive, or
distribute Delayed IEX Data from third
parties. IEX states that its proposal will
continue ‘‘to allow market participants
to access IEX Data free of charge if they
can wait at least fifteen milliseconds to
receive it’’ 71 but acknowledges that
‘‘[d]istributors of Delayed IEX Data may
charge a fee for the data, but that fee is
not payable to IEX.’’ 72 What do
commenters think will be the end costs
to consumers of Delayed IEX Data?
While IEX itself will not charge for
Delayed IEX Data, do commenters think
there is sufficient competition among
data vendors such that market
participants will have access to Delayed
IEX Data for a reasonable fee?
10. Sharing with Affiliates. In an
example discussing the other exchanges
that charge for proprietary market data,
IEX explains that ‘‘the aggregate
monthly cost for those 11 equity
exchanges [to obtain IEX Data] would be
$3,000 per exchange family.’’ 73 That
statement, however, appears to be
inconsistent with the rule text and the
proposed definition of Data Subscriber.
Specifically, IEX’s proposed rule text
defines ‘‘Data Subscriber’’ as ‘‘any
natural person or entity that receives
Real-Time IEX market data either
directly from the Exchange or from
another Data Subscriber.’’ 74 Further, it
states that each Data Subscriber ‘‘must
enter into a Data Subscriber Agreement
with IEX in order to receive Real-Time
IEX market data’’ 75 as well as pay the
applicable fee. Yet, IEX’s example of
affiliated exchanges states that an
exchange family would only be assessed
$3,000 in fees (i.e., $2,500 for DEEP and
$500 for TOPS), despite the fact that
each exchange within a family would
independently meet the proposed
definition of Data Subscriber. IEX’s
filing appears incomplete with respect
to how the proposed fees would apply
in the case of internal sharing of TOPS
and/or DEEP with an affiliate.
Under the Commission’s Rules of
Practice, the ‘‘burden to demonstrate
that a proposed rule change is
consistent with the [Act] and the rules
and regulations issued thereunder . . .
is on the [SRO] that proposed the rule
change.’’ 76 The description of a
proposed rule change, its purpose and
operation, its effect, and a legal analysis
of its consistency with applicable
requirements must all be sufficiently
detailed and specific to support an
affirmative Commission finding,77 and
any failure of an SRO to provide this
information may result in the
Commission not having a sufficient
basis to make an affirmative finding that
a proposed rule change is consistent
with the Act and the applicable rules
72 Notice,
66 Notice,
supra note 3 at 64270.
67 Notice, supra note 3 at 64273.
68 Notice, supra note 3 at 64275.
69 Notice, supra note 3 at 64270.
70 Notice, supra note 3 at 64270.
71 Notice, supra note 3 at 64275.
PO 00000
Frm 00104
Fmt 4703
Sfmt 4703
527
supra note 3 at 64276, n.75.
supra note 3 at 64272.
74 Notice, supra note 3 at 64274.
75 See id.
76 Rule 700(b)(3), Commission Rules of Practice,
17 CFR 201.700(b)(3).
77 See id.
73 Notice,
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Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Notices
and regulations.78 Moreover,
‘‘unquestioning reliance’’ on an SRO’s
representations in a proposed rule
change would not be sufficient to justify
Commission approval of a proposed rule
change.79
The Commission believes it is
appropriate to institute proceedings to
allow for additional consideration and
comment on the issues raised herein,
including as to whether the proposed
fees are consistent with the Act, any
potential comments or supplemental
information provided by the Exchange,
and any additional independent
analysis by the Commission.
V. Request for Written Comments
The Commission requests that
interested persons provide written
submissions of their views, data, and
arguments with respect to the concerns
and issues identified above, as well as
any other relevant concerns. In
particular, the Commission invites the
written views of interested persons
concerning whether the proposal is
consistent with Sections 6(b)(4), 6(b)(5),
and 6(b)(8), or any other provision of the
Act, or the rules and regulations
thereunder. The Commission asks that
commenters address the sufficiency and
merit of the Exchange’s statements in
support of the proposal, in addition to
any other comments they may wish to
submit about the proposed rule change.
Although there do not appear to be any
issues relevant to approval or
disapproval that would be facilitated by
an oral presentation of views, data, and
arguments, the Commission will
consider, pursuant to Rule 19b–4, any
request for an opportunity to make an
oral presentation.80
Interested persons are invited to
submit written data, views, and
arguments regarding whether the
proposal should be approved or
disapproved by January 26, 2022. Any
person who wishes to file a rebuttal to
any other person’s submission must file
that rebuttal by February 9, 2022.
Comments may be submitted by any
of the following methods:
78 See
id.
Susquehanna Int’l Group, LLP v. Securities
and Exchange Commission, 866 F.3d 442, 446–47
(D.C. Cir. 2017) (rejecting the Commission’s reliance
on an SRO’s own determinations without sufficient
evidence of the basis for such determinations).
80 Section 19(b)(2) of the Exchange Act, as
amended by the Securities Act Amendments of
1975, Public Law 94–29 (June 4, 1975), grants the
Commission flexibility to determine what type of
proceeding—either oral or notice and opportunity
for written comments—is appropriate for
consideration of a particular proposal by a selfregulatory organization. See Securities Act
Amendments of 1975, Senate Comm. on Banking,
Housing & Urban Affairs, S. Rep. No. 75, 94th
Cong., 1st Sess. 30 (1975).
TKELLEY on DSK125TN23PROD with NOTICE
79 See
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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–2021–14 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–IEX–2021–14. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (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 IEX–2021–14 and should be
submitted on or before January 26, 2022.
Rebuttal comments should be submitted
by February 9, 2022.
VI. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(3)(C) of the Act,81 that File
No. SR–IEX–2021–14 be, and hereby is,
temporarily suspended. In addition, the
Commission is instituting proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
81 15
PO 00000
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Frm 00105
Fmt 4703
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.82
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2021–28577 Filed 1–4–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93885; File No. SR–DTC–
2021–018]
Self-Regulatory Organizations; The
Depository Trust Company; Notice of
Filing and Immediate Effectiveness of
a Proposed Rule Change To Amend
the Reorganizations Guide and the Fee
Guide
December 30, 2021.
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
29, 2021, The Depository Trust
Company (‘‘DTC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II and III
below, which Items have been prepared
by the clearing agency. DTC filed the
proposed rule change pursuant to
Section 19(b)(3)(A) of the Act 3 and
Rules 19b–4(f)(2) and (f)(4) thereunder.4
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The proposed rule change 5 consists of
amendments to the Reorganizations
Guide and the Fee Guide to (i) postpone
the retirement of DTC’s legacy computer
to computer facility (‘‘CCF’’) files for
corporate actions entitlements and
allocations (‘‘CCF Entitlements and
Allocations Files’’) 6 to January 1, 2023,
82 17
CFR 200.30–3(a)(57) and (58).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(2) and (f)(4).
5 Each term not otherwise defined herein has its
respective meaning as set forth in the Rules, ByLaws and Organization Certificate of DTC (the
‘‘Rules’’), the Guide to the DTC Fee Schedule (‘‘Fee
Guide’’), and the Reorganizations Service Guide
(‘‘Reorganizations Guide’’), available at https://
www.dtcc.com/legal/rules-and-procedures.aspx.
6 Each of the CCF Entitlements and Allocations
Files falls into one of two categories (each, a ‘‘File
Category’’): (i) Pre-allocation (‘‘Pre-Allocation CCF
Files’’), which includes files containing a
Participant’s allocation projections and
entitlements, or (ii) allocation/post-allocation
(‘‘Allocation/Post-Allocation CCF Files’’), which
1 15
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]]>Agencies
[Federal Register Volume 87, Number 3 (Wednesday, January 5, 2022)]
[Notices]
[Pages 523-528]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-28577]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93883; File No. SR-IEX-2021-14]
Self-Regulatory Organizations; Investors Exchange LLC; Suspension
of and Order Instituting Proceedings To Determine Whether To Approve or
Disapprove a Proposed Rule Change To Amend Its Fee Schedule for Market
Data Fees
December 30, 2021.
I. Introduction
On November 1, 2021, Investors Exchange LLC (``IEX'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'' or ``Exchange Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to modify its Fee Schedule to
establish fees, as of January 3, 2022, for the receipt and distribution
of proprietary market data feeds. The proposed rule change was
published for comment in the Federal Register on November 17, 2021.\3\
Pursuant to Section 19(b)(3)(C) of the Act,\4\ the Commission is hereby
temporarily suspending File No. SR-IEX-2021-14 and instituting
proceedings to determine whether to approve or disapprove File No. SR-
IEX-2021-14.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 93557 (November 10,
2021), 86 FR 64268 (November 17, 2021).
\4\ 15 U.S.C. 78s(b)(3)(C).
---------------------------------------------------------------------------
II. Description of the Proposed Rule Change
IEX offers two real-time proprietary market data feeds, ``TOPS''
\5\ and ``DEEP'' \6\ (collectively, ``IEX Data'' or the ``market data
feeds'').\7\ DEEP includes all resting displayed liquidity on the
Exchange aggregated by price level and it therefore includes the top of
book quotes contained in TOPS, as well as less aggressively priced
displayed quotes. IEX has not previously imposed fees to access or
redistribute its market data feeds.\8\
---------------------------------------------------------------------------
\5\ TOPS is an uncompressed data feed that offers aggregated top
of book quotations for all displayed orders resting on the IEX Order
Book and last sale information for executions on the Exchange. See
Notice, supra note 3, at 64269. According to the Exchange, the data
available through TOPS is also available through the securities
information processor feed. See id.
\6\ DEEP is an uncompressed data feed that provides aggregated
depth of book quotations for all displayed orders resting on the IEX
Order Book at each price level and last sale information for
executions on the Exchange. See Notice, supra note 3, at 64269.
\7\ See Notice, supra note 3, at 64269.
\8\ See id.
---------------------------------------------------------------------------
The Exchange proposes to modify its Fee Schedule to assess fees on
Data Subscribers \9\ that access IEX Data in real-time.\10\ As
discussed below, IEX would not itself provide or impose a fee for time-
delayed IEX Data.\11\ The Exchange proposes to implement these fees on
January 3, 2022.
---------------------------------------------------------------------------
\9\ The Exchange proposes to define the term ``Data Subscriber''
as ``any natural person or entity that receives Real-Time IEX market
data either directly from the Exchange or from another Data
Subscriber.'' See Notice, supra note 3, at 64274. IEX will require
Data Subscribers to enter into a Data Subscriber Agreement with IEX
in order to receive Real-Time IEX Data. See id. at 64270, n.23.
\10\ See Notice, supra note 3, at 64269.
\11\ See Notice, supra note 3, at 64270, n.22.
---------------------------------------------------------------------------
Specifically, IEX proposes to assess Data Subscribers $2,500 per
month for its ``Real-Time'' DEEP feed and $500 per
[[Page 524]]
month for its ``Real-Time'' TOPS feed. The Exchange proposes to define
``Real-Time'' as ``IEX market data that is accessed, used, or
distributed less than fifteen (15) milliseconds after it was made
available by the Exchange.'' \12\
---------------------------------------------------------------------------
\12\ See Notice, supra note 3, at 64274. IEX will consider
``market data that is accessed, used, or distributed at least
fifteen (15) milliseconds after it was made available by the
Exchange'' as ``Delayed'' IEX Data. See id. IEX only provides Real-
Time IEX Data and will not itself delay the dissemination of IEX
Data to Data Subscribers. See Notice, supra note 3, at 64269, n.22.
---------------------------------------------------------------------------
Further, the Exchange proposes to assess a $500 per month
``Distribution Fee'' to each Data Subscriber that redistributes IEX
Data in Real-Time to an external, non-affiliated third-party.\13\ For
Data Subscribers that redistribute IEX Data to others, IEX would not
charge them a Distribution Fee if: (1) They only redistribute the IEX
Data in Real-Time to internal, affiliated parties; or (2) they delay
distribution of the data by at least fifteen milliseconds before
redistributing it.
---------------------------------------------------------------------------
\13\ See Notice, supra note 3, at 64269.
---------------------------------------------------------------------------
For recipients of IEX Data, IEX would not consider them a ``Data
Subscriber'' and would not charge them the TOPS or DEEP fees if they
only (1) receive IEX Data subject to a delay of at least a fifteen
milliseconds \14\ or (2) receive Real-Time IEX Data internally from an
affiliate.
---------------------------------------------------------------------------
\14\ See Notice, supra note 3, at 64270. The Exchange notes that
a recipient of Delayed IEX Data may be subject to fees imposed by
the redistributor of the Delayed IEX Data pursuant to the contract
between the recipient of the Delayed IEX Data and the third-party
provider of such market data. See id. at 64270, n.24.
---------------------------------------------------------------------------
III. Suspension of the Proposed Rule Change
Pursuant to Section 19(b)(3)(C) of the Act,\15\ at any time within
60 days of the date of filing of an immediately effective proposed rule
change pursuant to Section 19(b)(1) of the Act,\16\ the Commission
summarily may temporarily suspend the change in the rules of a self-
regulatory organization (``SRO'') 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. As described below, the Commission believes a temporary
suspension of the proposed rule change is necessary and appropriate to
allow for additional analysis of the proposed rule change's consistency
with the Act and the rules thereunder.
---------------------------------------------------------------------------
\15\ 15 U.S.C. 78s(b)(3)(C).
\16\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------
In support of its proposed market data fees, the Exchange states
``its belief that the fees each equities exchange charges for its
proprietary market data are not subject to competitive forces'' \17\
and therefore has proposed fees that it believes are ``fair and
reasonable as a form of cost recovery plus the possibility of a
reasonable return for IEX's aggregate costs of offering IEX Data to its
Data Subscribers.'' \18\ With respect to its proposed cost-based fees,
IEX provides a summary of its annual market data infrastructure costs
($2,483,644 for 2021), with a breakdown of selected line-item costs
including direct costs, enhancement initiative costs, and personnel
costs.\19\ IEX states that its proposed fees are reasonable under the
Act because they are ``based both on the relative costs to IEX to
generate TOPS and DEEP, as well as IEX's objective to make TOPS broadly
available to a range of market participants including long-term
investors.'' \20\ IEX further asserts that its proposed fees ``are
reasonable because they are designed to generate annual revenue of
approximately $3.1 million (reflecting a 25% markup over costs),'' \21\
though IEX acknowledges a potential markup from ``break even'' or even
below aggregate costs to an aggregate markup of 95%, depending on the
number of paying subscribers it ultimately will have.\22\ IEX further
states that it ``is only charging Data Subscribers who use IEX Data in
real time'' and argues that its proposed fees ``are significantly less
than the fees charged by competing equities exchanges'' and that its
fee proposal ``will not impose onerous audit requirements on Data
Subscribers.'' \23\
---------------------------------------------------------------------------
\17\ See Notice, supra note 3, at 64274.
\18\ See Notice, supra note 3, at 64274.
\19\ See Notice, supra note 3, at 64271.
\20\ See Notice, supra note 3, at 64274-75.
\21\ See Notice, supra note 3, at 64275.
\22\ See Notice, supra note 3, at 64273.
\23\ See Notice, supra note 3, at 64275.
---------------------------------------------------------------------------
When an Exchange files a proposed rule change with the Commission,
including fee filings, it is required to provide a statement supporting
the proposal's basis under the Act and the rules and regulations
thereunder applicable to the exchange.\24\ The instructions to Form
19b-4, on which exchanges file their proposed rule changes, specify
that such statement ``should be sufficiently detailed and specific to
support a finding that the proposed rule change is consistent with
[those] requirements.'' \25\
---------------------------------------------------------------------------
\24\ See 17 CFR 240.19b-4 (General Instructions for Form 19b-4--
Information to be Included in the Complete Form--Item 3 entitled
``Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change'').
\25\ See id.
---------------------------------------------------------------------------
Section 6 of the Act, including Sections 6(b)(4), (5), and (8),
requires, among other things, that the rules of an exchange: (1)
Provide for the equitable allocation of reasonable fees among members,
issuers, and other persons using the exchange's facilities; \26\ (2) be
designed to perfect the mechanism of a free and open market and a
national market system and to protect investors and the public
interest, and not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers; \27\ and (3) not impose any
burden on competition not necessary or appropriate in furtherance of
the purposes of the Act.\28\
---------------------------------------------------------------------------
\26\ 15 U.S.C. 78f(b)(4).
\27\ 15 U.S.C. 78f(b)(5).
\28\ 15 U.S.C. 78f(b)(8).
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In temporarily suspending the Exchange's proposed rule change, the
Commission intends to further consider whether the proposed fees are
consistent with the statutory requirements applicable to a national
securities exchange under the Act. In particular, the Commission will
consider whether the proposed rule change satisfies the standards under
the Act and the rules thereunder requiring, among other things, that an
exchange's rules provide for the equitable allocation of reasonable
fees among members, issuers, and other persons using its facilities;
are designed to perfect the mechanism of a free and open market and a
national market system and to protect investors and the public
interest, and are not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers; and do not impose any burden
on competition not necessary or appropriate in furtherance of the
purposes of the Act.\29\
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\29\ See 15 U.S.C. 78f(b)(4), (5), and (8), respectively.
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Therefore, the Commission finds that it is appropriate in the
public interest, for the protection of investors, and otherwise in
furtherance of the purposes of the Act, to temporarily suspend the
proposed rule change.\30\
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\30\ For purposes of temporarily suspending the proposed rule
change, the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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IV. Proceedings To Determine Whether To Approve or Disapprove SR-IEX-
2021-14 and Grounds for Disapproval Under Consideration
In addition to temporarily suspending the proposal, the Commission
also hereby institutes proceedings pursuant to Sections 19(b)(3)(C)
\31\ and
[[Page 525]]
19(b)(2)(B) \32\ of the Act to determine whether the proposed rule
change should be approved or disapproved. Institution of such
proceedings is appropriate at this time in view of the legal and policy
issues raised by the proposed rule change. Institution of proceedings
does not indicate that the Commission has reached any conclusions with
respect to any of the issues involved. Rather, as described below, the
Commission seeks and encourages interested persons to provide comments
on the proposed rule change to inform the Commission's analysis of
whether to approve or disapprove the proposed rule change.
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\31\ 15 U.S.C. 78s(b)(3)(C). Once the Commission temporarily
suspends a proposed rule change, Section 19(b)(3)(C) of the Act
requires that the Commission institute proceedings under Section
19(b)(2)(B) to determine whether a proposed rule change should be
approved or disapproved.
\32\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Act,\33\ the Commission is
providing notice of the grounds for possible disapproval under
consideration. The Commission is instituting proceedings to allow for
additional analysis of whether the Exchange has sufficiently
demonstrated how the proposed rule change is consistent with Sections
6(b)(4),\34\ 6(b)(5),\35\ and 6(b)(8) \36\ of the Act. Section 6(b)(4)
of the Act requires that the rules of a national securities exchange
provide for the equitable allocation of reasonable dues, fees, and
other charges among its members and issuers and other persons using its
facilities. Section 6(b)(5) of the Act requires that the rules of a
national securities exchange be designed, among other things, 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, and not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers. Section 6(b)(8) of the Act
requires that the rules of a national securities exchange not impose
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
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\33\ 15 U.S.C. 78s(b)(2)(B). Section 19(b)(2)(B) of the Act also
provides that proceedings to determine whether to disapprove a
proposed rule change must be concluded within 180 days of the date
of publication of notice of the filing of the proposed rule change.
See id. The time for conclusion of the proceedings may be extended
for up to 60 days if the Commission finds good cause for such
extension and publishes its reasons for so finding, or if the
exchange consents to the longer period. See id.
\34\ 15 U.S.C. 78f(b)(4).
\35\ 15 U.S.C. 78f(b)(5).
\36\ 15 U.S.C. 78f(b)(8).
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The Commission asks that commenters address the sufficiency of the
Exchange's statements in support of the proposal, which are set forth
in the Notice, in addition to any other comments they may wish to
submit about the proposed rule change. In particular, the Commission
seeks comment on the following aspects of the proposal and asks
commenters to submit data where appropriate to support their views:
1. Cost Allocation. IEX states it ``does not believe that exchange
market data fees are constrained by competitive market forces,'' \37\
and that ``each exchange has a natural monopoly over its own market
data.'' \38\ Consequently, for market data fee filings, IEX believes
that exchanges ``should meet very high standards of transparency to
demonstrate why each new fee or fee increase meets the Exchange Act
requirements'' and that ``each exchange should demonstrate that these
fees bear a reasonable relationship to its costs and reasonable
business needs and that it is not taking unfair advantage of its unique
position as the sole provider of its own proprietary market data.''
\39\ In proposing its fees, IEX says it used a ``cost-plus model'' and
``sought to determine such fees in a transparent way in relation to its
own aggregate costs of providing the related service. . . .'' \40\ IEX
says it used a ``conservative methodology (i.e., that strictly
considers only those costs that are most clearly directly related to
the production and distribution of IEX Data) to estimate such costs, as
well as the relative costs of compiling the TOPS and DEEP feeds . . .''
\41\ and also considered its ``objective to make TOPS broadly available
to a range of market participants including long-term investors.'' \42\
IEX summarizes its cost components according to (1) direct costs
(servers, infrastructure, monitoring), (2) enhancement initiative costs
(new functionality and capacity), and (3) personnel.\43\ IEX asserts
that direct costs are those that are specifically dedicated to IEX Data
and that physical assets and software are valued at cost and
depreciated over three years.\44\ For direct costs, IEX notes that
``servers included were limited to those specifically dedicated to IEX
Data'' and that ``[a]ll physical assets and software, which also
includes assets used for testing and monitoring of market data
infrastructure, were valued at cost, and depreciated over three
years.'' \45\ Do commenters believe IEX has provided sufficient detail
about the specific direct costs it has assigned to market data to
justify its proposal? For enhancement initiative costs, IEX asserts
that, though they are one-time costs, it expects to incur ``annual
enhancement costs on an ongoing basis'' that ``will be similar'' to
what it incurred in 2021.\46\ Do commenters believe enhancement costs
are sufficiently clear and defined? Further, do commenters expect costs
(enhancement costs as well as all other costs) incurred in 2021 to be
generally representative of an exchange's expected costs going forward
(to the extent commenters consider 2021 to be an atypical year), or
should an exchange present an estimated range of costs with an
explanation of how profit margins could vary along with estimates
costs? For personnel costs, IEX ``calculated an allocation of employee
time for employees whose functions include providing and maintaining
IEX Data and/or the proprietary market data feeds used to transmit IEX
Data, and used a blended rate of compensation reflecting salary, stock
and bonus compensation, bonuses, benefits, payroll taxes, and 401(k)
matching contributions.'' \47\ IEX estimates 6.15 FTEs who ``work in
support of compiling and disseminating IEX Data,'' \48\ but does not
identify the department and job title of all employees it counted as
``work[ing] in support of compiling and disseminating IEX Data'' nor
does it explain the methodology it used to determine how much of an
employee's time is devoted to that specific activity (e.g., are
finance, legal, HR, administrative personnel included in this estimate
and what portion of their time did IEX count towards market data costs
and why?). Further, IEX uses a ``blended compensation rate . . . to
determine the personnel costs associated with compiling and
disseminating IEX Data,'' \49\ which includes salary, stock
compensation, annual cash bonus, benefits, payroll taxes, and 401(k)
matching contributions.\50\ Do commenters believe those are appropriate
criteria? In particular, would it be appropriate to include stock
compensation and annual cash bonuses in a blended compensation rate for
[[Page 526]]
purposes of assessing market data costs if those items are based on an
exchange's overall profitability or performance and not the individual
employee's performance (and thus not directly attributable to market
data)? Across all of these costs, what are commenters' views on whether
the Exchange has provided sufficient detail on the elements that go
into its market data costs, including how it allocated and attributed
shared costs to market data expenses, to permit an independent review
of its costs and meaningfully assess the reasonableness of purported
cost-based fees and the corresponding profit margin thereon?
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\37\ Notice, supra note 3 at 64272.
\38\ Notice, supra note 3 at 64269.
\39\ Notice, supra note 3 at 64269.
\40\ Notice, supra note 3 at 64269-70.
\41\ Notice, supra note 3 at 64270.
\42\ Notice, supra note 3 at 64274-75.
\43\ Notice, supra note 3 at 64270-71.
\44\ Notice, supra note 3 at 64271.
\45\ Notice, supra note 3 at 64271.
\46\ Notice, supra note 3 at 64270, n.31.
\47\ Notice, supra note 3 at 64271.
\48\ Notice, supra note 3 at 64271, n.33.
\49\ Notice, supra note 3 at 64271, n.33.
\50\ See, e.g., Cost Study at 3.
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2. TOPS versus DEEP. IEX states that its proposed market data fee
structure is ``designed to make real time access to IEX's top of book
widely available to a broad base of market participants'' and, to
accomplish that goal, IEX ``proposes to allocate its cost plus
structure so that TOPS is materially more affordable than DEEP.'' IEX
notes that ``because it contains multiple price levels, DEEP requires
more processing (and related costs) for IEX to generate than TOPS.''
\51\ As proposed, DEEP ($2,500) is five times more expensive than TOPS
($500). However, IEX does not assert in its filing that DEEP is five
times more costly for it to produce than TOPS, nor does IEX present its
separate costs to produce DEEP and TOPS individually. Rather, IEX
appears to be subsidizing TOPS, though it has not presented a cost-
based explanation for how it is doing so or explained the extent to
which it is subsidizing TOPS through the proposed fees for DEEP or some
other source of revenue. Do commenters believe that the price
difference between TOPS and DEEP is consistent with IEX's assertions
that it set the level of its proposed fees ``in relation to its own
aggregate costs of providing the related service. . .'' \52\ and
according to the ``relative costs of compiling the TOPS and DEEP
feeds?'' \53\ Do commenters believe that IEX should provide more detail
about the types of market participants that subscribe to TOPS and DEEP
in order to assess, among other things, IEX's statement that ``fees
also do not depend on any distinctions between Members, customers,
broker-dealers, or any other entity, because they are solely determined
by the individual Data Subscriber's business needs?'' \54\
---------------------------------------------------------------------------
\51\ Notice, supra note 3 at 64270.
\52\ Notice, supra note 3 at 64269.
\53\ Notice, supra note 3 at 64270.
\54\ Notice, supra note 3 at 64275.
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3. Subscribers. IEX acknowledges that imposing a fee on the
proprietary market data it previously offered for free may cause some
of its current market data subscribers to terminate or modify their
current subscriptions.\55\ Specifically, IEX says it ``currently has 70
Data Subscribers who it believes are individuals and expects that most,
if not all, of the individual Data Subscribers will terminate their
subscriptions for IEX Data'' once IEX charges for Real-Time data
(though ``if they choose to continue to receive IEX Data, [they] can
opt to receive Delayed IEX Data from a third-party vendor or through
HIST'').\56\ IEX says (without providing supporting numbers) that the
``remaining, non-individual, Data Subscribers are made up of
approximately one-third IEX Members, one-third professional market
participants that are not IEX Members (e.g., hedge funds and broker-
dealers), and one-third data vendors'' and ``[b]ased on IEX's general
understanding of many of its current Data Subscribers' business models,
IEX projects at least half of the data vendors will retain all of their
existing subscriptions for IEX Data while the others may cancel their
real-time data subscriptions, and also anticipates that several Members
and non-Members will cancel their real-time data subscriptions for
either TOPS, DEEP, or both.'' \57\ IEX did not offer any further
explanation of its basis for these projections. For example, how many
non-individual Data Subscribers does IEX have that subscribe to each of
TOPS, DEEP, or TOPS and DEEP, and on what basis does IEX estimate they
will alter their current subscriptions? Has IEX received any verbal or
written indication of such subscribers' likely intent? Do commenters
believe IEX has provided sufficient information regarding its current
market data subscriber base as well as sufficient information to
support its projections regarding what types of current subscribers
(i.e., individuals, vendors, members, and non-members) may terminate or
modify their current subscriptions and why? Do commenters believe that
additional detail on estimated subscribers to TOPS, DEEP, or TOPS and
DEEP is necessary and useful to assess the Exchange's estimated profit
margin on market data?
---------------------------------------------------------------------------
\55\ See Notice, supra note 3 at 64273 (discussing IEX's
projections regarding how fees are likely to impact IEX market data
subscriptions).
\56\ Notice, supra note 3 at 64273.
\57\ See id.
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4. Profit Margin Range. IEX states that its proposed fee structure
is ``designed to recoup its costs and limit any revenue in excess of
cost to an amount that represents no more than what IEX believes is a
reasonable rate of return over such costs.'' \58\ Depending on how many
paying subscribers IEX will have once the fees take effect, IEX
projects that the proposed market data fees will generate revenue of up
to 95% above cost, though it has targeted and projects a 25% return
over costs based on its estimate of subscribers.\59\ IEX attributes the
wide range to its inability to know beforehand who will subscribe to
TOPS or DEEP (or both or neither). If IEX is incorrect and all people
that currently obtain IEX Data (for free) keep that data and pay the
fee, IEX estimates it could generate revenue of 95% above cost. On the
other hand, IEX also acknowledges that ``revenues could range from
`break even' (or even below aggregate costs)'' if its projections are
incorrect.\60\ However, IEX does not specify the circumstances under
which it would receive zero or negative profit margins or the
likelihood of that occurring. Further, IEX does not specifically
explain why it believes that profit margins of up to 95% are
appropriate nor does it provide an argument to support a finding that
fees within that range would be reasonable under the Act. Do commenters
find IEX's projected range to be appropriately narrow for a cost-based
fee filing, or should IEX provide a more detailed and precise estimate
in order to facilitate consideration of whether the proposed fees are
reasonable and equitably allocated? Do commenters believe that the top-
end of the range (95%) would constitute a reasonable rate of return
over cost for proprietary market data?
---------------------------------------------------------------------------
\58\ Notice, supra note 3 at 64271.
\59\ Notice, supra note 3 at 64273.
\60\ Notice, supra note 3 at 64273.
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5. Reasonable Rate of Return. IEX believes that a 95% return ``is
unlikely'' and ``is targeting a return of 25% over its costs'' \61\
because ``market participants that do not need real-time data will have
the option to receive Delayed IEX Data (at a minimal delay of only 15
milliseconds) in lieu of real-time data, without paying a fee to IEX.''
\62\ IEX states that its proposed fees are reasonable because, among
other things, ``IEX is only charging Data Subscribers who use IEX Data
in real time'' and the fees ``are significantly less than the fees
charged by competing equities exchanges. . . .'' \63\ If IEX's
subscriber estimates are correct, do commenters agree with IEX that its
targeted 25% profit margin would constitute a reasonable rate of return
over cost for proprietary market data? If not, what would commenters
consider
[[Page 527]]
to be a reasonable rate of return for proprietary market data fees? The
rate of return is dependent on the accuracy of the cost allocations
which, if inflated (intentionally or unintentionally), may render the
projected profit margin meaningless. What are commenters' views
regarding what factors should be considered in determining what
constitutes a reasonable rate of return for proprietary market data
fees?
---------------------------------------------------------------------------
\61\ Notice, supra note 3 at 64271.
\62\ Notice, supra note 3 at 64272.
\63\ Notice, supra note 3 at 64275.
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6. Periodic Reevaluation. IEX represented that ``[i]f the revenue
IEX receives from the proposed fees materially deviates from IEX's
projections described herein, IEX will assess whether it is appropriate
to make a rule filing pursuant to Section 19(b) of the Act to increase
or decrease the fees accordingly.'' \64\ In light of the impact that
the number of subscribers has on market data profit margins (because
market data costs do not necessarily linearly change as the number of
subscribers increase or decrease), what are commenters' views on the
need for exchanges to commit to reevaluate, on an ongoing and periodic
basis, their cost-based proprietary market data fees to ensure that
they stay in line with their stated profitability target and do not
become unreasonable over time, for example, by failing to adjust for
efficiency gains, cost increases or decreases, and changes in
subscribers? How formal should that process be, how often should that
reevaluation occur, and what metrics and thresholds should be
considered? How soon after a new market data fee change is implemented
should an exchange assess whether its subscriber estimates were
accurate and at what threshold should an exchange commit to file a fee
change if its estimates were inaccurate? Should an initial review take
place within the first 30 days after a proprietary market data fee
becomes operative?
---------------------------------------------------------------------------
\64\ Notice, supra note 3 at 64271, n.44.
---------------------------------------------------------------------------
7. Real-Time. IEX is only proposing to assess fees for market data
that is made available in ``Real-Time.'' The Exchange is proposing to
define ``Real-Time'' market data as IEX market data that is accessed,
used, or distributed less than fifteen milliseconds after it was made
available by the Exchange. IEX states that it ``sought informal
feedback from Members and other Data Subscribers'' and, ``[b]ased upon
that informal feedback, IEX believes that most, if not all, non-
electronic trading desks would be able to continue to use IEX Data if
it was received subject to at least a fifteen-millisecond delay.'' \65\
What are commenters' views on this threshold and whether this
definition accurately reflects and correlates to IEX's assertion that
``it is the very demand for real-time, low latency data that drives
much of the costs associated with creating and distributing'' such
data? \66\ Do commenters agree with IEX's statement that ``most, if not
all, non-electronic trading desks would be able to continue to use IEX
Data if it was received subject to at least a fifteen-millisecond
delay,'' and that (conversely) electronic trading desks that need IEX
Data for trading purposes require the data to have less than a 15
millisecond delay? \67\ Similarly, do commenters agree with IEX's
statement that a fifteen-millisecond delay is ``a time frame that is
usable for most trading purposes'' (i.e., does usefulness to ``non-
electronic trading desks'' cover ``most trading purposes''), while the
fifteen-minute delay offered by other exchanges ``makes the data stale
for any subscribers using the data to make trading decisions''? \68\
---------------------------------------------------------------------------
\65\ Notice, supra note 3 at 64273.
\66\ Notice, supra note 3 at 64270.
\67\ Notice, supra note 3 at 64273.
\68\ Notice, supra note 3 at 64275.
---------------------------------------------------------------------------
8. Distribution Fee. IEX proposes a $500 redistribution fee because
``[e]nabling redistribution in real time adds to IEX's administrative
expenses related to the need to identify and track the recipients of
IEX Data.'' \69\ IEX does not, however, provide any estimate of such
administrative expenses, nor does it mention its targeted profit margin
on the proposed Distribution Fee. IEX also justifies the proposed
Distribution Fee by noting that ``if it allowed Data Subscribers to
redistribute IEX Data in real time without any additional fees, it
could enable Data Subscribers to circumvent IEX's fees for providing
IEX Data, which would conflict with IEX's objective to recover its
costs of producing IEX Data.'' \70\ IEX does not explain how the
proposed Distribution Fee would discourage Data Subscribers from
circumventing the TOPS and/or DEEP fees. What are commenters' views on
the adequacy of the information IEX provides regarding its proposed
Distribution Fee?
---------------------------------------------------------------------------
\69\ Notice, supra note 3 at 64270.
\70\ Notice, supra note 3 at 64270.
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9. Delayed IEX Data. IEX does not propose to itself directly offer
Delayed IEX Data, nor does it propose to charge persons that access,
receive, or distribute Delayed IEX Data from third parties. IEX states
that its proposal will continue ``to allow market participants to
access IEX Data free of charge if they can wait at least fifteen
milliseconds to receive it'' \71\ but acknowledges that
``[d]istributors of Delayed IEX Data may charge a fee for the data, but
that fee is not payable to IEX.'' \72\ What do commenters think will be
the end costs to consumers of Delayed IEX Data? While IEX itself will
not charge for Delayed IEX Data, do commenters think there is
sufficient competition among data vendors such that market participants
will have access to Delayed IEX Data for a reasonable fee?
---------------------------------------------------------------------------
\71\ Notice, supra note 3 at 64275.
\72\ Notice, supra note 3 at 64276, n.75.
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10. Sharing with Affiliates. In an example discussing the other
exchanges that charge for proprietary market data, IEX explains that
``the aggregate monthly cost for those 11 equity exchanges [to obtain
IEX Data] would be $3,000 per exchange family.'' \73\ That statement,
however, appears to be inconsistent with the rule text and the proposed
definition of Data Subscriber. Specifically, IEX's proposed rule text
defines ``Data Subscriber'' as ``any natural person or entity that
receives Real-Time IEX market data either directly from the Exchange or
from another Data Subscriber.'' \74\ Further, it states that each Data
Subscriber ``must enter into a Data Subscriber Agreement with IEX in
order to receive Real-Time IEX market data'' \75\ as well as pay the
applicable fee. Yet, IEX's example of affiliated exchanges states that
an exchange family would only be assessed $3,000 in fees (i.e., $2,500
for DEEP and $500 for TOPS), despite the fact that each exchange within
a family would independently meet the proposed definition of Data
Subscriber. IEX's filing appears incomplete with respect to how the
proposed fees would apply in the case of internal sharing of TOPS and/
or DEEP with an affiliate.
---------------------------------------------------------------------------
\73\ Notice, supra note 3 at 64272.
\74\ Notice, supra note 3 at 64274.
\75\ See id.
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Under the Commission's Rules of Practice, the ``burden to
demonstrate that a proposed rule change is consistent with the [Act]
and the rules and regulations issued thereunder . . . is on the [SRO]
that proposed the rule change.'' \76\ The description of a proposed
rule change, its purpose and operation, its effect, and a legal
analysis of its consistency with applicable requirements must all be
sufficiently detailed and specific to support an affirmative Commission
finding,\77\ and any failure of an SRO to provide this information may
result in the Commission not having a sufficient basis to make an
affirmative finding that a proposed rule change is consistent with the
Act and the applicable rules
[[Page 528]]
and regulations.\78\ Moreover, ``unquestioning reliance'' on an SRO's
representations in a proposed rule change would not be sufficient to
justify Commission approval of a proposed rule change.\79\
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\76\ Rule 700(b)(3), Commission Rules of Practice, 17 CFR
201.700(b)(3).
\77\ See id.
\78\ See id.
\79\ See Susquehanna Int'l Group, LLP v. Securities and Exchange
Commission, 866 F.3d 442, 446-47 (D.C. Cir. 2017) (rejecting the
Commission's reliance on an SRO's own determinations without
sufficient evidence of the basis for such determinations).
---------------------------------------------------------------------------
The Commission believes it is appropriate to institute proceedings
to allow for additional consideration and comment on the issues raised
herein, including as to whether the proposed fees are consistent with
the Act, any potential comments or supplemental information provided by
the Exchange, and any additional independent analysis by the
Commission.
V. Request for Written Comments
The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
concerns and issues identified above, as well as any other relevant
concerns. In particular, the Commission invites the written views of
interested persons concerning whether the proposal is consistent with
Sections 6(b)(4), 6(b)(5), and 6(b)(8), or any other provision of the
Act, or the rules and regulations thereunder. The Commission asks that
commenters address the sufficiency and merit of the Exchange's
statements in support of the proposal, in addition to any other
comments they may wish to submit about the proposed rule change.
Although there do not appear to be any issues relevant to approval or
disapproval that would be facilitated by an oral presentation of views,
data, and arguments, the Commission will consider, pursuant to Rule
19b-4, any request for an opportunity to make an oral presentation.\80\
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\80\ Section 19(b)(2) of the Exchange Act, as amended by the
Securities Act Amendments of 1975, Public Law 94-29 (June 4, 1975),
grants the Commission flexibility to determine what type of
proceeding--either oral or notice and opportunity for written
comments--is appropriate for consideration of a particular proposal
by a self-regulatory organization. See Securities Act Amendments of
1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No.
75, 94th Cong., 1st Sess. 30 (1975).
---------------------------------------------------------------------------
Interested persons are invited to submit written data, views, and
arguments regarding whether the proposal should be approved or
disapproved by January 26, 2022. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
February 9, 2022.
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-2021-14 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-IEX-2021-14. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (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 IEX-2021-14 and should be submitted on or
before January 26, 2022. Rebuttal comments should be submitted by
February 9, 2022.
VI. Conclusion
It is therefore ordered, pursuant to Section 19(b)(3)(C) of the
Act,\81\ that File No. SR-IEX-2021-14 be, and hereby is, temporarily
suspended. In addition, the Commission is instituting proceedings to
determine whether the proposed rule change should be approved or
disapproved.
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\81\ 15 U.S.C. 78s(b)(3)(C).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\82\
---------------------------------------------------------------------------
\82\ 17 CFR 200.30-3(a)(57) and (58).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2021-28577 Filed 1-4-22; 8:45 am]
BILLING CODE 8011-01-P
