[Federal Register Volume 85, Number 92 (Tuesday, May 12, 2020)]
[Notices]
[Pages 28059-28061]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-10057]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88819; File No. SR-IEX-2020-06]
Self-Regulatory Organizations; Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Modify
the IEX Fee Schedule, Pursuant to IEX Rule 15.110(a) and (c), To
Clarify the Circumstances in Which IEX Offers Certain Physical Port
Connections
May 6, 2020.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on April 22, 2020, the Investors Exchange LLC (``IEX'' or
the ``Exchange'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule change as described in Items I
and II below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Pursuant to the provisions of Section 19(b)(1) under Act,\4\ and
Rule 19b-4 thereunder,\5\ IEX is filing with the Commission a proposed
rule change to modify its Fee Schedule, pursuant to IEX Rule 15.110(a)
and (c), to clarify the circumstances in which IEX offers certain
physical port connections. The Exchange has designated this rule change
as ``non-controversial'' under Section 19(b)(3)(A) of the Act \6\ and
provided the Commission with the notice required by Rule 19b-4(f)(6)
thereunder.\7\
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\4\ 15 U.S.C. 78s(b)(1).
\5\ 17 CFR 240.19b-4.
\6\ 15 U.S.C. 78s(b)(3)(A).
\7\ 17 CFR 240.19b-4.
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The text of the proposed rule change is available at the Exchange's
website at www.iextrading.com, at the principal office of the Exchange,
and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of and basis for the
proposed rule change
[[Page 28060]]
and discussed any comments it received on the proposed rule change. The
text of these statement may be examined at the places specified in Item
IV below. The self-regulatory organization has prepared summaries, set
forth in Sections A, B, and C below, of the most significant aspects of
such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to modify its Fee Schedule, pursuant to IEX
Rule 15.110(a) and (c), to clarify the circumstances in which IEX
offers certain physical port connections. Specifically, the Exchange
proposes to add two footnotes to its Fee Schedule to clarify that 10
gigabit (``10G'') physical connections are available to connect to both
its production and test systems, but 1 gigabit (``1G'') physical
connections are only available to connect to its test system. IEX will
continue to offer all physical connections to the Exchange free of
charge.
IEX is proposing this change to its Fee Schedule in order to more
clearly denote the various ways market participants can connect to the
Exchange. IEX, like all securities exchanges, offers its Members \8\
physical connections (also called ``physical ports'') through which
Members may ``plug in'' to the Exchange.\9\ These physical ports come
in several forms that offer different amounts of bandwidth into the
Exchange's network. IEX offers two types of physical ports: Either a 1G
or 10G interface.\10\ 10G physical ports are ten times faster than 1G
physical ports. IEX offers 10G physical ports only to connect to the
IEX point-of-presence (``IEX POP'') and Disaster Recovery data centers
(collectively the ``Production Systems'').\11\ 1G physical ports are
the default interface to the IEX Test Facility (``ITF''), which is not
as bandwidth or latency sensitive as the Production Systems, but 10G
physical ports are also available to connect to the ITF.\12\ IEX offers
all physical ports free of charge, but the current IEX Fee Schedule
does not specify which physical ports are used to connect to the
Production Systems or the ITF.\13\
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\8\ See IEX Rule 1.160(s).
\9\ Members physically connect to IEX through physical ports,
each of which supports multiple ``logical port'' connections.
Members send and receive data through the logical ports (also known
as ``sessions'') such as order entry messages and market data feeds.
\10\ See IEX Connectivity Manual (Version 1.80) at 5, available
at https://iextrading.com/docs/IEX%20Connectivity%20Manual.pdf.
\11\ Prior to January 1, 2017, IEX allowed Members to connect to
the Production Systems through either 1G or 10G physical ports, see
IEX Trading Alert #2016-060 ``Notice of Upcoming Network & Support
Changes'' (October 28, 2016) available at https://iextrading.com/trading/alerts/2016/060/, but always recommended to Members that
they connect via the faster 10G physical ports. See ``Connectivity
Manual (Version 1.0),'' Addendum F-14 to IEX's Form 1 Filing
(September 9, 2015).
\12\ See supra note 10.
\13\ See IEX Fee Schedule, available at https://iextrading.com/trading/fees/.
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Therefore, the Exchange proposes to add two clarifying footnotes to
the ``Connectivity Fees'' section of the IEX Fee Schedule. The first
footnote, after the words ``10G Physical Port,'' states that ``10G
physical ports are available to connect to IEX's production systems
(i.e., the IEX POP and Disaster Recovery Data Centers) and the IEX Test
Facility (`ITF').'' The second footnote, after the words ``1G Physical
Port,'' states that ``1G physical ports are the default connection to
the ITF, but Members may also connect to the ITF through a 10G physical
port.''
IEX also proposes to make three conforming changes to the
Connectivity Fees section of the IEX Fee Schedule. First, IEX proposes
to renumber current footnote one to footnote three and current footnote
two to footnote four, to reflect the addition of the new footnotes one
and two. And IEX proposes to remove the words ``IEX Test Facility''
from the newly-renumbered footnote three, because the term is defined
in the new footnote one.
2. Statutory Basis
IEX believes that the proposed rule change is consistent with the
provisions of Section 6(b) \14\ of the Act in general, and furthers the
objectives of Sections 6(b)(4) \15\ of the Act, in particular, in that
it is designed to provide for the equitable allocation of reasonable
dues, fees and other charges among its Members and other persons using
its facilities. The Exchange also believes that the proposed rule
change is consistent with Section 6(b)(5) \16\ of the Act, in
particular, in that it is designed to prevent fraudulent and
manipulative acts and practices; to promote just and equitable
principles of trade; to foster cooperation and coordination with
persons engaged in facilitating transactions in securities; and 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 is not designed to permit unfair
discrimination between customers, brokers, or dealers.
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\14\ 15 U.S.C. 78f.
\15\ 15 U.S.C. 78f(b)(4).
\16\ 15 U.S.C. 78f(b)(5).
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Specifically, the Exchange believes that the proposed rule change
is consistent with Section 6(b)(4) of the Act because physical ports
will continue to be available to all Members on the same basis and free
of charge. As described in the Purpose section, all Members will
continue to be able to connect to the IEX Production Systems through
faster 10G physical ports, and may choose to use either 1G or 10G
physical ports to connect to the ITF. As described in the Purpose
section above, this proposed rule change does not change any fees
charged by IEX, but rather provides clarity to market participants as
to which physical port connections are available to connect to the
Production Systems and the ITF.
The Exchange also believes that the proposed rule change is
consistent with Section 6(b)(5) of the Act because it is designed to
provide enhanced clarity to Members that 1G physical ports are only
available to connect to the ITF, and that physical connections to the
Exchange's Production Systems are only available through a 10G physical
port connection. While the availability of 1G and 10G physical port
connections are clearly described in the IEX Connectivity Manual, as
discussed in the Purpose section, IEX believes that including
descriptive language in the IEX Fee Schedule will provide enhanced
clarity to Members.
Furthermore, the Exchange believes it is consistent with the Act to
make conforming changes to the Connectivity Fees section of the Fee
Schedule, because the renumbering of the footnotes and deletion of the
duplicative language in the newly-numbered third footnote will provide
enhanced clarity in the IEX Fee Schedule to the benefit of all market
participants.
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 intermarket or intramarket competition that is not
necessary or appropriate in furtherance of the purposes of the Act. The
Exchange believes that the proposed rule change does not impact
competition in any respect, since it is merely designed to provide
enhanced clarity to market participants rather than for any competitive
purpose.
[[Page 28061]]
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 Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \17\ and Rule 19b-4(f)(6) thereunder.\18\
Because the proposed rule change does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \19\ and Rule 19b-
4(f)(6)(iii) thereunder.\20\
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\17\ 15 U.S.C. 78s(b)(3)(A)(iii).
\18\ 17 CFR 240.19b-4(f)(6).
\19\ 15 U.S.C. 78s(b)(3)(A).
\20\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's intent to file the proposed rule change, along with a
brief description and text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \21\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\22\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing because the proposed rule
change merely clarifies the IEX Fee Schedule's description of physical
port connections offered by IEX. The Exchange believes that waiver of
the operative delay is consistent with the protection of investors and
the public interest because it will allow the Exchange to provide
clarity to market participants about which physical port connections
may be used to connect to the Production Systems and the ITF, thereby
permitting the Exchange to avoid any potential confusion on the part of
its Members and their associated persons. For this reason, and because
the proposal does not raise any novel issues or affect fees, the
Commission believes that waiver of the 30-day operative delay is
consistent with the protection of investors and the public interest.
According, the Commission hereby waives the 30-day operative delay and
designates the proposal operative upon filing.\23\
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\21\ 17 CFR 240.19b-4(f)(6).
\22\ 17 CFR 240.19b-4(f)(6)(iii).
\23\ For purposed only of waiving the 30-day operative delay,
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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At any time within 60 days of the filing of this 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 will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-IEX-2020-06 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-2020-06. 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 (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-IEX-2020-06, and should be submitted on
or before June 2, 2020.
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\24\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-10057 Filed 5-11-20; 8:45 am]
BILLING CODE 8011-01-P