[Federal Register Volume 85, Number 126 (Tuesday, June 30, 2020)]
[Notices]
[Pages 39251-39253]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-14011]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89146; File No. SR-IEX-2020-07]
Self-Regulatory Organizations: Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend IEX
Rule 11.190(b)(13) To Discontinue the Market Maker Peg Order and Make
Conforming Changes
June 24, 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 June 15, 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,
II and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Pursuant to the provisions of Section 19(b)(1) under the Act \4\
and Rule 19b-4 thereunder,\5\ IEX is filing with the Commission a
proposed rule change to amend IEX Rule 11.190(b)(13) (Market Maker Peg
Order) to discontinue the Market Maker Peg Order and make conforming
changes. 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\ 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.
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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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II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of and basis for the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of these statement [sic] 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 purpose of this proposed rule change is to amend IEX Rule
11.190(b)(13) (Market Maker Peg Order) to discontinue the Market Maker
Peg Order and make conforming changes to other IEX rules.
The Market Maker Peg order is a one-sided displayed limit order
that is designed to simplify market maker compliance with the
continuous quoting and pricing obligations set forth in IEX Rule 11.151
by providing quotation adjusting functionality.\8\ Only IEX Members
registered as Market Makers pursuant to IEX Rule 11.150 may use Market
Maker Peg Orders, and use of such orders is optional.
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\8\ See IEX Rule 11.190(b)(13) for a complete description of the
Market Maker Peg order.
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In addition to its quotation adjusting functionality, the Market
Maker Peg order is also designed to provide an effective compliance
tool to facilitate market makers' compliance with the requirements of
Rule 15c3-5 under the Act (the ``Market Access Rule'') \9\ and
Regulation SHO.\10\ Specifically, when using a Market Maker Peg order,
market makers would have control of order origination, as required by
the Market Access Rule, while also allowing market makers to make
marking and locate determinations prior to order entry, as required by
Regulation SHO, while also facilitating compliance with their Exchange
market making obligations.
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\9\ 17 CFR 240.15c3-5.
\10\ 17 CFR 242.200 through 242.204.
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[[Page 39252]]
Market Maker Peg Orders are not eligible for routing pursuant to
IEX Rule 11.230(b) and are always displayed on the Exchange. In
addition, a new timestamp is created for the order each time that it is
automatically adjusted in accordance with the proposed rule. Market
Maker Peg Orders may only be entered by a registered Market Maker,
pursuant to IEX Rule 11.150.
There are currently no Members registered as Market Makers and
therefore no Members eligible to use the order. Accordingly, the
Exchange proposes to discontinue the Market Maker Peg order, delete the
existing text of IEX Rule 11.190(b)(13) (which describes the Market
Maker Peg order), and reserve that provision.
In conjunction with the proposed discontinuation of the Market
Maker Peg order, the Exchange proposes to make two conforming changes.
First, the Exchange proposes to delete the text of IEX Rule
11.340(d)(1)(A), related to rounding of the price of Market Maker Peg
Orders in connection with the Plan to Implement a Tick Size Pilot
Program (which has terminated). Second, the Exchange proposes to delete
text in IEX Rule 11.510(c)(1) which provides that, pursuant to Rule
11.190(b)(13), each time a Market Maker Peg Order is automatically
adjusted by the System, all inbound and outbound communications related
to the modified order instruction will traverse an additional POP
between the Market Maker Peg Order repricing logic and the Order Book.
Both of these provisions are rendered obsolete with the discontinuation
of the Market Maker Peg order, as proposed.
2. Statutory Basis
IEX believes that the proposed rule change is consistent with
Section 6(b) of the Act in general,\11\ and furthers the objectives of
Section 6(b)(5) of the Act,\12\ 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, 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.
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\11\ 15 U.S.C. 78f.
\12\ 15 U.S.C. 78f(b)(5).
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As discussed in the Purpose section, the proposed rule change is
designed to discontinue the Market Maker Peg Order, because no Members
are eligible to use the order type. Consequently, the Exchange believes
is consistent with the protection of investors and the public interest
to discontinue the Market Maker Peg Order since the lack of current
demand for the order type does not warrant the infrastructure and
ongoing maintenance expenses required to support it. Further, the
Exchange believes that the proposed rule change is consistent with the
protection of investors and the public interest since it is designed to
avoid any potential confusion regarding the availability of the Market
Maker Peg Order to Members. In addition, the Exchange notes that use of
the Market Maker Peg Order is purely optional on the part of a Market
Maker and, in the event that any Member were to register as a Market
Maker, such Member could use other IEX order types to comply with the
continuous quoting and pricing obligations set forth in IEX Rule
11.151. Lastly, the Exchange does not believe that this proposal will
permit unfair discrimination among customers, brokers, or dealers
because the Market Maker Peg Order will no longer be available to any
Member of the Exchange.
Further, the Exchange believes that the proposed conforming rule
changes, as discussed in the Purpose section, are consistent with the
protection of investors and the public interest because they will
provide clarity to market participants by deleting references to the
now discontinued Market Maker Peg Order.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposal will impose any
burden on competition not necessary or appropriate in furtherance of
the purposes of the Act. The proposed rule change is not designed to
address any competitive issues but rather remove an order type for
which there is currently no demand and eliminate the infrastructure and
ongoing maintenance expenses to support it.
Furthermore, the Exchange believes the proposed rule change does
not impose any burden on intra-market competition not necessary or
appropriate in furtherance of the purposes of the Act because, as
described above, the Market Maker Peg order will no longer be available
to any Member of the Exchange, and thus all Members will be impacted in
the same manner. Further, as discussed in the Statutory Basis section,
use of the Market Maker Peg Order by a registered Market Maker is
optional and not required in order to comply with the in the continuous
quoting and pricing obligations set forth in IEX Rule 11.151.
The Exchange also does not believe that the proposed rule change
would impose a burden on inter-market competition since other exchanges
are free to adopt or discontinue comparable order types.
Finally, the proposed conforming rule changes, as discussed in the
Purpose section, are not designed to address any competitive issue, but
rather to provide clarity to market participants by deleting references
to the now discontinued Market Maker Peg Order.
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 designated this rule filing as non-controversial
under Section 19(b)(3)(A) \13\ of the Act and Rule 19b-4(f)(6) \14\
thereunder. 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 for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6) thereunder.
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(6).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \15\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\15\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
[[Page 39253]]
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-2020-07 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-2020-07. 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 will also be available for inspection
and copying at the IEX's principal office and on its internet website
at www.iextrading.com. All comments received will be posted without
change. Persons submitting comments are cautioned that we do not redact
or edit personal identifying information from comment submissions. You
should submit only information that you wish to make available
publicly. All submissions should refer to File Number SR-IEX-2020-07
and should be submitted on or before July 21, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-14011 Filed 6-29-20; 8:45 am]
BILLING CODE 8011-01-P