82_FR_42312 82 FR 42141 - Self-Regulatory Organizations; Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to Fees Pursuant to Rule 15.110

82 FR 42141 - Self-Regulatory Organizations; Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to Fees Pursuant to Rule 15.110

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 171 (September 6, 2017)

Page Range42141-42143
FR Document2017-18796

Federal Register, Volume 82 Issue 171 (Wednesday, September 6, 2017)
[Federal Register Volume 82, Number 171 (Wednesday, September 6, 2017)]
[Notices]
[Pages 42141-42143]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-18796]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81502; File No. SR-IEX-2017-28]


Self-Regulatory Organizations; Investors Exchange LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Related to 
Fees Pursuant to Rule 15.110

August 30, 2017.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b19b-4 thereunder,\3\ notice is 
hereby given that, on August 16, 2017, 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 Securities 
Exchange Act of 1934 (``Act''),\4\ and Rule 19b-4 thereunder,\5\ 
Investors Exchange LLC (``IEX'' or ``Exchange'') is filing with the 
Commission a proposed rule change to modify its Fee Schedule, pursuant 
to IEX Rule 15.110(a) to adopt pricing for orders that execute pursuant 
to Rule 11.231 (Regular Market Session Opening Process for Non-IEX-
Listed Securities). Changes to the Fee Schedule pursuant to this 
proposal are effective upon filing, and will be operative once the 
Exchange begins conducting the Regular Market Session Opening Process 
for Non-IEX-Listed Securities (the ``Opening Process'').\6\ The text of 
the proposed rule change is available at the Exchange's Web site 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\ See, IEX Trader Alert #2017-027 available at https://www.iextrading.com/trading/alerts/2017/027/.
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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 statements may be examined at 
the places specified in Item IV below. The self-regulatory organization 
has prepared summaries, set forth in Sections A, B, and C below, of the 
most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange Exchange recently filed and the Commission approved a 
proposed rule change to Rule 11.231, which modified the Opening Process 
for non-IEX-listed securities.\7\ The Exchange proposes to update its 
Fee Schedule, pursuant to IEX Rule 15.110(a) and (c), to add a new Fee 
Code ``X'' to identify the fee applicable to certain orders that 
execute in the Opening Process. More specifically, orders that execute 
in the Opening Process will receive the new Fee Code X on execution 
reports as follows:
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    \7\ See Securities Exchange Act Release No. 81195 (July 24, 
2017), 82 FR 35250 (July 28, 2017) (SR-IEX-2017-11).
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     Execution reports for non-displayed orders resting on the 
Continuous Order Book that execute in the Opening Process will receive 
new Fee Code X rather than Fee Code I.\8\
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    \8\ The Exchange notes that orders taking or adding non-
displayed liquidity prior to or after the Opening Process, will 
continue to receive Fee Close I, either alone or in conjunction with 
other applicable Fee Codes.
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     Execution reports for displayed orders resting on the 
Continuous Order Book that execute in the Opening Process will continue 
to receive Fee Code L and will also receive new Fee Code X.
     Execution reports for all orders on the Cross Book \9\ 
that execute in the Opening Process will receive new Fee Code X.
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    \9\ See Rule 11.231(a).
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    The Exchange is proposing to charge fees that are analogous to 
existing fees for orders that execute in the Opening Process. 
Accordingly, non-displayed orders on the Continuous Order Book and 
orders on the Cross Book that are executed in the Opening Process will 
receive Fee Code X on their execution reports and will be subject to a 
fee of $0.0009 per share (or 0.30% of total dollar value of the 
transaction calculated as the execution price multiplied by the number 
of shares executed in the transaction for shares executed below $1.00). 
Further, orders that were displayed on the Continuous Order Book during 
the Pre-Market Session \10\ that are executed in the Opening Process 
will receive new Fee Code X and existing Fee Code L, and will not be 
charged a fee because, pursuant to the IEX Fee Schedule, to the extent 
a Member receives multiple Fee Codes on an execution, the lower fee 
shall apply.\11\
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    \10\ See Rule 1.160(z).
    \11\ See IEX Fee Schedule, Transaction Fees, bullet three.
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    The Exchange notes that the Internalization Fee, Displayed Match 
Fee for non-displayed orders that remove displayed liquidity, and the 
exception to the Non-Displayed Match Fee for displayable orders that 
remove non-displayed resting interest upon entry are not applicable to 
the Opening

[[Page 42142]]

Process. As discussed below in the Statutory Basis section, the Opening 
Process is a bulk execution without explicit counterparties.
2. Statutory Basis
    IEX believes that the proposed rule change is consistent with the 
provisions of Section 6(b) \12\ of the Act in general, and furthers the 
objectives of Sections 6(b)(4) \13\ 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 notes that it operates in a highly 
competitive market in which market participants can readily direct 
order flow to competing venues if they deem fee levels at a particular 
venue to be excessive.
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    \12\ 15 U.S.C. 78f.
    \13\ 15 U.S.C. 78f(b)(4).
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    IEX believes that its proposed pricing for the Opening Process is 
reasonable and equitable because the Exchange is proposing to charge 
fees analogous to those already in place for orders executed on the 
Exchange during continuous trading,\14\ while also accounting for 
orders on the Cross Book executed in the Opening Process. Specifically, 
non-displayed orders resting on the Continuous Order Book during the 
Pre-Market Session that are executed in the Opening Process, as well as 
orders on the Cross Book that are executed in the Opening Process, will 
be charged the Opening Match Fee (which is equal to the existing Non-
Displayed Match Fee), while displayed orders on the Continuous Order 
Book in the Pre-Market Session executed in the Opening Process will be 
subject to the existing Displayed Match Fee.
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    \14\ See Securities Exchange Act Release No. 78550 (August 11, 
2016), 81 FR 54873 (August 17, 2016) (SR-IEX-2016-09).
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    The Exchange believes that it is appropriate, reasonable, and 
consistent with the Act to charge the Opening Match Fee (which is equal 
to the existing Non-Displayed Match Fee) to orders on the Cross Book 
that are executed in the Opening Process, because such orders 
(regardless of display instruction) are queued and not displayed prior 
to or during the Opening Process.\15\ Furthermore, as noted above, such 
fee is consistent with the fee currently charged by the Exchange for 
taking and providing non-displayed liquidity.
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    \15\ The Exchange notes that to the extent such orders are 
unexecuted after the Opening Process, the Exchange would display 
such orders consistent with their display instructions.
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    While the Displayed Match Fee applicable to executions during 
continuous trading also applies to a non-displayed order that removes 
liquidity from a displayed resting order as counterparty, in the 
context of the Opening Process (which is a bulk execution of multiple 
buy and sell orders at a single price), the Exchange does not believe 
that it is appropriate to provide the Displayed Match Fee to non-
displayed orders that execute in the Opening Process because there are 
no explicit counterparties in a bulk execution. Similarly, the Exchange 
does not believe that the exception to the Non-Displayed Match Fee for 
displayable orders that take resting interest upon entry is applicable 
in the context of the Opening Process since such orders are not able to 
remove resting interest on entry in the Opening Process, because they 
are either queued on the Cross Book and not displayed, or resting 
displayed on the Continuous Order Book.\16\ Furthermore, as noted above 
the Opening Process is a bulk execution of multiple buy and sell orders 
at a single price, and thus there are no counterparties to distinguish 
between liquidity provider and liquidity takers, or their respective 
display status.\17\
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    \16\ The Exchange notes that it is possible for a displayed 
order to remove non-displayed liquidity in the Pre-Market Session; 
however, such execution would not be part of the Opening Process, 
and would be subject to the exchanges existing fee schedule.
    \17\ See Rule 11.231(a).
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    IEX also believes that it is appropriate, reasonable, and 
consistent with the Act not to charge a fee for the execution of an 
order that was displayed on the Continuous Order Book during the Pre-
Market Session prior to the Opening Process. As with the existing fee 
structure for execution of transactions including displayed liquidity, 
this fee structure is designed to incentivize Members to send IEX 
aggressively priced displayable orders, thereby contributing to price 
discovery, and consistent with the overall goal of enhancing market 
quality. IEX believes that, as with the existing Displayed Match Fee, 
not charging a fee for such a previously displayed order is equitable 
and not unfairly discriminatory because it is designed to facilitate 
execution of, and enhance trading opportunities for, displayable 
orders, thereby further incentivizing entry of displayed orders.
    Further, the Exchange notes that the proposed fees are 
nondiscriminatory because they will apply uniformly to all Members and 
all Members have the opportunity to submit both displayed and non-
displayed orders for execution in the Opening Process. In addition, the 
Exchange believes that the proposed fees for the Opening Process are 
appropriate, reasonable, and consistent with the Act, because such fees 
are within the range of transaction charged by other exchanges for the 
opening process for non-listed securities.\18\ Further, although orders 
that execute in the Opening Process may be subject to different fees, 
for the reasons discussed in the Purpose section, the Exchange notes 
that other exchanges also charge differential pricing for orders that 
execute in their opening process.\19\
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    \18\ For example, the Nasdaq Stock Market charges fees ranging 
from $0.0015-$0.00085 for orders executed in the Nasdaq Opening 
Cross, including capping such fees at $35,000 per month for certain 
members, which includes crosses for listed and non-listed securities 
(see, https://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2). Similarly, Bats EDGX Exchange 
charges $0.0010 for orders executed in the EDGX opening or re-
opening process for non-listed securities priced above $1.00 (see, 
http://www.bats.com/us/equities/membership/fee_schedule/edgx/).
    \19\ Id.
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    Additionally, the Exchange believes that its proposed Fee Code X, 
to be provided on execution reports, will provide transparency and 
predictability to Members as to the applicable transaction fees, 
because Members can determine which Fee Code is applicable to the 
execution of a particular order in the Opening Process.
    In conclusion, the Exchange also submits that its proposed fee 
structure satisfies the requirements of Sections 6(b)(4) and 6(b)(5) of 
the Act for the reasons discussed above in that it does not permit 
unfair discrimination between customers, issuers, brokers, or dealers, 
and is designed 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. Further, IEX believes that its proposal does 
not raise any new or novel issues that have not previously been 
considered by the Commission in connection with the existing IEX fees 
or the fees of other national securities exchanges.

B. Self-Regulatory Organization's Statement on Burden on Competition

    IEX does not believe that the proposed rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange does not believe 
that the proposed rule change will impose any burden on intermarket 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act.

[[Page 42143]]

To the contrary, the Exchange believes that the proposed pricing 
structure will increase competition and hopefully draw additional 
volume to the Exchange for the Opening Process. The Exchange operates 
in a highly competitive market in which market participants can readily 
favor competing venues if fee schedules at other venues are viewed as 
more favorable. Consequently, the Exchange believes that the degree to 
which IEX fees could impose any burden on competition is extremely 
limited, and does not believe that such fees would burden competition 
of Members or competing venues in a manner that is not necessary or 
appropriate in furtherance of the purposes of the Act.
    The Exchange does not believe that the proposed rule change will 
impose any burden on intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because, while 
different fees are assessed in some circumstances, these different fees 
are not based on the type of Member entering the orders that execute in 
the Opening Process but on the type of order entered and all Members 
can submit any type of order. Further, the proposed fees are intended 
to encourage market participants to bring increased volume to the 
Exchange, which benefits all market participants.

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) \20\ of the Act.
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    \20\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

    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) \21\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \21\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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 rule-comments@sec.gov. Please include 
File Number SR-IEX-2017-28 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-2017-28. 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 Web site (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 Web site 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; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-IEX-2017-28, and should be 
submitted on or before September 27, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-18796 Filed 9-5-17; 8:45 am]
 BILLING CODE 8011-01-P



                                                                             Federal Register / Vol. 82, No. 171 / Wednesday, September 6, 2017 / Notices                                                   42141

                                                    should be included on the subject line                  ‘‘Exchange’’) filed with the Securities               non-IEX-listed securities.7 The
                                                    if email is used. To help the                           and Exchange Commission (the                          Exchange proposes to update its Fee
                                                    Commission process and review your                      ‘‘Commission’’) the proposed rule                     Schedule, pursuant to IEX Rule
                                                    comments more efficiently, please use                   change as described in Items I, II and III            15.110(a) and (c), to add a new Fee Code
                                                    only one method. The Commission will                    below, which Items have been prepared                 ‘‘X’’ to identify the fee applicable to
                                                    post all comments on the Commission’s                   by the self-regulatory organization. The              certain orders that execute in the
                                                    Internet Web site (http://www.sec.gov/                  Commission is publishing this notice to               Opening Process. More specifically,
                                                    rules/sro.shtml). Copies of the                         solicit comments on the proposed rule                 orders that execute in the Opening
                                                    submission, all subsequent                              change from interested persons.                       Process will receive the new Fee Code
                                                    amendments, all written statements                                                                            X on execution reports as follows:
                                                                                                            I. Self-Regulatory Organization’s                        • Execution reports for non-displayed
                                                    with respect to the proposed rule
                                                    change that are filed with the                          Statement of the Terms of Substance of                orders resting on the Continuous Order
                                                    Commission, and all written                             the Proposed Rule Change                              Book that execute in the Opening
                                                    communications relating to the                             Pursuant to the provisions of Section              Process will receive new Fee Code X
                                                    proposed rule change between the                        19(b)(1) under the Securities Exchange                rather than Fee Code I.8
                                                    Commission and any person, other than                   Act of 1934 (‘‘Act’’),4 and Rule 19b–4                   • Execution reports for displayed
                                                    those that may be withheld from the                     thereunder,5 Investors Exchange LLC                   orders resting on the Continuous Order
                                                    public in accordance with the                           (‘‘IEX’’ or ‘‘Exchange’’) is filing with the          Book that execute in the Opening
                                                    provisions of 5 U.S.C. 552, will be                     Commission a proposed rule change to                  Process will continue to receive Fee
                                                    available for Web site viewing and                      modify its Fee Schedule, pursuant to                  Code L and will also receive new Fee
                                                    printing in the Commission’s Public                     IEX Rule 15.110(a) to adopt pricing for               Code X.
                                                    Reference Room, 100 F Street NE.,                       orders that execute pursuant to Rule                     • Execution reports for all orders on
                                                    Washington, DC 20549 on official                        11.231 (Regular Market Session Opening                the Cross Book 9 that execute in the
                                                    business days between the hours of                      Process for Non-IEX-Listed Securities).               Opening Process will receive new Fee
                                                    10:00 a.m. and 3:00 p.m. Copies of the                  Changes to the Fee Schedule pursuant                  Code X.
                                                    filing will also be available for                       to this proposal are effective upon filing,              The Exchange is proposing to charge
                                                    inspection and copying at the principal                 and will be operative once the Exchange               fees that are analogous to existing fees
                                                    office of the Exchange. All comments                    begins conducting the Regular Market                  for orders that execute in the Opening
                                                    received will be posted without change;                 Session Opening Process for Non-IEX-                  Process. Accordingly, non-displayed
                                                    the Commission does not edit personal                   Listed Securities (the ‘‘Opening                      orders on the Continuous Order Book
                                                    identifying information from                            Process’’).6 The text of the proposed rule            and orders on the Cross Book that are
                                                    submissions. You should submit only                     change is available at the Exchange’s                 executed in the Opening Process will
                                                    information that you wish to make                       Web site at www.iextrading.com, at the                receive Fee Code X on their execution
                                                    available publicly. All submissions                     principal office of the Exchange, and at              reports and will be subject to a fee of
                                                    should refer to File No. SR–BatsBYX–                    the Commission’s Public Reference                     $0.0009 per share (or 0.30% of total
                                                    2017–19 and should be submitted on or                   Room.                                                 dollar value of the transaction
                                                    before September 27, 2017.                                                                                    calculated as the execution price
                                                                                                            II. Self-Regulatory Organization’s                    multiplied by the number of shares
                                                      For the Commission, by the Division of                Statement of the Purpose of, and                      executed in the transaction for shares
                                                    Trading and Markets, pursuant to delegated
                                                                                                            Statutory Basis for, the Proposed Rule                executed below $1.00). Further, orders
                                                    authority.65
                                                                                                            Change                                                that were displayed on the Continuous
                                                    Eduardo A. Aleman,
                                                                                                               In its filing with the Commission, the             Order Book during the Pre-Market
                                                    Assistant Secretary.
                                                                                                            self-regulatory organization included                 Session 10 that are executed in the
                                                    [FR Doc. 2017–18792 Filed 9–5–17; 8:45 am]                                                                    Opening Process will receive new Fee
                                                                                                            statements concerning the purpose of
                                                    BILLING CODE 8011–01–P                                                                                        Code X and existing Fee Code L, and
                                                                                                            and basis for the proposed rule change
                                                                                                            and discussed any comments it received                will not be charged a fee because,
                                                                                                            on the proposed rule change. The text                 pursuant to the IEX Fee Schedule, to the
                                                    SECURITIES AND EXCHANGE                                                                                       extent a Member receives multiple Fee
                                                    COMMISSION                                              of these statements may be examined at
                                                                                                            the places specified in Item IV below.                Codes on an execution, the lower fee
                                                    [Release No. 34–81502; File No. SR–IEX–                 The self-regulatory organization has                  shall apply.11
                                                    2017–28]                                                prepared summaries, set forth in                         The Exchange notes that the
                                                                                                            Sections A, B, and C below, of the most               Internalization Fee, Displayed Match
                                                    Self-Regulatory Organizations;                                                                                Fee for non-displayed orders that
                                                    Investors Exchange LLC; Notice of                       significant aspects of such statements.
                                                                                                                                                                  remove displayed liquidity, and the
                                                    Filing and Immediate Effectiveness of                   A. Self-Regulatory Organization’s                     exception to the Non-Displayed Match
                                                    Proposed Rule Change Related to Fees                    Statement of the Purpose of, and the                  Fee for displayable orders that remove
                                                    Pursuant to Rule 15.110                                 Statutory Basis for, the Proposed Rule                non-displayed resting interest upon
                                                                                                            Change                                                entry are not applicable to the Opening
                                                    August 30, 2017.
                                                       Pursuant to Section 19(b)(1) 1 of the                1. Purpose                                               7 See Securities Exchange Act Release No. 81195
                                                    Securities Exchange Act of 1934 (the                       The Exchange Exchange recently filed               (July 24, 2017), 82 FR 35250 (July 28, 2017) (SR–
asabaliauskas on DSKBBXCHB2PROD with NOTICES




                                                    ‘‘Act’’) 2 and Rule 19b19b–4                            and the Commission approved a                         IEX–2017–11).
                                                    thereunder,3 notice is hereby given that,               proposed rule change to Rule 11.231,
                                                                                                                                                                     8 The Exchange notes that orders taking or adding

                                                    on August 16, 2017, the Investors                                                                             non-displayed liquidity prior to or after the
                                                                                                            which modified the Opening Process for                Opening Process, will continue to receive Fee Close
                                                    Exchange LLC (‘‘IEX’’ or the                                                                                  I, either alone or in conjunction with other
                                                                                                              4 15 U.S.C. 78s(b)(1).                              applicable Fee Codes.
                                                      65 17 CFR 200.30–3(a)(12).                              5 17                                                   9 See Rule 11.231(a).
                                                                                                                   CFR 240.19b–4.
                                                      1 15 U.S.C. 78s(b)(1).                                  6 See, IEX Trader Alert #2017–027 available at         10 See Rule 1.160(z).
                                                      2 15 U.S.C. 78a.
                                                                                                            https://www.iextrading.com/trading/alerts/2017/          11 See IEX Fee Schedule, Transaction Fees, bullet
                                                      3 17 CFR 240.19b–4.                                   027/.                                                 three.



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                                                    42142                    Federal Register / Vol. 82, No. 171 / Wednesday, September 6, 2017 / Notices

                                                    Process. As discussed below in the                      continuous trading also applies to a                  Exchange believes that the proposed
                                                    Statutory Basis section, the Opening                    non-displayed order that removes                      fees for the Opening Process are
                                                    Process is a bulk execution without                     liquidity from a displayed resting order              appropriate, reasonable, and consistent
                                                    explicit counterparties.                                as counterparty, in the context of the                with the Act, because such fees are
                                                                                                            Opening Process (which is a bulk                      within the range of transaction charged
                                                    2. Statutory Basis
                                                                                                            execution of multiple buy and sell                    by other exchanges for the opening
                                                       IEX believes that the proposed rule                  orders at a single price), the Exchange               process for non-listed securities.18
                                                    change is consistent with the provisions                does not believe that it is appropriate to            Further, although orders that execute in
                                                    of Section 6(b) 12 of the Act in general,               provide the Displayed Match Fee to                    the Opening Process may be subject to
                                                    and furthers the objectives of Sections                 non-displayed orders that execute in the              different fees, for the reasons discussed
                                                    6(b)(4) 13 of the Act, in particular, in that           Opening Process because there are no                  in the Purpose section, the Exchange
                                                    it is designed to provide for the                       explicit counterparties in a bulk                     notes that other exchanges also charge
                                                    equitable allocation of reasonable dues,                execution. Similarly, the Exchange does               differential pricing for orders that
                                                    fees and other charges among its                        not believe that the exception to the                 execute in their opening process.19
                                                    Members and other persons using its                     Non-Displayed Match Fee for                              Additionally, the Exchange believes
                                                    facilities. The Exchange notes that it                  displayable orders that take resting                  that its proposed Fee Code X, to be
                                                    operates in a highly competitive market                 interest upon entry is applicable in the              provided on execution reports, will
                                                    in which market participants can                        context of the Opening Process since                  provide transparency and predictability
                                                    readily direct order flow to competing                  such orders are not able to remove                    to Members as to the applicable
                                                    venues if they deem fee levels at a                     resting interest on entry in the Opening              transaction fees, because Members can
                                                    particular venue to be excessive.                       Process, because they are either queued               determine which Fee Code is applicable
                                                       IEX believes that its proposed pricing               on the Cross Book and not displayed, or               to the execution of a particular order in
                                                    for the Opening Process is reasonable                   resting displayed on the Continuous                   the Opening Process.
                                                    and equitable because the Exchange is                   Order Book.16 Furthermore, as noted                      In conclusion, the Exchange also
                                                    proposing to charge fees analogous to                   above the Opening Process is a bulk                   submits that its proposed fee structure
                                                    those already in place for orders                       execution of multiple buy and sell                    satisfies the requirements of Sections
                                                    executed on the Exchange during                         orders at a single price, and thus there              6(b)(4) and 6(b)(5) of the Act for the
                                                    continuous trading,14 while also                        are no counterparties to distinguish                  reasons discussed above in that it does
                                                    accounting for orders on the Cross Book                 between liquidity provider and liquidity              not permit unfair discrimination
                                                    executed in the Opening Process.                        takers, or their respective display                   between customers, issuers, brokers, or
                                                    Specifically, non-displayed orders                      status.17                                             dealers, and is designed to promote just
                                                    resting on the Continuous Order Book                       IEX also believes that it is                       and equitable principles of trade, to
                                                    during the Pre-Market Session that are                  appropriate, reasonable, and consistent               remove impediments to and perfect the
                                                    executed in the Opening Process, as                     with the Act not to charge a fee for the              mechanism of a free and open market
                                                    well as orders on the Cross Book that are               execution of an order that was displayed              and a national market system and in
                                                    executed in the Opening Process, will                   on the Continuous Order Book during                   general to protect investors and the
                                                    be charged the Opening Match Fee                        the Pre-Market Session prior to the                   public interest. Further, IEX believes
                                                    (which is equal to the existing Non-                    Opening Process. As with the existing                 that its proposal does not raise any new
                                                    Displayed Match Fee), while displayed                   fee structure for execution of                        or novel issues that have not previously
                                                    orders on the Continuous Order Book in                  transactions including displayed                      been considered by the Commission in
                                                    the Pre-Market Session executed in the                  liquidity, this fee structure is designed             connection with the existing IEX fees or
                                                    Opening Process will be subject to the                  to incentivize Members to send IEX                    the fees of other national securities
                                                    existing Displayed Match Fee.                           aggressively priced displayable orders,               exchanges.
                                                       The Exchange believes that it is                     thereby contributing to price discovery,
                                                    appropriate, reasonable, and consistent                 and consistent with the overall goal of               B. Self-Regulatory Organization’s
                                                    with the Act to charge the Opening                      enhancing market quality. IEX believes                Statement on Burden on Competition
                                                    Match Fee (which is equal to the                        that, as with the existing Displayed                     IEX does not believe that the
                                                    existing Non-Displayed Match Fee) to                    Match Fee, not charging a fee for such                proposed rule change will result in any
                                                    orders on the Cross Book that are                       a previously displayed order is                       burden on competition that is not
                                                    executed in the Opening Process,                        equitable and not unfairly                            necessary or appropriate in furtherance
                                                    because such orders (regardless of                      discriminatory because it is designed to              of the purposes of the Act. The
                                                    display instruction) are queued and not                 facilitate execution of, and enhance                  Exchange does not believe that the
                                                    displayed prior to or during the                        trading opportunities for, displayable                proposed rule change will impose any
                                                    Opening Process.15 Furthermore, as                      orders, thereby further incentivizing                 burden on intermarket competition that
                                                    noted above, such fee is consistent with                entry of displayed orders.                            is not necessary or appropriate in
                                                    the fee currently charged by the                           Further, the Exchange notes that the               furtherance of the purposes of the Act.
                                                    Exchange for taking and providing non-                  proposed fees are nondiscriminatory
                                                    displayed liquidity.                                    because they will apply uniformly to all                18 For example, the Nasdaq Stock Market charges

                                                       While the Displayed Match Fee                        Members and all Members have the                      fees ranging from $0.0015–$0.00085 for orders
                                                    applicable to executions during                         opportunity to submit both displayed                  executed in the Nasdaq Opening Cross, including
asabaliauskas on DSKBBXCHB2PROD with NOTICES




                                                                                                            and non-displayed orders for execution                capping such fees at $35,000 per month for certain
                                                                                                                                                                  members, which includes crosses for listed and
                                                      12 15 U.S.C. 78f.                                     in the Opening Process. In addition, the              non-listed securities (see, https://
                                                      13 15 U.S.C. 78f(b)(4).                                                                                     www.nasdaqtrader.com/
                                                      14 See Securities Exchange Act Release No. 78550        16 The Exchange notes that it is possible for a     Trader.aspx?id=PriceListTrading2). Similarly, Bats
                                                    (August 11, 2016), 81 FR 54873 (August 17, 2016)        displayed order to remove non-displayed liquidity     EDGX Exchange charges $0.0010 for orders
                                                    (SR–IEX–2016–09).                                       in the Pre-Market Session; however, such execution    executed in the EDGX opening or re-opening
                                                      15 The Exchange notes that to the extent such         would not be part of the Opening Process, and         process for non-listed securities priced above $1.00
                                                    orders are unexecuted after the Opening Process,        would be subject to the exchanges existing fee        (see, http://www.bats.com/us/equities/membership/
                                                    the Exchange would display such orders consistent       schedule.                                             fee_schedule/edgx/).
                                                    with their display instructions.                          17 See Rule 11.231(a).                                19 Id.




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                                                                                 Federal Register / Vol. 82, No. 171 / Wednesday, September 6, 2017 / Notices                                                 42143

                                                    To the contrary, the Exchange believes                     IV. Solicitation of Comments                            For the Commission, by the Division of
                                                    that the proposed pricing structure will                                                                         Trading and Markets, pursuant to delegated
                                                    increase competition and hopefully                           Interested persons are invited to                   authority.22
                                                    draw additional volume to the Exchange                     submit written data, views, and                       Eduardo A. Aleman,
                                                    for the Opening Process. The Exchange                      arguments concerning the foregoing,                   Assistant Secretary.
                                                    operates in a highly competitive market                    including whether the proposed rule                   [FR Doc. 2017–18796 Filed 9–5–17; 8:45 am]
                                                    in which market participants can                           change is consistent with the Act.                    BILLING CODE 8011–01–P
                                                    readily favor competing venues if fee                      Comments may be submitted by any of
                                                    schedules at other venues are viewed as                    the following methods:
                                                    more favorable. Consequently, the                                                                                SECURITIES AND EXCHANGE
                                                                                                               Electronic Comments                                   COMMISSION
                                                    Exchange believes that the degree to
                                                    which IEX fees could impose any                              • Use the Commission’s Internet                     [Release No. 34–81500; File Nos. SR–
                                                    burden on competition is extremely                         comment form (http://www.sec.gov/                     BatsBYX–2017–13; SR–BatsBZX–2017–39;
                                                    limited, and does not believe that such                    rules/sro.shtml); or                                  SR–BatsEDGA–2017–14; SR–BatsEDGX–
                                                    fees would burden competition of                                                                                 2017–24; SR–BOX–2017–19; SR–CBOE–
                                                    Members or competing venues in a                             • Send an email to rule-comments@                   2017–043; SR–IEX–2017–21; SR–ISE–2017–
                                                    manner that is not necessary or                            sec.gov. Please include File Number SR–               52; SR–MRX–2017–08; SR–MIAX–2017–24;
                                                                                                               IEX–2017–28 on the subject line.                      SR–NASDAQ–2017–059; SR–BX–2017–029;
                                                    appropriate in furtherance of the
                                                                                                                                                                     SR–GEMX–2017–24; SR–PHLX–2017–47;
                                                    purposes of the Act.                                       Paper Comments                                        SR–NYSE–2017–24; SR–NYSEArca–2017–
                                                      The Exchange does not believe that                                                                             60; SR–NYSEMKT–2017–31]
                                                    the proposed rule change will impose                         • Send paper comments in triplicate
                                                    any burden on intramarket competition                      to Secretary, Securities and Exchange                 Self-Regulatory Organizations; Bats
                                                    that is not necessary or appropriate in                    Commission, 100 F Street NE.,                         BYX Exchange Inc.; Bats BZX
                                                    furtherance of the purposes of the Act                     Washington, DC 20549–1090.                            Exchange, Inc.; Bats EDGA Exchange,
                                                    because, while different fees are                                                                                Inc.; Bats EDGX Exchange, Inc.; BOX
                                                                                                               All submissions should refer to File                  Options Exchange LLC; Chicago
                                                    assessed in some circumstances, these                      Number SR–IEX–2017–28. This file
                                                    different fees are not based on the type                                                                         Board Options Exchange,
                                                                                                               number should be included on the                      Incorporated; Investors Exchange
                                                    of Member entering the orders that
                                                                                                               subject line if email is used. To help the            LLC; Nasdaq ISE, LLC; Nasdaq MRX,
                                                    execute in the Opening Process but on
                                                                                                               Commission process and review your                    LLC; Miami International Securities
                                                    the type of order entered and all
                                                    Members can submit any type of order.                      comments more efficiently, please use                 Exchange, LLC; The NASDAQ Stock
                                                    Further, the proposed fees are intended                    only one method. The Commission will                  Market LLC; NASDAQ BX, Inc.; Nasdaq
                                                    to encourage market participants to                        post all comments on the Commission’s                 GEMX, LLC; NASDAQ PHLX LLC; New
                                                    bring increased volume to the Exchange,                    Internet Web site (http://www.sec.gov/                York Stock Exchange LLC; NYSE Arca,
                                                    which benefits all market participants.                    rules/sro.shtml). Copies of the                       Inc.; NYSE MKT LLC; Order Approving
                                                                                                               submission, all subsequent                            Proposed Rule Changes, as Modified
                                                    C. Self-Regulatory Organization’s                          amendments, all written statements                    by Amendments, To Adopt a
                                                    Statement on Comments on the                               with respect to the proposed rule                     Consolidated Audit Trail Fee Dispute
                                                    Proposed Rule Change Received From                         change that are filed with the                        Resolution Process
                                                    Members, Participants, or Others                           Commission, and all written                           August 30, 2017.
                                                      Written comments were neither                            communications relating to the
                                                                                                               proposed rule change between the                      I. Introduction
                                                    solicited nor received.
                                                                                                               Commission and any person, other than                    On May 16, 2017,1 May 23, 2017,2
                                                    III. Date of Effectiveness of the                          those that may be withheld from the                   May 25, 2017,3 June 6, 2017,4 June 8,
                                                    Proposed Rule Change and Timing for                        public in accordance with the                         2017 5 and June 9, 2017,6 Bats BYX
                                                    Commission Action                                          provisions of 5 U.S.C. 552, will be                   Exchange, Inc. (‘‘Bats BYX’’), Bats BZX
                                                       The foregoing rule change has become                    available for Web site viewing and                    Exchange, Inc. (‘‘Bats BZX’’), Bats EDGA
                                                    effective pursuant to Section                              printing in the Commission’s Public                   Exchange, Inc. (‘‘Bats EDGA’’), Bats
                                                    19(b)(3)(A)(ii) 20 of the Act.                             Reference Room, 100 F Street NE.,                     EDGX Exchange, Inc. (‘‘Bats EDGX’’),
                                                                                                               Washington, DC 20549, on official                     BOX Options Exchange LLC (‘‘BOX’’),
                                                       At any time within 60 days of the
                                                                                                               business days between the hours of
                                                    filing of the proposed rule change, the                                                                            22 17 CFR 200.30–3(a)(12).
                                                                                                               10:00 a.m. and 3:00 p.m. Copies of the
                                                    Commission summarily may                                                                                           1 New  York Stock Exchange, LLC, NYSE Arca,
                                                    temporarily suspend such rule change if                    filing also will be available for                     Inc., NYSE MKT LLC, and Miami International
                                                    it appears to the Commission that such                     inspection and copying at the principal               Securities Exchange LLC filed their proposed rule
                                                                                                               office of the Exchange. All comments                  changes on May 16, 2017.
                                                    action is necessary or appropriate in the                                                                          2 Bats BYX Exchange, Inc., Bats BZX Exchange,
                                                    public interest, for the protection of                     received will be posted without change;
                                                                                                                                                                     Inc., Bats EDGA Exchange, Inc., Bats EDGX
                                                    investors, or otherwise in furtherance of                  the Commission does not edit personal                 Exchange, Inc. and Chicago Board Options
                                                    the purposes of the Act. If the                            identifying information from                          Exchange, Incorporated filed their proposed rule
                                                                                                               submissions. You should submit only                   changes on May 23, 2017.
asabaliauskas on DSKBBXCHB2PROD with NOTICES




                                                    Commission takes such action, the                                                                                  3 BOX Options Exchange LLC filed its proposed
                                                    Commission shall institute proceedings                     information that you wish to make                     rule change on May 25, 2017.
                                                    under Section 19(b)(2)(B) 21 of the Act to                 available publicly. All submissions                     4 Investors Exchange LLC filed its proposed rule

                                                    determine whether the proposed rule                        should refer to File Number SR–IEX–                   change on June 6, 2017.
                                                    change should be approved or                               2017–28, and should be submitted on or                  5 The NASDAQ Stock Market LLC and NASDAQ

                                                    disapproved.                                               before September 27, 2017.                            PHLX LLC filed their proposed rule changes on
                                                                                                                                                                     June 8, 2017.
                                                                                                                                                                       6 NASDAQ BX, Inc., Nasdaq GEMX, LLC, Nasdaq
                                                      20 15   U.S.C. 78s(b)(3)(A)(ii).                                                                               ISE, LLC, Nasdaq MRX, LLC filed their proposed
                                                      21 15   U.S.C. 78s(b)(2)(B).                                                                                   rule changes on June 9, 2017.



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Document Created: 2017-09-06 00:56:53
Document Modified: 2017-09-06 00:56:53
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation82 FR 42141 

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