83 FR 23954 - Self-Regulatory Organizations: Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 11.410(a) To Update the Market Data Source That the Exchange Will Use To Determine the Top of Book Quotation for NYSE National in Anticipation of Its Planned Re-Launch

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 100 (May 23, 2018)

[Federal Register Volume 83, Number 100 (Wednesday, May 23, 2018)]
[Notices]
[Pages 23954-23956]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-10976]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83275; File No. SR-IEX-2018-10]


Self-Regulatory Organizations: Investors Exchange LLC; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Rule 11.410(a) To Update the Market Data Source That the Exchange Will 
Use To Determine the Top of Book Quotation for NYSE National in 
Anticipation of Its Planned Re-Launch

May 17, 2018.
    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 May 10, 2018, 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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[[Page 23955]]

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\ IEX is 
filing with the Commission a proposed rule change to amend the table in 
Rule 11.410(a) to update the market data source that the Exchange will 
use to determine the Top of Book \6\ quotation for NYSE National, Inc. 
(``XCIS'') in anticipation of its planned re-launch. The Exchange has 
designated this rule change as ``non-controversial'' under Section 
19(b)(3)(A) of the Act \7\ and provided the Commission with the notice 
required by Rule 19b-4(f)(6) thereunder.\8\ 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 CRF 240.19b-4.
    \6\ See IEX Rule 11.410(a)(1).
    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4.
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II. Self-Regulatory Organization's Statement of the Purpose of, and the 
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 proposes to amend the table in Rule 11.410(a) to 
update the market data source that the Exchange will use to determine 
the Top of Book quotation for XCIS in anticipation of its planned re-
launch.\9\ As specified in Rule 11.410(a)(2), the Exchange uses data 
from each away trading center that produces a Protected Quotation \10\ 
to determine its Top of Book quotation, as well as the NBBO \11\ for 
certain reporting, regulatory and compliance systems within IEX.
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    \9\ See NYSE Group Trader Update published on March 8, 2018 
available at: https://www.nyse.com/publicdocs/nyse/markets/nyse/National_BC.pdf.
    \10\ See IEX Rule 1.160(bb).
    \11\ See IEX Rule 1.160(u).
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    Specifically, the Exchange proposes to amend and update the table 
specifying the primary and secondary sources for NYSE National 
(``XCIS'') in anticipation of the planned re-launch of XCIS on May 21, 
2018.\12\ As proposed, the Exchange will use securities information 
processor (``SIP'') data, i.e., CQS SIP data for securities reported 
under the Consolidated Quotation Services and Consolidated Tape 
Association plans and UTDF SIP data for securities reported under the 
Nasdaq Unlisted Trading Privileges national market system plan, to 
determine XCIS Top of Book quotes. No secondary source is proposed to 
be specified as SIP data will be used exclusively. While the Exchange 
uses proprietary market data feeds to determine the Protected 
Quotations of other away markets, as specified in Rule 11.410, it has 
determined to utilize the SIP quote feeds for XCIS for several reasons. 
First, XCIS quotations will not be included in the market data feeds 
that IEX currently subscribes to and consumes for NYSE Group 
exchanges.\13\ Although XCIS is not proposing charges for its 
proprietary market data, the Exchange notes that making the necessary 
technical changes to consume XCIS proprietary market data in time for 
XCIS' planned May 21, 2018 re-launch would divert technical resources 
from other higher priority initiatives. Second, the Exchange believes 
that XCIS will likely have relatively low market share,\14\ and 
accordingly does not believe that subscribing to an additional 
proprietary market data feed at this time is necessary in order to 
determine XCIS Top of Book quotes and enable the Exchange to comply 
with applicable requirements of Regulation NMS with respect to its Top 
of Book quotes. The Exchange also notes that other exchanges also use 
SIP market data feeds to determine Top of Book quotes for some away 
markets, including XCIS, pursuant to effective rule filings.\15\
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    \12\ See supra note 9.
    \13\ See supra note 12. NYSE Group is the immediate parent 
company of XCIS and its national securities exchange affiliates. See 
Securities Exchange Act Release No. 82635 (February 6, 2018), 83 FR 
6057 (February 12, 2018) (File No. SR-NYSENAT-2018-03).
    \14\ XCIS had overall market share of 0.02% for the week of 
January 30, 2017, immediately prior to ceasing operations.
    \15\ See, e.g., Nasdaq Stock Market Rule 4759(a).
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    The Exchange is also proposing a conforming change to Rule 
11.410(a)(2) to reflect that, as proposed, the Exchange will not use 
proprietary market data feeds as the primary source from which it will 
determine Top of Book quotations for XCIS.
    The Exchange is not proposing any other changes to Rule 11.410 with 
respect to its use of market data feeds and calculations of necessary 
price reference points. The proposed change merely specifies the market 
data feeds that the Exchange will use to determine XCIS Top of Book 
quotes, and does not alter the manner in which orders are handled or 
routed by the Exchange.
2. Statutory Basis
    IEX believes that the proposed rule change is consistent with the 
provisions of Section 6(b) \16\ of the Act in general, and furthers the 
objectives of Section 6(b)(5) of the Act \17\ in particular, in that it 
is designed to prevent fraudulent and manipulative acts and practices, 
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.
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    \16\ 15 U.S.C. 78f.
    \17\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change removes 
impediments to and perfects the mechanism of a free and open market and 
protects investors and the public interest because it provides 
transparency with respect to the sources of market data that it will 
use to determine XCIS Top of Book quotes. For the reasons discussed in 
the Purpose section, the Exchange believes that use of SIP market data 
will enable it to determine XCIS Top of Book quotes and comply with 
applicable requirements of Regulation NMS. In addition, and as further 
noted in the Purpose section, other exchanges use SIP market data to 
determine Top of Book quotes for some away markets, including XCIS, so 
the proposed change does not raise any new or novel issues not already 
considered by the Commission.
    The Exchange also believes it is consistent with the Act to make a 
conforming change to Rule 11.410(a)(2) so that provision is consistent 
with the table in Rule 11.410(a).

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 believes that the 
proposed update does not impact competition in any respect since its 
purpose is to enhance transparency and with respect

[[Page 23956]]

to the operation of the Exchange and its use of market data feeds.

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

    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 \18\ and Rule 19b-4(f)(6) thereunder.\19\
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    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the 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.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \20\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \21\ permits the 
Commission to 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, thus 
allowing IEX's proposed rule change to reflect in its rules, prior to 
the planned re-launch of XCIS, the source of market data that the 
Exchange will utilize for determining XCIS Top of Book quotes. The 
Commission does not believe that any new or novel issues are raised by 
the proposal. For these reasons, the Commission believes the waiver of 
the operative delay is consistent with the protection of investors and 
the public interest. Therefore, the Commission hereby waives the 
operative delay and designates the proposal operative upon filing.\22\
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    \20\ 17 CFR 240.19b-4(f)(6).
    \21\ 17 CFR 240.19b-4(f)(6)(iii).
    \22\ For purposes only of waiving the 30-day operative delay, 
the Commission has also 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 the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule 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-2018-10 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE, 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-IEX-2018-10. This file 
number should be included in 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 Section, 100 F Street NE, Washington, 
DC 20549-1090. 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-
2018-10 and should be submitted on or before June 13, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-10976 Filed 5-22-18; 8:45 am]
 BILLING CODE 8011-01-P