83 FR 31828 - Self-Regulatory Organizations; Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify the Structure of its Fee Schedule and Make Several Conforming and Clarifying Changes, Pursuant to IEX Rule 15.110(A) and (C)
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 131 (July 9, 2018)
Federal Register Volume 83, Issue 131 (July 9, 2018)
| Page Range | 31828-31833 | |
| FR Document | 2018-14547 |
[Federal Register Volume 83, Number 131 (Monday, July 9, 2018)] [Notices] [Pages 31828-31833] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-14547] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-83582; File No. SR-IEX-2018-11] Self-Regulatory Organizations; Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify the Structure of its Fee Schedule and Make Several Conforming and Clarifying Changes, Pursuant to IEX Rule 15.110(A) and (C) July 2, 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 June 29, 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, 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. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 15 U.S.C. 78a. \3\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- 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 Securities and Exchange Commission (``Commission'') a proposed rule change to modify the structure of its Fee Schedule and make several conforming and clarifying changes, pursuant to IEX Rule 15.110(a) and (c), in order to provide more clarity to market participants regarding the fees assessed for executions on the Exchange. Changes to the Fee Schedule pursuant to this proposal are effective upon filing and will be operative on July 1, 2018. --------------------------------------------------------------------------- \4\ 15 U.S.C. 78s(b)(1). \5\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- The text of the proposed rule change is available at the Exchange's website at www.iextrading.com, at the principal office of the Exchange, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statement may be examined at the places specified in Item IV below. The self-regulatory organization has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to modify the structure of its Fee Schedule and make minor conforming changes, pursuant to IEX Rule 15.110(a) and (c), in order to provide more clarity to market participants regarding the fees assessed for executions on the Exchange. The Exchange's existing Fee Schedule requires market participants to determine which of the Exchange's Fee Codes are applicable to any given transaction, and then calculate the applicable fee that will be assessed depending on the applicable Fee Code combination. After informal discussions with various market participants, the Exchange is proposing to provide more clarity to market participants regarding the fees assessed for executions on the Exchange by amending the structure of its Fee Schedule to explicitly provide each possible Fee Code combination, along with the associated fee applicable to such transaction. The Exchange is also proposing to make several minor substantive changes to the Fee Schedule and related rules to enhance the consistency and clarity of the Exchange's Fee Schedule. Existing Fee Schedule In an effort to incentivize Members \6\ to submit displayed orders to the Exchange, the Exchange currently charges a fee of $0.0003 per share (or 0.30% of the total dollar value of the transaction for securities priced below $1.00) to Members for executions on IEX that provide or take resting interest with displayed priority (i.e., an order or portion of a reserve order that is booked and ranked with display priority on the Order Book).\7\ Furthermore, the Exchange currently charges $0.0009 per share (or 0.30% of the total dollar value of the transaction for securities priced below $1.00) to Members for executions on IEX that provide or take resting interest with non- displayed priority (i.e., an order or portion of a reserve order that is booked and ranked with non-displayed priority on the Order Book).\8\ --------------------------------------------------------------------------- \6\ See Rule 1.160(s). \7\ This pricing is referred to by the Exchange as ``Displayed Match Fee'' with a Fee Code of `L' provided by the Exchange on execution reports. See the Investors Exchange Fee Schedule, available on the Exchange public website. \8\ This pricing is referred to by the Exchange as the ``Non- Displayed Match Fee'' with a Fee Code of `I' provided by the Exchange on execution reports. See the Investors Exchange Fee Schedule, available on the Exchange public website. --------------------------------------------------------------------------- Moreover, in order to reduce the variability in fees to access liquidity on the Exchange and thereby incentivize Members to route more orders to the Exchange that are executable at the far side of the NBBO,\9\ the Exchange assesses a deterministic Spread-Crossing Remove Fee of $0.0003 per share to all executions at or above $1.00 that result from removing liquidity with a buy (sell) order that is executable at the NBO (NBB).\10\ The Exchange does not charge [[Page 31829]] any fee to Members for executions on IEX when the adding and removing order originated from the same Exchange Member,\11\ and all executions below $1.00 are assessed a fee equal to 0.30% of the total dollar value of the transaction.\12\ --------------------------------------------------------------------------- \9\ As defined by Regulation NMS Rule 600(b)(42). 17 CFR 242.600. \10\ This pricing is referred to by the Exchange as the ``Spread-Crossing Remove Fee'', with a Fee Code of ``N'' provided by the Exchange on execution reports. See the Investors Exchange Fee Schedule, available on the Exchange public website. The Exchange notes that if an order--based on market conditions, User instructions, applicable IEX Rules and/or the Act and the rules and regulations thereunder--is not executable at the far side of the NBBO, such order will not be eligible for the Spread-Crossing Remove Fee. See Securities Exchange Act Release No. 83147 (May 1, 2018) 83 FR 20118 (May 7, 2018) (SR-IEX-2018-09). \11\ This pricing is referred to by the Exchange as the ``Internalization Fee'' with a Fee Code of `S' provided by the Exchange on execution reports. Orders from different market participant identifiers of the same broker dealer, with the same Central Registration Depository registration number, are treated as originating from the same Exchange Member. See the Investors Exchange Fee Schedule, available on the Exchange public website. \12\ See the Investors Exchange Fee Schedule, available on the Exchange public website. --------------------------------------------------------------------------- Furthermore, to incentivize additional resting liquidity on IEX, including displayed liquidity, the Exchange charges the maximum fee allowable pursuant to Regulation NMS for certain executions that appear to be part of a deliberate trading strategy that targets resting liquidity during periods of quote instability. Specifically, the Exchange charges a Crumbling Quote Remove Fee (``CQRF'') of $0.0030 (or 0.3% of the total dollar value of the transaction for securities priced below $1.00) to orders that remove resting liquidity during periods of quote instability, as defined in Rule 11.190(g), if such orders constitute at least 5% of the Member's volume executed on IEX and at least 1 million shares, on a monthly basis, measured on a per market participant identifier (``MPID'') basis.\13\ Orders that exceed the 5% and 1 million share thresholds are assessed the CQRF per each incremental share executed that exceeds the threshold.\14\ --------------------------------------------------------------------------- \13\ This pricing is referred to by the Exchange as the ``Crumbling Quote Remove Fee Indicator'' with a Fee Code of `Q' provided by the Exchange on execution reports. See the Investors Exchange Fee Schedule, available on the Exchange public website. See also 17 CFR 242.610(c). \14\ See Securities Exchange Act Release No. 81484 (August 25, 2017), 82 FR 41446 (August 31, 2017) (SR-IEX-2017-27). --------------------------------------------------------------------------- In addition to the fees assessed for trading on the continuous market, the Exchange also assesses fees for orders that execute in an IEX Auction for securities listed on the Exchange pursuant to Rule 11.350, as well as for orders that execute in the Opening Process for non-IEX-listed securities pursuant to Rule 11.231.\15\ For orders that execute in an IEX Auction for securities listed on the Exchange: --------------------------------------------------------------------------- \15\ See Securities Exchange Act Release No. 82127 (November 20, 2017), 82 FR 56089 (November 27, 2017) (SR-IEX-2017-40), and Securities Exchange Act Release No. 81502 (August 30, 2017), 82 FR 42141 (September 6, 2017) (SR-IEX-2017-28), respectively. The Exchange does not yet have any IEX-listed securities, but intends on launching a listings program for corporate issuers. ---------------------------------------------------------------------------Executions in the Opening Auction \16\ receive Fee Code ``O'', and are assessed a fee of $0.0003 per share, unless the order was displayed on the Continuous Book during the Pre-Market Session,\17\ in which case the execution also receives Fee Code ``L'', and is not charged a fee. --------------------------------------------------------------------------- \16\ See Rule 11.350(c). \17\ See Rule 1.160(z). --------------------------------------------------------------------------- Executions in the Closing Auction \18\ receive Fee Code ``C'', and are assessed a fee of $0.0003 per share, unless the order was displayed on the Continuous Book during the Regular Market Session,\19\ in which case the execution also receives Fee Code ``L'', and is not charged a fee. --------------------------------------------------------------------------- \18\ See Rule 11.350(d). \19\ See Rule 1.160(gg). --------------------------------------------------------------------------- Executions in a Halt Auction \20\ or Volatility Auction \21\ receive Fee Code ``H'', and are assessed a fee of $0.0003 per share; \22\ and --------------------------------------------------------------------------- \20\ See Rule 11.350(e). \21\ See Rule 11.350(f). \22\ The Exchange also notes that there is no Continuous Book prior to a Halt, Volatility, or IPO auction, and thus no opportunity for a Member to have a displayed order on the Continuous Book that is executed in such auctions. --------------------------------------------------------------------------- Executions in an IPO Auction \23\ receive Fee Code ``P'', and are assessed a fee of $0.0003 per share.\24\ --------------------------------------------------------------------------- \23\ See Rule 11.350(e). \24\ See supra note 13. --------------------------------------------------------------------------- For orders that execute in the Opening Process for non-IEX-listed securities pursuant to Rule 11.231: Orders resting on the Cross Book \25\ that execute in the Opening Process receive Fee Code ``X'', and are assessed a fee of $0.0009 per share; --------------------------------------------------------------------------- \25\ See Rule 11.231(a). --------------------------------------------------------------------------- Non-displayed orders resting on the Continuous Book that execute in the Opening Process receive Fee Code ``X'', and are assessed a fee of $0.0009 per share; and Displayed orders resting on the Continuous Book that execute in the Opening Process receive Fee Codes ``X'' and ``L'', and are assessed a fee of $0.0003 per share. In addition to the fees described above, the Exchange also offers a Market Quality Incentive Program that offers certain fee-based incentives for Members that provide meaningful and consistent support to market quality and price discovery by extensive quoting at and/or near the NBBO in IEX-listed securities for a significant portion of the day.\26\ Specifically, a Member that satisfies the quoting criteria for one or more of the following tiers in each security listed on IEX over the course of the month that the security is listed on IEX may be designated as an ``IEMM'': --------------------------------------------------------------------------- \26\ See Rule 11.170(a). --------------------------------------------------------------------------- Inside Tier IEMM: One or more of its MPIDs has a displayed order entered in a principal capacity of at least one round lot resting on the Exchange at the NBB and/or the NBO for an average of at least 20% of Regular Market Hours (the ``NBBO Quoting Percentage''); and/or Depth Tier IEMM: One or more of its MPIDs has a displayed order entered in a principal capacity of at least one round lot resting on the Exchange at the greater of 1 minimum price variation (``MPV'') or 0.03% (i.e., 3 basis points) away from the NBBO (or more aggressive) for an average of at least 75% of Regular Market Hours (the ``Depth Quoting Percentage''). Members that are designated as an IEMM qualify for the Displayed Match Fee Discount as well as the Non-Displayed Match Fee Discount. Specifically, for Inside Tier IEMMs, the Displayed Match Fee Discount and the Non-Displayed Match Fee Discount results in a $0.0001 discount for each execution subject to the Displayed Match Fee and the Non- Displayed Match Fee, respectively, with no cap on aggregate monthly savings. Furthermore, Depth Tier IEMMs will receive a $0.0001 discount for each execution subject to the Displayed Match Fee and the Non- Displayed Match Fee, up to $20,000.00 in aggregate savings per month.\27\ --------------------------------------------------------------------------- \27\ See Securities Exchange Act Release No. 82636 (February 6, 2018), 83 FR 6059 (February 12, 2018) (SR-IEX-2018-02). See also the Investors Exchange Fee Schedule, available on the Exchange public website. --------------------------------------------------------------------------- Proposed Changes After informal discussions with various market participants, the Exchange is proposing to provide more clarity to market participants regarding the fees assessed for executions on the Exchange by amending the structure of its Fee Schedule to provide an overarching framework for interpreting the Exchange's Fee Codes, as well as explicitly enumerating each possible Fee Code combination, along with the associated fee applicable to such transaction. The Exchange is also proposing to make several conforming changes to the Fee Schedule and related rules to account for the updated structure. The Exchange proposes to continue utilizing standard FIX tag 9730 (Trade Liquidity Indicator) to populate the applicable Fee Codes for executions on [[Page 31830]] the Exchange.\28\ Furthermore, the Exchange is proposing to divide the Exchange's Fee Codes into ``Base Fee Codes'', one of which shall be supplied on every execution report, and ``Additional Fee Codes'', one or more of which may be provided on an execution report, as applicable. The first position in the Last Liquidity Indictor tag would always contain a Base Fee Code. The second through fourth positions would contain one or more Additional Fee Codes, as applicable, that serve to modify the Base Fee Code in the first position. --------------------------------------------------------------------------- \28\ See the Investors Exchange FIX Specification, available on the Exchange's public website. --------------------------------------------------------------------------- As in the existing Fee Schedule, all proposed fees identify cost per share executed unless otherwise specified, and footnotes provide further explanatory text or indicate variable rate changes, provided the conditions in the footnote are met. The rates listed in the proposed Base Rates table apply unless a Member's transaction is assigned an Additional Fee Code. If a Member's transaction is assigned an Additional Fee Code, the rates listed in the Fee Code Combinations and Associated Fees table will apply. Executions below $1.00 are assessed a fee of 0.30% of TDV unless the Fee Code Combination results in a FREE execution. For executions on routable orders, the Exchange passes-through in full any fees charged by/rebates received from away venues (``Cost'') to the Member and adds the IEX fee (i.e., a $0.0001 charge per share). The Exchange also proposes to adopt the following definitions that are substantially like the Exchange's existing definitions governing transaction fees: ``Fee Code'' is identified on each execution report message from the Exchange in the Trade Liquidity Indicator (FIX tag 9730) field. ``MPID'' means a market participant identifier. ``TDV'' means the total dollar value of the execution calculated as the execution price multiplied by the number of shares executed in the transaction. ``Quote instability'' is defined in IEX Rule 11.190(g).\29\ --------------------------------------------------------------------------- \29\ The Exchange notes the proposed definition of ``Quote instability'' is a new definition, and is simply a cross reference to Rule 11.190(g). See Rule 11.190(g). --------------------------------------------------------------------------- ``CQRF Threshold'' means the Crumbling Quote Remove Fee Threshold. The threshold is equal to 5% of the sum of a Member's total monthly executions on IEX if at least 1,000,000 shares during the calendar month, measured on an MPID basis. ``Spread-crossing eligible order'' means a buy order that is executable at the NBO or a sell order that is executable at the NBB after accounting for the order's limit (if any), peg instruction (if any), market conditions, and all applicable rules and regulations.\30\ --------------------------------------------------------------------------- \30\ The Exchange notes that the proposed definition of ``Spread-crossing eligible order'' is a new definition, and is intended to provide market participants further clarity regarding the conditions associated with the Spread-Crossing Remove Fee. See Securities Exchange Act Release No. 83147 (May 1, 2018) 83 FR 20118 (May 7, 2018) (SR-IEX-2018-09). The proposed Base Fee Codes and Additional Fee Codes, as well as the corresponding fees, are as follows: ---------------------------------------------------------------------------------------------------------------- Executions at Base fee codes Description or above $1.00 Executions below $1.00 ---------------------------------------------------------------------------------------------------------------- I, X................................ Standard Match Fee.......... $0.0009 0.30% of TDV. L................................... Reduced Match Fee........... 0.0003 0.30% of TDV. O, C, H, P.......................... Auction Match Fee........... 0.0003 0.30% of TDV. --------------------------------------------- Alpha............................... Routing and removing Cost + $0.0001 liquidity (all routing options). ---------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------ Additional fee codes Description Fee ------------------------------------------------------------------------ S........................ Internalization Fee: Member FREE executes against resting liquidity provided by such Member. Q........................ Crumbling Quote Remove Fee: $0.0030 Removes liquidity during periods of quote instability at or within the NBBO above the CQRF Threshold, measured on an MPID basis. N........................ Spread-Crossing Eligible $0.0003 Remove Fee: Removes liquidity with a spread- crossing eligible order. D........................ Discounted Single-Price Cross FREE Fee: Displayed interest resting on the Continuous Book executes in a cross or auction. ------------------------------------------------------------------------ Fee Codes ``I'' and ``X'' are currently identified as the Non- Displayed Match Fee and the Opening Match Fee, respectively, and would both be referred to as the Standard Match Fee, as proposed. Furthermore, Fee Code ``L'' is currently identified as the Displayed Match Fee, and would be referred to as the Reduced Match Fee, as proposed. The Exchanges notes these amendments reflect only changes in nomenclature, and do not represent substantive changes to the fees assessed for execution on the Exchange. Moreover, similar to the existing Fee Schedule, the Exchange proposes to append footnote 1 to each Fee Code combination that includes Fee Code ``Q''. Footnote 1 states that executions with Fee Code Q that exceed the CQRF Threshold are subject to the Crumbling Quote Remove Fee identified in the Fee Code Modifiers table. Executions with Fee Code Q that do not exceed the CQRF Threshold are subject to the fees identified in the Fee Code Combinations and Associated Fees table. The Exchange is proposing to make one minor conforming change to the fees assessed for displayed order's resting on the Continuous Book that are executed in the Opening Process for non-IEX-listed securities pursuant to Rule 11.231 in order to enhance the consistency and clarity of the Exchange's Fee Schedule. Specifically, as described above, a displayed order resting on the Continuous Book that is executed in the Opening Process for non-IEX-listed securities is currently charged the Displayed Match Fee (or the Reduced Match Fee, as proposed). In contrast, a displayed order resting on the Continuous Book that is executed in an Opening or Closing Auction for IEX-listed securities is not charged a fee. However, as proposed, the Opening Process utilizes the Base Fee Code of ``X'', which would conflict with the Base Fee Code of ``L'' for displayed executions. Thus, the Exchange is [[Page 31831]] proposing to harmonize the fees charged to displayed orders resting on the Continuous Book that are executed in the Opening Process or the Opening or Closing Auction, by introducing Additional Fee Code ``D'' (Discounted Single-Price Cross Fee), representing displayed interest resting on the Continuous Book that executes in a single price cross (i.e., in Opening Process, or an IEX Auction), and is not charged a fee.\31\ --------------------------------------------------------------------------- \31\ See proposed Additional Fee Code ``D'', Discounted Single- Price Cross: displayed interest resting on the Continuous Book executes in a cross or auction. --------------------------------------------------------------------------- The Exchange believes that offering such displayed orders resting on the Continuous Book free execution in the Opening Process is consistent with the protection of investors and the public interest in that it may have the effect of incentivizing Members that seek execution in the Opening Process to enter displayed interest, thereby contributing to the public price discovery process to the benefit of all market participants. Furthermore, the proposed change creates consistency in the Exchange's fee for similarly situated orders in that displayed orders resting on the Continuous Book that are executed as part of a single-priced cross will receive the same free execution. In addition to the Base Fee Code and Additional Fee Code framework described above, the Exchange is also proposing to provide a table of all possible Fee Code combinations and their associated fees, which explicitly sets forth each of the fees associated with each Fee Code combination. This table is designed to provide market participants an authoritative source on how to interpret the Fee Code's assigned by the Exchange on each execution report. Consistent with the foregoing, the proposed Fee Code combinations and associated fees are as follows: \32\ --------------------------------------------------------------------------- \32\ The Exchange has included an asterisk to denote a Fee Code combination that will have proposed footnote 1 appended. As described above, Footnote 1 states that executions with Fee Code Q that exceed the CQRF Threshold are subject to the Crumbling Quote Remove Fee of $0.0030, as identified in the Fee Code Modifiers table. Executions with Fee Code Q that do not exceed the CQRF Threshold are subject to the fees identified in the Fee Code Combinations and Associated Fees table. ------------------------------------------------------------------------ Fee Codes Description Fee ------------------------------------------------------------------------ I........................ Adds or removes non-displayed $0.0009 liquidity. L........................ Adds or removes displayed $0.0003 liquidity. IS....................... Member executes against FREE resting non-displayed liquidity provided by such Member. IQ *..................... Removes non-displayed $0.0009 liquidity during periods of quote instability. IN....................... Removes non-displayed $0.0003 liquidity with a spread- crossing eligible order. LS....................... Member executes against FREE resting displayed liquidity provided by such Member. LQ *..................... Removes displayed liquidity $0.0003 during periods of quote instability. LN....................... Removes displayed liquidity $0.0003 with a spread-crossing eligible order. ISQ *.................... Member removes non-displayed FREE liquidity provided by such Member during periods of quote instability. ISN...................... Member removes non-displayed FREE liquidity provided by such Member with a spread- crossing eligible order. IQN *.................... Removes non-displayed $0.0003 liquidity during periods of quote instability with a spread-crossing eligible order. LSQ *.................... Member removes displayed FREE liquidity provided by such Member during periods of quote instability. LSN...................... Member removes non-displayed FREE liquidity provided by such Member with a spread- crossing eligible order. LQN *.................... Removes displayed liquidity $0.0003 during periods of quote instability with a spread- crossing eligible order. ISQN *................... Member removes non-displayed FREE liquidity provided by such Member during periods of quote instability with a spread-crossing eligible order. LSQN *................... Member removes non-displayed FREE liquidity provided by such Member during periods of quote instability with a spread-crossing eligible order. X........................ Opening Process for Non- $0.0009 Listed Securities (``Opening Process''). XD....................... Displayed interest resting on FREE the Continuous Book executes in the Opening Process. O........................ Opening Auction, IEX-listed $0.0003 security. OD....................... Displayed interest resting on FREE the Continuous Book executes in the Opening Auction. C........................ Closing Auction, IEX-listed $0.0003 security. CD....................... Displayed interest resting on FREE the Continuous Book executes in the Closing Auction. H........................ Halt or Volatility Auction, $0.0003 IEX-listed security. P........................ IPO Auction, IEX-listed $0.0003 security. ------------------------------------------------------------------------ Lastly, in order to enhance the consistency and clarity of the Exchange's Fee Schedule, IEX proposes to make conforming changes to the description of the IEMM Program in both the Fee Schedule and Rule 11.170(a)(3) to account for the changes described above, as well as to clarify the application of the Spread-Crossing Eligible Remove Fee. Specifically, the Exchange is changing the name of the Non-Displayed Match Fee Discount and the Displayed Match Fee Discount to the Standard Match Fee Discount and Reduced Match Fee Discount, respectively, which conforms to the nomenclature of the proposed Base Rate's. Furthermore, the Exchange is clarifying that Members that qualify as IEMMs will receive a $0.0001 discount on executions that receive the Spread- Crossing Eligible Remove Fee, subject to any applicable Depth Tier aggregate monthly savings cap. The Spread-Crossing Eligible Remove Fee Code of ``N'' is an additional Fee Code applied to execution that remove resting liquidity (either displayed, or non-displayed), and thus, such executions would also receive the applicable Base Fee Code, but would be subject to the Spread-Crossing Eligible Remove Fee as set forth in the proposed table of Fee Code combinations and associated fees. The Exchange believes the proposed changes do not substantively change the IEMM Program, as executions qualifying for the Spread- Crossing Eligible Remove Fee are a logical subset of executions that satisfy the conditions of the Standard Match Fee (when removing non- displayed liquidity) or the Reduced Match Fee (when removing displayed liquidity). Thus, to provide clarity regarding the application of the Spread-Crossing Eligible Remove Fee, the Exchange proposes to amend the Fee Schedule to explicitly enumerate the Spread-Crossing Eligible Remove Fee Discount for Members that qualify as an IEMM. Accordingly, as proposed, unless an IEMM otherwise qualifies for a lower rate, IEMMs will receive the following rates for executions during continuous trading in securities priced at or above $1.00. [[Page 31832]] ---------------------------------------------------------------------------------------------------------------- Spread- crossing IEMM Tier Standard match Reduced match eligible fee discount fee discount remove fee discount ---------------------------------------------------------------------------------------------------------------- Inside Tier..................................................... $0.0001 $0.0001 $0.0001 Depth Tier...................................................... 0.0001 0.0001 0.0001 ---------------------------------------------------------------------------------------------------------------- The Exchange also proposes to clarify in the Fee Schedule that IEMMs qualifying for the Depth Tier can receive up to $20,000.00 in aggregate savings, per month, before the discounted rates above no longer apply, and the IEMM is subject to the Base Rates. Furthermore, the Exchange proposed to clarify in both the Fee Schedule and Rule 11.170(a)(3) that if a Member qualifies under both the Inside Tier and the Depth Tier, any earned Standard Match Fee Discount, Reduced Match Fee Discount, and Spread-Crossing Eligible Remove Fee Discount will be aggregated and applied to such Members' executions that are subject to the Standard Match Fee, Reduced Match Fee, or Spread-Crossing Eligible Remove Fee in securities priced at or above $1.00, subject to the applicable Depth Tier aggregate monthly savings cap of $20,000.00. Finally, the Exchange is proposing to make conforming changes to Rule 11.170(a)(3) in order to explicitly state that for Members that qualify as an IEMM, executions that take liquidity in securities priced at or above $1.00 with a buy order that is executable at the NBO or a sell order that is executable at the NBB after accounting for the order's limit (if any), peg instruction (if any), market conditions, and all applicable rules and regulations (i.e., orders that receive the Spread-Crossing Eligible Remove Fee) will receive a $0.0001 fee reduction, up to $20,000.00 in aggregate savings, per month, inclusive of Reduced Standard Match Fee and Reduced Discounted Match Fee savings. The Exchange believes that these changes do not represent a substantive change to the IEMM Program, but are simply meant to conform to the Exchange's proposed Fee Schedule as discussed above. 2. Statutory Basis IEX believes that the proposed rule change is consistent with the provisions of Section 6(b) \33\ of the Act in general, and furthers the objectives of Sections 6(b)(4) \34\ 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 believes that the proposed fee change is reasonable, fair and equitable, and non-discriminatory. --------------------------------------------------------------------------- \33\ 15 U.S.C. 78f. \34\ 15 U.S.C. 78f(b)(4). --------------------------------------------------------------------------- The proposed changes are designed to provide more clarity to market participants regarding the fees assessed for executions on the Exchange by amending the structure of its Fee Schedule to explicitly provide each possible Fee Code combination, along with the associated fee applicable to such transaction, therefore making the Exchange's Fee Schedule more clear and deterministic to the benefit of all market participants. The Exchange believes the proposed changes enhance the consistency and clarity of the Exchange's Fee Schedule, and do not represent a significant departure from pricing currently offered by the Exchange. As described in the Purpose section, the Exchange is proposing to primarily make formatting changes, and certain conforming edits designed to make the Exchange's rules clearer and more precise. As described above, as part of the proposed restructuring of the Fee Schedule, the Exchange is proposing to not charge any fee for displayed order's resting on the Continuous Book that are executed in the Opening Process for non-IEX-listed securities pursuant to Rule 11.231. The Exchange believes that offering displayed orders resting on the Continuous Book free execution in the Opening Process is consistent with the protection of investors and the public interest in that it may have the effect of incentivizing Members that seek execution in the Opening Process to enter displayed interest, thereby contributing to the public price discovery process to the benefit of all market participants. Furthermore, the proposed change creates consistency in the Exchange's fees for similarly situated orders in that displayed orders resting on the Continuous Book that are executed as part of a single-priced cross (i.e., the Opening Process or an IEX Auction) will receive the same free execution. In addition, as described above, the Exchange is also proposing to make conforming changes to the description of the IEMM Program in both the Fee Schedule and Rule 11.170(a)(3) to account for the modified Fee Schedule, as well as to clarify the application of the Spread-Crossing Eligible Remove Fee. The Exchange believes these proposed changes are reasonable, fair and equitable, and non-discriminatory because they do not substantively change the IEMM Program, as executions qualifying for the Spread-Crossing Eligible Remove Fee are a logical subset of executions that satisfy the conditions of the Standard Match Fee (when removing non-displayed liquidity) or the Reduced Match Fee (when removing displayed liquidity). Thus, the proposed changes are primarily designed to provide clarity regarding the application of the Spread- Crossing Eligible Remove Fee in the context of the IEMM program by explicitly enumerating the Spread-Crossing Eligible Remove Fee Discount for Members that qualify as an IEMM. Furthermore, the Exchange notes that the proposed structure of the Fee Schedule is substantially like the Fee Schedule of other market centers, and therefore does not present any new or novel issues not already considered by the Commission.\35\ --------------------------------------------------------------------------- \35\ See, e.g., the Fee Schedule of Cboe BZX Exchange, Inc., available at http://markets.cboe.com/us/equities/membership/fee_schedule/bzx/. --------------------------------------------------------------------------- Finally, the Exchange believes that the proposed fees are nondiscriminatory because they will continue to apply uniformly to all Members. 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 intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act, because, as discussed above, the Exchange is not materially altering the fees assessed for executions on the Exchange. Moreover, the Exchange operates in a highly competitive market in which market participants can readily favor competing venues if fee [[Page 31833]] 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 between Members or competing venues in a manner that is not necessary or appropriate in furtherance of the purposes of the Act. Moreover, as noted in the Statutory Basis section, the Exchange does not believe that the proposed changes represent a significant departure from its current fee schedule. 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 because the Exchange is not materially altering the fees assessed for executions on the Exchange. Furthermore, as noted above, the Exchange notes that the proposed structure of the Fee Schedule is substantially similar to the Fee Schedule of other market centers, and therefore does not present any new intermarket competitive burdens that do not already exist.\36\ --------------------------------------------------------------------------- \36\ See supra note 30. --------------------------------------------------------------------------- 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) \37\ of the Act. --------------------------------------------------------------------------- \37\ 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) \38\ of the Act to determine whether the proposed rule change should be approved or disapproved. --------------------------------------------------------------------------- \38\ 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 [email protected]. Please include File Number SR-IEX-2018-11 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-2018-11. 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, 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-2018-11 and should be submitted on or before July 30, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\39\ --------------------------------------------------------------------------- \39\ 17 CFR 200.30-3(a)(12). Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-14547 Filed 7-6-18; 8:45 am] BILLING CODE 8011-01-P
![31828 Federal Register / Vol. 83, No. 131 / Monday, July 9, 2018 / Notices
days after the date of publication of Commission is publishing this notice to combination. After informal discussions
notice of filing of the proposed rule solicit comments on the proposed rule with various market participants, the
change. The Commission may extend change from interested persons. Exchange is proposing to provide more
the period for issuing an order clarity to market participants regarding
I. Self-Regulatory Organization’s
approving or disapproving the proposed the fees assessed for executions on the
Statement of the Terms of Substance of
rule change by not more than 60 days Exchange by amending the structure of
the Proposed Rule Change
if the Commission determines that a its Fee Schedule to explicitly provide
longer period is appropriate and Pursuant to the provisions of Section each possible Fee Code combination,
publishes the reasons for such 19(b)(1) under the Securities Exchange along with the associated fee applicable
determination. As noted earlier, the Act of 1934 (‘‘Act’’),4 and Rule 19b–4 to such transaction. The Exchange is
proposed rule change was published for thereunder,5 Investors Exchange LLC also proposing to make several minor
notice and comment in the Federal (‘‘IEX’’ or ‘‘Exchange’’) is filing with the substantive changes to the Fee Schedule
Register on January 9, 2018. July 8, Securities and Exchange Commission and related rules to enhance the
2018, is 180 days from that date, and (‘‘Commission’’) a proposed rule change consistency and clarity of the
September 6, 2018, is 240 days from that to modify the structure of its Fee Exchange’s Fee Schedule.
date. Schedule and make several conforming
The Commission finds it appropriate and clarifying changes, pursuant to IEX Existing Fee Schedule
to designate a longer period within Rule 15.110(a) and (c), in order to In an effort to incentivize Members 6
which to issue an order approving or provide more clarity to market to submit displayed orders to the
disapproving the proposed rule change participants regarding the fees assessed Exchange, the Exchange currently
so that it has sufficient time to consider for executions on the Exchange. charges a fee of $0.0003 per share (or
this proposed rule change. Accordingly, Changes to the Fee Schedule pursuant 0.30% of the total dollar value of the
the Commission, pursuant to Section to this proposal are effective upon filing transaction for securities priced below
19(b)(2) of the Act,9 designates and will be operative on July 1, 2018. $1.00) to Members for executions on IEX
September 6, 2018, as the date by which The text of the proposed rule change that provide or take resting interest with
the Commission should either approve is available at the Exchange’s website at displayed priority (i.e., an order or
or disapprove the proposed rule change www.iextrading.com, at the principal portion of a reserve order that is booked
(File Number SR–NASDAQ–2017–128). office of the Exchange, and at the and ranked with display priority on the
Commission’s Public Reference Room. Order Book).7 Furthermore, the
For the Commission, by the Division of
Trading and Markets, pursuant to delegated II. Self-Regulatory Organization’s Exchange currently charges $0.0009 per
authority.10 Statement of the Purpose of, and share (or 0.30% of the total dollar value
Eduardo A. Aleman, Statutory Basis for, the Proposed Rule of the transaction for securities priced
Assistant Secretary. Change below $1.00) to Members for executions
[FR Doc. 2018–14667 Filed 7–6–18; 8:45 am] on IEX that provide or take resting
In its filing with the Commission, the
interest with non-displayed priority
BILLING CODE 8011–01–P self-regulatory organization included
(i.e., an order or portion of a reserve
statements concerning the purpose of
and basis for the proposed rule change order that is booked and ranked with
SECURITIES AND EXCHANGE and discussed any comments it received non-displayed priority on the Order
COMMISSION on the proposed rule change. The text Book).8
Moreover, in order to reduce the
[Release No. 34–83582; File No. SR–IEX– of these statement may be examined at
variability in fees to access liquidity on
2018–11] the places specified in Item IV below.
the Exchange and thereby incentivize
The self-regulatory organization has
Self-Regulatory Organizations; Members to route more orders to the
prepared summaries, set forth in
Investors Exchange LLC; Notice of Exchange that are executable at the far
Sections A, B, and C below, of the most
Filing and Immediate Effectiveness of significant aspects of such statements. side of the NBBO,9 the Exchange
Proposed Rule Change To Modify the assesses a deterministic Spread-Crossing
Structure of its Fee Schedule and Make A. Self-Regulatory Organization’s Remove Fee of $0.0003 per share to all
Several Conforming and Clarifying Statement of the Purpose of, and the executions at or above $1.00 that result
Statutory Basis for, the Proposed Rule from removing liquidity with a buy
Changes, Pursuant to IEX Rule
Change (sell) order that is executable at the NBO
15.110(A) and (C)
1. Purpose (NBB).10 The Exchange does not charge
July 2, 2018.
Pursuant to Section 19(b)(1) 1 of the The Exchange proposes to modify the 6 See Rule 1.160(s).
Securities Exchange Act of 1934 (the structure of its Fee Schedule and make 7 This pricing is referred to by the Exchange as
‘‘Act’’) 2 and Rule 19b–4 thereunder,3 minor conforming changes, pursuant to ‘‘Displayed Match Fee’’ with a Fee Code of ‘L’
IEX Rule 15.110(a) and (c), in order to provided by the Exchange on execution reports. See
notice is hereby given that, on June 29, the Investors Exchange Fee Schedule, available on
2018, the Investors Exchange LLC provide more clarity to market the Exchange public website.
(‘‘IEX’’ or the ‘‘Exchange’’) filed with the participants regarding the fees assessed 8 This pricing is referred to by the Exchange as
Securities and Exchange Commission for executions on the Exchange. The the ‘‘Non-Displayed Match Fee’’ with a Fee Code of
Exchange’s existing Fee Schedule ‘I’ provided by the Exchange on execution reports.
(the ‘‘Commission’’) the proposed rule See the Investors Exchange Fee Schedule, available
change as described in Items I, II and III requires market participants to on the Exchange public website.
sradovich on DSK3GMQ082PROD with NOTICES
below, which Items have been prepared determine which of the Exchange’s Fee 9 As defined by Regulation NMS Rule 600(b)(42).
by the self-regulatory organization. The Codes are applicable to any given 17 CFR 242.600.
transaction, and then calculate the 10 This pricing is referred to by the Exchange as
9 Id. applicable fee that will be assessed the ‘‘Spread-Crossing Remove Fee’’, with a Fee
Code of ‘‘N’’ provided by the Exchange on
10 17 CFR 200.30–3(a)(57). depending on the applicable Fee Code execution reports. See the Investors Exchange Fee
1 15 U.S.C. 78s(b)(1). Schedule, available on the Exchange public
2 15 U.S.C. 78a. 4 15 U.S.C. 78s(b)(1). website. The Exchange notes that if an order—based
3 17 CFR 240.19b–4. 5 17 CFR 240.19b–4. on market conditions, User instructions, applicable
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![Federal Register / Vol. 83, No. 131 / Monday, July 9, 2018 / Notices 31833
schedules at other venues are viewed as change is consistent with the Act. SMALL BUSINESS ADMINISTRATION
more favorable. Consequently, the Comments may be submitted by any of
Exchange believes that the degree to the following methods: National Small Business Development
which IEX fees could impose any Centers Advisory Board
Electronic Comments
burden on competition is extremely
• Use the Commission’s internet AGENCY:Small Business Administration.
limited and does not believe that such
fees would burden competition between comment form (http://www.sec.gov/ Notice of open Federal Advisory
ACTION:
Members or competing venues in a rules/sro.shtml); or Committee meeting.
manner that is not necessary or • Send an email to rule-comments@
sec.gov. Please include File Number SR– SUMMARY: The SBA is issuing this notice
appropriate in furtherance of the to announce the cancellation of the July
purposes of the Act. Moreover, as noted IEX–2018–11 on the subject line.
17, 2018 meeting of the Federal
in the Statutory Basis section, the Paper Comments Advisory Committee for the Small
Exchange does not believe that the
• Send paper comments in triplicate Business Development Centers Program.
proposed changes represent a significant Future meetings of the Committee will
to Secretary, Securities and Exchange
departure from its current fee schedule. be publicized as details become
Commission, 100 F Street NE,
The Exchange does not believe that
Washington, DC 20549–1090. available.
the proposed rule change will impose
any burden on intermarket competition All submissions should refer to File FOR FURTHER INFORMATION CONTACT:
that is not necessary or appropriate in Number SR–IEX–2018–11. This file Anne Reim, Office of Small Business
furtherance of the purposes of the Act number should be included in the Development Centers, U.S. Small
because the Exchange is not materially subject line if email is used. To help the Business Administration, 409 Third
altering the fees assessed for executions Commission process and review your Street SW, Washington, DC 20416;
on the Exchange. Furthermore, as noted comments more efficiently, please use anne.reim@sba.gov; 202–205–9565.
above, the Exchange notes that the only one method. The Commission will If anyone wishes to learn more about
proposed structure of the Fee Schedule post all comments on the Commission’s the Committee, please contact Anne
is substantially similar to the Fee internet website (http://www.sec.gov/ Reim at the information above.
Schedule of other market centers, and rules/sro.shtml). Copies of the SUPPLEMENTARY INFORMATION: Pursuant
therefore does not present any new submission, all subsequent to section l0(a) of the Federal Advisory
intermarket competitive burdens that do amendments, all written statements Committee Act (5 U.S.C. Appendix 2),
not already exist.36 with respect to the proposed rule the SBA announces the meetings of the
change that are filed with the National SBDC Advisory Board. This
C. Self-Regulatory Organization’s Commission, and all written
Statement on Comments on the Board provides advice and counsel to
communications relating to the the SBA Administrator and Associate
Proposed Rule Change Received From proposed rule change between the
Members, Participants, or Others Administrator for Small Business
Commission and any person, other than Development Centers.
Written comments were neither those that may be withheld from the
solicited nor received. public in accordance with the John Woodard,
provisions of 5 U.S.C. 552, will be White House Liaison.
III. Date of Effectiveness of the available for website viewing and [FR Doc. 2018–14622 Filed 7–6–18; 8:45 am]
Proposed Rule Change and Timing for printing in the Commission’s Public BILLING CODE P
Commission Action Reference Section, 100 F Street NE,
The foregoing rule change has become Washington, DC 20549–1090, on official
effective pursuant to Section business days between the hours of
SUSQUEHANNA RIVER BASIN
19(b)(3)(A)(ii) 37 of the Act. 10:00 a.m. and 3:00 p.m. Copies of the
COMMISSION
At any time within 60 days of the filing will also be available for
filing of the proposed rule change, the inspection and copying at the IEX’s Projects Approved for Consumptive
Commission summarily may principal office and on its internet Uses of Water
temporarily suspend such rule change if website at www.iextrading.com. All
it appears to the Commission that such comments received will be posted AGENCY: Susquehanna River Basin
action is necessary or appropriate in the without change. Persons submitting Commission.
public interest, for the protection of comments are cautioned that we do not ACTION: Notice.
investors, or otherwise in furtherance of redact or edit personal identifying
the purposes of the Act. If the information from comment submissions. SUMMARY: This notice lists the projects
Commission takes such action, the You should submit only approved by rule by the Susquehanna
Commission shall institute proceedings information that you wish to make River Basin Commission during the
under Section 19(b)(2)(B) 38 of the Act to available publicly. All submissions period set forth in DATES.
determine whether the proposed rule should refer to File Number SR–IEX– DATES: May 1–31, 2018.
change should be approved or 2018–11 and should be submitted on or ADDRESSES: Susquehanna River Basin
disapproved. before July 30, 2018. For the Commission, 4423 North Front Street,
Commission, by the Division of Trading Harrisburg, PA 17110–1788.
IV. Solicitation of Comments and Markets, pursuant to delegated
FOR FURTHER INFORMATION CONTACT:
sradovich on DSK3GMQ082PROD with NOTICES
Interested persons are invited to authority.39
Jason E. Oyler, General Counsel, 717–
submit written data, views, and
Eduardo A. Aleman, 238–0423, ext. 1312, joyler@srbc.net.
arguments concerning the foregoing,
Assistant Secretary. Regular mail inquiries May be sent to
including whether the proposed rule
[FR Doc. 2018–14547 Filed 7–6–18; 8:45 am] the above address.
36 See supra note 30. BILLING CODE 8011–01–P SUPPLEMENTARY INFORMATION: This
37 15 U.S.C. 78s(b)(3)(A)(ii). notice lists the projects, described
38 15 U.S.C. 78s(b)(2)(B). 39 17 CFR 200.30–3(a)(12). below, receiving approval for the
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Document Created: 2018-07-07 00:42:03
Document Modified: 2018-07-07 00:42:03
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 83 FR 31828 |
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