83 FR 51515 - Self-Regulatory Organizations: Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify Its Fee Schedule To Specify the Circumstances Under Which the Exchange Will Aggregate the Activity of Affiliated Members for Purposes of Applying the Provisions of Rule 11.170(a) Related to the IEMM Program
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 197 (October 11, 2018)
Federal Register Volume 83, Issue 197 (October 11, 2018)
| Page Range | 51515-51518 | |
| FR Document | 2018-22043 |
[Federal Register Volume 83, Number 197 (Thursday, October 11, 2018)] [Notices] [Pages 51515-51518] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-22043] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-84360; File No. SR-IEX-2018-20] Self-Regulatory Organizations: Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify Its Fee Schedule To Specify the Circumstances Under Which the Exchange Will Aggregate the Activity of Affiliated Members for Purposes of Applying the Provisions of Rule 11.170(a) Related to the IEMM Program October 4, 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 September 26, 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. --------------------------------------------------------------------------- \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\ IEX is filing with the Commission a proposed rule change to modify its Fee Schedule, pursuant to IEX Rule 15.110(a) and (c), to specify the circumstances under which the Exchange will aggregate the activity of affiliated Members for purposes of applying the provisions of Rule 11.170(a) (IEX Enhanced Market Maker (``IEMM'')) Program. The Exchange has designated this rule change as ``non-controversial'' under Section 19(b)(3)(A) of the Act \6\ and provided the Commission with the notice required by Rule 19b-4(f)(6) thereunder.\7\ --------------------------------------------------------------------------- \4\ 15 U.S.C. 78s(b)(1). \5\ 17 CFR 240.19b-4. \6\ 15 U.S.C. 78s(b)(3)(A). \7\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- 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 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 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 Background The Exchange proposes to modify its Fee Schedule, pursuant to IEX Rule 15.110(a) and (c), to specify the circumstances under which the Exchange will aggregate the activity of affiliated Members for purposes of applying the provisions of the IEMM Program. The Exchange also proposes a minor change to correct an errant cross reference in the Fee Schedule. The IEMM program is 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.\8\ 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: --------------------------------------------------------------------------- \8\ See Rule 11.170(a). See also Securities Exchange Act Release No. 82636 (February 6, 2018), 83 FR 6059 (February 12, 2018) (SR- IEX-2018-02). ---------------------------------------------------------------------------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 [[Page 51516]] 75% of Regular Market Hours (the ``Depth Quoting Percentage''). Members that are designated as an IEMM qualify for the Standard Match Fee Discount, Reduced Match Fee Discount, and the Spread-Crossing Eligible Remove Fee Discount. Specifically, for Inside Tier IEMMs, the Standard Match Fee Discount, Reduced Match Fee Discount, and the Spread-Crossing Eligible Remove Fee Discount results in a $0.0001 discount for each execution subject to the Standard Match Fee Discount, Reduced Match Fee Discount, or the Spread-Crossing Eligible Remove Fee Discount, respectively, with no cap on aggregate monthly savings. Furthermore, Depth Tier IEMMs will receive a $0.0001 discount for each execution subject to the Standard Match Fee Discount, the Reduced Match Fee Discount, and the Spread-Crossing Eligible Remove Fee Discount, up to $20,000.00 in aggregate savings per month. 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 Member's executions 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. Proposed Changes The Exchange proposes to amend its Fee Schedule to provide for aggregation of affiliated Members' activity for purposes of applying the provisions of the IEMM Program. The proposal is substantially based on Nasdaq Stock Market, LLC (``Nasdaq'') Rule 7027, and the New York Stock Exchange, Inc.'s (``NYSE'') Price List.\9\ --------------------------------------------------------------------------- \9\ See Nasdaq Rule 7027; see also NYSE's Price List, available at: https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf. --------------------------------------------------------------------------- Specifically, the Exchange proposes to add footnote 2 to the Exchange's Fee Schedule, entitled ``Aggregation of activity of affiliated Members'' to specify that for purposes of applying the provisions of Rule 11.170(a), a Member may request that the Exchange aggregate its activity with activity of such Member's affiliated Members. A Member requesting aggregation of affiliate activity is required to certify to the Exchange the affiliate status of Members whose activity it seeks to aggregate prior to receiving approval for aggregation, and inform the Exchange immediately of any event that causes an entity to cease being an affiliate. The Exchange shall review available information regarding the entities and reserves the right to request additional information to verify the affiliate status of an entity.\10\ The Exchange shall approve a request unless it determines that the certification is not accurate. --------------------------------------------------------------------------- \10\ For example, the Exchange would review a Member's Form BD in FINRA's Central Registration Depository (``CRD'') to verify that the Member(s) for which it seeks aggregation pursuant to the proposed rule is under 75% common ownership or control of the requesting Member. --------------------------------------------------------------------------- If two or more Members become affiliated on or prior to the sixteenth day of a month and submit the required request for aggregation on or prior to the twenty-second day of the month, an approval of the request by the Exchange shall be deemed to be effective as of the first day of that month. If two or more Members become affiliated after the sixteenth day of a month or submit a request for aggregation after the twenty-second day of the month, an approval of the request by the Exchange shall be deemed to be effective as of the first day of the next calendar month. For purposes of applying the provisions of Rule 11.170(a), references to an IEMM shall include the Member and any of its affiliates that have been approved for aggregation. The term ``affiliate'' shall mean any Member under 75% common ownership or control of that Member. Lastly, the Exchange proposes to correct an errant cross reference in the Fee Schedule that incorrectly cross references Rule 11.160(a) (Notification Requirements for Offering Participants) as the IEX Enhanced Market Maker program. The Exchange proposes to correct the cross reference to appropriately cite to Rule 11.170(a) (Market Quality Incentive Programs). 2. Statutory Basis IEX believes that the proposed rule change is consistent with the provisions of Section 6(b) \11\ of the Act in general, and furthers the objectives of Section 6(b)(5) of the Act \12\ in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to 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. --------------------------------------------------------------------------- \11\ 15 U.S.C. 78f. \12\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange believes the proposed rule change is consistent with the protection of investors and the public interest because it establishes a clear and objective process for aggregating activity across affiliated legal entities to simplify the process of billing under the IEMM program. Furthermore, the Exchange believes the proposed rule change is consistent with the protection of investors and the public interest in that it establishes a clear policy with respect to affiliate aggregation for fee purposes that is common among other exchanges, thereby promoting Members' understanding of the parameters of the IEMM program and the efficiency of its administration. The proposed rule is equitable because all similarly situated members are subject to the proposed rules equally, and access to the Exchange is offered on fair and nondiscriminatory terms. All Members seeking to aggregate their activity are subject to the same reasonable parameters, in accordance with a standard that recognizes an affiliation as of the month's beginning, or close in time to when the affiliation occurs, provided the Member submits a timely request. Moreover, the proposed billing aggregation language is reasonable because it establishes a standard for implementation of aggregation requests that is easy to administer and that reflects the need for the Exchange to review and approve aggregation requests while avoiding the complexities associated with proration of the bills of Members that become affiliated during the course of a month. The Exchange believes that this approach will thus simplify the process of billing under the IEMM program for the Exchange and its Members and is substantially similar to aggregation standards adopted by other exchanges.\13\ --------------------------------------------------------------------------- \13\ See supra note 4 [sic]. --------------------------------------------------------------------------- The Exchange believes that the proposed rule change avoids disparate treatment of Members that have divided their various business activities between separate legal entities as compared to Members that operate those business activities within a single legal entity. The Exchange further notes that the proposed rule change is reasonable and is designed to remove impediments to and perfect the mechanism of a free and open market by harmonizing the rules across exchanges that govern the aggregation of certain activity for purposes of billing. In particular, as noted above, both Nasdaq and NYSE have substantially similar rules governing aggregation of activity for fee purposes.\14\ Thus, the Exchange believes the proposed change does not present any unique or novel issues under the Act that have not already been considered by the Commission. --------------------------------------------------------------------------- \14\ See supra note 4 [sic]. --------------------------------------------------------------------------- [[Page 51517]] Lastly, the Exchange believes the proposed correction to the cross- reference is reasonable and consistent with the protection of investors and the public interest in that it is designed to make the Exchange's Fee Schedule more clear and accurate, to the benefit of all market participants. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on intermarket or intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. As stated above, the proposed rule change, which applies equally to all Members, is intended to reduce the Exchange's administrative burden in applying discounts for firms which have requested aggregation with an affiliate Member, and is substantially similar to rules adopted by other exchanges. Because the market for order execution and routing is extremely competitive, Members may readily opt to disfavor the Exchange if they believe that alternatives offer them better value. The Exchange thus does not believe the proposed changes will impair the ability of Members or competing order execution venues to maintain their competitive standing in the financial markets. Lastly, the Exchange believes the proposed correction to the cross reference, as described above, does not impose any burden on competition, as it is simply designed to make the Exchanges Fee Schedule more clear and accurate, to the benefit of 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 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 \15\ and Rule 19b-4(f)(6) thereunder.\16\ --------------------------------------------------------------------------- \15\ 15 U.S.C. 78s(b)(3)(A). \16\ 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. --------------------------------------------------------------------------- A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the Act \17\ normally does not become operative for 30 days after the date of its filing. However, Rule 19b-4(f)(6)(iii) \18\ 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 Exchange may implement the proposed rule change to coincide with the launch of its listing program. The Exchange believes that providing for IEMM affiliate aggregation will help to address the significant competitive challenges it will face in establishing itself as a competitive listings market by providing appropriate incentives to affiliated Members seeking to become IEMMs that accrue to the benefit of issuers listed on IEX as well as market participants generally. The Commission does not believe that the proposed change presents any new or novel issues, as the Exchange's proposal is based on similar rules of other listing exchanges. Accordingly, 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.\19\ --------------------------------------------------------------------------- \17\ 17 CFR 240.19b-4(f)(6). \18\ 17 CFR 240.19b-4(f)(6)(iii). \19\ 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). --------------------------------------------------------------------------- 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) \20\ of the Act to determine whether the proposed rule change should be approved or disapproved. --------------------------------------------------------------------------- \20\ 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-2018-20 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-2018-20. 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, 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-2018-20 and should be submitted on or before November 1, 2018. [[Page 51518]] For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\21\ --------------------------------------------------------------------------- \21\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-22043 Filed 10-10-18; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 83, No. 197 / Thursday, October 11, 2018 / Notices 51515
that information. Currently, FINRA SECURITIES AND EXCHANGE II. Self-Regulatory Organization’s
supports four technological protocols COMMISSION Statement of the Purpose of, and the
for its members to report transactions to Statutory Basis for, the Proposed Rule
TRACE. FINRA has proposed to [Release No. 34–84360; File No. SR–IEX– Change
discontinue supporting one of those 2018–20] In its filing with the Commission, the
four protocols, CTCI. The Commission self-regulatory organization included
believes that such action is a reasonable Self-Regulatory Organizations: statements concerning the purpose of
exercise of FINRA’s discretion, for the Investors Exchange LLC; Notice of and basis for the proposed rule change
following reasons. Filing and Immediate Effectiveness of and discussed any comments it received
Proposed Rule Change To Modify Its on the proposed rule change. The text
First, FINRA will continue to support
Fee Schedule To Specify the of these statement may be examined at
three other technological protocols for Circumstances Under Which the
reporting transactions to TRACE: FIX, the places specified in Item IV below.
Exchange Will Aggregate the Activity The self-regulatory organization has
web browser, and via third-party of Affiliated Members for Purposes of
vendor. Second, FIX already is utilized prepared summaries, set forth in
Applying the Provisions of Rule Sections A, B, and C below, of the most
by approximately half of the third-party 11.170(a) Related to the IEMM Program
vendors and two-thirds of member firms significant aspects of such statements.
with direct reporting capability, and October 4, 2018. A. Self-Regulatory Organization’s
with the increase in the percentage of Pursuant to Section 19(b)(1) 1 of the Statement of the Purpose of, and the
TRACE transactions reported via FIX Securities Exchange Act of 1934 (the Statutory Basis for, the Proposed Rule
there has been a concomitant decrease ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 Change
in CTCI usage.11 Third, supporting three notice is hereby given that, on 1. Purpose
instead of four reporting protocols September 26, 2018, the Investors
would conserve FINRA resources and Exchange LLC (‘‘IEX’’ or the Background
has some potential for reducing ‘‘Exchange’’) filed with the Securities The Exchange proposes to modify its
operational risks.12 Fourth, FINRA is and Exchange Commission (the Fee Schedule, pursuant to IEX Rule
taking reasonable steps to assist member ‘‘Commission’’) the proposed rule 15.110(a) and (c), to specify the
firms that currently use CTCI and must change as described in Items I and II circumstances under which the
transition to other reporting protocols. below, which Items have been prepared Exchange will aggregate the activity of
FINRA has stated that it will contact by the self-regulatory organization. The affiliated Members for purposes of
each such firm to offer assistance in Commission is publishing this notice to applying the provisions of the IEMM
connection with the migration, and is solicit comments on the proposed rule Program. The Exchange also proposes a
allowing over a year—until February 3, change from interested persons. minor change to correct an errant cross
2020—for affected firms to complete the I. Self-Regulatory Organization’s reference in the Fee Schedule.
migration.13 The Commission has no Statement of the Terms of Substance of The IEMM program is a Market
reason to believe that this proposal will the Proposed Rule Change Quality Incentive Program that offers
impose undue burdens on FINRA certain fee-based incentives for
member firms; the Commission notes Pursuant to the provisions of Section Members that provide meaningful and
that no comments on the proposal were 19(b)(1) under the Securities Exchange consistent support to market quality and
submitted. Act of 1934 (‘‘Act’’),4 and Rule 19b–4 price discovery by extensive quoting at
thereunder,5 IEX is filing with the and/or near the NBBO in IEX-listed
For these reasons, the Commission Commission a proposed rule change to securities for a significant portion of the
believes the proposed rule change is modify its Fee Schedule, pursuant to day.8 Specifically, a Member that
consistent with the Act. IEX Rule 15.110(a) and (c), to specify satisfies the quoting criteria for one or
IV. Conclusion the circumstances under which the more of the following tiers in each
Exchange will aggregate the activity of security listed on IEX over the course of
It is therefore ordered, pursuant to affiliated Members for purposes of the month that the security is listed on
Section 19(b)(2) of the Act,14 that the applying the provisions of Rule IEX may be designated as an IEMM:
proposed rule change (SR–FINRA– 11.170(a) (IEX Enhanced Market Maker • Inside Tier IEMM: One or more of
2018–030) is approved. (‘‘IEMM’’)) Program. The Exchange has its MPIDs has a displayed order entered
designated this rule change as ‘‘non- in a principal capacity of at least one
For the Commission, by the Division of controversial’’ under Section 19(b)(3)(A) round lot resting on the Exchange at the
Trading and Markets, pursuant to delegated of the Act 6 and provided the NBB and/or the NBO for an average of
authority.15
Commission with the notice required by at least 20% of Regular Market Hours
Eduardo A. Aleman, Rule 19b–4(f)(6) thereunder.7 (the ‘‘NBBO Quoting Percentage’’); and/
Assistant Secretary. The text of the proposed rule change or
[FR Doc. 2018–22046 Filed 10–10–18; 8:45 am] is available at the Exchange’s website at • Depth Tier IEMM: One or more of
BILLING CODE 8011–01–P www.iextrading.com, at the principal its MPIDs has a displayed order entered
office of the Exchange, and at the in a principal capacity of at least one
Commission’s Public Reference Room. round lot resting on the Exchange at the
khammond on DSK30JT082PROD with NOTICES
greater of 1 minimum price variation
1 15 U.S.C. 78s(b)(1). (‘‘MPV’’) or 0.03% (i.e., 3 basis points)
2 15 U.S.C. 78a. away from the NBBO (or more
11 See Notice, 83 FR at 42741. 3 17 CFR 240.19b–4. aggressive) for an average of at least
12 See id. at 42741.
4 15 U.S.C. 78s(b)(1).
13 See id. at n. 8. 5 17 CFR 240.19b–4. 8 See Rule 11.170(a). See also Securities Exchange
14 15 U.S.C. 78s(b)(2). 6 15 U.S.C. 78s(b)(3)(A).
Act Release No. 82636 (February 6, 2018), 83 FR
15 17 CFR 200.30–3(a)(12). 7 17 CFR 240.19b–4. 6059 (February 12, 2018) (SR–IEX–2018–02).
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75% of Regular Market Hours (the immediately of any event that causes an activity across affiliated legal entities to
‘‘Depth Quoting Percentage’’). entity to cease being an affiliate. The simplify the process of billing under the
Members that are designated as an Exchange shall review available IEMM program. Furthermore, the
IEMM qualify for the Standard Match information regarding the entities and Exchange believes the proposed rule
Fee Discount, Reduced Match Fee reserves the right to request additional change is consistent with the protection
Discount, and the Spread-Crossing information to verify the affiliate status of investors and the public interest in
Eligible Remove Fee Discount. of an entity.10 The Exchange shall that it establishes a clear policy with
Specifically, for Inside Tier IEMMs, the approve a request unless it determines respect to affiliate aggregation for fee
Standard Match Fee Discount, Reduced that the certification is not accurate. purposes that is common among other
Match Fee Discount, and the Spread- If two or more Members become exchanges, thereby promoting Members’
Crossing Eligible Remove Fee Discount affiliated on or prior to the sixteenth day understanding of the parameters of the
results in a $0.0001 discount for each of a month and submit the required IEMM program and the efficiency of its
execution subject to the Standard Match request for aggregation on or prior to the administration. The proposed rule is
Fee Discount, Reduced Match Fee twenty-second day of the month, an equitable because all similarly situated
Discount, or the Spread-Crossing approval of the request by the Exchange members are subject to the proposed
Eligible Remove Fee Discount, shall be deemed to be effective as of the rules equally, and access to the
respectively, with no cap on aggregate first day of that month. If two or more Exchange is offered on fair and
monthly savings. Furthermore, Depth Members become affiliated after the nondiscriminatory terms.
Tier IEMMs will receive a $0.0001 sixteenth day of a month or submit a All Members seeking to aggregate
discount for each execution subject to request for aggregation after the twenty- their activity are subject to the same
the Standard Match Fee Discount, the second day of the month, an approval of reasonable parameters, in accordance
Reduced Match Fee Discount, and the the request by the Exchange shall be with a standard that recognizes an
Spread-Crossing Eligible Remove Fee deemed to be effective as of the first day affiliation as of the month’s beginning,
Discount, up to $20,000.00 in aggregate of the next calendar month. For or close in time to when the affiliation
savings per month. If a Member purposes of applying the provisions of occurs, provided the Member submits a
qualifies under both the Inside Tier and Rule 11.170(a), references to an IEMM timely request. Moreover, the proposed
the Depth Tier, any earned Standard shall include the Member and any of its billing aggregation language is
Match Fee Discount, Reduced Match affiliates that have been approved for reasonable because it establishes a
Fee Discount, and Spread-Crossing aggregation. The term ‘‘affiliate’’ shall standard for implementation of
Eligible Remove Fee Discount will be mean any Member under 75% common aggregation requests that is easy to
aggregated and applied to such ownership or control of that Member. administer and that reflects the need for
Member’s executions subject to the Lastly, the Exchange proposes to the Exchange to review and approve
Standard Match Fee, Reduced Match correct an errant cross reference in the aggregation requests while avoiding the
Fee, or Spread-Crossing Eligible Remove Fee Schedule that incorrectly cross complexities associated with proration
Fee in securities priced at or above references Rule 11.160(a) (Notification of the bills of Members that become
$1.00, subject to the applicable Depth Requirements for Offering Participants) affiliated during the course of a month.
Tier aggregate monthly savings cap of as the IEX Enhanced Market Maker The Exchange believes that this
$20,000.00. program. The Exchange proposes to approach will thus simplify the process
correct the cross reference to of billing under the IEMM program for
Proposed Changes appropriately cite to Rule 11.170(a) the Exchange and its Members and is
The Exchange proposes to amend its (Market Quality Incentive Programs). substantially similar to aggregation
Fee Schedule to provide for aggregation 2. Statutory Basis standards adopted by other exchanges.13
of affiliated Members’ activity for The Exchange believes that the
purposes of applying the provisions of IEX believes that the proposed rule
change is consistent with the provisions proposed rule change avoids disparate
the IEMM Program. The proposal is treatment of Members that have divided
substantially based on Nasdaq Stock of Section 6(b) 11 of the Act in general,
and furthers the objectives of Section their various business activities between
Market, LLC (‘‘Nasdaq’’) Rule 7027, and separate legal entities as compared to
the New York Stock Exchange, Inc.’s 6(b)(5) of the Act 12 in particular, in that
it is designed to prevent fraudulent and Members that operate those business
(‘‘NYSE’’) Price List.9 activities within a single legal entity.
Specifically, the Exchange proposes to manipulative acts and practices, to
promote just and equitable principles of The Exchange further notes that the
add footnote 2 to the Exchange’s Fee proposed rule change is reasonable and
Schedule, entitled ‘‘Aggregation of trade, to remove impediments to and
perfect the mechanism of a free and is designed to remove impediments to
activity of affiliated Members’’ to and perfect the mechanism of a free and
specify that for purposes of applying the open market and a national market
system, and, in general, to protect open market by harmonizing the rules
provisions of Rule 11.170(a), a Member across exchanges that govern the
may request that the Exchange aggregate investors and the public interest.
The Exchange believes the proposed aggregation of certain activity for
its activity with activity of such purposes of billing. In particular, as
rule change is consistent with the
Member’s affiliated Members. A noted above, both Nasdaq and NYSE
protection of investors and the public
Member requesting aggregation of have substantially similar rules
interest because it establishes a clear
affiliate activity is required to certify to governing aggregation of activity for fee
and objective process for aggregating
the Exchange the affiliate status of purposes.14 Thus, the Exchange believes
khammond on DSK30JT082PROD with NOTICES
Members whose activity it seeks to 10 For example, the Exchange would review a the proposed change does not present
aggregate prior to receiving approval for Member’s Form BD in FINRA’s Central Registration any unique or novel issues under the
aggregation, and inform the Exchange Depository (‘‘CRD’’) to verify that the Member(s) for Act that have not already been
which it seeks aggregation pursuant to the proposed
9 See Nasdaq Rule 7027; see also NYSE’s Price rule is under 75% common ownership or control
considered by the Commission.
List, available at: https://www.nyse.com/ of the requesting Member.
11 15 U.S.C. 78f. 13 See supra note 4 [sic].
publicdocs/nyse/markets/nyse/NYSE_Price_
List.pdf. 12 15 U.S.C. 78f(b)(5). 14 See supra note 4 [sic].
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![51518 Federal Register / Vol. 83, No. 197 / Thursday, October 11, 2018 / Notices
For the Commission, by the Division of II. Self-Regulatory Organization’s economic cycles. The second,
Trading and Markets, pursuant to delegated Statement of the Purpose of, and ‘‘Understanding Products and Their
authority.21 Statutory Basis for, the Proposed Rule Risks,’’ covers securities products at a
Eduardo A. Aleman, Change high level as well as associated
Assistant Secretary. In its filing with the Commission, the investment risks. The third,
[FR Doc. 2018–22043 Filed 10–10–18; 8:45 am] Exchange included statements ‘‘Understanding Trading, Customer
concerning the purpose of and basis for Accounts and Prohibited Activities,’’
BILLING CODE 8011–01–P
the proposed rule change and discussed focuses on accounts, orders, settlement
any comments it received on the and prohibited activities. The final,
‘‘Overview of the Regulatory
SECURITIES AND EXCHANGE proposed rule change. The text of these
Framework,’’ encompasses topics such
COMMISSION statements may be examined at the
as SROs, registration requirements and
places specified in Item IV below. The
specified conduct rules. It is anticipated
[Release No. 34–84362; File No. SR– Exchange has prepared summaries, set
that the SIE will include 75 scored
PEARL–2018–20] forth in sections A, B, and C below, of
questions plus an additional 10
the most significant aspects of such
unscored pretest questions. The passing
Self-Regulatory Organizations: Notice statements.
score will be determined through
of Filing and Immediate Effectiveness A. Self-Regulatory Organization’s methodologies compliant with testing
of a Proposed Rule Change by MIAX Statement of the Purpose of, and industry standards used to develop
PEARL, LLC To Amend Exchange Rule Statutory Basis for, the Proposed Rule examinations and set passing standards.
203, Qualification and Registration of Change The restructured program will
Members and Associated Persons, eliminate duplicative testing of general
Relating to Registration and 1. Purpose securities knowledge on the current
Qualification Examinations Required The Securities and Exchange representative-level qualification
for Members and Associated Persons Commission (the ‘‘SEC’’ or the examinations by moving such content
of Members That Engage in Trading ‘‘Commission’’) recently approved a into the SIE. The SIE will test
Activities on the Exchange proposed rule change to restructure the fundamental securities related
Financial Industry Regulatory Authority knowledge, including knowledge of
October 4, 2018. (‘‘FINRA’’) representative-level basic products, the structure and
Pursuant to the provisions of Section qualification examination program.3 function of the securities industry, the
The rule change, which will become regulatory agencies and their functions
19(b)(1) of the Securities Exchange Act
effective on October 1, 2018, and regulated and prohibited practices,
of 1934 (‘‘Act’’) 1 and Rule 19b–4
restructures the examination program whereas the revised representative-level
thereunder,2 notice is hereby given that qualification examinations will test
into a more efficient format whereby all
on September 27, 2018, MIAX PEARL, knowledge relevant to day-to-day
new representative-level applicants will
LLC (‘‘MIAX PEARL’’ or ‘‘Exchange’’) be required to take a general knowledge activities, responsibilities and job
filed with the Securities and Exchange examination (the Securities Industry functions of representatives. The SIE
Commission (‘‘Commission’’) a Essentials Examination (‘‘SIE’’)) and a was developed in consultation with a
proposed rule change ’’) a proposed rule tailored, specialized knowledge committee of industry representatives
change as described in Items I and II examination (a revised representative- and representatives of several SROs.
below, which Items have been prepared level qualification examination) for their Each of the current representative-level
by the Exchange. The Commission is particular registered role. Individuals examinations covers general securities
publishing this notice to solicit are not required to be associated with knowledge, with the exception of the
comments on the proposed rule change the Exchange or any other self- Research Analyst (Series 86 and 87)
from interested persons. regulatory organization (‘‘SRO’’) examinations.
member to be eligible to take the SIE. The Exchange proposes to require that
I. Self-Regulatory Organization’s effective October 1, 2018, new
However, passing the SIE alone will not
Statement of the Terms of Substance of applicants seeking to register in a
qualify an individual for registration
the Proposed Rule Change with the Exchange. To be eligible for representative capacity with the
registration, an individual must also be Exchange must pass the SIE before their
The Exchange is filing a proposal to registrations can become effective. The
amend Rule 203, Qualification and associated with a firm, pass an
appropriate qualification examination Exchange proposes to make the
Registration of Members and Associated requirement operative on October 1,
Persons, relating to registration and for a representative or principal and
satisfy the other requirements relating to 2018 to coincide with the effective date
qualification examinations required for of FINRA’s requirement.
the registration process.
Members and Associated Persons of The Exchange notes that individuals
The SIE will assess basic product
Members that engage in trading knowledge; the structure and function who are registered as of October 1, 2018
activities on the Exchange. of the securities industry markets, will be eligible to maintain their
The text of the proposed rule change regulatory agencies and their functions; registrations without being subject to
is available on the Exchange’s website at any additional requirements.
and regulated and prohibited practices.
Individuals who have been registered
http://www.miaxoptions.com/rule- In particular, the SIE will cover four
within the last two years prior to
khammond on DSK30JT082PROD with NOTICES
filings/pearl at MIAX PEARL’s principal major areas. The first, ‘‘Knowledge of
October 1, 2018, will also be eligible to
office, and at the Commission’s Public Capital Markets,’’ focuses on topics such
maintain those registrations without
Reference Room. as types of markets and offerings,
being subject to any additional
broker-dealers and depositories, and
requirements, provided they register
21 17 CFR 200.30–3(a)(12). 3 See Securities Exchange Act Release No. 81098 within two years from the date of their
1 15 U.S.C. 78s(b)(1). (July 7, 2017), 82 FR 32419 (July 13, 2017) (Order last registration. However, with respect
2 17 CFR 240.19b–4. Approving File No. SR–FINRA–2017–007). to an individual who is not registered
VerDate Sep<11>2014 20:54 Oct 10, 2018 Jkt 247001 PO 00000 Frm 00084 Fmt 4703 Sfmt 4703 E:\FR\FM\11OCN1.SGM 11OCN1](https://thefederalregister.org/doc/83_FR_51712/page/4.svg)
Document Created: 2018-10-11 15:34:05
Document Modified: 2018-10-11 15:34:05
| 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 51515 |
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