[Federal Register Volume 81, Number 238 (Monday, December 12, 2016)]
[Notices]
[Pages 89562-89564]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-29645]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79473; File No. SR-IEX-2016-17]


Self-Regulatory Organizations: Investors Exchange LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Modify 
the Web site Data Publication Requirements Relating to the Regulation 
NMS Plan To Implement a Tick Size Pilot Program

December 6, 2016.
    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 November 21, 2016, the Investors Exchange LLC (``IEX'' 
or the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I 
and II below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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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) of 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 amend IEX Rule 11.340 to modify the Web site data publication 
requirements relating to the Regulation NMS Plan to Implement a Tick 
Size Pilot Program (``Plan'').
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    \4\ 15 U.S.C. 78s(b)(1).
    \5\ 17 CFR 240.19b-4.
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    IEX has filed the proposed rule change for immediate effectiveness. 
IEX has requested that the SEC waive the 30-day operative period so 
that the proposed rule change may become operative upon filing.
    The text of the proposed rule change is available at the Exchange's 
Web site at www.iextrading.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

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
    On August 25, 2014, FINRA and several other self-regulatory 
organizations (the ``Participants'') filed with the Commission, 
pursuant to Section 11A of the Act \6\ and Rule 608 of Regulation NMS 
thereunder,\7\ the Plan to Implement a Tick Size Pilot Program.\8\ The 
Participants filed the Plan to comply with an order issued by the 
Commission on June 24, 2014.\9\ The Plan was published for comment in 
the Federal Register on November 7, 2014, and approved by the 
Commission, as modified, on May 6, 2015.\10\ The Commission approved 
the Pilot on a two-year basis, with implementation to begin no later 
than May 6, 2016.\11\ On November 6, 2015, the SEC exempted the 
Participants from implementing the Pilot until October 3, 2016.\12\ 
Under the revised Pilot implementation date, the Pre-Pilot data 
collection period commenced on April 4, 2016. An amendment to the Plan 
adding IEX as a Participant was filed with the Commission on August 4, 
20 [sic].\13\ On September 13, 2016, the SEC exempted the Participants 
from the requirement to fully implement the Pilot on October 3, 2016, 
to permit the Participants to implement the pilot on a phased-in basis, 
as described in the Participants' exemptive request.\14\
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    \6\ 15 U.S.C. 78k-1.
    \7\ 17 CFR 242.608.
    \8\ See Letter from Brendon J. Weiss, Vice President, 
Intercontinental Exchange, Inc., to Secretary, Commission, dated 
August 25, 2014.
    \9\ See Securities Exchange Act Release No 72460 (June 24, 
2014), 79 FR 36840 (June 30, 2014).
    \10\ See Securities Exchange Act Release No. 74892 (May 6, 
2015), 80 FR 27513 (May 13, 2015) (``Approval Order'').
    \11\ See Approval Order at 27533 and 27545.
    \12\ See Securities Exchange Act Release No. 76382 (November 6, 
2015), 80 FR 70284 (November 13, 2015).
    \13\ Securities Exchange Act Release No. 78702 (August 26, 
2016). Pursuant to the terms of the plan, the amendment was 
effective on filing pursuant to Rule 608(b)(3) of the Act because it 
involves solely technical or ministerial matters.
    \14\ See Letter from David S. Shillman, Associate Director, 
Division of Trading and Markets, Commission, to Eric Swanson, EVP, 
General Counsel and Secretary, Bats Global Markets, Inc., dated 
September 13, 2016; see also Letter from Eric Swanson, EVP, General 
Counsel and Secretary, Bats Global Markets, Inc., to Brent J. 
Fields, Secretary, Commission, dated September 9, 2016.
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    The Plan is designed to allow the Commission, market participants, 
and the public to study and assess the impact of increment conventions 
on the liquidity and trading of the common stock of small-
capitalization companies. Each Participant is required to comply, and 
to enforce compliance by its member organizations, as applicable, with 
the provisions of the Plan.
    IEX adopted rule amendments to implement the requirements of the 
Plan, including relating to the Plan's data collection requirements and 
requirements relating to Web site data publication.\15\ Specifically, 
with respect to the Web site data publication requirements pursuant to 
Section VII and Appendix B to the Plan, IEX Rule 11.340(b)(2)(C) 
provides that IEX shall make the data required by Items I and II of 
Appendix B to the Plan, and collected pursuant to paragraphs (b)(2)(A) 
and (B) of Rule 11.340, publicly available on the IEX Web site on a 
monthly basis at no charge and shall not identify the Member that 
generated the data. IEX Rule 11.340(b)(3)(C), provides, among other 
things, that IEX shall make the data required by Item IV of Appendix B 
to the Plan, and collected pursuant to paragraph (b)(3)(A) and (B) of 
Rule11.340, publicly available on the IEX Web site on a monthly basis 
at no charge and shall not identify the Trading Center that generated 
the data. Supplementary Material .09 to IEX Rule 11.340 provides, among 
other things, that the requirement that IEX make certain data publicly 
available on the IEX Web site pursuant to Appendix B and Appendix C to 
the Plan shall

[[Page 89563]]

commence at the beginning of the Pilot Period.
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    \15\ See, e.g., Securities Exchange Act Release No. 78820 
(September 13, 2016), 81 FR 64234 (September 19, 2016) (Notice of 
Filing and Immediate Effectiveness of File No. SR-IEX-2016-13); see 
also Securities Exchange Act Release No. 78481 (August 4, 2016) 81 
FR 52933 (August 10, 2016) (Notice of Filing and Immediate 
Effectiveness of File No. SR-IEX-2016-07); see also Letter from 
David S. Shillman, Associate Director, Division of Trading and 
Markets, Commission, to Claudia Crowley, Chief Regulatory Officer, 
IEX, dated August 30, 2016.
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    IEX is proposing amendments to Rule 11.340(b)(2)(C) (regarding 
Appendix B.I and B.II data) and Rule 11.340(b)(3)(C) (regarding 
Appendix B.IV data), to provide that data required to be made available 
on IEX's Web site be published within 120 calendar days following month 
end. In addition, the proposed amendments to Supplementary Material .09 
to Rule 11.340 would provide that, notwithstanding the provisions of 
paragraphs (b)(2)(C) and (b)(3)(C), IEX shall make data for the Pre-
Pilot period publicly available on the IEX Web site pursuant to 
Appendix B to the Plan by February 28, 2017.\16\
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    \16\ With respect to data for the Pilot Period, the requirement 
that IEX make data publicly available on the IEX Web site pursuant 
to Appendix B to the Plan shall continue to commence at the 
beginning of the Pilot Period. Thus, the first Web site publication 
date for Pilot Period data (covering October 2016) would be 
published on the IEX Web site by February 28, 2017, which is 120 
days following the end of October 2016. We note that FINRA has 
submitted a request for exemption, on behalf of all Plan 
Participants, requesting that the Commission grant an exemption from 
such provisions of the Plan. See, letter from Marcia E. Asquith, 
Senior Vice President and Corporate Secretary, FINRA, to Robert W. 
Errett, Deputy Secretary, Commission, dated November 14, 2016.
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    The purpose of delaying the publication of the Web site data is to 
address confidentiality concerns by providing for the passage of 
additional time between the market information reflected in the data 
and the public availability of such information.
    As noted in Item 1 of this filing, IEX has filed the proposed rule 
change for immediate effectiveness and has requested that the 
Commission waive the 30-day operative delay. If the Commission waives 
the 30-day operative delay, the operative date of the proposed rule 
change will be the date of filing.
2. Statutory Basis
    IEX believes that the proposed rule change is consistent with the 
provisions of Section 6(b) of the Act,\17\ which requires, among other 
things, that IEX rules must be designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, and, in general, to protect investors and the 
public interest, and Section 6(b)(8) of the Act,\18\ which requires 
that IEX rules not impose any burden on competition that is not 
necessary or appropriate.
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    \17\ 15 U.S.C. 78f.
    \18\ 15 U.S.C. 78f(b)(8).
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    IEX believes that this proposal is consistent with the Act because 
it is designed to assist the Participants in meeting their regulatory 
obligations pursuant to the Plan and is in furtherance of the 
objectives of the Plan, as identified by the Commission. IEX believes 
that the instant proposal is consistent with the Act in that it is 
designed to address confidentiality concerns by permitting IEX to delay 
Web site publication to provide for passage of additional time between 
the market information reflected in the data and the public 
availability of such information.

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. IEX notes that the proposed 
rule change implements the provisions of the Plan, and is designed to 
assist the Participants in meeting their regulatory obligations 
pursuant to the Plan.
    The proposal is intended to address confidentiality concerns that 
may adversely impact competition, especially for Pilot Securities that 
may have a relatively small number of designated Market Makers, by 
permitting IEX to delay Web site publication to provide for passage of 
additional time between the market information reflected in the data 
and the public availability of such information. IEX notes that the 
proposed change will not affect the data reporting requirements of 
Members under IEX's rules. The proposal also does not alter the 
information required to be submitted to the Commission.

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.\19\
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    \19\ Financial Information Forum (FIF) submitted a letter to the 
staff of the Commission, copying FINRA, raising concerns regarding 
the publication of certain Appendix B statistics on a disaggregated 
basis using a unique masked market participant identifier. See 
Letter from Mary Lou Von Kaenel, Managing Director, FIF, to David S. 
Shillman, Associate Director, Division of Trading and Markets, 
Commission, dated August 16, 2016, available at https://www.fif.com/comment-letters.
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III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action
    Because the foregoing 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) \20\ of the Act and Rule 19b-
4(f)(6) \21\ thereunder.
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    \20\ 15 U.S.C. 78s(b)(3)(A).
    \21\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \22\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\23\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. In this filing, the 
Exchange has asked that the Commission waive the requirement that the 
proposed rule change not become operative for 30 days after the date of 
the filing.
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    \22\ Id.
    \23\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Exchange notes that the proposed rule change implements the 
provisions of the Plan, and is designed to assist the Participants in 
meeting their regulatory obligations pursuant to the Plan. The proposal 
is intended to address confidentiality concerns by permitting the 
Exchange to delay Web site publication to provide for passage of 
additional time between the market information reflected in the data 
and public availability of such information. The proposal does not 
alter the information required to be submitted to the Commission.
    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because it will allow the Exchange to implement these proposed changes 
that are intended to address confidentiality concerns. The Commission 
notes that some Pilot data was scheduled to be published on November 
30, 2016. Therefore, the Commission hereby waives the 30-day operative 
delay and designates the proposed rule change to be operative on 
November 30, 2016.\24\
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    \24\ For purposes only of waiving the operative delay for this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.\25\ If the 
Commission takes such action, the Commission shall institute 
proceedings under Section 19(b)(2)(B) \26\ of the Act to

[[Page 89564]]

determine whether the proposed rule change should be approved or 
disapproved.
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    \25\ 15 U.S.C. 78s(b)(3)(C).
    \26\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

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-2016-17 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-2016-17. 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 Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Section, 100 F Street 
NE., Washington, DC 20549-1090. Copies of the filing will also be 
available for inspection and copying at the IEX's principal office and 
on its Internet Web site at www.iextrading.com. All comments received 
will be posted without change; the Commission does not edit personal 
identifying information from submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-IEX-2016-17 and should be submitted on 
or before January 3, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\27\
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    \27\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2016-29645 Filed 12-9-16; 8:45 am]
 BILLING CODE 8011-01-P