[Federal Register Volume 89, Number 80 (Wednesday, April 24, 2024)]
[Notices]
[Pages 31231-31236]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-08682]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99989; File No. SR-IEX-2024-06]


Self-Regulatory Organizations; Investors Exchange LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend the 
Exchange's Fee Schedule Concerning Transaction Fees for Tape B 
Securities

April 18, 2024.
    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 April 8, 2024, the Investors Exchange LLC (``IEX'' or 
the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I, 
II and III below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Pursuant to the provisions of Section 19(b)(1) under the Securities 
Exchange Act of 1934 (``Act''),\4\ and Rule 19b-4 thereunder,\5\ IEX is 
filing with the Commission a proposed rule change to amend the 
Exchange's fee schedule applicable to Members \6\ (the ``Fee 
Schedule'') pursuant to IEX Rule 15.110(a) and (c). Changes to the Fee 
Schedule pursuant to this proposal are effective upon filing,\7\ and 
will be operative on May 1, 2024.
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    \4\ 15 U.S.C. 78s(b)(1).
    \5\ 17 CFR 240.19b-4.
    \6\ See IEX Rule 1.160(s).
    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
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    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 statements may be examined at 
the places specified in Item IV below. The self-regulatory organization 
has prepared summaries, set forth in Sections A, B, and C below, of the 
most significant aspects of such statements.

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

1. Purpose
    The Exchange proposes to modify its Fee Schedule, pursuant to IEX 
Rule 15.110(a) and (c), to modify the transaction fees applicable to 
most \8\ displayed executions of Tape B securities.\9\ As proposed, the 
Exchange will increase the rebate paid for executions of displayed 
liquidity adding orders in Tape B securities with an execution price of 
$1.00 per share or more from $0.0004 to $0.0014 per share, increase the 
fee for executions of most \10\ displayed liquidity removing orders in 
Tape B securities from $0.0010 to $0.0020 per share (unless a lower fee 
applies), and introduce two new fee codes to reflect these fee changes. 
IEX is not proposing any changes to executions that add or remove non-
displayed liquidity in Tape B securities, which will continue to be 
subject to the same fees charged for executions in Tape A and C 
securities.\11\ The Exchange notes that other exchanges also offer 
different fees for Tape B executions that are designed to incentivize 
the posting of displayed liquidity in Tape B securities.\12\ IEX's 
proposed fee structure for executions of Tape B securities is less than 
or in line with other exchanges, but with lower access fees and rebates 
and without the use of any volume-based pricing.\13\
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    \8\ This fee proposal will not change the fees charged or fee 
codes applied for Retail and Retail Liquidity Providing executions 
of Tape B securities, which execute for free. Additionally, while 
the fee proposal includes a fee code change for all other executions 
of Tape B securities that are priced at less than $1.00 per share, 
the fees charged for such executions will not change. Finally, as 
described infra, certain pegged order types that by design are not 
likely to interact with displayed liquidity will not be subject to 
the increased fees charged for taking displayed liquidity in Tape B 
securities.
    \9\ ``Tape B securities'' are securities listed on any national 
securities exchange other than the New York Stock Exchange or The 
Nasdaq Stock Market.
    \10\ See supra note 5.
    \11\ As discussed below, IEX is proposing to introduce a new fee 
code that will apply to non-displayed adding or removing executions 
of Tape B securities, but the fees charged for these executions will 
be unchanged.
    \12\ See, e.g., MEMX Equities Fee Schedule (effective April 1, 
2024), available at https://info.memxtrading.com/equities-trading-resources/us-equities-fee-schedule/ (paying an ``additive rebate'' 
of $0.0002 per share for Tape B securities if the member satisfies a 
volume threshold in its Tape B trades, but offering no similar 
rebate for Tape A or C securities); Nasdaq Equity 7, Section 
118(a)(1), available at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules/Nasdaq%20Equity%207#section_118_nasdaq_market_center_order_execution_and_routing (paying a supplemental rebate of $0.0001 per share for 
Tape B displayed liquidity providing orders, but offering no similar 
rebate for Tape A or C securities).
    \13\ See, e.g., MEMX Equities Fee Schedule, supra, note 9 
(offering rebates for adding displayed Tape B liquidity of $0.0015 
to $0.0035, depending upon trading volume, and charging as much as 
$0.0030 to remove Tape B liquidity); Nasdaq Equity 7, Section 
118(a)(1), supra, note 9 (offering rebates for adding displayed Tape 
B liquidity of $0.0028 to $0.0036, depending upon trading volume, 
and charging as much as $0.0030 to remove Tape B liquidity).
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    IEX is making this proposal to incentivize the posting of displayed 
liquidity in Tape B securities by increasing the rebate applied to 
those orders, thereby promoting price discovery and market quality on 
the Exchange, which the Exchange believes benefits all Members and 
market participants. The Exchange periodically assesses its fee 
structure. Based upon a recent assessment, the Exchange believes that 
the proposed pricing change would further incentivize Members to submit 
displayed orders in Tape B securities priced at or above $1.00 per 
share.

[[Page 31232]]

Fee Schedule Changes
    IEX proposes to increase the rebate it pays for adding displayed 
liquidity in Tape B securities from $0.0004 per share to $0.0014 per 
share for executions priced at or above $1.00 per share. ``Sub-dollar'' 
\14\ executions of Tape B securities that add displayed liquidity will 
continue to execute for free. Consistent with the higher rebate IEX 
will pay for adding displayed liquidity in Tape B securities, IEX 
proposes to increase the fee for removing displayed liquidity in Tape B 
securities from $0.0010 per share to $0.0020 per share. Sub-dollar 
executions of Tape B securities that remove displayed liquidity will 
continue to be charged 0.09% of the Total Dollar Value (``TDV'') of the 
execution.
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    \14\ ``Sub-dollar'' refers to orders or executions priced at 
less than $1.00 per share.
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    IEX does not propose to change the fee ($0.0010 per share) 
currently applicable to Discretionary Peg (``D-Peg''),\15\ Fixed 
Midpoint Peg (``FM-Peg''),\16\ Midpoint Peg (``M-Peg),\17\ or Primary 
Peg (``P-Peg'') \18\ orders that remove displayed liquidity in Tape B 
securities. IEX notes that each of these four order types is designed 
to execute within the spread (i.e., at a price between the NBBO \19\). 
IEX understands that Members and other market participants typically 
use these order types with the expectation that they will either add or 
remove non-displayed liquidity, and that they will not execute against 
displayed liquidity. However, these four order types may execute 
against displayed orders in certain ``edge case'' scenarios, such as 
when a resting D-Peg order is invited to Recheck the Order Book \20\ 
and matches with a displayed odd lot order, or when an incoming M-Peg 
order matches with a displayed order standing its ground in a locked or 
crossed market. Currently, in these circumstances, the non-displayed 
pegged order is charged the same fee (i.e., $0.0010 per share) as if it 
traded with a non-displayed order (Fee Code Combination TL). To provide 
greater fee determinism to its Members and consistent with current 
practice, IEX proposes to continue charging $0.0010 per share for D-
Peg, FM-Peg, M-Peg, and P-Peg orders that remove displayed liquidity in 
a Tape B security in one of the above-listed circumstances.
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    \15\ See IEX Rule 11.190(b)(10).
    \16\ See IEX Rule 11.190(b)(19).
    \17\ See IEX Rule 11.190(b)(9).
    \18\ See IEX Rule 11.190(b)(8).
    \19\ See IEX Rule 1.160(u).
    \20\ See IEX Rule 11.230(a)(4)(D).
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    Notwithstanding this exception, if an incoming Post Only \21\ order 
for a Tape B security executes against a resting M-Peg or FM-Peg order 
with the Trade Now \22\ instruction, IEX proposes to charge the M-Peg 
or FM-Peg order a fee of $0.0020 per share, not the $0.0010 per share 
fee that would otherwise apply had the M-Peg or FM-Peg order executed 
against a displayed order for a Tape B security. IEX is proposing to 
make this distinction because Members that include a Trade Now 
instruction on their M-Peg or FM-Peg orders have thereby specified 
their willingness to match with incoming Post Only orders, and thus 
indicated their willingness to pay the $0.0020 per share fee IEX will 
charge for taking displayed liquidity in Tape B securities.
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    \21\ See IEX Rule 11.190(b)(20).
    \22\ When an incoming Post Only order matches a resting order 
with a Trade Now instruction, the resting order converts into an 
executable order that removes liquidity against the incoming Post 
Only order, and the incoming Post Only order becomes the liquidity 
adding order. See IEX Rule 11.190(b)(21). A Trade Now instruction 
cannot be added to a D-Peg or P-Peg order. See IEX Rules 
11.190(b)(8) and 11.190(b)(10).
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    IEX is not proposing to change the fees charged or fee codes 
applied to Retail \23\ or Retail Liquidity Provider \24\ orders that 
execute in Tape B securities. Thus, a Retail order that takes liquidity 
from a non-displayed order in a Tape B security will be assigned Fee 
Code Combination TIR (free execution), and the non-displayed order will 
be assigned Fee Code Combination MIB (fee of $0.0010 per share). 
Relatedly, a Retail order that takes liquidity from a displayed odd lot 
order in a Tape B security will be assigned Fee Code Combination TLR 
(free execution), and the displayed odd lot order will be assigned Fee 
Code Combination MLB (rebate of $0.0014 per share).
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    \23\ See IEX Rule 11.190(b)(15).
    \24\ See IEX Rule 11.190(b)(14). Retail Liquidity Provider 
orders can only match with Retail orders and will always be assigned 
Fee Code Combination MIA (free execution), irrespective of if the 
execution is a Tape B security.
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    IEX also proposes to introduce two new Fee Code Modifiers: ``B'' 
and ``K'' to reflect the proposed fee changes. Fee Code Modifier B 
would be included on any execution report for an execution of a Tape B 
security, with the exception of executions of Retail and Retail 
Liquidity Provider orders, which will continue to execute for free, as 
described above. In addition, Fee Code Modifier K would be included on 
execution reports for D-Peg, FM-Peg, M-Peg, or P-Peg orders that remove 
displayed liquidity in a Tape B security in the circumstances discussed 
above.
    IEX also proposes to add two new footnotes to the Fee Schedule: (i) 
proposed Footnote 2, which would apply to Fee Code Modifier B, and (ii) 
proposed Footnote 3, which would apply to Fee Code Combination TLBK. 
Proposed Footnote 2 reads in full:

    Fee Code B: Fee Code B applies to all executions of Tape B 
securities, other than executions of Retail and Retail Liquidity 
Provider orders and executions with Base Fee Codes X, O, C, H, and 
P.\25\
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    \25\ Fee Code X applies to securities that trade in the Opening 
Cross. Fee Codes O, C, H, and P are the Auction Match fee codes. As 
reflected in proposed footnote 2, these fee codes will continue to 
apply to Tape B securities.

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And Proposed Footnote 3 reads in full:

    TLBK will not apply to Midpoint Peg and Fixed Midpoint Peg 
orders with Trade Now functionality enabled that take liquidity from 
an incoming Post Only order for a Tape B security; such executions 
will be assigned Fee Code Combination TLWB.

    IEX proposes to add these Fee Codes to the Fee Code Modifiers table 
on the IEX Fee Schedule as follows (internal footnotes omitted):

------------------------------------------------------------------------
    Additional fee codes           Description               Fee
------------------------------------------------------------------------
B...........................  Tape B security.....  See Relevant Fee
                                                     Code Combinations
                                                     Below.
K...........................  Discretionary Peg,    See Relevant Fee
                               Fixed Midpoint Peg,   Code Combinations
                               Midpoint Peg, or      Below.
                               Primary Peg order
                               removes displayed
                               liquidity (Tape B).
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    Additionally, IEX proposes to add nine new Fee Code Combinations to 
the Additional Fee Code Combinations and Associated Fees table that 
reflect the fees IEX proposes to assess for executions involving a Tape 
B security: \26\
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    \26\ As described above, all nine of the following Fee Code 
Combinations will be modified by proposed footnote 2.

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[[Page 31233]]

     Fee Code Combination MIB would apply to an order that adds 
non-displayed liquidity in a Tape B security. These executions will be 
charged a fee of $0.0010 per share for executions at or above $1.00 and 
0.10% of the TDV for sub-dollar executions.
     Fee Code Combination MLB would apply to an order that adds 
displayed liquidity in a Tape B security. These executions will be paid 
a rebate of $0.0014 per share for executions at or above $1.00 and 
execute for free for sub-dollar executions.
     Fee Code Combination MLYB would apply to a Post Only order 
that executes on entry with a contra-side order with the Trade Now 
instruction in a Tape B security. These executions will be paid a 
rebate of $0.0014 per share. Because the Exchange will disregard the 
Post Only instruction on sub-dollar orders,\27\ IEX proposes to have 
the ``Executions below $1.00'' column of the Additional Fee Code 
Combinations and Associated Fees table column read ``N/A''.\28\
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    \27\ See IEX Rule 11.190(b)(20)(A).
    \28\ An incoming sub-dollar order for a Tape B security with a 
disregarded Post Only instruction will not trigger a resting order 
with the ``Trade Now'' instruction to become the taking order and 
will not be treated as the displayed liquidity adding order. Thus, 
Fee Code Combination MLYB would never apply. If the incoming order 
matched with a resting non-displayed or displayed order, it will 
result in a Fee Code Combination of TLB or TIB, with fees of 0.09% 
or 0.10% of TDV, respectively.
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     Fee Code Combination TIB would apply to an order that 
removes non-displayed liquidity in a Tape B security. These executions 
will be charged a fee of $0.0010 per share for executions at or above 
$1.00 and 0.10% of TDV for sub-dollar executions.
     Fee Code Combination TIYB would apply to a Post Only order 
priced at $1.00 or more that removes non-displayed liquidity in a Tape 
B security on entry. These executions will be charged a fee of $0.0010 
per share for executions at or above $1.00. Because the Exchange will 
disregard the Post Only instruction on sub-dollar orders,\29\ IEX 
proposes to have the ``Executions below $1.00'' column of the 
Additional Fee Code Combinations and Associated Fees table read ``N/
A''.\30\
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    \29\ See supra note 24.
    \30\ An incoming sub-dollar order with a disregarded Post Only 
instruction that executes on entry with a resting non-displayed 
order will result in a Fee Code Combination of TIB (``Removes non-
displayed liquidity (Tape B)'') on the execution report and be 
charged the normal sub-dollar dark taking fee of 0.10% of the Total 
Dollar Value (``TDV'').
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     Fee Code Combination TLB would apply to an order that 
removes displayed liquidity in a Tape B security. These executions will 
be charged a fee of $0.0020 per share for executions at or above $1.00 
and 0.09% of TDV for sub-dollar executions.
     Fee Code Combination TLBK would apply to a D-Peg, FM-Peg, 
M-Peg, or P-Peg order that removes displayed liquidity in a Tape B 
security. These executions will be charged a fee of $0.0010 per share 
for executions at or above $1.00 and 0.09% of TDV for sub-dollar 
executions. As described above, Fee Code Combination TLBK will be 
modified by proposed footnote 2, which explains that M-Peg and FM-Peg 
orders with a Trade Now instruction that execute against an incoming 
Post Only order will be assigned Fee Code Combination TLWB, and will 
not be assigned Fee Code Combination TLBK.
     Fee Code Combination TLYB would apply to a Post Only order 
priced at $1.00 or more that removes displayed liquidity on entry in a 
Tape B security. These executions will be charged a fee of $0.0020 per 
share. Because the Exchange will disregard the Post Only instruction on 
sub-dollar orders,\31\ IEX proposes to have the ``Executions below 
$1.00'' column of the Additional Fee Code Combinations and Associated 
Fees table read ``N/A''.\32\
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    \31\ See supra note 24.
    \32\ An incoming sub-dollar order with a disregarded Post Only 
instruction that executes on entry with a resting displayed order 
will result in a Fee Code Combination of TLB (``Removes displayed 
liquidity (Tape B)'') on the execution report and be charged the 
normal sub-dollar lit taking fee of 0.09% of the TDV.
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     Fee Code Combination TLWB would apply to a resting non-
displayed order with the Trade Now instruction that executes against an 
incoming Post Only order priced at $1.00 or more per share. These 
executions will be charged a fee of $0.0020 per share. Because the 
Exchange will disregard the Post Only instruction on an incoming sub-
dollar orders,\33\ that order will not trigger a resting order with the 
``Trade Now'' instruction to become the taking order. Therefore, Fee 
Code Combination TLWB would never apply to a resting non-displayed 
order that matches with an incoming sub-dollar order with a Post Only 
instruction, and IEX proposes to have the ``Executions below $1.00'' 
column of the Additional Fee Code Combinations and Associated Fees 
table column read ``N/A''.
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    \33\ See supra note 24.
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2. Statutory Basis
    IEX believes that the proposed rule change is consistent with the 
provisions of Section 6(b) \34\ of the Act in general and furthers the 
objectives of Sections 6(b)(4) \35\ 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.
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    \34\ 15 U.S.C. 78f.
    \35\ 15 U.S.C. 78f(b)(4).
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    IEX has concluded that, in the context of current regulatory 
requirements governing access fees and rebates, it is not able to 
sufficiently compete with other exchanges for order flow in Tape B 
securities without offering higher rebate incentives. Based on informal 
discussions with market participants, IEX believes that Members and 
other market participants may be more willing to send displayed orders 
in Tape B securities to IEX if the proposed fee structure was adopted.
    Accordingly, IEX has designed the proposed access fee and rebate to 
attract and incentivize displayed orders in Tape B securities as well 
as order flow seeking to trade with such displayed orders. Moreover, 
increases in displayed liquidity of Tape B securities would contribute 
to the public price discovery process which would benefit all market 
participants and protect investors and the public interest.
    As it has stated repeatedly, IEX believes that the existing access 
fee level of $0.0030 per share set by Rule 610 of Regulation NMS \36\ 
heavily affects the way that exchanges compete for order flow and has 
led to various market distortions and inefficiencies. It has also 
created a collective action problem that substantially hinders the 
ability of exchanges to compete by offering better execution quality 
and without relying on high access fees and correspondingly high 
rebates. The Commission can resolve this problem and help to promote 
more displayed liquidity by adjusting the access fee cap to $0.0010 per 
share, a level consistent with other market-based trading cost measures 
and one favored by a broad spectrum of market participants and 
virtually all institutional investors that have commented on this 
issue.\37\ IEX hopes to be able to further adjust its transaction 
prices in the near future to reflect a market-wide adoption of lower 
access fees as a result of this critically-needed reform.
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    \36\ 17 CFR 242.610
    \37\ See IEX comment letters on S7-30-22, Regulation NMS: 
Minimum Pricing Increments, Access Fees, and Transparency of Better-
Priced Orders: https://www.sec.gov/comments/s7-30-22/s73022-20160364-328968.pdf; https://www.sec.gov/comments/s7-30-22/s73022-276579-672162.pdf; https://www.sec.gov/comments/s7-30-22/s73022-434239-1076742.pdf.

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[[Page 31234]]

    Accordingly, IEX has designed this proposed rebate to attract and 
incentivize displayed order flow in Tape B securities as well as order 
flow seeking to trade with displayed order flow in Tape B securities. 
Moreover, increases in displayed liquidity of Tape B securities would 
contribute to the public price discovery process which would benefit 
all market participants and protect investors and the public interest.
    The Exchange believes that the proposed fee structure for providing 
and removing displayed liquidity in Tape B securities is reasonable and 
consistent with the Act. Specifically, the Exchange believes that for 
securities that trade at or above $1.00 per share, it is reasonable to 
provide an increased rebate of $0.0014 per share for providing 
displayed liquidity in Tape B securities and to increase the fee for 
removing displayed liquidity in Tape B securities from $0.0010 per 
share to $0.0020 per share, which is designed to keep IEX's displayed 
trading prices for Tape B securities competitive with those of other 
exchanges.\38\ In this regard, IEX notes that while many competing 
exchanges pay rebates to provide displayed liquidity in Tape B 
securities that are substantially higher than those proposed, others 
charge fees to provide displayed liquidity for Tape B securities that 
trade at or above $1.00 per share.\39\ Further, IEX notes that for 
securities that trade at or above $1.00 per share, many competing 
exchanges charge substantially higher fees to remove displayed 
liquidity than those charged by IEX.\40\ And, as discussed in the 
Purpose section, other exchanges also offer specific fee incentives for 
Tape B securities.\41\ Consequently, IEX believes that the proposed fee 
structure for providing and removing displayed liquidity in Tape B 
securities is within the range charged by competing exchanges and does 
not raise any new or novel issues not already considered by the 
Commission in the context of other exchanges' fees.
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    \38\ As discussed in the Purpose section, IEX's proposed rebate 
of $0.0014 per share for displayed liquidity adding orders in Tape B 
securities priced at $1.00 or more is below the rebate ranges of 
$0.0015 to $0.0035 per share and $0.0028 to $0.0036 per share paid 
by MEMX and Nasdaq, respectively, for displayed liquidity adding 
orders. And IEX's proposed fee of $0.0020 for removing displayed 
liquidity in Tape B securities priced at $1.00 or more is also below 
the $0.0030 per share fee charged by both MEMX and Nasdaq for 
displayed liquidity removing orders. See supra note 10.
    \39\ See e.g., Nasdaq BX Equity 7 Section 118(a) ($0.0020 fee 
per share to add displayed liquidity in Tape B securities priced at 
or above $1.00 per share), available at https://listingcenter.nasdaq.com/rulebook/bx/rules/BX%20Equity%207; Cboe BYX 
Equities Fee Schedule ($0.0020 fee per share to add displayed 
liquidity in Tape B securities priced at or above $1.00 per share, 
available at https://www.cboe.com/us/equities/membership/fee_schedule/byx/; Cboe EDGA Equities Fee Schedule ($0.0030 fee per 
share to add displayed liquidity in Tape B securities priced at or 
above $1.00 per share, available at https://www.cboe.com/us/equities/membership/fee_schedule/edga/.
    \40\ See e.g., Cboe BZX Equities Fee Schedule ($0.0030 fee per 
share to remove displayed liquidity in Tape B securities priced at 
or above $1.00 per share), available at https://markets.cboe.com/us/equities/membership/fee_schedule/bzx/; MIAX Pearl Equities Exchange 
Fee Schedule ($0.00295 fee per share to remove displayed liquidity 
in in Tape B securities priced at or above $1.00 per share), 
available at https://www.miaxglobal.com/sites/default/files/fee_schedule-files/MIAX_Pearl_Equities_Fee_Schedule_04012024.pdf; 
MEMX Fee Schedule ($0.0030 fee per share to remove displayed 
liquidity in in Tape B securities priced at or above $1.00 per 
share), available at https://info.memxtrading.com/fee-schedule/; 
Nasdaq Equity 7 Section 118(a) (up to $0.0030 fee per share to 
remove displayed liquidity in in Tape B securities priced at or 
above $1.00 per share), available at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules/nasdaq-equity-7; New 
York Stock Exchange Price List 2024 ($0.00275 fee per share to 
remove displayed liquidity in in Tape B securities priced at or 
above $1.00 per share), available at https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf.
    \41\ See supra note 9.
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    Further, IEX believes that it is reasonable and consistent with the 
Act not to modify the fees charged to D-Peg, FM-Peg, M-Peg, and P-Peg 
orders that remove displayed liquidity (except for M-Peg and FM-Peg 
orders with a Trade Now instruction that remove displayed liquidity 
from an incoming Post Only order), even if it is in a Tape B security. 
As discussed in the Purpose section, these four order types are 
designed to interact with non-displayed liquidity, but in unexpected 
circumstances can trade with displayed liquidity. IEX understands that, 
in general, Members seek fee determinism, i.e., the ability to know in 
advance the transaction fees that will apply to particular orders at 
the time they send the orders, and a lack thereof could operate to 
disincentive order flow. Consequently, IEX believes it is fair and 
equitable to continue charging $0.0010 per share for displayed 
liquidity removing executions of these four order types to avoid this 
impact. Further, IEX notes that any Member can submit a D-Peg, FM-Peg, 
M-Peg, or P-Peg order, and therefore this fee will apply equally to all 
Members.
    However, if an incoming Post Only \42\ order for a Tape B security 
executes against a resting M-Peg or FM-Peg order with the Trade Now 
\43\ instruction, IEX proposes to charge the M-Peg or FM-Peg order a 
fee of $0.0020 per share, not the $0.0010 per share fee that would 
otherwise apply had the M-Peg or FM-Peg order executed against a 
displayed order for a Tape B security, as described in the preceding 
paragraph. IEX is proposing to make this distinction because the Member 
who included a Trade Now instruction on its M-Peg or FM-Peg order 
specified its willingness to match with incoming Post Only orders, and 
thus indicated its willingness to pay the $0.0020 per share fee IEX 
will charge for taking displayed liquidity in Tape B securities.
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    \42\ See IEX Rule 11.190(b)(20).
    \43\ When an incoming Post Only order matches a resting order 
with a Trade Now instruction, the resting order converts into an 
executable order that removes liquidity against the incoming Post 
Only order, and the incoming Post Only order becomes the liquidity 
adding order. See IEX Rule 11.190(b)(21).
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    Correspondingly, IEX believes that it is reasonable and consistent 
with the Act to modify the fees charged to M-Peg and FM-Peg orders with 
a Trade Now instruction that remove displayed liquidity from an 
incoming Post Only order in a Tape B security. As discussed in the 
Purpose section, the Member who included a Trade Now instruction on its 
M-Peg or FM-Peg order specified its willingness to match with incoming 
Post Only orders, and thus indicated its willingness to pay the $0.0020 
per share fee IEX will charge for taking displayed liquidity in Tape B 
securities.
    The Exchange also believes that it is reasonable and consistent 
with the Act not to modify its displayed fees for sub-dollar executions 
to synchronize those fees with the proposed fees for executions at or 
above $1.00 per share. The Exchange believes that the existing fee 
structure for such executions continues to be reasonably designed to 
incentivize displayed order flow (and orders seeking to trade with 
displayed order flow) in such securities.
    Further, IEX believes that it is reasonable and consistent with the 
Act not to change the fees applicable to the execution of Retail orders 
that remove liquidity, which will continue to execute for free. In this 
regard, the Exchange believes that the existing fee structure continues 
to be reasonably designed to incentivize the entry of Retail orders and 
Retail Liquidity Provider orders, and notes that the Commission, in 
approving IEX's Retail Price Improvement Program, acknowledged the 
value of exchanges' offering incentives to attract both retail investor 
orders and orders specifically designated to execute only with retail 
orders.\44\
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    \44\ See Securities Exchange Act Release No. 86619 (August 9, 
2019), 84 FR 41769, 41771 (August 15, 2019) (SR-IEX-2019-05).
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    The Exchange further believes that the proposed fee change is 
consistent with the Act's requirement that the Exchange provide for an 
equitable allocation of

[[Page 31235]]

fees that is also not unfairly discriminatory.
    First, the fees for adding and removing displayed liquidity in Tape 
B securities will apply on a per share basis in an equal and 
nondiscriminatory manner to all Members, without regard to the volume 
of orders submitted by a Member or other factors.
    Second, because the fees would apply on a flat, per share basis--
like IEX's existing fees--they will continue to be fully deterministic, 
in that a Member will be able to determine the Exchange fees for each 
execution in a Tape B security. IEX believes this aspect of its fee 
proposal will assist all Members in making decisions about routing of 
orders without the uncertainties associated with volume tiers or other 
requirements that cannot be determined at the time of the trade. IEX 
notes that applying fees in this way is consistent with the purpose of 
the Commission's proposal to require that exchange fees be set in a 
manner such that the amount of a fee or rebate related to each trade is 
determinable at the time of the trade.\45\
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    \45\ See Securities Exchange Act Release No. 96494 (December 14, 
2022), 87 FR 80266, 80292-93 (December 29, 2022) (File No. S7-30-
22).
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    Additionally, the Exchange believes that it is reasonable to add 
footnote 2 to the Fee Codes section of the Fee Schedule to clarify that 
only Fee Code Combinations that include new Fee Code B are for 
executions of Tape B securities. Adding this footnote will avoid any 
potential confusion as to the applicable fees and rebates for each 
execution.
    Finally, to the extent the proposed change is successful in 
incentivizing the entry and execution of displayed orders on IEX, such 
greater liquidity will benefit all market participants by increasing 
price discovery and price formation (on IEX and market-wide) as well as 
market quality and execution opportunities.

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

    IEX believes that the proposed rule change will not result in any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange does not believe 
that the proposed rule change will impose any burden on intermarket 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. To the contrary, the proposed fee change is 
designed to enhance IEX's competitiveness with other venues, as 
described in the Statutory Basis section. In this context, the Exchange 
does not believe that the proposed fees would burden competition on 
competing venues or their participants. Moreover, as noted in the 
Statutory Basis section, the Exchange believes that the proposed 
changes do not raise any new or novel issues not already considered by 
the Commission.
    The Exchange believes that the proposed rule change will not impose 
any burden on intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because, while 
different fees are assessed in some circumstances, these different fees 
are not based on the type of Member entering the orders that match or 
on the volume of orders submitted by a Member but on the type of order 
entered or if the security at issue is a Tape B security, and all 
Members can submit any type of order for any type of security and will 
be subject to the same fee for that type of order and security. IEX 
believes that applying a flat, per share fee or rebate for each type of 
order avoids imposing a burden on competition by ensuring that 
individual Members do not gain a competitive advantage over other 
Members based solely on their size or volume of orders they are able to 
submit to the Exchange. Further, the proposed fee changes are designed 
to encourage market participants to bring increased order flow to the 
Exchange, which benefits all market participants.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) \46\ of the Act.
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    \46\ 15 U.S.C. 78s(b)(3)(A)(ii).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \47\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \47\ 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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-IEX-2024-06 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-2024-06. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://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 Room, 100 F Street NE, 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-IEX-2024-06 and should be 
submitted on or before May 15, 2024.


[[Page 31236]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\48\
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    \48\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-08682 Filed 4-23-24; 8:45 am]
BILLING CODE 8011-01-P