consistent with the Act and the rules thereunder, in particular Section
6 of the Act. Among other things, Section 6 requires that an exchange's
rules be designed to protect investors and the public interest, not be
designed to permit unfair discrimination among brokers, dealers, or
customers, and not impose any unnecessary or inappropriate burden on
competition. For IEX's POP/coil delay, discussed below, the Commission
finds that IEX's proposed rules are designed to operate in a manner
that is consistent with the Act in that they are designed to protect
investors and the public interest, are not designed to permit unfair
discrimination, and would not impose any unnecessary or inappropriate
burden on competition.
---------------------------------------------------------------------------

    \210\ See infra Section III.C.7., Protected Quote Status, for a
discussion of the status of IEX's quotation under Regulation NMS.
---------------------------------------------------------------------------

    The Commission first considers IEX's POP/coil delay as applied to
outbound data. The POP/coil delay applies to IEX's outbound proprietary
market data, other than the data it sends to the SIP. Doing so allows
market participants to execute on IEX while slightly delaying the news
of that execution to IEX's proprietary market data feed and to the
participants to the trade (through not to the applicable SIP), which in
effect allows the order sender to avoid the potential for information
leakage when subsequently accessing liquidity on other markets before
news of its execution on IEX could affect resting liquidity on those
markets (e.g., potentially resulting in cancellations or re-pricing of
interest resting on away markets). Exchanges are not required to offer
proprietary market data, but those that do must offer it to all market
participants in a not unfairly discriminatory manner.\211\ Because IEX
delays its proprietary market data feed uniformly to all IEX users, as
well as to its routing logic, the Commission believes that the outbound
delay of IEX market data is not unfairly discriminatory.
---------------------------------------------------------------------------

    \211\ See 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission similarly concludes that IEX's inbound POP/coil
delay is not unfairly discriminatory and does not impose an unnecessary
or inappropriate burden on competition. The delay imposed on inbound
messages benefits resting pegged orders on IEX because that delay,
together with the fact that IEX takes in direct data feeds from other
exchanges unencumbered by the delay, allows IEX to update the prices of
resting pegged orders in response to changes in the NBBO (which may
include displayed orders on IEX) as quickly as IEX is able to receive
data and calculate it before incoming messages, including incoming
orders seeking to execute against pegged orders, reach the matching
engine. At the same time, the POP/coil delay appears to provide no
protection or benefits for displayed orders or non-displayed orders at
fixed limit prices.\212\ Several commenters critiqued this aspect of
IEX's design as treating resting pegged orders preferentially, which
they assert will incentivize dark liquidity on IEX (in the form of
pegged orders in particular) over displayed liquidity.\213\ Most of
these commenters suggested that this is contrary to the central purpose
of an exchange to provide price discovery through displayed liquidity,
and that price discovery, and overall market quality, will deteriorate
as a

result.\214\ Commenters on the Notice of Interpretation also criticized
what they termed IEX's ``selective'' application of its POP/coil delay.
One such commenter opined that geographic delays are ``inescapable''
but ``do, in fact, complicate the markets in the presence of Reg NMS''
and argued that the proposed interpretation should not apply to
``intentional delays that are selective and therefore not equivalent to
geographic latencies.'' \215\ Another commenter criticized a potential
access delay that would ``treat dark orders more favorably than
displayed orders,'' which it characterized as a ``significant departure
from the way current exchanges operate'' and ``would lead to less
transparent markets, wider spreads and higher costs for investors.''
\216\ These commenters' concern with the ``selective'' application of
an access delay is not so much that an intentional delay is necessarily
inconsistent with Rule 611, but that an exchange might impose the delay
on others but not itself, thereby advantaging certain types of orders
(i.e., pegged orders) or market participants over others.\217\
---------------------------------------------------------------------------

    \212\ See, e.g., Budish Letter at 2, 4-5 (noting that IEX's POP/
coil structure would prevent latency arbitrage of non-displayed
pegged orders on IEX but would not prevent latency arbitrage of
standard displayed limit orders). The POP/coil, because it will
delay all inbound message traffic from all members equally, will not
provide any advantages for displayed and non-pegged orders. For
example, if a displayed limit order to sell is resting on IEX at
$10, and away markets all move to a higher price of $10.01 to sell,
the User resting at IEX may also want to adjust the price of its
order to track the market. However, pursuant to its rules, IEX
cannot unilaterally adjust the price of a non-pegged limit order
resting on its book at $10; rather, the User needs to send a message
to IEX with instructions on what to do. As it is doing that, a low-
latency trader may be able to send in an order to buy against that
$10 offer to sell, and may be able to reach the POP before the
member that posted that order is able to send in a cancellation and
replace it with an order to sell at $10.01. Since the low-latency
trader's message to buy and the member's cancel message both must
enter through the POP and traverse the coil, the race simply takes
place at the POP and therefore the two market participants are in
the same position on IEX as they would be on other markets without
intentional access delays.
    \213\ See FIA First Letter at 4; FIA Second Letter at 2; Citadel
First Letter at 7-10; Citadel Fifth Letter at 2-5; NYSE First Letter
at 9-10; NYSE Third Letter at 4-7; Hudson River Trading First Letter
at 2-7; Hudson River Trading Second Letter at 2-4; Jones C Letter at
2-3; Nasdaq Third Letter at 2.
    \214\ See NYSE First Letter at 9-10 (stating that IEX would be
unique ``in that all pegged orders would be dark and pegged orders
would be provided advantages that other orders on IEX would not
enjoy'' and that the POP/coil and Book Recheck combine to favor
pegged orders to such an extent that ``it is likely that IEX's order
book would be composed primarily, or entirely, of these dark, pegged
orders and would not be performing one of the central functions of a
registered exchange, which is to foster the price discovery process
through the display of orders''); NYSE Third Letter at 4, 7; Citadel
First Letter at 8 (suggesting that ``IEX's real aim is to create a
dark pool on a lit venue to provide itself with regulatory immunity
and other benefits afforded to national securities exchanges'');
Hudson River Trading First Letter at 2-7 (expressing concern that
IEX's POP would harm price discovery because it offers no protection
to displayed limit orders, which ``provide the foundation for price
discovery,'' but delays incoming limit orders and outgoing market
data for the benefit of non-transparent pegged orders); Hudson River
Trading Second Letter at 4; Jones C Letter at 2-3 (arguing that
``IEX is effectively using the discriminatory delay to tilt the
playing field, artificially attracting pegged orders from other
venues'' which will ``force other exchanges to introduce similar
disparities to avoid losing pegged orders to IEX'' and ``which will
result in more dark liquidity and less timely price discovery
market-wide''). One such commenter offered an analysis that
attempted to quantify the purported economic advantages and
disadvantages implicated by IEX's proposed handling of resting
pegged orders (including the cost to market participants routing
orders to IEX when resting pegged orders on IEX, due to the access
delay, ``fade'' to worse prices before they can be accessed), while
also noting the limitations of his analysis (including that ``[i]n
reality, market participants may change their order submission
behavior to substantially blunt IEX's pegged order repricing
scheme'' by adjusting for the latency imposed by the POP/coil delay
when routing to IEX). See Jones C Letter at 3-5. Other commenters
criticized that commenter's analysis. See Themis Third Letter;
Hovanec Seventh Letter. In particular, one of these commenters
rebutted the analysis as ``just measuring transient effects on an
NBBO after a trade and then attributing all of that fade as a
`disadvantage' of the speed bump, which he puts at $400 million
annually just for Nasdaq activity.'' See Themis Third Letter at 2.
    Another commenter recommended that IEX be approved as a
``manual'' market without a protected quote, unless it developed and
offered a ``bypass'' order type that ``that foregoes potential price
improvement associated with interacting with hidden mid-point peg
orders to by-pass the delay and interact with protected quotes.''
See Hudson River Trading Second Letter at 4. The Commission notes
that midpoint pegged orders, by definition, would be priced more
aggressively than IEX's displayed quotation, and thus by foregoing
execution against such midpoint pegged orders in order to execute
against less aggressively priced displayed quotations, the suggested
``bypass'' order type would appear to violate the price priority of
the resting midpoint pegged orders. In addition, if such an order
type were able to execute against resting non-displayed primary
pegged interest on IEX, the resting primary peg order would be
subject to latency arbitrage as a result of the incoming order
bypassing the POP/coil delay. The Commission further notes that the
issue of permissible delays in accessing protection quotations is
addressed in the Commission's Interpretation Regarding Automated
Quotations Under Regulation NMS, which provides that, in the context
of determining whether a trading center maintains an ``automated
quotation'' for purposes of Rule 611 of Regulation NMS, the term
``immediate'' used in Rule 600(b)(3) does not by itself prohibit a
trading center from implementing an intentional access delay that is
de minimis--i.e., a delay so short as to not frustrate the purposes
of Rule 611 by impairing fair and efficient access to an exchange's
quotations. See Final Interpretation, supra note 13.
    \215\ FIA PTG Comment Letter on Notice of Proposed
Interpretation (``Interp Letter'') at 6. The commenter criticized
the proposed interpretation for not distinguishing ``between
geographic delays, which apply equally to all information
communicated between remote locations, and selective delays like
those proposed by IEX'' and argued that such delays, ``even very
short ones, open the door for behaviors that are fundamentally
inconsistent with Reg NMS'' and ``would make Reg NMS requirements
around order protection and locked and crossed markets essentially
unworkable.'' Id. at 2-3. Another commenter argued that an
intentional delay can impair a market participant's ability to
access a protected quotation as it could create an ``un-level
playing field'' when ``an exchange could update certain orders
before allowing members to update theirs.'' See MMI Interp Letter at
1. The commenter noted that an investor selling to a resting pegged
order that IEX updates while the customer is traversing the POP/coil
delay would end up selling to the pegged order at a worse price than
she would have sold at had IEX not been able to reprice the pegged
order outside of the POP/coil delay. See MMI Interp Letter at 2. In
other words, according to that commenter, IEX's POP/coil delay only
protects certain investors (those with dark peg orders resting on
IEX) and may harm other long-term investors who cannot compete
``against the exchange's superior speed.'' See MMI Interp Letter at
2. The commenter also argued that selective access delays may
interfere with a broker's best execution obligation, and may distort
order execution and routing. See MMI Interp Letter at 2-3. Another
commenter opposed ``non-symmetrical'' delays and argued that they
add complexity and reduce the likelihood of capturing visible
liquidity in the equities markets, which can impact liquidity in the
options markets. See Weldon Interp Letter at 1-2. While true that
IEX's POP/coil delay benefits resting non-displayed orders,
investors routing to displayed liquidity on IEX will not ``compete''
against IEX in the sense of racing to access a resting order before
IEX can reprice it--because IEX will not reprice displayed orders,
there is no such race. Further, the Commission does not believe that
such a delay will interfere with best execution or distort routing
so long as it is de minimis--i.e., a delay so short as to not
frustrate the purposes of Rule 611 by impairing fair and efficient
access to an exchange's protected quotations.
    \216\ See NYSE Interp Letter at 4 (arguing that IEX's
``preferential treatment of resting dark orders'' is novel because
``[w]hile other markets update pegged orders in the same way as IEX,
they do not intentionally delay the ability to update displayed
orders on their book or to enter or cancel interest''). See also
Citadel Interp Letter at 8. One commenter opined that allowing an
exchange to re-price displayed orders during and outside of an
access delay ``would render such orders conditional'' and ``result
in precisely the kind of `maybe' quotations Rule 611 was designed to
prevent.'' Markit Interp Letter at 2-3. The commenter urged the
Commission to explicitly preclude exchanges from ``utilizing the
delay to re-price displayed orders.'' Id. at 2. The Commission notes
that IEX will only reprice pegged orders, which are non-displayed.
Non-displayed orders are not reflected in an exchange's quotations,
and Rule 611 applies order protection to publicly displayed quotes
only. Accordingly, an access delay that does not allow the repricing
of displayed orders does not impact an exchange's displayed
quotation, and cannot be said to lead to ``maybe'' quotations.
    \217\ See, e.g., Citadel Interp Letter at 10 (recommending that
intentional delays should ``only be permissible where the
intentional delay applies equally to all market participants and
order types'' where ``no order type, such as pegged orders, would be
permitted to circumvent access delays directly or indirectly by
repricing without delay'').
---------------------------------------------------------------------------

    Other commenters believed that IEX's proposed re-pricing of resting
pegged orders without any POP/coil delay would not be problematic.\218\
One commenter found no material distinction between pegged orders on
IEX not being subject to the POP/coil delay and how existing exchanges
reprice resting pegged orders, noting that existing exchanges reprice
resting pegged orders without being subject to ``non-trivial'' latency
associated with transiting the exchanges' order entry gateways.\219\
---------------------------------------------------------------------------

    \218\ See Markit Second Letter at 3; Healthy Markets Letter at
4-5. See also Trirogoff Letter (critiquing other commenters'
arguments likening IEX's pegged order functionality to ``last look''
functionality).
    \219\ See Healthy Markets Letter at 4-5.
---------------------------------------------------------------------------

    In response, IEX represented that it will provide a ``powerful
incentive'' for Users to submit displayed orders because displayed
orders will have priority over non-displayed orders at the same
price.\220\ IEX also noted that it seeks to ``bring the benefits of
exchange oversight and regulation to more of the trading that currently
happens off-exchange.'' \221\
---------------------------------------------------------------------------

    \220\ See id.; see also IEX First Response at 17. The Commission
notes that IEX represents that it intends to propose discount
pricing for displayed orders. Any such proposal will be subject to
the rule filing requirements of Section 19 of the Act and Rule 19b-4
thereunder.
    \221\ See IEX Second Response at 12-13. IEX noted that as an
ATS, 8.76% of IEX matched volume resulted from displayed orders and
it expects that number to ``increase substantially'' if IEX becomes
a registered exchange. See id. at 12.

---------------------------------------------------------------------------

    The Commission does not believe that the advantage IEX provides to
pegged orders is unfairly discriminatory or imposes an unnecessary or
inappropriate burden on competition. Rather, it is designed to ensure
that pegged orders on IEX operate as designed and as reflected in IEX's
rules by accurately tracking the NBBO, and that users of pegged orders
on IEX can better achieve their goals when their pegged orders operate
efficiently. To accomplish this, IEX slows down incoming order messages
by 350 microseconds to allow it to update resting pegged orders when
the NBBO changes, so that the resting pegged orders are accurately
pegged to current market prices. Without this protection, pegged orders
resting on IEX have the potential to be subject to ``latency
arbitrage'' by those market participants using very sophisticated
latency-sensitive technology, who can rapidly aggregate market data
feeds and react faster than IEX to NBBO updates. In such case, pegged
orders on IEX could be executed at disadvantageous ``stale'' prices
that have not been updated to reflect the new NBBO. Further, because
non-displayed pegged order types will be available to all Users of IEX,
all Users will be able to benefit from this order type on IEX and thus
utilize the POP/coil delay.
    IEX's proposed POP/coil delay is thus narrowly designed to allow
IEX to update the prices of non-displayed resting pegged orders so that
they can achieve their intended purpose--pricing that is accurately
benchmarked to the NBBO. Though the POP/coil delay does not benefit
displayed limit orders or non-pegged non-displayed limit orders, such
orders would not benefit from the symmetrical POP/coil delay because
their purpose is to post or execute consistent with their fixed limit
price. The Commission thus finds that IEX's ability to update the
prices of resting pegged orders during the POP/coil delay is not
designed to unfairly discriminate among members to the detriment of
investors or the public interest and is intended to benefit investors
that post pegged orders.
    The Commission is engaged in an ongoing broad-based review of
equity market structure, including whether there are appropriate
incentives to display trading interest and whether the level of
undisplayed liquidity may be impairing price discovery.\222\ Through
its POP/coil delay, IEX is seeking to address what it views as the
detrimental effects of speed on pegged orders, and the Act does not
foreclose reasonable and not unfairly discriminatory innovations that
are designed to protect investors who seek to reliably place passive,
non-displayed pegged orders on an exchange.
---------------------------------------------------------------------------

    \222\ See Securities Exchange Act Release No. 61358 (January 14,
2010), 75 FR 3594 (January 21, 2010) (Concept Release on Equity
Market Structure). While the Commission believes that IEX's
application for exchange registration is consistent with the Act,
the Commission notes that IEX's representation to propose and adopt
additional incentives for placing resting displayed orders on IEX
may further address commenters concerns, including execution
priority for displayed orders at the same price as non-displayed
orders (including pegged orders) and material pricing incentives to
displayed orders. The Commission also notes that IEX would allow for
registered market makers, who, if appointed, would need to maintain
displayed quotes pursuant to IEX rules. See IEX Rule 11.150
(Registration as a Market Maker) and Rule 11.151 (Market Maker
Obligations). In addition, the Commission observes that non-
displayed order types, including pegged order types that are non-
displayed, exist across exchanges today. See, e.g., BATS BZX Rule
11.9(c)(9) (mid-point peg order). While one commenter asserts that
the repricing of pegged orders in response to market movements is
``a traditional broker-dealer service'' (see Citadel Fifth Letter at
5), the Commission notes that many exchanges offer pegged orders
that are repriced in a substantively identical manner. See, e.g.,
BATS BZX Rule 11.19(c)(8) (pegged order); Nasdaq Rule 4703(d)
(pegging). Lastly, while one commenter asserts that IEX is unique in
that all of its pegged order types would be non-displayed (see NYSE
First Letter at 9), the Commission does not believe that the design
of IEX's proposed pegged order types is inconsistent with the Act
for the reasons discussed in this order.
---------------------------------------------------------------------------

    Finally, the Commission notes that the POP/coil delay applies to
all IEX Users equally, and may not be bypassed, for a fee or
otherwise.\223\ Accordingly, the Commission concludes that IEX's
proposed POP/coil delay is designed to protect investors and the public
interest in a manner that is not unfairly discriminatory and that does
not impose an unnecessary or inappropriate burden on competition.
---------------------------------------------------------------------------

    \223\ A few commenters suggested that a 2012 proposed rule
change from NASDAQ PHLX (``Phlx'') should preclude IEX's quotations
from being protected. See Securities Exchange Act Release No. 67680
(August 17, 2012), 77 FR 51073 (August 23, 2012) (SR-Phlx-2012-106)
(``Phlx 5 Millisecond Proposal''). See also Nasdaq First Letter at
2-3; NYSE First Letter at 7 n.14; FIA First Letter at 2-3; Citadel
First Letter at 4. In that matter, Phlx proposed instituting a five
millisecond delay in the time between the receipt of an order and
the time when it would be presented for execution against the PSX
order book. See Nasdaq First Letter at 2. In response, IEX noted
that while this delay would have applied to inbound liquidity taking
orders, no such delay would have applied to liquidity adding orders.
See IEX First Response at 8; IEX Second Response at 5. The
Commission notes that Phlx ultimately withdrew its proposal, and
therefore the Commission has not ruled on the merits of the Phlx
proposal or its consistency with the Act. Nevertheless, the
Commission notes that the structure and implementation of the delay
proposed in the Phlx proposal appears to differ in significant
respects from IEX's POP/coil, particularly with respect to its
differential application to members depending on whether they were
providing or taking liquidity.
---------------------------------------------------------------------------

6. Outbound Routing through IEXS
    As noted above, IEXS, IEX's affiliated single-purpose outbound
routing broker-dealer, will provide outbound routing services for IEX.
As detailed in the Order Instituting Proceedings, under the initially
published version of IEX's Form 1 (prior to Amendment No. 2), orders
routed from IEX through IEXS to away trading centers for execution (as
well as reports back to IEX from those away trading centers) would not
have traversed the POP/coil (though reports communicated from IEX back
to members would have traversed the coil). Several commenters expressed
concern that this design would provide an unfair competitive advantage
to IEXS over other routing brokers to most quickly and efficiently
route to away markets,\224\ and might lead other exchanges to implement
similar features that would add complexity to the markets and be
detrimental to market structure.\225\ Some commenters recommended that
orders sent from IEX to IEXS be subject to the same POP/coil delay as
unaffiliated members.\226\ Other commenters supported IEX's initially
proposed routing structure.\227\
---------------------------------------------------------------------------

    \224\ See BATS First Letter at 4-5; BATS Second Letter at 3-6;
BATS Third Letter at 3; NYSE First Letter at 3-5; NYSE Second Letter
at 3; Citadel First Letter at 6-7; Citadel Second Letter at 5-6;
Citadel Third Letter at 1-2; FIA First Letter at 4-5; Tabb Letter at
2-3; Hudson River Trading First Letter at 3-7; Hudson River Trading
Second Letter at 4-5; Markit First Letter at 1-3; Markit Second
Letter at 3-4 and 6; Weldon First Letter.
    \225\ See Hudson River Trading First Letter at 6-7; BATS Second
Letter at 4-5; Citadel Third Letter at 2; Hunsacker Letter; Weldon
First Letter.
    \226\ See Markit First Letter at 3; BATS Second Letter at 5-6;
Citadel First Letter at 6; Citadel Third Letter at 2; FIA First
Letter at 5; Hunsacker Letter. IEX stated that, under its initially
proposed approach to outbound routing through IEXS, IEXS would not
receive market data from IEX (or any other market) or have any
greater access to information than other IEX members. See IEX First
Response at 14; see also IEX Second Response at 14. One commenter
challenged IEX's claim and argued that IEX's purported argument
concealed the fact that IEXS's competitive advantage does not
involve or require IEXS receiving market data from IEX's own book.
See Markit First Letter at 2.
    \227\ See Norges Bank Letter; Mannheim Letter; Sethi Letter.
---------------------------------------------------------------------------

    In response to these comments, IEX submitted Amendment Nos. 2, 3,
and 4 to propose a complete redesign of the way its trading system will
handle outbound routing by bifurcating its handling of non-routable and
routable orders once they initially exit the coil and reach IEX.\228\
Specifically, IEX will

direct non-routable orders to the IEX matching engine, while it will
direct routable orders to the IEX routing logic.\229\ According to IEX,
the coil, when combined with the physical distance between the POP and
the IEX trading system (herein referred to as the ``POP/coil''),
provides IEX Users sending non-routable orders with 350 microseconds
\230\ of one-way latency to the IEX book (hereinafter the ``POP/coil
delay'').\231\ For routable orders, however, IEX explains that it would
insert an additional POP/coil delay within the IEX system to delay
routable orders' access to the IEX book from the IEX routing logic (for
those routable orders that the IEX routing logic determines to send to
the IEX book) by an additional 350 microseconds (for a total delay of
700 microseconds before any portion of the routable order first reaches
the IEX book).\232\ Likewise, messages from the IEX order book back to
IEX's routing logic also would be subject to this POP/coil delay in
order to effect a latency for its routing logic that is identical to
the latency experienced by IEX's non-affiliated members when receiving
messages back from the IEX order book.\233\ In addition, the routing
logic would receive IEX exchange data products subject to the POP/coil
delay.\234\ IEX represents that the extra POP/coil delay between the
routing logic and the IEX book is intended to place IEX in the same
position as a third-party routing broker in reaching IEX's book through
a POP/coil delay, such that IEX's ability to submit a routable order to
its own order book would be identical to any other routing broker-
dealer's ability to submit a routable order to the IEX order book
despite the fact that the orders would traverse different paths in the
system.\235\ As such, IEX represents that its routing functionality
would have no information advantage (i.e., no special view of IEX's
book, including displayed or non-displayed interest), and IEX
represents that the proposal places its outbound routing functionality
in an identical position to third-party routing broker-dealers when
sending orders into the IEX matching engine and when receiving
transaction information from the IEX matching engine.\236\
---------------------------------------------------------------------------

    \228\ See IEX Sixth Response, at 1. The proposed revisions to
accommodate the new routing process are primarily addressed in IEX
Rule 11.510 (Connectivity), as well as in IEX Rules 2.220 (IEX
Services LLC as Outbound Router), 11.130 (Access), 11.230(b)-(c)
(Order Execution), 11.240 (Trade Execution, Reporting, and
Dissemination of Quotations), 11.330 (Data Products), and 11.410
(Use of Market Data Feeds and Calculations of Necessary Price
Reference Points). IEX also proposed other changes in Amendment Nos.
2 and 3, including changes to proposed Rule 2.160 (Restrictions on
Membership) to reflect the Series 57 exam; proposed new Rule 2.250
(Mandatory Participation in Testing of Backup Systems); proposed new
Rule 9.217 (Expedited Client Suspension Proceeding); proposed new
Rule 10.270 (Disruptive Quoting and Trading Activity Prohibited);
changes to proposed Rule 11.190(a)(3) (Pegged Orders), (b)(8)-(10)
(concerning pegged orders), and (g) (concerning quote stability for
Discretionary Peg Orders); and changes to proposed Rule 11.260
(LIMITATION OF LIABILITY).
    \229\ See IEX Rule 11.230 (stating that an incoming non-routable
order will attempt to be matched for execution in the IEX order
book, and that, upon receipt of a routable order, the IEX system
will process it in accordance with one of the available routing
options, which may include routing IOC or FOK orders to the IEX
order book). See also IEX Sixth Response at 1; Amendment Nos. 2 and
3; IEX Rule 2.220(a) (defining ``System routing logic'').
    \230\ A microsecond is one millionth of a second.
    \231\ See IEX First Response at 3; see also Amendment Nos. 2 and
3.
    \232\ See IEX Rule 11.130(a) (noting that members' access to the
IEX order book includes the IEX system routing members' routable
orders to the order book via the IEX POP); IEX Rule 11.510(c)(1)
(stating that ``when the System routes all or a portion of a
routable order to the Order Book, in accordance with the System
routing logic, all inbound and outbound communications (including,
without limitation, order messages, cancel messages, and execution
report messages found in the Exchange's FIX Specification) traverse
an additional POP between the System routing logic and the Order
Book''); see also IEX Sixth Response at 2 (``Please note that
because of the speed bump introduced between the IEX Router and the
IEX matching engine, IEX routing members independently choosing to
use the IEX Router will experience an additional 350 microseconds of
latency as compared to members sending non-routable orders to the
IEX matching engine.'').
    \233\ See IEX Rule 11.510(c)(1); see also IEX Sixth Response at
1-2 (noting that ``the IEX Router would receive fill information
from the IEX matching engine by way of the speed bump, which would
place the IEX Router's ability to receive information from the IEX
matching engine on equal terms to an independent broker router'').
    \234\ See IEX Rule 11.510(c)(2)(A) (stating that ``[t]he System
routing logic receives Exchange data products after traversing the
POP'').
    \235\ See IEX Sixth Response at 1 (``In particular, this
redesign eliminates any alleged advantage claimed by the commenters
that the Router has over a third party broker routing to IEX.'').
    \236\ See IEX Sixth Response at 2 (noting that ``the IEX Router
would receive IEX quote information (the IEX TOPS feed) over the
speed bump, which would place the IEX Router's ability to receive
IEX quote information on equal terms to an independent broker
router'').
---------------------------------------------------------------------------

    Given the additional POP/coil delay, Users submitting routable
orders to IEX and Users submitting non-routable orders to IEX would not
be subject to the same cumulative POP/coil delay. Non-routable orders
would remain subject to the 350 microsecond delay into and out of the
IEX matching engine via the initial POP/coil. Routable orders, however,
would be sent to IEX's system routing logic first, and, if routed to
IEX, would traverse a new POP/coil delay (with an additional 350
microsecond delay) when interacting with the IEX matching engine.\237\
---------------------------------------------------------------------------

    \237\ See IEX Rule 11.230; see also IEX Sixth Response at 2. IEX
believes that this additional delay should not be to the detriment
of a User submitting a routable order, and notes that Users may
avoid this additional delay by submitting non-routable orders. See
IEX Sixth Response at 2. In addition, the trade confirmation report
from the IEX matching engine back to the User that submitted the
routable order would be subject to a 700 microsecond delay, whereas
IEX's proprietary data feed would only be subject to a 350
microsecond delay. See id. at 1-2.
---------------------------------------------------------------------------

    In the Order Instituting Proceedings, the Commission noted that it
was particularly interested in commenters' views as to whether the
changes to IEX's outbound routing process set forth in IEX's Form 1, as
amended by Amendment Nos. 2, 3 and 4, are consistent with the Act, in
light of commenters' concerns that, under IEX's Form 1 prior to
Amendment No. 2, IEX's proposed routing functionality and IEXS would
have an advantage over other routing broker-dealers that would be
unfairly discriminatory and an inappropriate burden on competition.
Several commenters stated the changes to IEX's proposed routing
functionality have sufficiently addressed these concerns and eliminated
the advantage IEXS would have had over other routing broker-dealers
under the original proposal.\238\ One of these commenters questioned
how the differing treatment of routable versus non-routable orders
under IEX's amended proposal would be consistent with the Act, and in
particular, how it would not be unfairly discriminatory or an
inappropriate burden on competition.\239\ Another commenter questioned
whether the revised routing functionality would operate as effectively
as the original proposal, and suggested IEX further clarify how its
redesigned functionality would achieve its investor protection goals in
comparison to the initial proposal.\240\
---------------------------------------------------------------------------

    \238\ See Nasdaq Third Letter at 1; Citadel Fifth Letter at 1;
Gilliland and Goodlander Letter at 1-2; FIA Second Letter at 2; NYSE
Third Letter at 8-9.
    \239\ See NYSE Third Letter at 8-9.
    \240\ See Anonymous March 14 Letter at 2-3.
---------------------------------------------------------------------------

    The Commission notes that it carefully scrutinizes exchange-
affiliated routing brokers, and has scrutinized with particularity
IEX's proposed operation of IEXS, both as initially proposed and as
amended by Amendment Nos. 2, 3, and 4.\241\ As noted in the Order
Instituting Proceedings, the Commission previously has stated that an
exchange-affiliated outbound router, as a ``facility'' of the exchange,
will be subject to the exchange's and the Commission's regulatory
oversight, and that the exchange will be responsible for ensuring that
the affiliated outbound routing function is operated consistent with
Section 6 of the Act and the

exchange's rules.\242\ For example, in approving an exchange with an
affiliated outbound routing broker, the Commission previously noted
that ``[a] conflict of interest would arise if the national securities
exchange (or an affiliate) provided advantages to its broker-dealer
that are not available to other members.'' \243\ The Commission further
explained that ``advantages, such as greater access to information,
improved speed of execution, or enhanced operational capabilities in
dealing with the exchange, might constitute unfair discrimination under
the Act.'' \244\
---------------------------------------------------------------------------

    \241\ See infra note 243 (citing to prior orders).
    \242\ See, e.g., Securities Exchange Act Release No. 62716 (Aug.
13, 2010), 75 FR 51295 (August 19, 2010) (granting BATS Y Exchange's
request to register as a national securities exchange).
    \243\ Securities Exchange Act Release No. 44983 (October 25,
2001), 66 FR 55225, 55233 (November 1, 2001) (PCX-00-25) (order
approving Archipelago Exchange (``ArcaEx'') as the equities trading
facility of PCX Equities, Inc.) (``ArcaEx Order''). In the 2001 PCX
filing, two commenters expressed concerns regarding ArcaEx's
affiliation with the Wave broker-dealer, which operated as the
outbound routing broker-dealer for ArcaEx. Specifically, these
commenters were concerned that the affiliation between ArcaEx and
Wave would be anti-competitive and could create a conflict of
interest. See also supra note 242, at 51304 (citing to the BATS Y
order).
    \244\ ArcaEx Order, supra note 243, at 55233.
---------------------------------------------------------------------------

    Thus, unique access or preferences that an exchange provides to its
outbound order routing function must be taken into account in the
analysis of whether an exchange provides outbound routing in a manner
consistent with the Act, and in particular, the requirement that an
exchange's rules be designed not to permit unfair discrimination and
not impose an unnecessary or undue burden on competition.\245\
---------------------------------------------------------------------------

    \245\ If an exchange provides its routing logic with a unique
structural advantage, such as preferential access to information
from the exchange's order book, that advantage could effectively be
passed on to its affiliated routing broker in the form of faster or
more informed routing instructions. For example, if an exchange were
to provide its routing logic with exclusive access to information
that it did not provide broadly to other routing brokers (e.g., to
orders resting non-displayed on the exchange's book) that would, on
its face, raise concerns under Sections 6(b)(5) and 6(b)(8) of the
Act. Such an advantage, if not available on identical terms to
routing brokers unaffiliated with the exchange, could unfairly
discriminate against those unaffiliated brokers or place an
inappropriate burden on their ability to compete with the exchange's
outbound routing services, in contravention of the Act. As initially
proposed, IEXS would functionally have benefitted from greater
access to information compared to other routing brokers because it
would have been able to route outbound (based on instructions from
the IEX matching engine following an execution (or lack thereof) on
IEX) before any other market participant would be in a similar
position.
---------------------------------------------------------------------------

    The Commission believes that the revisions to IEX's outbound
routing structure set forth in Amendment Nos. 2, 3, and 4 have
eliminated any such improper advantage that may have been provided to
IEXS under IEX's initial proposal. The Commission notes that, following
these amendments, certain commenters that criticized IEX's initially-
proposed outbound routing structure expressed support for IEX's amended
outbound routing structure.\246\
---------------------------------------------------------------------------

    \246\ See, e.g., Citadel Fifth Letter; Nasdaq Third Letter; FIA
Second Letter; NYSE Third Letter at 8-9. One commenter that was
critical of IEX's initially proposed routing structure suggested
that Nasdaq's simultaneous routing functionality would be a viable
alternative, and noted that it ``did not have a negative impact on
price discovery or market quality.'' See Hudson River Trading Second
Letter at 5. See also Securities Exchange Act Release Nos. 67246
(June 25, 2012), 77 FR 38875 (June 29, 2012) (notice of proposed
rule change) (notice of Nasdaq simultaneous routing proposal) and
67639 (August 10, 2012), 77 FR 49034 (August 15, 2012) (SR-NASDAQ-
2012-071) (order approving proposed rule change).
---------------------------------------------------------------------------

    The Commission believes that IEX has directly responded to the
comments on this point through the changes it proposed in Amendment
Nos. 2, 3, and 4. Specifically, by inserting an additional POP/coil
delay for routable orders between the IEX routing logic and IEX
matching engine, the Commission believes that IEX's ability to provide
outbound routing services will now be on substantively comparable terms
to a third party routing broker that is a member of IEX. Both the IEX
routing logic and a third-party routing broker-dealer would experience
350 microseconds of latency in sending order messages to the IEX
matching engine (assuming that the third-party routing broker-dealer
sends a non-routable order, which would bypass the IEX routing logic
and instead proceed to the IEX matching engine) and 350 microseconds of
latency in receiving fill and quote information back from the IEX
matching engine. Thus, if the IEX routing logic were to pursue a serial
routing strategy, it would do so based on a view of the IEX book that
is subject to the POP/coil delay, it would experience the same 350
microsecond latency in the transmission of the order to the IEX book
that a routing broker-dealer would experience with its non-routable
order, and it would experience the same 350 microsecond latency in
waiting to determine what, if any, remainder is left to be routed to
away destinations. The Commission believes that these are the same
conditions that a third-party routing broker-dealer would experience
when pursuing a serial routing strategy involving IEX.
    IEX's new router design provides flexibility to its routing
functionality to employ either a ``spray'' approach to routing or a
``serial'' approach.\247\ If the IEX routing logic pursues a ``spray''
routing approach, which would entail the IEX routing logic
simultaneously routing shares to destinations on the IEX routing table,
including the IEX book, the Commission believes that IEX's new design
will place it on the same footing as a third-party routing broker-
dealer choosing to ``spray'' route to multiple trading destinations,
including IEX. Specifically, they both would have a view of the IEX
book that is subject to the POP/delay, and thus would be in a similar
position with respect to determining how many shares to send to the IEX
book as part of the ``spray'' route. Moreover, the shares that are sent
to the IEX book from the IEX routing logic or the third-party routing
broker-dealer each would have to traverse the POP/coil before reaching
the IEX book.
---------------------------------------------------------------------------

    \247\ See IEX Sixth Response, at 1 (``Pursuant to the redesign,
our Routing logic, when necessary, will have the ability to route to
IEX and away exchanges simultaneously utilizing only public
information, which will protect the IEX routing member from
electronic front running to away exchanges.'').
---------------------------------------------------------------------------

    Thus, under IEX's amended outbound routing rule, IEX's affiliated
broker-dealer does not have any structural or informational advantages
in its provision of routing services as compared to a third-party
broker-dealer member of IEX performing a similar function for itself or
others. Thus, the Commission believes that IEX's proposed routing
structure, as amended, would not be unfairly discriminatory and would
not impose an inappropriate burden on competition.\248\
---------------------------------------------------------------------------

    \248\ In response to a commenter's questioning whether IEX's
differential handling of non-routable orders and routable orders
would be unfairly discriminatory or an inappropriate burden on
competition (see NYSE Third Letter at 8-9), the Commission notes
that while a User that sends a routable order to IEX would
experience different latencies as compared to a User that sends a
non-routable order to IEX, any User may choose to send either kind
of order--routable or non-routable--to IEX. Thus, the Commission
does not believe that there is any structural advantage in IEX's
proposed handling of either kind of order that would be available to
certain Users but not to others. In addition, the Commission notes
that the design of IEX's system with respect to its handling of
routable versus non-routable orders is similar to that of at least
one existing exchange. See Nasdaq Third Letter at 3 (noting that
``if a Nasdaq member does not wish to use Nasdaq's routing
functionality, it has the ability to send an order directly to the
Nasdaq matching engine, thereby bypassing the exchange system that
handles orders designated for routing, and would receive an
immediate confirmation of the order's execution on Nasdaq''). See
also id. at 5 (noting that ``[u]sing Nasdaq's order management
system is optional, and members opting against using Nasdaq's OMS
are not disadvantaged in any way'').
---------------------------------------------------------------------------

    Accordingly, for the reasons stated above, the Commission believes
that the outbound routing functionality of IEX, as amended by Amendment
Nos. 2, 3,

and 4, and as described in IEX's Sixth Response, is consistent with
Section 6(b) of the Act in that it is consistent with the goals of
promoting just and equitable principles of trade, removing impediments
to and perfecting the mechanism of a free and open market and a
national market system, protecting investors and the public interest,
and not permitting unfair discrimination between customer, issuers,
brokers or dealers.\249\
---------------------------------------------------------------------------

    \249\ See 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

7. Protected Quote Status
    In light of the POP/coil delay, the issue of whether IEX would
operate as an automated trading center, in compliance with Rule
600(b)(4) of Regulation NMS,\250\ such that its quotations would be
``automated'' under Rule 600(b)(3) and thus ``protected'' under Rule
611 of Regulation NMS (the ``Order Protection Rule'' or ``Trade-Through
Rule''),\251\ attracted considerable attention among commenters.
Specifically, several commenters questioned whether IEX's operation of
the POP/coil delay would be consistent with either the Order Protection
Rule or the intent behind the Rule.\252\ Commenters mainly assert that
the 350 microsecond latency caused by the POP and coil calls into
question whether IEX quotations would be ``automated,'' and therefore
whether they can be ``protected,'' under Regulation NMS.\253\
---------------------------------------------------------------------------

    \250\ 17 CFR 242.600(b)(4).
    \251\ 17 CFR 242.611. Rule 611(a)(1) requires a trading center
to establish, maintain and enforce written policies and procedures
that are reasonably designed to prevent trade-throughs on the
trading center of protection quotations. 17 CFR 242.611(a)(1).
    \252\ See NYSE First Letter at 5; BATS First Letter at 3; FIA
First Letter at 2; Nasdaq First Letter at 2; Citadel First Letter at
3. See also Gibson Dunn Letter at 6-7.
    \253\ See BATS First Letter at 2-4; FIA First Letter at 2; NYSE
First Letter at 5-7; Nasdaq First Letter at 2; Citadel First Letter
at 2-4. Commenters critical of IEX's proposed design cite to
language from the Regulation NMS Adopting Release where the
Commission elaborated on what it means for a quotation to be
``automated,'' including an interpretation that the term
``immediate,'' as it relates to the definition of an automated
quotation, ``precludes any coding of automated systems or other type
of intentional device that would delay the action taken with respect
to a quotation'' (emphasis added). See BATS First Letter at 3; FIA
First Letter at 2; Citadel First Letter at 3; Citadel Second Letter
at 3; see also Securities Exchange Act Release No. 51808 (June 9,
2005) 70 FR 37496, 37534 (June 29, 2005) (``Regulation NMS Adopting
Release''). Based on this language, the commenters contend that
IEX's quotation cannot be considered automated, or at least question
whether it can be so considered. Several commenters urged the
Commission not to decide this question in the context of IEX's Form
1. See, e.g., Citadel Second Letter at 4; Nasdaq Second Letter at 1-
4; Direct Match Letter at 2-4; Scott Letter. One commenter urged the
Commission, should it disagree with the contention that IEX's
quotation cannot be protected, to explain its reasoning in a
rulemaking proceeding or exemptive order that is subject to public
vetting. See Citadel Second Letter at 4. Other commenters urged the
Commission to articulate clear standards regarding what constitutes
a permissible access delay. See BATS First Letter at 3-4, 6; T. Rowe
Price Letter at 2; Jon D. Letter. One of these commenters supported
an interpretation of the definition of an automated quotation that
would include the delay resulting from IEX's POP/coil, but further
urged the Commission to articulate clear regulatory standards that
would be applicable to all trading venues and market participants.
See BATS Second Letter at 2. Other commenters offered support for
IEX's proposed access delay, and challenged the assertion that IEX's
quotation would not meet the definition of ``automated quotation''
under Regulation NMS. See, e.g., Leuchtkafer First Letter at 1-2;
Leuchtkafer Second Letter at 1-2; Verret Letter at 4; Franklin
Templeton Letter at 2; Upson Letter at 2. IEX asserted that the
language of the Order Protection Rule and the Regulation NMS
Adopting Release, when considered in light of the context in which
the Order Protection Rule was adopted, do not compel the conclusion
that IEX's quotes should be considered ``manual quotations'' instead
of ``automated quotations.'' See IEX First Response at 5-7; IEX
Second Response at 4; IEX Third Response at 1-3.
---------------------------------------------------------------------------

    As noted above, according to IEX, all incoming messages (e.g.,
orders to buy or sell and any modification to a previously sent open
order) from any User would traverse the proposed POP/coil delay.\254\
In addition, all outbound messages from IEX back to a User (e.g.,
confirmations of an execution that occurred on IEX) would pass through
the same route in reverse.\255\ IEX's direct proprietary market data
feed, which is an optional data feed that IEX would make available to
subscribers, also would traverse the coil before exiting at the
POP.\256\ As a result, a non-routable immediate-or-cancel (``IOC'')
order, which is a type of order that IEX would permit Users to send to
the IEX system, would traverse the proposed POP/coil (and its attendant
350 microsecond delay) before arriving at the IEX system and
potentially executing against a displayed quotation on IEX.\257\
Likewise, the response from the IEX system to the User indicating the
action taken by the IEX system with respect to such IOC order also
would traverse the POP/coil and experience a 350 microsecond delay, for
a cumulative inbound and outbound intentional delay imposed on a non-
routable order of 700 microseconds.\258\
---------------------------------------------------------------------------

    \254\ See IEX First Response at 3-4; see also IEX Rule 11.510.
    \255\ See IEX Rule 11.510.
    \256\ See id.
    \257\ IEX has designed its rules relating to orders, modifiers,
and order execution to comply with the requirements of Regulation
NMS, including Rule 600(b)(3) in particular by providing an
immediate-or-cancel functionality. See IEX Rules 11.190 and 11.230;
see also 17 CFR 242.600(b)(3). IEX permits immediate-or-cancel
orders to be non-routable when designated as ``IEX Only,'' and thus
unexecuted portions of immediate-or-cancel orders designated as such
would be canceled without being routed elsewhere, in accordance with
Rule 600(b)(3)(iii). See IEX Rule 11.190; see also 17 CFR
242.600(b)(3)(iii). These proposed rules include accepting orders
marked as intermarket sweep orders, which will allow orders so
designated to be automatically matched and executed without
reference to Protected Quotations at other trading centers, and
routing orders marked as intermarket sweep orders by a User to a
specific trading center for execution. See IEX Rule 11.190(b)(12);
see also 17 CFR 242.600(b)(3) and 242.611.
    \258\ See IEX Rule 11.510; see also IEX First Response at 3.
Outbound transaction and quote messages from IEX to the applicable
securities information processor (``SIP'') would not pass through
the POP/coil, but instead would be sent directly from the IEX system
to the SIP processor without an intentional delay. See IEX Rule
11.510(c); see also IEX First Response at 3-4.
---------------------------------------------------------------------------

    Several commenters asserted that this 700 microsecond delay would
not be de minimis or otherwise consistent with the Act and the rules
thereunder. Some believed that if IEX's best bid and best offer were
protected quotations in light of the latency attendant to IEX's POP/
coil structure, including the fact that IEX's proprietary market data
feed would be subject to such latency as it leaves IEX, it would be
detrimental to the market.\259\ Some commenters asserted that if IEX's
quotation were protected, it would negatively affect the accuracy of
the NBBO and the price discovery process, and could lead to market
instability.\260\ Others were concerned that it would lead to confusion
among market participants, and cause a higher incidence of locked or
crossed markets.\261\ Some commenters contended that orders routed to
IEX would experience lower fill rates and inferior executions because
routed orders might miss out on better quotes on other markets if they
need to route to a stale quote on IEX that had already traded but that
fact has not yet

been communicated through IEX's proprietary data.\262\ In addition,
some commenters argued that resting orders, including pegged orders, on
away markets could be mispriced, and potentially executed against at a
stale price, due to the fact that outgoing proprietary market data from
IEX would be subject to the POP/coil latency.\263\
---------------------------------------------------------------------------

    \259\ See, e.g., BATS First Letter at 3; Nasdaq First Letter at
3; FIA First Letter at 3; Citadel First Letter at 4-5; NYSE First
Letter at 7-9; Scott Letter; Anonymous December 5 Letter at 2;
Hudson River Trading First Letter at 6; PDQ Enterprises Letter at 1-
2. See also Gibson Dunn Letter at 7.
    \260\ See BATS First Letter at 3; PDQ Enterprises Letter at 1-2
(arguing that because of IEX's POP/coil delay, ``its quotes may not
be truly actionable on an alarmingly regular basis'' and that, if
other exchanges adopt access delays of their own, it will lead to
order routers ``chasing ghost quotes through numerous speed bumps''
and, as a result, ``price discovery chaos''); Hudson River Trading
First Letter at 7 (predicting that other exchanges will seek delays
of their own, which would increase market structure complexity and,
``during periods of high volatility, several quotes may be
intentionally delayed, clouding the view of the NBBO and leading to
greater uncertainty for market participants that could contribute to
market instability''); Citadel First Letter at 5; see also Scott
Letter (``While the changes proposed by IEX could potentially be
positive for IEX and its owners, the changes accompanying the
approach could negatively impact an investors' ability to execute a
trade at the best price, the centerpiece of our national market
system.'').
    \261\ See Nasdaq First Letter at 3; FIA First Letter at 3;
Citadel First Letter at 4-5.
    \262\ See FIA First Letter at 3; Citadel First Letter at 4, 9;
Citadel Fifth Letter at 2-4; PDQ Enterprises Letter at 1-2; Hudson
River Trading First Letter at 5; Hudson River Trading Second Letter
at 2-4.
    \263\ See NYSE First Letter at 7-9; Citadel First Letter at 5;
FIA First Letter at 4; Hudson River Trading First Letter at 6;
Anonymous December 5 Letter at 2. Some of these commenters contended
that this would lead to the development of order types on other
markets that are designed to bypass IEX protected quotations. See
NYSE First Letter at 8 n.16; FIA First Letter at 4; see also Gibson
Dunn Letter at 7 (expressing concern that intentional delays such as
that proposed by IEX might ``open the floodgates to a new wave of
complex order types''). Further, one commenter expressed concern
that the POP/coil delay could be exploited for manipulative trading
purposes. See Instinet Letter at 1 (expressing concern that an
access delay might be used to ``place[] into the public data stream
materially unexecutable quotes that persist for, on order, one
millisecond''). The Commission believes there is no basis to
conclude that concerns regarding manipulative and predatory quoting
behavior should be more pronounced on IEX due to the POP/coil delay,
than with respect to other exchanges. While the commenter discusses
the hypothetical submission of quotes to IEX that are cancelled
before any other market participant could react to them, but that
linger in the public market data stream for longer durations because
of the POP/coil delay on outbound proprietary data, the Commission
notes that such quoting behavior, to the extent it constitutes
manipulative trading behavior, would be prohibited by the federal
securities laws and rules, including Section 10(b) of the Act and
Rule 10b-5 thereunder, as well as exchange rules and FINRA rules.
The Commission also notes that, in addition to IEX's surveillance
procedures, and in addition to IEX's rules prohibiting certain
trading practices (see the IEX Rule 10.100 series), IEX's rules, as
amended, include proposed Rule 10.270, which specifically prohibits
disruptive quoting and trading activity on IEX, as well as proposed
Rule 9.217, which sets forth an expedited suspension proceeding for
alleged violations of Rule 10.270. See Amendment No. 4 to IEX's Form
1. The Commission believes that IEX's rules are appropriately
designed to prevent and detect quoting behavior of the sort that the
commenter is concerned about, as well as, generally, to prevent
fraudulent and manipulative acts and practices in accordance with
Section 6(b)(5) of the Act. IEX, like all registered national
securities exchanges, must comply with the Act and the rules
thereunder, and its own rules, and (subject to the provisions of
Section 17(d) and the rules thereunder), absent reasonable
justification or excuse, enforce compliance with such provisions by
its members and persons associated with its members. See 15 U.S.C.
78s(g).
---------------------------------------------------------------------------

    Other commenters did not believe that protecting IEX's quotations
despite IEX's POP/coil would have a detrimental impact on market
quality,\264\ and noted that there is latency associated with the
transmission of orders to protected quotations at existing market
venues--and in some cases, those latencies are greater than that
associated with transmitting orders to IEX even factoring in the
proposed POP/coil delay.\265\ One commenter observed that the 350
microsecond POP/coil delay is ``not much more than the normal latency
that all trading platforms impose,'' and that an exchange could achieve
the same delay by ``locat[ing] its primary data center 65 or more miles
away from the other exchange data centers.'' \266\ Another commenter
did not find the proposed POP/coil delay ``particularly problematic, as
the time gap is minimal, and (even including the speed bump) IEX
matches orders faster than a number of other markets.'' \267\ Another
commenter contended that IEX's POP/coil delay will have little impact
on the NBBO calculations of the consolidated tape.\268\
---------------------------------------------------------------------------

    \264\ See Chen & Foley Letter at 5 (``Based on our empirical
analysis of Alpha's speed bump in Canada, we believe that IEX's
application will not result in detrimental impacts on overall market
quality in the United States.'').
    \265\ See, e.g., BATS First Letter at 4; BATS Second Letter at
2-3; Healthy Markets Letter at 4; Angel Letter at 2; Kim Letter;
Mannheim Letter; Wilcox Letter. Because the POP/coil delay is not
variable, market participants should be able to account for it when
routing as they could any other known latency. See, e.g., Chen &
Foley Letter at 4 (``The fixed nature of IEX's inbound speed bump
enables individual marketable orders from a smart order router spray
to be timed to arrive at IEX's speed bump point-of-presence 350
microseconds prior to arrival at other markets, minimizing any
potential for information leakage.''); Jones C Letter at 4
(``[M]arket participants may change their order submission behavior
to substantially blunt IEX's pegged order repricing scheme . . .
[by] sending the order to IEX so that it arrives 350 microseconds
earlier than it arrives at other venues.''). As noted above, in the
Jones C Letter, the commenter attempted to quantify the purported
cost that certain market participants would incur when IEX pegged
orders ``fade'' before they can be accessed. See supra note 214. The
Commission believes that market participants who adjust their
routing strategies to account for IEX's access delay (which the
commenter acknowledged market participants may do) should be able to
mitigate the ``fade'' that they encounter when routing orders to IEX
by calibrating the timing of their routed orders so that the orders
destined for IEX arrive there 350 microseconds before the orders
sent to other venues.
    \266\ Angel Letter at 3; see also Abel/Noser Letter at 2.
    \267\ Tabb Letter at 1. See also Jones C Letter at 2 (noting
that ``from an economic point of view the 350-microsecond delay
[proposed by IEX] per se should not be a particular cause for
concern, as it is well within the bounds of the existing,
geographically dispersed National Market System, and does not seem
likely to contribute substantially to a phantom liquidity
problem'').
    \268\ See Upson Letter at 1.
---------------------------------------------------------------------------

    In response to commenters that argued that the POP/coil delay would
negatively affect market transparency, degrade the NBBO, or cloud price
discovery, the Commission notes that Rule 600(b)(3)(v) requires trading
centers to immediately update their displayed quotations to reflect
material changes. Market participants today already experience very
short delays in receiving updates to displayed quotations, as a result
of geographic and technological latencies, similar to those experienced
when accessing protected quotations. Indeed, the NBBO is an
amalgamation of individual protected quotations from different markets
located in different places, and is already subject to geographic,
network, computational, and other technological latencies.\269\ For any
market participant that chooses to use exchange proprietary data feeds,
including IEX's feed with its attendant 350 microsecond one-way delay,
and calculate the NBBO for itself, they will not experience an
unprecedented delay in receiving IEX's data because the 350 microsecond
delay on IEX's data is well within the range of geographic and
technological latencies that market participants experience today.
Thus, latency to and from IEX will be comparable to--and even less
than--delays attributable to other markets that currently are included
in the NBBO.\270\ For this reason, the Commission does not believe the
introduction of a small intentional delay like the POP/coil delay will
impair market transparency, lead to greater incidences of locked or
crossed markets, or materially impact pegged orders on away markets.
---------------------------------------------------------------------------

    \269\ See Final Interpretation, supra note 13.
    \270\ See Healthy Markets Letter at 4 (noting that ``[t]he NBBO
already includes quotes with varied degrees of time lag'' and that
the length of IEX's coiled cable ``is far less than the distance
between NY and Chicago, and is remarkably similar to the distance
between Carteret and Mahwah (36 miles)''). See also IEX First
Response at 6 (stating that ``the amount of latency imposed by the
POP is less than or not materially different than that currently
involved in reaching various exchanges based on geographic
factors,'' and referring, by way of example, to the geographic
distance that an order from the Chicago Stock Exchange's Secaucus,
New Jersey data center must physically traverse before reaching the
Chicago Stock Exchange's trading system in Chicago); see also id. at
9-10 (noting that the POP/coil latency is shorter than the latency
associated with protected quotations published through FINRA's
Alternative Display Facility and the National Stock Exchange's
former order delivery product); IEX Second Response at 11 (noting
that the distance between Nasdaq's Carteret facility and NYSE's
Mahwah facility is 42.8 miles (compared to the IEX coil's
approximately 38 mile equivalent)); IEX Third Response at 2. Other
commenters similarly understood that the POP/coil latency is
comparable to or shorter than natural and geographic latencies in
today's market. See Angel Letter at 2; BATS First Letter at 4; BATS
Second Letter at 2-3; Kim Letter; Mannheim Letter; T. Rowe Price
Letter at 2-3; Wilcox Letter. Two commenters specifically suggested
that such a delay would be inconsequential or de minimis. See Angel
Letter at 3; Abel/Noser Letter at 2.
---------------------------------------------------------------------------

    In addition, the Commission published notice of a proposed
interpretation regarding the permissibility of intentional access

delays.\271\ Today, the Commission is issuing a final interpretation
that, when determining whether a trading center maintains an
``automated quotation'' for purposes of Rule 611 of Regulation NMS, the
term ``immediate'' in Rule 600(b)(3) precludes any coding of automated
systems or other type of intentional device that would delay the action
taken with respect to a quotation unless such delay is de minimis--
i.e., so short as to not frustrate the purposes of Rule 611 by
impairing fair and efficient access to an exchange's quotations.\272\
In accordance with that interpretation and the Commission's findings,
discussed above, that the application of IEX's POP/coil delay is not
unfairly discriminatory and is otherwise consistent with the Act, the
Commission does not believe that IEX's POP/coil delay precludes IEX
from maintaining an automated quotation. Because the delay imposed by
IEX's POP/coil is well within geographic and technological latencies
experienced today that do not impair fair and efficient access to an
exchange's quotations or otherwise frustrate the objectives of Rule
611, the Commission believes that such intentional delay will not
frustrate the purposes of Rule 611 by impairing fair and efficient
access to IEX's quotations. Accordingly, the Commission finds that an
intentional 700 microsecond delay is de minimis and thus IEX can
maintain a protected quotation.\273\
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    \271\ See Securities Exchange Act Release No. 77407 (March 18,
2016), 81 FR 15660 (March 24, 2016) (S7-03-16) (``Notice of Proposed
Interpretation''). In particular, the Commission noted that the POP/
coil, because it delays inbound and outbound messages to and from
IEX Users, raises a question as to whether, under the interpretation
set forth in the Regulation NMS Adopting Release from 2005, IEX
will, among other things, ``immediately'' execute IOC orders under
Rule 600(b)(3)(ii), ``immediately'' transmit a response to an IOC
order sender under Rule 600(b)(3)(iv), and ``immediately'' display
information that updates IEX's displayed quotation under Rule
600(b)(3)(v). See id.; see also 17 CFR 242.600(b)(3); Regulation NMS
Adopting Release, supra note 253, at 37504.
    \272\ See Final Interpretation, supra note 13. One commenter
argued that there is ``no evidence of a need for a de minimis
exception or that planned delays will benefit investors in any
meaningful way.'' Gibson Dunn Letter at 7. This comment pertains
mainly to, and is addressed, in the Commission's Final
Interpretation, being issued separately today. As stated in the
Final Interpretation, the Commission believes that its updated
interpretation allowing for de minimis intentional access delays in
certain circumstances is warranted in light of technological and
market developments and is consistent with the purposes of Rule 611.
    \273\ See Final Interpretation, supra note 13.
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8. Market Participants Required To Treat IEX's Quotations as Protected
    Consequently, IEX is a trading center whose quotations can be
``automated quotations'' under Rule 600(b)(3). In turn, IEX is designed
to be an ``automated trading center'' under Rule 600(b)(4) whose best-
priced, displayed quotation would be a ``protected quotation'' under
Rules 600(b)(57) and 600(b)(58), and for purposes of Rule 611.\274\
---------------------------------------------------------------------------

    \274\ The foregoing discussion of whether IEX can have an
automated quote and operate as an automated trading center and
therefore receive order protection under Rule 611 focuses on whether
the IEX system can ``immediately and automatically'' execute an
order against an IEX quotation within the meaning of the definition
of ``automated quotation'' set forth in Rule 600(b)(3). Rule
600(b)(3) sets forth additional requirements for a quotation to be
automated. See 17 CFR 242.600(b)(3). Moreover, being capable of
displaying ``automated quotations,'' as defined in Rule 600(b)(3),
is just one of several requirements that a trading center must
satisfy in order to be considered an ``automated trading center''
under Rule 600(b)(4). See 17 CFR 242.600(b)(4). In particular, as
summarized above, IEX's trading rules are designed to satisfy the
requirements of Rule 600(b)(3) by permitting orders to be marked as
``immediate-or-cancel'' and providing for immediate and automatic
execution of such incoming orders, cancelation of unexecuted
portions, transmission of a response to the sender, and updates to
its displayed quotation. See also IEX Rules 11.230 (Order Execution)
and 11.240 (Trade Execution, Reporting, and Dissemination of
Quotations). Further, to the extent IEX satisfies the conditions of
Rule 600(b)(4), it will operate as an ``automated trading center.''
In such case, IEX can be an automated trading center with automated
quotations that are protected under Rule 611.
---------------------------------------------------------------------------

    As a result, following the issuance of this order and IEX having
met the conditions to begin operating as an automated trading center in
a particular symbol, market participants will be required to have
reasonably designed policies and procedures to treat IEX's best bid and
best offer in such symbol as a protected quotation.\275\ At the same
time, to meet their regulatory responsibilities under Rule 611(a) of
Regulation NMS, market participants must have sufficient notice of new
Protected Quotations, as well as all necessary information (such as
final technical specifications).\276\ The Commission believes that it
would be a reasonable policy and procedure under Rule 611(a) to require
that industry participants begin treating IEX's best bid and best offer
as a Protected Quotation as soon as possible but no later than 90 days
after the date of this order, or such later date as IEX begins
operation as a national securities exchange. The Commission notes that
it has taken the same position with other new equities exchanges.\277\
---------------------------------------------------------------------------

    \275\ See 17 CFR 242.611(a).
    \276\ See Securities Exchange Act Release No. 53829 (May 18,
2006), 71 FR 30038, 30041 (May 24, 2006) (File No. S7-10-04)
(extending the compliance dates for Rule 610 and Rule 611 of
Regulation NMS under the Act).
    \277\ See, e.g., Securities Exchange Act Release Nos. 58375
(August 18, 2008), 73 FR 49498, 49505 (August 21, 2008) (approval of
the BATS Exchange) and 61698 (March 12, 2010), 75 FR 13151, 13163
(March 28, 2010) (approval of the EDGA and EDGX exchanges).
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D. Discipline and Oversight of Members

    As noted above, one prerequisite for the Commission's grant of an
exchange's application for registration is that a proposed exchange
must be so organized and have the capacity to be able to carry out the
purposes of the Act.\278\ Specifically, an exchange must be able to
enforce compliance by its members and persons associated with its
members with federal securities laws and rules thereunder and the rules
of the exchange.\279\ As also noted above, pursuant to the Regulatory
Contract, FINRA will perform many of the initial disciplinary processes
on behalf of IEX.\280\ For example, FINRA will investigate potential
securities laws violations, issue complaints, and conduct hearings
pursuant to IEX rules. Appeals from disciplinary decisions will be
heard by the IEX Appeals Committee \281\ and the IEX Appeals
Committee's decision shall be final.\282\ In addition, the Exchange
Board may on its own initiative order review of a disciplinary
decision.\283\
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    \278\ See 15 U.S.C. 78f(b)(1).
    \279\ See id.
    \280\ See supra notes 120-121 and accompanying text. See also
IEX Rule 9.001 (noting that IEX and FINRA are parties to a
regulatory contract, pursuant to which FINRA will perform certain
functions).
    \281\ See IEX Rule 1.160(r).
    \282\ See IEX Rule 9.349(c) (providing, among other things, that
if the Exchange Board does not call the disciplinary proceeding for
review, the proposed written decision of the IEX Appeals Committee
shall become final).
    \283\ See IEX Rule Series 9.350.
---------------------------------------------------------------------------

    The IEX Amended and Restated Operating Agreement and IEX rules
provide that the Exchange has disciplinary jurisdiction over its
members so that it can enforce its members' compliance with its rules
and the federal securities laws and rules.\284\ The Exchange's rules
also permit it to sanction members for violations of its rules and
violations of the federal securities laws and rules by, among other
things, expelling or suspending members, limiting members' activities,
functions, or operations, fining or censuring members, or suspending or
barring a person from being associated with a member, or any other
fitting sanction.\285\ IEX's rules also provide for the imposition of
fines for certain minor rule violations in lieu of commencing
disciplinary proceedings.\286\

Accordingly, as a condition to the operation of IEX, a Minor Rule
Violation Plan (``MRVP'') filed by IEX under Act Rule 19d-1(c)(2) must
be declared effective by the Commission.\287\
---------------------------------------------------------------------------

    \284\ See generally IEX Amended and Restated Operating Agreement
Article X and IEX Rules Chapters 8 and 9.
    \285\ See IEX Rule 2.120. See also BATS Rule 2.2 (containing a
nearly identical provision).
    \286\ See IEX Rule 9.216(b).
    \287\ 17 CFR 240.19d-1(c)(2).
---------------------------------------------------------------------------

    The Commission received one comment on this topic, from a commenter
that encouraged IEX to adopt a rule similar to BATS Rule 8.17
(Expedited Client Suspension Proceeding) concerning expedited
suspension proceedings with respect to alleged violations of IEX's
disruptive quoting and trading rule.\288\ IEX proposed a substantively
similar rule in amendment Nos. 2 and 3.\289\ The Commission finds that
IEX's Amended and Restated Operating Agreement and rules concerning its
disciplinary and oversight programs are consistent with the
requirements of Sections 6(b)(6) and 6(b)(7) \290\ of the Act in that
they provide fair procedures for the disciplining of members and
persons associated with members. The Commission further finds that the
rules of IEX provide it with the ability to comply, and with the
ability to enforce compliance by its members and persons associated
with its members, with the provisions of the Act, the rules and
regulations thereunder, and the rules of IEX.\291\
---------------------------------------------------------------------------

    \288\ See Instinet Letter at 2.
    \289\ See IEX Rule 9.217.
    \290\ 15 U.S.C. 78f(b)(6) and (b)(7).
    \291\ See Section 6(b)(1) of the Act, 15 U.S.C. 78f(b)(1).

E. Listing and Trading on the IEX Exchange \292\
---------------------------------------------------------------------------

    \292\ The Commission did not receive any comments addressing the
substance of the listing requirements.
---------------------------------------------------------------------------

1. Registration Under Section 12(b) of the Act
    Once IEX begins operations as a national securities exchange, a
security will be considered for listing on IEX only if such security is
registered pursuant to Section 12(b) of the Act \293\ or such security
is subject to an exemption.\294\ An issuer may register a security
pursuant to Section 12(b) by submitting to IEX a listing application
that provides certain required information.\295\ The IEX Exchange will
review the listing application and, if the listing application is
approved, will certify to the Commission that it has approved the
security for listing and registration.\296\ Registration of the
security will become effective thirty days after the receipt of such
certification by the Commission or within a shorter period of time as
the Commission may determine.\297\ Once registration is effective the
security is eligible for listing on IEX.\298\
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    \293\ 15 U.S.C. 78l(b).
    \294\ 15 U.S.C. 78l(c); IEX Rules 14.202 and 14.203.
    \295\ 15 U.S.C. 78l(b); IEX Rule 14.202. Prior to submitting a
listing application to IEX, the issuer would be required to
participate in a free confidential pre-application eligibility
review, in which the IEX Exchange will determine whether the issuer
meets its listing criteria and is eligible to submit a listing
application. See IEX Rule 14.201.
    \296\ See IEX Rule 14.203(f); 15 U.S.C. 78l(d).
    \297\ 15 U.S.C. 78l(d).
    \298\ See IEX Rule 14.203(f); 15 U.S.C. 78l(d).
---------------------------------------------------------------------------

2. Initial and Continuing Listing Standards
    The Commission notes that IEX's proposed initial and continuing
listing standards for securities to be listed and traded on the IEX
Exchange are virtually identical to the current rules for the Nasdaq
Global Select Market of The NASDAQ Stock Market.\299\ The Commission
has previously determined that the initial and continuing listing
standards of Nasdaq are consistent with the Act.\300\ The Commission
believes that IEX's proposed initial and continuing listing standards
are consistent with the requirements of the Act. With respect to the
standards relating to the listing and delisting of companies, including
procedures and prerequisites for initial and continued listing on IEX,
obligations of security issuers listed on IEX, as well as rules
describing the application and qualification process,\301\ IEX's
proposed listing rules for securities are virtually identical to those
of Nasdaq. With respect to IEX Rule 14.201, which is substantially
similar to the analogous rule of NYSE,\302\ IEX requires a company
seeking the initial listing of one or more classes of securities on IEX
to participate in a free confidential pre-application eligibility
review to determine whether the company meets the IEX Exchange's
listing criteria and, if, upon completion of this review, IEX
determines that a company is eligible for listing, IEX will notify that
company in writing that it has been cleared to submit an original
listing application. The Commission notes that, if, upon completion of
this review, the Exchange determines that a company is ineligible for
listing, the company may request a review of IEX's determination
pursuant to the process set forth in IEX Rule 9.555. In addition, with
respect to the standards relating to other securities, including
securities of exchange-traded funds and other exchange-traded
derivative securities products, the Commission notes that IEX's
proposed listing rules are virtually identical to those of Nasdaq.\303\
---------------------------------------------------------------------------

    \299\ See Nasdaq Rule 5000 series; IEX Rule Chapters 14 and 16.
In addition, IEX proposed a Confidential Pre-Application Review of
Eligibility for its proposed listing standards, which is based on
the equivalent rule of the New York Stock Exchange. See IEX Rule
14.201; see also NYSE Listed Company Manual Sections 101 and 104
(providing for a free confidential review of the eligibility for
listing of any company that requests such a review and provides the
necessary documents).
    \300\ See Securities Exchange Act Release No. 53128 (January 13,
2006), 71 FR 3550 (January 23, 2006) (File No. 10-131) (approving
the application of Nasdaq to become a registered national securities
exchange). See also Securities Exchange Act Release No. 66648 (March
23, 2012), 77 FR 19428 (March 30, 2012) (SR-NASDAQ-2012-013)
(approving the adoption of listing rules relating to certain
derivative securities products).
    \301\ See IEX Rules Chapter 14. IEX Rule 14.201 is the same as
the NYSE rule, both of which relate to the confidential pre-
application review for eligibility for companies seeking to list on
the Exchange. See IEX Rule 14.201; see also NYSE Listed Company
Manual Sections 101 and 104. The Commission notes that, except for
IEX Rule 14.201 (which is substantively similar to the rule of
NYSE), all other requirements relating to the listing of companies
are virtually identical to those of Nasdaq. See Nasdaq Rule 5000
series
    \302\ See supra note 301 (referencing IEX Rule 14.201 and NYSE
Listed Company Manual Sections 101 and 104).
    \303\ See IEX Rules Chapter 16. See also the Nasdaq Rule 5000
series.
---------------------------------------------------------------------------

3. Corporate Governance Standards
    The Commission notes that IEX's proposed corporate governance
standards in connection with securities to be listed and traded on the
IEX Exchange are virtually identical to the current rules of Nasdaq and
the NYSE.\304\ The Commission has previously determined that the
corporate governance standards for listed issuers of Nasdaq and NYSE
are consistent with the Act.\305\ The Commission finds that IEX's
proposed corporate governance listing standards for listed issuers
contained in IEX's proposed rules are consistent with Section 6(b)(5)
of the Act and satisfy the requirements of Section 10A(m) of the

Act and Rule 10A-3 thereunder.\306\ The Commission believes that IEX's
corporate governance standards for listed issuers are designed to
promote independent and objective review and oversight of the
accounting and auditing practices of listed issuers and to enhance
audit committee independence, authority, and responsibility by
implementing the standards set forth in Rule 10A-3.
---------------------------------------------------------------------------

    \304\ See Nasdaq Rule 5600 et seq.; NYSE Listed Company Manual
Section 303A.07(c) (requiring listed companies to maintain an
internal audit function to provide management and the audit
committee with ongoing assessments of the listed company's risk
management processes and system of internal control). See also IEX
Rule 14.414.
    \305\ See Securities Exchange Act Release No. 53128 (January 13,
2006), 71 FR 3550 (January 23, 2006) (File No. 10-131) (approving
the application of Nasdaq to become a registered national securities
exchange). The Commission notes that IEX proposed to adopt NYSE's
requirement for listed issuers to have an internal audit function.
See supra note 304 (referencing NYSE Listed Company Manual Section
303A.07(c) and IEX Rule 14.414). See also Securities Exchange Act
Release No. 48745 (November 4, 2003), 68 FR 64154 (November 12,
2003) (SR-NYSE-2002-33, SR-NASD-2002-77, SR-NASD-2002-80, SR-NASD-
2002-138, SR-NASD-2002-139, and SR-NASD-2002-141) (order approving
rules relating to corporate governance of listed companies,
including rules relating to the internal audit function).
    \306\ See 15 U.S.C. 78f(b)(5); 15 U.S.C. 78j-1(m); 17 CFR
240.10A-3.
---------------------------------------------------------------------------

    While IEX does not intend to list securities upon becoming an
exchange, it has expressed an intent to do so in the future.\307\ The
Commission believes that the listings program is an important
regulatory function of an exchange, and prior to becoming a primary
listing market, the Commission expects IEX to ensure its effective
compliance with, and enforcement of, its listing standards on an
initial and continued basis.\308\
---------------------------------------------------------------------------

    \307\ See Exhibit N to IEX's Form 1. Upon commencing operations
as an exchange, IEX intends to initially trade only securities that
have been admitted pursuant to unlisted trading privileges. See
Exhibit H to IEX's Form 1.
    \308\ See 15 U.S.C. 78s(g)(1).
---------------------------------------------------------------------------

4. Trading Pursuant to Unlisted Trading Privileges
    As an exchange, IEX will be permitted by Section 12(f) of the Act
\309\ to extend unlisted trading privileges to securities listed and
registered on other national securities exchanges, subject to
Commission rules. In particular, Rule 12f-5 under the Act requires an
exchange that extends unlisted trading privileges to securities to have
in effect a rule or rules providing for transactions in the class or
type of security to which the exchange extends unlisted trading
privileges.\310\ The Commission notes that IEX's proposed rules allow
it to extend unlisted trading privileges to any security that is an NMS
Stock (as defined in Rule 600 of Regulation NMS under the Act) that is
listed on another national securities exchange.\311\ Accordingly,
consistent with Rule 12f-5, IEX's proposed rules provide for
transactions in the class or type of security to which the exchange
intends to extend unlisted trading privileges.\312\ The Commission
finds that IEX's proposed rules governing trading pursuant to unlisted
trading privileges are therefore consistent with the Act.
---------------------------------------------------------------------------

    \309\ 15 U.S.C. 78l.
    \310\ See 17 CFR 240.12f-5. See also Securities Exchange Act
Release No. 35737 (April 21, 1995), 60 FR 20891 (April 28, 1995)
(File No. S7-4-95) (adopting Rule 12f-5 under the Act).
    \311\ See IEX Rules 11.120 and 16.160. Any such security will be
subject to all IEX trading rules applicable to NMS Stocks, unless
otherwise noted, including provisions of IEX Rule 11.280 and
Chapters 14 and 16 of the IEX Rules. See IEX Rule 16.160.
    \312\ IEX's rules currently do not provide for the trading of
options, security futures, or other similar instruments.
---------------------------------------------------------------------------

F. Section 11(a) of the Act

    Section 11(a)(1) of the Act \313\ prohibits a member of a national
securities exchange from effecting transactions on that exchange for
its own account, the account of an associated person, or an account
over which it or its associated person exercises investment discretion
(collectively, ``covered accounts'') unless an exception applies. Rule
11a2-2(T) under the Act,\314\ known as the ``effect versus execute''
rule, provides exchange members with an exemption from the Section
11(a)(1) prohibition. Rule 11a2-2(T) permits an exchange member,
subject to certain conditions, to effect transactions for covered
accounts by arranging for an unaffiliated member to execute
transactions on the exchange. To comply with Rule 11a2-2(T)'s
conditions, a member: (i) Must transmit the order from off the exchange
floor; (ii) may not participate in the execution of the transaction
once it has been transmitted to the member performing the execution;
\315\ (iii) may not be affiliated with the executing member; and (iv)
with respect to an account over which the member or an associated
person has investment discretion, neither the member nor its associated
person may retain any compensation in connection with effecting the
transaction except as provided in the Rule.
---------------------------------------------------------------------------

    \313\ 15 U.S.C. 78k(a)(1).
    \314\ 17 CFR 240.11a2-2(T).
    \315\ This prohibition also applies to associated persons. The
member may, however, participate in clearing and settling the
transaction.
---------------------------------------------------------------------------

    In a letter to the Commission, IEX requested that the Commission
concur with IEX's conclusion that IEX members that enter orders into
the IEX trading system satisfy the requirements of Rule 11a2-2(T).\316\
For the reasons set forth below, the Commission believes that IEX
members entering orders into the IEX trading system would satisfy the
requirements of Rule 11a2-2(T).
---------------------------------------------------------------------------

    \316\ See Letter from Sophia Lee, General Counsel, IEX, to Brent
Fields, Secretary, Commission, dated June 10, 2016 (``IEX 11(a)
Letter'').
---------------------------------------------------------------------------

    The Rule's first requirement is that orders for covered accounts be
transmitted from off the exchange floor. In the context of automated
trading systems, the Commission has found that the off-floor
transmission requirement is met if a covered account order is
transmitted from a remote location directly to an exchange's floor by
electronic means.\317\ IEX has represented that the IEX Exchange does
not have a physical trading floor, and the IEX trading system will
receive orders from members electronically through remote terminals or
computer-to-computer interfaces.\318\ The Commission believes that the
IEX trading system satisfies this off-floor transmission requirement.
---------------------------------------------------------------------------

    \317\ See, e.g., Securities Exchange Act Release Nos. 61419
(January 26, 2010), 75 FR 5157 (February 1, 2010) (SR-BATS-2009-031)
(approving BATS options trading); 59154 (December 23, 2008), 73 FR
80468 (December 31, 2008) (SR-BSE-2008-48) (approving equity
securities listing and trading on BSE); 57478 (March 12, 2008), 73
FR 14521 (March 18, 2008) (SR-NASDAQ-2007-004 and SR-NASDAQ-2007-
080) (approving NOM options trading); 53128 (January 13, 2006), 71
FR 3550 (January 23, 2006) (File No. 10-131) (approving The Nasdaq
Stock Market LLC); 44983 (October 25, 2001), 66 FR 55225 (November
1, 2001) (SR-PCX-00-25) (approving Archipelago Exchange); 29237 (May
24, 1991), 56 FR 24853 (May 31, 1991) (SR-NYSE-90-52 and SR-NYSE-90-
53) (approving NYSE's Off-Hours Trading Facility); and 15533
(January 29, 1979), 44 FR 6084 (January 31, 1979) (``1979
Release'').
    \318\ See IEX 11(a) Letter, supra note 316.
---------------------------------------------------------------------------

    Second, the Rule requires that the member and any associated person
not participate in the execution of its order after the order has been
transmitted. IEX represented that at no time following the submission
of an order is a member or an associated person of the member able to
acquire control or influence over the result or timing of the order's
execution.\319\ According to IEX, the execution of a member's order is
determined solely by what quotes and orders are present in the system
at the time the member submits the order, and the order priority based
on the IEX rules.\320\ Accordingly, the Commission believes that an IEX
member and its associated persons do not participate in

the execution of an order submitted to the IEX trading system.\321\
---------------------------------------------------------------------------

    \319\ See IEX 11(a) Letter, supra note 316. IEX notes that a
member may cancel or modify the order, or modify the instructions
for executing the order, after the order has been transmitted,
provided that such cancellations or modifications are transmitted
from off an exchange floor. The Commission has stated that the non-
participation requirement is satisfied under such circumstances so
long as such modifications or cancellations are also transmitted
from off the floor. See Securities Exchange Act Release No. 14563
(March 14, 1978), 43 FR 11542 (March 17, 1978) (``1978 Release'')
(stating that the ``non-participation requirement does not prevent
initiating members from canceling or modifying orders (or the
instructions pursuant to which the initiating member wishes orders
to be executed) after the orders have been transmitted to the
executing member, provided that any such instructions are also
transmitted from off the floor'').
    \320\ See IEX 11(a) Letter, supra note 316. The Commission notes
that IEX has proposed rules for the registration, obligations, and
operation of market makers on the IEX Exchange. IEX has represented
that market makers, if any, would submit quotes in the form of
orders in their assigned symbols.
    \321\ See, e.g., Securities Exchange Act Release Nos. 58375
(August 18, 2008), 73 FR 49498, 49505 (August 21, 2008) (approval of
the BATS Exchange) and 61698 (March 12, 2010), 75 FR 13151, 13164
(March 28, 2010) (approval of the EDGA and EDGX exchanges).
---------------------------------------------------------------------------

    Third, Rule 11a2-2(T) requires that the order be executed by an
exchange member who is unaffiliated with the member initiating the
order. The Commission has stated that this requirement is satisfied
when automated exchange facilities, such as the IEX trading system, are
used, as long as the design of these systems ensures that members do
not possess any special or unique trading advantages in handling their
orders after transmitting them to the exchange.\322\ IEX has
represented that the design of the IEX trading system ensures that no
member has any special or unique trading advantage in the handling of
its orders after transmitting its orders to IEX.\323\ Based on IEX's
representation, the Commission believes that the IEX trading system
satisfies this requirement.
---------------------------------------------------------------------------

    \322\ See, e.g., Securities Exchange Act Release Nos. 58375
(August 18, 2008), 73 FR 49498, 49505 (August 21, 2008) (approval of
the BATS Exchange) and 61698 (March 12, 2010), 75 FR 13151, 13164
(March 28, 2010) (approval of the EDGA and EDGX exchanges). In
considering the operation of automated execution systems operated by
an exchange, the Commission noted that, while there is not an
independent executing exchange member, the execution of an order is
automatic once it has been transmitted into the system. Because the
design of these systems ensures that members do not possess any
special or unique trading advantages in handling their orders after
transmitting them to the exchange, the Commission has stated that
executions obtained through these systems satisfy the independent
execution requirement of Rule 11a2-2(T). See 1979 Release, supra
note 317.
    \323\ See IEX 11(a) Letter, supra note 316.
---------------------------------------------------------------------------

    Fourth, in the case of a transaction effected for an account with
respect to which the initiating member or an associated person thereof
exercises investment discretion, neither the initiating member nor any
associated person thereof may retain any compensation in connection
with effecting the transaction, unless the person authorized to
transact business for the account has expressly provided otherwise by
written contract referring to Section 11(a) of the Act and Rule 11a2-
2(T) thereunder.\324\ IEX members trading for covered accounts over
which they exercise investment discretion must comply with this
condition in order to rely on the rule's exemption.\325\
---------------------------------------------------------------------------

    \324\ See, e.g., Securities Exchange Act Release Nos. 58375
(August 18, 2008), 73 FR 49498, 49505 (August 21, 2008) (approval of
the BATS Exchange) and 61698 (March 12, 2010), 75 FR 13151, 13164
(March 28, 2010) (approval of the EDGA and EDGX exchanges). In
addition, Rule 11a2-2(T)(d) requires a member or associated person
authorized by written contract to retain compensation, in connection
with effecting transactions for covered accounts over which such
member or associated persons thereof exercises investment
discretion, to furnish at least annually to the person authorized to
transact business for the account a statement setting forth the
total amount of compensation retained by the member or any
associated person thereof in connection with effecting transactions
for the account during the period covered by the statement. See 17
CFR 240.11a2-2(T)(d). See also 1978 Release, supra note 319 (stating
``[t]he contractual and disclosure requirements are designed to
assure that accounts electing to permit transaction-related
compensation do so only after deciding that such arrangements are
suitable to their interests'').
    \325\ IEX represented that it will advise its membership through
the issuance of an Information Circular that those members trading
for covered accounts over which they exercise investment discretion
must comply with this condition in order to rely on the rule's
exemption. See IEX 11(a) Letter, supra note 316.
---------------------------------------------------------------------------

IV. Exemption From Section 19(b) of the Act With Regard to FINRA Rules
Incorporated by Reference

    IEX Exchange proposes to incorporate by reference certain FINRA
rules as IEX rules. Thus, for certain IEX rules, Exchange members will
comply with an IEX rule by complying with the FINRA rule
referenced.\326\ In connection with its proposal to incorporate FINRA
rules by reference, IEX Exchange requested, pursuant to Rule 240.0-
12,\327\ an exemption under Section 36 of the Act from the rule filing
requirements of Section 19(b) of the Act for changes to those IEX
Exchange rules that are effected solely by virtue of a change to a
cross-referenced FINRA rule.\328\ IEX Exchange proposes to incorporate
by reference categories of rules (rather than individual rules within a
category) that are not trading rules. IEX Exchange agrees to provide
written notice to its members whenever a proposed rule change to a
FINRA rule that is incorporated by reference is proposed and whenever
any such proposed change is approved by the Commission or otherwise
becomes effective.\329\
---------------------------------------------------------------------------

    \326\ IEX Exchange proposes to incorporate by reference the
12000 and 13000 Series of the FINRA Manual (Code of Arbitration
Procedures for Customer Disputes and Code of Arbitration Procedures
for Industry Disputes). See IEX Exchange Rule 12.110 (Arbitration).
In addition, IEX Exchange proposes to incorporate by reference FINRA
Rules 4360 (Fidelity Bonds), 2090 (Know Your Customer), 2111
(Suitability), 2210 (Communications with the Public), 3230
(Telemarketing), 4110 (Capital Requirements), 4120 (Regulatory
Notification and Business Curtailment), 4140 (Audit), 4511 (General
Requirements), 4512 (Customer Account Information), 4513 (Records of
Written Customer Complaints), 3130 (Annual Certification of
Compliance and Supervisory Procedures), 5270 (Front Running of Block
Transactions), 7430 (Synchronization of Member Business Clocks),
7440 (Recording of Order Information), and 7450 (Order Data
Transmission Requirements) and NASD Rule 3050 (Transactions for or
by Associated Persons). See IEX Exchange Rules 2.240 (Fidelity
Bonds), 3.150 (Know Your Customer), 3.170 (Suitability), 3.280
(Communications with Customers and the Public), 3.292
(Telemarketing), 4.110 (Financial Condition), 4.120 (Regulatory
Notification and Business Curtailment), 4.140 (Audit), 4.511
(General Requirements), 4.512 (Customer Account Information), 4.513
(Record of Written Customer Complaints), 5.130 (Annual Certification
of Compliance and Supervisory Procedures), 10.260 (Front Running of
Block Transactions), 11.420(c), (d) and (e) (Order Audit Trail
System Requirements), and 5.170 (Transactions for or by Associated
Persons), respectively.
    \327\ See 17 CFR 240.0-12.
    \328\ See Letter from Sophia Lee, General Counsel, IEX, to Brent
Fields, Secretary, Commission, dated June 13, 2016.
    \329\ IEX Exchange will provide such notice through a posting on
the same Web site location where IEX Exchange posts its own rule
filings pursuant to Rule 19b-4 under the Act, within the required
time frame. The Web site posting will include a link to the location
on the FINRA Web site where FINRA's proposed rule change is posted.
See id.
---------------------------------------------------------------------------

    Using its authority under Section 36 of the Act,\330\ the
Commission previously exempted certain SROs from the requirement to
file proposed rule changes under Section 19(b) of the Act.\331\ The
Commission is hereby granting IEX Exchange's request for exemption,
pursuant to Section 36 of the Act, from the rule filing requirements of
Section 19(b) of the Act with respect to the rules that IEX Exchange
proposes to incorporate by reference. This exemption is conditioned
upon IEX Exchange providing written notice to its members whenever
FINRA proposes to change a rule that IEX Exchange has incorporated by
reference. The Commission believes that this exemption is appropriate
in the public interest and consistent with the protection of investors
because it will promote more efficient use of Commission and SRO
resources by avoiding duplicative rule filings based on simultaneous
changes to identical rules sought by more than one SRO.
---------------------------------------------------------------------------

    \330\ 15 U.S.C. 78mm.
    \331\ See, e.g., BATS Y Exchange Order and MIAX Exchange Order,
supra note 30; BATS Exchange Order and DirectEdge Exchanges Order,
supra note 74.
---------------------------------------------------------------------------

V. Conclusion

    It is ordered that the application of IEX Exchange for registration
as a national securities exchange be, and it hereby is, granted.
    It is furthered ordered that operation of IEX Exchange is
conditioned on the satisfaction of the requirements below:
    A. Participation in National Market System Plans. IEX Exchange must
join the CTA Plan, the CQ Plan, the Nasdaq UTP Plan, the Order
Execution Quality Disclosure Plan, the Plan to Address Extraordinary
Market Volatility, the Plan to Implement a Tick Size Pilot

Program, and the Plan Governing the Process of Selecting a Plan
Processor and Developing a Plan for the Consolidated Audit Trail.
    B. Intermarket Surveillance Group. IEX Exchange must join the
Intermarket Surveillance Group.
    C. Minor Rule Violation Plan. A MRVP filed by IEX Exchange under
Rule 19d-1(c)(2) must be declared effective by the Commission.\332\
---------------------------------------------------------------------------

    \332\ 17 CFR 240.19d-1(c)(2).
---------------------------------------------------------------------------

    D. 17d-2 Agreement. An agreement pursuant to Rule 17d-2 \333\
between FINRA and IEX Exchange that allocates to FINRA regulatory
responsibility for those matters specified above \334\ must be approved
by the Commission, or IEX Exchange must demonstrate that it
independently has the ability to fulfill all of its regulatory
obligations.
---------------------------------------------------------------------------

    \333\ 17 CFR 240.17d-2.
    \334\ See supra notes 134-135 and accompanying text.
---------------------------------------------------------------------------

    E. Participation in Multiparty Rule 17d-2 Plans. IEX Exchange must
become a party to the multiparty Rule 17d-2 agreement concerning the
surveillance, investigation, and enforcement of common insider trading
rules.
    F. RSA. IEX Exchange and FINRA must finalize the provisions in the
RSA, as described above, that will specify the IEX Exchange and
Commission rules for which FINRA will provide certain regulatory
functions, or IEX Exchange must demonstrate that it independently has
the ability to fulfill all of its regulatory obligations.
    It is further ordered, pursuant to Section 36 of the Act,\335\ that
IEX Exchange shall be exempted from the rule filing requirements of
Section 19(b) of the Act with respect to the FINRA rules that IEX
proposes to incorporate by reference into IEX Exchange's rules, subject
to the conditions specified in this Order.
---------------------------------------------------------------------------

    \335\ 15 U.S.C. 78mm.

    By the Commission (Chair WHITE and Commissioner STEIN;
Commissioner PIWOWAR concurring in part and dissenting with respect
to Sections III.C.7 and III.C.8).
Robert W. Errett,
Deputy Secretary.

Exhibit A

    Comment Letters Received Regarding Investors' Exchange LLC's
Application for Registration as a National Securities Exchange under
Section 6 of the Securities Exchange Act of 1934 (File No. 10-222)

Abebe: Letter from Brook Abebe, Dec. 15, 2015.
Abel/Noser: Letter from Eugene Noser, Abel/Noser Corp., Dec. 17,
2015.
Abfall: Letter from Jeffrey D. Abfall, Dec. 10, 2015.
Addy: Letter from Steven Addy, Dec. 11, 2015.
Aesthetic Integration: Letter from Denis A. Ignatovich and Grant
Passmore, Co-Founders, Aesthetic Integration Ltd, Nov. 18, 2015.
Agne: Letter from Mike Agne, Dec. 10, 2015.
Ahlfeld: Letter from Ryan Ahlfeld, Dec. 14, 2015.
Akbar: Letter from Imran Akbar, Dec. 14, 2015.
Albert: Letter from Jean Albert, Dec. 15, 2015.
Angel: Letter from James J. Angel, Ph.D., Associate Professor,
McDonough School of Business, Georgetown University, Dec. 5, 2015.
Anonymous December 5: Letter from Anonymous, Dec. 5, 2015.
Anonymous December 14: Letter from Anonymous, Dec. 14, 2015.
Anonymous Second December 14: Letter from Anonymous, Dec. 14, 2015.
Anonymous March 14: Letter from Anonymous, Mar. 14, 2016.
Anonymous March 18: Letter from Anonymous, Mar. 18, 2016.
Anonymous June 16: Letter from Anonymous, June 16, 2016.
Arens: Letter from Richard Arens, Dec. 10, 2015.
Armand: Letter from Barry Armand, Dec. 13, 2015.
Arnold: Letter from Lonnie Arnold, Jr., Feb. 2, 2016.
Asset Owners/Investment Managers March 21: Letter from Kevin
McCreadie, President and CIO, AGF Investment Inc.; Steve Berexa,
Global CIO Equity, Allianz Global Investors; Bryan Thomson, Senior
Vice President, Public Equities, British Columbia Investment
Management; Faith Ward, Chief Responsible Investment and Risk
Officer, Environment Agency Pension Fund; Michelle de Cordova,
Director, Corporate Engagement Public Policy, ESG Services, NEI
Investments; Oyvind Schanke, CIO Asset Strategies, Norges Bank
Investment Management; and David H. Zellner, Chief Investment
Officer, Wespath Investment Management, Mar. 21, 2016.
Baggins: Letter from Roger Baggins, Feb. 2, 2016.
Baird: Letter from Ritchie Baird, Jan. 3, 2016.
Baker: Letter from Christopher Baker, Dec. 11, 2015.
Ballestrand: Letter from Bill Ballestrand, Dec. 14, 2015.
Bardini: Letter from Marguerite Bardini, Dec. 14, 2015.
Barry: Letter from Catherine Barry, Jan. 2, 2016.
Barth: Letter from Donald J. Barth, Mar. 4, 2016.
BATS First: Letter from Eric Swanson, EVP and General Counsel, BATS
Global Markets, Inc., Nov. 3, 2015.
BATS Second: Letter from Eric Swanson, EVP and General Counsel, BATS
Global Markets, Inc., Dec. 20, 2015.
BATS Third: Letter from Eric Swanson, EVP and General Counsel, BATS
Global Markets, Inc., Feb. 11, 2016.
Bautista: Letter from Barry Bautista, June 17, 2016.
Ben D.: Letter from Ben D., Mar. 20, 2016.
Benites: Letter from Roger Benites, Dec. 13, 2015.
Bensky: Letter from Jonathan Bensky, Mar. 3, 2016.
Berrizbeitia: Letter from Luis Berrizbeitia, Dec. 14, 2015.
Bilyea: Letter from Robert Bilyea, Dec. 17, 2015.
Bingham: Letter from George B. Bingham, Jan. 8, 2016.
Birch Bay: Letter from Michael Jacejko, Chief Executive Manager,
Birch Bay Capital, LLC, Nov. 6, 2015.
Black: Letter from Wade Black, Dec. 17, 2015.
Boatman: Letter from Peter L. Boatman, June 3, 2016.
Bodenstab: Letter from Jeffrey Bodenstab, Dec. 19, 2015.
Bogdan: Letter from Michael Bogdan, Dec. 15, 2015.
Bohr: Letter from Vincent Bohr, Dec. 11, 2015.
Boittiaux: Letter from Thomas Boittiaux, Apr. 22, 2016.
Borbridge: Letter from Harold Borbridge, Dec. 13, 2015.
Bova: Letter from Nicholas M. Bova, Dec. 14, 2015.
Bowcott: Letter from Mike Bowcott, Dec. 9, 2015.
Boyce: Letter from Edward J. Boyce, Dec. 14, 2015.
Brennan: Letter from Michael Brennan, Dec. 16, 2015.
Brenner: Letter from Daniel S. Brenner, Dec. 14, 2015.
Brian S.: Letter from Brian S., Dec. 10, 2015.
Broder: Letter from Michael K. Broder, Jan. 9, 2016.
Bruin: Letter from Eric Bruin, Dec. 16, 2015.
Buckingham: Letter from Mallory Buckingham, Dec. 15, 2015.
Budish: Letter from Eric Budish, Professor of Economics, University
of Chicago Booth School of Business, Feb. 5, 2016.
Burger: Letter from Ronald J. Burger, Dec. 19, 2015.
Burgess: Letter from Jack M. Burgess, Dec. 26, 2015.
Byrnes: Letter from Jannette Byrnes, Dec. 13, 2015.
CalSTRS: Letter from Anne Sheehan, Director of Corporate Governance,
California State Teachers' Retirement System, Mar. 10, 2016.
Campbell: Letter from Mike Campbell, Dec. 15, 2015.
Cantori: Letter from John Cantori, Dec. 11, 2015.
Capital Group: Letter from Timothy D. Armour, Chairman, The Capital
Group Companies, Sep. 29, 2015.
Carper: Letter from Carol Carper, Dec. 27, 2015.
Chen & Foley: Letter from Haoming Chen and Sean Foley, Ph.D., Feb.
24, 2016.
Chesler: Letter from Dan Chesler, Dec. 15, 2015.
Chilson: Letter from Cody J. Chilson, Dec. 10, 2015.
Chung and Jeon: Letter from Michael Chung and Jayoung Jeon, Apr. 10,
2016.
Chung: Letter from Charles Chung, Dec. 15, 2015.

Citadel First: Letter from John C. Nagel, Esq., Managing Director
and Sr. Deputy General Counsel, Citadel LLC, Nov. 6, 2015.
Citadel Second: Letter from John C. Nagel, Esq., Managing Director
and Sr. Deputy General Counsel, Citadel LLC, Nov. 30, 2015.
Citadel Third: Letter from John C. Nagel, Esq., Managing Director
and Sr. Deputy General Counsel, Citadel LLC, Dec. 7, 2015.
Citadel Fourth: Letter from John C. Nagel, Esq., Managing Director
and Sr. Deputy General Counsel, Citadel LLC, Feb. 23, 2016.
Citadel Fifth: Letter from John C. Nagel, Esq., Managing Director
and Sr. Deputy General Counsel, Citadel LLC, Apr. 14, 2016.
Clark B.: Letter from Bruce R. Clark, Ph.D., Dec. 22, 2015.
Clark J. First: Letter from James T. Clark, Jr., Dec. 11, 2015.
Clark J. Second: Letter from James T. Clark, Jr., Dec. 15, 2015.
Clark K.: Letter from Kyle Clark, Dec. 14, 2015.
Cobb: Letter from Jeffrey Cobb, Feb. 13, 2016.
Coe: Letter from Charles R. Coe, Dec. 10, 2015.
Colbert: Letter from Stephen Colbert, Dec. 10, 2015.
Cole: Letter from Rebecca A. Cole, Mar. 20, 2016.
Conklin: Letter from J.J. Conklin, Jan. 5, 2016.
Connolly: Letter from Francis A. Connolly, III, Feb. 2, 2016.
Cook: Letter from Aran Cook, Dec. 14, 2015.
Copelan: Letter from Julie Copelan, Feb. 22, 2016.
Cowen: Letter from Jeffrey M. Solomon, President, Daniel Charney,
Managing Director and Head of Equities, and John Cosenza, Managing
Director & Head of Electronic Trading, Cowen Group, Inc., Nov. 2,
2015.
Cox First: Letter from Steven M. Cox, Dec. 10, 2015.
Cox Second: Letter from Steven M. Cox, Feb. 2, 2016.
CPMG: Letter from John E. Bateman, Chief Operating Officer, CPMG,
Inc., Jan. 5, 2016.
Crespo: Letter from Pablo Crespo, Dec. 10, 2015.
Cull: Letter from Stephanie Cull, Mar. 31, 2016.
Curtin: Letter from Kim Ann Curtin, Jan. 15, 2016.
D.B.: Letter from D.B., Apr. 5, 2016.
Dall: Letter from Cindy Dall, May 11, 2016.
Daniels: Letter from Larry Daniels, Jan. 23, 2016.
Deccristifaro: Letter from Aj Deccristifaro, Feb. 21, 2016.
Delaney: Letter from Stephen W. Delaney, Jan. 1, 2016.
Demos: Letter from Mark Demos, Dec. 16, 2015.
DePoorter: Letter from Walter DePoorter, Dec. 14, 2015.
DeVito: Letter from David J. DeVito, Dec. 10, 2015.
Direct Match: Letter from Jim Greco, CEO, Direct Match, Feb. 24,
2016.
Discepola: Letter from Domenico Discepola, Dec. 11, 2015.
Dole: Letter from William Dole, Dec. 14, 2015.
Doran: Letter from Brendan Doran, Dec. 13, 2015.
Dover: Letter from Roland Dover, Jan. 31, 2016.
Doyle L.: Letter from Larry Doyle , Dec. 14, 2015.
Doyle T.: Letter from Thomas Doyle, Jan. 21, 2016.
Duffy: Letter from Representative Sean P. Duffy, Jan. 21, 2016.
Dukelow: Letter from James S. Dukelow, Jr., Dec. 18, 2015.
Dwork: Letter from Nicholas Dwork, Jan. 27, 2016.
Eric K.: Letter from Eric K., Feb. 16, 2016.
Estate: Letter from Carlos J. Estate, Feb. 28, 2016.
Eustace: Letter from Mark Eustace, Dec. 13, 2015.
Farallon Capital Management: Letter from Andrew J.M. Spokes,
Managing Partner, Farallon Capital Management, LLC, Mar. 2, 2016.
Feldscher: Letter from Stephen Feldscher, Mar. 22, 2016.
Ferber: Letter from William Ferber, May 7, 2016.
fi360: Letter from Blaine F. Aikin, Executive Chairman, J. Richard
Lynch, Director, and Duane R. Thompson, Senior Policy Analyst,
fi360, Inc., Jan. 5, 2016.
FIA First: Letter from Mary Ann Burns, Chief Operating Officer, FIA
Principal Traders Group, Nov. 6, 2015.
FIA Second: Letter from Mary Ann Burns, Chief Operating Officer, FIA
Principal Traders Group, Mar. 3, 2016.
Fields: Letter from Byron Fields, Jan. 13, 2016.
Filabi: Letter from Azish Filabi, Feb. 3, 2016.
Finley: Letter from Ted Finley, Dec. 14, 2015.
Franklin Templeton Investments: Letter from Madison S. Gulley, EVP,
Head of Investment Management Strategic Services, William J.
Stephenson IV, SVP, Global Head of Trading, David A. Lewis, SVP,
Head of Americas Trading, Benjamin Batory, SVP, Head of U.S.
Trading, and Craig S. Tyle, EVP, General Counsel, Franklin Templeton
Investments, Feb. 12, 2016.
Franz: Letter from John P. Franz, Feb. 25, 2016.
Froehlich: Letter from Paul Froehlich, Dec. 10, 2015.
Gai: Letter from Robert Gai, Feb. 24, 2016.
Gannon: Letter from James Gannon, Dec. 10, 2015.
Geduld: Letter from E.E. Geduld, Dec. 18, 2015.
Gibbons P.: Letter from Peter Gibbons, Dec. 10, 2015.
Gibbons T.: Letter from Toni Gibbons, Dec. 14, 2015.
Gibson Dunn: Letter from Amir C. Tayrani, Gibson, Dunn & Crutcher
LLP, May 19, 2016.
Giguere: Letter from John Giguere, Dec. 14, 2015.
Gilliland and Goodlander: Letter from Jason Gilliland and Maggie
Goodlander, Apr. 14, 2016.
Givehchi: Letter from Mehran Givehchi, Dec. 14, 2015.
Glatt: Letter from Alex Glatt, Dec. 14, 2015.
Glennon: Letter from Allan Glennon, Dec. 10, 2015.
Gloy First: Letter from Alexander Gloy, Dec. 10, 2015.
Gloy Second: Letter from Alexander Gloy, Dec. 15, 2015.
Godden: Letter from Daniel Godden, May 31, 2016.
Godonis: Letter from Anthony Godonis, Jan. 28, 2016.
Gold: Letter from James J. Gold, Jan. 9, 2016.
Goldman Sachs: Letter from Paul M. Russo, Managing Director,
Equities, Goldman, Sachs & Co., Jan. 12, 2016.
Gordon: Letter from Doug Gordon, Dec. 13, 2015.
Goswami: Letter from Binoo Goswami, Jan. 24, 2016.
Gough: Letter from William S. Gough, Jan. 22, 2016.
Grant: Letter from John Grant, Dec. 13, 2015.
Green: Letter from Jordan Green, Feb. 9, 2016.
Grey: Letter from Richard M. Grey, Feb. 23, 2016.
Guertin: Letter from Robert Guertin, Dec. 11, 2015.
Hall: Letter from Lori Hall, Dec. 13, 2015.
Hamadyk: Letter from Zach Hamadyk, Dec. 19, 2015.
Hamlin: Letter from David Hamlin, Dec. 19, 2015.
Hammermill: Letter from Winston Hammermill, Jan. 22, 2016.
Hammond: Letter from Shaun Hammond, Feb. 21, 2016.
Hand: Letter from David A. Hand, Jan. 27, 2016.
Harbort: Letter from Timothy S. Harbort, Dec. 11, 2015.
Harrison: Letter from Daniel Harrison, Dec. 19, 2015.
Hartley: Letter from Kirk T. Hartley, Dec. 13, 2015.
Hasan: Letter from Nidal Hasan, Dec. 17, 2015.
Hawley: Letter from James Hawley, Dec. 14, 2015.
Haydel: Letter from Christopher J. Haydel, Dec. 11, 2015.
Healthy Markets: Letter from David Lauer, Chairman, Healthy Markets
Association, Nov. 6, 2015.
Hedgepath: Letter from Brandon D. Hedgepath, Dec. 11, 2015.
Henderson First: Letter from Hazel Henderson, President and Founder,
Ethical Markets Media, Jan. 5, 2016.
Henderson Second: Letter from Hazel Henderson, President and
Founder, Ethical Markets Media, Jan. 5, 2016.
Henderson Third: Letter from Hazel Henderson, President and Founder,
Ethical Markets Media, Jan. 5, 2016.
Henry: Letter from Patrick Henry, Dec. 19, 2015.
Hibernia: Letter from Emma Hibernia, Dec. 23, 2015.
Hiester: Letter from Christopher Hiester, Dec. 14, 2015.
Holden First: Letter from C.M. Holden, Dec. 13, 2015.
Holden Second: Letter from C.M. Holden, Dec. 14, 2015.
Hollinger: Letter from Nancy Hollinger, Feb. 8, 2016.
Hooper: Letter from Donald C. Hooper, Feb. 22, 2016.

Hovanec First: Letter from Ron Hovanec, Dec. 10, 2015.
Hovanec Second: Letter from Ron Hovanec, Dec. 14, 2015.
Hovanec Third: Letter from Ron Hovanec, Feb. 1, 2016.
Hovanec Fourth: Letter from Ron Hovanec, Feb. 2, 2016.
Hovanec Fifth: Letter from Ron Hovanec, Feb. 25, 2016.
Hovanec Sixth: Letter from Ron Hovanec, Feb. 26, 2016.
Hovanec Seventh: Letter from Ron Hovanec, Mar. 9, 2016.
Howarth: Letter from Charles Howarth, Dec. 10, 2015.
Hudson River Trading First: Letter from Adam Nunes, Head of Business
Development, Hudson River Trading LLC, Dec. 4, 2015.
Hudson River Trading Second: Letter from Adam Nunes, Head of
Business Development, Hudson River Trading LLC, Jan. 7, 2016.
Huff: Letter from TE Huff, Dec. 15, 2015.
Hunsacker: Letter from Derick Hunsacker, Dec. 11, 2015.
Ianni: Letter from Mike Ianni, Dec. 10, 2015.
Ierardo First: Letter from Mark Ierardo, Dec. 11, 2015.
Ierardo Second: Letter from Mark Ierardo, Dec. 16, 2015.
Instinet: Letter from John Comerford, Executive Managing Director,
Global Head of Trading Research, Instinet Holdings Incorporated,
Mar. 2, 2016.
Israel: Letter from Representative Steve Israel, June 16, 2016.
Iyer First: Letter from Sree Iyer, Dec. 14, 2015.
Iyer Second: Letter from Sree Iyer, Dec. 20, 2015.
Jacobson: Letter from Cameron Jacobson, Dec. 10, 2015.
James G.: Letter from James G., Dec. 15, 2015.
Janson: Letter from Susan C. Janson, Feb. 4, 2016.
Jefferies: Letter from Jefferies LLC, Jan. 14, 2016.
Jicmon: Letter from Laurentiu I. Jicmon, Ph.D., Dec. 10, 2015.
John J.: Letter from Jacob John, Mar. 17, 2016.
John M.: Letter from Mike John, Dec. 10, 2015.
John P.: Letter from Pramod John, Ph.D., Jan. 29, 2016.
Johnson: Letter from Robert S. Johnson, May 27, 2016.
Jon D.: Letter from Jon D., Dec. 23, 2015.
Jones C.: Letter from Charles M. Jones, Robert W. Lear Professor of
Finance and Economics, Columbia Business School, Mar. 2, 2016.
Jones S.: Letter from Sam F. Jones, Dec. 15, 2015.
Joshi: Letter from Kishore A. Joshi, Feb. 5, 2016.
Julos: Letter from Jena A. Julos, Dec. 16, 2015.
Jurgens: Letter from Daniel T. Jurgens, Dec. 10, 2015.
Kaeuper: Letter from Steve Kaeuper, Dec. 19, 2015.
Kara: Letter from Faizal Kara, Dec. 14, 2015.
Katz: Letter from Sondra Katz, Dec. 17, 2015.
Kaye: Letter from Greg Kaye, Dec. 15, 2015.
Kearney: Letter from Michael Kearney, Dec. 14, 2015.
Keblish First: Letter from Peter Keblish, Dec. 9, 2015.
Keblish Second: Letter from Peter Keblish, Dec. 10, 2015.
Keenan: Letter from Chris Keenan, Dec. 18, 2015.
Kelly: Letter from John A. Kelly, Dec. 14, 2015.
Kendall: Letter from Jack R. Kendall, Feb. 4, 2016.
Kennedy First: Letter from Matthew Kennedy, Dec. 10, 2015.
Kennedy Second: Letter from Matthew Kennedy, Dec. 16, 2015.
Kenyon: Letter from Andrew Kenyon, Dec. 14, 2015.
Kiely: Letter from Philip Kiely, Mar. 17, 2016.
Kiessling: Letter from David Kiessling, Dec. 14, 2015.
Kim: Letter from Seong-Han Kim, Ph.D., Dec. 16, 2015.
King First: Letter from Toby King, Dec. 10, 2015.
King Second: Letter from Toby King, Dec. 13, 2015.
King Third: Letter from Toby King, Dec. 31, 2015.
AK Financial Engineering Consultants First: Letter from Abraham
Kohen, President, AK Financial Engineering Consultants LLC, Mar. 11,
2016.
AK Financial Engineering Consultants Second: Letter from Abraham
Kohen, President, AK Financial Engineering Consultants LLC, Apr. 25,
2016.
Lafayette: Letter from Marcus Lafayette, Dec. 28, 2015.
Lancastle: Letter from Neil M. Lancastle, Senior Lecturer,
Accounting and Finance, De Montfort University, Dec. 21, 2015.
Landis Kenesaw: Letter from Kenesaw Landis, Feb. 9, 2016.
Landis Kenneth: Letter from Kenneth Landis, Jan. 1, 2016.
Lantry: Letter from Jackie Lantry, Dec. 14, 2015.
Larson: Letter from Brian C. Larson, Dec. 22, 2015.
Laub: Letter from Craig B. Laub, Dec. 18, 2015.
Lazarus: Letter from Steve Lazarus, Dec. 14, 2015.
Lee F.: Letter from Francis Lee, Jan. 8, 2016.
Lee S.: Letter from Sang Lee, Dec. 10, 2015.
Leeson: Letter from Brock Leeson, Jan. 15, 2016.
Leff: Letter from Bruce Leff, Dec. 26, 2015.
Leino: Letter from Scott Leino, Dec. 29, 2015.
Leuchtkafer First: Letter from R.T. Leuchtkafer, Nov. 20, 2015.
Leuchtkafer Second: Letter from R.T. Leuchtkafer, Feb. 19, 2016.
Levi: Letter from J.D. Levi, Dec. 11, 2015.
Levy: Letter from Steven A. Levy, Dec. 14, 2015.
Lewis: Letter from Michael Lewis, Dec. 12, 2015.
Lewkovich: Letter from Robert Lewkovich, Dec. 14, 2015.
Liquidnet: Letter from Seth Merrin, Founder and CEO, Liquidnet
Holdings, Feb. 23, 2016.
Loh: Letter from Roger Loh, Jan. 11, 2016.
Long: Letter from Richard Long, Jan. 15, 2016.
Loomis: Letter from David Loomis, Dec. 16, 2015.
Luce First: Letter from Steve Luce, Dec. 10, 2015.
Luce Second: Letter from Steve Luce, Dec. 12, 2015.
Luoma: Letter from Jeremiah Luoma, Professor of Economics, Finlandia
University, Dec. 17, 2015.
Lupinski: Letter from Ryan Lupinski, Jan. 22, 2016.
Lynch: Letter from Representative Stephen F. Lynch, Jan. 8, 2016.
Lysko: Letter from Greg Lysko, May 21, 2016.
Mack: Letter from Carol Mack, Jan. 31, 2016.
MacLeod: Letter from Neil MacLeod, Dec. 17, 2015.
Mannheim: Letter from Lou Mannheim, Dec. 12, 2015.
Manushi First: Letter from Ektrit Manushi, Dec. 24, 2015.
Manushi Second: Letter from Ektrit Manushi, Dec. 29, 2015.
Maqbool: Letter from Massoud Maqbool, May 26, 2016.
Markit First: Letter from David Weisberger, Managing Director,
Markit, Dec. 23, 2015.
Markit Second: Letter from David Weisberger, Managing Director,
Markit, Feb. 16, 2016.
Marquez: Letter from Thelma Marquez, Dec. 14, 2015.
McCannon: Letter from Xavier McCannon, Dec. 13, 2015.
McCarty: Letter from David McCarty, Dec. 16, 2015.
McCloskey: Letter from Michael J. McCloskey, Esq., Dec. 14, 2015.
McGeer: Letter from Jim McGeer, Dec. 10, 2015.
McGeorge: Letter from Don W. McGeorge, Jan. 4, 2016.
McGowan: Letter from D.S. McGowan, Dec. 10, 2015.
McHugh: Letter from James McHugh, Dec. 17, 2015.
Meeks: Letter from Thomas Meeks, Dec. 10, 2015.
Mehlmann: Letter from Tino Mehlmann, Dec. 10, 2015.
Melin: Letter from Mark H. Melin, Dec. 11, 2015.
Meskill: Letter from Duncan S. Meskill, Dec. 10, 2015.
Metzger: Letter from Andrew Metzger, Mar. 5, 2016.
Meyer: Letter from James Meyer, Dec. 10, 2015.
Michail: Letter from Theocharis Michail, Mar. 7, 2016.
Michel: Letter from Daniel Michel, Feb. 22, 2016.
Millard: Letter from Sean Millard, Dec. 10, 2015.
Milligan: Letter from Christopher Milligan, Dec. 23, 2015.
Modern Markets: Letter from William R. Harts, CEO, Modern Markets
Initiative, Dec. 3, 2015.
ModernIR: Letter from Tim Quast , President, ModernNetworks IR LLC,
Dec. 7, 2015.
Mollner: Letter from Terry Mollner, Jan. 7, 2016.
Montes: Letter from David J. Montes, Dec. 15, 2015.
Moore: Letter from Dylan Moore, Feb. 28, 2016.

Morgan: Letter from Daniel Morgan, Dec. 15, 2015.
Morris: Letter from Kelly Morris, Apr. 9, 2016.
Morrow: Letter from Benjamin B. Morrow, Jan. 22, 2016.
Moses: Letter from Matt Moses, Dec. 15, 2015.
Mulson: Letter from Danny Mulson, Dec. 15, 2015.
Murphy: Letter from Ann Murphy, Associate Dean, Undergraduate
Studies, School of Business, Stevens Institute of Technology, Nov.
6, 2015.
Murray: Letter from Lynn G. Murray, Dec. 29, 2015.
Nagel: Letter from Jeff Nagel, Jan. 8, 2016.
Nakamura: Letter from Tomohiko Nakamura, Feb. 20, 2016.
Nanex First: Letter from Eric S. Hunsader, CEO, Nanex, LLC, Dec. 14,
2015.
Nanex Second: Letter from Eric S. Hunsader, CEO, Nanex, LLC, Jan.
20, 2016.
Nanex Third: Letter from Eric S. Hunsader, CEO, Nanex, LLC, Jan. 25,
2016.
Nasca: Letter from Mark J. Nasca, Jan. 8, 2016.
Nasdaq First: Letter from Joan C. Conley, Senior Vice President and
Corporate Secretary, Nasdaq, Inc., Nov. 10, 2015.
Nasdaq Second: Letter from Joan C. Conley, Senior Vice President and
Corporate Secretary, Nasdaq, Inc., Jan. 29, 2016.
Nasdaq Third: Letter from Joan C. Conley, Senior Vice President and
Corporate Secretary, Nasdaq, Inc., Mar. 16, 2016.