that triggered IEX to operate the Opening Auction Contingency
Procedures. The Exchange believes that providing transparent Opening
Auction Contingency Procedures is consistent with the protection of
investors and the public interest in that Users will have more clarity
regarding the methodology for arriving at the IEX Official Opening
Price and the status of open orders, therefore allowing for such Users
to resubmit such interest in the Regular Market Session, or re-route
such interest to an alternate trading center after IEX has opened the
security for trading. In addition, the Opening Auction Contingency
Procedures are designed to ensure the orderly and timely opening of
IEX-listed securities, which will help to ensure a fair and orderly
market for securities listed on the Exchange.
---------------------------------------------------------------------------

    \69\ Note, the Exchange intends to disseminate a System Status
Alert to publicly announce contingency plans, which automatically
publishes an email alert, twitter update, and text message to all
persons registered to receive such alerts, as well as publishing to
the IEX public Web site. To register for System Status Alerts, visit
https://www.iextrading.com/status/#/.
---------------------------------------------------------------------------

Transition to Regular Market Session
    Pursuant to proposed Rule 11.350(c)(3), LOO, MOO, and market orders
that are not fully executed at the conclusion of the Opening Auction
will be canceled immediately after the Opening Auction match. Limit
orders to buy (sell) with a TIF of DAY or GTX and a limit price above
(below) the upper (lower) threshold of the Opening/Closing Auction
Collar that are not fully executed at the conclusion of the Opening
Auction will be canceled immediately after the Opening Auction
match.\70\ All remaining shares from Auction Eligible Orders that are
not canceled by the System immediately after the Opening Auction match,
along with all Auction Ineligible Orders queued for trading in the
Regular Market Session, shall be released to the Continuous Book for
trading in the Regular Market Session, subject to the orders'
instructions. Routable orders that are released to the Continuous Book
will be routed in accordance with IEX Rule 11.230(c) (Re-Sweep
Behavior), subject to the orders instructions.
---------------------------------------------------------------------------

    \70\ The Exchange's cancellation of MOO, LOO, and market orders,
as well as limit orders with a time-in-force of DAY or GTX with a
limit price more aggressive than Opening Auction match price that
are not executed in the auction match is identical to order handling
offered by Bats pursuant to Bats Rule 11.23(b)(3)(B)-(C), which
states that RHO orders queued for the Opening Auction with a limit
price more aggressive than the auction match that are not executed
in the auction match will be canceled following the auction match.
---------------------------------------------------------------------------

Closing Auction
Order Entry and Cancellation Before Closing Auction
    As proposed in Rule 11.350(d)(1), the Exchange will allow Users to
submit orders eligible for execution in the Closing Auction at the
beginning of the Pre-Market Session, or at the beginning of the Order
Acceptance Period for an IPO, which in both cases begins at 8:00 a.m.
Any MOC and LOC orders designated for the Closing Auction Book will be
queued until the end of the Regular Market Session (e.g., 4:00 p.m., or
such earlier time as the Regular Market Session ends on days that IEX
is subject to an early closing), at which time they will be eligible to
be executed in the Closing Auction. Orders on the Closing Auction Book,
as proposed, would include and be limited to MOC and LOC orders. In
addition to orders on the Closing Auction Book, limit and pegged orders
on the Continuous Book with a time-in-force of DAY, GTX, GTT, or SYS
are eligible for execution in the Closing Auction (``Regular Market
Continuous Book'').\71\ All orders eligible for execution in the
Closing Auction (i.e., orders on the Closing Auction Book and orders on
the Regular Market Continuous Book) are Auction Eligible Orders. The
resting price (as defined in proposed Rule 11.350(b)(1)(A)(i)) of
Auction Eligible Orders are used to calculate the auction match price,
and the Indicative Clearing Price disseminated in IEX Auction
Information. Non-displayed buy (sell) orders on the Continuous Book
with a resting price within the Reference Price Range will be priced at
the Protected NBB (NBO) for the purpose of determining the clearing
price (and determining the Indicative Clearing

Price disseminated in IEX Auction Information leading up to the auction
match), but will be ranked and eligible for execution in the Closing
Auction match at the order's resting price.
---------------------------------------------------------------------------

    \71\ The following types of orders are not eligible for
execution in the Closing Auction: Market orders (except MOC orders)
and orders with a time-in-force of IOC or FOK. As described above,
Market orders entered during the Regular Market Session and orders
marked IOC or FOK do not rest on the Continuous Book, and therefore
are not Auction Eligible Orders.
---------------------------------------------------------------------------

    Pursuant to proposed Rule 11.350(d)(1), beginning at the Closing
Auction Lock-in Time (i.e., 3:50 p.m., or 10 minutes prior to the end
of the Regular Market Session on days that IEX is subject to an early
closing), the Closing Auction will be subject to certain ``lock-in''
and ``lock-out'' restrictions.\72\ Specifically, under proposed Rule
11.350(d)(1)(B), Users may enter, cancel, or modify Auction Eligible
Orders until the Closing Auction Lock-in Time, at which time orders on
the Closing Auction Book can no longer be canceled or modified, except
that between the Closing Auction Lock-in Time and five minutes before
the Closing Auction match (e.g., 3:55 p.m.), LOC and MOC orders can be
canceled only if the participant requests that IEX correct a legitimate
error in the order (e.g., side, size, symbol, price, or duplication of
an order). LOC and MOC orders cannot be canceled or modified at or
after five minutes before the Closing Auction match (e.g., 3:55 p.m.)
for any reason.\73\ After the Closing Auction Lock-in Time, the
Exchange will begin to reject Hyper-aggressive Auction Orders upon
entry.\74\ For the Closing Auction, Hyper-aggressive Auction Orders, as
proposed, include MOC orders, and LOC orders with a limit price more
aggressive than the latest Opening/Closing Auction Collar calculated by
the System (i.e., buy orders priced above the latest upper auction
collar threshold and sell orders priced below the latest lower auction
collar threshold calculated by the System). LOC orders entered with a
limit price that is not more aggressive than the latest Opening/Closing
Auction Collar calculated by the System will continue to be accepted
until the Closing Auction Lock-out Time (i.e., 3:59:50 p.m., ten (10)
seconds prior to the Closing Auction match).\75\ As noted above in the
context of the Opening Auction, the Exchange similarly believes that
rejecting Hyper-aggressive Auction Orders in the Closing Auction after
the Lock-in Time, while allowing LOC orders that are priced within the
applicable auction collar to be entered and be eligible for execution
in the Closing Auction until the Lock-out Time will allows Users to
continue to express interest and offset imbalances in the minutes
leading up to the auction match, while also avoiding the increase of
imbalances resulting from aggressively priced orders in the Auction
Book during the last ten minutes of the auction process. Instead, the
Exchange is proposing to allow for price discovery to occur on the
Auction Book and Continuous Book within the applicable auction collars
leading up to the auction match, allowing for a convergence of the
Auction Book with the Continuous Book to establish equilibrium.\76\
Limit orders designated for the Regular Market Continuous Book may
continue to be entered and modified or canceled at any time prior to
execution. Similar to the Opening Auction, the proposed Lock-Out Time
of 3:59:50 p.m., ten (10) seconds prior to the Closing Auction, is
designed to provide Users an opportunity to offset any remaining
imbalance during a period of relative stability (while the Auction Book
is locked) by submitting limit orders on the Continuous Book.
---------------------------------------------------------------------------

    \72\ Bats implements a less restrictive cut-off time, allowing
LOC and MOC orders to be submitted until 3:55 p.m., but still
allowing orders eligible for continuous trading and LLOC orders to
be entered until immediately before the auction match. See Bats Rule
11.23(C)(1)(A). Nasdaq implements an identical cut-off time (3:50
p.m.), but still allows orders eligible for continuous trading and
imbalance only orders to be entered until immediately before the
auction match. See Nasdaq Rules 4702(b)(11)-(13).
    \73\ See proposed Rule 11.350(d)(1)(C).
    \74\ See proposed Rule 11.350(d)(1)(B).
    \75\ NYSE applies a similar restriction for its closing auction
under NYSE Rule 70.25, which states that d-Quotes may be entered,
modified, and canceled until 10 seconds before the end of the
Regular Market Session (emphasis added). The Exchange notes that as
explained by a recent study on NYSE auctions conducted by Greenwich
Associates, NYSE d-Quotes (which can be entered by brokers that have
relationships with NYSE floor brokers, or trading algorithms that
are able to enter orders directly via FIX) contribute a meaningful
portion of closing auction volume, as evidenced by the significant
increase and fluctuations of indicative volume taken as a percentage
of realized volume in the closing auction. Specifically, NYSE's
auction data feed shows a material spike in indicative volume at
3:55 p.m., when d-Quotes are first included in the NYSE auction data
feed, followed by fluctuations in indicative volume as a percent of
realized volume. The Exchange further notes that the proposed
handling of LOO, LOC, and limit orders submitted after the Lock-in
Time that are not priced beyond the Opening/Closing Auction Collars
is distinguishable from NYSE d-Quotes in that d-Quotes can be
entered at any price, and can be canceled. As proposed, LOO, LOC,
and limit orders submitted after the Lock-in Time that are not
priced beyond the Opening/Closing Auction Collars cannot be
canceled. The proposed order handling and IEX Auction information
dissemination is designed to reflect ``locked-in'' interest on the
Auction Book, which is intended to stimulate price discovery, and
reduce fluctuations indicative volume taken as a percentage of
realized volume that are caused by Users canceling orders on the
Auction Book. See Trading the Auctions, Greenwich Associates, 2017,
Doc ID 16-2068 (https://www.greenwich.com/equities/trading-auctions).
    \76\ As discussed above, the Exchange notes that allowing Users
to offset imbalances on the Auction Book after the Lock-in Time is
designed to promote price discovery and stability, and establish
equilibrium leading into the auction match because such orders are
not able to be canceled or modified after entry (i.e., they are
locked-in), which is in direct contrast with offsetting orders on
the Continuous Book that may be fleeting, because they are eligible
for cancellation, modification, or execution until the auction
match. Orders eligible for the Closing Auction Book that are
received after the Closing Auction Lock-out Time will be rejected
upon entry.
---------------------------------------------------------------------------

Closing Auction Process for IEX-Listed Securities
    Under proposed Rule 11.350(d)(2)(A), beginning at the Closing
Auction Lock-in Time and updated every one second thereafter, the
Exchange will disseminate IEX Auction Information via electronic means,
as described below. The Exchange will attempt to conduct a Closing
Auction for all IEX-listed securities at 4:00 p.m., or such earlier
time as the Regular Market Session ends on days that IEX is subject to
an early closing in accordance with the clearing price determination
process, described above and set forth in proposed Rule
11.350(d)(2)(B). Auction Eligible Orders will be ranked in accordance
with IEX Auction Priority, described above, and as set forth in
proposed Rule 11.350(b).
    For example, if the Continuous Book and Closing Auction Book were
to contain the following orders:

[GRAPHIC] [TIFF OMITTED] TN09MY17.000

    Shares are maximized and left unexecuted at $20.01, therefore the
IEX Closing Auction would execute 11,000 shares at $20.01.
    Auction Eligible Orders matched in the Closing Auction will execute
in accordance with IEX Auction Priority, described above. Specifically,
as set forth in proposed Rule 11.350(d)(2)(C), MOC orders have priority
over all other Auction Eligible Orders, and to the extent there is
executable contra side interest, such MOC orders will execute at the
IEX Official Closing Price in accordance with time priority. After the
execution of all MOC orders, the remaining Auction Eligible Orders
(i.e., LOC, as well as limit and pegged orders with a time-in-force of
DAY, GTT, GTX, or SYS) with a resting price more aggressive than the
IEX Official Closing Price will be executed in price-display-time
priority at the IEX Official Closing Price. All remaining Auction
Eligible Orders with a resting price equal to the IEX Official Closing
Price shall execute in display-time priority at the IEX Official
Closing Price. Upon completion of the Closing Auction for IEX-listed
securities, the IEX Official Closing Price for the security will be
disseminated to the Consolidated Tape along with a bulk execution. The
IEX Official Closing Price will be the price of the auction. If there
is insufficient crossing interest to conduct a Closing Auction, no
Closing Auction will occur, and the IEX Official Closing Price will be
the price of the Final Last Sale Eligible Trade.\77\ In such cases, the
transition to the Post-Market Session shall be conducted pursuant to
proposed Rule 11.350(d)(3), described below.
---------------------------------------------------------------------------

    \77\ See proposed Rule 11.350(a)(7).
---------------------------------------------------------------------------

    Pursuant to proposed Rule 11.350(d)(2)(D), if a halt is
disseminated in an IEX-listed security prior to the Closing Auction,
all orders on the Auction Book will remain open. Users may resume
submission of new or make modifications to existing Auction Eligible
Orders for the halted security during the Order Acceptance Period.
Users may cancel open Auction Eligible Orders at any time during the
halt. If a halt persists through the end of Regular Market Hours, no
Closing Auction will occur. All On-Open orders, On-Close orders, and
pegged orders will be canceled at the conclusion of Regular Market
Hours, and the Final Last Sale Eligible Trade will be the IEX Official
Closing Price. However, where an IEX-listed security is paused pursuant
to IEX Rule 11.280(e) at or after the Closing Auction Lock-in Time, or
the Order Acceptance Period of a Volatility Auction for a security
paused before the Closing Auction Lock-in Time pursuant to IEX Rule
11.280(e) would otherwise be extended by the Exchange to a time after
the Closing Auction Lock-in Time, On-Close orders are added to the
Volatility Auction and such auction will be used to determine the IEX
Official Closing Price for the subject security at the conclusion of
Regular Market Hours in accordance with proposed Rule 11.350(f)(3),
described below.
Closing Auction Contingency Procedures
    Pursuant to proposed Rule 11.350(d)(4), when a disruption occurs
that prevents the execution of the Closing Auction as set forth above,
IEX proposes to apply either the Primary or Secondary Closing Auction
Contingency Procedures. The proposed contingency procedures are
identical to those recently proposed by Nasdaq in conjunction with NYSE
and NYSE Arca, and the exclusive securities information processors for
the Nasdaq UTP Plan and the Consolidated Quote/Consolidated Tape Plan
(the ``SIPs''), as part of a larger industry initiative to ensure the
orderly execution and dissemination of official closing prices.\78\
---------------------------------------------------------------------------

    \78\ See, for example, Nasdaq Rule 4754(b)(8); Bats Rule
11.23(i); Arca Rule 1.1(gg).
---------------------------------------------------------------------------

    IEX will employ the Primary Closing Auction Contingency Procedures
if at all possible, and it will employ the Secondary Closing Auction
Contingency Procedures only if it determines that both the standard
procedures and the Primary Closing Auction Contingency Procedures are
unavailable. The determination to employ Primary or Secondary Closing
Auction Contingency Procedures will be based upon all available
information including the type of disruption, the system or sub-system
disrupted, the availability of testing and diagnostic data, and
observed Member and market impact. The determination to implement
Primary or Secondary Closing Auction Contingency Procedures shall be
made by the President of IEX or a senior level employee designated by
the President. If such a disruption occurs, IEX shall publicly announce
at the earliest possible time the initiation of Primary or Secondary
Closing Auction Contingency procedures via system status alerts and
email notification directories.
Primary Closing Contingency Procedures
    If IEX determines to initiate the Primary Closing Auction
Contingency Procedures, IEX will publicly announce that no Closing
Auction will occur. The price of the Final Consolidated Last Sale
Eligible Trade will be used for the IEX Official Closing Price. The IEX
Official Closing Price will be published to the Consolidated Tape. IEX
will execute orders on the Closing Auction Book at the IEX Official
Closing Price to the extent that executable buy and sell interest
exists on the Closing Auction

Book. All orders on the Order Book will be canceled at the conclusion
of the contingency process. IEX will report the resulting execution to
the Consolidated Tape and deliver execution reports to participants. If
a security's IEX Official Closing Price cannot be determined by this
subsection, IEX will not publish an Official Closing Price for the
security and cancel all orders on the Order Book. The Post-Market
Session shall begin either as scheduled, or upon resolution of the
disruption that triggered IEX to operate the Primary Contingency
Procedures.
Designation of a Back-Up Exchange
    When a determination to implement Secondary Closing Auction
Contingency Procedures has been made by the President of IEX or a
senior level employee designated by the President, IEX shall publicly
announce this determination at the earliest possible time via system
status alerts and email notification directories. If the Secondary
Closing Auction Contingency Procedures are implemented, IEX will
designate an alternate exchange to provide an official closing price
for all or a subset of IEX-listed securities. The Exchange would
publicly announce the exchange designated as the alternate exchange via
Trader Alert, and will confirm the designated alternate exchange via
system status alert and email notification directories at the time of
announcing the implementation of Secondary Closing Auction Contingency
Procedures.
Secondary Closing Contingency Procedures
    If IEX determines to follow Secondary Closing Auction Contingency
Procedures for one or more securities at or before 3:00 p.m., IEX will
designate an alternate exchange to provide an official closing price
for all or a subset of IEX-listed securities. IEX will cancel all open
orders on the Order Book in the impacted securities to give Members the
opportunity to route their orders to alternative execution venues. The
IEX Official Closing Price will be the official closing price
established for the security under the rules of the designated back-up
exchange. If there is no official closing price in a security on the
designated back-up exchange, the IEX Official Closing Price will be the
volume weighted average price (``VWAP'') of the last sale eligible
trades reported to the Consolidated Tape during the last five minutes
of Regular Market Hours on that trading day, including any closing
transactions on an exchange and any trade breaks or corrections up to
the time the VWAP is processed. If there are no last sale eligible
trades reported to the Consolidated Tape during the last five minutes
of Regular Market Hours, the IEX Official Closing Price of such
security will be the Final Consolidated Last Sale Eligible Trade for
the security on that trading day. If there were no last sale eligible
trades reported to the Consolidated Tape on that trading day, the IEX
Official Closing Price will be the previous official closing price. The
IEX Official Closing Price will be published to the Consolidated Tape.
If a security's IEX Official Closing Price cannot be determined under
this subsection, IEX will not publish an IEX Official Closing Price for
the security, and the Post-Market Session shall begin either as
scheduled, or upon resolution of the disruption that triggered IEX to
operate the Secondary Contingency Procedures.
    If IEX determines to follow Secondary Closing Auction Contingency
Procedures for one or more securities after 3:00 p.m., IEX will cancel
all open orders on the Order Book in the impacted securities to give
Members the opportunity to route their orders to alternative execution
venues. The IEX Official Closing Price will be the VWAP of the last
sale eligible trades reported to the Consolidated Tape during the last
five minutes of Regular Market Hours on that trading day, including any
closing transactions on an exchange and any trade breaks or corrections
up to the time the VWAP is processed. If there are no last sale
eligible trades reported to the Consolidated Tape during the last five
minutes of Regular Market Hours, the IEX Official Closing Price of such
security will be the Final Consolidated Last Sale Eligible Trade for
the security on that trading day. If there were no last sale eligible
trades reported to the Consolidated Tape on that trading day, the IEX
Official Closing Price will be the previous official closing price. The
IEX Official Closing Price will be published to the Consolidated Tape.
If a security's IEX Official Closing Price cannot be determined under
this subsection, IEX will not publish an IEX Official Closing Price for
the security, and the Post Market Session shall begin either as
scheduled, or upon resolution of the disruption that triggered IEX to
operate the Secondary Contingency Procedures.
Transition to the Post-Market Session
    Pursuant to proposed Rule 11.350(d)(3), LOC, MOC, and pegged
orders, as well as limit orders with a time-in-force of DAY that are
not fully executed at the conclusion of the Closing Auction will be
canceled immediately after the Closing Auction match. All remaining
shares from Auction Eligible Orders that are not canceled by the System
immediately after the Closing Auction match will be released to the
Continuous Book for trading in the Post-Market Session, subject to the
orders' instructions. Routable orders that are released to the
Continuous Book will be routed in accordance with IEX Rule 11.230(c)
(Re-Sweep Behavior), subject to the orders' instructions.
IPO and Halt Auctions
    For trading in an IEX-listed security in an initial public offering
(an ``IPO''), or launch of a new issue, the Exchange will conduct an
IPO Auction pursuant to proposed Rule 11.350(e), as described further
below. Following a trading halt in an IEX-listed security pursuant to
Supplementary Material .01 to Rule 14.207 and proposed Rule
11.280(g)(1), (4), or (5), the Exchange will conduct a Halt Auction, as
described below.
Order Entry and Cancellation Before an IPO/Halt Auction
    As proposed in Rule 11.350(e)(1), the Exchange will allow Users to
submit orders for potential participation in an IPO or Halt Auction
during the Order Acceptance Period. Similar to Bats and Nasdaq, the
Order Acceptance Period for an IPO Auction begins at the start of
System Hours (i.e., 8:00 a.m.), and five (5) minutes prior to the
scheduled auction match for a Halt Auction.\79\ Note, however, the
Exchange will not execute any orders in the applicable security prior
to the auction match. All Auction Eligible Orders associated with an
IPO or Halt Auction will be queued until the applicable auction match,
at which time they will be eligible to be executed in the associated
auction. All orders associated with an IPO or Halt Auction must be
received prior to the auction match in order to be eligible to execute
in the auction. Auction Ineligible Orders with a TIF of IOC or FOK will
be rejected prior to the auction match; Auction Ineligible Orders that
may rest on the Order Book will be queued and maintained during the
Order Acceptance Period in accordance with Rule 11.220(a)(1). Auction
Eligible Orders associated with an IPO or Halt Auction may be canceled
or modified at any time prior to the auction match. At the conclusion
of Regular Market Hours, On-Open orders, On-Close orders, pegged
orders, market orders, and limit orders with a TIF of DAY will be
canceled automatically by the System. In the event the Exchange cannot

complete an IPO or Halt Auction before the end of Post-Market Hours
(i.e., 5:00 p.m.), all open orders in the subject security on the Order
Book will be canceled.\80\
---------------------------------------------------------------------------

    \79\ See Bats Rule 11.23(d)(1)(A); Nasdaq Rules 4120(c)(7)(A)
and 4120(c)(8)(A). Note, Nasdaq permits Users to submit orders
beginning at 4:00 a.m., the start of Nasdaq System Hours.
    \80\ The Order Acceptance Period extensions proposed by the
Exchange are substantially similar to the criteria set forth in Bats
Rule 11.23(d)(2)(B) regarding the extension of the Bats Quote-Only
Period.
---------------------------------------------------------------------------

    For an IPO Auction, Auction Eligible Orders, as proposed, would
include MOO, LOO, and market orders with a time-in-force of DAY, as
well as limit orders with a time-in-force of DAY, GTX, GTT, SYS, FOK,
or IOC.\81\ For a Halt Auction, pursuant to proposed Rule
11.350(a)(1)(D), Auction Eligible Orders would include:
---------------------------------------------------------------------------

    \81\ Note, limit orders with a time-in-force of IOC or FOK will
be executed in the same manner as LOO orders and market orders with
a time-in-force of DAY, FOK, or IOC will be executed in the same
manner as MOO orders in the IPO Auction, and all unexecuted shares
will be canceled immediately following the auction match.
---------------------------------------------------------------------------

     On-Open orders queued prior to Regular Market Hours if a
Pre-Market Session halt persists through the start of Regular Market
Hours and the Halt Auction is scheduled to occur during the Regular
Market Session;
     Limit orders with a TIF of GTT, SYS, FOK, or IOC received
during the Order Acceptance Period;
     Limit orders with a TIF of DAY received during the Order
Acceptance Period within the Regular Market Session or queued prior to
the Regular Market Session for securities that have not traded during
the Regular Market Session on that trading day;
     Limit orders with a TIF of GTX received during the Order
Acceptance Period within the Regular Market Session or Post-Market
Session or queued prior to the Regular Market Session for securities
that have not traded during the Regular Market Session on that trading
day;
     Market orders with a TIF of FOK or IOC received during the
Order Acceptance Period within the Regular Market Session;
     Market orders with a TIF of DAY received during the Order
Acceptance Period within the Regular Market Session or queued prior to
the Regular Market Session for securities that have not traded during
the Regular Market Session on that trading day; and
     Displayed portions of limit orders on the Continuous Book
at the time of the halt dissemination.
    IPO and Halt Auctions are not subject to ``lock-in'' or ``lock-
out'' restrictions. Pegged orders and non-displayed orders on the
Continuous Book at the time of the halt dissemination will not be
eligible to execute in the Halt Auction. Pegged orders submitted during
the Order Acceptance Period will not be eligible to execute in the IPO
or Halt Auction.
IPO and Halt Auction Process for IEX-Listed Securities
    Pursuant to proposed Rule 11.350(e)(2)(A), at the beginning of the
Display Only Period (i.e., thirty minutes prior to the scheduled
auction match for an IPO Auction, and the start of the Order Acceptance
Period for a Halt Auction), and updated every one second thereafter
until the IPO or Halt Auction match, the Exchange will disseminate IEX
Auction Information via electronic means, as described below.
    The Order Acceptance Period may be extended at the time of the
auction match pursuant to proposed Rule 11.350(e)(2)(B)(i)-(iii)
automatically for five (5) minutes in an IPO Auction when there are
unmatched shares from market orders on the IPO Auction Book, or when
the Indicative Clearing Price at the auction match differs by the
greater of five percent (5%) or fifty cents ($0.50) from any of the
previous fifteen (15) Indicative Clearing Price disseminations,
automatically during the Pre-Launch Period when the clearing price is
above (below) the upper (lower) price band selected by the underwriter
pursuant to proposed Rule 11.280(h)(8), until the clearing price is
within such bands, or a manual extension may be implemented upon
request from the underwriter at any time prior to the auction match.
For a Halt Auction, pursuant to Rule 11.350(e)(2)(B)(i)-(ii), the Order
Acceptance Period may be extended automatically for one (1) minute when
there are unmatched shares from market orders on the Halt Auction Book,
or when the Indicative Clearing Price at the auction match differs by
the greater of five percent (5%) or fifty cents ($0.50) from any of the
previous fifteen (15) Indicative Clearing Price disseminations.
    The Exchange will generally attempt to conduct an auction for
corporate IPOs beginning at 10:15 a.m., or 9:30 a.m. for new issues, in
accordance with the clearing price determination process, described
above and as set forth in proposed Rule 11.350(e)(2)(C). Auction
Eligible Orders will be ranked in accordance with IEX Auction Priority,
described above and as set forth in proposed Rule 11.350(b). Auction
Eligible Orders are used to calculate the auction match price. Auction
Eligible Orders matched in the IPO or Halt Auction will execute in
accordance with IEX Auction Priority, described above. Specifically, as
set forth in proposed Rule 11.350(e)(2)(D), market and MOO orders have
priority over all other Auction Eligible Orders, and to the extent
there is executable contra side interest, such market and MOO orders
will execute at the IEX Official IPO Price or the price of the IEX Re-
Opening Trade in accordance with time priority. After the execution of
all market and MOO orders, the remaining Auction Eligible Orders with a
resting price more aggressive than the IEX Official IPO Price or the
price of the IEX Re-Opening Trade will be executed in price-display-
time priority at the IEX Official IPO Price, or the price of the IEX
Re-Opening Trade. All remaining Auction Eligible Orders with a resting
price equal to the IEX Official IPO Price or the price of the IEX Re-
Opening Trade execute in display-time priority at the IEX Official IPO
Price, or the price of the IEX Re-Opening Trade. Upon completion of an
IPO Auction for IEX-listed securities, the IEX Official IPO Opening
Price for the security will be the price of auction, and shall be
disseminated to the Consolidated Tape along with a bulk execution. Upon
completion of a Halt Auction for IEX-listed securities, the IEX Re-
Opening Trade for the security will be the execution that resulted from
the Halt Auction. If a security does not have a Halt Auction (e.g.,
there is insufficient crossing interest to conduct a Halt Auction), no
Halt Auction will occur, and the transition to continuous trading shall
be conducted pursuant to proposed Rule 11.350(e)(3), described below.
    If IEX has not determined the IEX Official Opening Price for an
IEX-listed security, and the Halt Auction is scheduled to occur during
the Regular Market Session, the IEX Official Opening Price will be the
price of the Halt Auction pursuant to proposed Rule 11.350(c)(2)(D) or
(E), as applicable. If there is insufficient crossing interest to
complete the Halt Auction, the transition to the Regular Market Session
shall be conducted pursuant to proposed Rule 11.350(e)(3), described
below, no auction will occur, and the IEX Official Opening Price will
be the Initial Last Sale Eligible Trade.\82\ If a security remains
halted at the end of Regular Market Hours, no Closing Auction will
occur, and all On-Open orders, On-Close orders, pegged orders, market
orders, and limit orders with a time-in-force of DAY will be canceled
at

the conclusion of Regular Market Hours.\83\
---------------------------------------------------------------------------

    \82\ See proposed Rule 11.350(a)(16).
    \83\ See proposed Rule 11.350(d)(2)(D). Note, in the event the
Exchange cannot complete a Halt Auction before the end of Post-
Market Hours (i.e., 5:00 p.m.), all open orders in the subject
security on the Order Book will be canceled pursuant to proposed
Rule 11.350(e)(1)(D).
---------------------------------------------------------------------------

Contingency Procedures
    When a disruption occurs that prevents the execution of an IPO or
Halt Auction as set forth above, IEX shall apply the IPO or Halt
Auction Contingency Procedures as set forth in proposed Rule
11.350(e)(4). Specifically, for an IPO Auction, IEX will publicly
announce that the Order Acceptance Period will be reset for the subject
security, at which point IEX will cancel all orders on the Order Book,
and shall disseminate a new scheduled time for the Order Acceptance
Period and auction match. For a Halt Auction, IEX will publicly
announce that no Halt Auction will occur. All orders on the Order Book
will be canceled, and IEX will open the security for trading without an
auction.
Transition to Continuous Trading
    Under proposed Rule 11.350(e)(3), LOO, MOO, and market orders, as
well as Auction Eligible Orders with a TIF of FOK or IOC that are not
fully executed at the conclusion of the IPO Auction will be canceled
immediately after the IPO Auction match. Auction Eligible Orders with a
time-in-force of FOK or IOC and market orders (as well as On-Open
orders when the Halt Auction is determining the IEX Official Opening
Price) that are not fully executed at the conclusion of the Halt
Auction will be canceled immediately after the Halt Auction match. All
remaining shares from Auction Eligible Orders that are not canceled by
the System immediately after an IPO or Halt Auction match and Auction
Ineligible Orders will be released to the Continuous Book for execution
in the Pre-Market, Regular Market, or Post-Market Session, as
applicable, subject to the orders instructions. Routable orders that
are released to the Continuous Book will be routed in accordance with
IEX Rule 11.230(c) (Re-Sweep Behavior), subject to the orders
instructions.
Volatility Auction
    IEX will conduct a Volatility Auction pursuant to proposed Rule
11.350(f) to re-open an IEX-listed security after such security is
subject to an LULD trading pause pursuant to IEX Rule 11.280(e).
Furthermore, as described below, IEX will close IEX-listed securities
using a Volatility Auction under proposed Rule 11.350(f)(3) when an
IEX-listed security is subject to an LULD trading pause at or after the
Closing Auction Lock-in Time, or the Order Acceptance Period of a
Volatility Auction for a security paused before the Closing Auction
Lock-in Time pursuant to the LULD Plan would otherwise be extended by
the Exchange to a time after the Closing Auction Lock-in Time. As noted
above in the description of the proposed Volatility Auction Collars,
the proposed Volatility Auction functionality is substantially similar
to the functionality proposed by Bats, Nasdaq, and NYSE Arca for
conducting an auction to resume a security subject to an LULD trading
pause. Furthermore, the proposed Volatility Auction functionality is
consistent with the commitment made by each primary listing exchange
set forth in Amendment 12 to the Limit Up-Limit Down Plan to file rule
changes with the Commission under Section 19(b) of the Exchange Act to
amend its respective trading practice for automated reopening's
following a trading pause consistent with a standardized approach
agreed to by Limit Up-Limit Down Plan Participants that would allow for
extensions of an LULD trading pause if equilibrium cannot be met for a
reopening price within specified parameters.\84\
---------------------------------------------------------------------------

    \84\ See Securities Exchange Act Release Nos. 79162 (October 26,
2016), 81 FR 75875 (November 1, 2016) (SR-BatsBZX-2016-61); 79158
(October 26, 2016), 81 FR 75879 (November 1, 2016) (SR-NASDAQ-2016-
131); and 79107 (October 18, 2016), 81 FR 73159 (October 24, 2016)
(File No. SR-NYSEArca-2016-130) and Securities and Exchange Act
Release No. 34-79410; File No. 4-631 (Notice of Filing of the
Twelfth Amendment to the National Market System Plan to Address
Extraordinary Market Volatility).
---------------------------------------------------------------------------

Order Entry and Cancellation for a Volatility Auction
    As set forth in proposed Rule 11.350(f)(1), the Exchange will allow
Users to submit orders for potential participation in a Volatility
Auction during the Order Acceptance Period, which is generally five (5)
minutes, and begins immediately after the pause dissemination. However,
when an IEX-listed security is paused pursuant to IEX Rule 11.280(e) at
or after the Closing Auction Lock-in Time, or if the Order Acceptance
Period of a Volatility Auction for a security paused before the Closing
Auction Lock-in Time pursuant to IEX Rule 11.280(e) would be in effect
at the Closing Auction Lock-in Time, the Order Acceptance Period shall
continue to the end of the Regular Market Session.\85\
---------------------------------------------------------------------------

    \85\ See proposed Rule 11.350(f)(1)(A).
---------------------------------------------------------------------------

    The Exchange will not execute any orders in the applicable security
prior to the auction match. Auction Eligible Orders submitted during
the Order Acceptance Period will join the Volatility Auction Book and
be queued until the Volatility Auction match. All orders associated
with a Volatility Auction must be received prior to the auction match
in order to be eligible for execution in the auction. Auction
Ineligible Orders with a TIF of IOC or FOK will be rejected prior to
the auction match; Auction Ineligible Orders that may rest on the Order
Book will be queued and maintained during the Order Acceptance Period
in accordance with Rule 11.220(a)(1). Auction Eligible Orders
associated with a Volatility Auction may be canceled or modified at any
time prior to the auction match.\86\ Auction Eligible Orders, as
proposed, include the following.\87\
---------------------------------------------------------------------------

    \86\ See proposed Rule 11.350(f)(1)(B)-(C).
    \87\ See proposed Rules 11.350(a)(1) and 11.350(a)(2). Note,
when an IEX-listed security is paused at or after the Closing
Auction Lock-in Time, or the Order Acceptance Period of a Volatility
Auction for a security paused before the Closing Auction Lock-in
Time would otherwise be extended by the Exchange to a time after the
Closing Auction Lock-in Time, i.e., when a Volatility Auction is
determining the IEX Official Closing Price pursuant to proposed Rule
11.350(f)(3), the Auction Eligible Orders for the Volatility Auction
include MOC and LOC orders.
---------------------------------------------------------------------------

     Limit orders with a TIF of GTX, GTT, SYS, FOK, or IOC
received during the Order Acceptance Period;
     Limit orders with a TIF of DAY received during the Order
Acceptance Period within Regular Market Hours;
     Market orders with a TIF of FOK, IOC, or DAY received
during the Order Acceptance Period within Regular Market Hours; and
     Displayed portions of limit orders on the Continuous Book
at the time of the pause dissemination.
    Auction Eligible Orders associated with a Volatility Auction may be
canceled or modified at any time prior to execution. Volatility
Auctions are not subject to ``lock-in'' or ``lock-out'' restrictions.
Pegged orders and non-displayed orders on the Continuous Book at the
time of the pause dissemination will not be eligible for execution in
the Volatility Auction. Pegged orders submitted during the Order
Acceptance Period will not be eligible for execution in the Volatility
Auction.
Volatility Auction Process for IEX-Listed Securities
    Pursuant to proposed Rule 11.350(f)(2)(A), at the beginning of the
Display Only Period (i.e., the start of the Order Acceptance Period),
and updated

every one second thereafter, the Exchange will disseminate IEX Auction
Information via electronic means, as described below.
    Pursuant to proposed Rule 11.350(a)(29)(C), the Order Acceptance
Period for a Volatility Auction shall commence immediately after a
trading pause dissemination. Under proposed Rules 11.350(f)(2)(C)(i)-
(ii), the conditions in which the Order Acceptance Period may be
extended automatically for five (5) minutes pursuant to Rule
11.350(f)(2)(D)(ii) at the time of the Volatility Auction match include
when: (i) There are unmatched shares from market orders on the
Volatility Auction Book, or when the Indicative Clearing Price is
higher (lower) than the upper (lower) threshold of the Volatility
Auction Collar (in either case, an ``Impermissible Price''); or (ii)
when the Indicative Clearing Price differs by the greater of five
percent (5%) or fifty cents ($0.50) from any of the previous fifteen
(15) Indicative Clearing Price disseminations. In addition, under
proposed Rule 11.350(f)(2)(C)(iii), the Order Acceptance Period will be
extended automatically to the end of the Regular Market Session where
an IEX-listed security is paused at or after the Closing Auction Lock-
in Time, or the Order Acceptance Period of a Volatility Auction for a
security paused before the Closing Auction Lock-in Time would otherwise
be in effect at the Closing Auction Lock-in Time, in which case the IEX
Official Closing Price will be determined by the Volatility Auction
pursuant to proposed Rule 11.350(f)(3).
    Under proposed Rule 11.350(f)(2)(D)(ii), the Order Acceptance
Period may be extended for five (5) minutes under proposed rule
11.350(f)(2)(C)(i) or (C)(ii) described above (the ``Initial Extension
Period''). After the Initial Extension Period, the Order Acceptance
Period may be extended for additional five (5) minute periods pursuant
to proposed Rule 11.350(f)(2)(C)(i) or (C)(ii) described above (each an
``Additional Extension Period'') until a Volatility Auction occurs. The
Exchange shall attempt to conduct a Volatility Auction every one second
during the course of each Additional Extension Period. Should the Order
Acceptance Period for a Volatility Auction be extended to a time past
the Closing Auction Lock-in Time (i.e., ten (10) minutes prior to the
end of the Regular Market Session), the Volatility Auction shall be
conducted pursuant to proposed Rule 11.350(f)(3), described below. At
the beginning of the Order Acceptance Period, the Volatility Auction
Collar Reference Price and the Volatility Auction Collar shall be
determined in accordance with proposed Rules 11.350(a)(32) and
11.350(a)(31), respectively.\88\ At the beginning of the Initial
Extension Period the upper (lower) Volatility Auction Collar shall be
increased (decreased) by five (5) percent in the direction of the
Impermissible Price, rounded to the nearest passive MPV. For securities
with a Volatility Auction Collar Reference Price of $3.00 or less, the
Volatility Auction Collar shall be increased (decreased) in $0.15
increments in the direction of the Impermissible Price, rounded to the
nearest passive MPV. At the beginning of each Additional Extension
Period pursuant to proposed Rule 11.350(f)(2)(C)(ii), the Volatility
Auction Collar shall be widened as described in this paragraph, in the
same manner as the Initial Extension Period.
---------------------------------------------------------------------------

    \88\ See proposed Rule 11.350(f)(2)(D)(i).
---------------------------------------------------------------------------

    The Exchange will attempt to conduct a Volatility Auction for all
IEX-listed securities to resume trading following an LULD trading
pause, in accordance with the clearing price determination process
described above and set forth in proposed Rule 11.350(f)(2)(E). If the
Volatility Auction price established by subparagraphs (i) through (iii)
is outside the Volatility Auction Collar, the Order Acceptance Period
shall be extended pursuant to 11.350(f)(2)(C)(ii) and the Volatility
Auction Collars shall be updated pursuant to Rule 11.350(f)(2)(D)(ii).
If the Volatility Auction price established by subparagraphs (i)
through (iii) meets the conditions for extending the Order Acceptance
Period described in Rule 11.350(f)(2)(C)(i), the Order Acceptance
Period shall be extended pursuant to 11.350(f)(2)(C)(i).
    Auction Eligible Orders matched in the Volatility Auction will
execute in accordance with IEX Auction Priority, described above.
Specifically, as set forth in proposed Rule 11.350(f)(2)(F), market
orders have priority over all other Auction Eligible Orders, and to the
extent there is executable contra side interest, such market orders
will execute at the price of the IEX Re-Opening in accordance with time
priority. After the execution of all market orders, the remaining
Auction Eligible Orders with a resting price more aggressive than the
price of the IEX Re-Opening will be executed in price-display-time
priority at the price of the IEX Re-Opening Trade. All remaining
Auction Eligible Orders with a resting price equal to the price of the
IEX Re-Opening Trade execute in display-time priority at the price of
the IEX Re-Opening Trade. Upon completion of a Volatility Auction, the
IEX Re-opening Trade for the security will be the execution that
resulted from the Volatility Auction. If a security does not have a
Volatility Auction (e.g., there is insufficient crossing interest to
conduct a Volatility Auction), the transition to continuous trading
shall be conducted pursuant to proposed Rule 11.350(f)(2)(G), described
below, and no Volatility Auction will occur. Pursuant to Rule
11.350(c)(2)(F), if IEX has not determined the IEX Official Opening
Price for an IEX-listed security, and the security is subject to an
LULD trading pause, the IEX Official Opening Price will be the price of
the Volatility Auction.
Volatility Auction Contingency Procedures
    When a disruption occurs that prevents the execution of a
Volatility Auction as set forth above, IEX shall apply the Volatility
Auction Contingency Procedures set forth in proposed Rule
11.350(f)(2)(H). Specifically, IEX will publicly announce that no
Volatility Auction will occur, and the Exchange will immediately notify
the single plan processor responsible for consolidation of information
for the security. All orders on the Order Book will be canceled, and
IEX will open the security for trading without an auction after the
single plan processor responsible for consolidation of information for
the security has disseminated Price Bands.
Transition to Continuous Trading
    Pursuant to proposed Rule 11.350(f)(2)(G), Auction Eligible Orders
with a TIF of FOK or IOC and market orders that are not fully executed
in a Volatility Auction will be canceled immediately after the
Volatility Auction match. All remaining shares from Auction Eligible
Orders and Auction Ineligible Orders that are not canceled by the
System immediately after a Volatility Auction match will be released to
the Continuous Book for trading in the Regular Market Session, subject
to the orders' instructions. Routable orders that are released to the
Continuous Book will be routed in accordance with IEX Rule 11.230(c)
(Re-Sweep Behavior), subject to the orders' instructions.
Closing With a Volatility Auction
    Where an IEX-listed security is paused pursuant to IEX Rule
11.280(e) at or after the Closing Auction Lock-in Time, or the Order
Acceptance Period of a Volatility Auction for a security paused before
the Closing Auction Lock-in Time pursuant to IEX Rule 11.280(e)

would otherwise be extended by the Exchange to a time after the Closing
Auction Lock-in Time, no Closing Auction for the security will occur.
Instead, the Exchange will conduct a Volatility Auction at the end of
Regular Market Hours to determine the IEX Official Closing Price for
the security pursuant to proposed Rule 11.350(f)(3).
Order Entry and Cancellation Before Closing With a Volatility Auction
    Pursuant to proposed Rule 11.350(f)(3)(A), Auction Eligible Orders
may be submitted to the Exchange at the beginning of the Order
Acceptance Period for participation in a Volatility Auction. All
Auction Eligible Orders will be queued until the auction match. All
orders associated with a Volatility Auction must be received prior to
the auction match in order to be eligible for execution in the
Volatility Auction. Auction Ineligible Orders will be rejected prior to
the auction match. MOC and LOC orders queued for the Closing Auction
will be incorporated into the Auction Book for the Volatility Auction.
When an IEX-listed security is paused pursuant to IEX Rule 11.280(e) at
or after the Closing Auction Lock-in Time, or the Order Acceptance
Period of a Volatility Auction for a security paused before the Closing
Auction Lock-in Time pursuant to IEX Rule 11.280(e) would otherwise be
extended by the Exchange to a time after the Closing Auction Lock-in
Time, non-displayed interest with a TIF of DAY and pegged orders will
be immediately canceled, in order to allow Users to re-enter such
interest as Auction Eligible Orders. Auction Eligible Orders associated
with a Volatility Auction may be canceled or modified at any time prior
to the auction match. In the event the Exchange cannot complete a
Volatility Auction before the end of Post-Market Hours (i.e., 5:00
p.m.), all open orders in the subject security on the Order Book will
be canceled.\89\
---------------------------------------------------------------------------

    \89\ See proposed Rule 11.350(f)(3)(A)(v).
---------------------------------------------------------------------------

Process for Closing With a Volatility Auction
    Under proposed Rule 11.350(f)(3)(B)(i), at the start of the Display
Only Period and updated every one second thereafter, IEX Auction
Information associated with the Volatility Auction will be disseminated
via electronic means. The Exchange shall execute the Volatility Auction
to determine the IEX Official Closing Price of a security in accordance
with the clearing price determination process described above and set
forth in proposed Rule 11.350(f)(3)(B)(ii). If the Volatility Auction
price established by proposed Rule 11.350(f)(3)(B)(ii) is outside the
Volatility Auction Collar, the Order Acceptance Period shall be
extended pursuant to 11.350(f)(2)(C)(ii) and the Volatility Auction
Collars shall be updated pursuant to Rule 11.350(f)(2)(D)(ii),
described above. If the Volatility Auction match price meets the
conditions for extending the Order Acceptance Period described in Rule
11.350(f)(2)(C)(i), the Order Acceptance Period shall be extended
pursuant to 11.350(f)(2)(C)(i).
    Auction Eligible Orders matched in the Volatility Auction will
execute in accordance with IEX Auction Priority, described above.
Specifically, as set forth in proposed Rule 11.350(f)(3)(B)(iii),
market and MOC orders have priority over all other Auction Eligible
Orders in the Volatility Auction. To the extent there is executable
contra side interest, such market and MOC orders will be executed at
the IEX Official Closing Price according to time priority. After the
execution of all market and MOC orders, the remaining Auction Eligible
Orders with a resting price more aggressive than the IEX Official
Closing Price will be executed in price-display-time priority at the
IEX Official Closing Price. All remaining Auction Eligible Orders with
a resting price equal to the IEX Official Closing Price shall execute
in display-time priority at the IEX Official Closing Price. All AGID
modifiers as defined in Rule 11.190(e), and Minimum Quantity
instructions as defined in Rule 11.190(b)(11), will not be supported in
the Volatility Auction, but will be enforced on all unexecuted shares
released to the Continuous Book following the Volatility Auction match.
The IEX Official Closing Price will be the price of the Volatility
Auction. If there is insufficient trading interest (i.e., no crossing
interest) in the System to execute the Volatility Auction for that
security, the Final Last Sale Eligible Trade shall be used as the IEX
Official Closing Price in that security, and the security will be
released for trading pursuant to proposed Rule 11.350(f)(3)(C),
described below. Pursuant to Rule 11.350(c)(2)(F), if IEX has not
determined the IEX Official Opening Price for an IEX-listed security,
and the security is subject to an LULD trading pause, the IEX Official
Opening Price will be the price of the Volatility Auction.
Contingency Procedures for Closing With a Volatility Auction
    Under proposed Rule 11.350(f)(3)(D), when a disruption occurs that
prevents the execution of the Volatility Auction as set forth above,
IEX will utilize the Closing Auction Contingency Procedures as defined
in proposed Rule 11.350(d)(4).
Transition to Post-Market Session
    Pursuant to proposed Rule 11.350(f)(3)(C), LOC, MOC, and market
orders, as well as all orders with a TIF of DAY, FOK, or IOC that are
not fully executed at the conclusion of the Volatility Auction will be
canceled immediately after the Volatility Auction match. All remaining
shares from Auction Eligible Orders that are not canceled immediately
by the System after the Volatility Auction match will be released to
the Continuous Book for trading in the Post-Market Session, subject to
the orders' instructions. Routable orders that are released to the
Continuous Book will be routed in accordance with IEX Rule 11.230(c)
(Re-Sweep Behavior), subject to the orders' instructions.
Short Sale Order Handling
    For Opening, Closing, Halt, and Volatility Auctions for covered
securities, when the Short Sale Price Test of Rule 201 of Regulation
SHO is in effect, the Exchange will not execute or display short sale
orders not marked short exempt at a price at or below the current
NBB.\90\ Specifically, when the Short Sale Price Test of Rule 201 of
Regulation SHO is in effect during the auction match for covered
securities, and the inclusion of one or more sell short orders not
marked short exempt would push the auction match price to a price at or
below the current NBB at the time of the auction match (i.e., the time
of execution of orders in the auction), then such short sale orders not
marked short exempt and all other short sale orders not marked short
exempt with lesser priority shall not receive an execution in the
auction match.
---------------------------------------------------------------------------

    \90\ See Rule 201(b)(1) of Regulation SHO.
---------------------------------------------------------------------------

    In addition, the Exchange notes that short sale orders not marked
short exempt for a covered security subject to the Short Sale Price
Test of Rule 201 of Regulation SHO submitted to the Continuous Book are
subject to Rule 11.190(h)(4) (Short Sale Price Sliding), and will
therefore not be displayed at a price at or below the current NBB.
Furthermore, short sale orders submitted to the Auction Book that are
not marked short exempt for a covered security subject to the Short
Sale Price Test of Rule 201 of Regulation SHO submitted to the Auction
Book are not displayed, and therefore will not be displayed at a price
at or below the current NBB. In the case of an IPO

Auction, the security will never be subject to the Short Sale Price
Test of Rule 201 of Regulation SHO since there will have been no prior
trading.\91\
---------------------------------------------------------------------------

    \91\ Note, IPO Auctions are used to open securities that are the
subject of a new security offering pursuant to Section 6 of the
Securities Act of 1933 on the first day of trading on the Exchange.
Pursuant to question 3.2 of the Responses to Frequently Asked
Questions Concerning Rule 201 of Regulation SHO, on the first day of
trading of a covered security on any listing market, pursuant to a
new security offering, there will not be a closing price for the
covered security for the prior day. Thus, Rule 201 will not apply to
such covered securities until the second day of trading.
---------------------------------------------------------------------------

    Accordingly, when the Short Sale Price Test of Rule 201 of
Regulation SHO is in effect during an auction for a covered security, a
short sale Auction Eligible Order not marked short exempt with a
resting (as defined in proposed Rule 11.350(b)(1)(A)(i)) price at or
below the auction match price will not participate (in whole or in
part) in the clearing price determination or receive an execution (in
whole or in part) in the auction match (despite such orders
marketability against the auction match price) if the short sale
order's participation in the clearing price determination of the
auction would push the auction match price to a price at or below the
current NBB price. The following describes the execution priority for
auctions in a security when the Short Sale Price Test pursuant to Rule
201 of Regulation SHO is in effect:
     Auction Eligible Order that are market orders, including
MOO and MOC orders, to buy, sell long, or sell short that do not push
the auction match price to a price at or below the current NBB, will
execute in time priority.
     All other Auction Eligible Orders priced more aggressively
than the auction match price to buy, sell long, or sell short that do
not push the auction match price to a price at or below the current
NBB, will execute in price-display-time priority.
     All other Auction Eligible Orders priced equal to the
auction match price to buy, sell long, or sell short that do not push
the auction match price to a price at or below the current NBB, will
execute in display-time priority.
    Proposed Rule 11.350(h) states that whenever in the judgment of the
Exchange, the interests of a fair and orderly markets so require, the
Exchange may adjust the timing of or suspend the auctions set forth in
this IEX Rule with prior notice to Users. The Exchange believes that
reserving qualified discretion to adjust the timing or suspend IEX
Auctions in the interest of fair and orderly markets is inherently
consistent with the protection of investors and the public interest.
The Exchange believes that this discretion is necessary to give the
Exchange latitude to adapt to quickly changing, volatile market
conditions that may negatively impact market participants. The Exchange
further notes that Bats Rule 11.23(f) reserves identical discretion,
stating ``[w]henever, in the judgment of [Bats], the interests of a
fair and orderly market so require, the Exchange may adjust the timing
of or suspend the auctions set forth in this Rule with prior notice to
Users''.
    Proposed Rule 11.350(i) states that for purposes of Rule 611(b)(3)
of Regulation NMS and section VI(D)(6) of the plan to Implement a Tick
Size Pilot Program, orders executed pursuant to the Opening Auction,
Closing Auction, IPO Auction, Halt Auction, and Volatility Auction may
trade-through or trade-at the price of any other Trading Center's
Manual or Protected Quotations if the transaction that traded-at or
constituted the trade-through was a single-priced opening, re-opening,
or closing transaction by the trading center. Each of the orders
executed pursuant to the Opening Auction, Closing Auction, IPO Auction,
Halt Auction, and Volatility Auction are by definition a single priced
opening, re-opening, or closing transactions, and therefore meet the
letter and spirit of Rule 611(B)(3) of Regulation NMS and section
VI(D)(6) of the plan to Implement a Tick Size Pilot Program, and are
consistent with the protection of investors and the public interest.
IEX Auction Information
    In addition to the amendments to IEX Rule 11.350 to govern Exchange
Auctions, the Exchange proposes to amend IEX Rule 11.330 to describe
the addition of IEX Auction Information to recipients of the IEX Top of
Book Quote and Last Sale feed (``TOPS''), the IEX Depth of Book and
Last Sale feed (``DEEP''), as well as the IEX Data Platform, which is
available on the Exchange's public Web site. TOPS, DEEP, and the IEX
Data Platform is available to Exchange data recipients \92\ free of
charge.
---------------------------------------------------------------------------

    \92\ Exchange data recipients include Members of the Exchange as
well as non-Members that have entered into an agreement with the
Exchange that permits them to receive Exchange data.
---------------------------------------------------------------------------

    As defined in proposed Rule 11.350(a)(9), IEX Auction Information
contains the current status of price, size, imbalance information,
auction collar information, and other relevant information related to
auctions conducted by the Exchange, described below.\93\ IEX intends to
disseminate substantially the same information through the Consolidated
Quotation System operated by the Consolidated Tape Association
(``CTA'') SIP, pending approval by the Operating Committee of the CTA.
Following such approval, IEX will amend Rule 11.330 to reflect this
additional means of dissemination.
---------------------------------------------------------------------------

    \93\ The Exchange does not charge fees for any of its data feeds
or for ports used for receipt of data from the Exchange.
---------------------------------------------------------------------------

    IEX Auction Information as proposed is substantially similar to the
Bats Auction Feed, and the Nasdaq Net Imbalance Order Indicator
(NOII).\94\ However, consistent with the commitment made by each
primary listing exchange set forth in Amendment 12 to the Limit Up-
Limit Down Plan, the Exchange is proposing to include the applicable
auction collar values and the reference price from which the collar is
derived, the scheduled time of the auction, and the number of auction
extensions, if any. Furthermore, the Exchange will disseminate IEX
Auction Information every one second, which is a more frequent interval
than auction information is disseminated by Bats and Nasdaq, but less
frequent than NYSE Arca.\95\ IEX Auction Information will contain the
following data elements:
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    \94\ See Bats Rule 11.22(i), as well as the Bats Auction Feed
Specification. See also Nasdaq Rules 4752(a)(2), 4753(a)(3), and
4754(a)(7), as well as the Nasdaq Net Order Imbalance Indicator User
Guide.
    \95\ See Bats Rules 11.23(b)(2)(A), 11.23(c)(2)(A),
11.23(d)(2)(A), and 11.23(e)(2)(A), which state that Bats auction
information will be disseminated in 5 second intervals; See Nasdaq
Rule 4752(d)(1), which states that an Order Imbalance Indicator
shall be disseminated every five seconds between 9:28 a.m. and the
Nasdaq Opening Cross, Nasdaq Rule 4754(b)(1), which states that an
Order Imbalance Indicator shall be disseminated every five seconds
between 3:50 p.m. and the Nasdaq Closing Cross, and Nasdaq Rule
4753(b)(1), which states that an Order Imbalance Indicator shall be
disseminated every five seconds at the beginning the Display Only
Period for a Nasdaq Halt Cross and continuing through the resumption
of trading; See Arca Rule 7.35(a)(4)(A), which states that Auction
Imbalance Information is updated at least every second, unless there
is no change to the information, as well as the XDP Integrated Feed
Client Specification version 1.16b, Section 13.2 at 27, which states
that Auction Imbalance Information is published in real time.
---------------------------------------------------------------------------

     Reference Price: The single price at or within the
Reference Price Range at which orders on the Auction Book would match
if the IEX Auction were to occur at that time of dissemination. The
Reference Price is set to the price that maximizes the number of the
shares from orders on the Auction Book to be executed in the auction.
If more than one price maximizes the number of shares that will
execute, the Reference Price is set to the entered price at which
shares will remain unexecuted in the

auction (i.e., the price of the most aggressive unexecuted order). If
more than one price satisfies the above conditions (i.e., shares are
maximized at each price at or higher than the most aggressive
unexecuted buy order and at or lower than the most aggressive
unexecuted sell order, resulting in an ``auction price range''), the
Reference Price is set to the price within the auction price range that
minimizes the distance from either the Volume Based Tie Breaker (if the
auction price range includes prices in the Reference Price Range) or
the Reference Price Range (if the auction price range does not include
prices in the Reference Price Range) at the time of dissemination. In
the case of an IPO or Halt Auction, the Reference Price shall be the
same as the Auction Book Clearing Price.
     Paired Shares: The number of shares from orders on the
Auction Book that can be matched with other orders on the Auction Book
at the Reference Price at the time of dissemination.
     Imbalance Shares: The number of shares from orders on the
Auction Book that may not be matched with other orders on the Auction
Book at the Reference Price at the time of dissemination.
     Imbalance Side: The buy/sell direction of any imbalance at
the time of dissemination.
     Indicative Clearing Price: The single price at or within
the Opening/Closing Auction Collar at which Auction Eligible Orders
would match if the IEX Auction were to occur at the time of
dissemination pursuant to the procedures for determining the clearing
price set forth in the applicable auction rule. In the case of an IPO,
Halt, or Volatility Auction, the Indicative Clearing Price shall be the
same as the Auction Book Clearing Price.
     Auction Book Clearing Price: The single price at which
orders on the Auction Book would match if the IEX Auction were to occur
at the time of dissemination pursuant to the procedures for determining
the clearing price set forth in the applicable auction rule, but shall
not be constrained by the Opening/Closing Auction Collar, as
applicable. If shares from market orders would remain unexecuted, IEX
shall disseminate an indicator for ``market buy'' or ``market sell.''
     Collar Reference Price: Opening/Closing Auction Collar
Reference Price for the Opening and Closing Auctions. Volatility
Auction Collar Reference Price for the Volatility Auction.
     Lower Auction Collar: The lower threshold of the Opening/
Closing Auction Collar for the Opening and Closing Auctions. The lower
threshold of the Volatility Auction Collar for the Volatility Auction.
     Upper Auction Collar: The upper threshold of the Opening/
Closing Auction Collar for the Opening and Closing Auctions. The upper
threshold of the Volatility Auction Collar for the Volatility Auction.
     Scheduled Auction Time: The projected time of the auction
match.
     Extension Number: The total number of automatic Order
Acceptance Period extensions an IPO, Halt, or Volatility Auction has
received.
    Note that the Reference Price, Indicative Clearing Price, and
Auction Book Clearing Price will show the same value during an IPO or
Halt Auction since there is no Continuous Book and no applicable
auction collar. In addition, if there is a market order imbalance in an
IPO or Halt Auction, the Reference Price, Indicative Clearing Price,
and Auction Book Clearing Price will all have a value of zero,
indicating that an auction match price cannot be calculated, the
Imbalance Side will indicate the side of the market order imbalance,
and the Imbalance Shares will indicate the size of the market order
imbalance. Lastly, if there is a market order imbalance in an Opening
or Closing Auction, the Auction Book Clearing Price will all have a
value of zero. IEX Auction Information will be disseminated every one
second between the Lock-in Time and the auction match for Opening and
Closing Auctions, and during the Display Only Period for IPO, Halt, and
Volatility Auctions.
    The fields proposed for dissemination in IEX Auction Information
are strategically tailored to the IEX Auction model, and were developed
after informal discussion with various Members, as well as reference to
existing fields offered in auction data provided by other exchanges,
including the Nasdaq NOII, and the Bats Auction Feed. Specifically, the
Indicative Clearing Price and Auction Book Clearing Price are
substantially similar to the Nasdaq ``Near Clearing Price'' and ``Far
Clearing Price'' as well as the Bats ``Indicative Price'' and ``Auction
Only Price'', and should therefore be familiar to Members that trade in
the Nasdaq and Bats auctions.\96\ Similarly, the proposed Reference
Price field is substantially similar to the Reference Price utilized by
Bats, and Nasdaq.\97\
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    \96\ See the Bats US Equities Auction Process specification at
8, as well as the Nasdaq Net Order Imbalance Indicator User Guide at
4-5.
    \97\ See the Bats US Equities Auction Process specification at
7, and 5, which define the Reference Price as the price within the
Reference Price Range that maximizes the number of shares to be
executed, minimizes the imbalance, and minimizes the distance to the
Volume Based Tie Breaker. See also e.g., Nasdaq Rule 4754(a)(7)(A),
which defines the Current Reference Price for the Nasdaq closing
cross.
---------------------------------------------------------------------------

    Moreover, as proposed, the Exchange will utilize orders on the
Auction Book to calculate the Paired Shares, Imbalance Shares, and
Imbalance Side fields included in IEX Auction Information (i.e., both
displayed and non-displayed orders on the Continuous Book are not
accounted for when determining the number of shares that can be matched
or remain unexecuted at the current Reference Price). The proposed
Paired Shares, Imbalance Shares, and Imbalance Side fields are designed
to enhance the reliability of the fields disseminated in IEX Auction
Information, and mitigate potential gaming scenarios that could
negatively impact Users trading in IEX Auctions.
    Specifically, the fields as proposed are designed to avoid
disseminating Paired Shares and Imbalance Shares based on orders on the
Continuous Book that may be fleeting. Orders on the Continuous Book are
not subject to lock-in or lock-out restrictions, and may therefore be
canceled or executed at any time before the auction match. Including
potentially fleeting orders in the Paired Shares and Imbalance Shares
fields could have negative implications for price discovery leading up
to the auction match by discouraging Users from offsetting Imbalance
Shares, leaving unmatched shares on the Auction Book at the time of the
match when Continuous Book orders that were ostensibly offsetting the
Imbalance Shares (and contributing to Paired Shares) are canceled or
executed prior to the auction.
    Furthermore, as proposed, the Paired Shares field is designed to
allow Users to determine the likelihood of their Eligible Auction
Orders being executed in the auction. Specifically, because Paired
Shares only reflects orders that are locked in to the auction (and
therefore will be eligible for execution only in the auction), Users
can assess their chances of receiving an execution in the auction match
based on the marketability of their order against the Indicative
Clearing Price, and the number of Paired Shares against their order
size. For example, if the final Indicative Clearing Price is $10.00,
and IEX has 100,000 shares paired, a User that has a LOC order to buy
10,000 shares with a limit price of $10.50 has a high likelihood of
receiving a 10,000 share execution in the Closing Auction. To continue
the example and highlight the positive effects of the proposed
functionality on price discovery, if the

Indicative Clearing Price were to have moved away from the participant
(to $10.50, for example), such User's chances of receiving an execution
in the auction are diminished because the auction match price has moved
to the order's limit price, and such order is ``locked-in'' (i.e.,
ineligible for modification or cancelation). Accordingly, Users are
incentivized to express their full limit on Auction Eligible Orders in
order to increase the likelihood of receiving an execution in the
Opening or Closing Auction at a price they believe reflects the
fundamental value of the security. This truthful representation of full
limit prices is designed to enhance price discovery leading into the
auction match.
    The Exchange further notes that as proposed, the Paired Shares,
Imbalance Shares, and Imbalance Side fields are substantially similar
to the ``Reference Buy Shares'' and ``Reference Sell Shares'' fields
currently offered by Bats on the Bats Auction Feed, which provide the
number of shares associated with buy (sell) side Eligible Auction
Orders (which are on the Bats auction book, as defined in Bats Rule
11.23(a)(8)) that are priced equal to or greater (less) than the
Reference Price. However, rather than market participants deriving the
number of Paired Shares, Imbalance Shares, and the Imbalance Side, the
Exchange is proposing to derive and disseminate each value
independently.\98\ Moreover, Paired Shares, Imbalance Shares, and
Imbalance Side fields are substantially similar to the Paired Shares,
Imbalance Shares, and Imbalance Side fields that are currently offered
by Nasdaq in the NOII.\99\
---------------------------------------------------------------------------

    \98\ Note, paired shares would be equal to the lesser of
Reference Buy Shares and Reference Sell Shares; Imbalance Shares
would be equal to the absolute value of Reference Sell Shares minus
Reference Buy Shares; and the side of the greater between Reference
Buy Shares and Reference Sell Shares is the imbalance side.
    \99\ See the Nasdaq Net Order Imbalance Indicator User Guide at
4-5.
---------------------------------------------------------------------------

    For example, in the case of a Closing Auction if the Continuous
Book were to contain the following orders at the Lock-in Time, and the
NBBO were to be $19.99 x $20.00:
[GRAPHIC] [TIFF OMITTED] TN09MY17.001

    And the Closing Auction Book at the time were to contain the
following orders:
[GRAPHIC] [TIFF OMITTED] TN09MY17.002

    IEX would disseminate the following IEX Auction Information:

 Reference Price: $20.00
 Paired Shares: 10,000
 Imbalance Shares: 1,000
 Imbalance Side: Buy
 Indicative Clearing Price: $20.01
 Auction Book Clearing Price: $20.02
 Collar Reference Price: $19.995
 Lower Auction Collar: $18.00
 Upper Auction Collar: $21.99
 Scheduled Auction Time: 16:00:00
 Extension Number: 0
Trading Halts and LULD Plan
    Exchange Rule 11.280 governs trading halts due to Extraordinary
Market Volatility and pursuant to the LULD Plan. In order to address
the obligations of a listing market under the LULD Plan, the Exchange
proposes several amendments to IEX Rule 11.280. First, the Exchange
proposes to add provisions governing the manner in which auction orders
would be handled during an LULD trading pause, and how trading would be
re-opened following such pause. As proposed, IEX Rule 11.280(e)(5)(F)
provides that Auction Eligible Orders on the Auction Book are not price
slid or canceled due to LULD price bands. This provision is
substantially similar to Nasdaq Rule 4120(a)(12)(E)(5). In addition,
the Exchange proposes to add paragraph (e)(7) to 11.280 to provide that
the Exchange may declare an LULD trading pause for a NMS Stock listed
on the

Exchange during a straddle state. This provision is identical to BATS
Exchange Rule 11.18(e)(7). The Exchange also proposes a clarifying
change to the title to IEX Rule 11.280 to reference the Limit Up-Limit
Down Plan. The Exchange believes that the revised rule title, will
provide greater clarity to Members and other market participants.
Lastly, proposed Rule 11.280(e)(8) provides that following a trading
pause, the Exchange shall re-open trading in IEX-listed securities
pursuant to the procedures set forth in IEX Rule 11.350(f), and trading
in non-IEX-listed securities shall re-open upon receipt of the Price
Bands from the single plan processor responsible for consolidation of
information for the security. This provision is substantially similar
to Bats Rule 11.18(e)(8), and is consistent with the commitment made by
each primary listing exchange set forth in Amendment 12 to Limit Up-
Limit Down Plan to file rule changes with the Commission under Section
19(b) of the Exchange Act to amend its respective trading practice for
automated reopening's following a Trading Pause.
    The Exchange also proposes to add new paragraphs (g) and (h) to IEX
Rule 11.280 governing the initiation and termination of trading halts
by IEX in IEX-listed securities. Proposed paragraphs (g) and (h) to IEX
Rule 11.280 are complementary to each other, and to proposed Rule
11.280(e), in that paragraph (g) sets forth the conditions under which
the Exchange can initiate trading halts in circumstances in which IEX
deems it necessary to protect investors and the public interest.
Furthermore, such trading halts shall be initiated and terminated
pursuant to the procedures set forth in proposed paragraph (h), which
sets for the various procedures the Exchange will follow to initiate
and terminate trading halts, including the procedures related to IPO's
on the Exchange for IEX-listed securities.
    As proposed, new paragraph (g) provides that in circumstances in
which IEX deems it necessary to protect investors and the public
interest, IEX may halt trading in an IEX-listed security, pursuant to
the procedures set forth in new paragraph (h), under the following
circumstances:
     IEX Rule 11.280(g)(1) provides that the Exchange may halt
trading on IEX of an IEX-listed security to permit the dissemination of
material news,\100\ provided, however, that in the Pre-Market Session,
IEX will halt trading for dissemination of news only at the request of
an issuer or pursuant to proposed Rule 11.280(g)(2). Consistent with
the practices of other listing markets, IEX expects that when a listed
company releases material news during the Regular Market Session, the
Exchange will typically halt trading temporarily to ensure full
dissemination of the news, generally referred to as a regulatory
trading halt. However, and consistent with NYSE and Nasdaq rules, if an
IEX-listed company were to issue material news during the Pre-Market
Session the Exchange would only halt trading if the listed company
requests that trading in its listed securities be halted pending
dissemination of a public announcement. The Exchange believes that
because of lower volume of trading generally during the Pre-Market
Session, a listed company is best positioned to determine whether a
trading halt is appropriate given the news it intends to release.\101\
This approach is comparable to the rules of the NYSE and Nasdaq.\102\
When the Exchange implements a regulatory trading halt in an IEX-listed
security, trading is halted on all market centers to ensure full
dissemination of the news to investors.
---------------------------------------------------------------------------

    \100\ The Exchange considers material news to be any news would
reasonably be expected to affect the value of a company's securities
or influence investors' decisions.
    \101\ Pursuant to Exchange Rule 14.207, listed companies are
required to provide notice to the Exchange's Regulation Department
at least ten minutes prior to release of specified material
information if such release is made during System Hours (including
the Pre-Market, Regular and Post-Market Sessions).
    \102\ See Section 202.06 of the NYSE Listed Company Manual and
Nasdaq Rule 4120(a)(1).
---------------------------------------------------------------------------

     IEX Rule 11.280(g)(2) provides that IEX may halt trading
on IEX of a security listed on another national securities exchange
during a trading halt imposed by such exchange to permit the
dissemination of material news. This provision is designed to prevent
trading on IEX in a security which is pending disclosure and
dissemination of material information so that all market participants
have equal access to such information prior to making a trading
decision. The provision is also consistent with the rules of other
exchanges.\103\
---------------------------------------------------------------------------

    \103\ See, e.g., Nasdaq Rule 4120(a)(2).
---------------------------------------------------------------------------

     IEX Rule 11.280(g)(3) provides that IEX halt trading on
IEX of a security listed on another national securities exchange when
such exchange imposes a trading halt in that security because of an
order imbalance or influx (an ``operational trading halt''). Further,
IEX may halt trading on IEX in a security listed on IEX, when the
security is a derivative or component of a security listed on another
national securities exchange and such exchange imposes an operational
trading halt in that security. Unlike with a regulatory trading halt,
if an operational trading halt is in effect, IEX Members may commence
quotations and trading otherwise than on IEX at any time following
initiation of the operational trading halt, without regard to whether
IEX has terminated the trading halt on IEX. These provisions are
substantially similar to Nasdaq Rule 4120(a)(3) and are designed to
enable IEX to provide optionality to IEX members with respect to
operational trading halts.
     IEX Rule 11.280(g)(4) provides that IEX may halt trading
in an American Depository Receipt (``ADR'') or other security listed on
IEX, when the IEX-listed security or the security underlying the ADR is
listed on or registered with another national or foreign securities
exchange or market, and the national or foreign securities exchange or
market, or regulatory authority overseeing such exchange or market,
halts trading in such security for regulatory reasons. This provision
is designed to prevent trading on IEX in a security which is pending
disclosure and dissemination of material information so that all market
participants have equal access to such information prior to making a
trading decision. The provision is also consistent with Nasdaq Rule
4120(a)(4).
     IEX Rule 11.280(g)(5) provides that IEX may halt trading
in an IEX-listed security when IEX requests from the issuer of such
security, issuer information relating to material news, the issuer's
ability to meet IEX listing qualification requirements or any other
information. This provision, which is substantially similar to Nasdaq
Rule 4120(a)(5) is designed to assure that market participants do not
effect transactions in a security when, in the Exchange's opinion,
there is uncertainty as to whether all material information regarding
the security, including its ability to meet listing requirements, has
been fully disclosed to market participants.
     IEX Rule 11.280(g)(6) provides that IEX may halt trading
in an IEX-listed security when there is extraordinary market activity
in the security, and IEX determines that such activity is likely to
have a material effect on the market for such security and believes
that such activity is caused by the misuse or malfunction of an
electronic quotation, communication, reporting or execution system
operated by, or linked to, IEX. This provision also provides that IEX
may halt a security traded on IEX on an unlisted trading privileges
basis that is subject to extraordinary market activity,

if, after consultation with another national securities exchange or
FINRA, IEX believes that such activity is caused by a misuse or
malfunction of an electronic quotation, communication, reporting or
execution system operated by, or linked to such other exchange or
FINRA, as applicable. This provision is substantially similar to Nasdaq
Rule 4120(a)(6).
     IEX Rule 11.280(g)(7) provides that IEX may halt trading
in a security that is the subject of an IPO on IEX. This provision,
which is substantially similar to Nasdaq Rule 4120(a)(7), is designed
to provide flexibility to enable a trading halt in the event of an
unexpected system or other issue, or otherwise in connection with the
start of trading in an IPO.
    As noted above, proposed paragraph (h) provides the procedures for
initiating and terminating a trading halt and is substantially similar
to Nasdaq Rule 4120(c). As proposed, subparagraphs (h)(1), and (h)(2)
provide that IEX issuers are required to notify IEX of the release of
certain material news prior to the release of such information to the
public, as required by Rule 14.207(b)(1) and directly to IEX's
Regulation Department in the manner specified by IEX. Paragraph (h)(3)
provides that, upon receipt of the information from issuer or other
source, IEX will promptly evaluate the information, estimate its
potential impact on the market and determine whether a trading halt in
the security is appropriate.
    Paragraph (h)(4) provides that should IEX determine that a basis
exists under IEX Rule 11.280(g) or (e) for initiating at trading halt
or LULD trading pause, the commencement of the trading halt or pause
will be effective at the time specified by IEX in a notice posted on a
publicly available IEX Web site. IEX would also effectuate halt notices
through the Securities Information Processor (``SIP''). The Exchange
notes that during any trading halt or pause for which a Halt Auction or
Volatility Auction under IEX Rules 11.350(e) or (f), respectively, will
not occur, orders entered during the trading halt or pause will not be
accepted. Paragraph (h)(5) provides that trading in a halted security
shall resume at the time specified by IEX in a notice posted on a
publicly available IEX Web site. As with initiation of a trading halt,
IEX will also effectuate resumption notices through the SIP. These
provisions are substantially similar to Nasdaq Rule 4120(c)(4) and (5),
except that IEX will not accept orders with instructions to route to
another exchange during any trading halt or pause for which a Halt of
Volatility Auction under IEX Rules 11.350(e) or (f) will not
occur.\104\
---------------------------------------------------------------------------

    \104\ See Nasdaq Rule 4120(c)(4)(B).
---------------------------------------------------------------------------

    Paragraph (h)(6) specifies the process for trading halts initiated
under paragraph (g)(6) based on the misuse of malfunction of an
electronic quotation, communication, reporting, or execution system
that is not operated by IEX. In such a situation, IEX will promptly
contact the operator of the system in question (as well as any national
securities exchange or FINRA facility to which such system is linked)
to ascertain information that will assist IEX in determining whether a
misuse or malfunction has occurred, what effect the misuse or
malfunction is having on trading in a security, and what steps are
being taken to address the misuse or malfunction. If the operator of
the system is unavailable when contacted by IEX, IEX will continue
efforts to contact the operator of the system to ascertain information
that will assist IEX in determining whether the trading halt should be
terminated. A trading halt initiated under paragraph (g)(6) shall be
terminated as soon as IEX determines either that the system misuse or
malfunction that caused the extraordinary market activity will no
longer have a material effect on the market for the security or that
system misuse or malfunction is not the cause of the extraordinary
market activity. This provision is substantially similar to Nasdaq Rule
4120(c)(6).
    Paragraph (h)(7) specifies that a trading halt or pause in IEX-
listed securities, initiated under IEX Rule 11.280(e)(2), (7) or
(g)(1), (4), or (5) shall be terminated when IEX releases the security
for trading at the conclusion of the Halt or Volatility Auction
pursuant to IEX Rule 11.350(e) or (f), as applicable.
    Paragraph (h)(8) sets forth the process for terminating a trading
halt initiated in a security that is the subject of an IPO, pursuant to
IEX Rule 11.280(g)(7).\105\ As proposed, the trading halt shall be
terminated when IEX releases the security for trading and the following
conditions are satisfied:
---------------------------------------------------------------------------

    \105\ The provisions are substantially similar to Nasdaq Rule
4120(c)(8) except that IEX would provide a 30-minute Display Only
Period, rather than the 15-minute period that Nasdaq provides, in
order to increase transparency and price discovery.
---------------------------------------------------------------------------

     Users may enter orders in that security beginning at the
start of the Order Acceptance Period (generally 8:00 a.m.) which will
be accepted and entered into the System;
     Prior to terminating the halt there will be a Display Only
Period during which IEX will disseminate IEX Auction Information via
electronic means, and Users may continue to enter orders in that
security in the System and IEX will begin to disseminate IEX Auction
Information via electronic means;
     Thirty (30) minutes after the start of the Display Only
Period, unless extended by the underwriter, the security will enter a
Pre-Launch Period of indeterminate duration. The Pre-Launch Period and
the Display Only Period will end and the security will be released for
trading when the requirements of Rule 11.350(e)(2) are satisfied, and
the following conditions are met:
    [cir] IEX receives notice from the underwriter of the IPO that the
security is ready to trade. The System will calculate the Indicative
Clearing Price at that time and display it to the underwriter. If the
underwriter then approves proceeding, the System will conduct the
following validation checks:
    [ssquf] The System must determine that all market orders will be
executed in the IPO Auction; and
    [ssquf] the security must pass the price validation test.\106\
---------------------------------------------------------------------------

    \106\ As specified in Rule 11.280(h)(8)(c)(1) [sic], the
validation test is as follows: Prior to the conclusion of the Pre-
Launch Period, the underwriter shall select price bands for purposes
of applying the price validation test. Under the price validation
test, the System compares the Indicative Clearing Price approved by
the underwriter under proposed Rule 11.280(h)(8)(A) with the actual
price calculated by the IPO Auction. If the actual price calculated
by the IPO Auction differs from the Indicative Clearing Price by an
amount in excess of the price band selected by the underwriter, the
security will not be released for trading and the Pre-Launch Period
will continue. The underwriter shall select an upper price band
(i.e., an amount by which the actual price may not exceed the
Indicative Clearing Price approved by the underwriter under proposed
Rule 11.280(h)(8)(A)) and a lower price band (i.e., an amount by
which the actual price may not be lower than the Indicative Clearing
Price approved by the underwriter under proposed Rule
11.280(h)(8)(A)). If a security does not pass the price validation
test, the underwriter may, but is not required to, select different
price bands before recommencing the process to release the security
for trading. The price bands available for selection shall include
$0 but shall not be in excess of $0.50. IEX will notify member
organizations and the public of changes in available price band or
increments through a notice that is widely disseminated at least one
week in advance of the change. In selecting available price bands
and increments, IEX will consider input from underwriters and other
market participants and the results of past usage of price bands to
adopt price bands and increments that promote efficiency in the
initiation of trading and protect investors and the public interest.
---------------------------------------------------------------------------

    The failure to satisfy the above conditions during the process to
release the security for trading will result in a delay of the release
for trading of the IPO, and a continuation of the Pre-Launch Period,
until all conditions have been satisfied. The underwriter, with
concurrence of IEX, may determine at

any point during the IPO Auction process up through the conclusion of
the Pre-Launch Period to postpone and reschedule the IPO. Market
participants may continue to enter orders and order cancellations for
participation in the IPO Auction during the Pre-Launch Period until the
auction match.
    Finally, paragraph (h)(9) provides that the process for halting and
initial pricing of a security that is the subject of an IPO shall also
be available for the initial pricing of any other security that has not
been listed on a national securities exchange or traded in the over-
the-counter market pursuant to FINRA Form 211 immediately prior to the
initial pricing, provided that a broker-dealer serving in the role of
financial advisor to the issuer of the securities being listed is
willing to perform the functions under IEX Rule 11.280(h)(8) that are
performed by an underwriter with respect to an IPO. This provision is
substantially similar to Nasdaq Rule 4120(c)(9).
2. Statutory Basis
    IEX believes that the proposed rule change is consistent with the
provisions of Section 6(b) \107\ of the Act in general, and furthers
the objectives of Sections 6(b)(5) \108\ of the Act, in particular, in
that it is designed to promote just and equitable principles of trade,
to foster cooperation and coordination with persons engaged in
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system and, in general, to protect investors and the public interest.
IEX believes that operation of Exchange auctions for securities listed
on the Exchange will assist in the price discovery process and help to
ensure a fair and orderly market for securities listed on the Exchange.
In this regard, the proposed rule change is integral to its operation
of a listing market pursuant to rules already approved by the
Commission.\109\ The existing U.S. exchange listing market for
operating companies is essentially a duopoly of Nasdaq and NYSE. As of
March 17, 2017 there were 4,767 operating companies listed on U.S.
securities exchanges. All but 203, which are listed on NYSE's affiliate
NYSE MKT, are listed on NYSE or Nasdaq. IEX believes that to the extent
IEX's listing program is successful, it will provide a competitive
alternative to the existing duopoly, which will thereby benefit issuers
and investors, remove impediments to and perfect the mechanism of a
free and open market and a national market system, consistent with the
protection of investors and the public interest. Each of the existing
listing markets offer auctions similar to the proposed Opening,
Closing, IPO, Halt and Volatility auctions for IEX-listed securities,
and the Exchange believes that offering such auctions is essential for
operation of a listing market. Accordingly, the Exchange believes that
the proposal will allow the Exchange to provide companies with another
listing option, thereby promoting the aforementioned principles and
purposes of Section 6(b)(5) \110\ of the Act. For the same reasons, the
Exchange believes that the proposal is also designed to support the
principles of Section 11A(a)(1) \111\ of the Act in that it is designed
to promote fair competition among brokers and dealers and among
exchange markets by offering a new listing market to compete with the
existing Nasdaq and NYSE duopoly.
---------------------------------------------------------------------------

    \107\ 15 U.S.C. 78f.
    \108\ 15 U.S.C. 78f(b)(5).
    \109\ See Securities Exchange Act Release No. 34-78101 at 47
(June 17, 2016), 81 FR 41142 (June 23, 2016) (File No. 10-222).
    \110\ 15 U.S.C. 78f(b)(5).
    \111\ 15 U.S.C. 78k-1(a)(1).
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    IEX Auctions, along with our market, are designed to incentivize
and enable a broad range of market participants to enter trading
interest for potential participation in the auctions. First, IEX does
not impose membership, connectivity, or market data fees, in contrast
to Nasdaq and NYSE, so there are no expensive barriers to entry for
participation in the IEX Auctions. In addition, as proposed, IEX
Auctions will utilize a simple and transparent price-display-time
execution priority. Moreover, all Members are permitted to enter any
type of Auction Eligible Order and there are no privileged participants
(such as NYSE designated market makers and floor brokers) who receive
enhanced priority, access to special order types, or receive
information not available to other market participants.\112\ IEX
believes that this ``open access'' design will result in auctions that
attract meaningful trading interest that will enable robust price
discovery, consistent with the protection of investors and the public
interest, and in alignment with issuers' interests.
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    \112\ See NYSE Rule 72(c)(ii) which provides that Floor broker
and designated market makers have enhanced priority for the purpose
of share allocation in an execution as compared to orders
collectively represented in NYSE systems. See also NYSE Rule 70 and
[sic] Supplementary Material .25 to [sic] NYSE Rule 123C describing
the availability of discretionary e-Quotes or ``d-Quotes'' to Floor
brokers. See also NYSE Rule 123C(6)(b) which provides that between
2:00 p.m. and 3:45 p.m. Floor brokers receive an imbalance data feed
not available to other market participants.
---------------------------------------------------------------------------

    With respect to the auction design, as described more fully below,
the Exchange believes that the proposed rule change provides an auction
methodology that will be a transparent, efficient, and robust process
to aggregate trading interest submitted by a broad range of market
participants to be matched at a single clearing price, consistent with
the protection of investors and the public interest and in alignment
with issuers' interests. As proposed, the IEX Auction rules are similar
to auction rules of Nasdaq, NYSE, Arca, and Bats (each of which have
been approved by the Commission and found to be consistent with the
protection of investors and the public interest) with several
differentiators designed to enhance price discovery, transparency and
participation, each of which are discussed below.
    As discussed in the Purpose Section, after informal discussions
with various Members, the Exchange believes that excluding all non-
displayed orders (including pegged orders) that were on the Continuous
Book at the time of a halt dissemination from participating in the Halt
Auction is consistent with the protection of investors and the public
interest because Users submitting non-displayed orders are generally
entrusting the Exchange to price such orders at values that are
reflective of the market for a security. In the event of a trading
halt, the market is in the process of reestablishing the value of a
security, and therefore including non-displayed orders that are priced
against a reference price that may not reflect adjustments in valuation
resulting from additional information regarding the security during the
halt could potentially harm investors. Similarly, as noted above, the
Exchange believes excluding non-displayed orders from the Volatility
Auction is consistent with the protection of investors and the public
interest because Users submitting non-displayed orders are generally
entrusting the Exchange to price such orders at values that are
reflective of the market for a security. In the event of a volatility
trading pause, the security has just experienced sharp price volatility
and the market is in the process of reestablishing the value of a
security, and therefore including non-displayed orders that are priced
against a reference price that may not reflect adjustments in valuation
during the pause could potentially harm investors.
    While non-displayed limit orders are not necessarily ``pegged'' to
any particular reference price (such as a midpoint peg order, for
example), such

orders are subject to the Midpoint Price Constraint pursuant to IEX
Rule 11.190(h)(2), which states that non-displayed limit orders posting
to the Order Book with a limit price more aggressive than the Midpoint
Price is booked and ranked on the Order Book non-displayed at a price
equal to the Midpoint Price. To reflect changes to the NBBO, the order
is automatically re-priced by the System in response to changes in the
NBBO to be equal to the less aggressive of the order's limit price or
the Midpoint Price. Accordingly, in volatile markets that have
triggered a trading pause or halt, limit orders resting on the Order
Book that are not actively or algorithmically monitored are likely to
have been restricted by the Midpoint Price Constraint. Accordingly,
such orders would be priced against a reference price (i.e., the
Midpoint Price) that may not reflect adjustments in valuation during
the halt or pause, which could potentially harm such investors.
    As described in the Purpose Section, the Exchange believes that not
supporting AGID modifiers in IEX Auctions is consistent with the
protection of investors and the public interest because within the
context of the aggregated auction match process, counterparties are not
considered; only the aggregate available volume for execution is
considered. It is illogical to cancel an order that happens to be
allocated an execution against an order entered using the same MPID,
because both orders execute at the exact same price to the exact same
effect where the orders happen to execute against orders of a different
MPID. Furthermore, the Exchange believes that supporting AGID modifiers
and Minimum Quantity instructions as defined in Rule 11.190(b)(11) in
IEX Auctions would introduce additional technical complexities to the
clearing price determination process, and the Exchange believes
providing simplicity in this regard is in the interest of the
protection of investors and the public interest.\113\
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    \113\ The Exchange notes that Bats does not support broker self-
match restrictions in an IPO auction, or on regular market and limit
orders in the Opening and Closing auctions. See Bats Rule
11.23(a)(8)(C)(1) [sic] and Bats US Equities Auction Process
specification at 9. See also NYSE Arca Rule 7.31(i)(2), which states
that Orders marked with an STP modifier will not be prevented from
interacting during any auction. (Emphasis added)
---------------------------------------------------------------------------

    As discussed in the Purpose section, the Exchange is proposing to
utilize a default threshold percentage of ten (10) percent for the
Opening/Closing Auction Collar because, based on informal discussion
with various Members, as well as Nasdaq's usage of identical default
threshold percentage values, such values typically provide an
appropriate range within which price discovery may occur to maximize
the number of shares executed in the auction. Furthermore, the Exchange
believes utilizing the midpoint of the Protected NBBO to establish the
Opening/Closing Auction Collar Reference Price is consistent with the
protection of investors and the public interest in that the Protected
NBBO represents the range of prices that best reflect the market for a
security. In addition, utilizing the midpoint of the Protected NBBO may
be less susceptible to volatility and manipulation, because in order to
move the midpoint of the Protected NBBO to influence the auction, one
or more Users would need to sweep the entire market, rather than simply
entering aggressive interest on the Exchange.
    Moreover, the Exchange believes that the proposed Opening/Closing
Auction Collars are consistent with the protection of investors and the
public interest in that the default threshold is identical to the
default auction collar thresholds used by Nasdaq; however, Nasdaq
utilizes the midpoint of the best bid and offer on Nasdaq's book as the
collar reference price.\114\ The Exchange anticipates modifying such
benchmarks and thresholds in response to market-wide events that are
driving price volatility, and would therefore benefit from temporarily
widening threshold values in the interest of allowing robust price
discovery, consistent with the protection of investors and the public
interest. The Exchange notes that modification of the default threshold
percentage values for the Opening/Closing Auction Collar are subject to
the provisions of Section 19(b)(1) under the Act, and Rule 19b-4
thereunder.\115\
---------------------------------------------------------------------------

    \114\ See Nasdaq Rule 4752(d)(2)(E).
    \115\ See 15 U.S.C. 78s(b)(1), and 17 CFR 240.19b-4.
---------------------------------------------------------------------------

    As described above, the Exchange believes that the Volatility
Auction Collar, as proposed, is consistent with the protection of
investors and the public interest. Specifically, as noted above, the
Volatility Auction Collar, as proposed, is identical to the auction
collars imposed by Bats, Nasdaq, and Arca when conducting an auction to
resume a security subject to an LULD trading pause.\116\ Furthermore,
the proposed Volatility Auction Collar functionality is consistent with
the commitment made by each primary listing exchange set forth in
Amendment 12 to the Limit Up-Limit Down Plan to file rule changes with
the Commission under Section 19(b) of the Exchange Act to amend its
respective trading practice for automated reopening's following an LULD
trading pause consistent with a standardized approach agreed to by
Limit Up-Limit Down Plan Participants that would allow for extensions
of an LULD trading pause if equilibrium cannot be met for a reopening
price within specified parameters.\117\
---------------------------------------------------------------------------

    \116\ See 81 FR 75875 (November 1, 2016) (SR-BatsBZX-2016-61);
79158 (October 26, 2016), 81 FR 75879 (November 1, 2016) (SR-NASDAQ-
2016-131); and 79107 (October 18, 2016), 81 FR 73159 (October 24,
2016) (File No. SR-NYSEArca-2016-130).
    \117\ See e.g., Securities Exchange Act Release Nos. 79162
(October 26, 2016), 81 FR 75875 (November 1, 2016) (SR-BatsBZX-2016-
61); 79158 (October 26, 2016), 81 FR 75879 (November 1, 2016) (SR-
NASDAQ-2016-131); and 79107 (October 18, 2016), 81 FR 73159 (October
24, 2016) (File No. SR-NYSEArca-2016-130) and Securities and
Exchange Act Release No. 34-79410; File No. 4-631 (Notice of Filing
of the Twelfth Amendment to the National Market System Plan to
Address Extraordinary Market Volatility).
---------------------------------------------------------------------------

    As proposed, Halt and IPO Auctions will not be subject to a collar,
which is substantially similar to operation of the Bats halt auction
and the Nasdaq halt cross.\118\ In the case of a Halt or IPO Auction,
the process for arriving at the clearing price includes methods for
automatic (and in the case of an IPO, manual) extensions when there is
a market order imbalance, or the clearing price experiences volatility.
In addition, there is no continuous trading before a Halt or IPO
Auction, and therefore there is no reference price that is reflective
of the market for the security from which to derive an appropriate
collar. Accordingly, the Halt and IPO Auctions are designed to allow
for additional price discovery to occur in order for supply and demand
to efficiently price the security. Furthermore, Halt and IPO Auctions
are not constrained to occur at a specific time like the Open and
Closing Auctions (i.e., the start and end of Regular Market Hours),
therefore the auction process continues until prices converge to an
equilibrium and collars are not required to constrain prices before an
equilibrium is reached.
---------------------------------------------------------------------------

    \118\ See Bats Rule 11.23(d), and Nasdaq Rule 4753.
---------------------------------------------------------------------------

    As described in the purpose section, after informal discussion with
various Members, in the event there is no crossing interest for an IEX
Auction (and therefore no auction occurs), the Exchange proposes to
utilize the initial (final) trade on IEX when the Exchange is
determining the official auction price of an IEX-listed security using
IEX auctions, because much of the trading interest is aggregated at the
primary trading center leading into and immediately following the
auction.

Therefore, the initial (final) trade on the Exchange is likely to best
reflect the market for a security in the event no crossing interest
exists.\119\ Moreover, in the event a disruption prevents the Exchange
from conducting an auction in an IEX-listed security, the Exchange is
proposing to utilize the initial, latest, or final consolidated last
sale eligible trade. If the Exchange is experiencing a disruption that
is preventing the execution of an auction, market participants would be
made aware of such disruption pursuant to the contingency procedures
set forth above, and market participants are therefore likely to re-
route such interest to alternative execution venues. Therefore, the
initial, latest, or final consolidated last sale eligible trade is
likely to best reflect the market for a security in the event of a
disruption on the Exchange that is preventing the execution of an
auction for an IEX-listed security.\120\ Accordingly, the Exchange
believes the proposed Rule is consistent with the protection of
investors and the public interest.
---------------------------------------------------------------------------

    \119\ See e.g., proposed Rules 11.350(c)(2)(B) and
11.350(d)(2)(B).
    \120\ See e.g., proposed Rules 11.350(c)(4)(i) [sic].
---------------------------------------------------------------------------

    The Exchange also believes that the auction clearing price
determination is designed to support robust price discovery in a
transparent manner, consistent with the protection of investors and the
public interest, and in furtherance of a free and open market and a
national market system. Specifically, auctions will be matched at the
price that maximizes the number of shares to be executed at a single
price, with appropriate tie breakers that reflect supply and demand
from Auction Eligible Orders in the security and displayed interest in
the market (i.e., by considering the Protected NBBO, IEX BBO, or Final
Consolidated Last Sale Eligible Trade, depending on market conditions,
as the final tie breaker). As discussed below, the Exchange believes
that its proposed auction clearing price determination methodology is
consistent with the protection of investors and the public interest
because it is designed to provide an auction clearing price based on
robust price discovery that reflects supply and demand in the subject
security. The clearing price determination process proposed by the
Exchange is similar to Nasdaq, with certain modifications as described
in the Purpose Section.
    Specifically, as proposed, the clearing price determination for
both Nasdaq and IEX would first attempt to maximize the number of
shares executable in the auction at a single price. However, in the
event there is more than one price at which shares are maximized,
Nasdaq Rule 4752(d)(2)(B) states that the auction shall match at the
price that minimizes any imbalance, and if there is more than one price
at which shares are maximized and imbalance is minimized, Nasdaq Rule
4752(d)(2)(C) states that the auction shall match at the price at which
shares will remain unexecuted in the auction. The Exchange believes
that Nasdaq Rule 4752(d)(2)(B) and (C) are often the same price,
because the price at which imbalance is minimized is often also the
price at which shares remain unexecuted in the auction. Accordingly,
the Exchange is proposing to consolidate these conditions, and instead
utilize the price at which shares will remain unexecuted in the auction
(i.e., the price of the most aggressive unexecuted order).\121\
---------------------------------------------------------------------------

    \121\ The Exchange notes that in the rare event that Auction
Eligible Orders are perfectly matched at multiple prices, the prices
at which imbalance is minimized and the prices at which shares will
remain unexecuted are different. In such cases, the range of prices
within which the auction can occur on Nasdaq would be one (1) MPV
less aggressive than the prices within which the auction can occur
as proposed by the Exchange. Furthermore, in the event that Auction
Eligible Orders are perfectly matched at two prices that create a
one cent range, the price at which imbalance is minimized and the
price at which shares remain unexecuted is the same.
---------------------------------------------------------------------------

    Moreover, in the event the clearing price determination process
results in a clearing price range (i.e., shares are maximized at each
price at or higher than the most aggressive unexecuted buy order and at
or lower than the most aggressive unexecuted sell order, resulting in
an ``auction price range''), the Exchange proposes to utilize the price
closest the Volume Based Tie Breaker within the auction price range
(i.e., the price at or higher than the most aggressive unexecuted buy
order and at or lower than the most aggressive unexecuted sell order
that is closest or equal to the Volume Based Tie Breaker).\122\ This
differs from Nasdaq in that in the event the clearing price
determination process results in a clearing price range, Nasdaq Rule
4752(d)(2)(D) states that the auction shall match at the price that
minimizes the distance from the bid-ask midpoint of the inside
quotation on Nasdaq prevailing at the time of the auction. The proposed
rule is designed to match the auction at the Volume Based Tie Breaker
(e.g., midpoint of the Protected NBBO). The Exchange believes that when
when the clearing price determination process results in a clearing
price range, matching the auction at the price closest to the midpoint
of the Protected NBBO is consistent with the protection of investors
and the public interest, because such prices reflect the broader market
for the security.
---------------------------------------------------------------------------

    \122\ The Volume Based Tie Breaker is generally the midpoint of
the Protected NBBO. See proposed Rule 11.350(a)(33).
---------------------------------------------------------------------------

    Lastly, in the event the clearing price determined pursuant to the
procedures above is below (above) the lower (upper) threshold of the
Opening/Closing Auction Collar in the Opening or Closing Auction, the
value will be the price at or within the range of prices between the
lower (upper) threshold of the Opening/Closing Auction Collar and the
lower (upper) threshold of the Reference Price Range that best
satisfies the conditions described above. This differs from Nasdaq in
that under Nasdaq Rule 4752(d)(2)(E), if the auction price is outside
of the Nasdaq opening or closing auction collars, the auction shall
occur at a price within the threshold amounts that best satisfies the
conditions of Nasdaq Rule 4752(d)(2)(A) through (D). The Exchange
believes that the proposed rule is designed to provide greater clarity
to Users regarding the range of prices within which the Opening or
Closing Auction will occur (because the range is narrower) in the event
the clearing price is outside of the collar.
    The Exchange notes that the clearing price determination processes
utilized by other primary listing markets are not homogeneous. As
described above, the Exchange designed IEX Auctions with certain
features that are substantial similar to current functionality offered
by other listings markets, while making certain changes designed to
democratize auction participation among all Members via simplification
and transparency. Accordingly, the Exchange believes that the proposed
auction design will provide a transparent, efficient, and robust
process to aggregate trading interest submitted by a broad range of
market participants to be matched at a single clearing price,
consistent with the protection of investors and the public interest,
and in alignment with issuers' interests.
    As discussed in the Purpose Section, for Opening and Closing
Auctions, the Exchange proposes that non-displayed buy (sell) orders on
the Continuous Book with a resting price (as defined in proposed Rule
11.350(b)(1)(A)(i)) within the Reference Price Range will be priced at
the Protected NBB (NBO) for the purpose of determining the clearing
price, but will be ranked and eligible for execution in the Opening or
Closing Auction match at the order's resting price. Thus, non-displayed
orders will

influence the clearing price if such price is outside the Reference
Price Range, but not if the clearing price is within the Reference
Price Range. The Exchange believes that the proposed treatment of non-
displayed interest on the Continuous Book resting within the Reference
Price Range is designed to protect the anonymity of such resting non-
displayed interest during the dissemination of IEX Auction Information.
    The Exchange believes that market participants generally choose to
enter non-displayed interest in order that such interest is not
publicly disseminated in market data feeds or otherwise. The Exchange
believes that if non-displayed interest on the Continuous Book
influenced the determination of the clearing price within the Reference
Price Range (i.e., generally within the Protected NBBO) for an Opening
or Closing Auction then the existence of such non-displayed interest
could be deciphered by market participants through IEX Auction
Information, thereby leaking order information in a manner inconsistent
with the terms of the order, and the protection of investors and the
public interest. For example, and as discussed in the Purpose section,
the Exchange believes that information leakage could occur if the
Indicative Clearing Price is closer to the midpoint of the NBBO than
the Reference Price. This would indicate that there is non-displayed
interest resting on the Continuous Book for at least the size of the
imbalance and priced at least as aggressive as the Reference Price.
Thus, the Exchange proposes to price non-displayed buy (sell) orders on
the Continuous Book with a resting price within the Reference Price
Range to the Protected NBB (NBO) for the purpose of determining the
clearing price, but allow such orders to be ranked and eligible for
execution in the Opening or Closing Auction match at the order's
resting price, in order to avoid leaking order information regarding
such non-displayed orders, consistent with the protection of investors
and the public interest.\123\
---------------------------------------------------------------------------

    \123\ The Exchange notes as well that its proposed handling of
non-displayed interest on the Continuous Book will not impact the
accuracy or completeness of the Indicative Clearing Price because
the methodology for calculating the Indicative Clearing Price is
identical to the methodology used to calculate the auction match,
and thus the Indicative Clearing Price will reflect the price at
which the auction would occur including all Auction Eligible Orders
(including non-displayed order on the Continuous Book) as of the
dissemination time.
---------------------------------------------------------------------------

    Furthermore, the Exchange notes that the proposed handling of non-
displayed orders on the Continuous Book with a resting price within the
Reference Price Range in the Opening and Closing Auctions is
functionally substantially similar to the operation of Nasdaq Imbalance
Only (``IO'') orders in the Nasdaq opening and closing cross.
Specifically, because IO's are repeatedly repriced to be equal to the
Nasdaq best bid for buy orders or the Nasdaq best offer for sell orders
(collectively, the ``Nasdaq BBO''), such orders effectively do not
influence the determination of the clearing price within the Nasdaq
BBO, but remain eligible for execution in the auction solely to offset
imbalance, and influence the clearing price of the auction when it
moves beyond the Nasdaq BBO.\124\ In the same manner, non-displayed buy
(sell) orders on the IEX Continuous Book with a resting price within
the Reference Price Range are priced to the Protected NBB (NBO) for the
purpose of determining the clearing price and thus effectively do not
influence the determination of the clearing price within the Reference
Price Range, but are ranked and remain eligible for execution in the
auction at the order's resting price. In addition, non-displayed buy
(sell) orders on the Continuous Book with a resting price within the
Reference Price Range will influence the clearing price of the auction
when the clearing price moves lower (higher) than the Reference Price
Range. Accordingly, the Exchange believes that the proposed treatment
of non-displayed orders resting within the Reference Price Range on the
Continuous Book in the Opening and Closing Auction does not present any
new or novel functionality that has not already been considered by the
Commission, and is consistent with the protection of investors and
public interest.
---------------------------------------------------------------------------

    \124\ See Nasdaq Rule 4702(b)(10), which states that if an
imbalance only order to buy (sell) is entered with a price that is
higher (lower) than the highest bid (lowest offer) on the Nasdaq
Book, the price of the Imbalance Only Order will be modified
repeatedly to equal the highest bid (lowest offer) on the Nasdaq
Book, subject to the Users limit price.
---------------------------------------------------------------------------

    As discussed in the Purpose Section, the Exchange does not propose
to offer an imbalance order type (i.e., an order type that by its terms
is designed to solely offset a buy or sell order imbalance in the
auction), which is currently offered by Nasdaq, but not by Bats.\125\
However, Users who wish to offset buy or sell imbalances in an auction
may do so by entering LOO, LOC, limit orders priced less aggressive
than the applicable auction collar, or specifically in the case of an
Opening or Closing Auction, non-displayed interest on the Continuous
Book is eligible to offset imbalance without influencing the
determination of the clearing price within the Reference Price Range.
After informal discussion with various Members, the Exchange believes
that imbalance only order types are generally employed by Users
deploying sophisticated auction trading strategies, and are seldom used
by long-term or natural investors. Accordingly, the Exchange believes
that not offering a special imbalance only order type that is unlikely
to garner broad User adoption, while still offering investors the
opportunity to offset imbalances using LOO, LOC, limit orders, or
specifically in the case of an Opening or Closing Auction, non-
displayed interest on the Continuous Book with a resting price within
the Reference Price Range will simplify the process of participating in
auctions and attract more trading interest from a broad range of market
participants, thereby resulting in robust price discovery for the IEX
Auction, consistent with the protection of investors and the public
interest.
---------------------------------------------------------------------------

    \125\ See Nasdaq Rule 4702(b)(10) and (13).