[Federal Register Volume 84, Number 158 (Thursday, August 15, 2019)]
[Notices]
[Pages 41793-41801]
[FR Doc No: 2019-17487]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86626; File No. SR-IEX-2019-07]

Self-Regulatory Organizations: Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Modify
the IEX Fee Schedule, Pursuant to IEX Rules 15.110(a) and (c), To
Charge a Fee of $100 Per Month for Each Logical Order Entry Port in
Excess of Five Per User

August 9, 2019.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act''),\2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that on August 8, 2019, the Investors Exchange LLC (``IEX'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    Pursuant to the provisions of Section 19(b)(1) under the Act,\4\
and Rule 19b-4 thereunder,\5\ IEX is filing with the Commission a
proposed rule change to modify its Fee Schedule, pursuant to IEX Rules
15.110(a) and (c), to charge a fee of $100 per month for each logical
order entry port (``Order Entry Ports'') \6\ in excess of five per
User.\7\ As described below, although changes to the Fee Schedule
pursuant to this proposal are effective upon filing, IEX is choosing to
defer implementation of the proposed fee until October 1, 2019 to
provide an opportunity for IEX to receive and consider any comments
before the fee is assessed, as well as an opportunity for Users to
reduce the number of their assigned Order Entry Ports and corresponding
fees before the fee is applicable.
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    \4\ 15 U.S.C. 78s(b)(1).
    \5\ 17 CFR 240.19b-4.
    \6\ Order Entry Ports are used for sending and receiving order
messages.
    \7\ See Rule 1.160(qq).
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    The text of the proposed rule change is available at the Exchange's
website at www.iextrading.com, at the principal office of the Exchange,
and at the Commission's Public Reference Room.

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

    In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of and basis for the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of these statement may be examined at
the places specified in Item IV below. The self-regulatory organization
has prepared summaries, set forth in Sections A, B, and C below, of the
most significant aspects of such statements.

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

1. Purpose
    IEX has not previously imposed any fees for Order Entry Ports used
to access its market. In general, IEX believes that exchanges, in
setting fees of all types, should meet very high standards of
transparency to demonstrate why each new fee or fee increase meets the
Exchange Act requirements that fees be reasonable, equitably allocated,
not unfairly discriminatory, and not create an undue burden on
competition among

members and markets. IEX believes this high standard is especially
important when an exchange imposes fees for its own market data or for
connectivity to the exchange, because it believes each exchange has a
natural monopoly over its own market data (specifically depth of book
and direct access to top of book) and access to its own market.
Therefore, IEX believes that each exchange should take extra care to be
able to demonstrate that these fees are based on its costs and
reasonable business needs and that it is not taking advantage of its
unique position as an exchange that many market participants must be
able to access.
    For the same reasons, IEX is also choosing to defer implementation
of the proposed fee to October 1, 2019 in order to provide an
opportunity for industry comment and to take into consideration any
such comments before beginning to charge the fee. Under the existing
regulatory regime, exchange fee changes ``shall take effect upon filing
with the Commission.'' \8\ While the proposed fee is being filed under
this provision, IEX believes that proposals to raise fees for market
data and connectivity should be exposed to public notice and comment
before they are implemented. Consistent with this view, IEX is
voluntarily delaying implementation of the proposed fee so that market
participants have a reasonable opportunity to assess whether it is fair
and reasonable and meets the other standards of the Exchange Act and to
provide written comments, if they wish, before any Users of IEX are
charged the new fee.\9\ Additionally, delayed implementation will
provide an opportunity for Users to disconnect any of their assigned
Order Entry Ports, if they choose to do so, thereby reducing the fee to
be charged, before the first month in which IEX will charge for
assigned Order Entry Ports in excess of five.
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    \8\ See Section 19(b)(3)(A)(ii) of the Act, 15 U.S.C.
78s(b)(3)(A)(ii).
    \9\ Although fee filings are effective upon filing with the
Commission, such filings are subject to a 21-day comment period
following filing. Further, at any time within 60 days of the filing
of the proposed rule change, the Commission summarily may
temporarily suspend such rule change if it appears to the Commission
that such action is necessary or appropriate in the public interest,
for the protection of investors, or otherwise in furtherance of the
purposes of the Act. See 15 U.S.C. 78s(b)(3)(C). Therefore, any
comments submitted about this fee filing within this time frame can
inform any decision by the Commission as to whether to suspend the
rule change.
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    In proposing to charge fees for Order Entry Port connectivity, IEX
has sought to be especially diligent in assessing those fees in a
transparent way against its own aggregate costs of providing the
related service, and also carefully and transparently assessing the
impact on Members \10\--both generally and in relation to other
Members, i.e., to assure the fee will not create a financial burden on
any participant and will not have an undue impact in particular on
smaller Members and competition among Members in general. IEX believes
that this level of diligence and transparency is called for by the
requirements of Section 19(b)(1) under the Act,\11\ and Rule 19b-4
thereunder,\12\ with respect to the types of information self-
regulatory organizations (``SROs'') should provide in seeking approval
of any fee changes, and Section 6(b) of the Act,\13\ which requires,
among other things, that exchange fees be reasonable and equitably
allocated,\14\ not designed to permit unfair discrimination,\15\ and
that they not impose a burden on competition not necessary or
appropriate in furtherance of the purposes of the Act.\16\ This rule
change proposal addresses those requirements, and the analysis and data
in each of the sections that follow are designed to clearly and
comprehensively show how they are met.\17\
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    \10\ See Rule 1.160(s).
    \11\ 15 U.S.C. 78s(b)(1).
    \12\ 17 CFR 240.19b-4.
    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(4).
    \15\ 15 U.S.C. 78f(b)(5).
    \16\ 15 U.S.C. 78f(b)(8).
    \17\ The Commission staff recently published guidance suggesting
the types of information that SROs may use to demonstrate that their
fee filings comply with the standards of the Exchange Act
(``Guidance''). While IEX understands that the Guidance does not
create new legal obligations on SROs, the Guidance is consistent
with IEX's view about the type and level of transparency that
exchanges should meet to demonstrate compliance with their existing
obligations when they seek to charge new fees. See Staff Guidance on
SRO Rule Filings Relating to Fees (May 21, 2019) available at
https://www.sec.gov/tm/staff-guidance-sro-rule-filings-fees.
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    As noted above, IEX currently does not charge fees for connectivity
to the Exchange, including fees for logical connectivity for order
entry purposes. The objective of this approach was to eliminate any
fee-based barriers to connectivity for Members when IEX launched as a
national securities exchange in 2016, and it was successful in
achieving this objective in that a large portion of Members are
directly connected to IEX. As detailed below, IEX recently calculated
its annual aggregate costs for providing connectivity to the Exchange
at $1,508,649. Because IEX has to date offered logical port connections
free of charge, IEX has borne 100% of all connectivity costs. In order
to recover a portion of the aggregate costs of providing connectivity
to its Users (both Members and Service Bureaus, \18\) the Exchange is
proposing to modify its Fee Schedule, pursuant to IEX Rules 15.110(a)
and (c), to charge a fee of $100 per month for each Order Entry Port in
excess of five per User.\19\ The proposed fees would not apply to
logical ports used for other purposes, such as receiving market data or
drop copies,\20\ nor would such ports count toward the five free Order
Entry Port calculation. Furthermore, IEX would not charge any fee for
Users to connect to IEX's Disaster Recovery Facility or Test Facility,
for the reasons explained below.\21\
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    \18\ Service Bureaus, which offer technology-based services to
other companies for a fee, may access the Exchange's Order Entry
Ports on behalf of one or more Members. See Rule 11.130(d).
    \19\ Users who connect to the Exchange's Order Entry Ports are
either Members that connect directly to Exchange, or Service Bureaus
through which one or more Members connect to the Exchange. Because
it is the Exchange's Members that send orders to the Exchange
(either directly or through a Service Bureau), this rule filing
focuses on the expected impact on Members. However, because IEX
assigns Order Entry Ports to Users, which includes Service Bureaus
that provide connectivity to Members, the impact of the proposed fee
on Service Bureaus will be addressed whenever relevant.
    \20\ Confirmations of orders and execution reports are
transmitted by the Exchange over the Order Entry Port that was used
to enter the order. A ``drop copy'' contains redundant information
that a Member chooses to have ``dropped'' to another destination
(e.g., to allow the Member's back office and/or compliance
department, or another Member--typically the Member's clearing
broker--to have immediate access to the information). Drop copies
can only be sent via a drop copy port. Drop copy ports cannot be
used to enter orders.
    \21\ Logical ports to connect to the Disaster Recovery or Test
Facilities also would not count toward the five free Order Entry
Port calculation.
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    Similar to other exchanges, IEX offers its Members logical
connectivity ports, also known as ``sessions,'' for order entry and
receipt of trade execution reports and order messages.\22\ Members can
also choose to connect to IEX indirectly through a session maintained
by a third-party Service Bureau. Service bureau sessions may provide
access to one or multiple Members on a single session. Users of IEX
services (both Members and Service Bureaus) (``Users'') seeking to
establish one or more sessions with IEX submit an Equities Port Request
Form to IEX.\23\ Upon receipt of the completed paperwork, IEX assigns
the User the number of sessions requested by the

User. The number of sessions assigned to each User as of May 31, 2019
ranges from one to more than 100, depending on the scope and scale of
the Member's trading activity on IEX (either through a direct
connection or through a Service Bureau) as determined by the Member.
For example, by using multiple sessions, Members can segregate order
flow from different internal desks, business lines, or customers. IEX
does not impose any minimum or maximum requirements for how many Order
Entry Ports a Member or Service Bureau can maintain, and it is not
proposing to impose any minimum or maximum session requirements for its
Members or their Service Bureaus.
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    \22\ Logical connectivity for order entry is provided via
network switch and cabling infrastructure that delivers order and
execution messages, as well as server infrastructure that runs
software processes responsible for validating and formatting such
messages for either internal or external consumption.
    \23\ See the Equities Port Request Form and Service Bureau
Authorization at https://iextrading.com/docs/IEX%20Connectivity%20Agreements%20and%20Forms.pdf Members may also
send orders to IEX as a sponsored participant of another Member,
pursuant to Rule 11.130.
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    In January 2019, IEX conducted a study of its aggregate costs to
produce market data and connectivity (the ``Cost Study'').\24\ The Cost
Study includes a detailed analysis of IEX's aggregate baseline costs,
including the methodology it used for determining such costs for three
separate segments--market data, physical connectivity (the physical
connections required to access IEX in its data center), and logical
connectivity, which concerns the cost to offer and maintain Order Entry
Ports. The Cost Study estimated that IEX's aggregate annual cost to
provide Order Entry Ports in 2018 was $1,508,976, or $83.17 per Order
Entry Port per month.\25\ IEX currently does not charge fees for Order
Entry Ports and therefore generates no revenue in connection with such
ports.
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    \24\ See ``The Cost of Exchange Services--Disclosing the Cost of
Offering Market Data and Connectivity as a National Securities
Exchange'' (January 2019) available at https://iextrading.com/docs/The%20Cost%20of%20Exchange%20Services.pdf.
    \25\ Id at 30.
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    The following chart, from the Cost Study, details the individual
annual line item costs considered by IEX to be directly related to
offering logical connectivity. The servers, switches, and software
licenses included were limited to those specifically dedicated to order
entry access. ``Monitoring'' includes hardware and software licenses
used to monitor these physical assets and the health of the order entry
services provided by the Exchange. All physical assets and software,
which also includes assets used for testing (``ITF Order Entry'') and
monitoring of order entry infrastructure, were valued at cost,
depreciated over three years. For personnel costs, IEX calculated an
allocation of employee time for employees whose functions include
providing and maintaining logical connectivity, and used a blended rate
of compensation reflecting salary, stock and bonus compensation,
bonuses, benefits, payroll taxes, and 401(k) matching contributions.
The total annual cost of $1,508,976 was divided by the number of
available Order Entry Ports, or sessions, to arrive at an annual cost
of $998, or approximately $83 per month, per port.\26\
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    \26\ As reflected in Table 1, the Cost Study estimated that
IEX's total annual order entry infrastructure costs are $1,616,409,
which includes a cost of $107,761 to provide 108 drop copy ports.
However, IEX is not proposing to charge for drop copy ports, and
therefore subtracted those costs ($107,761) from the annual order
entry infrastructure costs, which results in the total estimated
annual cost for providing Order Entry Ports of $1,508,976. See Id.
at 28-31.

                                 Table 1
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------------------------------------------------------------------------
Annual IEX Order Entry Infrastructure...................    ($1,616,409)
                                                                    \27\
Order Entry Distribution Switches (2 x 52 port).........       ($16,667)
Order Entry Access Layer Switches (6 x 24 port).........       ($40,000)
Client Gateway & Drop Copy Servers (CLGW/DCGW) (84/6)...      ($165,000)
a. Software Licensing...................................       ($48,000)
Sequencing Access Layer Switches (6 x 24 port)..........       ($50,000)
ITF Order Entry.........................................       ($95,333)
Space, Power, Security..................................       ($14,560)
Administrative Access...................................       ($33,333)
Monitoring..............................................      ($320,567)
Personnel...............................................      ($832,949)
Max Order Entry Sessions (Logical Sessions).............           1,512
Max Drop Copy Sessions (Logical Sessions)...............             108
Annual Cost per Order Entry Session.....................          ($998)
Annual Cost per Drop Copy Session.......................          ($998)
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    In order to recoup a portion of its aggregate costs in providing
Order Entry Ports, IEX is proposing to charge a fee of $100 per month
for each Order Entry Port above five such ports per User. IEX proposes
to provide five free Order Entry Ports in order to minimize barriers to
entry for Members and incentivize liquidity on the Exchange. IEX's
business model seeks to generate revenue from trading rather than from
data and connectivity fees, so an essential part of the proposed fee
structure is to enable all Members to be able to connect to the
Exchange at no cost. As described in more detail below, based on Order
Entry Port connectivity as of May 31, 2019, over 75% of Members with
connectivity use fewer than five Order Entry Ports and therefore will
not be subject to any corresponding port fees. In determining the
appropriate number of Order Entry Ports to provide for free, IEX
considered several factors. First, IEX recognizes that each User needs
at least two Order Entry Ports for redundancy purposes. Second, while
there is no ``exact science'' to the determination, from a review of
the number of Order Entry Ports currently requested and assigned to
each User, IEX believes that five such ports appear to be sufficient
for a majority of its Users. On that basis, IEX chose five Order Entry
Ports as a base level of free connectivity. Some Members will use many
more Order Entry Ports than other Members (and the five provided for
free), depending on the nature and volume of the business they conduct
on IEX and the choices they make in segmenting that business among
different Order Entry Ports. Allowing for this additional use of
Exchange capacity represents an aggregate cost that IEX seeks to
recover in part.
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    \27\ Id.
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    The proposed change is also designed to encourage Users to be
efficient with their Order Entry Port usage, thereby resulting in a
corresponding increase in the efficiency that the Exchange would be
able to realize in managing its aggregate costs for providing Order
Entry Ports. As discussed below, approximately 25% of the Order Entry
Ports maintained by Members were not used to send orders to IEX during
May 2019. There is no requirement that any Member maintain a specific
number of Order Entry Ports and a Member may choose to maintain as many
or as few of such ports as each Member deems appropriate.
    Finally, the fee will help to encourage Order Entry Port usage in a
way that aligns with IEX's regulatory obligations. As a national
securities exchange, IEX is subject to Regulation Systems Compliance
and Integrity (``Reg SCI'').\28\ Reg SCI Rule 1001(a) requires that IEX
establish, maintain, and enforce written policies and procedures
reasonably designed to ensure (among other things) that its Reg SCI
systems have levels of capacity adequate to maintain IEX's operational
capability and promote the maintenance of fair and orderly markets.\29\
By encouraging Users to be efficient with their Order Entry Port usage,
the proposed fee will support IEX's Reg SCI obligations in this regard
by ensuring that unused Order Entry Ports are available to be allocated
based on individual User needs and as IEX's overall order and trade
volumes increase.\30\ Additionally, because IEX will continue not to
charge for connections to its Disaster Recovery Facility or its Test
Facility, the proposed fee structure will further support IEX's Reg SCI
compliance by reducing the potential impact of a disruption should

IEX be required to switch to its Disaster Recovery Facility and
encouraging Members to engage in any necessary system testing without
incurring any port fee costs.\31\
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    \28\ 17 CFR 242.1000-1007.
    \29\ 17 CFR 242.1001(a).
    \30\ In the past year, IEX has seen a 10.8% increase in the
number of active use sessions.
    \31\ By comparison, some other exchanges charge less to connect
to their disaster recovery facilities, but still charge an amount
that could both recoup costs and potentially be a source of profits.
See, e.g., Nasdaq Stock Market LLC Equity 7, Section 115 (Ports and
other Services).
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    As proposed, Order Entry Port fees will apply based on the User
that maintains the Order Entry Port. If that User is a Member, the
Member will not be subject to a fee for the first five Order Entry
Ports and will be assessed a $100 monthly fee for each assigned Order
Entry Port in excess of five. If that User is a Service Bureau, the
Service Bureau likewise will not be subject to a fee for the first five
Order Entry Ports and will be assessed a $100 monthly fee for each
Order Entry Port assigned in excess of five. Depending on the
contractual terms in place, Service Bureaus may pass on such port fees
to their client Members.\32\
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    \32\ A total of 76 Members connect to IEX through an Order Entry
Port assigned to a Service Bureau, but only two Service Bureaus
currently maintain more than five Order Entry Ports, thereby
subjecting them to a fee for some of these ports.
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    As of May 31, 2019, 136 Members have assigned Order Entry Ports
(either directly or through a Service Bureau), with the number of
assigned Order Entry Ports ranging from one to 139 per Member. The
number of assigned Order Entry Ports is highly concentrated among a few
Members. Close to 50% of all Order Entry Ports are assigned to seven
Members. Of the Order Entry Ports assigned to those seven Members,
three are assigned over 32% of the Order Entry Ports, and two are
assigned close to 25%. More than 75% of IEX's Members (103 of 136) with
logical port connectivity to the Exchange will not be subject to any
Order Entry Port fees under the proposed fee based on current usage,
because they are assigned five or fewer Order Entry Ports (either
directly or through a Service Bureau).
    Requests for (and assignment of) Order Entry Ports have increased
since IEX launched as an exchange in 2016 and as IEX's order and trade
volume have increased. In addition, some Users request and are assigned
more Order Entry Ports than they use. For example, during May 2019, 100
Members did not send orders through one or more assigned Order Entry
Ports, representing approximately 25% of all assigned Order Entry
Ports.
    Based on May 2019 data, IEX projects that 33 Members will be
subject to Order Entry Port fees, assuming no changes in the number of
assigned Order Entry Ports. The following chart provides data on
projected monthly fees based on current Order Entry Port usage and a
separate projection assuming Members eliminate all currently unused
assigned Order Entry Ports following the implementation of the fee:
\33\
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    \33\ As discussed below, upon implementation of the new fee, IEX
expects some Members to reduce their unused assigned Order Entry
Ports, which would lead to a commensurate drop in the Order Entry
Port fees incurred by those Members.
    \34\ All four tables focus on the number of Order Entry Ports
assigned to Members, and do not include any of the Service Bureaus.
As discussed in note 32, above, under the proposed fee, two Service
Bureaus currently maintain more than five ports each, and would
therefore be charged for those Order Entry Ports in excess of five.
Specifically, these two Service Bureaus will collectively be charged
$3,000 per month based on their current Order Entry Port usage
($2,400 per month if the Service Bureaus disconnect their unused
sessions). Those two Service Bureaus may pass the Order Entry Port
fees on to their Members, depending on the contractual relationship
between the parties. Although these Service Bureaus are not included
in the four tables, the projected revenue from the Service Bureaus
is included in any calculations of total projected revenues from
this fee filing.

                                                   Table 2 34
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                                                   All currently assigned  ports    Eliminating unused assigned
                                                 --------------------------------              ports
                                                                                -------------------------------
                    Fee range                                        Estimated                       Estimated
                                                     # Members        average                         average
                                                                   monthly fees      # Members     monthly fees
                                                                        ($)                             ($)
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No Fee..........................................             103  ..............             109  ..............
Under $500......................................              10           2,800               9          $1,700
$500-$999.......................................               6           4,500               4           2,900
$1,000-$2,499...................................               7          12,700               7          10,400
$2,500-$4,999...................................               6          18,300               3           8,300
$5,000+.........................................               4          38,900               4          31,900
                                                 ---------------------------------------------------------------
    Totals......................................             136          77,200             136          56,200
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    Depending on the number of unused Order Entry Ports that are
retained following implementation of the proposed fee change, IEX
projects that between 103 and 109 Members will not be subject to any
Order Entry Port fees and between 27 and 33 Members will be subject to
the Order Entry Port fee, with most of those Members (between 20 and
23) paying less than $2,500 per month for their logical port
connections. Between seven and ten Members are projected to be subject
to a monthly charge of more than $2,500. Only four Members will be
potentially subject to a monthly charge in excess of $5,000. As
described in more detail below, the proposed fee is projected to
partially recover IEX's aggregate costs of providing logical Order
Entry Ports to Users. The anticipated annual deficit (i.e., the
difference between aggregate costs and fee revenue) is projected to be
between $546,249 and $805,449.\35\
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    \35\ These numbers are calculated as follows: IEX calculates its
annual aggregate cost for providing Order Entry Ports as $1,508,649.
Based on current Order Entry Port usage, on an annual basis, IEX
will collect $926,400 from its Members, and, as described in
footnote 34, above, $36,000 from two Service Bureaus (totaling
$962,400). Should the Members and Service Bureaus drop all unused
Order Entry Ports, on an annual basis, IEX will collect $674,400
from its Members and $28,800 from two Service Bureaus (totaling
$703,200). Finally, IEX subtracted the two projected annual fee
revenue totals from the total calculated cost of providing Order
Entry Ports.
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    The proposed fee will not apply differently based upon the size or
type of the market participant, but rather based upon the number of
Order Entry Ports a User requests, based upon factors deemed relevant
by each User (either a Member or Service Bureau). IEX believes these
factors include the costs to maintain connectivity, the volume of
incoming messages sent to

IEX, and choices Members make in how to segment or allocate their order
flow.\36\
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    \36\ IEX understands that some Members (or Service Bureaus) may
also request more Order Entry Ports to enable the ability to send a
greater number of simultaneous order messages to IEX by spreading
orders over more Order Entry Ports, thereby increasing throughput
(i.e., the potential for more orders to be processed in the same
amount of time). The degree to which this usage of Order Entry Ports
provides any throughput advantage is based on how a particular
Member sends order messages to IEX. However, it is important to note
that all Order Entry Ports on IEX provide the same throughput.
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    IEX assessed whether the fee may impact different types or sizes of
Members differently. As a threshold matter, and as discussed above, the
fee does not by design apply differently to different types or sizes of
Members. Nonetheless, IEX assessed whether there would be any
differences in the amount of the projected fee that correlate to the
type and/or size of different Members. This assessment revealed that
the number of assigned Order Entry Ports, and thus projected fees,
correlates closely to a Member's inbound message volume to IEX.
Specifically, as inbound message volume increases per Member, the
number of requested and assigned Order Entry Ports increases. Table 3,
below, presents data from May 2019 evidencing the correlation between a
Member's inbound message volume and the projected fee, based on the
number of Order Entry Ports assigned to the Member as of May 31, 2019.
Members with relatively higher inbound message volume are projected to
pay higher fees because they have requested more Order Entry Ports. For
example, the four Members that are projected to be subject to monthly
fees of $5,000 or more on average account for 9.6% of May inbound
messages (38.4% in the aggregate) and would pay 50.4% of the total
amount paid for Order Entry Port fees. In contrast, the 103 Members
that, based on their May 2019 Order Entry Port usage are not projected
to be subject to any Order Entry Port fees, on average account for only
0.2% of May inbound messages and would pay 0% of the total amount paid
for Order Entry Port fees.
    As discussed in more detail in the Statutory Basis section, IEX
believes that the variance between projected fees and Order Entry Port
usage is not unfairly discriminatory because it is based on objective
differences in Order Entry Port usage among different Members. IEX
notes that the distribution of total inbound message volume is
concentrated in relatively few Members, which consume a much larger
proportionate share of the Exchange's resources (compared to the
majority of Members that send substantially fewer inbound order
messages). This distribution of inbound message volume requires IEX to
maintain sufficient Order Entry Port capacity to accommodate the higher
existing and anticipated message volume of higher volume Members. Thus,
IEX's incremental aggregate costs for all Order Entry Ports are
disproportionately related to volume from the highest inbound message
volume Members. For these reasons, IEX believes it is not unfairly
discriminatory for the Members with the highest inbound message volume
to pay a higher share of the total Order Entry Port fees.
    In this regard, IEX notes that it is not possible to fully
synchronize its objective to provide five free Order Entry Ports to all
Members, thereby minimizing barriers to entry and encouraging liquidity
on the Exchange, with an approach that exactly aligns the projected per
Member fee with each Member's number of requested Order Entry Ports.
IEX believes that the low amount of the proposed fee substantially
mitigates any disparate impact.

                                                     Table 3
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                                                                   All currently assigned ports
                                                 ---------------------------------------------------------------
                                                                     Estimated                     Average % of
                    Fee range                                         average       % of total        inbound
                                                     # Members     monthly fees    fees charged    messages per
                                                                        ($)         (aggregate)       member
----------------------------------------------------------------------------------------------------------------
No Fee..........................................             103  ..............             0.0             .24
Under $500......................................              10           2,800             3.6             .37
$500-$999.......................................               6           4,500             5.8            1.56
$1,000-$2,499...................................               7          12,700            16.5            1.39
$2,500-$4,999...................................               6          18,300            23.7            2.41
$5,000+.........................................               4          38,900            50.4            9.61
----------------------------------------------------------------------------------------------------------------

    While Members with a business model that results in higher relative
inbound message activity are projected to pay higher fees, the level of
such fees is based solely on the number of Order Entry Ports deemed
necessary by the Member and not on the Member's business model or type
of Member. IEX notes that the correlation between percent of message
volume and projected Order Entry Port fees is not completely aligned
for two main reasons. First, every Member will receive up to five free
Order Entry Ports, and those ports become a decreasing percentage of a
Member's total Order Entry Ports as the number of such ports increases.
Second, Members individually determine how many Order Entry Ports to
request, and Members may make different decisions on the appropriate
message to Order Entry Port ratio based on facts unique to their
individual businesses.
    IEX also considered whether there are any differences in the number
of Order Entry Ports requested/assigned based on the liquidity ``take''
versus ``provide'' ratio \37\ of a Member's executed orders. The
results are summarized in Table 4 below. This analysis identified some
variation among Members at different projected fee levels, but not any
differences that are indicative of a disparate impact. The four Members
that are projected to incur a monthly charge in excess of $5,000 had a
slightly lower ``provide'' percentage of 42%, compared to Members not
projected to be subject to any charge, which had a ``provide''
percentage of 55%. Overall, however, Members at all projected fee
levels include significant amounts of taking and providing executed
orders. Thus, IEX does not believe that these differences reflect any
material connection between projected Order Entry Port fees and the
take versus provide ratio.
---------------------------------------------------------------------------

    \37\ An order that takes liquidity executes against orders
resting on IEX's order book. An order that provides liquidity is
executed after resting on IEX's order book.

                                                     Table 4
----------------------------------------------------------------------------------------------------------------
                                                                   All currently assigned ports
                                                                 --------------------------------
                                                                                Estimated      % of trades
                            Fee range                                                 average      that provide
                                                                     # Members     monthly fees      liquidity
                                                                                ($)
----------------------------------------------------------------------------------------------------------------
No Fee..........................................................             103  ..............              55
Under $500......................................................              10           2,800              44
$500-$999.......................................................               6           4,500              50
$1,000-$2,499...................................................               7          12,700              49
$2,500-$4,999...................................................               6          18,300              55
$5,000+.........................................................               4          38,900              42
----------------------------------------------------------------------------------------------------------------

    Consequently, the Exchange believes that this data supports its
view that the proposed fee will be fairly allocated among IEX Members
based on their usage of Order Entry Ports.
    The proposed fee is effective on filing and will become operative
on October 1, 2019.\38\
---------------------------------------------------------------------------

    \38\ Monthly fees will be assessed based on the number of Order
Entry Ports assigned to each User as of the first of each month.
---------------------------------------------------------------------------

    The Exchange is not proposing to assess any other fees for
connectivity, market data, or membership, each of which is currently
provided without charge.
2. Statutory Basis
    IEX believes that the proposed rule change is consistent with the
provisions of Section 6(b) \39\ of the Act in general and furthers the
objectives of Section 6(b)(4) \40\ of the Act, in particular, in that
it is designed to provide for the equitable allocation of reasonable
dues, fees and other charges among its Members and other persons using
its facilities. The Exchange also believes that the proposed fee change
promotes just and equitable principles of trade and will not be
unfairly discriminatory, consistent with the objectives of Section
6(b)(5) \41\ of the Act.
---------------------------------------------------------------------------

    \39\ 15 U.S.C. 78f(b).
    \40\ 15 U.S.C. 78f(b)(4).
    \41\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

Reasonableness
    With regard to reasonableness, the Exchange understands that the
Commission has traditionally taken a market-based approach to examine
whether the SRO making the proposal was subject to significant
competitive forces in setting the terms of the proposal. In looking at
this question, the Commission considers whether the SRO has
demonstrated in its filing that (i) there are reasonable substitutes
for the product or service; (ii) ``platform'' competition constrains
the ability to set the fee; and/or (iii) revenue and cost analysis
shows the fee would not result in the SRO taking supracompetitive
profits. If the SRO demonstrates that the fee is subject to significant
competitive forces, the Commission will next consider whether there is
any substantial countervailing basis to suggest the fee's terms fail to
meet one or more standards under the Exchange Act. If the filing fails
to demonstrate that the fee is constrained by competitive forces, the
SRO must provide a substantial basis, other than competition, to show
that it is consistent with the Exchange Act, which may include
production of relevant revenue and cost data pertaining to the product
or service.
    IEX has not previously charged Order Entry Port fees, so it does
not have IEX-specific data to support whether or not competitive forces
would constrain its ability to set fees for Order Entry Ports. However,
IEX notes that Order Entry Port fees at competing exchanges have
steadily risen over the last few years, \42\ compared to the pattern of
changes in transaction fees,\43\ which IEX believes demonstrates that
competition does not constrain connectivity fees. As noted in the Cost
Study, the six largest equities exchanges by market share \44\ all
charge between $550 and $575 per month to connect to each Order Entry
Port.\45\ As also noted in the Cost Study, the extreme differences
between IEX's aggregate cost to produce market data, physical
connectivity, and logical connectivity products and the prices charged
by other exchanges for similar products and services clearly suggests
that the pricing for all of these classes of products is not
constrained by competition.\46\ Furthermore, IEX notes that, as with
the market for other exchanges' Order Entry Ports, there is no
reasonable substitute for an IEX Order Entry Port to send orders to
IEX. Members (and Service Bureaus) could choose not to transact on IEX
and send orders to competing venues instead, but their orders may not
receive the same execution quality and other protections that IEX is
designed to provide. Members may also need connectivity to IEX, as with
other exchanges, in order to meet best execution \47\ and order
protection \48\ regulatory requirements. With respect to the Order
Protection Rule, connectivity to IEX enables a Member to access a
protected quotation on IEX in compliance with the rule. A Member (or
Service Bureau) could choose to send orders through another Member of
IEX as agent or through a Service Bureau, in lieu of connecting
directly to IEX. However, in such circumstances IEX expects that the
Member (or Service Bureau), subject to any IEX applicable fees, would
be subject to charges related to IEX connection fees either directly
(via a pass through) or indirectly (via charges that reflect the cost
of IEX connection fees). More important, connecting indirectly would
add latency that would

make this alternative impractical as a competitive matter for many
firms that, by virtue of their business, require the fastest available
access to the markets on which they trade. Accordingly, IEX does not
assert that this approach constitutes a reasonable substitute to
connecting directly to IEX's Order Entry Ports.
---------------------------------------------------------------------------

    \42\ As an example of the steady increase in Order Entry Port
fees charged by other exchanges, in 2012 NYSE raised its monthly
Order Entry Port fees from $150 to $200 per month, and three years
later, raised the monthly Order Entry Port fees from $200 to $550.
See Securities Exchange Act Release No. 68229 (November 14, 2012),
77 FR 69688 (November 20, 2012) (SR-NYSE-2012-60) and Securities
Exchange Act Release No. 76072 (October 5, 2015), 80 FR 61258
(October 9, 2015) (SR-NYSE-2015-43).
    \43\ With respect to transaction fees, other exchanges often
lower their fees or increase their rebate amounts, thereby lowering
their overall transaction fees. See, e.g., Securities Exchange Act
Release No. 85636 (April 17, 2019), 84 FR 16062 (April 12, 2019)
(SR-CboeBZX-2019-021) (creating a new volume tier that further
reduced the fees charged at the pre-existing volume tier) and
Securities Exchange Act Release No. 85373 (March 20, 2019), 84 FR
11379 (March 26, 2019) (SR-NASDAQ-2019-015) (offering an additional
$.00005 per share rebate for displayed quotes/orders that provide
liquidity).
    \44\ The market share of equities exchanges is calculated from
January 1, 2019 to May 31, 2019, based on IEX market data.
    \45\ See Cost Study, footnote 24 at 27.
    \46\ See Cost Study, footnote 24 at 18-19, 24-25, and 31-32,
respectively.
    \47\ FINRA Rule 5310.
    \48\ 17 CFR 242.611 (``Order Protection Rule'').
---------------------------------------------------------------------------

    Further, IEX is not aware of and does not believe that there is any
evidentiary support for the proposition that competition at the
``platform level'' constrains market data and connectivity fees in
general, including logical connectivity fees of the type proposed in
this filing.
    Thus, IEX believes that in the current market structure, the market
for connectivity to IEX and other exchanges is not subject to
significant competitive forces sufficient to ensure the reasonableness
of Order Entry Port fees, and IEX is not relying on an argument that
the fees proposed in this filing are justified based on market
competition.
    Instead, IEX believes the proposed fee is fair and reasonable as a
form of partial cost recovery for IEX's aggregate costs of offering
logical ports to its Members and Service Bureaus.\49\ The proposed fees
are expected to generate annual revenue of between $703,200 and
$962,400,\50\ providing a partial cost recovery to IEX for the
aggregate costs of offering logical port connections, based on a
methodology that narrowly limits the aggregate cost elements considered
to those closely and directly related to the particular product
offering. Thus, based on IEX's conservative cost methodology and
accounting for the costs of maintaining excess Order Entry Port
capacity, the proposed fees are projected to yield at most 63.8% of the
annual aggregate costs of offering the related product ($962,400
divided by $1,508,649). While IEX believes that exchanges could,
consistent with the Act, charge fees that represent a reasonable markup
over cost if they appropriately justify such fees, this proposed fee is
designed to provide only a partial cost recovery of IEX's aggregate
costs.
---------------------------------------------------------------------------

    \49\ See In the Matter of the Application of Securities Industry
and Financial Markets Ass'n for Review of Action taken by NYSE Arca,
Inc. and Nasdaq Stock Market, LLC, Securities Exchange Act Release
No. 84432, at 51 (October 16, 2018) (``the exchanges must
demonstrate that the fees are fair and reasonable, not that they are
less expensive than competing products'').
    \50\ See note 35 supra for the calculation of IEX's projected
annual Order Entry Port fee revenue.
---------------------------------------------------------------------------

    Further, IEX believes that a fee of $100 per Order Entry Port is
reasonable in relation to the per port cost estimate in the Cost Study
because: (i) Considering the five free ports for each User and the fact
that some Order Entry Ports are not used but are held in reserve by the
Exchange to meet increased capacity needs, IEX's aggregate cost is
greater than $100 per available Order Entry Port; (ii) the Cost Study
estimate was based on conservative assumptions that allocated only
those costs most directly related to the product offering; and (iii)
even ignoring these other factors, the $100 per port fee represents a
modest increase over the $83 cost estimate and dramatically less than
estimates of percentage markups for logical port fees charged by other
exchanges.\51\
---------------------------------------------------------------------------

    \51\ See Cost Study, footnote 24 at 31-32.
---------------------------------------------------------------------------

    IEX also believes the proposed fee is a reasonable means of
encouraging Users to be efficient in the number of logical ports they
reserve for use, with the benefits to overall system efficiency
described above with respect to unused Order Entry Ports.
Equitable Allocation and Non-Discrimination
    IEX believes that its proposed fee is reasonable, fair and
equitable, and not unfairly discriminatory because it is designed to
align fees with services provided, will apply equally to all Members
that are assigned Order Entry Ports (either directly or through a
Service Bureau), and will minimize barriers to entry by providing all
Members with five free Order Entry Ports. As described in the Purpose
section, a significant majority of Members will not be subject to any
fee, and only four Members will potentially be subject to a fee of over
$5,000 per month, based on current usage. In contrast, as described
above, other exchanges generally charge in excess of $500 per Order
Entry Port without providing any free Order Entry Ports.\52\ Even for
Members that choose to maintain more than five Order Entry Ports, IEX
believes that the cost-based fee of $100 is low enough that it will not
operate to restrain any Member's ability to maintain the number of
Order Entry Ports that it determines are consistent with its business
objectives. The small number of Members projected to be subject to the
highest fees will still pay considerably less than competing exchanges
charge.\53\ Further, the number of assigned Order Entry Ports will
continue to be based on decisions by each Member, including the ability
to reduce fees by discontinuing unused Order Entry Ports.
---------------------------------------------------------------------------

    \52\ See Cost Study, footnote 24 at 27.
    \53\ Notably, a Member that pays $10,000 in monthly Order Entry
Port fees to IEX (meaning the Member is assigned 105 Order Entry
Ports, with the first five being free), would pay $57,550 each month
to maintain the same number of sessions on NYSE (assuming the Member
was not a DMM connected to NYSE's DMM Gateway, which provides the
first 12 Order Entry Ports free of charge) and $60,375 each month to
maintain the same number of sessions on NASDAQ. See NYSE Price List
2019, available at https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf and Nasdaq General Equity and Options Rule,
Equity 7 Section 115(b) (``Ports and other Services'') available at
http://nasdaq.cchwallstreet.com/NASDAQTools/PlatformViewer.asp?selectednode=chp_1_1_2_2&manual=%2Fnasdaq%2Fmain%2Fnasdaq-llcrules%2F.
---------------------------------------------------------------------------

    The Exchange believes that providing five free Order Entry Ports is
fair and equitable, and not unfairly discriminatory because it will
enable all Members to access IEX free of charge, thereby encouraging
order flow and liquidity from a diverse set of market participants,
facilitating price discovery and the interaction of orders. IEX
believes that five Order Entry Ports is an appropriate number to
provide for free because it aligns with the number of such ports
currently maintained by a substantial majority of Members, as discussed
in the Purpose section. Based on a review of Order Entry Port usage,
103 of 136 connected Members are not projected to be subject to any
Order Entry Port fees under the proposed fee. As described in the
Purpose section, while Order Entry Port usage is concentrated in a few
relatively larger Members, the number of such ports requested is not
based on the size or type of Member but rather correlates to a Member's
inbound message volume to IEX. Further, as discussed in the Purpose
section, Members with relatively higher inbound message volume also
request (and are assigned) more Order Entry Ports than other Members,
which in turn means they account for a disproportionate share of IEX's
aggregate costs for providing Order Entry Ports. Therefore, IEX
believes it is not unfairly discriminatory for the Members with higher
inbound message volume to pay a modestly higher proportionate share of
the Order Entry Port fees.
    Accordingly, the Exchange believes that the fee will be applied
consistently with its specific purpose--to partially recover IEX's
aggregate costs, encourage the efficient use of Order Entry Ports, and
align fees with Members' Order Entry Port and system usage.
    The Exchange further believes that the proposed fees are
reasonable, fair and equitable, and non-discriminatory because they
will apply to all Members in the same manner and are not targeted at a
specific type or category of market participant engaged in any
particular trading strategy. All Members (or Service Bureaus) will
receive five free

Order Entry Ports and pay the same $100 per Order Entry Port for each
additional Order Entry Port. Each Order Entry Port is identical,
providing connectivity to IEX on identical terms. While the proposed
fee will result in a different effective ``per unit'' rate for
different Members (or Service Bureaus) after factoring in the five free
Order Entry Ports, the Exchange does not believe that this difference
is material given the overall low fee of $100 per Order Entry Port.
Because the first five Order Entry Ports are free of charge, each
entity will have a ``per unit'' rate of less than $100. Further, the
fee is not connected to volume-based tiers. All Members will be subject
to the same fee schedule, regardless of the volume sent to or executed
on IEX. The fee also does not depend on any distinctions between
Members, customers, broker-dealers, or any other entity. The fee will
be assessed solely based on the number of Order Entry Ports an entity
selects and not on any other distinction applied by IEX. While entities
that send relatively more inbound messages to IEX may select more Order
Entry Ports, thereby resulting in higher fees, that distinction is
based on decisions made by each Member and the extent and nature of the
Member's business on IEX rather than application of the fee by IEX.
Members (and their Service Bureaus) can determine how many Order Entry
Ports they need to implement their trading strategies effectively. IEX
proposes to offer multiple Order Entry Ports at a low fee to enable all
Members to purchase as many Order Entry Ports as their business needs
dictate in order to optimize throughput and manage latency across the
Exchange.
    Notwithstanding that Members with the highest number of Order Entry
Ports will pay a greater percentage of the total projected fees than is
represented by their Order Entry Port usage, IEX does not believe that
the proposed fee is unfairly discriminatory. As discussed in the
Purpose section, it is not possible to fully synchronize IEX's
objective to provide five free Order Entry Ports to all Members,
thereby minimizing barriers to entry and incentivizing liquidity on the
Exchange, with an approach that exactly aligns the projected per Member
fee with each Member's number of requested Order Entry Ports. As
proposed, IEX is providing a reasonable number of Order Entry Ports to
each Member (or Service Bureau) without charge. Any variance between
projected fees and Order Entry Port usage is attributable to objective
differences among Members in terms of the number of Order Entry Ports
they determine are appropriate based on their trading on IEX. Further,
IEX believes that the low amount of the proposed fee (which in the
aggregate is projected to only partially recover IEX's directly-related
costs) mitigates any disparate impact.
    By way of comparison, IEX notes that differential pricing based on
the volume of trading activity is common in other exchanges' fee
structures, including, for example, the use of volume ``tiers'' that
provide discounts and/or higher rebates based upon various volume-based
measures of activity.\54\ Under these pricing structures, a lower
volume market participant pays substantially more on a per-transaction
basis than higher volume members, with the stated goal of incentivizing
certain types of trading activity on the exchange. In contrast, by
offering five free Order Entry Ports to each User, IEX is seeking to
maintain incentives for a broad cross-section of participants to trade
on the Exchange, while the low per port fee applies consistently to all
similarly situated market participants in a way designed to avoid
imposing a material business cost on any participant.
---------------------------------------------------------------------------

    \54\ See, e.g., Securities Exchange Act Release No. 85864 (May
15, 2019), 84 FR 23109 (May 21, 2019) (SR-NYSE-2019-24).
---------------------------------------------------------------------------

    IEX also believes that it is consistent with the Act to apply the
fee (including five free Order Entry Ports) directly to Service Bureaus
providing Order Entry Ports to one or more Members rather than to such
Members directly because such Order Entry Ports may be shared by
multiple Members and applying the fee to such Members directly would
result in multiple billing for the same service. To illustrate this
point, in the case of an Order Entry Port subject to the $100 fee
(i.e., not included in the first five free Order Entry Ports), if a
Service Bureau provided access to that Order Entry Port to five
Members, and if IEX charged each Member for the Order Entry Port, each
of those Members would pay IEX $100 for the Order Entry Port, totaling
$500, whereas a Member subscribing directly to the same Order Entry
Port would pay only $100 for the connection.\55\
---------------------------------------------------------------------------

    \55\ As discussed in note 34, above, IEX expects two Service
Bureaus to be charged a total of $3,000 per month for their Order
Entry Ports. This fee could be reduced to as little as $2,400 per
month if the two Service Bureaus disconnect their unused Order Entry
Ports.
---------------------------------------------------------------------------

    Further, the Exchange believes that the proposed fee is consistent
with the Exchange Act because it will support its Reg SCI compliance
obligations, as described in the Purpose section.
    IEX also believes that it is reasonable, equitable, and not
unfairly discriminatory to base its billing for Order Entry Ports on
the number of Order Entry Ports assigned to each User as of the first
day of each month. IEX believes that this approach is fair because
Members (and Service Bureaus) will have a reasonable understanding and
expectation of the cutoff date for determining whether a User has more
than five assigned Order Entry Ports. Additionally, IEX's decision to
wait more than a month for this proposed fee to take effect will not
only allow time for market participants to comment on the proposed fee,
it will also allow Users time to determine if they want to disconnect
any of their assigned Order Entry Ports before the first month in which
IEX will charge for assigned Order Entry Ports in excess of five.
    Finally, the Exchange believes that the proposed fee is consistent
with Section 11A of the Exchange Act in that it is designed to
facilitate the economically efficient execution of securities
transactions, fair competition among brokers and dealers, exchange
markets and markets other than exchange markets, and the practicability
of brokers executing investors' orders in the best market.
Specifically, the proposed low, cost-based fee will enable a broad
range of IEX Members to continue to connect to IEX, thereby
facilitating the economically efficient execution of securities
transactions on IEX, fair competition between and among such Members,
and the practicability of Members that are brokers executing investors'
orders on IEX when it is the best market.
    For the foregoing reasons, the Exchange believes that the proposed
fee is reasonable, equitably allocated, and not unfairly
discriminatory.

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

    IEX does not believe that the proposed rule change will result in
any burden on intramarket or intermarket competition that is not
necessary or appropriate in furtherance of the purposes of the Act.
    The Exchange does not believe that the proposed rule change will
impose any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The proposed fee
is a cost-based fee, significantly less than Order Entry Port fees
charged by competing venues, that is designed to enable the Exchange to
partially recoup its applicable costs as described in the Purpose and
Statutory Basis sections. The proposed fee is not a tiered pricing
structure that requires minimum volume levels to realize economic
pricing benefits. The Order Entry Ports to which the fee applies all

have the same characteristics, and IEX is not proposing to charge a
higher fee for a ``high performance'' alternative.
    The Exchange also does not believe that the proposed rule change
will impose any burden on intramarket competition that is not necessary
or appropriate in furtherance of the purposes of the Act because all
Members (and their Service Bureaus) are entitled to five free Order
Entry Ports and subject to the same low, cost-based fee for additional
Order Entry Ports. While different total fees would be assessed
depending on the number of Order Entry Ports a Member (or Service
Bureau) requests, these different fees are not based on the type of
Member requesting the Order Entry Port(s) but on the number of such
ports the Member (or Service Bureau) requests, and each Member (or
Service Bureau) can determine the number of such ports to reserve.
Further, providing five free Order Entry Ports is designed to avoid
creating barriers to entry for smaller Members, thereby promoting
intramarket competition. In addition, even Members subject to
relatively higher fees for more Order Entry Ports will still be subject
to a relatively low aggregate fee (and significantly less than
competing exchanges, as described above) and thus the proposed fee will
not operate as a barrier to entry for such Members or impose a
significant business cost burden on such Members relative to their
levels of business activity. Finally, as described in the Purpose
section, the proposed fee change is designed to assist the Exchange in
complying with its Reg SCI compliance obligations to have levels of
capacity adequate to maintain IEX's operational capability and promote
the maintenance of fair and orderly markets, thereby promoting both
intermarket and intramarket competition by enabling IEX to support a
robust trading environment for its Members and compete with other
equities venues.

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

    Written comments were neither solicited nor received.

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) \56\ of the Act.
---------------------------------------------------------------------------

    \56\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \57\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \57\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
    Electronic comments:
     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
File Number SR-IEX-2019-07 on the subject line.
    Paper comments:
     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-IEX-2019-07. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal offices of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-IEX-2019-07, and should be submitted on
or before September 5, 2019.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\58\
---------------------------------------------------------------------------

    \58\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-17487 Filed 8-14-19; 8:45 am]
BILLING CODE 8011-01-P