[Federal Register Volume 87, Number 71 (Wednesday, April 13, 2022)]
[Notices]
[Pages 21945-21957]
[FR Doc No: 2022-07853]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-94630; File No. SR-IEX-2022-02]

Self-Regulatory Organizations; Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its
Fee Schedule To Adopt Market Data Fees

April 7, 2022.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that, on April 1, 2022, the Investors Exchange LLC (``IEX'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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,\3\
and Rule 19b-4 thereunder,\4\ the Exchange is filing with the
Commission a proposed rule change to modify its Fee Schedule, pursuant
to IEX Rules 15.110(a) and (c), to assess fees for receipt of its
proprietary market data feeds. IEX intends to implement the proposed
fees beginning on July 1, 2022, to provide an opportunity for
subscribers to update their data subscriptions to suit their particular
market data needs.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78s(b)(1).
    \4\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

    The text of the proposed rule change is available at the Exchange's
website at www.iextrading.com, at the principal office of the Exchange,
and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    IEX is proposing to modify its Fee Schedule, pursuant to IEX Rules
15.110(a) and (c), to assess fees for receipt of its proprietary market
data feeds.
Background
    IEX previously filed a proposal to charge market data fees on
November 1, 2021, with the proposed fee changes effective on filing but
not operative until January 3, 2022 (``First Fee Filing'').\5\ The
First Fee Filing was published for comment in the Federal Register on
November 17, 2021.\6\ The Commission received no comments on the First
Fee Filing before December 30, 2021. On that date, the Commission
suspended the First Fee Filing and requested public comment and
additional information on various aspects of the First Fee Filing.\7\
To date, the Commission has received four comment letters in response
to its Suspension Order, none of which stated that the First Fee Filing
should not be approved by the Commission.\8\ Generally, the letters
either commended IEX for the level of transparency raised in its rule
filing and offered support for approval, or raised issues which are
irrelevant to the consideration of IEX fees. As described more fully
below, this filing provides additional transparency in support of IEX's
proposed approach to charging for proprietary market data, as well as
providing additional data and information included in the Commission's
requests for comments in the Suspension Order.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 93557 (November 10,
2021), 86 FR 64268 (November 17, 2021) (SR-IEX-2021-14).
    \6\ See supra note 3.
    \7\ See Securities Exchange Act Release No. 93883 (December 30,
2021), 87 FR 523 (January 5, 2022) (SR-IEX-2021-14) (``Suspension
Order'').
    \8\ See January 27, 2022 letter from Erika Moore (Nasdaq Vice
President and Corporate Secretary), January 26, 2022 letter from
Tyler Gellasch (Executive Director, Healthy Markets Association),
January 26, 2022 letter from Douglas Cifu (CEO, Virtu Financial,
Inc.), and February 28, 2022 letter from Hope M. Jarkowski (General
Counsel, New York Stock Exchange Group, Inc.). The comment letters
are accessible at: https://www.sec.gov/comments/sr-iex-2021-14/sriex202114.htm.
---------------------------------------------------------------------------

    The Exchange withdrew the First Fee Filing on April 1, 2022 and now
submits this proposal for immediate effectiveness (``Second Fee
Filing''), with a scheduled implementation date of July 1, 2022. This
Second Fee Filing revises the fees proposed in the First Fee Filing to
remove the proposed redistribution fees \9\ and provide additional
clarity regarding how the fees apply to affiliated market data
subscribers. Further, as discussed below, in connection with the First
Fee Filing, IEX obtained feedback from some current market data
subscribers with respect to their anticipated plans with respect to
IEX's fee liable market data products (i.e., products for which IEX
would charge a fee) which was not available at the time of filing of
the First Fee Filing. This feedback enables IEX to supplement this
Second Fee Filing with additional details relevant to its revenue
projections. Additionally, this filing responds to various questions
and requests for information contained in the Suspension Order.
---------------------------------------------------------------------------

    \9\ IEX determined not to propose a redistribution fee in this
Second Fee Filing (referred to as distribution fees in the fee
schedule proposed in the First Fee Filing) because of challenges
allocating costs directly to redistribution by a Data Subscriber.
---------------------------------------------------------------------------

    As explained in the First Fee Filing, IEX's proposed market data
fees were derived based on IEX's costs to produce the market data
products to which the fees apply and applying a reasonable markup over
those costs (i.e., a ``cost-plus model''). Further, as discussed more
fully below, the proposed allocation of these fees to the two market
data products is informed by the extent to which demand for each
product drives IEX's overall market data costs and the different uses
of the products by different types of participants.

    IEX has not previously imposed any fees to access its real-time top
of book (``TOPS'' \10\) and depth of book (``DEEP'' \11\) proprietary
market data feeds (``IEX Data''),\12\ either by direct recipients or
through redistribution. 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. IEX believes this high standard is
especially important when an exchange imposes fees for its own depth of
book market data because each exchange is the exclusive source of its
own depth of book market data. IEX further believes that, as a general
matter, market data fees cannot be sufficiently justified based on
unproven assumptions about competition for market data. Rather, IEX
believes that market data fees can be best justified by an exchange
demonstrating that its fees bear a reasonable relationship to its
related costs and business needs (i.e., to obtain a reasonable return
on its costs) and that it is not taking unfair advantage of its unique
position as the source of its own proprietary market data. IEX believes
that it does not need to address questions about market competition in
the context of this filing because the proposed fees are so clearly
consistent with the Act based on a cost analysis.
---------------------------------------------------------------------------

    \10\ See IEX Rule 11.330(a)(1).
    \11\ See IEX Rule 11.330(a)(2).
    \12\ As discussed below, both TOPS and DEEP also include last
sale information.
---------------------------------------------------------------------------

    In proposing to charge fees for access to IEX Data, IEX has sought
to determine such fees in a transparent way in relation to its own
aggregate costs of providing the related service, that also carefully
and transparently assesses the impact on Data Subscribers \13\--both
generally and in relation to other Data Subscribers, i.e., to assure
the fee will not create an unfair financial burden on any participant
and will not have an undue impact in particular on smaller Data
Subscribers and competition among Data Subscribers in general.
---------------------------------------------------------------------------

    \13\ ``Data Subscriber'' refers to any natural person or entity
that receives real-time market data either directly from IEX or from
another non-affiliated Data Subscriber. IEX notes that the current
recipients of IEX Data include many Members of the Exchange, see IEX
Rule 1.160(s), but also include several non-Members, including
vendors who redistribute IEX Data to third-party recipients.
---------------------------------------------------------------------------

    IEX believes that this level of diligence and transparency is
called for by the requirements of Section 19(b)(1) under the Act,\14\
and Rule 19b-4 thereunder,\15\ 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,\16\ which
requires, among other things, that exchange fees be reasonable and
equitably allocated,\17\ not designed to permit unfair
discrimination,\18\ and that they not impose a burden on competition
not necessary or appropriate in furtherance of the purposes of the
Act.\19\ 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.\20\
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78s(b)(1).
    \15\ 17 CFR 240.19b-4.
    \16\ 15 U.S.C. 78f(b).
    \17\ 15 U.S.C. 78f(b)(4).
    \18\ 15 U.S.C. 78f(b)(5).
    \19\ 15 U.S.C. 78f(b)(8).
    \20\ In May 2019, the Commission staff 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.
---------------------------------------------------------------------------

    As noted above, IEX offers two real-time proprietary market data
feeds: TOPS and DEEP. TOPS is an uncompressed data feed that offers
aggregated top of book quotations for all displayed orders resting on
the Order Book \21\ and last sale information for executions on the
Exchange.\22\ The data available in TOPS is also available through the
securities information processor (``SIP'') feeds. DEEP is an
uncompressed data feed that provides aggregated depth of book
quotations for all displayed orders resting on the Order Book at each
price level and last sale information for executions on the
Exchange.\23\ DEEP includes all resting displayed liquidity on the
Exchange, aggregated by price level, meaning it includes the top of
book quotes contained in TOPS, and also contains any less aggressively
priced displayed quotes. The content of both TOPS and DEEP is derived
exclusively from orders that are sent by the Exchange's Members,\24\
which the Exchange formats and rebroadcasts to market participants and
to data vendors.
---------------------------------------------------------------------------

    \21\ See IEX Rule 1.160(p).
    \22\ See IEX Rule 11.330(a)(1).
    \23\ See IEX Rule 11.330(a)(2).
    \24\ See IEX Rule 1.160(s).
---------------------------------------------------------------------------

    IEX currently does not charge fees for access to IEX Data,
irrespective of whether the Data Subscriber is a Member or not, the
manner in which the data is received or used, the number of users, how
quickly the recipient is able to receive the data after it is made
available by the System,\25\ or whether the data is subject to any
delay through the redistribution process. The objective of this
approach was to eliminate any fee-based barriers to access IEX Data
when IEX launched as a national securities exchange in 2016, and it was
successful in achieving this objective in that a large number of both
Members and non-Members currently receive either TOPS, DEEP, or both.
As discussed more fully below, IEX recently calculated its annual
aggregate costs for providing IEX Data to its Data Subscribers at
approximately $2.5 million. Because IEX has to date offered IEX Data
free of charge, IEX has borne 100% of all costs for the compilation and
dissemination of IEX Data to IEX's Data Subscribers.
---------------------------------------------------------------------------

    \25\ See IEX Rule 1.160(nn).
---------------------------------------------------------------------------

Proposal
    In order to establish fees that are designed to recover the
aggregate costs of providing IEX Data to its Data Subscribers and limit
the amount of potential return in excess of those costs to no more than
a reasonable markup, the Exchange is proposing to modify its Fee
Schedule, pursuant to IEX Rules 15.110(a) and (c), to charge all Data
Subscribers fees to access IEX Data in real time.
    As proposed, the following definitions and concepts will be
applicable to market data fees:
     ``Real-Time'' means IEX market data that is accessed,
used, or distributed less than fifteen (15) milliseconds after it was
made available by the Exchange. IEX provides only Real-Time IEX market
data to Data Subscribers.
     ``Data Subscriber'' means any natural person or entity
that receives Real-Time IEX market data either directly from the
Exchange or from another non-affiliate Data Subscriber. A Data
Subscriber must enter into a Data Subscriber Agreement with IEX in
order to receive Real-Time IEX market data. A natural person or entity
that receives Real-Time IEX market data from an affiliated Data
Subscriber is subject to the Data Subscriber Agreement of such
affiliated Data Subscriber.
     A Data Subscriber may redistribute Real-Time IEX market
data that it receives from the Exchange on a Real-Time basis to a
natural person or entity. Receipt of IEX market data on a Real-Time
basis by an affiliate of a Data Subscriber is not subject to additional
Fees beyond those paid by such affiliated Data Subscriber.
     ``Delayed'' means IEX market data that is accessed, used,
or distributed at

least fifteen (15) milliseconds after it was made available by the
Exchange. A Data Subscriber may redistribute Real-Time IEX market data
that it receives from the Exchange on a Delayed basis to a natural
person or entity. In addition, a recipient of Delayed IEX market data
may further redistribute such Delayed IEX market data to a natural
person or entity.
    IEX proposes to charge the following flat fees to each Data
Subscriber: $500 per month for Real-Time access to the TOPS feed and
$2,500 per month for Real-Time access to the DEEP feed, whether
received directly from IEX or from another Data Subscriber, except for
an affiliated Data Subscriber \26\ as described more fully below. As
proposed, IEX will only provide Real-Time IEX Data, and every recipient
of such data (whether directly or indirectly) is required to become a
Data Subscriber and enter into a Data Subscriber Agreement with
IEX.\27\ A Data Subscriber may redistribute IEX Data on either a Real-
Time basis or subject to a delay. IEX is not proposing to charge a fee
for redistribution of IEX Data. However, a recipient of Real-Time IEX
Data would be required to become a Data Subscriber, and would be
subject to the applicable fees, except for an affiliated recipient of
the Data Subscriber. Further, a recipient of IEX Data that is subject
to at least a 15-millisecond delay (whether from an IEX Data Subscriber
or other recipient) is not required to become a Data Subscriber or pay
any fees to IEX.\28\ IEX is not proposing to charge any additional fees
to a Data Subscriber based on the way it uses the data, e.g., display
v. non-display use, and is not proposing to impose any individual per
user fees.
---------------------------------------------------------------------------

    \26\ As specified in the IEX Fee Schedule, as proposed, the
terms ``affiliate'' and ``affiliated'' have the meaning specified in
Rule 12b-2 of the Exchange Act which provides that such terms as ``a
person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, the person specified''. The Data Subscriber Agreement
provides additional context and defines affiliate as ``any
individual, corporation, company, partnership, limited partnership,
limited liability company, trust, association or other entity that,
directly or indirectly through one or more intermediaries, controls,
is controlled by or is under common control with such party.'' A
non-affiliated third-party is any individual, corporation, company,
partnership, limited partnership, limited liability company, trust,
association or other entity that is not an affiliate of the Data
Subscriber pursuant to such definition.
    \27\ See IEX Market Data Policies, available at https://storage.googleapis.com/assets-bucket/exchange/assets/Market_Data_Agreements/IEX_Market_Data_Policies_Jan_2022.pdf.
    \28\ The Delayed IEX Data recipient may be subject to any fees
charged by the redistributor of the Delayed IEX Data, based upon the
contractual arrangement between the Delayed IEX Data recipient and
the provider of Delayed IEX Data. Such fees would not be paid to the
Exchange.
---------------------------------------------------------------------------

    The Suspension Order sought clarification on how affiliated
entities are treated for purposes of the Data Subscriber definition,
noting an apparent inconsistency between that language and IEX's
calculation of the amount that exchange companies would be required to
pay for IEX Data. To address that question, this Second Fee Filing
clarifies that the definition of Data Subscriber includes any
affiliates of the Data Subscriber. Thus, for example, a broker-dealer
subscriber and an investment adviser under common control could both
use the data from a particular feed for a single fee. Real-Time
distribution of IEX Data to an affiliate of the Data Subscriber would
not subject the affiliated recipient to any additional fees beyond
those paid by the IEX Data Subscriber. Further, an affiliate that
receives Real-Time IEX Data from an affiliated Data Subscriber is
subject to the Data Subscriber Agreement of such Data Subscriber.
IEX Framework
    The Suspension Order seeks additional information and comments on
various aspects of the First Fee Filing. In many respects, the
Commission's questions about the First Fee Filing raise broader
questions around the factors the SEC should consider and the type of
data and analysis an exchange should provide in considering whether
market data or connectivity fees are fair and reasonable under a cost-
based methodology.
    In this Second Fee Filing, IEX offers a conceptual framework for
further considering the Commission's questions that draws on IEX's
experience over several years in analyzing its own costs. The elements
of that framework are as follows:
    First, we allocate costs to market data products as part of a
comprehensive and coherent methodology for allocating costs to
different types of exchange products. That methodology does not allow
``double-counting'' of the same costs for different classes of exchange
products--for example market data, physical connectivity, or
``logical'' port connections. Our general methodology was detailed in
our 2019 Study of exchange costs, described below. This methodology
reflects our belief that in conducting a cost analysis, it is both
realistic and appropriate to segregate the costs of producing market
data, for example, from the costs of other general aspects of an
exchange's operation, including the receiving and matching of orders
for execution.
    Second, we have sought to carefully and narrowly allocate specific
costs to the market data products to which the fees apply. In this
filing, we provide more detail about how that allocation was
determined, including by providing information about tangential cost
items that were not included. In general, we believe that the more an
exchange can demonstrate its cost accounting is carefully
circumscribed, the stronger it can make the case that its fees are fair
and reasonable.
    Third, in accounting for costs, we have included certain costs we
have incurred in the last year to enhance our technology related to
market data. We believe such expenses are appropriately included if
they are identified and can be shown to bear a reasonable relationship
to projected future expenses of this type.
    Fourth, our framework recognizes that the cost elements related to
market data are largely common across different types of market data
products. Accordingly, we have set fees for each of our two market data
products based on factors other than differences between the two in
cost to produce. These other factors include differences in the use and
need for depth of book compared to top of book data among different
types of participants, and the impact of the need for more detailed
real-time data in driving many operational costs of the Exchange.
    Fifth, we have sought to maximize the availability of data that is
not needed on a very time-sensitive basis to investors and other market
participants. For that reason, we are not proposing to charge for any
data that a user receives with a delay of 15 milliseconds or more. IEX
believes that promoting the wide availability of market data to market
participants other than latency-sensitive traders is consistent with
the goal of fair and efficient markets.
    Sixth, IEX has created a flat, simple fee structure that imposes a
single monthly fee for each Data Subscriber and its affiliates, without
added fees based on the way the data is used or individual per user
fees. IEX believes this relatively simple, flat structure is
transparent and easy for users to apply, and this difference also helps
to show that it meets the objectives of the Act.
    Finally, because it is difficult to predict how much revenue IEX
will receive from market data fees with precision, IEX is committing to
conduct a one-year review after implementation of these fees, and to
publish the results of that review. IEX expects that it may propose to
adjust fees at that time, to increase fees in the event that revenues
fail to cover costs and a reasonable

mark-up of such costs. Similarly, IEX would propose to decrease fees in
the event that revenue materially exceeds our current projections. In
addition, IEX will periodically conduct a review to inform its decision
making on whether a fee change is appropriate (e.g., to monitor for
costs increasing/decreasing or subscribers increasing/decreasing, etc.
in ways that suggest the then-current fees are becoming dislocated from
the prior cost-based analysis) and would propose to increase fees in
the event that revenues fail to cover market data costs and a
reasonable mark-up, or decrease fees in the event that revenue or the
mark-up materially exceeds our current projections. In the event that
IEX determines to propose a fee change, the results of a timely review,
including an updated cost estimate, will be included in a rule filing
proposing the fee change. More generally, we believe that, in applying
a cost-plus model, it is appropriate for an exchange to refresh and
update information about its relevant costs and revenues in seeking any
future changes to fees, and IEX commits to do so.
    IEX believes that applying this framework to the proposed fees
shows that they are consistent with the requirements of the Act,
leaving aside the stark contrast in the amount of the proposed fees in
comparison to market data fees commonly charged by other exchanges.
IEX Market Data Costs
    The proposed fees are based on a comprehensive and transparent
``cost-plus'' methodology, wherein the proposed fees bear a reasonable
relationship to the cost of producing market data products using a
rigorous and narrow allocation of costs.\29\ Moreover, IEX believes
that any potential profit over IEX's costs of offering market data is
reasonably based on realistic revenue assumptions, as described below.
Further, as described above, IEX will conduct a review of these fees
one year after implementation (as well as subsequent periodic reviews),
including public disclosure of its revenues based on actual experience,
and may propose to adjust such fees if warranted based on that review.
In addition, IEX intends to provide updated information about its
market data costs and revenue in any future filing to change its
fees.\30\
---------------------------------------------------------------------------

    \29\ IEX first published a comprehensive study of its aggregate
costs to produce market data and connectivity in January 2019. See
``The Cost of Exchange Services--Disclosing the Cost of Offering
Market Data and Connectivity as a National Securities Exchange''
available at https://iextrading.com/docs/The%20Cost%20of%20Exchange%20Services.pdf. (``IEX Study'').
    \30\ Notwithstanding that IEX does not currently charge for its
market data products, it does not believe that a review is warranted
sooner than one year after implementation because of the feedback it
received from current market data subscribers regarding their plans
with respect to IEX's fee liable market data products, as discussed
supra. This feedback provides a reasonable basis for IEX to project
anticipated revenue and support that the proposed fees are
consistent with the Act.
---------------------------------------------------------------------------

    In determining the appropriate fees to charge, IEX considered its
costs of providing market data, using what it believes to be a
conservative methodology (i.e., that strictly considers only those
costs that are most clearly directly and exclusively related to the
production and distribution of IEX Data) to estimate such costs,\31\
and set fees that are designed to cover its costs with a limited
potential return in excess of such costs. However, as discussed more
fully below, such fees may also result in IEX recouping less than all
of its costs of providing market data because of the uncertainty of
forecasting Data Subscriber decision-making with respect to their IEX
market data subscriptions.
---------------------------------------------------------------------------

    \31\ For example, IEX only included the costs associated with
physical assets that are directly responsible for producing and
transmitting IEX Data and excluded from its market data cost
calculations any physical connectivity assets that are used to
provide both order entry and market data. See IEX Study at 16. Thus,
IEX notes that this methodology underestimates the total costs of
providing market data.
---------------------------------------------------------------------------

    Prior to the Commission's suspension of its First Fee Filing, IEX
advised its current Data Subscribers of the proposed market data fees
and received feedback from a significant number of such Data
Subscribers as to whether they planned to continue to receive real-time
IEX Data following implementation of such fees. Based on that feedback,
which is described below, IEX believes it is likely that the proposed
fees will not fully cover its costs and that a ``best case'' scenario
is a return of approximately six percent in excess of such costs. The
following describes IEX's cost allocation methodology, and how such
methodology supports that the proposed fees are clearly consistent with
the Act.
    IEX was the first exchange to conduct a comprehensive review of its
costs to produce market data, physical connectivity (the physical
connections required to access IEX in its data center), and logical
connectivity products (the cost to offer and maintain order entry
ports) and published the results of that review in the January 2019 IEX
Study.\32\ The IEX Study explained how hardware, software, and
personnel costs were allocated for market data and connectivity and
identified an annual dollar cost for each line item in each category.
The IEX Study also explained graphically and textually the relationship
of the different parts of the operation of an electronic exchange, to
allow readers to understand the interrelationship among the various
components. The IEX Study estimated IEX's aggregate annual cost to
offer IEX Data to its Data Subscribers to be approximately $1.8 million
per year, for the year 2019, as reflected in Table 1.\33\
---------------------------------------------------------------------------

    \32\ See supra note 27.
    \33\ See IEX Study at 15-18 for details on how IEX estimated the
costs of its market data infrastructure; see also supra note 29.

             Table 1--Annual IEX Market Data Infrastructure
                                 [2019]
------------------------------------------------------------------------
                                                           ($1,791,403)
------------------------------------------------------------------------
Top of Book Servers (TOPS) (5)..........................       ($12,833)
Depth of Book Servers (DEEP) (5)........................        (12,833)
Market Data Feeds Switches (2 x 24 port)................        (13,333)
ITF Market Data.........................................         (7,333)
Data Center Space, Power, Security......................        (10,605)
Administrative Access...................................        (33,333)
Monitoring..............................................       (596,135)
Personnel...............................................     (1,104,998)
                                                         ---------------
    Total Annual Costs..................................     (1,791,403)
------------------------------------------------------------------------

    In 2021, in preparation for the First Fee Filing, IEX updated and
refreshed the cost estimates contained in the IEX Study. As further
detailed below, this update reflects somewhat lower annual hardware
costs related to market data than contained in the 2019 IEX Study, and
somewhat higher personnel costs. Considering all factors together, the
updated estimates reflect an increase in total annual costs to produce
market data from $1,791,403 to $2,483,644.
    Table 2, below, details the individual annual line-item costs
considered by IEX to be directly related to offering IEX Data to Data
Subscribers.\34\ The chart shows three cost components: (1) Direct
costs, such as servers, infrastructure, and monitoring; (2) enhancement
initiative costs (e.g., new functionality for IEX Data and increased
capacity for the proprietary market data feeds, as described below);
\35\ and (3) personnel

costs. The costs allocated to IEX Data do not include the de minimis
costs for creation of ``HIST'' \36\ files available for download from
IEX's website, or separate costs associated with transmitting IEX
market data to the SIPs.\37\
---------------------------------------------------------------------------

    \34\ Table 2 also shows the breakdown of the 2019 estimated
market data infrastructure costs.
    \35\ As described more fully below, these enhancement initiative
costs are a routine part of offering proprietary market data. Some
of the enhancement costs in Table 2, such as the introduction of the
snapshot functionality for TOPS and DEEP, are one-time costs, but
each year IEX expects to incur new enhancement costs such as the
costs associated with increasing the capacity of its market data
feeds and costs associated with upgrading its market data
infrastructure, as well as any new functionality. Thus, IEX believes
that its annual enhancement costs on an ongoing basis will be
similar and that the enhancement costs included in the 2021 update
are not extraordinary.
    \36\ See IEX Rule 11.330(a)(4). HIST data is available for
download at https://iextrading.com/trading/market-data/#hist-download.
    \37\ IEX also notes that the SIPs are operated separately from
IEX's provision of proprietary market data, with correspondingly
separate costs and revenue streams.
---------------------------------------------------------------------------

    The servers and related hardware included were limited to those
specifically dedicated to IEX Data, subject to the depreciation
schedule described below. Network Infrastructure and Administrative
Access costs consist of 100% of the network equipment (switches and
cabling) to enable data transmission and maintenance. Data Center costs
consist of the fees charged by the third-party data centers used by IEX
and represent less than 10% the Exchange's total data center costs
based on space utilized. Monitoring costs include 100% of the hardware
and vendor licenses needed to enable the IEX technology team to monitor
these servers and the health of the market data products provided by
such assets, which are primarily used for market data monitoring.\38\
The monitoring consists of real-time monitoring of system performance,
integrity, and latency of market data products.
---------------------------------------------------------------------------

    \38\ These assets may be used infrequently for incidental
purposes to assess the status of Exchange systems.
---------------------------------------------------------------------------

    All physical assets were valued at cost for financial accounting
purposes and depreciated over three years. All software used for market
data purposes was developed internally, and the applicable costs are
captured in the personnel category. For purposes of the allocation of
these costs to market data, IEX allocates the annual depreciation
expense (i.e., one-third of the initial asset value) of in-scope
physical assets in each year. For personnel costs, IEX calculated an
allocation of employee time for employees whose functions include
providing and maintaining IEX Data and/or the proprietary market data
feeds used to transmit IEX Data,\39\ and used a blended rate of
compensation reflecting salary, stock and bonus compensation, benefits,
payroll taxes, and 401(k) matching contributions.\40\ Enhancement costs
are allocated similarly (i.e., hardware is subject to a three year
depreciation schedule) and consist primarily of personnel costs (over
80%), with the balance comprised of hardware utilized for development
and operation of each enhancement.
---------------------------------------------------------------------------

    \39\ Notably, IEX did not include any costs associated with
operating the Exchange itself in calculating the costs of offering
IEX Data.
    \40\ Applying the methodology of the IEX Study, IEX determined
cost allocation for employees who perform work in support of
compiling and disseminating IEX Data to arrive at a full time
equivalent (``FTE'') of 6.15 FTEs across all the identified
personnel (the FTE at the time of the IEX Study was 4.05). IEX then
multiplied the FTE times a blended compensation rate for all
relevant IEX personnel to determine the personnel costs associated
with compiling and disseminating IEX Data.

             Table 2--Annual IEX Market Data Infrastructure
------------------------------------------------------------------------
                                               2019            2021
                                           ($1,791,403)    ($2,483,644)
------------------------------------------------------------------------
Direct Costs:
    Servers.............................       ($32,999)       ($26,696)
    Network Infrastructure & Admin              (46,666)       (152,783)
     Access.............................
    Monitoring..........................       (596,135)       (213,109)
    Data Center (Space, Power, Security)        (10,605)        (79,142)
Enhancement Initiatives Costs:
    DEEP Snapshot.......................             N/A        (95,974)
    TOPS Snapshot.......................             N/A        (95,974)
    Capacity Planning...................             N/A       (232,856)
    Monitoring Tools....................             N/A        (49,609)
Ongoing Personnel Costs.................     (1,104,998)     (1,537,500)
                                         -------------------------------
    Total Annual Costs..................     (1,791,403)     (2,483,644)
------------------------------------------------------------------------

    As noted in Table 2, IEX continues to introduce enhancement
initiatives to IEX Data. First, effective February 3, 2021, IEX
launched ``DEEP Snapshot'', which allows Data Subscribers to download
point-in-time snapshots of DEEP in order to enable Data Subscribers to
accelerate late start recovery.\41\ Second, effective September 27,
2021, IEX launched ``TOPS Snapshot'', which allows Data Subscribers to
download point-in-time snapshots of TOPS in order to enable them to
accelerate late-start recovery. Third, IEX is in the process of
expanding the capacity and monitoring tools that support the efficient
transmission of IEX Data to the IEX's proprietary market data feeds.
---------------------------------------------------------------------------

    \41\ See Trading Alert No. 2021-003, available at https://iextrading.com/alerts/#/135.
---------------------------------------------------------------------------

    IEX also notes that it has made recent changes to its system
functionality and architecture which improve the content and speed of
IEX's proprietary market data feeds, but that have no impact on IEX's
estimated costs of providing IEX Data. For example, effective February
16, 2021, IEX removed its outbound 350 microsecond latency
``speedbump'' while retaining its inbound 350 microsecond latency
``speedbump.'' \42\ Prior to that date, IEX disseminated its top of
book data and last sale data to the SIPs free of any artificial delays,
but all other outbound messages, including IEX Data transmitted through
IEX's proprietary market data feeds, were subjected to a 350-
microsecond latency.\43\ Additionally, on April 1, 2021, IEX began to
display odd lot sized orders, which are aggregated by price on DEEP,
and can aggregate to form the top of book quote on TOPS.\44\ And on
October 13, 2021, IEX began disseminating a ``Retail Liquidity
Indicator'' on both TOPS and DEEP, which tells market participants when

IEX has at least one round of Retail Liquidity Provider order \45\
interest available for a particular security, which is resting at the
Midpoint Price \46\ and priced at least $0.001 better than the NBB \47\
or NBO.\48\ The Retail Liquidity Indicator reflects the symbol and side
of the resting interest, but does not include the price or size.\49\
---------------------------------------------------------------------------

    \42\ See Trading Alert No. 2021-006, available at https://iextrading.com/alerts/#/138.
    \43\ See Securities Exchange Act Release No. 91016, January 29,
2021, 86 FR 8238 (February 4, 2021) (SR-IEX-2020-18).
    \44\ See Trading Alert 2021-010, available at https://iextrading.com/alerts/#/142; see also, See Securities Exchange Act
Release No. 90933, January 15, 2021, 86 FR 6687 (January 22, 2021)
(SR-IEX-2021-01).
    \45\ See IEX Rule 11.190(b)(14).
    \46\ The term ``Midpoint Price'' means the midpoint of the NBBO.
See IEX Rule 1.160(t). The term ``NBBO'' means the national best bid
or offer, as set forth in Rule 600(b) of Regulation NMS under the
Act, determined as set forth in IEX Rule 11.410(b).
    \47\ See IEX Rule 1.160(u).
    \48\ Id.
    \49\ See Trading Alert 2021-036, available at https://iextrading.com/alerts/#/169; see also, Securities Exchange Act
Release No. 92398 (July 13, 2021), 86 FR 38166 (July 19, 2021) (SR-
IEX-2021-06).
---------------------------------------------------------------------------

    As discussed above, IEX's cost methodology allocates costs for
hardware, software, and personnel expenses, and identified an annual
dollar cost for each line item in each category. IEX's cost methodology
does not provide for ``double-counting'', that is, the same cost items
are not counted for more than one set of products. This was the
approach followed in the IEX Study, the 2021 update, the First Fee
Filing, and this Second Fee Filing. This segmentation of costs is also
consistent with IEX's earlier filing to charge fees for order entry
logical ``ports'' members use to communicate order messages to the
Exchange (``Port Fee Filing'').\50\ In the Port Fee Filing, we detailed
the servers, other hardware, monitoring, administrative, and personnel
expenses that were directly connected to the provision of logical order
entry ports. Consequently, there is no overlap with the costs IEX
allocated to the provision of logical order entry ports and the
provision of market data feeds.
---------------------------------------------------------------------------

    \50\ See Securities Exchange Act Release No. 86626 (August 9,
2019), 84 FR 41793 (August 15, 2019) (SR-IEX-2019-07).
---------------------------------------------------------------------------

    In the First Fee Filing, IEX provided detail on how it allocated
the costs of providing market data feeds. The Suspension Order raised
questions about whether additional detail and explanation should be
provided, as detailed below. As described in the IEX Study, IEX
considers the following physical technology assets and services as
relevant to the production of market data: \51\
---------------------------------------------------------------------------

    \51\ In some cases, these assets and services also entail fees
from outside service providers, such as software licenses and data
center costs. Additional detail is available in the IEX Study.

     Market Data Servers
     Market Data Feed Switches
     Software Licenses
     IEX Testing Facility (ITF) Infrastructure Hardware
     Data Center Space, Power, and Security
     Administrative Access \52\
---------------------------------------------------------------------------

    \52\ Administrative Access consists of the dedicated networking
infrastructure to enable the technology team to manage and
troubleshoot the production and distribution of market data.
---------------------------------------------------------------------------

     Monitoring Servers, Switches and Licenses \53\
---------------------------------------------------------------------------

    \53\ See IEX Study at 15. See also discussion supra describing
monitoring functions.
---------------------------------------------------------------------------

    Hardware is depreciated on a straight-line three-year period, which
in IEX's experience, is equal to the typical life expectancy of those
assets. As noted above, one-third of the cost of each hardware asset is
included in the annual costs allocated to market data. IEX only
included hardware specifically dedicated to the market data feeds in
calculating the costs of providing market data. This means that
physical assets used for both order entry and market data were excluded
from the calculation.\54\
---------------------------------------------------------------------------

    \54\ See IEX Study at 16.
---------------------------------------------------------------------------

    The Suspension Order asked if IEX should provide more detail about
the methodology IEX used to determine how much of an employee's time is
devoted to specific market data related activities. In considering the
cost of personnel, IEX generally considered the time spent on various
market data projects and initiatives through project management
tracking tools, in the following areas:

Technology Teams:
     Technical Operations
     Software Engineering
     Quality Assurance
     Infrastructure
Non-Technology Teams:
     Market Operations
     Project Management
     Product Management
     Business Development/Corporate Communications
     Regulatory
     Legal
     Accounting/Finance

    Based on this analysis, IEX allocated 6.15 ``full time equivalent''
employees (or ``FTEs'') to direct market data costs. Generally, for the
technology teams, we attributed approximately 8% of their aggregate
time to market data. For the non-technology teams we attributed
approximately 12% of their time to market data. Consistent with IEX's
methodology, these allocations do not provide for any ``double
counting''. Additionally, the Suspension Order asked if it is
appropriate to include incentive compensation in the blended personnel
compensation rate if the incentive compensation is not directly
attributable to market data. IEX believes that inclusion is appropriate
on the same basis as other personnel costs for in-scope employees
because incentive compensation is a part of the total personnel costs
associated with IEX's provision of market data. Moreover, IEX notes
that it has taken a conservative approach in determining which
employees to include in its cost analysis, in terms of function and
percent allocation, so that the included personnel costs are directly
and closely tied to the costs of providing market data. The FTE
allocation represents just 7.1% of the Exchange's overall personnel
costs. In addition, IEX allocated 1.58 FTEs to market data
enhancements, which represents 1.8% of the Exchange's overall personal
costs, totaling 7.73 FTEs and 8.9% when combined with personnel
allocated to direct market data costs. Consistent with IEX's
conservative methodology to limit costs allocated to market data, this
approach includes only a de minimis personnel cost allocation for
senior level executives and no allocation for members of IEX's board of
directors. Accordingly, IEX believes that the allocated personnel
expenses included are appropriately attributable to market data.
    Another way to evaluate whether costs are narrowly allocated is to
consider other expenses that may bear an indirect relationship to the
production of market data, but which were not included. Various expense
items may be viewed as necessary to exchange functioning and therefore
having some relationship to market data, but IEX chose not to allocate
any portion of the cost of those items, because we believe limiting
allocated costs to those with a more proximate relationship to market
data is more justifiable and avoids the difficulties and potential
arbitrariness of determining how to allocate a portion of general
operational expenses to specific data products. IEX's excluded costs
relate to:

 General and Administrative Expenses
    [cir] Travel, Sales, and Marketing
    [cir] Office and Miscellaneous/Occupancy and Overhead
    [cir] Professional Fees (including Audit Fees)
 Operating Expenses
    [cir] Costs Paid to Exchanges
    [cir] Other Technology and Infrastructure
 Other (Income)/Expense
 Income Tax (Benefit)/Expense

    The expenses associated with the above, excluded, items amount to
many multiples of the approximately $2.5 million in annual costs that
IEX

allocated to market data. Inclusion of just a small portion of these
more tangential items would have more than doubled the estimated cost
basis for IEX to provide market data feeds.
    Exchanges typically incur episodic expenses to upgrade market data
or connectivity products, for example, to expand capacity, increase
security or reliability, reduce latency, or to achieve other
objectives. These expenses would not otherwise be captured in a
methodology that looks exclusively at more static annualized expenses,
such as servers, switches, and routine testing and monitoring
functions. In the First Fee Filing, IEX detailed episodic expenses
directly related to offering market data totaling $474,000, amounting
to approximately 19% of the total of the approximately $2.5 million
estimate for total market data infrastructure costs in 2021. These
costs were approximately $282,000 for capacity planning and monitoring
and approximately $192,000 for the addition of ``snapshot''
functionality, which facilitates the ability of users to construct an
integrated stream of market data when there is a temporary
interruption. IEX believes that this level of episodic expenses will
likely recur, and that it is therefore appropriate to include such
expenses as part of the cost allocation. In any event, variations in
episodic expenses will be reflected in IEX's annual review of its
market data fees and any proposed adjustments.
Characteristics and Pricing of Different Products
    IEX believes the process of allocating costs to individual exchange
products necessarily involves some degree of subjectivity, but that an
exchange's allocation of costs to identified products and services
should be part of a coherent and transparent methodology for allocating
costs across various products and services, so that the Commission and
commenters can evaluate whether its decisions are reasonable and well-
grounded. Exchanges incur many operational costs as preconditions to
being able to offer various products and services, but individual cost
elements differ in how closely they are related to the offering of
specific products, as distinct from general operational costs.
    If an exchange is proposing different fees for products of the same
class, e.g., different connectivity options or different market data
feeds, it may seek to allocate fees separately by product even if there
are not material differences in terms of the cost of each product. It
is IEX's experience, as explained in the IEX Study, that most of the
expenses to offer a class of products and services, e.g., physical
connectivity, logical connectivity, and market data feeds, are common
to the category and not unique to individual products. Accordingly, IEX
believes that an exchange may base price differences among products in
a given category based on factors other than cost where there are other
reasons to differentiate.
    Consistent with the practice at all other exchanges, IEX is
proposing to charge different fees for its top of book (``TOB'') and
depth of book (``DOB'') market data feeds, i.e., TOPS and DEEP
respectively. The costs allocated to IEX's production of market data
are in large part costs that are common to the offering of both market
data feeds. Thus, IEX based its proposed pricing for Real-Time access
to TOPS and DEEP, as well as minimally delayed access to TOPS and DEEP,
on other factors as well. While there are some cost differences to
compile and disseminate TOPS versus DEEP,\55\ IEX is basing its
proposed pricing differential on other factors.
---------------------------------------------------------------------------

    \55\ DEEP is an aggregated feed that must perform additional
logic on each order-related message received from the System to
calculate the total number of displayed shares available at each
price level. TOPS requires less processing than DEEP because it only
aggregates displayed liquidity at a single price level, the top of
book.
---------------------------------------------------------------------------

    First, IEX believes that the fee differential is justified based on
the need for real-time DEEP data by electronic trading firms, the
relative volume of and benefit to those firms in terms of their trading
on the Exchange, and the need to compile and distribute real-time DOB
data as a factor driving Exchange costs. Based on data from the fourth
quarter of 2021, the top ten members of IEX by volume on the Exchange
collectively represented over 60% of total Exchange volume. More
tellingly, the same firms represented approximately 70% of message
traffic on the Exchange. Over 90% of displayed orders are submitted by
market participants that subscribe to DEEP. IEX believes that it is
clear and well-established that trading that occurs on a millisecond
and sub-millisecond time scale drives the majority of trading on U.S.
exchanges. Further, IEX systems costs are heavily impacted by the need
to support this activity, including the need to provide real-time depth
data that is required by electronic trading firms. IEX believes that in
order to provide market data that supports these types of trading
strategies, IEX's market data needs to be published quickly enough
(i.e., microsecond timescales) following order and trade events to be
useful. Further, such publication timescales must be consistent and
deterministic regardless of market volume and volatility.
    In contrast, IEX believes that the relative value of real-time TOPS
is diminished by the availability of alternative sources of IEX's TOB
market data. Specifically, IEX believes that several factors operate to
restrain demand for real-time TOPS, including that real-time IEX TOB
market data can be readily obtained from the SIPs \56\ and that
fifteen-millisecond delayed TOPS data (which would not be subject to
any IEX fees pursuant to this proposal) is adequate for many firms that
are not electronic trading firms. In discussions with current market
data subscribers regarding the fees proposed in the First Fee Filing, a
number of such firms advised IEX that they would drop Real-Time access
to TOPS to avoid the $500 monthly fee, and instead rely on the SIPs or
delayed access for IEX's TOB market data. Thus, IEX believes that there
are constraints that operate to limit its ability to base Real-Time
TOPS pricing based on some type of pro rata cost allocation. In view of
these factors, IEX believes that it is fair and reasonable to price
Real-Time access to DEEP at five times the price of TOPS.
---------------------------------------------------------------------------

    \56\ Broadly speaking, the self-regulatory organizations
(``SROs'') administer the SIPs and set pricing. Each SIP charges its
own fees, which are determined by the operating committees of each
SIP subject to the SEC rule filing process. While IEX is a member of
the operating committee of each SIP, it has only one vote and does
not exercise control over SIP pricing. IEX also notes that the SIPs
charge pursuant to a different pricing structure than the pricing
structure proposed by IEX in this filing.
---------------------------------------------------------------------------

    Further, IEX is charging only for data that is made available in
Real-Time, because it is the very demand for Real-Time, low latency
data that drives much of the costs associated with creating and
distributing IEX Data. For example, IEX must invest more in the
resiliency, capacity, and redundancy of its proprietary market data
feeds to provide Real-Time, low latency access to IEX Data. Moreover,
IEX's decision to not charge fees for Delayed IEX Data is also
consistent with IEX's goal to make its data broadly available to a wide
range of market participants including long-term investors.
    Specifically, IEX believes that minimally delayed market data may
be useful to a much broader range of market participants. For example,
such data may be useful in a variety of display use cases, for example,
in streams of market data prices that are available in a graphical user
interface, for episodic trading strategies that are less latency
sensitive, for retail and individual investors that have no need for
Real-Time data, for use by ``middle office'' or risk personnel at
broker-

dealers, and for academics, among others.
    The Suspension Order asks if IEX should provide more detail about
the types of market participants that choose to subscribe to TOPS,
DEEP, or both, in that such information may be relevant to an
assessment of its pricing of different market data products. IEX has 70
Data Subscribers who it believes are individuals,\57\ and 170 other
subscribers who are comprised of approximately one-third IEX Members,
one-third professional market participants that are not IEX Members
(e.g., hedge funds and broker-dealers), and one-third data vendors. Of
the 170 non-individuals, 15 currently subscribe to only DEEP (4 IEX
Members, 4 professional market participants, 7 vendors), 64 to only
TOPS (14 IEX Members, 23 professional market participants, 27 vendors)
and 91 to both (41 Members, 26 professional market participants, 24
vendors). All of the individuals currently subscribe only to TOPS, and
no individual subscriber has indicated that it will continue to receive
TOPS in Real-Time once IEX begins charging the fee set forth in this
proposal.
---------------------------------------------------------------------------

    \57\ IEX's belief in this regard is based on an assessment that
the Data Subscriber has a natural person name (i.e., fist name--last
name), rather than an entity name.
---------------------------------------------------------------------------

    As proposed, IEX is structuring its fees so that fee levels are
aligned with access to Real-Time DOB market data of the type that is
needed by the relatively small number of firms that drive much of the
Exchange's market data costs. Because of this dynamic, the proposed fee
structure means that the absolute amount of fees charged for DOB market
data will be far less than those charged by other exchanges for the
equivalent products \58\ and result in fees that are fair and
reasonable from the standpoint of all users, including electronic
trading firms. This structure serves the goal of promoting the wide
availability of minimally delayed data to a broad range of market
participants, including investors. IEX believes that these distinctions
are not only allowed by the Act but fully align with the principles of
fair and efficient markets more than many other fee structures now in
place. IEX's proposed cost structure serves to provide wide
availability of market data on a cost-effective (and in some cases,
free) basis, which is itself a fundamental purpose of the Securities
Acts Amendments of 1975.\59\
---------------------------------------------------------------------------

    \58\ For examples of other exchange's market data fees, see
https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Fee_Schedule.pdf; https://nasdaqtrader.com/Trader.aspx?id=DPUSdata; and https://www.cboe.com/us/equities/membership/fee_schedule/bzx/.
    \59\ Public Law 94-29, 89 Stat. 97 (1975).
---------------------------------------------------------------------------

    IEX proposes to provide Delayed IEX Data free of charge in order to
minimize barriers to access IEX Data and thereby potentially increase
trading on IEX. IEX's business model seeks to primarily generate
revenue from trading rather than from data and connectivity fees, so an
essential objective of the proposed fee structure is to enable broad
access to IEX Data while it is still timely and useful to most IEX Data
consumers without incurring any IEX fees.
    IEX notes that other equities exchanges also offer delayed market
data free of charge, but they define ``delayed data'' as data that is
disseminated at least fifteen minutes after the same data is
disseminated in Real Time.\60\ These delayed data feeds are often used
by brokerage firms \61\ or online distributors of market data \62\ to
provide stock quote information free of charge, even if it is 15
minutes old.
---------------------------------------------------------------------------

    \60\ See, e.g., NYSE Comprehensive Market Data Policies, Section
7 (Delayed Data Policy), available at https://www.nyse.com/publicdocs/data/Policy-ComprehensivPackage_PDP.pdf; Cboe Global
Markets North American Data Policies, Section 5 (Delayed Data),
available at https://cdn.batstrading.com/resources/membership/Market_Data_Policies.pdf; Nasdaq Delayed Data Policy, available at
http://www.nasdaqtrader.com/content/administrationsupport/policy/delayeddatapolicy.pdf.
    \61\ See, e.g., Interactive Brokers Delayed and Streaming Market
Data, available at https://www.interactivebrokers.com/en/software/webtrader/webtrader/marketdata/delayedandstreamingmarketdata.htm
(``Delayed market data is available for instruments for which you do
not currently hold market data subscriptions.'').
    \62\ See, e.g., MarketWatch Market Data Terms of Use, available
at https://www.marketwatch.com/site/investing-terms-of-use
(``comprehensive quotes and volume reflect trading in all markets
and are delayed at least 15 minutes.'').
---------------------------------------------------------------------------

    In determining the appropriate delay interval, IEX sought to strike
a balance between offering IEX Data at a reasonable and transparent
price to market participants who require real-time data, while also
offering market participants a commercially viable option for the
receipt of free IEX Data within a time period in which the data will
remain useful to market participants who do not require near
instantaneous real-time market data for trading purposes. Knowing there
is no ``exact science'' to the determination of how long to delay data
before allowing it to be retransmitted free of charge, IEX sought
informal feedback from Members and other Data Subscribers. Based upon
that informal feedback, IEX believes that most, if not all, non-
electronic trading desks would be able to continue to use IEX Data if
it was received subject to at least a fifteen-millisecond delay. Also
based on that informal feedback, IEX believes that there will be some
current Data Subscribers--e.g., algorithmic traders, data vendors, and
any electronic trading platform that we believe typically use real-time
data to calculate the NBBO--that will continue to pay for Real-Time IEX
Data.
    In addition, IEX is not proposing to charge fees for HIST and did
not include the de minimis incremental costs to create daily HIST files
in its market data costs. IEX believes that HIST is not used for
trading decisions since it is available only on a T+1 basis, other than
possibly for back testing and research. Accordingly, all the factors
that apply to IEX's decision not to charge for Delayed Data are even
more applicable to HIST (which is significantly more delayed than 15
milliseconds), including the objective to provide broad access to IEX
Data.
    The proposed fees will not apply differently based upon the size or
type of the market participant, but rather based upon the speed with
which the Data Subscriber wishes to obtain IEX Data, based upon factors
deemed relevant by each Data Subscriber, such as the cost to access and
process IEX Data as well as business models.
    Finally, IEX notes that this simple, transparent market data fee
proposal will simplify IEX audits for compliance with applicable market
data policies. Any Data Subscriber receiving Real-Time IEX Data will
enter into a Data Subscriber Agreement with IEX, even if the Data
Subscriber obtains its data through a third-party vendor (as noted
above, if the Real-Time data is received by an affiliate of the Data
Subscriber, there will be no additional fees charged). Further, any
Delayed IEX Data recipient does not need to enter into a Data
Subscriber Agreement with IEX. Therefore, to assess compliance with
applicable market data policies, IEX would simply audit whether any
redistribution of IEX Data to any external, non-affiliate third party
Data Subscribers is occurring, and if so, whether such redistribution
is in Real Time or subject to at least a fifteen-millisecond delay.
    IEX's proposed fee structure is designed to recoup its costs and
limit any revenue in excess of costs to an amount that represents no
more than what IEX believes is a reasonable rate of return over such
costs.\63\ IEX conducted an updated analysis of potential

revenue, based on responses from current market data subscribers in
connection with the First Fee Filing. Specifically, IEX obtained
feedback from existing Data Subscribers in connection with the First
Fee Filing on whether they intend to continue to subscribe to Real-Time
TOPS and/or DEEP following the implementation of the fees proposed
therein. As discussed above, this feedback, which was not available at
the time of filing of the First Fee Filing, enables IEX to supplement
this Second Fee Filing with additional details relevant to revenue
projection. Based upon that feedback, and the expertise of IEX
employees, IEX expects that most, if not all, of the individual Data
Subscribers will terminate their subscriptions for Real-Time IEX Data
and, if they choose to continue to receive IEX Data, can opt to receive
Delayed IEX Data from a third-party vendor or through HIST. Of the non-
individual Data Subscribers IEX projects the following: Over one-third
overall will drop Real-Time IEX Data and use Delayed IEX Data, SIP
feeds or obtain Real-Time IEX Data through an affiliate; approximately
two-thirds of Members that are Data Subscribers will retain Real-Time
access; over 50% of vendors will drop Real-Time IEX Data; and those
Data Subscribers that currently only subscribe to TOPS are more likely
to drop compared to those that subscribe to DEEP.
---------------------------------------------------------------------------

    \63\ IEX notes that it is not only being transparent about its
costs associated with producing IEX Data, but is also being
transparent about its anticipated markup over costs.
---------------------------------------------------------------------------

    Based on the feedback received, IEX believes that in the worst
case, assuming no subscribers that have not yet indicated whether they
will continue to subscribe elect to subscribe, we estimate annual
revenues of $1.75 million, amounting to a loss of 29.5% under our
estimated costs. In the best case, if all such subscribers choose to
continue to subscribe, we estimate annual revenue of $2.63 million,
representing a potential markup of just 6.1%. IEX believes that this
revenue and cost recovery range is clearly reasonable and does not come
even close to constituting taking an unfair advantage of its unique
position as the sole source of its own proprietary market data.
    IEX does not have visibility into other equities exchanges' costs
to provide market data, and therefore cannot use those exchanges'
market data fees as a benchmark to determine a reasonable markup over
the costs of providing market data. Nevertheless, IEX believes the
other exchanges' market data fees are a useful example of alternative
approaches to providing and charging for market data. To that end, IEX
notes that its proposed fees are materially lower than what competing
equities exchanges charge IEX for similar market data products.\64\
Specifically, during 2022, IEX pays an aggregate monthly cost of
$101,024 to the 11 other equities exchanges \65\ that charge for their
market data \66\ to obtain TOB, DOB and last sale market data. By
comparison, to obtain the equivalent market data from IEX (as proposed)
the aggregate monthly cost for those 11 equity exchanges would be
$3,000 per exchange family, compared to the approximately $34,000 (on
average) that IEX pays each exchange family to obtain such equivalent
market data. As proposed, the 11 competing exchanges will, in the
aggregate, be subject to monthly fees of $9,000 or approximately one-
eleventh of the aggregate fees that IEX pays to those 11 exchanges.
Additionally, as noted in the IEX Study, the actual costs IEX incurs to
obtain market data from other exchanges often involve aggregating
several different kinds of fees, making it difficult to ascertain the
actual costs to a market participant of obtaining equivalent market
data from other exchanges.\67\ For example, several other exchanges
charge separate fees depending on whether exchange data is
redistributed internally \68\ or externally,\69\ is used for non-
display or other forms of use,\70\ or is calculated on a per user
basis, with different fees for non-professional \71\ and professional
\72\ users of the data feeds.\73\ By contrast, IEX's fee proposal is
much simpler--charging a flat fee for any entity to access one or both
of the IEX Data feeds ($500 month for TOPS/$2,500 for DEEP), with no
fee to redistribute TOPS, DEEP, or both TOPS and DEEP in Real-Time or
on a Delayed basis (regardless of the number of recipients that the
entity redistributes to). This simple fee structure means the cost
burden for subscribing to receive IEX Data would be relatively flat
regardless of the size of the Data Subscriber's firm. At the same time,
IEX believes that the fees are set at a level that will not represent a
significant cost to any Data Subscriber. For example, because IEX will
not be charging any variable per user fees, Data Subscribers will not
need to expend resources on monthly reporting of market data usage that
can be required when subscribing to other exchange data feeds with
pricing that differs based on the various factors noted above.
Furthermore, because IEX will not be charging different usage fees
(such as for ``display'' vs. ``non-display'' usage) or charging based
on ``controlled'' and ``uncontrolled'' products, the Data Subscribers
will not need to expend resources on managing different methods of
receiving and distributing IEX Data or different types of application
usage. Furthermore, IEX understands that the above administrative
concerns can result in contentious audits or even litigation between
data subscribers and providers of proprietary market data, all of which
can result in substantial costs to the subscribers of other exchanges'
market data feeds.
---------------------------------------------------------------------------

    \64\ See supra note 56.
    \65\ Currently, IEX pays for market data from four NYSE
exchanges (New York Stock Exchange LLC, NYSE American LLC, and NYSE
Arca, Inc.), three Nasdaq exchanges (Nasdaq Stock Market LLC, Nasdaq
BX, Inc., and Nasdaq PHLX LLC) and four Cboe exchanges (Cboe BYX
Exchange, Inc., Cboe BZX Exchange, Inc., Cboe EDGA Exchange, Inc.,
and Cboe EDGX Exchange, Inc.).
    \66\ Long-Term Stock Exchange Inc.; MEMX LLC; MIAX PEARL, LLC;
and NYSE Chicago, Inc. currently do not charge for their market
data. However, MEMX LLC has announced a plan to begin charging for
market data on April 1, 2022, which would increase IEX's fees.
    \67\ See IEX Study at 18.
    \68\ Internal distribution is receiving market data from an
exchange and distributing it within the same entity that received
the data.
    \69\ External distribution is receiving market data from an
exchange and distributing it to a third party outside of the entity
that received the data.
    \70\ Non-display usage means any method of accessing a market
data product that involves access or use by a machine or automated
device without access or use of a display by a natural person.
    \71\ Non-professional users are natural persons who use data for
personal, not commercial, purposes, and are not a registered
financial services professional.
    \72\ Anyone who is not a non-professional user is considered a
professional user.
    \73\ See supra note 56.
---------------------------------------------------------------------------

    IEX acknowledges that there are trade-offs between the benefits of
a relatively simple fee structure and a fee structure that is more
graduated based on the extent and variety of uses of IEX Data. IEX
believes it has struck an appropriate balance of these interests by
creating a fee model that is simple, easy to understand and administer,
and set at a level that is affordable for all firms that need real-time
data, while imposing no charge on recipients of Delayed IEX Data that
do not need Real-Time IEX Data.
    As discussed above, IEX estimates that this fee proposal would
result in it receiving at most an amount equal to approximately 6.1%
over its estimated costs of providing market data, with a significant
possibility that IEX will not even recoup all of its costs.\74\ We
believe

the fact that some current users have indicated to IEX they no longer
plan to subscribe to Real-Time IEX Data owes in part to the fact that
they will have the option to receive Delayed IEX Data (at a minimal
delay of only 15 milliseconds) in lieu of Real-Time IEX Data, without
paying a fee to IEX. IEX believes that Data Subscribers that are not
engaged in high speed, low latency trading may not choose to pay for
Real-Time IEX Data. As proposed, Data Subscribers may provide Delayed
IEX Data to market participants who do not require (or quite possibly
even have the necessary technology tools to use) near instantaneous
access to IEX Data.\75\ These Delayed IEX Data recipients that elect to
receive Delayed IEX Data from a Data Subscriber of IEX Data will not
incur any IEX fees.\76\ Conversely, a market participant that values
near instantaneous market data (e.g., algorithmic traders or other
equities venues that use proprietary market data feeds to calculate the
NBBO for each security) will have the option of paying $3,000 per month
to receive Real-Time TOPS and DEEP. IEX also notes that any consumers
can continue to obtain all the data in TOPS and DEEP free of charge on
a T+1 basis from IEX's HIST data product. And a market participant can
also choose to obtain IEX TOB market data from the SIPs instead of from
IEX.
---------------------------------------------------------------------------

    \74\ IEX notes that the proposed fee filing introduces a new
subscription model, and IEX will notify all current Data Subscribers
that before July 1, 2022, they will need to enter into a new Data
Subscriber Agreement with IEX if they wish to continue receiving IEX
Data in real time (either directly from IEX or via a third party).
Furthermore, anyone who elects to receive Delayed IEX Data from a
third party would no longer need to enter into a Data Subscriber
Agreement with IEX, as required under IEX's current market data
policies.
    \75\ As noted above, IEX will only provide real-time IEX Data
and will not itself delay the dissemination of IEX Data to Data
Subscribers.
    \76\ The Delayed IEX Data recipient may be subject to any fees
charged by the redistributor of the Delayed IEX Data, based upon the
contractual arrangement between the Delayed IEX Data recipient and
the provider of Delayed IEX Data. Such fees would not be paid to the
Exchange.
---------------------------------------------------------------------------

Annual Review of Fees
    In its Suspension Order, the Commission asks whether exchanges
should periodically reevaluate fees on an ongoing and periodic basis in
order to assure that actual revenue aligns with a reasonable cost-plus
model. IEX intends to conduct a review (as described above) one year
after implementation of the proposed fees and will publish the results
of that review, including the aggregate revenue received during the
year from subscription to each market data product. IEX expects that it
may propose to adjust fees at that time, to increase fees in the event
that revenues fail to cover costs. Similarly, IEX would propose to
decrease fees in the event that revenue materially exceeds our current
projections and is above a reasonable mark-up of market data costs.
Further, and as discussed above, IEX will periodically conduct a review
to inform its decision making on whether a fee change is appropriate
(e.g., to monitor for costs increasing/decreasing or subscribers
increasing/decreasing, etc. in ways that suggest the then-current fees
are becoming dislocated from the prior cost-based analysis). In the
event that IEX determines to propose a fee change, the results of a
timely review, including an updated cost estimate, will be included in
a rule filing proposing the fee change. IEX believes this approach will
further increase transparency around market data costs and help to
ensure that Exchange fees continue to be reasonably related to costs.
Specific Changes to the Fee Schedule
    In order to effectuate the proposed fee changes, IEX is proposing
to make the following changes to the definitions in the ``Market Data
Fees'' part of its Fee Schedule:
     Remove the definitions for ``Internal Distribution Fee''
and ``External Distribution Fee'' because IEX is not proposing to
charge any distribution fees.
     Define the term ``Real-Time'' as ``IEX market data that is
accessed, used, or distributed less than fifteen (15) milliseconds
after it was made available by the Exchange. IEX provides only Real-
Time IEX market data to Data Subscribers. A Data Subscriber may
redistribute Real-Time IEX market data that it receives from the
Exchange on a Real-Time basis to a natural person or entity. Receipt of
IEX market data on a Real-Time basis by an affiliate of a Data
Subscriber is not subject to additional Fees beyond those paid by such
Data Subscriber.\1\''
     Define the term ``Delayed'' as ``IEX market data that is
accessed, used, or distributed at least fifteen (15) milliseconds after
it was made available by the Exchange. A Data Subscriber may
redistribute Real-Time IEX market data that it receives from the
Exchange on a Delayed basis to a natural person or entity. In addition,
a recipient of Delayed IEX market data may further redistribute such
Delayed IEX market data to a natural person or entity.''
     Define the term ``Data Subscriber'' as ``any natural
person or entity that receives Real-Time IEX market data either
directly from the Exchange or from another non-affiliate Data
Subscriber. A Data Subscriber must enter into a Data Subscriber
Agreement with IEX in order to receive Real-Time IEX market data. A
natural person or entity that receives Real-Time IEX market data from
an affiliated Data Subscriber is subject to the Data Subscriber
Agreement of such affiliated Data Subscriber.''
     Remove the definition of ``Usage Fee'' because IEX is not
proposing to charge any usage fees for its market data.
     Add the following words before the ``Service/Fee'' table:
``The following fees\2\ are assessed by IEX on market data
recipients:''
    IEX is also proposing to the make the following changes to the
``Service/Fee'' table in the Market Data Fees section of the Fee
Schedule:
     Delete the references to the Internal Distribution,
External Distribution, and Usage Fees.
     Add the following entries to the table:

------------------------------------------------------------------------
                  Service                                Fee
------------------------------------------------------------------------
DEEP Feed (Real-Time).....................  $2,500 per month.\3\
TOPS Feed (Real-Time).....................  $500 per month.\3\
DEEP Feed (Delayed).......................  FREE.
TOPS Feed (Delayed).......................  FREE.
------------------------------------------------------------------------

     Define footnote 1 to say: ``The terms ``affiliate'' and
``affiliated'' have the meaning specified in Rule 12b-2 of the Exchange
Act.''
     Define footnote 2 to say: ``The fees set forth below
include only fees charged by IEX. Receipt of Real-Time IEX market data
from a Data Subscriber or Delayed IEX market data from a Data
Subscriber or other person may also be subject to fees agreed to
between the Data Subscriber and recipient of such IEX market data.''
     Define footnote 3 to say: ``These fees will be operative
beginning July 1, 2022.''
Implementation Schedule
    As noted above, the proposed rule change is effective on filing and
the fees proposed herein will become operative on July 1, 2022. Delayed
implementation will provide an opportunity for current Data Subscribers
to modify the manner in which they receive IEX Data, if they choose to
do so, allowing them to obtain IEX Data without incurring any charge
from IEX if they receive it subject to at least a fifteen-millisecond
delay,\77\ before the first month in which IEX will charge for access
to IEX Data.\78\
---------------------------------------------------------------------------

    \77\ The Delayed IEX Data recipient may be subject to any fees
charged by the redistributor of the Delayed IEX Data, based upon the
contractual arrangement between the Delayed IEX Data recipient and
the provider of Delayed IEX Data. Such fees would not be paid to the
Exchange.
    \78\ IEX will bill all Data Subscribers directly, even if the
Data Subscriber obtains IEX Data from a vendor, rather than
indirectly billing the Data Subscriber through the vendor and
requiring the Data Subscriber to reimburse the vendor from which it
receives IEX Data.

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

2. Statutory Basis
    IEX believes that the proposed rule change is consistent with the
provisions of Section 6(b) \79\ of the Act in general and furthers the
objectives of Section 6(b)(4) \80\ 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) \81\ of the Act.
---------------------------------------------------------------------------

    \79\ 15 U.S.C. 78f(b).
    \80\ 15 U.S.C. 78f(b)(4).
    \81\ 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 fee proposal was subject to significant
competitive forces in setting the terms of the proposal. IEX
understands that in general the analysis 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, IEX understands that in general the analysis 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. IEX further understands that 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.
    As discussed in the Purpose section, IEX believes that as a general
matter, because each exchange is the exclusive source of its own market
data (particularly its depth of book data), market data fees cannot be
sufficiently justified based on unproven assumptions about competition
for market data, notwithstanding that a newer and/or smaller securities
exchange, such as IEX, may be less able to set prices for its market
data free of competition pressures than may be the case for more
established securities exchanges. Nevertheless, IEX has not determined
its proposed overall market data fees based on assumptions about market
competition, instead relying upon a cost-plus model to determine a
reasonable fee structure that is informed by the extent to which demand
for each product drives IEX's overall market data costs and the
different uses of the products by different types of participants. In
this context, IEX believes the proposed fees overall are fair and
reasonable as a form of cost recovery plus the possibility of a
reasonable return for IEX's aggregate costs of offering IEX Data to its
Data Subscribers.
    As discussed in the Purpose section, IEX believes that charging
$500 per month for TOPS and $2,500 per month for DEEP is reasonable
because it is based both on the relative costs to IEX to generate TOPS
and DEEP, the extent to which each product drives IEX's overall costs
and the relative value of each, as well as IEX's objective to make TOPS
broadly available to a range of market participants including long-term
investors. Therefore, IEX believes that it is reasonable to charge a
higher fee for DEEP than for TOPS.
    IEX also believes the proposed fees are reasonable because they are
designed to generate annual revenue to recoup some or all of IEX's
annual costs of providing market data. As discussed in the Purpose
section, subsequent to the First Fee Filing, IEX conducted an updated
analysis of potential revenue, based on responses from current market
data subscribers. Based on that analysis, assuming no subscribers that
have not yet indicated whether they will continue to subscribe elect
not to subscribe, we estimate annual revenues of $1.75 million in
market data fees, amounting to a loss of 29.5% under our estimated
costs of providing that data. Even if all such subscribers choose to
continue to subscribe, we estimate this fee filing will result in
annual revenue of $2.63 million, representing a potential markup of
just 6.1% over the cost of providing market data. Accordingly, IEX
believes that this fee methodology is reasonable because it both allows
IEX to recoup some or all of its expenses for providing market data
(with any additional revenue representing no more than what IEX
believes to be a reasonable rate of return), while continuing to allow
market participants to access IEX Data free of charge if they can wait
at least fifteen milliseconds to receive it.
    Additionally, IEX believes the proposed fees are reasonable because
IEX is only charging Data Subscribers who use IEX Data in Real-Time,
and as described in the Purpose section, these Data Subscribers are the
very ones creating the demand for Real-Time IEX Data, thereby causing
IEX to incur the costs described above to produce Real-Time market data
feeds.
    IEX also believes that the proposed fees are reasonable because
they are significantly less than the fees charged by competing equities
exchanges, notwithstanding that the competing exchanges may have
different system architectures that may result in different cost
structures for the provision of market data. As described above, the
three large exchange families charge significantly more than IEX's
proposed fees for real-time access to their proprietary market data.
Significantly, they charge these fees without offering an option to
receive delayed market data within a time frame that is usable for most
trading purposes. The delayed data offered by other exchanges is also
offered free of charge, but only fifteen minutes after it is first
disseminated, which IEX believes generally makes the data stale for any
subscribers using the data to make trading decisions.
    Finally, as described in the Purpose section above, IEX believes
that this fee proposal is reasonable because it will not impose onerous
audit requirements on Data Subscribers, because there will be no need
to substantiate the number of users of IEX Data or the manner in which
it is being used, but rather only whether it is being redistributed in
real time or subject to at least a fifteen-millisecond delay.
Equitable Allocation and Non-Discrimination
    IEX believes that its proposed fees are reasonable, fair, and
equitable, and not unfairly discriminatory because they are designed to
align fees with services provided, will apply equally to all Data
Subscribers that require real-time data, and will minimize barriers to
entry by providing IEX Data for free after at least fifteen
milliseconds, thereby allowing all but the most latency sensitive
market participants access to IEX Data within a time frame that is
usable for most trading purposes.
    The Exchange believes that providing Delayed IEX Data without
charging any fees and charging as much as $3,000 per month to Data
Subscribers who require Real-Time IEX Data is fair and equitable, and
not unfairly discriminatory because it will enable all market
participants to access Delayed IEX Data without paying

any fees to IEX \82\ and will charge only the users who require the
fastest market data feeds available (which, as discussed in the Purpose
section, drives much of the costs associated with creating and
distributing IEX Data because it increases the resiliency, capacity and
redundancy costs associated with IEX's proprietary market data feeds)
for access to IEX Data. Additionally, as noted in the Purpose section,
anyone can obtain TOPS and DEEP data free of charge on a T+1 basis
through IEX's HIST data product. IEX believes this approach to market
data fees will equitably distribute the costs of IEX Data among market
participants whose business models require the highest speed market
data available but without unfairly discriminating among market
participants based on any distinctions between or among Members,
customers, broker-dealers, or any other entity, because they are solely
determined by the individual market participant based on its business
needs.
---------------------------------------------------------------------------

    \82\ Although IEX will not charge any distribution fees to a
redistributor of Delayed IEX Data, the redistributor may still
charge its own fees to its customers that receive Delayed IEX Data
from such redistributor.
---------------------------------------------------------------------------

    Furthermore, IEX believes that charging $500 per month for TOPS and
$2,500 per month for DEEP is fair and equitable because, as discussed
in the Purpose section, it is based on the relative value of DEEP and
TOPS, the fact that demand for real-time DEEP drives a significant
portion of IEX's market data costs, and the existence of alternatives
to real-time TOB market data. These factors operate to limit IEX's
ability to base real-time TOPS pricing strictly on a proportional cost
allocation; additionally, charging significantly less for TOPS supports
IEX's objective to make TOPS broadly available to a range of market
participants including long-term investors. Therefore, IEX believes
that it is fair and equitable to charge a higher fee for DEEP than for
TOPS.
    The Exchange also believes that it is fair and reasonable to not
charge additional fees to affiliates of a Data Subscriber because that
approach is agnostic on corporate structure without financially
penalizing a firm organized into multiple affiliates. Moreover, IEX's
costs do not materially differ based on how Data Subscribers have
legally structured their operations.
    The Exchange further believes that the proposed fees are
reasonable, fair, and equitable, and non-discriminatory because they
will apply to all Data Subscribers in the same manner based on the type
of market data needed. All similarly situated market participants are
subject to the same fees. The fees also do not depend on any
distinctions between or among Members, customers, broker-dealers, or
any other entity, because they are solely determined by the individual
market participant based on its business needs.
    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, with the option of
receiving free data from a third party on at least a fifteen-
millisecond delay \83\ or for absolutely no cost on a T+1 basis using
HIST, will enable a broad range of market participants to continue to
receive IEX Data, 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.
---------------------------------------------------------------------------

    \83\ Distributors of Delayed IEX Data may charge a fee for the
data, but that fee is not payable to IEX.
---------------------------------------------------------------------------

    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
fees are based on actual costs and are designed to enable the Exchange
to recoup its applicable costs with the possibility of a reasonable
profit on its investment as described in the Purpose and Statutory
Basis sections. Competing equities exchanges are free to adopt
comparable fee structures subject to the SEC rule filing process.
    The Exchange also does not believe that the proposed fees will
impose any burden on intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act because all
market participants are entitled to receive IEX Data free of charge
after at least a fifteen-millisecond delay. Providing a commercially
viable free data feed to Data Subscribers is designed to avoid creating
barriers to entry for smaller Members, thereby promoting intramarket
competition. In addition, even Members subject to relatively higher
fees, because they are paying up to $3,000 per month for IEX Data, will
still be subject to a relatively low aggregate fee (and significantly
less than the fees charged by competing exchanges, as described above)
and IEX thus believes that 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 noted in the Purpose and Statutory Basis sections, IEX
believes that not requiring any onerous audits for Data Subscribers
will be of equal benefit to all Data Subscribers.

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) \84\ of the Act.
---------------------------------------------------------------------------

    \84\ 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) \85\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \85\ 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 No. SR-IEX-2022-02 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 No. SR-IEX-2022-02. 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 office of the Exchange and on its internet
website at www.iextrading.com. 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 No. SR-IEX-
2022-02, and should be submitted on or before May 4, 2022.
---------------------------------------------------------------------------

    \86\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\86\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-07853 Filed 4-12-22; 8:45 am]
BILLING CODE 8011-01-P