[Federal Register Volume 83, Number 139 (Thursday, July 19, 2018)]
[Notices]
[Pages 34277-34279]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-15369]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-83634; File No. SR-IEX-2018-15]
Self-Regulatory Organizations; Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To
Discontinue the Router Basic Routing Option
July 13, 2018.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on July 10, 2018, the Investors Exchange LLC (``IEX'' or
the ``Exchange'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule change as described in Items I,
II and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 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 Securities
Exchange Act of 1934 (``Act''),\4\ and Rule 19b-4 thereunder,\5\
Investors Exchange LLC (``IEX'' or ``Exchange'') is filing with the
Securities and Exchange Commission (``Commission'') a proposed rule
change to amend Rule 11.230(c) (Routing Options) to discontinue the
Router Basic routing option and delete references thereto. The Exchange
has designated this rule change as ``non-controversial'' under Section
19(b)(3)(A) of the Act \6\ and provided the Commission with the notice
required by Rule 19b-4(f)(6) thereunder.\7\
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78s(b)(1).
\5\ 17 CFR 240.19b-4.
\6\ 15 U.S.C. 78s(b)(3)(A).
\7\ 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 statement may be examined at
the places specified in Item IV below. The self-regulatory organization
has prepared summaries, set forth in Sections A, B, and C below, of the
most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this proposed rule change is to amend Rule 11.230(c)
(Routing Options) to delete references to the Router Basic routing
option. The Exchange currently offers two routing options--Router and
Router Basic--which may be elected by a User upon entry of an order
eligible for routing to the Exchange.\8\ The Exchange proposes to
discontinue the Router Basic option.
---------------------------------------------------------------------------
\8\ See standard FIX tag 18 (ExecInst) in the Investors Exchange
FIX Specification, available on the Exchange's public website.
---------------------------------------------------------------------------
Rule 11.230(c)(1) describes the Exchange's Router Basic routing
option under which the System \9\ sends routable orders to market
centers on the Exchange's proprietary System routing table.\10\ If
shares remain unexecuted after routing, they are posted on the Order
Book or canceled, as per User instructions. Once posted to the Order
Book, the unexecuted portion of such an order is eligible for the re-
sweep behavior described in Rule 11.230(c)(3), market conditions
permitting.
---------------------------------------------------------------------------
\9\ See Rule 1.160(nn).
\10\ See Rule 11.230(c). The term ``System routing table''
refers to the proprietary process for determining the specific
trading venues, including the Order Book, to which the System routes
orders and the order in which it routes them. The Exchange reserves
the right to maintain a different System routing table for different
routing options and to modify the System routing table at any time
without notice.
---------------------------------------------------------------------------
Furthermore, Rule 11.230(c)(2) describes the Exchange's Router
routing option under which the System sends routable orders to the
Order Book to check for available shares and then any remainder is sent
to market centers on the Exchange's proprietary System routing table.
If shares remain unexecuted after routing, they are
[[Page 34278]]
posted on the Order Book or canceled, as per User instructions. Once
posted to the Order Book, the unexecuted portion of such an order is
eligible for the re-sweep behavior described in Rule 11.230(c)(3),
market conditions permitting.
The Exchange evaluates its product and service offerings on an
ongoing basis to identify opportunities for enhancement and
simplification. After several internal analyses, the Exchange has
identified that relatively fewer Users elect Router Basic in comparison
to the Exchange's Router option.\11\ Accordingly, the Exchange has
determined to simplify the routing options offered by the Exchange by
discontinuing the Router Basic option, considering the current demand
for Router Basic does not warrant the infrastructure and ongoing
maintenance expenses required to support the product. Users seeking to
route orders to market centers on the System routing table via the
Exchange will continue to be able to do so using the Router option.
Furthermore, use of the Exchange's router will continue to be optional
and Users may access liquidity on away market centers using alternative
methods, such as connecting to those exchanges directly or through a
third-party service provider.
---------------------------------------------------------------------------
\11\ For example, during the first quarter of 2018, over two
thirds of routable orders entered on the Exchange were entered under
the Router option, instead of Router Basic.
---------------------------------------------------------------------------
In conjunction with the proposed discontinuation of Router Basic,
the Exchange proposes to reserve paragraph (1) of Rule 11.230(c). The
Exchange intends to implement the proposed rule change on the operative
date of this filing.
2. Statutory Basis
IEX believes that the proposed rule change is consistent with
Section 6(b) of the Act in general,\12\ and further the objectives of
Section 6(b)(5) of the Act,\13\ in particular, in that it is designed
to prevent fraudulent and manipulative acts and practices, to promote
just and equitable principles of trade, to foster cooperation and
coordination with persons engaged in facilitating transactions in
securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system and, in general, to
protect investors and the public interest.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78f.
\13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
As discussed in the Purpose section, the proposed rule change is
designed to simplify the Exchange's routing options, which the Exchange
believes is consistent with the protection of investors and the public
interest. Furthermore, the Exchange believes the proposed changes are
consistent with the protection of investors and the public interest in
that, as described above, the Exchange has relatively few Users
electing Router Basic. Accordingly, the Exchange has determined to
simplify the routing options offered by the Exchange by discontinuing
the Router Basic option, considering the current demand for Router
Basic does not warrant the infrastructure and ongoing maintenance
expenses required to support the product. Routing through the Exchange
is voluntary, and an alternative routing option offered by the Exchange
as well as other methods remain available to Users that wish to route
to market centers on the System routing table. In addition, the Router
Basic routing option is not a core product offering of the Exchange,
nor is the Exchange required by the Act to offer such product.
Therefore, the Exchange believes the proposed rule change would
simplify the Exchange's routing options, and make its rules clearer and
less confusing for investors by removing a routing option that will no
longer be offered by the Exchange, thereby removing impediments to and
perfecting the mechanism of a free and open market and a national
market system, and, in general, protecting investors and the public
interest. Lastly, the Exchange does not believe that this proposal will
permit unfair discrimination among customers, brokers, or dealers
because the Router Basic routing option will no longer be available to
any Users of the Exchange.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposal will impose any
burden on competition not necessary or appropriate in furtherance of
the purposes of the Act. The proposed rule change is not designed to
address any competitive issues but rather simplify the Exchange's
routing options, and eliminate the infrastructure and ongoing
maintenance expenses to support a product that Members use relatively
less.
Furthermore, the Exchange believes the proposed rule change does
not impose any burden on intra-market competition not necessary or
appropriate in furtherance of the purposes of the Act because, as
described above, the Router Basic routing option will no longer be
available to any Users of the Exchange, and thus all Users will be
impacted in the same manner. Further, Users seeking to route orders to
market centers on the System routing table will continue to be able to
do so using the Router option or may access liquidity on away market
centers using alternative methods, such as connecting to those
exchanges directly or through a third-party service provider.
The Exchange also does not believe that the proposed rule change
would impose a burden on inter-market competition since other exchanges
are free to adopt comparable routing options.
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 Exchange has designated this rule filing as non-controversial
under Section 19(b)(3)(A) \14\ of the Act and Rule 19b-4(f)(6) \15\
thereunder. Because the proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6) thereunder.
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
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) \16\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------
\16\ 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:
[[Page 34279]]
Electronic Comments
Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-IEX-2018-15 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-IEX-2018-15. 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 this filing will also be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-IEX-2018-15 and should be submitted on
or before August 9, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
---------------------------------------------------------------------------
\17\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-15369 Filed 7-18-18; 8:45 am]
BILLING CODE 8011-01-P