4 World Trade Center, 44th Floor

CX Group, Inc.

4 World Trade Center, 44th Floor

New York, New York 10007

1 646 343 2000 tel

1 888 481 9706 tel

www.iextrading.com

August 31, 2018

Robert W. Errett

Deputy Secretary

U.S. Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549-1090

Re:

Exemptive Application Pursuant to Rule 608 of Regulation NMS

Implement a Tick Size Pilot Program

—

NMS Plan to

Dear Mr. Errett:

Pursuant to Rule 608(e) of Regulation NMS under the Securities Exchange Act of 1934

(“Exchange Act”), Investors Exchange LLC, on behalf of itself and Cboe BZX Exchange, Inc.,

Cboe BYX Exchange, Inc., Cboe EDGA Exchange, Inc., Cboe EDGX Exchange, Inc., Chicago

Stock Exchange, Inc., Financial Industry Regulatory Authority, Inc., NASDAQ BX, Inc.,

NASDAQ PHLX LLC, The Nasdaq Stock Market LLC, NYSE National, Inc., New York Stock

Exchange LLC, NYSE American LLC, and NYSE Arca, Inc. (collectively, “Participants”),

requests that the Securities and Exchange Commission (“Commission” or “SEC”) grant an

exemption from the quoting and trading requirements of the National Market System Plan

(“Plan”) to Implement a Tick Size Pilot Program (“Pilot”), such that the quoting and trading

requirements of the Plan would effectively end on Friday, September 28, 2018, rather than on

Tuesday, October 2, 2018. Capitalized terms not otherwise defined in this letter shall have the

meanings ascribed to them in the Plan.

Background

On August 25, 2014, the Participants filed the Plan’ with the Commission, pursuant to Section

1 1A of the Exchange Act2 and Rule 608 of Regulation NMS thereunder.3 The Participants filed

the Plan to comply with an order issued by the Commission on June 24, 2014. The Plan was

published for comment in the Federal Register on November 7, 2014, and approved by the

Commission, as modified, on May 6, 2015. The Commission approved the Pilot on a two-year

See Letter from Brendon I. Weiss, Vice President, Intercontinental Exchange, Inc.,

Secretary, Commission, dated August 25, 2014.

2

15U.S.C.78k-1.

17 CFR 242.608.

Securities Exchange Act Release No. 72460 (June 24, 2014), 79 FR 36840 (June 30,

2014).

Sc Securities Exchange Act Release No. 74892 (May 6, 2015), 80 FR 27513 (May 13,

2015).

Robert W. Errett

August 31, 2018

basis, with implementation to begin no later than May 6, 2016.6 On November 6, 2015, the SEC

granted an exemption allowing the Participants to defer implementing the Pilot until October 3,

2016. Under the Plan, the Pilot is scheduled to run for two years from that date. Therefore, the

Pilot Period is due to expire at the end of trading on Tuesday, October 2, 201$.

The Plan is designed to allow the Commission, market participants, and the public to study and

assess the impact of increment conventions on the liquidity and trading of the common stock of

small-capitalization companies. Each Participant is required to comply, and to enforce

compliance by its member organizations, as applicable, with all provisions of the Plan, including

the Plan’s quoting and trading requirements.8

Rule 60$ and the Proposed Exemption

Rule 608(c) of Regulation NMS provides that “[e]ach self-regulatory organization shall comply

with the terms of any effective national market system plan of which it is a sponsor or a

participant. Each self-regulatory organization also shall, absent reasonable justification or

excuse, enforce compliance with any such plan by its members and persons associated with its

members.”9 Rule 608(e) allows the Commission to “exempt from the provisions of this section,

either unconditionally or on specified terms and conditions, any self-regulatory organization,

member thereof, or specified security, if the Commission determines that such exemption is

consistent with the public interest, the protection of investors, the maintenance of fair and orderly

markets and the removal of impediments to, and perfection of the mechanisms of, a national

market system.”° The Participants are seeking exemptive relief from the Test Group quoting

and trading requirements as set forth in Section VI B., C., and D. of the Plan, as described below.

Section VI of the Plan generally establishes the quoting and trading requirements for the Control

Group and each Test Group. When those requirements end, the Participants intend to transfer to

the Control Group all of the securities that are included in each of the Test Groups, consistent

with the practice that they have followed during the Pilot Period when individual securities no

longer qualify for inclusion in one of the Test Groups and are moved to the Control Group.1’

Transferring securities from the Test Groups to the Control Group will allow the Participants to

continue the post-Pilot data collection requirements as set forth in the Plan.

6

Id.

Securities Exchange Act Release No. 76382 (November 6, 2015), 80 FR 70284

(November 13, 2015).

8

See Section VI of the Plan.

17 CFR 242.608(c).

10

17 CFR 242.608(e).

See, e.g., Letter from David S. Shillman, Associate Director, Division of Trading and

Markets, SEC, to Claudia Crowley, Chief Regulatory Officer, JEX Group, Inc., dated

October 3, 2016.

Page 2 of 3

Robert W. Errett

August 31, 2018

Members of the Participants have made changes to their internal systems to comply with the

quoting and trading requirements for each of the Test Groups. Industry representatives have

represented to the Participants that changing the quoting and trading requirements during the

trading week may increase the risk of a disorderly transition out of the Pilot, by requiring

members to make necessary system changes on a very short time frame. Ending the restrictions

at the end of a trading week, in contrast, will provide sufficient time to adjust and test internal

systems and minimize the risk of potential disruption.

Absent an exemption or other relief, the Participants will be required to comply, and enforce

compliance by their members, with the quoting and trading requirements under Section VI B.,

C., and D. of the Plan through October 2, 2018. To minimize any potential systems issues, the

Participants request that the Commission grant to Participants an exemption from the quoting

and trading requirements of Section VI B., C., and D. of the Plan, to allow all Pilot Securities to

be quoted and traded as Control Group securities, effective as of the end of trading on Friday,

September 28, 2018.

The requested exemption will have no impact on the collection or publication of data under

Appendix B and Appendix C of the Plan, which under Section VII of the Plan is required to

continue for six months following the end of the Pilot Period. Subject to the receipt of the

requested exemption, the Participants intend to submit to the Commission, for immediate

effectiveness under Section 19(b)(3)(A) of the Exchange Act, rule filings to make any

corresponding changes to their respective rules needed to ensure their rules remain consistent

with the Plan, as modified by the exemption.

*****

For the reasons set forth above, the Participants respectfully request that, pursuant to Rule

608(e), the Commission grant exemptive relief from the specified requirements of Section VI of

the Plan, as set forth above. For the reasons described above, the Participants believe that this

exemption is consistent with the public interest, the protection of investors, the maintenance of

fair and orderly markets, and the removal of impediments to, and perfection of the mechanisms

of, a national market system.

Thank you for your consideration of this request.

Sincerely,

Market Policy Officer

IEX

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