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[Release No. 34-106390; File No. SR-IEX-2026-31]

Self-Regulatory Organizations; Investors Exchange LLC; Notice of Filing and Immediate

Effectiveness of Proposed Rule Change to Address Internal Inconsistencies in Rule 22.260

in Advance of the Launch of IEX Options

September 16, 2026.

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 September 8, 2026, 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 and II

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.

Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed

Rule Change

Pursuant to the provisions of Section 19(b)(1) under the Act, 4 and Rule 19b-4

thereunder,5 the Exchange is filing with the Commission a rule change proposal to address

internal inconsistencies in Rule 22.260 in advance of the launch of IEX Options. The Exchange

15 U.S.C. 78s(b)(1).

15 U.S.C. 78a.

17 CFR 240.19b-4.

15 U.S.C. 78s(b)(1).

17 CFR 240.19b-4.

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

The text of the proposed rule change is available at the Exchange’s website at

https://www.iexexchange.io/resources/regulation/rule-filings and at the principal office of the

Exchange.

II.

Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for,

the Proposed Rule Change

In its filing with the Commission, the self-regulatory organization included statements

concerning the purpose of and basis for the proposed rule change and discussed any comments it

received on the proposed rule change. The text of these 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.

Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory

Basis for, the Proposed Rule Change

Purpose

On September 18, 2025, the Commission approved IEX’s proposal to adopt rules

governing the trading of options on the Exchange in a new facility called “IEX Options”; 8 IEX

Options has announced its plan to commence trading options on October 2, 2026. 9 As set forth in

15 U.S.C. 78s(b)(3)(A).

17 CFR 240.19b-4.

See Securities Exchange Act Release No. 103290 (June 18, 2025), 90 FR 26865, 26878 (June 24, 2025)

(SR-IEX-2025-02) (Notice of Filing of Amendment No. 3 to a Proposed Rule Change To Adopt Rules To

Govern the Trading of Options on the Exchange for a New Facility Called IEX Options) (“Options Rule

Filing”) and Securities Exchange Act Release No. 103998 (September 18, 2025), 90 FR 45861 (September

23, 2025) (SR-IEX-2025-02) (Commission order approving a Proposed Rule Change, as Modified by

Amendment No. 3, to Adopt Rules To Govern the Trading of Options on the Exchange for a New Facility

Called IEX Options) (“Approval Order”).

See https://www.iex.io/options/resources#important-dates.

the IEX Options rules, the System’s 10 acceptance and execution of orders, quotes, and bulk

messages, as applicable, are subject to the price protection mechanisms and risk controls

provided to Options Members11 in Rule 22.250 (Pre-Trade and Activity-Based Risk Controls)

and Rule 22.260 (Additional Price Protection Mechanisms and Risk Controls). In advance of the

commencement of trading options, IEX now makes this rule change proposal to address internal

inconsistencies in Rule 22.260. Specifically, as described below, IEX proposes to delete Rule

22.260(b) and to expand the types of orders that are not subject to Rule 22.260(e). The Exchange

has designated this rule change as “non-controversial” under Section 19(b)(3)(A) of the Act 12

and provided the Commission with the notice required by Rule 19b-4(f)(6) thereunder.13

Background

IEX Options has three Order Types (applicable to orders and quotes): Limit orders, 14

Market orders,15 and Attributable orders.16 Each order and quote must also have a TIF17 of either

The term “System” means the automated trading system used by IEX Options for the trading of options

contracts, as described in Rule 22.100(a). See Rule 17.100.

The term “Options Member” means a firm, or organization that is registered with the Exchange pursuant to

Chapter 18 of these Rules for purposes of participating in options trading on IEX Options as an Options

Order Entry Firm, Options Market Maker, or Clearing Member. See Rule 17.100.

15 U.S.C. 78s(b)(3)(A).

17 CFR 240.19b-4.

See Rule 22.100(d)(1).

See Rule 22.100(d)(2).

See Rule 22.100(d)(3).

The term “TIF” shall mean the period of time that the System will hold an order, subject to the restrictions

set forth in paragraph (l) below with respect to bulk messages, for potential execution. A Time-in-Force

applied to a bulk message applies to each bid and offer within that bulk message. Unless otherwise

specified in the Exchange Rules or the context indicates otherwise, the Exchange determines which of the

following Times-in-Force are available on a class or system basis. See Rule 22.100(g).

IOC18 or Day.19 Options Members may also include one of three optional “Handling

Instructions”20 with their orders and quotes: Book only,21 Post Only,22 and Intermarket Sweep

Orders.23

IEX Options rules provide for several price protection mechanisms, including Rule

22.260(b) (Market Orders in No-Bid (Offer) Series) and Rule 22.260(e) (Drill-Through

Protection). The Market Orders in a No-Bid (Offer) Series rule is designed to protect Market

orders from executions at potentially erroneous prices, and provides that if the System receives a

“Immediate Or Cancel” or “IOC” shall mean, for an order so designated, an order that is to be executed in

whole or in part as soon as such order is received. The portion not so executed immediately on the

Exchange or another options exchange is cancelled and is not posted to the IEX Options Book. IOC orders

that are not designated as Book Only and that cannot be executed in accordance with Rule 22.170 on the

System when reaching the Exchange will be eligible for routing away pursuant to Rule 22.180. Market

Makers may designate bulk messages as IOC. See Rule 22.100(g)(1).

“Day” shall mean, for an order so designated, an order to buy or sell which, if not executed expires at

market close. Market Makers may designate bulk messages as Day. See Rule 22.100(g)(2).

The term “Handling Instruction” means an additional instruction a User designates on an order, subject to

the restrictions set forth in paragraph (l) below with respect to bulk messages. A Handling Instruction

applied to a bulk message applies to each bid and offer within that bulk message. Unless otherwise

specified in the Exchange Rules or the context indicates otherwise, the Exchange determines which of the

following Handling Instructions are available on a class or system basis. See Rule 22.100(e).

“Book Only” is a Handling Instruction that an order is to be ranked and executed on the Exchange pursuant

to Rule 22.170 (Order Display and Book Processing), or to be repriced or cancelled, as appropriate, without

routing away to another options exchange. See Rule 22.100(e)(1).

“Post Only” is a Handling Instruction a User may designate on an order that is to be ranked and executed

on the Exchange pursuant to Rule 22.170 (Order Display and Book Processing) or cancelled, as

appropriate, without routing away to another options exchange except that the order will not remove

liquidity from the IEX Options Book. The System reprices, cancels or rejects (in accordance with User

Instructions) a bid (offer) designated as Post Only with a price that locks or crosses the Exchange’s best

offer (bid). A Market order cannot be designated as Post Only. See Rule 22.100(e)(2).

“Intermarket Sweep Orders” or “ISO” are orders that have the meaning provided in Rule 28.100

(Definitions). Such orders may be executed at one or multiple price levels in the System without regard to

Protected Quotations at other options exchanges (i.e., may trade through such quotations). The Exchange

relies on the marking of an order as an ISO when handling such order, and thus, it is the entering Options

Member’s responsibility, not the Exchange’s responsibility, to comply with the requirements relating to

ISOs. ISOs are not eligible for routing pursuant to Rule 22.180 (Order Routing). A Market order cannot be

designated as an Intermarket Sweep Order. Market Makers may not designate bulk messages as ISOs. See

Rule 22.100(e)(3).

sell Market order in a series after it is open for trading with an NBB24 of zero and an NBO25 less

than or equal to $0.50, the System will convert the Market order to a Limit order with a limit

price equal to the minimum trading increment applicable to the series and will post the order to

the Order Book.26 If the System receives a sell Market order in a series after it is open for trading

with an NBB of zero and an NBO greater than $0.50, the System cancels or rejects the Market

order, except if the sell Market order would be subject to the drill-through protection, in which

case the order joins the ongoing drill-through process.27 If the System receives a buy Market

order in a series after it is open for trading with an NBO of zero, the System cancels or rejects

the Market order.28

The Drill-Through Protection rule is designed to prevent an aggressively priced order

from executing beyond multiple price levels by utilizing a series of iterations up to an Exchangedetermined “buffer amount”29 that caps how far the order can execute, rather than immediately

sweeping all available liquidity up to its limit price, before it stops executing or routing the

order.30 Bulk messages 31 and ISOs are not eligible for drill-through protection.32

Proposal

See Rule 17.100.

See Rule 22.260(b)(1)(A). Note that following the Opening Process, orders and quotes received prior to

and not executed in full during the Opening Process will be transitioned to the continuous Order Book and

handled in accordance with existing IEX rules, as applicable. The System is considered to have received

such orders at that time for purposes of the Market Orders in No-Bid (Offer) Series rule. See Rule

22.160(d). The Market Orders in No-Bid (Offer) Series rule is not applicable to the Opening Process.

See Rule 22.260(b)(1)(B).

See Rule 22.260(b)(2).

IEX Options determines the buffer amount on a class and premium basis. See Rule 22.260(e)(1)

See generally Rule 22.260(e)(3)(F).

See Rule 22.100(l).

See Rule 22.260(e)(4).

A. Deletion of Rule 22.260(b)

As noted above, IEX Rule 22.260(b) specifies that if the System receives a sell Market

order in a series after it is open for trading with an NBB of zero, if the NBO in the series is less

than or equal to $0.50, then the System will convert the Market order to a Limit order with a

limit price equal to the minimum trading increment applicable to the series and enter it into the

IEX Options Book. However, IEX Market orders may only have a TIF of IOC, 33 which means a

Market order that is not “executed immediately on the Exchange or another options exchange is

cancelled and is not posted to the IEX Options Book.”34 Because Market orders either execute or

cancel on entry, they cannot be converted by the System into a Limit order that is entered into

the Options Order Book nor could they be subject to an ongoing drill-through process.

Thus, the provisions in Rule 22.260(b) that refer to converting a sell Market order to a

limit order or the order being subject to an ongoing drill-through process are inapplicable. If a

Market order to sell is received at a time when the NBB is zero (i.e., there is no interest to buy in

the series), the Market order will be automatically canceled by the System because it would not

be executed, pursuant to Rule 22.100(g)(1). With respect to a buy Market order received in a

series after it is open for trading with an NBO of zero (i.e., there is no interest to sell in the

series), Rule 22.260(b)(2) provides that the order will be rejected. In this context the terms

rejected and canceled achieve the same result because the order would not rest on the IEX

Options Order Book. Accordingly, IEX proposes to delete Rule 22.260(b) as unnecessary and

The Exchange may determine the TIF(s) applicable to each order type on a system-wide basis unless

otherwise specified in the Exchange Rules. See Rule 22.100(g). The Exchange TIF determinations are

specified in the FIX and binary input specifications and specify that Market orders may only have a TIF of

IOC. See IEX Options FIX Specification, Appendix A, available at https://www.iex.io/documents/iexoptions-fix-specification and IEX Binary Options Protocol Specification, Appendix A, available at

https://www.iex.io/documents/iex-binary-options-protocol-specification.

See supra note 18.

duplicative of Rule 22.100(g)(1) and insert the word “Reserved” in its place.

B. Amendment to Rule 22.260(e)

IEX’s Drill-Through Protection provides execution-price protection for liquidity-taking

orders, which permits a marketable order to access liquidity across multiple price levels while

limiting the distance through the prevailing contra-side NBBO at which executions may initially

occur to prevent an order from executing through successive price levels too aggressively.35

IEX’s Drill-Through Protection Rule does not apply to bulk messages or ISOs.36 Bulk

messages are designed to enable Market Makers to efficiently submit and update liquidity

providing quotations, rather than to function as liquidity-taking orders seeking execution through

multiple price levels. For example, Day37 bulk messages cannot sweep at all because they are

Post Only;38 and IOC bulk messages are for the limited purpose of Market Maker risk

management.39 Accordingly, applying drill-through to bulk messages would not meaningfully

advance the purpose for which drill-through protection was designed.

IEX’s Drill-Through Protection Rule does not apply to ISOs for a different reason. An

Options Member submitting an ISO order is affirmatively instructing the Exchange to execute

the order through the market up to its limit price without regard to Protected Quotations at other

options exchanges.40 Restricting the order by the Drill-Through process would be inconsistent

See generally Rule 22.260(e).

See Rule 22.260(e)(4).

An order or quote with a TIF of Day that does not execute on entry rests on the Order Book, and if it does

not execute before market close, is canceled. See Rule 22.100(g)(2).

See Rule 22.100(l)(3).

See Securities Exchange Act Release No. 105729 (June 18, 2026), 91 FR 38051 (June 24, 2026) (SR-IEX2026-17) (Allowing bulk messages to have a TIF of IOC for the limited purpose of Market Maker risk

management, in view of a Market Maker’s core obligation to provide liquidity to the market.)

See supra note 23,

with the objective of an ISO order.

IEX proposes to exclude Post Only orders (i.e., including orders and quotes not submitted

as bulk messages), which by definition cannot remove liquidity from the IEX Options Order

Book, from the Drill-Through Protection rule. For the reasons discussed above, this exclusion is

logical because Drill-Through Protection is designed to protect liquidity-taking orders

(something Post Only orders cannot do) from executing at too aggressive a price. 41 Thus, as

proposed, Rule 22.260(e)(3)(4) will now read: “This protection does not apply to bulk messages,

Post Only, or ISOs.”

Statutory Basis

The Exchange believes that the proposed rule change is consistent with Section 6(b) of

the Act42 in general, and furthers the objectives of Section 6(b)(5) of the Act 43 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

regulating, clearing, settling, processing information with respect to, and 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.

As discussed in the Purpose section, the proposed rule change is designed to address

internal inconsistencies in IEX Options rules. As such, the proposed rule change would foster

cooperation and coordination with persons engaged in facilitating transactions in securities and

would remove impediments to and perfect the mechanism of a free and open market and a

IEX Options rules provide that the System reprices, cancels, or rejects Post Only interest that would

lock/cross the Exchange's contra-side interest, and Post Only interest does not route away. See supra note

22.

15 U.S.C. 78f(b).

15 U.S.C. 78f(b)(5).

national market system.

In particular, the Exchange believes the proposed rule change will promote just and

equitable principles of trade, remove impediments to and perfect the mechanism of a national

market system, and protect investors and the public interest, by clarifying how impacted order

types will function. Specifically, IEX believes that Options Members would not expect a Market

order with a TIF of IOC to be eligible for the Market Orders in No-Bid (Offer) Series protection

of converting the order to a Limit order and would not expect Drill-Through Protection for

aggressive taking orders to apply to Post Only orders that by definition must add liquidity to the

Order Book. Thus, IEX believes that the proposed changes will reduce confusion among market

participants, 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.

The Exchange also believes that the proposed changes are consistent with the investor

protection and the public interest provisions of the Act because impacted order types will

continue to function as expected. Specifically, buy (or sell) Market orders received in a series

after it is open for trading with an NBO (or NBB) of zero, will be canceled, which is what an

Options Member would expect to happen when there is no contra-party interest because all IEX

Options Market orders have a TIF of IOC.44 And with respect to Drill-Through Protections,

because Post Only orders do not take liquidity, it is logical to exclude them from a protection

mechanism that prevents taking liquidity at excessive prices. Importantly, Market orders and

Post Only orders will continue to be subject to all the applicable protections specified in Rules

22.250 and 22.260.

Moreover, the Exchange believes these proposed, narrowly tailored changes to its rules

See supra note 33.

are not designed to permit unfair discrimination among Options Members as they would apply

equally to all Options Members.

Finally, each of these proposed changes is based on the logical functionality of the

Commission-approved price protection mechanisms coupled with how IEX’s order types, TIFs,

and Handling Instructions interact, and thus, the Exchange does not believe that the proposed

rule change raises any new or novel issues.

Self-Regulatory Organization’s Statement on Burden on Competition

The Exchange does not believe that the proposed rule change will impose any burden on

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. To the extent the proposed changes enhance the competitiveness of IEX Options, competing

exchanges have and can continue to adopt comparable functionality, subject to the Commission’s

rule filing process.

The Exchange also does not believe that the proposed rule change will impose any

burden on intramarket competition that is not necessary or appropriate in furtherance of the

purposes of the Act. The rule change will apply equally to all Options Members. The Exchange

believes that these proposed changes to Rule 22.260 to better align the rule with System

functionality will enable Options Members to better understand and utilize these price protection

mechanisms and risk controls, which, in turn, may enhance the integrity of trading on the options

market and help to assure the stability of the financial system.

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 filed the proposed rule change pursuant to Section 19(b)(3)(A) of the

Act45 and Rule 19b-4(f)(6)46 thereunder. Because the foregoing proposed rule change does not:

(i) significantly affect the protection of investors or the public interest; (ii) impose any significant

burden on competition; or (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 Act47 and Rule 19b-4(f)(6)48 thereunder.

A proposed rule change filed under Rule 19b-4(f)(6)49 normally does not become

operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b4(f)(6)(iii),50 the Commission may designate a shorter time if such action is consistent with

protection of investors and the public interest. The Exchange has asked the Commission to waive

the 30-day operative delay so that the proposed rule change may become operative immediately

upon filing. According to the Exchange, waiving the 30-day delay would allow the proposed

rule change to become operative on October 2, 2026, when IEX Options commences trading, and

would permit the IEX Options System to operate in a manner fully aligned with IEX Options

rules, alleviating any confusion among market participants about how the rules operate. Waiver

of the 30-day operative delay is consistent with the protection of investors and the public interest

because it allows the revised IEX Options rules to be operative by October 2, 2026, the date that

15 U.S.C. 78s(b)(3)(A).

17 CFR 240.19b-4(f)(6).

15 U.S.C. 78s(b)(3)(A).

17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) requires the Exchange to give the Commission

written notice of its intent to file the proposed rule change, along with a brief description and text of the

proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or

such shorter time as designated by the Commission. The Exchange has satisfied this requirement.

17 CFR 240.19b-4(f)(6).

17 CFR 240.19b-4(f)(6)(iii).

trading begins on the IEX Options System, provides clarity and prevents potential confusion for

market participants about the operation of IEX Options rules, and does not introduce any novel

regulatory issues. Accordingly, the Commission designates the proposed rule change to be

operative upon filing.51

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 will institute proceedings to determine whether the proposed rule change should be

approved or disapproved.

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

(https://www.sec.gov/rules/sro.shtml); or

•

Send an email to rule-comments@sec.gov. Please include file number SR-IEX-2026-31

on the subject line.

Paper Comments:

•

Send paper comments in triplicate to Secretary, Securities and Exchange Commission,

For purposes only of waiving the 30-day operative delay, the Commission also has considered the proposed

rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f).

100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-IEX-2026-31. 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 (https://www.sec.gov/rules/sro.shtml). Copies

of the filing will be available for inspection and copying at the principal office of the Exchange.

Do not include personal identifiable information in submissions; you should submit only

information that you wish to make available publicly. We may redact in part or withhold

entirely from publication submitted material that is obscene or subject to copyright protection.

All submissions should refer to file number SR-IEX-2026-31 and should be submitted on or

before [INSERT DATE 21 DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL

For the Commission, by the Division of Trading and Markets, pursuant to delegated

authority.52

Sherry R. Haywood,

Assistant Secretary.

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

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.