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Updated Exchange Transition Plan and Test Opportunities

IEX Trading Alert #2016 - 010

Please Route To: Trading, Business, Market Data Technology, and Trade Support

What you need to know:

  • IEX is adjusting the Investors Exchange testing and launch timeline to accommodate a 90 day extension specified by the SEC on its deadline to take action on IEX's amended Form 1 application.
  • Pending SEC approval, and after at least a 60 day industry adoption period, IEX will transition the IEX ATS to Investors Exchange using a security-by-security phase-in approach over a two-week period from mid-August to September 2, 2016.
  • IEX is offering four (4) remaining Saturday test opportunities between June and August 2016.
  • Details regarding third-party identifier information, behavior during the transition period, and the "Exchange-only" TOPS feed may be found in IEX Trading Alert #2015-030, which was disseminated on November 17, 2015, and the Investors Exchange FAQs.

Why has the timing changed?

Last Friday, the SEC instituted proceedings under Section 19(a)(1)(B) of the Act to determine whether to grant or deny IEX's exchange registration application, as amended.

Accordingly, the SEC postponed the deadline for rendering a decision by 90 days from the original March 21 target, and has designated June 18, 2016 as the date by which they shall determine whether to grant or deny IEX's amended Form 1 application for registration as a national securities exchange.

When and how will IEX ATS transition to Investors Exchange?

As previously announced, pending SEC approval, IEX ATS will transition to Investors Exchange using a security-by-security phase-in approach similar to that used by Electronic Communication Networks ("ECNs") who transitioned to national securities exchanges in the past.

Pre-launch Period: To ensure a smooth transition of trading from IEX ATS (the "ATS") to Investors Exchange (the "Exchange"), there will be a three-week pre-launch period during which participants will be able to enter test orders on the Exchange using test symbols.

Phase-in Period: Following the launch date, there will be a two-week phase-in period during which securities currently trading on IEX ATS will be migrated from the ATS to the Exchange. Once a security is migrated from the ATS to the Exchange, it will no longer be available for trading on the ATS and will only be available for trading on the Exchange. Once the Exchange begins trading its first non-test security, it will operate in conjunction with the ATS until all securities are fully transitioned.

The objective of migrating securities in this manner is to promote a stable, predictable trading experience for market participants and technology partners. The schedule is as follows:

  • August 1 - 18 (M - Th): Test symbols transition (pre-launch period)
  • August 19 - 23 (F - Tu): 2 non-test symbols ("Launch Date", phase-in period begins)
  • August 24 - 26 (W - F): 10 non-test symbols
  • August 29 - 30 (M - Tu): Y-Z symbol range
  • August 31 - September 1 (W - Th): V-Z symbol range
  • September 2 (F): All symbols (phase-in period ends, ATS ceases operation)

Note that each set of symbols is additive to the previously migrated set(s).

When can I test Exchange functionality, including identifying IEX quotations on the SIP?

IEX has scheduled the following Saturday testing opportunities in advance of the Exchange launch:

  • March 5: 1st Member Testing Opportunity (COMPLETE)
  • June 4: 2nd Member Testing Opportunity
  • July 9: 3rd Member Testing Opportunity
  • July 30: 4th Member Testing Opportunity
  • August 13: 5th Member Testing Opportunity

During each Saturday test, the IEX Production system is available from 8:00 a.m. to 1:00 p.m. ET for testing functionality of Investors Exchange.

Test data is available nightly directly from the SIPs.

  • CTA: Test data is disseminated from CQS/CTS on business weekdays from 9:00 - 9:15 p.m. ET from the multicast Playback Test channels (not over Production channels).
  • UTP: A test file is recorded to be replayed in the evenings from 9:00 p.m. to 10:30 p.m. ET to all UTP data feed subscribers. Evening test data is provided over the production IP services during the designated times. No registration is required to participate in evening testing.

Who is eligible to participate in the scheduled Saturday tests?

Members, Service Bureaus, Sponsored Participants, and Extranet Providers

Those who wish to access the IEX system for order entry and execution must submit all required Connectivity Agreements and Forms, and such forms must be approved by IEX on the Monday prior to a Saturday test to be eligible for participation. Additionally, new Members and Service Bureaus must complete a successful certification in IEX's Certification environment prior to participating in a Saturday test. The first page of the document provides a checklist of the agreements and forms required from each type of participant.

Additionally, application and agreements for broker membership, service bureau access, or sponsored access must be submitted to IEX by the Monday prior to a Saturday test to be eligible for participation (IEX approval prior to testing is not required for these documents). The checklist on the first page of each document below outlines the required application, agreement, and forms for each participant:

Data Recipients

Those who wish to access IEX's system for the receipt of IEX's data products (e.g. TOPS) must submit all required Data Agreements and Forms and such forms must be approved by IEX on the Monday prior to a Saturday test to be eligible for participation. The first page of the document provides a checklist of the agreements and forms required.

Newly Connecting Participants

Those who require new physical connections to IEX, please plan accordingly to ensure the physical connectivity is ordered at least two (2) weeks in advance of the test you wish to participate in.

Who can submit orders on the IEX ATS or Investors Exchange during the transition period?

During the pre-launch period, all ATS Subscribers may submit orders to IEX. During the two-week phase-in period following Exchange launch, only market participants who are Members of Investors Exchange or technology partners who have been approved by Investors Exchange will be able to submit orders to either the ATS or the Exchange. During the two-week phase-in period, ATS Subscribers who are also Members may submit orders in any security, while Members who are not ATS Subscribers may only submit orders in securities that have migrated to the Exchange.

For additional information about the documentation required to participate on the Exchange, see https://iextrading.com/trading/membership/.

Where can I learn more?

About IEX

Dedicated to institutionalizing fairness in the markets, IEX provides a more balanced marketplace via simplified market structure design and cutting-edge technology. IEX operates a fair-access platform accessible by any qualified broker dealer. IEX is driven by a team of cross-industry experts with backgrounds spanning market venues, electronic trading, and broker-dealers. IEX is the first equity trading venue seeded exclusively by a consortium of buy-side investors, including mutual funds, hedge funds, and family offices. Learn more at: iextrading.com.