Updated through January 3, 2018*

Transcription

1 Updated through January 3, 2018* * Investors Exchange rules were adopted by Securities Exchange Act Release No ; File No (June 17, 2016). Dates of subsequent changes to the Investors Exchange Rule Book are indicated herein. Copyright 2017 Investors Exchange LLC. This document may not be modified, reproduced, or redistributed without the written permission of Investors Exchange LLC. All rights reserved.

2 Table of Contents CHAPTER 1. ADOPTION, INTERPRETATION AND APPLICATION OF IEX RULES, AND DEFINITIONS...11 Rule Series General Provisions Rule Adoption of IEX Rules Rule Effective Date Rule Interpretation Rule Reserved Rule Applicability Rule Definitions Rule Regulation of IEX and Its Members Rule Fingerprint-Based Background Checks of Employees and Independent Contractors CHAPTER 2. MEMBERS OF THE EXCHANGE Rule Rights, Privileges and Duties of Members Rule Obligations of Members and the Exchange Rule Member Eligibility Rule Prohibited Conditions Relating to Expungement of Customer Dispute Rule Application Process and Waive-In Rule Restrictions on Membership Rule Application Procedures for Membership or to become an Associated Person of a Member Rule Revocation of Membership or Association with a Member Rule Voluntary Termination of Rights as a Member Rule Dues, Assessments and Other Charges Rule No Affiliation between Exchange and any Member Rule IEX Services LLC as Outbound Router Rule Retention of Jurisdiction Rule Fidelity Bonds Rule Mandatory Participation in Testing of Backup Systems CHAPTER 3. RULES OF FAIR PRACTICE Rule Business Conduct of Members Rule Violations Prohibited Rule Use of Fraudulent Devices Rule False Statements Rule Know Your Customer Rule Fair Dealing with Customers Rule Suitability Rule The Prompt Receipt and Delivery of Securities Rule Charges for Services Performed Rule Series Information and Disclosure Rules Rule Use of Information Obtained in Fiduciary Capacity Rule Publication of Transactions and Quotations Rule Offers at Stated Prices Investors Exchange Page 2 of 409

3 Rule Payments Involving Publications that Influence the Market Price of a Security Rule Customer Confirmations Rule Disclosure of Control Relationship with Issuer Rule Discretionary Accounts Accounts Rule Communications with Customers and the Public Rule Customer Disclosures Rule Influencing or Rewarding Employees of Others; Gratuities Rule Telemarketing Rule Short-Interest Reporting CHAPTER 4. FINANCIAL AND OPERATIONAL RULES Rule Series FINANCIAL CONDITION Rule Capital Compliance Rule Regulatory Notification and Business Curtailment Rule Reserved Rule Audit Rule Series MARGIN Rule Prohibitions and Exemptions Rule Day Trading Margin Rule Series RESERVED Rule Series RESERVED Rule Series BOOKS, RECORDS AND REPORTS Rule General Requirements Rule Customer Account Information Rule Record of Written Customer Complaints Rule Furnishing of Records Rule Disclosure of Financial Condition CHAPTER 5. SUPERVISION Rule Supervision Rule Supervisory Control System Rule Annual Certification of Compliance and Supervisory Processes...48 Rule Reserved Rule Prevention of the Misuse of Material, Non-Public Information...48 Rule Anti-Money Laundering Compliance Program Rule Transactions for or by Associated Persons CHAPTER 6. MISCELLANEOUS PROVISIONS Rule Comparison and Settlement Requirements Rule Failure to Deliver and Failure to Receive Rule Forwarding of Proxy and Other Issuer-Related Materials; Proxy Voting Rule Assigning of Registered Securities in Name of a Member or Member Organization Rule Commissions Investors Exchange Page 3 of 409

4 Rule Off-Exchange Transactions Rule Regulatory Services Agreement Rule Transactions Involving IEX Employees Rule Ex-Dividend or Ex-Rights Dates CHAPTER 7. RESERVED CHAPTER 8. INVESTIGATIONS AND SANCTIONS Rule Series GENERAL PROVISIONS Rule Regulation of IEX and its Members Rule Availability of IEX Rulebook to Customers Rule Definitions Rule Series INVESTIGATIONS Rule Provisions of Information and Testimony and Inspection and Copying of Books Rule Automated Submission of Trading Data Requested Rule Series SANCTIONS Rule Sanctions for Violation of the Rules Rule Effect of a Suspension, Revocation, Cancellation or Bar Rule Reserved Rule Release of Disciplinary Decisions Rule Payment of Fines, Other Monetary Sanctions, or Costs; Summary Action for Failure to Pay Rule Costs of Proceedings CHAPTER 9. CODE OF PROCEDURE Rule Series CODE OF PROCEDURE Rule Regulatory Contract with FINRA Rule Application and Purpose Rule Application Rule Definitions Rule Series Service; Filing of Papers Rule Service of Complaints Rule Service of Orders, Notices, and Decisions by Adjudicator Rule Service of Papers Other Than Complaints, Orders, Notices, or Decisions Rule Methods of, Procedures for Service Rule Filing of Papers with Adjudicator: Procedure Rule Filing of Papers: Form Rule Filing of Papers: Signature Requirement and Effect Rule Computation of Time Rule Series Proceedings Rule Appearance and Practice; Notice of Appearance Rule Withdrawal by Attorney or Representative Rule Ex Parte Communications Rule Separation of Functions Rule Rules of Evidence; Official Notice Investors Exchange Page 4 of 409

5 Rule Motions Rule Rulings on Procedural Matters Rule Interlocutory Review Rule Reserved Rule Exclusion from IEX Rule Series Proceeding Rule Recusal or Disqualification Rule Series DISCIPLINARY PROCEEDINGS Rule Series Complaint and Answer Rule Authorization of Complaint Rule Complaint Issuance Requirements, Service, Amendment, Withdrawal, and Docketing Rule Assignment of Hearing Officer and Appointment of Panelists to Hearing Panel or Extended Hearing Panel Rule Consolidation or Severance of Disciplinary Proceedings Rule Answer to Complaint Rule Acceptance, Waiver, and Consent; Plan Pursuant to Exchange Act Rule 19d-1(c)(2) Rule Expedited Client Suspension Proceeding Rule Violations Appropriate for Disposition Under Plan Pursuant to Exchange Act Rule 19d-1(c)(2) Rule Reserved Rule Series Request for Hearing; Extensions of Time, Postponements, Adjournments Rule Request for Hearing Rule Extensions of Time, Postponements, and Adjournments Rule Series Appointment of Hearing Panel, Extended Hearing Panel Rule Appointment by the Chief Hearing Officer of Hearing Panel or Extended Hearing Panel or Replacement Hearing Officer Rule Criteria for Selection of Panelists and Replacement Panelists...84 Rule Hearing Panel or Extended Hearing Panel: Recusal and Disqualification of Hearing Officers...84 Rule Hearing Panel or Extended Hearing Panel: Recusal and Disqualification of Panelists Rule Hearing Officer Authority Rule Series Pre-hearing Conference and Submission Rule Pre-hearing Conference Rule Pre-Hearing Submission Rule Series Discovery Rule Inspection and Copying of Documents in Possession of Staff Rule Requests for Information Rule Production of Witness Statements Rule Series Hearing and Decision Rule Evidence and Procedure in Hearing Rule Testimony Rule Evidence: Admissibility Rule Motion for Summary Disposition Rule Record of Hearing Rule Proposed Findings of Fact, Conclusions of Law, and Post-Hearing Briefs Investors Exchange Page 5 of 409

6 Rule Record; Supplemental Documents Attached to Record; Retention Rule Decision of Hearing Panel or Extended Hearing Panel Rule Default Decisions Rule Settlement Procedure Rule Contemptuous Conduct Rule Expedited Disciplinary Proceedings Rule Series REVIEW OF DISCIPLINARY PROCEEDING BY IEX BOARD; APPLICATION FOR SEC REVIEW Rule Series Appeal to or Review by the IEX Board Rule Appeal by Any Party; Cross-Appeal Rule Review Proceeding Initiated by the IEX Board Rule Counsel to IEX Board and Appeals Committee Rule Transmission of Record Rule Extensions of Time, Postponements, Adjournments Rule Reserved Rule Disqualification and Recusal Rule Series Proceedings Rule Oral Argument Rule Failure to Appear at Oral Argument Rule Disposition without Oral Argument Rule Failure to Participate Below; Abandonment of Appeal Rule Reserved Rule Evidence in IEX Appeals Committee Proceedings Rule Filing of Papers in IEX Appeals Committee Proceedings Rule Powers of the IEX Appeals Committee on Review Rule IEX Appeals Committee Formal Consideration; Decision Rule Series Discretionary Review by IEX Board Rule Discretionary Review by IEX Board Rule Effectiveness of Sanctions Rule Application to SEC for Review Rule Series OTHER PROCEEDINGS Rule Series Eligibility Proceedings Rule Purpose and Definitions Rule Initiation of Eligibility Proceeding by IEX Staff; Member Regulation Consideration Rule Acceptance of IEX Regulation Recommendations and Supervisory Plans by Consent Pursuant to Exchange Act Rule 19h Rule IEX Appeals Committee Consideration Rule Discretionary Review by the IEX Board Rule Expedited Review Rule Application to SEC for Review Rule Series Expedited Proceedings Rule Reserved Rule Failure to Provide Information or Keep Information Current Investors Exchange Page 6 of 409

7 Rule Failure to Pay IEX Dues, Fee and Other Charges Rule Failure to Comply with an Arbitration Award or Related Settlement or an Order of Restitution or Settlement Providing for Restitution Rule Failure to Meet the Eligibility or Qualification Standards or Prerequisites for Access to Services Rule Failure to Comply with Temporary and Permanent Cease and Desist Orders Rule Procedures for Regulating Activities Under IEX Rules and Regarding a Member Experiencing Financial or Operational Difficulties Rule Summary Proceedings for Actions Authorized by Section 6(d)(3) of the Exchange Act Rule Hearing Procedures for Expedited Proceedings Under the Rule 9550 Series Rule Series PROCEDURES FOR EXEMPTIONS Rule Application Rule Decision Rule Appeal Rule Series Reserved Rule Series TEMPORARY CEASE AND DESIST ORDERS Rule Initiation of Proceeding Rule Appointment of Hearing Officer and Hearing Panel Rule Hearing Rule Issuance of Temporary Cease and Desist Order by Hearing Panel Rule Review by Hearing Panel Rule Violation of Temporary Cease and Desist Orders Rule Application to SEC for Review CHAPTER 10. TRADING PRACTICE RULES Rule Series Prohibited Trading Practices Rule Market Manipulation Rule Fictitious Transactions Rule Excessive Sales by a Member Rule Manipulative Transactions Rule Dissemination of False Information Rule Prohibition Against Trading Ahead of Customer Orders Rule Joint Activity Rule Influencing the Consolidated Tape Rule Trade Shredding Rule Series Trading Obligations Rule Options Rule Best Execution and Interpositioning Rule Publication of Transactions and Changes Rule Trading Ahead of Research Reports Rule Obligation to Honor System Trades Rule Front Running of Block Transactions Rule Disruptive Quoting and Trading Activity Prohibited CHAPTER 11. TRADING RULES Investors Exchange Page 7 of 409

8 Rule Series General Trading Rules Rule Hours of Trading and Trading Days Rule Securities Eligible for Trading Rule Access Rule Authorized Traders Rule Registration as a Market Maker Rule Market Maker Obligations Rule Withdrawal of Quotations Rule Voluntary Termination of Registration Rule Suspension and Termination of Quotations Rule Notification Requirements for Offering Participants Rule Reserved Rule Units of Trading Rule Orders and Modifiers Rule Series Order Guidelines Rule Priority of Orders Rule Order Execution Rule Regular Market Session Opening Process for Non-IEX-Listed Securities Rule Trade Execution, Reporting, and Dissemination of Quotations Rule Clearance and Settlement; Anonymity Rule LIMITATION OF LIABILITY Rule Clearly Erroneous Executions Rule Trading Halts Rule Limit Up-Limit Down Plan and Trading Halts Rule Short Sales Rule Series System Guidelines Rule Locking or Crossing Quotations in NMS Stocks: Rule Input of Accurate Information Rule Data Products Rule Compliance with Regulation NMS Plan to Implement a Tick Size Pilot Rule Auctions Rule Reserved Rule Reserved Rule Risk Management Rule Reserved Rule Series Market Data Feeds Rule Use of Market Data Feeds and Calculations of Necessary Price Reference Points Rule Order Audit Trail System Requirements Rule Connectivity Rule Series Consolidated Audit Trail Compliance Rule Rule Consolidated Audit Trail Definitions Rule Consolidated Audit Trail - Clock Synchronization Investors Exchange Page 8 of 409

9 Rule Consolidated Audit Trail Industry Member Data Reporting (b) Timing of Recording and Reporting (c) Applicable Securities (d) Security Symbology Rule Consolidated Audit Trail Customer Information Reporting Rule Consolidated Audit Trail Industry Member Information Reporting Rule Consolidated Audit Trail - Time Stamps Rule Consolidated Audit Trail Clock Synchronization Rule Violation Rule Consolidated Audit Trail Connectivity and Data Transmission Rule Consolidated Audit Trail Development and Testing Rule Consolidated Audit Trail - Recordkeeping Rule Consolidated Audit Trail Timely, Accurate and Complete Data Rule Consolidated Audit Trail Compliance Dates (a) General (b) Clock Synchronization (c) CAT Data Reporting CHAPTER 12. CODE OF ARBITRATION PROCEDURE FOR CUSTOMER AND INDUSTRY DISPUTES Rule Arbitration CHAPTER 13. RESERVED CHAPTER 14. IEX LISTING RULES Rule The Qualification, Listing, and Delisting of Companies Rule Definitions tory Authority Rule Change of Control, Bankruptcy, Liquidation, and Reverse Mergers Rule General Procedures and Prerequisites for Initial and Continued Listing on the Exchange Rule Confidential Pre-Application Review of Eligibility Rule The Applications and Qualifications Process Rule Prerequisites for Applying to List on the Exchange Rule American Depositary Receipts Rule Additional Requirements for IEX-Listed Securities Issued by the Exchange or its Affiliates Rule Listing Requirements for Units Rule Obligations for Companies Listed on the Exchange Rule Direct Registration Program Rule Listings Requirements Rule General Listing Requirements Rule Definitions and Computations Rule Initial Listing Requirements for Primary Equity Securities Rule Initial Listing Requirements for Rights and Warrants Rule Initial Listing Requirements for Preferred Stock and Secondary Classes of Common Stock Rule Listing Requirements for Securities Not Otherwise Specified (Other Securities) Rule Continued Listing Requirements and Standards for Primary Equity Securities Rule Continued Listing Requirements for Rights and Warrants Rule Continued Listing Requirements for Preferred Stock and Secondary Classes of Common Stock Investors Exchange Page 9 of 409

10 Rule Corporate Governance Requirements Rule Background Rule Board of Directors and Committees Rule Code of Conduct Rule Exemptions from Certain Corporate Governance Requirements Rule Meetings of Shareholders Rule Notification of Noncompliance Rule Review of Related Party Transactions Rule Shareholder Approval Rule Voting Rights Rule Internal Audit Function Rule Failure to Meet Listing Standards Rule Notification of Deficiency by IEX Regulation Rule Review of Staff Determinations by the Listings Review Committee Rule Finality of Delisting Determination Rule Rules Applicable to the Listings Review Committee and Advisors Rule Adjudicatory Process: General Information Rule Listed Company Fees Rule Rule Products and Services Available to Listed Companies CHAPTER 15. DUES, FEES, ASSESSMENTS AND OTHER CHARGES; EFFECTIVE DATE Rule Authority to Prescribe Dues, Fees, Assessments and Other Charges Rule Collection of Exchange Fees and Other Claims and Billing Policy CHAPTER 16. OTHER SECURITIES Rule Preamble to the Listing Requirements for Other Securities Rule Exchange Traded Funds: Portfolio Depository Receipts and Index Fund Shares Rule Securities Linked to the Performance of Indexes and Commodities (Including Currencies) Rule Trading of Certain Derivative Securities Rule Reserved Rule Paired Class Shares Rule Selected Equity-linked Debt Securities ("SEEDS") Rule Trust Issued Receipts Rule Index Warrants Rule Trading in Commodity-Related Securities Rule Listing Requirements for Securities Not Otherwise Specified (Other Securities) Rule Managed Fund Shares Rule Derivative Securities Traded under Unlisted Trading Privileges Rule Trading Halts for Trading of Certain Derivative Securities Products on IEX Pursuant to Unlisted Trading Privileges Investors Exchange Page 10 of 409

11 CHAPTER 1. ADOPTION, INTERPRETATION AND APPLICATION OF IEX RULES, AND DEFINITIONS Rule Series General Provisions Rule Adoption of IEX Rules The following IEX Rules are adopted pursuant to Article III, Section 1 and Article X, Section 1 of the Operating Agreement of the Exchange. Rule Effective Date (a) All IEX Rules shall be effective when approved by the Commission in accordance with the Act and the rules and regulations thereunder, except for those Rules that are effective upon filing with the Commission, and except as otherwise specified by the Exchange in individual Rule filings or these Rules. Rule Interpretation IEX Rules shall be interpreted in such a manner as to comply with the rules and requirements of the Act and to effectuate the purposes and business of the Exchange, as well as to require that all practices by the Exchange be just, reasonable, and not unfairly discriminatory. Rule Reserved. Rule Applicability (a) These Rules shall apply to all Members and persons associated with a Member. Persons associated with a Member shall have the same duties and obligations as a Member under these Rules. (b) A Member or person associated with a Member, who has been expelled, canceled, or revoked from membership or from registration with the Exchange, or who has been barred from being associated with all Members, shall cease to have any privileges of Exchange membership or registration. A Member or person associated with a Member who has been suspended from Exchange membership or registration shall also cease to have any privileges of membership or registration other than those under the Code of Procedure as set forth in Chapter 9 of the IEX Rules. In neither case shall such a Member or person associated with a Member be entitled to recover any admission fees, dues, assessments or other charges paid to the Exchange. (c) A Member or person associated with a Member who has been suspended from Exchange membership or registration shall be considered a non-member during the period of suspension for purposes of applying the provisions of these Rules, which govern dealings between both Members and non-members. In this regard, such non-member shall retain all of the obligations imposed on a Member or person associated with a Member by the Rules of the Exchange. Rule Definitions Unless the context otherwise requires, for all purposes of these IEX Rules, terms used in IEX Rules shall have the meaning Investors Exchange Page 11 of 409

12 (a) Act or Exch (b) Active Order: active order -side interest against which to execute and includes new incoming orders, orders posting to the Order Book after having been routed to away trading centers, and orders Rechecking the Order Book pursuant to IEX Rule (a)(4)(D). For each symbol, only one order may be Active at a given time. (c) Adverse Acti rights of any Member, applicant for membership, or any person associated with a Member (including the denial of membership and the barring of any person from becoming associated with a Member), and any prohibition or limitation by the Exchange imposed on any person with respect to access to services offered by the Exchange, or a Member thereof. This term does not include disciplinary actions for violations of any provision of the Act or the rules and regulations promulgated thereunder, or any provision of the Operating Agreement or IEX Rules or any interpretation thereof, or resolution or order of the Board or appropriate committee of the Board, which has been filed with the Commission pursuant to Section 19(b) of the Act and has become effective thereunder. Review of disciplinary actions is provided for in IEX Rule Series (d) son who may submit orders (or who the Member he or she is associated with or his or her Sponsored Participant. (e) Board or Board of Directors: Exchange. (f) (g) (h) (i) (j) (k) his or her delegate. pursuant to the Act. ans the Chief Regulatory Officer of IEX, or and Exchange Commission, established (l) Designated Self-Regulatory Organization: - - regulatory organization, other than the Exchange, designated by the Commission under Section 17(d) of the Act to enforce compliance with IEX Rule (m) Exchange: The (n) its subsidiaries. (o) n the Exchange. (p) of orders. Investors Exchange Page 12 of 409

13 (q) department of IEX or designated employees of IEX that supervise, administer, or perform the regulatory functions of IEX, including the administration of any regulatory services agreements with another self-regulatory organization to which IEX is a party. (r) IEX Appeals Committee: The term "IEX Appeals Committee" means the committee authorized and directed to act for the Board of Directors in a manner consistent with the Rules and Operating Agreement of IEX with respect to (1) an appeal or review of a disciplinary proceeding; (2) a statutory disqualification decision; (3) a review of a membership proceeding; (4) a review of an offer of settlement, a letter of acceptance, waiver, and consent, and a minor rule violation plan letter; (5) the exercise of exemptive authority; and (6) such other proceedings or actions authorized by the Rules of the Exchange. (s) Exchange. A Member will have the status of a Member of the Exchange as that term is defined in Section 3(a)(3) of the Act. Membership may be granted to a sole proprietor, partnership, corporation, limited liability company, or other organization that is a registered broker or dealer pursuant to Section 15 of the Act, and which has been approved by the Exchange. (t) Mid midpoint of the NBBO. Where the Midpoint Price may be expressed within four (4) decimal places beyond the dollar, the Exchange uses the Midpoint Price; for Midpoint Prices which would require a fifth decimal place beyond the dollar, the Exchange uses the nearest, passive, fourth decimal price. (u) NBB, NBO, best bid or offer, as set forth in Rule 600(b) of Regulation NMS under the Act, determined as set forth in IEX Rule (b). (v) Official Closing Price Official Closing Price primary listing market in such security. (w) LLC. (x) egal entity. (y) occupying a similar status or performing similar functions), any person directly or indirectly controlling, controlled by, or under common control with such Member, or any employee of such Member, except that any person associated with a Member whose functions are solely clerical or ministerial shall not be included in the meaning of such term for purposes of these Rules. (z) Pre-Market Hours or Pre-Market Session: The term - -Market between 8:00 a.m. and 9:30 a.m. Eastern Time. (aa) Post-Market Hours or Post- - - time between 4:00 p.m. and 5:00 p.m. Eastern Time. (bb) Protected Bid, Protected Offer, and Protected Quotation or a bid or offer, respectively, in a security that is (i) displayed by an automated trading center; (ii) disseminated pursuant to an effective national market system plan; and (iii) an automated quotation that is calculated by IEX to Investors Exchange Page 13 of 409

14 be the best bid or best offer, respectively, of a national securities exchange or association. (cc) Protected NBB, Protected NBO, and Protected NBBO: determined as set forth in IEX Rule (b). Quotation, (dd) q (ee) registered broker or dealer, as defined in Section 3(a)(48) of the Act that is registered with the Commission under the Act. (ff) Commission pursuant to Section 17A of the Act that is deemed qualified by the Exchange. (gg) Regular Market Hours or Regular Market Session Market means the time between 9:30 a.m. and 4:00 p.m. Eastern Time. (hh) Regulatory Contract: The term Regulatory Contract means the regulatory services agreement between IEX and FINRA pursuant to which FINRA has agreed to perform certain regulatory functions on behalf of IEX. (ii) Resting Order: resting order posted to the IEX Order Book pursuant to IEX Rule (jj) IEX Rule Series 1.100, as adopted by the Board of Directors pursuant to the Operating Agreement of the Exchange, as hereafter amended or supplemented, and also includes the Operating Agreement and the Limited Liability Company Agreement of the ange LLC. (kk) -dealer that has been issued a membership by the Exchange who has been designated by a Sponsored Participant to execute, clear, and settle transactions resulting from the System. The Sponsoring Member shall be either (i) a clearing firm with membership in a clearing agency registered with the Commission that maintains facilities through which transactions may be cleared or (ii) a correspondent firm with a clearing arrangement with any such clearing firm. (ll) Sponsored Participant: arrangement with a Sponsoring Member pursuant to IEX Rule (mm) in Section 3(a)(39) of the Act. (nn) through which securities orders of Members are consolidated for ranking, execution, and, when applicable, routing. (oo) System Hours: The t means the time between the beginning of the Pre-Market Session and the end of the Post-Market Session, which is the time between 8:00 a.m. and 5:00 p.m. Eastern Time. (pp) pursuant to IEX Rule (qq) User: System pursuant to IEX Rule ranked order to buy (or sell) in the Order Book as ranked ain access to the Investors Exchange Page 14 of 409

15 (rr) Exchange pursuant to unlisted trading privileges. (Amended by SR-IEX eff. July 29, 2016). Rule Regulation of IEX and Its Members (a) The Exchange and FINRA are parties to the Regulatory Contract pursuant to which FINRA has agreed to perform certain functions described in these Rules on behalf of the Exchange. The IEX Rules that refer to IEX Regulation, IEX Regulation staff, IEX staff, and IEX departments should be understood as also referring to FINRA staff and FINRA departments acting on behalf of the Exchange pursuant to the Regulatory Contract. (b) Notwithstanding the fact that the Exchange has entered into the Regulatory Contract with FINRA to perform some of the Exchange's functions, the Exchange shall retain ultimate legal responsibility for, and control of, such functions. In addition, the Exchange has incorporated by reference certain FINRA and NASD rules. Exchange members shall comply Rule Fingerprint-Based Background Checks of Employees and Independent Contractors (a) In order to enhance the physical security of the facilities, systems, data, and information of IEX and its subsidiaries, affiliates and any facilities of the Exchange (collectively, the "IEX Entities"), it shall be the policy of the IEX Entities to conduct a fingerprint-based criminal records check of (i) all prospective and current employees of the IEX Entities, (ii) all independent contractors who have access to facilities of the IEX Entities for ten business days or longer, and (iii) all temporary employees who have access to facilities of the IEX Entities for ten business days or longer. The IEX Entities shall apply this policy in all circumstances where permitted by applicable law. (b) The IEX Entities shall submit fingerprint cards obtained pursuant to the foregoing policy to the Attorney General of the United States or his or her designee for identification and processing. The IEX Entities shall at all times maintain the security of fingerprint cards, as well as any information received from the Attorney General of the United States (c) The Exchange shall evaluate information received from FINRA and otherwise administer this IEX Rule in accordance with Exchange fingerprint procedures as in effect from time to time and the provisions of applicable law. Fingerprint-based background information, such as a felony or serious misdemeanor conviction, will be a factor in making employment decisions; engaging or retaining any temporary personnel, or independent contractors; or permitting any fingerprinted person access to Exchange facilities and records. CHAPTER 2. MEMBERS OF THE EXCHANGE Rule Rights, Privileges and Duties of Members (a) Unless specified otherwise in IEX Rules or the Operating Agreement of the Exchange, each Member shall have the rights, privileges, and duties of any other Member. Rule Obligations of Members and the Exchange Investors Exchange Page 15 of 409

16 (a) In addition to all other obligations imposed by the Exchange in its Operating Agreement or IEX Rules, all Members, as regulated by the Exchange and shall recognize that the Exchange is obligated to undertake to enforce compliance with the provisions of IEX Rules, its Operating Agreement, its interpretations and policies and with the provisions of the Act and regulations thereunder, and that, subject to orders and rules of the Commission, the Exchange is required to discipline Members and persons associated with Members for violations of the provisions of IEX Rules, its Operating Agreement, its interpretations and policies of the Exchange and the Act and regulations thereunder, by expulsion, suspension, limitation of activities, functions, and/or operations, fines, censure, being suspended or barred from being associated with a Member, or any other fitting sanction. Rule Member Eligibility (a) Except as hereinafter provided, any registered broker or dealer that is a Member of another registered national securities exchange or association, or any person associated with such a registered broker or dealer, shall be eligible to be, and to remain, a Member of the Exchange. Rule Prohibited Conditions Relating to Expungement of Customer Dispute No Member or associated person shall condition or seek to condition settlement of a dispute with a customer on, or to otherwise compensate the customer for, the customer's agreement to consent to, or not to oppose, the Member's or associated person's request to expunge such customer dispute information from the CRD system. Rule Application Process and Waive-In For a temporary period beginning on the date the Exchange is approved by the SEC as a national securities exchange and ending 90 days after such date, an applicant that is: (i) a current Subscriber of IEX Services LLC, and (ii) an active member of FINRA or a registered national securities exchange, may apply to become a Member by submitting a waive-in application form as prescribed by the Exchange, including an agreement or agreements conforming with Rule 2.170(a)(1) through (a)(5). The Exchange may request additional documentation in addition to the waive-in application form in order to determine that a waive-in applicant meets the qualification standards set forth in IEX Rule Rule Restrictions on Membership (a) No person may become a Member or continue as a Member in any capacity on the Exchange where: (1) such person is other than a natural person and is not a registered broker or dealer; (2) such person is a natural person who is not either a registered broker or dealer or associated with a registered broker or dealer; (3) such person is subject to a statutory disqualification, except that a person may become a Member or continue as a Member where, pursuant to Rules 19d-1, 19d-2, 19d-3 and 19h-1 of the Act, the Commission has issued an order providing relief from such a disqualification and permitting such a person to become a Member; or (4) such person is not a Member of another registered national securities exchange or association. (b) No natural person or registered broker or dealer shall be admitted as, or be entitled to continue as, a Member or an associated person of a Member, unless such natural person or broker or dealer meets the standards of training, experience and competence as the Exchange may prescribe. Each Member shall have the responsibility and duty to Investors Exchange Page 16 of 409

17 ascertain by investigation the good character, business repute, qualifications and experience of any person applying for registration with the Exchange as an associated person of a Member. (c) No registered broker or dealer shall be admitted as, or be entitled to continue as, a Member if such broker or dealer: (1) fails to comply with either the financial responsibility requirements established by Rule 15c3-1 under the Act, or such other financial responsibility and operational capability requirements as may be established by IEX Rules; (2) fails to adhere to IEX Rules relating to the maintenance of books and records or those rules of other selfregulatory organizations of which such broker or dealer is or was a Member; (3) fails to demonstrate to the Exchange adequate systems capability, capacity, integrity, and security necessary to conduct business on the Exchange; (4) is not a Member of a registered clearing agency, or does not clear transactions executed on the Exchange through another Member that is a Member of a registered clearing agency; (5) is subject to any unsatisfied liens, judgments, or unsubordinated creditor claims of a material nature, which, in the absence of a reasonable explanation therefor, remain outstanding for more than six months; (6) has been subject to any bankruptcy proceeding, receivership, or arrangement for the benefit of creditors within the past three years; or (7) has engaged in an established pattern of failure to pay just debts or has defaulted, without a reasonable explanation, on an obligation to a self-regulatory organization, or any Member of a self-regulatory organization. (d) No person shall be admitted as a Member or as an associated person of a Member where it appears that such person has engaged, and there is a reasonable likelihood that such person again may engage, in acts or practices inconsistent with just and equitable principles of trade. (e) No person shall become an associated person of a Member unless such person agrees: (1) Member as may be specified by the Exchange; (2) to permit examination of such information so supplied; and (3) to be regulated by the Exchange and to recognize that the Exchange is obligated to undertake to enforce compliance with the provisions of IEX Rules, the Operating Agreement, the interpretations and policies of the Exchange, and the provisions of the Act and the regulations thereunder. (f) The Exchange may require the successful completion of a written proficiency examination to enable it to examine and verify that prospective Members and associated persons of Members have adequate training, experience, and competence to comply with IEX Rules and policies of the Exchange. (g) If the Exchange requires the completion of such proficiency examinations, the Exchange may, in exceptional cases and where good cause is shown, pursuant to IEX Rule Series 9.600, waive such proficiency examinations as are required by the Exchange upon written request of the applicant and accept other standards as evidence of an ications. Advanced age, physical infirmity, or experience in fields ancillary to the securities business will not individually of themselves constitute sufficient grounds to waive a proficiency examination. (h) The Exchange requires the General Securities Rep examination module approved by the Exchange in qualifying persons seeking registration as General Securities Investors Exchange Page 17 of 409

18 Representatives, including as Authorized Traders, on behalf of Members. For those persons seeking limited registration as Securities Traders as described in paragraph (k) below, the Exchange requires the Securities Traders 57 Registrat (i) The Exchange requires each Member other than a sole proprietorship or a proprietary trading firm with 25 or fewer the Exchange may waive the two Principal requirement in situations that indicate conclusively that only one Principal associated with the Member should be required. A Limited Size Proprietary Firm is required to register at least one on designated as a Chief Compliance Officer on Schedule A of Form BD. Each Principal is required to have successfully completed the General Securities Principal n and oversight of Member personnel. The Exchange will accept the New York Stock Exchange Series 14 Compliance Official Examination in lieu of the Series 24 to satisfy the above requirement for any person designated as a Chief Compliance Officer. Individuals that supervise the activities of General Securities Representatives must have successfully completed the Series 7 or an equivalent foreign examination module as a prerequisite to the Series 24 or Series 14 and shall be referred to as General Securities Principals. The Exchange will require the Series 57 as a prerequisite to the Series 24 or Series 14 for those Principals whose supervisory responsibilities are limited to overseeing the activities of Series 57 qualified Securities Traders. These limited representative Principals shall be referred to as Securities Trader Principals. Each Principal with responsibility over securities trading activities on the Exchange shall become qualified and registered as a Securities Trader Principal. (j) Each Member subject to Exchange Act Rule 15c3-1 shall designate a Financial/Operations Principal. The duties of a Financial/Operations Principal shall include taking appropriate actions to assure that the Member complies with applicable financial and operational requirements under Exchange Rules and the Exchange Act, including but not limited to those requirements relating to the submission of financial reports and the maintenance of books and records. Each Financial/Operations Principal is required to have successfully completed the Financial and Operations of Member personnel. A Financial/Operations Principal of a Member may be a full-time employee of the Member or may be a part-time employee or independent contractor of the Member. The Exchange may waive the requirements of this paragraph (j) if a Member has otherwise satisfied the financial and operational requirements of its designated examining authority. (k) The Exchange recognizes the Series 57 qualification for Authorized Traders that engage solely in trading on the Exchange, on either an agency or principal basis. (l) ber that trades its own capital, that does not have customers, and that is not a member of FINRA. In addition, to qualify for this definition, the funds ccounts, and traders must be owners of, employees of, or contractors to the firm. (m) Reserved. (n) The following sets forth the qualification requirements for each of the registration categories described above: Investors Exchange Page 18 of 409

19 CATEGORY OF REGISTRATION QUALIFICATION EXAMINATION ALTERNATIVE ACCEPTABLE QUALIFICATIONS General Securities Representative Series 7 Equivalent foreign examination module (Series 17 or Series 37/38) Securities Trader Series 57 N/A General Securities Principal Series 24 Compliance Official Examination (Series 14) 2 Securities Trader Principal Series 24 Compliance Official Examination (Series 14) 2 Financial/Operations Principal Series 27 Other examination acceptable to designated examining authority 3 Reserved. 2 The Exchange will only permit the Series 14 for those designated as Chief Compliance Officers on Schedule A of Form BD 3 waives the requirements of paragraph (j) above. (o) Reserved. (p) Continuing Education Requirements. (1) Requirements. orm duties as a Registered Representative on behalf of such Member, unless such person has complied with the continuing education requirements in this IEX Rule. Each Registered Representative shall complete the Regulatory Element of the continuing education program on the occurrence of their second registration anniversary date and every three years thereafter or as otherwise prescribed by FINRA. On each occasion, the Regulatory Element must be completed within 120 days after the Registered Representative this IEX Rule. The content of the Regulatory Element of the continuing education program shall be determined by FINRA for each registration category of Registered Representatives subject to the Rule. A Registered Representative qualified solely as a Securities Trader shall comply with the continuing education requirements appropriate for the Series 57. All other Registered Representatives shall comply with the continuing education requirements applicable to their particular registration. (2) Failure to Complete. Investors Exchange Page 19 of 409

20 Unless otherwise determined by the Exchange, Registered Representatives who have not completed the Regulatory Element of the continuing education program within the prescribed time frames will have their registration deemed inactive until such time as the requirements of the program have been satisfied. Any person whose registration has been deemed inactive under this IEX Rule shall cease all activities as a Registered Representative and is prohibited from functioning in any capacity requiring registration with the Exchange. A registration that is inactive for a period of two years will be administratively terminated. A person whose registration is so terminated may reactivate the registration only by reapplying for registration and satisfying applicable registration and qualification requirements he Exchange may, upon application and a showing of good cause, allow for additional time for a Registered Representative to satisfy the program requirements. (3) Disciplinary Actions. Unless otherwise determined by the Exchange, a Registered Representative will be required to retake the Regulatory Element and satisfy all of its requirements in the event such person: (A) (B) (C) is subject to any statutory disqualification as defined in Section 3(a)(39) of the Exchange Act, is subject to suspension or to the imposition of a fine of $5,000 or more for violation of any provision of any securities law or regulation, or any agreement with or rule or standard of conduct of any securities governmental agency, securities self- regulatory organization, or as imposed by any such regulatory or self-regulatory organization in connection with a disciplinary proceeding, or is ordered as a sanction in a disciplinary action to retake the Regulatory Element by any securities governmental agency or securities self-regulatory organization. The retaking of the Regulatory Element shall commence with participation within 120 days of the Registered Representative becoming subject to the statutory disqualification, in the case of 3(A) above, or the disciplinary action becoming final, in the case o base date for purposes of this IEX Rule. (4) Reassocation in a Registered Capacity Any Registered Representative who has terminated association with a registered broker or dealer and who has, within two years of the date of termination, become re-associated in a registered capacity with a registered broker or dealer shall participate in the Regulatory Element at such intervals that may apply (second anniversary and every three years thereafter) based on the initial registration anniversary date, rather than based on the date of re-association in a registered capacity. The following sets forth the Regulatory Elements appropriate for each registration category: CATEGORY OF REGISTRATION REGULATORY ELEMENT General Securities Representative S101 General Program Securities Trader S101 General Program General Securities Principal S201 Supervisor Program Investors Exchange Page 20 of 409

21 CATEGORY OF REGISTRATION REGULATORY ELEMENT Securities Trader Principal S201 Supervisor Program Financial/Operations Principal S201 Supervisor Program (q) Registration Procedures. (1) Persons associated with a Member who seeks to register with the Exchange shall electronically file a Form U4 Exchange as a requested registration on the electronic Form U4 filing. Any person required to complete Form U4 shall promptly electronically file any required amendments to Form U4 with the CRD System. (r) Termination of Employment. (1) The discharge or termination of employment of any person registered with the Exchange, together with the reasons therefor, shall be electronically reported to the CRD System, by an applicable Member immediately following the date of termination, but in no event later than thirty days following termination on a Uniform provided concurrently to the person whose association has been terminated. (2) The applicable Member shall also electronically report to the CRD System, by means of an amendment to the Form U5 filed pursuant to paragraph (r)(1) above, in the event that the Member learns of facts or circumstances causing any information set forth in the notice to become inaccurate or incomplete. Such amendment shall be provided concurrently to the person whose association has been terminated no later than thirty days after the Member learns of the facts or circumstances giving rise to the amendment. Rule Application Procedures for Membership or to become an Associated Person of a Member (a) Applications for membership shall be made to the Exchange and shall contain the following: (1) of Formation, its Operating Agreement, IEX Rules, the policies, interpretations and guidelines of the Exchange and committee; provided, however, that such agreement shall not be construed as a waiver by the applicant of any right to appeal as provided in the Act. (2) An agreement to pay such dues, assessments, and other charges in the manner and amount as shall from time to time be fixed by the Exchange. (3) An agreement that the Exchange and its officers, employees, and Members of its Board and of any Board committee shall not be liable, except for willful malfeasance, to the applicant or to any other person, for any action taken by such director, officer or Member in his, her or its official capacity, or by any employee of the Exchange while acting within the scope of his or her employment, in connection with the administration or enforcement of any of the provisions of the Certificate of Formation, Operating Agreement, IEX Rules, policies, Investors Exchange Page 21 of 409