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The
Investors' Exchange is the 13th U.S. stock exchange and will
compete with the likes of Nasdaq Inc <NDAQ.O>, Bats Global
Markets <BATS.Z> and Intercontinental Exchange Inc's <ICE.N> New
York Stock Exchange.
IEX plans to win market share without paying brokers incentives
to trade on its exchange - it has a flat pricing structure - and
not allowing trading firms to pay to house their servers next to
the exchange's stock matching engine to gain a speed advantage,
common practices on most other exchanges.
The U.S. Securities and Exchange Commission received hundreds of
comment letters related to IEX's exchange application. Most,
including from firms such as Goldman Sachs <GS.N> and Virtu
Financial <VIRT.O>, were positive.
"We've been a customer and supporter of IEX from day one because
we believe in competition, transparency and innovation," Virtu's
Chief Executive Officer, Doug Cifu, said on Friday.
But some trading firms and other exchanges were vehemently
opposed to IEX's unique model, saying it would actually make the
market more complex and less fair. ICE CEO Jeffrey Sprecher even
called IEX "un-American."
Interest in IEX was partly driven by "Flash Boys," which
followed the exchange's founders as they built what they saw as
a more investor-focused market.
The book ignited a storm of controversy in March 2014 after
Lewis claimed profit-hungry exchanges had rigged the market in
favor of high-frequency trading firms that used sophisticated
technology to front run investors.
Lewis, who has written books such as "Money Ball" and "The Big
Short," said on Friday he was relieved to see IEX operating as
an exchange.
"They are by far the most direct, honest and trustworthy
characters in a market riddled with terrible incentives," he
said in an email. "It's going to be interesting to watch
whatever happens next."
IEX use a "speed-bump" to slow stock orders by 350
millionths-of-a-second, saying the feature helps prevent
predatory trading practices.
While other exchanges initially opposed the speed bump, some
have said they were looking into implementing similar features
after IEX won its exchange license.
"It's encouraging," said Adrian Facini, IEX's head of product
management. "This market is based on competition, so we
encourage them to try to create new products."
(Reporting by John McCrank; Editing by Tom Brown)
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