First, congratulations to IEX on their approval as a US stock exchange, against Nasdaq’s and the rest of the industry’s best efforts. In June the SEC said IEX’s proposal to launch a national exchange had been approved. The SEC determined that IEX’s “speed-bump”, or the delay a longer wire would introduce when connecting traders to the matching engine, “will not prevent investors from accessing stock prices in a fair and efficient manner consistent with the goals of the Order Protection Rule.“
IEX has taken a lot of risk to stand up and actually build something that would help break down the wall that was created around the high-powered and well-funded cabal of insiders who have chopped-up and staked-claim to various market centers. As Brad Katsuyama, CEO of IEX, says in the video below “this was mostly going to be my last job on Wall Street. You know, you can’t fight the system and fail and expect the system to accept you back.” That comment comes as a video plays of then Direct Edge CEO William O’Brien losing his mind in a then-live debate as he realized his “good faith effort” to explain market structure was failing in the midst of Kasuyama’s cool demeanor and ability to clearly explain a complex topic such as how a trade is made in the US equity market.
Now as the world races around in a cloud of uncertainty trying to figure out where the next QE will come from, whether Italy will need a bailout, how big the next China bailout will, or whether the UK will actually leave the EU, IEX has fought to become a venue where fair trading takes place. It is harsh already for main-street to understand and stay on top global developments. They should not need to struggle between choosing a Post No Preference Blind Limit Order or a Routed Peg Order.
Complexity in finance acts as a barrier and IEX has been taking on career risk as the employees fought back against the system. Indeed, as we said, we were surprised that the SEC recommended approving IEX’s application. Just shy 1 minute into the video Katsuyama discusses fairness and taking action over just speaking. This is Wall Street cleaning itself up from the inside out.
If IEX could smash together this group and take on the system that nearly ruined Haim Bodek, imagine if someone within the central bank stood up against the insane manipulation we’ve witnessed. And just in case you forgot how markets respond to the Fed, there are still some 12 to 14 more Fed head discussions taking place before Midnight on Friday in which to experience real manipulation done in a way the exchanges can only dream of.