IEX
Investors Exchange (IEX) is a stock exchange in the United States. It was founded in 2012 in order to mitigate the effects of high-frequency trading.[1] IEX was launched as a national securities exchange in September 2016. On October 24, 2017, it received regulatory approval from the U.S. Securities and Exchange Commission (SEC) to list companies. IEX listed its first public company, Interactive Brokers, on October 5, 2018. The exchange said that companies would be able to list for free for the first five years, before a flat annual rate of $50,000.[2] On September 23, 2019, it announced it was leaving its listing business.[3]
For other uses, see IEX (disambiguation).Type
New York, New York (office),
Weehawken, New Jersey (matching engine), United States
2012
IEX Group, Inc.
334 million shares/day, market share 2.4% (February 24, 2021)
In September 2019, IEX announced that its co-founder and COO, John Schwall, would retire from the company by the end of 2019.[4]
The genesis and early days of the exchange are chronicled in the 2014 book Flash Boys: A Wall Street Revolt by Michael Lewis.[5]
History[edit]
Founding and first trading[edit]
Founded in 2012[2] and started by Brad Katsuyama and Ronan Ryan, IEX opened for trading on October 25, 2013. The company’s offices are located at 3 World Trade Center in New York City. The matching engine is located across the Hudson River in Weehawken, New Jersey, and the initial point of presence is located in a data center in Secaucus, New Jersey.[1] IEX's main innovation is a 38-mile (61 km) coil of optical fiber placed in front of its trading engine. This additional length of cable results in a 350 microsecond delay, referred to as a "speed bump".[6] The round-trip delay of 0.0007 seconds is designed to negate the certain speed advantages utilized by some high-frequency traders.[7] This method was subsequently implemented by competing stock exchange NYSE American in response to the SEC approval of IEX.[6][8][9]
In 2020, Caisse de dépôt et placement du Québec made a strategic investment in IEX Group.[10]
Federal approvals[edit]
The SEC approved IEX to be an official exchange on June 17, 2016.[11] In late 2016, IEX hired Sara Furber to lead its listing effort. A former managing director at Morgan Stanley,[2][12] she reported to Katsuyama. The company aimed to start listing companies in 2017.[12]
After a 13-month wait, on October 24, 2017, IEX Group Inc. received regulatory approval from the SEC to list companies. IEX said it would begin listings in early 2018, with a focus on having companies switch over from other stock exchanges by undercutting the listing fees of rivals. The exchange said that companies would be able to list for free for the first five years, before a flat annual rate of $50,000. In comparison, NYSE had annual listing fees as high as $500,000 and Nasdaq up to $155,000.[2] The Wall Street Journal wrote that the approval paved "the way for the first competition to the New York Stock Exchange and Nasdaq Inc. in nearly a decade... Companies seeking to list their shares on a U.S. exchange haven’t had a choice besides NYSE or Nasdaq since 2008, when the American Stock Exchange was acquired by NYSE." Only Wynn Resorts Ltd. said publicly that it was considering a listing on IEX at the time of the approval announcement, with IEX not releasing more details on listings.[2]
Exchange features[edit]
Operating principles[edit]
IEX was created in response to questionable trading practices that had become widely used across traditional public Wall Street exchanges as well as dark pools and other alternative trading systems. The IEX exchange aims to attract investors by promising to "play fair" by operating in a transparent and straightforward manner, while also helping to level the playing field for traders. Strategies to achieve those goals include:[13]