It’s a big day for the trading community – a new stock exchange was born.
The Investors Exchange or IEX, the subject of Michael Lewis’ 2014 book “Flash Boys: A Wall Street Revolt,” made its highly anticipated Wall Street debut today.
Backed by some of the industry’s heaviest hitters, such as JPM, KCG, and Capital Group, IEX aims to compete with the twelve existing U.S. stock exchanges, including Nasdaq, The New York Stock Exchange, and BATS.
“Flash Boys” portrayed the traditional exchanges as unfair, asserting that average investors consistently receive inferior stock prices because high-speed traders are given prioritized access to data and order completion, a practice known as front-running.
IEX’s market model introduces a split-second order delay that its founders assert will level the playing field for average investors.
As a NYSE alum, I watched this debate unfold from the defense perspective. Executives from ICE, NYSE’s parent company, as well as Nasdaq and BATS officials have repeatedly denied Lewis’ charges.
But on the trading floor yesterday, journalists, traders and insiders discussed the debut in hushed tones. Will listed companies consider transfering to the new exchange? Will IEX debut IPOs without a hitch? Will IEX host a bell ceremony that could draw media attention away from the NYSE or Nasdaq bells?
There has been plenty of speculation, but those questions will take time to answer. So far, only two stocks trade on IEX. An additional eight securities will begin trading next Wednesday, and during the week of August 29, a wider universe of stocks will become available, including all NYSE and Nasdaq-listed stocks.