IEX Welcomes High-Speed Traders, as Long as They Behave
' IEX Group Inc.’s trading platform was built to combat predatory practices. That doesn’t mean it’s on a crusade to kill high-frequency trading firms. Chief Executive Officer Brad Katsuyama, whose firm is the subject of Michael Lewis’s new book “Flash Boys,” welcomes all kinds of traders on his five-month-old platform that’s trying to reshape the $22 trillion U.S. equity market. Virtu Financial Inc., one of the biggest high-speed trading firms, trades on IEX, for instance.
“It’s not about being anti-HFT, but about being pro-fairness,” Katsuyama said during an interview today. “It would be easy for us to go after Virtu or an HFT firm because of the way we’re being shaded. But it’s not fair because although they are only a small percentage of our overall volume, they are a good contributor of value to our market.”
~~~ “We act on the assumption that computerized trading never goes away,” Katsuyama said. “It should be part of the market and it should be delivering the efficiencies that they deliver,” he added. “But should it be 50 percent of the market or greater? Probably not. It is an intermediary after all.”
Ronan Ryan, chief strategy officer at IEX, said he’s met with about 15 high-frequency trading firms in recent months to explain his company’s approach.
~~~ “We went along and said that while some of the press might give off the perception we’re anti-HFT, we’re not, we’re pro-technology,” he said. “I’d say the meetings went fairly well. At the beginning they weren’t that receptive, they were a little bit skeptical about our speed bump, that’s all they knew it to be. But when they went through our architecture, a lot of them said, ‘You’ve thought this through, I like the architecture.’”
Several of these firms asked for a backdoor into IEX -- a way to circumvent IEX’s design to their own benefit.
“They weren’t joking,” said Ryan, who declined to name the firms or say what they asked for. “They literally felt it was a legitimate question because for years they’ve been granted that type of special treatment.”
bloomberg.com
Jim
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