Hi Frank - The answer to your question lies in the fact that large funds were finally educated on how they -- and their contributing investors -- were being screwed by HFT. We're talking pension funds and Fidelity, for instance: big players. Like many on SI, these sophisticated players simply didn't understand how they were being gamed.
But they were. It was RBC, Katsuyama and Thor that first brought change. In Canada, later the 'States
If I interpret your question correctly the problem lies in how you understand the dynamics. IEX is being adopted by funds who don't want their trades to be gamed. When they bid $20.00/share, they don't want to discover, a nanosecond later, that the price has magically jumped to $20.01. So it's not really a "speed bump" thing—it's a "They can't game my bid" thing. That's why IEX volume continues to grow.
For more detailed explanation, please see here.
"But some HFTs employ “predatory” strategies to make the extra penny or two per share: things like flooding a market with orders to change a stock’s price, jumping ahead of other investors, or trading with only certain kinds of investors. These tend to work against the interests of the investors themselves, who just need their trades carried out; they may not get the best prices. As a result, IEX believes, existing exchanges and dark pools market their services towards intermediaries like brokers and HFTs, not the actual investors who drive corporate growth. “What I think is lost on people is that the investor’s order is actually far more important than the intermediary’s order,” reasons Katsuyama. “If all investors stop trading, there would be no volume. If the HFTs disappeared, there would still be trading, like there was many years ago.”
So IEX takes the opposite approach. Its sales pitch is aimed at funds, which it sways with a promise to prevent predatory HFTs from hijacking their orders."
HTH,
Jim |
