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The original plan for IEX sounds like a wonderful extortion racket. By law, you cannot buy or sell stock on someone else's behalf unless you check with all majo
by danielvf 10y ago
The original plan for IEX sounds like a wonderful extortion racket. By law, you cannot buy or sell stock on someone else's behalf unless you check with all major US stock exchanges first to verify that you are getting your client the best price. IEX intentionally, massively delays answering back unless you pay them buckets of money. Thus, unless you pay IEX buckets of money, you are at a huge disadvantage on every stock market, not just IEX. Quite a racket.
Has anything changed with either the laws or IEX's plan since then?
Update: IEX did indeed change their proposal to remove the favored order routing. Which still affects trades in other exchanges, and still affects negatively effects traders on all markets, but at least its "fair" now.
- ikeboy 10y agoWhat are those buckets of money? Also, IEXs delay is less than the delay between existing exchanges because of speed of light limits, so massively seems inappropriate.
- lpage 10y agoYou might be surprised (when talking about the U.S equities exchanges at least): http://anova-tech.com/wp-content/uploads/2014/09/market-data-chart.jpg http://anova-tech.com/wp-content/uploads/2014/09/market-data.... The LoS distances in NY are on the order of 5-30mi and the lowest latency links are over microwave and laser.
- evanpw 10y agoThe Chicago Stock Exchange is 15 milliseconds away from all the others. There isn't much trading volume there, though [1]. [1] http://batstrading.com/market_summary/ http://batstrading.com/market_summary/
- encoderer 10y agoDerivatives are traded in massive volume on the Cboe which is why the time between New Jersey and Chicago is so important
- evanpw 10y agoThe CBOE matching engine is in New Jersey, along with the equities exchanges (http://www.automatedtrader.net/news/exchange-news/141860/cboe-moves-to-equinix-new-york-data-centre-campus http://www.automatedtrader.net/news/exchange-news/141860/cbo...). The Chicago-NJ latency race is more about futures traded on CME.
- hendzen 10y agoHere are some newer numbers: http://www.mckay-brothers.com/wp-content/uploads/2016/06/20160601a-chicago_presentation.pdf http://www.mckay-brothers.com/wp-content/uploads/2016/06/201... CME -> NY4 latency is now slightly higher than that allowed by the speed of light.
- evanpw 10y ago> you cannot buy or sell stock on someone else's behalf unless you check with all major US stock exchanges first to verify that you are getting your client the best price It's not just trading on behalf of a client. Even if you're trading directly for yourself, you're still legally obligated not to "trade-through" a displayed price. The idea is to protect the person who placed the displayed order, not yourself or your client. > IEX intentionally, massively delays answering back unless you pay them buckets of money You can't pay them to avoid the delay. They delay all outgoing direct-to-trader information and all incoming orders or cancels. The difference between what IEX does and just placing your stock exchange 38 miles from everyone else's (350us at light speed in fiber) is that while they delay incoming orders and outgoing data, IEX itself listens to data coming in from other exchanges with no delay, and uses that 350us look into the future to re-price orders before anyone else can interact with them.
- danielvf 10y agoYeah, they do plan to delay everyone equally now. However in the original proposal if you used IEX's router, you weren't delayed.
- Bromskloss 10y ago> obligated not to "trade-through" a displayed price. > The idea is to protect the person who placed the displayed orde I'm afraid I don't understand what the first quote means and how the person in the second one is protected. An explanation would be much appreciated.
- Lazare 10y ago> The idea is to protect the person who placed the displayed order, not yourself or your client. I'm pretty sure that's wrong. I've never heard NMS/rule 611/etc described in those terms, and logically, it makes no sense. The point of the rule is to try and stop people eg, buying at price X when the NBBO is < X, full stop.
- evanpw 10y ago
- zhte415 10y ago> By law, you cannot buy or sell stock on someone else's behalf unless you check with all major US stock exchanges first to verify that you are getting your client the best price. The side-effects of this law and because of it not being able to achieve a 'fair' price was why IEX was created. Edit: This is neither a pro nor anti comment. It is a factual comment, of the motivation to create IEX.
- encoderer 10y agoI read flashboys too and I don't remember it having anything to do with national best bid/offer laws. Was there something specific?
- deleted 10y ago[deleted]