Exactly. IEX exchange is relatively new, and their big innovation is that they use long spools of fiberoptic wire to delay their user's connections, thus creat

Exactly. IEX exchange is relatively new, and their big innovation is that they use long spools of fiberoptic wire to delay their user's connections, thus creating an even playing field. https://www.sec.gov/files/07feb18_hu_iex_becoming_an_exchange.pdf https://www.sec.gov/files/07feb18_hu_iex_becoming_an_exchang... "The reduction in trading costs (spreads) is broadly consistent with recent theories on how speed advantages may be used to exploit mechanical arbitrage opportunities. These theories suggest that market makers face adverse selection from fast traders even in the absence of traditional “fundamental” informed trading. For instance, Budish et al. (2015) defnes “quote sniping” as the mechanical arbitrage of taking “stale” quotes before market makers can cancel. In his Comment Letter on IEX’s Exchange Application, Eric Budish argues that IEX’s speed bump may be able to mitigate quote sniping as it allows IEX’s pegged orders to avoid executing against market orders at stale prices.7 Moreover, cross-sectional di˙erences in spreads in response to IEX’s protected quote are consistent with recent theory suggesting that exchange speed is a double-edged sword for market makers (Menkveld and Zoican, 2016). On one hand, faster exchanges allow market makers to update their quotes faster, reducing spreads. On the other hand, higher exchange speed results in a higher probability of quote sniping. Hence, the results support this more nuanced view of the net e˙ects of speed on trading costs. "