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It's pretty silly to describe IEX as curbing "abusive" practices. What IEX is attempting to do is build a platform where large traders can move lots of shares

It's pretty silly to describe IEX as curbing "abusive" practices. What IEX is attempting to do is build a platform where large traders can move lots of shares while their smaller counterparties are stuck absorbing the price impact. This is potentially useful for large traders (e.g. Goldman, JP Morgan and Citi, as mentioned in the article) but bad for small traders. What's actually kind of "abusive" is IEX's marketing - they are encouraging unsophisticated investors to direct liquidity to them rather than having brokers route for best execution. http://www.iextrading.com/insight/letter/ http://www.iextrading.com/insight/letter/ This letter directs your broker to route your trades to IEX, rather than the best available venue. This means you may be stuck paying IEX fees - which could be greater than other venue's fees - and of course, you are providing liquidity to sharks who want to make sure you absorb the price impact of their trades.

jasode 11y ago
I think what you're saying is, in essence, IEX's current incarnation of handling stock transactions does not exist in a vacuum -- because they are only a trading technology platform instead of an exchange like NYSE & NASDAQ. As a technology platform, they are really just "clients" of other exchanges and therefore, they're the tail trying to wag the dog. If they become a full-fledged exchange with stocks listings exclusive to IEX, then those stocks would have better "fairness" characteristics that Brad Katsuyama claims. Therefore trading AAPL through IEX may incur a financial penalty for being on the "slow" IEX system but trading YC2019Unicorn stock exclusive to IEX may not.
- yummyfajitas 11y ago
  Actually, what I'm saying is the following. Don't put resting orders out onto IEX - a big player will take your liquidity in a big trade and you'll suffer the inevitable price impact. I.e., putting your orders on IEX rather than the open market is just a way to funnel your money to JP Morgan. It's far better to mingle your orders with HFT orders - that'll keep the big guys honest. You'll probably also pay lower fees.

jasode 11y ago

I think what you're saying is, in essence, IEX's current incarnation of handling stock transactions does not exist in a vacuum -- because they are only a trading technology platform instead of an exchange like NYSE & NASDAQ. As a technology platform, they are really just "clients" of other exchanges and therefore, they're the tail trying to wag the dog. If they become a full-fledged exchange with stocks listings exclusive to IEX, then those stocks would have better "fairness" characteristics that Brad Katsuyama claims. Therefore trading AAPL through IEX may incur a financial penalty for being on the "slow" IEX system but trading YC2019Unicorn stock exclusive to IEX may not.

yummyfajitas 11y ago
Actually, what I'm saying is the following. Don't put resting orders out onto IEX - a big player will take your liquidity in a big trade and you'll suffer the inevitable price impact. I.e., putting your orders on IEX rather than the open market is just a way to funnel your money to JP Morgan. It's far better to mingle your orders with HFT orders - that'll keep the big guys honest. You'll probably also pay lower fees.