“Know Your Role” (by Ronan Ryan, IEX)
What’s the role of an exchange?
We debate that question a lot here at IEX.
I believe the role of our exchange is to solve trading problems.
This might come as a surprise to those who followed our exchange application — and perhaps the fewer still who actually read our public comment letters (no shame, some of them were quite dense).
If you did track our application process, you may have walked away thinking it was about propagation delays, speed bumps and routers, i.e. a market structure candy store. Or you may have sensed that the debate was about the incremental effect a new exchange — that is, IEX — will have on today’s market structure.
What you might have missed, lost in the salacious headlines or buried under an avalanche of footnotes, were problems, and more importantly, solutions.
It’s not easy to justify yet another new exchange. Before designing our exchange, the goal we set for ourselves was to solve real problems with solutions that address your needs and pain points.
For the buyside…we help you trade effectively in an ever-accelerating market. We’ve designed our matching engine to peg (and repeg) your resting orders so that they are priced at where the market is, not where it used to be.
For the sellside…we lower barriers to quality executions. Connecting to IEX is free and no one can pay to trade ahead of you. We don’t pay rebates, which helps lower competition for queue priority. We will fight to alleviate the cost pressure you feel from market data.
For market makers…we will not hold you hostage to the “race to zero”. We are not in the business of slicing and dicing market access into ever-thinner tiers, each one only microseconds faster than the next. Our goal is to minimize the emphasis on de minimis increments of speed, in order to free you up to focus on using your ingenuity and skill to compete.
For issuers…we will provide the trading experience your shareholders deserve. We will work to consolidate liquidity for your stock, instead of contributing to fragmentation in your name.
Unfortunately, what the comment letters and articles didn’t — or couldn’t — focus on are the very real problems that multiple classes of market participants have with today’s markets.
So let’s get back to business. As we near our August 19th exchange launch we wanted to not only take a moment to thank our current Subscribers and supporters, but to also ask for your support, patience, and feedback for ways we can continue to develop and grow a market that solves as many problems for the investing, trading and issuer community as possible.
We’re here to help, so…what’s your problem?
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