07.24.2017

NYSE American Debuts Speed Bump

There is a two-horse race regarding exchange speed bumps as NYSE officials opened trading on its NYSE American exchange today, July 24.

The new exchange, which previously operated as NYSE MKT, is NYSE’s response to upstart IEX, which was the first introduced the speed bump to hamper high frequency trading.

NYSE American implements a 350-microsecond delay on all orders, proprietary data feeds, and outbound routing of orders, which lets resting pegged order to re-price before new orders arrive, according to NYSE.

However, the competition between NYSE American and IEX for displayed liquidity will not prove a massive battle. IEX, according to its own published data, has approximately a 0.6% share of displayed liquidity while NYSE MKT had a 0.2% market share, according to the most recent Tabb Associate’s Equities Liquidity Matrix from May 2017.

“It’s going to be interesting to have another data point, another exchange with a similar business plan, and see if they have any more success,” said Richard Johnson, vice president, market structure & technology at analyst firm Greenwich Associates. “With two out there, they may complement each other. They could end up bringing renewed interest to this type of functionality.”

Johnson does not envision the speed bump race growing beyond its current participants.

“The Chicago Stock Exchange proposed a speed bump, which the regulators did not approve,” he added. “They may try something else. If there is going to be any additional speed bumps, it’s going to be them.”

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