IEX backed by major asset managers in challenge of US exchanges
IEX Group, the anti-HFT trading venue made famous by Michael Lewis' "Flash Boys" has received backing from a number of asset managers in its quest to become a fully regulated exchange﻿. IEX has criticised the NYSE for its plans to charge a premium for a new private data feed, referring to the topic as a fundamental issue about fairness and transparency. It aims to lower charges, stating that greater use of automation by exchanges should have resulted in lower charges.  Last week, asset managers including The Capital Group, Southeastern Asset Management, Franklin Templeton and Oaktree Capital signed letters submitted to the SEC endorsing the trading venue's application, which was submitted to the SEC in September﻿. Separately, Financial News have reported that PGGM, Europe's second-largest pension fund, said it has been able to achieve better prices on larger trades on IEX than other trading venues in the US.

The IEX team. IEX

IEX Group, the stock-trading venue at the center of Michael Lewis' book "Flash Boys," has just received the backing of a slew of big-name investors.

The trading venue, led by Brad Katsuyama, uses a 350-microsecond "speed bump" designed to level the playing field between hyper-fast traders and ordinary traders.

IEX filed with the Securities and Exchange Commission in September to become a stock exchange. The filing was published on the SEC website.

Now, Southeastern Asset Management, a $26 billion fund manager, and Capital Group, an investor in IEX that manages $1.4 trillion, have filed letters to the SEC supporting the application.

The Southeastern Asset Management letter is also signed by some of the best-known fund managers in the business, including Franklin Templeton Investments, Greenlight Capital, Oaktree Capital Management, Pershing Square Capital Management, and Teacher Retirement System of Texas.

Bill Ackman, the managing member of Pershing, signed the letter himself.

It said:

Approving IEX's exchange application will further the Commission's long-held goals of increasing market competition and improving the end investor's market experience. IEX offers market participants a differentiated choice with regard to how to trade their orders as they pursue the best execution possible. The equity market's structure and all participants will fully realize the benefits of this choice when IEX begins operating as an exchange.

In a separate letter, The Capital Group said it too supported the exchange application:

Capital Group

The endorsements extend a good week for IEX. Financial News reported this week that PGGM, the second-largest pension fund in Europe, with €167 billion — or around $190 billion — in assets under management, has said it has been able to achieve better prices on larger trades on IEX than at other trading venues in the US.

IEX is bidding to become an exchange at a critical time for the industry in the US. One of the New York Stock Exchange's biggest rivals, and some large trading firms, criticized NYSE for its handling of the market volatility in late August.

The former chairman and CEO of NYSE Dick Grasso said last month that the stock market was unfair and should be reviewed.He also took aim at exchanges selling data to some clients and not others.