SEC approves IEX application for full exchange status
Trading venue, IEX has won a controversial battle to become a fully fledged exchange in the US. A 350-microsecond delay, intended to level the playing field, was at the heart of the debate over whether IEX should be granted exchange status. The SEC intended its approval to promote competition and innovation according to SEC chair, Mary Jo White. The move is expected to result in other exchanges exploring the use of similar speed bumps, potentially ending a decade of prioritising speed in stock trading. NASDAQ head, Bob Greifeld told CNBC that allowing sub-millisecond delays could result in a deluge of new order types seeking to take advantage of the various times and reportedly implied he could sue the SEC for violating its own rules.

In a world where markets move at lightning speed, the IEX Group has won a victory by staking its business model on (marginally) slower trading.

Late Friday, the Securities and Exchanges Commission approved IEX's application to join the ranks of the New York Stock Exchange (NYSE), Nasdaq and BATS Global Markets. In the process, the SEC updated a rule that will compel other markets to honor trades subject to a small delay—referred to as a "speed" bump —that will effectively slow down trading by a fraction of a second even as other markets process trades in the blink of an eye.



"Today's actions promote competition and innovation, which our equity markets depend on to continue to deliver robust, efficient service to both retail and institutional investors," said SEC Chair Mary Jo White in a statement.



"A critical role of the Commission's regulatory framework is to facilitate the ability of market participants to craft appropriate market-based initiatives, consistent with our mission to protect investors, maintain market integrity, and promote capital formation," she added.

The IEX argues that it wants to use the speed bump to protect investors from potentially harmful trading that may involve the front-running of orders.