CEO Brad Katsuyama’s start-up company Investors’ Exchange, or IEX for short, is causing a major stir on wall street, Renae Merle reports. IEX aims to provide investors with a venue for purchasing or selling stocks without the influence of high-frequency traders. Merle explains,
IEX could soon be competing against some of the oldest names on Wall Street, including the New York Stock Exchange, which is more than 200 years old. The Securities and Exchange Commission is expected to approve IEX’s application to become a registered stock exchange as early as Friday, a move that could shake up the institutions that have long dominated the way stocks are bought and sold.
IEX operates as a lightly regulated private one now, so investors cannot be forced to use it. That would change with approval, opening it up to a much larger market because traders have a duty to seek out the best price for their clients, be they pension funds or small investors.
“We have done everything we could possibly do. I feel content that we left it all on the field,” Katsuyama said.
IEX’s application has divided New York’s financial world and attracted high-profile detractors who say the start-up would add unnecessary complexity to the financial system and is asking for special treatment. IEX wants not only to slow down trades but also to process them in a potentially cheaper way, making it attractive to large pension funds or hedge funds that trade millions of shares of stock a day. Opponents worry that if the model catches on, it could be replicated across the industry.
Continue reading the full story here: This start-up is promising a revolution, and Wall Street is pushing back
Posted by Allison Trupp, Associate Editor, Wealth Strategies Journal