The traders’ discovery
While working at the Royal Bank of Canada (RBC), the global electronic trading team led by Brad Katsuyama, Ronan Ryan, John Schwall, and Rob Park discovered that stock exchanges were enabling predatory trading strategies that were harming long-term investors such as mutual funds and pension funds that represent the savings of millions of Americans.
Ultimately, the traders decided to team up and build a new exchange that put the interests of investors first: The Investors Exchange.
The moment we learned the SEC had approved our exchange application.
The Investors Exchange, a new kind of stock exchange
IEX debuted as an Alternative Trading System (also known as a dark pool) in 2013, and the story behind this founding was chronicled in Michael Lewis’s 2014 book, Flash Boys: A Wall Street Revolt. The subsequent industry reckoning ignited a movement in support of our mission to level the playing field for all investors and raise awareness of the conflicts of interest that sow mistrust in the financial markets.
IEX has developed and introduced innovations that aim to give market participants a better trading experience. These include the IEX Speed Bump, which is designed to ensure that the exchange executes trades at the most up-to-date price, and the IEX Signal (i.e., Crumbling Quote Indicator or CQI), a machine learning-based signal that aims to protect investors from trading while prices are unstable. These tools are designed to protect market participants from predatory trading strategies. Since its inception, more than $8.5 trillion in shares traded on IEX Exchange have benefited from the IEX Signal.
Today, the exchange trading landscape is evolving faster than ever and IEX stands to benefit as investors, brokers and regulators are more focused than ever on performance and transparency.
Leveling the playing field across the financial industry
At IEX, we aspire to build a trusted, disciplined, and diversified business. Our belief is that technology should level the playing field so that opportunity is equitable. We are applying what we learned from building a high-performance stock exchange to build technology that solves for complexity and accelerates growth in other areas.
In 2017, IEX made free, real-time stock market data from IEX Exchange available to everyone through an API. The popularity of this among developers led IEX to create IEX Cloud, an independent business that serves the broader developer community by making a range of financial datasets accessible. Since 2019, IEX Cloud has grown organically to serve more than 150,000 users through a single platform and easy-to-use API, bringing more innovation into financial markets and the fintech space.
More recently, asset managers representing pensions and mutual funds have become more focused on trade execution performance and crave data that describes how their trades are executed across brokers and strategies. To meet this need, IEX launched IEX Astral, a tool for institutional investors to understand the lifecycle of their orders and have transparency into their own data.
Our goal is to build transformative technology without compromising our integrity - and we’re just getting started.
Retired Counsel, Partner at Morgan, Lewis & Bockius LLP, and Former SEC Associate Director