Upstart exchange IEX snags its first listing from Nasdaq
- IEX, the startup stock exchange made famous in Michael Lewis' book "Flash Boys," has won its first listing from rival Nasdaq.
- It's an important moment for the young stock exchange which commands just 2% of the stock-trading market.
IEX, the startup stock exchange made famous in Michael Lewis' book "Flash Boys," has snagged a listing from one of its larger rivals.
The New York firm, which gained stock-exchange approval in 2016, announced Wednesday that electronic brokerage Interactive Brokers will switch its listing venue from Nasdaq to IEX in October.
IEX, which was founded by Brad Katsuyama in 2012, is known for its speed-bump stock-trading model that aims to put the world's fastest trading firms on a level playing field with retail investors.
In a sense, the move by Interactive Brokers is a continuation of the firm's alignment with IEX on market structure issues. Interactive Brokers CEO Thomas Peterffy has spoken out against the negative consequences of some high-frequency-trading practices. The company's stock was trading down 0.92% at $57.35 a share Wednesday morning. IEX is a private company.
The young stock exchange has been trying to get its listings business off the ground since the end of 2017. At the time, IEX told Business Insider that it expected its first listing in early 2018. And many market observers thought the first switch would be Wynn Resorts, but the resignation of chief executive Steve Wynn might have pumped the brakes on a switch.
In May, the exchange hired former Bank of America Merrill Lynch banker Dan Cummings as head of corporate advisory, which includes IEX's listings business. He replaced Sara Furber, a former Morgan Stanley executive who took on the CFO role.
While there have been some role changes at the firm, the strategy has stayed the same, according to Katsuyama.
"So the strategy doesn't change at all," Katsuyama said in an interview with Business Insider. "The play book is the same as it is with getting investors: providing companies with answers.
"They have been underserved and [Nasdaq and NYSE] are not answering questions about how the markets work. We are telling the truth and providing transparency."
Katsuyama made the distinction between IB, an early pioneer of electronic trading, and the high-frequency-trading firms with which he has sparred in the past.
"IB is focused on making markets and protecting investors," he said. "It has brought down cost."
He added: "Predatory high speed traders are using technology to disadvantage investors. Delineating the two is important."
A boost in the number of companies listed on IEX would likely mean an increase in the amount of trading that takes place on it, as stocks are more likely to trade on the exchange on which they are listed. This could help boost IEX's 2% market share of daily exchange volume.
In addition, having a well-known company switch to IEX would represent an endorsement of its market model and could open the door to more listings in the future.