Financial Industry Opposes 350 Microsecond Standard for Trades – Washington Post
June 20, 2016
Editor’s Note: This very interesting article from the Washington Post shows how policy and timing technology are inextricably intertwined. There is also an interesting video embedded in the article.
This start-up is promising a revolution, and Wall Street is pushing back
NEW YORK — One of the most feared men on Wall Street recently gave a tour of his offices with confident glee. From one window on the 44th floor, there is a view of the Statue of Liberty. On the other side is One World Trade Center.Brad Katsuyama, 38, has the only enclosed office on the floor, but he rarely uses it. Dressed in jeans and wearing a fleece vest, he slides easily among his nearly 70 employees.“This is where the action is,” he says, pointing to a desk in the middle of a crowded room.
From here, Katsuyama has drawn the attention of some of the biggest names on Wall Street with his four-year-old company, Investors’ Exchange, or IEX. The idea behind the company is simple: Provide a venue for investors who want to buy or sell stocks where sophisticated high-frequency traders, who can make thousands of trades in a blink of an eye, do not have the advantage.
The firm was the hero of Michael Lewis’s 2014 book “Flash Boys: A Wall Street Revolt,” which argued that the markets are rigged against mom-and-pop investors. Stock exchanges once dominated by screaming brokers, scrambling to get the best price on a stock, have been taken over by computers and traders using complex algorithms to find an advantage — measured in fractions of a second. High-frequency traders, Lewis argued, could always stay a step ahead.