IEX snags its first listing from Nasdaq

Brad
Katsuyama, chief executive of IEX Group, is pictured at IEX’s new
office space in 2014
Brad Katsuyama,
chief executive of IEX Group

• 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.