IEX exchange eyes first listing in October

Financial Times

28-06-2017

IEX exchange eyes first listing in October

Regulatory approval for move would be group’s latest effort to shake up US equity market

Nicole Bullock in New York MAY 31, 2017

IEX, the US trading start-up that became an exchange about a year ago, is going after the listing business of its rivals the New York Stock Exchange and Nasdaq, aiming to secure its first listing in October.

Pending regulatory approval, the move into listings would be IEX’s latest effort to shake up the status quo in the US equity market.

The group, whose origins are as a dark pool operator, was catapulted to fame as the main character of Flash Boys: A Wall Street Revolt by Michael Lewis. It depicted IEX’s group of traders and technologists as crusaders against a “rigged” market.

NYSE and Nasdaq are in effect a duopoly for corporate listings in the US, while rival Bats Global Markets focuses on listings of exchange traded funds.

Rather than initial public offerings, IEX has said it plans to lure listings from other exchanges.

“The pipeline and reception is across the market in terms of size and industry,” said Sara Furber, IEX’s head of listings, referring to the companies it hopes to attract. “I will say that financial services companies, because they have the vocabulary of trading and have worked with us in other areas, can make conversations go faster.”

Casino mogul Steve Wynn, an IEX investor, has also reportedly voiced interest in switching Wynn Resorts to IEX from Nasdaq.

Officials for Wynn were not immediately available to comment.

The regulatory process to become a primary listing exchange requires a patchwork of approvals rather than a single green light from the Securities and Exchange Commission.

Since launching as an exchange last August, IEX’s market share has risen from 1.6 per cent to as much as 2.6 per cent, but it remains small compared with most of its exchange rivals. Hosting listings could give it a boost, since a company’s shares trade more on its home exchange at the open and close of trading.

While IEX hopes to heighten competition in the business of corporate listings, it is facing increased competition in other areas.

The linchpin of IEX’s strategy is a 350-microsecond delay on orders, meant to offset what it argues are structural advantages for high-speed traders over long-term investors.

NYSE in May received regulatory approval for an identical “speed bump” on one of its trading venues, NYSE American, which caters to small and mid-cap companies. Nasdaq and the Chicago Stock Exchange are also experimenting with speed on their exchanges, but haven’t received approval for their proposals.

Financial Times