What's going on?

A new stock exchange launched in the US on Friday and, counter-intuitively, it�s aimed at making trading slower!

What does this mean?

Investors� Exchange, known as IEX, aims to fight back against �high frequency trading�, which uses high-speed computers to access trading data milliseconds before other investors. The idea is that these high-powered computers are able to isolate quick opportunities for profit � and execute on them many, many times in a single day. Some argue that such trading hurts regular investors who are looking to genuinely own stocks. IEX, which was made famous by a 2014 Michael Lewis book called Flash Boys, imposes a �speed-bump� on all its participants so that any super-fast computers, effectively, lose their trading advantage. The financial world will be watching closely to see if this new �slow speed� approach proves successful.

Why should I care?

For you personally: There�s a big debate about whether high-frequency trading is good or bad for the average investor.
One major concern is that these super-fast electronic traders are pinching pennies from pension fund and mutual fund traders � which effectively hits the bottom-line of individuals’ investment savings. On the flip side, high-frequency trading is often credited with greatly reducing trading fees � which can significantly impact investment returns. The popularity of IEX, or other �slower� platforms, should be a good indication of how concerned traditional investors are about high-frequency trading.


The bigger picture: There are lots of different exchanges � it�s not just the New York Stock Exchange.
Many companies choose to have their �primary� listing on a major exchange like the New York Stock Exchange (NYSE) or the NASDAQ. But there are lots of platforms on which investors can trade the same stocks: just because a stock�s primary listing is on the NYSE doesn�t mean that�s the only exchange on which it trades. Just like in other industries, having more providers (e.g. more exchanges) creates more competition and, in theory, drives down the price for customers (e.g. trading fees) and/or improves customer service.