IEX CEO Brad Katsuyama discusses the philosophy behind IEX’s mission to “build fairer markets” and how his role in Michael Lewis’ 2014 book Flash Boys helped shaped the debate around high-frequency trading.
On the issue IEX was trying to solve in the markets: “I think the best analogy to use is if you think of a horse race, when the horse race is going typically they don’t take bets after the race starts. In the stock market people are betting in real time. And the issue is that some people know the horse has actually crossed the line and can go out and bet against people who still think the race is happening.... And the reason that they know that the horse has crossed the line is that they’re actually buying data, faster data, faster technology from the exchanges who make more money now selling high speed data and technology than they do from matching buyers and sellers.”
On the future of IEX: “A lot of what we designed at IEX is to prevent trades from happening. We don’t want to take bets when somebody knows that the horse race is over. And what that means is actually less betting. We’re actually going for a smaller pool of the total overall trade.… So, we care about quality, we don't care about quantity, and frankly, we’re in this for the long haul.… So, I think as things start to change, the acceleration of our growth I think changes.”