1. Investors Exchange (IEX)
Building A Market that Works for Investors

2. FLASH BOYS: A WALL STREET REVOLT

3. THE STOCK MARKET HAD BECOME AN ILLUSION

4. DISCOVERY OF A PROBLEM $ Client order 2 milliseconds NYSE NASDAQ
DISTANCE
NYSE
Mahwah, NJ
25K shares AMD
NASDAQ
Carteret, NJ
25K shares AMD
Direct Edge
Secaucus, NJ
25K shares AMD
BATS
Weehawken, NJ
25K shares AMD
NYC
2 milliseconds
LATENCY $
BUY ORDER
100K shares AMD

5. Electronic “front-running”
LATENCY ARBITRAGE WAS THE CAUSE OF THE PROBLEM
Electronic “front-running”
DISTANCE
Client order
NYSE
Mahwah, NJ
NASDAQ
Carteret, NJ
25K shares AMD
15,000 shares AMD
Direct Edge
Secaucus, NJ
~50-60% FILL RATES
25K shares AMD
12,500 shares AMD
BATS
Weehawken, NJ
25K shares AMD
NYC
476 microseconds
LATENCY $
BUY ORDER
100K shares AMD

6. WE COUNTERED SPEED BY SLOWING THINGS DOWN
THOR
DISTANCE
NYSE
Mahwah, NJ
25K shares AMD
NASDAQ
Carteret, NJ
25K shares AMD
Direct Edge
Secaucus, NJ
25K shares AMD
100% FILL RATES
BATS
Weehawken, NJ
25K shares AMD
NYC
290 microseconds
LATENCY $
BUY ORDER
100K shares AMD

7. EXCHANGES ARE NOT WHAT YOU THINK THEY ARE
ILLUSION
WALL STREET
TIMES SQUARE
REALITY
MAHWAH, NJ
CARTERET, NJ

8. WHY DOES A STOCK EXCHANGE EXIST?
Study Says Broker Rebates Cost Investors Billions
May 6, 2012
“In recent years, though, brokers have had another enticement that can pull them in a different direction: payments from stock exchanges in return for sending them business.
The practice has attracted criticism from several industry participants and former regulators who say the so-called rebates that the exchanges pay Wall Street firms could give those firms an incentive to profit at the expense of investors. Now a new study using industry data says that the rebates could be costing mutual funds, pension funds and ordinary investors as much as $5 billion a year.”
August 9, 2010
NYSE Opens Mahwah Data Center
“The new data center features colocation space for trading firms seeking high-speed access to the matching engines. NYSE Euronext says it has sold out all the available colocation space in its first phase at Mahwah – reported to be at least two 20,000 square foot pods. Three additional pods are planned as expansion space, for a total of 100,000 square feet of colocation space.”
CME, Nasdaq Plan High-Speed Network Venture
March 28, 2013
“CME Group Inc. and Nasdaq OMX Group Inc. have detailed plans to launch a wireless network joint venture in May that will beam stock and derivatives prices between Chicago and New York in fractions of a second.
The service is pitched at high-frequency traders and Wall Street banks seeking a competitive edge using the data to place trades more quickly than rivals.”
Slow Dark Pools Cost Investors, Study Says
August 25, 2015
“The technological shortcomings can cost mutual funds and hedge funds millions of dollars over time, New York research firm Tabb Group plans to say in a release Wednesday.
What they found is the Boston Company’s orders at times were getting filled at prices that were “suboptimal” in some dark pools, meaning they could potentially have gotten a better result if a trade was carried out more quickly.”
July 27, 2009
Direct Edge in Crosshairs of “Flash Orders” Debate
“The practice gives banks, hedge funds, and some dark pools, where orders are matched anonymously, an advanced look at order flow. The service helped spark Direct Edge's impressive growth, and was closely imitated early last month by formal exchanges Nasdaq Stock Market and BATS Exchange.
Critics…say they provide an unfair advantage to select participants, creating a "two-tiered" market that undermines the confidence of those without lightning-quick computer trading software.”

9. WHY DO EXCHANGES SELL FAST DATA AND TECHNOLOGY?
Those who pay will know of a price change before those who don’t pay. The only way to profit from this is to trade quickly before others get the same information.
Exchanges sell Fast Technology
That allow fast traders to profit from advanced knowledge.
This has enabled the rise of High Frequency Trading from ~25% of market volume to ~50% of volume

10. BUT…WE HAD NO MONEY! Potential Sources of Funds:
Brokers / Banks
Exchanges
Mutual Funds / Hedge Funds / Public Companies
Good partners
Creates potential conflicts of interest
Limits Disruption
Cash rich
Competitor
Incentive to maintain status quo
End users
No Conflicts
Has Never Been Done
It took 9.5 Months to raise our first round. But we had resolve to do it right, or it wasn’t worth doing at all…..

11. OUR RESOLVE PAID OFF: CONFLICT-FREE OWNERSHIP

12. IEX CREATES A LEVEL PLAYING FIELD
IEX is a seasoned TEAM OF EXPERTS from large banks, asset managers, exchanges, and regulators
We SLOW DOWN high- speed traders to make our market safe for investors
We AVOID CONFLICTS in pricing and operations of our market.
VS.
FLAT FEE PRICING
&
SIMPLE MARKET
REBATE PRICING
&
COMPLEX MARKET
VS.

13. IEX QUARTERLY GROWTH

14. WHAT CAN YOU DO TO CHANGE HISTORY?
Ask Questions
Ask what exchanges and dark pools your orders are trading in and ask WHY you are trading there
Seek Transparency
Work with brokers and exchanges to understand how each market is handling your order and providing a fair marketplace for investors
Vote With Your Feet
Take greater control of your orders and support solutions that are aligned with your interests
Every Order Makes a Difference……

15. Investors Exchange
Fair, Simple, and Transparent

16. HOW TO CHANGE THE COURSE OF HISTORY…
START BY UNDERSTANDING WHY HISTORY REPEATS ITSELF
Regulation
Scandal
Loophole
INNOVATION
TALENT
Exploitation

17. Market- Based Solution
BREAK THE HISTORICAL CYCLE TO CREATE POSITIVE CHANGE
Regulation v
INNOVATION
Scandal
Loophole
TALENT
Market- Based Solution
Exploitation