Reshaping the Market, One Trade at a Time

One year ago, the SEC approved IEX tobecome a national securities exchange. It was an exhilaratingmoment, opening the door for us to continue our mission to level the playing field for investors.

Were proud to stand behind the progress weve made since then, and realize that there is still a lot of work to do.

Some peers, observers and pundits dismiss us as a non-event. But the changes that weve already brought to investors and the broader market tell another story.

Quantity from Quality
In the nine months since we launched as an exchange, our overall market share has grown 56%. Our lit market share has tripled, although we still trail behind exchanges who pay rebates for displayed orders. But more important is the fact that weve done it without compromising our focus on providing higher-quality trading to investors. In fact, just nine months into being a stock exchange,our competitor ranks IEX #1 in execution qualityamongst all exchanges.

Weve grown in this way because we dont operate like other exchanges. Rather than prioritizing market share at any cost, we are laser-focused on what investors want us to be good at: trading in size without moving the price. Our most recentwhite paperuses public data to demonstrate our success in this area.

Do we trade more in the dark than displayed? Yes. Nearly 50% of the broader market is non-displayed, and investors have adapted to a toxic marketplace by displaying less and seeking to trade with other naturals without showing their hand. IEX has adapted to their needs (much to the chagrin of certain market participants) by building a different type of exchange.

Sticking to our Principles
Some detractors have questioned whether IEX walks the walk in terms of prioritizing the needs of investors. For the record: we are fair access. Anyone can trade on our venue (or attend our parties).

From day one, we have focused on thwarting toxic strategies, not firms. In fact, the composition of market participants on IEX has remained largely unchanged as we moved from ATS to Exchange and continue to grow?-?it is still a dynamic mix with HFT participation approximately one-half of what it is industrywide.

But we havent changed our focus or our design to placate anyone, or to grab more market share or revenue in the short term. Anyone who trades on IEX trades on the same terms, without special advantages like a faster connection or faster data.

And we wont compromise in the future either. For instance, we wont apologize for highlighting that exchange rebates have introduced a toxic conflict into our markets. They create the incentive for participants to route for rebate payments, rather than the best execution quality. It happens. Public data proves it, and we will not relent on this point.

If You Cant Beat Em…Pretend to Join Em?
After years of subjecting the industry to the Race to Zero, exchanges are suddenly pursuing innovations in the name of deprioritizing speed or helping institutional investors.

NYSE filed to relaunch its smallest exchange with a speed bump, but given that they make more money from selling speed than from trading, we believe that our speed bump is the only speed bump designed to protect investors.

As weve said before, if you dont bring something new to the markets, youre not choice?-?youre just more fragmentation.

The Fight for Our Markets Future
This year, weve continued to innovate and bring new tools and solutions to investors, like our refined and improvedIEX Signal, which is designed to protect investors from being picked off by modern latency arbitrage. These innovations are just the beginning of a long journey to level the playing field for investors.

From day one, weve believed that this market was overdue for disruption, and that investors needed a whole new kind of exchange, not a mere variation on a theme. Its in the early innings, but we think we are delivering on that promise. The lengths to which defenders of the status quo are willing to go to distort the progress weve made just shows the pressure theyre finding themselves under. While lazy logic and alternative facts can be easily retweeted, it doesnt make them true.

Thank you all for your continued support and business in the past year. We appreciate every order we receive, and do our best to protect it accordingly.