SEC To Delay IEX Stock Exchange Decision Until June: Reports

Another day, another delay for the upstart "Flash Boys" trading venue that wants to be a stock exchange.

The Securities and Exchange Commission is reportedly planning to push back its deadline for deciding on whether IEX can become a full-fledged stock exchange until June.

News reports say that the regulatory agency is seeking further commentary about IEXs proposal for stock exchange status and its aim to create more fairness in the markets by adding a speedbump or a delay in processing trades. This would confound the high-frequency traders who were accused of rigging the markets in the book Flash Boys by Michael Lewis.

Traders visits the IEX Trading Floor.

The SEC was set to make its decision this month after weeks of delays and passionate commentary from participants and key players in the US capital markets. The Wall Street Journal reports, Regulators want to give IEX’s allies and opponents another chance to comment on how the upstart market would work after its founders announced a change last month to how it would treat some customer orders, these people said.

Those opponents would be major stock exchanges and high-speed buyside firms that seek to exploit sub-second trading in their investment strategies.

This is the SECs second delay since IEX filed for stock exchange status last September. This process has set the usually staid world of stock exchanges on edge, to say the least. Some supporters believe that IEX and its speed bump would help level a playing field that favors tech-savvy and speedy firms while more traditional stock exchanges feel that this delay would be an unfair advantage to the buyside trading venue.

As the Journal reports:

IEX’s loudest opponent, other than incumbent stock exchanges that would become its rivals, is hedge fund and high- frequency trading firm Citadel LLC. The Chicago-based firm said IEX blunted some criticism by tweaking the way its router works.

“They realized this was a major issue and at least it was a major barrier to getting approved,” John Nagel, Citadel’s senior deputy general counsel, said in an interview. “And they gave in on it.”

Citadel says IEX still shouldn’t be approved as a full-fledged exchange because its speed bump would invite variants on other exchanges, casting a fog overmarket datathat investors trust to reveal the best price, Mr. Nagel said.

At press time, IEX has not made an official comment to this news.