‘Flash Boys’ exchange IEX wins first listing

Interactive Brokers, headed by one of the pioneers of computerised trading, has become the first company to list on IEX, the small stock exchange trying to break the US listing duopoly of the New York Stock Exchange and Nasdaq.

Interactive will move its primary market listing from Nasdaq at the start of October. The retail brokerage is chaired by billionaire Thomas Peterffy, who in the 1970s was among the first traders to use computers to help calculate the value of securities and options.

The techniques used by the Hungarian-born Mr Peterffy helped, ultimately, to usher automated trading on to Wall Street.

IEX was founded in 2013 to challenge the dominance of high-frequency trading on US markets, and rose to fame in 2015 thanks to the Michael Lewis book Flash Boys: A Wall Street Revolt. After a bitter, high-profile battle to win regulatory approval, IEX launched as a registered exchange and has around 2.5 per cent of the US equity market.

Brad Katsuyama, IEX chief executive, said Mr Peterffy’s “bold, candid, and consistent view that equity markets are here to serve investors” partly inspired him to set up IEX.

Mr Katsuyama told the Financial Times that Interactive Brokers “is the perfect example of productive automated high-speed trading versus predatory high-speed trading”.

Regarding which companies might follow Interactive Brokers’ lead in switching to IEX, Mr Katsuyama said the exchange was having “a lot of productive discussions with many companies across many different industries”, but declined to comment on specific names.

IEX is trying to challenge a de facto duopoly in the US where all companies can trade on various registered exchanges and off-exchange venues, but nearly all list on the New York Stock Exchange, a unit of Intercontinental Exchange, and Nasdaq. Cboe Global Markets is home to its own corporate listing, but otherwise has focused on exchange traded funds.

IEX is seeking to lure transfers from Nasdaq and NYSE rather than initial public offerings and is offering at least five years of no listing fees. Based on a published fee schedule, Interactive Brokers was likely to have been paying Nasdaq $100,000 in annual listing fees. A spokesperson for Interactive Brokers was not immediately available.

Interactive Brokers’ decision to switch came as scepticism was building about IEX’s listing plans since nearly a year had passed since its last major regulatory approval for the effort.

“We at Interactive Brokers understand that being the first listing on a new exchange may entail certain risk, but we think that individual and institutional customers who own and trade our stock will receive better execution prices and that advantage will outweigh the risk,” Mr Peterffy said in a statement.

Nasdaq declined to comment.