My latest on CNBC: Why the SEC should just say ‘no’ to IEX

By UCLA Professor Avanidhar Subrahmanyam and University of Alaska Professor Holly Bell

 

Since IEX submitted an application last year to the SEC to become a public stock exchange, a big debate has erupted about a seemingly small time frame — 350 microseconds.

IEX’s proposed exchange would implement an intentional delay of 350 microseconds to incoming and outgoing information, except for a few select order types.

The debate has led the SEC to issue an interpretive release, which in short asks: Do delays under 1,000 microseconds pose a problem for equity market structure? In the short term, the answer will affect IEX’s application to become a recognized national exchange. Long term, the answer could redefine the foundation of equity market structure.

Here’s our answer: Deliberately adding any amount of latency to the current market system would be a step backwards, especially when applied in an unequal way. Some types of investors do face real challenges, but intentional delays are not the answer.

Click here to continue reading the article at CNBC.

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