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.
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