Money Managers Battle High Frequency Traders With New IEX Platform

Mutual fund managers are fighting back against high frequency trading firms, which they claim hurt long-term shareholders by jumping in and out of markets and raising trading costs. Their weapon: New York–basedIEX GROUP., the first alternative trading system owned by the buy side. An electronic-trading team from Royal Bank of Canada started IEX, which launched in October and caters to traditional investors. IEX is owned by a group of mutual funds,对冲基金，家庭办公室和员工。总部位于圣地亚哥的品牌投资合作伙伴和基本集团，总部设在洛杉矶，每个持股不到5％，以遵守管理共同基金的规则。

20世纪90年代和2000年代的监管变化，旨在增加竞争，使市场更公平的主流投资者，已经将美国股票交易分散。交易现在发生在几十台交易所，经纪商交易系统，电子通信网络和黑暗池中，买家和卖家匿名匹配。在这种碎片和自动化中，高频交易员使用计算机算法在燃烧速度下购买和销售证券，不利地区的共同资金和其他investorsthat lack the same firepower.

布拉德福,总统和CEO of IEX and former global head of electronic sales and trading at Toronto-based RBC Capital Markets, says RBCCM had built a smart order router, which determines the best transaction venue based on various preferences. The team saw an opportunity after realizing that money managers know little about how the markets handle and mishandle their trades. But RBC couldn’t serve traditional managers on the scale it wanted because it’s a broker-dealer and those clients want to split their business among many parties. Katsuyama and three other executives from his group left to form IEX and registered it as a market so that its clients are the brokers themselves. “We decided to go to the root of the problem,” he says. “Exchanges and dark pools are catering to the highest-volume participants, which are the high frequency traders.”

“Rather than talk about it, the team from IEX actually took action,” says Joseph Scafidi, director of trading at $25 billion Brandes. As of late November, IEX hadn’t released any volume numbers, but Scafidi is happy. “We are executing more volume with less impact than with other ATSs or even the exchanges,” he says. “We have also seen data shared by other buy-side clients that indicate they are having similar experiences.”

IEX通过充电买家和卖家为单位的费用来区分自身。它可以吸引的量越多，它的利润就越多。平面费用也避免了传统的折扣或制造商，系统，由此市场给经纪人或流动资金提供者提供退税，同时为另一个经纪人或流动性接受者提供费用。该系统为经纪人创造了一种奖励，用于路由交易进行折扣，而不是让客户获得最佳执行。其他IEX特征旨在通过抵消高频开关来保护投资者：在某些竞争对手平台提供一系列特殊复杂订单来吸引快速交易者，它只需四种简单的订单类型。

CEO Katsuyama thinks IEX’s biggest contribution could be raising the bar on best-execution rules. Brokers are supposed to ensure that clients’ trades are handled fairly, but ATSs don’t have to disclose how their markets work or which order types they offer — and until IEX, none did. The firm has made public its Form ATS, which details its operations for the Securities and Exchange Commission. Besides opening the door to feedback from critics and supporters, this voluntary disclosure may prompt other venues to follow suit. “If the buy side starts asking for documentation before it sends its next order, it changes the way the market works,” Katsuyama says.

Sal Arnuk, co-head of trading at Chatham, New Jersey–based brokerage Themis Trading, which uses IEX, believes the new ATS is doing something unique. “The SEC has proposed regulating dark pools since 2009, but wouldn’t it be great if dark pools voluntarily publicized all the mechanics of how they work, including order types and average trade size?” Arnuk says. “Dark pools will always say, ‘All customers need to do is ask us.’ But that’s not true disclosure.” • •

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