A FAIRER STOCK EXCHANGE
In 2007, Brad Katsuyama was trading stocks for the Royal Bank of Canada when he noticed that every time he placed an order, the stock price jumped by one or two cents. He realized that high-frequency traders were using faster connections to buy the stock he wanted and resell it to him for a profit. And it was widespread, costing investors like him up to $160 million a day. So Katsuyama created the Investors Exchange, an upstart trading platform powered by an ingenious hack: Every trade encounters a virtual “speed bump” to subvert high-frequency traders. In September 2016, IEX opened for public business.
User-centered thinking plays a big role. Product chief Adrian Facini spent more than a decade on
Wall Street, where he grew disillusioned by traders gaming the system. “During the design process, we think about how trading features can be used or abused,” he explains. “If something can be manipulated, we nix it.” The NYSE has now copied IEX’S speed-bump idea. But Facini isn’t bothered by the imitation, insisting that while anyone can copy a feature, “they can’t copy our ethos.”