From Secret Tunnels to Fair Trades: The Untold Story of IEX and the Fight Against Market Predators

In the shadow of Wall Street’s high-speed arms race, a small team dared to dream of a fairer market. The Investors Exchange (IEX) was created to level the playing field, protecting investors from the predatory tactics of high-frequency traders.

IEX’s key innovation was a fixed 350-microsecond delay, implemented through coiled fiber optic cables. This deliberate pause prevented traders from exploiting speed advantages to jump ahead of orders. Unlike other exchanges, IEX simplified order types to reduce complexity and potential manipulation.

Rejecting the common practice of accepting payments for order flow, IEX aligned its incentives with investors rather than brokers or high-frequency traders. This transparency and fairness attracted growing support.

However, IEX’s journey was not easy. Established banks and exchanges resisted fiercely, ignoring routing instructions to send orders to IEX and spreading rumors to undermine its credibility. Regulatory approval was slow and influenced by entrenched interests.

Despite these challenges, the persistence of IEX’s founders and supporters demonstrated that reform is possible. Their story is a testament to how technology and ethics can combine to challenge powerful market forces and restore trust.

IEX’s success has sparked broader conversations about market structure, transparency, and fairness, inspiring ongoing efforts to make markets work for all participants.

References: Summary and analysis from The Investors Podcast 1 , Wikipedia overview 2 , Financial Pipeline review 3 , Alone With Books summary 4 .