A proposal to create the first new American stock exchange in five years has sparked a fierce debate over how to solve problems created by increasingly complex and high-speed stock markets, on whether exchanges favor high-frequency traders that use computer algorithms to trade at warp speed.
IEX responded in a letter on Monday that its methods were the best way to protect investors who do not depend on placing and canceling orders quickly.
''Is there room in the national market system for an exchange to adopt any means, however narrowly drawn, to counteract the more pernicious aspects of speed-based trading?'' IEX's general counsel, Sophia Lee, wrote in a letter to the Securities and Exchange Commission, dated November 13, but made public on Monday.
In a letter to FINRA, Donald Bollerman, Head of Market Operations at IEX said, "IEX encourages initiatives to provide greater transparency into the operation of market venues to facilitate better investor understanding of best execution. We encourage the SEC and FINRA to pursue other initiatives, such as the Non-Public Trading Interest Proposal, and a holistic review of Rule 605 and Rule 606 reporting, to require greater disclosure with respect to reporting filled and unfilled orders, fill rates, usage and other statistics similar to those compiled by the Division of Economic and Risk Analysis in their white paper."
