It’s not even a new idea that huge companies like Citadel have gained an unfair advantage in the fast paced world of the computerised market, here is the IEX CEO saying the market is rigged thanks to High Frequency trading years ago, back in 2014.
The market is rigged says IEX CEO Katsuyama
This video, from the archives of YouTube shows Brad Katsuyama in a bit of a scuffle with Willian O’Brien, the president of BATS Global Markets, who accused the IEX CEO of trying to build his business by generating ‘fear’, ‘mistrust’ and ‘accusations’. Hilarious considering that it’s exactly these high frequency trading issues which is under scrutiny in the latest court case between Citadel and the SEC.
IEX was co-founded by Katsuyama back in 2012 with the mission to mitigate the effects of high frequency trading, and the company operates a system which introduces just enough delay into the system to ensure that all orders are processed at the same time, regardless of where the orders originate from.
IEX was created in response to questionable trading practices that had become widely used across traditional public Wall Street exchanges as well as dark pools and other alternative trading systems. The IEX exchange aims to attract investors by promising to “play fair” by operating in a transparent and straightforward manner, while also helping to level the playing field for traders. Strategies to achieve those goals include:
- Publishing the matching rules used in the exchange’s computerized order matching engine.
- Offering a limited number of simple and familiar order types.
- Charging fixed fees on most orders (or a flat percentage rate on small orders).
- Ensuring market pricing data arrives at external points of presence simultaneously.
- Slightly delaying market pricing data to all customers (no colocation).
- Refusing to pay for order flow.