Exclusive: Upstart trading venue IEX may prompt U.S. market rule change

U.S regulators may relax rules that require the fastest possible execution of securities trades, potentially helping upstart trading venue IEX Group's plans to become a full-fledged stock exchange. IEX, described in author Michael Lewis' book "Flash Boys: A Wall Street Revolt" earlier this year as a place for investors to place buy and sell orders without worrying that they are being "front-run" by other traders whose order transmission speeds are faster than theirs. IEX has put in place a "speed bump" – delaying incoming orders by 350 millionths of a second, or a thousandth of the time it takes to blink -- on its trading venue, letting it update prices faster than the fastest market participants can calculate them, so that high-frequency trading firms cannot use their speed advantage to front-run others. The strategy has proved popular with investors, who have made IEX the 7th most used alternative trading system in the U.S. for the week of July 7, according to data from the Financial Industry Regulatory Authority.

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