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IEX sick of SEC delays on exchange approval

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Published Feb. 19, 2016, 10:09 p.m. ET

These “flash boys” are starting to lose their patience.

After five months, IEX, the trading upstart squaring off against high-speed traders, is tired of waiting for regulators to approve its application to become a full-fledged stock exchange.

An IEX executive told Securities and Exchange Commission officials as much last week during a conference call, saying the company wasn’t willing to grant the agency another 90-day extension to review its proposal.

IEX, which is run by CEO Brad Katsuyama of “Flash Boys” fame, has been embroiled in a Wall Street tug-of-war with rivals that oppose its bid to become a registered stock exchange like the New York Stock Exchange.

IEX’s proposal has drawn an unprecedented 379 comment letters from the public since it was filed in September. In mid-December, the company agreed to give the SEC an extra three months to decide on whether to approve its application.

The SEC has until March 21 to determine the fate of IEX. After that, the agency must get the company to agree to another extension — something it isn’t willing to do.

In a Feb. 11 call with SEC officials and 30 executives at other exchanges, John Ramsay, IEX’s chief market policy and regulatory officer, insisted that regulators had been given plenty of time and would need to vote soon.

“The SEC needs to rule on this,” Ramsay said, according to a source who participated in the call. “We made our case. There is no reason to extend. We do not even intend to grant an extension.”

If its application is approved, IEX would become the first new standalone equities exchange in five years. There are now 18 registered public exchanges. IEX is now a “dark pool,” or a less regulated private trading platform, but it wants to play in the big leagues.

The company’s detractors, including the NYSE and trading giant Citadel, oppose IEX because of a 350 microsecond delay designed to keep out ultra-fast traders. Critics argue that IEX’s “speed bump” could actually harm investors.

Gerald Lam, an IEX spokesman, declined to comment.