If you can’t beat the “flash boys,” you might as well join ’em.
In a major reversal, Wall Street’s biggest stock exchanges are looking to copy the controversial “speed bump” put forward by IEX that’s divided the investment world during the past two years, The Post has learned.
IEX, the trading upstart run by Brad Katsuyama, gained notoriety for his idea to slow down all stock orders by 350 microseconds in order to keep out aggressive traders — along with rival exchanges trying to end-run client’s trades.
But now, that all looks like it could change.
The New York Stock Exchange has been quietly developing its own “Plan B” speed bumps for more than a month, according to a person familiar with the company’s plans. Nasdaq previously filed, and pulled, a similar speed-bump plan in 2012, and CEO Bob Greifeld said he’d consider it again.
And in what might be the most ironic twist, BATS, the exchange that cut ties with its former CEO William O’Brien after he went on a tirade against Katsuyama on CNBC, is considering adding its own speed bump if the IEX model does well in the market, according to one executive there.
While there are no definite plans by any of the exchanges to bring the competing speed bumps to market, the IEX rivals are considering introducing their own delays as a matter of competition.
In other words, they’re betting they can divert market share away from Katsuyama’s company by leveraging their size and larger market presence to compete on price, one person said.
The about-face comes to light just days after the Securities and Exchange Commission delayed IEX’s application to become an exchange by another three months.
But the agency signaled, for the first time, that market delays under one millisecond, or a thousandth of one second, were acceptable to the regulator.
Since IEX’s speed bump is less than a millisecond, that not only appears to clear the way for Katsuyama’s company to join the field, it opens the door for other exchanges to offer the same.
Spokespeople for IEX, Nasdaq, NYSE and BATS all declined to comment.