NEW YORK, Feb 5 (Reuters) - Upstart stock trading venue IEX Group is forming a committee of outside brokerage executives to help advise it on market issues once it becomes a registered U.S. exchange, the company’s head of markets and sales said in an interview.
The move comes as some incumbent exchanges and trading firms blast IEX’s business model, which eschews many industry practices, such as allowing firms to pay for faster access to the market. It also slows down orders by fractions of a second, a practice it says lets it ensure transactions are fair.
Jeff Sprecher, the head of New York Stock Exchange owner Intercontinental Exchange Inc, went so far as to call IEX’s disruptive methods “un-American” on Thursday.
IEX’s new 12-person “quality of markets committee” will make recommendations to the company’s leadership on how it should proceed within its own business and also help inform them on market-wide issues and advocacy, said Don Bollerman, who is overseeing the group’s development.
“You want to make sure you get a diversity of views, not just people who agree with your point of view, because if there is not friction intellectually, how can you be sure you’re arriving at a good outcome?” he said.
Among representatives on the committee will be KCG Holdings Inc, Russell Investments and Investment Technology Group .
“It has felt like there are not enough exchanges taking the long view or thinking about long-term investors so we view this as an opportunity to be helpful in terms of getting more of that thinking in the mix,” Jamie Selway, ITG’s head of electronic brokerage, said in an interview.
IEX was thrust into a heated debate on the fairness of the U.S. financial market when it was featured in Michael Lewis’s book “Flash Boys: A Wall Street Revolt,” which said the market was rigged in favor of high-speed traders.
The private trading venue applied to become a public stock exchange in September, generating hundreds of letters of support by investors, asset managers and trading firms.
But some exchanges and trading firms have said they think IEX’s plans do not conform to rules governing the market and that regulators should not let them go forward as is.
That has heightened calls by many market participants for a long-overdue review of decade-old regulations.
“Shakeups and innovation and change often can be positive things and the IEX guys are somewhat bearing that mantle now,” said ITG’s Selway. (Reporting by John McCrank; Editing by Leslie Adler)