December 16, 2015
To Whom it May Concern,
As an independent market maker at the Chicago Board of Trade I completely understand why market participants in the equity space would like to route their orders to IEX as an exchange. Latency arbitrage, quote stacking, payment for order flow, and internalization in the current system create a conflict of interest between exchanges and brokers and their customers. The exchanges and brokers are dependent on volume and currently prioritize/"incentivize" market participants who provide them volume at the expense of other market participants.
Exchanges and brokers "incentivize" a few market participants (the highest volume ones) to trade by helping them setup trades in which they (the chosen market participant) is very unlikely to lose.
Special order types and faster datafeeds are some avenues that are available only to a select few.
If the assertions of various internalizers ( like IEX's speedbump is detrimental to the marketplace and illegal) is true, current stock exchanges should be rexamined for speedbumps as it has been proven that some stock exchanges send their quotes and trades slower to the SIP than to their direct data feeds. The academic work of Haim Bodek and Eric Hunsader provide hundreds of clear examples of select participants exploiting these oversights and clearly violating existing laws.
I encourage you to reexamine the intentions and definitions of RegNMS and NationalNBBO vs what is actually happening with the goal of enforcing current laws.
Thank you,
Gregory P. Papas