IEX slowed every order by 350 microseconds to make trading fairer.

On public exchanges, speed was the edge: the participant who learned of a price change first could grab every stale quote and then trade against those who had been beaten. The typical fix was to get faster, an arms race few could afford.

IEX took the opposite route and built a deliberate delay. Orders and messages must travel through a long coil of optical fiber before they reach the matching engine, adding a constant 350 microseconds. The exchange also signs market data from other venues, so it has time to incorporate the latest prices into the book before a trade executes.

The result is a venue where a pegged order is protected from trading at a stale price, because the exchange can read the current market in the window the speed bump buys; the design was approved as a US stock exchange in 2016.

Add one delay to everyone, not speed to a few

A fixed delay applies to all orders, so the race disappears

The delay only affects the exchange, not the incoming market data

It removes the profit from front-running a stale quote

It lets the exchange detect an unstable price before it fills an order

When speeding up the fast side is a losing arms race, try leveling the playing field; a cost imposed equally on all participants can beat a marginal advantage held by a few.

IEX won approval as a US exchange and its speed bump became the defining feature of the 'fair trading' debate, widely credited with changing how the industry talked about latency. It also drew criticism from market makers who claimed it reduced liquidity.