Brand Stories to Watch: IEX Stock Exchange

When Brad Katsuyama and his team at RBC in New York realized that the stock market favoured high-speed electronic trading firms over others, he did what any of us might have done.

Okay not really:
He left his job and built an alternative stock market.

In a nutshell:
As explained by author of the book Flash Boys: A Wall Street Revolt, Michael Lewis, on 60 Minutes, the system favours High Frequency Traders (HFT’s). Their systems have built in advantages that let them send information to the stock exchange faster than other traders, view what trades others intend to make, buy those stocks and then sell them to those traders.

Why IEX is different:
The current system may be legal but it’s not particularly fair. It’s also one more thing already eroding trust the public has in big business and the market. IEX, on the other hand, slows down everyone’s trades, including those of HFT’s, so no one has an unfair advantage.

Why we love it:

• The brand and its founder live their values which are apparent in every interview and throughout the website.
• IEX shares its values through the eyes of real investors; and it’s beautiful
• This was a well thought out launch, a book by a respected expert and a feature on 60 Minutes piece, both of which appeared 6 months after the launch of IEX (Oct 2013), giving the new stock market a chance to prove its business case first
• The IEX site does a great job of explaining the problem that affects up to 1/2 of trades (which are predatory) and it as the solution working to restore consumer confidence.

How important is IEX?
A growing number of every day people are convinced the markets and big business do not play fair. When Katsuyama debated BATS Global Markets president William O’Brien on CNBC, the market slowed as traders stopped what they were doing to watch.

When viewers were polled, 66 per cent Katsuyama had won the debate.

We long for fairness in business. Leaving the usual suspects in charge has not done much to restore trust in the system. Reimagining a stock market predicated on fairness, well, that’s a brand worth watching.