The New York Stock Exchange is out to crush America's newest stock exchange

pulse

July 25, 2017 4:06 PM

The New York Stock Exchange has launched a new unit to rival upstart IEX.

The New York Stock Exchange has launched a new market for small and mid-cap securities called NYSE American.
NYSE American employs a so-called speed bump, a feature made famous by rival exchange IEX.
The NYSE is offering big rebates to its designated electronic market makers to bring liquidity to the market.

The New York Stock Exchange is going all out in its effort to crush rival upstart IEX.

IEX, which gained exchange status last June, challenged the industry's status quo by introducing a 350-microsecond trading "speed bump." The idea has been

The difference between what the NYSE is paying out in rebates on these specific securities and what it is taking in via fees from market takers, the beneficiaries of the liquidity provided by market makers, is glaring.

Market takers will be charged just $.0002 per share to trade on NYSE American, representing a $.0043 difference on every trade for NYSE American-listed securities.

The point of the rebates, according to the NYSE COO

The rebates the NYSE is paying to market makers on its NYSE American exchange are among the highest in the industry and could pose a threat to IEX's business. Market makers would likely opt for an exchange offering incentives over one that isn't, according to Don Ross, CEO at PDQ Enterprises, a broker-dealer firm . He told Business Insider it's a risk for IEX to consider.

"If I were IEX I would be worried," Ross said."It sets a precedent for the NYSE to take market share away from IEX."

NYSE president Tom Farleytold Business Insider

"We think we can improve on the existing speed-bump model because frankly, we can do it a lot cheaper for customers," he added.

aggressively fighting against the IEX speed-bump model to implementing one, he stressed that the NYSE would do whatever it took to have the best listings franchise. IEX has outlined plans to win listings.

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