As an excerpt at The New York Times shows, buy-side traders who feel victimized by high-frequency trading are backing an alternative exchange called IEX that promises to cut the high-frequency guys out of the order flow and, as a result, give small investors better pricing.
IEX is a threat to NYSE's parent company, Intercontinentalexchange Group (ICE), and savvy traders have figured that out. Shares of ICE are trading slightly below the level they were at when the deal was concluded. They closed Monday at $197.83, compared with $198.70 on Nov. 13, the day the NYSE-Euronext deal closed.
IEX is a threat to ICE because, despite what you may see on your TV screens each morning, the NYSE doesn't consist of people so much as it does of computers. And computers can be replaced by other computers.
A lot of the NYSE's trading volume doesn't take place at the stock exchange at all. There are 44 active alternative trading systems such as IEX, and many broker-dealers handle trades internally without going to an exchange. Alternative trading systems are non-exchange trading venues that match buyers and sellers.
ICE runs fully computerized markets for commodities and currencies futures, and it went after NYSE-Euronext mainly for the exchange's global derivatives market, Liffe. ICE's success is tied closely to global trading desks at the same firms that created high-frequency trading.