In this episode, I speak with Dan Aisen, one of Forbes’ 30 Under 30 in Finance (2015) and the co-founder of IEX.
Dan started his career at RBC, working with a team to develop their frontrunning execution algorithm, THOR, under Brad Katsuyama. Brad is another co-founder of IEX, as well as the CEO, and was heavily featured in Flash Boys.
As you may know, IEX is an Alternative Trading System (ATS), also known as a dark pool. However, IEX is filing to obtain exchange status.
We discuss the projects Dan was a part of at RBC, how IEX went from concept to operating trading system, and their mission to make markets “fair.”
I also ask Dan about the “speed bumps” which have been added to IEX, the inner workings of dark pools, and for his observations on the broader market structure.
What’s Covered in This Interview:
- Dan’s introduction to trading at the Royal Bank of Canada (RBC), the same place he developed THOR, their key execution algorithm, with Brad Katsuyama.
- How IEX came about and the first steps from concept to operating trading venue – quite the accomplishment!
- The major differences between a stock exchange and a dark pool, and why market participants sometimes choose to hide versus show their orders.
- What value dark pools add to markets overall, and the incentives for institutional investors and brokers to trade in a dark pool instead of an exchange.
- Why IEX has implemented a 350-microsecond “speed bump” to prevent high-speed traders from benefiting from flaws in the market structure.
- Dan goes over the volume of trading in dark pools and the possible issues of trading activity moving away from exchanges.
Links and Resources:
- Chat With Traders Facebook group – Join the free Chat with Traders Facebook group to connect with other traders and podcast listeners!
- The Comprehensive Guide to Trading Mentorship – My free eBook answering all of your questions and explaining how to get a mentor.
- Flash Boys: A Wall Street Revolt by Michael Lewis – The story of IEX and their quest to create fairness in markets is featured in this highly controversial book.
- Brad Katsuyama’s Next Chapter – Jeremy Kahn’s write up on Brad Katsuyama and Dan Aisen, published in August 2015 by Bloomberg.
- IEXTrading.com – For the latest from IEX and additional info, visit their website. Also, you can follow @IEX on Twitter!
