Over the past week, a host of U.S. authorities have confirmed that they are looking into certain practices used by high-speed traders, whose strategies can involve executing thousands of trades in milliseconds. The FBI, the U.S. Securities and Exchange Commission, the U.S. Justice Department and the attorney-general of New York State all have investigations underway.
For Mr. Katsuyama, the probes are partial vindication. Several years ago, while working for Royal Bank of Canada in New York, he began to suspect something was amiss in the execution of stock trades – namely that high-speed traders were, in effect, getting a tiny sneak peek at his transactions before they could be completed.
RBC “was the perfect place to discover what we discovered,” he said. It was a firm where “choosing to do the right thing was not a hard decision.”
Mr. Katsuyama left RBC in 2012 and launched IEX’s stock trading platform last October. Its objective: creating a market where high-speed traders do not enjoy any advantages over their slower peers. For now, the IEX share of overall trading volume is minuscule, but it is growing; this week, the platform experienced its biggest day on record, with 58 million shares traded.
Sitting in a bare office overlooking the former site of the two World Trade Center towers, Mr. Katsuyama appeared slightly shell-shocked by his transformation into a semi-public figure and by the passionate responses to Flash Boys – both in support and in opposition.