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Say there are three exchanges, A, B, C, each with 1k shares of Ford on offer at $20. They are all random numbers of ms away from me, and for simplicity say A is closest and C is farthest. I send out my order for 3k shares at $20, and it hits A then B then C. People who are watching A see my request, and try to make adversarial changes on B and C. They have a low chance of success on B because it's almost as close to me as A is, but they have a higher chance on C because it's pretty far from me.

One way to fix this is to delay your orders carefully so that A, B, and C will all get your order at almost the same time. Now there's not time for someone who sees your order on A to react and send a message to C that will beat your message to C.

I believe this is what IEX does: http://en.wikipedia.org/wiki/IEX



That's not what IEX does. IEX is, to fit within your example merely exchange A. It can't control whether you delay your order to B or C or not.

What A does do is delay the output. When it receives an order it doesn't immediately broadcast that information back out, it waits some small (but relevant) period of time.




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