The IEX Speed Bump
IEX's most distinctive feature is its 350-microsecond 'speed bump' — a coil of fiber-optic cable that delays incoming orders by 350 microseconds. This delay neutralizes the advantage of co-located high-frequency trading systems relative to more distant participants. The speed bump is designed to ensure that market makers cannot exploit latency advantages to trade against investors' orders.
IEX's Origin Story
IEX's founding and its market structure philosophy were popularized by Michael Lewis's book 'Flash Boys' (2014). Lewis's book described how a group of former RBC Capital Markets traders built IEX specifically to address what they characterized as the unfairness of HFT-dominated markets. While the book was controversial in financial circles, it brought HFT and market structure issues to a wide public audience.
Routing to IEX
Several brokers offer routing options that include IEX. Investors who want their orders exposed to IEX's speed-bump-protected environment can request IEX routing from brokers that support it. Interactive Brokers and some other direct-access platforms allow customers to specify order routing destinations.
IEX and PFOF
IEX, as an exchange, does not participate in the PFOF system in the way that wholesale market makers like Citadel Securities do. Orders routed to IEX are matched against other exchange orders with the speed bump protection. Whether IEX consistently provides better execution than Citadel Securities for retail orders depends on the specific stock, order type, and market conditions — and is a subject of ongoing academic and industry debate.