Retail routing to IEX exchange

U

unregisterred

I have not been active in the stock market since 2009. The war on shorts in the fall of 2008 (that capped my profits) and the too big to fail/ save the banks at all cost mantra that followed really killed my interest in equities. The belief that markets were "free" in the Western world died around the same time.

Watching the 60 Minutes interview this past Sunday was a breath of fresh air. Imagine a world where even a retail trader can have their trades routed around the troll bridge stick-up spots of Wall Street.... a world where the broker cannot trade against you through payment for order flow or predatory program trading .... a place where trade execution is strictly agency basis because there is no proprietary trading desk.

I would open a retail account today if there was a retail broker that one could direct trades to the IEX platform even if the commissions were somewhat higher than the typical discount broker. Unfortunately, there does not appear to be one YET.

If interested, send the following to relevant parties at retail brokers you use:

Retail Investor Name
Retail Investor Mailing Address Line 1
Retail Investor Mailing Address Line 2 (Optional)
Retail Investor City, State, Zip

Retail Brokerage Name
Attention: Compliance Department
Retail Brokerage Mailing Address Line 1
Retail Brokerage Mailing Address Line 2 (Optional)
Retail Brokerage City, State, Zip

RE: Order Routing Instructions

To Whom It May Concern:

In accordance with the definition of a directed order under Regulation NMS 242.600 and pursuant to FINRA Rule 5310 Supplementary Material .08: Customer Instructions Regarding the Routing of Orders, please direct all of my orders for any purchase or sale of National Market System equity securities during normal market hours (i.e., 9:30AM ET to 4:00 PM ET) to IEX Services LLC (MPID IEXG), except to the extent that I have otherwise directed you to route any of my orders elsewhere, and provided that there is no known technical issue preventing IEX Services LLC from receiving or processing my orders. These standing order routing instructions apply to the following account(s) held at your firm:

• Retail Account Number 1
• Retail Account Number 2

I hereby acknowledge that, pursuant to FINRA Rule 5310, by routing my order(s) to IEX Services LLC, your firm is not required to make a best execution determination beyond this specific instruction, although you remain obligated to process my order(s) promptly and in accordance with the terms of the order(s). I further acknowledge that IEX Services LLC is required to meet best execution requirements with respect to handling my order(s), including possibly routing such order(s) to other market centers. As such, any of my orders sent to IEX Services LLC as a result of this instruction should be marked “Routable,” which would enable my orders to be further routed via IEX Services LLC according to their routing methodology to other nationally protected market centers. “Routable” ensures that if IEX cannot satisfy the full quantity of your order, IEX will seek to complete the remainder of your order up or down to your specified buy/sell limit price on other market centers.

I understand that IEX Services LLC charges a fee of $0.0009 per share for orders executed on IEX Services LLC’s platform, or $0.0001 per share for orders routed by IEX Services LLC to another market center for execution (plus any fees charged by any such market center).

Please be sure to contact me if you have any questions regarding this request. Likewise, please notify me if you are unable to honor this request, including when you will be able to honor the request, and whether I will be charged any additional fees specific to this request. I can be reached via the contact information below.

Sincerely,

Your name and signature
Contact Information (telephone and/or email)
 
If you check the IEX web site, they list 2 retail brokers that have signed on with them:

Tradestation and IB.

Coincidentally, I happen to have Tradestation and am currently testing LiveVol, which resides on IB. Tradestation sent out a message--I think yesterday--to their TWS announcing that a direct route to IEX is available. Not sure--I don't see it in my TWS routing, but perhaps I'm looking in the wrong place.

When I spoke with LiveVol, their rep told me that IB may or may not route your order automatically to IEX but does not provide a direct route. Zerohedge seems to disagree, so maybe her information was behind the times.
 
Ppark said:
When I spoke with LiveVol, their rep told me that IB may or may not route your order automatically to IEX but does not provide a direct route. Zerohedge seems to disagree, so maybe her information was behind the times.
More...

Livevol has incorrect information. Here is a screenshot. Just enter a stock symbol on the TWS, click on direct and you can choose between SMART and all the other exchanges.
 
drownpruf said:
IEX is brilliant. 350-microsecond delay. Not enough to arb but enough to stuff the top HFT.
More...

It doesn't stuff HFT. It prevents order leakage so that certain strategies (that some HFT firms use) wont work as well. But unless you are trading a large amount of shares, you probably won't notice a difference. Other than paying higher commissions of course.
 
I think retail trades are impacted more than people think. If anything, it seems like there's even less oversight/regulation of retail orders than institutional orders. Just look at how much money Citadel is making after buying up all the retail order flow.
 
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