NYSE Feud With IEX Heats Up With Sprecher's `Un-American' Jab

  • CEO of NYSE's parent company calls IEX speed bump unfair
  • ICE shares plunge following quarterly earnings report

The war of words between the New York Stock Exchange and upstart IEX Group Inc., which is seeking approval to become an exchange, continued on Thursday as Jeffrey Sprecher, chief executive officer of NYSE parent Intercontinental Exchange Inc., called IEX criticisms of its trading systems “absolutely false.”

IEX has faced criticism for its planned fraction-of-a-second “speed bump” on orders that’s intended to level the playing field for all traders. In a letter published Sunday, Don Bollerman, IEX’s head of markets and sales, accused the NYSE of operating a two-tier system that favors only the savviest traders, effectively having a speed bump of its own.

“We do not, and that’s absolutely false and it’s wrong,” Sprecher said on an earnings call Thursday. “NYSE does not have any kind of speed bump, any kind of artificial delays.”

Sprecher blasted IEX on the same day his operator of futures and equity markets reported quarterly results -- an event that drove ICE’s shares lower. The stock lost 6.1 percent as of 1:13 p.m. New York time, which would be the largest daily decline since July 2009.

While fourth-quarter earnings beat estimates, ICE said operating expenses would be $490 million to $500 million this quarter. That’s more than the $481 million that Chris Allen, an analyst at Evercore ISI, had anticipated. “We would not be surprised to see stock under pressure,” Allen wrote in a report Thursday.

Exchange executives have been peppered with questions about IEX on calls with analysts and investors this earnings season. While IEX claims its delay on orders reduces the advantages that some high-speed traders have over others, exchange groups including NYSE and Nasdaq Inc. contend that it would disrupt the $22 trillion U.S. stock market.

“What IEX is asking is for an exemption that would solely be for IEX, not for the industry,” Sprecher said. “It is looking for the ability to have a regulated monopoly status that the other exchanges do not have.”

“I don’t think it’s fair,” he added. “It is un-American and it’s not fair and it’s not the way that our system should work.”

Sprecher’s remarks echo comments from Nasdaq CEO Robert Greifeld, who said on the company’s earnings call that the U.S. Securities and Exchange Commission needs to change rules that govern the entire market before approving IEX’s application for exchange status.

While IEX’s delay on orders comes from a coil of fiber optic cable, the comparison in Bollerman’s letter was related to the gateways companies use to connect to NYSE.

“We stand by our research and would challenge NYSE to prove us wrong,” IEX CEO Brad Katsuyama said in an e-mailed statement.

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