Matt Levine, Columnist

The 'Flash Boys' Exchange Is Growing Up

It's hard to be a knight in shining armor if you're running a dark pool.

September 16, 2015 at 8:47 PM UTC

Matt Levine is a Bloomberg Opinion columnist. A former investment banker at Goldman Sachs, he was a mergers and acquisitions lawyer at Wachtell, Lipton, Rosen & Katz; a clerk for the U.S. Court of Appeals for the 3rd Circuit; and an editor of Dealbreaker.

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On Wednesday, the Securities and Exchange Commission disclosed that IEX has applied to become a public stock exchange, to be called the Investors' Exchange.1442423056570 IEX, and its chief executive officer, Brad Katsuyama, are of course the heroes of Michael Lewis's "Flash Boys," rebellious idealists who discovered that the U.S. stock market was rigged and decided to do something about it. What they did was start a dark pool. Now they're trying to turn it into an exchange.

Why would IEX want to become an exchange? One obvious reason is that IEX is not just a business but also a mission: Katsuyama seems to genuinely want to reform the markets, and the way you do that is as an exchange, not a dark pool. "Dark pool" just sounds bad. If you are trying to change how people trade, you want to do it in daylight: