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Nasdaq Upgrade May Give High-Speed Traders an Edge over IEX Speedbump

On October 24, 2016, Nasdaq Inc. will launch an upgraded system that could lessen the protections from high-speed traders offered by IEX Group Inc., the stock exchange whose founders were the protagonists in Michael Lewis’s book “Flash Boys.” According to a WSJ report, IEX’s trading system places 350-microsecond delays on information coming in and out of IEX, so that by the time a high-speed trader learns of a transaction executed on IEX, it would be too late to act on it.After the Nasdaq upgrade, however, the time it takes for trades executed at U.S. exchanges such as IEX to be published on Nasdaq’s consolidated feed of stock prices will shrink to less than 20 microseconds, down from 480 currently. As a result, a high-speed trading firm could learn of trades done on IEX and quickly act on that knowledge at other exchanges. IEX says Nasdaq’s faster speeds have been running in test mode for more than a month and have not affected its usefulness.

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