One Final Pause Before an Exit

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Dan offers some final thoughts on the divisive issue of exchange speed bumps as the curtain comes down on his Waters tenure and he prepares for pastures new, although not far away—he joins the Risk staff at the beginning of May.

All things must come to an end, which is why I am announcing that this will be my final editor’s letter in Waters. My nearly three years at Waters, and the year-and-a-half I’ve spent holding down this page of the magazine as deputy editor, sell side, have been fantastic. US editor Anthony Malakian and editor-in-chief Victor Anderson, along with managing editor Elina Patler, have been amazing mentors to me, helping me grow as a journalist in a field that I had no prior experience in.   

But as I said, every beginning must have an end, and while I’ve enjoyed my time at Waters immensely, I’ll be moving over to Risk, a sibling publication of Waters also owned by Incisive Media—recently acquired by Infopro Digital, although the rebranding of the business hasn’t been completed yet—to work on its commodities desk. Still, I am neither exciting nor important enough to spend 700 words lamenting my last column for Waters. So instead, I’ll address the topic at hand: my feature in this month’s issue. 

Speed Bump Revival

As you’ve seen on page 20, this month I looked at the trend the industry has seen over the past year of exchanges attempting to implement speed bumps or speed-bump-type orders, as Nasdaq, the Chicago Stock Exchange (CHX) and NYSE Group have all submitted proposals to the US Securities and Exchange Commission (SEC).

It’s a fitting way to end my time at Waters, as I will always consider speed bumps to be intrinsically tied to the start of my career here. Prior to joining in August 2014, I asked Anthony if there were any books worth reading to get a good grasp on the industry. His suggestion was Michael Lewis’ Flash Boys, which was a great introduction to the world I’d be covering for the next three years. One can debate the merits of the book, but personally, I found it to be the perfect gateway into an industry that was clearly evolving, from a technology perspective, at a rapid pace. 

Fast forward to a few years later, and here I sit on my way out the door covering speed bumps one last time. The conversations around them have certainly changed since then, mainly stemming from the fact that the SEC has granted the Investors Exchange (IEX) approval as a national exchange, although the passion people exhibit when discussing speed bumps is still just as strong.

Tough Debate

I hate to sit on the fence for my last column, but I find it hard to take one side or the other when discussing speed bumps. From a technology perspective, I find it hard not to support any new innovation an exchange wants to push forth if it believes there is a market for it among its customers. But from a markets perspective, I do agree with those in the space that trading has gotten far too complex, and adding more speed bumps certainly won’t simplify things. 

It’s a difficult discussion, because it’s not fair to ask exchanges to stop innovating and creating new services. One can’t turn back the clock and go back to a day and age when it was easier to trade. That’s just not how things work. 

But exchanges must also be cognizant of the fact that with every new implementation they make, they are putting a strain on clients who must adjust their operations to account for the additional tweaks made. 

It’s a delicate balance, this understanding of how to allow exchanges to change their offerings while still making the markets accessible and understandable. And it’s too early to tell the true impact of speed bumps, as IEX has been operational for less than a year. 

And while I’d like to point a finger at the regulators, I’m not sure what I’d ask them to do, considering IEX has already gained approval and is operational. To shut the door on the implementation of additional speed bumps so that they can study the markets would give the newest national exchange an unfair advantage over those looking to also add their own delay mechanisms. Fortunately for me, that’s a problem for the next deputy editor, sell side, to figure out. 

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