The speed bump is intended to thwart high frequency traders who might "scalp" your order by purchasing a security milliseconds before your order is processed. With the speed bump, the NYSE is the second (alongside startup IEX) to implement the measure. IEX had captured 2.6% market share as a result of the speed bump.
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NYSE wins approval for ‘speed bump’ in trading
“The IEX model is about protecting investors from predatory trading strategies enabled by NYSE’s other exchanges,” said Brad Katsuyama, IEX’s chief executive. “Investors are sophisticated and will see through this; selling speed bumps and speed advantages at the same time just demonstrates that NYSE doesn’t understand the point.” NYSE’s proposal raised eyebrows earlier this year because the exchange had been a vocal opponent of IEX’s effort to become an registered exchange. NYSE officials have since said that the exchange had opposed IEX’s application because it believed the rival exchange was looking for an exception to rule.
