WEBVTT - 49: The Man Who Wants to Better Trading by Slowing It 0:00:00.160 --> 0:00:02.320 But knowledge to work and grow your business with c 0:00:02.520 --> 0:00:06.680 i T from transportation to healthcare to manufacturing. C i 0:00:06.760 --> 0:00:10.520 T offers commercial lending, leasing, and treasury management services for 0:00:10.600 --> 0:00:13.480 small and middle market businesses. Learn more at c i 0:00:13.560 --> 0:00:25.800 T dot com put Knowledge to Work. Hello and welcome 0:00:25.840 --> 0:00:30.200 to another edition of the podcast. I'm Tracy Alloway, executive 0:00:30.280 --> 0:00:34.040 editor at Bloomberg Markets, and I'm Joe Wisenthal, Managing editor 0:00:34.120 --> 0:00:38.879 Bloomberg Markets. Joe, this is a special special episode of 0:00:38.920 --> 0:00:42.560 the podcast. Uh, it's special because we're not on it right. Yeah, 0:00:43.760 --> 0:00:48.599 it's extra special because we've edited ourselves out. Now we 0:00:48.760 --> 0:00:52.440 are going to be playing an interview today that Bloomberg 0:00:52.520 --> 0:00:56.200 View columnist Matt Levine, and a friend of this podcast, 0:00:56.240 --> 0:00:59.800 as you know, has done with Brad katsu Yama. He 0:01:00.080 --> 0:01:03.800 is the co founder and CEO of an exchange that 0:01:03.920 --> 0:01:07.440 I think we've all heard of. It's called I e X. Uh. 0:01:07.480 --> 0:01:12.280 You might remember it from such movies as Michael Lewis's movies, 0:01:12.440 --> 0:01:16.360 such books as Michael Lewis's Flashboys. Right, this was the 0:01:16.480 --> 0:01:20.280 exchange because there's been all this anxiety about high frequency 0:01:20.280 --> 0:01:26.080 trading exactly. So Flashboys is about the evils of high 0:01:26.160 --> 0:01:31.399 frequency trading and how they're messing up markets. Um. There 0:01:31.400 --> 0:01:34.720 were some examples in there that some people took issue with, 0:01:34.760 --> 0:01:38.920 but basically, high frequency trading is the villain of flashboys. 0:01:38.920 --> 0:01:42.600 Certainly a lot of politicians and regulators seemed to be 0:01:42.640 --> 0:01:45.640 on board with that view. And then we had I 0:01:45.800 --> 0:01:48.840 e X that sprang forth from this guy called Brad 0:01:48.960 --> 0:01:52.880 katsu Yama, and I X was basically the antithesis of 0:01:52.960 --> 0:01:56.840 high frequency trading. They kind of install speed bumps to 0:01:57.040 --> 0:02:00.080 prevent people from doing that, and they're supposed to be 0:02:00.160 --> 0:02:02.720 a different way of trading, a better way of trading. 0:02:02.880 --> 0:02:05.760 And I mean, the book is worth reading. I don't 0:02:05.760 --> 0:02:09.480 know if you've read it, um, but what's definitely worth 0:02:09.520 --> 0:02:14.680 listening to is this interview. Great, well, this is an interview. 0:02:14.760 --> 0:02:19.920 It's associated with the November six edition of Bloomberg Market magazine, 0:02:20.760 --> 0:02:34.240 and uh, I hope everyone enjoys it. There's sort of 0:02:34.240 --> 0:02:38.079 an origin story for you were traded at RBC almost 0:02:38.080 --> 0:02:41.920 ten years ago. You noticed that there was that, you know, 0:02:41.919 --> 0:02:43.520 you try to buy a hundred thousand shares, you can 0:02:43.560 --> 0:02:46.440 only get them. You're wondering what was up. I thought 0:02:46.440 --> 0:02:49.760 it was a software problem. Eventually figured out that it 0:02:49.840 --> 0:02:51.480 was a sort of issue with the structure, with the 0:02:51.520 --> 0:02:54.560 deep structure of the stock exchanges. So you built the 0:02:54.600 --> 0:02:57.000 thing at RBC that would help your clients avoid that 0:02:57.480 --> 0:03:00.160 and get the full hundred thousand shares. Then you're like, l, 0:03:00.520 --> 0:03:02.480 we can do this more broadly, and so you built 0:03:02.480 --> 0:03:05.440 the trading venue called i X that did the same 0:03:05.480 --> 0:03:07.799 thing that you You coiled wire in a shoe box 0:03:08.000 --> 0:03:09.600 so that when people sent you an order for a 0:03:09.680 --> 0:03:12.040 hundred thousand shares and you had twenty five thousand, you'd 0:03:12.040 --> 0:03:15.280 give them the twenty five and before you told anyone 0:03:15.320 --> 0:03:18.360 else about this, you would run to the other exchanges 0:03:18.560 --> 0:03:21.120 and get the other seventy thousand that were displayed and 0:03:21.120 --> 0:03:24.160 give people the full size of their order. And that 0:03:24.280 --> 0:03:26.760 was kind of like the origin story of i X 0:03:26.800 --> 0:03:29.360 that's told in Flashboys. It's sort of a plot of Flashboys. 0:03:29.360 --> 0:03:32.360 I've seen you tell it on stage, and now that 0:03:32.360 --> 0:03:34.120 you've become a stock exchange, it occurs to me that 0:03:34.240 --> 0:03:36.960 story is not quite true anymore. Right, Like the thing 0:03:37.120 --> 0:03:39.480 that is the sort of basis of the origin story 0:03:39.680 --> 0:03:42.160 is this router that skips the speed bumper, that that 0:03:42.520 --> 0:03:45.960 allows people to get all the shares before the high 0:03:45.960 --> 0:03:48.480 prequoncent trators learn about it and can raise ahead of them, 0:03:48.560 --> 0:03:51.320 and as part of the sec process you had to 0:03:51.320 --> 0:03:53.960 take that out. So I want to hear like just 0:03:54.000 --> 0:03:55.800 kind of what what your thought presses on that was 0:03:55.840 --> 0:03:57.960 liked you miss it was ever a moment and you said, 0:03:57.960 --> 0:04:00.280 we'd rather not be in exchange than do this. Part 0:04:00.320 --> 0:04:02.960 of the story was that we realized that when we 0:04:02.960 --> 0:04:06.320 were trying to buy or sell stock across the broader 0:04:06.360 --> 0:04:09.440 market that executions, that the venues that we got to 0:04:09.560 --> 0:04:12.600 first would lead to fading of liquidity or trading ahead 0:04:12.880 --> 0:04:16.120 at other venues. And so we originally started i X 0:04:16.200 --> 0:04:19.000 under the premise that we would be this router for 0:04:19.120 --> 0:04:22.800 clients that wanted to trade through. Any broker could send 0:04:22.800 --> 0:04:24.960 a rottable order to to i X and we could 0:04:25.000 --> 0:04:27.280 get that order out to the market. And that was 0:04:27.320 --> 0:04:30.680 the original premise that we started with UM and thank goodness, 0:04:30.800 --> 0:04:34.200 kind of it evolves because we're we're only we're routing 0:04:34.760 --> 0:04:37.159 I think forty to fifty million shares a day, we're 0:04:37.160 --> 0:04:41.840 matching ten million shares of that on our own market, 0:04:42.520 --> 0:04:45.400 which means that if that was our only premise, we 0:04:45.440 --> 0:04:47.279 would be doing a very small amount of volume on 0:04:47.279 --> 0:04:49.600 I X and sending a lot of volume elsewhere. And 0:04:49.960 --> 0:04:53.560 I think the way that UM the concept evolved was 0:04:53.600 --> 0:04:57.560 to say or ask the question, well, why does why 0:04:57.640 --> 0:05:00.800 can someone get a signal from one place and get 0:05:00.800 --> 0:05:03.359 to the next UM. And it really came down to 0:05:03.480 --> 0:05:07.080 co location and this idea that UM people could pay 0:05:07.120 --> 0:05:09.839 to put their servers as close as possible to the exchanges, 0:05:10.400 --> 0:05:14.360 UM get fast information and now with microwave connectivity, etcetera, 0:05:14.480 --> 0:05:16.880 can beam orders to other markets faster than people that 0:05:16.920 --> 0:05:19.080 are traveling through cable or people that don't have the 0:05:19.120 --> 0:05:22.720 same level of sophistication or have paid for the same 0:05:22.800 --> 0:05:25.920 level of access and UM. So when we thought about it, 0:05:26.160 --> 0:05:29.359 you know, RBC as a broker could only solve a 0:05:29.480 --> 0:05:32.520 very narrow part of the problem, and the problem was 0:05:32.560 --> 0:05:35.080 broader because not only for orders that were routed, what 0:05:35.160 --> 0:05:38.240 about orders that are resting on the exchange, or what 0:05:38.279 --> 0:05:40.800 about orders that are pegged on exchanges? How are those 0:05:40.920 --> 0:05:44.400 orders treated when there is this huge kind of disparity 0:05:44.480 --> 0:05:48.440 between who knows what when, And that evolved into things 0:05:48.520 --> 0:05:52.600 such as you know, discretionary PEG and midpoint PEG and 0:05:52.800 --> 0:05:55.359 basically the evolvement of the speed bumps so UM, I 0:05:55.360 --> 0:05:58.599 think if we had stayed as focused only on the router, 0:05:59.440 --> 0:06:00.800 I don't know if I X would have made it 0:06:00.880 --> 0:06:05.080 because because the router became secondary to our operation as 0:06:05.160 --> 0:06:08.000 as a market and so you don't missed the former 0:06:08.080 --> 0:06:10.280 structure of the router. The benefit and I guess the 0:06:10.520 --> 0:06:13.520 slight change now is the fact that the router trades 0:06:13.560 --> 0:06:16.480 a little bit less on I X because the router 0:06:16.600 --> 0:06:19.240 doesn't know there are certain orders that are displayed and 0:06:19.240 --> 0:06:21.480 their certain orders that are not displayed and then not displayed. 0:06:21.520 --> 0:06:24.520 Non displayed orders aren't being broadcast to the router because 0:06:24.520 --> 0:06:26.640 that would create an unfair advantage, even though that advantage 0:06:26.640 --> 0:06:30.200 exists for certain exchanges. Today hopefully that gets addressed. But 0:06:30.640 --> 0:06:32.400 you know, from our standpoint, so it trades slightly less 0:06:32.400 --> 0:06:35.720 on A X. So I guess that's that's a small change, 0:06:35.720 --> 0:06:38.400 But the customer experience doesn't change. So I think that's 0:06:38.400 --> 0:06:40.400 that for us was most important. So can I ask 0:06:40.440 --> 0:06:42.920 you like the customer experience? So I said, the origin story, 0:06:42.960 --> 0:06:44.440 the story that you tell on stage is this thing 0:06:44.440 --> 0:06:48.000 about the kind of the routing. Um, the customers on 0:06:48.080 --> 0:06:49.760 I X, the people that you talked to who are 0:06:49.800 --> 0:06:52.320 like you know, owners who are the sort of ultimate customers. 0:06:53.080 --> 0:06:55.719 What is important to them? Like is it is it 0:06:55.800 --> 0:06:57.599 kind of this fill rate on routable orders? Like what 0:06:57.640 --> 0:06:59.640 are they kind of what do they think that is 0:06:59.680 --> 0:07:02.960 your vantage versus other exchanges? I think most important to 0:07:03.040 --> 0:07:05.400 them is they feel like we've represent their interests. I 0:07:05.400 --> 0:07:08.280 think they've they've What does that mean? It means that 0:07:08.520 --> 0:07:11.520 the market has evolved in a way where they were 0:07:11.680 --> 0:07:13.560 kind of in a position to be the last to know, 0:07:13.880 --> 0:07:17.440 I mean clients, since clients can't be members of exchanges, 0:07:17.640 --> 0:07:20.200 meaning that a broker is a member. The client has 0:07:20.200 --> 0:07:22.920 to route in order through a broker member to get 0:07:22.960 --> 0:07:25.040 the exchange they're they're kind of, you know, just by 0:07:25.040 --> 0:07:27.640 that relationship on the outside looking in. And as a 0:07:27.680 --> 0:07:29.880 result a lot of these things that evolved over the 0:07:29.960 --> 0:07:33.280 last decade um, we earned a lot of credibility when 0:07:33.320 --> 0:07:35.240 we were at RBC going out there and meeting with 0:07:35.280 --> 0:07:38.120 these customers saying here's what's really happening, here's here's an 0:07:38.160 --> 0:07:40.360 explanation for this experience you're having when you can't buy 0:07:40.440 --> 0:07:43.160 or sell what you see. That level of trust parlays 0:07:43.200 --> 0:07:45.640 into us as an exchange, saying here are the things 0:07:45.640 --> 0:07:47.240 that you should be focused on. Here are the things 0:07:47.240 --> 0:07:50.120 that we think are important. Here the ways that we're different. Um, 0:07:50.360 --> 0:07:52.520 So I think it starts first and foremost with that. 0:07:53.040 --> 0:07:55.560 So for a customer, would you say that they use 0:07:55.600 --> 0:07:59.000 I X for kind of more the the specific structural 0:07:59.120 --> 0:08:01.760 like we have d Paget partically answer this crumbling quote, 0:08:02.080 --> 0:08:03.720 or would you say that it's more a kind of 0:08:04.120 --> 0:08:06.720 general sense of These are the guys who explain stuff 0:08:06.720 --> 0:08:08.080 to us. These are the guys we trust, These are 0:08:08.120 --> 0:08:10.720 the guys who have kind of more transparency on fees 0:08:10.800 --> 0:08:13.080 or whatever. Like is it about you or is it 0:08:13.120 --> 0:08:18.040 about Deepeg? I think I think it depends. Um. You know, 0:08:18.200 --> 0:08:21.160 we work a lot with by side clients who are 0:08:21.320 --> 0:08:23.560 just as sophisticated as we are, who do a huge 0:08:23.560 --> 0:08:25.520 amount of analysis, and they actually teach us a lot 0:08:25.520 --> 0:08:28.600 about the market and so so they are very specifically 0:08:28.680 --> 0:08:31.680 using us for a particular reason. Um. Some others that 0:08:31.760 --> 0:08:35.080 let's say, haven't dove that deep into market structure turned 0:08:35.080 --> 0:08:36.440 around and said, you know what, you did the right 0:08:36.480 --> 0:08:38.800 thing for us at OURBC. You did the right thing 0:08:38.840 --> 0:08:40.680 for us as as an a t S. We trust you, 0:08:40.720 --> 0:08:44.400 we believe you, and and you have a sophisticated following. 0:08:44.679 --> 0:08:48.480 It depends. I don't think everyone's as sophisticated as um, 0:08:48.520 --> 0:08:50.520 you know, as as some of the by side shops, 0:08:50.600 --> 0:08:52.360 nor can they because they don't have the resources. But 0:08:52.400 --> 0:08:54.760 I think in general, um, you know, we have a 0:08:54.880 --> 0:08:58.439 we have a good group of of of supporters. Um. 0:08:58.559 --> 0:09:01.520 Some based on data, some based don trust. But we 0:09:01.600 --> 0:09:04.679 like the fact that we have very sophisticated supporters. I 0:09:04.760 --> 0:09:06.200 gonna tell you a little bit more about kind of 0:09:06.240 --> 0:09:09.840 like the origin story flashblay stuff, just because like you 0:09:09.880 --> 0:09:11.800 are the hero of Michael Lewis book, which is an 0:09:11.880 --> 0:09:14.880 unusual situation for for anyone in finance to find themselves 0:09:14.920 --> 0:09:17.880 on one question that I kind of asked, is Michael 0:09:17.960 --> 0:09:21.240 Lewis for for a generation on Wall Street created this 0:09:21.400 --> 0:09:25.360 um or like popularized this notion that equity traders are dopes, 0:09:25.480 --> 0:09:28.680 right like equities in Dallas became a famous insult after 0:09:28.679 --> 0:09:31.240 a Liars Poker. Um, did you ever talk about that 0:09:31.280 --> 0:09:35.439 with him? I don't think so. No. I knew that 0:09:36.280 --> 0:09:38.960 I had read that. Well. It's funny. When I first 0:09:38.960 --> 0:09:41.840 started the business, the first book I was told to 0:09:41.840 --> 0:09:43.800 read was Liars Poker, and I was I was starting 0:09:43.800 --> 0:09:46.280 on the equities trading desk, and I remember specific equities 0:09:46.280 --> 0:09:48.160 and tells. I was like, wow, okay, well you know 0:09:48.200 --> 0:09:51.120 I saw that as an opportunity. Um, but no, I don't. 0:09:51.240 --> 0:09:53.480 I don't recall us ever talking about that. Was it 0:09:53.520 --> 0:09:55.840 strange too? I mean, he is not just that, but 0:09:55.880 --> 0:09:58.800 like he's kind of created the mindset, He's created the 0:09:58.800 --> 0:10:00.400 way that a lot of Wall Street thing about Wall 0:10:00.440 --> 0:10:03.200 Street for a generation. And you were kind of telling 0:10:03.240 --> 0:10:04.960 him how Wall Street works. Was that like a strange 0:10:04.960 --> 0:10:06.960 experience to be like, no, no, Michael, you have it 0:10:07.000 --> 0:10:10.600 all wrong. Well, the the Moneyball was was a huge 0:10:10.679 --> 0:10:12.839 kind of influential book for me. I mean, starting at 0:10:12.880 --> 0:10:15.120 the role Bank of Canada back in two thousand and two, 0:10:15.559 --> 0:10:17.840 you know, we needed to find ways to to be 0:10:17.960 --> 0:10:21.160 different with you know, without the same resources as the 0:10:21.160 --> 0:10:23.440 biggest banks out there. And so I read Moneyball and 0:10:23.480 --> 0:10:25.959 that I felt like that had a pretty big influence 0:10:26.000 --> 0:10:29.960 on on the way we thought. You know. The discussion 0:10:30.000 --> 0:10:32.680 with Michael started with really helping him write a story 0:10:32.679 --> 0:10:35.880 about somebody else he he um had stumbled on the 0:10:35.920 --> 0:10:38.560 story of Sergey Alannakov, who got who got thrown in 0:10:38.600 --> 0:10:42.520 prison for taking computer code, and I went to a 0:10:42.520 --> 0:10:44.679 couple of people characters in the big short who I know, 0:10:44.840 --> 0:10:46.920 And so really the first the first few months was 0:10:46.960 --> 0:10:49.640 really just giving him background and saying he'd ask a question, 0:10:49.640 --> 0:10:51.200 what is this, and I you know, we tried our 0:10:51.240 --> 0:10:53.840 best to kind of answer it, and that evolved into 0:10:53.880 --> 0:10:56.440 him getting to understand and know our story a little 0:10:56.440 --> 0:10:59.360 bit more so in many ways, it's it's you know, 0:10:59.520 --> 0:11:01.480 we were telling him the same things that we had 0:11:01.480 --> 0:11:03.680 been talking to the by side about for a long time, 0:11:03.720 --> 0:11:06.560 and there was a decision point where we had decide 0:11:06.559 --> 0:11:08.760 whether we were going to talk about us or not. 0:11:08.840 --> 0:11:10.560 Giving him back around and writ a story about somebody 0:11:10.559 --> 0:11:12.360 else is very different than give talking to him about 0:11:12.559 --> 0:11:15.160 you and in your life and your decisions. And at 0:11:15.160 --> 0:11:17.880 the time it's it's there was a bit of a conflict. 0:11:17.880 --> 0:11:20.200 The personal side of me was a little bit more reserved, 0:11:20.440 --> 0:11:21.920 and I had to like really kind of talk it 0:11:21.960 --> 0:11:23.520 through with my wife and say, is this something that 0:11:24.040 --> 0:11:25.679 you know, we really want to do. But as the 0:11:25.679 --> 0:11:28.160 CEO of i X, which was you know, brand new, 0:11:28.200 --> 0:11:30.480 we hadn't launched, it was there's all and and really 0:11:30.520 --> 0:11:34.040 it's a it's a very complicated subject and and he's 0:11:34.040 --> 0:11:36.000 someone that can tell that in a different type of 0:11:36.040 --> 0:11:38.040 way as the CEO of I X. It was a 0:11:38.040 --> 0:11:40.960 no brainer when you sort of first started talking about 0:11:40.960 --> 0:11:43.400 I X specifically, did you think, Wow, this is a 0:11:43.400 --> 0:11:45.080 Michael Lewis story or did you think we just you know, 0:11:45.120 --> 0:11:47.480 we run some were on the stock venue like we 0:11:47.520 --> 0:11:49.400 had been told for a while that this is a 0:11:49.400 --> 0:11:51.599 Michael Lewis story. Did I Did I necessary believe that 0:11:51.679 --> 0:11:54.000 I I could be the main character one? Probably not. 0:11:54.160 --> 0:11:56.520 And it's funny because one of the things he told 0:11:56.559 --> 0:11:59.120 me kind of in the middle of his research, He's like, 0:11:59.160 --> 0:12:02.120 you're fairly bored person. It's kind of it's hard to 0:12:02.640 --> 0:12:04.440 you basically said, it's hard to make you jump off 0:12:04.440 --> 0:12:07.839 the page. So and I suggested that I asked you, 0:12:08.040 --> 0:12:10.760 could you be where you are today without Flashboys? And 0:12:10.760 --> 0:12:12.240 I kind of I wanted to the answer it sounds 0:12:12.240 --> 0:12:14.560 I mean, you seem do you think you're very lucky 0:12:14.720 --> 0:12:17.040 that that had happened. I kind of want to want 0:12:17.040 --> 0:12:18.840 to ask the opposite question, which is like, you know, 0:12:19.080 --> 0:12:21.320 there you were, you had by side clients, you had 0:12:21.360 --> 0:12:24.600 kind of a business going, and I mean, you tell me, 0:12:24.640 --> 0:12:26.960 but it seems like it would have worked without Flash Boys. 0:12:27.520 --> 0:12:30.560 At least in some commercial way. Has kind of going 0:12:30.640 --> 0:12:33.400 so big and so pop culture has that put pressures 0:12:33.400 --> 0:12:36.120 on you that make it harder as it spread you 0:12:36.160 --> 0:12:39.199 too thin or made things too controversial. Like has there 0:12:39.240 --> 0:12:41.960 been a downside of the book? There have been upsides 0:12:42.000 --> 0:12:45.400 and downsides, and but I do think the upsides far 0:12:45.440 --> 0:12:48.400 out way the downsides. You know. The upsides were the 0:12:48.480 --> 0:12:52.000 story had much greater reach than Ronan and I could 0:12:52.000 --> 0:12:55.320 have ever gotten going door to door. Um, So I 0:12:55.320 --> 0:12:58.280 think that on that front that was that was important. 0:12:58.920 --> 0:13:00.920 And it's important not not to be an a T 0:13:01.160 --> 0:13:03.240 S or like a mid sized A T S. You 0:13:03.240 --> 0:13:06.240 didn't need that, but to really kind of be in 0:13:06.320 --> 0:13:08.160 exchange and kind of try to take this to the 0:13:08.200 --> 0:13:10.400 next level. I think I think that was critically important. 0:13:10.720 --> 0:13:13.240 You know. The downside was that it upset a lot 0:13:13.240 --> 0:13:16.000 of people, and and we made the decision early on 0:13:16.720 --> 0:13:20.040 we wanted brokers to be our our members and and 0:13:20.080 --> 0:13:22.480 our customers, which was hard because the by side was 0:13:22.480 --> 0:13:25.480 our was our strongest relationships were sticking the broker in 0:13:25.559 --> 0:13:29.320 between and Flashboys upset a lot of people. So we 0:13:29.360 --> 0:13:31.880 had to try to say, listen, what we're not going 0:13:31.920 --> 0:13:34.240 to back away from what we said, But we do 0:13:34.320 --> 0:13:37.120 think there's a there's a way forward here for us 0:13:37.200 --> 0:13:39.199 all to kind of work together. And you know, it 0:13:39.480 --> 0:13:41.880 worked in some cases. In some cases, I'm sure you 0:13:41.920 --> 0:13:44.040 know some people are still upset. But if I were 0:13:44.080 --> 0:13:48.240 away the pros and cons, I'd say it's it's absolutely helped. 0:13:51.880 --> 0:13:54.040 But knowledge to work and grow your business with c 0:13:54.240 --> 0:13:58.400 i T from transportation to healthcare to manufacturing. C i 0:13:58.480 --> 0:14:02.240 T offers commercial lending, using and treasury management services for 0:14:02.320 --> 0:14:05.199 small and middle market businesses. Learn more at c i 0:14:05.280 --> 0:14:14.200 T dot com put knowledge to work. So you're now 0:14:14.600 --> 0:14:17.160 in exchange, you have been for like a month. What 0:14:17.240 --> 0:14:21.000 does it look like for you to win? Like what's 0:14:21.040 --> 0:14:22.800 the end game? And I guess like what I mean 0:14:22.840 --> 0:14:25.560 by that is like there's one model that is like 0:14:26.280 --> 0:14:29.200 there are different types of participants in the market. Some 0:14:29.280 --> 0:14:32.360 of them think that your model favors them, is good 0:14:32.360 --> 0:14:34.440 for them, and so they come to you. Others think 0:14:34.520 --> 0:14:36.920 that bats are nice here and as das model is 0:14:36.960 --> 0:14:39.240 better for them to go to them. There's a there's 0:14:39.280 --> 0:14:42.400 just sort of like a market segmentation. There's room for 0:14:42.440 --> 0:14:44.440 a bunch of different approaches and a bunch of different 0:14:44.640 --> 0:14:47.680 exchanges that kind of cater slightly to different investor types. 0:14:47.920 --> 0:14:50.680 And the other way to think about it is you 0:14:50.720 --> 0:14:52.880 need to kill everyone that you have the right model, 0:14:53.000 --> 0:14:56.040 everyone else has the wrong model. So like what's the 0:14:56.080 --> 0:14:57.480 right way to look at it? And like what what 0:14:57.720 --> 0:15:00.960 success looked like to you? So it it's hard for 0:15:01.080 --> 0:15:05.000 us to try to say a specific market share goal 0:15:05.080 --> 0:15:06.400 is what we want to do because a lot of 0:15:06.400 --> 0:15:09.880 the decisions that we make, I mean, we trade less volume. 0:15:10.600 --> 0:15:13.920 So deep peg is about preventing trades from happening. UM 0:15:14.040 --> 0:15:17.080 the speed bump deterred some type of some types of activities. 0:15:17.520 --> 0:15:20.800 Not paying rebates as an exchange is a huge differentiator, 0:15:21.160 --> 0:15:23.080 and we think it's benefit to I X and it's 0:15:23.080 --> 0:15:25.720 a benefit to to kind of the investors and brokers 0:15:25.720 --> 0:15:28.960 that we're trying to cater to UM. But not paying 0:15:28.960 --> 0:15:30.760 someone for an order to send you an order when 0:15:30.800 --> 0:15:33.080 a bunch of other exchanges are doing that, there's there's 0:15:33.120 --> 0:15:35.160 a disincentive there. I think if you're paying rebates would 0:15:35.200 --> 0:15:37.240 be a lot more of the volume. So we try 0:15:37.280 --> 0:15:40.360 not to set market share targets. UM. We try to 0:15:40.360 --> 0:15:44.080 focus mostly on is the data kind of showing our 0:15:44.120 --> 0:15:47.280 third parties, you know, are the brokers happy with their execution, 0:15:47.600 --> 0:15:50.080 and it's really kind of an education process. You know. 0:15:50.120 --> 0:15:53.760 The rebate is such a huge short term incentive. You 0:15:53.840 --> 0:15:56.400 have to have a very strong sales pitch to get 0:15:56.440 --> 0:16:00.000 someone to change their behavior to come to a market 0:16:00.040 --> 0:16:02.440 that won't pay you to come to come there. So 0:16:02.480 --> 0:16:05.520 I think for us, it's it's a longer sales cycle. 0:16:05.920 --> 0:16:07.640 You know, in many ways, if I were, if I 0:16:07.680 --> 0:16:09.600 were to really drop the hammer and say we have 0:16:09.680 --> 0:16:13.400 to get to X present by this time, people internally 0:16:13.400 --> 0:16:16.240 at I X would probably start making different decisions. And 0:16:16.280 --> 0:16:18.080 I think that that's something that we don't want to do. 0:16:18.160 --> 0:16:20.200 It's we don't have a revenue target, we don't have 0:16:20.240 --> 0:16:23.280 a market share target. We care mostly about the experience 0:16:23.280 --> 0:16:25.840 on on our market. It's interesting because you're you're sort 0:16:25.880 --> 0:16:27.960 of um, you're not choosing one or the other of 0:16:28.320 --> 0:16:31.320 what I said. On the one hand, like it sounds 0:16:31.360 --> 0:16:33.640 like you don't have any near term goal to be 0:16:34.360 --> 0:16:36.240 of the market, right do You are happy to have 0:16:36.280 --> 0:16:39.280 a ecosystem of different competitors, but then there encounter as 0:16:39.280 --> 0:16:41.720 a win when your competitors kind of moved towards your approach. 0:16:42.320 --> 0:16:44.520 You do think that you're doing at least some things 0:16:44.760 --> 0:16:46.480 the right way, and there's only one right way, and 0:16:46.520 --> 0:16:48.480 you're moving the whole market to your way. Well, it 0:16:48.560 --> 0:16:52.440 depends on whose perspective you view the right way. So 0:16:52.600 --> 0:16:55.520 they the exchanges clearly have set their trading models up 0:16:55.560 --> 0:16:58.440 to sell latency and to basically provide certain advantages for 0:16:58.440 --> 0:17:00.720 people that want to pay for them. Caters do a 0:17:00.720 --> 0:17:02.640 certain class of the market, and we're trying to do 0:17:02.720 --> 0:17:05.640 something almost the exact opposite, where we're created universal speed 0:17:05.640 --> 0:17:07.440 bump and there's one way in and one way out. 0:17:07.960 --> 0:17:12.840 Do we think we're serving the most critical player in 0:17:12.880 --> 0:17:15.159 the market. We do, because at the end of the day, 0:17:15.280 --> 0:17:17.560 the stock market was built to serve long term investors 0:17:17.600 --> 0:17:21.119 and help them invest in companies. Um. But does that 0:17:21.200 --> 0:17:23.959 mean that everyone should have to serve that one constituent. 0:17:24.480 --> 0:17:27.639 That's no, because that that's what makes for competitions. Can 0:17:27.680 --> 0:17:29.560 we talk about some of the other speed bumps? Sure? 0:17:29.880 --> 0:17:32.320 The one I think is maybe most maybe the most interesting, 0:17:32.400 --> 0:17:35.480 is the Chicago one, because you know, again I go 0:17:35.560 --> 0:17:37.520 back to the origin story of I X more than 0:17:37.560 --> 0:17:40.200 like the kind of exact present structure, which is this 0:17:40.240 --> 0:17:42.880 notion that you want to get all the volume that's 0:17:42.920 --> 0:17:45.440 listed in the market you send, you find a way 0:17:45.480 --> 0:17:47.240 to send out an order such that you get every 0:17:47.280 --> 0:17:51.320 piece of displayed liquidity. The Chicago speed bump Chicago saks change. 0:17:51.840 --> 0:17:55.720 What they've done is created a speed bump that applies 0:17:55.800 --> 0:18:00.840 only to incoming liquidity taking orders, which means effect that 0:18:01.600 --> 0:18:04.760 market makers on Chicago have a last look. They can 0:18:04.800 --> 0:18:08.240 put up an order, and when a new order comes 0:18:08.240 --> 0:18:12.160 in to take their liquidity, they get a few microseconds 0:18:12.240 --> 0:18:14.960 or whatever to decide whether or not they want to 0:18:15.000 --> 0:18:17.399 pull their order. So it's sort of the opposite of 0:18:17.400 --> 0:18:19.520 the story that is told in flash plays. What do 0:18:19.520 --> 0:18:22.160 you think about that? So, so it's what they're trying 0:18:22.200 --> 0:18:24.439 to do is actually very similar to what Nasdac I 0:18:24.440 --> 0:18:27.760 think proposed a few years ago. Um and I think 0:18:27.760 --> 0:18:31.080 when Nazac proposed it, it was a five millisecond um 0:18:31.160 --> 0:18:33.159 speed bump as opposed to three or fifty, which is 0:18:33.280 --> 0:18:36.920 an eternity of it, right. So, so I think it'll 0:18:36.960 --> 0:18:40.159 be interesting to see how the SEC handles it, because 0:18:40.280 --> 0:18:44.400 it's it's a it's an asymmetrical application of latency, so 0:18:44.640 --> 0:18:47.960 which which means that it slowing down certain parties and 0:18:48.000 --> 0:18:51.400 not others. I think I think we'll create a bit 0:18:51.400 --> 0:18:53.959 of a challenge. I think that one thing that happens 0:18:54.920 --> 0:18:59.080 is that people customers come to exchanges and say, hey, 0:18:59.119 --> 0:19:01.040 this would be a good idea. And I think like 0:19:01.080 --> 0:19:03.800 a year or two ago, you'd read news articles about 0:19:03.880 --> 0:19:08.159 that dialogue and there would be a certain level of 0:19:08.200 --> 0:19:11.160 suspicion because the customers coming to the exchanges would generally 0:19:11.200 --> 0:19:13.679 be high frequency traders, and everyone would say there's a 0:19:13.720 --> 0:19:16.119 new order type on an exchange. That probably means that 0:19:16.119 --> 0:19:20.359 it's a high frequency trader coming to game the exchange 0:19:20.440 --> 0:19:23.320 or to pick off other people. One do you think 0:19:23.320 --> 0:19:25.320 that's true? And too as your as your kind of 0:19:25.359 --> 0:19:27.359 view on that change, as you've run an A T 0:19:27.560 --> 0:19:29.480 S and then an exchange and had customers come to 0:19:29.520 --> 0:19:32.200 you and talk to you about new order types, and yeah, 0:19:32.280 --> 0:19:36.120 I think it's true that customers are trying to get 0:19:36.160 --> 0:19:38.720 markets to do things that would help them. I think 0:19:38.760 --> 0:19:41.960 that's natural. There's a certain level of influence that customers 0:19:42.000 --> 0:19:43.359 are going to have in the bigger the customer, the 0:19:43.359 --> 0:19:45.800 greater the influence. I think that that's perfect. You know 0:19:45.840 --> 0:19:50.280 that that's that It probably exists in most business cultures. Um, 0:19:50.359 --> 0:19:52.639