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MARKETS

NYSE electronic exchange gets approval for 350-microsecond speed bump

speed bump sign

The New York Stock Exchange's proposal to create a 350-microsecond delay on its NYSE MKT electronic exchange was approved by the SEC.

The trading speed bump was approved in an order issued late Tuesday by the Securities and Exchange Commission. Following the approval, NYSE MKT will be renamed NYSE American.

The exchange will impose a 350-microsecond delay upon order entry, proprietary data and outbound routing. The delay, also known as a speed bump, is intended to bar high-frequency traders from using predatory techniques to read the market in advance of trades.

The agency in March delayed a decision on the proposal because of opposition from several trading organizations including IEX Group, which uses a similar-duration speed bump in its electronic venue that was approved as a U.S.-registered exchange by the SEC last June.

In the SEC order, NYSE said its delay mechanism is based in part on the IEX model and intends "to create a competitive trading model" to IEX. The SEC agreed with the need to provide such a competitive model, according to the order.

In to comment letter opposing the NYSE proposal, IEX pointed to NYSE's opposition to its use of a speed bump and its entry as a registered exchange.