Nasdaq said there would be lawsuits. Others said it would create market chaos. Yet it happened—the Securities and Exchange Commission approved IEX’s proposal to become a public stock exchange.

And it wasn’t an ordinary proposal. IEX, also known as the Investors Exchange, has been the centerpiece of a raging debate on Wall Street—a debate involving the major exchanges and their dependence on high frequency trading.

The controversy intensified after the 2014 release of Michael Lewis’s book Flash Boys, which profiled IEX and depicted a trading world of perverse incentives: hundreds of order types, complex pricing structures, and excessive co-location payments. The public exchanges created a system of tangled webs in order to charge high-speed firms bigger fees to travel straight through, disadvantaging other investors without the means or connections. Meanwhile, high-frequency trading firms had entered an arms race for speed—a race to arbitrage market prices. But to what end?

The IEX debate

IEX created a seemingly simple antidote to the expanding complexity: Slow everything down. Slow all incoming and outgoing orders with a speedbump of 350 microseconds. This delay would be smaller than any human would notice—faster than the blink of an eye—but large enough that IEX could update its order book before high-speed firms could trade on IEX in reaction to price changes elsewhere. The speed bump also means that there is no information leakage from IEX when users send orders to other venues.

But this delay creates more unnecessary complexity, critics claim. Public exchanges are required to route customer orders to the venue with the best prices. With a speedbump on IEX—and possibly other exchanges if they follow suit—it would be impossible to know what prices truly are.

“The slower and more problematic the data, the wider firms will need to price their trades, as speedbumps, by definition, obfuscate data, slow orders down and reduce the market’s determinism,” wrote Larry Tabb, CEO of the Tabb Group, in a recent letter.

However, the markets are already complex and prices aren’t what they seem, say IEX supporters. With trading venues sprinkled along the New Jersey Turnpike and exchanges that charge millions of dollars to shave off a few microseconds in connectivity, a 350 microsecond speedbump is well within the range of complexity that already exists.

“The markets are already incredibly complex and made that way by the exchanges,” says Brad Katsuyama, CEO of IEX. “You have many different kinds of participants coming through multiple layers of access and speed, depending on how much you pay, trading with dozens of order types on multiple exchanges. New York [Stock Exchange] owns three exchanges. Nasdaq owns three. Bats owns four.”