Document Type

Honors Thesis


Finance, Financial Economics


Stephen Jurich

Committee Members

Travis Blackmer, Ronald Nadeau, Ronald Roope, Stefano Tijerina

Graduation Year

May 2021

Publication Date

Spring 5-2021


Over the past several decades, the secondary market system has evolved into a more complex and fragmented system than it once was. The Investor’s Exchange (IEX) emerged in 2014 in rebellion of purportedly unethical High-Frequency Trading (HFT) behaviors in the markets. Using a novel, proprietary model for trade matching along with providing other services, the IEX has become a respectable player in the market system that prides itself on transparency and fairness. This paper explores the role that IEX has played in market fragmentation since its inception using empirical and historical analysis. The empirical analysis focuses primarily on a recent two-year time period spanning from August 13th, 2018 through August 13th, 2020. Using difference in means tests this paper makes comparisons between the IEX and NYSE American, the two most reputable “speed bump” models. Additionally, using ordinary least-squares regressions this paper does an extensive analysis of predictors of volume and market share. In-depth review of existing literature offers further insight about the IEX and its relationship to trends in market microstructure. I find that the IEX has been effective in deterring HFT behavior. This research supports the theory of a single market with multiple entry points described by O’Hara & Ye (2011) by highlighting how the IEX has become its own unique entry point for a well-connected market system.