Why would a stock exchange add a speed bump?
On a stock exchange, a tiny delay can change whether an order meets an old quote or an updated one. IEX’s 2021 explanation shows its speed bump giving incoming market data time to update certain resting orders before another order reaches them. That design intention is distinct from proving that every trade is fair.
Questions you could explore
- Which message needs to arrive first for the protection to work?
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- IEX Exchange, March 2021Breaking Down M-Peg and D-Peg
The exchange’s own worked example makes the ordering of an incoming trade and a quote update visible.
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