At mutual fund giant Capital Group, investment managers study stocks, looking to buy when they’re underpriced and sell when they’re overpriced. That’s how the downtown L.A. firm has made healthy returns for its millions of investors since the 1930s.
But over the last few years, Capital Group has been looking toward something else to help boost its returns: a new stock exchange founded by a group of Wall Street evangelists, lauded in a bestselling book and powered by a spool of 38 miles of fiber-optic cable tucked away in a New Jersey data center.
That new exchange, the Investors Exchange or IEX, the subject of Michael Lewis’ 2014 book ‘Flash Boys: A Wall Street Revolt,’ was founded on the premise that ordinary investors – particularly the middle-class ones whose money is managed by big firms like Capital Group – need protection from high-speed trading firms that manipulate the market.
After a nearly yearlong struggle for approval from the Securities and Exchange Commission, IEX today becomes a public stock exchange, like the New York Stock Exchange and NASDAQ, marking a victory for both the upstart exchange’s founders and Capital Group.
This post was published at Los Angeles Times
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