Competition is a linchpin of successful free market economies. It drives innovation, promotes efficient use of resources, and increases choice for consumers. It is no less critical to the success of our equity capital markets. But trends of the past decade have seen a sharp increase in costs to trade on exchanges, a sharp decrease in the number of exchange broker members, and a steady erosion in the ability of smaller or new firms to compete for business.

One year ago this month, IEX Exchange launched "D-Limit," a new order type that was designed to do something that hadn't been done in many years: make the quality of displayed trading better.

In this post, we use five months of D-Limit data (comparing May-September 2020 to October 2020-February 2021) to show how those expectations have come to life in terms of both IEX Exchange's trading quality and the dynamics of the broader market. We also show how the concerns raised during the approval process have not materialized in the data.

IEX Exchange has long been known for its rich midpoint liquidity. However, over the past year, much of the attention on IEX has focused on D-Limit and its impact on the growth of IEX's displayed book. That may lead some to ask whether IEX has moved away from its focus on the midpoint. The answer is -- absolutely not!

Competition is a linchpin of successful free market economies. It drives innovation, promotes efficient use of resources, and increases choice for consumers. It is no less critical to the success of our equity capital markets. But trends of the past decade have seen a sharp increase in costs to trade on exchanges, a sharp decrease in the number of exchange broker members, and a steady erosion in the ability of smaller or new firms to compete for business.