It doesn’t matter if a trading venue has 99% market share of a stock if you don’t have an interest in buying or selling that symbol. It’s no secret that most investors don’t have equal interest in trading every stock listed in the U.S.
So how do exchanges stack up for the stocks that are most important?
Traditional Investor Interest: S&P 500 & Russell 2000 Index Constituents
In Q2 2022, IEX Exchange had at least 5% intraday market share in more than 75% of S&P 500 names or 394 symbols. That’s more than every other exchange aside from Nasdaq and slightly higher than NYSE. For the broader Russell 2000 Index, the numbers look similar, with IEX having 5% market share in 74% of the R2K, only exceeded by Nasdaq.
Source: NYSE TAQ, Q2 2022. The chart does not include LTSE, which does not affect the analysis or conclusions drawn.
And looking further down the chart, IEX had 7% intraday market share in more symbols in both the S&P 500 and R2K than every exchange aside from the primary listing exchanges, Nasdaq and NYSE.
Why is this?
1) Constituents: IEX was initially staked and owned by the buyside and has continued to prioritize the interests of institutional investors, who are more likely to trade in these names at these times because they are trading on fundamentals. That natural interest comes together on IEX, increasing the market share in these names.
2) Pricing: Rebates, which are applied per-share, are less of an incentive in higher-priced names, because they make up a smaller percentage of the overall price of the security – and when urgency is higher, the rebate means less. Recently, the average price of S&P 500 names was over $200, and in general, higher-priced names are more represented in the S&P 500. These higher prices contribute to a higher market share on IEX, which does not pay rebates.
3) Quality: We believe that many components of the S&P 500, and especially the Russell 2000, index are “harder to trade” names. They can be less liquid and/or have wider spreads. In these circumstances, it’s even more imperative to execute the order at a venue that prioritizes performance, whether that means a stable midpoint or Signal protection of displayed orders.
This bears out in the data. Within the S&P 500 symbols, IEX has materially higher intraday market share in the less liquid, harder to trade S&P 500 stocks. In fact, if you take the bottom half of the S&P 500 symbols by average daily volume, IEX has at least 5% market share in virtually all (99%) of the symbols, with market share trending closer to 10% in the least liquid symbols. This suggests that in these harder to trade names, investors are gravitating to IEX and the protections designed into our exchange.
Source: NYSE TAQ, Q2 2022
Adjusting the Mental Model
Institutional brokers and dealers often come to IEX Exchange for the technology that’s designed to address adverse selection. But they keep coming back because of the execution quality and the deep pool of stable liquidity they find here, particularly in S&P 500 and Russell 2000 names.
If you would like additional data on IEX Exchange’s market share and trading dynamics in a particular subset of stocks or would like instructions on how to monitor IEX market share in your specific names on Bloomberg, please reach out to me or your IEX contact.
 Data for S&P 500 and Russell 2000 is intraday ex-auction.