Week InReview: February 22, 2019

Speed bumps.

"Exchange giant Intercontinental Exchange Inc., known as ICE, quietly unveiled a plan earlier this month to impose a three-millisecond 'speed bump' - or brief delay - on some trades in gold and silver futures....

"Under the plan, the three-millisecond delay would apply to incoming orders seeking to hit unexecuted buy or sell orders already posted on ICE. Traders posting new orders to be displayed on the exchange wouldn't be affected.

"Such a design would benefit market makers, the firms that facilitate trading by continuously quoting prices for stocks or futures. Market makers would be able to cancel or adjust their quotes without having to wait three milliseconds.

"The losers from ICE's plan would be high-speed trading firms that 'pick off' slightly out-of-date quotes posted by slower-moving market makers - in other words, buying just as the price is about to tick up or selling just before the price drops."

- The Wall Street Journal

Read entire Week InReview: February 22, 2019