Upstart trading venue IEX Group said on Wednesday it has raised $75 million from a wide range of investors in a recent round of financing to help fund its efforts to become a registered U.S. stock exchange and to explore other opportunities.
IEX has operated since October as an alternative trading system, which is like a stock exchange, but cannot offer corporate listings and generally has less regulatory burdens.
The New York-based company aims to become a stock exchange and has grown quickly since being featured in author Michael Lewis’ book “Flash Boys: A Wall Street Revolt,” as a place for brokers to trade stocks without worrying about being “front-run” by other traders with faster technology.
“Our intention from day one was to challenge the status quo by building a market that prioritizes the needs of traditional investors and issuer companies,” said IEX Chief Executive Brad Katsuyama. “We are encouraged by our recent growth, which has been driven by both investors and their brokers. This additional capital enables us to build and operate a world-class stock exchange.”
IEX only accepts funding from so called “buy-side” firms – institutional investors and fund companies, as well as individuals and private equity. The company said its latest round of financing was led by boutique venture capital firm Spark Capital, and included Bain Capital Ventures, MassMutual Ventures, which is the venture capital arm of Massachusetts Mutual Life Insurance Company, and investment manager Franklin Resources.
As part of the financing deal, Alex Finkelstein, a general partner at Spark, which has invested in firms like Twitter and Wayfair, will join IEX’s board of directors, the company said.
Other participants included private investment firms Cleveland Capital Management and TDF Ventures, as individual investors Jim Clark, who cofounded computer services company Netscape, and Steve Wynn, head of casino developer and operator Wynn Resorts.
Investors in past rounds of IEX financing have included The Capital Group, Brandes Investment Partners, Greenlight Capital, Senator Investment Group, Pershing Square Capital, Maverick Capital, Scoggin Capital Management, Belfer Management, Kistler Associates and Third Point Partners.
In June, IEX hired John Ramsay, formerly the acting director of the Securities and Exchange Commission’s Division of Trading and Markets, to help pursue registration as a national securities exchange. If it is successful, IEX will compete against 11 other stock exchanges, including those run by Nasdaq OMX Group, BATS Global Markets, and Intercontinental Exchange Inc.
(Reporting by John McCrank in New York; Editing by Bernard Orr)
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