every exchange takes some amount of time to match orders. IEX is no different. Let me ask you this way. Why would you expect IEX delay to prevent HFT from succeeding ?
Edit: http://blogs.wsj.com/moneybeat/2014/08/11/debate-over-high-f... Seems like there is some debate. IEX claims 17.7% which is still higher than I expected.
So the 17.7% of HFT counterparties squares roughly with 30%+ HFT trades.
http://www.amazon.com/Introduction-High-Frequency-Finance-Ra...
If a participant places a large buy order into the IEX, this is going to affect the price of that asset, both at the IEX (obviously) and anywhere else it is listed, along with any correlated assets.
Now, the original participant will have bought its shares at the price it wanted at the IEX and be happy about it. However, market makers at other exchanges will not be aware of this upward price shock just yet. They will be blindly quoting sell offers at a price that had just been bought in bulk at the IEX. Whoever can receive the information out of the IEX 'magic shoebox' first and shoot that information over to the other exchanges will be able to make a profit. You can see that it doesn't matter how long the IEX delay is.
The original buyer will be the first to know of course, but they are unlikely to want to take on the risk of all available shares at that price at all exchanges. Thus, there will likely be some left for HFT to take.
(1) A person decides to cross the spread on IEX first -- in this case, their order will be delayed by 350us (or whatever the shoebox delays), and no one in the world sees the result of their trade until the public data feed updates, in which case all participants are reacting off the same feed, same as any other US equity exchange.
(2) A person hits another exchange first, in which case HFT races to cancel their orders on IEX or cross the spread against another firm's orders on IEX -- yes, their action is delayed by 350us, but so is every other person, so you're otherwise racing to get into the message queue at IEX, and the artificial shoebox delay is irrelevant, since all market participants are equally delayed by it.
So while IEX's shoebox delays the latency on the result of an action, it doesn't make an appreciable difference in the typical HFT strategy. The primary difference is in (1), there is a higher chance that an unsophisticated large block trader (because a sophisticated one will have already set up the necessary delays to hit all exchanges simultaneously) will be able to hit market makers on both IEX and other exchanges before anyone has the time to react, thus being able to take large advantage of their own proprietary knowledge (their own order) some percentage of times more often. The only thing this results in a decrease in liquidity on IEX, but seeing as they're a dark pool/minor player anyways, the difference is negligible.
If this is not true, I don't see why anyone would care about IEX at all, and why they would trade on it.
they offer lower fees than other exchanges - standard practice to steal away business from competitors. Traders will trade anywhere where there is liquidity.