IEX Group, which rose to prominence with its bid to shake up stock trading in the United States, now aims to do the same in the more than US$5 trillion-a-year gold market with a new exchange being created by its spinoff TradeWind Markets, a board member of the new venture said on Tuesday.
The protagonists of Michael Lewis’s book, Flash Boys: A Wall Street Revolt, are planning a gold exchange that would use elements of blockchain technology to improve transparency and the clearing and settling of trades, said Matt Harris, a managing director at Bain Capital Ventures. Bain has an investment in IEX.
Blockchain is a tamper-proof shared ledger that can automatically process and settle transactions using computer algorithms.
TradeWind Markets began as an internal project of IEX and was spun off as a separate firm earlier this year. In June, the startup raised US$9 million, according to a regulatory filing with the US Securities and Exchange Commission. A person familiar with the operation who asked not to be identified because the plans are not public, said the funding came from IEX and Sprott Inc, a Canada-based investment firm that manages physical bullion funds.
A lack of transparency is one of the problems that makes the gold market ripe for change, said Harris, who is on TradeWind’s board.
