‘Flash Boys’ protagonists aiming new exchange at gold

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.