This is very close to the blog post I would write if I were going to write a critic of Flash Boys. I'd add the following:

IEXT has a few main selling points. 1 transparency, 2 simplicity, 3 looking out for "investors". The problem is that they aren't any of those things and it is obvious from a simple reading of their technical documents.

First transparency. Their marketing pitch is that as opposed to other dark pools, they are transparent about what is happening on their markets. Yet the first thing they say in their technical documents is "IEX will commence operation as a fully NON- ---DISPLAYED venue." What this means is that their order books is not available for outside audit. They are meeting the lowest hurdle to regulatory compliance by providing best bid/offer and no more. If you think that is ok, let me ask you. If I told you that there was 1 buyer willing to buy at 10.00 and 1 seller willing to sell at 11.00 what would you think the "real" price for that instrument is? What if I told you that there was 1 buyer at 10, 1 seller at 11, 100 million buyers at 9.99 and zero sellers at 11.01? If you think those markets should be priced the same way, IETX is for you. If not, realize that IETX would tell you those markets are the same thing.

As far as simplicity, Flash Boys and the IETX marketing materials make a big deal about all of the order types that provide advantages to market makers, yet they remain silent on those order types that are explicitly there for large institutional investors. Lewis rages against ALO orders yet doesn't even mention iceberg orders which the sole point of is to hide the amount of shares a participant wants to sell. Then he extols the virtue of IETX for only offering 3 order types (which has since risen to 4), yet doesn't explain that in those 3 order types are many variants that only benefit large investors. IETX has literally removed all of the order types that allow market makers to do their jobs, while leaving all the order types that allow large institutions to hide their order flow. One of the most controversial order types out there is an ISO order, which is literally a legislative exemption for large block buyers that allows them to circumvent regulation about the national ticker. IETX offers those sorts of orders, but you will be happy to know they don't support "esoteric" orders.

The most egregious problem in Flash Boys is Lewis' use of the term "investor". He uses this term to make his readers think he is talking about them, after all anyone who is not an HFT, who is long holding a stock is an "investor". Yet the practices he describes as predatory, are really simple market dynamics. If an "investor" wants to buy or sell an extremely large block of shares, that should move the market price. No other marketplace would think differently. If McDonalds buys all the cows in America, beef should cost more. We all understand that. But the giant hedge funds of the world hate this. They want to use their privileged information of demand to make money, and not change the prices of the things in demand. They used to be able to accomplish this because the markets were dumb. They aren't anymore. Price discovery is an extremely efficient (and cut throat business). IETX does its gosh darn Canadian best to undercut that. Literally every rule they have is an attempt to hide demand and undermine price discovery. It's possible that bad pricing is an overall societal good. I'm not smart enough to weigh in on that. I will ask, if they are looking out for the little guy though, why do they have a special order type that insures that big investors don't trade with them (min. qty orders)? They will respond that it is protection against predatory HFT. I ask you though, if the huge hedge funds of the world don't want to trade in small volume with the rest of the informed markets, at the lowest prices conceivable, who do they want to trade with? The answer is large dumb funds, who don't care about trading at inflated costs. I.E. pension funds.