IEX became famous in Michael Lewis' 2014 book "Flash Boys: A Wall Street Revolt." The IEX is going to be the only exchange in the US with a so-called speed bump - a 350 millionths-of-a-second delay in all incoming and outgoing orders.
IEX says that delay is useful as it protects investors from high-frequency traders who can pick up on trading signals and use their faster technology to electronically front-run slower investors.
The speed bump was approved by the SEC under what it called an interpretation of Regulation NMS, for National Market System, which disallowed intentional delays of price displays.
Despite that regulation, the agency said it had determined that "a small delay will not prevent investors from accessing stock prices in a fair and efficient manner."
"We are grateful and humbled by the support we've received from the investor community, without it, we may have faced a different result," said Brad Katsuyama, co-founder and chief executive of IEX.
"This is a milestone for all of those who have supported IEX and we look forward to becoming a stock exchange, which will provide us the opportunity to have an even greater impact on the markets."
The SEC also agreed to consider delays of less that one millisecond at a "de minimis" level. It will now conduct a study within two years to determine the effect of intentional delays on the quality of market, including asset pricing.
It is learned that Chair Mary Jo White, Commissioner Kara M. Stein and Commissioner Michael S. Piwowar voted in favor of the application.