[hsk]

I haven't read the documentation, but I can respond to your questions given what you quoted.

1) It seems that way. Presumably, they will require affiliates to follow stricter rules. Even so, you would expect that these affiliates would try their hardest to take advantage of their speed advantage.

2) Pegged orders are essentially orders that the exchange manages for you. For example, if you peg an order at the inside bid, your order will follow the market as it moves around. Essentially, these orders will react with close to zero latency since the exchange itself is modifying them. It's unclear how these orders will be used to game the market, since their logic is so simple and predefined by the exchange.

In terms of time frame, it's just the evolution of technology. For example, processors are clocked in nanoseconds. When your limiting reagent is how quickly you can update based on changes in the world, you need lower latencies. That's one of the aspects of the system that IEX tries to solve, by adding a giant delay to everyone's orders, so that the jitter swallows any small advantage.

One of the concerns of changing the rules, however, is that once smart people start using the system, they will eventually find some new way to game it, landing us not far from where we started.