'Flash Boys' hero Katsuyama: Some HFT adds value

Brad Katsuyama, the hero of the bestseller "Flash Boys," is progressing on his goal to introduce the fourth-largest U.S. stock exchange by the end of this year.

And though Katsuyama has long been critical of high-frequency traders, his platform, IEX, will allow those same traders to operate.

"I think that some high-frequency traders provide a value to the market if you're trading an ETF against the underlying stocks, that's an arbitrage that will exist until the end of time," he said on CNBC's "Squawk on the Street." "We built a market at IEX that does not sell certain types of technology advantages to high-frequency traders, and as a result, the high-frequency traders that didn't rely on buying those advantages trade on IEX."

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Katsuyama hopes to distinguish his exchange from others by not paying rebates for orders they receive.

"Every single exchange that's out there pays a rebate," he said. "Paying someone to send you an order, I think, creates a pretty significant conflict. So when we started IEX, we started on the premise of, first of all, not wanting to create these conflicts."

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As far as whether or not enough has been done to regulate the market since the "flash crash" sent the Dow down nearly a thousand points five years ago, Katsuyama thinks there is a ways to go.

"I think the market is safer, in a way," he said. "Can another flash crash occur? I think it's possible."