Wednesday, January 9, 2019

Big: Wall St. Moves on Exchange Fees with Members Exchange

In a nod to the past when Exchanges were owned by the members who traded on them, a consortium of Wall St. firms have announced plans for a low cost members exchange to challenge the equity market oligopoly in U.S. equities: 

Named MEMX, the exchange will be controlled by the nine banks, brokerages and high-frequency trading firms funding it, according to a news release.

The founding members are Bank of America Merrill Lynch, Fidelity Investments, Morgan Stanley, UBS, Charles Schwab, TD Ameritrade, Virtu Financial, E*TRADE, and Citadel Securities.

Wall St. has been whingeing over market data fees for some time, of course, a battle most recently (October 2018) highlighted by the SEC’s recent decision to overturn previous fee approvals for NYSE and Nasdaq, and to institute new procedures for how exchanges should file proposals for fee-liable data services.

This will take a while to play out – wouldn’t launch until 2020 at the earliest, and attracting liquidity will be a significant challenge, but this might help put some fees pressure on the 3 firms – ICE, NASD and CBOE – that dominate us equities trading.

Press Round-up

WSJ: Wall Street Firms Plan New Exchange to Challenge NYSE, Nasdaq
Traders: Members Exchange Set to Open But is it Needed?
Bloomberg: Traders Want Their Own Exchange Too
Business Insider: Big Wall Street names are teaming up to launch a stock exchange

- Kevan Huston

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