New challenge to NYSE and Nasdaq from major names

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  • Nine-company strong collaboration to launch new exchange
  • Major Wall Street names involved
  • Members Exchange (MEMX) will challenge NYSE and Nasdaq

Major Wall Street players including Morgan Stanley, Citadel Securities LLC, Fidelity Investments and more are looking to launch a low-cost alternative stock exchange.

The challenge to the New York Stock Exchange and Nasdaq comes after years of complaints by brokers and traders regarding the high fees that are charged by the big U.S. stock exchanges.

The announcement of the new exchange caused NYSE and Nasdaq parent company share prices to dip on Monday. The New York Stock Exchange is owned by Intercontinental Exchange Inc, while Nasdaq is run by Nasdaq Inc.

Fitch Ratings’ Nathan Flanders said: “The announcement is the latest salvo in the ongoing fee battle between exchanges and other market participants, and one which should be taken seriously at least from the perspective of the potential earnings pressure on existing exchanges.”

The companies behind the new exchange, which will be known as Members Exchange or MEMX, issued a joint statement on Monday in which they stated that their aims were to increase competition, reduce fixed costs and improve transparency. They claim that this will simplify equity trading in the U.S. Nine institutions will fund and control the new venture.

According to the statement, MEMX will soon file an application with the SEC that will seek approval for it to operate as a national securities exchange.

Last year, the SEC asked stock exchanges to justify their fees for public market data in an improved way. For the first time, the SEC also repealed a pair of data price changes for public feeds for listed securities on the Nasdaq and New York Stock Exchange.

The World Federation of Exchanges (WFE) commented: “The price at which information is licensed is accordingly a commercial matter for each individual consumer and exchange. The WFE stands ready to assist any regulators who are concerned about the role and nature of market data.”

Brian Ducey

Brian graduated from Chaminade High School and the University Of Vermont Kalkin School Of Business with a concentration in Finance. He began his career with Knight Capital Markets, working his way to market maker. Brian later expanded his market repertoire, working with various sell-side research brokerage firms, such as Sidoti & Co., and William O’Neill & Co., as an Account Executive. With over 20 years-experience in the financial industry, Brian has built a unique perspective into “market intelligence” understanding an ability to read the tape and apply second level thinking in a fast paced environment. Brian also carried several market licenses, including the series 7, 24, 55, 65, and 63 licenses as well as previously passing The Connecticut Life and Health Insurance Exam