A new venture backed by Morgan Stanley and UBS is seeking to become a low-cost alternative to the New York Stock Exchange and Nasdaq

Reuters
  • Members Exchange filed an application with the SEC to become the nation’s 15th stock exchange.
  • The new venture is backed by major financial players including Morgan Stanley and UBS, and aims to compete with the New York Stock Exchange and Nasdaq by cutting fees for traders.
  • MEMX is eyeing a mid-2020 launch, and could offer early traders rebates to kick-start activity on the exchange.
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A new project backed by major financial sector players applied for regulatory approval to compete with legacy stock exchanges including the New York Stock Exchange and Nasdaq.

The Securities and Exchange Commission published Members Exchange’s application Thursday. The venture, also known as MEMX, was announced in January and looks to slash the lofty connectivity and data fees associated with major exchanges.

MEMX could launch as early as mid-2020 and become the country’s 15th stock exchange if it wins approval from the SEC.

The exchange’s investors include:

The nine investing companies would each own part of the exchange, straying from popular exchanges’ for-profit models. MEMX’s name calls back to stock exchanges of the past, non-profit organisations owned by investing “members.”

The venture raised $US70 million in its first funding round, the Wall Street Journal reported in January.

The new exchange could offer traders rebates to kick-start activity on its platform and entice others to join, according to WSJ. Yet lower fees and trading rebates don’t guarantee the venture will grow popular among investors in the slow-moving exchange landscape.

Legacy exchanges – NYSE-parent Intercontinental Exchange, Nasdaq, and Cboe Global Markets – collectively own twelve stock exchanges between them.

The application filing arrives weeks after major brokerage firms including Fidelity, E*Trade, and TD Ameritrade slashed commission fees for traders. A lower-fee exchange could help the firms maintain their margins without their past levels of fee income.


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