U.S. Markets

Former Instinet CEO tapped to head new Wall Street-backed exchange

NEW YORK (Reuters) - Jonathan Kellner, former chief executive officer of brokerage Instinet, was on Wednesday named CEO of the Members Exchange, a new low-cost electronic bourse being built by a group of financial heavyweights to challenge the New York Stock Exchange and Nasdaq.

Kellner is the first publicly announced employee of the would-be exchange, known as MEMX, which is backed by Bank of America Merrill Lynch, Charles Schwab Corp, Citadel Securities, E*TRADE Financial Corp, Fidelity Investments, Morgan Stanley, TD Ameritrade, UBS, and Virtu Financial.

The consortium said in January it was forming MEMX to reduce fixed costs for its members and to increase transparency around how those costs are set.

“The launching of MEMX, with the backing of a diverse and large cross-section of leading market players, is a transformative development that will drive a more competitive equity trading environment,” Kellner said in a statement.

Brokers have long complained about what they say are unjustifiably high fees for essential data on stock trades charged by the big three U.S. exchange groups, which control 12 of the 13 U.S. stock exchanges. The incumbents are Intercontinental Exchange Inc, which owns the New York Stock Exchange, Nasdaq Inc and Cboe Global Markets Inc. IEX Group runs the only independent U.S. stock exchange and does not charge for market data.

MEMX is expected to be up and running late this year or in early 2020, subject to regulatory approval.

Kellner, an industry veteran, was tapped by cryptocurrency exchange Coinbase in October to build out the firm’s institutional crypto-trading offerings. But in January, Coinbase said it had pulled the plug on that effort and that Kellner would not be joining after all.

Kellner spent more than 11 years at Instinet and previously held key positions at Schwab and Morgan Stanley. Instinet was a part of Reuters from 1987 until its 2001 initial public offering. It is now owned by Nomura Group.

Reporting by John McCrank; Editing by Nick Zieminski