NEW YORK, Oct 31 (Reuters) - The Members Exchange (MEMX), a new would-be bourse backed by major Wall Street firms, that aims to take on the New York Stock Exchange and Nasdaq Inc by way of lower fees, has filed its application with regulators and aims to launch by mid-2020.
If the application, which was published by the U.S. Securities and Exchange Commission on Thursday, is approved, MEMX would become the 15th U.S. stock exchange, following the yet-to-be-launched Long Term Stock Exchange, which was granted regulatory status in May.
“MEMX was formed as a result of industry demand for competition, meaningful technical innovation, and increased operational transparency,” MEMX Chief Executive Officer Jonathan Kellner said in a blog post. “We believe that execution on this charter will deliver needed improvement, catalyze change, and drive better outcomes for the investing public.”
Brokers and traders have complained for years about what they say are unjustifiably high fees charged by most stock exchanges for market data and connectivity.
When MEMX was first announced in January, it pushed down the share prices of Nasdaq and NYSE parent Intercontinental Exchange Inc.
The institutions that fund and control MEMX are some of the incumbent exchanges’ biggest customers, including Bank of America Corp, UBS, Virtu Financial, Morgan Stanley, Fidelity and Citadel Securities.
Online retail brokers Charles Schwab Corp, E*Trade Financial Corp and TD Ameritrade Holdings Corp are also founding members. All three have in recent weeks slashed their trading commissions to zero, pressuring profit margins, and adding appeal to a low-cost bourse.
Around a decade ago, a group of banks backed a low-cost exchange called BATS. Another group of industry heavyweights launched an exchange called Direct Edge with a similar goal of slashing trading costs. The two exchanges quickly gained market share, later merged and are now owned by Cboe Global Markets .
Last year, the SEC asked stock exchanges to do a better job justifying their fees for public market data. More recently the regulator began temporarily suspending exchange fee filings.
“The exchanges actually can’t even lower prices, and the exchanges can’t really offer new products or bundles or do any other actions ... we’re just looking at a market where it’s likely frozen,” ICE CEO Jeff Sprecher said on a post earnings call with analysts on Thursday.
MEMX said it would offer a less expensive model; fewer, less complex order types; and a basic market data feed. (Reporting by John McCrank; editing by Diane Craft)