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MEMX:
The road ahead
Following news of major US players seeking to establish a member-owned
equities exchange, industry experts agree the move could prove to be positive
for markets but warn the road ahead for MEMX may be a difficult one.
W
all Street kicked off
2019 with a bang, as
news of major US
players banding together to take
on incumbent exchange operators
with a potentially game-changing
move.
Nine institutions encompassing
retail brokers, banks, global market
makers and an asset manager have
agreed to launch a new equities
exchange, known as Members Ex-
change, or MEMX for short.
Details at this stage are vague, but
what we do know is that MEMX
aims to reduce the fixed costs of
trading and simplify execution in
the US equities space through basic
order types, a low-cost fee struc-
ture and the latest technology.
Some industry experts and
analysts have deliberated that the
50 // TheTrade // Spring 2019
development is hardly shocking
and more of a cyclical industry
trend. Aite Group analyst, Spencer
Mindlin, summarised this within a
blog post on the news, explaining
that over the past 20 years, the
form of BATS and Direct Edge,
which chipped away at incumbent
exchange market share by catering
for the next generation of traders.
The market has now consoli-
dated itself down to three major
“We simply don’t know yet what MEMX plans to
do that’s original. So far they have only talked
about offering lower fees and that won’t be a
paradigm shift.”
ALASDAIR HAYNES, CHIEF EXECUTIVE, AQUIS EXCHANGE
US exchange industry has been
through two major arcs of modern
market fragmentation and consol-
idation.
The trend saw the rise of con-
sortium-led challengers in the
exchange groups: NYSE, Nasdaq
and Cboe, with one independent
exchange – the Investors Exchange
(IEX) – alongside various Alterna-
tive Trading Systems (ATSs) and
dark pools.