A group of nine financial institutions, including Morgan Stanley, Fidelity Investments and Bank of Bank of America Merrill Lynch, plan to launch a low-cost bourse that will compete with the New York Stock Exchange and Nasdaq.
In a joint statement on Monday, the firms said the new exchange would seek to boost competition, improve operational transparency, reduce fixed costs and simplify equity trading in the US, Reuters reports.
The venture will be called Members Exchange, or MEMX, and will be funded and controlled by the following financial institutions: Bank of America Merrill Lynch, Charles Schwab, E*TRADE Financial, TD Ameritrade, UBS, Virtu Financial, Morgan Stanley, Fidelity and Citadel Securities, the report said.
MEMX, which plans to offer a simple trading model with basic order types and the latest technology, will offer “lower pricing on market data, and connectivity and transaction fees,” according to the statement.
The plans comes as the existing big three US exchanges — NYSE, Nasdaq and CBOE — have faced criticism for surging fees for services like data feeds that brokers use to monitor movements in stock prices, Reuters noted.
In early 2019 MEMX will file an application with the US Securities and Exchange Commission for approval to operate as a national securities exchange.
This is not the first time that industry giants have taken on the established exchanges.
A decade ago, a group including Citi, Credit Suisse, Deutsche Bank, JPMorgan, Lehman Brothers, Morgan Stanley and Merrill Lynch backed a low-cost exchange called BATS, Reuters noted.
Around the same time, other 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.
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