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Wall Street’s Top Traders Launch

Wall Street’s Top Traders Launch “Members Exchange”

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After Nasdaq, Dow Jones and other market places, a new trading exchange might become the hotspot in New York. A few weeks ago, top traders have decided to launch a new platform called Members Exchange.

The new platform will stay invisible for everyday investors. However, professionals will be trading with it on the New York Stock Exchange floor (NYSE) just like any other platform.

Giant financial institutions like Morgan Stanley, UBS, Citadel and Virtu have official joined the adventure. Nonetheless, experts are skeptical. The market already counts 13 exchanges… Will Members Exchange make a difference? Here is an analysis of what to expect. 

A revival of NYSE’s early days

Members Exchange is the new “cool kid” of the block. Founded by nine brokers and big bank executives, it has reportedly already raised $70 million.

According to a statement a few weeks ago, its goal is to “increase competition, improve operational transparency, further reduce fixed costs and simplify the execution of equity trading in the U.S”. 

For many, Members Exchange is a revival of NYSE’s early days.

According to Bloomberg’s Nick Baker: “The move recalls the days when NYSE was owned by their members rather than being for-profit, publicly traded corporations whose interests sometimes conflicted with those of their customers.” 

Moreover, brokers have expressed complains for the past years as they were charged “too much” for market data, the most valuable piece of information for traders.

Three main exchanges sue the SEC

Members Exchange might be a wake-up call for giant exchanges to change their game, too.

Last Friday, in an unprecedented situation, Nasdaq Inc. and Cboe Global Markets Inc released a press statement saying they would take on their own regulator to terminate a legislative project that would limit fees they charge for trading.

A day earlier, the New York Stock Exchange said it would sue the US Securities & Exchange Commission for the same matter.

The “Transaction Fee Pilot”, an experiment designed by the SEC, was supposed to enable the latter to see how much exchanges charge their traders.
The fee was supposed to cap at $0.01 per share for more than 730 names, while another round of 730 stocks, exchanges could not be able to pay rebates to the broker dealers with liquidity.
The project was revealed to the press last December. It was supposed to apply to stocks that trade at least 30,000 shares a day with a minium stock price of $2. Experts alerted on such an initiative as it could encourage a market volatility.

Will crypto save exchanges?

All in all, will Members Exchange become the “Robinhood” from the markets that will save finance? For many, it might just open a new chapter in trading products.

A month ago, the NYSE announced it would expand its data product to crypto, in order to “enhance our transparency”.

The NYSE is now providing trading data on 400 crypto, through the platform The Intercontinental Exchange. The latter was founded more than a decade ago.

However, analysts worry that the crypto market might even more volatile than any the Transaction Fee project.

“The cryptocurrency community has been lacking the data that serious investors need to put market movements into context and make informed decisions”, said Danny Kim, Head of Growth at SFOX  in a recent interview for Forbes.

In the meantime, experts have alerted that a recession could be imminent if major decisions regarding the U.S.-China tariffs and Brexit deal were not taken.

Read our story: “Tariffs: China and US Resume Talks This Week”

 

Note: The opinions expressed in this article are the author's own and do not necessarily reflect the view of Alvexo on the matter.