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IEX research fans the flames of US exchange data feed pricing row

The proposed launch of a new US equities exchange may just be a shot across the bows of the incumbents, but it illustrates the anger within the industry at exchange revenues that have risen 5.4% annually since 2010.


On January 7, a group of nine leading retail broker-dealers, banks, financial services firms and global market makers announced their agreement to launch an equities exchange, called MEMX, or Members Exchange.

The consortium includes Morgan Stanley, Fidelity, Citadel Securities, Bank of America Merrill Lynch, Charles Schwab, E*Trade, TD Ameritrade, UBS and Virtu.

The idea is to offer a simple trading model with basic order types, the latest technology and a simple, low-cost fee structure.

Given that there are already 13 exchanges and 45 alternative equity trading systems in the US, adding another one would not, at first glance, seem to be such a great move.

The incumbents – NYSE, Nasdaq and Cboe – control 60% of trading, and between them own all of the exchanges with the exception of the Investors Exchange, or IEX.

IEX was founded in 2012 by ex-RBC traders Brad Katsuyama, Ronan Ryan, John Schwall, and Rob Park and finally gained regulatory approval in July 2016. It was made famous by Michael Lewis’s book ‘Flash boys, published two years before.

Until MEMX receives its licence, IEX remains the only independent equity exchange in the market, with a less than 3% market share.

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