The newly planned Member’s Exchange is hoping to compete with the Nasdaq and the New York Stock Exchange. Nine financial heavyweights are collaborating to make the ambitious plan come to life. The Member’s Exchange isn’t expected to gain SEC approval until 2020 at the earliest. However, the new exchange is backed by American financial superpowers Morgan Stanley, UBS, and Bank of America, giving the exchange in the making some serious firepower.
There are multiple reasons for these companies to justify opening a new stock exchange. Among these reasons, there is the simple lack of an alternative equities exchanges. By spreading sales orders to new exchanges, volatility may be reduced. There are also concerns over the trading mechanisms employed at the NYSE, which includes high-speed trading that contributes to volatility. The new Member’s Exchange is expected to employ newer practices and technology, including blockchain. Ultimately, the backers of the Member’s Exchange hope to shake up the exchange markets.
The main selling point of the new exchange, however, is simplifying the trading process, while offering lower fees. At first, it is possible that a new exchange could cause the others to lose money in the short term. However, if the end result is a better equity exchange, and by extension a better broader exchange culture, the move could prove positive for all involved.