If you have been paying attention to the investing media in recent weeks, you have likely heard about MEMX. Short for the Members Exchange, MEMX was founded by individuals who carefully listened to investors to promote a transparent and fair trading experience. The exchange was officially founded in 2019. MEMX received approval from the SEC to function as a national securities exchange shortly thereafter. In short, MEMX is a comparably simple trading platform with features that are optimal for retail investors as well as those at the institutional level.
The Merits of MEMX
MEMX is garnering attention for good reason. This stock exchange makes trading fast, easy and simple thanks to its limited number order types. The overarching aim is unparalleled efficiency and transparency, ensuring traders understand exactly what they are doing. MEMX is powered by the industry’s latest technology, ensuring trade execution is highly efficient and uber-fast. MEMX is also favored as it has lower pricing for market data, transaction fees and connectivity.
Perhaps most important is the fact that MEMX is the lone member-owned platform for trading equities. This means MEMX serves the interests of its members as well as those of members’ client bases. The trading platform’s client base consists of both institutional investors and everyday retail investors. The group of leading international financial institutions behind MEMX includes global banks, financial services firms, the top web-based retail broker-dealers in the United States and the premier global market makers. Examples of members include BofA Securities, TD Ameritrade, Morgan Stanley, E*Trade, Citadel Securities, Fidelity and Charles Schwab.
Why MEMX Matters
The masterminds behind MEMX created the platform in an attempt to improve the quality of the trading experience on a platform owned by its own members. MEMX’s entry into the segment is welcomed as it ramps up the competition all the more. The arrival of this innovative platform is ultimately mutually beneficial for investors as well as the industry as a whole. MEMX bolsters exchange diversity all the more, providing a transparent and highly efficient platform for trading. Though MEMX was initially limited to seven stocks, the exchange will extend to all exchange-listed securities in the United States. In other words, it is possible for any publicly traded company to be listed on the MEMX. Keep in mind, stocks can be listed on several exchanges through dual-listings. The bottom line is if a company lists its shares on MEMX, investors can buy and sell shares through MEMX regardless of whether there is a dual-listing with another exchange.
MEMX is attempting to capture market share from the industry’s incumbents. This is precisely why the exchange did not charge for connectivity or market data at its launch. The aggressive approach just might be enough to bolster order flow to the point that the exchange builds enough momentum to convince clients to transition over from the top trading platforms. MEMX will also serve as a valuable vehicle for its members to speak out on market issues.
The hope is that MEMX proves transformative. If you were capable of fast forwarding a couple years into the future, you might find MEMX is an industry power player revered for its innovation and transparency. It is quite possible MEMX’s alignment of exchange services with the aims of traders will help the exchange reach the level of the Nasdaq and NYSE. If everything goes according to plan, MEMX will ultimately bolster competition, enhance operational transparency, minimize fixed costs and make the execution of equity trades in issuers that much more simple for investors as well as the transfer agent.
MEMX Means Business
The message to shareholders and those looking to invest their hard-earned money is clear: Stay tuned. MEMX will continue to evolve as we move forward, potentially progressing in unforeseen ways. Though no one is predicting MEMX will disrupt the industry to the level that it captures the bulk of the market share, the exchange is a metaphorical breath of fresh air that just might spur competitors to innovate, ultimately proving beneficial for investors, the industry’s progression and market liquidity.