What is important is who it is, not what it is
The new firm’s stated aim is to offer a simple trading model with basic order types, the latest technology and a simple, low cost fee structure; but just how it plans to do so remains unclear. It has nine members: Morgan Stanley, Fidelity, Citadel Securities, Bank of America Merrill Lynch, Charles Schwab, E*Trade, TD Ameritrade, UBS and Virtu. There are many notable absentees, including Goldman Sachs and Citi.
Data feed margins: This is about market data, not transaction fees
Revenues at the incumbent exchanges have grown by 5.4% per year since 2010, with non-transactional revenue (data, tech, listings and fees) now greater than transactional revenue. The number of brokers in the US has fallen by 24% over a similar period, according to Finra. So, this growth in data revenue is being paid for by a shrinking pool of clients. Larry Tabb, founder and research chairman of New York-based capital markets research and consulting firm Tabb Group, says that the launch of MEMX is understandable.
