Wall Street’s Biggest Traders Are Building Their Own Exchange

Does the U.S. need another stock exchange? There’s no shortage of places to trade: Nasdaq, Cboe Global Markets, and Intercontinental Exchange Inc.’s NYSE division each run multiple public exchanges, and there are dozens of private markets housed inside banks. Even so, a group of Wall Street trading titans has announced plans for a platform that it’s calling the Members Exchange. And despite the crowded field, there’s a good chance it could take off—after all, the owners likely will be among the customers.

Like most exchanges these days, the Members Exchange will be largely invisible to everyday investors. Relatively few stocks are traded on the famed New York Stock Exchange floor. Almost all the action takes place on electronic markets housed in fortresslike data centers in New Jersey. Regulations require that brokerages and trading firms get the best possible prices for customers, which in practice gives them little choice but to connect to all 13 exchanges and pay any fees they charge for market data and other services. Traders would like this to cost less, and their proposal to open a new platform appears to be a salvo in that battle.