Morgan Stanley , Fidelity Investments, Citadel Securities LLC and a host of other financial companies have agreed to jointly launch a new low-cost bourse that will compete with the New York Stock Exchange and Nasdaq.
In a joint statement on Monday, the companies said the new exchange will look to increase competition, improve operational transparency, reduce fixed costs and simplify equity trading in the U.S.
The new venture will be called Members Exchange (or MEMX) and will be funded and controlled by nine institutions, including Bank of America Merrill Lynch , Charles Schwab Corp , E*TRADE Financial Corp , TD Ameritrade Holdings Corp , UBS and Virtu Financial .
The new exchange comes after years of headaches among brokers and traders with high fees charged by U.S. stock exchanges.
Members Exchange, which plans to offer a simple trading model with basic order types and the latest technology, will also represent the interests of its founders' collective client base, comprised of retail and institutional investors.
The big three U.S. exchanges have faced criticism for surging fees for services like data feeds that brokers use to monitor movements in stock prices.
Intercontinental Exchange Inc owns the New York Stock Exchange, Nasdaq is run by Nasdaq Inc and the other exchange is Cboe Global Markets Inc .
Shares of Intercontinental Exchange were down 2.6 percent and Nasdaq operator Nasdaq Inc fell 2.8 percent.
IEX Group Inc is the only independent exchange not owned by the ICE and Nasdaq, and handles a little more than 2 percent of U.S. equities trading volume.
MEMX will file an application seeking approval to operate as a national securities exchange with the U.S. Securities and Exchange Commission in early 2019, according to the statement.