Fintech Research: Capital Market

Stock Exchange

Members Exchange (MEMX) is a member-owned exchange formed by a consortium with the vision to improve equity markets for all participants with the aims to increase price competition in the exchange landscape, an issue that has arisen as a result of industry consolidation.

CEO: Jonathan Kellner

Strategic Value:

  • MEMX aspires to be an additional venue through which competition can be fostered in the exchange marketplace.
  • The company provides an avenue to facilitate bank’s data and innovation strategy.

The big picture: All but one of the nation’s stock exchanges (not including dark pools) are controlled by three big players: Intercontinental Exchange (the parent company of NYSE), Nasdaq and Cboe.

  • MEMX’s arrival comes at a time of strife: The SEC is looking to loosen the grip the major exchanges have on businesses, like stock market data.
  • And NYSE, Nasdaq and Cboe all sued the SEC last year over the regulator’s effort to limit the fees they can charge for trading.

What’s new: MEMX said it’s raised an undisclosed amount of money from new members JPMorgan, Goldman Sachs and trading firm Jane Street Capital.

  • Other MEMX backers include Morgan Stanley, Bank of America, and Fidelity Investments.
  • It’s also backed by Citadel Securities and Virtu Financial — two of the biggest stock trading firms, which each control about 20% of trading volume, per the WSJ.
  • The Members Exchange just received approval from the US Securities and Exchange Commission to operate as a national securities exchange
  • As a result, the startup exchange said it’s on track to go live during the third quarter of 2020

Reflection: Financial institutions are putting bets on new comers and challenging the legacy financial exchange/clearing entity, like stock exchange/fix-income exchange/transaction clearing house and etc.

Long-Term Stock Exchange designs an SEC-regulated national securities exchange that aligns great companies and long-term investors.

CEO: Eric Ries

Strategic Value:

  • LTSE provide a platform for startups seeking a cash injection and those that wish to be able to trade,
  • Also giving investors the opportunity to cash in on new hot projects
  • Its goal is to reshape the incentives for the next generation of public companies so that they can focus on the long term

The big picture: LTSE reflects a new wave of rethinking the old ways of doing business. Spotify’s decision last year to hold a direct listing instead of a traditional IPO was something of an inflection point in tech’s relationship with Wall Street, and now Slack is doing the same. Some other leading voices in Silicon Valley have tried other gambits meant to minimize the big banks’ involvement.

OneChronos (a pending Alternative Trading System) is a wholly owned subsidiary of OCX Group Inc, a technology company bringing innovative order entry and matching technology based on combinatorial auctions and high precision timestamping to global financial markets.

CEO: Kelly Littlepage and Stephen Johnson

Recent update:The OneChronos ATS plans on launching a US “dark pool” offering agency only matching of NMS equities by Q1 2020 followed by European equities (via a Periodic Auction MTF) and additional asset classes as the next mandate.

Financial Service Software

Akoya is a data aggregation utility designed to help customers securely share their data, the partnership with Akoya will promote the creation and adoption of secure industry standards around data sharing.

CEO: Stuart Rubinstein

Strategic Value:

  • Akoya will be a pro-competitive centralized utility offering for data aggregation, giving customers another option that is more secure, convenient and customer-centric.

About Akoya: Fidelity spun off its data-aggregation business, Akoya, into its own company on Feb, giving financial institutions another tool to securely share customer data with third-party financial apps.  

Akoya collects data from banks on its network and provides a single entry point for third-party apps and data aggregators, such as Plaid and Yodlee. Akoya will be owned and operated by Fidelity, 11 major banks and The Clearing House.

The pain point: Akoya seeks to reduce reliance on “screen scraping,” which occurs when consumers give their banking login credentials to third parties that log in on their behalf to connect to their account data. By contrast, Akoya is enabling API-based secure data access, moves that banks like Wells Fargo and JPMorgan Chase have been pursuing through agreements with aggregators. Much like Wells Fargo’s Control Tower, Akoya will enable consumers to approve and deny data access directly from their financial institutions’ online banking

Reflection: Under open-banking big initiative, big banks and other financial institutions are looking for strategic investment target that enable them to adopt the trend, also make a influence.

Arcesium is a provider of middle office outsourcing services and post trade technology focused on the Alternatives Investment segment.

CEO: Gaurav Suri

Strategic Value:

• The investment enables big bank to grow its Hedge Fund Services and Strategic Middle Office business, while providing input on key business decisions.

• Gained access to next generation technology, since Arcesium could become the underlying platform for offering end-to-end services for Alternatives.

The big picture: In the wake of the financial crisis, and the raft of regulation that resulted from it, investors have been pushing hedge funds to provide greater transparency. To do that, hedge funds have had to build out their back- and middle-office operations, utilizing technology from a variety of providers to monitor their post trade activities. The challenge is getting the disparate systems to work together effectively and efficiently, so managers can take a comprehensive look across all the different asset classes and investment strategies in their portfolios.

Arcesium was spin off from D.E. Shaw Group. Arcesium has provided a highly automated, exceptions-driven platform — meaning that its back- and middle-office staff only had to get involved in posttrade activities when there was a problem to solve.

OpenFin is the financial industry’s operating system, enabling rapid and secure deployment, native experience and desktop interoperability. Used by the largest industry players through to the newest of FinTech innovators, OpenFin deploys more than 1,000 desktop applications to more than 1500 buy-side and sell-side firms.

CEO: Mazy Dar


Key pillars: First, having apps that can be downloaded and updated with ease, the same way you would download an app on your phone, and then have it update regularly. Then there is the layer of security, a key issue for any Wall Street institution. Finally, there is interoperability, or letting the apps talk to one another, the same way social media apps connect on your phone.

Cloud9 Technologies is the leading voice collaboration and analytics firm for the financial markets that is reinventing the way traders communicate. We offer advanced trader communication, voice analytics and transcription solutions.

CEO: Gerald Starr

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