Explain the new MEMX exchange to me

[disneysteve]

I've heard that there is a new stock exchange being launched - MEMX - to compete with NYSE and NASDAQ. How does that work exactly? When I put in a buy or sell order with my brokerage, I don't specify what exchange I want the trade made through, but they say that the new exchange will result in lower costs to the consumer. Is that because the brokerage firm will go through MEMX instead of NYSE and pass whatever savings that results in for them on to the customer? Since we now trade commission-free, will the savings come in the form of paying less for the stock shares I purchase?

[kork13]

My understanding is that when a company issues an offering of stock, the company registers the stock with one of the exchanges. Exchanges are simply companies that register & process trades of various company stocks. So you don't directly select the exchange that you're using, rather that coffee had been made for you by the company itself whose stock you're purchasing.

[disneysteve]

My understanding is that when a company issues an offering of stock, the company registers the stock with one of the exchanges. Exchanges are simply companies that register & process trades of various company stocks. So you don't directly select the exchange that you're using, rather that coffee had been made for you by the company itself whose stock you're purchasing.

So will the new exchange only handle newly issued stock? Can companies already listed on NYSE decide to move their listing over to MEMX? I'm assuming there is some sort of contract involved there. And where will the cost savings come from if we already trade commission-free?

[kork13]

So will the new exchange only handle newly issued stock? Can companies already listed on NYSE decide to move their listing over to MEMX? I'm assuming there is some sort of contract involved there. And where will the cost savings come from if we already trade commission-free?

I'm pretty sure I've heard of companies changing the exchange that they're listed with, so I presume companies will be able to elect to switch if desired. As for cost savings... I don't fully understand how transaction costs work, but I'm pretty sure part of it somehow involves the bid/ask spread, but beyond that, no idea. Perhaps the exchange charges brokers a fee for each transaction, and this new one is going to charge a smaller fee?