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QUICK TAKE: Baird’s Miller on MIAX Equities – “Why?”

Traders Magazine Online News, March 13, 2019

John D'Antona Jr.

But why? But why? But why?

This is a too common refrain that parents hear when a child either doesn’t want to accept an answer or really doesn’t understand the answer give. Jack Miller, Head of Trading at Robert W. Baird & Company in New York attempted to answer this “why” question about the recent announcement that the new MIAX Equities would be forming and coming to the equities market.

With more than a dozen exchanges already, does the fragmented market structure really need one more?

According to Miller, it’s a fair question to ask. But as he sees it, the equity exchange marketplace is  dominated by only three exchange operators who oversee 12 of the 13 public venues.


“Exchange proliferation is a market-driven reaction to dissatisfaction with the ‘big three’s’ oligopoly,” he began. “Specifically, the post-demutualization business model of operating as independent for-profit entities has led to potential conflicts of interest. IEX led the charge in offering an alternative model focused on aligning interests with investors, while the recent MEMX announcement is similar in that it is looking to align interests with brokers. The Miami Exchange could be cast as an issuer-focused venue, though given that the parent company is already a major options exchange operator, it is more likely an attempt for another major operator to join the equities side.”

 Miller adds that with all of the challenges in the current environment, these recent exchange announcements are welcome and preferable to a regulatory-first approach, which could have unintended consequences.

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