MEMX Options, Rising Midpoint and Retail Activity, and Sensible Market Reforms
Highlights & Recent Developments
- MEMX hit a new average daily volume record of 555 million shares in March, including 864 million shares on March 8th
- Month-over-month, retail volume grew 77% and hidden volume grew 44%
- With input from our members, MEMX developed and submitted a series of recommended market reforms to the SEC
- MEMX announced plans to launch a U.S. options exchange—read the press release
MEMX exchange market share excluding auction volume was 7.6% in March 2022, up from 2.9% in March 2021.
Volume & Diversity of Liquidity
MEMX hit a new daily volume record of 864 million shares on March 8th, and set a new high of 555 million average daily shares traded for the month.
In March, MEMX introduced new rebates for adding hidden volume, which contributed to a 44% month-over-month increase in average daily hidden volume to 38 million shares for the month. There are hundreds of securities trading on MEMX with significant midpoint activity. On a daily basis, midpoint volume accounts for over 10% of MEMX volume in approximately 400 securities, and between 5% to 10% of MEMX volume in more than 500 securities.
Retail add volume grew 75% month-over-month, hitting a new record of 39 million average daily shares in March.
Market Reform Recommendations
The U.S. equity market is not broken. Nonetheless, there are improvements that can and should be made to make sure that regulation continues to keep pace with market evolution. With helpful feedback from our members, MEMX developed a series of market structure recommendations designed to improve market quality, enhance the ability for trading venues of all types to compete for order flow, and to provide information investors can use to make informed decisions about how to best participate in the market.
The recommendations for sensible equity market structure changes focused on the following areas:
- Tick size reform
- Round lot reform
- Enhancements to Rule 605 disclosures
- Limit Order Display Rule enhancements
- Daily disclosure of ATS and Non-ATS volume information
Read our recommendations to the SEC.
Launching a U.S. Options Exchange
MEMX recently announced plans to launch an all-electronic U.S. options exchange, pending SEC approval. MEMX Options will be a price-time priority exchange with continuous trading in single-leg options on equities and ETPs. This is the largest segment of the options market, accounting for approximately 60% of contract volume. Price-time exchanges control the majority of trading market share in this segment due to superior quoting from market makers, which in turn attracts order flow from retail and institutional investors. MEMX will offer a suite of risk management tools, including innovative quote protections, which are expected to improve market-maker liquidity participation. MEMX investors represent some of the largest participants in U.S. options, with diverse order flow from market makers, broker/dealers, retail and institutional investors.