Network based systems

MEMX exchange puts market data on blockchain-based Pyth network

  • MEMX is a member-owned exchange that went live in May 2020.
  • The one-year exchange puts its market data on the blockchain-based Pyth network for free.
  • This move will bring MEMX data to new users and is a key step in boosting competition in the space.

The Member Exchange, a newbie exchange backed by JPMorgan, Goldman Sachs and Citadel Securities, puts its market data on a blockchain network in a nod to the potential future of how Wall Street accesses its information .

The stock exchange offers free access to its real-time price data on Pyth Network, a financial market data distributor that sits on the Solana blockchain.

The way Wall Street consumes its data has evolved as data providers and financial institutions embrace new technologies.

The public cloud is one of those drivers of change, with data providers moving to technology as banks, hedge funds and asset managers demand more information at a faster pace.

The Nasdaq released its cloud-based data analytics hub in September. Snowflake unveiled a financial services cloud to help clients unify disparate data sets, while Bloomberg launched its BQuant tool for advanced analytics last week.

MEMX’s partnership with Pyth isn’t just about leveraging new technologies to distribute data. It is also about expanding access to market data to a wider range of users.

Market data, which includes everything from the bid and ask price of a particular stock to the amount or little of trade, is the lifeblood of any business organization. Information is essential to help traders and their algorithms make decisions in the market.

But data access doesn’t come cheap. Global spending on financial market data and analysis totaled $ 33.2 billion in 2020, an increase of 5.9% year-over-year, according to an April report from consulting firm Burton-Taylor.

But despite the importance of market data to participants, the industry is largely dominated by a handful of players like Bloomberg and Refinitiv. The space is also becoming increasingly profitable for trading groups, which sell data feeds based on the trading activity that takes place at their sites.

The growth of so-called trading platform information services activities has been a focal point of many exchanges in 2020, according to a May report by Burton-Taylor.

MEMX, which does not currently sell its market data, took a different approach, leading it to partner with Pyth.

The member-owned site has always aimed to “bring competition and participate in projects that help market players and challenge the status quo, and over time all investors will benefit from all of the benefits. exchanges, ”MEMX CEO Jonathan Kellner told Insider.

MEMX was formed to address what some participants saw as a consolidation of power in the US stock market. Founded in 2019, it has received backing from some of Wall Street’s biggest players, including JPMorgan, Bank of America and Goldman Sachs. The upstart currently has 64 members.

MEMX has become one of the fastest growing trading platforms, increasing its market share by 21% month over month. It currently manages around 4.5% of US equity trading volume. A record $ 20.5 billion was traded on the stock exchange in one day in September, according to the the most recent company data.

Open data to new users

MEMX won’t be the first company to publish stock data on Pyth. Many of its members, including trading giants Jump Trading, Hudson River Trading, Virtu Financial, Jane Street and Susquehanna International Group already publish their price data on the network.

IEX Cloud, which is owned by the IEX Group exchange, also provides its market data to Pyth.

“When you see that many members support a project, that doesn’t mean it’s going to be successful, but it’s probably an area worth watching,” Kellner added.

Pyth is part of decentralized finance, a forward-looking movement to make financial markets more accessible to less sophisticated participants through blockchain technology.

DeFi allows consumers to access financial products without having to go through intermediaries, such as banks or brokerage houses. This includes issuing smart contracts, a self-executing contract where the terms of the buyer’s and seller’s agreement are written in lines of code.

Access to timely, accurate and consistent data has been one of the limitations of many DeFi systems. The Pyth Network aims to solve this problem by bringing this data from off-chain sites – such as traditional exchanges – to the chain, Kellner said.

Of course, the process is not perfect. In September, Solana, the blockchain behind Pyth, had a 17 hour outage due to “resource depletion”.

Pyth, for his part, has at least 25 companies publish data on its network. And while it’s currently not able to compete with traditional data feeds, it’s working to create something that’s DeFi-enabled, free and open to anyone interested in data, according to a spokesperson for Pyth.

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