B10| Friday, February 21, 2020 THE WALL STREET JOURNAL.
of wealth experience isn’t a
hindrance, since the bank has
two of the industry’s top exec-
utives—Tom Naratil and Iqbal
Khan—leading that business
division.
Other UBS executives who
were considered to be poten-
tial successors to Mr. Ermotti
have left in recent years, in-
cluding former wealth-man-agement head Juerg Zeltner
and investment-banking boss
Andrea Orcel.
The bank’s main rival,
Credit Suisse GroupAG, also
named a new CEO this month.
Thomas Gottstein, formerly
the head of its Swiss business,
succeeded Tidjane Thiam, who
was forced to resign after a
spying scandal.nies: NYSE, owned byInter-
continental Exchange Inc.;
Nasdaq; andCboe Global Mar-
ketsInc., the country’s No. 3
stock-exchange group by mar-
ket share.
Brokers and trading firms
say the big three exchangeBANKING & FINANCE
unveiled its plans in January
2019, already had the backing
of nine financial heavyweights,
including banks, retail brokers
and electronic trading firms.
MEMX was created after
years of frustration among bro-
kers and traders with the fees
charged by the big U.S. ex-
change groups, particularly for
market-data feeds that many fi-
nancial firms regard as essen-
tial for their business. MEMX’s
backers have expressed hope
that by charging rock-bottom
fees, the new exchange will
pressure the incumbents to
keep their own fees low.
“We’ve been quite vocal
about the rising cost of data,”
Jason Sippel, global head of eq-
uities and prime services at JP-
Morgan, said in an interview.
“Lowering data costs will bene-
fit all of our clients.”
About 60% of U.S. stock-
trading volume takes place on
exchanges run by three compa-groups behave in an oligopolis-
tic fashion and charge too
much for services such as mar-
ket-data feeds. NYSE, Nasdaq
and Cboe reject such criticisms
and say their fees are reason-
able.
Electronic-trading giants
Virtu FinancialInc. andCita-
del Securities, which together
trade about 40% of the shares
that change hands in the U.S.
stock market, are both in
MEMX’s founding consortium.
They are expected to support
MEMX by quoting prices and
executing trades at the new ex-
change.
MEMX’s other investors are
Bank of America Corp.,
Charles Schwab Corp.,
E*Trade FinancialCorp.,Fi-
delity Investments,Morgan
Stanley,TD Ameritrade Hold-
ingCorp. andUBS GroupAG.
In an interview, MEMX Chief
Executive Jonathan Kellner de-
clined to say how much moneythe startup exchange had
raised in the new funding
round. MEMX, which is based
in Jersey City, N.J., raised $70
million in its initial funding
round last year.
MEMX said in Thursday’s
news release that its market-
place would go live on July 24,
pending regulatory approval
from the Securities and Ex-
change Commission.
NYSE has criticized MEMX’s
application to register as an ex-
change. In a Jan. 15 letter to
the SEC, the Big Board warned
that MEMX’s owners could
glean unfair advantages over
rival market participants
through access to the new ex-
change’s trading data.
“NYSE Group believes that
this apparent unfettered access
to the records and facilities of
MEMX by [members of the
consortium]...could pose signif-
icant conflicts of interest,” the
Big Board said in its letter.Last week, MEMX responded
in a letter to the SEC that
NYSE’s conclusions were
wrong. It said that confidential-
ity provisions in MEMX’s gov-
ernance documents would en-
sure that only authorized
people, such as MEMX’s in-
house market regulators, would
have access to sensitive trading
data.
MEMX’s name harks back to
the era when stock exchanges
were nonprofit cooperatives
owned by their “members,”
which were generally brokerage
firms that traded at the ex-
changes.
U.S. exchanges converted
into investor-owned, for-profit
companies starting in the
2000s. Since that shift, ten-
sions have grown between bro-
kers and exchanges, largely be-
cause of the cost of data feeds
and related services that the
exchanges sell to their custom-
ers.Goldman Sachs GroupInc.
andJPMorgan Chase&Co.
agreed to back a new low-cost
stock exchange that plans to
launch this summer to chal-
lenge the New York Stock Ex-
change andNasdaqInc.
The two banks, along with
high-speed trading firmJane
Street CapitalLLC, led a new
round of funding for Members
Exchange, or MEMX, the
startup exchange said in a news
release Thursday.
Goldman’s and JPMorgan’s
investment provides an addi-
tional boost to MEMX from two
of Wall Street’s most promi-
nent institutions. MEMX, which
BYALEXANDEROSIPOVICH
Goldman, JPMorgan Back New Exchange
The upstart trading
venue aims to take on
NYSE and Nasdaq by
charging lower fees
MarketsharebyU.S.
stock-exchangegroupSource: Rosenblatt SecuritiesNote: Data based on January trading activity.1000255075%Off-exchangeNYSENasdaqCboeIEXhis leadership, the bank also
increased revenue as it im-
proved internal systems and
the technology behind how it
interacted with clients.
The moves let it cut costs
by shutting hundreds of
branches and shedding thou-
sands of jobs in Belgium and
the Netherlands.
UBS Chairman Axel Weber
said Mr. Hamers beat out
other candidates to succeed
Sergio Ermotti in a 15-month
CEO search because of his re-
cord in transforming ING. Like
UBS, ING underwent a lengthy
post-2008-crisis restructuring
to narrow its operations and
return to financial health.
“The hope that we have is
that he will help us get to the
next level in digitalizing our
business,” Mr. Weber said
Thursday. Already, UBS spends
around $3.5 billion a year on
technology. The bank’s strate-
gic plans won’t change, ac-
cording to the chairman. The
Swiss firm lowered its finan-
cial targets in January to re-flect weakness in the world
economy and the effects of
low and negative interest
rates.
Mr. Hamers said he hit it
off with Mr. Weber through
their work together at an in-
dustry association, the Insti-
tute of International Finance,
where Mr. Weber is chairman
and Mr. Hamers is a board
member. A uniting feature at
ING and UBS is that they both
had to take bold actions to
weather the challenges facing
banks, he said. Both are also
on a list of systemically im-
portant banks compiled by
global and national regulators,
reflecting their size and com-
plexity.
Mr. Hamers declined to say
whether he would look to cut
bank branches in Switzerland,
where UBS has a large retail
network. He plans to dig in
deep to understand UBS’s
business model once he starts
a transition period at the bank
from September, before taking
the CEO role.For the Dutch executive, go-
ing to UBS should mean a big
pay rise. Mr. Ermotti is among
Europe’s best-paid bank CEOs,
making around $15 million a
year through salary and bo-
nuses. He started as UBS CEO
in 2011 and helped boost its
share price by shrinking its in-
vestment bank and centering
its activities around wealth
management.
In contrast, Mr. Hamers
was denied a raise in 2018
from a €1.75 million ($1.9 mil-
lion) base. ING paid €775 mil-
lion that year to settle a crimi-
nal investigation over failures
in its anti-money-laundering
systems. On Thursday, Mr. We-
ber said Mr. Hamers had been
cleared of any blame in the
matter and that UBS consid-
ered the incident in making its
CEO decision.
The UBS chairman declined
to say how much Mr. Hamers
will be paid. Mr. Ermotti’s base
salary in 2018 was 2.5 million
Swiss francs ($2.5 million).
He said Mr. Hamers’s lackUBS GroupAG spent the
last nine years reinventing it-
self as the world’s largest
wealth manager. For its next
act, the bank wants technol-
ogy to drive higher profits
from its client base and reduce
costs.
On Wednesday, it tapped a
digital banking specialist,
Ralph Hamers, to be its next
chief executive from Nov. 1,
surprising investors and ana-
lysts who expected either an
internal candidate or an out-
sider with experience running
a wealth-management busi-
ness. Mr. Hamers will join
fromING GroepNV, where he
has been CEO since 2013 in a
29-year career focused mainly
around retail and corporate
clients at the Dutch lender.
Mr. Hamers got the job af-
ter building a reputation at
ING for successfully moving
more customers out of
branches and onto their
phones and computers. Under
BYMARGOTPATRICK
UBS Puts Digital First With New Chief
Ralph Hamers was praised for returning ING to financial health.ARND WIEGMANN/REUTERSExperienceInsiderAccessinMilan
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