can you start your own stock exchange

This guide answers “can you start your own stock exchange” for founders, comparing national exchanges, ATS, OTC and crypto venues. It explains legal, technical, governance and business steps, gives...

2026-01-10 09:22:00

By CryptoBridge Communicator

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Can You Start Your Own Stock Exchange? Practical Guide for Founders

Short answer: Yes — can you start your own stock exchange? Technically and legally it is possible, but doing so requires substantial regulatory approval, capital, technology and market-making commitments. This article explains the main paths (national exchange, alternative trading system, OTC venue, or crypto exchange), the regulatory landscape (with emphasis on the U.S.), technical and post‑trade needs, typical costs and timelines, and a practical checklist for founders.

What we mean by “can you start your own stock exchange”

The question "can you start your own stock exchange" is interpreted here as: how an organization can create and operate a regulated trading venue or a trading platform that matches buyers and sellers of securities or crypto assets. That covers several concrete options:

Launching a national or regional securities exchange with full registration and listing authority.
Operating an Alternative Trading System (ATS) in the U.S. under Regulation ATS (trading-only venue without listing authority).
Running an OTC market or matching service for specific assets.
Building a cryptocurrency exchange (centralized exchange, CEX, or decentralized exchange, DEX) as an alternative route with a different regulatory profile.

This article repeatedly addresses "can you start your own stock exchange" across legal, technical, governance and business dimensions so founders can evaluate feasibility and next steps.

Types of trading venues (clear definitions)

National securities exchange: A fully regulated, registered exchange that lists securities and operates continuous markets (examples of structure: large incumbents and newer entrants). Launching one normally requires registration with the relevant securities regulator and the ability to enforce listing rules and disclosure.
Regional exchange: A geographically or sector‑focused exchange with narrower scope; regulatory requirements may be similar but scale and capital needs are smaller.
Alternative Trading System (ATS): A trading venue that matches buyers and sellers but does not itself provide listing standards. In the U.S., many ATSs operate under Regulation ATS; they are subject to surveillance, reporting and fair access rules but the registration process differs from a full exchange.
Over‑the‑Counter (OTC) markets: Less formal trading arrangements that rely on broker‑dealer networks or quotation systems; regulatory burden can be lower but liquidity and investor protections differ.
Cryptocurrency exchanges (CEX and DEX): Centralized crypto exchanges act as custodial trading platforms and typically register under local money‑transmission/virtual asset rules; decentralized exchanges run on smart contracts and raise different custody, custody‑risk and securities‑law questions.

Understanding these distinctions answers part of the core question: "can you start your own stock exchange?" — yes, but the legal path you choose determines time, cost and obligations.

Legal and regulatory framework (U.S. focus)

If you ask "can you start your own stock exchange" and target the United States, the baseline is the Securities Exchange Act of 1934. Key points:

Registration: A venue that operates as an exchange generally needs to register with the SEC as a national securities exchange. The SEC reviews the venue's rules, capacity to maintain fair and orderly markets, surveillance and governance.
Regulation ATS: An ATS may register under Regulation ATS (Reg ATS) as an alternative to full exchange registration. Reg ATS operators must file Form ATS with the SEC, meet fair access obligations, and maintain surveillance and recordkeeping.
Rules and rule‑filings: Exchanges file rule changes and sometimes initial rules with the SEC; transparency and investor protection are central to evaluation.
Market‑abuse, AML/KYC and reporting: Market‑manipulation rules, anti‑money‑laundering and know‑your‑customer obligations apply. Broker‑dealer participants must be registered; transactions and trade reports must be delivered to consolidated tapes or reporting mechanisms as required.
Post‑trade obligations: Clearing, settlement and reconciliation obligations generally tie exchanges to central counterparties (CCPs) or established clearinghouses unless an alternative arrangement is permitted.
Legal text: Relevant material includes 17 CFR Part 240 Subpart A (rules on registration and exemptions for exchanges) and associated SEC guidance.

The regulatory pathway is often lengthy and intensive. The question "can you start your own stock exchange" therefore implies commitment to a regulatory programme, not just a technology project.

Regulatory requirements by jurisdiction (examples)

United States: Registration as a national securities exchange under the Exchange Act, or operate as an ATS under Reg ATS. Filings with the SEC (e.g., Form 1 historically for exchanges; Form ATS for ATS operators) plus ongoing reporting and surveillance obligations.
South Africa: Licensing and conduct oversight by the Financial Sector Conduct Authority (FSCA); De Rebus and local professional sources describe formal licensing steps and governance expectations for new exchanges.
Other jurisdictions: Each country sets capital, governance, AML and market‑integrity rules differently; timelines and minimum capital vary. Founders must consult local regulators early.

(As a practical reference point: LTSE — the Long‑Term Stock Exchange — obtained U.S. SEC approval to operate as an exchange in 2019; the Texas Stock Exchange initiative has been reported in recent years as pursuing federal approvals and raising capital for a new venue.)

Governance, compliance and market integrity

Operating a trading venue is not only software — it is a regulated market operator with continuous obligations:

Corporate governance: A competent board, independent directors, compliance and risk committees, and clear governance structures that prevent conflicts of interest.
Fit‑and‑proper tests: Senior officers and key personnel typically must meet fitness requirements.
Surveillance: Real‑time market surveillance systems to detect spoofing, layering, insider trading and other manipulative behaviours.
Market rules: Transparent listing, trading, suspensions, halts and delisting protocols, with fair access rules for participants.
Reporting and oversight: Regular reporting to the regulator and cooperation on market investigations.
Investor protections and disclosures: Ensuring listed issuers meet continuous disclosure obligations and that investors have access to accurate market data.

All of these points are central to answering "can you start your own stock exchange" responsibly: approval depends on proving you can deliver and enforce these safeguards.

Technical infrastructure and market microstructure

Whether you build a securities exchange or a crypto venue, the technical design is core. Key components:

Matching engine / order book: Core logic that matches orders according to the venue's order types and priority rules (commonly price‑time). The matching engine must be deterministic, low‑latency and thoroughly tested.
Order types and routing: Support for market/limit orders, IOC/GTC, pegged orders and complex order types demanded by professional traders.
Market data and feeds: Real‑time market data distribution, data entitlements and market‑data monetization strategies. Data quality is central to market confidence.
Connectivity: FIX APIs, proprietary binary protocols, co‑location services and cross‑connects to brokers and liquidity providers.
Co‑location and latency management: Hosting options for liquidity providers and market makers to reduce latency; capacity planning is essential.
Cybersecurity and resilience: DDoS protection, intrusion detection, multi‑factor authentication, role‑based access controls and incident response plans.
Redundancy and disaster recovery: Geographic failover, data replication and tested business continuity plans.
Testing and certification: Certification environments for market participants, simulated trading sessions, stress tests and edge‑case testing.

Technical design choices also shape market behaviour: continuous trading vs periodic auctions, tick size regimes, and matching rules influence liquidity and participant strategy.

Clearing, settlement and custody

Clearing: Many new exchanges connect to an existing central counterparty (CCP). If planning your own clearing solution, expect major regulatory scrutiny.
Settlement cycles: Most major securities markets follow T+2 settlement; settlement infrastructure must integrate with national depositories and custodian banks.
Custody: Secure custody arrangements for participants and issuers; for crypto venues, custody design and key management are crucial. When web3 wallets are referenced, Bitget Wallet is recommended for secure custody integrations and user onboarding.
Reconciliation: Back‑office systems for trade matching, position keeping, margin calculations and fails management.

Without robust post‑trade links, an exchange cannot operate reliably — again central to the question "can you start your own stock exchange" in a compliant manner.

Market participants and operations

An exchange is an ecosystem. Typical roles:

Members / broker‑dealers: Firms authorized to access the trading venue and act for clients.
Market makers / designated market makers (DMMs): Provide continuous liquidity, often under contractual obligations and fee incentives.
Liquidity providers: Institutional participants that deliver depth and tighter spreads.
Retail vs institutional access: Decide if retail clients access the venue directly or via member brokers.
Onboarding and KYC: Membership approvals, KYC/AML checks and technical certification.
Fee structures: Transaction fees (maker/taker), listing fees, market data fees, connectivity and co‑location charges.

Securing commitments from initial market makers and broker partners is one of the hardest parts of launching a new exchange — and it answers the practical side of "can you start your own stock exchange?" by highlighting go‑to‑market needs.

Listing standards and issuer onboarding

If your venue will host listings, set clear issuer standards:

Financial thresholds: Minimum market capitalization, shareholder counts and earnings or revenue tests.
Governance and disclosures: Board independence, audit requirements and continuous disclosure obligations.
Due diligence: Document and audit review during listing application.
Ongoing compliance: Periodic reporting, insider trading policies and corporate actions handling.

For comparison, major exchanges maintain multiple listing tiers and rigorous onboarding processes; new exchanges often position differentiated listing philosophies (for example, the Long‑Term Stock Exchange focused on governance features when it launched). If your model is trading‑only (ATS), you will instead concentrate on participant access and traded products rather than issuer listing standards.

Business model, capital requirements and costs

Revenue streams

Transaction fees (maker/taker spreads or per‑trade fees).
Listing fees and application charges (if you offer listings).
Market data subscriptions and licensing.
Connectivity and co‑location fees.
Value‑added services (index licensing, surveillance data sales).

Typical capital scale

New regulated exchanges often require significant upfront capital. In practice, recent exchange initiatives have raised from tens to hundreds of millions of dollars to cover technology, regulatory, staffing, market maker incentives and operating losses during market onboarding. For example, the Long‑Term Stock Exchange secured capital to support its launch, and the Texas Stock Exchange initiative has reported multi‑million fundraising activity as it seeks approvals and market buildout.

Major expense categories

Technology development or purchase and ongoing maintenance.
Legal and regulatory costs for filings, counsel and compliance teams.
Staff (trading ops, surveillance, compliance, engineering, sales).
Market‑making incentives and marketing to attract listings and liquidity.
Data centre, connectivity and co‑location infrastructure.

These financial realities help founders answer "can you start your own stock exchange?" — technically yes, but financially demanding.

Step‑by‑step process to launch (high‑level timeline)

Strategy and business model: Define whether you will be a national exchange, regional venue, ATS, OTC platform or crypto exchange.
Legal formation and governance: Create the corporate entity, board and clear governance framework.
Capital raising: Secure seed and operating capital sufficient for a multi‑year market build.
Build or buy technology: Choose a matching engine and market‑data stack (custom build or licensed solution).
Draft rulebook and listing standards: Prepare trading rules, participant rules and listing criteria.
Surveillance and compliance systems: Implement AML/KYC, market surveillance and reporting engines.
Regulatory engagement and filings: Submit registration or Form ATS and engage in dialogue with the regulator.
Testing and certification: Conduct connectivity tests, certification for members, stress tests and simulated trading.
Pilot / limited live trading: Onboard selected participants and iterate.
Full go‑live and ongoing oversight: Open the market while meeting ongoing reporting and surveillance obligations.

Timelines: Regulatory approval and market readiness typically take many months to years depending on jurisdiction and complexity. For example, LTSE’s approval process and launch planning spanned years; other recent exchange initiatives have similarly required extended regulatory dialogue and capital accumulation.

Lower‑barrier and alternative approaches

If your goal is to facilitate trading but you want a faster or less capital‑intensive path, consider:

Operate an ATS (Reg ATS in the U.S.): Lower initial burden than a full exchange; still subject to surveillance, reporting and access obligations.
White‑label exchange platforms: License turnkey matching engines and compliance stacks to speed launch.
Partner with an incumbent exchange: Joint ventures or partnerships let you leverage existing infrastructure and regulatory status.
Build a cryptocurrency exchange: Crypto venues can be launched faster in some jurisdictions, but they still face AML/KYC, custody and securities‑law risk if tokens qualify as securities. For wallet integrations and custody, Bitget Wallet and Bitget custody solutions can accelerate user onboarding and secure asset management.

Each alternative changes the core question of "can you start your own stock exchange" to a different operational and regulatory trade‑off: speed and cost vs. control and listing authority.

Case studies and recent examples

Long‑Term Stock Exchange (LTSE): LTSE applied for and received SEC approval to operate as a national securities exchange; it positioned itself with a differentiated listing philosophy focused on long‑term governance. LTSE illustrates that a new exchange can be approved if it demonstrates credible market rules, surveillance and governance.
Texas Stock Exchange (TXSE): As an example of a recent initiative, the TXSE group has pursued approvals and fundraising to create an exchange aimed at providing competition to established markets. As of 2023, media reporting covered the TXSE’s federal filings and capital‑raising efforts as it sought regulatory approval and market traction.
International licensing examples: South African commentary (professional legal journals) shows that jurisdictional licensing regimes differ widely and that early engagement with regulators is crucial.

These case studies answer the practical part of "can you start your own stock exchange" by showing real projects, timelines and the emphasis on regulatory readiness.

Technical & market design considerations (deeper dive)

Important microstructure choices founders must make:

Continuous trading vs periodic auctions: Auctions can help open/close liquidity; continuous trading supports intraday market making.
Tick size regime: Tick sizes alter spreads and can influence liquidity provision.
Order priority rules: Price‑time priority is common; pro‑rata or other regimes change participant incentives.
Fee design: Maker/taker models vs flat per‑trade fees affect market‑maker behaviour.
Dark vs lit liquidity: Allowing dark pools or hidden orders affects price discovery and is often regulated.
Market protections: Circuit breakers, limit up/limit down and trading halts preserve orderly markets during stress.

These choices materially influence whether participants will enter and whether your venue can attract the liquidity needed to survive.

Risks, challenges and competitive dynamics

Liquidity attraction: New exchanges often struggle to attract initial liquidity and listings. Without depth, market participants may avoid the venue.
Regulatory burden: High compliance costs and ongoing reporting obligations.
Technology and operational risk: Outages or cybersecurity incidents harm reputation and may provoke regulator action.
Competitive response: Incumbent exchanges have network scale, deep relationships with brokers and large market‑data businesses.
Market fragmentation: Each new venue can fragment liquidity and raise costs for price discovery.
Reputational risk: Any failure to prevent manipulation, outages or settlement fails can be damaging.

Answering "can you start your own stock exchange" requires realistic risk assessment and mitigation plans for these challenges.

Practical checklist for founders

Define venue type and jurisdiction clearly.
Assemble experienced legal, regulatory and market operations advisors.
Draft the rulebook and listing/trading standards.
Raise adequate capital for 2–3 years of build and market development.
Choose whether to build or license a matching engine and market‑data stack.
Implement surveillance systems and AML/KYC onboarding.
Engage regulators early and prepare Form ATS or exchange registration filings.
Run extensive testing, certification and pilot trading.
Contract initial market makers and broker participants.
Launch with clear contingency and incident response plans.

This checklist turns the abstract "can you start your own stock exchange" into concrete steps.

Frequently Asked Questions (short answers)

Q: Can an individual start an exchange? A: Not directly. Starting an exchange requires an institutional legal entity, governance structures, capital and regulatory filings. Individuals usually lead or fund the effort through a company.

Q: How long does approval take? A: Approval can take many months to multiple years depending on jurisdiction, complexity and regulator engagement.

Q: Is crypto easier? A: Crypto exchanges may be faster to spin up technically but face AML/KYC, custody and potential securities‑law risks depending on token types and local rules.

Q: How much startup capital is typical? A: New exchange initiatives often require tens to hundreds of millions of dollars to cover technology, legal, staff and market development — fundraising examples from recent exchanges show sizable capital needs.

Reporting context and selected dated references

As of 2019, LTSE received SEC approval to operate as a national securities exchange and positioned itself with differentiated listing governance requirements (source: LTSE filings and media coverage).
As of 2023, media reports covered the Texas Stock Exchange initiative’s regulatory filings and fundraising as it sought to gain federal approval and market traction for a U.S.‑based exchange (source: published reporting in national outlets and the exchange’s own public statements).
The U.S. regulatory text governing exchange registration and exemptions is available in 17 CFR Part 240 Subpart A (federal securities rules) (source: official regulatory code).

These dated notes provide context to recent real‑world exchange launches and regulatory materials founders should consult.

How Bitget can help

If you are evaluating paths to build trading venues or crypto markets, Bitget offers products that can accelerate parts of your stack:

Bitget exchange: a regulated trading platform proposition for trading products and liquidity solutions; consider partnerships or market‑making cooperation when designing go‑to‑market strategies.
Bitget Wallet: recommended for secure custody, user onboarding and integration into crypto trading flows; using a reliable wallet supports KYC/AML flows and improves user trust.
Technology and liquidity services: Bitget’s market access, connectivity and wallet integrations can reduce time‑to‑market for crypto‑facing projects.

(These mentions are not endorsements of a specific launch path; they are practical references to platform services that founders commonly use.)

Final notes — what founders should remember

As you consider "can you start your own stock exchange", keep these realities front of mind:

It is legally possible to launch a trading venue, but the pathway is resource‑intensive and regulated.
Decide early whether you need listing authority (full exchange), or whether an ATS, OTC model or crypto exchange better fits time‑to‑market and capital constraints.
Regulatory engagement, credible governance, robust surveillance and proven technology are non‑negotiable.
Plan for several years of work and significant capital; secure anchor participants early.

If you want a practical next step, prepare a one‑page business model that defines: venue type, target users, initial products, revenue model and a capital estimate. Share that with experienced market counsel and consider technical partners — for crypto custody and wallet integration, explore Bitget Wallet and Bitget’s market services to speed deployment.

Further exploration: request a tailored deep‑dive on any of the sections above — for example, a full legal checklist for a U.S. exchange application, a technology architecture blueprint for a matching engine, or a capital‑budget template for the first three years.

Note: This article is informational and not legal or investment advice. Regulatory requirements and timelines vary by jurisdiction and change over time; consult official regulatory texts and counsel before proceeding.

The content above has been sourced from the internet and generated using AI. For high-quality content, please visit Bitget Academy.