The lawsuit was filed on Friday in Manhattan federal district court, as the high-speed trading industry came under greater scrutiny following the publication last month of author Michael Lewis's book 'Flash Boys: A Wall Street Revolt'.
A number of regulators have said they are probing the industry, including the Justice Department, Securities and Exchange Commission and Commodities Futures Exchange Commission.
The proposed securities class action was brought by the city of Providence, Rhode Island, on behalf of investors who bought stock in the United States from April 2009 to present.
The lawsuit targets stock exchanges operated by BATS Global Markets Inc, Chicago Board Options Exchange, NASDAQ OMX Group Inc and Intercontinental Exchange's New York Stock Exchange, accusing them of engaging in a fraud designed to manipulate the markets.
The alleged fraud, carried out with several brokerage firms and sophisticated high-frequency trading firms like Citadel, resulted in the diversion of "billions of dollars annually from buyers and sellers of securities to themselves", the lawsuit said.
The scheme allowed some market participants to get non-public data that gave them an "informational advantage" to manipulate the US securities market, the lawsuit said.
Stock exchanges and brokerages that controlled alternate trading venues, or "dark pools", received kickbacks in exchange for giving high-frequency trading firms access to material trading data, the complaint alleged.
The complaint alleged wrongful conduct including electronic front-running, rebate arbitrage, spoofing and contemporaneous trading.
"By employing the aforementioned devices, contrivances, artifices and manipulations, defendants pursued a fraudulent scheme and wrongful course of business that operated as a fraud or deceit on public investors trading stocks on the US stock exchanges," the lawsuit said.
The brokerage defendants include a number of major financial institutions including Bank of America Corp, JPMorgan Chase & Co, Citigroup Inc and Morgan Stanley.