Edited highlights of LMAX Exchange CEO, David Mercer, at FX Week Europe, London, November 2015

LMAX Exchange

Liquidity in FX or a lack of ? Have the market conditions really changed in 2015? Regulatory scrutiny of ‘Last Look’: what’s the price of firm liquidity? Watch David Mercer, LMAX Exchange CEO, discuss ‘Liquidity in FX or a lack of: What the new breed of liquidity providers have to say’.


David Mercer, LMAX Exchange CEO, shares insights.
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During the panel discussion at FX Week Europe 2015 conference CEO of LMAX Exchange, David Mercer, offers his views on liquidity conditions, the practice of ‘Last Look’ and ways to improve transparency in FX .  Elaborating on the highlights from the recently published LMAX Exchange report ‘Restoring Trust in Global FX markets’, David addressed the following questions:

  1. Liquidity conditions better or worse from a year ago?
  2. How do you balance the needs of LPs with the demand in the market?
  3. Isn’t it up to the client whether they choose to trade on last look prices?
  4. Will non-banks become the largest liquidity providers in the future?
  5. Is there a relationship between PB credit availability and market liquidity?
  6. Are the spreads wider compared to a year ago?
  7. What is your outlook for 2016?

Concluding thoughts:
In recent years, the evolution of the FX market has put greater pressure on LPs to take more risk
to benefit from their liquidity service provision and perhaps the line between market making and
proprietary trading became too blurred as a result. This is exactly the sort of grey area which the
market would do well to move away from, but that leaves a pressing question: how are LPs to be
rewarded for the liquidity they offer?

To enjoy the benefits of transparent price discovery and firm liquidity, customers must meet the
costs of the service provided. Fair execution must come at a fair price, and transparency cannot
come at the cost of destroying liquidity provision.

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