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LMAX Exchange blog - FX industry thought leadership

All the latest business and technology views and insights on the FX industry from LMAX Exchange management and staff

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Business and Technology

LMAX Exchange CEO, David Mercer, participated in an interview with Profit & Loss at Forex Network New York on 28 May offering his views on the industry’s changing landscape.

With thanks to no last-look liquidity from the world’s leading banks and market makers, LMAX Exchange became the UK’s fastest growing technology firm in The Sunday Times Tech Track 100.
Now with offices in London, Hong Kong, Singapore and the US, as well as clients in 90 countries, LMAX Exchange continues to build its global FX market presence.

David Mercer, LMAX Exchange CEO, shares insights.
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LMAX Exchange CEO, David Mercer, gave a speech at the World Exchange Congress 2015, on global capital markets and specifically about the FX market, the world’s largest asset class. David argues the practice of ‘Last Look’, which is a price with an option to reject or re-quote an order by market makers, that further drives down the level of transparency in the market and reduces the certainty of execution.

He continues, ‘last look’ is a relic of history and with it you can never prove best execution, it’s a one way option, to the benefit of a few but to the detriment of the many. FX should benefit from the transparency we see at every other asset class, there is no level-playing field in FX and the customer is beginning to react.

David states that the future of FX is on exchange and that the challenge is to create an exchange for the benefit of all, rather than the few. LMAX Exchange is a testament that the exchange style execution works and is the most efficient way to trade FX. Having the world’s top tier global banks and leading HFTs as Liquidity Providers, LMAX Exchange has been leading the FX industry’s evolution towards exchange style trading for the past 4 years. And unlike the ECNs, LMAX Exchange is authorised and regulated by the FCA as an MTF and has stringent regulatory requirements. LMAX Exchange is establishing the new exchange benchmark in FX trading and is addressing two main issues faced by clients trading FX 1) lack of price transparency and 2) lack of certainty of execution.

LMAX Exchange CEO speaking at the World Exchange Congress – part 2
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LMAX Exchange CEO, David Mercer, gave a speech at the World Exchange Congress 2015, on global capital markets and specifically about the FX market,  the world’s largest asset class. David puts forward the view that the long-term future of FX trading lies on exchange, as it  delivers the highest level of transparency and certainty of execution, compared to ECNs, dark pools or voice trading.

He continues, the FX market is under pressure due to lack of trust in the market place, and it is important for capital markets and FX markets to regain it. There’s a lack of transparency in FX,  a lack of transparency that can only exist in a bilateral OTC market place; and the opaque practice of ‘last look’, an option to reject or  re-quote an order by market makers, that further drives down the level of transparency in the market and reduces the certainty of execution. ‘Last Look’ is a relic of history and with it you can never prove best execution, it’s a one way option, to the benefit of a few but to the detriment of the many.

David states that LMAX Exchange fundamentally believes in a market structure that allows equal access and best execution, and by offering greater transparency, LMAX Exchange can be the change that the customer requires today. In terms of regulation, David suggests that regulators need to look at the spot market first rather than starting with Swaps and NDFs. He believes that by solving the spot market – by default one will solve the swap market.

LMAX Exchange CEO speaking at the World Exchange Congress – part 1
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LMAX Exchange CEO, David Mercer, comments that the recent public perception of High Frequency Trading as being the poorest incarnation of Big Finance could be the result of particular journalistic approach and the reality is that HFT is here to stay. David states, the markets require liquidity and the best liquidity providers are the best high frequency market makers, who incidentally are situated in banks and proprietary trading firms with no differentiator. It could be public perception can be changed with a combination of greater education and more responsible journalism.

David Mercer, LMAX Exchange CEO, shares insights.
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LMAX Exchange CEO, David Mercer, states that the impact of High Frequency Trading is good for the FX market. There is no better time to be a customer in the market, the cost of trading has been driven down, allowing prices to become more accessible whilst providing a greater degree of price discovery than ever before.

David Mercer, LMAX Exchange CEO, shares insights.
Is the impact of HFT good or bad for the FX market?

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LMAX Exchange CEO, David Mercer, talks about the journey the company has taken in recent years: the opportunities and challenges faced along the way, leading change and disrupting the financial trading industry, and the persistence to challenge conventions, resulting in 307.8% growth between 2010/11 and 2013/14 and LMAX Exchange topping the 2014 Sunday Times Tech Track 100 list.

David Mercer, LMAX Exchange CEO, shares insights.
Is the impact of HFT good or bad for the FX market?

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LMAX Exchange CEO, David Mercer, comments that despite new regulations it is uncommon for market makers to be reluctant in the FX market. David states incentivising market makers is still yet to be encountered in FX and currently the difficulty could be perceived as the onboarding of buy side clients.

David Mercer, LMAX Exchange CEO, shares insights.
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LMAX Exchange CEO, David Mercer, on providing efficient market access for small institutional clients – at Profit & Loss Forex Network, Chicago, Sept 2014.

David Mercer, LMAX Exchange CEO, shares insights.
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Any opinions, news, research, analyses, prices or other information ("information") contained on this Blog, constitutes marketing communication and it has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Further, the information contained within this Blog does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument. LMAX Exchange has not verified the accuracy or basis-in-fact of any claim or statement made by any third parties as comments for every Blog entry.

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LMAX Exchange will clearly identify and mark any content it publishes or that is approved by LMAX Exchange.

FX and CFDs are leveraged products that can result in losses exceeding your deposit. They are not suitable for everyone so please ensure you fully understand the risks involved. The information on this website is not directed at residents of the United States of America, Australia (we will only deal with Australian clients who are "wholesale clients" as defined under the Corporations Act 2001), Canada (although we may deal with Canadian residents who meet the "Permitted Client" criteria), Singapore or any other jurisdiction where FX trading and/or CFD trading is restricted or prohibited by local laws or regulations.

LMAX Limited operates a multilateral trading facility. LMAX Limited is authorised and regulated by the Financial Conduct Authority (firm registration number 509778) and is a company registered in England and Wales (number 6505809). Our registered address is Yellow Building, 1A Nicholas Road, London, W11 4AN.

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