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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 eyes US market play

Wall Street Letter, June 2013 – A US-based matching engine may be in the cards for LMAX Exchange, the London-based multi-lateral trading facility for foreign exchange, according to CEO David Mercer.

The company is looking into New York as the location for a new matching engine, he said. “All the major players have matching engines in London and New York,” he added. The company will first build up the business in London to create a solid base, he said, adding the US play would likely be next year.

“We need to [...]

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David Mercer looks further afield and beyond the regularly discussed topics of geography, greater transparency and growing regulation. In the context of the current challenges in the FX market, David offers views on how the market may be transformed in the very near future.


Video Transcript

David Mercer looks further afield…

David Mercer: Ok, so let’s talk about the future of FX, let’s look further afield, we could talk to death about geography, greater transparency, growing regulation but let’s [...]

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Electronic trading execution methods (as defined by BIS) account for 55% of all spot trading, represented collectively by electronic broking (interbank), MDPs, and SDPs. Of the three electronic execution methods, interbank systems (i.e., EBS and Thomson Reuters) have one of the largest shares of the spot FX market, at 26%.

Retail aggregators do not appear on this execution venue list because they are counted as bank clients in this BIS survey. Inter-broker dealers like ICAP and Tradition capture 47% of FX swap business (voice broker plus inter-dealer direct percentages) as well as 35% of FX options volume.

When looking at electronic trading platforms, both single- and multibank platforms compete actively in two markets: FX spot and outright forward markets.

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According to the recently published report by Aite Group ‘Global FX Market Update 2013: Increased Market Transparency, More Competition’, June 2013, the spot FX volumes will continue to grow on the back of prime-brokered clients (retail FX brokers and hedge funds/HFT firms) for the foreseeable future. Other FX products not impacted directly by regulations, such as outright forwards and FX swaps, should experience similar growth trajectory. Aite Group expects the spot FX market to reach US$2.2 trillion in daily turnover by 2016, up 35% from 2010 levels.

The largest daily trading volume in foreign exchange has traditionally come from the FX swap part of the market, but there are clear signs that new regulations on both sides of the Atlantic— particularly related to higher margin requirements for OTC FX swaps—will temper volume growth as market participants unable to secure margin to maintain or roll FX swaps choose to let them expire or look for alternative hedges on the futures/on-exchange side of the market, something that is now being termed “the futurization of FX swaps.”

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LMAX Exchange CEO, David Mercer, talks exclusively with Profit & Loss Editor, Colin Lambert, explaining the key drivers behind LMAX Exchange’s growth in the marketplace and the company’s continuous focus on delivering benefits to its clients, traders and liquidity providers.

Please find the discussion highlights below and watch the video:

  • What does it take to succeed in the multi-dealer world we currently live in?
  • Do you need to look at how you manage those 4 different clearing solutions?
  • You strive for differentiation, and you have a successful model is it likely to be replicated?
  • Did your ability to build [...]

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LMAX Exchange was awarded the “Best Margin Sector Platform” at the recent 2013 Profit & Loss Readers’ Choice Awards.

Voted on by P&L readers, the Profit & Loss Readers’ Choice Awards recognises excellence within the foreign exchange industry throughout the previous year.

David Mercer, LMAX Exchange CEO, commented:

“Over the last year, LMAX Exchange has delivered on its unique vision for FX trading – a transparent, neutral, level playing field for ALL participants, regardless of status, size or activity levels.

We look forward to further diversifying and growing the LMAX Exchange client base and the Profit & Loss [...]

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It’s been a very exciting and busy first quarter
of the year: in February, LMAX Exchange
was recognised as the ‘Best FX Trading Platform
– ECN/MTF’ by the Wall Street Letter Awards, triumphing over industry heavyweights FXall, Knight Hotspot FX & Bloomberg Tradebook. WSL-Award New trading initiatives

Our expertise is continuously focused on refining and improving all aspects of LMAX Exchange technology with one end in mind – improving our clients’ trading experience and opportunities – here are a few of the latest initiatives…

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LMAX Exchange CEO, David Mercer talks exclusively with Profit & Loss Editor, Colin Lambert explaining the vision behind LMAX Exchange in the context of industry practices. David comments on the new level of transparency LMAX Exchange is bringing to the market through exchange style execution and no ‘last look’ as standard.

Please find the discussion highlights below and watch the video:

  • What’s your view on the demise of Last Look?
  • How easy is it to differentiate LMAX Exchange offering in a competitive space?
  • What does LMAX Exchange have [...]

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The new LMAX Exchange iPad App enables full trading functionality and exchange quality execution with speeds of less than 3ms.

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Seamlessly integrating with LMAX Exchange, it enhances the trading experience with many unique and improved features

  • View of the market depth (the only iPad app showing depth)
  • Edit working Limit orders
  • [...]

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LMAX Exchange Head of Systems, Dr Andrew Phillips, took part in a panel discussion “Low Latency – Is it worth IT?”. This panel focused on the expanding debate relating to investment in infrastructure for trading in different markets, and whether there is ROI justification. The discussion was timely as automated trading moves into complex multi-leg strategies and new asset classes, such as FX, Fixed Income and Derivatives.

Please find the panel discussion highlights below or watch the video.

  • Who justifies the investment and makes decisions with regard to low-latency infrastructure costs?
  • Is the latency reduction in the FX market as [...]

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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.

LMAX Exchange will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. No representation or warranty is given as to the accuracy or completeness of the above information. While the produced information was obtained from sources deemed to be reliable, LMAX Exchange does not provide any guarantees about the reliability of such sources. Consequently any person acting on it does so entirely at his or her own risk. It is not a place to slander, use unacceptable language or to promote LMAX Exchange or any other FX, Spread Betting and CFD provider and any such postings, excessive or unjust comments and attacks will not be allowed and will be removed from the site immediately.

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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