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LMAX Exchange calls for UK to lead global regulatory change in the $5.3 trillion FX industry

London, 11 July 2016 – LMAX Exchange, the leading Multilateral Trading Facility (MTF) for FX and one of the UK’s fastest growing fintech companies, is calling for UK financial regulators to show worldwide leadership and deliver on the FEMR objectives to improve transparency in the FX market, set out by the Chancellor of the Exchequer and the Governor of the Bank of England in June 2014.

This call to action comes at a time when the market sentiment still suggests a lack of trust in FX trading, the world’s largest asset class, and at a crucial juncture for the UK government’s aim to protect UK’s leading position in the global financial markets.

LMAX Exchange believes that there is more urgency than ever for the UK regulators to lead with impactful reforms to improve transparency and fairness in the global FX market and put an end to the two-year regulatory inertia. This is supported by the industry survey findings, detailed in the newly launched report by LMAX Exchange.

‘The road to FX reformation: Restoring trust – a second look at market progress’  report highlights that the FX market participants do not believe that much has changed in the last two years, question the ease of implementing the Code of Conduct on a global scale and want to see the end to FX market practices that are open to abuse, such as ‘Last Look’.

As a result, LMAX Exchange is calling on the FCA, the Bank of England and HM Treasury to use the FEMR process and to drive the global FX regulatory agenda through introduction of new industry standards and a commitment to a clear timeline for ridding the market of practices open to abuse.

This mirrors the earlier set out objectives by the Fair and Effective Markets Review to “reinforce the confidence in the wholesale Fixed Income, Currency and Commodities (FICC) markets in the wake of serious misconduct seen in recent years; and to influence the international debate on trading practices.”

The market survey findings presented in ‘The road to FX reformation’ report highlight:

FX market’s disillusion with regulatory initiatives over the last two years:

  • 65% of the respondents don’t believe they get fair execution when trading FX
  • Over 60% doubt the impact of the global code of conduct, expecting potential conflict with local regulations
  • A majority believed that transparency had not improved since the FEMR review

Clear signal that ‘Last Look’ must go:

  • Findings highlighted the extent to which the use of ‘Last Look’ is open to abuse – 50% of respondents said that they were not aware of this practice
  • 76% of aware respondents preferred to trade without ‘Last look’
  • 62% of aware respondents said ‘last look’ is the most unacceptable market practice

Industry’s view on what can improve transparency:

  • 78% believed that ‘Last Look’ should be abolished
  • 77% said that FX should move to rules-based regulated trading environment
  • 71% of respondents believed that FX trading should move to execution-only venues

These findings show that the ongoing campaign by LMAX Exchange to rid the market of practices that damage trust, like ‘Last Look’, is as relevant as ever. The Global Code of Conduct has been welcomed but market sentiment, demonstrated through the survey, suggests that the global FX industry is not convinced of its potential impact.

As a result of the survey, LMAX Exchange calls on the regulators to:

  • Define how a transparent and fair FX trading environment should work by being specific about the required business model, trading rules and market practices
  • Commit to a clear action plan for change with a timeline that includes the abolition of market practices open to abuse
  • Appoint and empower the delivery body (regulatory, industry or a mix of both) to implement the transparent state of the FX market within a specified timeframe

David Mercer, CEO of LMAX Exchange, comments, “It is clear that restoring trust is the biggest challenge that the global FX industry faces. Fines for market abuse have continued since we last provided an in-depth survey of the market and the Global Code of Conduct has been launched to a lukewarm reception and only addresses the ‘voice market’, just 30% of the industry. The easy questions have been answered, with the hard ones yet to come.

As a result, we are calling on the UK regulators to show global leadership in current uncertain times and abolish ‘Last Look’ among other practices that are open to abuse. This requires a clear timeline and action plan, significant revision to the composition of the working groups and a total focus on the ways that technology can make the global FX industry work more effectively.

These findings should concern those seeking to reform the FX market. FX can only thrive as a liquid, global and essential market that it should be if it engenders trust among all market participants.

This research shows that the market still has a long way to go to win back trust and there needs to be greater focus and urgency to address the major issues at play. This is being brought under even sharper focus with the exceptional global uncertainty following the UK’s Leave vote in the EU Referendum.”

To download the report please go to: www.lmax.com/fx-reformation

Download as a PDF

Media Contacts

For further information, please contact:

Seven Hills:
Tom Nutt T: 44 (0) 20 7199 6191 E: [email protected]

LMAX Exchange:
Barbara Pozdorovkina T: 44 (0) 20 3192 2510 E: [email protected]

About LMAX Exchange

LMAX Exchange Group is a dynamic, visionary and award-winning financial technology company. Recognised as one of the UK’s fastest growing technology firms, LMAX Exchange is leading the transformation of the global FX industry to transparent, fair, precise and consistent execution. Operating one global marketplace for trading FX, metals, indices and commodities, LMAX Exchange delivers open access, transparency and a level playing field to all market participants.

LMAX Exchange Group offers all clients the ability to trade on LMAX Exchange central limit order book, driven by streaming no ‘last look’ limit-order liquidity from top tier banks and non-bank financial institutions. Servicing funds, banks, brokerages, asset managers and proprietary trading firms, LMAX Exchange offers an anonymous, regulated, rules-based trading environment, order execution in strict price/time priority, and access to real-time streaming market and trade data, enabling all market participants to control execution quality and total trading costs.

Offering a comprehensive range of instruments and ultra-low latency execution, LMAX Exchange operates a global FX exchange infrastructure with matching engines in London, New York and Tokyo.

LMAX Exchange - a unique vision for global FX.

Financial technology awards:

2017 Best FX Trading Venue - (ECN/MTF) – Fund Technology and WSL Awards more

LMAX Exchange has been awarded The Fund Technology and WSL Awards “Best FX Trading Venue - ECN/MTF”. The award honours excellence among providers to the institutional trading industry. close

2016 Best Trading & Execution Technology – HFM US Technology Awards more

The HFM US Technology awards recognise hedge fund technology providers that have demonstrated exceptional customer service and innovative product development in the past 12 months. close

2013 Best Overall Testing Project – The European Software Testing Awards more

The European Software Testing Awards (TESTA) recognise excellence and innovation in the software testing and quality assurance across a variety of industries. close

2011 Best Trading System – Financial Sector Technology Awards more

The FST Awards recognise excellence and innovation in the field of information technology within the UK and EMEA financial services sector.close

2011 Innovative Programming Framework – Oracle Duke's Choice Awards more

Oracle’s Duke's Choice Awards celebrate extreme innovation in the world of Java technology and are granted to the most innovative projects using the Java platform. close

FX industry awards:

2018, 2017, 2013 Best Execution Venue – Forex Magnates Awards more

LMAX Exchange has been awarded the Forex Magnates Awards “Best Execution Venue”. The awards are granted to the top firms in their categories and announced at the annual London summit. close

2017, 2016, 2015, 2014, 2013 Best FX Trading Venue - (ECN/MTF) – WSL Awards more

LMAX Exchange has been awarded The WSL Awards “Best FX Trading Venue - ECN/MTF” for four consecutive years. The awards honour excellence among providers to the institutional trading industry. close

2017, 2016, 2015, 2014, 2013 Best Margin Sector Platform – Profit & Loss Readers' Choice Awards more

LMAX Exchange has been awarded The Profit & Loss Readers’ Choice Awards “Best Margin Sector Platform” for five consecutive years. These awards are voted on by the readers and recognise excellence within the foreign exchange industry throughout the previous year. close

2014 Best Infrastructure/Technology Initiative – WSL Institutional Trading Awardsmore

LMAX Exchange has been awarded The Wall Street Letter Institutional Trading Awards “Best Infrastructure/Technology Initiative” in 2014. WSL awards honour excellence among providers to the institutional trading industry. close

Business growth awards:

2016, 2015 Winner – Deloitte UK Technology Fast 50 more

Deloitte UK Technology Fast 50 is a ranking of the 50 fastest-growing technology companies in the UK, based on percentage growth of fiscal year revenues over the last four years. close

2016, 2015 Winner – Deloitte EMEA Technology Fast 500 more

The Deloitte EMEA Technology Fast 500 pre-eminent technology awards program is a ranking of Europe, the Middle East, and Africa's fastest-growing technology companies based on percentage revenue growth over three years. close

2015, 2014, 2013 Fastest Growing Tech Company in the UK – The Sunday Times Tech Track 100 more

LMAX Exchange has been recognised amongst the UK’s fastest growing technology firms for three consecutive years. Tech Track 100, compiled by Fast Track annually and published by the Sunday Times each September, lists Britain’s 100 fastest-growing private tech companies based on sales growth over the last three years. close

2015 Recognised as a Tech City Future Fifty company – Tech City UK Future Fiftymore

LMAX Exchange is part of the Future Fifty programme, focused on accelerating the success of high-growth tech businesses. close

LMAX Exchange Group is the holding company of LMAX Limited and LMAX Broker Limited.

LMAX Exchange is a trading name of LMAX Limited, which operates a multilateral trading facility, authorised and regulated by the Financial Conduct Authority (firm reference number 509778) and is a company registered in England and Wales (number 6505809).

LMAX Global is a trading name of LMAX Broker Limited which is authorised and regulated by the Financial Conduct Authority (firm reference number 783200) and is a company registered in England and Wales (number 10819525).