LMAX Exchange CEO comments on the FEMR report
London, 11 June 2015 – Commenting on the Fair and Effective Markets Review Final Report published yesterday, David Mercer, CEO of LMAX Exchange, said, “As the leading FCA regulated MTF for spot FX operating a ‘no last look’ open order book, we fully welcome the review’s endeavour to bring increased transparency to the FX market. We will fully support and cooperate with the new market standards committee to help drive the effort in increasing fairness and transparency in FX markets globally.”
Section 2.4.1 of the report discusses enhanced transparency around ‘time stamping’ and ‘last look’ practices in FX Markets.
On the need to standardise the application of ‘time stamps’ to show precise execution time, Mercer commented: “We believe that ‘time stamps’ need to be universal and consistent globally. At LMAX Exchange, we time stamp every order (from receipt to execution and acknowledgement) in milliseconds and believe that this should be the industry standard.
“On the use of ‘last look’, we have a long held view that this practice is no longer required given the advances in trading technology.”
He added: “The answer is clear: to avoid the potential for abuse of ‘last look’, it is best not to have it at all. Technological advancement has entirely eliminated the need for ‘last look’ and a world without it would reinstate much-needed transparency and trust in FX markets, as people will know that they are being presented with the true cost of execution.
“25 of the leading global banks and all major non-bank market makers are already operating on LMAX Exchange’s ‘no last look’ open order book architecture, demonstrating that all participants can co-exist within the same exchange model that is the cornerstone of liquidity for every other asset class.
“This is the benchmark for global FX trading, and whilst we are encouraged that Mr Carney is taking the helm and steering the industry in this direction, we think questioning the acceptability of ‘last look’ is a foregone conclusion – the only “clear standard” that needs to be set is that it should not exist.
“Across the industry there is still not enough understanding about the practice of ‘last look’. A worryingly high number of customers we were speaking to six months ago had never heard of ‘last look’, despite being quoted this way for the last decade. The regulators need to not only draw attention to the practice, but go all the way and accept that it is not needed, under any circumstances. The regulators need to look beyond the established spot FX venues, they need to understand how the new venues operate and see that we have already solved the problem.”
Mercer concluded, “We urge the FEMR to more actively engage with all participants in the market, whether big or small, old or new. As an MTF already practicing ‘no last look’ as standard, we are fully committed and willing to be an industry example of good practice in this respect.”
For further information please contact:
LMAX Exchange (London):
Barbara Pozdorovkina T: +44 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.
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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).