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Platform speed bumps a ‘marketing ploy’

FX Week, July 2013 - The use of randomisation logic to eliminate the execution advantages gained on foreign exchange trading platforms by some high-frequency traders (HFTs) was denounced as little more than a “marketing ploy” by a group of platforms and technology vendors at FX Week USA.

Speaking during a panel discussion, David Mercer and Dmitri Galinov, chief executives of LMAX Exchange and FastMatch respectively, agreed the use of randomisation, which is a central tenet of bank-backed platform ParFX and is also being rolled out on EBS, is unlikely to become widespread.

“I think randomisation is nuts, and it covers deficiencies in existing venues. Technology hasn’t gone anywhere near as far as it is going to. We talk to some of the banks that allegedly would prefer or are involved in randomisation, and they say they want to be done in price-time priority, but sure, if they are losing out to HFTs, then let’s randomise. The banks have caught up a lot with the HFTs. Randomisation is easy to do; it’s trivial technology-wise, but it is a marketing ploy right now, apparently to create fairness. I don’t think it will be the way forward,” said Mercer.

“Typically every market goes through this, where you have primary venues that don’t have good technology,” added Galinov. “They come out with randomisation mechanisms and other things, but ultimately new venues with better technology will show up; they will buy them and they will upgrade their technology, which will benefit all participants.”

Other panellists agreed randomisation is unlikely to spread, and that while ParFX and EBS have argued it creates a fairer playing field, it could tip the balance too far by delaying orders and preventing participants from getting the best out of their technology. Better market surveillance might be a more effective way to tackle latency arbitrage, said Yaacov Heidingsfeld, chief executive of liquidity aggregation technology vendor TraderTools.

“If we can self-police away from latency arbitrage, and get rid of the valueless volume and flow that goes through platforms just because market participants are taking advantage of latency, I think that will go a long way toward creating the fairness everybody is talking about. But people that are faster inherently and can spot market trends more quickly – and certainly that would include some types of HFT – should be allowed to profit and benefit from things like that. It is not knowing which way the market is going first that is the problem; it is taking advantage of those market participants that can’t act fast enough because of infrastructure or technology limitations,” said Heidingsfeld.

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Media Contacts

For further information please contact:

LMAX Exchange (London):
Barbara Pozdorovkina T: +44 20 3192 2510 E: press@lmax.com

About LMAX Exchange

Recognised as one of the UK’s fastest growing technology firms for three consecutive years (2015, 2014 and 2013 Sunday Times, Tech Track 100), LMAX Exchange is the leading MTF for FX, authorised and regulated by the FCA. Servicing retail brokers, funds, corporates, asset managers and banks, LMAX Exchange delivers a unique vision for global FX trading - a transparent, neutral, level playing field for all market participants, regardless of status, size or activity levels.

The LMAX Exchange OPEN order book is driven by streaming, no ‘Last Look’ limit order liquidity. LMAX Exchange offers a range of key products, including spot FX, precious metals, commodities and equity indices, with complete pre and post-trade transparency and order execution where no ‘last look’ is standard. Orders are executed in strict price/time priority.

LMAX Exchange – the emerging benchmark for global FX.

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

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

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 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

FX industry awards:

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

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

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 three 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 Awards more

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

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

Financial technology awards:

2016 Best Trading & Execution – 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

LMAX Limited operates a multilateral trading facility (MTF). Authorised and regulated by the Financial Conduct Authority, FCA Registered no. 509778.