LMAX Limited today announced that it has received Financial Services Authority (FSA) authorisation and plans to launch and operate a multilateral trading facility (MTF) to trade contracts for difference.
Immediately prior to FSA authorisation Goldman Sachs, pursuant to an agreement entered into in 2008, acquired a 12.5% stake in LMAX Limited’s parent company London Multi-Asset Exchange (Holdings) Limited. LMAX was established by Betfair, the world’s leading sports betting exchange, in 2007, to enter the market for online retail financial trading. Betfair is the majority shareholder in the company.
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It seems that LMAX is going to be the first CFDs exchange that I’m aware of, with the exception of the American NADEX, which offers products somewhat similar to CFDs.
MTF is a MiFiD definition for an exchange, of what we often call an ECN marketplace. It seems that many now view CFDs as a growing market segment and are beginning to offer these products. Boston Technologies recently announced that it will start offering CFD liquidity making access to this instrument even easier.
A word about Betfair: Betfair is the world’s largest international online sports betting provider and pioneered the first successful Betting Exchange in 2000. The Betting Exchange, where customers come together in order to bet at odds sought by themselves or offered by other customers, has eliminated the need for a traditional bookmaker. Having been in touch with the people from Balderton Capital, one of Betfair’s investors and the firm that was behind Bebo as well, a couple of years ago news of Betfair’s imminent IPO which puts its value £1.5bn didn’t come as a surprise to me. I wish Roberto, Balderton Capital and Betfair a successful IPO and best of luck with the new LMAX venture as well.