LMAX was established and is majority owned by Betfair, the world’s leading sports betting exchange. LMAX launched in October 2010 after nearly three years of development. Based in the UK, LMAX is authorised and regulated by the Financial Services Authority as a Multi-Lateral Trading Facility (“MTF”) making it first Europe’s MTF for trading FX and CFD instruments. LMAX enables both private and institutional investors to trade directly on the exchange.
Spot FX is an OTC product which means it is decentralized and deregulated. This means that basically any forex broker is a trading venue on its own which explains different spreads and pricings. The idea of creating a spot fx exchange is not new and FXMarketSpace was an initiative by CME and Reuters however it was shut down after about a year. Other exchanges like CME, ICE and DGCX only offer futures and options on currencies, making LMAX the only known spot fx exchange.
One of the biggest problems of spot fx exchanges is attracting liquidity, providing advanced trading platforms attractive to both retail and institutional investors and in general being attractive to retail investors (LMAX minimum account size is $10,000 as opposed to no minimum at all with some brokers).
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For now, LMAX is not doing very well financially and last year it reported a £13.2 million loss.
LMAX is now trying to attract retail traders by offering a MT4. As detailed on Trading Gurus getting an MT4 account is not easy, probably because it’s either still in soft launch or because LMAX is not very interested in actively promoting it. This reminds of eToro’s MT4 soft launch – you still can’t find MT4 on its site although eToro launched MT4 long time ago.
It would be interesting to see if LMAX lowers its minimal deposit requirements and whether the retail acceptance of this venue would increase. To make sure this happens LMAX should become much more aggressive on marketing to both market segments.