LMAX Evolvement Continues as it Focuses more on Liquidity
- LMAX, continues to evolve its business model since a management buyout last December separated the firm from Betfair. From partnering with retail IBs, it now focuses on becoming a source of liquidity for the FX industry.
(Post updated below)
FX and CFD Exchange provider, LMAX, continues to evolve its business model since a management buyout last December separated the firm from Betfair. In terms of its product, LMAX is the only FX exchange, built using a matching order engine. As an order based system, LMAX differs from many of the existing FX ECNs platforms which offer Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term providers last looks and are quote driven. To its credit, LMAX’s order engine has become an industry standard for speed and execution, with rival products often benchmarking their technology and efficiency to that of LMAX.
With its bread and butter on offering liquidity takers a no-requote and transparent market, LMAX has been focusing its operations as a liquidity provider. Part of this move has been to integrate its API with retail trading platforms such as Protrader and MT5, as well as partnering with bridging companies to offer liquidity to MT4 (we wrote about Armada Markets and their relationship with LMAX in August 2012). In addition, LMAX recently launched its Interbank offering, to compete with institutional ECNs such as EBS, Hotspot, and Thomson Reuters.
The focus on liquidity, comes as LMAX is in the process of winding down its direct retail offering. Currently, retail customers can open accounts directly with LMAX, with onboarding and compliance procedures handled by the exchange. While these account come with a minimum $10,000 deposit, LMAX offers reduced sized accounts with as little as $1000 deposits through IBs. Speaking to the company in February, an LMAX representative explained that the goal of these IB relationships that offered smaller sized accounts was to create increased awareness of LMAX across the retail sector. Examples like this relationship (https://puretradingsignals.com/) are beneficial for the IB, since it provides them the ability to market a higher end product to smaller sized clients.
However, Forex Magnates has learned from LMAX partners and inside sources that the company is winding down its direct to retail operation. When asked about the evolvement in May of this year as well as more recently, LMAX's marketing division declined to provide comment. However, a source close to the firm did state to us privately that they would be soon no longer accepting retail clients (no word though if they would still accept larger sized individual accounts). The source explained that the process of facing retail clients directly and handling support and compliance “wasn’t worth it economically”. Supporting these comments, another firm who had been in discussion to launch their IB initiative with LMAX explained to Forex Magnates that they retracted their initial plans due to upcoming changes from LMAX.
For LMAX, the migration to a liquidity source from a brokerage house occurs as volumes continue to grow to from around $80 billion a month earlier in the year to over $120 billion recently with the addition of activity in its Interbank venue. The company attributes the growth on greater understanding of its pricing and product within the FX industry. This has allowed them to gain a stronger foothold in attracting institutional clients such as hedge funds, money managers, and proprietary trading firms.
(Update: as seen in the comments and a direct follow-up with Sunny Singh, Senior Marketing Manager at LMAX, after the publishing of this article, the firm publicly disputes any claims of changes to its retail services. However, we stand by our sources in this regard)
(Post updated below)
FX and CFD Exchange provider, LMAX, continues to evolve its business model since a management buyout last December separated the firm from Betfair. In terms of its product, LMAX is the only FX exchange, built using a matching order engine. As an order based system, LMAX differs from many of the existing FX ECNs platforms which offer Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term providers last looks and are quote driven. To its credit, LMAX’s order engine has become an industry standard for speed and execution, with rival products often benchmarking their technology and efficiency to that of LMAX.
With its bread and butter on offering liquidity takers a no-requote and transparent market, LMAX has been focusing its operations as a liquidity provider. Part of this move has been to integrate its API with retail trading platforms such as Protrader and MT5, as well as partnering with bridging companies to offer liquidity to MT4 (we wrote about Armada Markets and their relationship with LMAX in August 2012). In addition, LMAX recently launched its Interbank offering, to compete with institutional ECNs such as EBS, Hotspot, and Thomson Reuters.
The focus on liquidity, comes as LMAX is in the process of winding down its direct retail offering. Currently, retail customers can open accounts directly with LMAX, with onboarding and compliance procedures handled by the exchange. While these account come with a minimum $10,000 deposit, LMAX offers reduced sized accounts with as little as $1000 deposits through IBs. Speaking to the company in February, an LMAX representative explained that the goal of these IB relationships that offered smaller sized accounts was to create increased awareness of LMAX across the retail sector. Examples like this relationship (https://puretradingsignals.com/) are beneficial for the IB, since it provides them the ability to market a higher end product to smaller sized clients.
However, Forex Magnates has learned from LMAX partners and inside sources that the company is winding down its direct to retail operation. When asked about the evolvement in May of this year as well as more recently, LMAX's marketing division declined to provide comment. However, a source close to the firm did state to us privately that they would be soon no longer accepting retail clients (no word though if they would still accept larger sized individual accounts). The source explained that the process of facing retail clients directly and handling support and compliance “wasn’t worth it economically”. Supporting these comments, another firm who had been in discussion to launch their IB initiative with LMAX explained to Forex Magnates that they retracted their initial plans due to upcoming changes from LMAX.
For LMAX, the migration to a liquidity source from a brokerage house occurs as volumes continue to grow to from around $80 billion a month earlier in the year to over $120 billion recently with the addition of activity in its Interbank venue. The company attributes the growth on greater understanding of its pricing and product within the FX industry. This has allowed them to gain a stronger foothold in attracting institutional clients such as hedge funds, money managers, and proprietary trading firms.
(Update: as seen in the comments and a direct follow-up with Sunny Singh, Senior Marketing Manager at LMAX, after the publishing of this article, the firm publicly disputes any claims of changes to its retail services. However, we stand by our sources in this regard)