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

(Post updated below)
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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 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.
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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 (http://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)
LMAX is very unique company, with unique and strong vision
respects and best wishes!
Well i can understand it from a business perspective.
But for me, this sucks. Its hands down the best service i have used, in many ways. I hope there will be some way to continue to trade on their platform somehow. Maybe someone will step in to provide DMA to LMAX for individuals.
We note the reference in an otherwise accurate article to winding down our direct retail business. I can confirm there have been no discussions on that internally and our minimum account size will remain $10k for non-IB business . That minimum may of course rise at some stage in the future. For any queries please feel free to contact us at info@lmax.com
I wonder if LMAX will be for FX what CME is for futures. As of now besides Armada Markets there is only a small number of brokers who promote LMAX. But I think it will change when LMAX develops further and comes out with new products.
Sunny: maybe they dont want to say anything before they make an official announcement? Communication strategy and all..
I could understand if they want to get rid of the minilotters. They generate miniscule commissions, but are high maintainance customers in terms of support (constantly asking silly questions and making complaints and feature requests). Also according to a recent article here, they pay higher fca fees for more accoutns.
They obviously will still need some kind of broker entity to support their business for MT4 clients and bigger traders. I suppose they will just drastically up the minimums at some point.
LMAX is an institutional grade product, nothing new here. So its best rentability is certainly towards institutional players. From day 1, it was quite of an obvious analysis. But of course, launching an institutional business from scratch takes time and investment.
But LMAX is above all a vision with some strong core values that financial industry is critically missing these days, despite regulatory push for it. Transparency, fairness to all players thanks to a central order book without last look, etc.
Let’s wish that retail traders can still benefit from LMAX in the future.
LMAX is in a unique position and I am sure that they have plans in the coming years to offer more services to their institutional clients. I believe that they are looking on how to diversify and increase potential revenue streams with their business model. I have been watching their moves since the beginning and it looks like some of the pieces are falling together… I wonder if they can convince the Japanese FSA as well the US NFA to allow their citizens/residents to trade through LMAX exchange via an accredit LMAX brokerage? Now that would start to give them… Read more »
LMax is denying that they have plans to not take any retail clients anymore.
On the other hand, Ron has 2 independent sources, which would even satisfy the NewYork Times minimal standard for reporting a fact. Wait and see, i suppose..