Betfair, the online sports betting exchange, has launched a retail CFD and FX platform this week. It allows customers to trade rolling spot FX contracts and CFDs in equity indices, commodities, bonds and interest rates.
After FSA approval last month, Betfair says that the new platform, LMax, will transform retail trading. In the announcement this week, it says: “LMax provides the retail CFD and FX investor with a highly sophisticated but easy-to-use neutral platform that seeks to offer traders a fairer and more transparent alternative to competitors’ offerings. The platform is an exchange that brings together retail and institutional buyers and sellers in a wide variety of financial instruments on a level playing field. Through the exchange, LMax delivers customers fairness, transparency, neutrality and a more efficient and open way to trade. LMax also provides its customers with a community that allows them to share ideas, trading strategies and actively contribute in the development of the platform.”
The idea is that LMax will make available to retail traders facilities such as an open order book, access to institutional pricing, deeper liquidity, central clearing and the ability to set or take the price they want. It makes retail traders the market makers for the first time, the company claims.
Robin Osmond, chief executive of LMax, says: “The current broker-led model for online trading of CFDs and FX is outdated and doesn’t work to directly benefit the customer as the interests of parties are not aligned. We are bringing transparency and fairness to the market by providing an exchange platform and a business model that clearly wants its retail traders to be as successful as possible. For the first time, retail CFD and FX traders can access an open order book with wholesale institutional liquidity across a wide variety of asset classes with all the protections you would expect. LMax offers traders the ability to make a market rather than be passive takers of broker prices.”
He adds: “Using LMax, traders are able to make their own price rather than being restricted to just taking prices. We have a very different model from anyone else in the market and believe that customers will find this extremely attractive. We are an MTF, and the market participants – both retail and institutional – determine our prices. LMax brings the benefits and efficiencies of institutional exchange trading to the retail market. This is long overdue.”
With further asset classes to be added over the next few months, LMax is a very interesting idea and we at theweeklyFiX are keen to see how it plays out. Without sounding too dramatic, it could be a game changer in the world of retail FX, handing some of the power back to the trader. Other big retail players would be forgiven for feeling slightly nervous. Betfair radically changed the face of betting when it launched in 2000 and went on to become the biggest internet betting exchange in the world.
