LeapRate Exclusive… LeapRate has learned from regulatory filings that after seeing a year of tremendous growth in 2014, multilateral trading facility (MTF) LMAX Exchange had a reversal of fortune in 2015, with Revenues declining by 12% on flat volumes.
LMAX brought in Revenues of £23.0 million (about USD $30 million) in 2015, down 12% from £26.2 million in 2014.
For the year, LMAX reported a net loss of £1.4 million, versus a profit of £1.6 million in 2014.
Trading volumes on LMAX’s system were basically flat from 2014, totaling $1.9 trillion for the year, or about $158 billion monthly. In addition to margin clients for whom LMAX provides clearing, activity from clients using their own clearing solution (LMAX calls them ‘Give-up clients’) increased during 2015, and now represent about a third of LMAX volumes.
Despite the decline in activity, client funds held at LMAX grew by 27% from $113 million at year end 2014 to $144 million in 2015.
Due to the decline in activity, toward the end of the year LMAX decided to downsize the size of its development team, leading to several dozen layoffs of IT and back office personnel. LMAX also downsized its Sales and Marketing staff during 2015. Overall, LMAX had 112 employees at year-end 2015.
So what happened in 2015 at LMAX?
In part, LMAX blamed the reduced activity on a risk-off mentality and reduced credit availability which pervaded the Forex markets last year for a while following the Swiss Franc spike of January 2015.
LMAX did give a fairly good prognosis for 2016, stating in the filing that Q1-2016 was its most profitable quarter ever. Along those lines, LMAX management provided LeapRate with the following statement, indicating that the company expects to report a multi million pound profit for 2016.
In 2015, LMAX Exchange achieved its main objectives with continued growth in institutional client acquisition and margined client funds, further global expansion, product diversification and futureproofing its exchange technology. This was achieved against a backdrop of reduced credit availability, low volatility, gapping markets and low interest rates following removal of the Swiss Franc peg in January 2015.
It was a year of investment and consolidation for the company with expansion in the Asia Pacific region, opening an office in Hong Kong and developing a Tokyo Exchange. LMAX Exchange continued to invest in its people and its core technology to enable further international growth, culminating in the launch this month of a New York matching engine.
The first nine months of 2016 have been productive for LMAX Exchange and it is expected to post a multi-million-pound profit for the financial year ending December 2016.
LMAX’s income statement for 2015, versus 2014:
