LMAX Exchange survey: Is the FX market transparent and fair?

LeapRate Exclusive Interview… The past year has seen its fair share of problems and scandals in both the retail and institutional arms of the FX market. The Swiss Franc spike. Last look abuse. Chat room collusion.

Have we all learned something?

Are things changing (for the better)?

Do we feel more confident about our FX trading today?

LMAX Exchange has set out to gather the views of everyone in the FX trading ecosystem – traders, brokers, asset managers, liquidity providers, banks, institutional investors…  – in a fairly wide sweeping survey of where everyone thinks we stand today.

We’re pleased to speak today with David Mercer, CEO of LMAX Exchange – the first FCA regulated MTF for FX – on the survey and a lot more. To take the survey yourself and help influence the future of FX trading click here.


LR: Hi David, and thanks for joining us today. We understand that LMAX Exchange is conducting a major survey of FX traders and other FX market participants. Can you let us know a little more about the survey, and why you’re doing it?

David Mercer, LMAX

David Mercer, LMAX

David: Following up on our recently published report “Restoring Trust in Global FX Markets”, this survey aims to identify any potential shift over the last six months in the market sentiment around transparency and fairness in FX. Six months is a long time in FX – since the second half of last year, we have witnessed yet more FX scandals and fines (incl. the abuse of ‘last look’), increasing regulatory scrutiny and the launch of multiple industry working groups, tasked with developing the global code of conduct and implementing FEMR recommendations. So there has been a lot of activity, but has anything fundamentally changed?

Our previous survey findings demonstrated alarming need to restore trust in the FX market and eliminate practices open to abuse, such as ‘last look’:

  • 80% of respondents agreed the market needs to be more transparent
  • 85% of industry participants identified ‘last look’ as the practice most open to abuse
  • 73% of all respondents prefer to trade without ‘last look’

In our current survey, we are asking industry participants about the changes taking place in the market in the context of the ongoing regulatory and industry initiatives, as well as what they expect to see in the future in terms of market practices, levels of internalisation and trading costs.

We would like to hear from more industry participants and would value the input from LeapRate readers. The survey is short and completely anonymous.

LR: What’s your main premise heading into the survey?

David: The FX industry still needs to do a lot to restore clients’ trust. As industry players, it is our responsibility to ensure a transparent, fair, level playing field marketplace.  Through this survey, we look forward to getting industry participants’ views on how to improve transparency, how to regulate  or standardize specific market practices and how trading volumes and costs are likely to be affected by the proposed industry-wide changes.

Restoring trust in FX marketsLR: Can you say how the response has been so far?

David: The response rate has been very good.  I am not surprised because the survey asks about very topical industry issues and gives market participants an opportunity to express their views. The survey results aren’t simply collected; they are analysed and presented, as industry views, to key stakeholders intent on reforming the market. As the first FCA regulated MTF for FX and a leading voice calling for increased transparency in FX and the end of “last look”, LMAX Exchange is engaged in discussions with regulators, both in the UK and globally, about the changes needed in the market and ways in which technology innovation can help address industry challenges.

LR: What do you plan to do with the survey results?

David: Just as we have done with our previous survey, we will publish the findings and then take them for discussion with industry groups and regulators.

LR: Back to LMAX Exchange for a moment. We know that 2014 was a breakout year for LMAX Exchange, with revenues up 45% and the company turning profitable. Can you let us know how 2015 has gone, as well as the beginning of this year?

David: 2015 was a difficult year for the industry but I am pleased to say that our volumes held up and the industry challenges gave greater credence to our business model. Since launch, LMAX Exchange has been speaking to the marketplace about the advantages of precision pricing, continuous, firm, fast market data and a future market with transparency at its core and no ‘last look’. It’s great to see the market is now talking about all these key issues and even the so called primary venues are coming round to our way of thinking, albeit five years on.

So far, we had a good start to 2016 and I see a lot of opportunity for growth in the next 12-24 months particularly in the Institutional segment and the rapidly growing Asia Pacific region.

LR: What can we expect to see from LMAX Exchange in the coming months?

David: With clients in over 90 countries and international offices in Japan, Hong Kong, Singapore and US, the ambition to build a truly global business and become a leading FX execution venue with real relevance to practitioners across all the diverse parts of the FX market.


To participate in the LMAX FX industry survey please follow this link.

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