LMAX Group has launched Weekend FX a service to allow clients to trade during those hours in which the FX market is closed, from 17:05 EST on Friday to 17:00 EST Sunday. The service will be available through LMAX Global, the group’s UK-regulated broker and will support cash-settled CFD (contracts for difference), which are non-fungible and non-deliverable.
The firm highlights two main factors driving the idea of the new service – more risk events at the weekend generally and, interestingly, lessons it has learnt from the first two years of LMAX Digital, which is open 24/7. “Through our institutional spot crypto currency exchange, we have seen how effectively the crypto market is functioning without any market downtime, so we would expect the same for FX,” says David Mercer, CEO of LMAX Group. “The discrepancy between trading hours of the FX and crypto markets has added to the need for the launch of LMAX Weekend FX. Crypto, the young up-start, is forcing FX, the established asset class, to change its ways, close the gap and provide liquidity over the weekend.”
Mercer also points to the increasing frequency of market moving events outside of FX market hours. “The last few months have reinforced the common understanding that volatility doesn’t stop on a Friday night and risk events have now extended beyond the working week,” he observes. “As a result, the current trading session doesn’t reflect market participants’ increasing need to access FX liquidity 24/7 in order to exchange risk – this puts significant pressure on the FX market to move with the times and become fully accessible seven days a week.
“More broadly we see LMAX Weekend FX as the first step along the path to all asset classes and markets opening up to perpetual trading and transitioning to complete, open market access,” he continues. “Specifically for the FX market, the launch is a landmark moment and a great example of how LMAX Group has remained at the forefront of industry change by continuing to innovate and create market leading solutions for our clients, who want to have the ability to exchange risk and access institutional grade FX liquidity 24/7.”
Clearly Mercer is confident regarding the new service, and again, he points to the experience in the crypto markets as a key factor. “By virtue of our distinctive position as a leader in the electronic FX and crypto currency markets we are able to provide clients with natural FX liquidity,” he asserts. “Without leadership in both these asset classes, competitors will be forced to run naked risk to achieve a similar the service. Our advantage is to offer institutional level liquidity in Weekend FX from Day 1 as a result of existing client demand in FX and crypto and full support from quality institutional liquidity providers.”
The service will launch in EUR/USD and USD/JPY only, however Mercer says other currency pairs will be added “in the near future”.
“We see the service being popular with FX investors of all types, from hedge funds through to retail brokers, as means of exchanging risk and accessing institutional grade liquidity through our fair and transparent execution venue,” he says. “We also expect to see substantial demand for Weekend FX from crypto currency market participants, trading on LMAX Digital, who can use the service to hedge their FX exposure when the FX market is closed.”
“We are very confident of long-term demand for this service, given the unassailable move to 24/7 FX trading on the back of consistent investor demand over the past 30 years for increased market access, increasing levels of global trade and the need for more efficient capital markets. We consider a full move to 24/7 spot FX trading a real possibility within the next five years, with Weekend FX representing a clear step forward in achieving this goal.”