FCA-regulated LMAX exchange launches Institutional crypto market

Large Forex platform adds limited range of major cryptocurrencies after demand from its users, will aim to make trading mainstream for institutional investors.

The London-based LMAX foreign exchange, which handles trades amounting to something in the region of $4tn per year, has just added Bitcoin, Ethereum, Litecoin, Ripple and Bitcoin Cash to its market options, according to The Financial Times. LMAX is fully regulated by the Financial Conduct Authority, and will offer the markets to institutional investors only – which it says drove the innovation – and will also offer a cryptocurrency storage facility for its clients. In its press release, CEO David Mercer said:

“We are furthering the legitimisation of the crypto currency market by offering institutions a platform on which to acquire, trade and hold crypto currencies securely with high quality, deep liquidity.”

Trading will be available 24 hours a day, seven days a week, and will be governed by similar rules and principles as LMAX Exchange’s FCA-regulated MTF (Multilateral Trading Facility). The move can be seen as an attempt by LMAX to overcome fears among institutional investors over security, reliability and oversight of existing and upcoming crypto-exchanges, and the it is keen to leverage its good name and established standing to attract its existing clientele of traders, hedge funds, and high-level investors into the digital currency market – as well as attracting new business from investment banks.

“We are perfectly positioned to address the gap in the market for a robust physical crypto currency exchange operating with institutional liquidity,” David Mercer continued. “Over $10 trillion of FIAT has been traded on our exchanges to date and we have institutional clients in over 100 countries. We’ve applied everything we’ve learned in the institutional FX market to LMAX Digital.”

The company says it plans to roll-out the service to its users in New York and Tokyo in the near future.

The Financial Times, in its report on the move by LMAX, quotes a report by consultancy firm The Tabb Group, which said institutional investors have been put off trading crypto “by a lack of regulatory clarity, data quality and adequate infrastructure”.

It quotes Monica Summerville, head of European research at Tabb, as saying funds “waiting for the right conditions to enter the market, and [this is] expected to begin happening this year.”

LMAX’s move comes at the same time as Coinbase, and its GDAX exchange, has just announced plans to upgrade its systems to better suit high-frequency traders, as well as launching a similar ‘custodian‘ service for its customers.

Financial Times (subscription).