LMAX Review

LMAX Review – Introduction

LMAX is a very exciting new Forex and CFD broker that uses a technology that differs from the coveted ECN and STP systems used by other brokers, namely “Multilateral Trading Facility” (MTF – more details below).

With a host of trading platforms, and supporting MetaTrader 4 via a bridge, it promises to have the best executions, spreads and no requotes of any retail Forex broker. As you may appreciate, finding an honest, reliable broker can be a challenge, so this may well be what we have all been looking for (please see this link for other Forex broker reviews, including impartial reviews from our members).

Below is a Q&A that forms the basis of this comprehensive LMAX Review.

[Important Update! Find out how to get rebates on commissions and also get an account with only $1.000 instead of the usual $10,000 - please scroll to the bottom of this LMAX review for more details of this fantastic offer for Forex FX Trader members and readers.]

LMAX Review – Q&A

(Thanks to Frederik Ohlson of Lmax for the answers to the below questions for our LMAX review.)

When was LMAX founded and what its relationship to Betfair?

LMAX was established and is majority owned by Betfair, the world’s leading sports betting exchange, and launched in October 2010 after nearly three years of development.
Based in the UK, LMAX is authorised and regulated by the Financial Services Authority as a Multi-Lateral Trading Facility (“MTF”). MTF is defined in the Markets in Financial Instruments Directive (“MiFID”) as a multilateral system, operated by an investment firm or a market operator, which brings together multiple third-party buying and selling interests in financial instruments – in the system and in accordance with non-discretionary rules – in a way that results in a contract in accordance with the provisions of Title II of MiFID.

How is the LMAX Exchange trading technology different?

The LMAX exchange venue’s award winning ‘disruptor’ technology ensures orders are processed and matched with unprecedented speed and efficiency. Key characteristics of LMAX Exchange technology are:

Ultra-low latency and superior performance matching engine
- Low latency (common execution speed <5ms)
- High throughput capacity > 100k messages per second
  - Capability to process institutional trading volumes
Full range of connectivity options
- UIs, APIs (.NET, Java, FIX 4.2), leading MT4 bridge providers (Gold-i and PrimeXM)
Straight Through Processing
Reliable and robust platform
- Formal change control system with comprehensive software testing
- Dedicated servers to run acceptance tests ( 4000+ tests run on new system functionality)

Which base account currencies do you offer?

At the moment we offer USD, EUR, GBP and AUD as base accounts currency. We are looking into offering more base accounts currencies as the demand grows.

What is your minimum lot size?

Minimum trading size is a micro lot, 0.01.

What is the maximum leverage you provide?

Maximum leverage is 1:100

Do you allow scalp trading and/or the use of high frequency trading systems?

Yes, we allow scalping and high frequency trading systems.

Can traders place S/L or T/P as close as they want to the current price?

Traders may place their S/L and T/P as close as they would like to the current price.

Can you please explain the commission charges?

The standard commission structure is as follows:

FX : $25 per million based on notional traded amount (or $0.25 per $10,000 contract). Minimum commissions apply to FX trades that are less than 1 standard lot. Please refer to Instrument information on the LMAX Exchange trading platform for further details.
If you are trading FX then the rate is 0.0025% of the notional traded value of the second currency (equivalent to $25 per million dollars traded)
CFDs:

- GBP traded instruments: £0.25 per contract traded; subject to a minimum £0.50

- EUR traded instruments: €0.30 per contract traded; subject to a minimum €0.60

- USD traded instruments: $0.40 per contract traded; subject to a minimum $0.80

How does LMAX Exchange offer security and reliability?

For ultimate security, LMAX is regulated and authorised by the FSA as an MTF (Multilateral Trading Facility) and as a broker.
In compliance with FSA regulations ALL client funds are kept in 100% segregated client accounts.
All LMAX Exchange Contracts for Difference (CFDs) are centrally cleared via LCH.Clearnet and margin FX products are bilaterally cleared via our institutional prime broker, JP Morgan.

What is LMAX Exchange?

The LMAX Exchange is the first multi-asset trading facility that offers a new way for IBs, Brokers, Professional Traders and Institutional investors to trade FX and CFDs. LMAX Exchange offers direct access to live, tight, executable, institutional prices.

Below is the schematic overview of LMAX exchange

LMAX Review Schematic

Difference between an MTF and an ECN:

LMAX Review - MTF Vs. ECN

What are the benefits of trading on the LMAX Exchange?

Direct access to market maker liquidity
Market/limit orders & ultra-fast execution (orders typically matched under 5ms)
Anonymous/neutral trading with no re-quotes and no “last look”(unlike ECNs)
An open order book, price transparency and market depth (up to 20 levels*)
Competitive aggregated spreads set by the market – not by LMAX
The ability to make your own market by placing your order into the order book
Ultra-competitive trading terms (plus, LMAX does not oppose client positions)
Flexible connectivity options – MT4, MultiCharts, FIX Protocol, Java, .Net & mobile
The credibility of an MTF authorised by the FSA in the UK

* Available through FIX API to Professional account holders

How are the prices set on the LMAX Exchange?

The LMAX Exchange offers clients direct access to live, executable, institutional pricing. Execution via our open, anonymous order book ensures the best bid and offer prices are set by the market.
Clients don’t have to accept the price offered in the order book – they can post their own orders at any level and wait for it to be matched.

Why is LMAX Exchange totally neutral and transparent?

On the LMAX Exchange there is no dealer intervention – and never any requotes. We don’t hedge, or oppose client positions either. LMAX purely and simply matches the best bids to the best offers.
There are no hidden charges on the LMAX Exchange. Nothing extra is built into the spread. Charges are entirely transparent. Just as on an institutional exchange, LMAX charges a commission rate per contract depending on the instrument.

LMAX Review – Conclusion

LMAX looks to be the most exciting broker to come around for years. Whilst the more sceptical amongst you will say that is not difficult, LMAX looks to address many of the problems we have seen with so many brokers.

Possibly the worst drawback was the account size needed to get trading on LMAX – $10,000 is the smallest for a Classic Account. However Lmax have agreed to reduce that dramatically.

Additionally, they do not accept US clients at the present time.

Despite this, the conclusion of our LMAX review would be to strongly recommend you take a look if you have the requisite account size and aren’t based in the United States.

LMAX Review – Important Update

If you sign up for LMAX from the banner below (simply click the link to open a new tab/window), not only will the minimum account size of $10,000 be reduced to $1.000, you will also be eligible for monthly rebates on commissions and your withdrawals will be free of charge (regular LMAX clients must pay a small fee for withdrawals).

We hope you take advantage of this fantastic service and that you enjoyed this LMAX Review