LMAX Group, independent operator of institutional execution venues for FX and crypto currency trading, announced today it has launched a Weekend FX service.
The service will enable clients to trade outside of market hours for the first time on institutional grade exchange infrastructure.
Weekend FX operates from Friday 17:05 EST to Sunday 17:00 EST, a period when the spot FX market is closed, allowing clients to trade margin FX 24/7. The service will be available through LMAX Global, a leading FCA regulated broker and part of the LMAX Group.
LMAX Group said that it launched Weekend FX in response to substantial demand from institutional market participants and liquidity providers to trade and hedge FX exposure when the underlying FX market is closed.
Reducing exposure to geopolitical and structural risks
According to LMAX, the launch comes at a time of increasing frequency of significant market-moving announcements and events taking place outside of FX market trading hours. This affected the ability of traders to respond to or capitalise on market opportunities and dislocations in a timely manner while being forced to wait until markets open on Sunday evening.
In becoming more widespread, these planned and unplanned events have increased traders’ exposure to geopolitical or structural risks as governments and supranational agencies have sought to respond to the effects of the Covid-19 pandemic and recent market turmoil.
LMAX Group’s global business model and the ability to offer our clients, who are based in 100 different countries across multiple time zones, a way of managing their risk during a closed market window is expected to be a key driver of the long-term growth of the Weekend FX service as the FX industry evolves to a 24/7 traded market.
“Volatility doesn’t stop on a Friday night”
David Mercer, CEO at LMAX said that 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.
“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,” he said.
“Through our institutional spot crypto currency exchange, LMAX Digital, we have seen how effectively the crypto market is functioning without any market downtime, so we would expect the same for FX. 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 continued.
Demand from crypto currency market participants
The firm sees 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. LMAX also expects 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,” Mercer added.
More broadly he sees 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.
24/7 institutional grade FX liquidity
Mercer noted that specifically for the FX market, the launch of LMAX Weekend FX 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 its clients, who want to have the ability to exchange risk and access institutional grade FX liquidity 24/7.
“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. Without leadership in both these asset classes, competitors will be forced to run naked risk to achieve a similar the service,” he said.
“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. We will be looking to expand our offering to include other currency pairs in the near future,” Mercer concluded.