LMAX does not have a true DOM / UK ECN brokers

Sidekicker · May 21, 2012

Just been chatting with LMAX. They state that their DOM is only the LMAX exchange, it does not list the order book from the actual exchange.
What is the point in that? If I want to read a DOM, I don't care if 10 of LMAX's clients are shorting, I care what the actual market is doing.

Secondly, why are there so few ECN brokers in the UK? Seems to be mostly a market dominated by the US.

tar · May 21, 2012

Sidekicker said:
Just been chatting with LMAX. They state that their DOM is only the LMAX exchange, it does not list the order book from the actual exchange.
What is the point in that? If I want to read a DOM, I don't care if 10 of LMAX's clients are shorting, I care what the actual market is doing.

Secondly, why are there so few ECN brokers in the UK? Seems to be mostly a market dominated by the US.

LMAX is a cfd exchange , anyway if you are talking about retail fx ecns like MBtrading for example , then it is also not the real forex dom , it is just a feed from few marketmakers or one market maker quoting a certain fx pair for this broker clients .

Sidekicker · May 21, 2012

tar said:
LMAX is a cfd exchange , anyway if you are talking about retail fx ecns like MBtrading for example , then it is also not the real forex dom , it is just a feed from few marketmakers or one market maker quoting a certain fx pair for this broker clients .

Again what's the point to that? Yes, I understand that the price feed is their exchange and it might not be exactly what is happening in the direct market. But it the order book only shows a tenth or less of the real orders in direct market then what is the point in having the order book at all. If 1000 contracts are being traded in the real market, then their DOM should not show only 89 contracts being traded.
I am unsure if this is what happens as I can't compare at the moment but they seem confused on the issue as well.

tar · May 21, 2012

Sidekicker said:
Again what's the point to that? Yes, I understand that the price feed is their exchange and it might not be exactly what is happening in the direct market. But it the order book only shows a tenth or less of the real orders in direct market then what is the point in having the order book at all. If 1000 contracts are being traded in the real market, then their DOM should not show only 89 contracts being traded.
I am unsure if this is what happens as I can't compare at the moment but they seem confused on the issue as well.

It is not the futures market it is a different market , LMAX exchange participants/marketmakers/traders can quote any price they want , they are not obligated to be inline with futures prices all the time ...

Sidekicker · May 21, 2012

tar said:
It is not the futures market it is a different market , LMAX exchange participants/marketmakers/traders can quote any price they want , they are not obligated to be inline with futures prices all the time ...

but you'd agree it's pretty close, just like any CFD or SB provider.
It's not the price that's the problem but the issue of providing a DOM on an exchange that doesn;t list the full market depth because it only lists it's own exchange.
For example, LMAX might show 200 contracts exchanged at a certain price and the market might go bid whereas the real market may have 1000 contracts traded there. A DOM on a self contained exchange is next to useless.

tar · May 21, 2012

Sidekicker said:
but you'd agree it's pretty close, just like any CFD or SB provider.
It's not the price that's the problem but the issue of providing a DOM on an exchange that doesn;t list the full market depth because it only lists it's own exchange.
For example, LMAX might show 200 contracts exchanged at a certain price and the market might go bid whereas the real market may have 1000 contracts traded there. A DOM on a self contained exchange is next to useless.

Why useless ? really i don't understand your point , it is a different market , which allows small retail traders to trade mini cfds instead of the full contract , the whole idea of LMAX DOM is to see how many contracts is available at each price and to provide exchange members with the ability to make a market and to trade inside the spread , but if you mean it doesn't have any benefit on your trading decision making , so yes you are right , but then again why would they provide you with the DOM of a different related market ( the futures ) , it will be misleading and there is no point from doing so . ie : it's like CME showing you ICE exchange DOM !

Sidekicker · May 21, 2012

tar said:
Why useless ? really i don't understand your point , it is a different market , which allows small retail traders to trade mini cfds instead of the full contract , the whole idea of LMAX DOM is to see how many contracts is available at each price and to provide the ability for exchange members to make a market and to trade inside the spread , but if you mean it doesn't have any benefit on your trading decision making , so yes you are right , but then again why would they provide you with the DOM of a different related market ( the futures ) , it will be misleading and there is no point from doing so . ie : it's like CME showing you ICE exchange DOM !

So, you are saying they can trade a contract called the FTSE 100 and bid it up to 6000 while the real market goes down to 4000? I know it's an exagerration but I don't think that could happen. Trading inside the spread can happen in the real market place too. They have FTSE futures contract on their system...

IG have this DOM as well but seems to be more closely linked to the real stock liquidity...

tar · May 21, 2012

Sidekicker said:
So, you are saying they can trade a contract called the FTSE 100 and bid it up to 6000 while the real market goes down to 4000? I know it's an exagerration but I don't think that could happen. Trading inside the spread can happen in the real market place too. They have FTSE futures contract on their system...

With money everything is possible but then you will expose yourself to arbitrage hunters , and yes you can trade inside the spread with LMAX like any other exchange , that's the whole idea of an exchange .

tar · May 21, 2012

Sidekicker said:
IG have this DOM as well but seems to be more closely linked to the real stock liquidity...

If you mean IGmarkets stocks dom then yes it is the real exchange ...

tar · May 21, 2012

Sidekicker said:
They have FTSE futures contract on their system...
.

BTW they don't have ftse futures cfd , instead they have UK100 which is ftse100 cash cfd ....

Bondboy · May 22, 2012

Sidekicker said:
Just been chatting with LMAX. They state that their DOM is only the LMAX exchange, it does not list the order book from the actual exchange.
What is the point in that? If I want to read a DOM, I don't care if 10 of LMAX's clients are shorting, I care what the actual market is doing.

Secondly, why are there so few ECN brokers in the UK? Seems to be mostly a market dominated by the US.

A slight misunderstanding. LMAX IS the Exchange, the only true public FX exchange in Europe. The DOM is made up of orders in the book from their institutional General members and clients through their broker. Prices on LMAX will always reflect the underlying market. General members include GS and JPM who quote 24x5.5 in all currency pairs and hence the price is the market price.

Hope that helps.

Bondboy · May 22, 2012

tar said:
If you mean IGmarkets stocks dom then yes it is the real exchange ...

LMAX don't offer stocks. IG offer stocks and DMA onto the underlying exchanges on thos products. FX prices on IG are their own - they are a market-maker and no DOM is shown on their FX products.
LMAX offer DOM on all their exchange products - FX, Commodities, Indices.

Bondboy · May 22, 2012

tar said:
With money everything is possible but then you will expose yourself to arbitrage hunters , and yes you can trade inside the spread with LMAX like any other exchange , that's the whole idea of an exchange .

LMAX depth on FX goes to twenty levels and shows up to $30m available at one time. The FX market is 1.5trillion dollars a day on > 1000 venues. No-one shows ALL that depth. LMAX is as good as it gets for retail - like EBS for institutional.

Bondboy · May 22, 2012

Market makers reference everything to the cash price for any Index future or CFD product. I guarantee if you compare the Index CFD price on IG/CMC/City etc. vs LMAX there will not be arbitrage. Market makers all price in the same way; Any mis-pricing is closed quickly with traders spotting the arb. That's the efficiency of the market.

scose-no-doubt · May 22, 2012

tar said:
If you mean IGmarkets stocks dom then yes it is the real exchange ...

what? when? where?

Sidekicker · May 22, 2012

Bondboy said:
LMAX depth on FX goes to twenty levels and shows up to $30m available at one time. The FX market is 1.5trillion dollars a day on > 1000 venues. No-one shows ALL that depth. LMAX is as good as it gets for retail - like EBS for institutional.

FX depth is a separate subject as it's not centralised.
Futures are centralised at the relevant exchange and from what LAMX was saying, their depth is not showing the depth at that exchange but their own exchange. To use a DOM effectively and to read it, you need to see all orders in the order book not just their self contained system.

Bondboy · May 22, 2012

Sidekicker said:
but you'd agree it's pretty close, just like any CFD or SB provider.
It's not the price that's the problem but the issue of providing a DOM on an exchange that doesn;t list the full market depth because it only lists it's own exchange.
For example, LMAX might show 200 contracts exchanged at a certain price and the market might go bid whereas the real market may have 1000 contracts traded there. A DOM on a self contained exchange is next to useless.

Best trade the future then on the relevant self contained but bigger exchange. LMAX is the only CFD exchange. All other Index CFD prices are made by "self contained" market makers. Surely some depth of market is better than none?

tar · May 22, 2012

Bondboy said:
LMAX don't offer stocks. IG offer stocks and DMA onto the underlying exchanges on thos products. FX prices on IG are their own - they are a market-maker and no DOM is shown on their FX products.
LMAX offer DOM on all their exchange products - FX, Commodities, Indices.

BTW IGmarkets has a service called L2 dealer for bigger clients , if you have 50K + they will switch their inst. FX level 2 service on for you , their FX dom is derived from tier 1 banks .

tar · May 22, 2012

Sidekicker said:
FX depth is a separate subject as it's not centralised.
Futures are centralised at the relevant exchange and from what LAMX was saying, their depth is not showing the depth at that exchange but their own exchange. To use a DOM effectively and to read it, you need to see all orders in the order book not just their self contained system.

LMAX indices is cash cfds indices not futures , so there isn't any point from showing you the real exchange futures DOM .

tar · May 22, 2012

scose-no-doubt said:
what? when? where?

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