What's happened to LMax's spreads?

[random12345]

oh that's quite a straight forward one to answer you need to think outside the box. I am NOT saying LMAX are doing this but one way would to contact a handful of your key LP's. You explain to them that the best inside bid/offer is currently very tight and you want to wet your beak a little. So you have an agreement with each LP to slightly widen and/or thin up your inside liquidity in return for a kick back which is shared between LP and the ECN. It's all very simply and it's shades of grey in the unregulated world of forex. I know of another high profile ECN who shall remain nameless who said to me if I dont want to pay $10 pmillion commission they will happily build it into the spread. You have to remember that each LP has many many different feeds they can provide depending on what flow they want.

Remember there are many games that are played across all the instruments. For the retail trader I have found futures to be the 'cleanest' instrument however even then you have to be wise to the games that are played.

Goldman's profits just doubled.

Good Luck.

All very interesting. Have been getting very decent spreads this week, yet when they gave me the list of their LPs on the phone a month or so a go, to be honest there weren't many large banks left to add... so who these 4 providers could be I don't know. Don't recall many others not being on there except JPM and Citi and they added Citi last month. Also I really don't understand their 'order book' - often I'm unconvinced these are the true depth of their LPs as I'm getting filled single price on more than the CTs supposedly on offer from time to time, but then their order book seems much too liquid at lower prices to simply be their own exchange participants (i.e. us and passthroughs). I'm thinking it's just rather laggy and not a great advert for themselves, but people do love an order book eh.

You pay less than 10 bucks a mill CM? I'm such a sucker for a good sales pitch!

 

[TraderHoo]

I am NOT saying LMAX are doing this but one way would to contact a handful of your key LP's. You explain to them that the best inside bid/offer is currently very tight and you want to wet your beak a little.

Ok so you are just guessing. I would find it highly unlikely LMAX would do something like this. One thing it would be illegal. They have a exchange license. FSA would be on their **** in a second for "kickbacks".

Secondly why would they be stupid enough to widen spreads to such an extent that even freaking FXCM is beating them with no-commission spreads? This thread is proof that traders have noticed and are making a noise about it.

They even publish the historical charts showing nearly double spreads in last four months on their own frontpage.

To assume a conspiracy here is silly. Simplest explanation, they lost some LP's because all the big ticket traders moved to their new "Interbank" market.

 

[cablemonster]

All very interesting. Have been getting very decent spreads this week, yet when they gave me the list of their LPs on the phone a month or so a go, to be honest there weren't many large banks left to add... so who these 4 providers could be I don't know. Don't recall many others not being on there except JPM and Citi and they added Citi last month. Also I really don't understand their 'order book' - often I'm unconvinced these are the true depth of their LPs as I'm getting filled single price on more than the CTs supposedly on offer from time to time, but then their order book seems much too liquid at lower prices to simply be their own exchange participants (i.e. us and passthroughs). I'm thinking it's just rather laggy and not a great advert for themselves, but people do love an order book eh.

You pay less than 10 bucks a mill CM? I'm such a sucker for a good sales pitch!

nah I dont pay less than 10 bucks pmillion, you need to be trading some decent volume for that, I have done my homework though. Depends on your trading frequency largely. If you trade 20 RT's a day on a 10 retail lot that is 400m per month and you should be able to get 10 bucks per million on that, possibly lower maybe 5 buck per million per side = 10 bucks pm RT.

In terms of which LP's are there it is largely irrelevant, sorry if I am teaching you to suck eggs here. A top name ECN will typically have 6 or 7 LP's and each LP has different feeds they can provide. I think DB has like 20 feeds and they can switch it depending on what flow they want. The LP's will typically offer a tighter spread the 'dumber' the flow.

 

[random12345]

Go away sales guy (LMAX)! Traders on here only please!

...who is that aimed at...?

 

[cablemonster]

Ok so you are just guessing. I would find it highly unlikely LMAX would do something like this. One thing it would be illegal. They have a exchange license. FSA would be on their **** in a second for "kickbacks".

Secondly why would they be stupid enough to widen spreads to such an extent that even freaking FXCM is beating them with no-commission spreads? This thread is proof that traders have noticed and are making a noise about it.

They even publish the historical charts showing nearly double spreads in last four months on their own frontpage.

To assume a conspiracy here is silly. Simplest explanation, they lost some LP's because all the big ticket traders moved to their new "Interbank" market.

It was just a suggestion about how one could go about it, I am not saying they are doing that. I am not sure about it being illegal, FX is unregulated. I am not sure how much interaction you have had with the regulator FSA now FCA but they are not the sharpest tools in the box. Are we talking about the same regulator that regulated Worldspreads and MF Global here? lol.

 

[random12345]

nah I dont pay less than 10 bucks pmillion, you need to be trading some decent volume for that, I have done my homework though. Depends on your trading frequency largely. If you trade 20 RT's a day on a 10 retail lot that is 400m per month and you should be able to get 10 bucks per million on that, possibly lower maybe 5 buck per million per side = 10 bucks pm RT.

In terms of which LP's are there it is largely irrelevant, sorry if I am teaching you to suck eggs here. A top name ECN will typically have 6 or 7 LP's and each LP has different feeds they can provide. I think DB has like 20 feeds and they can switch it depending on what flow they want. The LP's will typically offer a tighter spread the 'dumber' the flow.

I trade over two yards a mth just during summer and I don't pay less than 10 pm a RT... sigh...

Well indeed, but they seemed to e-mail 'hoo and inform him of 4 added LPs which I assume are distinct big name banks else why bother. Anyway, I'm undecided about shenanigans, technicalities aside, since they have been transparent about their own widening spreads on their frontpage. The GU spread has been extremely poor and I'm surprised they never addressed it (potentially) until now. Would be interesting to know if they had seen this thread and how many complaints they had as a result.

 

[TraderHoo]

what do u mean by a big ticket trader traderhoo?

LMAX InterBank - Spot FX Execution Venue for Banks | LMAX Exchange

Read up on that website on the requirements to join that market.

 

[AARasheed]

Ok so you are just guessing. I would find it highly unlikely LMAX would do something like this. One thing it would be illegal. They have a exchange license. FSA would be on their **** in a second for "kickbacks".

Secondly why would they be stupid enough to widen spreads to such an extent that even freaking FXCM is beating them with no-commission spreads? This thread is proof that traders have noticed and are making a noise about it.

They even publish the historical charts showing nearly double spreads in last four months on their own frontpage.

To assume a conspiracy here is silly. Simplest explanation, they lost some LP's because all the big ticket traders moved to their new "Interbank" market.

By the time the FCA investigate, it could be years down the line. It isn't about doing anything blatantly, it's how these brokers bend the rules. The exchange model they utilise is based on LMax's exchange participants placing their limit orders (where no last look applies) and liquidity swapping. Banks will never allow a no last look function, so it will be LMax's participant brokers and funds that give this no last look feature.
The liquidity shown isn't the depth of these participants, it's what they want to give/show on LMax.
The exchange model is very confusing and not everyone understands it.
You are totally incorrect in assuming that the 'big ticket' clients have moved onto the new Interbank service. This service is for 'Banks Only' (according to their web site). LMax's staple clients are retail brokers who have clients with primarily small ticket sizes not the banks. Basically their Interbank service is trying to mimic EBS.
It's like I said before, if they were so good why were they dumped by their investors?!

 

[random12345]

By the time the FCA investigate, it could be years down the line. It isn't about doing anything blatantly, it's how these brokers bend the rules. The exchange model they utilise is based on LMax's exchange participants placing their limit orders (where no last look applies) and liquidity swapping. Banks will never allow a no last look function, so it will be LMax's participant brokers and funds that give this no last look feature.
The liquidity shown isn't the depth of these participants, it's what they want to give/show on LMax.
The exchange model is very confusing and not everyone understands it.
You are totally incorrect in assuming that the 'big ticket' clients have moved onto the new Interbank service. This service is for 'Banks Only' (according to their web site). LMax's staple clients are retail brokers who have clients with primarily small ticket sizes not the banks. Basically their Interbank service is trying to mimic EBS.
It's like I said before, if they were so good why were they dumped by their investors?!

"By the time the FCA investigate..." well if you know something for fact (which of course you don't) then you should feel free to call the FCA either using the whistleblower line on +44 20 7066 9200 along with the employee who substantiated these claims or their public consumer helpline (+44 20 7066 1000) if you have no such source rather than bleating this on a retail board like this as it would undermine the investigation in the first instance. I'm sure you know the FCA procedures being so down with the business.

No doubt you also 'knew' that Knight Capital also had risk management involving two hamsters in a wheel and advised people against using hotspot in case the underlying group collapsed any day!?

Fishwives!

 

[cablemonster]

The liquidity shown isn't the depth of these participants, it's what they want to give/show on LMax.

exactly AA exactly.

 

[AARasheed]

"By the time the FCA investigate..." well if you know something for fact (which of course you don't) then you should feel free to call the FCA either using the whistleblower line on +44 20 7066 9200 along with the employee who substantiated these claims or their public consumer helpline (+44 20 7066 1000) if you have no such source rather than bleating this on a retail board like this as it would undermine the investigation in the first instance. I'm sure you know the FCA procedures being so down with the business.

No doubt you also 'knew' that Knight Capital also had risk management involving two hamsters in a wheel and advised people against using hotspot in case the underlying group collapsed any day!?

Fishwives!

This is a discussion board and we are all discussing.
Hmmmm..... judging by your reaction, what is your role at LMAX?

 

[random12345]

This is a discussion board and we are all discussing.
Hmmmm..... judging by your reaction, what is your role at LMAX?

A lot of your discussions don't come with the necessary preamble to say it's all theory however. LMAX is, in my opinion, one of the few places small retail traders can make money... and this is a board, generally, for those type of people. It would be wrong for me to let criticism of this nature fly without rebutting it, since we all know you have disliked LMAX for a long time now. Your CapMar tip was a good one, but we all know most people here don't have the tech to make money using FIX algos and don't discretionary trade in nearly the volume required to maintain an acct. I would therefore only advise either IB (40:1 leverage) or LMAX if they want 100:1 to the underteched trader or someone who wants to trade discretionary in less than 3m a go. Your tips on where to go AFTER that point are good.

I'm surprised you played the very lame card of accusing me of being with LMAX as I have only taken to defending them as of now since the theories have gotten a bit silly, a little libellous and need substantiation. You got me sir though, well done, well done. I am the CFO of LMAX. And the CEO. And every other role. In fact it's just me there and I'm rinsing you all on the spread, making against you all and draining your accounts. Just as with all your other speculative posts based on zero fact, you nailed me down.

 

[AARasheed]

A lot of your discussions don't come with the necessary preamble to say it's all theory however. LMAX is, in my opinion, one of the few places small retail traders can make money... and this is a board, generally, for those type of people. It would be wrong for me to let criticism of this nature fly without rebutting it, since we all know you have disliked LMAX for a long time now. Your CapMar tip was a good one, but we all know most people here don't have the tech to make money using FIX algos and don't discretionary trade in nearly the volume required to maintain an acct. I would therefore only advise either IB (40:1 leverage) or LMAX if they want 100:1 to the underteched trader or someone who wants to trade discretionary in less than 3m a go. Your tips on where to go AFTER that point are good.

I'm surprised you played the very lame card of accusing me of being with LMAX as I have only taken to defending them as of now since the theories have gotten a bit silly, a little libellous and need substantiation. You got me sir though, well done, well done. I am the CFO of LMAX. And the CEO. And every other role. In fact it's just me there and I'm rinsing you all on the spread, making against you all and draining your accounts. Just as with all your other speculative posts based on zero fact, you nailed me down.

trade12345, my intentions were not to cause offence or distress.
I am not a normal retail punter, I have been in the industry for over 25 years and I have run brokerages (in the UK and abroad) previously and worked in investment banks. I know what I am talking about.

I have nothing against LMAX, I used to have an account with them. I know how their model works. I just don't like the way they are claiming to revolutionise the industry and have people misunderstanding their model. How many people know exactly what this exchange model is?

I want to ensure that people know the system from someone who has been on the inside and not be fooled by clever marketing and clever salespersons.

 

[C-12]

Still seeing strange action on GBPUSD. Very strange regular spread spikes going up to 1.4 or 1.7 and then dropping back down again. Strange since EURUSD seems fairly stable at between 0.1 and 0.6

I've been demo'ing ICMarkets and getting decent execution and low spreads. Of course I'll need to stick some funds in and see how their live platform performs to confirm this.

Since I mainly scalp EU and GU, it doesn't make much sense to trade with LMAX right now.

 

[arts998]

The exchange model they utilise is based on LMax's exchange participants placing their limit orders (where no last look applies) and liquidity swapping. Banks will never allow a no last look function, so it will be LMax's participant brokers and funds that give this no last look feature.
The liquidity shown isn't the depth of these participants, it's what they want to give/show on LMax.

Hi AARasheed. If banks will never allow a no last look function, how to they place orders on LMax? Do they place only small amount to limit their risk (hence the larger spread)?

What innovations does LMax has, exactly? If it is the ability for traders to add liquidity, doesn't other ECNs, Currenex, etc have the same feature? How does their "exchange" model differ from other ECNs and Currenex?

 

[AARasheed]

Hi AARasheed. If banks will never allow a no last look function, how to they place orders on LMax? Do they place only small amount to limit their risk (hence the larger spread)?

What innovations does LMax has, exactly? If it is the ability for traders to add liquidity, doesn't other ECNs, Currenex, etc have the same feature? How does their "exchange" model differ from other ECNs and Currenex?

Hello arts998,
LMax have very few banks giving liquidity. They will plug their spreads wider to limit risk but will always reserve the right to last look. Also it will cost more money to send the bank a trade of 5 lots or less. So they it will be diverted to one of their partner broker or fund and share profits or do whatever they do

Their sales guys religiously bleat about no last look (which isn't 100% correct) and their low spreads (very very thin volumes and they show it as mini lots instead of standard lots to make it seem they have higher volumes at that price). It is a very weak and thinly veiled exchange like model. It's not a Nasdaq

You are correct. Anyone can plug in liquidity into currenex. The problem is most brokers will claim their ECN (which is technically correct) but won't stp the order to the bank (instead will direct to one if their own funds, partner funds or broker). Only a small number of brokers will directly send all orders to banks

 

[Shakone]

Hello arts998,
LMax have very few banks giving liquidity. They will plug their spreads wider to limit risk but will always reserve the right to last look. Also it will cost more money to send the bank a trade of 5 lots or less. So they it will be diverted to one of their partner broker or fund and share profits or do whatever they do

Their sales guys religiously bleat about no last look (which isn't 100% correct) and their low spreads (very very thin volumes and they show it as mini lots instead of standard lots to make it seem they have higher volumes at that price). It is a very weak and thinly veiled exchange like model. It's not a Nasdaq

You are correct. Anyone can plug in liquidity into currenex. The problem is most brokers will claim their ECN (which is technically correct) but won't stp the order to the bank (instead will direct to one if their own funds, partner funds or broker). Only a small number of brokers will directly send all orders to banks

Do you have evidence that there is last look on LMAX? If so, I suggest you report them.

 

[The Pear]

Lets face it - it is pretty close to what everyone wants from an ECN. You cant knock that for retail clients. I have been doing spread comparisons over news announcements against other SB firms and they stack up ok...bit stcky at times but on the whole not bad for us small fry.

 

[random12345]

Lets face it - it is pretty close to what everyone wants from an ECN. You cant knock that for retail clients. I have been doing spread comparisons over news announcements against other SB firms and they stack up ok...bit stcky at times but on the whole not bad for us small fry.

SB? Spread better? LMAX is DMA. Looks like someone needs to do a tax return!

 

[random12345]

Do you have evidence that there is last look on LMAX? If so, I suggest you report them.

Shakone, you should know by now that no evidence is required on the interwebs. Except for, "I knew an ex employee who told me..."