Online sports betting exchange operator Betfair is preparing to launch a multilateral financial trading facility for CFDs via its subsidiary LMAX, that is planned to compete with the London Stock Exchange.
LMAX Ltd. has secured FSA approval on July 27th to offer CFDs, financial spread betting and rolling spot forex contracts. The company was formed by Betfair in 2007 to provide online retail financial trading. The new CFD platform – the London multi-asset Exchange (LMAX) – will offer broking services as well as training and educational services related to the provision of multi-asset broking. The company also confirmed that immediately prior to FSA approval, Goldman Sachs Group Inc. acquired a 12.5% stake in Betfair Ltd.’s stock exchange for an undisclosed sum, with Betfair retaining a majority shareholding.
The company hopes that the exchange will take on the online stockbrokers such as TD Waterhouse and Self-Trade. Betfair is currently a white-label partner London Capital Group – operator of the Capital Spreads website, however the new exchange platform will be unique and offer more trading products
‘It’s really quite revolutionary,’ said the spokesperson. ‘We’re hoping it will transform the market. We’re hoping to progress it, towards other non-leveraged products. It will enable people to come and buy and sell in the same way as the betting site, and without leverage. It will open it up for people, for brokers, for people who want to hedge. We are looking at the shares retail market. It’s still developing. We’re making sure we have the right proposition.’.
The trading platform will be one of a growing number of new exchanges in London that have been setup since pan-European regulation opened the market to competition in 2007. American stock exchange operator NYSE Euronext also launched a division in the City in July, targeted at international investors who would stand to benefit from a ‘much broader, more diverse and more liquid investor pool than on many of our competitors’.
Multilateral trading facilities such as Chi-X and BATS have gained market share in the last few years as revenues at the London Stock Exchange fell. The LSE announced a 13% layoff of its staff in May in an effort to minimise costs.
