LMAX Exchange, which is the UK foreign-exchange trade, is now launching a cryptocurrency exchange for institutional investors
The LMAX said that it developed the new “LMAX Digital” venue at the request of clients that wanted to access to cryptocurrencies such as Bitcoin and Ether. Clients will have the trading option for Bitcoin, as well as Ether, Litecoin, XRP and Bitcoin cash on the exchange, which is going to operate 24 hours a day and seven days a week.
David Mercer, the CEO of LMAX Exchange said in a statement that they are furthering the legitimization of cryptocurrency market by offering to institutions investing on a platform on which to acquire, as well as trade and hold cryptocurrencies securely with high quality.
LMAX is also going to offer cryptocurrency custodian services to clients that trade on its exchange. By solving one of the most critical issues, LMAX prevented institutional investors from dabbling in cryptocurrencies.
Banks, as well as hedge funds, have been reluctant to buy these new assets difficulty in holding and securing them.
The launch of LMAX Exchange
LMAX Exchange started in 2010 as a multilateral trading venue for foreign exchange, and it has transacted over $10 trillion of fiat currency since it has been launched.
Mercer said that they had applied everything that they have learned in the institutional FX market to LMAX Exchange, to create a fundamentally improved, as well as secure digital exchange based on the proven trading technology, market-leading liquidity and transparent and precise execution.
The launching of LMAX Digital comes just days after JP Morgan created a new position of head of the crypto strategy, and a few weeks after Goldman Sachs signaled its intention to begin trading Bitcoin-linked products.
Crypto hedge funds are springing up
According to the research firm Autonomous Next, the crypto hedge funds have also been springing up, with an estimated 167 launched in 2017.
They have largely relied on “over the counter” market makers to purchase cryptocurrencies rather than transparent and centralized exchanges. Most of the crypto exchanges globally cannot handle the order sizes that are required without significant changes in price. Some startups such as B2C2, Circle, and Coinbase have emerged as leading over-the-counter brokers for institutions, but the sums that were involved remain small compared with other asset classes.
Mercer said that the rise of institutional trading of cryptocurrencies is going to be a game changer for the industry. They also believe that their new exchange is going to support the transformation of the crypto market from the fringes to the mainstream.
LMAX Digital is going to be run out of London
Mercer also added that digital currencies are, without a doubt, coming of age. Exchanges are going to play a crucial role in bringing the significant cryptocurrencies into broader circulation, in that way helping them to become accepted into general funds which in turn are going to contribute to support normalization of value.
LMAX Digital is also going to be run out of London initially, but Mercer also said that the data-center infrastructures of the company would soon be replaced in New York and Tokyo, to support clients in those markets.