Forex broker, LMAX Group has announced the launch of Weekend FX trading. The new weekend forex trading service will be available to clients of the MTF and exchange operator from 17.05 pm EST on Friday until 17.00 pm EST on Sunday, potentially filling the gap in what is otherwise is a 24-hour market.
The service will be offered through LMAX’s brokerage division LMAX Global the firm says that it is launching the service in response to substantial demand from institutional market participants and liquidity providers who want to trade and hedge FX exposure when the underlying FX market is closed.
Increased requirements for weekend trading and hedging
It used to be that one of the best things about working in finance was that no matter how volatile things were during the week, there was little you could do about it over the weekend. So you could actually have some time off.
That demand has grown out of an increasing number of market-moving events and news taking place over the weekend.
A time at which FX markets are traditionally closed. The weekend break was historically related to banking hours and gave participants a chance to process trades and reconcile their books.
Of course, these days payment systems operate independently of banking hours so perhaps markets should do so as well, indeed one of the main attractions of physical cryptocurrencies to traders was the fact that they traded (in theory at least ) 24/7.
Commenting on the launch LMAX CEO David Mercer said
“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.”
It’s interesting that this initiative should come at the same time that the London Stock Exchange is considering shortening or condensing its trading hours in response to feedback from its users
How does LMAX differ from traditional forex brokers?
As an exchange LMAX relies on its members to provide liquidity in FX products
We have all seen how thin fx markets can be out of session, around bank holidays, or on black swan type news flow. Whilst we applaud the initiative that LMAX is showing here we wonder just how keen those liquidity providers will be to make prices in size, when they themselves won’t have any natural outlet through which to hedge their positions. Of course, if LMAX can demonstrate that there is a demand for, and volumes in weekend trading then their competitors may follow suit.
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Richard founded the Good Money Guide (previously Good Broker Guide) in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously a multi-asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2001 & 2000.