This week’s launch of a new multilateral trading facility for cleared contracts for difference could be the first step in a big shake-up of the futures markets, as CFDs emerge as an increasingly important tool for institutional investors.
Betfair, the UK online betting exchange, launched the London Multi-Asset Exchange on Monday October 25.
The UK already has many well-established platforms offering CFDs to retail investors, covering all the major risks that futures exchanges offer – equities, indices, interest rates, currencies and commodities.
What is different about LMax is that it is retail-targeted but also centrally cleared, using LCH.Clearnet’s UK arm, which will make it more attractive to institutions. And LMax is using an MTF model so that ultimately investors will be able to trade with each other, rather than with the CFD provider itself.
It is possible, though by no means certain, that CFDs will...