Exchange takes cue from crypto investors with weekend FX trading

Welcome to The Fintech Files, your weekly roundup from FN’s fintech correspondent Ryan Weeks, keeping you up-to-date with the latest developments in financial tech and innovation. 

Part of bitcoin and other cryptocurrencies’ appeal to investors is that they can be traded anywhere, anytime, instantaneously.

For one exchange operator, that characteristic is leading to changes in more established markets.

Fintech Files can reveal that the London-based exchange operator, LMAX Group, has launched a weekend trading service for foreign exchange. LMAX runs multiple trading venues including a cryptocurrency exchange for institutions.

Normal hours for the spot FX market begin late Sunday and end on Friday evening. LMAX’s new service will cover that gap using contracts for difference, which are agreements that allow investors to bet on the future price of an asset.

LMAX Global, an FCA-regulated broker, will act as the counterparty to trades while most market infrastructure is closed for the weekend.

LMAX says it took the decision to extend its hours because of demand from its clients to trade and hedge their FX exposure while the underlying market is closed.

But another key factor was the example laid down by the company’s institutional crypto exchange LMAX Digital, which sees hundreds of millions of dollars in crypto traded each week, without any downtime.

David Mercer, chief executive of LMAX Group, said the discrepancy between hours in FX and crypto markets has accentuated the need for FX hours to be extended.

“Crypto, the young up-start, is forcing FX, the established asset class, to change its ways, close the gap and provide liquidity over the weekend,” he said.

Those who follow cryptocurrencies have become accustomed to this story playing out in reverse. They are used to news about crypto markets gradually morphing into something more akin to their institutional counterparts – a trend seen as important in bringing big investors to the table.

Today, for instance, a crypto firm called ETC Group announced the impending launch of what it describes as the “world’s first centrally cleared” bitcoin tracker product on Deutsche Börse’s XETRA platform.

It is noteworthy, therefore, that crypto markets might have a thing or two to teach the old school.

“In this day and age, it’s remarkable that capital markets close at effectively five o’clock New York time Friday night,” said Mercer.

But crypto enthusiasts should remember that in the wider capital markets, if anything, trading hours look more likely to be trimmed than extended. The London Stock Exchange and Euronext, two of Europe’s largest stock exchange operators, are currently consulting on whether to shorten the trading day in Europe.

Supporters of the idea think it could boost diversity in the sector, while former LSE boss Xavier Rolet sees it as “a storm in a tea cup”.

One wonders whether cryptocurrency and blockchain, the technology it runs on, might play a part in the trading hours debate before all’s said and done.

Blockchain, after all, finds a way of sticking its oar in on almost everything else.

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Further reading:

Last week, Wired reported that Revolut staff claim they’ve been told to quit their jobs or be fired. The people that have left the company in this way come in addition to the 62 redundancies reported by Financial News in May.

The latest from us is that the start-up has seen another senior exec depart. Hannas Graah, vice president of growth, left the company last week.

Germany’s oldest private bank, Berenberg, has partnered with fintech company Moonfare to provide its customers access to private equity funds.

Finance Magnates brings us news that Wall Street investors have backed document analysis firm H4 with $27m.

TechCrunch reports that Halal fintech startup Wahed has closed a $25M round led by Saudi Aramco’s investment arm.

Finally, Monzo has been criticised for putting its head of diversity at risk of redundancy, according to the Telegraph.

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To contact the author of this story with feedback or news, email Ryan Weeks