Betfair to launch its own trading system

Marion Dakers
ONLINE gambling group Betfair is gearing up to launch a trading platform in London later this year, becoming the latest in a line of companies to compete with the London Stock Exchange.

Following approval from the FSA at the end of July, developers are working to complete the platform based on Betfair’s existing gambling programmes, funded by start-up capital from Betfair. The multilateral trading facility will allow investors to exchange contracts for difference, which provide exposure to a company without owning the shares.

Goldman Sachs recently bought a 12.5 per cent stake in the LMAX venture for an undisclosed sum, though Betfair remains the majority owner.

Betfair first moved into financial trading in 2008, when it launched a spin-off website called Tradefair, parts of which have been subsumed under the LMAX name.

The platform will be one of a growing number of junior exchanges in the City that have sprung up since pan-European regulation opened the market to competition in 2007.

American exchange operator NYSE Euronext launched a London branch in July, aimed at overseas investors who would 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 flourished in recent years as profits at the mainstream exchange struggled. The LSE cut 13 per cent of its staff in May in a bid to minimise costs.

The group took a majority share in the Turquoise multilateral trading facility in February, alongside Barclays, Nomura and JP Morgan.