Spread betting exchange Tradefair is building an online trading platform for derivatives trading that will propel it into the Contracts For Difference (CFD) market.

What Investment.co.uk understands that a new platform - the London multi-asset Exchange (LMAX) - will offer broking services as well as training and educational services related to the provision of multi-asset broking.

Parent company Betfair has started advertising for business development staff and has registered the LMAX trademark with the Intellectual Property Office. Tradefair declined to comment on the launch.

TD Waterhouse is already operational in the market and said that the barriers to entry are relatively small compared to stock broking because corporate actions can be settled with cash alternatives, so it is possible to set up with a relatively small outlay. 

James Daly, investor centre representative at TD Waterhouse, said that the derivatives market is a more competitive marketplace than traditional share dealing because many client risk profiles are not suitable for the products.

He explained, ‘Some of these providers will be fighting over the same clients although the volumes have been good and going up ever since Northern Rock. 

‘We have seen a gradual increase in currency trades although index trades have always been popular.  People are trading banking stocks and mining stocks.’