London Capital (LCG.L) - new retail platform 'Capital Forex Lite' LCG.L
Comment by Objective Capital , Sep 25, 2007 Questions?
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London Capital announced that Capital Forex, its on-line foreign exchange trading division, has launched its new retail platform 'Capital Forex Lite' in conjunction with Currenex. Currenex is a subsidiary of State Street and a leading provider of global currency trading systems. LCG and Currenex have an existing close relationship in the institutional FX market place. Capital Forex Lite offers retail traders access to a new and comprehensive FX trading platform complete with all the requirements of the serious FX trader. LCG believes this is the most advanced proposition in the market.
Objective's view:
This development was heralded at the analyst meeting for the half-year results and represents a logical extension of the group’s business. Until now Capital Forex has catered for institutional clients and high net worth individuals through its Forex platform while the group’s retail clients have only been able to get exposure to currencies through spread betting.
The foreign exchange market is huge (some US$ 1.5 trillion per day) and already available to retail clients through several companies. We believe that it makes sense for LCG to use its brand strength to extend its retail offering into this market. It has a strong relationship with Currenex by virtue of the very successful start up of Capital Forex and it makes equal sense for Currenex to use Capital Forex Lite to enter the retail market.
We believe that the platform will have been developed by Currenex and so do not anticipate any development costs being borne by LCG. We would also expect the business to be commission-based initially but LCG may retain the option to take some risk on the non-professional business as it does in spread-betting. With a launch effectively in the last quarter of the current financial year we do not expect Capital Forex Lite to make a meaningful contribution in 2007. However, with the overall foreign exchange market growing at around 20% p.a. and a growing retail interest in forex products we would expect to see a contribution to LCG’s growth in 2008.
