Interdealer ICAP has issued its August volume totals. Starting with the good, US Treasury average daily volumes (ADV) on its BrokerTec platform were $142.1 billion, a 4% MoM gain, and 33% above the same period last year. The increase in interest rate volumes reflects an overall rise in trading within the sector. Yesterday, we saw similar results from the CME’s Interest Rate division which paced the exchange’s overall gains. Overall, ICAP reported a 2% MoM in total ADVs of $643.1 billion.
Countering the gains in interest rate products was ICAP’s FX division, EBS. During August, EBS reported ADV of $78.7 billion traded on interbank ECN. The figures mark the second month in a row of sub $100 billion volume, and were 12% below July’s numbers, which were a multi-year low themselves. On a year over year level, the past month’s volumes were 18% below 2012 figures.
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While seasonal factors, as well as EBS’s strong share in yen trading being factors in the decline of August volumes, the weak numbers don’t reflect well on the recent changes initiated on the platform. Aiming to be the ‘go to’ destination for sourcing deep and ‘real’ liquidity, EBS initiated a series of changes to its trading conditions. Among new policies was the end of fractional pricing, with spot FX products quoted in ½ pips among majors and full pips for other currency crosses. In addition, the ECN adapted randomized orders to remove trading advantages available to high frequency traders. Reporting on the results, EBS CEO Gil Mandelzis has stated that the net effects are deeper liquidity available for large traders, and a return of corporate flow which was suffering due to the evolution of electronic trading in FX.
Starting the year, EBS appeared to have turned the corner during January and February, and retook the top spot among publicly reporting FX venues. However, in the following months, volumes have been steadily contracting, leading to this month’s multi-year low for the platform. As such, the figures appear to indicate that the strategy change is either not working, or competing firms have been able to win back business that migrated to EBS earlier in the year. In terms of competitors, interdealer Tradition has noted a quick uptake for its new ParFX platform. In addition, while not disclosing numbers, trading on Bloomberg’s FXGO platform is reportedly continuing to achieve record volumes in 2013, following 50%+ growth in 2012. With Bloomberg terminals being a staple on FX desks, the integrated commissionless FXGO platform, has become an efficient choice for firms to source liquidity.
Looking for a ray of hope, EBS could see an improvement later this year with the public launch of EBS Direct. Currently, in live beta testing, EBS Direct is slated to be fully released to customers during Q4 after ICAP finalizes internal risk management and back office software. Speaking to Forex Magnates earlier this year, Jeff Ward, Global Head of EBS Direct stated that the firm was seeing a demand building for the launch. Specifically, current EBS Market customers were interested in the opportunity to access both ECN and relationship pricing within a single platform, for more efficient trading.