EBS continues to be an active member of the eFX trading world with the announcement of proposals of Aggregation Best Practices, as well as the launch of EBS Certified Aggregation Partner Program.
Citing the recognition that “aggregators are an increasingly prevalent service offering for customers which have emerged to consolidate the many sources of liquidity available, and believes that aggregation providers can enhance and add great value to a customer’s trading experience” EBS has announced a list of best practice proposals to be adopted by industry aggregators. The goal is to create industry standardization among aggregators, whose products combine multiple liquidity sources to traders through one connection. In addition to the best practice proposals, EBS is simultaneously launching its Certified Aggregation Partner Program. The program is for aggregators that wish to connect to the EBS platform which includes both its EBS Markets and Direct product.
According to EBS proposed best practices include:
- Aggregation providers should operate as agents, rather than principals to the trade, to reduce the opportunities for potential conflicts of interest.
- All sources of revenue earned by aggregation providers with respect to a customer’s trading must be fully disclosed to the customer. While the customer is aware of the fees they pay directly to the aggregation provider, this may represent only a limited portion of the commercial interest obtained from the trade and significantly affect the prices the client sees or its relationship with its pricing providers.
- The prices a customer sees as ‘best prices’ should be based on the best prices available to the customer
- The sources of liquidity and credit provided and any potential conflict of interest should be fully disclosed to the customer.
For EBS, the eFX trading platform continues to reestablish itself and a dominant player in the industry following years of losing market share. Last year, volumes on EBS hit six year lows as the firm announced that it will be launching EBS Direct, a relationship based platform, as well as creating changes to its dealing rules. Competing against EBS are Thomson Reuters, who has taken the top spot among publicly reporting ECNs, FXall, which has experienced increased market share of its hybrid relationship and ECN platform, as well as myriads of smaller ECNs and aggregators. With today’s news, EBS is attempting to distinguish itself as an industry leader in terms of innovation and transparency.
It will be interesting to see what the response from EBS competitors will be. Not surprisingly, in prepared comments, EBS received the backing from two aggregators, Progress Apama and Marketfactory, who are technology based firms without their own liquidity.
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Commenting on the news are:
Chris Purves, Global Head FX E-Trading at UBS, commented: “This topic of aggregators has not been widely discussed and looked at by the market as a whole and it is certainly an important one to address. We are pleased to see EBS taking an industry leading position on this important topic and look forward to supporting this initiative.”
Dr Richard Bentley, VP Capital Markets at Progress Apama, said: “As a provider of aggregation and smart execution solutions to the FX marketplace, we recognise the importance of providing customers with a true, up to date picture of market liquidity. We welcome the steps EBS has taken to define guidelines for aggregation and fully support the underlying principles of transparency and impartiality that these guidelines represent.”
James Sinclair, CEO of MarketFactory, said: “An orderly market depends on transparent business rules and logic. This includes aggregators providing a true and accurate representation of liquidity. We are strong advocates of open and disclosed execution rules, as these proposals promote.”
Gil Mandelzis, CEO of EBS, said: “We at EBS believe passionately in the importance of transparent, fair and ethical markets. We see an important opportunity to create global standards that we and our partners can work to, as we seek to improve best execution and transparency for market participants. This is an exciting new initiative for EBS and, we believe, for the market as a whole.”