Interdealer, ICAP has released October volumes among its electronic trading platforms. In its Interbank FX ECN, EBS, October average daily volumes (ADV) were $77 billion. The volumes mark a multi-year low and are 5% below September’s figures, and a 17% decline from the same period in 2012. The drop in volumes at EBS was similar to figures reported from the CME earlier today, as October trading appears to have been weak for brokers and FX venues. In terms of EBS, following a great start to the year where February ADVs hit $149 billion, trading has fallen nearly 50% and has resumed a longer-term downtrend of declining volumes which led to management shake-ups and dealing changes at the ECN.
EBS Direct to the rescue?
While affected by the overall FX industry drop in volumes since July, EBS is also losing market share to relationship platform providers. Rather than connecting to the interbank market via central ECNs, liquidity aggregators such as Market Factory, Integral and TraderTools provide solutions for liquidity takers to create their own ECNs via direct relationships with dealing banks.
Liquidity Constraints in 2021 – What is the Best Path Forward?Go to article >>
Combating this trend, EBS is in the late stages of launching EBS Direct. Similar to FXall, EBS Direct allows users to integrate both their relationship-based pricing as well as EBS’s ECN liquidity within one platform. In terms of FXall, the hybrid model has been successful in allowing the platform to achieve record volumes traded using its technology. Speaking to Forex Magnates earlier this year, Jeff Ward, Global Head of EBS Direct, explained that the integrated platform of both relationship and EBS liquidity was driven by client demand, and the firm has already signed up more than 250 customers for the product. However, upon launching EBS Direct will be hitting a competitive field. In addition to liquidity aggregating technology firms and FXall, Bloomberg with its twin FXGO and Tradebook products that offer both relationship pricing and an a public ECN has also become a much larger player in the FX markets, with overall volumes rivaling that of EBS.
Outside of FX, interdealer ICAP reported total ADV of $675 billion which was slightly above the same period in 2012, and 5% below September’s figures. The largest MoM decline was seen in US Treasuries, where ADV fell 14% to $167.8 billion. The unit had benefitted from volatility in bond prices in previous months.
Overall on the news, shares of ICAP (IAP.L) are trading nearly unchanged at 384.00p.