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EBS Cracks China

Icap looks to have secured a deal full of (Far) Eastern
promise. The company has extended its association with the China Foreign
Exchange Trade System (CFETS) by announcing the latter has chosen its EBS
BrokerTec technology for electronic execution services in mainland China. CFETS
is China’s official interbank trading and infrastructure platform. 

CFETS has been looking to upgrade its platforms for some
years, developing what it calls its Next Generation Trading System (NGTS). Icap
says that following a thorough RFP process, CFETS selected EBS BrokerTec for
“its established and robust infrastructure capabilities, unique seamless and
integrated trading technology, proven innovation and development of products
such as EBS Direct and BrokerTec Direct, and a strong pipeline of product
development, which is scalable and aligned to CFETS’ growth strategy.”

The deal, it says, will enhance CFETS’ capability to offer
central limit order book (CLOB) and disclosed trading models for FX spot,
forwards and swaps and a disclosed trading model for cash bonds, to the onshore
renminbi (RMB) market. It will do this through a localised EBS BrokerTec
Graphical User Interface (GUI).

The deal, which is valued at $65 million over a three-year
period, will see Icap expand into China. Not surprisingly, it sees this as a
key growth market and EBS BrokerTec will establish a local office and
development centre in Shanghai.

Icap has a fairly long history of working with CFETS. The
two formed Shanghai CFETS Icap more than nine years ago as a joint venture to
provide broking and information services in the onshore and offshore interbank
FX, money market, bond and derivatives market.

When Icap sells off its voice broking business to Tullett
Prebon, a deal expected to be completed later in 2016, EBS BrokerTec will form
the core of the electronic Nex broking and post-trade business. Icap chief
executive Michael Spencer alludes to the future in a written comment on the new
deal.

“Icap has invested meaningfully in financial technology over
many years, which will continue to be part of the Nex Group strategy. Our EBS
BrokerTec business has a strong track record of innovation in the development
of electronic OTC markets,” he says.

Spencer adds: “China is an extremely important financial
market and we are honoured that our long term partner, CFETS, has asked us to
collaborate with them to build a significant platform which will play a key
role in the future of the renminbi.”

EBS BrokerTec’s chief executive Gil Mandelzis is similarly
ebullient. “This is a hugely exciting project for EBS BrokerTec and we are
looking forward to working with CFETS to shape market development in the
Chinese FX and fixed income trading markets,” he says, adding: “CFETS’ decision
to use EBS BrokerTec technology to launch NGTS is a resounding endorsement for
the quality of our technology and our role as a trusted provider of trading
infrastructure and venues globally, across multiple asset classes.”

The deal was led to completion by Paul Allmark, EBS
BrokerTec’s global head of e-Commerce solutions. According to Xu Zaiyue,
executive vice president of CFETS, the institution “consistently drives its
independent technology development with various technology resources over the
world.”

He says: “The introduction of technology from EBS BrokerTec
is an important part of CFETS NGTS project. The platform architecture conforms
to the latest standards and has been approved by external technology experts.
With acquired intellectual property and source code, CFETS’ technology platform
will be greatly enhanced and strengthened.”

He concludes: “I am glad that as our partner, EBS BrokerTec
is helping us to achieve our goal. I firmly believe NGTS will become one of the
most important infrastructures of China’s RMB market and provide strong and
steady support to the development of China’s interbank market and globalisation
of the RMB. ”

Editorial

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