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EBS Sees Rise in NDF Trading

Icap’s EBS trading platform says it has seen a continued increase in cross-regional counterparty trading of non-deliverable forwards (NDFs) currency products on the platform for the months of March to June 2009.

“In spite of overall challenging market conditions, we have seen a steady increase in global counterparty participation, particularly over the last few months,” says Chris Soriano, NDFs product manager, Icap Electronic Broking. “Over 135 banks, evenly dispersed among our three major trading centres in Asia Pacific, London and New York, are now live to trade NDFs on the platform.”

In February 2008, Icap was the first interdealer broker to introduce electronic trading of NDFs, and has gradually expanded its offering to include a range of NDF Asian and Latin American pairs and tenors.

Soriano adds that several trends are emerging in NDF trading: “Cross-regional electronic NDF trading has continued to grow. Activity in the South Korean won continues to dominate, although in June we also saw increased trading in the Indian rupee, Malaysian ringgit and Taiwan dollar,” he says. “Most of our NDF customers are becoming comfortable with executing trades on EBS, as evident in the expanding variety of tenors traded in the past few months.”

Soriano gets support from James Pearson, managing director, global foreign exchange trading, at Nomura International, who says: “Volatility has been falling for the past few months in Asian NDFs, with better liquidity finally returning to the markets. This has facilitated the re-emergence of electronic trading in this space, the inevitable next step for these markets.”

The growth in NDF trading has also been boosted by increased efficiency, Soriano notes. “Straight-through processing for NDFs on EBS is fully operational and already deployed globally in several banks leading to increased trading efficiencies, improved deal flow audit trail, less manual intervention and added security.”

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