Icap’s EBS is launching a new platform that will provide relationship-based disclosed liquidity as it seeks to attract new customer segments to its market.
Called EBS Direct, the platform will launch in December and will be available initially to EBS’s bank clients, although the company says it will eventually roll out the service to any institutional client segment. EBS Direct will be available in addition to EBS’s long-standing anonymous matching platform.
With 120 banks globally signed up to use the new service and more than 20 liquidity providers, EBS Direct will allow smaller banks to access flow directly from large providers in a disclosed, transparent way. The service will also offer a ‘last-look’ function, giving the liquidity provider the right to refuse a trade pre-execution.
This is in contrast to EBS’s flagship platform, which provides an anonymous, no last-look matching of currency trades between banks and professional trading firms.
“We have confined our business over the last 25 years to the segment of anonymous trading in the spot market. The reality is that liquidity providers want to provide liquidity not just to anonymous pools, but to disclosed clients as well, and liquidity consumers would like to receive disclosed liquidity as well as anonymous liquidity,” says Gil Mandelzis, chief executive of EBS.
“There is a level of excitement around EBS expanding its services and providing a total, complete solution to clients,” he says.
EBS Direct prices will be separate from anonymous prices but integrated within the same screen so users can hit either a disclosed or anonymous price, as they wish. Unlike on the anonymous platform where clients cannot trade below $1 million, the minimum trade size will be set at $100,000 and prices will be shown in one pip and tenth pip increments. According to Mandelzis, the disclosed market better supports tenth pip increments.
”Ultimately what we are offering our existing client segment with EBS Direct is an additional type of flow in our currency pairs. But the service will enable us to grow into additional currency pairs, to expand beyond spot FX and to go after additional client segments – not just the bank segment. There are multiple dimensions here into which we can grow,” he says.
The company says EBS Direct will serve those looking to avoid moving the market with certain trades. It will also help build on relationships between banks and their clients, in the hope that by disclosing who the counterparties are to a trade, customers will benefit from tighter prices.
“If I know the counterparty and they have great credit then I can give them a better price, which is why disclosed liquidity has grown; it has benefits,” says Mandelzis. “However, some people prefer to go into the anonymous, no last-look market – there are advantages to both models. Whatever our clients wish to do, in whichever way they want to trade, we can provide it to them through the same connection, the same reliable network and through the same screens that they are used to.”
EBS Direct will leverage EBS’s vast network of workstations and API connections across banks globally and will be available to clients through the EBS Workstation, EBS Global Access, a browser-based trading service, and EBS Spot Ai, an API-based trading service.
Initially EBS Direct will offer spot FX trading, although the company has plans to expand into non-deliverable forwards and other products.
Jeff Ward, EBS’s global head of sales, will become global head of EBS Direct. “This is the first step in a number of long-term strategic initiatives to provide a complete suite of products and services that benefit both liquidity providers and liquidity consumers,” Ward says.
Liquidity providers on the platform include ANZ, Bank of Tokyo-Mitsubishi, Barclays, BNP Paribas, BofA Merrill Lynch, Citi, Commerzbank, Credit Suisse, Goldman Sachs, HSBC, Jefferies, JP Morgan, Morgan Stanley, Nomura, Nordea, RBS, Société Générale, Standard Chartered and UBS.
Mandelzis says the list is not exhaustive and other liquidity providers will be announced at a later date.
The new service will compete in a crowded market of platforms offering a disclosed liquidity trading model, including FXall, owned by Thomson Reuters, Knight Capital’s Hotspot FX, Currenex, 360T and Integral Development Corp.