Retail platform provider FX Solutions is now able to offer price data from Icap’s EBS foreign exchange platform; at the same time EBS will be selling FXS products and adding a new client base.
FXS was acquired by spread-betting shop City Index, owned by IPGL which is also a 20% owner of inter-dealer broker Icap, in March. The exclusive data deal from Icap EBS means that FXS is the only retail platform on the market that can offer prices directly from the dealing banks on EBS.
Tom Plaut, co-CEO at FX Solutions, says having EBS prices helps to legitimise retail FX: "There is a feeling out there that there is a lack of price integrity in retail FX. This deal is good for the whole market, it legitimises the space."
Icap has embraced the FX market with its acquisition of EBS, and its share in City Index which now owns FX Solutions, to offer soup-to-nuts FX trading from spread betting to retail trading to institutional and interbank.
David Rutter, deputy CEO for Icap electronic broking, says: "EBS is the leading source of price data in the spot FX markets and as such we believe that our market data partnership with City Index will greatly support the development of the retail FX market."
The exclusive deal between EBS and FXS enables the retail provider to integrate data from EBS to support its pricing engines. It does not offer FX Solutions or its clients access to transact on the EBS platform however.
"The price for FX is where it originates in the market. There is no exchange as such, but there is EBS. Getting prices directly from where they originate is an advantage for our clients," says Plaut. "We are now standing shoulder-to-shoulder with institutional offerings."
The other part of the EBS and FXS deal is leveraging the worldwide Icap electronic broking sales team and relationship managers to introduce FXS turnkey retail white-labelling platform into their client space. It gives EBS sales a product that targets a new client segment – retail aggregators, says Plaut. "Banks, broker dealers and financial institutions can use FXS for their retail client base. It adds a whole new class of introducing brokers to the market."
And using EBS’s global sales force gives FXS the opportunity to offer its white labelling solution. With the passing of the new US Farm Bill (Squawkbox, June 12) the retail FX market now has legal standing and more banks and brokers are looking to get involved. Banks including Deutsche Bank and Citi have already begun to offer FX aggregation services to retail clients, and more are looking into it, says Plaut.
The deal between Icap EBS, City Index and FXS adds weight to this: "In my opinion, it is big news and demonstrates the retail FX market has arrived," concludes Plaut.