Icap’s foreign exchange trading platform EBS is changing its pricing structure in a move designed to reward increased volumes. However, price makers, who traditionally traded at a cheaper rate, will be paying higher prices.
With effect from 1 January 2008, the company will begin a phased transition to volume-based pricing for all FX products on the platform starting with larger volume customers. EBS says it aims to complete the transition to the new pricing structure by April 2008.
Under the new scheme, both make and take volume will be chargeable on a brokerage per million basis. Make fees will be 50% of take fees. So, for instance, if global monthly volumes are under $1 billion, the maker will pay $2.50 per million dollar traded while the taker will pay $5.00 per million dollar traded.
For monthly volumes of $1 billion to $5 billion, the make price decreases to $2.38 while the take price drops to $4.75 per million dollar traded. This continues all the way to monthly volumes of more than $700 billion where the make price is $0.68 and the take price is $1.35 per million dollar traded.
EBS currently charges $25 for each take – regardless of the size of the transaction, while price makers pay $1 per million unless the price maker matches automatically with an existing buyer/seller. Then the maker is charged as a taker.
On the whole, pricing will be global and transparent and the price for takes will be significantly reduced, a spokesperson for EBS says. In addition, customers will be able to group global volumes for greater discounts.
The new pricing scheme has been modelled with exact volumes and brokerage revenues for all customers over the past year, EBS says.
The spokesperson adds that the changes are in response to market and customer demand for a simpler and more equitable pricing structure. It also brings EBS into line with other platform providers in the FX space who charge both sides to a transaction.
The new structure will be revenue-neutral for the company, EBS says, and follows a period of consultation with clients.