He says EBS client concerns about the ability of high-frequency trading systems to take advantage of decimalization in FX trading, as well as their ability to transact currencies at high speeds, were among the reasons the company refined its brokerage mechanisms. “Our clients have been highlighting the disadvantages of decimals across the board, [and] they’ve been highlighting where speed is going to,” says Mandelzis. “These issues are prevailing issues in the FX market and prevailing issues in other markets globally.”
EBS will also now offer revised quote and hit fill ratios out to 40% set on a pair-by-pair basis, and will take a stricter approach to enforcement of fill ratio policies that include the cancellation of financial surcharges for non-compliance.
The broker is also offering new quoting guidelines for Asia trading.
In April, average daily spot FX volumes on the EBS platform were down by more than one-quarter year-on-year at $109.7 billion – 11% lower than the previous month and down 26% on the year.
EBS’s FX volumes rose 5% in June, as volatility returned to the market in May, but the company’s year-on-year volume numbers were still down 21% overall.
The refined trading rules announced on Tuesday show that EBS is willing to take a principled stance on how FX trading should function, given its position as the market’s leading brokerage provider, says Mandelzis.
“I don’t believe there is any other platform that has such material wall-to-wall support across the board from large banks and non-banks,” he says.
Mandelzis says EBS welcomes competition from the 15 to 20 new FX brokerage platforms that emerged recently to compete with the company’s platform since volumes in the market began to decline.
“Competition is competition,” he says. “We feel very good about where we are and about the progress we are making. We will continue to listen to our clients’ concerns in an effort to make the market better.”
And EBS’s efforts to work with 30 of the leading FX market makers from the banking community and buy-side professionals to redraft the platform’s trading rules mean the company remains confident of maintaining its market-leading status over the long term, says Mandelzis.
Tradition managing director Daniel Marcus – whose firm is set to launch traFXpure, which will be an EBS competitor – says his firm welcomed the changes to EBS’s platform rules.
“We are delighted the entry of new participants, such as traFXpure, has invigorated the FX market and triggered such changes,” says Marcus.
“These moves validate and strengthen the traFXpure proposition by further highlighting to the market the importance of providing transparent, efficient and stable trading environments for client-driven FX trades.”