EBS volumes rebound in September; remain 39% down year-on-year

Average daily spot volumes at EBS were $111.9 billion in September, a 17% increase from August’s $95.5 billion of volumes.

However, compared with September 2011, EBS average daily volumes remain down by 39%.

In August, EBS took the lead over its competitors in limiting the impact high-frequency trading systems (HFTs) can have over volatility on its FX platform by changing several trading rules after a review of the guidelines by new CEO Gil Mandelzis.

Mandelzis maintains that the changes to the trading rules will address EBS client concerns about the ability of HFTs to take advantage of decimalization in FX trading and their ability to transact currencies at lightning pace.

Despite EBS’s efforts to alleviate client fears about too much volatility on the platform driven by HFTs, the real concern at the end of the summer for the platform was the general lack of volatility in the FX market.

EBS average daily volumes in August were down 11% from July, which was the lowest volumes level the platform had seen since Icap bought the firm in 2006 and the second time that volumes on the platform slipped below the $100 billion level.

EBS competitor Thomson Reuters is set to release its average daily FX volumes for September on Monday, in what could be the start of a key few weeks for electronic currencies broker-dealer platforms as they look to recover volumes.

Thomson Reuters saw an 11.5% fall in FX volumes in August, while CME Group reported a 9% decline, as volumes on both platforms dropped to levels last seen in 2009.

“September saw high volatility in both the equities and currencies markets, and there is a healthy increase in volumes emerging,” says Gerald Segal, managing director at online FX analysis firm LeapRate. “We would expect some of the other ECNs that are going to report soon to record a much better month last month for volumes than they saw over the summer.”

The saviour for volatility in September from the lull in August was ECB president Mario Draghi’s announcement on September 6 of a peripheral bond-buying plan aimed at rescuing a flagging Spanish economy, says Segal.

“Europe getting its house back in order led to the rapid rise in the euro,” says Segal. “It seems Europe’s problems have temporarily been put on the back-burner now.”