EBS crashes raise questions

All electronic trading systems crash at some point, so when EBS went down for just over two hours on Thursday, March 5, I didn’t give it too much attention. After all, FX is not like other markets where activity is concentrated on a single venue. There’s plenty of choice in FX, I thought. Trading elsewhere should be relatively simple.

However, while other platforms did see an increase in volumes, the market’s reliance on EBS for certain currency pairs became apparent. Some banks, notably Deutsche, even stopped streaming EUR/USD and USD/JPY rates, while most widened their spreads.

This should have proved some comfort to Icap as it fended off no doubt numerous phone calls from its clients asking what was going on. Many so-called market makers – including various machines – can only quote a price when they know what it is on EBS.

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