EBS's client platforms | The client experience
Banks are set to lose spread revenue trading foreign exchange, face a heightened risk of being left holding more loss-making positions and could bear the brunt of any collapse of an FX trading hedge fund.
These are the fears FX traders at some of the leading banks are entertaining now that their largest inter-dealer market-making system, EBS, is pushing ahead with plans to allow buy-side clients to trade on the platform alongside them. It's even prompting some traders to question their commitment to market-making on the platform they set up. Some are talking about taking their liquidity elsewhere.
In May last year EBS launched EBS Prime, a service aimed at smaller banks, and followed that up in December with a four-month pilot programme for the buy side called EBS Prime Professional (see box).
| Increase of hedge fund trading |
Bank traders, especially spot desks, are the main users of EBS, responsible for most of the $110 billion of its average daily volume last year. That's increasing. In the first week of January EBS averaged a record daily volume of $162 billion, an impressive increase in an already high-volume market.