EBS BrokerTec smashes $200bn mark in post-US frenzy

Over the past few years, market participants have watched with something close to terrified fascination as monthly average volumes on EBS BrokerTec ticked to less than $200 billion, then $150 billion, and finally to below $100 billion.

And yet the day after the UK's vote on membership of the European Union was announced, the platform saw daily volumes increase to more than $200 billion. During the US election fallout, flows on EBS amounted to nearly $240 billion, while BrokerTec ticked up its second-highest day ever with $437 billion in on-the-run US Treasuries.

EBS BrokerTec has been voted the winner in the Best Broker for Spot FX category at the 2016 FX Week Best Banks Awards.

Seth Johnson, the newly appointed chief executive of EBS BrokerTec, says the death of public markets and the shift towards disclosed trading has been overdone. Johnson, who took over from previous chief Gil Mandelzis in September, sees several reasons for a rebound.

"I think the decline in volumes going through the open market has been slightly overstated and I believe public markets will continue to play a vital role. Having a disclosed environment to trade in is all very well, but if you don't know where the price is in the interdealer space, you won't be able to price direct streams either," he says.

"Whenever there is a major shock event there is an immediate return to public markets... so I expect [their] relevance will gradually return. This would also be in line with what regulators expect market participants to do," Johnson adds.

The challenge will be to see when real-money players are ready to face counterparties via a prime broker, rather than directly
Seth Johnson, EBS BrokerTec

EBS Brokertec had a busy year, with new launches including a liquidity pool called EBS Select – in response to the growing importance of non-bank market-makers, whose rise also spurred the venue to open up its NDF liquidity pool to them – and EBS Live Ultra, a new data feed.

"Opening rolling one-month contracts for non-bank liquidity providers has already had a significant impact on volumes and liquidity, and while it's early days still, the signs are very encouraging," Johnson says.

"There is a growing appetite from buy-side clients to take liquidity from non-bank liquidity providers and I expect this trend will continue. The challenge will be to see when real-money players are ready to face counterparties via a prime broker, rather than directly, which would give non-bank liquidity providers a further boost in terms of volumes and activity," he adds.

In the past, EBS had a hard time getting caught in the crossfire between the new kids on the block and core bank customers. The aim is now to ensure equal market conduct standards to all participants.

"We want to make sure all market participants, whether they are banks or non-banks, are held to account by the same standards of behaviour, so that all platform participants are able to exchange risk. It's not about the distribution of banks versus non-banks – it's about behaviour," Johnson says.

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