EBS sets sights on running central system for FX fix

Wed Apr 15, 2015 10:11am EDT
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By Patrick Graham

LONDON (Reuters) - Currency trading platform EBS has been approached by major banks to provide a computerized system removing much of the human element behind a scandal over the manipulation of currency benchmarks by lenders, a senior EBS manager said.

Such a facility has been discussed for some time as a way of reducing the risk of sensitive client order information seeping out and increasing the scope for wrongdoing in the trades that set benchmark exchange rates used to value trillions of dollars of investments daily.

EBS, one of the main venues for banks and other large financial institutions to trade currencies, launched its eFix solution last year to help banks to match off their orders to buy and sell currencies at the daily "fixings".

That stops short of the outright central facility looked at by the Financial Stability Board (FSB) last year to take in, net off and process orders anonymously and independently of the bank trading desks at the center of a two-year long row over market manipulation.

But it might give EBS the critical mass to launch what could become the main venue for such activity.

"EBS Market is well positioned to play the role of a central utility for the execution of benchmarks globally," Darryl Hooker, head of EBS Market, the platform's main product suite, told Reuters.

"We've been approached by a number of the major banks with regard to providing a netting facility to our eFix solution."

The FSB's final recommendations last year abandoned the idea of ordering the creation of a fixing utility, saying that it saw the potential for the market to generate such a solution without official intervention.   Continued...

A sign displaying currency exchange rates is pictured at a retail currency exchange location in New York City, March 12, 2015.   REUTERS/Mike Segar