Best Banks Awards: EBS

The announcement in June 2016 that the interbank and foreign exchange division of the People’s Bank of China had selected EBS to deliver technology for a new renminbi-trading platform was a major win for the London-based company.

In February this year, the China Foreign Exchange Trade System and EBS launched the first phase of the project – a central limit order book (Clob) platform for spot onshore Chinese renminbi (CNY), providing anonymous execution for the home market, as well as access to a central pool of liquidity and a public reference point for spot CNY pricing.

“Before launching the Clob, the domestic renminbi market was almost exclusively quote-driven. Since CFETSFX2017 went live, we have seen over 50% of domestic volumes going through the order book,” says Seth Johnson, chief executive of Markets, the division incorporating EBS at CME Group.

CME Group acquired Nex Markets in October, and announced that the Nex brand would be retired and EBS brought back to life as a sub-brand.

“I think this is a real milestone for the renminbi market and we are very proud that the launch went smoothly, despite having to connect over 700 institutions at the same time,” Johnson says.

EBS scooped Best Broker for Spot FX at the 2018 FX Week Best Banks Awards.

Asia, more broadly, has been a big story for EBS over the past 12 months, with volumes in some non-deliverable forwards growing by 70% year-on-year in the first six months of 2018. The USD/CNH pair, meanwhile, has become one of the most traded units on EBS since its launch.

For the first time in a very long time there are real underlying themes to trade and that’s going to underpin volumes going forward

Seth Johnson, CME Group

The growth was in no small part due to the uptick in volatility in Asian currency pairs against the dollar and the Japanese yen, which is traditionally one of the five currencies trading on EBS. Johnson now says underlying volatility is starting to show signs of returning to FX more broadly, for the first time since the financial crisis.

“I think there is a sense in markets that some sort of a correction is happening, as post-crisis monetary policy comes to an end and political factors create uncertainty. For the first time in a very long time there are real underlying themes to trade and that’s going to underpin volumes going forward,” he says.

Data and analytics

But, at the same time, cost pressures for both buy- and sell-side market participants persist, while the focus on data and analytics is continuing. The platform’s analytics suite has seen huge success, leading to significantly changed behaviour and trading outcomes on EBS.

“Changes in hold times and reject rates have been significant, and they continue to improve,” Johnson says. “Transparent data available to all participants is a huge theme for the market because it leads to better behaviours and outcomes in trading.”

But as behaviour changes, so do the roles played by dealers. Johnson predicts that as spread compression in FX continues while distribution, technology and balance sheet costs rise, an increasing number of banks will move towards agency service models. This, in turn, is likely to boost concentration among a handful of top players.

“The reality is that most sophisticated dealers today make more money from their agency and algo business on an average per-trade basis than they do from their principal desks,” says Johnson. “It’s not going to be a surprise if the concentration amongst principal trading banks and non-banks increases, while the rest of the market moves to an agency model.”

“2018 was the year when the FX market rehabilitated itself,” he adds.

Interviews with the 2018 FX Week Best Banks Awards winners

JP Morgan

Best Bank Overall for Foreign Exchange Dealing

Best Bank for FX for Banks

Best Bank for FX for Investors

Best Bank for Spot FX

Best Bank for FX Forwards

Best Bank for EUR/USD

Best Bank for USD/JPY

Best Bank for EUR/JPY

Best Bank for E-Trading

Citi

Best Bank for FX for Corporates

Best Bank for Currency Options

Best Bank for Structured Products

Best Bank for FX Prime Brokerage

Best Bank for FX in North America

Best Bank for Emerging European, Middle Eastern and African Currencies

Best Bank for FX Research and Strategy

HSBC

Best Bank for FX in Asia-Pacific

Best Bank for Renminbi

Best Bank for Emerging Asian Currencies

Deutsche Bank

Best Bank for FX in the Eurozone

ANZ

Best Bank for Australian Dollar

Barclays

Best Bank for GBP/USD

Best Bank for EUR/GBP

Best Bank for FX in London

UBS

Best Bank for Swiss Franc

NatWest Markets

Best Bank for FX Post-Trade Services

360T

Best Professional e-Trading Venue

Best Vendor for Dealing Technology

Refinitiv

Best Broker for Forward FX

Best Broker for Emerging Markets FX

LCH

Best FX Clearing House

EBS

Best Broker for Spot FX

Bloomberg

Best Market Data Provider for FX

Danske Bank

Best Bank for Scandinavian Currencies

Standard Bank

Best Bank for South African Rand

Best Bank for African Currencies excluding ZAR

BMO Capital Markets

Best Bank for Canadian Dollar

Banco Santander

Best Bank for Emerging Latin American Currencies

kACE

Best Vendor for Risk Management/Options Pricing Software

Saxo Bank

Best Prime-of-Prime House

BGC (no interview)

Best Broker for Currency Options