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Trading Volumes Plunge At Forex Broker EBS

05/04/2012 | 07:50am US/Eastern

--EBS sees lowest currency-trading volumes since January 2006

--ICAP-owned system has now lagged rival Reuters for six straight months

--Slowdown coincides with high-level staff departures, discussions of change in strategy

 
   By Eva Szalay and Katie Martin 
   Of  
 

(Adds background, rewrites throughout.)

More signs of stress emerged at currencies broker EBS Friday as it reported a 26% year-on-year slide in average daily volumes passing through the system in April.

The drop to an average of $109.7 billion a day in volumes marks an 11% slide on the month--a much sharper decline than the 6% slide on systems owned by rival Thomson Reuters (TRI) over the same period. It also represents EBS's lightest volumes since January 2006 and means that EBS has now lagged Reuters for six months--a big shift from its long held position as No. 1 bank-to-bank system.

London-based ICAP PLC (>> ICAP plc), which owns the firm, blamed the slip in performance to the "seasonal slowdown over Easter."

The plunge in trading volumes at EBS comes at a tumultuous time for the firm. In March, chief executive David Rutter abruptly left the company, to be replaced by ICAP-insider Gil Mandelzis, who ran a trade-processing firm also owned by ICAP.

Several other senior executives also left within a few weeks.

The broker also appears to be mulling a shift in strategy as it seeks to heal bruised relations with its core dealer banks.

As Dow Jones Newswires reported Wednesday, several people familiar with the situation say that EBS is considering scrapping the fifth decimal place that it imposed on currency prices less than two years ago.

This so-called decimalization was designed to bring EBS up to date with other systems, and help it maintain market share. But it has irked some bank traders, who say it has hindered their ability to process large trades and made it harder to snag trading profits.

- By Eva Szalay and Katie Martin, Dow Jones Newswires; 44 20 7842 9305; (eva.szalay@dowjones.com) @djfxtrader

(Jessica Mead in London contributed to this article.)

Stocks mentioned in the article : ICAP plc, ICAP plc
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