Banks dealing in foreign exchange are discussing a currency-trading system that may become a competitor to a platform run by ICAP Plc, according to three people with knowledge of the talks. The negotiations include the 10 biggest currency traders, said one of the people, who asked not to be identified because the discussions are confidential. ICAP, the world’s largest broker of transactions among banks, operates the EBS system, which handled daily transactions of $162.5 billion in November, according to the London-based company’s website.
Currency trading worldwide amounts to $4 trillion a day, according to the Bank for International Settlements. An alternative system to EBS would take time to develop, and may not “hurt” ICAP, said Steve Keeling, an analyst at Singer Capital Markets in London.
“Any consortium of banks that wants to put in a competing platform poses a threat to anybody that has a market share in that area” said Keeling. “But this type of competing platform takes a lot of time. There is no guarantee they would get the liquidity that clients want. In the short to medium term, ICAP’s position is relatively strong on this matter.”
ICAP rose 1.6 percent to 530.5 pence at 1:55 p.m. in London trading, more than the 0.5 percent gain by the benchmark FTSE 100 Index. Plans for a new currency-trading system were reported yesterday by Dow Jones Newswires.
EBS Liquidity
“ICAP’s EBS platform is the core source of liquidity in the professional global spot foreign-exchange market,” said Mike Sheard, a spokesman the company. “We are committed to continuously engaging with our customer base to ensure understanding of their requirements and to develop solutions that satisfy their needs. The foreign-exchange markets have always been and will continue to be very competitive.”Talks among the banks are at an early stage, two of the people said.
Deutsche Bank AG is the world’s biggest currency trader, according to Euromoney Institutional Investor Plc. Rounding out the top 10 are UBS AG, Barclays Plc, Citigroup Inc., Royal Bank of Scotland Group Plc, JPMorgan Chase & Co., HSBC Holdings Plc, Credit Suisse Group AG, Goldman Sachs Group Inc. and Morgan Stanley, the Euromoney rankings show.