The first quarter of 2006 was the busiest trading period for spot foreign exchange on record, measured by volume and transactions, according to global FX trading technology provider, EBS.
Counterparties traded a total daily average of USD 132 billion in Q1 2006 on the EBS Spot system, taking the quarter to a new high – and a 2.3% increase on the previous quarterly record of USD 129 billion for Q1 2005. The busiest day of the quarter overall was 10 February, with total trading for the day in excess of USD 191 billion through 102,000 deals.
March 2006 alone was the second highest month for volume in EBS' history when counterparties from across the globe traded a total daily average of USD 137 billion a day in volume over the EBS Spot system. March also saw the highest total of counterparties trading on the system, 15% up on the previous year.
The news for Q1 2006 means that the top three busiest periods in FX trading have been the first quarter of each of the past three years, with volumes increasing in chronological order through 2004, 2005 and 2006.
Activity was intense across both emerging and developed markets. The record trading period includes volumes from EBS Prime customers. There are now 19 EBS Prime banks and a total of 147 EBS Prime customers (of which 112 are banks and 35 professional trading customers). Total daily EBS Prime average volumes for EBS Prime customers are now more than USD 25 billion.
Bill Moran, Chief Operating Officer, EBS said: "It has been a remarkable Q1 for global spot foreign exchange. We have seen extremely high levels of trading from counterparties from across the world. This included increasing amounts of activity from the EBS Prime customers that have recently joined the market or increased their trading activity.
EBS Prime volumes have grown from a standing start just 18 months ago to over USD 25 billion a day at present. The six highest days of EBS Prime volumes overall came in March this year, which again is a reflection of the significant trading activity for the quarter.
EBS is a market of natural interest where participants quote and transact as and when they need. EBS Prime has allowed banks to fulfil the needs of their professional trading customers in a highly controlled manner.
There is more diverse market interest at every price level, more continuous market movements and greater liquidity than ever before and participants are better able to transact at the time, in the amount and at the price that they need."
The first quarter of 2006 saw EBS in the final stages of its three-year programme of substantial investment to upgrade and enhance its technology and operations. This work included migrating users to an upgraded EBS Spot platform, enabling remote servicing and upgrading capabilities as well as an improved overall customer service. EBS has converted more than 2,000 traders on more than 700 floors in more than 50 countries.
EBS has also upgraded its three main EBS global matching engines in New York, London and Tokyo and completed the re-engineering of its core telecommunications network, providing best-of-breed telecommunications lines.
Customers have received state of the art technology coupled with significant benefits in terms of capacity handling and the minimisation of data latency. Average EBS Spot deal time is under 350 milliseconds. In a normal trading day, there are more than 600,000 quotes in the market, which need tens of millions of system messages to be transacted.
Bill Moran continued: "The challenge for any FX platform seeking to provide a fair distribution of prices is the scale of the geographic challenge. EBS was originally designed to meet this challenge. We have now completed the complete upgrade of these key components that improves the customer experience dramatically."
The EBS Spot system is built on a distributed global architecture, with technology hubs positioned close to the main FX trading markets. Says Moran: "Foreign exchange is a truly global business. The challenge is to ensure fair distribution of rates. Through our distributed architecture we have simultaneous price distribution in 40+ markets."
The combination of pre-screened credit, plus the physical closeness of the deal-matching engines to customers in the three core markets around the globe significantly reduces latency in both deal matching and market data feeds.Download the document now 5.3 kb (GIF Image)