New trading rules implemented Tuesday by electronic
foreign-exchange trading platform EBS are just the first step
toward booting "disruptive" traders from its market, Chief
Executive Gil Mandelzis said Tuesday.
Earlier Tuesday, the ICAP-owned (IAP.LN) platform outlined new
rules requiring users to complete a certain proportion of their
trades--a key push back against methods used by some high-speed
trading accounts that have grated banks that make up a large
portion of EBS volumes.
"We have had some concerns about disruptive actions in the
markets, and we felt we wanted to make an unequivocal statement,"
Mandelzis told reporters at a briefing Tuesday. "We don't want to
provide a market whereby being super fast gives you an
advantage."
Following the rule changes announced Tuesday, EBS is planning to
update its trading system, which could include a decision to drop
the fifth decimal place in currency quotes, as well as minimum time
requirements for holding a particular currency pair. The firm plans
to send an initial list of the proposed changes to its clients by
the end of this month and hopes to have the measures in place by
late August or early September, Mr. Mandelzis said.
The firm also is looking at ways to enhance surveillance and
enforcement, he said, with those measures likely sometime next
year.
The update to its protocols comes as the first overhaul since
2008 for EBS. Mr. Mandelzis's comments come less than a year after
he was named chief executive in a senior management shakeup that
came amid flagging volumes.
In the overhaul, Mr. Mandelzis said he isn't looking to ban
certain funds from the firm's trading system, nor the growing
business of electronic traders. Instead, he is looking to force out
strategies that attempt to move the prices of securities in a
predatory way, or only make money by being first on a specific
trade.
The move to counteract these type of traders is in stark
contrast to some stock exchanges that had embraced a growing
industry of firms that look to buy and sell securities in
microseconds, or fractions of a second.
"High-frequency behaviors are also employed by some banks, while
others on the buy side have standard buying and selling. We are
aligning ourselves with genuine liquidity to prevent disruptive
behavior. We are not for or against any type of entity," said Mr.
Mandelzis, who said he hopes these and other measures will ensure
there won't be a "flash crash" in foreign-exchange trading.
EBS also faces heightened competition from Thomson Reuters Corp.
(TRI, TRI.T). The EBS rival earlier this week announced plans to
buy electronic currencies trading platform FX Alliance Inc. (FX)
for $616 million, cranking up competition in the electronic
currencies dealing space and suggesting the data provider is
striving to get a bigger slice of the $4 trillion-a-day global
currencies business.
Mr. Mandelzis said "it is not evident there will be any material
effect on our business" from the FXall deal.
-Eva Szalay contributed to this article.
Write to Geoffrey Rogow at geoffrey.rogow@dowjones.com