By Nia Williams
LONDON, Nov 13 (Reuters) - Currency trading platform EBS will change pricing in the euro/Swiss franc pair, owner ICAP said on Tuesday, limiting high-speed traders’ ability to exploit price discrepancies at the expense of banks.
From Nov. 26 the platform will price euro/Swiss in half pips rather than tenth pips, bringing the pair into line with changes made to other major currency pairs in September, interdealer broker ICAP said in a statement.
Foreign exchange dealers welcomed the move, saying changes to pricing in other currencies such as the euro and yen were already beneficial. They saw little impact on the Swiss National Bank’s cap on the franc at 1.20 francs per euro from this move.
“We are noticing we are doing a lot more business through EBS because there’s more liquidity at each price point,” said Graham Davidson, director of FX trading at National Australia Bank in London.
The fifth number after the decimal point in the euro/Swiss franc price will now be a half pip - a zero or five - rather than a number between one and 10.
The technical changes have been designed to address banking clients’ complaints that tactics used by high-frequency traders were disruptive.
Market players said those complaints have contributed to the recent decline in trading volumes on EBS and rival Thomson Reuters dealing platforms.
Banks take issue with trading firms that post orders to buy or sell at prices that they do not intend to trade at, thus gleaning information about their rivals’ trading intentions. That strategy is more expensive under the new pricing.
EBS chief executive Gil Mandelzis said there had been a reduction in this practice of “price flashing”, and there would be further moves in future to limit disruptive market practices.