(Reuters) – ICAP, the world’s largest currency broker, expects to see business from speed-trading clients fall after technical changes to its currency platform this month to address banking clients’ complaints about tactics used by speed-traders.
The broker said it will introduce on Sept. 17 changes to how prices are quoted on its foreign exchange system EBS in a move that should placate its bank clients and effectively distances the firm from some high-speed traders.
“It is probable we will lose some flow as a result of the changes but we believe it is highly likely we will gain from other sources more than we lose,” said Gil Mandelzis, the chief executive of ICAP EBS.
Inter-dealer brokers such as ICAP and rivals Tullett Prebon and Tradition marry prospective buyers and sellers of bonds, currency and complex derivatives.
The foreign exchange market was dominated by large investment banks until relatively recently, when a new breed of high-speed trading hedge funds started trading these markets and skimming off profits from the banks.
These high-frequency trading firms have grown rapidly in recent years, much to the annoyance of the banks who have fought back by calling for changes at broking systems like EBS to readjust the balance of power.