EBS Direct to Cut Last Look Threshold; Raise Code Compliant Bar

CME Group’s EBS has announced a reduction in its last look threshold to 30 milliseconds from 200ms and that it will disable non-FX Global Code compliant liquidity providers from the relationship platform.

The changes will come into effect from 1 April, although as was the case when Euronext FX announced a similar change last year, clients will be able to maintain relationships with non-compliant liquidity providers if they choose to, but they must proactively opt to do so.

EBS says the changes to its rule book follow a detailed review of trading on EBS Direct, revealing that average last look hold times in 2022 were 12 milliseconds and 96% of volumes were with liquidity providers that have stated their adherence to the FX Global Code.

EBS Direct is also enhancing its transaction cost analysis (TCA) tools, including metrics to monitor flow quality, such as whether a counterparty is co-located with the exchange, and median, 90% and 99% last look hold times.

“The changes we’re announcing today for EBS Direct will accelerate the industry shift towards FX Global Code compliance,” says Jeff Ward, global head of EBS. “Our new trading rules will create minimum standards for our market while our new transparency tools will help the ecosystem evolve.”

Global Foreign Exchange Committee chair Andréa Maechler, adds, “Any measures that help to increase transparency in the foreign exchange market and support FX Global Code adherence by market participants are welcomed by the Global Foreign Exchange Committee.”

The move makes EBS the fourth firm to specifically remove non-Code compliant LPs from some of its venues. Last year Cboe FX, 360T GTX and, as noted, Euronext FX, all altered their rule books to promote Code compliance.

“Credit Suisse supports adherence to the FX Global Code and we appreciate the work done by EBS Direct to encourage compliance,” says John Estrada, global head of FX trading at the bank. “FX must continue to move forward and this work is a step in the right direction.”

Zar Amrolia, chairman and co-CEO at XTX Markets, adds, “We congratulate the efforts and progress made by both EBS and its LPs in tightening the thresholds for last look times. Today’s changes from EBS are an important step forward in the industry’s journey to zero additional hold times in line with the FX Global Code.”