Sale offers a fresh start for EBS

This week's news that Icap has put in a bid of some $700 million for the bank-owned platform brings to a head months of speculation about the future for the business. In a sense, it is surprising that this has not happened sooner.

EBS's business plan was always going to be difficult to hammer out. With so many powerful owners, each with their own agendas, it has been difficult for the portal to decide exactly what proposition it is offering the market. This came into sharp focus when it launched its prime offering and targeted the buy-side.

On the surface this was a good idea. It offered banks a new way to access a potentially vast audience, but it also led to a conflict of interest. If it was really going to offer buy-side clients access to the best prices, it would by definition be luring customers away from the banks that owned it.

Other evidence that all is not well with EBS under its current ownership structure emerged when the platform stopped new customers going live last November. Its technology is behind that of much of the industry, which meant the banks that owned the platform found they were losing money to aggressive traders.

With 13 institutions each having a stake, making decisions on costly investments in technology is always going to be difficult.

For this reason, the decision to sell makes sense. The purchaser, whoever that turns out to be, will be able to make decisions on what investment is necessary and which markets it should enter without worrying whether it is damaging its owners.

Admittedly, there is now a danger that out in the cold reality of the open market, without the backing of the world's largest banks, EBS will fail to attract the volumes of those that used to feel compelled to support an entity that they owned. However, the benefits to be accrued from cutting costs and freeing the business to move into those markets where they can make money must be healthy for foreign exchange as a whole. Only time will tell if EBS, its competitors or the banks that are off-loading it will be those that reap the rewards.