English translation: Restricted market access given credit line restrictions
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14:18 Feb 14, 2005
English to English translations [PRO] Bus/Financial - Finance (general) / FX
English term or phrase:access to roughly 10 per cent of EURUSD prices
An EBS Spot bank in Asia with limited access to the market increased its average daily trading volume on EBS from USD 2.5 million to USD 30 million using EBS Prime.
Before it became an EBS Prime Customer, this bank had bilateral credit with 40 EBS Spot floors resulting in access to roughly 10 per cent of EURUSD prices.
What does this 'access to roughly 10 per cent of EURUSD prices ' in the second sentence mean?
Explanation: First of all, EBS is a foreign exchange trading platform, so this *is* about the EUR/USD FX market. Given the inherent counterparty risks in FX trading (a spot EUR/USD trade means two payments in different time zones - a lot can go wrong in between, as demonstrated by Herstatt and Barings), having credit lines with key market participants is crucial for market access. The bank in question was previously only accepted as a trading counterparty by 40 trading participants, as a result of which 90 percent of the pricing action in that currency pair was 'off limits'.