Will EBS And Minex Become One To Make Reuters Number Two?

MANAGEMENT ISSUES

Talk that the Electronic Broking Service and its rival Minex Corp. would merge their FX order-matching activities has intensified in Tokyo and London in recent weeks. Sources suggest the two are nearing an agreement to join forces to combat Reuters' Dealing 2000-2, which has been battling it out with EBS for the top spot in electronic FX brokerage worldwide. Sources say EBS and Minex are still working out the final details of the proposed union.

EBS chairman Peter Bartko says that EBS has "been talking to Minex on and off for years about doing something together and we're still talking to them." He declines to comment further on the progress they are making in the talks.

But other sources say some sort of merger remains highly likely. However, finalising the agreement between the two consortia is taking some time to complete, these sources say.

Other sources suggest that the combined operation would rely on EBS' matching systems only. Apart from the fact that it is live in more locations than is Minex, EBS has also managed to attract greater volumes in every currency pair except dollar/yen.

The Minex official designated as the company's press officer, Tsugio Kambara, didn't return calls seeking comment.

In Asia in particular, Reuters would have much to fear from the combined forces of Minex--with its strength in dollar/yen trading--and EBS--which already enjoys a clear lead in dollar/mark trading.

According to Bank of Japan, EBS and Reuters market share figures, the three vendors carved up the market in Asia at last count as follows: Minex had 19 percent of dollar/yen brokerage in Tokyo, Reuters had seven, while EBS had six percent. For dollar/mark trading in Tokyo, EBS led with 62 percent, while Minex had negligible share. In Singapore overall, EBS had 59 percent of the electronic FX brokerage market, Reuters had 31 and Minex had 10 percent (D&IS, 11 Sept.).

Worldwide, though Reuters continues to have the advantage in terms of market penetration, geographic spread and number of currency pairs covered, EBS has overtaken Dealing 2000-2 in terms of volume transacted.

The EBS partnership comprises thirteen major North American and European banks, as well as Citicorp's Citicorp Dealing Resource unit, which develops, markets and supports the system.

Minex shareholders are a more diverse group, ranging from 19 major Japanese banks to two non-Japanese banks to voice brokers. The group also includes Dow Jones, whose Telerate unit markets the system outside Japan, and KDD, the telecommunications carrier whose network links it uses where possible. Each of the latter two would likely need to relinquish their roles supplying and supporting the underlying technology for a merged EBS/Minex.

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