UPDATE 3-Ex-Barclays exec seen as strong contender to replace EBS' Mandelzis

* EBS FX volume declining

* Citi analyst says Mandelzis exit disappointing (Adds third source close to company on selection process)

By Patrick Graham and Gertrude Chavez-Dreyfuss

LONDON/NEW YORK July 21 (Reuters) - Former Barclays globalhead of electronic trading Tim Cartledge is seen as a leadingcontender to take the helm at EBS BrokerTec after Thursday'sannouncement that Chief Executive Gil Mandelzis will step down,sources close to EBS said.

Cartledge has been chief strategy officer at EBS sinceNovember 2015.

Interdealer broker ICAP Plc said in a statement onThursday that Mandelzis decided to leave EBS, a unit of theLondon-based company.

ICAP said Mandelzis will leave New York-based EBS "in duecourse" without giving a reason for his departure. Mandelzis hasbeen in the job since 2012.

ICAP CEO Michael Spencer said the company was consideringinternal and external candidates.

Two industry insiders with close ties to EBS said thecompany has cherry-picked a number of senior staff from banks torefresh a business that dates to the early days of electronictrading in the early 1990s.

As the head of Barclays' fixed income, currencies, andcommodities electronic trading, Cartledge helped build theBritish bank into one of the big three global banking players inforeign exchange, a position it has relinquished since he leftearly last year.

"I know that Tim Cartledge is seen by everyone inside EBS asbeing in pole position to take over," one of the sources, aformer EBS employee who still works closely with the company,said.

A second source said: "They have surrounded Gil with talentfrom banks which seems like a fairly healthy thing. It isnatural that you replenish the talent base from time to time andnatural that someone like that take over when Gil leaves."

A spokeswoman for EBS declined to comment on whetherCartledge was likely to be appointed chief executive.

Speculation about Mandelzis leaving the company had swirledfor many weeks.

Like its competitors, which include Thomson Reuters, EBS has been struggling to combat a slide in volumesover the last three years, as the currency market struggled withchanges in regulation and a market manipulation scandal.

EBS forex volume for the first six months of the yeartotaled $105.3 billion, down 15 percent from a year earlier.

A research note from Citi said Mandelzis' departure is a"disappointing development" for EBS.

"Mr Mandelzis has been a key driver of innovation at EBSBrokerTec, both in terms of product development but also interms of driving a more collaborative approach across differentparts of the business."

The company has appointed head hunters Korn Ferry to run therecruitment process and a third source close to EBS said theselection was still in its early stages.

(Reporting by Gertrude Chavez-Dreyfuss in New York and PatrickGraham in London; Editing by Cynthia Osterman and Tom Brown)