My guess so far is that they've kept him with the first team match day squad (the whole traveling party, not the first XI and subs) so far for a couple of reasons -
1) so they can have a closer look at him, assess him in training with the first team and see how he reacts alongside elite players and then properly decide on what his next move should be, be it EDS, loan or first team etc...
2) I think there's also an element of posturing, which though is silly is also a little understandable. If he'd immediately started with the EDS the club would have been roundly castigated by the press cos he's English and cost a lot of money. Ruining English players and throwing them with the reserves etc. load of nonsense obviously, but they would have jumped on it, as they do with any opportunity to slag city off. So I think they've held off on playing him with the eds just yet for that reason, keeping him training and travelling with the first team squad, even if logically it'd make sense to make sure he gets minutes in the EDS. He most definitely isn't first team ready yet either way.
I reckon in a couple of weeks we will know a little more about where he stands as the club commit to a course of action. Personally I think he'll end up in the EDS before heading on loan around January, but I may be wrong.