A new report released today, 'Trading Slowdown Can't Stop the Electronification of FX', by Greenwich Associates shows that the continued adoption of e-trading by large numbers of institutions and companies is furthering the transformation of foreign exchange into a truly electronic marketplace.

Even in the United States electronic trading platforms managed to expand their customer bases last year by meaningful margins. The share of U.S. market participants trading foreign exchange electronically increased to 82% in 2012 from 76% in 2011. Electronic platforms also gained a few new customers in the United Kingdom, where the share of institutions and companies trading FX electronically increased to 82% from 80%, and in continental Europe, where the share of market participants executing trades electronically increased to 75% from 73%.

In Japan, market participants have been slow to adopt electronic trading in part due to concerns that a switch to e-trading would undermine personal relationships with banks that are seen as invaluable sources of market information, trade ideas, sales coverage and support and, of course, credit. While adoption rates in Japan continue to lag behind those of other markets by a considerable margin, the share of Japanese companies and institutions trading FX electronically jumped to 45% in 2012 from just 38% in 2011.

Greenwich Research Associates estimate that including short-term transactions, e-trading systems captured 71% of global FX trading volume in 2012. Institutions executed 76% of trading volume in G-10 currencies electronically, as well as 53% of trading volume in emerging markets currencies and 23% in currency options. And they expect are poised to grow.