The latest BIS Triennial Central Bank Survey for April 2016 * - the most comprehensive source of information on the size and structure of global foreign exchange (FX) and over-the-counter (OTC) derivatives markets - showed that:
- Trading in foreign exchange markets averaged $5.1 trillion per day in April 2016. This is down from $5.4 trillion in April 2013, a month which had seen heightened activity in Japanese yen against the background of monetary policy developments at that time.
- London’s share dropped to 37.1% (from 41% in 2013) which was across most currency pairs. The market share of the euro area continued to decline, falling to 8% in April 2016 from 9% in 2013, although France maintained its 3% share. The trend decline in the share of trading activity taking place in Switzerland and Australia also continued, to 2% in each country in 2016 compared with 3% in 2013.
- For first time since 2001, spot turnover declined. Spot transactions fell to $1.7 trillion per day in April 2016 from $2.0 trillion in 2013. In contrast, the turnover of FX swaps rose further, reaching $2.4 trillion per day in April 2016. This rise was driven in large part by increased trading of FX swaps involving yen
- The US dollar remained the dominant vehicle currency, being on one side of 88% of all trades in April 2016. The euro, yen and Australian dollar all lost market share. In contrast, many emerging market currencies increased their share. The renminbi doubled its share, to 4%, to become the world’s eighth most actively traded currency and the most actively traded emerging market currency
- share of trading between reporting dealers grew over the three-year period, accounting for 42% of turnover in April 2016, compared with 39% in April 2013. Banks other than reporting dealers accounted for a further 22% of turnover. Institutional investors were the third largest group of counterparties in FX markets, at 16%.
- sales desks in five countries – the United Kingdom, the United States, Singapore, Hong Kong SAR and Japan – intermediated 77% of foreign exchange trading.
* The latest survey of turnover took place in April 2016. Central banks and other authorities in 52 jurisdictions participated in the 2016 survey (see page 15). They collected data from close to 1,300 banks and other dealers in their jurisdictions and reported national aggregates to the BIS, which then calculated global aggregates. Turnover data are reported by the sales desks of reporting dealers, regardless of where a trade is booked, and are reported on an unconsolidated basis, ie including trades between related entities that are part of the same group.
CTMfile take: After Brexit, will the decline of London continue?
FX basics - the 5 mistakes businesses make when processing international payments
Kantox shows how you can eliminate them
FX global code of conduct to promote standards and efficiency
The Bank for International Settlements has published the first phase of the global code of conduct for global FX markets, aimed at raising standards and promoting fairness and efficiency in currency markets.
Corporates migration to FX algos and to Single Dealer Platforms will continue
Greenwich research shows that financial institutions and corporates are moving to single dealer platforms using algo trading