Growth of global foreign exchange turnover

Turnover in April 2010

Рита

Global foreign exchange market turnover was 20% higher in April 2010 than in April 2007, with average daily turnover of $4.0 trillion compared with $3.3 trillion. The increase was driven by the 48% growth in turnover of spot transactions, which represent 37% of foreign exchange market turnover. Spot turnover rose to $1.5 trillion in April 2010 from $1.0 trillion in April 2007.

The increase in turnover of other foreign exchange instruments was more modest at 7%, with average daily turnover of $2.5 trillion in April 2010. Turnover in outright forwards and currency swaps grew strongly (by 31% and 36%, respectively). Turnover in the large foreign exchange swaps segment was flat relative to the previous survey, while trading in currency options fell.

As regards counterparties, the higher global foreign exchange market turnover is associated with the increased trading activity of “other financial institutions” – a category that includes non-reporting banks, hedge funds, pension funds, mutual funds, insurance companies and central banks. Turnover by this category grew by 42%, rising to $1.9 trillion in April 2010 from $1.3 trillion in April 2007. At 13%, the share of trading with non-financial customers was the lowest since 2001.

Надя:

Foreign exchange market activity became more global, with cross-border transactions representing 65% of trading activity in April 2010, while local transactions accounted for 35%, the lowest share ever.

The relative ranking of foreign exchange trading centres has changed slightly from the previous survey. Banks located in the United Kingdom accounted for 37% of all foreign exchange market turnover, against 35% in 2007, followed by the United States (18%), Japan (6%), Singapore (5%), Switzerland (5%), Hong Kong SAR (5%) and Australia (4%).

6 2. Amounts outstanding and market values at end-June 2010

Growth in the positions of OTC foreign exchange instruments was moderate at 9%, compared with an increase of 83% in notional amounts outstanding of currency instruments in the 2004–07 period.

In contrast, market values of these instruments almost doubled against a backdrop of increased financial market volatility during mid-April and early June 2010.

Форзон

B. Turnover in the global foreign exchange markets in April 2010

Growth of global foreign exchange turnover

The 2010 triennial survey shows another substantial increase in global foreign exchange market activity (spot transactions, outright forwards, foreign exchange swaps, currency swaps, currency options and other foreign exchange products1) since the last survey in 2007, following the unprecedented 72% rise in activity between 2004 and 2007.2 In the wake of the financial crisis, global foreign exchange market turnover was 20% higher in April 2010 than in April 2007 (Table B.1). This increase brought average daily turnover to $4.0 trillion (from $3.3 trillion) at current exchange rates. Because euro/dollar exchange rates were almost unchanged in April 2007 and 2010, growth calculated at constant exchange rates was similar at 18%.3, 4

Turnover of outright forwards, foreign exchange swaps, currency swaps, currency options and other OTC foreign exchange products continues to be many times larger than the volumes traded on organised exchanges. Daily turnover for currency instruments on organised exchanges was $168 billion, less than 7% of the $2.5 trillion average daily turnover in those instruments (Table B.1).

Азиза и Эвелина

Data for turnover by counterparty show that the increase in global foreign exchange market turnover in 2010 is largely due to the enlarged trading activity of other financial institutions – a category that includes non-reporting banks, hedge funds, pension funds, mutual funds, insurance companies and central banks5 (Graph B.1). Turnover by this category grew by 42% to $1.9 trillion in April 2010 from $1.3 trillion in April 2007.

Although a surge in activity with other financial institutions had already accounted for most of the growth in total turnover in 2007, this category’s share (48%) surpassed transactions between reporting dealers (39%) for the first time in 2010 (Graph B.1). Other financial institutions increased their activity mainly in the spot market, with their share of turnover rising from 39% to 51%. In outright forwards, their share rose from 44% to 54% (Annex Table E.1).

Transactions between reporting dealers in the interbank market grew by 11% to $1.5 trillion in April 2010 from $1.4 trillion in April 2007 (Table B.2). Some of the factors identified as drivers of the downward trend in the share of the interbank market in analyses of previous triennial surveys, such as the increased concentration of the banking sector and the spread of electronic broking platforms, may also have had a dampening effect on interbank turnover.6

The lower share of turnover between reporting dealers is consistent with ongoing concentration in the FX industry. Among the top 13 global FX centres (covering 90% of global turnover), a decrease in the number of banks accounting for 75% of the turnover was reported between 2007 and 2010 in most centres. In contrast, in Denmark, Hong Kong SAR and Korea, an increase in competition is evident (Table B.3).

Foreign exchange market transactions with non-financial customers declined by 10%, falling to $533 billion in April 2010 from $593 billion in April 2007 (Table B.2). This category, which includes corporations and governments, now represents around 13% of global foreign exchange market activity, its lowest share since 2001. An increase in spot transactions by these counterparties was offset by a decrease in the use of foreign exchange swaps and currency options. The use of outright forwards and currency swaps by non-financial customers was relatively unchanged (Annex Table E.1).

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