Steep drop in institutional Forex volume is reported
The Foreign Exchange Committee today released the results of its tenth Survey of North American Foreign Exchange Volume. The announcement
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The Foreign Exchange Committee today released the results of its tenth Survey of North American Foreign Exchange Volume.
The following dealers participated and reported a decline of over 25% in traded volumes across all instruments as well as strong signs of consolidation in that sector:
ABN AMRO
Bank of America
Bank of Montreal
The Bank of New York
Bank of Tokyo-Mitsubishi
Barclays Capital
BNP Paribas
Citigroup
Canadian Imperial Bank of Commerce
Calyon
CSFB
Deutsche Bank AG
Dresdner Bank AG
Goldman Sachs & Co.
HSBC Bank USA
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JP Morgan Chase Bank
Merrill Lynch
Mizuho Corporate Bank
Morgan Stanley
Royal Bank of Canada
Royal Bank of Scotland
Skandinaviska Enskilda Bank
Société Générale
Standard Chartered
State Street Corporation
Sumitomo Mitsui Banking Corporation
UBS Bank
Wells Fargo Bank N.A.
Key findings include:
- Average daily volume in total over-the-counter foreign exchange instruments (including spot transactions, outright forwards, foreign exchange swaps, and options) totaled $527 billion, a decrease of 26.3 percent compared with the April 2008 reporting period and the lowest level since October 2005;
- Declines in average daily volume were broad based and were reported across all currency pairs, instrument types, counterparty types, and execution methods;
- Spot market transactions conducted by the top quintile of dealers based upon market share remained elevated following the rise seen in the October 2008 survey results, continuing to suggest increased market concentration over the past year.
I doubt we’ll see any similar decline in retail forex in the near future but this may be a likely scenario in the long term. Institutional forex trading reached its maturity long time ago so this decline amid the financial crisis is not a big surprise.
Summary of the survey is embedded below for your convenience.
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Yes that may all be true but at the same time I am curious what a similar report about the London market would conclude. As London is much more lliquid than NYC it could be that a lot of volume, previously conducted in the NY markets has shifted to the London market.
Regards
Peter Ris
http://www.bankofengland.co.uk/markets/forex/fxjsc/#surveys
and
http://www.bankofengland.co.uk/markets/forex/fxjsc/fxturnresults090727.pdf
the fall in the UK volume was the same: ~25%