Following the boom in activity seen at major FX trading venues in March, the institutional ECNs were in a sea of red in April 2020, as currency trading volumes were down even further.
Activity on FXSpotStream’s trading venue, the aggregator service of LiquidityMatch LLC, dropped sharply last month to its weakest in five months. The company reported an average daily volume (ADV) of $34 billion, which is lower on a monthly basis by -45 percent from $62 billion back in March 2020. The figure is the lowest ADV since December 2019 but was higher by seven percent from year-ago levels when weighed against $32 billion in April 2019.
FXSpotStream also saw a notable drop across its total trading volumes in April 2020 after reporting just $747 billion for the month, the lowest reading since December 2019, but was mildly higher from $703 billion in April 2019. The difference can’t be explained by fewer working days since April saw a total of 22 trading days, the same as it had been in the month prior.
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During the month of March 2020, FXSpotStream reported a record $1.37 trillion in total volumes, which was 43 percent higher month-on-month from $956 billion in February 2020.
This decline in trading volumes despite ongoing Cocona-led volatility could reflect a return of the “internationalization” trend that was seen in late 2019, where dealers and global banks preferred to offset risks of their client trades on their books rather than passing them to multi-user platforms. A notable example was Citigroup, which cut the number of third-party platforms it gives currency quotes to 15 from 45 by the first quarter of 2020.
Citi is the fifth-largest currency trading firm by market share last year, after the likes of JPMorgan and UBS.
From another perspective, however, other banking giants and major exchange groups have opted to position themselves to take an expanded role in the 6-trillion-a-day foreign exchange market.