Despite ending the 2015-year entrenched in a negative downtrend, trading volumes on ICAP’s electronic foreign exchange (FX) platform EBS managed to rebound sharply in January 2016 as market volatility heated up, according to an ICAP statement.
January 2016 has seen widespread surges in trading volumes at a number of institutional and retail venues with FX market volatility picking up steam. The narrative at EBS was no exception, with its FX volumes totaling $103.8 billion daily, which represents a growth 38.7% MoM from just $74.8 billion daily back in December 2015.
While the figure does represent steadfast growth in regard to last month, EBS’ FX volumes did come in lower than its January 2015 counterpart, falling -19.9% YoY from $129.6 billion daily. However, the period in question encompassed a historic Swiss National Banking (SNB) decision that roiled currency markets, which explains the unusually high volumes during January 2015.
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EBS’ market volumes were also helped by activity in trading Japan, as well as the influence of the Bank of Japan (BoJ). According to ICAP representatives, in a statement to Finance Magnates: “Volumes growth was driven by JPY safe haven status during a period of Asian stock market turmoil. Comments from the BOJ’s Kuroda suggested that if this trend continued it could prompt action, which culminated in the decision to enforce negative interest rates on 29th January 2015. This decision resulted in substantial activity, with USDJPY trading over a three big figure range of 118.60 – 121.60 following the announcement. As a knock-on effect EBS saw USDJPY represent 29.8% of overall volumes in January (versus previous month of 20.8%).”
“NDFs average daily volume increased 83% in January versus December. There were two sizeable events: China’s central bank decision to set the currency’s reference rate at an unexpectedly weak level sent shockwaves through financial markets and escalated fears of a global currency war. This led to extreme volatility in the local stock markets causing increased trading volumes on a daily basis,” the spokesperson added.
Finally, EBS’ CNH average daily volumes increased by 50% in January 2016 versus the previous month. “This growth was predominantly encouraged by a series of significant market moves that looked to close the onshore-offshore yuan spread from a high of 1,818 pips on 7th January, alongside increased market share of the currency.”
In addition to FX volumes, EBS also experienced a strong uptick in its US Treasury volumes, following a tight consolidation of activity towards the tail end of last year. For the month ending January 2016, US Treasury volumes swelled to $202.9, up 42.0% MoM from $142.5 billion in December 2015. Across a yearly timetable, this also yielded a growth of 9.6% YoY from $185.2 billion in January 2015.