CLS Sees Significant Uptick in Spot FX Volumes, Driven by COVID-19

Overall, trading increased by 5 percent year-on-year in February of 2020.

CLS has published its trading volumes for the month of February 2020, revealing an overall uptick in volumes, which were largely driven by increased market volatility in reaction to the COVID-19 pandemic.

According to the data released by CLS Group, a leading provider of risk mitigation and settlement services for forex dealers and institutions, the average daily traded volumes increased by 5 percent on a yearly comparison, with the total monthly volume coming in at $1.81 trillion.

When measuring this figure against the previous month, January of 2020, which had a total monthly volume of $1.77 trillion, volumes have also managed to increase by 2.2 percent.

Although, overall, volumes increased, according to the data provided by CLS, which measures the trading activity submitted to the company, February delivered different results across its three products – swap FX, spot FX, and forward FX.

Specifically, Spot FX trading volumes increased significantly in February of 2020, coming in at $500 billion. This represents an uptick of 24.7 percent month-on-month, and it has increased by 24.4 percent on a yearly measurement.

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Swap forex and FX Forwards, however, both saw a drop in trading volumes on both a yearly and monthly comparison, which goes against the trend of February, which saw many trading providers report robust performances.

COVID-19 drives CLS volumes up into March

Commenting on the volumes, CLS’s Head of Information Services, Masami Johnstone, said in the statement: “Covid-19 (Coronavirus) was the dominant theme driving markets in February 2020, which coincided with record daily averages in USDKRW of USD24 billion, USDSGD of USD44 billion and USDILS of USD7 billion.

“The high average daily traded volumes observed at the end of February, particularly USD2.30 trillion during the last week of February, have continued well into March with average daily traded volumes of USD2.30 trillion, up almost 27% compared to February 2020 as a whole. By product this was a rise of 55% in spot, 15% in FX swaps and 36% in forwards.”

“This was against the backdrop of the increased market volatility. The spread of the Coronavirus globally led to significant losses in global stock markets. Meanwhile the US 10-year treasury bond fell below 1.00% for the first time in its history on the back of a surprise Federal Reserve 50 basis point rate cut.”

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