USD/Trading, Swaps Volumes Jump in the US in April: FXC Survey

The Foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term Committee (FXC) has reported the results of the 24^th Survey of North American Foreign Exchange Volumes, which captured the period of April 2016 – amongst many notable findings were a growing over-the-counter (OTC) average daily volume (ADV) for FX instruments, with turnover also on the uptick, per recent survey findings.

The FXC includes a composite of representatives across major financial institutions engaged in foreign currency trading in the United States. The survey itself was originally developed in order to provide market participants relevant information on the size and structure of FX activity in North America.

Key Findings

During April 2016, ADV of OTC FX instruments, which includes spot, outright forward, foreign exchange swap, and option transactions came in at $893.2 billion, up over 10.0% relative to the October 2015 survey period.

Looking specifically at the latest tranche of data, the largest increase in ADV during the April 2016 survey as seen across Swaps Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Read this Term, relative to April 2015. Moreover, swaps constituted a larger percentage of FX market share, growing from April 2015 – by extension, forwards and swaps declined slightly over the same period.

Overall, the increase in swaps turnover was quantified at 23.0% in the latest April 2016 survey. Furthermore, average daily turnover in spot, forwards, and options also grew by 7.0%, 8.0%, and 3.0%, respectively over the same timeline. Finally, in terms of turnover, volumes relegated to reporting dealers and nonfinancial customers was pointed lower in the latest survey, falling -11.0% and -8.0% respectively.

Currency Pair Analysis

While the EUR/USD continued to dominate with the highest proportion of the composition of the trading market (23.0% and $207.0 billion despite losing -4.0% in volumes), the USD/JPY currency pair grew by 35.0% from the previous survey, justifying $157.9 billion or 18.0% of the market. The GBP/USD was a distant third, yielding $90.4 billion or just 10.0% during April 2016 – however, turnover volumes of the GBP/USD also jumped 15.0% over the same period. The survey can be read in full by accessing the following link.