London FX Turnover Amounts to $2.2t in April: Last Pre-Brexit Vote Report

The foreign exchange capital of Europe London accounts for a substantial share of the global FX market.

London has continued its dominance in foreign exchange markets according to the latest half-annual survey data published by the Bank of England’s Foreign Exchange Joint Standing Committee.

As of April 2016, the 30 financial institutions which are actively participating in the survey have reported that the average daily volumes (ADV) of foreign exchange traded in the UK totaled $2.213 trillion. The figure was higher by 5 per cent when compared to October 2015, and 9 per cent lower than last year’s report.

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Total Turnover in UK, in $bln, Source: Bank of England

Spot FX trading increased by 4 per cent when compared to October, but was lower by 21 per cent when compared to a year ago. Meanwhile the growth numbers in FX swaps were higher on both counts – by 4 and by 2 per cent respectively.

The bulk of the increase in trading activity was attributed to turnover in the USD/JPY currency pair, where growth was marked at 27 per cent when compared to the previous edition of the survey from October at $361 billion per day.

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Reported UK foreign exchange market turnover by currency pair
Reported UK foreign exchange market turnover by currency pair, Source: Bank of England

The USD/CNY currency pair is the 7th most traded on the market with 1.8 per cent of total transactions. The next closest rival for the Chinese currency is the Canadian dollar, where trading volumes in London remained quite consistent.

Looking at currency pairs data, turnover in some emerging markets pairs has increased materially with the USD/TRY and the USD/MXN charging the way. GBP/USD trading increased by 7 per cent to $256 billion per day. The biggest decliner in majors was the AUD/USD pair, where trading declined by 20 per cent, which is the lowest level since 2010 and a reiteration on the volumes decline in Australia in recent quarters.

FX market share London
Market share data for major dealers in the UK, Source: Bank of England

The dominance of the biggest six dealers in the UK amongst the 30 surveyed has been the biggest when it comes to currency swaps and and spot trading. FX swaps and outright forwards have been less reliant on the top 6, with the second largest six dealers holding almost 29 per cent of the market.

This is the last survey of the London foreign exchange market turnover before the vote by the UK population to leave the European Union. The next set of data is expected to be published sometime in January 2016 with the bulk of the effects still unclear.

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