FXC Survey Shows Drop in FX Turnover in North America

The Foreign Exchange Committee (FXC), a multi-national cooperative conducting a semi-annual survey that includes FX data from leading dealers and banks in North American, today issued its 31^st report, which covers October 2019. This semi-annual FX survey is taken every six months to provide the market with frequent information on the size and structure of the FX markets in the respective regions.

According to a New York Fed filing, average daily volume in total over-the-counter (OTC) foreign exchange instruments (including spot, outright forward, foreign exchange swap, and option transactions) was $889 billion in October 2019, down 10.7 percent from the ADV figure in the year before, which was reported at $995 billion. However, the average daily volume was higher nine percent than the $810 billion reported back in April 2019 survey.

The decline in the average daily volume in North America was broad-based and was reported across almost all currency pairs, instrument types, counterparty types, and Execution Execution Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Read this Term methods.

One of the primary culprits of the recent fall in October 2019 was attributed to a drop in spot turnover, which came in at $358 billion and thus lost nearly 21 percent since the survey of October 2018. This was also accompanied by a decrease in turnover across forwards and 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 by a respective factor of -6.8 percent and -0.2 percent, respectively, from the previous year. The average daily turnover in OTC options, however, climbed by 6.2 percent in October 2019.

Euro, Yen, and Pound retain top positions

In terms of specific FX pairs across the spot market, EUR/USD turnover dropped -27 percent in the six months to October 2019, having yielded $75.9 billion per day compared to $103.8 billion in October 2018. USD/JPY was the next most commonly traded pair, totaling $50.1 billion, down -36 percent on a year-over-year basis from $78.9 billion.

Rounding out the top three trading pairs was the GBP/USD, which saw a slight increase in daily volume by six percent from $41.2 billion in the 2018 survey, coming in at $43.6 billion.

The Foreign Exchange Committee (FXC) surveys to provide market participants with developments in the North America FX market. In conducting the survey, the Federal Reserve of New York provides technical assistance in collecting and processing the data of respective respondents.

Similar surveys are also carried out in the UK, Singapore, Canada, and Australia.