The UK’s
foreign exchange (Forex) market saw average daily trading volume (ADTV) decline
to $3.2 trillion in October 2024, marking a 5% decrease from April levels while
maintaining its position as the world’s largest currency trading hub. Compared to the $7.5 trillion daily turnover of the entire market, this means that London accounts for nearly half of all transactions.
UK Foreign Exchange
Trading Volume Dips 5% in Late 2024
According
to the latest semi-annual survey by the Foreign Exchange Joint Standing
Committee (FXJSC), the decline follows historical seasonal patterns where
October typically shows lower activity than April. Despite the sequential dip, trading
volumes grew 10% compared to October 2023, highlighting the market’s
continued expansion.
FX swaps
continued to dominate trading activity, accounting for 44% of total volume,
while spot transactions represented 28% of trades, similar
to results from April 2024 survey. The euro-dollar remained the most
actively traded currency pair, with daily turnover of $797 billion,
representing a quarter of all trading activity.
“Market
share of the top three traded currency pairs; EUR/USD, GBP/USD and USD/JPY,
remained broadly in line with previous surveys,” the report added.
The survey,
which included responses from 25 major financial institutions active in the UK
foreign exchange market, reveals that overall FX trading volume has nearly
doubled since October 2008, growing from $1.7 trillion to $3.2 trillion daily.
BIS vs. FXJSC survey
The data in
this report is similar to what the Bank of International Settlements (BIS)
triennial survey collects, but the FXJSC gathers it more frequently.
Additionally, the FXJSC survey reports based on where the price-setting dealer
is located, whereas the BIS triennial survey uses the location of the sales
desk as its reporting basis.
The latest
BIS survey, released
in October 2022, covers data from April of that year. It shows that the ADVT
in the UK foreign exchange market reached $3,755 billion, an increase from
$3,576 billion per day recorded in
April 2019.
The UK
remains the largest hub for foreign exchange activity, accounting for 38.1% of
global turnover. While this marks a decline from 43.2% in April 2019, the 2022
survey indicates that the UK’s global market share remains generally consistent
with levels seen in
previous surveys.
Although
London still leads the market, its share in the global FX trading has been
declining in favor of competitors, especially after Brexit. The U.S. market is
expanding rapidly, while other locations in Germany and France are beginning to
take over London’s role in Europe. The latest BIS survey, expected to be
published this year, should provide further insight into the UK’s position in
the global FX ecosystem.
This article was written by Damian Chmiel at www.financemagnates.com.
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