London has maintained its place as a global hub for currency trading as the share of currency trading in the United States has declined, with global market trading reaching $ 6.6 trillion per day in April of this year. .
According to the Bank for International Settlements (BIS) triennial survey of over-the-counter foreign exchange market turnover, global market trade per day has increased from $ 5.1 trillion per day three years ago, fueled by strong growth in trading in FX derivatives, particularly FX swaps.
The survey found that while the share of currency trading in the United States increased from 20% in 2016 to 17% in 2019, the United Kingdom has strengthened its position as the main hub for currency trading in the world, with its share of currency trading rising to 43% in April of this year, despite the specter of Brexit.
“As New York’s overall market share as a trading hub has shrunk, London has increased and strengthened its position as the world’s preeminent FX hub,” commented the managing director of inter-professional brokerage ParFX, Dan Marcus. , about the results. “This is a testament to London’s long-standing global trade relationships, the concentration of counterparties and continued investment in technology infrastructure. From a currency perspective, there is no doubt that London remains a global center of excellence.
At the same time, the share of currency trading taking place in Asia declined slightly to 20% over the same period due to a slowdown in activity in Singapore and Tokyo. However, China’s currency trading saw an increase in activity to $ 136 billion in 2019, a significant 87% increase from three years ago.
Matthew Hodgson, CEO and founder of data analytics firm FICC Mosaic Smart Data, also said the growth in FX derivatives revealed by the survey poses a challenge for participants in terms of risk and data handling.
“These more complex instruments present their own challenges, especially when it comes to managing and monitoring prices and risks. The forex markets still lack standardized messaging or a central ticker, making it difficult for market participants to understand what is going on in their own forex business, ”Hodgson said.
“The forex markets are already the most liquid in the world, creating a huge data challenge. If we are to see these growth trends continue, data processing and analysis systems will need to evolve to keep pace.