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FAQ: BIS FX Turnover Survey

Includes: FXE, FXY, UUP
by: Marc Chandler

Spot turnover eased, but swap turnover increased.

The US dollar is almost 90% of FX trades, the yuan is 4%.

London remains the largest center.

How much growth has foreign exchange experienced from the last report in April 2013? Overall trading in foreign exchange has fallen from a year to year basis. Markets in April 2016 saw turnover fall to $5.1 trillion from $5.4 trillion due primarily to less movement in the JPY in the current market environment.

What is the break down among the different foreign exchange products? Spot transactions fell to $1.7 trillion in 2016 from $2.0 trillion three years prior in 2013, a 19% decline. It is the first decline since 2001. Turnover of fx swaps rose 6% to $2.4 trillion.

Was there a significant cause of the growth in fx swaps? The BIS cited the increased turnover of the Japanese yen as an important driver.

Which currency was the most highly traded? The US dollar was on one side of 87.6% of trades, up slightly from the previous survey

Were there any other notable shifts in the currencies that are actively traded? The euro, yen and Australian dollar lost market share while emerging markets overall increased with the Chinese yuan leading the pack in growth. The yuan accounted was on one side of 4% of the trades, up from 2.2% in 2013. After the yuan, the emerging market currency with the highest turnover is the Mexican peso with a 2.1% share, down from 2.4% in 2013.

Which participants were most active? Shares of trading grew among reporting dealers to 42% of turnover from 39% in 2013. Banks and institutional investors were the second and third largest group of counter parties for turnovers of 22% and 16% respectively. Hedge funds and prop desks saw their market share drop to 8% from 11% previously.

What were the most important financial centers for foreign exchange turnover? The UK remains the largest center, accounting for 37% of the turnover, reflecting some slippage from its 2013 41% shares. The US share was steady at 19%. EMU countries had a 8% share, down slightly from the previous survey.

(with assistance by my colleague Dimitrios Skambas)

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.