Decline of $10 billion in average daily volume in spot transactions – United States

Courtesy of Forex Magnates

The Foreign Exchange Committee today released the results of its*fourteenth Survey of North American Foreign Exchange Volume. *Here are the key points:

- Average daily volume in total over-the-counter foreign exchange instruments (including spot, outright forward, foreign exchange swap, and option transactions) reached $799 billion in April 2011, exceeding the prior survey record of $772 billion established in*October 2010.*The April 2011 total represented a 3.5 percent increase from the prior survey.

- Average daily volume in outright forwards, swaps, and foreign exchange options increased by $13 billion, $17 billion, and $7 billion, respectively, offsetting a decline of $10 billion in average daily volume in spot transactions.

- Across currency pairs, the euro versus the U.S. dollar pair*continues to have the highest share of reported turnover, at 31 percent.


http://forexmagnates.com/decline-of...ly-volume-in-spot-transactions-united-states/

thats about 2 orders innit?

Gets harder and harder to trade spot forex in the US. A lot of brokers left the US market or were driven out by regulations and the higher margin requirements mean less $ volume transactions. It's not all bad though. The gov't has cleaned up the shady fx market here to some extent.

Peter

wackypete2 said:

Gets harder and harder to trade spot forex in the US. A lot of brokers left the US market or were driven out by regulations and the higher margin requirements mean less $ volume transactions. It's not all bad though. The gov't has cleaned up the shady fx market here to some extent.

Peter

Click to expand...

fits in with a report I read yesterday in the FT suggesting a lot of business had transferred to London..


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Foreign exchange trading volumes in London have risen sharply to record levels, according to data released by the Bank of England.

The surge in activity in London came as turnover in New York and on electronic broking platforms remained relatively stable, suggesting that London banks were strengthening their hold on the world’s largest financial market.

Average daily turnover in traditional forex products in London, including spot, forward and swap transactions, rose to $2,000bn in April 2011, figures published by the Bank’s foreign exchange joint standing committee revealed.

That was up 25 per cent from the $1,600bn daily volume reported in April 2010 and was driven by a 43 per cent surge in daily spot forex volumes, which climbed from $642bn in April 2010 to $919bn.

Meanwhile, the Federal Reserve Bank of New York reported that daily volumes in traditional forex products rose 4 per cent over the year to April to stand at $751bn. Although this was a record for total forex daily activity, the average value of spot forex trading in New York dropped by 5 per cent.

The rise in London trading came after figures from EBS and Reuters, the world’s leading electronic forex broking platforms, showed activity in the interbank spot forex market remained stable.

In April 2011, the average daily volume on EBS was $147bn, a slight decrease on the $154bn in April 2010. On Reuters, average daily trading volume was unchanged on the year at $138bn.

Mark McDonald, forex strategist at HSBC, said it should be noted that measuring volumes in the currency market was intrinsically difficult given its predominantly “over-the-counter” nature.

“However, the magnitude of the increase seen in the UK indicates that this is probably a genuine result, rather than simply noise in the data,” he said.

Mr McDonald said that the fact that the rise in activity in London had not coincided with a similar jump in activity on electronic broking platforms could reflect the fact that banks had improved their trading systems.

That could have allowed banks to “internalise” more trades, allowing them to match more buy and sell orders over their internal systems rather than having to go outside to cover a deal.

Furthermore, Mr McDonald said that the rise in volumes in London could be related to fears over increasing regulation in the US, which was driving business towards London.

“It is not inconceivable that just as Sarbanes-Oxley legislation raised concerns over US equity markets, worries over potential Dodd-Frank reforms could be pushing FX investors towards London.”

http://www.ft.com/cms/s/0/99e19ee8-b795-11e0-b95d-00144feabdc0.html?ftcamp=rss#axzz1TGBLaJ5B

2 trillion a day? That must be a little over 50%. Crikey.

lots of flight money escaping the middle east and Greece will have helped certain brokers/banks, Greek officials were pleading for repatriation funds last week, Cyprus has been a great home for Euro flight..

wackypete2 said:

Gets harder and harder to trade spot forex in the US. A lot of brokers left the US market or were driven out by regulations and the higher margin requirements mean less $ volume transactions. It's not all bad though. The gov't has cleaned up the shady fx market here to some extent.

Click to expand...

The survey data does not include retail forex broker volume. It's only inter-bank, so blaming the (small) decline in volume on new regulations which have nothing to do with banks is erroneous. You'd need to look at the broker figures to be able to make a judgement, and I don't think they've seen any significant impact (but I don't have them in front of me).

Rhody Trader said:

The survey data does not include retail forex broker volume. It's only inter-bank, so blaming the (small) decline in volume on new regulations which have nothing to do with banks is erroneous. You'd need to look at the broker figures to be able to make a judgement, and I don't think they've seen any significant impact (but I don't have them in front of me).

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While you're probably right, at some point a broker will have to go to a bank and lay off the positions. It can then go through the inter-bank market. So if retail trading dropped, it would still have some (though small) effect.

Shakone said:

While you're probably right, at some point a broker will have to go to a bank and lay off the positions. It can then go through the inter-bank market. So if retail trading dropped, it would still have some (though small) effect.

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I'd suggest changing "small" to "tiny" or maybe "miniscule" seeing as retail brokers first offset trades internally, and only when they have a meaningful imbalance do they go into the market. Further, some % of that offsetting will end up getting done with other brokers, which won't get reflected in the inter-bank numbers.

For that matter, are the primary liquidity providers even a) among those banks surveyed, and b) including the retail side of things in their survey numbers?

Rhody Trader said:

I'd suggest changing "small" to "tiny" or maybe "miniscule" seeing as retail brokers first offset trades internally, and only when they have a meaningful imbalance do they go into the market. Further, some % of that offsetting will end up getting done with other brokers, which won't get reflected in the inter-bank numbers.

For that matter, are the primary liquidity providers even a) among those banks surveyed, and b) including the retail side of things in their survey numbers?

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Jeezus John, we don't see you for months then you arrive and kill the thread stone dead..

Black Swan said:

Jeezus John, we don't see you for months then you arrive and kill the thread stone dead..

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I'm here every day. You just need to know where to look.