UK increases lead in global FX trading while global turnover falls

According to new figures released today by TheCityUK, the UK increased its share of global foreign exchange (FX) trading in April 2015 to 43.1% – up 1.7% compared to six months ago, and just short of its record of 43.2% twelve months ago.

This growth was achieved against an 11% decline in global FX transactions, including spot transactions, outright forwards and FX swaps. These totalled $5.1 trillion in April 2015, down from a record $5.7 trillion turnover six months ago.

TheCityUK’s estimates, based on individual surveys of foreign exchange activity released this week by central banks in the UK, US, Japan, Australia, Canada and Singapore, show that the UK’s share was well ahead of the next three largest trading centres – US (15%), Singapore (7%) and Japan (6%) – with London accounting for the bulk of the UK’s daily turnover, averaging $2,481bn.

Gary Campkin, Director, International Strategy, TheCityUK, said, “The latest figures show that more than twice as many US dollars are traded on the UK’s foreign exchange market than in the US, and more than double the amount of euros are traded in the UK than in all the euro-area countries combined.

“The UK’s strong position stems from trading generated by prime brokerage, investment banking and hedge funds, three areas of activity that are important to its position as an international financial centre. London’s dominance further demonstrates its importance as an international foreign exchange hub and its position as Europe’s financial centre.”

According to Mr Campkin, despite the fall over the past six months, the volume of foreign exchange trading is on a long-term upward trend, tripling over the last 15 years.

“This trend can be attributed to the growing importance of foreign exchange as an asset class and an increase in global fund management assets. In addition, the diverse selection of execution venues and development of electronic platforms is making it easier for retail traders to access this market.

“But we cannot be complacent. For the UK to remain a leading international financial centre, it must remain an attractive place in which and from which to do business. To ensure this, the Government should continue to implement bold and ambitious policies that both support the financial and related professional services industry and sustain the UK’s competitiveness in the global market,” he concluded.

 Foreign exchange market average daily turnover:     
  Global foreign exchange market turnover ($bn) UK US Japan Others
April 2010 3,981 36.8 17.9 6.2 39.1
April 2011 4,487 40.1 16.8 5.6 37.5
April 2012 4,400 40.3 17.2 5.7 36.8
April 2013 5,345 40.9 18.9 5.6 34.6
April 2014 4,898 43.2 14.6 6.5 35.7
October 2014 5,667 41.4 17.0 5.8 35.8
April 2015 5,068 43.1 15.3 6.3 35.3

 

Figures in table exclude double-counting.

Sources: TheCityUK extimates based on BIS, FXJSC, FXC, SFEMC, CFEC, TFEMC, AFXC data