After the expected fall in volumes in the first quarter of 2009, the FX market has reassessed the risks and volumes are growing once again. The latest data show the market is in good health.
In New York, the Foreign Exchange Committee’s 11th survey of North American volume found that the total average daily turnover in over-the-counter instruments, including spot transactions, outright forwards, FX swaps and options, totalled $675 billion during October 2009, an impressive increase of 28.1% on April 2009. This level of activity is almost back to those of October 2007 and April 2008. It suggests that activity may soon be back to where it was in October 2008. Turnover then was $762 billion.
Encouragingly, the FXC says the increased volume was “broad-based, occurring across all instrument types, counterparty types and execution methods, as well as across most currency pairs.” Compared with the figures reported six months ago, average daily turnover in spot rose 32% to $388 billion; outright forwards 16% to $85.5 billion; swaps 24% to $176.3 billion; and option volumes rose 41% to $25.1 billion because of markedly increased liquidity and greater demand at lower volatility levels.
London numbers
In London, the Foreign Exchange Joint Standing Committee reports less dramatic increases. Average daily traditional FX turnover – including spot transactions, outright forwards, FX swaps and non-deliverable forwards – was $1.43 trillion In October 2009. This was up 12.7% on the previous six months. Combined turnover, including FX options and currency swaps, at $1.55 billion, was up 14% on April 2009. Spot volumes rose 17.3% to $522 billion; outright forwards improved 17.1% to $171 billion; swaps were up 7.4% to $711 billion; and options recovered 44% to $101 billion. The combined turnover figure is just 9% lower than October 2008.
Meanwhile, in Singapore, average daily traditional FX turnover was $231 billion, 13% up on April 2009.
This surge in volumes continued through to the end of the year, and is confirmed by numbers revealed by leading trading platforms.
Volumes on EBS came in at a daily average of $112 billion in December, down a modest 11.25% from a year earlier, which is not bad given the volatility of the last quarter of 2008.
More impressively, the CME’s success story appears to be gathering even more momentum. Average daily volume came in at $96 billion, which the exchange says is an 81% increase on 2008. The CME also saw a record day on December 4, when $185 billion traded. Over the year, the CME says it recorded a fractional increase in turnover; the likelihood is few other established platforms have done the same.
Elsewhere, CLS says its average daily volume in December was 631,155 payment instructions, compared with 472,793 in December 2008. The average daily value for December 2009 was $3.9 trillion; in December 2008 it was $3.11 trillion.
