FX comment: More than numbers – BIS triennial survey
Predictably, the majority of comment on the Bank for International Settlements (BIS) survey led with the largely meaningless aggregate turnover figure, a measure that is about as useful a gauge of FX market development as VaR is as a tool for the management of an exotic options book.
But for once theweeklyFiX will conform to the market norm: the aggregate figure was reported at $3,981 billion during April 2010, compared with $3,324 billion in 2007. The total sums average daily turnover figures for spot FX, outright forwards, FX swaps, currency swaps and “options and other products”.
More interesting are the increase and change of composition of the figure for spot FX. It has now reached $1,490 billion per day, or $1,965 billion including outright FX. That is an increase of almost 50% over 2007 and four times the volumes transacted in 2001 when the electronic market was still in its infancy.
While the numbers are impressive, the headline increase over 2007 may be more flattering than it should be. As Mark Warms, general manager EMEA at FXall, points out: “It is important to remember that spot FX transactions volumes were buoyed considerably by the European debt crisis.