Results of Euromoneys annual benchmark survey of the global foreign exchange industry show that competition is tougher than ever in a market that has continued to be a source of profit for global banks throughout the financial crisis and beyond.
Deutsche Bank secures first place for overall market share for the sixth consecutive year. UBS narrowly hangs on to second place from the advancing Barclays Capital. Citi overtakes RBS to secure fourth place in the survey.
For a number of years, the survey has seen a handful of leading foreign exchange banks consolidating more and more market share.
In 2010, the trend is reversed.
The top three banks in the survey accounted for 40.44% of the total market in 2010, compared with 45.99% in 2009. There was a similar story among the top five banks, whose share of the market declined from 61.5% to 54.63%.
However the next tier of banks have performed well this year. The market share of banks ranked from 6th place to 10th place increased from 18.18% to 22.53%. The top 10 global banks accounted for 77.16% of volume this year, compared to 79.68% in the 2009 survey.
There is one new entrant to the top 10 this year: Morgan Stanley replaces BNP Paribas, although it only edged out the French bank by just 0.02%.
The trend among the top players is amplified in the electronic trading market, which now accounts for well over 50% of all foreign exchange business.
The share of the top three banks e-platforms (Deutsche, Barclays and UBS) fell from 72.56% to 57.65%; but the e-share of banks ranked from 4th to 10th place rose from 19.43% of the market to 27.62%.
These results suggest that the positions of banks that took an early lead in e-trading may not be as entrenched as they believed. As other banks look to produce e-platforms that match those of the market leaders, the competition for this form of market share is likely to become fiercer.
The top 10 banks overall in this years survey are as follows:
1. Deutsche Bank (last year 1)
2. UBS (2)
3. Barclays Capital (3)
4. Citi (5)
5. RBS (4)
6. JPMorgan (6)
7. HSBC (7)
8. Credit Suisse (9)
9. Goldman Sachs (8)
10. Morgan Stanley (11)
Outside the top 10, a number of banks made big strides forward. Bank of Montreal had the biggest organic increase in market share overall compared to last year, rising from 43rd to 30th place. Nomura, having integrated the European and Asian business of Lehman Brothers, leaps the highest number of places in the overall rankings, from 57th to 18th.
Volumes recorded by the Euromoney survey fell slightly this year, from $175.3 trillion to $167.3 trillion, reflecting relatively subdued trading conditions throughout 2009. We received valid votes from 11,716 institutions.
More information on the FX survey, including previous results