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Foreign Exchange

LeapRate launches global retail FX volume index

LeapRate, the online forex analysis firm, has launched a monthly index measuring the trading volume in the retail FX industry.

LeapRate says its Retail FX Volume Index is a calculation of aggregated average daily trading volumes across the retail universe. Gerald Segal, managing director at LeapRate, believes there is a lot of misinformation regarding the true size of the retail FX sector – for example, figures for Japan are often exaggerated.

“Our approach has always been to take a bottom-up, firm-by-firm approach in getting to our regional and global numbers,” he says.

“While our figures are, by nature, estimates, as most companies in this industry are private and prefer to keep their numbers private, there is more than enough data out there today for us to use as scientific an approach as possible to come up with what we believe are reliable industry totals.”

After several years of rampant growth in the mid 2000s, the retail sector has seen some contraction in the past two years, thanks to increased regulation and lower volatility levels.

Segal says, as the retail FX sector has matured and become a global business, he felt it was time to have a measure of how volumes were trending.

“There is a lot of interest, both within and around the industry, as to how volumes are trending beyond the anecdotal evidence we see here and there from FX brokerage firms and aggregating networks, which release monthly and/or quarterly results,” he says.

 Global average daily retail FX volumes ($billion)

 Source: LeapRate

For April, average daily retail FX volumes were $172 billion, according to LeapRate, down 5% from March, but up 4% from April 2011.

The dip reflects the falling trend in volumes across the FX market in April, as volatility remained subdued across most currency pairs.

The firm expects May’s figures to rise, given the increase in volatility sparked by heightened fears of an Athens exit from the eurozone, after inconclusive Greek elections earlier this month finally pushed EURUSD out of its tight trading range.

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