FX survey results revealed
Fewer and fewer banks can still claim to compete as full-service foreign exchange providers on a global basis.
Deutsche Bank retained its position as the world’s leading foreign exchange house, according to Euromoney’s benchmark survey of the global FX industry. Deutsche Bank’s overall market share was 15.18%, rising from 14.56% last year. That increase in overall market share was just enough to hold off the challenge of second-placed Citi, which increased its market share to 14.90%, up from 12.29% last year. Deutsche and Citi have become the clear top-two players in the global FX market. Their combined market share was just over 30% of all FX trading, up from 26.85% last year. The battle for third place was equally closely contested, with Barclays edging out UBS by 10.24% to 10.11%.
The top four banks now account for just over 50% of the entire global FX market, up from 48.3% last year.
Tim Carrington, global head of currencies and emerging markets at RBS, says his bank may be the last in the rankings to afford the cost of competing as full-service global foreign exchange provider. RBS claims seventh place in Euromoney’s 2013 foreign exchange market share survey. Those below it are having to pick their spots, offering foreign exchange only to select client groups in certain products and currency pairs. Those above RBS are increasing their combined share of customer business, raising questions over how healthy it is for such a large market to depend on so few banks.
The Euromoney FX survey once again captured more FX market activity than ever before. Total valid responses numbered 16,298 (up from 15,423 last year) and represented $225 trillion of volume, compared with $208 trillion in 2012.
The Euromoney FX survey is the most comprehensive quantitative and qualitative annual study available on the FX markets.
For all the fragmentation in the FX market, the top four banks further consolidated their dominance of customer business, according to the 2013 Euromoney foreign exchange survey. As volumes rise again in FX, volatility returns and banks’ earnings from it recover, margins are still compressing. Customers are focused on cutting transaction costs. Banks face big demands on scarce IT resources.
Fragmentation and phantom liquidity bedevil the foreign exchange market with its proliferation of trading venues. Investors and corporates want to see the true depth of the market and what amounts they can really trade at the enticing prices being flashed at them. In a low-return world, these end-users are getting rigorous on trading cost analysis. Banks are developing new technology to respond.
34 years of the FX survey: the key market share trends