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Foreign Exchange

FX Electronic Trading Surges Globally

Global foreign exchange volume continues to soar, with a study surveying the buy-side showing corporates are lagging behind banks, fund managers and hedge funds regarding industry volume.

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May 2007

Trading Tech Daily

New research from Greenwich Associates’ annual FX research program saw global FX volumes increase 17% from 2005 to 2006, while the interest-rate derivatives business bounced back with a 10% rise last year. The research firm’s annual FX research program surveyed more than 1,600 large companies and financial institutions about forex trading, and the firm interviewed 694 companies and institutions about interest-rate trading volume. Results showed trading volumes from international banks grew 17% from 2005 to 2006, while volumes among fund managers and pension funds were up 23% and firms considered “other institutions” saw volumes leap 54%. Hedge funds saw a small increase but corporate trading volumes hardly changed, with corporate business accounting for only 16% of total foreign currency trading volume, down from 20% in 2005. Greenwich Associate Consultant Woody Canady said in a company statement, “As financial institutions continue ramping up their currency trading business, corporates are becoming a less significant part of the market.” As for execution methods, half of global buy-side FX volumes were executed electronically last year, up from less than 30% in 2005.

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