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Foreign Exchange

FX: Non-banks make headway among smaller Aussie participants

Non-bank market makers in Australian FX are not taking away many big clients from banks, but they are taking meaningful market share in smaller clients.

One of the closest observers of the Australian FX market is Cameron Peter, managing director of Peter Lee Associates, whose annual market survey covers corporates and financial institutions – mainly real money fund managers, insurance companies, non-price maker banks and state and territory treasury corporations – with FX volumes in excess of $100 million.

Cameron-Peter-160x186

Cameron Peter,
Peter Lee Associates

According to the survey, the leading domestic banks controlled just under two thirds (64%) of the corporate FX market last year, although their market share among financial institutions was lower at 42%. US banks accounted for more than a third (36%) of financial institution FX business in 2017.

The research showed non-banks were not winning a notable share of business at the top end of the market, says Peter, but this does not appear to be the case among smaller market participants.

Non-bank liquidity providers have been steadily strengthening their position in the traditional sell-side market during the past 12 months with the buy side and corporates ready to take on more liquidity providers as they become more sophisticated, says Michael Go, head of trading market development, Asia Pacific, at Thomson Reuters.

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