Daily forex turnover: $4 trillion in 2010

According to a triennial central bank survey by the Bank of International Settlements (BIS), global foreign exchange market turnover was 20% higher in April 2010 than in April 2007. The average daily turnover of the forex market has risen to $4 trillion compared to $3.3 trillion three years ago.

According to the BIS, the growth is coming from the spot market, which surved by 48% over the period. The spot market represents 37% of foreign exchange market turnover.

The center of the forex universe continues to be the United Kingdom, despite the lingering dominance of the U.S. dollar on world markets. Banks in the United Kingdom were responsible for 37% of all foreign exchange market turnover. Banks in the United States contributed 18% of forex volume.

From the BIS...

  • Global foreign exchange market turnover was 20% higher in April 2010 than in April 2007, with average daily turnover of $4.0 trillion compared to $3.3 trillion.
  • The increase was driven by the 48% growth in turnover of spot transactions, which represent 37% of foreign exchange market turnover. Spot turnover rose to $1.5 trillion in April 2010 from $1.0 trillion in April 2007.
  • The growth of turnover in other foreign exchange instruments was more modest at 7%, with average daily turnover of $2.5 trillion in April 2010. Turnover in outright forwards and currency swaps grew strongly (by 31% and 36%, respectively). Turnover in the large foreign exchange swaps segment was flat relative to the previous survey, while trading in currency options fell.
  • Activity was supported by the increase in trading by "other financial institutions" - a category that includes non-reporting banks, hedge funds, pension funds, mutual funds, insurance companies and central banks. Turnover with these counterparties grew by 42%, rising to $1.9 trillion in April 2010 from $1.3 trillion in April 2007.
  • Reflecting further foreign exchange market globalisation, cross-border transactions represented 65% of trading activity in April 2010, the highest share ever.
  • The relative ranking of foreign exchange trading centres changed slightly from the previous survey. Banks located in the United Kingdom accounted for 37% of all foreign exchange market turnover, against 35% in 2007, followed by the United States (18%).
  • Growth in the positions of OTC foreign exchange instruments was moderate at 9%, compared with an increase of 83% in notional amounts outstanding of currency instruments in the 2004-07 period.
  • In contrast, market values of these instruments almost doubled against a backdrop of increased financial market volatility during mid-April and early June 2010.
  • Trading activity with other financial institutions also drove the increase in the global foreign exchange positions. Their share (45%) surpassed transactions with reporting dealers (36%) for the first time in 2010.

Detailed tables, expanding those published on 1 September 2010, are available.

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