3:06 pm - Wednesday September 26, 0801

Current trends in FX markets

FX Markets are the backbone of international financial markets.

An insight into the current trends in global FX markets reveals an interesting reading as under:

Markets

  • Global FX turnover ($4.2 Trillion daily) gone up by over 25% over April 2007
  • After financial crises, Global FX markets experienced lower volatility and wider spreads
  • Trading activity of other financial institutions (Hedge/Pension/Mutual Funds/Insurance Companies/Central Banks) has gone up
  • Cross border transactions now constitute about 65% of the trading activity (source BIS Report)
  • FX Trading in emerging markets currencies – more financial and more offshore

Products

  • Turnover in outright forwards and currency swaps is growing strongly
  • Turnover in FX swaps is relatively flat
  • Trading in currency options is showing downward trend
  • From purely interbank focus, the overall market share of client to dealer market is increasing
  • Retail FX market seems to be growing steadily due to increasing global trade

Technology

  • High Frequency Trading has now spread to FX Market (source: Aite Analyst Report)
  • Electronic trading adoption continues to increase in global FX Markets
  • Voice trading still remains a dominant and vital part of client to dealer market
  • Execution Algos are being introduced in FX steadily despite skepticism
  • Growing demand for low latency trading infrastructure within FX market

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