$7.5 Trillion: FX Gets a New Benchmark
Posted by Colin Lambert. Last updated: October 28, 2022
The Bank for International Settlements (BIS) has released the long-awaited 2022 Triennial Survey of FX Turnover showing average daily volume in FX markets in April was $7.5 trillion, a 13.9% rise from the 2019 survey. Within that number, however, is something of a surprise in the segment responsible for the bulk of the increase.
Growth was across the board, however as indicated by the semi-annual turnover surveys from the regional FX committees, it was led by FX swaps volumes, which registered $3.81 trillion per day in 2022, a 19% increase from 2019. Spot FX volumes were also higher, by 6% to $2.1 trillion; while outright activity was also stronger, up 16.4% to $1.16 trillion. FX options volumes also increased, by 3.4% to $304.3 billion per day.
Interestingly, and perhaps highlighting the segment’s role as a risk warehouse during times of market volatility, while activity in one client segment grew, the vast majority of the increase came from volume between Reporting Dealers. Overall, this segment was responsible for $3.46 trillion per day, or 46.1% of daily turnover, while Other Financial Institutions (OFIs) traded $3.6 trillion per day for 48.2% – the balance being Non-Financial Institutions (NFIs).
There is, perhaps, food for thought for those businesses who have increasingly focused on client business at the expense of risk warehousing in that spot FX volume with client groups actually dropped from 2019, with all the growth – and more – coming from inter-dealer trading. Spot turnover with Reporting Dealers was $842.5 billion per day, up a massive 42% from 2019, while turnover with Other Financial Institutions fell by 9.9% to $1.1 trillion. Activity with Non-Financial Institutions in spot also fell, by $9 billion per day to $150 billion.
Clients were busier in other products compared to 2019, however again Reporting Dealers were responsible for the largest increases. In FX swaps, Reporting Dealers executed $2.04 trillion per day in 2022, up 36.3% from 2019, while OFIs traded $1.62 trillion up just 5.4% by comparison. NFO activity in FX swaps actually fell by 10.9% to $147.9 billion per day.
In outright forwards, clients remain the driving force, although again Reporting Dealers were responsible for the bulk of growth – activity at $394 billion is up 47% on the 2019 survey. OFI activity was $674.8 billion, up 9.7%, while NFI volume was $94.7 billion, down from $116 billion in 2019.
In FX options, growth was exclusively among Reporting Dealers, activity rising to $117.8 billion from $107 billion, while OFI turnover was unchanged at $160 billion per day and NFI drifted slightly to $26.6 billion from $27 billion in 2019.
Perhaps reflecting the growing impact of regulation in FX markets, exchange-traded FX volumes also rose, from $127 billion in 2019 to $152 billion in the latest survey.