Global FX trade surges to $4 trillion per day

TRADE on global currency markets has jumped by a fifth over the past three years to $4 trillion a day, roughly equal to the annual economic output of Germany, according to the Bank for International Settlements (BIS).

The increase in volumes was driven by a 48 per cent jump in turnover of conventional spot transactions, BIS said in the triennial survey, which is watched closely by banks and institutions as a comprehensive snapshot of currency market trading.

Growth in the spot market partly reflects the continued rise of algorithmic trading, where so-called black boxes can process thousands of trades a minute.

The survey also showed London has further cemented its prominence as the centre for forex markets, accounting for 36.7 per cent of global turnover, up from 34.6 per cent in 2007.

In 2007-2010 London’s share of average daily turnover rose roughly by a quarter to $1.9 trillion. That was more than double the turnover in the US, the second-largest centre.

The over-the-counter (OTC) derivatives market also saw strong growth, with daily turnover 24 per cent to $2.1 trillion.