UK Forex Activity Falls as London Keeps Global Leadership

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UK foreign exchange activity fell 11% over the course of last 3 years, but London managed to keep the global foreign exchange leadership position, the report from the Bank of England in cooperation with the Bank for International Settlement showed.

London - The Bank of England has released the UK part of the survey on global foreign exchange market activity conducted by the Bank for International Settlement (BIS) in Basel that confirmed the position of London as the largest foreign exchange centre.

The so-called Triennial BIS survey coordinated globally showed the average daily turnover in foreign exchange market in the UK to fall 11% to $2,426 billion during April 2016, down from the average daily turnover of $2,726 billion recorded for April 2013.

The United Kingdom remains the single largest centre of foreign exchange activity with 37% of global turnover in April 2016, decreasing from 41% in 2013, the data from the Bank of England (BoE) showed on Thursday.

The decrease was driven by a fall in the foreign exchange spot transactions, which fell 24% since last survey in 2013. Average daily turnover in options and forward transactions also decreased, down 37%and 14% respectively, the report also showed.

In contrast, turnover in foreign exchange swaps increased by 3% and remain the largest traded foreign exchange item in the UK, accounting for 48% of all trades. Turnover in currency swaps also increased, up 125%, although account for just 3% of total turnover, the report from BoE also noted.

Average daily turnover in the over-the-counter (OTC) interest rate derivatives was $1,181 billion during April 2016, a 12% decrease on the $1,348 billion recorded for April 2013.

The UK is no longer the largest centre for OTC interest rate derivatives activity, with 39% of OTC interest rate derivatives activity taking place in the United Kingdom, compared with 41%in the US.

Turnover in interest rate forward rate agreements decreased 21%, whilst turnover in interest rate swaps and interest options decreased 5% and 39%respectively. Interest rate swaps remained the most traded interest rate derivative, accounting for 64% of total OTC interest rate derivatives turnover in April 2016.


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