Global daily forex turnover at $4 trillion in 2010

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

Growth is mainly from the spot market, which surged 48% over the period. According to BIS, the spot market represents 37% of foreign exchange market turnover.

The survey also conforms London's numero uno status as far as the forex universe is concerned with the city accounting for 37% of all foreign exchange market turnover. Despite the dominance of the US dollar on world markets the banks in the United States contributed only 18% of the total forex volume.

Highlights of the BIS survey:

• Global foreign exchange market turnover was 20% higher in April 2010 than in April 2007
  
• The average daily turnover was $4.0 trillion, compared to $3.3 trillion in 2007.
  
• 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 a more modest 7%, with average daily turnover of $2.5 trillion in April 2010.
  
• Turnover in outright forwards and currency swaps has seen strong growth - 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.
  
• Increase in trading was also because of enhanced participation 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.
  
• 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.
  
• Reflecting the increased dominance of Other Financial Institutions trading activity with them drove the increase in the global foreign exchange positions. Their share (45%) surpassed transactions with reporting dealers (36%) for the first time in 2010.