Summary of the April 2010 Triennial Central Bank Survey1

Posted by Hassan Askry
Turnover on the global foreign exchange market
Global foreign exchange market turnover was 20% higher in April 2010 than in
April 2007, with average daily turnover of $4.0 trillion compared to $3.3 trillion.
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 increase in turnover of other foreign exchange instruments was more
modest at 7%, with average daily turnover of $2.5 trillion in April 2010. Turnover
in outright forwards and currency swaps grew strongly. Turnover in foreign
exchange swaps was flat relative to the previous survey, while trading in
currency options decreased.
As regards counterparties, the higher global foreign exchange market turnover
is associated with the increased trading activity of "other financial institutions" -
a category that includes non-reporting banks, hedge funds, pension funds,
mutual funds, insurance companies and central banks, among others. Turnover
by this category grew by 42%, increasing to $1.9 trillion in April 2010 from $1.3
trillion in April 2007. For the first time, activity of reporting dealers with other
financial institutions surpassed inter-dealer transactions (ie transactions
between reporting dealers).
Foreign exchange market activity became more global, with cross-border
transactions representing 65% of trading activity in April 2010, while local
transactions account for 35%.
The percentage share of the US dollar has continued its slow decline witnessed
since the April 2001 survey, while the euro and the Japanese yen gained
relative to April 2007. Among the 10 most actively traded currencies, the
Australian and Canadian dollars both increased market share, while the pound
sterling lost ground and the Swiss franc declined marginally. The market share
of emerging market currencies increased, with the biggest gains for the Turkish
lira and the Korean won.
The relative ranking of foreign exchange trading centres has changed slightly
from the previous survey. Banks located in the United Kingdom accounted for
36.7%, against 34.6% in 2007, of all foreign exchange market turnover,
followed by the United States (18%), Japan (6%), Singapore (5%), Switzerland
(5%), Hong Kong SAR (5%) and Australia (4%).
Turnover in OTC interest rate derivatives
Activity in OTC interest rate derivatives grew by 24%, with average daily
turnover of $2.1 trillion in April 2010. Almost all of the increase relative to the
last survey was due to the growth of forward rate agreements (FRAs), which
increased by 132% to reach $601 billion.