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Volume by currency pairs

Popularity of currency pairs can change rapidly depending on various factors. The share of prime brokered trades in spot FX out of London is rising over time. The notional value of prime-brokered trades rose 27% from April 2010 to October 2012, while the value of non-prime-brokered trades fell 17% over the same period.

David Mercer, LMAX Exchange CEO, shares insights.

A few key observations on specific currency pair volume changes follow:

  • Favorite FX pairs: In notional value, each EUR/USD and AUD/USD had US$26 billion more in trading volume in October 2012 during the London session than it did in April 2010. Traditionally, the EUR/USD has been the favorite trading pair of retail FX traders outside of Japan. The wider prime-brokered community, however, has been increasingly interested in trading four other pairs for which it has a market share of at least 45%: USD/MXN (51%), NZD/USD (48%), USD/CAD (47%), and EUR/JPY (46%). Since the end of 2012, EUR/JPY and USD/JPY have attracted a lot of attention among institutional and retail traders and the result has been record-setting FX volume during the Japan session.
  • Rapid-fire: In a relatively short period—a single year—prime-brokered traders can raise their share of trading volume by 10% in very liquid pairs (EUR/USD, GBP/USD, AUD/USD) and by 20% in fairly liquid pairs (USD/RUB, USD/MXN, USD/TRY).
  • Neglected pairs: Pairs for which national authorities have taken steps to reduce currency volatility have generally been shunned by traders, most of whom seek pairs for which volatility is present. A case in point is the EUR/CHF, which is currently trading at half the volume it saw in April 2010. At 11.9%, the notional volume growth in EUR/USD during the April 2010-to-October 2012 period has definitely been subdued considering the huge volume traded daily in London (US$245 billion as of October 2012). Uncertainty over the outlook for Europe and artificial measures that the European Central Bank may undertake to defend the euro against perceived speculative pressures have clearly contributed to a lukewarm trading volume for this pair.
  • Up-and-coming pairs: Since late 2011, Australian crosses (EUR/AUD and GBP/AUD) and currency pairs from BRIC nations (USD/INR, USD/BRL, USD/RUB, USD/CNY) have been experiencing rapid volume growth.

Volume by Currency Pairs


Source: BIS, Aite Group ‘Global FX Market Update 2013: Increased Market Transparency, More Competition’, June 2013

Source: Aite Group ‘Global FX Market Update 2013: Increased Market Transparency, More Competition’, June 2013

Video Transcript

Volume by currency pairs

LMAX Exchange, CEO, David Mercer shares his thoughts on the Aite Group report reference to the Spot FX market currently being dominated by EUR/USD trades, with the FX pair having an average of 27% of all the daily flow according to the last BIS tri annual survey. David Mercer comments, in the short term this could increase to 30% of the daily Spot FX market volume with a possible decline in 2016 onwards. The decline could be driven by the emergence of China, which already contributes up to 15% of global GDP and virtual currencies becoming more established.

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