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LMAX Group blog - FX industry thought leadership

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  • Average Trade Size Declines for Spot FX

    A key insight from semi-annual surveys by the London Foreign Exchange Joint Standing Committee (FX JSC) and U.S. Foreign Exchange Committee is that the average trade size for parts of FX markets is decreasing over time. Lower currency volatility, the rise in interest for HFT, and fierce competition in the FX liquidity part of the market have reduced the average size of spot FX trades two- to threefold, to around US$1.1 million in both the United Kingdom and the United States. The average trade size of other FX products is much higher than that of spot FX, however—outright forwards currently sit at US$3.0 million, FX options at US$25.1 million, and FX swaps at US$47.1 million. With expected continued growth in HFT volume and increasing market participation by retail traders, the average trade size of spot FX is expected to decrease even more in coming years.

    Average Trade Size Declines for Spot FX

    Average Trade Size Declines for Spot FX

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  • What will drive further adoption of electronic trading?

    Electronic trading execution methods (as defined by BIS) account for 55% of all spot trading, represented collectively by electronic broking (interbank), MDPs, and SDPs. Of the three electronic execution methods, interbank systems (i.e., EBS and Thomson Reuters) have one of the largest shares of the spot FX market, at 26%.

    Retail aggregators do not appear on this execution venue list because they are counted as bank clients in this BIS survey. Inter-broker dealers like ICAP and Tradition capture 47% of FX swap business (voice broker plus inter-dealer direct percentages) as well as 35% of FX options volume.

    When looking at electronic trading platforms, both single- and multibank platforms compete actively in two markets: FX spot and outright forward markets.

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