HSBC Reports Q2 Metrics, FX Revenues Dive -34% QoQ

HSBC has recently reported its Q2 figures, which were highlighted by a staunch 34% QoQ decline in foreign exchange revenues - the largest composition of the bank’s global trading business.

HSBC is a banking conglomerate that provides myriad financial services worldwide – unfortunately, one of its greatest sources of trading – Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term – has seen a widespread decline in volumes as historically low volatilities have hurt the overall industry. In particular, Forex volumes fell to $631 million in Q2, corresponding to a -34% loss QoQ.

The bank has attributed waning Forex revenues to ‘tough conditions’ that are seemingly underpinning business. More specifically, HSBC cited revenue declines that were reflective on “lower market Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad Read this Term and reduced client flows," according to a recently released statement.

While institutional banks are feeling the crunch on Forex revenues and volumes, it is also the retail sector that has suffered the same fate, with several regional brokers also witnessing lower YoY figures. In particular, Japanese brokers, largely reliant on the USD/JPY trading, have seen the largest decreases in volumes.