UK Forex volumes down

The average daily turnover in UK foreign exchange markets fell in the six months to October, driven by a drop in FX swaps and options activity, according to a Bank of England survey.

The survey revealed that average daily turnover of spot, outright forwards, non-deliverable forwards, swaps, FX options and currency swaps in the UK market totalled $1.972 trillion (£1.24 trillion) in October 2011, 3 per cent lower than in April 2011 but 17 per cent higher than a year earlier.

While the drop from April 2011 was driven by a 9 per cent fall in FX swaps activity, spot turnover rose 2 per cent to a record high of $802bn.

Turnover for currency swaps also saw a relatively large increase, although average daily turnover in 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 options fell to $130bn from $140bn in April 2011.

The daily turnover in FX swaps fell to $820bn in the latest survey, from $902bn.

According to the survey, the US dollar was the most actively traded currency, and its share rose in the six months to October while the euro, which was the next most traded currency, also saw its share climb.

The Australian dollar’s share rose at the expense of the pound sterling, the Japanese yen and the Swiss franc.

Thirty financial institutions active in the UK foreign exchange market participated in the survey.

London is recognised as the largest FX market according to Bank of International Settlements, the UK's capital has strengthened its position since the recent NFA rulings on Leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders Read this Term as leading US based brokers shifted business to UK under the FSA. This trend is continuing as Cyprus based FX brokers are using the MIFID to offer services under the UK banner.