CLS Group Reports Drop in FX Trading Volumes in February

After a mixed start to the year, CLS Group, a leading provider of risk mitigation and settlement services for foreign exchange (FX) dealers and institutions, has reported a further decline in the daily traded volumes submitted by its clients this Friday.

During the month of February, the total average daily traded volume submitted to CLS was $1.725 trillion. While this might seem to be a solid figure, it is actually less than that submitted in January by 3.3 percent, which was $1.784 trillion.

When measured against the same month of the previous year, February of 2018, the results also do not hold up. This is because February of last year saw a daily average traded volume of $1.949 trillion submitted, which is around 11.5 percent higher.

The total traded volume can be broken down into three separate segments - swap FX, spot FX, and FX Forwards FX Forwards FX forwards are contracts occurring within the foreign exchange market where market participants lock in exchange rates for the buying or selling of a currency on a predetermined date. Sometimes known as currency forwards, FX forwards can be thought of as a customizable hedging approach.In this sense, upfront margin payments are not required and all contracts are over-the-counter (OTC) due to the decentralized nature of the foreign exchange market. Popularity of FX ForwardsFX forwards are popula FX forwards are contracts occurring within the foreign exchange market where market participants lock in exchange rates for the buying or selling of a currency on a predetermined date. Sometimes known as currency forwards, FX forwards can be thought of as a customizable hedging approach.In this sense, upfront margin payments are not required and all contracts are over-the-counter (OTC) due to the decentralized nature of the foreign exchange market. Popularity of FX ForwardsFX forwards are popula Read this Term. Out of the three, swap FX consistently attracts the largest daily average volumes.

In February of 2019, the average daily traded volume was $1.227 trillion. When measured against the previous month, which had an average volume of $1.253 trillion per day, this is less by 2.1 percent. February of 2018 reported an average daily traded volume of $1.301 trillion, which is also up from last month’s result by 6.1 percent.

Moving on to Spot FX, the average traded volume per day last month was $402 billion. This is down on both a monthly and yearly comparison by 9.7 percent and 25 percent, respectively.

FX Forwards Bucks Declining Trend on CLS

However, FX forwards, which is the smallest out of the three segments in terms of volume, actually managed to report an increase in the daily traded volumes of 11.6 percent when measured against the previous month.

Specifically, during the month of February, $96 billion worth of FX forwards trades were recorded. However, although up month-over-month, on an annual comparison, last month’s result was still down by four percent.