FX Markets are the backbone of international financial markets.
An insight into the current trends in global FX markets reveals an interesting reading as under:
Markets
- Global FX turnover ($4.2 Trillion daily) gone up by over 25% over April 2007
- After financial crises, Global FX markets experienced lower volatility and wider spreads
- Trading activity of other financial institutions (Hedge/Pension/Mutual Funds/Insurance Companies/Central Banks) has gone up
- Cross border transactions now constitute about 65% of the trading activity (source BIS Report)
- FX Trading in emerging markets currencies – more financial and more offshore
Products
- Turnover in outright forwards and currency swaps is growing strongly
- Turnover in FX swaps is relatively flat
- Trading in currency options is showing downward trend
- From purely interbank focus, the overall market share of client to dealer market is increasing
- Retail FX market seems to be growing steadily due to increasing global trade
Technology
- High Frequency Trading has now spread to FX Market (source: Aite Analyst Report)
- Electronic trading adoption continues to increase in global FX Markets
- Voice trading still remains a dominant and vital part of client to dealer market
- Execution Algos are being introduced in FX steadily despite skepticism
- Growing demand for low latency trading infrastructure within FX market