Forex Market Snapshot

The following facts and figures relate to the foreign exchange market. Most of the information comes from the Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity conducted by the Bank for International Settlements (BIS) in April 2004, and published in March 2005. 52 central banks and monetary authorities participated in the survey, collecting information from approximately 1200 market participants.

Structure

• Decentralised, over-the-counter market, also known as the 'interbank' market
• Main participants: Central Banks, commercial and investment banks, hedge funds, pension funds, corporations & private speculators
• The free-floating currency system began in 1973, and was officially mandated in 1978
• Online trading began in the mid to late 1990's

Source: BIS Triennial Survey 2004

Trading Hours

• 24 hour market
• Sunday 5pm EST through Friday 4pm EST.
• Trading begins in New Zealand, followed by Australia, Asia, the Middle East, Europe, and America

Size

• Largest market in the world
• $1.9 trillion average daily turnover, equivalent to:
   
  • More than 10 times the average daily turnover of global equity markets¹
  • 40 times the average daily turnover of the NYSE²
  • $300 a day for every man, woman, and child on earth
  • An annual turnover more than 10 times world GDP³
    
    
• The spot market accounts for about one-third of daily turnover

1. About $167 billion - World Federation of Exchanges aggregate 2004
2. About $46 billion - NYSE 2004
3. About $36 trillion - World Bank 2003

Source: BIS Triennial Survey 2004

Major Markets

• The US & UK account for more than 50% of turnover
• Major markets: London, New York, Tokyo
• Trading activity is heaviest when major markets overlap
• Nearly two-thirds of NY activity occurs in the morning hours while European markets are open⁴

Average Daily Turnover by Country

Concentration in the Banking Industry

• 16 banks account for 75% of turnover in the U.K.
• 11 banks account for 75% of turnover in the U.S.
• 11 banks account for 75% of turnover in Japan

Note: The reference here is to individual banking offices rather than banking organisations.

Source: BIS Triennial Survey 2004