Average daily turnover on the UK’s foreign exchange market reached USD1.1 trillion in April 2006, up 41 percent from the previous year according to a new IFSL report on Foreign Exchange.
There was also a further USD102 billion traded in currency derivatives. Growth of trading in the UK outpaced the 38 percent in global foreign exchange volumes which totaled a record USD2.7 trillion in April 2006. Key factors in the increase of foreign exchange trading were its growing importance as an alternative investment and an increase in fund management and hedge fund assets.
The UK strengthened its leading position with a 0.9 percent increase in its global share (of traditional foreign exchange transactions) to 32.4 percent in April 2006 (excluding double-counting between centres). The US saw a fall in its share from 18.9 percent to 18.2 percent. Japan’s share also fell, from 8.3 percent to 7.6 percent.
The bulk of trading in the UK was conducted in London which is by far the largest global centre for foreign exchange business. For example, more dollar-based foreign exchange trading occurs in the UK than in the US, and more euros are traded in the UK than in all the euro-area countries combined. Foreign owned institutions, accounted for around 60 percent of foreign exchange trading in London in April 2006.