Electronic Trades Rise to 74% of Currency Market, Greenwich Says

Almost three quarters of global currencies trading volume was executed through electronic systems last year, according to Greenwich Associates.

Electronic trading rose to 74 percent of global volume in the $5.3 trillion-per-day foreign-exchange market in 2013, from 71 percent the year before, the Stamford, Connecticut-based research company said.

“As evidenced by last year’s growth, the e-FX market has not yet lost its dynamism,” said Greenwich Associates consultant Peter D’Amario in a news release yesterday. “Electronic trading is simply making new headway among smaller FX players and the market’s most active traders.”

Banks are shifting more activity onto electronic platforms as profit margins shrink and clients demand greater transparency in pricing and transaction charges. The move has been hastened by a widening probe of the market that has seen the dismissal or suspension of more than 21 currency traders from the world’s biggest foreign exchange traders, including Deutsche Bank AG and Citigroup Inc.

Citigroup, the second-biggest currency trader, said March 24 it named Richard Bibbey to run its global spot foreign-exchange business as the bank seeks to more closely align its voice and electronic trading.

The Greenwich report said retail aggregators contributed to most of the expansion in electronic trading last year as volume rose to 98 percent last year from 92 percent. Firms generating less than $1 billion in annual trading volume make up 48 percent of market participants, or 26 percent in total volume.

Continental Europe saw a decline in electronic trading to 68 percent from 73 percent. Usage in the U.S. was unchanged at 83 percent of market participants, while Japan stood at 87 percent.

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