U.S. Unseats U.K. as Global Center for Rates Derivatives Trading

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New York overtook London for the first time as the largest global center for over the counter interest-rate derivatives trading, according to a report released Thursday by the Bank for International Settlements in Basel.

Forty-one percent of interest-rate derivatives were traded in the U.S. as of April, up from 23 percent three years ago. The U.K.’s share of the $2.7 trillion market shrunk to 39 percent from about half during the same period. The BIS said the geographic shift was due to increased trading of dollar-denominated swaps relative to euro-denominated instruments.

The U.K.’s June 23 vote to leave the European Union has raised questions about London’s status as the global leader for euro-denominated trading. Last year, the U.K. scored a major victory when the EU General Court in Luxembourg ruled that the European Central Bank lacked the authority to dictate that clearinghouses be located within the currency bloc. The decision allowed London to remain the global trading hub for euro-denominated derivatives.

On Thursday, the BIS said the trading volume for dollar-denominated interest-rate derivatives reached $1.4 trillion per day, compared with $600 billion a day for euro-denominated instruments. Total volume for interest-rate derivatives rose to $2.7 trillion per day from from $2.3 trillion in 2013, including interest-rate swaps, forwards and options.