ANATOMY OF THE IN APRIL 2010 THE AVERAGE TURNOVER

OF THE FOREX MARKET REACHED

FOREX MARKET >> $4 TRILLION PER DAY >>
Source: King, M. R., & Rime, D. (2010). The $4 trillion question: what explains FX growth since 2007 survey?
BIS Quarterly Review, Dec, pp. 27-42.
US$ Billion
Japan 43
Australia 32

USA Denmark 17
US$ 168 billion Singapore 16
Hong Kong 10
Canada 4.6
India 4.1
Brazil 2.9

In April 2010 the daily average

Forex market turnover topped
$4 trillion. 85% of this volume
was largely down to high-
frequency traders, banks and
UK retail investors trading online.
US$ 214 billion This was 20% higher than in
2007.

2008 Lehman’s collapse

Spot Forex Volume By Country

Source: 2010 Triennial Central Bank Survey

Algorithmic (automated) trading has shown

strong growth from 2% in 2004 up to 45% in
2010. This has boosted the growth of multi-
bank platforms.

10
0 20
08
Barclays’ FX Liquidity Index
20
09
80 98 EURUSD
% USDJPY
20
10 GBPUSD

60
28 Following the bankruptcy of Lehman Brothers many
%
financial institutions experienced a sharp rise in
72 volatility and drop in liquidity. With limited market
%
40 liquidity many investors across various asset classes
turned to the Forex Market to hedge risk.
45
%
55
% Average Trade Size

Automated Trading
Manual Trading

Growth of algorithmic trading

Sources: CME; EBS; Greenwich Associates.

Algorithmic High Frequency Trading is push-

ing Forex Market turnover higher. Evidence of
the increase can be seen with the rise of trade 2005 Average Number of Trades 2009
frequency and the reduction in trade size.
Evidence of high-frequency trading
Source: Survey by New York FX Committee

Pepperstone is a leading global provider of online

Pepperstone trading services, specialising in foreign exchange.
www.pepperstone.com