FX volumes bounced back in 2009

GLOBAL – Average daily trading volumes settled through CLS jumped 30% from 502,538 in April to 653,991 in October, 2009.

Volumes of outright forwards grew 32.8% to 20,720, while spot trades increased 30.67% to 610,813. The sum of the average daily value settled totalled $3.608 trillion in October 2009, a marked improvement on $3.061 trillion in April 2009.

Meanwhile, CLS Bank said average daily volumes of payment instructions settled over the system in December reached 631,155, down 2.7% on the 648,217 payment instructions volume settled in November. However, it was up on the 472,793 payment instructions volume settled in December 2008.

The average daily value for December 2009 was $3.9 trillion, up from $3.66 trillion in November and a substantial increase from $3.11 trillion in December 2008.

This surge correlates with the findings of a November 2009 report by Axel Pierron and Sreekrishna Sankar of Boston-based consultancy firm Celent. It reported that the global economic decline caused average daily volumes to slip to $2.9 trillion in 2009, down from a record $3.98 trillion in 2008. But the research company predicted this trend to reverse, with financial institutions driving the growth. Average daily turnover in the foreign exchange market is set to reach $4 trillion this year, according to the Celent analysts.

Jonathan Butterfield, director of communications at CLS group, said: "The huge surge in FX volumes experienced during and immediately after the Lehman Brothers crisis was followed by a period of illiquidity, lack of credit and loss of investor risk appetite. This led some in the FX industry to predict a significant and sustained decline in FX volumes in 2009. However, since the first quarter of 2009, CLS has seen sustained growth in values traded for all products for the rest of the year. CLS settled an average daily volume of 597,977 sides during 2009, nearly 10% up on 2008.

"Given the intense focus on risk management, CLS experienced an unprecedented growth in participation with additional banks, financial firms and fund managers during 2009. We were particularly heartened by the 50% increase in fund participation."