In March 1986, the Bank of England carried out the first comprehensive statistical survey of the volume and composition of the foreign exchange market in London. The results of that survey aroused considerable interest and prompted the Bank to mount a further survey in April this year, when similar surveys in other centres were conducted by other central banks. This article sets out the results of the Bank of England's second survey of foreign exchange business transacted by principals and brokers operating in London. It compares the results with those obtained in 1986 and, in the light of results in other centres, puts the foreign exchange market in London into a world perspective.
The survey shows that:
- London continues to be the world's largest centre for foreign exchange trading, with an average daily turnover equivalent to some US$187 billion (up from US$90 billion per day in 1986).
- Although US dollar/sterling and US dollar/deutschemark transactions again account for most of the business, there has been a significant increase (from 3% to 9%) in cross-currency trading not involving the US dollar.
- Brokers continue to intermediate in a significant proportion of business in London, although their percentage share of total turnover has shown some decline.
- Direct transactions between principals and their customers have grown from 9% of overall turnover in 1986 to some 15% this year.
The market in foreign exchange in London