In April, twenty-six central banks, including the Bank of England, conducted surveys of turnover in their Local foreign exchange markets. This was the third survey of the London market; the first was in March 1986 and the second in April 1989. This article sets out the results and compares them with those from previous surveys and for other major centres.
The results show that:
- London has extended its lead in the last three years as the world's largest centre for foreign exchange trading. Total average daily turnover in London during April 1992 was US$300 billion (60% higher than the US$187 billion per day recorded in April 1989).
- In addition, brokers in London intermediated in transactions averaging the equivalent of US$12 billion per day between principals abroad (and not therefore included in the US$300 billion daily figure). They continue to intermediate in about a third of foreign exchange business in London.
- About half of total turnover is now accounted for by forward business, predominately swaps, while the share of spot business has declined by 14% since 1989.
- London continues to feature a wide diversity of foreign banks, and the spread of actively traded currencies has remained larger than in other major centres.
- The most traded currency pairs are still sterling/US dollar (19%) and US dollar/deutschmark (23%); but their combined share has declined since 1989 as non-dollar currency trading has grown.
- Although interbank business continues to account for the bulk of activity, the proportion of business with non-financial customers and other financial institutions has risen to 23% of daily turnover.
The foreign exchange market in London