This year, the survey found that worldwide FX trading reached US$9.6 trillion per day, while daily OTC interest rate derivatives trading came in at US$7.9 trillion. The volume of daily FX activity was up 28% from the previous survey in 2022, and derivatives trading jumped 59% over the same period.
The U.S. dollar remained the most-traded currency, followed by the euro and the yen, the BIS reported. FX swaps were the most-traded instrument, with average daily turnover rising 5% to US$4 trillion.
Shifting U.S. trade policy resulted in higher FX volatility that boosted trading in currency hedging instruments, the bank noted.
“For example, the depreciation of the U.S. dollar appears to have led many institutional investors and asset managers with dollar asset exposures to limit further FX losses on their portfolios by selling dollars forward,” the BIS said.
In the OTC interest rate derivatives market, overnight index swaps “were by far the most traded instrument and the predominant driver of the growth in global turnover,” the bank said, with the increase largely driven by euro-, sterling- and yen-denominated contracts.
While U.S. dollar-denominated trading was up 7%, average daily turnover in euro-denominated contracts nearly doubled to US$3.0 trillion, the BIS reported.
“Contracts in other major currencies also saw a notable increase in turnover,” the report said, with derivatives based in U.K. sterling and Japanese yen soaring 179% and 684%, respectively.
The BIS also reported that FX and interest rate derivatives trading continues to be concentrated in the largest financial centres, with the top four jurisdictions — the U.K., U.S., Singapore and Hong Kong — accounting for 75% of total FX trading. The U.K. and U.S. generated 73% of OTC interest rate derivatives trading, with the U.K. remaining the global leader, driving 38% of FX trading and 50% of OTC rate derivative trading.
