FX settlement utility CLS is the latest market function to unveil record turnover in March following a raft of platforms doing the same earlier this month. CLS says that it handled $2.194 trillion per day across FX products, with increases in all segments. This represents a 21.1% increase from February and a17.8% rise year-on-year.
Spot FX was again responsible for the majority of the increase, rising 41.1% from February to $707 billion per day – this is also a 61% year-on-year increase. FX swaps remain the busiest segment for CLS with turnover reaching $1.358 trillion, a 10.9% increase from February and up 3.8% year-on-year, while outright forward settlement notional was $129 billion, up 48.3% from the previous month and up 11.2% March 2019. All three products established a new record for CLS settlement.
“The impact of COVID-19 on the global economy significantly increased in March 2020, with the World Health Organisation taking the expected step of declaring a pandemic on Wednesday 11 March,” says Masami Johnstone, head of information services at CLS. “The multiple nationwide lockdowns had a significant impact on investor sentiment which led to sharp stock market movements in both directions. On Thursday 19 March 2020 we saw the highest CBOE Volatility Index (VIX) ever recorded at 82.69. As a result, the market saw significant demand for dollars as a safe haven. The exchange rates of those currencies that CLS settles against the dollar also experienced the most significant monthly movements of the last decade, an average absolute daily percentage change of 1.14%, almost double the previous monthly high.
“Reflecting the negative global sentiment, March 2020 saw record average daily traded volumes of USD2.19 trillion, representing a growth of 18% compared to March 2019,” she continues. “Compared to the previous record high in February 2018 (USD1.93 trillion) the volume was 14% higher. Spot volumes were particularly noteworthy with a monthly high of USD985 billion on 9 March 2020 (sixth on the all-time list). The increased spot volumes continued throughout March with five of the 50 largest all-time spot volumes occurring during the month. Of the majors, monthly records were seen across EUR/USD, USD/JPY, GBP/USD, USD/CHF and USD/CAD, with only AUD/USD and NZD/USD narrowly missing out.”