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UK Extends Dominance in FX Market

The UK has extended its domination in the foreign exchange trading market according to figures released by the UK’s Foreign Exchange Joint Standing Committee (JSC) last week.

Average daily reported FX turnover in spot, outright forwards and FX swaps was $942 billion in April 2006, a rise of 19% on October 2005.

The semi-annual survey also shows that average daily reported UK turnover in other over-the-counter foreign exchange instruments, includingFX options and currency swaps, was $87 billion in April 2006, a rise of 18% on October 2005.

Combined average daily turnover in April 2006 was $1029 billion, some 39% higher than in April 2005. The increase further establishes London as the world’s largest foreign exchange dealing centre.

The rise means that banks in the UK conduct almost double the $577 billion a day that passes through North America, according to New York Federal Reserve figures also released last week.

The UK survey shows that much of the growth was driven by straightforward spot transactions. This tranche of business surged by 33% in the six months to April alone. Business with organisations other than banks – such as hedge funds based outside the UK – increased by almost 39%.

In April 2006, 30 financial institutions active in the UK FX market participated in the fourth published semi-annual turnover survey for the JSC.

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