The debate about whether or not the foreign exchange market will ever fully adopt an exchange-traded model has been raging for years. It is likely to continue, with proponents and detractors able to put forward good arguments why it will and why it won’t.
A frequent claim is that activity in the exchange-traded FX market is minuscule when compared with the over-the-counter environment. Ostensibly this appears to be true but a more complex, different picture lies underneath the bare figures.
| Craig Donohue, CME: seeing some underlying shifts in the FX market |
According to the most recent Bank for International Settlements Triennial Central Bank Survey, overall daily activity in April 2004 in the OTC FX market totalled about $1.9 trillion. By contrast, notional volume at the Chicago Mercantile Exchange, by far the largest regulated FX marketplace, came in at just $17 billion a day during the same period, less than 1% of the total turnover. Since April 2004, the FX market has continued to post strong growth in turnover; daily activity now is thought to be in the region of $2.5