List of categories included in the full 2008 FX poll results
A lot has been written about the emergence of retail players in FX; there has been much conjecture about how many platforms now exist to cater for this audience; there is plenty of discussion about the size of this particular market segment. All of this information is buried somewhere in Euromoney’s FX poll data.
There is a category for FX platforms so, in theory, the information should be easy to access. This year, there were 224 votes from so-called FX platforms, accounting for $12.5 trillion of annual flow. Most of this business is spot. Assuming that around one-third of the total reported volume of $175 trillion was spot suggests that retail now accounts for around 21% of this market segment.
Unfortunately, these figures could be inaccurate because many of the self-labelled FX platforms are nothing of the kind – the voters have simply filled in the wrong category. By removing those who are not platforms, the number falls to ‘just’ 124 and turnover drops to $10.5 trillion. But to confuse matters further, around 20 platforms voted in another category – non-bank market participants. These 20 players accounted for a further $9.4 trillion of flow, suggesting that retail accounts for annual flow to the banks of nearly $20 trillion, or around $80 billion a day.
This number may only be a guestimate but it does have some validity. There are numerous differences in the business models of the platforms – some seek to internalise flow, while others push it straight through and either charge an explicit commission or add a spread. Also, there really is no such thing as a clearly defined retail sector. Many of the platforms service institutional clients and, increasingly, high-net wealth individuals. The lines have become so blurred that some banks are examining the feasibility of providing multiple APIs to single firms to try and make a distinction between what is considered benign and toxic flow.