The constitution of the FX market is changing – it is no longer the exclusive preserve of banks, with a non-bank prop fund breaking into the top 10 for the first time, despite solid continuing performances from City, JP Morgan and UBS.
The release of Euromoney’s annual FX rankings for 2016 showed some significant changes in the performance of global banks at the top flight of the table, but also the rise of non-bank challengers such as XTX Markets, which secured 9th position ahead of Morgan Stanley, with a 3.87% market share on debut.
Relative to competition from other major banks, Citi strengthened its position with a 4% lead at the top of the table, despite an overall year-on-year decline in comparison to its 2015 figures. This decline in volume was mirrored across the top 5 global banks, as FX trading divisions struggle to tackle growing compliance and cost challenges. Over a 7-year period, combined market share among this group has fallen almost 17% from a high of 61.5% in 2009.
Deutsche Bank continues to undergo restructuring and cost cutting and suffered heavy falls across FX Spot and FX Forward markets, while retaining its crown in the FX Options market. Overall, the bank fell from second to fourth, losing almost half if its 2015 market share.
As many banks continue to face balance sheet pressures and the constraints of capital requirement rules, non-bank liquidity providers have in many cases flourished. Beside major gains by XTX Markets, Tower Research Capital, Jump Trading, Virtu Financial, Lucid Markets and Citadel Securities all secured a top 50 ranking.
According to Euromoney, total volumes taken into account for the 2016 rankings amounted to almost USD 95 trillion. Foreign exchange settlement volume from Chatsworth Client, CLS, hit USD 4.96 trillion in April, up 5.7% from the previous month, and up 6.9% from the USD 4.64 trillion in April 2015.