London’s position as the world’s FX trading centre is damaged by Brexit
London’s position as the world’s main currency trading centre would be threatened by a British exit from the European Union, with Frankfurt, Paris, New York and Dublin likely to be the main beneficiaries, according to a survey of foreign exchange (FX) market professionals.
As reported in Bloomberg and Reuters, the research team at Chatsworth Communications polled 12,000 members of the ACI Financial Markets Association, the largest global trade body representing the international currency markets, for their personal views ahead of the UK Referendum vote on 23 June.
- Two-thirds (65%) of respondents believe a UK vote to leave the EU would negatively affect London’s position as the world’s largest FX trading centre, while 13% believe a Brexit would have a positive impact.
- Of those concerned about the negative impact on London, more than 70% identified Frankfurt as the trading centre most likely to benefit from a Brexit, followed by Paris (49%), New York (40%) and Dublin (28%).
- 80% of all respondents believe the UK will vote to remain in the EU.
London’s dominance of the foreign exchange market has grown exponentially as the size of the market expanded, and is, by far, the largest and most established centre for currency trading. Nearly 41% of global trading goes through London, more than double the market share of New York, according to data from the Bank for International Settlements (BIS)*.
Currency trading increased globally to an average USD 5.3 trillion (GBP 3.8 trillion) per day in 2013. The vast majority (75%) occurred in five jurisdictions: London (41%), New York (19%), Singapore (5.7%), Japan (5.6%) and Hong Kong (4.1%).*
A UK vote to leave the EU will…
- Positively affect London’s position as the world’s largest FX trading centre: 13%.
- Negatively affect London’s position as the world’s largest FX trading centre: 65%.
- Have no effect: 22%.
How do you think the UK public will vote?
- The UK will vote to remain in the EU: 80%.
- The UK will vote to leave the EU: 20%.
Which global trading centres do you think will benefit the most if the UK votes to leave (NOTE: answered only by respondents who believe a Brexit will have a negative impact on London)?
- Frankfurt: 71%.
- Paris: 49%.
- New York: 40%.
- Dublin: 28%.
- Zurich: 14%.
- Hong Kong: 8%.
- Singapore: 7%.
- Geneva: 7%
- Dubai: 4%.
- Tokyo: 4%.
How long have you worked in the FX industry?
- Less than one year: 0%.
- 1-2 years: 9%.
- 3-5 years: 10%.
- 6-10 years: 16%.
- 11-15 years: 17%.
- 16-20 years: 18%.
- More than 20 years: 30%.