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eFX volumes Single Dealer vs Multi Dealer Platforms

Research by Greenwich Associates (released in March 2010) states that around the world, multi-bank electronic trading platforms captured about 40% of overall FX trading volume in 2008-2009 and single-bank platforms captured another 15%.

However, the two most authoritative sources of actual empirical data on FX activity, namely the Bank of England (BoE) and the Bank of International Settlements (BIS) seem to paint a very different picture!

Bank of England (BoE): Empirical data released by the Bank of England (Oct 2009), covering FX activity between reporting dealers and clients in London (the largest global FX market), shows that single dealer platforms (SDPs) accounted for 25% of all electronic FX volume, compared with only 13% of electronic volume done through multi-dealer platforms (MDPs) - see chart below.

Bank of International Settlements (BIS): The most definitive empirical data on global FX volumes is produced every three years by the BIS in their Triennial survey. Data from the 2007 triennial survey shows a similar picture to the BoE data. Whilst electronic trading accunted for some 34% of all global daily FX volumes, nearly 30% of all etrading was executed through SDPs, compared with only 21% of etrading executed through MDPs.  - see chart below.

The 2010 Triennial Central Bank Survey of FX activity will be released in August, and should prove fascinating reading in terms of the latest trends.

Top chart Daily London eFX volumes by SDP and MDP (BofE -2009)

Bottom chart:Daily Global eFX volumes by SDP and MDP (BIS-2007)



Comments: (2)

A Finextra member
A Finextra member 14 May, 2010, 09:02Be the first to give this comment the thumbs up 0 likes

For this to be properly understood you would need to compare the exact definitions of MDP used in each of the surveys.

Paul Blank
Paul Blank - TradAir - London 14 May, 2010, 10:24Be the first to give this comment the thumbs up 0 likes

Hi David,

I don’t have access to the full Greenwich survey, so cannot comment on how they break down the catagories, and was anyway only commenting on the ‘teaser’ article they published.

But the full BIS Triennial survey is freely available, and their methodology (pg 44) has a category of FX execution method called “Electronic Trading Systems”, which is defines as “Executed via a single-bank proprietary platform (SDP) or a multi-bank dealing system (MDP) – and of course, includes FXAll along with Currenex and FXConnect. Another category of electronic method is Electronic Broking Systems, which covers EBS and Reuters Matching.

Within the BIS survey summary (here), it states that electronic methods of execution accounted for 34% of all FX trading (across spot, fwds, swaps and options), of which:

Broking Systems= 17%
Multibank Trading Systems (MDPs) = 7%
Single Bank Trading Systems (SDPs) =10%

Total Electronic Trading = 34%

So, that would mean that SDPs account for nearly 30% of all electronic trading, whilst MDPs accounted for 21%.

I could provide a similar breakdown of the Bank of England data if needed. As I said, it will be interesting to see what the 2010 BIS survey results will show!




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