Currency Market Professionals: FX Trading Would be Harmed by a Brexit

Currency Market Professionals: FX Trading Would be Harmed by a Brexit
24.06.2016 10:00 am

Currency Market Professionals: FX Trading Would be Harmed by a Brexit

Trading Systems

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.

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.

Key findings:

  • 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%).*

Nick Murray-Leslie, CEO, Chatsworth, said: “This is the only poll of the experts at the coal face of the global FX market, the people handling trillions of dollars of currency flow and providing the liquidity, technology and infrastructure necessary for the global currency market to operate efficiently. 

“Their views and analysis on the impact of a Brexit matter a great deal because they manage investment positions and make a daily judgment on currencies, interest rates and cross-border economic factors impacting international trade and commerce.

“The FX market is the world’s largest and most liquid financial market in the world market, playing a key role in enabling world trade, as well as for investment and hedging other asset classes. London is right out in front for this market and there is clearly some concern among traders that a Brexit would be detrimental to the city’s position as the main currency trading hub.”

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