2014 Greenwich Leaders: Global Foreign Exchange Services

(Awards White Paper, 4 Pages)

Deutsche Bank, UBS, Citi and Barclays are tightening their grip on the foreign exchange market as global FX continues its transition to a primarily electronic marketplace.

5 March 2014

Executive Summary

The top four dealers in FX together captured an impressive 46.7% of global top-tier customer trading volume in 2013, an aggregate share that has grown by six percentage points since 2012. The dominance of these banks is even greater in certain regional markets. In the top-tier United States, these four dealers claimed an aggregate market share of close to 53% in 2013, up from about 42% in 2012. This performance earned Deutsche Bank, UBS, Citi, and Barclays, along with number-five ranked J.P. Morgan, the title of 2014 Greenwich Share Leaders in Global Top-Tier Foreign Exchange Services.

Many factors come into play in the selection of a dealer for an FX trade. For example, Citi and Deutsche Bank distinguished themselves from other dealers last year by providing the market’s best service quality. However, one of the main drivers of market consolidation is the increasing use of electronic trading by market participants. Global FX trading volume increased by approximately 14% last year, with strong growth recorded in continental Europe and Japan. Worldwide growth was driven largely by an increase in trading activity among financial institutions (+18%), which in turn was powered by a 41% increase in trading volumes generated by retail aggregators.

One trend contributing to the continued growth of electronic trading is the increase in trading volumes in emerging market currencies. In past years, the increased popularity of emerging market currencies produced only a marginal effect on eFX due to the fact that many of these currencies did not trade on electronic platforms and offered market participants only limited liquidity if they did. Over the past 12 months, however, the average share of emerging market currency cash trading volume executed electronically increased to 56% from 52%.

Download this Greenwich Leaders report to view the full list of Greenwich Share and Quality winners for global top-tier corporates, financials and by region. In addition, read more on the drivers of market share and how emerging markets and currency options are contributing to eFX growth.

Greenwich Associates conducted interviews with 5,341 users of foreign exchange globally, of which 3,709 are top-tier
accounts, at large corporations and financial institutions on market trends and their relationships with their dealers.

To be considered top tier, a firm must be either a central bank, a government agency, a hedge fund, a fund manager, a FT100 global firm, a firm with reported trading volume of more than $10 billion, or a firm with reported sales of more than $5 billion. Interviews were conducted in North America, Latin America, Europe, Asia, and Japan between September and November 2013.