Natasha Rega-Jones<\/a><\/p>\nThe UK has retained its crown as the top hub for trading foreign exchange and interest rate derivatives, according to a report from the Bank for International Settlements, underlining how London remains at the heart of financial markets five years on from the country\u2019s exit from the European Union.\u00a0<\/p>\n
Half of all over-the-counter interest rate derivatives trading activity in April took place in the UK, according to the BIS\u2019s triennial central bank survey, up from 43% in April 2022. London\u2019s share of FX trading also held steady at 38%, the BIS said.<\/p>\n
The UK\u2019s dominance of FX and interest rate derivatives came amid a surge in activity in both markets. FX trading volumes hit a record US$9.6trn a day in April, the BIS said, a 28% rise from three years earlier. Interest rate derivatives trading activity increased 59% to an average US$7.9trn a day.<\/p>\n
Dealers reported a sharp uptick in trading activity in April when the BIS survey was conducted following the chaotic announcement of US tariffs and a subsequent spike in market volatility.<\/p>\n
In a somewhat ironic twist, the BIS noted a \u201csurge\u201d in euro derivatives trading helped drive the increase in the UK\u2019s share of interest rate derivatives activity. Average daily turnover of euro-denominated interest rate derivatives nearly doubled to US$3trn in April from three years earlier, making euros comfortably the most popular currency for contracts in these markets. \u00a0<\/p>\n
Elsewhere, trading in sterling-dominated interest rate derivatives nearly tripled to US$939bn a day, while yen-denominated activity increased eightfold to US$411bn. Growth in US dollar contracts was more modest, rising 7% to US$2.4trn, the BIS said.<\/p>\n
London\u2019s dominant role in euro derivatives trading has long been a source of annoyance for the European Union. Brussels sought to grab a larger share of euro derivatives trading and clearing in the wake of Brexit, although it has so far struggled to engineer a mass migration of interest rate derivatives activity. Around 95% of euro swaps volumes were cleared through London’s LCH in 2024, according to analytics firm ClarusFT. LCH is part of LSEG, which also owns IFR.<\/p>\n
Frankfurt-based Eurex operates the main EU-based interest rate derivatives clearinghouse. Germany\u2019s share of daily interest rate derivatives turnover increased to 7.5% in April, up from 5% in 2022 and just 0.8% in 2019.<\/p>\n
The BIS survey underscores the pivotal role the US dollar continues to play in global financial markets. The greenback was on one side of 89% of the US$9.6trn of transactions that on average changed hands in FX markets each day in April. The euro was the second most popular currency with a market share of 29%, followed by the yen on 17% and sterling on 10%.<\/p>\n
FX swaps remained the most widely traded instrument across all currencies, with average daily turnover rising 5% to US$4trn. Options registered the fastest growth of any FX product, with daily turnover more than doubling to US$634bn. Spot FX volumes increased 42% to US$2.9trn while turnover in FX forwards rose 60% to US$1.8trn.<\/p>\n
Corrected story: <\/p>\n
Corrects figure in second paragraph<\/p>\n","protected":false},"excerpt":{"rendered":"
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