London Extends Lead in FX and Rates Trading, BIS Triennial Survey Finds

Core Insights - The UK has solidified its status as the leading global center for foreign exchange (FX) and over-the-counter (OTC) interest rate derivatives, with significant increases in average daily turnover in April 2025 [1][2][3] FX Market Performance - In April 2025, the UK reported an average daily FX turnover of $4.745 trillion, a notable increase from $3.735 trillion in April 2022, reflecting a robust growth trajectory [2][4] - The UK's share of global FX turnover was 37.8%, slightly below the 38.0% recorded in 2022, indicating sustained market dominance [3][4] OTC Interest Rate Derivatives - The UK experienced a dramatic rise in OTC interest rate derivatives turnover, reaching $4.32 trillion in April 2025, up from $2.359 trillion in the previous survey cycle [2][10] - London's market share in OTC interest rate derivatives increased to 49.6%, rebounding from 42.9% in 2022, although still below the 50.6% recorded in 2019 [3][11] Market Structure and Infrastructure - London's FX market benefits from a unique combination of time zone advantages, deep counterparty networks, and advanced electronic trading infrastructure, which collectively enhance liquidity and reduce bid-ask spreads [5][6] - The product mix has shifted towards swaps and forwards, which are crucial for treasury and risk management, indicating a strategic alignment with market needs [6][8] Electronification and Trading Efficiency - The trend towards electronic execution has become the norm in both inter-dealer and dealer-to-client channels, facilitating rapid price discovery and larger notional flows [7][18] - The infrastructure supporting OTC interest rate derivatives has proven capable of scaling efficiently, maintaining turnover even during periods of high volatility [9][10] Implications for Policy and Market Participants - The Triennial Survey serves as a critical benchmark for understanding global FX and OTC rates trading, influencing discussions on liquidity concentration and systemic risk [12][13] - For market participants, the survey highlights London's infrastructure as a reliable source for executing trades and managing risk effectively [14][20] Future Trends - Key themes shaping the market include ongoing electronification, the push for collateral efficiency, and the impact of regulatory and geopolitical factors on liquidity routing [18][19][20]