Daily FX volumes plunge in February after volatile start to year

Mon Mar 23, 2015 11:00am EDT
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By Jemima Kelly

LONDON, March 23 (Reuters) - Average daily volumes in the global foreign exchange market fell in February after soaring the previous month in the wake of Switzerland's shock removal of its currency cap, data from FX settlement system CLS showed on Monday.

The value of all transactions through the CLS system, which is used almost universally by the banking industry to process or settle trades on most major currencies, fell 8.3 percent to $4.87 trillion a day, from $5.31 trillion in January.

That was also down on the $5.15 trillion a day seen in the world's largest and most liquid financial market in the same month last year.

January was turbulent for the FX market, with the shock move on Jan. 15 by the Swiss National Bank to scrap its cap on the franc against the euro driving the biggest day's trading ever by some measures, worth more than $9 billion on the day.

Volatility also spiked on Jan. 22, when the European Central Bank announced a quantitative easing programme which, though long-awaited, surprised markets with its size: 1.1 trillion euros of bond purchases over 18 months.

"The FX market moved to a period of notably lower volatility during the month of February following the unprecedented movements that followed the Swiss National Bank's announcement on 15 January," said David Puth, CEO of CLS. "As a result, average daily input volumes in CLS for February decreased."

Input volumes submitted to CLS -- the number of instructions received by the system on a given day for future settlement -- were down 16.5 percent month-on-month, the company said.

Both Thomson Reuters and EBS, among the industry's biggest trading platforms, reported monthly falls in foreign exchange volumes in February, following surges the previous month. (Editing by Susan Fenton)