TheNews

Big banks extend dominance of forex league table

The biggest banks have reinforced their dominance of the $5.3tn a day foreign exchange market in the past year, according to a closely watched industry survey.

The combined market share of the top five banks in currency dealing has risen to 60.6 per cent from last year’s 57.4 per cent in Euromoney’s annual poll. It is the first time the combined share of the top five has risen above 60 per cent since 2009.

The main players in the currency market fight to secure their place in Euromoney’s rankings, which serve as the industry standard although they are based on voting by clients and claim to be no more than a proxy for market trends.

Last year, Citigroup’s head of FX sales resorted to dressing as a superhero in a campaign to drum up votes – and the gamble has paid off, with Citi overtaking Deutsche Bank to take the top spot for the first time since 2002.

But the lobbying has this year been more subdued, with several banks deciding not to canvass clients. The poll, published on Thursday, follows months of intense scrutiny of the forex market as regulators around the world probe allegations that senior traders at the top banks colluded ahead of key benchmark fixings.

More than 30 staff across 11 banks have been fired, suspended or placed on leave and a number of senior executives have chosen to move on at a time of turmoil in the industry.

The probes are accelerating a long-term shift from voice to electronic trading, which many believe could favour the dominance of the biggest operators, who are able to invest more in their trading platforms.

Scale matters in a market with high volumes but low and shrinking margins, and there is already a big gap between the top handful of banks and those lower down the rankings.

Euromoney said Barclays had retained third place in its rankings, with Royal Bank of Scotland and Credit Suisse suffering the biggest falls compared with last year. BNP Paribas and Bank of America Merrill Lynch were among the main gainers.

Some institutions have already chosen to scale back forex divisions that are suffering the same pressures as fixed income and commodities at many investment banks. But relatively low capital requirements mean few are likely to pull out entirely.