In the interbank market, the strong get stronger, and the weak get eliminated

Each year in May, [I][B]EuroMoney[/B][/I] publishes a list of the 10 or 15 largest players in the FX interbank network. The 2016 list is expected later this month. Ahead of the 2016 listing, [I]EuroMoney[/I] has published this article on consolidation within the ranks of the FX top tier —

Euromoney Magazine

The take-away from this article is that the top 5 banks are essentially taking over the business of providing FX liquidity, and the smaller banks are being reduced to the role of “agents” for the top banks. Furthermore, with inadequate FX market share, these smaller banks cannot operate profitably as FX market makers, and will likely exit the FX business over the next few years.

If you are interested in seeing last year’s list of the top 15 banks, here it is —

The top of the forex food-chain — 2015

Keep in mind that a new list will be coming out in a couple of weeks.


could well lose its ranking as in the last three years at least it has been whacked by restructuring, ***ism scandals, and big fines…the chief looked troubled last year, and for good reasons…

Even more interestingly, smaller banks may not die out of the FX food chain if.joining a peer-to-peer network as suggested in this article

Euromoney Magazine

Question is: how will 2016 and beyond shape the retail side? Will brokers’ liquidity be affected? Spreads going up or restrictions on instruments available?

This sort of thing isn’t really anything new. Citi used to dominate the inter-bank market back in the day, with a few others at the next tier and a bunch well below that.

Sorry, I don’t understand that comment.

Here are the Citi rankings by FX market share for the last 7 years:

no. 5

no. 4

no. 4

no. 2

no. 2

no. 1

no. 1


That ranking kind of speaks to my point that things are constantly changing. Back in the 90s Citi was #1 by a large margin. They fell off for a while. Maybe they got behind the curve in the technological changes that came sweeping through circa 2000. During that time, others moved to the top. Obviously, they’ve now recovered.

[B][I]Euromoney’s[/I] 2016 FX Rankings[/B] were released today, showing the Top 10 FX liquidity providers, their respective market shares, and their previous (2015) rankings.

This latest list seems to refute the assertions made in the [I]Euromoney[/I] article linked in the quote (above).

Rather than monopolizing FX liquidity, as the previous article implied, the top 5 FX liquidity providers have — as a group — [I]lost market share dramatically.[/I]

[U]Here is an excerpt from today’s [I]Euromoney[/I] article[/U] —

The biggest change in the rankings this year is the decline of the combined market share of the top five global banks. Their market share in the survey peaked in 2009 at 61.5% and was still above 60% as recently as 2014.

This year the top five banks account for just 44.7% of total volume. The hopes of many global FX heads and their investment bank bosses – that the share of the big banks would rise inexorably as the market became more automated and that they would be able to benefit from oligopolistic pricing power as a result – now seem like distant and deluded dreams.

One FX veteran tells Euromoney that the decline of the top five banks’ combined market share “is exactly what the regulators would want in a market they continue to keep a very close eye on.”

While the market share of the top 10 FX houses overall also declines, from over 75% last year to just 66% this year, the fall is entirely due to the performance of the top five banks. The banks ranked from sixth to 10th place overall produced a combined market share of 22%, roughly in line with the last five years of the survey and considerably higher than the 14% they managed in 2008.

Citi actually extends its lead over the second-placed bank in the survey, which market participants regard as the most accurate reflection of client-based activity in the global foreign exchange markets, to more than four percentage points – even though the bank’s own market share declined by more than three percentage points, from 16.11% in the 2015 survey to 12.91% of trading in 2016.

[U]Here are the current rankings for the Top 10 FX liquidity providers[/U] —

[U]And here is a link to the public (free) version of today’s [I]Euromoney[/I] article[/U] — Euromoney Magazine


Citi: how the mighty fall .

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