Each year, the publication Euromoney compiles their Euromoney FX Survey, which details, among other things, the market shares of the top forex liquidity providers. These liquidity providers, collectively known as the Interbank Market, are what I refer to as the top of the forex food chain.
Here is Euromoney’s Top Ten for 2020
Some comments
Unchanged in rank in the 2020 Survey
JP Morgan (in 1st place for 3 years running)
Moved up in the 2020 Survey
UBS (from 5th to 2nd)
XTX Markets (from 4th to 3rd)
HSBC (from 8th to 6th)
Jump Trading (from 11th to 7th)
Goldman Sachs (from 10th to 8th)
Moved down in the 2020 Survey
Deutsche Bank (from 2nd to 4th)
Citi (from 3rd to 5th)
State Street (from 6th to 9th)
Bank of America (from 9th to 10th)
The 2020 Top Ten listing reflects the foreign exchange volume transacted by the top ten forex liquidity providers during the calendar year 2019. In calendar year 2019, these Top Ten transacted 64% of all the foreign exhange trading worldwide.
You probably recognize the bank names on this list (JP Morgan, UBS, etc.).
But, you may not be familiar with XTX Markets and Jump Trading. These non-bank trading firms have grown in recent years to sufficient size that they are now able to compete at the top of the forex food chain – the Interbank Market. For a quick primer on the Interbank Market, see HERE.
If you look back at the Top Ten currency traders in the years prior to 2016, you will see only bank names, with Deutsche Bank typically at the top of the list, commanding 20% (or so) of the market. Then, in 2016, an unfamiliar name popped up (in the number 9 spot in the rankings) – XTX Markets. So, we went searching to find out who they are. HERE is what XTX Markets says about themselves currently.
In 2017, XTX Markets disappeared from the Top Ten. But, then in 2018, they returned (in the number 3 spot), and they have remained in the Top Five through this year.
Last year, another non-bank – HC Tech – made the 2019 Top Ten. They are not in this year’s Top Ten.
This year, a new name has appeared in the 2020 Top Ten – proprietery trading firm Jump Trading.
HERE is a brief profile of Jump Trading LLC from Wikipedia.
For a look-back at prior years’ survey results (for 2016 through 2019), see HERE.
As retail forex traders, we tend to think of ourselves as part of a big and important market, the worldwide foreign exchange market. Without a doubt, that market is big – the biggest market in the world, in fact. But, our little corner of that market – the retail spot forex market – is far from important in the overall scheme of things. In fact, our retail market is so small, percentage-wise, as to be insignificant.
So, what are the heavy-hitters in the Interbank Market doing? They are trading currency swaps.
In 2019, that trading totaled $104.2 TRILLION, according to Euromoney. You can read about currency swaps HERE.