Average daily volumes in the global foreign exchange market dropped by almost 14 percent in July, data from FX settlement system CLS showed, as traders took their summer breaks and as volatility approached historic lows.
Volumes were the same as last July when volatility was twice its current levels. As interest rates stay low globally, crimping arbitrage between even the most liquid currencies traders have little incentive to take positions.
Daily currency trading volumes on one platform provider -Thomson Reuters – fell 11 percent month-on-month, the company said on Friday.
The value of all transactions through the CLS system, which is used almost universally by the banking industry to process or settle trades, dropped to $4.71 trillion in July.
CLS noted that volumes from April to June rose 14 percent.
A survey by the Bank of England in July showed daily currency trading in London, the world’s largest foreign exchange center, rose 7 percent in the six months to April.
But a combination of ultra-low interest rates across the developed world and an uncertain regulatory environment has hammered spot trade volumes over the past year. The BoE said spot volumes from October to April were down more than a fifth.
Spot trading on Thomson Reuters platforms – which includes Thomson Reuters Matching and FXall – fell to $99 billion, its lowest in at least 18 months. But overall, volumes were up 8 percent on the year at $344 billion.
Volumes at rival platform EBS fell by 8 percent from a month ago to $70.6 billion, leaving them 21 percent below where they were a year ago, and highlighting the troubles that the interdealer broker has been facing.