Foreign exchange and derivatives trading activity has surged over the past three years, according to new data from a global central bank survey.
The latest triennial survey of FX and over-the-counter (OTC) derivatives markets finds that, globally, trading in FX markets rose to US$6.6 trillion per day in 2019 from US$5.1 trillion in 2016.
And, daily turnover of OTC interest rate derivatives averaged US$6.5 trillion this year, up from US$2.7 trillion per day in 2016.
“This rise appears to have been driven mainly by increased hedging and positioning amid shifting prospects for growth and monetary policy,” the global survey notes.
For Canada, total turnover of FX transactions rose by 27.6% from US$1.8 trillion in 2016 to almost US$2.3 trillion in 2019.
Average daily turnover in Canada also increased from US$85.5 billion in 2016 to US$109.1 billion in 2019.
“The increase was driven by FX swaps with all other product categories except for options experiencing turnover growth,” the Bank of Canada said.
This is consistent with the trend in other major jurisdictions, leaving Canada’s share of global turnover unchanged at 1.3%, the central bank added.
The survey also found that single-currency interest rate derivatives turnover almost quadrupled in Canada, jumping to almost US$2.6 trillion this year from US$688.6 billion in 2016.
“The increase was driven by forward rate agreements and interest rate swaps,” the central bank says. “There was also increased trading in overnight indexed swaps, which are now reported separately.”
Amid this large increase, Canada’s share of global turnover jumped from 1.1% in 2016 to 1.6% in 2019, the central bank says.
Globally, the survey includes reporting by the Bank of Canada and 52 other central banks and monetary authorities covering almost 1,300 reporting dealers, mainly large commercial and investment banks.