EBS and Reuters Reports Improving FX Trading Volumes

Surprise, surprise! After months of depressed trading volumes, it seems that investors are starting to put their money back in the forex market!

Last week, both Electronic Brokering Services (EBS) and Thomson Reuters reported that forex trading volume in their platforms in February has increased. Take note that EBS and Thomson Reuters are the two largest trading platforms in the spot currency market.

EBS said that the average trading volume in their forex platform jumped to $149 billion in February this year from $126.7 billion the same month in 2012. Month-on-month, the average trading volume increased by 5%. It was the highest recorded average trading volume at EBS since October of 2011.

As for Thomson Reuters, average trading volume went up to $126 billion, which is a 24% jump from the $102 billion seen in December 2012.

This new information runs contrary to earlier reports by brokers such as FXCM and IG Group that trading volume has been declining. After being subdued for the most of 2012, trading volume looks like it’s gaining traction. Apparently, the low interest rate environment is motivating investors to put their money in more volatile currencies.

Central bank activities might have also helped in jumpstarting volumes this year. With the Bank of Japan (BOJ) and the Bank of England (BOE) changing leadership and the major central banks like the Fed, the European Central Bank (ECB), and the Reserve Bank of Australia (RBA) promising more stimulus if needed, there is a lot of incentive for traders to move their money around.

Not everyone is feeling the good vibes though. While hedge funds are stepping up their trades, many big banks continue to scale back their activities. Does this mean that Reuters and EBS’ numbers are a one-time thing? Or is it a start of a new trend? What do you think?


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