U.K. Currency Trading Averages $1.3 Trillion a Day (Update2)

U.K. Currency Trading Averages $1.3 Trillion a Day (Update2)

By Kim-Mai Cutler

Jan. 28 (Bloomberg) -- Foreign exchange turnover increased 7 percent in the U.K. to $1.3 trillion a day in the six months ended in October, according to a Bank of England-affiliated study.

The U.K.'s daily turnover, which the Foreign Exchange Joint Standing Committee said was $1.5 trillion including currency options and swaps trading, was more than twice that of the U.S., where spot, forward, swaps and options transactions averaged $701 billion a day in October. U.K. turnover in October rose 38 percent from October 2006, while U.S. trading rose 31 percent.

``Foreign exchange is increasingly being seen as an asset class in its own right,'' said Neil Mellor, a London-based currency strategist at Bank of New York. ``London is the foreign exchange capital of the world, and a lot of banks realize this is the place to be.''

The U.S. total was reported in a study published by the Foreign Exchange Committee, an industry group affiliated with the Federal Reserve Bank of New York.

Currency options and swaps trading in the U.K. rose 6 percent from April 2007 to $138 billion by October, the British study reported.

Semi-Annual Survey

The findings were part of a semi-annual survey conducted in October with 30 financial institutions active in the U.K.'s currency market by the Foreign Exchange Joint Standing Committee, a group that links banks and brokers in the London market with the Bank of England. The committee, chaired by the British central bank, was founded as a forum in 1973 by the financial institutions.

The most popular pair of currencies to trade were the euro and dollar, making up 33 percent of transactions, followed by the pound and U.S. currency, which comprised 14 percent of turnover.

Other financial centers also saw growth in overall turnover. Singapore averaged $278 billion a day while Canada's daily turnover was $68 billion, including swaps and options, according to similar studies published by central banks today.

Daily foreign exchange trading worldwide rose to a record $3.2 trillion in 2007, the Bank for International Settlements reported on Sept. 25. The U.K. accounted for 34 percent of all trades, the Basel, Switzerland-based bank reported.