NEW YORK, March 5 Deutsche Bank, UBS, Citigroup, and Barclays continued their dominance of the global foreign exchange market in 2013, garnering 46.7 percent of top-tier customer trading volume, financial services research firm Greenwich Associates said on Wednesday.
The four banks' share grew six percentage points from 2012 as the $5.3 trillion currency market continued to move toward a primarily electronic marketplace. In the United States, the four dealer banks had an aggregate market share of close to 53 percent last year, up from about 42 percent in 2012.
The biggest beneficiaries of the shift into electronic trading were banks with the best trading platforms, Greenwich said.
"In general, it is the biggest banks that are able to afford the sizable investments needed to build, deploy and maintain these sophisticated platforms," Greenwich Associates consultant Peter D'Amario said in the report.
Deutsche Bank was the top FX bank last year, capturing 12.4 percent of the market. UBS came in second with 12.1 percent. Citi had 11.7 percent; Barclays 10.5 percent, with J.P. Morgan rounding out the top five banks, with a 6.2 percent share of the market.
The report also showed that global FX trading volume grew 14 percent last year, with strong growth posted in Europe and Japan. Global growth was driven largely by an increase in trading activity among financial institutions, which rose 18 percent.
Financial institutions also stepped up their usage of electronic platforms to 77 percent, up three percentage points from 2012, while retail aggregators upped the share of their own business done through electronic systems to 98 percent from 93 percent.
The increase in trading volume in emerging market currencies contributed to the continued growth of electronic trading. In 2013, the average share of emerging market currency cash trading volume executed electronically rose to 56 percent last year from 52 percent in 2012.
Electronic FX volumes are also getting a boost from currency options, which are often traded through single-dealer platforms that customize trades for clients. The share of global FX market participants trading currency options electronically increased four percentage points to 28 percent last year.