ICAP Plc., also known as IAP has declared that the currency-trading volumes of the EBS electronic platform that it runs, has gone down by 4% in last month. The current volume is the lowest since 2006. The average daily foreign exchange volume has seen a drop of $3.9 billion from $95.7 billion of that of December, 2011. The statistics was released on the official website of IAP. The website contains data starting from January, 2006 and this trading volume took its peak in September, 2008, when it reached $274.2 billion. On the other hand, average daily volumes in the fixed income products of IAP’s renowned BrokerTec trading platform increased by 5% from that of 2011, as mentioned in the official website.
According to analysts, decline in currency trading volumes can be explained by the monetary policies of different countries. Yen, Euro and USD are the 3 most traded currencies across the world. However, thanks to the record low interest rates in different counties of Europe, Japan and US, the number of price swings in the corresponding currencies has also lowered. Therefore, investors have stayed away from investing much into the market.
Michael Derks, who works as the Chief Strategist of FxPro Group Ltd., rightfully stated that overall situation is not suitable for currency trades. Michael added that in the last couple of quarters, the foreign-exchange volumes have seen a good amount of decrease, no matter which platform is being used by the broker. As the currency volatility has reduced, investors are not able to come up with good number of opportunities. Therefore, the traders are not seeing any good incentive in opening up big positions across all the major asset classes. Michael commented that this situation may extend further.
The G7 Volatility Index of JPMorgan Chase & Co experienced a drop to 7.06 on 18th December, marking its lowest value since August, 2007. During the course of last 5 years, the index has averaged at 12.3 and is currently at 7.82.
All the reports on different electronic broking volumes of IAP are done through a single count basis. The average daily volumes for the month of December, 2012 was calculated based on the 21 working days, including the public holidays of that month. IAP is a big name in currency trading and such reductions are definitely not bringing any positive signs.