Average foreign exchange trading by the same 716 institutions in 2001 and 2002 rose to $28.2 billion from $26.6 billion. Among the largest of them, those that trade more than $10 billion annually, the average rose to $54.5 billion from $53.0 billion, according to a Greenwich Associates report.
Examining the market by region, average foreign exchange volume is up sharply in continental Europe, Canada, and Australia/New Zealand and up slightly in Latin America, Asia, and the United States. However, the markets were down in the United Kingdom and Japan.
There is evidence that foreign exchange users are reducing their number of dealer relationships, in part because of greater dealer consolidation but also to matter more to those they do trade with. At the same time, banks are attempting to join their foreign exchange services with related products in order to maximize their client business.
Seven out of 10 (70%) of larger institutions are conducting at least some of their foreign exchange trading on a “non-competitive” basis, up from 67% in 2001. This figure includes 96% in Japan, 82% in the United States, and 73% in the United Kingdom.
Further, institutions are awarding more of their foreign exchange business to those banks that supply them with credit, 59% of larger corporations and 24% of financial institutions award new or additional business as a result of lending relationships.
In most regions, particularly Latin America and Asia (excluding Japan and Australia/New Zealand), such awarding takes place as often as 40% of the time. The lowest proportion awarding their foreign exchange business for credit consideration is Japan.
More than half (51%) of the larger institutions using foreign exchange around the world prefer to be covered by a foreign exchange specialist; 22% prefer to be covered by a generalist supported by a specialist, and 13% prefer pure coverage by a generalist across products.
Overall, these foreign exchange professionals earned more globally, an average salary of $108,000 in 2002, up from $106,000 in 2001. Salaries rose to $76,000 from $73,000, while bonuses fell marginally to $32,000 from $33,000.
Total compensation was highest in the United States ($172,000), followed by Latin America ($161,000) and the United Kingdom ($154,000). Those in Asia and Australia/New Zealand earned substantially less.