Spot FX volume drops 9% at CLS Group in May

abdelaziz Fathi

FX settlement specialist CLS Group today reported that the executed volumes of currency trading on its platforms took yet another step back in May.

In particular, the average daily traded volume submitted to CLS was $1.89 trillion last month, down 2.1 percent month-over-month from $1.93 trillion in April 2023. Across a yearly timetable, however, the figure reflected an increase of 1.3 percent relative to May 2022’s $1.86 trillion.

CLS reported swaps volumes at $1.30 trillion in May 2023, down 3.7 percent from $1.35 trillion in April 2023. Further, the figure was higher by the same percentage from a year ago.

In terms of CLS’ spot FX volume, the group reported the figure at $436 billion in May 2023, up two percent percent from $429 billion in April. However, the figure was lower by 9 percent on a yearly basis from the $476 billion set in the previous year.

Although monthly comparisons are always vulnerable to short-term fluctuations, there was a longer-term trend of declining spot volumes. However, the curve of this decline seems to have flattened in recent months.

The weak performance was not pronounced across CLS forwards business, which yielded a figure of $156 billion last month. That was higher by more than three percent over a monthly basis from $151 billion in April, and was up by 22 percent year-over-year from $126 billion in May 2022.

“In May 2023, we saw average daily traded volumes of USD1.89 trillion, an increase of 1.3% compared to May 2022. Over the same period, FX forward volumes were up noticeably by 22.1%, FX swap volumes increased by 3.1%, while FX spot volumes decreased by 9%,” said CLS’s Global Head of Product, Keith Tippell.

CLS Group, which provides risk mitigation and settlement services for FX dealers and institutions, has shifted its reporting methodology for FX data in 2018. The figures are now reported based on one side of FX transactions and only one of the four legs of FX swap trades, in line with BIS standards and Foreign Exchange Committee market reports, and thus it avoids double counting the total amount of trades.

The company, which was formed in 2002 to reduce FX settlement risks, recently has been keen to promote itself as a provider of innovative products, including post-trade risk management, aggregation, and netting solutions.

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