Forex Trading is Still a Monopoly for European Banks

Though Forex trading is open for all and now even retail Forex traders do well, still most of the trading is done by three kinds of traders e.g. commercial banks, foreign investment banks, commercial firms.

Whereas the UK accounts for 36.7% of the total Forex trading, the US accounts for 17.9%. Thus, the two countries account for more than half of the total Forex trading.

Though Japan accounts for 6.2% of the global Forex trading, it is miniscule. Despite Chinese economic growth and expansion, Forex trading is illegal; thus, it is still Euro-centric.

Another reason behind the absence of Forex trading is that developing economies do not allow foreign exchange derivative products on their exchanges i.e. governments have capital control.

However, despite all capital control, the trend is changing for some countries like Korea, South Africa, and India as these are now open for currency futures exchanges.

Also, in several of these countries, particularly India, China, Mexico, Philippines, etc. money transfer companies or remittance companies perform high-volume low-value transfers for their expatriates; however, this cannot be counted as Forex trading in traditional way.

European and American Banks Still Rule the Roost

With huge funds at their disposal, commercial banks are well equipped to do Forex trading and that may be a reason that these account for a significant amount.

Until now, some major players with their share in the trade are: Deutsche Bank (15.18%), Citi Bank (14.90%), Barclays Investment Bank (10.24%), UBS AG (10.11%), HSBC (6.93%), JPMorgan (6.07%), Royal Bank of Scotland (5.62%), Credit Suisse (3.70%), Morgan Stanley (3.15%) and Bank of America Merrill Lynch.

Thus, nearly four trillion dollar industry is monopolized by the US and the UK banks.