Foreign exchange volumes through settlement system CLS Bank have risen more than a quarter since the onset of the financial crisis, partly due to increased concerns about interbank FX settlement risk, the Bank for International Settlements said in its quarterly review on Sunday.
From April 2007 to April 2010, settlements via CLS rose 27 percent, "somewhat higher" than the growth implied by the last BIS triennial survey in 2010, the BIS said.
The BIS estimates that global foreign exchange volumes may have risen as high as $5 trillion in September 2011, before dropping to $4.7 trillion per day in October and then slumping considerably by the end of the year and into early 2012.
FX volumes fell sharply after the Lehman bankruptcy in September 2008, falling to just above $3 trillion in April 2009 before starting to pick up again by mid-2009, the bank said.
The estimates are based on analysis of central bank semi-annual surveys and turnover data from trading platforms and CLS settlement numbers. Its triennial survey in 2010 showed FX volumes at $4 trillion per day.
CLS eliminates settlement risk by ensuring that both legs of an FX transaction occur simultaneously. It was founded in 1997 in response to concerns raised by central banks about settlement risks in foreign exchange transactions.
"Settlements have grown sharply since its start, reflecting a combination of market growth and increasing market share," BIS said in a report.
Data earlier this month from CLS showed average daily FX values settled for spot, swap and forwards rose to $4.68 trillion in February from $4.24 trillion in January and was up around 6 percent from a year earlier. Spot transactions were also up 3 percent year-on-year.
But Thomson Reuters' platform and EBS showed falls in spot volumes from a year earlier of nearly 5 percent and 9 percent respectively, although they rose from January.
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