Lower turnover in the Norwegian foreign exchange market, but higher turnover in the OTC interest rate derivatives market
Norges Bank

Lower turnover in the Norwegian foreign exchange market, but higher turnover in the OTC interest rate derivatives market

September 17, 2019

Trading in the Norwegian foreign exchange market averaged NOK 30 billion per day in April 2019, a decline of 25 percent from April 2016. Average daily trading in the over-the-counter (OTC) interest rate derivatives market rose by 60 percent, to USD 6.5 billion. These are the results of a survey of activity in the Norwegian foreign exchange and derivatives market conducted by Norges Bank in April 2019. The survey is part of a global survey of 53 countries coordinated by the Bank for International Settlements (BIS).

The BIS Triennial Survey has been conducted every three years since 1989. In addition, data on outstanding amounts were collected at the end of June 2019. The BIS will publish the results of these surveys in November 2019.

Lower daily turnover in the Norwegian spot market, but somewhat higher turnover in the forward market

Daily foreign exchange spot trading averaged USD 1.6 billion in April 2019, down from USD 13.6 billion in April 2016. Daily forward trading showed a moderate rise, from USD 26.7 billion to USD 27.9 billion in the same period. Owing to a substantial reporting error in the April 2016 survey, the figure for spot market transactions was too high and the figure for forward transactions was too low. In the Norwegian foreign exchange market, the US dollar remained the most traded currency, although the share of transactions involving the Norwegian krone has increased. Foreign currency trading involving non-Norwegian counterparties fell to 63.1 percent, the lowest share recorded in the seven most recent surveys.

The BIS has included currency options and currency swaps[1] in the trading figures for the foreign exchange market since 2010. These continue to account for a modest share of total turnover.

According to the BIS, reporting banks in the Norwegian foreign exchange market had a market share of 0.4 percent of turnover in the global foreign exchange market in April 2019, compared with 0.6 percent in April 2016. Transactions involving the Norwegian krone accounted for 1.8 percent of turnover in the global foreign exchange market compared with 1.7 percent in April 2016.

Higher daily trading in OTC interest rate derivatives

Average daily trading in OTC interest rate derivatives rose by 76.7 percent between April 2016 and April 2019. Trading in forward rate agreements (FRAs) rose by 134.7 percent between April 2016 and April 2019, while activity in interest rate swaps increased by 26.6 percent in the same period. No turnover in interest rate options was reported in April 2019. According to the BIS, Norwegian banks had a market share of 0.1 percent of turnover in the global OTC interest rate derivatives market in April 2019, unchanged from the survey in April 2016.

Footnotes
1) Also referred to as basis swaps.

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