Citigroup takes top spot as world's biggest currency trader
Deutsche Bank loses crown after nine years amid low volatility in forex market
Deutsche Bank has been dethroned after a nine-year reign as the world's biggest currency trader by Citigroup, a Euromoney Institutional Investor survey showed, as subdued volatility depressed trading in the euro.
The biggest dealers in the US$5.3 trillion-a-day foreign-exchange market are facing reduced revenues after stimulus efforts by central banks around the world muffled many of the trends that traders and investors use to make money. That is adding to competition among banks, which are pushing more trading on to electronic platforms to boost market share.
"We're a big euro bank and it's not helped that the euro has not been a focus of attention over the past 18 months," said Kevin Rodgers, the global head of foreign exchange at Deutsche Bank in London. "Currency volatility in my career hasn't been down at these levels for any length of time, ever. What will cause it to bounce, I don't know."
The euro traded in its narrowest range against the US dollar since its 1999 debut in the last week of last month, moving just 0.7 US cent, between US$1.3785 and US$1.3855. Three-month implied volatility on the currency pair dropped to 5.5475 per cent on May 2, the lowest since 2007.
The Euromoney rankings are drawn from a survey of traders in the foreign exchange markets. This year's was based on 14,050 responses, representing US$225 trillion of turnover, London-based Euromoney said. Deutsche Bank had been ranked No 1 since 2005.
Citigroup's move to the top spot "is a validation of our continuing effort to better serve our clients by providing them the best pricing, trade execution and advisory services", said Nadir Mahmud, the bank's global head of foreign exchange and local markets. The bank headed the rankings for the Euromoney survey's first 23 years.
Citigroup named Mahmud as successor to Anil Prasad in February, agreeing for him to move to London from Singapore, where he led the bank's markets business in the Asia-Pacific region. Prasad left to "pursue other interests", Citigroup said at the time.
Mahmud assumed his position against the backdrop of allegations that traders at currency dealers colluded to manipulate benchmark rates. More than 30 people from 11 firms have been fired, suspended, taken leave of absence or retired since October last year, when regulators said they were investigating the market. No firms or individuals have been accused of wrongdoing by government authorities.
Citigroup relies on currency trading for a higher percentage of its revenue than rivals, according to Sanford C. Bernstein. It gets 4 per cent to 5 per cent of revenue from foreign exchange, according to a report last week from John McDonald, an analyst at Sanford C. Bernstein.
