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US vote, Brexit could weigh on FX trading volumes in longer-term: CLS
[LONDON] The surprise outcome of the U.S. election and Britain's Brexit vote could lead to increased activity in foreign exchange trading in the near-term, but also depress activity in the longer-run, settlement system CLS said on Monday.
CLS, which settles more than 90 per cent of all trades in the global currency market, said both events had a significant and similar impact on the FX spot market in the days immediately following.
"The unexpected outcome of both events creates uncertainty which could lead to increased activity in the near term. However, it is also feasible that they could depress activity in the longer term," CLS said in a statement.
"If trade deals are renegotiated or protectionist policies implemented, then international trade would likely be reduced."
CLS also said the average daily volume rose to US$4.99 trillion in November, a 1.4 per cent increase from October.
A rise in trading volumes tends to be good news for the major banks and brokerages who are most heavily engaged in the near-US$5 trillion a day market. A number of banks have reported results boosts from trading since the Brexit referendum in June.