What makes London the best place for foreign exchange traders?

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London still the top spot for Forex trading according to City-Am and Reuters latest findings. But why is London such a draw for foreign exchange trading?

On an average day in April London executed around £2.7 trillion in FX transactions, whilst our friends across the pond only did about half that ($994bn).  In the UK, that’s a 27% increase year on year in 2017. Transactions rose but 11% in Hong Kong and 10% in New York. Interesting enough, Singapore volumes dropped by 5%.

So why do traders love London based Forex Brokers?

Here’s a few reasons:

  • The time: it’s basic, but London sits neatly between the two time spectrums. Open before the US markets and after the Asian markets.
  • Language: English may not be the most commonly spoken language in the world, but when it comes to finance it’s up there.
  • Regulation: depsite the battering the FCA gets, whenever they move the goal posts, they are one of the most responsible and flexible regulator’s out there. They look after the consumer, whilst being relatively commercially focussed.
  • Technology: whilst there are some amazing developers around Europe and the US. London is still the go-to place for careers progression in finance.

There’s a big boom in all sorts of fin-tech at the moment. Currency brokers, who handle large international currency transfers have seen a massive expansion in the market and a rush for customers. Although deliverable FX volumes pale in comparison to margin Forex, they are increasing.

Of course, there is always talk of big Forex brokers leaving London for offshore or European headquarters because of Brexit. So that may have a small impact on FX volumes in the short term. But London’s infrastructure, culture, regulation and talent pool will always be a draw for FX traders.

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Richard started the Good Broker Guide in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously a multi-asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2001 & 2000.