Frankfurt passes Tokyo in OTC market turnover

[Vikash Yadav]

A mildly interesting development noted in the recently released 2001
BIS Triennial Survey of Foreign Exchange and Derivatives Activity is
the fact that Frankfurt has displaced Tokyo as the third largest
over-the-counter (OTC) derivatives market in the world. Frankfurt has
benefited from the introduction of the Euro and the establishment
there of the European Central Bank (ECB).  London and New York remain
in the top two positions. Paris, Singapore and Zurich round out the
rest of the top seven. These seven markets account for 77% of the
global daily turnover in the OTC markets.

In case you are out of the loop, the OTC financial derivatives market
is an unregulated market in which financial instruments whose value is
derived from other financial instruments (such as currency, stocks,
and bonds) are traded. The OTC markets have a daily turnover of around
$1.4 trillion (notional value). Concentration of exposures in these
markets raises questions of systemic stability (as witnessed by the
LTCM debacle in 1998).

The final version of the survey is on the BIS website:
http://www.bis.org/publ/rpfx02.htm

Best,

Vikash Yadav
Philadelphia, PA