Barclays Plc (BARC) leapfrogged UBS AG (UBSN) as the second-biggest foreign-exchange trader in an annual survey by Euromoney Institutional Investor Plc, pushing the Swiss bank out of the top two places for the first time since 2001.
Deutsche Bank AG (DBK) ranked first for the seventh straight year, Euromoney said in an e-mailed statement. The Frankfurt- based lender held onto its position even as its market share dropped by the most of any bank in the survey’s top 20. Royal Bank of Scotland Group Plc (RBS) fell two places to seventh, while HSBC Holdings Plc (HSBA), ranked sixth, had the biggest increase in market share as it rose one step.

“We are focused on our goal of becoming the number one bank in FX globally,” said Nick Howard, head of foreign- exchange and emerging-market distribution at London-based Barclays. “The rise to number two in the poll provides confirmation that our strategy is working.”
Foreign-exchange trading rose last year, with the value of transactions handled by CLS Bank, the New York-based operator of the largest currency-settlement system, jumping 22 percent to an average $4.1 trillion a day. Currency markets climbed to record highs for average daily trading volume in the U.K. and North America, according to central bank reports.

‘Efficiency and Innovation’

Barclays’ market share slipped 0.3 percentage point to 10.8 percent. That still left it above Zurich-based UBS, whose portion fell 0.7 percentage point to 10.6 percent, according to Euromoney. Deutsche Bank’s market share fell to 15.6 percent from 18.1 percent, while the volume traded by the banks in places four through 10 rose to 40.3 percent of the market from 36.7 percent.
“With an increased focus on both the cost of, and return on capital, foreign exchange is seen as an attractive business,” said Jim O’Neill, co-head of Barclays’ Risk Solutions Group. “Competition does of course breed efficiency and innovation.”
The information for the poll is derived from a survey of end users in the foreign-exchange market, and is based on 13,039 responses, representing $177.6 trillion of turnover, according to Euromoney.

Market Share

“People and technology are at the heart of our success,” said Zar Amrolia, London-based global head of foreign exchange at Deutsche Bank, who said he joined the company in 1995, when it was ranked 22nd in the foreign-exchange industry. “Is the competition tougher than ever before? Yes. We are making record investments, which I expect will further revolutionize our electronic business in 2011.”
Deutsche Bank will invest in new systems to focus on services for end-investors and corporate clients, Amrolia said. Deutsche Bank believes it was the first bank to have begun electronic onshore trading of the Chinese yuan, he said, referring to making a market within China for China’s currency.
“Market share is not our only goal but it does complement other benchmarks such as profitability per head and return on equity,” he said.
HSBC rose up the rankings after volumes increased, while the bank also encouraged more of its customers to participate in the survey this year, said Conor Ogle, head of marketing, communications and strategy at HSBC’s foreign-exchange unit in London. “We have been doing more business both on the cash and the derivatives side, but we can’t blindly chase market share as we’ve also got a commitment to focus on profitability.”
HSBC’s share increased to 6.3 percent from 4.6 percent, Euromoney said.

Electronic Trading

“UBS remains confident that key investments already made will deliver results throughout 2011 to further improve client satisfaction and regain market share next year,” the bank said in an e-mailed statement. “UBS has consistently succeeded in being a top three foreign-exchange bank, and this year we are particularly pleased to have regained the number one position in foreign-exchange swaps,” it said.
Electronic trading volumes increased 25 percent from the previous year, according to the Euromoney survey, to account for 56 percent of all foreign-exchange business.
“To be a leader in the foreign-exchange markets today, you must have a strong electronic trading platform,” said Barclays’ Howard.
Following is a table of Euromoney’s rankings for foreign- exchange market share (all products).

Bank                     2011                     2010
                    Rank      Share (%)      Rank      Share (%)
Deutsche Bank       1         15.6           1         18.1
Barclays Capital    2         10.8           3         11.1
UBS                 3         10.6           2         11.3
Citi                4         8.9            4         7.7
JPMorgan            5         6.4            6         6.4
HSBC                6         6.3            7         4.6
RBS                 7         6.2            5         6.5
Credit Suisse       8         4.8            8         4.4
Goldman Sachs       9         4.1            9         4.3
Morgan Stanley      10        3.6            10        2.9
BNP Paribas         11        3.2            11        2.9
BofA Merrill Lynch  12        2.9            12        2.3
Societe Generale    13        1.9            13        2.1
Nomura              14        1.5            18        0.8
Commerzbank         15        1.3            14        1.5
Credit Agricole CIB 16        1.2            17        0.8
Standard Chartered  17        1.1            15        1.3
RBC                 18        0.6            20        0.7
Bank of Tokyo MUFJ  19        0.6            22        0.5
UniCredit           20        0.6            26        0.4