The five largest global foreign-exchange dealers saw their combined market share decline to 51% in 2014, a Greenwich Associates report said.
The five firms — Deutsche Bank, UBS, Citigroup, Barclays and J.P. Morgan Chase — had 53% of market share the previous year, according to the report issued Tuesday.
Dealers ranked six through 10 in terms of market share captured a combined 24% of global trading volume in 2014, up from 22% in 2013, and dealers ranked 11 through 20 had their cumulative share rise to 15% from 14%. The report did not identify the dealers outside of the top five.
The dip in market share among the top five dealers was contrary to expectations in a Greenwich report last year, which said trends in electronic trading growth and increases in capital costs would drive more business to the five dealers.
“It seems the regulatory pressures have hurt the top guys a bit while the next tier has really invested in tech to pick up share,” said Kevin McPartland, principal and head of market structure research at Greenwich. He said that while there will be more competition among the top 10, the top five firms “aren’t going anywhere.”
Despite the decline in the top five, the report said their overall dominance in market share is expected to continue, although the expanded use of multidealer platforms for FX trading will help smaller dealers whittle away at the top five’s market share.
The report is based on interviews from September to November with 1,612 users of foreign exchange at large corporations and financial institutions in North and Latin America, Europe, Asia, Australia and Japan.
The full Greenwich report is available on its website.