Spot FX - the focus for smaller businesses
(10 December 2012 – Australia) Smaller Australian businesses dominate the AUD Spot FX market in terms of both market share and volumes, according to new research from industry consultants East & Partners.
East’s most recent Business FX research, conducted in November, shows that the
three smallest business segments – Micro, SME and Lower Corporate – together
comprise 63.2 percent of the AUD Spot FX market.
The largest of the three sectors are the Lower Corporates, who account for 36.8 percent of AUD Spot volumes.
The larger Upper Corporate and Institutional segment – businesses with revenues of A$100 million or more – account for 27.9 percent of Spot volumes.
The situation is almost the opposite when looking at non AUD Spot markets, with Institutional clients comprising 42.5 percent of all volumes, which are also around 20 percent higher than AUD Spot.
The research also examined Forward FX, a market in which larger organisations are much more active than Micro and SME businesses.
One feature of interest in the Forward markets was the high level engagement from Lower Corporates in non AUD Forwards, where they comprise 44.3 percent of volumes, just behind Upper Corporates and Institutions with 45.1 percent.
Total percentage of Market Volumes by Market Segment
Source: East & Partners Australian Business Foreign Exchange Markets Report – November 2012
Lachlan Colquhoun, Head of Markets Analysis at East & Partners, said the research gave a strong insight into how Australian businesses were approaching FX.
"Smaller businesses, because their needs are less sophisticated and their FX exposure less complex, are more inclined to be heavier users of Spot products," he said.
"But when it comes to more complex strategies such as currency hedging, the larger organisations are more focussed on this and are naturally bigger users of Forward products."
Colquhoun said the high levels of Lower Corporate use of non-AUD Forward FX was of keen interest, and showed their increased and active engagement with global economy.
"It might also indicate their perception that the Australian dollar may soon decline in value against other currencies," he adds.
About East & Partners’ Australian Business Foreign Exchange Markets Report
This ongoing six-monthly market monitor provides benchmarks against which FX providers can measure the success of their service proposition. This standalone report addresses the FX markets across the Micro, SME and Lower Corporate segments.
The program monitors product engagement, performance and behaviours across these core markets, and provides market share and wallet share being achieved by individual providers against market-wide performance.
Note: Market Segments:
Upper Corporate & Institutional – A$100 million plus
Lower Corporate – A$20-100 million
SME – A$5-20 million
Micro – A$1-5 million
To interview East & Partners on this Business Foreign Exchange report, please contact:
Sian Dowling
Marcomms & Client Services
East & Partners
t: 02 9004 7848
m: 0420 583 553
e: sian.d@eastandpartners.com
For more information on this Business Foreign Exchange report, please contact:
David Brown
Client Relationship Development
East & Partners
t: 02 9004 7848
m: 0414 186 970
e: david.b@eastandpartners.com
The largest of the three sectors are the Lower Corporates, who account for 36.8 percent of AUD Spot volumes.
The larger Upper Corporate and Institutional segment – businesses with revenues of A$100 million or more – account for 27.9 percent of Spot volumes.
The situation is almost the opposite when looking at non AUD Spot markets, with Institutional clients comprising 42.5 percent of all volumes, which are also around 20 percent higher than AUD Spot.
The research also examined Forward FX, a market in which larger organisations are much more active than Micro and SME businesses.
One feature of interest in the Forward markets was the high level engagement from Lower Corporates in non AUD Forwards, where they comprise 44.3 percent of volumes, just behind Upper Corporates and Institutions with 45.1 percent.
Total percentage of Market Volumes by Market Segment
| % of Total Market | |||
| A$ Spot Market | Non-A$ Spot Market | A$ Forward Market | |
| Micro Businesses | 14.2 | 6.2 | 8.3 |
| Small – Medium (SME) | 21.1 | 10.2 | 14.3 |
| Lower Corporate | 36.8 | 41.1 | 34.9 |
| Upper Corporate & Institutional | 27.9 | 42.5 | 42.5 |
Source: East & Partners Australian Business Foreign Exchange Markets Report – November 2012
Lachlan Colquhoun, Head of Markets Analysis at East & Partners, said the research gave a strong insight into how Australian businesses were approaching FX.
"Smaller businesses, because their needs are less sophisticated and their FX exposure less complex, are more inclined to be heavier users of Spot products," he said.
"But when it comes to more complex strategies such as currency hedging, the larger organisations are more focussed on this and are naturally bigger users of Forward products."
Colquhoun said the high levels of Lower Corporate use of non-AUD Forward FX was of keen interest, and showed their increased and active engagement with global economy.
"It might also indicate their perception that the Australian dollar may soon decline in value against other currencies," he adds.
About East & Partners’ Australian Business Foreign Exchange Markets Report
This ongoing six-monthly market monitor provides benchmarks against which FX providers can measure the success of their service proposition. This standalone report addresses the FX markets across the Micro, SME and Lower Corporate segments.
The program monitors product engagement, performance and behaviours across these core markets, and provides market share and wallet share being achieved by individual providers against market-wide performance.
Note: Market Segments:
Upper Corporate & Institutional – A$100 million plus
Lower Corporate – A$20-100 million
SME – A$5-20 million
Micro – A$1-5 million
To interview East & Partners on this Business Foreign Exchange report, please contact:
Sian Dowling
Marcomms & Client Services
East & Partners
t: 02 9004 7848
m: 0420 583 553
e: sian.d@eastandpartners.com
For more information on this Business Foreign Exchange report, please contact:
David Brown
Client Relationship Development
East & Partners
t: 02 9004 7848
m: 0414 186 970
e: david.b@eastandpartners.com
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