For those trading online, 43% of their total foreign exchange trades by volume are now transacted electronically, compared with 32% in 2002.
But the percentage of institutions saying they planned to start trading electronically fell from 20% in 2002 to 14% in 2003. Those with no plans to start trading electronic forex remained nearly flat, dropping from 48% in 2002 to 46% in 2003.
"While the growth we’re witnessing is impressive, eventually there comes a point at which electronic forex service providers are going to have to crack that second group if they are to continue this pace," said Andrew Awad, a Greenwich consultant.
Some 69% of non-online traders said they did not trade electronically because there is 'no need’.
There were significant regional variations. In the US, 16% of institutions said security was a problem, while 60% of Asian electronic forex holdouts cited it as a concern. A greater issue in the US was that trading online might interrupt the growing practice of using foreign exchange as a reward to banks for credit.
In Japan, 28% of respondents said the inflexibility of error correction was a barrier to trading online.
One surprising outcome of the survey, which covered 1,200 global forex clients in November 2003, was the discovery that single-dealer platforms are still going strong in the face of competition from multi-dealer sites. Greenwich said this is because they often offer multiple products.
Neither are multi-bank portals necessarily losing out: FXall now boasts trading relationships with one-third of the market, Greenwich said.