sizable number of transactions to computerized systems instead of telephone-based trading methods, according to a study by the Federal Reserve Bank of New York. The study, based on a survey undertaken in July, was published last month. It was designed to measure the size and structure of the largely unbridled foreign exchange business. It's part of a project by more than a score central banks to examine the global foreign exchange market every three years. The New York Fed found that in the United States, foreign exchange continued to grow at a double-digit pace since the last study, in 1992, but not as fast as in the go-go 1980s. In April, average daily transaction volume was $244 billion, reflecting an annualized growth rate of 13% since 1992. In contrast, during the previous decade, the U.S. foreign exchange market grew by about 20% a year, the New York Fed report said. The dollar, the German mark, and the Japanese yen remain the most actively traded currencies in the United States, although the New York Fed report noted that trades involving the French franc as well as European currencies other than the mark and the British pound grew three times faster than the overall market. Another recent trend the study revealed was the increased application of automated brokerage systems, where computers are used to match, buy, and sell orders for currency trades. Traditonally, currency dealers solicited bids by calling up counterparties on the telephone. Telephone-based trading still predominates, but automated foreign exchange brokers in the U.S., which include Electronic Brokerage Systems, Minex and Reuters, are making inroads, the New York Fed report said. "The use of automated brokerage systems has grown rapidly from virtually nothing in 1992," wrote Catherine Benadon and John Kambhu, the New York Fed staffers who oversaw the study. Of the $73 billion in average daily foreign exchange volume that was handled by brokers last April, 19% was routed through computer-based systems, and over one-third of all "spot" transactions, the most basic and prevalent type of currency trade. Another shift detected was that although the foreign exchange business remains mainly driven by speculation, global trade is having a growing influence. The 1995 New York Fed study found that 83% of foreign exchange volume is still between financial counterparties, but trades coming from non- financial customers increased from 14% in 1992 to 17% this year. These nonbanks are typically multinational corporations and other firms seeking foreign currency for their export/import activities. But despite all the discussion of the eventual "globalization" of financial markets, U.S. foreign exchange traders aren't losing much sleep - yet. "In spite of the global nature of the foreign exchange market, trading activity follows the path of sunlight around the globe," the New York Fed report concluded. But the survey found that the volumne of trading between 4 p.m. and 8 a.m. in the United States increased from 5% in 1992 to 8% this year.

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