Worldwide foreign exchange trading has surged by nearly half in the past three years, according to a survey by the Bank for International Settlements.
April's daily average was $1.2 trillion, 45% more than in April 1992.
The BIS report covers 26 countries and 2,414 financial institutions.
According to the study, foreign exchange trading remains dominated by a handful of large players, mostly banks. In the United States, 20 banks, mostly money-centers and superregionals, account for 70% of the trading.
The survey looked at two types of trading: forward transactions, which involve futures on foreign currencies; and spot contracts, which cover immediate delivery.
BIS officials said they were reassured by the greater growth in forward transactions, which are conducted by relatively sophisticated players for risk management purposes.
Spot contracts increased 30%, to $520 billion a day, while forwards and swaps increased 60%, to $670 billion.
"We feel this is an indication that more trading is being driven by sophisticated liquidity and hedging management rather than speculative positions being taken to any great extent," said one official.
Big trading institutions increased their market share in the United States and other countries. In the U.S., the 10 most active banks increased their share to 47%, from 41%, while the top 20 increased their share to 70%, from 60%.
London retained its position as the preeminent foreign exchange market, accounting for nearly one-third of worldwide turnover and far outranking New York and Tokyo in volume.
Average daily trading in London stood at $464 billion, up 60% over 1992 and nearly twice the $244 billion reported in the United States. U.S. trading volume rose 46% while the Japanese market increased 34%.
For the first time, the BIS expanded its survey to include derivatives market activity.
As of March 1995, the notional value of outstanding interest rate and currency-related derivatives contracts on the over-the-counter market totaled $47.5 trillion. Sixty-one percent of the contracts were interest rate based, and 37% were foreign-exchange related. The balance comprised equities and commodities-related derivatives contracts.
Net market value of the contracts was estimated at slightly over $2.2 trillion.