London leads in currency deals

London has increased its lead as the world's biggest centre for foreign exchange trading. Turnover is more than twice as high as in the US, its nearest competitor.

Average daily turnover was $464bn (pounds 300bn) in April, up from $290bn three years earlier, according to a Bank of England survey. The share of sterling trading fell from 23 per cent to only 15 per cent of the total.

Ian Plenderleith, an executive director of the Bank of England, said yesterday: ''This confirms London's pre-eminent position as an international centre for the global foreign exchange markets.'' He saw no reason why the growth of business in London should not continue.

Daily turnover rose in New York and Tokyo during the same period but by far less. It increased 46 per cent to $244bn in the US and 34 per cent to $161bn in Japan, compared with London's 60 per cent rise.

Terry Smeeton, head of the Bank's foreign exchange division, said the scale of the growth between this survey and the last, in April 1992, had been a bit surprising. There had been greater than expected growth in currency swaps, which might be explained by demand from fund managers hedging their increasingly international portfolios.

The survey was the fourth conducted simultaneously by the Bank of England and 25 other central banks. Average turnover in London was less than $100bn a day in 1986, the year of the first survey. Its lead over other centres has been increasing since.

Banks that carry out a lot of currency trades in London are clear about the main advantage: the time zone. David Cocker at Chemical Bank said: ''London can deal with other centres all day. From 5pm our time the US is only dealing with itself.'' Adrian Cunningham at UBS agreed: ''It boils down to time. It has nothing to do with lower costs or greater expertise.''

Mr Plenderleith said London had achieved a critical mass that helped it carry on growing. The pace of growth was geared to the expansion of world trade. There was no evidence in the survey to suggest speculative dealing was on the increase, he said.

The most popular trade is the dollar against the mark, followed by dollar- yen. Sterling-dollar comes a distant third. Trades involving currencies that could eventually join a single European currency account for at most 14 per cent of the total.

The proportion of business accounted for by forward transactions - mainly swaps - rather than spot deals increased by 11 per cent to 59 per cent. This rise explained most of the increase in total turnover since 1992.

Business with end-users accounted for 25 per cent of all transactions, the rest being interbank trading. The share of business taken by the top 10 banks was constant at 44 per cent, and seven of them were also in the top 10 three years ago.

The share taken by the top 20 rose from 63 per cent to 68 per cent. Foreign- owned institutions accounted for about 79 per cent of total turnover.

The survey of 301 banks and 12 brokers covered 18 days in April. The Bank for International Settlements will publish comprehensive figures on the size of the world foreign exchange market in November.