After initial slowdown, Turkish traders return as market seems safer.
The Wall Street Journal ran an interesting article on the growing retail FX market in Turkey. The WSJ pointed out that recently-introduced more stringent regulations and enforcement in the local market first had the (expected) effect of lowering trading volumes in the country. However as certain local brokerages went through the regulation process, and as leading foreign firms such as Saxo Bank (which purchased Turkish brokerage Deger Menkul Degerler earlier this year) became involved, Turkish traders flooded back to the FX markets, confident that they were now trading with safer, regulated brokers.
We agree with the WSJ's estimates of the size of the retail FX market in Turkey, at about $1 billion per day (or about $20 billion monthly), roughly 0.5% of the global market. This figure is lower than other more optimistic estimates we have seen bouncing around for Turkey, but we believe it to be fairly accurate -- and even so it shows growth in volumes of almost 3x since regulations came into effect last fall.
For more on the global Forex industry see the LeapRate-Dow Jones Forex Industry Report.