Pages

2 Oct 2015

BIS Financial Transactions for 2014 - over $11 quadrillion

Note added Saturday 3rd October: Revised and corrected version.

On the 30th of September, the Bank for International Settlements published their preliminary figures concerning the Statistics on payment, clearing and settlement systems for 23 countries. You can download the data as a 593 page pdf file or alternatively, as two separate excel files.  One of the excel files gives comparative tables for the 23 countries in US dollars, which makes it easier to add the numbers together. The other one provides the detailed information country by country, but using the local currency of each country in turn.

Using the comparative tables, I have extracted all the data concerning financial transactions to produce an enormous excel sheet containing all the different numbers. This involves extracting the numbers from Table 8 (Payment transactions by non-banks), Table TRS3 (Trades executed on selected exchanges and trading systems: value of transactions), Table PS3 (Payments processed by selected interbank funds transfer systems : value of transactions), Table CCP3 (Transactions cleared by selected central counterparties and clearing houses, and Table CSD3 (Transactions processed by selected central securities depositories). All the figures are given in billions of US dollars.

The complete table includes over 230 different entries, and is frankly rather boring to read. But in the following table, I have presented just the 50 biggest entries for 2014, together with the corresponding data since 2006 when available.  There are a few numbers in red. This refers to data that is not yet available ('nav') and in that case, I used the number for the previous year. The Total values at the end include all the numbers I could find.

The value for total transactions in 2014 comes to over $11 quadrillion.

The number is down by about $300 trillion on 2013, but $11 quadrillion is still a very large number. And, with a minute transaction tax of (say) 0.1% would raise trillions in tax revenue that could be injected into peoples pockets in the form of a debt-free Basic Income (for example). But I digress.

For me, the really interesting thing is to see who the biggest players are.

I'm delighted to see that BIS is now providing information about the transactions handled by the multinational entity CLS - the world leader in Foreign Exchange. It is worth extracting the relevant numbers directly from the BIS document. Here they are:

In 2014, CLS handled over 204 million transactions, with an average value of over $6.2 million. That means  a total of $1.278 quadillion (yes, the numbers are in US billions, except for CLS, where they decided to use trillions of US dollars as the measure.

Number 2 on the list is the GSD - Government Securities Division  of the DTCC (Depository Trust and Clearing Corporation) based in the US which also handled over $1 quadrillion in 2014.
It is followed closely by another US based system - Fedwire, which handled $884 trillion.

Number 4 on the list is the European Union's TARGET system. The BIS didn't have the numbers in their report despite the fact that the numbers are provided month by month on the European Central Bank's website. It seems reasonable to suppose that the number will be close to the value in 2013.

And so it goes on.

But, while the $11 quadrillion figure is impressive, it is seriously underestimated. For example, my favourite London based outfit, LCH Clearnet Ltd, which I reported had handled over $641 trillion in 2014, doesn't even get a look in. It has been "nav" since 2009. And what about the Options Clearing Corporation, which handled over 4 billion transactions last year, generating $1300 billion in premiums. They might easily be handling several quadrillion every year in transactions. But it too is  nowhere to be seen in the BIS report.

I suppose that BIS do say that they are only reporting "selected" exchanges and trading systems, "selected" interbank funds transfer systems, "selected" central counterparties and clearing houses, and "selected" central securities depositories. Isn't it about time that someone, somewhere started compiling ALL the data on financial transactions?

If the full details were known, it would be even clearer that taxing those transactions would be a very intelligent alternative to the counterproductive and inefficient taxes that we currently use.

No comments:

Post a Comment