8 Oct 2017

BIS Financial Transactions in 2016 - Over $11 quadrillion - again.

Sorry. I've been very quite for a couple of months. But when the Bank for International Settlements brings out its Statistics on payment, clearing and settlement systems in October, I really feel that I have to do my standard analysis - one that I've been doing every year since I started this blog in 2010.

If you want to do the number crunching yourself, you can get the original data files from the BIS website. There are two excel files - one provides comparative tables for the 23 countries that BIS reports, all converted into US dollars. The other provides information country by country, using each countries national Currency.

You can also download the whole thing as a handy 572 page pdf file.

However, the really interesting numbers are not available directly in the documents. You have to compile a monster file with all the entries from the different tables. There are 241 separate values, and you can see them all for the entire period from 2006 to 2016 in a Google Sheet that I have made public here.

The bottom line (literally) is that in 2016, the total value of the transactions listed by the BIS comes to $11,014,671,780,050,100. Let's just call it $11 quadrillion, shall we? 

The total for the period from 2006 now totals over $117 quadrillion. Which means that the average annual value is a healthy $10.6 quadrillion over the entire period. It has never slipped much below $10 quadrillion, except for 2006. 

To get an idea about the key players, I've compiled a short table with just the top 25 players, each of which has done over $1 quadrillion in trading since 2006.  Together they account for over 80% of the total. 
The three red values are based on the previous years numbers. I did this because the the values for 2016 are not yet available for NSCC (National Securities Clearing Corporation) and Payment Transactions by non-banks in the USA. And for some reason, the Payment Transactions by Non-Banks for 2011 was never made available in the BIS data set. Oh well. Too late now, I guess.

The value for 2016 is up about 4% on 2015. But this is mainly due to the fact that BIS has finally managed to get a figure for one of my favourite trading sites - LCH Clearnet Ltd. Those figures have been mysteriously "nav" - not available for the period 2010-2015. Given that LCH Clearnet managed to handle over nearly $1.6 quadrillion in transactions in 2008, this slight oversight meant that the figures for that period are clearly underestimates. Now that the BIS has rediscoved the existence of LCH Clearnet's figures in 2016, you can see that with over $786 trillion of transactions in 2016,  it's a major player. 

But the fact is that even BIS's figures are certainly massively underestimated. For a start, they only cover 23 of the worlds countries. But even more significant is the fact that the Bank for International Settlements doesn't report anything for the Options Clearing Corporation, based in Chicago, which is "the world's largest equity derivatives clearing organization". The OCC has handled over 4 billion transactions every year since 2011. I've been unable to find how much those transactions were worth, but given that they generate over $1.3 trillion in premiums, the total could dwarf even the $11 quadrillion a year in total value listed by BIS. 

Why are such numbers important? Well, suppose that we decided to impose a 0.1% flat rate Financial Transaction tax on all electronic transactions. It's an idea that I have been pushing since October 2010.  Back in January 2016, I calculated that such a tax would generate enough money to give a Universal Basic Income at 50% of the median income for every person on the planet

Imagine. No more starvation, no more mass migrations, no more need to inflict environmental destruction on the planet. The wealthiest 1% of the population would soon no longer have the same wealth as the rest of mankind - as Oxfam reported earlier this year.  Six people would no longer have the wealth of half of humanity - as recently pointed out by Bernie Sanders

Think about it. I think it makes sense.  

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