Key findings from recent LSEG FX research

Key Findings

Top focus areas for firms in the FX market:

This is the year of risk management
With economic and geopolitical uncertainty showing no signs of slowing, 65% of respondents said managing and mitigating FX risk was their number one priority. Risk management featured highly throughout multiple parts of the study.

Navigating emerging markets is vital
Whether to capture growth or manage currency fluctuations, a large proportion (54%) of firms place emerging markets and emerging markets currencies among their top priorities. This is driven by expected market volatility, combined with lower global trade volumes and higher US yields. However, it is vital that firms are equipped with the right tools to manage the risk and volatility associated with these currencies.

Regulation is a high priority (again)
Identified as important by market participants over many years, keeping pace with regulation is ranked third highest priority by survey respondents (52%). Complying with regulation is no longer a ‘tick box’ exercise to keep in line with new regulatory demands. The pace and scope of change in regulation over the past few years has cemented its position as central to all areas of FX.

An opportunity to capitalise on clearing?
Small and mid-cap firms are trying to catch up with larger firms by prioritising clearing and margin solutions. But there is an opportunity for a broader understanding of clearing’s cost and efficiency benefits across FX roles as the market continues to evolve.

Three areas identified as high priorities in 2024 and 2025 are managing risk, navigating emerging markets and currencies, and keeping pace with regulation.

Improving fundamental services while targeting areas of growth

Trading firms of all sizes and types identified risk management and regulatory compliance as crucial. It is unsurprising that risk and compliance are seen as fundamental functions for both buy-side and sell-side firms, as both need to manage risk to trade FX and comply with regulations to stay in business. In addition, a large number of respondents see significant opportunity in implementing new risk management strategies, trading emerging market currencies and the cost and operational benefits of adopting clearing.

Priority 1: Risk management and mitigation

Key investment areas are regulatory compliance solutions and advanced data analytics and AI.

The research highlighted the importance of managing and mitigating FX risk amid economic

and geopolitical uncertainty. This was recorded as the highest priority in 2024 and the second highest priority in 2025. However, with extreme market volatility related to trade tariffs, the importance of risk management has never been higher. In the week following President Trump’s announcement of trade tariffs, LSEG FX venues saw daily FX transactions increase. In these volatile markets, risk management’s importance cannot be overstated.

Two-thirds of all respondents globally cited risk management as their highest priority (see Fig 1), with respondents commenting that there continues to be volatility in the FX markets. 

In the area of risk management, two main investment priorities emerged: 66% of respondents cited regulatory compliance solutions with almost as many focused on advanced data analytics and AI (see Fig 3). The latter was a more important focus for larger companies (those with revenue greater than US$1bn/AUM), as they have the necessary resources to implement this technology to manage risk. As more firms adopt AI solutions, analytics are likely to aid decision-making and empower domain specialists without coding skills by quickly capturing and analysing cross-asset data from multiple sources to identify risks and opportunities. 

Priority 2: Emerging markets and currencies

Chinese renminbi, Indian rupee, Brazilian real and South African rand dominate the list of currencies attracting interest, reflecting growth in these markets.

Managing emerging markets and currencies ranked as the second most important focus for respondents (54% – see Fig 1), but many expect it to take top spot in 2025 as technology improves access and transparency, and firms seek potentially higher returns beyond G20 currencies.

Among the major emerging markets currencies, 70% of all global respondents – and 80% in

APAC – showed the most interest in the Chinese renminbi, followed by the Indian rupee – reflecting the two countries’ positions as the world’s largest and fastest-growing economies.

APAC-based firms are even more focused on BRICS currencies than those in other regions (see Fig 4). Conversely, issues with credit and market access mean that Turkish lira is the emerging markets currency currently generating the least interest from respondents.

Priority 3: Keeping pace with regulatory developments

Firms remain focused on regulatory compliance, with resources and technology deployed to meet regulatory requirements.

Keeping pace with regulation is a multi-year theme in the FX market and this is unlikely to change. Even as the Trump administration looks to roll back some financial regulations, global trading activity continues to drive a strong focus on compliance. The survey highlights a shared challenge across firms: keeping up with the pace of regulatory change and adapting to developments across multiple jurisdictions. In this area, 79% of respondents cited risk management as a key focus.

With numerous pieces of Iegislation, directives and regulatory bodies to monitor and adhere to, respondents cited T+1, EMIR, MiFID, KYC and Basel as the main regulatory developments

impacting their firms. Perhaps surprisingly there was no mention of the FX Global Code, suggesting firms see regulation as more important than the Code. It is also the case that take-up of the code has largely been limited to sell-side firms. The Global Foreign Exchange Committee (GFXC) updated the FX Global Code in January 2025 (after this survey was conducted in October 2024) – to strengthen guidance on FX settlement risk and improve transparency around FX transactions.

Although T+1 was not identified as a high priority overall (4% of respondents overall, which rose to 16% in the US and Canada), this was likely due to the US transition working efficiently and the fact that in FX markets T+1 can be achieved without significantly changing T+2 processes. 

Priority 4: Adapting to clearing and margin requirements

Enhanced risk management and trade compression are the main areas of interest.

As the FX market evolves, clearing continues to grow – a trend reflected in this research. LCH ForexClear, for example, reported US$37trn notional cleared in 2024, up 34% vs 2023.

This has been driven by the cost of capital and the operational and capital efficiencies created by post trade optimisation solutions like Quantile. Clearing emerged as a higher priority for small and mid-cap firms, while larger organisations, typically already have more advanced processes in place.

Sixty percent of respondents reported that they were enhancing risk management practices to manage margin requirements (see Fig 6). Among respondents in risk, middle- and back-office roles, this figure rose to 73% (see Fig 7).

Trade compression strategies were cited by 45% of respondents, with stronger interest from small- and mid-cap companies (54%) compared to larger organisations (43%).

Respondents in risk, middle- and back-office roles also showed greater focus on peer-to-peer clearing networks than other functions – 47% vs 36% overall – though this remains an unproven model.

Driving growth and staying competitive in FX

Looking to the future, the survey identified five main growth drivers:

1. Investing in technology to enhance speed and efficiency

Firms stressed the importance of leveraging advanced trading platforms and analytical tools to make trading more efficient. Respondents also highlighted the role of AI/machine learning in evaluating market conditions and improving trading decision-making, along with adopting low latency solutions to speed up trading.

2. Utilising data and insights to inform decisions and mitigate risk

Respondents emphasised the need for real-time data and news to respond effectively to market movements. Traders placed high importance on quality economic data and forecasting, research and analysis to anticipate market conditions. Many also noted that access to unique insights and expert opinions add value and help to drive market growth. 

3. Diversifying and adapting strategies to stay competitive and mitigate risk

Diversifying portfolios by spreading investments across different currencies remains a key strategy for managing risk and staying competitive. Entering new markets can offer unique trading opportunities with less competition, but firms also need to stay agile and adapt quickly to market shifts to grow their FX business profitably.

4. Nurturing client relationships

Respondents placed strong emphasis on client relationships and customer service. This includes providing regular feedback, market updates and tailored services – underpinned by transparency, trust, deep market knowledge and a clear understanding of each client’s business.

5. Implementing AI

AI and machine learning are playing an increasingly important role in driving efficiency and transparency in FX markets. For example, natural language processing (NLP) supports price discovery and trade execution, while AI enhances precision and reduces false positives in eDiscovery. We see significant value in NLP tools that surface trusted data and insights for FX professionals, without requiring any coding. Although the use of AI in FX is not yet transformational, most agree that it will become essential. 

Conclusion

With volatility still a major challenge in FX markets, it is no surprise the LSEG FX survey shows that risk management, emerging markets and regulation remain participants’ top three priorities – led by strong demand for regulatory compliance solutions. Managing emerging markets and their currencies remains a key focus, as firms seek to diversify and capture increased trading opportunities beyond G20, particularly in fast-growing economies such as China and India. 

You can access the report here