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Central banks, SWFs make up less than 1 percent of FX trade - BIS

By Jessica Mortimer

LONDON (Reuters) - Trading by central banks and sovereign wealth funds account for less than 1 percent of the $5.3 trillion (3.40 trillion pounds) a day FX market, while smaller and regional banks make up nearly a quarter, a survey showed on Thursday.

Trading by central banks is seen by most FX traders as highly influential, mainly because they tend to deal in large amounts at a time. However, their impact may be less than many think.

The Bank for International Settlements' 2013 FX survey showed hedge funds and proprietary trading firms made up around 11 percent of total FX trade, while institutional investors - such as pension funds and insurance companies - also comprised 11 percent.

In its survey, which is released once every three years, the BIS for the first time provided a breakdown of counterparties classed under "other financial institutions".

This segment overtook "other reporting dealers", or those that trade in the inter-dealer market, for the first time in 2007 and now makes up 53 percent of total FX trading.

Non-reporting banks - usually smaller, regional commercial or public ally owned banks - made up around 24 percent of the market. These are clients of large FX dealing banks but do not engage in market-making in major currency pairs.

New data in the 2013 survey also showed 16 percent of dealers' global FX transactions were conducted by a prime brokerage.

Trades of dealers with retail customers, either via electronic margin trading platforms or through so-called 'retail aggregators', made up 3.5 percent of global FX trade.

FXCM (FXCM.N), one of the largest providers of electronic platforms for retail FX investors, said its total monthly retail volumes were $366 billion in April 2013, 66 percent higher than in April 2010.

The average daily retail volumes on FXCM was $16.6 billion, up from $10.0 billion in April 2010.

(The story has been filed again to correct the figures in paragraph 10 to $366 billion and not $355 billion.)

(Editing by Susan Fenton)