Non-bank financial institutions like insurance companies, mutual funds and pension funds account for more than 50 percent of daily turnover in the currency market, a survey of the foreign exchange market showed on Thursday.
Their share of the market reflects growing demand for hedging through foreign exchange swaps, the triennial survey by the Bank for International Settlements showed.
That backed up anecdotal evidence and trends from other surveys that large pension funds and insurance companies raised their hedging requirements to protect themselves from sharp currency fluctuations during the period between 2013-2016. That period saw the Bank of Japan and the European Central Bank embark on massive bond-buying programmes along while the Federal Reserve started to tighten policy.