Discover what 400 FX professionals think is driving the FX market

FX market participants are facing numerous challenges, from world events and their effect on markets to the need to keep pace with new technology and regulatory developments. A recent report from LSEG FX unpacks how FX professionals are tackling the uncertainty of 2025 – from risk and regulation to navigating emerging markets – based on insights from 400 professionals worldwide.

• 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.
• 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.
• Regulation is a high priority (again)
  Identified as important by market participants, the pace and scope of change in regulation over recent 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.

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. With extreme market volatility related to trade tariffs, the importance of risk management has never been higher.

Two-thirds of all respondents globally cited risk management as their highest priority, 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. 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. 

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%), 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. Conversely, issues with credit and market access mean that Turkish lira is the emerging markets currency currently generating the least interest from respondents.

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. 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.

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. Among respondents in risk, middle- and back-office roles, this figure rose to 73%.

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.