Connecticut-based consulting firm Greenwich Associates surveyed treasurers, assistant treasurers and other financial professionals at more than 2,700 corporate and financial institutions that that each trade $250 million or more annually in FX products. Interviews were conducted throughout Asia, Europe and the Americas.

Online FX trading is most prevalent in the US, where four out of every ten institutions are trading some FX volume electronically, up from 27% in 2001. Strong growth has also been reported in continental Europe (up from 15% to 29%) and Australia/New Zealand (from 23% to 30%).

Volumes in 2002 climbed from 26% to 32% of the total trading volume among those institutions trading online, and is expected to rise to 40% by 2003.

But despite the take-up, more than half of the marketplace do not trade electronically now and have no plans to do so in the future. The survey shows that 46% of financial institutions say they don't intend to trade online, compared with 60% of corporate institutions.

The main drawback to online forex trading, according to those who do not utilise it, is the loss of personal contact. Peter D'Amario, consultant, Greenwich Associates, says market participants enjoy longstanding personal relationships with their principal dealers and rely on them to supply market updates.

He adds that those reservations may well melt away as these institutions observe the continued success of e-trading.

The research also shows that corporations and financial institutions have different attitudes to fx trading via the Web. One-third of financial institutions are trading online and trade nearly $2.9 trillion in annual electronic foreign exchange volume. By contrast, 22% of corporate institutions trade via the Web, with online volume estimated to represent a total of around $770 billion annually.

D'Amario says for the great majority of corporations, the need to trade FX is a rather unwelcome sideline unrelated to their core business.

The proportion of FX users using straight-through processing (STP) remains below 15%, and Greenwich Associates consultants say that even this figure may depend on a liberal definition of what STP is.

Tim Sangston, Greenwich Associates consultant, comments: "STP means different things to different people, and when you actually peel the onion, you find that complete STP - in the sense of pushing a button and getting a trade executed, confirmed, and entered into the books - doesn't exist yet."

Only 14% of all institutions trading foreign exchange said they used STP in 2002, up from 13% in 2001. But the proportion of those saying they do not plan to use STP fell in 2002 from 69% to 59%.