By Jamie McGeever
LONDON (Reuters) - The world's biggest currency dealing banks are losing their grip on the world's biggest financial market as newer, smaller players take a larger chunk of the $5 trillion-a-day-business, an annual industry survey showed on Wednesday.
Citi retained top spot in the annual Euromoney poll of FX market participants with a share of 12.9 percent, down from 16.1 percent a year ago.
But XTX Markets was ranked number nine, the first time one of the new brand of non-bank liquidity providers has made it into the top 10.
The top five banks also saw their share plunge to an all-time low of 44.7 percent as tighter regulation, tough trading conditions and increased automation took their toll. Deutsche Bank's share almost halved to 7.9 percent .
"There have been unprecedented shifts in the overall rankings. The biggest change this year is the decline of the combined market share of the top five global banks," Euromoney said.
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Euromoney's annual poll, watched closely by the foreign exchange industry, has traditionally been dominated by the big banks. In 2009 the top five banks commanded a 61.5 percent share of the market, and the top 10 close to 80 percent.
The FX industry has also been hit by a market-rigging scandal that erupted in 2013. This culminated in dozens of traders being suspended or fired, banks being fined billions of dollars, and accelerating their withdrawal from FX trading operations that was already underway.
According to data analytics firm Coalition, revenue at the top 12 investment banks from FX, bond and commodity trading in the first quarter was down 49 percent from five years earlier, and headcount was down 32 percent.
"The market faces industry-transforming changes that, in turn, are yielding a mixed bag of growth prospects," Boston-based financial research and consultancy Aite Group said earlier this week.
U.S. banks gained ground on their European peers. Five of them were in the top 10, with Citi at the top of the tree and four others rising in the rankings.
European banks accounted for six of last year's top 10, but this year two dropped out all together and three fell in the rankings.
(Editing by Jeremy Gaun)