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Major Participants In The Foreign Exchange Market |
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1. Governments: Governments have requirements for foreign currency, such as paying staff salaries and local bills for embassies abroad, or for arraigning a foreign currency credit line, most often in dollars, for industrial or agricultural development in the third world, interest on which, as well as the capital sum, must periodically be paid. Foreign exchange rates concern governments because changes affect the value of product and financial instruments, which affects the health of a nation’s markets and financial systems.
2. Banks: There are different types of banks, all of which engage in the foreign exchange market to greater or lesser extent. Some work to signal desired movement in the market without causing overt change, while some aggressively manage their reserves by making speculative risks. The vast majority, however, use their knowledge and expertise is assessing market trends for speculative gain for their clients.
3. Brokering Houses: These exist primarily to bring buyer and seller together at a mutually agreed price. The broker is not allowed to take a position and must act purely as a liaison. Brokers receive a commission from both sides of the transaction, which varies according to currency handled. The use of human brokers has decreased due mostly to the rise of the interbank electronic brokerage systems.
4. International Monetary Market: The International Monetary Market (IMM) in Chicago trades currencies for relatively small contract amounts for only four specific maturities a year. Originally designed for the small investor, the IMM has grown since the early 1970s, and the major banks, who once dismissed the IMM, have found that it pays to keep in touch with its developments, as it is often a market leader.
5. Money Managers: These tend to be large New York commission houses that are often very aggressive players in the foreign exchange market. While they act on behalf of their clients, they also deal on their own account and are not limited to one time zone, but deal around the world through their agents.
6. Corporations: Corporations are the actual end-users of the foreign exchange market. With the exception only of the central banks, corporate players are the ones who affect supply and demand. Since the corporations come to the market to offset currency exposure they permanently change the liquidity of the currencies being dealt with.
7. Retail Clients: This includes smaller companies, hedge funds, companies specializing in investment services linked by foreign currency funds or equities, fixed income brokers, the financing of aid programs by registered worldwide charities and private individuals. Retail investors trade foreign exchange using highly leveraged margin accounts. The amount of their trading in total volume and in individual trade amounts is dwarfed by the corporations and interbank markets.
Other financial institutions involved in the foreign exchange market include:
Stockbrokers
Commodity Firms
Insurance Companies
Charities and Private Institutions
Private Individuals
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| Symbol |
Rate |
| GBP:CHF |
1.747703 |
| GBP:JPY |
155.484239 |
| GBP:USD |
1.638403 |
| NZD:USD |
0.627050 |
| EUR:CAD |
1.545998 |
| EUR:CHF |
1.516857 |
| EUR:GBP |
0.867915 |
| EUR:JPY |
134.947096 |
| EUR:USD |
1.421994 |
| AUD:JPY |
76.394373 |
| AUD:USD |
0.805000 |
| USD:CAD |
1.087204 |
| USD:CHF |
1.066711 |
| USD:JPY |
94.899879 |
| USD:SEK |
7.613010 |
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History