Main foreign exchange market participants

Forex is an international interbank market. Operations are conducted through a system of institutions: central banks, commercial banks, investment banks, brokers and dealers, pension funds, insurance companies, multinational corporations, etc. The amount of the contract with the actual delivery of currency on the second working day (spot market) is typically about 5 million U.S. dollars or its equivalent. The cost of one konvertatsionnogo payment ranges from 60 to 300 dollars. In addition, will incur costs of up to 6 thousand dollars a month interbank information and trading terminal. Because of these conditions on Forex do not have conversions of small amounts of money. To do this, turn to cheaper financial intermediaries (bank or a currency broker), who will convert to a percentage of the amount of the transaction.

When large numbers of clients and applications differently intermediaries is not always necessary to conduct a real conversion through Forex. But they receive their commissions with clients at all times. It is because of the fact that the Forex are not all client applications, brokers can offer clients a commission, which is significantly lower the cost of direct operations in the Forex. At the same time, if you eliminate the middlemen, the cost of converting to the final customer inevitably increase.

Current Currency quotes are used for a large number of transactions that do not necessarily have direct access to Forex. An example is the change in exchange rate state-owned bank, which has to maintain the proportion between the rate of foreign currencies into line with their proportions in the Forex, even if the actual demand / supply within the country does not correspond to trends in the Forex. For example, if the domestic market is over-supply of the euro, but at the price of Forex euro against the dollar increases, the central bank will be forced to raise prices, not lower, under pressure from oversupply.

Another striking example - marginal speculative currency trading, which is focused on fixing the current forex quotes, but on its terms without any real supply. Almost all the brokers in the foreign exchange market to offer customers not only direct services to convert, but speculative trade with the credit side. In most cases, fees for such transactions is even lower than for the direct conversion, as well as by the massive and short transactions need to conclude contracts for the supply of the real occurs even less frequently. Very often, the commission take the form of spreads - the difference between the fixed purchase price of the currency and the selling price at the same time. In most cases, between the Forex and speculators is organized chain of several intermediaries, each of which takes its commission.

Margin transactions can lead (but not necessarily) to a real demand or additional proposals in the foreign exchange market, especially in the short period of time. But the general trend movements in exchange rates, they do not form.

Major participants in the foreign exchange market are:

Commercial banks.
They spend the bulk of foreign exchange. As banks hold accounts and other market participants are required to carry out its objectives, conversion and deposit-lending operations. Banks accumulate operation with our customers through the combined needs of the market in the exchange rate, as well as to attract / Accommodation and went with them to other banks. In addition to meeting the requests of customers, banks can conduct operations independently and at their own expense. Ultimately, the foreign exchange market is a market for interbank transactions, and, thereafter, on motion of exchange rates and interest rates, one should bear in mind the interbank foreign exchange market.

On the international currency market, the greatest influence of large international banks, the daily volume of transactions reaches billions of dollars.

Central banks.
The central (national) banks play an important role in the foreign exchange market. These functions include management of foreign exchange reserves, foreign exchange interventions have an impact on the level of the exchange rate, as well as regulation of the level of interest rates on investments in the national currency.

Companies engaged in foreign trade operations.
Companies participating in international trade have a strong demand for foreign currency (as importers) and supply of foreign currency (exporters), as well as place and are free foreign exchange balances in short-term deposits. In doing so, these organizations direct access to the foreign exchange market, as a rule, do not have, and carries out conversion and deposit transactions via commercial banks.

Companies engaged in foreign investments of assets.
These companies provided different kinds of international investment, pension and hedge funds, as well as insurance companies, are implementing policies of diversified management of portfolio of assets by placing funds in securities of governments and corporations of different countries. At the dealer's slang they are referred to simply fund or funds; most famous fund «Quantum» George Soros conducting successful exchange speculations. For this type of firms are also major international corporations engaged in foreign manufacturing investment: the creation of subsidiaries, joint ventures, etc.

Currency Exchange.
In some countries with transitional economies there are exchange markets, responsible for the exchange rates for businesses and market-based exchange rate. The state usually regulates the level of active exchange rate, using a compact stock market.

Foreign exchange brokerage firms.
Their duties include bringing the buyer and seller of foreign exchange and conversion between them, or credit-deposit operations. During his brokerage brokerage firms charge a broker's fee as a percentage of the amount of the transaction. Brokerage firm, has requested information on the courses and rates, is a place where a real exchange rate and real interest rates have already signed deals. Commercial banks given the current level of satisfaction from the brokerage firms.

Individuals.
Individuals who hold a wide range of non-trade transactions in foreign tourism, remittances, pensions, royalties, buying and selling hard currency.