Main FOREX Participants

Commercial Banks

They execute the main volume of currency operations. Other market participants hold their accounts in banks and make necessary conversional, depositary and credit transactions on them. Banks cumulate (through operations with clients) market requirements of currency conversions and funds attraction/depositing and refer with them to other banks. Besides filling clients’ requests banks can make transactions independently at own their expenses. Finally, Forex represents a market of interbank transactions, and under currency and interest rates fluctuations we should consider interbank foreign exchange market.

Large international banks, daily operation volumes of which reach 1 bln dollars, have the most important impact on the world exchange markets. These are such banks as Deutsche Bank, Barclays Bank, Union Bank of Switzerland, Citibank, Chase Manhattan Bank, Standard Chartered Bank and others. Large transaction volumes that may cause significant changes in quotations or currency prize are the most evident distinction of these banks. Large players are usually divided into bulls and bears. Bulls are the market participants who play for the currency prize increasing; bears are the market participants who play for the currency prize decreasing. The market is usually in balance between bulls and bears, and the difference in currency quotations usually fluctuates in quite a narrow range. Although when bulls or bears overpower, currency rates quotations fluctuate quite sharply and significantly.

Firms that realize foreign trade operations

Companies that take part in the international trading have a great demand on the foreign currency (with regard to importers) and offer of the foreign currency with regard to exporters), and also deposit and attract free currency remains. As a rule, these organizations have no direct access to Forex and make conversional and deposit transactions via commercial banks.

Companies that realize depositing of foreign assets (Investment Funds,Money Market Funds, International Corporations)

These companies represent different international investment funds. They realize policy of diversifying management of assets portfolio, depositing funds in securities of governments and corporations of different countries. They are called just funds in slang of dealers. The most popular funds are «Quantum» of George Soros and «Dean Witter».

Large international corporations also refer to this kind of firms. They realize foreign industrial investments: affiliates and joint enterprises foundation, such as Xerox, Nestle, General Motors, British Petroleum, etc.

Central banks

Currency regulation on the foreign market is the main duty of the central banks, particularly, prevention from national currency sharp bounces in order to avoid economical crises, support balance between exports and imports etc. Central banks have a direct influence on Forex. Their influence may be both: direct – currency intervention, and indirect – money funds and interest rates regulating. They can’t be referred to bulls or bears, as they may play both for rising and falling depending on concrete tasks they have currently. Central banks may act alone on the market to influence on the national currency, or they may act together with the other central banks to conduct the collective currency policy on the international market or for collective interventions.

The following banks have the greatest influence on the world currency market: the US Central bank — US Federal Reserve (FED), German Central bank — Deutsche Bundesbank and GB Central bank — Bank of England (Old Lady).

Foreign exchanges

In some countries with transition economy currency markets operate. They realize currency exchange for entities and formation of the market currency rate. The State usually regulates the exchange rate, making use of currency markets compactness.

Currency brokerage firms

Their function is to bring together a buyer and a seller of the foreign currency and to accomplish conversional or loan-depositary operation between them. Broker firms take broker commission in the form of percent from the transaction charge.

Physical bodies

Physical bodies make a great deal of noncommercial transactions as related to traveling abroad, wages, pension and earned income transfer, foreign exchange cash buying and selling. In 1986 due to margin introduction physical bodies got an opportunity to invest free cash on Forex to take profit.

The main volume (90-95%) on Forex is earned by the largest world commercial banks by making conversional transactions both in clients’ interests and by their own expense. Nevertheless, advance in computer technologies let to find field of application for funds of private and retail investors. More and more brokerage firms and banks give access for private investors to Forex via Internet.

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