Participants of the Forex market
The main participants of the currency market are: the commercial banks, the currency exchanges, the central banks, firms which are realizing the foreign trade operations, investment funds, broker companies, individuals.
Are generally made by spot operations which are also called the current conversion operations or the actual execution which (valuation) is executed for the second working day after day of the inference of the transaction.
Commercial banks. Perform the main volume of currency transactions.In banks other participants of the market akeep their accounts nd realize with them necessary conversion and deposit and credit operations. The bank as if accumulates (through operations with clients) cumulative needs of the market for currency conversion, and also attract/invest of funds and quit with them on other banks. In addition to satisfaction of requests of clients banks can perform AND operations independently at the expense of own means.
Finally the currency market represents the market of interbank transactions, and, speaking afterwards about movement of exchange rates and interest rates, it must be kept in mind that it is the interbank currency market.
In the world currency markets large international banks which daily volume of operations reach billions of dollars and have the greatest impact. Such banks as Deutsche Bank, Barclays Bank, Union Bank of Switzerland, Citibank, Chase Manhattan Bank, Standard Chartered Bank and others.
Their main difference are large volumes of transactions which can bring to the considerable change in the quotation or in the currency price. Usually large players are subdivided into bulls and bears. Bulls — are participants of the market who are interested in increase of cost of currency; bears — are participants of the market who are interested in depreciation of currency.
Usually the market is in an equilibrium state between bulls and bears, and the difference of quotations of currencies fluctuates in rather narrow limits. However, when bulls or bears "get the best", quotations of exchange rates change rather sharply and considerably.
The firms which realize the foreign trade operations show steady demand for foreign currency (regarding importers) and an offer of a foreign currency (exporters), and also place and involve the free currency residuals in short-term deposits. Thus these organizations of direct access on the currency market, as a rule, dont have and perform conversion and deposit operations through commercial banks.
The companies which are realizing foreign attachments of assets (Investment Funds, Money Market Funds, International Corporations, etc.). Realize a policy of diversified portfolio management of assets, placing means in securities of the governments and corporations of different countries. On a dealer slang I call them simply funds or funds; are most known the Quantum fund of George Soros which is carrying out successful currency speculation, and also Dean Witter fund.
The companies which realize foreign attachments of assets (Investment Funds, Money Market Funds, International Corporations, etc.). Realize a policy of diversified portfolio management of assets, placing means in securities of the governments and corporations of different countries. On a dealer slang we call them simply funds; the most known are the Quantum fund of George Soros which is carrying out successful currency speculation, and also Dean Witter fund.
Also large international corporations which are realizing foreign production investments treat this type of firms: creation of branches, joint ventures, etc., such, as, for example, Copier, Nestlé, General моторс, British Petroleum and others.
Central banks. Their task is a currency regulation in a foreign market — namely, preventing of sharp saltuses of courses of national currencies, for the purpose of prevention of economic crises, maintenance of balance of export import, etc. The central banks have a direct impact on the currency market. Their influence can be both to straight lines — in the form of currency intervention, and indirect — through regulation of volume of money supply and interest rates.
They can't be carried to bulls or to bears since they can play both on increase, and on reduction proceeding from the specific objectives facing them at present. The Central Bank can appear in the market alone, for rendering influence on national currency, or in coordination with others the Central Bank for carrying out a joint currency policy in the international market or for joint interventions.
Have the greatest influence on the world currency markets: the central bank of the USA — the Federal Reserve System (US Federal Reserve or is short FED), the central bank of Germany — Bundesbank (Deutsche Bundesbank) and Great Britain — Bank of England (Bank of England called also Old Lady).
Currency exchanges. In a number of countries with economies in transition the currency exchanges as which implementation of a currency exchange for legal entities and formation of a market exchange rate enters function. The state usually actively regulates the level of an exchange rate, using compactness of the exchange market.
Individuals. Natural persons carry out a wide range of uncommercial operations regarding foreign tourism, remittances, pensions, the fees, purchase and sale of cash currency. And in 1986 with introduction of mid-flight trade natural persons had an opportunity to invest the free money in the FOREX market for the purpose of receiving profit.
The main volumes (90-95%) in the FOREX market do the largest world commercial banks, making conversion operations as in interests of the clients, and at own expense. Nevertheless progress in thte area of computer technologies allowed and to find in this sphere of finance application area for means of quotients and often small-sized investors. An increasing number of broker firms and banks open access to private investors to the FOREX market via the Internet.