The players in the foreign exchange market :


Different types of actor are found on the international currency market. There are commercial banks, central banks, institutional investors, multinational companies and individuals. Let's look at it in more detail.

Commercial banks are the leading players in forex with about 43% of total transactions. The impact on the foreign exchange market is therefore substantial. The most active are Deutsche Bank, UBS or Barclay's. Generally these commercial banks negotiate on behalf of their clients who may be financial institutions, other banks or individuals like you and me. They obviously also deal with their own account.

In second place, institutional investors come. They account for about 30% of market transactions. These institutional investors take the form of a hedge fund or an insurance company. With their important resources, they have an important impact. It is even estimated that they will ultimately be the number one actors in forex. Investment funds use the foreign exchange market for speculative purposes but also to hedge investments made in other asset classes.

Third in importance, with 17% of transactions, there are multinational companies. Most large companies do actually intervene on the forex. They use the latter to hedge currency risk to the extent that they trade in foreign currencies. Generally, they evolve on the futures market, less on the spot market (speculation).

Central banks such as the ECB, the Fed or the central bank of Japan are the fourth in terms of transactions in the foreign exchange market. They represent about 8%. Central banks are in charge of the monetary policy of their countries, so it is logical that they influence the evolution of the different exchange rates considerably.

Individuals with 2% of the transactions carried out on the exchange market close the march. If they are a minority today, it could change in the years to come. More and more individuals are launching, in effect, in currency trading. Individuals do not deal directly with the markets, they go through an intermediary, the broker.

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