Business Administration 4440Q/R/S/T Study Guide - Foreign Exchange Market, Non-Bank Financial Institution, Interbank

• School: Western University
• Department: Business Administration
• Course: Business Administration 4440Q/R/S/T
• Professor: Brad Bisho

Document Summary

Answer: the market for foreign exchange can be viewed as a two-tier market. One tier is the wholesale or interbank market. The other tier is the retail or client market. International banks provide the core of the fx market, both wholesale and retail. In the retail market, banks buy or sell foreign currency serving their (retail) clients non-financial business and individuals in cross- currency exchange for trade and international investment. Retail transactions account for about 16 percent of fx trades. Answer: the market participants that comprise the fx market can be categorized into five groups: international banks, bank customers, non-bank dealers, fx brokers, and central banks. International banks provide the core of the fx market. Approximately 100 to 200 banks worldwide make a market in foreign exchange, i. e. , they stand willing to buy or sell foreign currency for their own account.