Anyone participating in foreign currency exchange should know which entities are key participates in the FX Market. There are numerous types of participants in the foreign exchange market, three main players include:
- Banks are one of the primary participants in the currency exchange market. Commercial and investment banks belong to the group known as the "interbank" market. The interbank market is the largest market that operates in the foreign exchange market. Corporations, central banks and global funds also operate at this level. Being the highest traders in the market, participants in the interbank level are given the best rates. This level constitutes about seventy five percent of the total volume available each day.
- Commercial companies and corporations are another important group of participants in this market. They usually trade small amounts compared to the trade volume of banks or speculators. Their trading activities usually have little short-term effects on the currency market rates. But in the long-term, their trade.
- Investment Management Firms are another group of entities that participate in the FX market. The strategy employed by this participant in FX trade is designed to minimize the exposure to certain unwanted s risk. At the same time it would allow profits from its investment activities. These often enter into futures, derivative or swap contracts.