2. Major centres of foreign exchange
8 Largest Forex Trading Centers in the World
1. United Kingdom – The UK and its financial
center of London participate in the largest percentage
of overall global forex daily trading volume of any
geographical location.
UK daily trading volume increased from 35 percent in
2007 to a total of 37 percent of the world’s overall
trading volume in 2010,.
Daily trading volume rose by just about 25 percent
since 2007 when dollar volume equaled $1,483 billion
to 2010 when volume stood at $1,854 billion per day.
3. The number one on the financial centres list is
London, with a bit more than 40% of the total daily
trading volume.
London has held the first place for several years and
it doesn’t look like it will lose it any time soon as its
share is much higher than anyone else is on the list.
4. 2. United States – The United States comes in
second in daily trading volume and is the largest
country on the list with over 300 million people.
o The second financial centre on the list is situated on
the other side of the Atlantic.
o New York recorded a daily trading volume of almost
19%, which is one percentage point more than in
2010.
5. 3. Singapore – Singapore is up next with a total of 5
percent of the world’s daily forex trading volume.
This small country of roughly 5 million people averaged
$266 billion of total daily volume in 2010.
This was an increase from a total of $242 billion in 2007
which accounted for 6 percent of the overall global forex
trade.
Financial Capital: Singapore
Average Daily Trading Volume: $266 billion
Percentage of Daily Global Forex Volume: 5 %
6. 4. Japan – Japan is the third-largest forex trading center
with a total of 6 percent of global foreign exchange turnover
taking place in this country of 128 million people.
Japan also amounted to 6 percent of the global turnover in
2007 following an 8 percent share in 2004.
Total dollar amount of trading surged by over 20 percent
from 250 billion in 2007 to a total of 312 billion in 2010.
7. o Japan lost one position when compared to the
previous survey and let gave up third place to
Singapore.
o The volume of transactions of the financial centre
placed in Tokyo dropped from 6.2% in 2010 to
5.6% in 2013.
8. 5. Hong Kong – Hong Kong follows Switzerland as
the sixth largest trading center in 2010 with
approximately 5 percent of forex daily trade volume.
This is an increase from 4 percent in 2007 for this
city-state on the southern coast of China which has an
estimated population of 7 million people.
Hong Kong’s total daily volume averaged $238 billion
in 2010 which was over a 30 percent increase from
2007.
9. The transaction volume fell in Hong Kong as well,
from 4.7% in 2010 to 4.1% in 2013.
However it holds the fifth position of the largest
Forex Trading centres in the world.
Hong Kong gained one position when compared to
the previous BIS survey, overtaking Switzerland.
10. 6. Switzerland –
Switzerland was the fifth-largest forex trading center in
2010 with 5 percent of the total global volume which was
small a decrease from 2007 when it accounted for 6
percent of daily volume.
This European country of roughly 8 million people is
famous for its banking sector and is one of the richest
countries in the world on a GDP per capita basis.
Total daily volume increased to $263 billion in 2010 from a
total of $254 billion in 2007.
11. Switzerland like Hong Kong and Japan has also seen
its transactions volume decrease.
Data showed a fall from 4.9% in 2010 to 3.2% in
2013. Moreover, Switzerland lost one position in the
ranking.
12. 7. Australia – Australia is next on the list with a 4 percent
share of total forex daily volume which matches its 2007
volume share.
o At the bottom of our list we find the country that opens the
weekly session. Australia also lost some points when
compared to 2010, from 3.8% to 2.7% in 2013.
Financial Capital: Sydney
13. 8. France – Number eight on our list with right around a 3
percent share of the daily forex trading volume is France
with its financial center of Paris.
France also amounted to 3 percent of the daily global forex
trade in 2007 and saw its daily total volume rise by roughly
20 percent from a total of $127 billion in 2007 to a total of
$152 billion in 2010.
Financial Capital: Paris
Average Daily Trading Volume: $152 billion
Percentage of Daily Global Forex Volume: 3 %
14. Interbank Market
DEFINITION
The financial system and trading of currencies among
banks and financial institutions, excluding retail investors
and smaller trading parties.
Interbank trading is performed by banks on behalf of large
customers, most interbank trading takes place from the
banks' own accounts.
15. The interbank market is an important segment of
the foreign exchange market. It is a wholesale
market through which most currency transactions
are channeled. It is mainly used for trading among
bankers.
The three main constituents of the interforeign
currency options are regulated in the United States
and trade on the Philadelphia Stock Exchange.
Further, in the U.S., the Federal Reserve Bank
publishes closing spot prices on a daily basis.
16. Bank markets are
spot market
forward market
SWIFT (Society for World-Wide Interbank Financial
Telecommunications)
The interbank market is unregulated and
decentralized. There is no specific location or
exchange where these currency transactions take
place.
17. CUSTOMER MARKETS
Customer market" is a term for the portion of available
customers who currently patronize a business, usually for a
product or service. Most frequently used in business
marketing, it can sometimes be called
the market or customer base for a business.
This group of customers can grow and shrink due to
changes in the business environment.
Maintaining a stable or growing market ultimately depends
on keeping the existing paying customers of the business
happy.
18. Paying consumers choose where they shop and what
products they purchase for a variety of reasons.
There are many types of customers in a customer market,
including loyal customers, customers who shop at a
discount, customers who buy things for fun, and
those who shop to browse.
A customer base can also include employees who use the
product or service they make, as well as indirect customers
who use the product or service although someone else
purchased it at the store.
19. Types of Foreign Exchange Markets
Foreign exchange markets exist to allow business
owners to purchase currency in another country so
they can do business in that country.
The "FX" market, also called the Forex market, is a
worldwide network of currency traders who work
around the clock to complete these transactions, and
their work drives the exchange rate for currencies
around the world.
20. Spot Market
These are the quickest transactions involving currency in
foreign markets. These transactions involve immediate
payment at the current exchange rate, which is also
called the spot rate.
The Federal Reserve says the spot market accounts
for one-third of all currency exchange, and trades
usually take place within two days of the agreement.
This does leave the traders open to the volatility of
the currency market, which can raise or lower the
price between the agreement and the trade.
21. Futures Market
These transactions involve future payment and
future delivery at an agreed exchange rate, also
called the future rate.
These contracts are standardized, which means
the elements of the agreement are set and non-
negotiable.
It also takes the volatility of the currency market,
specifically the spot market, out of the equation.
These are popular among traders who make
large currency transactions and are seeking a
steady return on their investments.
22. Forward Market
These transactions are identical to the Futures Market
except for one important difference---the terms are
negotiable between the two parties. This way, the terms
can be negotiated and tailored to the needs of the
participants.
It allows for more flexibility.
Forward market involves a currency swap, where two
entities swap currency for an agreed-upon amount of time,
and then return the currency at the end of the contract.
23. There are approximately five different types of entities that
use the foreign exchange markets on a daily basis.
Commercial banks are the leaders in this market and are
the main source of currency transactions.
Traditional users refer to entities that do business
across national borders.
Participants
24. Central banks are the official players in this market,
and each country has a central bank to manage its money
supply.
Brokers work as go-betweens for banks, typically during
large transactions.
And, traders and speculators work to take advantage
of short-term trends in the market.
