In this chapter Academy will focus its attention on a specific OTC market: the foreign exchange market (FX market) which is considered one of the most liquid. We will have a look at FX structure, organisation and specific features of the products traded on this market and at its main participants.
The volume of international business transactions has been growing systematically over the last 65 years.
In cross borderinternational business transactions, normally at least one party is dealing in a foreign currency (FX).
In this context, the purpose of the FX market is to allow transfers of purchasing power, denominated in one currency, to another.
An American exporter who sells goods in England, for example, will be paid in British pounds, and the dollar value of those pounds depends on the exchange rate at the time payment is made.
Most currency transactions are channelled by the interbank market.
The worldwide interbank market accounts for 95% of foreign exchange transactions and is normally referred to as the FX market.
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