While the interbank market is not regulated — and therefore decentralized — most central banks will collect data from market participants to assess whether there are any economic implications.
Source of Data on Foreign Exchange Mark n The Bank for International Settlements (BIS) conducts a Central Bank Survey of the foreign exchange markets every three years. The latest (7 th) survey was completed in April 2007. 210 trillion ( 71%) Reasons for the recent increase: q q q q q n n n Growing role of hedge funds in the market. q Both purchase and sale are usually conducted with the same counterpart (i. , the same global bank) The most common FX swap is a spot against forward q A bank buys FX in the spot market and simultaneously sells the same amount back in the forward market q Since the swap transaction is an offset, the bank incurs NO exchange rate exposure. Example of FX Swap n n n Corporate approaches its bank wanting to borrow 10, 000 euros for 90 days.
Already, Bureau De Change operators have laid claim to the solution and are seeking return to the arena.
While the new exchange rate regime has been applauded severally, as having a measure of stability effect through the interplay of market forces – demand and supply, the twin issues of lone source of supply and channeling of some forex demand to the futures market are now emerging concerns among stakeholders.
There is no centralized location for the market, as trading takes place simultaneously around the world, and stops only for weekends and holidays.
The advent of the floating rate system coincided with the emergence of low-cost computer systems that allowed increasingly rapid trading on a global basis.