How Do Banks Trade The Forex?
The commercial and investment banks form the cornerstone of the foreign exchange market because, in addition to trading on behalf of their customers, they also provide the channel through which all other participants have to trade. In effect they are the main sellers within the foreign currency exchange market. Another important point to remember is that the commercial and investment banks do not simply trade on behalf of their customers, but also trade in their own right through proprietary desks with the objective of realizing a profit for the bank. Commercial and investment banks possess a unique knowledge of the marketplace and have the ability to monitor the activities of other participants such as the central banks and investment funds. The commercial banks have been at the very hub of the Forex market for many years and their role has remained basically the same throughout this time. However, the introduction of electronic brokering systems such as Reuter’s ‘Monitor Dealing Serv
