What is foreign exchange market trading?

The foreign exchange market refers to a trading place that engages in foreign exchange trading and adjusts foreign exchange supply and demand. Its function is to operate currency commodities, that is, currencies of different countries.

The foreign exchange market is the largest financial market in the world. There are transactions in the foreign exchange market almost all the time, and the transaction volume is huge, estimated to be several trillion dollars a day. This scale is larger than the total transaction volume of all the global stock markets. The foreign exchange market is not concentrated in one place, but is an over-the-counter transaction. Buyers and sellers rely on telephones, computers, fax machines and other real-time communication tools to connect for transactions. According to the latest statistics of the International Settlement Group, the average daily transaction volume in the international foreign exchange market is approximately US$1.6 trillion.

Foreign exchange market transactions
Compared with the futures and securities markets, the foreign exchange market is fundamentally different from them. This difference is also a limitation of other markets-trading is interrupted at the end of the day and only restarts the next morning. Therefore, if you are trading in the Russian market and some important market-related events have occurred in the United States, when the market opens in the morning, it may be completely different from what you expected.

The foreign exchange market works 24 hours a day, and foreign currency transactions will not be interrupted during the working days of the week. Almost every time zone (London, New York, Tokyo, Hong Kong, Sydney, etc.) has dealers who are willing to provide foreign exchange quotations.

What does the interbank foreign exchange market mean?

The inter-bank foreign exchange market refers to the trading market between domestic financial institutions (including banks, non-bank financial institutions and foreign-funded financial institutions) approved by the State Administration of Foreign Exchange to conduct foreign exchange business through the China Foreign Exchange Trading Center. The inter-bank foreign exchange market is gradually developing and improving.
Interbank foreign exchange market

The inter-bank foreign exchange market is a wholesale foreign exchange market in which traders of large banking institutions conduct foreign exchange transactions. Other participants include hedge funds or trading companies. Their trading volume is also very large, and they are also part of the inter-bank foreign exchange market.

In 1994, China’s foreign exchange management system underwent major reforms, abolishing foreign exchange retention, handing in and quota management, implementing a foreign exchange settlement and sales system, and establishing a unified national inter-bank foreign exchange market, also known as foreign exchange wholesale market, which became China’s main foreign exchange trading place , The transaction subjects are mainly financial institutions, investment companies, and import and export enterprises. At the same time, a trading platform based on the electronic trading system of the China Foreign Exchange Trading Center has been established. The establishment of the inter-bank foreign exchange market laid the foundation for a managed floating exchange rate system based on market supply and demand.

Market organization form: China’s inter-bank foreign exchange market implements membership management. All financial institutions and their branches that have been approved to establish and conduct foreign exchange business and engage in foreign exchange settlement and sales can apply to become members of the inter-bank foreign exchange market. After review and approval , Enter the market through the electronic trading system of the China Foreign Exchange Trading Center.

Quotation transaction method: At present, the inter-bank market implements the bidding transaction method of separate quotation and matching transaction. The transaction subject reports the buying and selling prices on-site at the China Foreign Exchange Trading Center or through remote terminals. The trading system of the China Foreign Exchange Trading Center combines the foreign exchange buying and selling quotations in the order of price priority and time priority, and the lowest The selling price and the highest buying price are matched in order.