FX is the abbreviated form for Forex Market. The largest liquidity online marketplace for foreign currency exchange rate. Through FX you can profit for your business a lot. You can get in longer terms of relationships with the second party that is your other dealer. There are lots of terms for the FX market. But, not all of us are aware of its structure.

To be honest its structure is really unique compared to its decentralized platform. As it is a massive Over-the-Counter market (OTC) and it is also independent, unlike the stock exchange markets. So we will not waste any of our time in talking nonsense so we are going in-depth into the structure of the FX or Forex Market.


When the Forex Market was limited only to governments and other official financial institutions once, it is not anymore. This is because the competition in the world of business has gotten really big and people from all over the world from various ethnics and diversity must participate in their profits. So, for now, the participants for the FX markets are:

  • Central Banks
  • Major Commercial Banks
  • International Corporations
  • Investment Banks
  • Pension
  • Mutual Funds
  • Speculators
  • Forex Brokers
  • Insurance Companies

There are also other business people and entrepreneur as well who participate in this marketplace for foreign currency exchange on a regular basis.


The Forex Market is made up of various kinds of transactions as it is a decentralized market. They include the Spot Transactions, Swaps, Options and Outright Forwards. In a Forex marketplace, about 90% of the Forex exchange is filled by the Swap Transactions.

All the transactions process are done by the Electronic Brokering Services as there are no centralized options for this. There is another alternative and that is the Reuters Dealings 3000. Plus one-third of the current interest is done by the spot market. The Forex Market also helps in providing various marketing information.


There are various types of buyers and retailers in the Forex marketplace. They can also be shown as a diagram in the pyramid but it goes something like this. If you are thinking from bottom to top then first comes the retail traders. The retail traders are the ones that buy foreign currencies in the micro lot. Then comes the retail market makers, the Hedge Funds Corporation, etc.

They provide security and they can also roll over the currency amount with interest rate if they want to. Then comes the medium-sized or the smaller banks and finally on top of the pyramid comes all the major commercial banks.

The major commercial banks determine the rates of the FX currency rate. They also provide relevant information regarding currency exchange. They can demand and supply foreign currencies from anywhere and at any time they want. They can change the complete scenario of the currency if they want to plus they can bid on the currencies as well.

The hedge funds or all the non-commercial banks basically provide liquidity for the Forex Market. They execute the transactions that are later gets approved by the major commercial banks. They need to be active constantly as they are doing all the final buying and selling of the currencies.

In the case of the governments and the Central Banks, they actually set down the rules as to how the Forex Markets will actually work from now on.

Finally, the speculators and the retail traders do all the original buying and selling as they are the center. Because they are in there to make the profit.

Spot Transaction

Also known as the spot market deal, it is solely for business purposes and for immediate deals that should be completed within two business days. But the USD/CAD is the major exception because they can be exchanged within one business day as the transaction rate is higher than any other currencies.

A spot transaction is also driven by the economic strength, interest rate differentials as well. It also depends on how active your own currency is.


It is not as easy to trade as it sounds. The traders will not purchase the currencies from the Forex market just like that. Even when you are a buyer, the thing that will matter to you the most is the transaction difference and the amount of profit the buyer will get. For which the buyers or retailers will roll over the currencies. They just reset the position of their currencies with some interest rates.

Forward Transactions

You will need some financial securities and Forex does offer you that. The buyer and seller settle on an agreement that to trade on a given date. They will be non-negotiable and it shall continue until the given date expires.


The structure of the Forex Market is pretty easy to grasp. The difficult part is to know how to trade in there. But I am sure you will learn it over time.