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Foreign Investments Companies
Foreign investment companies are basically the investment organizations
which are carrying out foreign currency trading operations in the market.
These companies show great requirements for a particular foreign currency.
For example, if we talk about foreign investment companies like importers of
certain products, that these firms would like to buy in bulk, a particular
foreign currency for trading and business purposes.
Same is the case with other investment firms like exporters of certain
products, who would like to sell a particular type of currency more. These
firms do not have a direct admission to Forex market. They operate their
conversion and depository processes via commercial banks only.
Commercial Firms
Commercial Firms make for a sizable part of the Forex trading market and a
significant part of the market gets its way from the economic activities of
such firms which are looking for foreign currency to pay for all the goods
and services they employ.
As compared to the big financial companies and huge banks, these commercial
firms often trade a rather small amount of money, and their trading mostly
has a slight temporary effect on the overall market rates. Trade flows, in
terms of internationally big companies, becomes a central issue in the
lasting direction of a currency's Forex rate. Some of these global giants
are also capable of having an impulsive impact on the market rates,
especially when very large positions are filled, of which, not many retail
or individual traders are aware.
Commercial banks
In the world of Foreign exchange market, the maximum control is in the hands
of huge multinational banks and organizations. This is because of the fact
that their everyday degree of actions of trading and market cross over
billions of dollars.
With such a huge figure in their hands, it would not be wrong to say that
these commercial banks use up an indispensable amount of exchange
transactions. The banks can be said to gather through all their clients, the
growing and collective wants of the market for currency exchange. Also, in
addition to agreement of clients’ purposes, the banks can sometimes trade
for their own operations for their own means too.
Some of the well known international banks which are successfully involved
with Foreign Exchange are Chase Manhattan Bank, Deutsche Bank, Citibank,
Standard Chartered Bank and Barclays Bank to name a few. Their huge
quantities of transactions can lead to noteworthy alterations in the
currency rates. Mostly these big commercial banks are divided into Bulls and
Bears.
Asset Management Companies
Asset Management companies are the ones which basically handle big money
accounts on behalf of their clients, like pension funds etc. Such companies
employ Foreign currency market to assist dealings in foreign investments.
While such companies are into Forex market and trading currencies, they take
these transactions as secondary to their real investment business, and
hence, are not intended for revenue-maximization.
According to the BIS study of Triennial Central Bank Survey, year 2004, 14%
were between a dealer and a non-financial company, 33% concerned a dealer (ie
a bank) and a finance manager and a major 53% of transactions were totally
interbank.
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