Home  Journals  Finance and Credit  22(454) - 2011 June

Contemporary turnover of global foreign exchange markets: instrument structure

Available online: 14 June 2011

Subject Heading: THE CURRENCY MARKET

JEL Classification: 

The objective of this article is to present information on the instrument structure of global foreign exchange markets. Previously the expression “traditional foreign exchange markets” was used to refer to spot transactions, outright forwards and foreign exchange swaps. This expression excluded currency swaps and currency options, which are under OTC (over-the-counter) instruments.
     Beginning with the 2010 BIS Triennial Central Bank Survey of Foreign Exchange and Derivative Market Activity, the expression “global foreign exchange markets” will include all fife transactions - outright spot and other related instruments.
     The author analyses trends in turnover on global foreign exchange markets, defines each of the specific transactions, identifies their functions and explains what type of instrument FE market participants may choose to use in case they need liquidity across money markets denominated in different currencies, hedging against currency or interest rate risks, profit out of arbitrage or speculation.

Keywords: global foreign exchange turnover, foreign exchange instruments, value date, outright spot and forward transactions, interest rate derivatives

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ISSN 2311-8709 (Online)
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