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World Currency Exchange
In 2004, the Bank for International Settlements (BIS) analyzed that approximately 50% of all forex transactions were strictly interbank trades. These trades are done in very large denominations, with currency changing ownership typically in lots of hundreds of thousands of dollars. This is also the reason why only the biggest institutions that have capital to cover the margin calls on such trades can participate on the market directly. These institutions include biggest banks, investment banks, other major financial institutions, large conglomerate firms and other major corporations with international exposure. The rest of the market, including individual traders, smaller banks and companies, and retail forex operations need to buy their currencies through these interbank operators. The rates given to these second tier operators are less favorable than what one would get from the interbank market. This rate differential to the interbank market rates is often expressed in spread differential. Spread is the difference between buying and selling a currency pair. The least favorable rates are often available for the travelers who exchange very small sums over the counter at the forex retail bureaus at the world's airports or holiday resorts. The world currency trading typically starts when the monday trading starts every week in the Asia Pacific, especially Auckland in New Zealand, and the trading week stops when U.S. West coast and Honolulu traders start their week-ends every Friday.
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