The major participants of the foreign exchange market are Banks which dominate the top level of access for the best Forex spread. It is the banks which actualize the bulk of foreign exchange transactions for account of their clients’ investments. Other participants in the exchange market deposit their money at commercial banks and send their requests for the act of currencies purchase and sale for their conversion cumulative needs. Banks, through their transactions with clients, are able to answer the needs of Forex via their taking and distributing of money, bringing the money into new banks.

Banks profit by utilizing bid-and-offer spread. The bid price is the exchange rate that the buyer is willing to buy and the offer price is the exchange rate at which the seller is willing to sell. The difference is called the bid-offer spread. Banks also benefit from speculating where the exchange rate will rise or fall in the future.

Through the exchange transactions a bank reveals customers’ common need for foreign currency operations and establishes links with other banks for their conduct in case it is not able to satisfy those needs itself. Thus, Forex, in fact, is not just an exchange house. It can also be defined as an interbank transactions market.

The interbank market is a market where also larger international banks transact with each other and determine the currency price. These banks deal with each other on electronic brokering systems which are based upon credit. Only the banks with credit relationships can engage in transactions. The larger the bank the more credit relationships it has and the better it can access for its customers. Such international banks as Deutsche Bank, Barclays Bank, Citibank, Union Bank of Switzerland affect the exchange markets in the world considerably by the daily operations at the amount of billion dollars, consequently, having an impact on the currency price or the quotation as well.

Commercial banks carry out monetary transactions not only by order of the customers but also for their own purposes, speculative or hedge ones. The monetary transactions can be consummated either directly with other commercial banks with which there has been achieved an agreement over the quotation or through brokerage firms. The scheme is the following: the dealership department of a bank willing to obtain some currency contacts a brokerage firm and inquires about the terms of the transaction being offered by other commercial banks. If satisfied with the terms, the commercial banks enter into a deal through the brokerage firm which, in its turn, reaps a benefit from commissions. That is why, brokerage firms are the central places where a Forex rate is formed. As for commercial banks, they receive information about the current level of exchange rate from brokerage firms.