Foreign Exchange Markets

The FX market maker is a bank or brokerage company that stands ready, every second of the trading day with a firm bid and ask price. This is good for the investor because when the investor chooses to buy and sell a pair of currencies, the market maker will purchase from and sell to the investor, even if they do not have a buyer and seller lined up. In doing so, they are literally “making a market” for the currencies.

Forex market makers ensure that the market is always functional and that the currencies in it will always fetch the market rate.

Typical FX market makers include Gain Capital, CMS Forex, Forex Capital Markets (FXCM), and Global Forex Trading, all of which are regulated by the Commodity
Futures Trading Commission (CFTC) of the USA. Another prominent forex market maker is Saxo Bank, which is regulated by the Financial Services Authority (FSA) of Denmark.

The investor in the currency market

Once an order is placed with a broker, the trade is executed within seconds. It is, of course, not as easy as that.

Whenever a pair of currencies is bought or sold, there must be someone at the other end of the transaction.
It is very unlikely that the investor will always find someone who is interested in buying and selling the same two currencies at the same amount, and at the same time.

Hence, the question remains, “How is it possible that the FX investor can buy or sell at any time?” This is where the FX market makers come in.