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FOREIGN EXCHANGE-THE FASTEST-GROWING MARKET OF OUR TIME

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FOREIGN EXCHANGE- THE FASTEST-GROWING MARKET OF OUR TIME

WHO ARE THE PLAYERS IN THE FX MARKET? ________________________________________________________________________________
Since the foreign exchange market is an over-the-counter (OTC) market without a centralized exchange, competition between market makers prohibits monopolistic pricing strategies. If one market maker attempts to drastically skew the price, then traders simply have the option to find another market maker. Moreover, spreads are closely watched to ensure market makers are not whimsically altering the cost of the trade. Many equity markets, in contrast, operate in a completely different fashion; the New York Stock Exchange (NYSE), for instance, is the sole place where companies listed on the NYSE can have their stocks traded. Centralized markets are operated by what are referred to as specialists, while market makers is the term used in reference to decentralized marketplaces. Since the NYSE is a centralized market, a s…