The Foreign exchange brokers are not similar to equity brokers. They do not take positions by themselves. They just service the banks.
Roles:
- They help in bringing the sellers and buyers into the market.
- They optimise the rate that they show their customers.
- They quickly, accurately and faithfully execute the trade orders.
The business done by the majority of the brokers is through the phone. The call cost between the brokers and the banks are generally free. The brokers install the software for free of cost. The Forex brokers have telephone lines direct to the firms around the world. The traders will not be able to hear the amounts of the particular bids and the offers and the names of the banks showing the prices. . The brokers will optimise the rates when he has more than one price on one or more sides. The brokers will show the highest bid with the lowest offer. Hence, the market will have access to the narrowest spread possible. . The matching systems are based on electronic brokers. These are very fast and very reliable too. These help in allowing the traders to conduct simultaneous trades. These are very safe as you can see the deals when they are executed. The business done by the majority of the brokers is through the phone. The call cost between the brokers and the banks are generally free. The brokers install the software for free of cost. The Forex brokers have telephone lines direct to the firms around the world. By this way, all the banks will be able to hear all the deals that are being executed. Due to the open box system used by the brokers, the traders will be able to hear about the prices quoted i.e. whether the bid was a hit or whether the offer was taken. Brokers show the customers the rates made by other clients either in bid and offer (two-way) prices or bid or offer (one way) rates from his/her clients. Each trader will show price as each of them view the market differently. The brokers will charge a commission that will be paid equally by the sellers and buyers. Negotiation will take place on individual basis by the banks and the brokers.
