When people talk about the “currency market,” they’re referring to the interbank market. The interbank market is where the really big money changes hands. Minimum trade sizes are one million of the base currency, such as €1 million of EUR/USD or $1 million of USD/JPY.

Much larger trades of between $10 million and $100 million are routine and can go through the market in a matter of seconds. Even larger trades and orders are a regular feature of the market. For the individual trading FX online, the prices you see on your trading platform are based on the prices being traded in the interbank market.

As the prefix suggests, the interbank market is “between banks,” with each trade representing an agreement between the banks to exchange the agreed amounts of currency at the specified rate on a fixed date. The interbank market is alternately referred to as the cash market or the spot market to differentiate it from the currency futures market, which is the only other organized market for currency trading.

The interbank market developed without any significant governmental oversight and remains largely unregulated. In most cases, there is no regulatory authority for spot currency trading apart from local or national banking regulations.

The interbank market is a network of international banks operating in financial centers around the world. Currency trading today is largely concentrated in the hands of about a dozen major global financial firms, such as UBS, Deutsche Bank, Citibank, JPMorgan Chase, Barclays, Goldman Sachs, and Royal Bank of Scotland, to name just a few. Hundreds of other international banks and financial institutions trade alongside the top banks, and all contribute liquidity and market interest.

These banks maintain trading operations to facilitate speculation for their own accounts, called proprietary trading (or prop trading for short), and to provide currency trading services for their customers. Banks’ customers can range from corporations and government agencies to hedge funds and wealthy private individuals.