In its role as a regulator, the Federal Reserve will need to be alert to the application of regulations in changing circumstances. As I have already noted, the Federal Reserve has, in recent years, modified its regulations to facilitate the greater use of electronics in the payments system and to address emerging risks.
As in the spot foreign exchange markets, brokers are used to locate counterparties for these trades. They do not act as principal. Once counterparties who are willing to transact at the quoted price have been identified, brokers reveal their names so that they can determine if each other’s credit quality is acceptable and if the exposure can be accommodated within credit limits.