The Forex market is the largest financial market in the world, with trillions of dollars traded daily. According to the Bank for International Settlements (BIS) Triennial Central Bank Survey, average daily global foreign exchange turnover reached approximately $7.5 trillion in April 2022, up from $6.6 trillion in 2019.

Of this total volume, more than $2 trillion occurred in the spot market, where most retail traders participate. Around $3.8 trillion was traded through FX swaps, and roughly $1.2 trillion through outright forwards.

To better understand how this massive market operates, the BIS breaks Forex trading activity into three main participant categories.

Reporting Dealers
Reporting dealers are primarily large commercial banks, investment banks, and major securities firms that actively trade currencies both for their own accounts and on behalf of clients.

These institutions participate in the interdealer market and provide liquidity to corporations, governments, hedge funds, and other financial participants.

Over time, the distinction between commercial banks and investment banks has become increasingly blurred. Major institutions such as Citibank and JPMorgan Chase operate as both retail-focused banks and large-scale trading institutions. Similarly, firms like Goldman Sachs and Morgan Stanley function as investment banks despite their involvement in broader financial activities.

Other Financial Institutions
This category represents a broad range of market participants and now accounts for the largest share of Forex trading volume.

It includes:

• Smaller commercial and investment banks
• Hedge funds and asset managers
• Pension funds and mutual funds
• Insurance companies
• Proprietary trading firms and high-frequency trading (HFT) firms
• Currency funds and money market funds

Large speculative firms and well-known global investors also fall within this group.

Additionally, this category includes official sector institutions such as:

• Central banks (Federal Reserve, ECB, Bank of England, etc.)
• Sovereign wealth funds
• International financial organizations (IMF, World Bank, BIS)

These participants often trade for reserve management, monetary policy implementation, and market stabilization purposes.

While trading activity from this group has continued to grow over time, recent data shows its share has stabilized relative to reporting dealers.

Non-Financial Customers
Non-financial customers include corporations, governments, and private individuals that use Forex primarily for:

• International trade
• Investment purposes
• Currency hedging
• Retail trading

This group represents a smaller portion of total volume but plays a crucial role in real-world currency demand.

How Forex Trading Is Geographically Concentrated
Although Forex operates globally, most trading is concentrated in a few major financial centers.

According to BIS data, nearly 78% of all Forex transactions occur in five primary locations:

• United Kingdom (London)
• United States (New York)
• Singapore
• Hong Kong
• Japan (Tokyo)

London remains the world’s largest Forex trading hub, accounting for approximately 38% of global trading volume, making it the most influential center for currency liquidity and price discovery.

Final Thoughts
The Forex market functions as a decentralized global network dominated by large financial institutions, professional traders, and major financial centers.

Retail traders operate within this ecosystem, benefiting from the liquidity created by banks, hedge funds, corporations, and central banks.

Understanding who participates in the Forex market and how volume is distributed helps traders better appreciate market behavior, liquidity patterns, and price movements.