Usually banks, foreign exchange trading companies and financial organizations are referred as Forex market makers. A market maker sells to and buys from its clients, and is compensated by means of price differentials for the service of providing liquidity, reducing transaction costs and facilitating trade.
The market makers decide the level of currency rate based on the important share of their operations in the total volume of the market. They establish current market rates by cooperating with each other and with smaller monetary organizations, which also are members of Forex market. In the same way, FX market makers determine a rate for minor banks, financial institutions and individuals.
Forex market makers are responsible for realizing certain functions. Firstly, they follow the orders of their clients and only in specific occasions include their own funds. Secondly, they act as intermediaries who take profit from spread; the price differences between currencies’ ask and bid prices.
The best prices of selling and buying are automatically listed on the top of the list and computer makes the deals in the first instance. Computer, as compared to manual actions, replaces the orders and moves of current market rates in the system quite faster.
Each broker has his personal market maker or several market makers. The head Forex market makers are Deutsche Bank, Mizuho Bank, Barclays Bank, PBS, Citi Bank, Chase Manhattan Bank and Union Bank of Switzerland.