How does the off-exchange currency market work?

The off-exchange forex market is a large, growing and liquid finan-cial market that operates 24 hours a day. It is not a market in thetraditional sense because there is no central trading location or“exchange.” Most of the trading is conducted by telephone orthrough electronic trading networks.The primary market for currencies is the “interbank market”where banks, insurance companies, large corporations andother large financial institutions manage the risks associatedwith fluctuations in currency rates. The true interbank marketis only available to institutions that trade in large quantitiesand have a very high net worth. In recent years, a secondary OTC market has developed that per-mits retail investors to participate in forex transactions. While thissecondary market does not provide the same prices as the interbankmarket, it does have many of the same characteristics.