The foreign exchange market may look simple from the outside. You open a trading platform, choose a currency pair such as EUR/USD, click buy or sell, and suddenly you are participating in a market that operates almost continuously across the world.
Behind that simple screen, however, is a massive network of banks, investment funds, multinational corporations, central banks, trading firms, brokers, and individual investors.
They do not all trade currencies for the same reason, nor do they have the same influence on exchange rates.
Understanding who participates in the global forex market makes it much easier to understand why currencies move, where market liquidity comes from, and why major economic events can create sudden price swings.
According to final data from the Bank for International Settlements (BIS), average daily over-the-counter foreign exchange turnover reached about $9.5 trillion in April 2025.
That enormous volume makes forex one of the largest and most liquid financial markets in the world.
The Forex Market Is a Network, Not a Single Exchange
Before looking at individual forex market participants, it helps to understand how the market itself works.
Unlike many stock markets, global foreign exchange trading is largely decentralized. There is no single building or exchange through which every EUR/USD, USD/JPY, or GBP/USD transaction must pass.
Instead, banks, financial institutions, corporations, brokers, and other participants connect through electronic trading platforms, dealer networks, communication systems, and bilateral relationships.
This structure is commonly described as an over-the-counter, or OTC, market.
Large financial institutions often trade directly with one another, while smaller customers usually reach the market through banks, brokers, or other intermediaries.
Technology has also changed this structure significantly, with algorithmic trading firms and non-bank liquidity providers becoming increasingly important.
The result is an enormous global network where different particpants interact for very different reasons.
1. Major Commercial and Investment Banks
Large banks sit near the center of the foreign exchange ecosystem.
Global commercial and investment banks buy and sell currencies for their own needs while also executing transactions for corporations, asset managers, hedge funds, governments, and other customers.
Many major banks also act as FX dealers or market makers. They continuously quote prices at which they are willing to buy and sell currencies, helping provide liqudity to the market.
Imagine an international investment fund wants to convert hundreds of millions of euros into US dollars. Instead of placing that transaction through an ordinary retail trading app, the fund may deal directly with a major banking institution.
Banks also trade currencies with one another.
The 2025 BIS survey found that transactions involving reporting dealers accounted for roughly 46% of global FX turnover. This highlights how important large banking and securities dealers remain even as non-bank financial institutions have grown.
2. Smaller Banks and Other Financial Institutions
Not every bank participating in forex is a giant global dealer.
Regional banks, smaller commercial banks, private banks, and other financial institutions also need foreign currencies. They might exchange currencies for customers, manage international funding, hedge their own exposures, or support cross-border lending.
BIS data classify many of these institutions as non-reporting banks.
In 2025, trading with non-reporting banks represented around 24% of total global forex turnover, making them an important part of the broader financial-institution category.
This helps explain why the forex market should not simply be viewed as a competition between a few giant banks and individual traders. There are many layers of financial institutions connecting different parts of the international monetary system.
3. Institutional Investors and Asset Managers
Institutional investors are another major force in global currency markets.
This group includes pension funds, mutual funds, insurance companies, sovereign investment entities, and large asset management companies. Their main business may not be currency trading, but international investing naturally creates foreign exchange exposure.
Suppose a European pension fund purchases US government bonds.
The fund may first need dollars to purchase those securities. Later, it may use an FX forward contract to reduce the risk that changes in the EUR/USD exchange rate hurt the portfolio’s returns.
That process is called currency hedging.
Institutional investors accounted for around 13% of global FX turnover in 2025, according to BIS figures. Their activity is especially important in spot and forward markets as investment portfolios are rebalanced and currency risks are managed.
In other words, large currency trades are often connected to investments occurring somewhere else in the financial system.
4. Hedge Funds and Proprietary Trading Firms
Hedge funds usually participate with a different objective.
While pension funds may primarily use currencies to hedge investments, hedge funds frequently trade forex to generate returns from movements in exchange rates, interest-rate expectations, economic trends, or relative value opportunities.
Strategies vary enormously.
Some funds hold positions for weeks or months based on macroeconomic views. Others use sophisticated quantitative models to identify short-term pricing opportunities across multiple currencies.
Proprietary trading firms, or PTFs, can operate even faster. Some rely heavily on algorithms capable of analyzing markets and submitting orders within fractions of a second.
BIS data indicate that hedge funds and proprietary trading firms together represented roughly 8% of global FX turnover in 2025.
Their importance extends beyond raw market share because active trading can influence price discovery and short-term market behavior.
5. Multinational Corporations and Businesses
Companies are among the easiest forex participants to understand because their currency needs often come directly from everyday business.
Consider a US company importing machinery from Germany. If the German supplier wants payment in euros, the American company may need to exchange dollars for euros.
Now imagine a Japanese manufacturer earning billions of dollars from sales in the United States. Eventually, some of those dollar revenues may need to be converted into yen.
Companies also use forwards, swaps, and other derivatives to protect themselves against unfavorable curreny movements.
The Federal Reserve describes corporations as part of the forex buy side and notes that companies use the market to hedge assets and liabilities created by overseas operations.
Interestingly, non-financial customers represented only about 5% of global turnover in the 2025 BIS data. Their share may be relatively small, but the underlying transactions connect forex directly to international commerce.
6. Central Banks and the Official Sector
Central banks participate in forex for very different reasons from hedge funds or retail traders.
Their objective usually is not simply to make trading profits.
A central bank may manage foreign exchange reserves, conduct transactions for government purposes, or intervene in currency markets under certain economic conditions.
Foreign exchange intervention happens when monetary authorities buy or sell currencies in an attempt to influence market conditions or address risks associated with exchange-rate movements.
The International Monetary Fund notes that FX intervention can become part of a broader policy response when specific market or financial frictions are present.
The European Central Bank, for example, has the ability to conduct foreign exchange intervention either independently or together with other central banks, although such interventions have historically been relatively rare for the ECB.
Because central banks control monetary policy and hold significant reserves, markets closely watch their statements and actions.
7. Forex Brokers and Retail Traders
At the smaller end of the market are individual or retail forex traders.
Retail participants typically access currency markets through forex brokers or trading platforms rather than trading directly with major global banks.
Brokers therefore serve as an important bridge between individuals and the wider FX enviroment. Depending on their business model and jurisdiction, they may route orders, act as counterparties, or connect clients with external liquidity providers.
Retail trading has become much more accessible because online platforms allow people to follow currency prices and open positions from laptops or smartphones.
However, accessibility should not be confused with equal market power.
A person trading a small EUR/USD position represents a tiny amount compared with transactions conducted by global banks or institutional funds.
Retail forex can also involve substantial leverage and risk, which is why regulators such as the US Commodity Futures Trading Commission impose rules on firms providing certain retail foreign exchange services.
How These Forex Market Participants Interact
The global forex market works because these participants constantly interact.
A corporation may ask a bank to hedge future foreign revenues. That bank may offset part of the resulting exposure by trading with another dealer. A hedge fund may take the opposite side because its economic model predicts the currency will move in a particular direction.
Meanwhile, an institutional investor might simultaneously rebalance an international bond portfolio while an algorithmic trading firm adjusts prices across multiple platforms.
This interaction creates continuous buying and selling.
The motives may include international trade, portfolio investment, hedging, speculation, liquidity management, monetary policy, and arbitrage.
That diversity is one reason the market is so deep.
BIS final data show that other financial institutions accounted for about 50% of global FX activity in 2025, compared with roughly 46% involving reporting dealers and around 5% involving non-financial customers. The percentages are rounded, so they do not add perfectly to 100%.
Why Knowing the Major Forex Players Matters
Understanding who participates in the global forex market can change how you interpret currency movements.
When EUR/USD suddenly moves after an interest-rate announcement, the change is not necessarily caused by thousands of individual traders making identical decisions.
Large banks may be adjusting inventories. Asset managers may be hedging portfolios. Hedge funds may be repositioning around interest-rate expectations, while algorithmic firms react instantly to new information.
The scale is also worth remembering.
Final BIS figures put average daily OTC FX turnover at approximately $9.5 trillion in April 2025, while the US dollar appeared on one side of nearly nine out of every ten FX transactions.
Retail trading is therefore just one small piece of a much larger global financial system.
So, who participates in the global forex market? Almost every major part of the international financial system plays a role.
Large banks provide dealing services and liquidity, institutional investors manage international portfolios, hedge funds search for trading opportunities, corporations exchange currencies for global business, and central banks manage reserves and occasionally intervene.
Brokers and technology platforms then give smaller institutions and retail traders access to this enormous network.
Understanding these groups makes forex much easier to follow because exchange rates are shaped by many different motives rather than one type of trader.
If you are learning about forex, the next useful step is to study how the forex market works, including currency pairs, spot transactions, forwards, swaps, liquidity, spreads, and the factors that influence exchange rates.