Describe difference between the retail or client market and the wholesale or interbank market for foreign exchange?
The market for foreign exchange can be distinguished as two-tier market. One tier is the wholesale or interbank market and the other one is the retail or client market. International banks provide the core of the FX market. They stand keen to buy or sell foreign currency for their own account. These international banks serve their retail clients, corporations or individuals, in conducting foreign commerce or making international investment in financial assets which requires foreign exchange. Retail transactions account for only approximate 16 percent of FX trades. The other 84 % is interbank trades among international banks, or non-bank dealers large sufficient to transact in the interbank market.