Group 10

MBA - FC 3rd Sem. (2017)

 GYANENDRA SHARMA
 HIMANSHU PANDEY
 HARIKANT YADAV
 ABHAY DWIVEDI
 ANUPAM A SINGH
 What is forex Market
 History
 FAMOUS STOCK MARKET IN THE WORLD
 Size of forex market
 Changes in Market structure
 Changes in 2015 to 2017
 Market sentiment
 Indian Forex market
 Conclusion
 The foreign exchange market (Forex, FX, or
currency market ) is a global decentralized
or over-the-counter (OTC) market for the
trading of currencies. This market
determines the foreign exchange rate. It
includes all aspects of buying, selling and
exchanging currencies at current or
determined prices. In terms of trading
volume, it is by far the largest market in the
world, followed by the Credit market
 The foreign exchange market is perhaps the
largest, most globally integrated, and most
active financial market in the world.
The transactions that take place there
are the lifeblood of a global economy that
comprises many different national currencies.
By enabling the transfer of funds and
purchasing power from one currency to
another, the foreign exchange market offers an
important means for price discovery that
facilitates international trade and investment
activity.
 1. To transfer finance, purchasing power from one
nation to another. Such transfer is affected through
foreign bills or remittances made through
telegraphic transfer. (Transfer Function).

 2. To provide credit for international trade. (Credit

Function).

 3. To make provision for hedging facilities, i.e., to

facilitate buying and selling spot or forward foreign
exchange. (Hedging Function).
 The Medici family were required to open banks at
foreign locations in order to exchange currencies to act
on behalf of textile merchants. To facilitate trade, the
bank created the nostro (from Italian, this translates to
"ours") account book which contained two columned
entries showing amounts of foreign and local currencies;
information pertaining to the keeping of an account with
a foreign bank
 Amsterdam maintained an active Forex market.
In 1704, foreign exchange took place between
agents acting in the interests of the Kingdom of
England and the County of Holland
In 1944, the Bretton Woods Accord was signed,
allowing currencies to fluctuate within a range
of ±1% from the currency's par exchange rate. In
Japan, the Foreign Exchange Bank Law was
introduced in 1954
 As a result, the Bank of Tokyo became
the center of foreign exchange by September
1954. Between 1954 and 1959, Japanese law
was changed to allow foreign exchange
dealings in many more Western currencies U.S.
President, Richard Nixon is credited with
ending the Bretton Woods Accord and fixed
rates of exchange, eventually resulting in a
free-floating currency system.
 After the Accord ended in 1971, the
Smithsonian Agreement allowed rates to
fluctuate by up to ±2%. In 1961–62, the
volume of foreign operations by the U.S.
Federal Reserve was relatively low. Those
involved in controlling exchange rates found
the boundaries of the Agreement were not
realistic and so ceased this in March 1973
when sometime afterward none of the major
currencies were maintained with a Capacity
 for conversion to gold organizations relied
instead on reserves of currency. From 1970 to
1973, the volume of trading in the market
increased three-fold. At some time (according
to Gandolfo during February–March 1973) some
of the markets were "split", and a two-tier
currency market was subsequently introduced,
with dual currency rates. This was abolished in
March 1974.
 New York Stock Exchange (NYSE) -
Headquartered in New York City. Market Capitalization (2011,
USD Billions) – 14,242; Trade Value (2011, USD Billions) –
20,161.
 The largest stock exchange in the world by both market
capitalization and trade value. NYSE is the premier listing
venue for the world’s leading large- and medium-sized
companies. Operated by NYSE Euronext, the holding company
created by the combination of NYSE Group, Inc. and Euronext
N.V., NYSE offers a broad and growin array of financial
products and services in cash equities, futures, options,
exchange-traded products (ETPs), bonds, market data, and
commercial technology solutions. Featuring more than 8000
listed issues it includes 90% of the Dow Jones Industrial
Average and 82% of the S&P 500 stock market indexes
volume.
 London Stock Exchange -

Headquartered in London. Market Capitalization (2011, USD

Billions) – 3,266; Trade Value (2011, USD Billions) – 2,871.
 Located in London City, it is the oldest and fourth-largest
stock exchange in the world. The Exchange was founded in
1801 and its current premises are situated in Paternoster
Square close to St Paul’s Cathedral. It is the most
international of all the world’s stock exchanges, with around
3,000 companies from over 70 countries admitted to trading
on its markets. The London Stock Exchange runs several
markets for listing, giving an opportunity for different sized
companies to list. For the biggest companies exists the
Premium Listed Main Market, while in terms of smaller SME’s
the Stock Exchange operates the Alternative Investment
Market and for international companies that fall outside the
EU, it operates the Depository Receipt scheme as a way of
listing and raising capital.
 Shanghai Stock Exchange -

 Headquartered in Shanghai. Market Capitalization

(2011, USD Billions) – 2,357; Trade Value (2011, USD
Billions) – 3,658.
 It is the world’s 5th largest stock market by market
capitalization and one of the two stock exchanges
operating independently in the People’s Republic of
China. Unlike the Hong Kong Stock Exchange, the SSE is
not entirely open to foreign investors. The main reason
is tight capital account controls by Chinese authorities.
The securities listed at the SSE include the three main
categories of stocks, bonds, and funds. Bonds traded on
SSE include treasury bonds, corporate bonds, and
convertible corporate bonds. The largest company in
SSE is PetroChina (market value – 3,656.20 billion).
 The Bombay Stock Exchange (BSE) is an Indian stock
exchange located at Dalal Street, Kala
Ghoda, Mumbai (formerly Bombay), Maharashtra, India.
 Established in 1875, the BSE is Asia’s first stock exchange, It
claims to be the world's fastest stock exchange, with a
median trade speed of 6 microseconds, The BSE is the
world's 11th largest stock exchange with an overall market
capitalization of more than $ 2 Trillion as of July, 2017. More
than 5500 companies are publicly listed on the BSE. Of these,
as of November 2016, there are only 7,800 listed companies
of which only 4000 trade on the stock exchanges at BSE
and NSE. Hence the stocks trading at the BSE and NSE account
for only about 4% of the Indian economy.
 I would like to focus on two of the more
significant recent changes in the market’s
structure:-

 Currency distribution
 Foreign Exchange rate
 Changes in volume
 Turnover by instrument
 Turnover of Forex market
 Date USD GBP EURO YEN
1/1/2015 63.3213 98.6706 76.5998 52.91
1/1/2016 66.178 97.6059 71.8627 55.1
1/1/2017 64.0225 83.967 71.5121 58.19
1/11/2017 64.5256 85.6706 75.0755 56.7
120

100

80

USD
60
GBP

EURO
40

20

0
1/1/2015 1/1/2016 1/1/2017
 The 2013 survey broke out the “other financial
institutions” category for the first time. The data
showed that non reporting banks accounted for
about 45 percent of the category’s trading volume
while institutional investors and hedge
funds/proprietary trading firms each accounted for
about 20 percent.
In a market where daily trading volume exceeds
$5 trillion, this represents significant activity and is
consistent with a general theme of increased
participation by nondealers in the FX market.
• Spot Forex transaction volume dropped by 19.16%
between 2013 and 2016. In other words, the total quantity
of spot Forex trades globally dropped by just under one
fifth! Forwards and swaps, in contrast, are almost
completely unchanged over the same period.

• The most widely traded currency pair is EUR/USD which

accounts for 23% of all transactions, followed by USD/JPY
(17.7%), GBP/USD (9.2%), and AUD/USD (5.2%). This should
give you a very good idea of where the money is!
• USD currency pairs comprised 87.3% of all transactions.

• The most popular currency cross was EUR/GBP (2.0%),

followed by EUR/JPY (1.6%).
• Since 2013, London’s volume of OTC FX trade turnover has
fallen by 10.99%, from $2.73 trillion to $2.43 trillion.
However, the United States’ volume over that same period
has risen very slightly.
Foreign Exchange Reserves in India decreased
to 398760 USD Million in October 27 from
399920 USD Million in the previous week.

Foreign Exchange Reserves in India averaged

207711.12 USD Million from 1998 until 2017,
reaching an all time high of 402510 USD
Million in September of 2017 and a record low
of 29048 USD Million in September of 1998.
 In India, Foreign Exchange Reserves are the
foreign assets held or controlled by the country central
bank. The reserves are made of gold or a specific
currency. They can also be special drawing rights and
marketable securities denominated in foreign currencies
like treasury bills, government bonds, corporate bonds
and equities and foreign currency loans. India Foreign
Exchange Reserves - plus previous releases, historical
high and low, short-term forecast and long-term
prediction, economic calendar, survey consensus and
news. India Foreign Exchange Reserves - actual data,
historical chart and calendar of releases - was last
updated on November of 2017.
 The foreign exchange market is one of the
most vital markets in the world. Individuals,
institutions, and the global financial system as a
whole rely upon the ongoing effective functioning
of this market. The market is constantly evolving,
and it remains imperative that the industry work to
strengthen the foundation of the market, and help
to ensure that its integrity is upheld. Particularly in
the wake of recent scandals, there is a role for
industry participants to restore and maintain
market integrity through support and development
of best practices.