With the exception of small transactions negotiated directly between institutions, the majority of the world’s currency trading is conducted on the interbank market. This market consists of a few centralized exchanges around the world, where financial institutions exchange large blocks of currency, usually in denominations of $1 million or greater. This may change, however, as the Chicago Mercantile Exchange announced it will soon debut an electronic exchange, with the help of Reuters. The exchange was designed for hedge funds, which began a mass foray into foreign exchange several years ago. Since hedge funds typically trade on margin, this platform could inject new volatility into the forex markets. Last year, the volume of forex trading increased over 30%! This new platform will ensure that forex trading continues to burgeon in popularity.

Read More: New FX platform eyes hedge funds