The foreign exchange, in short, is termed as “forex”. This includes the process of exchanging one coin for another. This is the biggest type of market in the world because of global trading. Banks, investors, and corporations, institutions, even governments all take part in currency exchange on a daily basis. The amount of currency that gets exchanged each day is almost $2 billion with the exchanges going on 24 hours a day.
There are numerous factors that affect the currency exchange rates. These factors are associated with political, social, and economic factors. Very often these factors result in the currency exchange being favorable and other times it doesn’t work out very well. There is some risk involved in currency exchange but one that most banks, corporations and investors realize they have to take if they wish to vie with a global scale.
There are some restrictions in India in the field foreign currency exchange policy - even though many liberalization steps have been adopted recently, it's still an economically isolated or highly protected country. Indian currency - rupee, is highly regulated by the central banking authority - Reserve Bank of India, and so Indian citizens still cannot freely exchange rupee to other currencies, they have to prove their need and there are yearly limits for different needs. Even popular money transfer systems such as Western Union - which is spread all over world and available to everyone, are forbidden in India - residents can only accept money, but not send.
However, for the globalization there is a definite need to open the economy, so Reserve Bank of India has been slackening rules and regulations in recent years. One of the major changes in regards to Forex trading is that in year 2008 Reserve Bank of India has finally permitted currency futures trading. Speculative trading became an allowable operation too - as it became impossible to ask for a proof of a hedging need.
The National Futures Association (NFA) is a self-control organization for the US futures industry. Its objective is to protect market integrity and protect investors by implementing forex rules and regulations. Membership in NFA is obligatory for any futures or forex broker operating in the US .It is a self-dependant regulatory body with no ties to any specific marketplace. The Commodity Futures Trading Committee (CFTC) was launched by congress. The Commodity Futures Trading Commission (CFTC) was formed in 1974 as a self-dependent agency with the mandate to issue forex regulations for monetary markets in the United States. The CFTC's forex regulations ensure the economic utility of the markets by encouraging their competitiveness and efficiency, and protecting market participants against and abusive forex trading practices.
In the United Kingdom, operations of Forex brokers are regulated by FSA (Financial Services Authority).The Financial Services Authority is non-governmental, self-dependent body, whose primary function is to make financial retail markets -that is, the markets that most of us use for trading- work more accurately. Their main aim is, essentially, to ensure that retail customers get a fair deal.
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