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The Forex establishment

Tue, Oct 20 2009, 10:27 GMT
by Joseph James Gelet

Elite E Services


While collecting data about the Forex market, it is important to know who the major players are. Who originally designed Forex, who are the major participants, who makes decisions that have a significant impact on the Forex market? This and more will be explored in “The Forex Establishment.” First, let’s examine what is an establishment.


What is an establishment?

Established interests, powers, businesses, individuals, and organizations, develop a territory in their own field. This is done by creating a paradigm; their own set of rules, objectives, and culture; associated with their field. ‘The Establishment’ originally was coined by British Journalist Henry Fairlie, in 1955:

"By the 'Establishment', I do not only mean the centres of official power—though they are certainly part of it—but rather the whole matrix of official and social relations within which power is exercised. The exercise of power in Britain (more specifically, in England) cannot be understood unless it is recognised that it is exercised socially."

The Forex Establishment is the Forex equivalent of those who control the Forex market by design, necessity, or other function. While modern Forex originated by the floating of the Dollar and the breakdown of the Breton Woods agreement, it has grown into something new. Those who were initially impacted by the floating of the US Dollar reacted to it in various ways. Some reacted by implementing advanced trading techniques such as hedging to combat a volatile currency environment. Others simply changed the way they did business. 


Table of contents

  • What types of players move the Forex market?
  • Banks
  • Central Banks
  • Governments
  • Corporations
  • Organizations (such as the IMF)
  • Hedge Funds
  • Forex Brokers
  • Who are the significant players, in each category?
  • Industry Statistics: Global Fund Management Industry
  • The new technology establishment
  • Who wants to support the US Dollar?
  • Alpha by money creation
  • Necessary data

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Legal disclaimer and risk disclosure

Foreign Exchange Trading is extremely risky and is for the sophisticated investor only. Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should only invest risk capital that you can afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor.

A Qualified Eligible Person (QEP) is: an FCM, Broker/Dealer, or CPO which has been registered and active for 2 years or has greater than $5,000,000 in assets, CTA which has been registered and active for 2 years or has greater than $5,000,000 in assets, Investment adviser which has been registered and active for 2 years or has greater than $5,000,000 in assets, Qualified Purchaser, Knowledgeable Employee, CPO, CTA, IA for the exempt pool or account, Principal of CPO, CTA IA for the exempt pool or account , Employee of CPO, CTA, IA for the exempt pool or account involved in investment activities for 1 year , Employee or agent of CPO, CTA, IA for the exempt pool or account involved in legal, accounting, auditing or financial services activities for 2 years and is an accredited investor (see note below), Trust not formed to invest in exempt pool or account with trustee being a QEP, Organization described in Sec. 501(c)(3) of the Internal Revenue Code with trustee being a QEP, Non-U.S. person or entity, An entitiy in which all participants are from any of the above groups, 4.5 entity with all QEP investors. The following qualifies as a QEP if portfolio requirements are met: Registered investment company, Bank, Insurance company, Plan, with greater than $5,000,000 in assets, for employees of a state or political subdivision, Employee benefit plan with greater than $5,000,000, Private business development company, Organization described in Sec. 501(c)(3) of the Internal Revenue Code with greater than $5,000,000 in assets, Corporation, trust, partnership with greater than $5,000,000 not formed to invest in exempt pool, Person with net worth greater than $1,000,000, Person with net income greater than $200,000 each of last 2 yrs. or greater than $300,000 when combined with spouse, Pool, trust separate account, collective trust with greater than $5,000,000 in assets, Certain governmental entities. Note: May also include spouse, child, sibling or parent if investment is made with knowledge and direction or a company, estate or any person acquiring participation by gift, bequest, separation or divorce from one of these persons.  Portfolio Requirement: The client must own securities with a market value greater than $2,000,000 and have had on deposit at an FCM, in the last 6 months, greater than $200,000 in margin and option premiums, have a combination of securities and FCM deposits. The percentages of required amounts must = 100%. From www.dynamicriskstrategy.com SPECIFIC FOREX RISK DISCLOSURE STATEMENT: BEFORE PROCEEDING, YOU MUST READ AND ACKNOWLEDGE THE FOLLOWING DISCLOSURE The risk of loss in trading foreign exchange markets (FOREX), also known as cash foreign currencies, the inter-bank market or the FOREX markets, can be substantial. You should therefore carefully consider whether such trading is suitable for you given your financial condition. Elite E Services does not control, and cannot endorse or vouch for the accuracy or completeness of any information or advice you may have received or may receive in the future from any other person not employed by Elite E Services regarding foreign currency trading or any managed account information. The factual information contained herein has been obtained from sources believed to be reliable but is NOT necessarily all-inclusive and is NOT guaranteed to be 100% accurate. The content herein is provided on a best efforts basis and is believed to be up-to-date and accurate; however, there are no explicit or implicit warranties of accuracy or timeliness made by Elite E Services or affiliates. FOREX trading involves substantial risk and is not for all investors. Investments or trading in the FOREX markets can be highly speculative and should only be done with risk capital which you can afford to lose and that, if lost, would not change or adversely affect your lifestyle. The high degree of leverage that is often possible in foreign exchange trading can work for you as well as against you. The use of leverage can lead to large losses as well as gains. Managed foreign exchange accounts can be subject to substantial charges for management and profit incentive Elite E Services, and in some cases introducing brokers’ commissions or mark-ups that are above and beyond the ordinary spread generally provided on a clearing firm’s trade execution platform. It may be necessary for those accounts that are subject to these charges to make substantial trading profits to avoid depletion or exhaustion of their assets. Performance results may vary due to account size, starting or closing date, the number of positions and/or markets traded and/or other factors. This brief statement cannot disclose all of the risks and other significant aspects of the foreign exchange markets. Therefore, you should carefully review the disclosures contained in this document to determine whether such trading is appropriate for you in light of you particular financial condition. There are also risks associated with utilizing an internet-based deal execution system software application, and computerized trading and money management tools including, but not limited to, the failure of the hardware and software. PAST PERFORMANCE DOES NOT NECESSARILY GUARANTEE FUTURE RESULTS, nor does it guarantee freedom from losses. The information contained herein should not be construed as an offer to buy or sell commodities, futures, securities, or any type of investment. Elite E Services highly recommends that before making a decision, the reader collects several opinions related to the decision and verify facts from several independent sources. ADDITIONAL WEB DISCLAIMER:  ALTHOUGH IT IS POSSIBLE TO PROFIT BY TRADING FOREIGN EXCHANGE, IT IS ALSO POSSIBLE TO LOSE 100% OF YOUR DEPOSIT.  THERE IS A HIGHER PROBABILITY OF LOSING VS. WINNING GIVEN ENOUGH TIME. FOREIGN EXCHANGE TRADING IS EXTREMELY RISKY AND IS ONLY FOR THE SOPHISTOCATED INVESTOR WITH AN ABOVE AVERAGE UNDERSTANDING OF CURRENCY MARKETS.  RISK CAPITAL SHOULD BE USED WHEN TRADING FX SYSTEMS, DEFINED AS CAPITAL THAT ONE CAN AFFORD TO LOSE 100%.  ANY INVESTOR MUST CONSIDER THE RISKS OF FOREX TRADING AND DETERMINE IF IT IS APPROPRIATE FOR HIM or HER.  THIS WEBSITE IS NOT A SOLICITATION TO INVEST IN FOREIGN EXCHANGE SYSTEMS, THIS WEBSITE DOES NOT RECOMMEND ANY PARTICULAR INVESTMENT. DRS is available to QEP's only. A Qualified Eligible Person (QEP) is: an FCM, Broker/Dealer, or CPO which has been registered and active for 2 years or has greater than $5,000,000 in assets, CTA which has been registered and active for 2 years or has greater than $5,000,000 in assets, Investment adviser which has been registered and active for 2 years or has greater than $5,000,000 in assets, Qualified Purchaser, Knowledgeable Employee, CPO, CTA, IA for the exempt pool or account, Principal of CPO, CTA IA for the exempt pool or account , Employee of CPO, CTA, IA for the exempt pool or account involved in investment activities for 1 year , Employee or agent of CPO, CTA, IA for the exempt pool or account involved in legal, accounting, auditing or financial services activities for 2 years and is an accredited investor (see note below), Trust not formed to invest in exempt pool or account with trustee being a QEP, Organization described in Sec. 501(c)(3) of the Internal Revenue Code with trustee being a QEP, Non-U.S. person or entity, An entitiy in which all participants are from any of the above groups, 4.5 entity with all QEP investors. The following qualifies as a QEP if portfolio requirements are met: Registered investment company, Bank, Insurance company, Plan, with greater than $5,000,000 in assets, for employees of a state or political subdivision, Employee benefit plan with greater than $5,000,000, Private business development company, Organization described in Sec. 501(c)(3) of the Internal Revenue Code with greater than $5,000,000 in assets, Corporation, trust, partnership with greater than $5,000,000 not formed to invest in exempt pool, Person with net worth greater than $1,000,000, Person with net income greater than $200,000 each of last 2 yrs. or greater than $300,000 when combined with spouse, Pool, trust separate account, collective trust with greater than $5,000,000 in assets, Certain governmental entities. Note: May also include spouse, child, sibling or parent if investment is made with knowledge and direction or a company, estate or any person acquiring participation by gift, bequest, separation or divorce from one of these persons.  Portfolio Requirement: The client must own securities with a market value greater than $2,000,000 and have had on deposit at an FCM, in the last 6 months, greater than $200,000 in margin and option premiums, have a combination of securities and FCM deposits. The percentages of required amounts must = 100%.

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Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.

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