UK foreign exchange markets

Abstract

Foreign exchange markets are market where financial assets are traded. These assets include money in currency form, shares, rights, derivatives, and securities. Shares are the value of a company split into denominated units that investors purchase. The company selling its shares offers them as ordinary or preferential. Ordinary shares give the holders voting rights as they share in the after-tax profits. Preferential shareholders only share in the earnings before tax (EBIT) and have no voting rights. This is a form of raising capital. Rights are shares offered for sale to current shareholders at a discount price. (Fouque, 2000)

Derivatives include futures, forwards and spot contracts. Futures are only traded in standardized and well-organized markets such as the United Kingdom Foreign Exchange. Most forex markets offer Swaps instead of futures. They are promises to settle payments at a specified future date. The party with an extended position (buyer) can affect the maturity of the contract. The short position (seller) has no effect on the maturity of the transaction.