The network of large banks and dealers that trade currencies with each other directly and through electronic platforms, forming the top layer of FX pricing.
There is no central exchange for spot currencies. Price is discovered across bank platforms, electronic communication networks and a handful of primary venues, with the same pair trading at slightly different prices in different places at the same instant.
Everything retail sees is derived from this layer. A broker's quote is the best price it can source from its liquidity-providers, plus a markup. Access is tiered: size, credit and relationship determine what price you are shown.
Example: a bank dealing EUR 100,000,000 might see a 0.2-pip spread, a hedge fund through a prime-broker 0.4 pips on EUR 5,000,000, and a retail client 0.8 pips on EUR 100,000. Same market, three different prices.
Original diagrams for the ideas on this page. Illustrative, not real market data.
The bid-ask spread. Buy orders sit below, sell orders above, and the gap between the best bid (50.01) and best ask (50.04) is the spread you pay to cross. Bar length shows the size resting at each price.
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