MODULE 5 THE FOREIGN EXCHANGE MARKET

1
LEARNING OBJECTIVES

01 02 03 04
Explore the multitude of Detail how the structure of Describe the financial Examine the forms of
functions of the foreign the global foreign and operational currency quotations used
exchange market exchange market has transactions conducted by currency dealers,
evolved in the foreign exchange financial institutions, and
market agents of all kinds when
conducting foreign
exchange transactions

2
FUNCTIONS OF THE FOREIGN EXCHANGE
MARKET

 The foreign exchange market is the mechanism by which

participants:
 transfer purchasing power between countries;
 obtain or provide credit for international trade transactions; and
 minimize exposure to the risks of exchange rate changes.
STRUCTURE OF THE FOREIGN EXCHANGE
MARKET

 The foreign exchange market today has evolved dramatically over

time. The market is based on:
 supply and demand;
 market information and expectations; and
 negotiating strength.

 Global trading is a 24-hour-a-day process as shown in Exhibit 5.1.

 When the Asian-based trading centers overlap, the global currency

markets exhibit the greatest depth and liquidity.
EXHIBIT 5.1 Global Currency Trading: The Trading Day

For long description, see slide 48:

Appendix 1
The currency trading day extends 24 hours per day. The busiest time of the
day, which historically was the London and New York overlap, has now
started shifting farther East to Asia.
MARKET PARTICIPANTS—THE PLAYERS

 Participants in the foreign exchange market include liquidity seekers and profit seekers.

 Five broad categories of institutional participants operate in the market:

 Bank and nonbank foreign exchange dealers
 Private individuals and firms conducting commercial or investment transactions
 Speculators and arbitragers
 Central banks and treasuries
 Foreign exchange brokers
MARKET PARTICIPANTS: BANK AND NONBANK
DEALERS

 Banks and nonbank traders profit from buying foreign exchange at a bid price and reselling it at a slightly higher
ask or offer price.

 Dealers in the foreign exchange department of large international banks often function as “market makers.”

 These dealers stand willing at all times to buy and sell those currencies in which they specialize and thus
maintain an “inventory” position in those currencies.
MARKET PARTICIPANTS: COMMERCIAL AND
INVESTMENT TRANSACTORS

 Importers and exporters, international portfolio investors, multinational corporations, tourists, and others use the
foreign exchange market to facilitate execution of commercial or investment transactions.

 Their use of the foreign exchange market is necessary, but incidental, to their underlying commercial or
investment purpose.
MARKET PARTICIPANTS: SPECULATORS AND
ARBITRAGERS

 Speculators and arbitragers seek to profit from trading in the market itself.

 They operate in their own interest, without a need or obligation to serve clients or ensure a continuous market.

 While dealers seek the bid/ask spread, speculators seek all the profit from exchange rate changes and arbitragers
try to profit from simultaneous exchange rate differences in different markets.
MARKET PARTICIPANTS: CENTRAL BANKS AND
TREASURIES

 Central banks and treasuries use the market to acquire or spend their country’s foreign exchange reserves as
well as to influence the price at which their own currency is traded, a practice known as foreign exchange
intervention.

 They may act to support the value of their own currency because of policies adopted at the national level or
because of commitments to other countries under exchange rate currency agreements.

 The motive is not to earn a profit as such, but rather to influence the foreign exchange value of their currency in a
manner that will benefit the interests of their citizens.

 As willing loss takers, central banks and treasuries differ in motive from all other market participants.
MARKET PARTICIPANTS: FOREIGN EXCHANGE
BROKERS

 Foreign exchange brokers are agents who facilitate trading between dealers without themselves becoming
principals in the transaction.
  With the collapse of Bretton Woods and the flotation of currencies,
profit seekers entered the market in volume.
EVOLUTION OF THE
 The evolution of foreign exchange trading institutions is described in
MARKET Exhibit 5.2.

 The foreign exchange market is the world’s largest financial market.

EXHIBIT 5.2 Evolution of the Modern Currency Trading Marketplace

All foreign currency transactions require some combination of three elements: 1) trading, 2)
messaging, and 3) settlement. The modern history of currency trading involves the
evolution of these elements from voice-based and paper-based communication to the use
of computers for trading, financial messaging, and multilateral netting settlement.
For long description, see slide 49: Appendix 2
  Foreign exchange dealers knew who they were talking to on the
phone and trades were paper-based.
THE EVOLUTION OF  Traders did not know:

F X TRADING: 1980S  Recent trade rates at other banks

 Quotes from other dealers

 Trades were subject to recording errors.

THE EVOLUTION OF F X TRADING: 1990S

 Traders are conversing using computers and the Internet, but they still
know the bank and trader on the other end of the link.

 The computer-based process is more efficient from a variety of

operational perspectives, and more importantly, it is conducted in a
market where individual agents have instantaneous access to much
more relevant market data.

 But there are still constraints and limitations.

EXHIBIT 5.3 Foreign Exchange Trading in the 1980s and 1990s

For long description, see slide 50: Appendix 3

THE EVOLUTION OF F X TRADING: 2010

 The separation of the interdealer and customer markets has

effectively broken down (Exhibit 5.4) with the introduction of:
 multibank trading systems (MBT)
 single-bank trading systems (SMT)
 prime brokerage (PB)

 Small customers gain access to the global currency market

through a variety of structures, including retail aggregators.
EXHIBIT 5.4 The Foreign Exchange Market Today

For long description, see slide 51: Appendix 4

Source: Constructed by authors based on “Foreign Exchange Market Structure, Players and
Evolution,” Michael R. King, Carol Osler and Dagfinn Rime, Norges Bank, Working
Paper,Research Department, 2011, 10, p. 21, and “The anatomy of the global FX market through
the lens of the 2013 Triennial Survey,” by Dagfinn Rime and Andreas Schrimpf, BI SQuarterly
Review, December 2013.
THE THREE COMPONENTS OF FX TRADES

 The exchange of a foreign exchange trade today actually

involves three different components:
 The foreign exchange trade transaction agreement
 Electronic communication and notification for payment and
settlement
 Final settlement of the currency trade
F X MARKET MANIPULATIONS: FIXING THE FIX (1 OF 2)

 Following the turmoil surrounding the setting of LIBOR rates in the interbank market during the 2007–2009 period,
similar allegations arose over the possible manipulation of benchmarks in the foreign exchange markets in 2013
and 2014.

 Much of the focus was on the London fix, the 4 p.m. daily benchmark rate used by a multitude of institutions and
indices for marking value. Traders were alleged to be exchanging emails, using social networking sites, and even
phone calls, to collaborate on market movements and price quotes at key times.
FX MARKET MANIPULATIONS: FIXING THE FIX (2 OF 2)

 By 2014, nearly 75% of all currency trades were executed electronically.

 This growing dominance of electronic execution was thought to be something of a market fix for the 4 p.m.
market spikes seen previously, thought to be caused by collusion among traders.

 Electronic trading might still facilitate market manipulation, just of a more sophisticated kind.

 It appears there will always be the human element in trading.

THE FX GLOBAL CODE OF CONDUCT 2016

 The Bank for International Settlements (BIS) proposed a set of six global principles following significant market
manipulation and coordinated malfeasance in 2013 and 2014
 Ethics
 Governance
 Information Sharing
 Execution
 Risk Management and Compliance
 Confirmation and Settlement Processes
TRANSACTIONS IN THE FOREIGN EXCHANGE MARKET
(1 OF 3)

 A spot transaction is the purchase of foreign exchange with delivery and payment between banks taking place
normally on the second following business day.

 Exhibit 5.5 provides a timetable of spot transactions, forward transactions, and swap transactions.

 The date of settlement is referred to as the value date.

EXHIBIT 5.5 Foreign Exchange Transactions and Settlement

Foreign exchange operations are defined by the timing—the future date—set for delivery. There are
in principle three major categories of over-the-counter transactions categorized by future delivery:
spot (which may be overnight), forward (including outright forward), and swap transactions.

For long description, see slide 52: Appendix 5

TRANSACTIONS IN THE FOREIGN EXCHANGE MARKET
(2 OF 3)

 An outright forward transaction (usually called just forward) requires delivery at a future value date of a
specified amount of one currency for a specified amount of another currency.

 The exchange rate is established at the time of the agreement, but payment and delivery are not required until
maturity.

 Forward exchange rates are usually quoted for value dates of one, two, three, six, and twelve months.

 Buying forward and selling forward describe the same transaction (the only difference is the order in which
currencies are referenced).
TRANSACTIONS IN THE FOREIGN EXCHANGE MARKET
(3 OF 3)

 A swap transaction in the interbank market is the simultaneous purchase and sale of a given amount of foreign
exchange for two different value dates.

 Both purchase and sale are conducted with the same counterparty.

 Some different types of swaps are:

 Spot against forward
 Forward-forward
 Nondeliverable forwards (NDF)
SIZE OF THE  The Bank for International Settlements (BIS) estimated daily global
FOREIGN net turnover in the foreign exchange market to be $6.6 trillion in April

EXCHANGE 2016, a 30% increase from 2016.

MARKET  Exhibit 5.6 shows data from 1989 to 2019.

EXHIBIT 5.6 Global Foreign Exchange Market Turnover, 1989-2019

For long description, see slide 53: Appendix 6

Source: Bank for International Settlements, “Triennial Central Bank Survey: Foreign
Exchange Turnover in April 2019,” Table 1, p. 10, September 16, 2019.
GEOGRAPHICAL DISTRIBUTION

 Exhibit 5.7 shows the proportionate share of foreign exchange trading for the top 10 markets.

 The United Kingdom (London) continues to be the hub of the global foreign exchange trading with 53% of the
market, followed by the U.S. with 20%.

 One of the oldest markets, Switzerland, saw a resurgence in 2019.

 The relative growth in Asia versus Europe is not surprising given the growth of Asian economics, markets, and
currencies.
EXHIBIT 5.7 Top 10 Geographic Trading Centers in the FX Market

For long description, see slide 54: Appendix 7

Source: Bank for International Settlements, “Triennial Central Bank Survey: Foreign
Exchange Turnover in April 2019,” Table 6, p. 14, September 16, 2019. Values are on a net-
gross basis, average daily turnover in April.
  Exhibit 5.8 shows global shifts in the currency composition of
trading.

 The U.S. dollar continues to maintain its share with a presence of

CURRENCY 88% of global currency trades.

COMPOSITION  The Japanese yen and the European euro both showed declines in
recent years in trade share, their roles as two of the world’s three
most frequently traded currencies appearing to be under siege by
the Chinese renminbi (4.1%, nearly doubling since 2013) and a
number of other emerging market currencies.
EXHIBIT 5.8
Daily FX Trading by Currency Pair (percent of total)

For long description, see slide 55: Appendix 8

Source: Constructed by authors based on data presented in Table 3, p. 11, of “Triennial

Central Bank Survey, Foreign Exchange Turnover in April 2019,” Bank for International
Settlements, September 2019.
FOREIGN EXCHANGE RATES AND QUOTATIONS (1 OF 7)

 A foreign exchange rate is the price of one currency expressed in terms of another currency.

 A foreign exchange quotation (or quote) is a statement of willingness to buy or sell at an announced rate.
Foreign Exchange Rates and Quotations (2 of 7)
 Quotations may be designated by traditional currency symbols or by ISO
codes.
 All electronic trading between institutions in the global marketplace uses the
three-letter ISO codes.
 The paper currency of most countries continues to be represented using
the country’s traditional currency symbol.
Currency Traditional Symbol I SO 4217 Code
U.S. dollar $ USD
European euro €
Euro

EU R
Great Britain £
Pound

GBP
pound ¥
Japanese yen Yen

JPY
Mexican peso Ps MXN
Foreign Exchange Rates and Quotations (3 of 7)
 Every currency exchange involves two currencies: the base or unit currency (CU
R1), and the price or quote currency (CUR2):
CUR1 / CUR2
 The quotation indicates the number of units of CUR2 required in exchange for
receiving one unit of CUR1.
 For example, a quotation of
EUR / USD1.2174
designates the euro (EUR) as the base currency, the dollar (USD) as the price
currency.
 The exchange rate is US D1.2174 = EUR1.00.

 Exhibit 5.9 provides an overview of the multitude of terms used to quote

currencies.
Exhibit 5.9 Foreign Currency Quotations
European terms American terms
Foreign currency price of one dollar U.S. dollar price of one euro (EUR)
(USD)
EUR/USD1.2174
USD/EUR0.8214
or
or
EUR1.00 = USD1.2174
USD1.00 = EUR0.8214
EUR is the base or unit currency
USD is the base or unit currency USD is the quote or price currency
EUR is the quote or price currency

1
= USD 1.2714 = EUR 1.00
EUR 0.8214 USD
Foreign Exchange Rates and Quotations (4 of 7)
 European terms, the quoting of the quantity of a specific currency per
one U.S . dollar, is most common.
 There are two major exceptions: the euro and the U .K . pound
sterling.
 Both are normally quoted in American terms—the U.S . dollar price
of one euro and the U.S . dollar price of one pound sterling.
 American terms are also utilized in quoting rates for most foreign
currency options and futures, as well as in retail markets that deal with
tourists.
Foreign Exchange Rates and Quotations (5 of 7)
 Foreign exchange quotes are at times described as either direct or
indirect.
 In this pair of definitions, the home or base country of the currencies
being discussed is critical.
 A direct quote is a home currency price of a unit of foreign currency.

 An indirect quote is a foreign currency price of a unit of home

currency.
 The form of the quote depends on what the speaker regards as
“home.”
Foreign Exchange Rates and Quotations (6 of 7)
 Interbank quotations are given as a bid and ask. Exhibit 5.10 shows how
these quotations may be seen in the market.
 A bid is the price (i.e., exchange rate) in one currency at which a dealer will
buy another currency.
 An ask is the price (i.e., exchange rate) at which a dealer will sell the other
currency.
 Dealers bid (buy) at one price and ask (sell) at a slightly higher price,
making their profit from the spread between the buying and selling prices.
 A bid for one currency is also the offer for the opposite currency.

 See Exhibit 5.11 for closing rates for selected currencies (plus the SDR) as
quoted by The Wall Street Journal.
EXHIBIT 5.10 Bid, Ask, and Mid-Point Quotation

For long description, see slide 59: Appendix 9

In text documents of any kind, the exchange rate may be stated as mid-
point quote, the average of bid and ask, of $1.2174 / €

For example, The Wall Street Journal would quote the following currencies as follows:

Blank Last Bid Blank Last Bid

Euro (EUR/USD) 1.2170 Brazilian Real (USD/BRL) 1.6827
Japanese Yen (USD/JPY) 83.16 Canadian Dollar (USD/CAD) 0.9930
U.K. Pound (GBP/USD) 1.5552 Mexican Peso (USD/MXN) 12.2365
EXHIBIT 5.11 Exchange Rates: New York Closing Snapshot

For long description, see slide 60: Appendix 10

Note: Quotes based on trading among banks of $1 million and more, as quoted at 4 p.m. ET by Reuters. Rates are
drawn from the The Wall Street Journal online on May 11, 2021.
Foreign Exchange Rates and Quotations (7 of 7)
 Many currency pairs are only inactively traded, so their exchange
rate is determined through their relationship to a widely traded third
currency (cross rate).
 Cross rates can be used to check on opportunities for intermarket
arbitrage.
Intermarket Arbitrage
 Quoted rates
Citibank quotes U.S. dollars per euro U S D1.3297 = 1 EU R
Barclays Bank quotes U.S. dollars per pound U S D1.5585 = 1 G B P
sterling
Dresdner Bank quotes euros per pound sterling EU R1.1722 = 1 G BP

 Cross rate calculation based on Citibank and Barclays Bank quotes

USD 1.5585 = GDP 1.00

= EUR 1.721 per GDP
USD 1.3297 = EUR 1.00

 The calculated is .001 less than the Dressner Bank’s quote, which results in
triangular arbitrage.
EXHIBIT 5.12 Triangular Arbitrage by a Market Trader

For long description, see slide 61: Appendix 11

FORWARD QUOTATIONS

 Spot rates are typically quoted on an outright basis (meaning all digits expressed) whereas forward rates are
typically quoted in points or pips (the last digits of a currency quotation).

 Forward rates of one year or less maturity are termed cash rates; for longer than one-year they are called swap
rates.

 As shown in Exhibit 5.13, the bid and ask spot quotes are outright quotes, but the forwards are stated as points
from the spot rate.
EXHIBIT 5.13 Spot and Forward Quotations for the Euro and Japanese Yen

For long description, see slide 62: Appendix 12

Appendix

47
Appendix 1

Long Description for Exhibit 5.1

The x-axis shows the Coordinated Universal Time (UTC) from 08 to 09. The
details are as follows: Tokyo and Sydney stretch from 10 to 09. London’s trading
hours are from 08 to 05. New York’s hours range from 01 to 10. The London New
York overlap stretches from 01 to 05 and the London Tokyo overlap is from 08 to
09.

Return to presentation
Appendix 2

Long Description for Exhibit 5.2

The evolution of the marketplace can be divided into two major eras. the Telephone Era of Currency Trading from
1970 to 1987 and the Computer Era of Currency Trading from 1987 to the present. The following provides the
notable events during the Telephone Era by year: 1971, Bretton Woods begins to break down; 1973, SWIFT
initiated; 1974, Bankhaus Herstatt Closure introduces settlement risk; and 1987, Reuters launches system for
bilateral trades between dealers and launches FXFX page. The following provides the notable events during the
Computer Era by year: 1990, EBS launches competitive product to Reuters; 1992, Reuters launches online limit
order system; 1996, State Street launches retail aggregator FX Connect; 1999, Currenex multi bank trading
system; 2002, Continuous Linked Settlement Bank, CLS, opens; 2005 to 2007, Interdealer and customer FX
market tiering ends with introduction of multitude of electronic systems; and 2016, Cyber attacks on central bank
currency transaction messages in SWIFT.

Return to presentation
Appendix 3

Long Description for Exhibit 5.3

The diagram compares how customers, brokers, and dealers interacted in the nineteen eighties versus how they
interacted in the nineteen nineties. In the nineteen eighties, all trades were conducted by telephone between
dealers and currency brokers. Retail customers were outsiders with limited access. The diagram shows
interdealer network with voice broker and dealer interacting with customers at various levels. In the nineteen
nineties, electronic brokers began to conduct trades by voice and by electronic messaging with major dealers, but
retail customers remained outsiders. The diagram shows interdealer network comprising of voice broker, and
dealer having a two-way communication with the electronic broker and to the customer.

Return to presentation
Appendix 4

Long Description for Exhibit 5.4

The two-tier structure that separated the interdealer market and the customer market for so many years is
effectively gone. Today’s system, dominated by electronic trading, allows customers all kinds of direct
access to global trading. The diagram shows dealers having a two-way communication with electronic
brokers, voice brokers, prime brokers, single bank trading systems, and multi bank training systems. Retail
aggregators and single bank trading systems connect customers to dealers. Hedge fund customers interact
with prime brokers and multi bank trading systems, and emergent market customers interact with voice
brokers.

Return to presentation
Appendix 5

Long Description for Exhibit 5.5

The details are as follows: The delivery periods mentioned are today, tomorrow, the day after tomorrow, two or more days
after tomorrow, and later than two or more days after tomorrow. The following list provides the delivery period for each
category. Spot transactions stretch from tomorrow to the day after tomorrow. Overnight transactions stretch from today to
the day after tomorrow. Forward or Outright Forward deliveries may occur two or more days after tomorrow. Swap
transactions include spot against forward, forward, forward swaps, and nondeliverable forwards. Swap transactions can
take place from the day after tomorrow to any period later than two or more days after tomorrow.

Return to presentation
Appendix 6

Long Description for Exhibit 5.6

The x-axis shows years from 1989 to 2019 in increments of 3 years. The y-axis shows U.S. dollars in
billions from 0 to 7000 in increments of 1000. Each stacked bar is divided into segments representing
spot transactions, outright forwards, FX swaps, and options and other. The details of the graph showing
daily turnover and percentage change respectively are as follows: 1989: 590, blank; 1992: 820, plus 39;
1995: 1190, plus 45; 1998: 1527, plus 28; 2001: 1239, minus 19; 2004: 1934, plus 54; 2007: 3324, plus
72; 2010: 3973, plus 20; 2013: 5357, plus 35; 2016: 5066, minus 5; and 2019: 6590, plus 30.

Return to presentation
Appendix 7

Long Description for Exhibit 5.7

The x-axis shows years from 2013 to 2019 in increments of 3. The y-axis shows U.S. dollars in billions from 0
to 4000 in increments of 500. The FX trading percentage for the selected countries in 2013, 2016, and 2019
respectively are as follows: United Kingdom: 41, 36, 53; United States: 19, 19, 20; Singapore: 6, 8, 9; Hong
Kong: 4, 7, 9; Japan: 6, 6, 6; Switzerland: 3, 2, 4; France: 3, 3, 2; Germany: 2, 2, 2; Australia: 3, 2, 2: and
China: 1, 1, 2.

Return to presentation
Appendix 8 (1 of 4)

Long Description for Exhibit 5.8

The first table lists trading for different currency pairs versus the dollar for the years 2001, 2004, 2007, 2010, 2013, 2016, and 2019. The details
respectively are as follows: USD, EUR; Euro; 2001, 30.0; 2004, 28.0; 2007, 26.8; 2010, 27.7; 2013, 24.1; 2016, 23.1; and 2019, 24.0. USD, JPY; Japanese
yen; 2001, 20.2; 2004, 17.0; 2007, 13.2; 2010, 14.3; 2013, 18.3; 2016, 17.8; and 2019, 13.2. USD, GBP; British pound; 2001, 10.4; 2004, 13.4; 2007, 11.6;
2010, 9.1; 2013, 8.8; 2016, 9.3; and 2019, 9.6. USD, AUD; Australian dollar; 2001, 4.1; 2004, 5.5; 2007, 5.6; 2010, 6.3; 2013, 6.8; 2016, 5.2; and 2019, 5.4.
USD, CAD; Canadian dollar; 2001, 4.3; 2004, 4; 2007, 3.8; 2010, 4.6; 2013, 3.7; 2016, 4.3; and 2019, 4.4. USD, CNY; Chinese yuan; 2001, No data; 2004,
No data; 2007, No data; 2010, 0.8; 2013, 2.1; 2016, 3.8; and 2019, 4.1. USD, CHF; Swiss franc; 2001, 4.8; 2004, 4.3; 2007, 4.5; 2010, 4.2; 2013, 3.4; 2016,
3.6; and 2019, 3.5. USD, HKD; Hong Kong dollar; 2001, No data; 2004, No data; 2007, No data; 2010, 2.1; 2013, 1.3; 2016, 1.5; and 2019, 3.3. USD, KRW;
Korean won; 2001, No data; 2004, No data; 2007, No data; 2010, 1.5; 2013, 1.1; 2016, 1.5; and 2019, 1.9. USD, INR; Indian rupee; 2001, No data; 2004,
No data; 2007, No data; 2010, 0.9; 2013, 0.9; 2016, 1.1; and 2019, 1.7. USD, SGD; Singapore dollar; 2001, No data; 2004, No data; 2007, No data; 2010,
No data; 2013, 1.2; 2016, 1.6; and 2019, 1.7. USD, NZD; New Zealand dollar; 2001, No data; 2004,
Appendix 8 (2 of 4)

No data; 2007, No data; 2010, No data; 2013, 1.5; 2016, 1.5; and 2019, 1.6. USD, MXN; Mexican peso; 2001, No data; 2004, No
data; 2007, No data; 2010, No data; 2013, 2.4; 2016, 1.8; and 2019, 1.6. USD, SEK; Swedish krona; 2001, No data; 2004, No data;
2007, 1.7; 2010, 1.1; 2013, 1; 2016, 1.3; and 2019, 1.3. USD, NOK; Norwegian krone; 2001, No data; 2004, No data; 2007, No data;
2010, No data; 2013, 0.9; 2016, 0.9; and 2019, 1.1. USD, BRL; Brazilian real; 2001, No data; 2004, No data; 2007, No data; 2010,
0.6; 2013, 0.9; 2016, 0.9; and 2019, 1. USD, RUB; Russian rouble; 2001, No data; 2004, No data; 2007, No data; 2010, No data;
2013, 1.5; 2016, 1.1; and 2019, 1. USD, ZAR; South African rand; 2001, No data; 2004, No data; 2007, No data; 2010, 0.6; 2013, 1;
2016, 0.8; and 2019, 0.9. USD, TRY; Turkish Ilra; 2001, No data; 2004, No data; 2007, No data; 2010, No data; 2013, 1.2; 2016, 1.3;
and 2019, 0.9. USD, TWD; Taiwan dollar; 2001, No data; 2004, No data; 2007, No data; 2010, No data; 2013, 0.4; 2016, 0.6; and
2019, 0.9. USD, PLN; Polish zioty; 2001, No data; 2004, No data; 2007, No data; 2010, No data; 2013, 0.4; 2016, 0.4; and 2019,
0.4. USD, Other; USD versus others; 2001, 16; 2004, 15.9; 2007, 18.4; 2010, 11.2; 2013, 4.0; 2016, 4.2; and 2019, 4.9. Dollar total;
2001, 89.8; 2004, 88.1; 2007, 85.6; 2010, 85; 2013, 86.9; 2016, 87.6; and 2019, 88.4.
Appendix 8 (3 of 4)

The second table lists trading for different currency pairs versus the euro for the years 2001, 2004, 2007, 2010, 2013, 2016, and 2019.
The second table reads as follows: EUR, GBP; British pound; 2001, 2.1; 2004, 2.4; 2007, 2.1; 2010, 2.7; 2013, 1.9; 2016, 2; and 2019, 2. EU
R, JPY; Japanese yen; 2001, 2.9; 2004, 3.2; 2007, 2.6; 2010, 2.8; 2013, 2.8; 2016, 1.6; and 2019, 1.7. EUR, CHF; Swiss franc; 2001, 1.1;
2004, 1.6; 2007, 1.9; 2010, 1.8; 2013, 1.3; 2016, 0.9; and 2019, 1.1. EUR, SEK; Swedish krona; 2001, No data; 2004, No data; 2007, 0.7;
2010, 0.9; 2013, 0.5; 2016, 0.7; and 2019, 0.5. EUR, NOK; Norwegian krone; 2001, No data; 2004, No data; 2007, No data; 2010, No data;
2013, 0.4; 2016, 0.6; and 2019, 0.5. EUR, AUD; Australian dollar; 2001, 0.1; 2004, 0.2; 2007, 0.3; 2010, 0.3; 2013, 0.4; 2016, 0.3; and 2019,
0.3. EUR, CAD; Canadian dollar; 2001, 0.1; 2004, 0.1; 2007, 0.2; 2010, 0.3; 2013, 0.3; 2016, 0.3; and 2019, 0.2. EUR, PLN; Polish zioty;
2001, No data; 2004, No data; 2007, No data; 2010, No data; 2013, 0.3; 2016, 0.3; and 2019, 0.2. EUR, DKK; Danish krone; 2001, No data;
2004, No data; 2007, No data; 2010, No data; 2013, 0.2; 2016, 0.2; and 2019, 0.2. EUR, HUF; Hungarian forint; 2001, No data; 2004, No
data; 2007, No data; 2010, No data; 2013, 0.2; 2016, 0.1; and 2019, 0.2. EUR, CNY; Chinese yuan; 2001, No data; 2004, No data; 2007,
No data; 2010, No data; 2013, 0; 2016, 0; and 2019, 0.1. EUR, TRY; Turkish Ilra; 2001, No data; 2004, No data; 2007, No data; 2010, No
data; 2013, 0.1; 2016, 0.1; and 2019, 0. EUR, Other; Other versus euro; 2001, 1.6; 2004, 1.9; 2007, 2.5; 2010, 2.6; 2013, 0.9; 2016, 1.3; and
2019, 1.3. Euro Total: 2001, 7.9; 2004, 9.4; 2007, 10.3; 2010, 11.4; 2013, 9.3; 2016, 8.4; and 2019, 8.3.
Appendix 8 (4 of 4)

The third table lists trading for different currency pairs versus the Japanese yen for the years 2001, 2004, 2007, 2010, 2013, 2016, and 2019. The third table reads as
follows: JPY, AUD; Australian dollar; 2001, No data; 2004, No data; 2007, No data; 2010, 0.6; 2013, 0.9; 2016, 0.6; and 2019, 0.5. JPY, CAD; Canadian dollar; 2001, No
data; 2004, No data; 2007, No data; 2010, No data; 2013, 0.1; 2016, 0.1; and 2019, 0.1. JPY, NZD; New Zealand dollar; 2001, No data; 2004, No data; 2007, No data;
2010, 0.1; 2013, 0.1; 2016, 0.1; and 2019, 0.1. JPY, TRY; Turkish Ilra; 2001, No data; 2004, No data; 2007, No data; 2010, No data; 2013, 0; 2016, 0.1; and 2019, 0.1. JP
Y, ZAR; South African rand; 2001, No data; 2004, No data; 2007, No data; 2010, No data; 2013, 0.1; 2016, 0.1; and 2019, 0.1. JPY, BRL; Brazilian real; 2001, No data;
2004, No data; 2007, No data; 2010, No data; 2013, 0.1; 2016, 0; and 2019, 0. JPY, Other; Other versus yen; 2001, 1.2; 2004, 0.7; 2007, 1.5; 2010, 1.2; 2013, 0.8; 2016,
1.3; and 2019, 1. Yen total: 2001, 1.2; 2004, 0.7; 2007, 1.5; 2010, 1.9; 2013, 2.1; 2016, 2.3; 2019, 1.9; Other currency pairs; all other; 2001, 1.1; 2004, 1.9; 2007, 2.7;
2010, 1.8; 2013, 1.7; 2016, 1.9; and 2019, 1.6. Global total: 2001, 100; 2004, 100; 2007, 100; 2010, 100; 2013, 100; 2016, 100; and 2019, 100.

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Appendix 9

Long Description for Exhibit 5.10

The details are as follows: base currency, EUR; quote currency, USD; you can sell 1 euro for 1.2170 dollars in “Bid”; you
can buy 1 euro for 1.2178 dollars in “Ask”; or traders may quote only the last two digits on a rate as 1.2170 or 78.

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Appendix 10

Long Description for Exhibit 5.11

The details for currency, symbol, code, USD equivalent, and currency per USD respectively are as follows: Americas: Argentina, peso, Ps, A R S; 0.0107; and 93.8528.
Brazil, real; R dollar; BRL; 0.1913; 5.2287. Canada, dollar, C dollar; CAD; 0.8261; 1.2105. Chile, peso; dollar; CLP; 0.001435; 697. Mexico, new peso; dollars; MXN;
0.0502; 19.9392. Asia: Australia, dollar; A dollar; AUD; 0.7829; 1.2773. China, yuan; Y; CNY; 0.1558; 6.4166. Hong Kong, dollar; H K dollar; HKG; 0.1288; 7.7656.
India, rupees; Rs; INR; 0.01361; 73.48555. Indonesia, rupiah; Rp; I D R; 0.0000704; 14198. Japan, yen; Y; JPY; 0.00919; 108.84; Singapore, dollar; S dollar; SGD;
0.7543; 1.3257. South Korea, won; W; KRW; 0.0008954; 1116.83. Thailand, baht; B; THB; 0.03213; 31.12. Vietnam, dong; d; VND; 0.00004336; 23062. Europe:
Czech Republic, koruna; Kc; CZK; 0.04744; 21.08. Denmark, korne; Dkr; DKK; 0.1631; 6.1307. Euro area, euro; e; EUR; 1.213; 0.8244. Norway, krone; NKr; NOK;
0.1209; 8.2727. Russia, ruble; R; R U B; 0.01345; 74.327. Sweden, krona; SKr; SEK; 0.1198; 0.9011. Switzerland, franc; Fr.; CHF; 1.1098; 0.9011. Middle East and
Africa: Egypt, pound; pound symbol; E G P; 0.0638; 15.6713. Israel, shekel; Shk; ILS; 0.3068; 3.2593. Saudi Arabia, riyal; SR; SAR; 0.2667; 3.7502. South Africa,
rand; R; ZAR; 0.0712; 14.0492.

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Appendix 11

Long Description for Exhibit 5.12

The banks at the three edges of the triangle are Citibank New York, Barclays Bank, London; and Dresdner
Bank. the steps are as follows: Step 1. Trader sells USD 1,000,000 to Barclays Bank at USD 1.5585 equals GB
P 1.00. Step 2. Trader receives GBP 641,643. Step 3. Trader sells GBP 641,643 to Dresdner Bank at EUR
1.1722 equals GBP 1.00. Step 4. Trader receives EUR 752,133 from Dresdner Bank. Step 5. Trader sells EUR
752,133 to Citibank at USD 1.3297 equals EUR 1.00. Step 6. Trader receives USD 1,000,112.

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Appendix 12 (1 of 2)

The table shows cash and swap rates for term, bid points and rate, and ask point and rate for Euro and Japanese yen. Euro: Spot
and forward (dollar equals euro 1.00) and Japanese yes: Spot and forward (yen equals dollar 1.00). The term wise details for Euro
and Japanese yen are as follows: term, spot; euro bid rate, 1,0897; euro ask rate, 1.0901; yen bid rate, 118.27; yen ask rate, 118.37. 1
week: euro bid point, 3; euro bid rate, 1.0900; euro ask point, 4; euro ask rate, 1.0905; yen bid point, minus 10; yen bid rate, 118.17;
yen ask point, minus 9; yen ask rate, 118.28. 1 month: euro bid point, 17; euro bid rate, 1.0914; euro ask point, 19; euro ask rate,
1.0920; yen bid point, minus 51; yen bid rate, 117.76; yen ask point, minus 50; yen ask rate, 117.87. 2 months: euro bid point, 35;
euro bid rate, 1.0932; euro ask point, 36; euro ask rate, 1.0937; yen bid point, minus 95; yen bid rate, 117.32; yen ask point, minus
93; yen ask rate, 117.44. 3 months: euro bid point, 53; euro bid rate, 1.0950; euro ask point, 54; euro ask rate, 1.0955; yen bid point,
minus 143; yen bid rate, 116.84; yen ask point, minus 140; yen ask rate, 116.97. 4 months: euro bid point, 72; euro bid rate, 1.0969;
euro ask point, 76; euro ask rate, 1.0977; yen bid point, minus 195; yen bid rate, 116.32; yen ask point, minus 109; yen ask rate,
116.47. 5 months: euro bid point, 90; euro bid rate, 1.0987; euro ask point, 95; euro ask rate, 1.0996; yen bid point, minus 240; yen
bid rate, 115.87; yen ask point, minus 237; yen ask rate, 116.00.
Appendix 12 (2 of 2)

6 months: euro bid point, 112; euro bid rate, 1.1009; euro ask point, 113; euro ask rate, 1.1014; yen bid point, minus
288; yen bid rate, 115.39; yen ask point, minus 287; yen ask rate, 115.50. 9 months: euro bid point, 175; euro bid
rate, 1.1072; euro ask point, 177; euro ask rate, 1.1078; yen bid point, minus 435; yen bid rate, 113.92; yen ask
point, minus 429; yen ask rate, 114.08. 1 year: euro bid point, 242; euro bid rate, 1.1139; euro ask point, 245; euro
ask rate, 1.1146; yen bid point, minus 584; yen bid rate, 112.43; yen ask point, minus 581; yen ask rate, 112.56. 2
years: euro bid point, 481; euro bid rate, 1.1378; euro ask point, 522; euro ask rate, 1.1432; yen bid point, minus
1150; yen bid rate, 106.77; yen ask point, minus 1129; yen ask rate, 107.08. 3 years: euro bid point, 750; euro bid
rate, 1.1647; euro ask point, 810; euro ask rate, 1.1711; yen bid point, minus 1748; yen bid rate, 100.79; yen ask
point, minus 1698; yen ask rate, 101.39. 4 years: euro bid point, 960; euro bid rate, 1.1857; euro ask point, 1039;
euro ask rate, 1.1940; yen bid point, minus 2185; yen bid rate, 96.42; yen ask point, minus 2115; yen ask rate,
97.22. 5 years: euro bid point, 1129; euro bid rate, 1.2026; euro ask point, 1276; euro ask rate, 1.2177; yen bid point,
minus 2592; yen bid rate, 92.35; yen ask point, minus 2490; yen ask rate, 93.47.

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End of Module
64