Over the Counter (OTC) Forex (also: “off-exchange forex”):
Trading that is not carried out through an exchange, but is done directly between two firms or individuals. Over the counter forex trading is the opposite of exchange trading, which is trading carried out through an exchange, such as forex options traded on the Chicago Mercantile Exchange.
Interbank (Primary) Forex Market:
Where large corporations and large financial institutions, including banks and insurance companies, deal with the risks related to the volatility of forex prices. The real interbank market is accessible only to organizations that complete large trades and have a very high net worth.
Secondary OTC Forex Market:
Allows retail traders to carry out forex trades. The secondary OTC market offers differing prices, but maintains many similarities to the interbank market.
Spot Market:
A market of immediate (or one to two day) delivery of, and payment for the product (in this case, currency). This is opposed to a futures market, where delivery and payment occur at some future time according to the contract between the two parties.
Clearinghouse or liquidity provider:
Clearinghouse, or clearing firm, generally means an organization that works with exchanges to handle confirmation, delivery and settlement of transactions that occur through the exchange. Technically, OTC markets like Forex do not have clearinghouses. However, large banks and brokerages act much like clearinghouses and often aggregate trades from smaller firms, so they are referred to as clearinghouses or liquidity providers.
Market Maker or Broker/Dealer:
A broker-dealer firm that accepts the risk of buying or selling currencies to facilitate trading in that currency. Once an order is received, the market maker immediately enters the market as a seller or buyer. The Market Maker may choose to offsets its sale or purchase by opening the opposite position with a clearing house.
Introducing Broker (IB):
IBs are firms that delegate trade processing and back-office operations to other firms and do not accept client funds or execute trades themselves. IBs generally focus on providing personal service and customer support and partner with a market maker that processes trades for the IB. All ActForex software, including ActBroker, allows your firm to take on multiple levels of IBs.
Dealer:
A dealer works at the Dealing Desk of a Market Maker and manually accepts orders from traders and manually opens positions with a clearinghouse to offset the Market Maker’s risk.
Retail investor/trader:
A retail trader is any individual trading for him/herself, as opposed to an institutional investor/trader who trades on behalf of an institution.
Application Programming Interface (API):
An interface or protocol that two computer programs use to exchange information and request services from each other. ActForex’s IT department can integrate our system with a wide range of third party software and systems through an API.
Managed Service Provider (MSP):
MSPs are software companies that provide online applications and additional support and hosting to their clients; ActForex is an MSP. Application Service Providers (ASPs) provide online applications, including development updates, but do not generally include any hosting or support.
Straight-through processing:
Straight Through Processing (STP) enables the entire trade process for capital markets and payment transactions to be conducted electronically without the need for re-keying or manual intervention, subject to legal and regulatory restrictions.
White-Label:
Having a White-Label platform means that ActForex’s software can be branded with your corporate name and logo. ActForex’s name and logo do not appear to any retail clients or IBs.