Market StructureInterbank
Interbank Market
The wholesale tier of the foreign exchange market where large banks and institutions trade directly with one another.
What Interbank Market means
The interbank market is the top tier of foreign exchange, where major banks deal with each other and with large institutions in very large sizes, either bilaterally over electronic platforms and voice or through anonymous matching venues. Access requires credit lines and prime brokerage relationships, so participation is limited to institutions. Prices formed here propagate down through prime-of-prime intermediaries, aggregators and retail brokers to the quotes seen on a trading platform.
Retail traders never trade in the interbank market directly, whatever marketing language may suggest. What they can obtain is pricing derived from it, less the markup or commission charged along the way, and in dealing sizes far below the wholesale minimum. Interbank quotes are also not a single official price: there is no consolidated tape in spot forex, so different venues can show marginally different rates for the same pair at the same instant.
Worked example
Interbank spot EUR/USD may trade at 1.08498 / 1.08500 in sizes of five million euros or more, while a retail client sees 1.08495 / 1.08505 after aggregation and markup.
Related terms
- Over-the-Counter (OTC)Trading conducted bilaterally between two counterparties rather than through a centralised exchange and clearing house.
- Liquidity ProviderA bank, non-bank market maker or institution that streams two-way prices a broker can fill client orders against.
- Spot MarketThe market for immediate delivery of currency, with spot FX trades conventionally settling two business days after the trade date.
- ECN (Electronic Communication Network)An electronic venue that anonymously matches buy and sell orders from many participants in a shared order book.
- MarkupThe amount a broker adds to a wholesale price or rate before showing it to the client, forming part of its revenue.
Frequently asked questions
What does Interbank Market mean in forex trading?
The wholesale tier of the foreign exchange market where large banks and institutions trade directly with one another.
How does Interbank Market work in practice?
Retail traders never trade in the interbank market directly, whatever marketing language may suggest. What they can obtain is pricing derived from it, less the markup or commission charged along the way, and in dealing sizes far below the wholesale minimum. Interbank quotes are also not a single official price: there is no consolidated tape in spot forex, so different venues can show marginally different rates for the same pair at the same instant.
What is an example of Interbank Market?
Interbank spot EUR/USD may trade at 1.08498 / 1.08500 in sizes of five million euros or more, while a retail client sees 1.08495 / 1.08505 after aggregation and markup.
Trade with a regulated broker
Understanding the terminology is the cheap part. The expensive part is choosing a counterparty whose execution, financing and withdrawal behaviour match what the marketing implies. Every broker below has been reviewed with a funded live account, and each review states which legal entity and which regulator applies to the account you would actually open.
Check the licence on the regulator's own register before you deposit — our regulators directory explains what each authority enforces, from leverage caps to compensation limits.