Where is the world's largest foreign exchange market located?

The correct answer is London.

Key Points

• London is recognized as the world's largest foreign exchange market, handling the highest volume of currency trades.
• The city's strategic location between time zones makes it a pivotal hub for global financial activities.
• London's foreign exchange market is known for its high liquidity and efficiency, attracting traders from around the globe.
• According to the 2019 Triennial Central Bank Survey by the Bank for International Settlements (BIS), London accounted for 43% of the global forex turnover.

Additional Information

• Foreign Exchange Market (Forex Market):
  • A global decentralized market for trading currencies.
  • Includes all aspects of buying, selling, and exchanging currencies at current or determined prices.
  • Largest and most liquid financial market in the world.
• Bank for International Settlements (BIS):
  • An international financial institution owned by central banks which fosters international monetary and financial cooperation.
  • Publishes the Triennial Central Bank Survey, a comprehensive source of information on the forex market.
• Liquidity:
  • Refers to the ease with which an asset or security can be quickly bought or sold in the market without affecting the asset's price.
  • High liquidity in the forex market ensures that trades can be executed rapidly and with minimal price fluctuations.
• Time Zones:
  • London's location allows it to trade with major markets in Asia during their late trading hours and with New York during its morning hours.
  • This overlapping trading session contributes significantly to the high volume of transactions.