Foreign Exchange Market Organization in Selected Developing and Transition Economies: Evidence from a Survey Jorge Iván Canales Kriljenko imf working paper wp04/4

international vendors. In particular, futures contracts on the currencies of Brazil, Mexico, 
Russia, and South Africa are listed on the Chicago Mercantile Exchange (CME).
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South 
Africa also allows futures trading of the rand in the New York Board of Trade exchange. 
Any dealer with access to Reuters’ broking systems can trade the currencies of the eight 
developing economies listed in them. The same applies to the currencies of Mexico and 
Singapore traded through EBS Spot (EBS), the electronic broking system provided by the 
EBS Partnership, Inc., as well as to the currencies of the countries that permit offshore 
trading of their currencies and have banks that make use of Reuters dealing systems.
The domestic currency can also be indirectly traded with offshore counterparties 
through the branches and subsidiaries of foreign banks. International voice brokers that 
operate in the developing countries also may connect foreign dealers willing to take positions 
in domestic currencies with domestic dealers willing to take positions in foreign currencies. 
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For this trading to be possible, the CME must be authorized to open a foreign currency and 
a domestic currency account in an agent bank that acts on its behalf in the country whose 
currency is being traded. 

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International voice brokers and the main banks active in foreign exchange may advertise 
trading in “exotic” currencies, as those of developing economies are known in the market.
C. Predominantly Against U.S. Dollars 
The U.S. dollar is the most traded foreign currency in developing economies.
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 It is even 
the most traded foreign currency in several countries applying for European Union 
membership (the Czech Republic, the Slovak Republic, and Poland). The exceptions are 
those countries that peg the value of their currencies to other foreign currencies. For example, 
the euro explains close to 70 percent of the foreign exchange market turnover in countries 
firmly pegging their currencies to the euro, like Estonia and Bulgaria. Appendix Table 4 
illustrates the share of the U.S. dollar in total trading, using turnover information available 
from the survey and from the triennial survey of foreign exchange, together with over-the-
counter derivative markets that the Bank of International Settlements (BIS) has conducted 
since 1989. The IMF survey also asked the authorities about their subjective rankings of 
foreign currencies by their perceived weight in total market turnover so as to capture 
information from those countries that did not compute turnover statistics. Eighty four percent 
of the 87 developing economies that responded the corresponding survey question ranked the 
U.S. dollar first, while only 10 percent ranked the euro and euro-legacy currencies first.