1. 1.–2. Foreign Exchange Markets International Finance Karel Bruna

2. Main Business Problems the role of bank/company in foreign exchange market main sources of risk to which bank/company face up main trends in foreign exchange markets effective ways how to manage foreign exchange transactions

3. Main Features of the Foreign Exchange Market place of trade concentration (geographical extent) trading channels participants (institutions) type of transaction motivation for transaction conventions in exchange rate quotation

4. Foreign Exchange Markets Geography

7. The Circadian Rhythms of the FX Markets

8. Main Trading Channels in FX Market Interbank MarketClient Market direct tradingsingle-bank systems Reuters Dealing 3000 DirectChief Dealer (Citibank) EBS TraderNatWest Global Banking & Markets electronic brokersmulti-bank systems Reuters Dealing 3000 SpotFxall, Currenex, eSpeed, EBS Spot 360 Treasury System, Lava FX FX Connecte-exchange FX MarketSpace HotSpotFX

9. Example of Dealer’s Conversation From “CODE” “FULL NAME HERE” *0728GMT 030801 */7576 Our Terminal: “CODE”Our Users: “FULL NAME HERE” EUR 10 #25.27 BA> I BUY #TO CONFIRM AT 1,0227 I SELL 10 MIO USD #VAL 5AUG01 #MY EUR TO “FULL NAME HERE” #THANKS AND BYE TO CONFIRM AT 1,0227 I BUY 10 MIO USD VAL 5AUG01 MY USD TO “FULL NAME HERE” THANKS FOR DEAL FRDS. CHEERS # #END REMOTE# # #END#

10. EBS Spot Electronic Broker

11. HotSpot FX

12. Volume of Transactions Traded Online (Gtnews Online Trading Survey, 2004)

13. Primary Benefits of E-Trading in FX Market (State Street Global Market Survey, 2005)

15. % Share and dynamics in main segments of dealer-to-client market (2005, ClientKnowledge, 2006)

17. Motivation for Transaction in Foreign Exchange Market change of purchasing power speculation hedging arbitrage

18. Exchange Rate Quotation European quotation outright quotation small figure quoted currency 31,264 EUR/CZK European quotation base currency big figure

19. Exchange Rate Quotation American quotation outright quotation small figure quoted currency 0,0322 CZK/EUR American quotation base currency big figure

20. Exchange Rate Quotation European vs. American quotation 1 European quotation BID = -------------------------------- American quotation ASK 1 European quotation ASK = -------------------------------- American quotation BID

21. Exchange Rate Quotation Direct quotation quoted currency = home currency 26,534 USD/CZK base currency = foreign currency

22. Exchange Rate Quotation Ind irect quotation quoted currency = foreign currency 0,1023 CZK/USD base currency = home currency

23. Exchange Rate Quotation 26,534626,5353 USD/CZK 26,5346/53 USD/CZK 46-53 USD/CZK

24. Main business problems (cross rates ) definition of the strategy of cross rates predictions cross trades as the source of volatility of company’s future cash flow company’s management of FX risk in case of cross trades

25. Cross rate European quotation USD/CHF cross rate rule GBP/CHF = -------------------- USD/GBP USD/CHF BID GBP/CHF BID = -------------------- USD/GBP ASK USD/CHF ASK GBP/CHF ASK = -------------------- USD/GBP BID

26. Cross rate American quotation GBP/USD cross rate rule GBP/CHF = -------------------- CHF/USD GBP/USD BID GBP/CHF BID = -------------------- CHF/USD ASK GBP/USD ASK GBP/CHF ASK = -------------------- CHF/USD BID

27. Cross rate European vs. American quotation cross rate rule GBP/CHF = GBP/USD. USD/CHF GBP/CHF BID = GBP/USD BID.USD/CHF BID GBP/CHF ASK = GBP/USD ASK.USD/CHF ASK

28. Cross rate (majors vs. cross rate majors market share in 2007) majorscross rate majors EUR/USD27%EUR/JPY2 % USD/JPY13 %EUR/GBP2 % GBP/USD12 %EUR/CHF2 %