6 INTERNATIONAL FINANCIAL MANAGEMENT
foreign currency. To facilitate the individuals and organizations including governments to
buy or sell foreign exchange, certain other organizations and individuals, called facilitators,
have come to play a role. In market terminology, these facilitators are categorized as primary
dealers and brokers. Primary dealers act as a principal in a transaction and conduct business in
their own account by committing their own funds, while brokers act as an agent for an actual
buyer/seller of foreign exchange and do not commit their own funds. Brokers do not take
positions and, therefore, are not exposed to foreign exchange risks. They rely on the broker-
age commission or fees that they receive from their clients. ...