The forex market is decentralized, meaning there is no single central exchange. Instead, it relies on a network of market participants known as Liquidity Providers (LPs).
Tier-1 Banks
At the top of the pyramid are Tier-1 banks like JP Morgan, Citibank, and HSBC. These institutions handle massive volumes and provide the tightest spreads to the interbank market.
The Role of Market Depth
LPs ensure that a buyer can always find a seller and vice-versa. Without them, the market would suffer from low liquidity, resulting in massive slippage and massive spreads.