How does Forex market operates and who finance it? -

This is assuming that you refer to the OTC (Over the counter) or Spot Forex market. The most simple way to understands such a broad question is to think of a market where any entity can make offers to buy or sell contracts of a certain currency pair. This unique market differs from that of any country s stock exchange in that there is no central exchange. Not having a physical exchange restriction means that as long as some market is open, OTC Forex activity can be conducted. Who finances it? Well, it s not a matter of who finances it, but more of who participates in the activity. 98-99% of the trading volume originates from major financial institutions. The rest come from individual traders and small firms with less than $10M in trading capital.