Pound sterling quotes are usually currency-based in the interbank world. Margins and Lines of Credit Currency transactions are executed under various conditions based on the creditworthiness of the counterparties. Lines of credit are the main mechanisms for executing forex transactions. Margin trading also is the cornerstone of futures trading. The interbank market uses margin trading for less creditworthy customers in order to maintain the integrity of the interbank transactions.
Margins are, in effect, performance bonds.
Futures exchanges have created elaborate systems to calculate margins, taking into account the historical volatility of a currency and the total value of the standardized futures contract. The interbank market takes its lead from the futures exchanges' calculations and also uses margin amounts as a lever to control the volume a customer may trade at any one time. Unfortunately, forex statements are frustrating nearly all the time. Each firm's statement looks different from those of other firms depending on the back-office computer platform used. Most customer account statements are never seen or reviewed by a regulatory agency and may have many inaccuracies, so the trader's ability to accurately analyze the statements is extremely important.