As a name suggests, price risk transfer describe the situation where a broker finds another party to assume the price risk and to run any potential losses. Usually this is another broker, a bank or a non-bank market maker. In the forex market, there are usually two types of clients that banks deal with: retail clients and institutional clients. Retail clients are individuals who trade for themselves, while institutional clients are organizations that trade for themselves or on behalf of their clients. In order to get the best prices for their trades, institutional clients often have to trade through an A- book broker.Finding the right party:-In order to find the right party to take on the price risk, the broker will need to have an understanding of who they are dealing with and what their motivations are. The broker will also need to have an in depth knowledge of the market in order to find the best possible match.Managing the risks:-Once the broker has found the right party to take on the price risk, they will need to manage the risks associated with the transaction. This includes making sure that both parties are aware of the risks involved and that they are comfortable with taking on those risks.
