DEFINITION of Dealing Desk
In foreign currency markets, a dealing desk is where the forex dealers at a bank or financial institution sit. Since the forex market is open around-the-clock, many institutions have dealing desks around the world. Dealing desks can also be found outside the foreign exchange markets, such as in banks and finance companies, to execute trades in securities and other financial products.
BREAKING DOWN Dealing Desk
The term "desk" may be a bit of a misnomer, given its connotation of a table shared by a couple of traders. Large financial institutions often have dealing facilities that are staffed by hundreds of dealers. In a large organization, major currencies, such as the euro and yen, may have several trading desks staffed by dozens of traders who specialize in these currencies.
Because of electronic trading, the number of forex dealers at a desk has declined significantly since the mid-2000s. In the late 1990s, a dealing desk could be made up of 15 to 20 traders, with often multiple people covering the same currency. However, today, your typical forex desk will have less than ten traders, some as few as five with a lot of the business being quoted and cleared by an electronic auto-hedging platform.
The forex dealing desk is located next to the sales desk and in most cases near the market risk desk that monitors positions and will flag any risk with trades or forex positions currently. The market risk team is looking for anomalies and will calculate the value at risk (VAR) at the end of each day to assess the size of the risk that the bank has at any given time.