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There is no supraregional or global supervisory institution for foreign exchange and currency markets. However, some market participants are supervised at the national level. If the market participants are banks or credit institutions, they are subject to the respective banking supervision of the respective country.

As far as Germany is concerned, foreign exchange trading is a banking transaction requiring a license. The legal basis for this is §1 paragraph 1 No. 4 KW (German Banking Act). According to this legal regulation, a banking transaction is considered to be "the sale as well as the acquisition of financial instruments in one's own name for the account of a third party".

In accordance with Section 1 (11) of the German Banking Act (KWG), financial instruments (including money market instruments, securities, foreign exchange or units of account and derivatives) are defined precisely here.

Similarly, proprietary trading of foreign exchange is also a financial service requiring a license (see § 1 (1a) No. 4 KWG). Proprietary trading (according to §

32 para. 1a sentence 1 KWG) is not directly subject to permission.

Compliance with the legal regulations (such as the minimum requirements for risk management -BA- in Germany, for example, which sets out the organizational structure for foreign exchange trading by banks and credit institutions) is monitored by the respective banking supervisory authorities.

Banks and credit institutions are also subject to regulatory reporting obligations based on the inventory risks of foreign exchange in accordance with the SolvV (Solvabilitäsverordnung - this is a legal regulation issued by the Federal Ministry of Finance in 2006 as part of the banking supervisory law). This regulation regulates the requirements for banks and credit institutions on the basis of Sections 10 ff of the German Banking Act (Kreditwesengesetz) in terms of capital adequacy (solvency) and liquidity.

The unclosed foreign exchange positions (uncovered or closed out positions) of banks and credit institutions are subject to a commitment to the available own funds of the bank or credit institution in accordance with sections 294 et seq. of the above-mentioned SolvV. If the total outstanding items account for 2 percent of the own funds, they are weighted at 8 percent. This then results in an automatic limit on the risky open overall positions in foreign exchange trading.