Forex Hedge Funds and Currency Exchange

I heard tale of a large entity ($20 billion was the number I heard) that used forex hedge funds to perform basic currency exchange (EUR to USD and vice versa without trying to trade it) when needed. I am left scratching my head for a number of reasons. Can someone who has been in the business as a big player (calling you brokers or bank employees) help answer a few questions?

1) Why would someone take this route as opposed to working with their bank? Some reasons I've thought of might be that funds may get better rates by being able to "shop" the trade or that funds offer privacy etc.
2) Hedge Funds typically require that funds be deposited with them and the withdrawn from them. This means that pass through the funds bank both in and out. Does anyone know how they manage this? Do funds keep multiple bank accounts in different currencies to handle deposits and withdrawals before the money goes on to the prime broker? Or do prime brokers have the ability to take the funds directly from the client thus bypassing the fund's bank and the need to apply exchange rates before you are ready to?
3) How exactly do amounts like this get handled? I realize the forex market is liquid but can this much really be cleared without much issue? What does it take and what kinds of brokers can handle it? That is a large amount of money (to me anyway). Brokers never talk about account maximums.
4) What kind of commission would be fair on something like this? Or rather what would this player expect fom the transaction both in terms of slippage and commission? Typically hedge funds make money from the 2&20 but I imagine a deal like this woule be very short term and not involve profit per se.


To put this all another way, if you were a hedge fund what would you need in place as infrastructure and then how would it work mechanically to handle a $20bio currency exchange?

You might want to read this: http://www.oracle.com/us/industries/...ces/045947.pdf

Legit currency Hedge Funds are typically trying to catch trends and are always looking for currency correlations. Most of them are not trading for "profit" but for compensating balances and hedges against other asset classes. In currency markets that I classify as Market Phase 1 or 7, most currency based hedge funds will algorithmically try to cling to a particular directional profile. However, these types of hedge funds have not seen particular stellar performance from their currency trading over the past 8 years or so.

Austerity, has a lot to do with the lack luster performance because as central banks have intervened, rates of been relatively low and volatility relatively low as a result. Traders chase currencies typically as monetary policy push rates higher and currencies with them. After the 2008 global liquidity crisis and the resultant central bank rate lowering regimes that fell into place, we saw relative drops in volatility typically associated with a more robust rate change environment followed by price fluctuations - which traders like to see in order to generate relative returns. You will notice that FXC, which was the absolute largest currency only fund was boarded-up after it could no longer grow its working capital to keep its investors happy. The returns of Hedge Funds in general has been lousy in the aggregate since 2008 and many have lost too much capital overall. Quite frankly, I don't know they do it - I just don't know how a fund with that much cost basis at its disposal, can't generate extraordinary returns for its investors and shareholders. It blows my mind.

You won't get an answer to your question here, as this forum full of people that managing $100 and not $20Billion.
Judging on on your post it makes no sense to use additional middleman to do basic conversion at such scale. Unless there is good reason behind that and we don't know about it or it's just another tale.