How much are you paying for your FX?

This topic is dedicated to corporate treasurers, CFO’s, and account executives who regularly deal in multiple currencies on behalf of their businesses. We quantify costs in all facets of running our businesses but foreign exchange has historically been a more opaque cost to assess. However, increasing numbers of non-bank competitors and the internet has helped improve FX transparency. Given this fact, we have outlined a simple methodology for calculating and assessing your FX transaction costs enabling you to calculate annual savings available via alternative FX and payment providers.

Banks tend not to be transparent with how the rate they give you is derived. There is an implicit mark up within their net rate. Therefore, we need a ‘zero cost’ benchmark in order to quantify a percentage mark up or absolute equivalent dollar amount that you are paying your bank. This benchmark is the wholesale rate. It is also described as the interbank rate. As interbank spreads are very tight it is effectively also close enough to the mid-price which is the average of the bid and offer.

How to find the interbank rate?

Many businesses don't have access to real-time wholesale rate aggregators such as Bloomberg or Reuters. However, free, independent and almost real-time alternatives are available such as:

Keep in mind that as FX is quote-driven and non-exchange traded like equities, mid-prices may vary very slightly.

Calculate the bank mark-up

Once you have this benchmark compare the rate in real-time to your quoted bank rate. The difference is the mark up. If you want to analyse your historic transactions to get an accurate reflection on mark ups you will need a trade time. You can then cross reference your rate versus the mid-price at that particular time of day. In certain fixed currency pairs like USDHKD intra day changes tend to be small so your trade time on that particular day won’t be needed. If you want Currenxie to analyse your historic data for a cost analysis we do this as a service to clients and prospective clients.

Example :

Bank client is a buyer of 100,000 Euros vs USD


9:16:06, 14 March 2015

Interbank Bid/ Offer:


This means that at 9:16:06, Hong Kong time (GMT+8), most of the biggest investment banks are willing to buy EUR at 1.1152 and sell it at 1.1153.

Mid Price:


Your quote:


% Mark up:

1.12 - 1.11525 = 0.00475 ~ 0.426%

$ Mark up/ Fee:

USD 475

To be fair, in less liquid currency pairs spreads may be wider so your FX provider does have a slightly higher cost to hedge your trade in the interbank market compared to the derived mid-price. Hence this should be a consideration when calculating mark-ups.

How do Banks price their clients FX?

Pricing tends to be correlated to your size. The smaller the client, the worse the rates. Retail gets the worst rates whilst large corporates tend to get closer to the wholesale rate.

In terms of online access with banks, they tier clients accordingly into spread tiers. Often it’s pot luck as to where you are set up and good luck in trying to change your tiering!

Larger clients tend to get access to a bank treasury desk which providers tighter pricing.


Currenxie and other comparable brokers are viable alternatives to banks for providing clients with much improved FX rates. Modern technology including cloud based infrastructure gives modern fintech companies a pricing advantage over traditional banks. In addition, transparency and personal service are an important part of the offering. All businesses especially those in high turnover, low margin industries such as textiles should see these savings feed down into their bottom line in a meaningful way.