FX Margins have left clients puzzled for too long, not anymore!
Every business should know what their FX Margin is!
When a client is asked ‘What is your FX Margin?’ the response we usually receive is another question. ‘What is that?’ or ‘How can I find it?’
The FX margin (also known as ‘Spread’) is the difference between the mid-market price (interbank price) and the client price, expressed in pips (smallest figure in the price) e.g. 200 pips or as a percentage e.g. 2.5%. Essentially the FX margin is the revenue generated by the Foreign Exchange provider.
Worryingly, the fact that many clients have little understanding of their FX Margin suggests that they are unaware of how much they are being charged and whether the pricing is consistent, fair and competitive.
Take a look at the following example:
If a firm that imported goods transferred £500,000 annually and the Foreign Exchange provider charged an FX margin of 2.5%, it would mean they were charged £12,500 in the year excluding any payment charges. Without the knowledge of your FX margin you would not know how much your company is being charged and if they are being charged at such a high level.
3 easy solutions to establish your FX Margin:
- Simply ask your FX provider
- Send us your previous trade confirmations to firstname.lastname@example.org
- Give us a call on 0203 66 77 345 and we can explain how to calculate it
We hope clients increase their awareness of their FX margin by asking more questions of their FX provider. Ultimately we hope this leads to clients receiving a low, consistent and fair FX margin.
Team Mayfair FX