WM/Reuters FX Benchmark rates are spot and forward foreign exchange rates that are used as standard rates for portfolio valuation and performance measurement. The WM/Reuters Closing Spot Rate service was introduced in 1994 to provide standard forex rates that would enable portfolio valuations to be compared more accurately against each other and financial benchmarks, without having to account for currency differentials.
The WM/Reuters FX Benchmark rates are provided by Thomson Reuters, which acquired the rate calculation business of the World Markets Company (WM) from State Street in 2016.
One way in which that transparency is enhanced in the Forex market is through visible benchmark fixings independently published, fully auditable Forex rates designed to provide an accurate and consensus-driven reflection of the market at a given time.
With benchmark fixings that are published on a regular and transparent basis, this allows market participants such as institutional investors and corporate treasurers to demonstrate that they have achieved the most competitive rate possible at the time of execution.
In the absence of central exchange, Forex markets can be fragmented, making it difficult to discover meaningful market rates for all but the most widely traded currencies.
This creates significant challenges. Measuring portfolio performance, settling derivatives, publishing indexes, and structuring financial products becomes increasingly difficult without access to reliable, standardized, and widely distributed FX benchmarks.
WM/Reuters FX benchmarks provide accurate data for more than 150 currencies distributed throughout the day and available to subscribers of Thomson Reuters Eikon and real-time feeds, plus other third-party providers.
With a published and transparent calculation methodology, the respect of central banks and national regulators worldwide, and a reputation for objectivity, WM/Reuters FX benchmarks are regulated by the FCA, widely accepted by auditors, aligned with IOSCO standards, and have been adopted by leading equity and bond and index publishers including MSCI, FTSE, S&P, JPM, and STOXX.
Vincent Nyagaka is a Professional Trader, Analyst & Author. He has been actively engaged in market analysis for the past 7 years. He has a monthly readership of 100,000+ traders and has taught over 1,000 students since 2014. Vincent is also an experienced instructor and public speaker. Check out Vincent’s Professional Trading Course here.