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Adam Solomon is a specialist in business foreign exchange issues at foreign exchange brokers TORfx.

The idea of this blog is to assist businesses in saving money on making or receiving payments in foreign currency. It is developed with all companies in mind from public companies with large and complex operations, to smaller companies and individuals.

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Home Opinion Business Foreign Exchange - Adam Solomon Why bank foreign currency rates are more expensive
Why bank foreign currency rates are more expensive PDF Print E-mail
Written by Adam Solomon at TORfx   
Wednesday, 10 March 2010 15:35
Adam Solomon at business foreign currency brokers TORfx explains why banks are so loose on their foreign currency margins as opposed to independent brokers.



Banks and independent providers all access the interbank rate but the profit margin is much wider using the bank. The tourist rate, what you might expect using your local post office for holiday money, is close to what a bank would offer on a significant amount of currency.

There is very little room for flexibility because banks don't tend to focus on foreign exchange purchases and the rate offered won't change a great deal on a daily basis. You cannot rely on banks to contact you following a significant move in the market that may effect your purchase dramatically. Whereas, an independent broker will solely focus on foreign exchange and be ready to contact you following the slightest move in the market.  

How important is personalised service when it comes to dealing with foreign exchange markets ?


I think it's fundamental that the client, particularly in the private sector, feels secure and confident when dealing in the foreign exchange market. Many of our clients are looking to convert the proceeds of a house sale or their life savings into another currency in preparation for a long awaited move abroad. Our corporate clients are always looking to reduce costs and have budgeted their foreign purchases at a particular level to make profit.

Our account managers all maintain a high level of service and understand that the client needs to achieve the very best rate possible.

When dealing with a bank, the client may be passed from pillar to post with no insight into whether it is good time for them to trade or not. Over a period of time, our clients tend to develop a good rapport with their account manager and it's always reassuring to speak to the same person who has a keen understanding of the client's requirements.

What is the difference between the interbank rate and the live trading rate?


The interbank rate is the rate at which the bank or broker exchange currency between themselves. Whereas, the live trading rate is the rate the bank or broker will offer the client.

The spread between the interbank rate and the live trading rate can differ massively depending on whether the client is using a bank or an independent broker. The bank will generally offer a rate between 1-4% off the interbank rate, whereas a broker will be prepared to compete and offer a more competitive price.
Last Updated ( Wednesday, 24 March 2010 11:06 )