What Are WM/Reuters Benchmark Rates?

WM/Reuters benchmark rates are spot and forward foreign exchange rates that are used as standard rates for portfolio 澳洲幸运5官方开奖结果体彩网: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. It eliminates the need to account for currency 澳洲幸运5官方开奖结果体彩网:differentials.

The WM/Reuters benchmark rates are provided by Thomson Reuters which acquired the World Markets Company (WM) rate calculation business from State Street in 2016. 

Basics of WM/Reuters Benchmark Rates

The original WM/Reuters service provided closing spot rates for 40 currencies a day. The service has since expanded to 155 closing spot currencies that are covered on an hourly basis. WM/Reuters also provides historical data and closing rates for 澳洲幸运5官方开奖结果体彩网:currency forwards and 澳洲幸运5官方开奖结果体彩网:non-deliverable forwards (NDFs). Rates are provided hourly intraday for spot, forward, and NDF rates.

Most major equity and bond index compilers use the WM/Reuters benchmark rates in their calculations but the rates are also used for other purposes such as calculating benchmark rates for the settlement of financial 澳洲幸运5官方开奖结果体彩网:derivatives.

How Rates Are Determined

The WM/Reuters benchmark rates are determined over a five-minute fix period from two minutes 30 seconds before to two minutes 30 seconds after the time of the fix. This is generally 4 p.m. in London. Bid and offer rates from the order matching system and actual trades executed are captured durꦐing this five-🦋minute window.

Trades occur in milliseconds so only a sample is captured rather than every trade. The median bid and offer are calculated using valid rates over the fix period and the mid-rate is then calculated from them.

Importance of Rates

These rates are important because they're used to value trillions of dollars in investments held by 澳洲幸运5官方开奖结果体彩网:money managers and 澳洲幸运5官方开奖结果体彩网:pension funds. The method used to fix the WM/Benchmark rates came under intense scrutiny in 2013 after widespread allegations of 澳洲幸运5官方开奖结果体彩网:collusion and rate manipulation by traders surfaced.

The Bottom Line

WM/Reuters benchmark rates are used as standard rates for performance measurement and portfolio valuation. Thomas Reuters acquired the rate calculation business in 𒊎2016 from State Street and has expanded it to 155 closing spot currencies that it covers on an hourly basis.

These rates can provide a helpful and powerful trading tool but they came under fire from traders in 2013 with allegations of rate manipulation and collusion. Consult with an 澳洲幸运5官方开奖结果体彩网:experienced broker if you’re not sure how to use them t♑o your best advantage.