I'm looking at converting some USD into EUR. I am comparing Revolut's currency exchange rate with Wise' currency exchange rate. As of now:

  • Revolut: 1 USD = 0.9216 EUR (screenshot). Revolut states they use the "interbank rate" (and add some fees in some case, which appear separately).
  • Wise: 1 USD = 0.922150 EUR (screenshot) Wise states they use "independent sources including Reuters, New Change and XE, which updates it in real time while the trading market is open" (and add some fees in some case, which appear separately).

Why does the interbank currency exchange rate differ from the Reuters, New Change and XE exchange rate so significantly?


1 Answer 1


According to your screenshot, Wise offers a guaranteed rate for 23 hours. Revolut is usually realtime. Almost all FX spot trading is OTC. Even the same platform will show numerous different rates depending where you look, even at the same time.

In more detail, FX trading is decentralized and takes place through transactions at brokerages, over-the-counter (OTC) markets, or via the interbank system, rather than centralized exchanges. Therefore, each platform will show slightly different prices. If you see the same, one must use the data from the other. Each platform that offers exchange rates must follow certain logics (e.g. aggregate all OTC quotes from market makers to display the best bid ask available in the market based on some filter criteria; mostly based on reliability - filter out spikes, stale quotes etc).

I want to illustrate this by looking at a single, widely used source for FX market data: Bloomberg

  • ALLQ for example shows all quotes (that your institution has access to). There will be a large amount of banks and brokers quoting bid and ask to Bloomberg
  • Bloomberg curates these quotes (all, not just the ones you can see) based on two different methods (CMPN and BGN), where CMPN stands for composite New York, and BGN for Bloomberg Generic New York.
  • Historically, the timing of the snapshot (New York, London - BGNL/CMPL, Tokyo BGNT/CMPT etc.) can also be set and details and white papers can be found on QFX and XDF.
  • Bloomberg also offers BGNE (e stand for executable), which is directly derived from executable quotes on FXGO (Bloomberg's FX trading platform), whereas the other quotes are purely indicative. There exist numerous such trading platforms like FX Connect from State Street’s GlobalLink, EBS, now part of the CME or Refinitiv. The aforementioned platforms offer quotes from numerous institutions in one place. E.g. Refinitiv states that it connects you with 16,000+ counterparties and 4,000+ institutions (not all will be for FX trading though). Euromoney routinely ranks these platforms by market share. While Refinitiv is the biggest, it largely depends on regions as well. E.g. 360T is very strong in the DACH region. FXGO has a good user base with corporations. However, there are also single bank platforms like Deutsche Bank Autobahn. According to Euromoney, DB has a ~14% market share in FX trading.
  • BFIX is a fixing (see next paragraph for details) that you can even get for free without a Bloomberg terminal (fixings should be easily available to be useful benchmarks).

So even with the same provider, based on your settings and choice of composite, you will see different rates for the same FX pair and day.

This leads to an obvious problem with OTC quotes though, because no one knows what the "exact" rate actually is. However, whenever someone needs to compute an amount payable or the value of a financial instrument or contract, or wants to track returns of funds, compute indices (see Appendix I and II), compute (performance) fees and the like, there must be a uniformly agreed way of doing this. In other words, there must be a benchmark for transaction purposes.

Therefore, so called fixings were developed, which are not only reliable, transparent and representative but also compliant with benchmark regulations like IOSCO or EU BMR which carries over to the UK via the onshored BMR. Two of these officially approved fixings are WMR and BFIX.

It is worth to note that this is different in different countries. For example, PTAX in Brazil is widely used, also CFETS in China or MOEX in Russia, where FX is exchange traded.


Given a similar question was posted afterwards, I would like to clarify that (almost) all of the sources I linked above count as interbank /inter-dealer. Since it is decentralized, there is no (one) market or quote. Every market maker quotes its own price. Just like every supermarket or gas station has different prices, but FX is a lot more competitive.

  • 2
    This is a great answer; incredibly detailed on the various sources and their methods. Apr 4, 2023 at 16:21

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