An FX spread is a difference between exchange rates. In wholesale markets it commonly means the gap between bid and ask prices. In customer pricing, people may also use the phrase for the gap between a reference rate and the offered rate. The benchmark must be stated before the percentage means anything.
Bid-ask spread
If an illustrative USD/PHP bid is 62.40 and the ask is 62.60, the absolute spread is 0.20 PHP and the midpoint is 62.50.
Spread as a percentage of midpoint = (Ask − Bid) ÷ Midpoint × 100
Here, 0.20 ÷ 62.50 × 100 equals 0.32%. The IMF discusses these spreads as a trading-cost and market-liquidity measure in its working paper on foreign exchange spreads.
| Comparison | Rates used | Main caution |
|---|---|---|
| Bid-ask spread | Market bid versus ask | Changes with liquidity and market conditions |
| Reference-to-customer gap | Timestamped benchmark versus offered rate | Requires the same pair, direction, amount and time |
Compare the outcome, not the advertised spread
- Record the benchmark source and time.
- Keep the pair direction consistent.
- Use the same send amount and Recipient.
- Add disclosed fees and possible deductions.
- Compare the expected Recipient amount.
Use the applicable Quotable Payments quote, not a generic spread claim. Compare the total debit and expected Recipient amount at the same timestamp, then account for the FX markup and separate fees.
