Thomson Reuters Unveils FX Benchmark Ahead of Change to ECB Reference Rate

A new FX service has been unveiled by Thomson Reuters, after the company announced today its WM/Reuters 2pm CET benchmark, aimed for corporates that need to value, hedge and/or settle cross-border transactions, according to a company statement on the newly released foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term product.

Described as an alternative to the European Central Bank (ECB) 2:15pm CET reference rate, the new solution from Thomson Reuters takes a 15-minute head start on the ECB rate, yet the company noted that the need for the product comes amid plans for the ECB to change its release time to later in the day.

The changes to the ECB reference rates have left a gap for corporates that need a trusted reference rate to settle cross-border transactions on a daily basis

ECB change on July 1st

In December, the ECB said that starting July 1, 2016, it will start releasing the euro reference rate at 16:00 CET and strongly discouraged its usage for transactional purposes, while reframing it as informational.

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Commenting in a company statement, Tobias Sproehnle, global head of benchmarks at Thomson Reuters, said: “The changes to the ECB reference rates have left a gap for corporates that need a trusted reference rate to settle cross-border transactions on a daily basis.”

Mr. Sproehnle added: “The WM/Reuters 2pm CET benchmark provides them with a highly-monitored and robust solution for this task that comes with the comfort that it fully aligns to IOSCO principles for benchmark calculation and that it is calculated on primary market data from leading market platforms.”

“It’s a key reason why our benchmarks are widely accepted by auditors and have been adopted by leading equity and bond publishers.”

WM/Reuters Benchmarks

The WM/Reuters intraday service covers 155 currencies against the three major currencies including the euro (EUR), the British pound (GBP), and the United States dollar (USD), according to a description of the product.

Thomson Reuters said in a statement that it is currently providing the 32 rates that are presently covered by the ECB reference rate and which are offered to corporates for free based on a 30-minute delay, whereas, customers can subscribe to real-time data including the 2pm spot rates for FX.

Rather than using composite data, such as from a sole source or other index, the company uses primary market data to create its benchmark rates, including data from its own Thomson Reuters Matching platform and other interdealer global trading platforms for FX such as EBS and Currenex.

Finance Magnates reported earlier this year when Thomson Reuters said it was launching a randomization process for its Spot FX matching service that was in production at the time with a planned launch across three currencies in June.