Answer: A service to evaluate and maintain Markups for your Foreign Exchange transactions with your Bank. The service arranges for optimal or appropriate FX pricing, which is regularly monitored and checked to make sure the Bank provides FX Rate Integrity®. FX Providers are not required by law to represent their clients in a fiduciary sense. Accordingly, FX Rate Integrity® assures you get fair pricing.
Answer: From Bloomberg, Reuters, or other systems Blades International can determine precisely—down to the minute—what the Interbank market has been on a historical trade. We are able to take your latest 3, 6, or 12 months of FX rate history and determine how much your bank has marked up your FX prices. Banks make most of their money in FX on the markup they charge you the client.
Answer: Banks either set the rate by a Foreign Exchange Trader when you call on the phone, or, if you use a bank online system, they have a formula to arrange a Markup based on various factors.
The factors determining your FX rate include (1) the amount of the FX purchase, (2) your bank relationship, (3) how much volume you typically do, and (4) the specific currency, and other market factors. If you are "Indifferent" the Bank will likely have their computer model set a Foreign Exchange Markup that is—higher—than you should pay if you have a regular flow of spot Foreign Exchange purchases and are a good bank client.
Answer: You must have your FX Provider enter a binding relationship, negotiate reasonable spreads and then review your transactions after this agreement has been signed to ensure the provider continues to honor their commitment. Blades International uses their experience and access to the market to perform these functions with FX Rate Integrity®
Answer: The two most important variables are (1) your Bank relationships and (2) the size of the FX purchase. Other factors include (3) if it is one of the major currencies, versus an exotic or less frequently trader currency, or (4) if volatility in the market has increased. With our understanding of banking and how banks set FX markups for good clients Blades International can help you get what will be a Good markup for you and a Fair Markup for the bank. There is no need to give a Bank an excessive markup due to your Indifference.
Answer: No, most Middle Market and even smaller corporate type clients do not know their FX Markups. Large corporate clients that do a lot of FX business typically have large Treasury staffs and may have very sophisticated ways to manage their FX costs. Our service is for the small and middle market clients that have over $1Million in FX flow per year and large clients that see up to $100million or more per year in FX flow.
Answer: Blades International will review monthly or quarterly FX transaction time stamps to prove the Savings and make sure the Bank gives price Integrity. The FX Rate Integrity® service does two key things. First, it proves Markups are lower than they were before and proves the amount Saved. Secondly, it verifies the maintenance of integrity on the FX Markup pricing.
Answer: So often clients will hear all sorts of comments from their bankers such as "we give good market rates", "you get the daily rates based on the foreign exchange market", etc.! What Blades International does is see the precise interbank market cost at a specific minute when you did your FX trades and we can pin point accurately in basis points (hundreds of 1%) what your historic markups have been. It is important to have this markup data when the bank is approached so they understand you are serious, and you have quantified how much they have made off what presumably is your good FX relationship. Going forward the bank might give you good rates for a period of time, and with the Blades International service you can make sure by comparing the time stamps to the market that they maintain that FX Rate Integrity®.
NOTE: A Basis Point is one one-hundredth of One Percent.
Answer: Blades International will investigate why the FX Markup was high, or off the agreed structure. If the Client made a mistake by not going to the online Wholesale FX portal, for example, but went to the Retail portal for FX, Blades International will help remedy the situation going forward. If the Bank made a mistake Blades International can help show the facts and the data to obtain a refund from the bank to make sure the Bank honors the agreement.
Answer: Each mandate for providing the service is customized based on a standard agreement. However, Blades International typically charges a fee to be mandated for review of the past year's activity. Then over the next year Blades International earns a percentage of the Proved Savings based on the number of trades that are monitored for FX Rate Integrity® on a monthly or quarterly basis. At the end of the first year period we can establish a modest maintenance agreement or the Client can ask us to periodically check the rates. Alternatively, a client can go forward with what we have arranged and taught them without any further cost. Accordingly, the client can have a Payback on the Fees they pay of about 3 or 4 months. In turn, they get the Savings for years continuously. The economics make this an excellent Process Improvement Project.
Answer: Blades International is using Big Data as we have experience, knowledge and the financial tools to pin down the exact cost of your FX and thus the Markups. With computer technology we can more readily understand what your Markup costs have been and monitor them going forward.
Answer: Most Middle Market companies would not want to open a new account at a new company to Save on FX. They would rather work with their existing Bank or another bank that has called on them and that has a sophisticated FX service. There is additional administrative work to open an account at a new entity which promises to Save you money, but in turn you have to monitor how they would price you as well. For Middle Market clients and larger companies it is best to stay with one of your Bank relationships for FX.
Answer: Yes. Blades International has Saved as much as 85% for some clients that were Indifferent. Those banks gave great service and execution and then charged full Retail FX Markups.
Answer: Bankers will have mixed emotions as there will be disappointment because charges on the FX business will be lower. However, bankers should appreciate clients Saving money and being conscientious.
Bankers should respect you for doing your best. If a banker is upset, and not an advocate for your business, you may want to evaluate the other aspects of the banking relationship as well.
Answer: Indeed, the more a client knows about how banks make money the better off in negotiating. Clients know interest rates, letter of credit fees and cash management account analysis charges which are itemized; however, often clients have no idea what the FX Markup a bank earns really is as they are Indifferent.
Answer: The fines Banks have paid for FX manipulation have been in excess of $15 Billion to date and have brought a lot of attention to this issue. However, banks still make good margins and have carefully in fine print made various disclosures about FX activity. Banks still have significant Markups if you are Indifferent.
Answer: Wikipedia defines the FX Scandal as follows: The forex scandal (also known as the forex probe) is a financial scandal that involves the revelation, and subsequent investigation, that banks colluded for at least a decade to manipulate exchange rates for their own financial gain. Market regulators in Asia, Switzerland, the United Kingdom, and the United States began to investigate the $5.3Trillion–a-day foreign exchange market (forex) after Bloomberg News reported in June 2013 that currency dealers said they had been front-running client orders and rigging the foreign exchange benchmark WM/Reuters rates by colluding with counterparts and pushing through trades before and during the 60-second windows when the benchmark rates are set. The Behavior occurred daily in the spot foreign-exchange market and went on for at least a decade according to currency traders.
Answer: Yes, Blades International can assist clients in making this service into a good Process Improvement project.
Answer: If a client simply allows banks to charge a Markup and is unaware of the Margin they put on FX payments they are “Indifferent”. Banks will adjust their pricing to a significant Markup unless questioned and confronted.
This does not matter if a client has a limited volume as maybe the high Markup is what other banks would charge as well. However, if a client has a FX volume flow of over $1million per year and is a good client they deserve good FX Markups. It is easy to get Free Indications from Blades International and then you know and are no longer Indifferent.
Answer: Yes, in most cases the bank would charge a Fee for the outgoing International Wire Transfer and have a Markup built into the Price. If you have a modest volume of over $1milllion on an annual basis and you pay a Wire Transfer Fee, or it is in in your Account Analysis on top of a Markup, it is likely you are paying too much if you have a favorable bank relationship.
Answer: Blades International is happy to talk to your bankers in a very diplomatic way. However, each client has a customized solution and you may decide it is best Blades International stay in the background as a Confidential Financial Advisor.
Answer: It will be good for you to know you have good Markups and you could thank your banker and let them know you are watching. You could express appreciation for the good relationship and the good FX rates. We would hope to stay in touch to periodically help you check should your FX volume grow or you suspect the FX markups have changed.
Answer: Interestingly, a number of relatively new companies offer services to individuals and small businesses to lower their FX rates. The key service they sell is lower rates and execution of your trades by having you open an account with them. This may be beneficial for an individual or small business that deals in modest amounts. However, for middle market and larger clients it is typically not a good option as they have bank relationships and do not want to open up a new account with a Financial Technology company which means additional counter party risk and additional administration. It is better for larger clients to stay with their bank or use their second bank relationship to do the FX.
Answer: There is no need for us to see more about your business than just the FX rates and the dated time stamps. We like to use the KISS method - ‘Keep it Short and Simple’. Just the Time Stamps and FX Rate data, no Payee or account # data please.
Answer: If the client cannot see or get the Time Stamps, and you are a good client that does Foreign Exchange purchases through your bank’s automated system that is a Red Flag! You want to talk to your Relationship Manager and tell him that you need the time stamp data. Blades International can help if your banker is not cooperative.
Answer: Yes, it is the Clients data. Compared to the Securities Market there are fewer regulations in the Global Foreign Exchange market, however, it is Client time stamp data and it is when the FX deal was done. The Bank should provide that information or make it readily available. If they continue to give you the run around, it may be time to consider an alternative bank for FX.
Answer: A Client should talk to the Relationship Manager or for larger accounts an Account Representative. The bank contact may refer you to the Foreign Exchange specialist, or Trader, or to a Cash Management Administrator. Those people should be able to assist. However, if in turn they refer you back to the Banker and if you get the run around, it is a Red Flag and we can help you.
Answer: Yes as there are significant markups in Forward transactions as well.
Answer: The Chief Financial Officer, or the CEO, is ultimately responsible for the FX Markups. However, it is often the case that handling FX Wire Transfers are delegated to a cash manager or an administrative officer. In turn, they may report to a Controller, or Treasurer, who in turn reports to a CFO. The responsibility for the FX Markups can often be lost in the organization if no one takes responsibility and understands there is a Savings to be obtained.
Answer: This can be a good project to show you are looking to save the company money. You can learn the facts of the Markups and help your Manager learn how much the bank earns on your FX. Even if you do not use the service it is good to have the Free Sample Indications so you know your costs and what your bank earns.
Answer: Being too busy is often an objection to not spend the time to learn what you might save. It can be the case that the Bank relationship is so close that no one wants to question the status quo, and in effect that is what your banker would want. However, as previously mentioned bankers will respect your desire to improve your company performance and Save and allow the Bank to earn a “Fair Return” on FX.
Answer: Yes we believe more FX trades will be electronic and fewer will be with traders. This makes it even more important to know you’re Markups.
Answer: Typically both the General Relationship Manager and an FX or Treasury specialist get cost center credit. Accordingly, either one can help you or they can refer you back and forth, which becomes frustrating.
Answer: Yes, Blades International has a number of bank relationships and can also show various attractive FX Provider alternatives.
Answer: Clients could always work with a bank that will be transparent and give good FX execution and Markups and simply draw an ACH on the Client’s main operating account.
Answer: Blades International estimates a client will typically earn back by FX Savings what was initially paid within weeks or a month. Within three or four months the client will have Saved enough to cover all the expenses incurred for a year and the Savings will continue.
Answer: Blades International will give you a report on your historic markups and analysis of your FX relationship. The report will highlight issues unique to your FX purchasing patterns and recommend a range of structured or tiered pricing agreements. Blades International will either negotiate directly with your bank or coach on how to negotiate the arrangements for good FX Markups. Blades International will then follow through to monitor the Bank FX Markups for FX Rate Integrity®.
Answer: Simply send in existing FX rate data for a Free FX Markup Indication and let Blades International contact you with results.
Simply share your FX rate data, including the time, date, rates, currencies and volumes. We will provide you with free indications of your markups. Please do NOT send confidential account or payee information.