WM/Reuters Benchmark Rates

AAA

DEFINITION of 'WM/Reuters Benchmark Rates '

Spot and forward foreign exchange rates that are used as standard rates for portfolio valuation and performance measurement. The WM/Reuters benchmark rates are provided by State Street subsidiary the WM Company and Thomson Reuters. The WM/Reuters Closing Spot Rate service was introduced in 1994 to prove standard forex rates that would enable portfolio valuations to be compared more accurately against each other and financial benchmarks, without having to account for currency differentials.

INVESTOPEDIA EXPLAINS 'WM/Reuters Benchmark Rates '

The original WM/Reuters service provided closing spot rates for 40 currencies daily; the service has since expanded to 159 closing spot currencies covered on an hourly basis. In addition, WM/Reuters also provides closing rates for currency forwards and non-deliverable forwards (NDF), hourly intraday for spot, forward and NDF rates, as well as historical data.

While most major equity and bond index compilers use the WM/Reuters benchmark rates in their calculations, the rates are also used for other purposes such as benchmark rates for the settlement of financial derivatives. Some banks also provide a service to their clients by providing a guarantee to trade at the WM/Reuters rates.

The WM/Reuters benchmark rates are determined over a one-minute fix period, from 30 seconds before to 30 seconds after the time of the fix, which is generally 4 pm in London. During this one-minute window, bid and offer rates from the order matching system and actual trades executed are captured. Since trades occur in milliseconds, 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.

The importance of these rates lies in the fact that they are used to value trillions of dollars in investments held by money managers and pension funds. In 2013, the method of fixing the WM/Benchmark rates came under intense scrutiny, after widespread allegations of collusion and rate manipulation by traders surfaced.

RELATED TERMS
  1. Managed Currency

    Any currency that can have its exchange rate affected by the ...
  2. Middle Rate

    A term used to describe the average rate agreed upon when conducting ...
  3. London Spot Fix

    A price per ounce for each of the precious metals (gold, silver, ...
  4. Forex Spot Rate

    The current exchange rate at which a currency pair can be bought ...
  5. Real Time Forex Trading

    A form of speculation in which a trader bets on the movement ...
  6. Steve Cohen

    A trading magnate also referred to as the Hedge Fund King and ...
Related Articles
  1. Investing Basics

    The Most Popular Bitcoin Mining Software

    Success at mining bitcoins depends on the combination of time, knowledge, computer hardware and the complementary software.
  2. Forex Education

    Who are cambrists and how do I become one?

    Discover what a cambrist is, why they are important to exchange markets and what skills you should possess if you are interested in becoming one.
  3. Forex Education

    Are Downside Tusuki Gap patterns important when trading forex pairs?

    Find out why forex traders use candlestick charting for currency pairs, and learn how the Downside Tasuki Gap pattern can be spotted for short-term gains.
  4. Trading Strategies

    Can forex currency pairs exhibit consolidation patterns?

    Learn how forex currency pairs exhibit recognizable consolidation patterns. These patterns offer traders the opportunity to place low-risk, high-reward trades.
  5. Forex

    Ways To Earn Bitcoins

    There are many ways to earn and own Bitcoins other than just buying them on a Bitcoin exchange.
  6. Investing Basics

    A Look At The Most Popular Bitcoin Exchanges

    The Bitcoin exchanges today claim to have learned from Mt. Gox and present themselves as advanced models with better security mechanisms in place.
  7. Forex Strategies

    What are common strategies traders implement when identifying a Bearish Engulfing Pattern?

    Learn how to spot a bearish engulfing pattern, and learn some of the trading strategies you can implement to take advantage of bear momentum.
  8. Bonds & Fixed Income

    End of Fed's Bond-Buying Program: 7 Things To Know

    This article helps investors understand the economic and financial effects that result when a central bank (like the Fed) ends its bond purchase program.
  9. Investing Basics

    Stores Where You Can Buy Things With Bitcoins

    One reason some people are wary of Bitcoin is they're not sure what to do with it other than buy and hold. But the Bitcoin retail explosion has just begun.
  10. Chart Advisor

    4 Currency ETFs On The Move

    The Bank of the Japan rocked the yen last week, but it isn't the only currency ETF to watch. Big moves are occurring throughout the forex market.

You May Also Like

Hot Definitions
  1. Santa Claus Rally

    A surge in the price of stocks that often occurs in the week between Christmas and New Year's Day. There are numerous explanations ...
  2. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  3. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  4. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  5. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  6. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
Trading Center