The Foreign Exchange Professionals Association has issued new guidance warning that widespread misuse of spread grids is distorting pricing expectations across FX markets. The industry body clarified that spread grids should be treated as indicative tools rather than executable benchmarks, following persistent confusion between liquidity providers and clients that has strained trading relationships.
FXPA’s Buy Side Working Group developed the paper amid growing concerns that increasingly sophisticated, data-driven execution workflows are amplifying misunderstandings about these pricing references. Richard Turner, Senior Trader at Insight Investment and working group chair, emphasized that while spread grids provide valuable context on expected costs across currency pairs and trade sizes, they cannot capture real-time market dynamics.
The association is urging firms to prioritize transaction cost analysis, RFQ histories, and observed execution outcomes over static reference grids. Volatility shifts, liquidity conditions, and trade size all affect actual pricing in ways spread grids cannot reflect. The guidance aims to reduce friction between buy-side and sell-side participants by establishing clearer interpretation standards.
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FXnCO Insight
** Traders should immediately review internal workflows to ensure spread grids inform rather than dictate execution expectations, combining them with real-time TCA data for accurate pricing assessment.
Source: Finance Magnates