The daily reference (or "information", or
"nominal") exchange rates published by financial
institutions, newspapers, central banks and
providers such as those which can be accessed by
Currency Server
are usually either based on concertation procedures
which occur every week day at a certain time between
central (national) banks, or on an analysis of a
high volume of foreign exchange trading during the
previous day. In this latter case, information providers
analyze, over a period of time, bid and ask currency
prices provided in real time by suppliers such as
Reuters, Bloomberg, Dow Jones Telerate, Knight-Ridder,
Tullet Tokyo, Bridge, etc. This raw data is validated
with consideration to frequency, unusual peaks,
possible errors, etc. The average of these filtered
bid and ask prices over a certain period of time
is called median price. Usually only the
mid rate (i.e. the arithmetic average of
the bid rate and the ask rate) of the median price
is provided. Where bid and ask rates are provided
instead, the mid rate can easily be calculated (Currency Server does this automatically, depending
on the data it receives).
Official exchange rates, e.g. rates published by institutions such as
national central banks, usually change once a day during weekdays (with no
updates during weekends). Private providers of exchange rate data, which for
example may base their data on real time trading sources rather than on official
reference data, may publish new rates more frequently.
Information providers such as
Oanda Corporation
and Xenon Laboratories
Incorporated represent examples of professional
organizations which provide data for an extremely
high number of currencies based on their own analysis
of the market. Their data, which is provided on
a subscription-basis, is updated several times a
day.
Public institutions such as national central
banks provide exchange rate data about fewer currencies
(i.e. only for major trading partners), and usually
only once every weekday, but the information is
free, and their perceived authority tends to be
superior to that of private companies. On the other
hand, not all of these public institutions offer
a service level guarantee. For example, they may
change the format of the data or the address at
which the data is published without notice, in which
case Currency Server would issue appropriate warning
messages, to which the administrator could respond
by setting a different FX feed, or by downloading
an updated FX feed filter from Cloanto, or by
modifying a filter for which source code is available
(full documentation is included with the software).
As part of the Currency
System family of products and services, Cloanto
also offers a basic exchange rate data feed, which
is provided at no charge to customers of Currency
Server. The data consists of a selection of exchange
rates for major currencies, aggregated from the
daily reference rates provided by multiple official
sources.
The number of providers of exchange rate data
which can be found by doing an online search can
be confusing, and it is not always easy to recognize
quality. One factor to consider, and which can easily
be verified by simply contacting the provider and
testing the service, is whether the data that is
provided is "clean" or "dirty". "Clean" data is
legal and accurate. "Dirty" data may contain or
consist of an unlicensed copy of data provided by
a commercial data feed under a non-redistribution
license, and simply "grabbed" and redistributed.
Asking the provider where the data comes from may
help clarify some doubts. "Dirty" data may also
include "exchange rates" for currencies which ceased
to be legal tender, or duplicates of the same currencies
with different codes and names. The result may consist
of an impressive number of currencies, which is
as easy to assemble from multiple unverified sources
as it is difficult and costly to promptly remove
or update currencies when they cease to be
legal tender, change name or code, etc. When this
data is loaded into Currency Server, a quick look
at the Legal Tender and Active columns of the All
Currencies tab of Currency Server Manager can reveal
the presence of currencies which ceased to be legal
tender, as well as the absence of new currencies.
Unless it is important to specifically use a
given provider, the difference between the major
providers of exchange rate data usually ends up
being one of reputation and cost vs. number of currencies,
reliability and support. When a customer of an e-commerce
site asks where the exchange rates applied to an
order came from, it may be easier to answer "We
used the official exchange rates published by the
National Central Bank for that day" than to indicate
a private organization. On the other hand, if a
professional foreign exchange analysis company offers
better technical support and overall services, that
may be a reason to prefer such a service. In either
case, it should be reassuring to know that the software
was designed to offer the best possible support
for a plurality of data providers, while shielding
the interface from the FX feed, so that choosing
a different provider is as easy as the selection
of an entry in a drop-down menu in Currency Server
Manager.
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