GLOSSARY
Mid-market Rate
The midpoint between the bid and ask price for a currency pair on the interbank market. The benchmark used in transaction cost analysis to measure FX spread paid versus the 'true' market rate.
The mid-market rate is the midpoint between the bid (what dealers pay) and ask (what dealers charge) for a currency pair at a given moment on the interbank market. It's the rate Reuters and Bloomberg quote as the spot, and it's the benchmark for measuring how much spread your bank or PSP applied on a trade.
Why it matters
Banks rarely publish the spread they apply explicitly; the cost shows up as the gap between mid-market at trade time and the rate you actually got. Comparing executed rates to mid-market — i.e. doing transaction cost analysis — is the only reliable way to know whether a corridor is FX-expensive.
Related terms
- Transaction Cost Analysis
- FX Spread
- Bid-Ask Spread